As filed with the Securities and Exchange Commission on April 26, 1995
File Nos. 2-28273; 811-1605-3
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. 56 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 /_X_/
Amendment No. 25 /_X_/
(Check appropriate box or boxes)
PIONEER INCOME 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, 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)
on [date] pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
X on April 28, 1995 pursuant to paragraph (a) of Rule 485
Registrant has registered an indefinte amount of securities under the Securities
Act of 1933 pursuant to Section 24(f) of the Investment Company Act of 1940. The
Registrant has filed the Notice required by Rule 24f-2 for its most recent
fiscal year on or about February 28, 1995.
<PAGE>
PIONEER INCOME FUND
CLASS A AND CLASS B 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
Form N-1A Item Number and Caption Additional 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 Objective,
Policies, and Risks; The Fund
5. Management of the Fund................ Prospectus - Management of the
Fund
6. Capital Stock and Other Securities.... Prospectus -Investment Objective,
Policies, and Risks; 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
Form N-1A Item Number and Caption Additional 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;
Shareholder Servicing/Transfer
Agent; Underwriting Agreement
and Distribution Plans;
Custodian; Independent Accountants
17. Brokerage Allocation and Other
Practices........................... Statement of Additional
Information - Portfolio
Transactions
18. Capital Stock and Other Securities.... Statement of Additional
<PAGE>
Location in Prospectus
or Statement of
Form N-1A Item Number and Caption Additional Information
Information - Description of
Shares; Certain Liabilities
19. Purchase Redemption and Pricing of
Securities Being Offered............ Statement of Additional
Information - Determination of Net
Asset Value; Letter of Intention;
Systematic Withdrawal Plan
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.................. Balance Sheet; Report of
Independent Public Accountants
<PAGE>
[PIONEER LOGO]
Pioneer
Income
Fund
Prospectus
Class A and B Shares
April 28, 1995
The investment objective of Pioneer Income Fund (the "Fund") is to seek current
income consistent with the preservation and conservation of capital. Growth of
capital is a secondary consideration. The Fund invests in dividend-paying
common stocks, preferred stocks, bonds and debentures which may or may not be
convertible into common stocks.
Fund returns and share prices fluctuate and the value of your account upon
redemption may be more or less than your purchase price. Shares in the Fund are
not deposits or obligations of, or guaranteed or endorsed by, any bank or other
depository institution, and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other
government agency.
This Prospectus (Part A of the Registration Statement) provides the information
about the Fund that you should consider before investing. Please read and
retain it for future reference. More information about the Fund is included in
the Statement of Additional Information (Part B of the Registration Statement),
dated April 28, 1995, which is incorporated by reference into this Prospectus.
A copy of the Statement of Additional Information may be obtained free of
charge by calling Shareholder Services at 1-800-225-6292 or by written request
to the Fund at 60 State Street, Boston, Massachusetts 02109. Other information
about the Fund has been filed with the Securities and Exchange Commission (the
"SEC") and is available upon request and without charge.
TABLE OF CONTENTS PAGE
I. EXPENSE INFORMATION 2
II. FINANCIAL HIGHLIGHTS 3
III. INVESTMENT OBJECTIVE, POLICIES AND RISKS 4
IV. MANAGEMENT OF THE FUND 6
V. FUND SHARE ALTERNATIVES 7
VI. SHARE PRICE 7
VII. HOW TO BUY FUND SHARES 8
Class A Shares 8
Class B Shares 9
VIII. HOW TO SELL FUND SHARES 10
IX. HOW TO EXCHANGE FUND SHARES 11
X. DISTRIBUTION PLANS 12
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION 12
XII. SHAREHOLDER SERVICES 13
Account and Confirmation Statements 13
Additional Investments 13
Automatic Investment Plans 13
Financial Reports and Tax Information 13
Distribution Options 13
Directed Dividends 13
Direct Deposit 14
Voluntary Tax Withholding 14
Telephone Transactions and Related Liabilities 14
Retirement Plans 14
Telecommunications Device for the Deaf (TDD) 14
Systematic Withdrawal Plans 14
Reinstatement Privilege (Class A only) 14
XIII. THE FUND 15
XIV. INVESTMENT RESULTS 15
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses that
you, as a shareholder, will bear directly or indirectly when you invest in the
Fund. The table reflects estimated annual operating expenses based on actual
expenses of the Class A shares for the fiscal year ended December 31, 1994.
Shareholder Transaction Expenses: Class A Class B+
Maximum Initial Sales Charge on Purchases (as
a percentage of offering price) 4.50%(1) None
Maximum Sales Charge on Reinvestment of
Dividends None None
Maximum Deferred Sales Charge None(1) 4.00%
Redemption Fee(2) None None
Exchange Fee None None
Annual Operating Expenses
(as a Percentage of Net Assets):(3)
Management Fees 0.48% 0.48%
12b-1 Fees 0.25% 1.00%
Other Expenses
(including accounting and transfer agent
fees, custodian fees and printing
expenses) 0.38% 0.38%
Total Operating Expenses: 1.11% 1.86%
+ Class B shares are a new class of shares, first offered on April 28, 1995.
(1) Purchases of $1,000,000 or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject
to a contingent deferred sales charge as further described under "How to
Sell Fund Shares."
(2) Separate fees (currently $10 and $20, respectively) apply to domestic and
international wire transfers of redemption proceeds.
(3) For Class B shares, operating expenses are based on estimated expenses that
would have been incurred during the previous fiscal year had Class B shares
been outstanding.
Example:
You would pay the following dollar amounts on a $1,000 investment in the
Fund, assuming 5% annual return and redemption at the end of each of the time
periods:
1 Year 3 Years 5 Years 10 Years
Class A Shares $56 $79 $103 $ 174
Class B Shares
- --Assuming complete redemption
at end of period $59 $88 $121 $199*
- --Assuming no redemption $19 $58 $101 $199*
*Class B shares convert to Class A shares eight years after purchase;
therefore, Class A expenses are used after year eight.
The example above assumes reinvestment of all dividends and distributions
and that the percentage amounts listed under "Annual Operating Expenses" remain
the same each year.
The example is designed for information purposes only, and should not be
considered a representation of future expenses or return. Actual Fund expenses
and return will vary from year to year and may be higher or lower than those
shown.
For further information regarding management fees, 12b-1 fees and other
expenses of the Fund, including information regarding the basis upon which
management fees and 12b-1 fees are paid, see "Management of the Fund,"
"Distribution Plans" and "How To Buy Fund Shares" in this Prospectus and
"Management of the Funds" and "Underwriting Agreement and Distribution Plans"
in the Statement of Additional Information. The Fund's imposition of a Rule
12b-1 fee may result in long-term shareholders indirectly paying more than the
economic equivalent of the maximum sales charge permitted under the Rules of
Fair Practice of the National Association of Securities Dealers, Inc. ("NASD").
The maximum initial sales charge is reduced on purchases of specified larger
amounts of Class A shares and the value of shares owned in other Pioneer mutual
funds is taken into account in determining the applicable initial sales charge.
See "How to Buy Fund Shares." No sales charge is applied to exchanges of shares
of the Fund for shares of other publicly available Pioneer mutual funds. See
"How to Exchange Fund Shares."
2
<PAGE>
II. FINANCIAL HIGHLIGHTS
The following information for the year ended December 31, 1994 has been
derived from financial statements of the Fund which have been audited by Arthur
Andersen LLP, independent public accountants, in connection with their
examination of the Fund's financial statements. Arthur Andersen LLP's report on
the Fund's financial statements as of December 31, 1994 appears in the Fund's
Annual Report which is incorporated by reference into the Statement of
Additional Information. The information for the years from 1985 through 1993
has been derived from financial statements which have been audited by the
Fund's then independent public accountants, Coopers & Lybrand. Class B shares
are a new class of shares; no financial highlights exist for Class B shares.
The Annual Report includes more information about the Fund's performance and is
available free of charge by calling Shareholder Services at 1-800-225-6292.
PIONEER INCOME FUND
Selected Data For a Class A Share Outstanding For The Years Presented
<TABLE>
<CAPTION>
For the Year Ended December 31,+
1994 1993 1992 1991 1990 1989 1988 1987
1986 1985
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
Net asset value,
beginning of year $ 10.21 $ 10.13 $ 10.14 $ 9.14 $ 9.53 $ 8.92 $ 8.67 $ 8.94 $
9.17 $ 8.28
Income from investment
operations--
Net investment income $ 0.66 $ 0.65 $ 0.65 $ 0.65 $ 0.70 $ 0.74 $ 0.77 $ 0.76 $
0.80 $ 0.80
Net realized and
unrealized gain (loss)
on investments (1.09) 0.37 0.09 1.00 (0.38) 0.63 0.27 (0.14)
0.04 1.09
Total income (loss)
from investment
operations $ (0.43) $ 1.02 $ 0.74 $ 1.65 $ 0.32 $ 1.37 $ 1.04 $ 0.62 $
0.84 $ 1.89
Distribution to
shareholders from--
Net investment income (0.67) (0.64) (0.66) (0.65) (0.71) (0.75) (0.76) (0.76)
(0.80) (0.80)
Net realized capital
gains 0.00 (0.30) (0.09) 0.00 0.00 (0.01) (0.03) (0.13)
(0.27) (0.20)
Net increase (decrease)
in net asset value $ (1.10) $ 0.08 $ (0.01) $ 1.00 $ (0.39) $ 0.61 $ 0.25 $ (0.27) $
(0.23) $ 0.89
Net asset value, end of
year $ 9.11 $ 10.21 $ 10.13 $ 10.14 $ 9.14 $ 9.53 $ 8.92 $ 8.67 $
8.94 $ 9.17
Total return(1) (4.31%) 10.24% 7.59% 18.62% 3.59% 15.89% 12.29% 6.82%
9.29% 23.84%
Ratio of net operating
expenses to average net
assets 1.11% 1.06% 0.99% 1.04% 0.94% 0.78% 0.80% 0.79%
0.77% 0.80%
Ratio of net investment
income to average net
assets 7.07% 6.52% 6.47% 6.73% 7.67% 7.98% 8.55% 8.29%
8.46% 9.05%
Portfolio turnover rate 50% 69% 54% 43% 44% 69% 87% 115%
76% 136%
Net assets end of year
(in thousands) $259,970 $296,699 $250,033 $197,184 $166,205 $169,607 $159,212 $149,659
$118,760 $75,365
</TABLE>
+ Prior to December 1, 1993, Mutual of Omaha Fund Management Company ("FMC")
acted as the investment adviser to the Fund.
(1)Assumes initial investment at net asset value at the beginning of each year,
reinvestment of all distributions, the complete redemption of the investment
at net asset value at the end of each year, and no sales charges. Total
return would be reduced if sales charges were taken into account.
3
<PAGE>
III. INVESTMENT OBJECTIVE, POLICIES AND RISKS
The investment objective of the Fund is to seek current income consistent
with the preservation and conservation of capital. Growth of capital is a
secondary consideration. The Fund invests in dividend-paying common stocks,
together with preferred stocks, bonds and debentures which may or may not be
convertible into common stocks. In selecting securities for investment, the
investment adviser attempts to identify companies that have better-than-average
earnings potential and those industries that stand to enjoy the greatest
benefit from the predicted economic environment. The Fund seeks to purchase the
securities of companies that are thought to be best situated in those industry
groupings. Since capital appreciation is a secondary consideration, the growth
potential of companies is also considered. The Fund invests in many different
companies in a variety of industries in an attempt to reduce its overall
exposure to investment and market risks.
In pursuing its objective, the Fund purchases portfolio securities with the
view of retaining them on a long-term basis. However, in its review of
individual securities, the market and general economic conditions, the Fund may
sell any security without regard to the period of time it has been held. Such
sales may cause the Fund's portfolio turnover rate to exceed 100% and may cause
it to incur greater brokerage commissions than would otherwise be the case.
Part or all of the Fund's assets may be temporarily invested in securities
of the U.S. government, its agencies or instrumentalities, commercial paper,
bank certificates of deposit and time deposits, bankers' acceptances, other
fixed income securities and repurchase agreements with banks and broker-dealers
with respect to any of the foregoing instruments. At times, the investment
adviser may believe that such investments are desirable due to present or
anticipated market or economic conditions which are affecting or could affect
the values of the Fund's investments, as well as for liquidity purposes or as a
temporary investment, pending investment in primary securities.
Risk Factors
The Fund may invest up to 35% of its net assets in lower rated or unrated
debt securities. These securities involve greater risk of default or price
declines due to changes in the issuer's creditworthiness than investment-grade
securities. Because of its investment in lower rated securities, the Fund may
be more dependent upon the investment adviser's credit analysis in seeking to
achieve its investment objective than a fund that only invested in higher rated
securities. Because the market for such securities may be thinner and less
active than for higher rated securities, there may be market price volatility
for these securities and limited liquidity in the resale market. These factors
may have the effect of limiting the ability of the Fund to sell such securities
at their fair value either in response to changes in the economy or the
financial markets or to meet redemption requests. An investment in the Fund may
involve greater risk than an investment in a fund which can invest only in
investment-grade securities.
The market for high yield, non-investment grade securities (commonly
referred to as junk bonds) grew primarily during a period of long economic
expansion and it is uncertain how such market would perform during a severe or
prolonged economic downturn. An economic downturn or an increase in interest
rates could severely disrupt the market for these securities and adversely
affect the value of outstanding securities and the ability of the issuers to
repay principal and interest. In addition, provisions of current tax law limit
the tax advantages of certain high yield securities, which may limit their
supply. Future legislation could adversely affect the market value of these
securities and, consequently, the Fund's net asset value.
If market quotations are not readily available for the Fund's lower rated or
unrated securities, these securities will be valued by a method that the Board
of Trustees of the Fund believes accurately reflects their fair value. Judgment
plays a greater role in valuation of lower rated securities and such valuation
becomes more difficult because there is less reliable, objective data available
on such securities. For year-end 1994, 32% of the Fund's net assets were
invested in equity securities, 2% in cash and equivalents and 66% in debt
securities. Of the Fund's net assets, 21% were invested in debt securities
rated AAA/Aaa by Standard & Poor's Ratings Group ("S&P") and/or Moody's
Investors Service, Inc. ("Moody's"), 2% rated AA/Aa, 4% rated A/A, 17% rated
BBB/Baa, 13% rated BB/Ba and 5% rated B/B. Only 4% of the Fund's net assets
were unrated and they were determined to be comparable in quality to AAA/Aaa
and BB/Ba rated debt securities. Securities rated BB/Ba or below (or comparable
unrated securities) are considered speculative, and payments of principal and
interest thereon may be questionable. See Appendix A to the Fund's Statement of
Additional Information for a discussion of bond ratings.
Writing Covered Call Options
The Fund does not invest in puts, calls, straddles, spreads or any
combination thereof. However, in order to preserve capital and increase income,
the Fund may write covered call options on securities if: (1) such calls are
listed on a national securities exchange, (2) when any such call is written and
at all times prior to a closing purchase transaction as to such call, or its
lapse or exercise, the Fund owns the securities which are subject to the call
or has the right to acquire such securities without the payment of further
consideration, and (3) after any such call is written, not more than 25% of the
value of the Fund's total assets would be subject to calls. Calls may be
purchased only to effect a "closing purchase transaction" as to any call
written in accordance with the foregoing.
The Fund will write only call options which are covered, which means that
the Fund will own, so long as the option is outstanding, the underlying
security, or own securities convertible into or carrying rights to acquire such
securities without payment of additional consideration. The Fund's obligation
with respect to an option is extinguished by its exercise or expiration or by
the Fund's purchase of a call option covering the same underlying securities
and having the same exercise price and expiration date as the option that the
Fund has written. The Fund will receive a premium for writing a call
4
<PAGE>
option, but gives up, until the expiration date, the opportunity to profit from
an increase in the underlying security price above the exercise price. The Fund
will retain the risk of loss from a decrease in the price of the underlying
security.
Restricted and Illiquid Securities
The Fund may purchase securities that are not registered or are offered in
an exempt non-public offering ("restricted securities") under the Securities
Act of 1933 ("1933 Act"), including securities eligible for resale to
"qualified institutional buyers" in accordance with Rule 144A under the 1933
Act. However, the Fund will not invest more than 15% of its net assets in
illiquid investments, which includes repurchase agreements maturing in more
than seven days, securities that are not readily marketable and restricted
securities, unless the Board of Trustees of the Fund determines, based upon a
continuing review of the trading markets for the specific restricted security,
that such restricted security eligible for resale in accordance with Rule 144A
is liquid. The Board of Trustees of the Fund may adopt guidelines and delegate
to the investment adviser the daily function of determining and monitoring the
liquidity of restricted securities. The Board of Trustees, however, will retain
sufficient oversight and be ultimately responsible for the determinations.
Since it is not possible to predict with assurance exactly how the market for
restricted securities eligible for resale pursuant to Rule 144A will continue
to develop, the Board of Trustees will carefully monitor the Fund's investments
in these securities, focusing on such important factors, among others, as
valuation, liquidity and availability of information. This investment practice
could have the effect of increasing the level of illiquidity in the Fund to the
extent that qualified institutional buyers become for a time uninterested in
purchasing these restricted securities.
The purchase price and subsequent valuation of restricted securities
normally reflect a discount from the price at which such securities trade when
they are not restricted, to the extent that the restriction makes them less
liquid. The amount of the discount from the prevailing market price is expected
to vary depending upon the type of security, the character of the issuer, the
party who will bear the expenses of registering the restricted securities and
prevailing supply and demand conditions.
Foreign Securities
The Fund may invest up to 30% of its assets at the time of investment in
listed and unlisted foreign securities. While such investments are intended to
reduce risk by permitting greater diversification of the Fund's portfolios,
investments in securities of foreign issuers entail certain risks not
associated with investments in domestic issuers. Such risks include
fluctuations in foreign currency exchange rates; possible expropriation or
nationalization of foreign companies; imposition of exchange control
regulations; currency blockage or dividends or interest withheld at the source;
unfavorable price spreads on currency exchanges; higher transaction costs; less
public information about issuers of securities; lack of uniform auditing,
accounting and financial reporting standards; less governmental regulation of
foreign stock exchanges and brokers; less liquidity and greater volatility of
securities of foreign companies; or imposition of foreign taxes. Therefore, the
Fund intends to invest primarily in the companies organized under the laws of
those nations which are considered as having relatively stable and friendly
governments, e.g., major industrialized nations such as the United Kingdom,
France, Canada, Germany and Japan.
Lending of Portfolio Securities
The Fund may seek to increase its income by lending portfolio securities,
provided that the value of the securities loaned would not exceed one-third of
the value of the total assets of the Fund. Under present regulatory policies,
such loans may be made to institutions, such as certain broker-dealers, and
are required to be secured continuously by collateral in cash, cash
equivalents, or U.S. government securities maintained on a current basis in an
amount at least equal to the market value of the securities loaned. The Fund
may experience loss or delay in the recovery of its securities if the
institution with which it has engaged in a portfolio loan transaction breaches
its agreement with the Fund.
When Issued Securities
The Fund may also purchase and sell securities on a "when issued" and
"delayed delivery" basis. These transactions are subject to market fluctuation;
the value at the time of delivery may be more or less than the purchase price.
Since the Fund will rely on the buyer or seller, as the case may be, to
consummate the transaction, failure by the other party to complete the
transaction may result in the Fund missing the opportunity of obtaining a price
or yield considered to be advantageous. No interest accrues to the Fund prior
to delivery. When the Fund is the buyer in such a transaction, however, it will
maintain, in a segregated account with its custodian, cash, U.S. government
securities, or high-grade, liquid debt obligations having an aggregate value
equal to the amount of such purchase commitments until payment is made. The
Fund will make commitments to purchase securities on such basis only with the
intention of actually acquiring these securities, but the Fund may sell such
securities prior to the settlement date if such sales are considered to be
advisable. To the extent the Fund engages in "when issued" and "delayed
delivery" transactions, it will do so for the purpose of acquiring securities
for the Fund's portfolio consistent with the Fund's investment objective and
policies and not for the purpose of investment leverage.
Repurchase Agreements
A repurchase agreement is an instrument under which the purchaser acquires
ownership of the obligation but the seller agrees, at the time of sale, to
repurchase the obligation at a mutually agreed upon time and price. The resale
price is in excess of the purchase price and reflects an agreed upon market
rate unrelated to the coupon rate on the purchased security. Such transactions
afford an opportunity for the Fund to invest temporarily available cash. In the
event of the insolvency of the seller, or an order to stay execution of an
agreement by a court or regulatory authority, the Fund could incur costs before
being able to sell the underlying obligations and the Fund's realization
5
<PAGE>
of the underlying obligations could be delayed or limited, which could
adversely affect the price the Fund receives for such obligations. There is
also a risk that the seller may fail to repurchase the underlying obligations
in which case the Fund may incur possible disposition costs and a loss if the
proceeds of the sale of such obligations to a third party are less than the
repurchase price. To guard against these possibilities, the investment adviser,
under guidelines established by the Fund's Board of Trustees, will evaluate the
creditworthiness of the seller. The Fund will enter into repurchase agreements
only with those institutions that the investment adviser believes present
minimal credit risks and which furnish collateral at least equal in value or
market price to the amount of the repurchase obligations. Repurchase agreements
maturing in more than seven days are considered by the Fund to be illiquid.
Price Fluctuation
Because prices of securities fluctuate from day to day, the value of an
investment in the Fund will vary based upon the Fund's investment performance.
The value of your shares in the Fund may, at any time, be higher or lower than
your original cost. The Fund may invest in debt securities with varying
maturities. In general, the longer the maturity of a security, the higher the
yield and the greater the potential for price fluctuations. A decline in
interest rates generally produces an increase in the value of debt securities
in the Fund's portfolio, while an increase in interest rates usually reduces
the value of these securities.
Additional Restrictions
In addition to the investment objective and policies discussed above, the
Fund's investments are subject to other restrictions which are described in its
Statement of Additional Information. Unless otherwise stated, the Fund's
investment objective and restrictions are considered fundamental and cannot be
changed without shareholder approval. Unless expressly designated as a
fundamental policy, the Fund's investment policies may be changed without
shareholder approval by the Board of Trustees of the Fund.
IV. MANAGEMENT OF THE FUND
The Board of Trustees of the Fund has overall responsibility for management
and supervision of such Fund. There are currently eight Trustees, six of whom
are not "interested persons" of the Fund as defined in the Investment Company
Act of 1940 (the "1940 Act"). The Board meets at least quarterly. By virtue of
the functions performed by Pioneering Management Corporation ("PMC") as
investment adviser, the Fund requires no employees other than its executive
officers, all of whom receive their compensation from PMC or other sources. The
Statement of Additional Information contains the names of and general
background information regarding each Trustee and executive officer of the
Fund.
Each domestic fixed income portfolio managed by PMC, including the Fund, is
overseen by the Domestic Fixed Income Portfolio Management Committee, which
consists of PMC's most senior domestic fixed income professionals. The
committee is chaired by Mr. David Tripple, PMC's President and Chief Investment
Officer and Executive Vice President of each of the Pioneer mutual funds. Mr.
Tripple joined PMC in 1974 and has had general responsibility for PMC's
investment operations and specific portfolio assignments for over five years.
Fixed income investments at PMC, including those made on behalf of the Fund,
are under the general supervision of Mr. Sherman Russ, a Senior Vice President
of PMC. Mr. Russ joined PMC in 1983. The investment managers primarily
responsible for the day-to-day management of the Fund are Messrs. John A. Carey
and Russ. Mr. Carey joined PMC in 1979 and is Vice President of PMC and the
Fund.
The Fund is managed under a contract with PMC. PMC serves as investment
adviser to the Fund and is responsible for the overall management of the Fund's
business affairs, subject only to the authority of the Fund's Board of
Trustees. PMC is a wholly owned subsidiary of The Pioneer Group, Inc. ("PGI"),
a Delaware corporation. PGI's indirect subsidiary, Pioneer Funds Distributor,
Inc. ("PFD"), is the principal underwriter of shares of the Fund. Prior to
December 1, 1993, FMC acted as investment adviser and principal underwriter to
the Fund.
In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109.
Under the terms of its contract with the Fund, PMC provides the Fund with an
investment program consistent with its investment objective and policies. PMC
furnishes the Fund with office space, equipment and personnel for managing the
affairs of the Fund. PMC also pays all expenses in connection with the
management of the affairs of the Fund except (i) charges and expenses for fund
accounting, pricing and appraisal services and related overhead, including, to
the extent such services are performed by personnel of PMC or its affiliates,
office space and facilities and personnel compensation, training and benefits;
(ii) the charges and expenses of auditors; (iii) the charges and expenses of
any custodian, transfer agent, plan agent, dividend disbursing agent and
registrar appointed by the Fund; (iv) issue and transfer taxes, chargeable to
the Fund in connection with securities transactions to which the Fund is a
party; (v) insurance premiums, interest charges, dues and fees for membership
in trade associations and all taxes and corporate fees payable by the Fund to
federal, state or other governmental agencies; (vi) fees and expenses involved
in registering and maintaining registrations of the Fund and/or its shares with
the SEC, state or blue sky securities agencies and foreign countries, including
the preparation of Prospectuses and Statements of Additional Information for
filing with the SEC; (vii) all expenses of shareholders' and Trustees' meetings
and of preparing, printing and distributing prospectuses, notices, proxy
statements and all reports to shareholders and to governmental agencies; (viii)
charges and expenses of legal counsel to the Fund and the Trustees; (ix)
distribution fees paid by the Fund in accordance with Rule 12b-1 promulgated by
the SEC pursuant to the 1940 Act; (x) compensation of those Trustees of the
Fund who are not affiliated with or
6
<PAGE>
interested persons of PMC, the Fund (other than as Trustees), PGI or PFD; (xi)
the cost of preparing and printing share certificates; and (xii) interest on
borrowed money, if any. In addition to the expenses described above, the Fund
shall pay all brokers' and underwriting commissions chargeable to the Fund in
connection with securities transactions to which the Fund is a party.
Orders for the Fund's portfolio securities transactions are placed by PMC,
which strives to obtain the best price and execution for each transaction. In
circumstances where two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides investment research or brokerage services or sells
shares of the Fund or other Pioneer mutual funds. See the Statement of
Additional Information for a further description of PMC's brokerage allocation
practices.
As compensation for its management services for the Fund and certain
expenses which PMC incurs, PMC is entitled to a management fee from the Fund at
the annual rates set forth below as a percentage of average daily net assets:
Net Assets Annual Fee
For assets up to $250,000,000 .50%
For assets in excess of $250,000,000 to $300,000,000 .48%
Over $300,000,000 .45%
PMC has agreed that until December 1, 1995, its fee shall not exceed the fee
that would have been payable under the prior management contract with FMC. See
the Statement of Additional Information for a discussion of the fee payable
under the prior management agreement.
For the fiscal year ended December 31, 1994, the Fund paid a management fee
of $ 1,341,020 to PMC.
John F. Cogan, Jr., Chairman and President of the Fund, Chairman of PFD,
President and a Director of PGI and Chairman and a Director of PMC, owned
approximately 15% of the outstanding capital stock of PGI as of January 31,
1995.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers two Classes of shares designated as Class A and
Class B shares, as described more fully in "How to Buy Fund Shares." If you do
not specify in your instructions to the Fund which Class of shares you wish to
purchase, exchange or redeem, the Fund will assume that your instructions apply
to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase, however, shares redeemed
within 12 months of purchase may be subject to a contingent deferred sales
charge ("CDSC"). Class A shares are subject to distribution and service fees at
a combined annual rate of up to 0.25% of the Fund's average daily net assets
attributable to Class A shares.
Class B Shares. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge, but
are subject to a CDSC of up to 4% if redeemed within six years. Class B shares
are subject to distribution and service fees at a combined annual rate of 1.00%
of the Fund's average daily net assets attributable to Class B shares. Your
entire investment in Class B shares is available to work for you from the time
you make your investment, but the higher distribution fee paid by Class B shares
will cause your Class B shares (until conversion) to have a higher expense ratio
and to pay lower dividends, to the extent dividends are paid, than Class A
shares. Class B shares will automatically convert to Class A shares, based on
relative net asset value, eight years after the initial purchase.
Purchasing Class A or Class B Shares. The decision as to which Class to
purchase depends on the amount you invest, the intended length of the investment
and your personal situation. If you are making an investment that qualifies for
reduced sales charges, you might consider Class A shares. If you prefer not to
pay an initial sales charge on an investment of $250,000 or less and you plan to
hold the investment for at least six years, you might consider Class B shares.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer fund and shares
acquired in the exchange will continue to be subject to any CDSC applicable to
the shares of the Fund originally purchased. Shares sold outside the U.S. to
persons who are not U.S. citizens may be subject to different sales charges,
CDSCs and dealer compensation arrangements in accordance with local laws and
business practices.
VI. SHARE PRICE
Shares of the Fund are sold at the public offering price, which is the net
asset value per share plus the applicable sales charge. Net asset value per
share of a Class of the Fund is determined by dividing the value of its assets,
less liabilities attributable to that Class, by the number of shares of that
Class outstanding. The net asset value is computed once daily, on each day the
New York Stock Exchange (the "Exchange") is open, as of the close of regular
trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation or securities for which sales prices are not generally reported are
valued at the mean between the current bid and asked prices. 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 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 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 the Exchange and will therefore not be
reflected in
7
<PAGE>
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
are 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 their fair value as determined in good faith by the
Trustees.
VII. HOW TO BUY FUND SHARES
You may buy Fund shares at the public offering price from any securities
broker-dealer which has a sales agreement with PFD. If you do not have a
securities broker-dealer, please call 1-800-225-6292 for assistance.
The minimum initial investment is $1,000 for Class A and Class B shares
except as specified below. The minimum initial investment is $50 for Class A
accounts being established to utilize monthly bank drafts, government
allotments, payroll deduction and other similar automatic investment plans.
Separate minimum investment requirements apply to retirement plans and to
telephone and wire orders placed by broker-dealers; no sales charges or minimum
requirements apply to the reinvestment of dividends or capital gains
distributions. The minimum subsequent investment is $50 for Class A shares and
$500 for Class B shares except that the subsequent minimum investment amount
for Class B share accounts may be as little as $50 if an automatic investment
plan is established (see "Automatic Investment Plans").
Class A Shares
You may buy Class A shares at the public offering price, that is, at the net
asset value per share next computed after receipt of a purchase order, plus a
sales charge as follows:
Sales Charge as a % of
Dealer
Allowance
Net as a % of
Offering Amount Offering
Amount of Purchase Price Invested Price
Less than $100,000 4.50% 4.71% 4.00%
$100,000 but less than $250,000 3.50% 3.63% 3.00%
$250,000 but less than $500,000 2.50% 2.56% 2.00%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more -0- -0- See below
No sales charge is payable at the time of purchase on investments of
$1,000,000 or more or for participants in certain group plans (described below)
subject to a CDSC of 1% which may be imposed in the event of a redemption of
Class A shares within 12 months of purchase. See "How to Sell Fund Shares." PFD
may, in its discretion, pay a commission to broker-dealers who initiate and are
responsible for such purchases as follows: 1% on the first $1 million invested;
0.50% on the next $4 million; and 0.10% on the excess over $5 million. These
commissions will not be paid if the purchaser is affiliated with the
broker-dealer or if the purchase represents the reinvestment of a redemption
made during the previous 12 calendar months. Broker-dealers who receive a
commission in connection with Class A share purchases at net asset value by
401(a) or 401(k) retirement plans with 1,000 or more eligible participants or
with at least $10 million in plan assets will be required to return any
commission paid or a pro rata portion thereof if the retirement plan redeems
its shares within 12 months of purchase. See also "How to Sell Fund Shares." In
connection with PGI's acquisition of FMC and contingent upon the achievement of
certain sales objectives, PFD pays to Mutual of Omaha Investor Services, Inc.
50% of PFD's retention of any sales commission on sales of the Fund's Class A
shares through such dealer.
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
of a trust estate or fiduciary account or related trusts or accounts including
pension, profit-sharing and other employee benefit trusts qualified under
Section 401 or 408 of the Internal Revenue Code of 1986, as amended (the
"Code"), although more than one beneficiary is involved. The sales charges
applicable to a current purchase of Class A shares of the Fund by a person
listed above is determined by adding the value of shares to be purchased to the
aggregate value (at the then current offering price) of shares of any of the
other Pioneer mutual funds previously purchased and then owned (except direct
purchases of Pioneer Money Market Trust's Class A Shares), provided PFD is
notified by such person or his or her broker-dealer each time a purchase is
made which would qualify. Pioneer mutual funds include all mutual funds for
which PFD serves as principal underwriter. See the "Letter of Intention"
section of the Account Application.
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be sold
at a reduced or eliminated sales charge to certain group plans ("Group Plans")
under which a sponsoring organization makes recommendations to, permits group
solicitation of, or otherwise facilitates purchases by, its employees, members
or participants.Class A shares of a Fund may be sold at net asset value per
share without a sales charge to Optional Retirement Program participants if (i)
the employer has authorized a limited number of investment company providers for
the Program, (ii) all authorized investment company providers offer their shares
to Program participants at net asset value, (iii) the employer has agreed in
writing to actively promote the authorized investment providers to Program
participants and (iv) the Program provides for a matching contribution for each
participant contribution. Information about such arrangements is available from
PFD.
Class A shares of the Fund may also be sold at net asset value per share
without a sales charge to: (a) current or former Trustees and officers of the
Fund and partners and employees of its legal counsel; (b) current or former
directors, officers, employees or sales representatives of PGI or its
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which PMC serves as investment adviser, and the
subsidiaries or affiliates of such persons; (d) current or former officers,
partners, employees or registered representatives of broker-dealers which have
entered into sales agreements with PFD; (e) members of the immediate families
of any of the persons above; (f) any trust, custodian, pension, profit-sharing
or
8
<PAGE>
other benefit plan of the foregoing persons; (g) insurance company separate
accounts; (h) certain "wrap accounts" for the benefit of clients of financial
planners adhering to standards established by PFD; (i) other funds and accounts
for which PMC or any of its affiliates serves as investment adviser or manager;
and (j) certain unit investment trusts. Shares so purchased are purchased for
investment purposes and may not be resold except through redemption or
repurchase by or on behalf of the Fund. The availability of this privilege is
conditioned upon the receipt by PFD of written notification of eligibility.
Class A shares of the Fund may also be sold at net asset value without a sales
charge in connection with certain reorganization, liquidation or acquisition
transactions involving other investment companies or personal holding
companies.
Reduced sales charges for Class A shares are available through an agreement
to purchase a specified quantity of Fund shares over a designated 13-month
period by completing the "Letter of Intention" section of the Account
Application. Information about the Letter of Intention procedure, including its
terms, is contained in the Statement of Additional Information. Investors who
are clients of a broker-dealer with a current sales agreement with PFD may
purchase Class A shares of the Fund at net asset value, without a sales charge,
to the extent that the purchase price is paid out of proceeds from one or more
redemptions by the investor of shares of certain other mutual funds. In order
for a purchase to qualify for this privilege, the investor must document to the
broker-dealer that the redemption occurred within the 60 days immediately
preceding the purchase of Class A shares; that the client paid a sales charge
on the original purchase of the shares redeemed; and that the mutual fund whose
shares were redeemed also offers net asset value purchases to redeeming
shareholders of any of the Pioneer funds. Further details may be obtained from
PFD.
Class B Shares
You may buy Class B shares at net asset value without the imposition of an
initial sales charge; however, Class B shares redeemed within six years of
purchase will be subject to a CDSC at the rates shown in the table below. The
charge will be assessed on the amount equal to the lesser of the current market
value or the original purchase cost of the shares being redeemed. No CDSC will
be imposed on increases in account value above the initial purchase price,
including shares derived from the reinvestment of dividends or capital gains
distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made
on the first day of that quarter. In processing redemptions of Class B shares,
the Fund will first redeem shares not subject to any CDSC, and then shares held
longest during the six-year period. As a result, you will pay the lowest
possible CDSC.
Year Since CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
First 4.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter none
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the end of
the calendar quarter that is eight years after the purchase date, except as
noted below. Class B shares acquired by exchange from Class B shares of another
Pioneer fund will convert into Class A shares based on the date of the initial
purchase and the applicable CDSC. Class B shares acquired through reinvestment
of distributions will convert into Class A shares based on the date of the
initial purchase to which such shares relate. For this purpose, Class B shares
acquired through reinvestment of distributions will be attributed to particular
purchases of Class B shares in accordance with such procedures as the Trustees
may determine from time to time. The conversion of Class B shares to Class A
shares is subject to the continuing availability of a ruling from the Internal
Revenue Service ("IRS"), for which the Fund is applying, or an opinion of
counsel that such conversions will not constitute taxable events for federal
tax purposes. There can be no assurance that such ruling or opinion will be
available at the time any particular conversion would normally occur. The
conversion of Class B shares to Class A shares will not occur if such ruling or
opinion is not available and, therefore, Class B shares would continue to be
subject to higher expenses than Class A shares for an indeterminate period.
Waiver or Reduction of Contingent Deferred Sales Charge.
The CDSC on Class B shares and on any Class A shares subject to a CDSC may
be waived or reduced for non-retirement accounts if: (a) the redemption results
from the death of all registered owners of an account (in the case of UGMAs,
UTMAs and trust accounts, the waiver applies upon the death of all beneficial
owners) or a total and permanent disability (as defined in Section 72 of the
Code) of all registered owners occurring after the purchase of the shares being
redeemed or (b) the redemption is made in connection with limited automatic
redemptions as set forth in "Systematic Withdrawal Plans" (limited in any year
to 10% of the value of the account in the Fund at the time the withdrawal plan
is established).
The CDSC on Class B shares and on any Class A shares subject to a CDSC may
be waived or reduced for retirement plan accounts if: (a) the redemption
results from the death or a total and permanent disability (as defined in
Section 72 of the Code) occurring after the purchase of the shares being
redeemed of a shareholder or participant in an employer- sponsored retirement
plan; (b) the distribution is to a partici-
9
<PAGE>
pant in an Individual Retirement Account ("IRA"), 403(b) or employer-sponsored
retirement plan, is part of a series of substantially equal payments made over
the life expectancy of the participant or the joint life expectancy of the
participant and his or her beneficiary or as scheduled periodic payments to a
participant (limited in any year to 10% of the value of the participant's
account at the time the distribution amount is established; a required minimum
distribution due to the participant's attainment of age 70-1/2 may exceed the
10% limit only if the distribution amount is based on plan assets held by
Pioneer); (c) the distribution is from a 401(a) or 401(k) retirement plan and
is a return of excess employee deferrals or employee contributions or a
qualifying hardship distribution as defined by the Code or results from a
termination of employment (limited with respect to a termination to 10% per
year of the value of the plan's assets in the Fund as of the later of the prior
December 31 or the date the account was established unless the plan's assets
are being rolled over to or reinvested in the same class of shares of a Pioneer
mutual fund subject to the CDSC of the shares originally held); (d) the
distribution is from an IRA, 403(b) or employer-sponsored retirement plan and
is to be rolled over to or reinvested in the same class of shares in a Pioneer
mutual fund and which will be subject to the applicable CDSC upon redemption;
(e) the distribution is in the form of a loan to a participant in a plan which
permits loans (each repayment of the loan will constitute a new sale which will
be subject to the applicable CDSC upon redemption); or (f) the distribution is
from a qualified defined contribution plan and represents a participant's
directed transfer (provided that this privilege has been pre-authorized
through a prior agreement with PFD regarding participant directed transfers).
The CDSC on Class B shares and on any Class A shares subject to a CDSC may
be waived or reduced for either non-retirement or retirement plan accounts if:
(a) the redemption is made by any state, county, or city, or any
instrumentality, department, authority, or agency thereof, which is prohibited
by applicable laws from paying a CDSC in connection with the acquisition of
shares of any registered investment management company; or (b) the redemption
is made pursuant to the Fund's right to liquidate or involuntarily redeem
shares in a shareholder's account.
Broker-Dealers. An order for either Class of Fund shares received by PFD from
a broker-dealer prior to the close of regular trading on the Exchange is
confirmed at the price appropriate for that Class as determined at the close of
regular trading on the Exchange on the day the order is received, provided the
order is received by PFD prior to PFD's close of business (usually, 5:30 p.m.
Eastern Time). It is the responsibility of broker-dealers to transmit orders so
that they will be received by PFD prior to its close of business.
General. The Fund reserves the right in its sole discretion to withdraw all or
any part of the offering of shares when, in the judgement 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 nay be rejected by, PFD until it has
been confirmed in writing by PFD and payment has been received.
VIII. HOW TO SELL FUND SHARES
You can arrange to sell (redeem) fund shares on any day the Exchange is open
by selling either some or all of your shares to the Fund.
You may sell your shares either through your broker-dealer or directly to
the Fund. Please note the following:
(bullet) If you are selling shares from a retirement account, you must make
your request in writing (except for exchanges to other Pioneer funds which can
be requested by phone or in writing). Call 1-800-622-0176 for more information.
(bullet) If you are selling shares from a non-retirement account, you may use
any of the methods described below.
Your shares will be sold at the share price next calculated after your order
is received and accepted less any applicable CDSC. Sale proceeds generally will
be sent to you in cash, normally within seven days after your order is
accepted. The Fund reserves the right to withhold payment of the sale proceeds
until checks received by the Fund in payment for the shares being sold have
cleared, which may take up to 15 calendar days from the purchase date.
In Writing. You may sell your shares by delivering a written request, signed
by all registered owners, in good order to Pioneering Services Corporation
("PSC"), however, you must use a written request, including a signature
guarantee, to sell your shares if any of the following situations applies:
(bullet) you wish to sell over $50,000 worth of shares,
(bullet) your account registration or address has changed within the last 30
days,
(bullet) the check is not being mailed to the address on your account (address
of record),
(bullet) the check is not being made out to the account owners, or
(bullet) the sale proceeds are being transferred to a Pioneer account with a
different registration.
Your request should include your name, the Fund's name, your fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described
below. Unless instructed otherwise, Pioneer will send the proceeds of the sale
to the address of record. Fiduciaries or corporations are required to submit
additional documents. For more information, contact PSC at 1-800-225-6292.
Written requests will not be processed until they are received in good order
and accepted by PSC. Good order means that there are no outstanding claims or
requests to hold redemptions on the account, certificates are endorsed by the
record 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.
10
<PAGE>
By Telephone or by Fax. Your account is automatically authorized to have the
telephone redemption privilege unless you indicated otherwise on your Account
Application or by writing to the Fund. You may redeem up to $50,000 of your
shares by telephone or fax and receive the proceeds by check or by wire. The
redemption proceeds must be made payable exactly as the account is registered.
To receive the proceeds by check: the check must be sent to the address of
record which must not have changed in the last 30 days. To receive the proceeds
by bank wire: the wire must be sent to your previously designated 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. The telephone redemption option is not available to retirement
plan accounts. You may always elect to deliver redemption instructions to PSC by
mail. See "Telephone Transactions and Related Liabilities" below. Telephone and
fax redemptions will be priced as described above.
Selling Shares Through Your Broker-Dealer. The Fund 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.
Small Accounts. The minimum account value is $500. If you hold shares of the
Fund in an account with a net asset value of less than the minimum required
amount due to redemptions or exchanges, the Fund may redeem the shares held in
this account at net asset value if you have not increased the net asset value of
the account to at least the minimum required amount within six months of notice
by the Fund to you of the Fund's intention to redeem the shares.
CDSC on Class A Shares. Purchases of Class A shares of $1,000,000 or more, or
by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months following
the share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer fund will continue to be subject to the CDSC until the
original 12-month period expires. However, no CDSC is payable with respect to
purchases of Class A shares by 401(a) or 401(k) retirement plans with 1,000 or
more eligible participants or with at least $10 million in plan assets.
General. Redemptions may be suspended or payment postponed during any period
in which any of the following conditions exist: the Exchange is closed or
trading on the Exchange is restricted; an emergency exists as a result of which
disposal by the Fund of securities owned by it is not reasonably practicable or
it is not reasonably practicable for the Fund to fairly determine th 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 indicated otherwise on your Account
Application or by writing to the Fund. Proper account identification will be
required for each telephone exchange. Telephone exchanges may not exceed
$500,000 per account per day. All telephone exchange requests will be recorded.
See "Telephone Transactions and Related Liabilities" below.
Automatic Exchanges. You may automatically exchange shares from one Pioneer
account for shares of the same Class in another Pioneer account on a monthly or
quarterly basis. The accounts must have identical registrations and the
originating account must have a minimum balance of $5,000. The exchange will be
effective on the 18th day of the month.
General. Exchanges must be at least $1,000. You may exchange your investment
from one Class of Fund shares at net asset value, without a sales charge, for
shares of the same Class of any other Pioneer mutual fund. Not all Pioneer
mutual funds offer more than one Class of shares. A new Pioneer account opened
through an exchange must have a registration identical to that on the original
account.
Class A or Class B shares which would normally be subject to a CDSC upon
redemption will not be charged the applicable CDSC at the time of an exchange.
Shares acquired in an exchange will be subject to the CDSC of the shares
originally held. For purposes of determining the amount of any applicable CDSC,
the length of time you have owned Class B shares acquired by exchange will be
measured from the date you acquired the original shares and will not be
affected by any subsequent exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern Time will be
effective on that day if the requirements above have been met, otherwise, they
will be effective on the next business day. PSC will process exchanges only
after receiving an exchange request in good order. There are
11
<PAGE>
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 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 funds, as described in each fund's current prospectus, before making
any exchange. To prevent abuse of the exchange privilege to the detriment of
other Fund shareholders, the Fund and PFD reserve the right to limit the number
and/or frequency of exchanges and/or to charge a fee for exchanges. The
exchange privilege may be changed or discontinued and may be subject to
additional limitations, including certain restrictions on purchases by market
timer accounts.
X. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for both Class A shares ("Class
A Plan") and Class B shares ("Class B Plan") in accordance with Rule 12b-1
under the 1940 Act pursuant to which certain distribution and service fees are
paid.
Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale
of Class A shares or to provide services to holders of Class A shares, provided
the categories of expenses for which reimbursement is made are approved by the
Fund's Board of Trustees. As of the date of this Prospectus, the Board of
Trustees has approved the following categories of expenses for Class A shares
of the Fund: (i) a service fee to be paid to qualified broker-dealers in an
amount not to exceed 0.25% per annum of the Fund's daily net assets
attributable to Class A shares; (ii) reimbursement to PFD for its expenditures
for broker-dealer commissions and employee compensation on certain sales of
the Fund's Class A shares with no initial sales charge (See "How to Buy Fund
Shares"); and (iii) reimbursement to PFD for expenses incurred in providing
services to Class A shareholders and supporting broker-dealers and other
organizations (such as banks and trust companies) in their efforts to provide
such services. Banks are currently prohibited under the Glass-Steagall Act
from providing certain underwriting or distribution services. If a bank was
prohibited from acting in any capacity or providing any of the described
services, management would consider what action, if any, would be appropriate.
Expenditures of the Fund pursuant to the Class A Plan are accrued daily and
may not exceed 0.25% of the Fund's average daily net assets attributable to
Class A shares. Distribution expenses of PFD are expected to substantially
exceed the distribution fees paid by the Fund in a given year. The Class A Plan
may not be amended to increase materially the annual percentage limitation of
average net assets which may be spent for the services described therein
without approval of the shareholders of the Fund.
The Class B Plan provides that the Fund will pay a distribution fee at the
annual rate of 0.75% of the Fund's average daily net assets attributable to
Class B shares and will pay PFD a service fee at the annual rate of 0.25% of
the Fund's average daily net assets attributable to Class B shares. The
distribution fee is intended to compensate PFD for its distribution services to
the Fund. The service fee is intended to be additional compensation for
personal services and/or account maintenance services with respect to Class B
shares. PFD also receives the proceeds of any CDSC imposed on the redemption of
Class B shares.
Commissions of 4%, equal to 3.75% of the amount invested and a first year's
service fee equal to 0.25% of the amount invested in Class B shares, are paid
to broker-dealers who have selling agreements with PFD. PFD may advance to
dealers the first year service fee at a rate up to 0.25% of the purchase price
of such shares and, as compensation therefore, PFD may retain the service fee
paid by the Fund with respect to such shares for the first year after purchase.
Dealers will become eligible for additional service fees with respect to such
shares commencing in the 13th month following the purchase. Dealers may from
time to time be required to meet certain criteria in order to receive service
fees. PFD or its affiliates are entitled to retain all service fees payable
under the Class B Plan for which there is no dealer of record or for which
qualification standards have not been met as partial consideration for personal
services and/or account maintenance services performed by PFD or its affiliates
for shareholder accounts.
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated, has qualified, and intends to qualify
each year as a "regulated investment company" under Subchapter M of the Code,
so that it will not pay federal income taxes on income and capital gains
distributed to shareholders at least annually.
Under the Code, the Fund will be subject to a nondeductible 4% federal
excise tax on a portion of its undistributed 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.
The Fund's policy is to pay to shareholders dividends from net investment
income, if any, quarterly in March, June, September and December and to make
distributions from net long-term capital gains, if any, usually in December.
Distributions from net short-term capital gains, if any, may be paid with such
dividends; distributions from income and/or capital gains may also be made at
such times as may be necessary to avoid federal income or excise tax. Dividends
from the Fund's net investment income, certain net foreign exchange gains and
net short-term capital gains realized by the Fund are taxable as ordinary
income. Dividends from the Fund's net long-term capital gains are taxable as
long-term capital gains.
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 above
whether a
12
<PAGE>
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 annually. For further information on the distribution options
available to shareholders, see "Distribution Options" and "Directed Dividends"
below.
Distributions by the Fund of the dividend income it receives from U.S.
domestic corporations, if any, may qualify for the corporate dividends-received
deduction for corporate shareholders, subject to minimum holding-period
requirements and debt-financing restrictions under the Code.
The Fund may be subject to foreign withholding taxes or other foreign taxes
on income (possibly including, in some cases, capital gains) from certain
foreign investments, which will reduce its return from those investments. The
Fund will not qualify to pass such taxes through to its shareholders, who
accordingly will neither treat such taxes as additional income nor be entitled
to any foreign tax credits or deductions with respect to such taxes.
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 a 31% backup withholding of federal income tax if the Fund
is not provided with the shareholder's correct taxpayer identification number
and certification that the number is correct and the shareholder is not subject
to 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. Non-U.S. shareholders and tax-exempt shareholders are
subject to different tax treatment that is not described above. Shareholders
should consult their own tax advisers regarding state, local and other
applicable tax laws.
XII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the Fund.
PSC, a Massachusetts corporation, is a wholly-owned subsidiary of PGI. PSC's
offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Pioneering Services Corporation, P.O. Box
9014, Boston, Massachusetts 02205-9014. Brown Brothers Harriman & Co. (the
"Custodian") serves as custodian of the Fund's portfolio securities and other
assets. The principal business address of the mutual fund division of the
Custodian is 40 Water Street, Boston, Massachusetts 02109.
Account and Confirmation Statements
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing
details of transactions are sent to shareholders as transactions occur, except
Automatic Investment Plan transactions which are confirmed quarterly. The
Combined Account Statement, mailed quarterly, is available to shareholders who
have more than one Pioneer account.
Shareholders whose shares are held in the name of an investment
broker-dealer or other party will not normally have an account with the Fund
and might not be able to utilize some of the services available to shareholders
of record. Examples of services which might not be available are investment or
redemption of shares by mail, automatic reinvestment of dividends and capital
gains distributions, withdrawal plans, Letters of Intention, Rights of
Accumulation, telephone exchanges and redemptions, and newsletters.
Additional Investments
You may add to your account by sending a check (minimum of $50 for Class A
shares and $500 for Class B shares) to PSC (account number and Class of shares
should be clearly indicated). The bottom portion of a confirmation statement
may be used as a remittance slip to make additional investments. Additions to
your account, whether by check or through a Pioneer Investomatic Plan, are
invested in full and fractional shares of the Fund at the applicable offering
price in effect as of the close of the Exchange on the day of receipt.
Automatic Investment Plans
You may arrange for regular automatic investments of $50 or more through
government/military allotments, payroll deduction or through a Pioneer
Investomatic Plan. A Pioneer Investomatic Plan provides for a monthly or
quarterly investment by means of a pre-authorized draft drawn on a checking
account. Pioneer Investomatic Plan investments are voluntary, and you may
discontinue the Plan at any time without penalty upon 30 days' written notice
to PSC. PSC acts as agent for the purchaser, the broker-dealer and PFD in
maintaining these plans.
Financial Reports and Tax Information
As a shareholder, you will receive financial reports at least semiannually.
In January of each year, the Fund will mail you information about the tax
status of dividends and distributions.
Distribution Options
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the same class of the Fund, at the applicable
net asset value per share, unless you indicate another option on the Account
Application. Two other options available are (a) dividends in cash and capital
gains distributions in additional shares; and (b) all dividends and capital
gains distributions in cash. These two options are not available, however, for
retirement plans or for an account with a net asset value of less than $500.
Changes in your distribution options may be made by written request to PSC.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer fund
account invested in a second Pioneer fund account. The value of this second
account must be at least $1,000 ($500 for Pioneer Fund or Pioneer II). Invested
dividends may be in any amount, and there are no fees or charges for this
service. Retirement plan shareholders may only direct dividends to accounts
with identical registrations, i.e., PGI IRA Cust for John Smith may only go
into another account registered PGI IRA Cust for John Smith.
13
<PAGE>
Direct Deposit
If you have elected to take distributions, whether dividends or dividends
and capital gains, in cash, or have established a Systematic Withdrawal Plan,
you may choose to have those cash payments deposited directly into your
savings, checking or NOW bank account. You may establish this service by
completing the appropriate section on the Account Application when opening a
new account or the Account Options Form for an existing account.
Voluntary Tax Withholding
You may request (in writing) that PSC withhold 28% of the dividends and
capital gains distributions paid from your account (before any reinvestment)
and forward the amount withheld to the IRS as a credit against your federal
income taxes. This option is not available for retirement plan accounts or for
accounts subject to backup withholding.
Telephone Transactions and Related Liabilities
Your account is automatically authorized to have telephone transaction
privileges unless you indicated otherwise on your Account Application or by
writing to the Fund. You may sell or exchange your Fund shares by telephone by
calling 1-800-225-6292 between 8:00 a.m. and 8:00 p.m. Eastern Time on weekdays.
See "Share Price" for more information. To confirm that each transaction
instruction received by telephone is genuine, the Fund will record each
telephone transaction, require the caller to provide the personal identification
number (PIN) for the account and send you a written confirmation of each
telephone transaction. Different procedures may apply to accounts that are
registered to non-U.S. citizens or that are held in the name of an institution
or in the name of an investment broker-dealer or other third-party. If
reasonable procedures, such as those described above, are not followed, the Fund
may be liable for any loss due to unauthorized or fraudulent instructions. The
Fund may implement other procedures from time to time. In all other cases,
neither the Fund, PSC or PFD will be responsible for the authenticity of
instructions received by telephone, therefore, you bear the risk of loss for
unauthorized or fraudulent telephone transactions.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund
by telephone to institute a redemption or exchange. You should communicate with
the Fund in writing if you are unable to reach the Fund by telephone.
Retirement Plans
You should contact the Retirement Plans Department of PSC at 1-800-622-0176
for information relating to retirement plans for businesses, age-weighted
profit sharing plans, Simplified Employee Pension Plans, IRAs, and Section
403(b) retirement plans for employees of certain non-profit organizations and
public school systems, all of which are available in conjunction with
investments in the Fund. The Pioneer Mutual Funds 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 your own 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 shares accounts are limited to 10% of the
value of the account at the time the plan is implemented. See "Waiver or
Reduction of Contingent Deferred Sales Charge" for more information. Periodic
checks of $50 or more will be sent to you, or any person designated by you,
monthly or quarterly, and your periodic redemptions of shares may be taxable to
you. If you direct that withdrawal checks be paid to another person after you
have opened your account, a signature guarantee must accompany your
instructions. Purchases of Class A shares of the Fund at a time when you have a
Systematic Withdrawal Plan in effect may result in the payment of unnecessary
sales charges and may therefore be disadvantageous. You may obtain additional
information by calling PSC at 1-800-225-6292 or by referring to the Statement
of Additional Information.
Reinstatement Privilege (Class A Shares Only)
If you redeem all or part of your Class A shares of the Fund, you may
reinvest all or part of the redemption proceeds without a sales charge in Class
A shares of the Fund if you send a written request to PSC not more than 90 days
after your shares were redeemed. Your redemption proceeds will be reinvested at
the next determined net asset value of the Class A shares of the Fund in effect
immediately after receipt of the written request for reinstatement. You may
realize a gain or loss for federal income tax purposes as a result of the
redemption, and special tax rules may apply if a reinvestment occurs. Subject
to the provisions outlined under "How to Exchange Fund Shares" above, you may
also reinvest in Class A shares of other Pioneer mutual funds; in this case you
must meet the minimum investment requirements for each fund you enter.
The 90-day reinstatement period may be extended by PFD for periods of up to
one year for shareholders living in areas that have experienced a natural
disaster, such as a flood, hurricane, tornado, or earthquake.
The options and services available to shareholders, including the terms of the
Exchange Privilege and the Pioneer Investomatic Plan, may be revised, suspended
or terminated at any time by PFD or by the Fund. You may establish the services
described in this section when you open your account. You may also establish or
revise many of them on an existing account by completing an Account Options
Form, which you may request by calling 1-800-225-6292.
14
<PAGE>
XIII. THE FUND
The Fund, an open-end management investment company (commonly referred to as
a mutual fund), was established as a Nebraska corporation on January 19, 1968
and reorganized as a Delaware business trust on June 30, 1994. The Fund has
authorized an unlimited number of shares of beneficial interest. As an open-end
management investment company, the Fund continuously offers its shares to the
public and under normal conditions must redeem its shares upon the demand of
any shareholder at the then current net asset value per share. See "How to Sell
Fund Shares." The Fund is not required, and does not intend, to hold annual
shareholder meetings although special meetings may be called for the purpose of
electing or removing Trustees, changing fundamental investment restrictions or
approving a management contract.
The Fund reserves the right to create and issue additional series of shares.
The Trustees have the authority, without further shareholder approval, to
classify and reclassify the shares of the Fund, or any new series, into one or
more classes. As of the date of this Prospectus, the Trustees have authorized
the issuance of two classes of shares, designated as Class A and Class B. The
shares of each class represent an interest in the same portfolio of investments
of the Fund. Each class has equal rights as to voting, redemption, dividends
and liquidation, except that each class bears different distribution and
transfer agent fees and may bear other expenses properly attributable to the
particular class. Class A and Class B shareholders have exclusive voting rights
with respect to the Rule 12b-1 distribution plans adopted by holders of those
shares in connection with the distribution of shares.
In addition to the requirements under Delaware law, the Declaration of Trust
provides that a shareholder of the Fund may bring a derivative action on behalf
of the Fund only if the following conditions are met: (a) shareholders eligible
to bring such derivative action under Delaware law who hold at least 10% of the
outstanding shares of the Fund, or 10% of the outstanding shares of the series
or class to which such action relates, shall join in the request for the
Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the Fund for
the expense of any such advisers in the event that the Trustees determine not
to bring such action.
When issued and paid for in accordance with the terms of the Prospectus and
Statement of Additional Information, shares of the Fund are fully-paid and
non-assessable. Shares will remain on deposit with the Fund's transfer agent
and certificates will not normally be issued. The Fund reserves the right to
charge a fee for the issuance of certificates.
XIV. INVESTMENT RESULTS
The Fund may from time to time include yield information for each Class of
Fund shares in advertisements or in information furnished generally to existing
or proposed shareholders. Whenever yield information is provided, it includes a
standardized yield calculation computed by dividing the Fund's net investment
income per share for each Class of Fund shares during a base period of 30 days,
or one month, by the maximum offering price per share for each Class of Fund
shares on the last day of such base period. (The Fund's net investment income
per share for each Class is determined by dividing the Fund's net investment
income for each Class during the base period by the Class's average number of
shares of the Fund entitled to receive dividends during the base period). The
Class's 30-day yield is then "annualized" by a computation that assumes that
the Class's net investment income is earned and reinvested for a six-month
period at the same rate as during the 30-day base period and that the resulting
six-month income will be generated over an additional six months.
The average annual total return (for a designated period of time) on an
investment in the Fund may also be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for each
Class is computed in accordance with the SEC's standardized formula. The
calculation for all Classes assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal or
state income taxes. In addition, for Class A shares the calculation assumes the
deduction of the maximum sales charge of 4.50%; for Class B shares the
calculation reflects the deduction of any applicable contingent deferred sales
charge. The periods illustrated would normally include one, five and ten years
(or since the commencement of the public offering of the shares of a Class, if
shorter) through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the Fund's existence and may or may not include the impact of
sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indexes,
indicators of economic activity or averages of mutual funds results may be
cited or compared with the investment results of the Fund. Rankings or listings
by magazines, newspapers or independent statistical or rating services, such as
Lipper Analytical Services, Inc., may also be referenced.
The Fund's yield and investment results will be calculated separately for
each class of shares and will vary from time to time depending on market
conditions, the composition of the Fund's portfolio, operating expenses of the
Fund and expenses allocated to a specific class of Fund shares. All quoted
investment results are historical and should not be considered representative
of what an investment in the Fund may earn in any future period. For further
information about the calculation methods and uses of the Fund's investment
results, see the Statement of Additional Information.
15
<PAGE>
[PIONEER LOGO]
Pioneer
Income
Fund
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICES INFORMATION
If you would like information on the following, please call . . .
Existing and new accounts, prospectuses,
applications, service forms and
telephone transactions ........................................ 1-800-225-6292
Automated fund yields, prices and
account information ............................................ 1-800-225-4321
Retirement plans ................................................ 1-800-622-0176
Toll-free fax ................................................... 1-800-225-4240
Telecommunications Device for the Deaf (TDD) .................... 1-800-225-1997
0495-2457
(C)Pioneer Funds Distributor, Inc.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PIONEER INCOME FUND
60 State Street
Boston, Massachusetts 02109
Class A and Class B Shares
April 28, 1995
This Statement of Additional Information (Part B of the Registration
Statement) is not a Prospectus, but should be read in conjunction with the
Prospectus dated April 28, 1995 of Pioneer Income 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.
TABLE OF CONTENTS
Page
1. Investment Objective and Policies...........................2
2. Investment Restrictions.....................................4
3. Management of the Fund......................................6
4. Investment Adviser..........................................11
5. Underwriting Agreement and Distribution Plans...............12
6. Shareholder Servicing/Transfer Agent........................15
7. Custodian...................................................16
8. Principal Underwriter.......................................16
9. Independent Public Accountant...............................17
10. Portfolio Transactions......................................17
11. Tax Status and Dividends....................................19
12. Shares of the Fund..........................................23
13. Determination of Net Asset Value............................25
14. Systematic Withdrawal Plan..................................26
15. Letter of Intention.........................................27
16. Investment Results..........................................27
17. General Information.........................................31
18. Financial Statements........................................31
Appendix A..................................................A-1
Appendix B..................................................B-1
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 OBJECTIVE AND POLICIES
See "Investment Objective, Policies and Risks" in the Prospectus for more
information concerning the investment objective and policies of the Fund.
Restricted and Illiquid Securities
In determining the liquidity of Rule 144A securities, the Fund's
officers, under guidelines established by the Fund's Board of Trustees, will
consider: (1) the unregistered nature of a Rule 144A security; and (2) any
relevant factors related to the marketability of the Rule 144A security, which
may include: (a) the frequency of trades and quotes for the security; (b) the
number of dealers willing to purchase or sell the security and the number of
other potential purchasers; (c) the willingness of dealers to undertake to make
a market in the security; and (d) the nature of the marketplace trades,
including the time needed to dispose of the security, the method of soliciting
offers, and the mechanics of transfer.
Since it is not possible to predict with assurance exactly how the market
for restricted securities sold and offered under Rule 144A will develop, the
Board will carefully monitor the Fund's investments in these securities,
focusing on such important factors, among others, as valuation, liquidity and
availability of information. This investment practice could have the effect of
increasing the level of illiquidity in the Fund to the extent that qualified
institutional buyers become for a time uninterested in purchasing these
restricted securities.
Writing Covered Call Options
The Fund does not invest in puts, calls, straddles, spreads or any
combination thereof. However, in order to attempt to preserve capital and
increase income, the Fund may write covered call options on securities if: (i)
such calls are listed on a national securities exchange; (ii) when any such call
is written and at all times prior to a closing purchase transaction as to such
call, or its lapse or exercise the Fund owns the securities which are subject to
the call or has the right to acquire such securities without the payment of
further consideration; and (iii) after any such call is written, not more than
25% of the value of the Fund's total assets would be subject to calls; calls may
be purchased only to effect a "closing purchase transaction" as to any call
written in accordance with the foregoing.
The Fund will write only call options which are covered, which means that
the Fund will own the underlying security, or own securities convertible into or
carrying rights to acquire such securities without payment of additional
consideration, which are acceptable for escrow, when it writes the call option
and until the Fund's obligation to sell the underlying security is extinguished
-2-
<PAGE>
by exercise or expiration of the call option or the purchase of a call option
covering the same underlying securities and having the same exercise price and
expiration date. The Fund will receive a premium for writing a call option, but
gives up, until the expiration date, the opportunity to profit from an increase
in the underlying security price above the exercise price. The Fund will retain
the risk of loss from a decrease in the price of the underlying security. The
writing of covered call options is a highly specialized activity which involves
investment techniques and risks different from those ordinarily associated with
investment companies. However, the restrictions and guidelines outlined on
writing covered call options tend to reduce such risks.
The premium received by the Fund for writing a covered call option will
be recorded as a liability in the Fund's statement of assets and liabilities.
This liability will be adjusted daily to the option's current market value,
which will be the latest sale price at the close of the New York Stock Exchange,
or, in the absence of such sale, at the latest ask quotation. The liability will
be extinguished upon expiration of the option, the purchase of an identical
option in a closing transaction, or delivery of the underlying security upon
exercise of the option.
The Options Clearing Corporation ("OCC") is the issuer of, and the
obligor on, the covered call options written by the Fund. In order to secure the
Fund's obligation to deliver to the OCC the underlying security of a covered
call option which the Fund writes, it will be required to make escrow
arrangements. The Fund's Custodian, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent, through the facilities of the
OCC, as to the securities on which the Fund has written calls or as to other
acceptable escrow securities, so that no margin will be required for such
transactions. OCC will release the securities on the expiration of the calls or
upon the Fund's entering into a closing purchase transaction.
The Fund will purchase call options only to close out a covered call
option it has written. In instances where the Fund believes it is appropriate to
close a covered call option it has written, the Fund can close out the
previously written call option by purchasing a call option on the same
underlying security with the same exercise price and expiration date, a "closing
purchase transaction." A previously written call option can be closed out by
purchasing an identical call option on a national securities exchange which
provides a secondary market in the call option. There is no assurance that a
liquid secondary market will exist for a particular option at such time. If the
Fund cannot effect a closing transaction, it will not be able to sell the
underlying security while the previously written option remains outstanding,
even though it might otherwise be advantageous to do so. The Fund may also be
able to transfer a previously written call option if there is a secondary market
for such an option. There is no assurance that a liquid secondary market will
exist for a particular call option at such time.
-3-
<PAGE>
If a substantial number of the call options written by the Fund are
exercised, the Fund's rate of portfolio turnover may exceed historical levels.
This would result in higher transaction costs, including brokerage commissions.
The Fund will pay brokerage commissions in connection with the writing of
covered call options and the purchase of call options to close out previously
written options. Such brokerage commissions are normally higher than those
applicable to purchases and sales of portfolio securities.
In the past the Fund has qualified for, and elected to receive, the
special tax treatment afforded regulated investment companies under Subchapter M
of the Internal Revenue Code. Although the Fund intends to continue to qualify
for such tax treatment, in order to do so it must, among other things, derive
less than 30% of its annual gross income from gains from the sale or other
disposition of stocks, securities and options held for less than three months.
Because of this, the Fund may be restricted in the writing of call options where
the underlying securities have been held less than three months, the writing of
covered call options which expire in less than three months, and in effecting
closing purchase transactions with respect to options which were written less
than three months earlier. As a result, the Fund may elect to forego otherwise
favorable investment opportunities and may elect to avoid or delay effecting
closing purchase transactions or selling portfolio securities, with the risk
that a potential loss may be increased or a potential gain may be reduced or
turned into a loss.
Portfolio Turnover Rate
The Fund will limit portfolio turnover to the extent practicable and
consistent with its investment objective and policies. In any event, the Fund
does not consider the rate of portfolio turnover a limiting factor where
management considers changes necessary. However, it is the Fund's general policy
to achieve its investment objective through long-term holdings of securities,
and therefore, it does not intend to engage generally in short-term trading. A
higher portfolio turnover rate may result in correspondingly higher transaction
costs.
2. INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions. The Fund considers the investment
objective, the investment policies under the captions "Restricted and Illiquid
Securities" and "Writing Covered Call Options," and the following restrictions
to be fundamental policies which cannot be changed without approval by a
"majority" of the Fund's outstanding voting securities (as such vote is defined
in Section 2(a)(42) of the Investment Company Act of 1940, as amended (the "1940
Act")) which means: (a) 67% or more of the voting securities present at a
special or annual meeting if the holders of more than 50% of the outstanding
-4-
<PAGE>
voting securities of the Fund are present or represented by proxy; or (b more
than 50% of the outstanding voting securities of the Fund, whichever is less.
All other investment policies are considered non-fundamental and may be changed
by approval of the Trustees without the vote of shareholders.
The Fund may not:
1. Concentrate the investment of its assets in any one industry or group of
industries and therefore will not invest more than 25% of its assets in any
one industry;
2. Purchase securities on margin, but it may obtain such short-term credits as
may be necessary for clearance of purchases and sales of securities;
3. Make short sales of securities unless at the time of such sale it owns or
has the right to acquire as a result of the ownership of convertible or
exchangeable securities, and without the payment of further consideration,
an equal amount of such securities which it will retain so long as it is in
a short position. At no time will more than 10% of the value of the Fund's
assets be committed to short sales;
4. Make loans of its assets, except that the Fund may purchase a portion of an
issue of bonds or other obligations of types commonly distributed publicly
to financial institutions, may purchase repurchase agreements in accordance
with its investment objective, policies and restrictions, and may make both
short-term (nine months or less) and long-term loans of its portfolio
securities to the extent of 40% of the value of the Fund's total assets
computed at the time of making such loans;
5. Borrow money except for temporary or emergency purposes in an amount up to
5% of the value of the Fund's assets;
6. Act as a securities underwriter or invest in real estate, commodities or
commodity contracts;
7. Participate on a joint or joint-and-several basis in any securities trading
account;
8. Purchase any security (other than obligations of the U.S. Government, its
agencies or instrumentalities), if as a result: (a) more than 25% of the
value of the Fund's total assets would then be invested in securities of any
single issuer, or (b) as to 75% of the value of the Fund's total assets: (i)
more than 5% of the value of the Fund's total assets would then be invested
in securities of any single issuer, or (ii) the Fund would own more than 10%
of the voting securities of any single issuer;
-5-
<PAGE>
9. Purchase securities of any company with a record of less than three years
continuous operation (including that of predecessors) if such purchase would
cause the Fund's investments in such companies taken at cost to exceed 5% of
the value of the Fund's assets, except holding companies or companies formed
by merger, where the operating companies have had at least three years of
continuous operation;
10. Purchase or retain the securities of any issuer if the officers and
trustees of the Fund or of its Investment Adviser who own individually or
beneficially more than 1/2 of 1% of the securities of such issuer together
own more than 5% of the securities of such issuer;
11. Purchase the securities of any other investment company, except that it may
make such a purchase as part of a merger, consolidation or acquisition of
assets; or
12. Enter into transactions with officers, trustees or other affiliated persons
of the Fund or its Investment Adviser or Underwriter, or any organization
affiliated with such persons, except securities transactions on an agency
basis at standard commission rates, as limited by the provisions of the
Investment Company Act of 1940, as amended.
Non-Fundamental Investment Restrictions. In addition to the foregoing
restrictions, the Fund may not purchase warrants of any issuer, if, as a result
of such purchases, more than 2% of the value of the Fund's total assets would be
invested in warrants which are not listed on the New York Stock Exchange or the
American Stock Exchange or more than 5% of the value of the total assets of the
Fund would be invested in warrants generally, whether or not so listed. For
these purposes, warrants are to be valued at the lesser of cost or market, but
warrants acquired by the Fund in units with or attached to debt securities shall
be deemed to be without value.
The Fund will not invest in oil, gas or other mineral exploration or
development programs or leases or purchase or sell real estate, including real
estate limited partnerships.
If a percentage restriction on investment or utilization of assets set
forth in any of the above is adhered to at the time an investment is made, a
later change in percentage resulting from changing values or a change in the
rating of a portfolio security will not be considered a violation of policy.
3. MANAGEMENT OF THE FUND
The 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
-6-
<PAGE>
those Trustees who are interested persons of the Fund within the meaning of the
1940 Act.
JOHN F. COGAN, JR.*, President and Director of The
Chairman of the Board, Pioneer Group, Inc. ("PGI");
President and Trustee Chairman and Director of Pioneering
Management Corporation ("PMC"); Chairman
of the Board and Chief Executive Officer
of Pioneer Winthrop Advisers ("PWA");
Chairman of the Board of Pioneer Funds
Distributor, Inc. ("PFD"); Director of
Pioneering Services Corporation ("PSC")
and Pioneer Capital Corporation ("PCC");
President and Director of Pioneer Plans
Corporation ("PPC"); Chairman of the Board
and Director of Teberebie Goldfields
Limited; and Chairman and Partner, Hale
and Dorr (counsel to the Fund).
RICHARD H. EGDAHL, M.D., Professor of Management, Boston
Trustee University School of Management,
Boston University since 1988; Professor of Public
Health Policy Health, Boston University School of
Institute Public Health; Professor of Surgery,
53 Bay State Road Boston University School of Medicine
Boston, Massachusetts and Boston University Health Policy
Institute; Trustee, Boston University
Medical Center; Executive Vice President
and Vice Chairman of the Board, University
Hospital; Academic Vice President for
Health Affairs, Boston University;
Trustee, Essex Investment Management
Company, Inc. (investment adviser), Health
Payment Review, Inc. (health care
containment software firm), Mediplex
Group, Inc. (nursing care facilities
firm), Peer Review Analysis, Inc. (health
care utilization management firm) and
Springer-Verlag New York, Inc.
(publisher); Honorary Trustee, Franciscan
Children's Hospital.
MARGARET B.W. GRAHAM, Manager of Research Operations,
Trustee Xerox Palo Alto Research Center,
The Keep since September 1991; Professor of
Post Office Box 110 Operations Management and Management
Little Deer Isle, Maine of Technology, Boston University
School of Management ("BUSM"), since 1989;
-7-
<PAGE>
Associate Dean, BUSM, 1988 to 1990 and
previously, Associate Professor,
Department of Operations Management, BUSM.
JOHN W. KENDRICK, Professor Emeritus of Economics,
Trustee George Washington University and
6363 Waterway Drive Adjunct Scholar, American Enterprise
Falls Church, Virginia Institute.
MARGUERITE A. PIRET, President, Newbury, Piret & Company,
Trustee Inc. (a merchant banking firm).
One Boston Place,
Suite 2363
Boston, Massachusetts
DAVID D. TRIPPLE*, Executive Vice President and
Trustee and Executive Director of PGI; Director of PFD,
Vice President Pioneer Investment Corp. ("PIC"),
Pioneer International Corp. ("PIntl"), PCC
and Pioneer SBIC Corporation; President,
Chief Investment Officer and a Director of
PMC.
STEPHEN K. WEST, Partner, Sullivan & Cromwell (a law
Trustee firm).
125 Broad Street
New York, New York
JOHN WINTHROP, President, John Winthrop & Co., Inc.
Trustee (a private investment firm); and
One North Adgers Wharf Trustee of NUI Corp. of Alliance
Charleston, South Carolina Capital Reserves, Alliance Government
Reserves and Alliance Tax Exempt Reserves.
JOHN A. CAREY Vice President, PMC.
Vice President
WILLIAM H. KEOUGH, Senior Vice President, Chief
Treasurer Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PPC, and
Pioneer SBIC Corporation; and Treasurer and
Director of PPC.
JOSEPH P. BARRI, Secretary of PGI, PMC, PPC,
Secretary PIC and PCC; Clerk of PFD and PSC
and Partner, Hale and Dorr (counsel to the
Fund).
ROBERT NAULT, General Counsel of PGI since 1995;
Assistant Secretary formerly of Hale and Dorr (counsel to the
-8-
<PAGE>
Trust) where he most recently served as a
junior partner.
ERIC W. RECKARD, Manager of Fund Accounting and
Assistant Treasurer Compliance of PMC since 1994; Manager of
Auditing and Business Analysis of PGI
(until 1994).
The business address of all officers is 60 State Street, Boston,
Massachusetts 02109.
All of the outstanding capital stock of PMC and PSC is owned by PGI, a
Delaware corporation. All the outstanding capital stock of PFD is indirectly
owned by PGI. The table below lists all the Pioneer Funds, including the Fund,
currently offered to the public and the investment adviser and principal
underwriter for each fund.
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 Fund PMC PFD
Pioneer II PMC PFD
Pioneer Three PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Winthrop Real Estate Note 1 PFD
Investment Fund
Pioneer Europe Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Short-Term Income Fund PMC PFD
Pioneer Income Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer California Double Tax-Free Fund PMC PFD
Pioneer New York Triple Tax-Free Fund PMC PFD
Pioneer Massachusetts Double PMC PFD
Tax-Free Fund
Pioneer Cash Reserves Fund PMC PFD
Pioneer U.S. Government Money Fund PMC PFD
Pioneer Tax-Free Money Fund PMC PFD
Pioneer Interest Shares, Inc. PMC Note 2
-9-
<PAGE>
Pioneer Variable Contracts Trust PMC Note 3
- -------------
Note 1 Pioneer Winthrop Advisers is the investment adviser for this fund.
Note 2 This is a closed-end fund and it is underwritten by Mellon Bank.
Note 3 This is a series of seven 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.
PMC, the Fund's investment adviser, also manages the investments of
certain institutional private accounts. Messrs. Cogan, Tripple, Keough and
Barri, officers and/or Trustees of the Fund, are also officers and/or directors
of PFD, PMC, PSC and PGI. As of March 31, 1995, to the knowledge of the Fund, 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 15% of such shares.
As of March 31, 1995, the officers and trustees held in aggregate less than 1%
of the outstanding shares of the Fund. As of March 31, 1995, to the knowledge of
the Fund, no person beneficially owned 5% or more of the outstanding 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 fee of $1,000 plus $100 per meeting attended to each Trustee
who is not affiliated with PMC, PFD or PSC. The Fund pays the Chairman of the
Audit Committee an annual fee of $250 and pays each member of the Audit
Committee an annual fee of $200. All Trustees are reimbursed for expenses
incurred in attending Trustee and committee meetings. The Fund also pays an
annual trustees' fee of $500 plus expenses to each Trustee affiliated with PMC,
PSC or PFD. Any such fees and expenses paid to affiliates or interested persons
of PMC, 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:
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits from Fund and
Aggregate Accrued as Pioneer
Compensation Part of Family
Name of Trustee From the Fund* Fund's Expense of Funds**
<S> <C> <C> <C>
John F. Cogan, Jr. $ 500 $0 $11,750
David D. Tripple 500 0 11,750
-10-
<PAGE>
Richard H. Egdahl, M.D. 3,200 0 55,650
Margaret B.W. Graham 3,200 0 55,650
John W. Kendrick 3,200 0 55,650
Marguerite A. Piret 3,500 0 66,650
Stephen K. West 3,400 0 63,650
John Winthrop 3,400 0 63,650
<FN>
* As of Fund's fiscal year end.
** As of December 31, 1994 (calendar year end for all Pioneer Funds).
</FN>
</TABLE>
4. INVESTMENT ADVISER
As stated in the Prospectus, PMC, 60 State Street, Boston, Massachusetts,
serves as the Fund's investment adviser. PMC became the Fund's investment
adviser on December 1, 1993. Prior to that date, Mutual of Omaha Fund Management
Company ("FMC") served as the Fund's investment adviser. The management contract
with PMC is renewable annually 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 Trustees or a majority of its outstanding voting
securities and the giving of 60 days' written notice.
As compensation for its management services and expenses incurred, PMC is
entitled to a management fee at the following rates per annum of the Fund's
average daily net assets. The fee is computed and accrued daily and paid
monthly.
Net Assets Annual Rate
For assets up to $250,000,000............................0.50%
For assets in excess of $250,000,000
to $300,000,000........................................0.48%
Over $300,000,000........................................0.45%
PMC has agreed that until December 1, 1995, its fee shall not exceed the
fee that would have been payable under the previous management contact with FMC,
without giving effect to any expense limitation. Under the previous management
contract with FMC, which was terminated on December 1, 1993, the Fund paid FMC a
management fee at an annual rate equal to the following percentages of the
Fund's average daily net assets:
Net Assets Annual Rate
For assets up to and including $100,000,000..............0.50%
For assets over $100,000,000 but not
over $200,000,0000.....................................0.48%
-11-
<PAGE>
For assets over $200,000,000 but not
over $300,000,000......................................0.46%
For assets over $300,000,000 but not
over $400,000,000......................................0.44%
For assets over $400,000,000 but not
over $500,000,000......................................0.42%
For assets over $500,000,000.............................0.40%
PMC has agreed that if in any fiscal year the aggregate expenses of the
Fund exceed the expense limitation established by any state having jurisdiction
over the Fund, PMC will reduce its management fee to the extent required by
state law. The most restrictive state expense limit currently applicable to the
Fund provides that the Fund's expenses in any fiscal year may not exceed 2.5% of
the first $30 million of average daily net assets, 2.0% of the next $70 million
of such assets and 1.5% of such assets in excess of $100 million.
The Fund paid $1,079,037 in management fees to FMC for the fiscal year
ended December 31, 1992 and $1,228,585 for the period from January 1 to November
30, 1993. The Fund paid $121,129 in management fees to PMC for the period from
December 1 to December 31, 1993. The Fund paid $1,341,020 in management fees to
PMC for the fiscal year ended December 31, 1994.
Under the previous management contract with FMC, FMC agreed to reimburse
the Fund quarterly for all expenses (excluding interest, brokerage commissions,
taxes and extraordinary expenses) incurred in each year by the Fund in excess of
1.50% of the first $30,000,000 of the Fund's average daily net assets plus 1.00%
of any net additional net assets, up to an amount not exceeding its management
fees for the period for which reimbursements, if any, is made. No excess
reimbursement was paid by FMC or PMC to the Fund for the fiscal years ended
December 31, 1992, 1993 or 1994.
5. UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS
The Fund entered into an Underwriting Agreement with PFD. Prior to that
date, FMC served as the Fund's principal underwriter. The Underwriting Agreement
will continue from year to year if annually approved by the Trustees. The
Underwriting Agreement provides that PFD will bear certain distribution expenses
not borne by the Fund.
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
-12-
<PAGE>
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 law.
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 Shares (the "Class A Plan") and a plan of
distribution with respect to Class B Shares (the "Class B 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 Fund shares. Certain categories of such expenditures have been approved by
the Board of Trustees and are set forth in the Prospectus under the caption
"Distribution Plans." The expenses of the Fund pursuant to the Class A Plan are
accrued on a fiscal year basis and may not exceed the annual rate of 0.25% of
the Fund's average daily 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 daily 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.
-13-
<PAGE>
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 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 CDSCs
attributable to Class B shares. (See "Distributions Plans" in the Prospectus.)
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 Trust, 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 Plan),
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 Fund affected thereby, and material amendments to 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
-14-
<PAGE>
vote of a majority of the outstanding voting securities of the respective Class
of the Fund (as defined in the 1940 Act). The Plan will automatically terminate
in the event of its assignment (as defined in the 1940 Act). In the Trustees'
quarterly review of the Plan, they will consider its continued appropriateness
and the level of compensation it provides.
During the fiscal year ended December 31, 1994, the Fund incurred total
distribution fees pursuant to the Fund's Class A Plan of $696,271. Distribution
fees were paid by the Fund to PFD in reimbursement of expenses related to
servicing of shareholder accounts and to compensate dealers and sales personnel.
6. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston, Massachusetts,
to act as shareholder servicing agent and transfer agent for the Fund. This
contract terminates if assigned and may be terminated without penalty by either
party by vote of its Board of Trustees or a majority of its outstanding voting
securities and the giving of ninety days' written notice.
Under the terms of its contract with the Fund, PSC will service shareholder
accounts, and its duties will include: (i) processing sales, redemptions and
exchanges of shares of the Fund; (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 $22.00 per Class A shareholder account and
$22.00 per Class B shareholder account from the Fund as compensation for the
services described above. This fee is set at an amount determined by vote of a
majority of the 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.
7. CUSTODIAN
Brown Brothers Harriman & Co. (the "Custodian"), 40 Water Street, Boston,
Massachusetts 02109, is 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 also provides
fund accounting, bookkeeping and pricing assistance to the Fund.
-15-
<PAGE>
The Custodian does not determine the investment policies of the Fund or
decide which securities it will buy or sell. The Fund may invest in securities
issued by the Custodian, deposit cash in the Custodian and deal with the
Custodian as a principal in securities transactions. Portfolio securities may be
deposited into the federal Reserve-Treasury Department Book Entry System or the
Depository Trust Company.
8. PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts, serves as the principal
underwriter for the Fund in connection with the continuous offering of the Class
A and Class B shares of each Fund. Under the Fund's previous underwriting
agreement with FMC, FMC received $2,537,827 and $2,376,000 in aggregate
underwriting commissions for the fiscal year ended December 31, 1992, for the
period from January 1 to November 30, 1993, of which $329,153 and $216,280 was
retained, respectively. Under the Fund's current Underwriting Agreement with
PFD, PFD received $123,000 and $1,501,540, respectively, in aggregate
underwriting commissions for the period from December 1 through December 31,
1993 and for the fiscal year ended December 31, 1994 of which $15,107 and
$120,501, respectively, was retained.
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 a bona fide reorganization,
statutory merger, or other acquisition of portfolio securities (other than
municipal debt securities issued by state political subdivisions or their
agencies or instrumentalities) provided (i) the securities meet the investment
objective and policies of the Fund; (ii) the securities are acquired by the Fund
for investment and not for resale; (iii) the securities are not restricted as to
transfer either by law or liquidity of market; and (iv) the securities have a
value which is readily ascertainable (and not established only by evaluation
procedures) as evidenced by a listing on the American Stock Exchange or the New
York Stock Exchange or the NASDAQ National Market.
9. INDEPENDENT PUBLIC ACCOUNTANT
Effective January 1, 1994, Arthur Andersen LLP (formerly Arthur Andersen &
Co.), One International Place, Boston, MA 02110, was selected as the independent
public accountant for the Fund. Previously, Coopers & Lybrand had served as
independent public accountant to the Fund. Arthur Andersen's election as
independent public accountant was approved, at a meeting called for the purpose
of voting on such approval, by the vote of a majority of those Trustees on the
Board of Trustees who are not interested persons of the Fund.
-16-
<PAGE>
10. 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 Fund's
management contract. In selecting broker-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 broker-dealer; the broker-dealer's execution services
rendered on a continuing basis; and the reasonableness of any broker-dealer
spreads.
PMC may select broker-dealers which provide brokerage and/or research
services to the Fund and/or other investment companies managed by PMC or who
sell shares of the Pioneer Funds. In addition, if PMC determines in good faith
that the amount of commissions charged by a broker-dealer is reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, the Fund may pay commissions to such broker-dealer in an amount
greater than the amount another firm may charge. Such services may include
advice concerning the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and performance of accounts; 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.
The research received from broker-dealers may be useful to PMC in rendering
investment management services to the Fund as well as other investment companies
managed by PMC, although not all such research may be useful to the Fund.
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
-17-
<PAGE>
by PMC. This policy does not imply a commitment to execute all portfolio
transactions through all broker-dealers that sell shares of the Fund.
The Board of Trustees periodically reviews PMC's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Fund.
In addition to the Fund, PMC also acts as investment adviser or subadviser
to the other Pioneer Funds and certain private accounts with investment
objectives similar to that of the Fund. Securities frequently meet the
investment objective of the Fund, such other funds and such private accounts. In
such cases, the decision to recommend a purchase to 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 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 more than one of the Fund,
another Pioneer Fund, Pioneer Interest Shares, Inc. or a private account managed
by PMC may not be able to acquire as large a position in such security as it
desires, 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 fund
or account, the resulting participation in volume transactions could produce
better executions for the Fund or the account. In the event 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 Fund paid brokerage or underwriting commissions of approximately
$8,300, $66,000, and $78,278, respectively, for the fiscal years ended December
31, 1992, 1993 and 1994.
11. TAX STATUS AND DIVIDENDS
The Fund's policy is to pay dividends quarterly from net investment income
to shareholders of record in the latter part of March, June, September and
December and to distribute net realized capital gains, if any, once a year.
-18-
<PAGE>
Additional distributions may be made for the purpose of avoiding liability for
federal income or excise tax.
It is the Fund's policy to meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (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 timing of its
distributions 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 receives, the Fund will be relieved of the necessity of paying
federal income tax.
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 in additional shares. Dividends from net
long-term capital gain in excess of net short-term capital loss, if any, whether
received in cash or 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. The federal income tax status
of all distributions will be reported to shareholders annually.
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.
If the Fund acquires stock in certain non-U.S. corporations that receive at
least 75% of their annual gross income from passive sources (such as interest,
dividends, rents, royalties or capital gain) or hold at least 50% of their
assets in investments producing such passive income ("passive foreign investment
companies"), the Fund could be subject to federal income tax and additional
interest charges on "excess distributions" received from such companies or gain
from the sale of stock in such companies, even if all income or gain actually
received by the Fund is timely distributed to its shareholders. The Fund would
not be able to pass through to its shareholders any credit or deduction for such
a tax. Certain elections may, if available, ameliorate these adverse tax
consequences, but any such election would require the Fund to recognize taxable
-19-
<PAGE>
income or gain without the concurrent receipt of cash. The Fund may limit and/or
manage its holdings in passive foreign investment companies to minimize its tax
liability or maximize its return from these investments.
The Fund may invest in debt obligations that are in the lower rating
categories or are unrated. Investments in debt obligations that are at risk of
default present special tax issues for the Fund. Tax rules are not entirely
clear about issues such as when the Fund may cease to accrue interest, original
issue discount, or market discount, when and to what extent deductions may be
taken for bad debts or worthless securities, how payments received on
obligations in default should be allocated between principal and income, and
whether exchanges of debt obligations in a workout context are taxable. These
and other issues will be addressed by the Fund, in the event it invests in such
securities, in order to ensure that it distributes sufficient income to preserve
its status as a regulated investment company and to avoid becoming subject to
federal income or excise tax.
If the Fund invests in certain PIKs, zero coupon 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 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.
At the time of an investor's purchase of Fund shares, a portion of the
purchase price is often attributable to realized or unrealized appreciation in
the Fund's portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions 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 in reality
represent a return of a portion of the investment.
Any loss realized upon the redemption 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 at net asset value pursuant
to the reinvestment privilege, the sales charge paid on such shares is not
-20-
<PAGE>
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
certain redemptions may be disallowed under "wash sale" rules in the event of
other investments in the Fund within a period of 61 days beginning 30 days
before and ending 30 days after a redemption or other sale of shares.
For federal income tax purposes, the Fund is permitted to carry forward a
net capital loss in any year to offset 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 are not expected to be distributed as such to shareholders. The
Fund has $1,121,099, of capital carryforwards, which expire in 2002, available
to offset future capital gains.
Certain options written by the Fund on portfolio securities may cause the
Fund to recognize gains or losses from marking-to-market at the end of its
taxable year even though such options may not have lapsed, been closed out, or
exercised and may affect the characterization as long-term or short-term of some
capital gains and losses realized by the Fund. Gains or losses from the lapse or
closing out of options written by the Fund may be treated as short-term capital
gains or losses under Section 1234 of the Code or, in the case of options
subject to Section 1256, all gains or losses may be treated as 60% long-term and
40% short-term capital gains or losses. Losses on certain options and/or
offsetting positions (portfolio securities or other positions with respect to
which the Fund's risk of loss is substantially diminished by one or more
options) may also be deferred under the tax straddle rules of the Code, which
may also affect the characterization of capital gains or losses from straddle
positions and certain successor positions as long-term or short-term. The effect
of these rules may be mitigated to the extent the Fund limits its options
writing to "qualified covered call options" on portfolio stock. The tax rules
applicable to options and straddles may affect the amount, timing and character
of the Fund's income and loss and hence of its distributions to shareholders.
For purposes of the 70% dividends-received deduction available to
corporations, dividends received by the Fund, if any, from U.S. domestic
corporations in respect of any share of stock with a tax holding period of at
least 46 days (91 days in the case of certain preferred stock) in an unleveraged
position and distributed and designated by the Fund may be treated as qualifying
dividends. Any corporate shareholder should consult its tax adviser regarding
-21-
<PAGE>
the possibility that its tax basis in its shares may be reduced, for federal
income tax purposes, by reason of "extraordinary dividends" received with
respect to the shares. Corporate shareholders must meet the minimum holding
period requirement stated above (46 or 91 days), taking into account any
holding-period reductions from certain hedging or other transactions that
diminish risk of loss, with respect to their Fund shares in order to qualify for
the deduction and, if they borrow to acquire Fund shares, may be denied a
portion of the dividends-received deduction. The entire qualifying dividend,
including the otherwise deductible amount, will be included in determining the
excess (if any) of a corporation's adjusted current earnings over its
alternative minimum taxable income, which may increase a corporation's
alternative minimum tax liability.
The Fund may be subject to withholding and other taxes imposed by foreign
countries with respect to its investments in those countries. Tax conventions
between certain countries and the U.S. may reduce or eliminate such taxes. The
Fund will not satisfy the requirements for passing through to shareholders their
pro rata shares of foreign taxes paid by the Fund, with the result that its
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.
Federal law requires that the Fund withhold 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 W-9
Forms, that the Social Security 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.
Provided that the Fund qualifies as a regulated investment company under
the Code, it will not be required to pay any Massachusetts income, corporate
excise or franchise taxes, and, subject to compliance with certain income-source
requirements under Delaware law, it should also not be required to pay Delaware
corporation income tax.
-22-
<PAGE>
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 and U.S.
domestic corporations, partnerships, trusts or estates, and who are subject to
U.S. federal income tax. The description does not address the special tax rules
applicable to certain classes of investors, such as banks, insurance companies,
or tax-exempt entities. Investors other than U.S. persons may be subject to
different U.S. tax treatment, including a possible 30% U.S. withholding tax (or
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 is
on file, to 31% backup withholding on certain other payments from the Fund.
Shareholders should consult their own tax advisors on these matters and on
state, local and other applicable tax laws.
12. SHARES OF THE FUND
General
The Fund is an open-end investment company established as a Nebraska
corporation in 1968 and reorganized as a Delaware business trust in June 1994.
Prior to December 1, 1993, the Fund was known as Mutual of Omaha Income Fund,
Inc. and prior to June 30, 1994, the Fund was known as Pioneer Income Fund, Inc.
Reference to the Fund includes both the Delaware business trust and the Nebraska
corporation. The Board of Trustees of the Fund, as of the date of this Statement
of Additional Information, has authorized the issuance of two classes of shares,
Class A and Class B.
Unless otherwise required by the 1940 Act or the Agreement and Declaration
of Trust (the "Declaration of Trust"), the Fund has no intention of holding
annual meetings of shareholders. Shareholders may remove a Trustee by the
affirmative vote of at least two-thirds of the Fund's outstanding shares and the
Trustees shall promptly call a meeting for such purpose when requested to do so
in writing by the record holders of not less than 10% of the outstanding shares
of the Trust. Shareholders may, under certain circumstances communicate with
other shareholders in connection with requesting a special meeting of
shareholders. However, at any time that less than a majority of the Trustees
holding office were elected by the shareholders, the Trustees will call a
special meeting of shareholders for the purpose of electing Trustees.
The Declaration of Trust permits the issuance of series of shares in
addition to the Fund which would represent interests in separate portfolios of
investments. No series would be entitled to share in the assets of any other
series or be liable for the expenses or liabilities of any other series.
In addition to the requirements under Delaware law, the Declaration of
Trust provides that shareholders of the Fund may bring a derivative action on
-23-
<PAGE>
behalf of the Fund only if the following conditions are met: (a) shareholders
eligible to bring such derivative action under Delaware law who hold at least
10% of the outstanding shares of the Fund, or 10% of the outstanding shares of
the series or class to which such action relates, shall join in the request for
the Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and to
investigate the basis of such claim. The Trustees shall be entitled to retain
counsel or other advisers in considering the merits of the request and shall
require an undertaking by the shareholders making such request to reimburse the
Fund for the expense of any such advisers in the event that the Trustees
determine not to bring such action.
Shareholder and Trustee Liability
The Fund is organized as a Delaware business trust, and, under Delaware
law, the shareholders of such a trust are not generally subject to liability for
the debts or obligations of the Trust. Similarly, Delaware law provides that the
Fund will not be liable for the debts or obligations of any other series of the
Trust. However, no similar statutory or other authority limiting business trust
shareholder liability exists in many other states. As a result, to the extent
that a Delaware business trust or a shareholder is subject to the jurisdiction
of courts in such other states, the courts may not apply Delaware law and may
thereby subject the Delaware business trust shareholders to liability. To guard
against this risk, the Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Fund. Notice of such
disclaimer will normally be given in each agreement, obligation or instrument
entered into or executed by the Fund or a Trustee. The Declaration of Trust
provides for indemnification by the Fund for any loss suffered by a shareholder
as a result of an obligation 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. The Trustees believe that, in view of the above, the risk of personal
liability of shareholders is remote.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he or she
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
or her office.
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 on the New York Stock Exchange (the "Exchange")
-24-
<PAGE>
(currently 4:00 p.m., Eastern Time) on each day the Exchange is open for
business. 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, 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 that the current net
asset value per share might be materially affected by changes in the value of
its portfolio securities. On any day in which no purchase orders for the shares
of the Fund become effective and no shares are tendered for redemption, the
Fund's net asset value per share may not be determined.
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 it by the number of
outstanding shares of the class. For purposes of determining net asset value,
expenses of classes of the Fund are accrued daily and taken into account.
In determining the value of the assets of the Fund for the purpose of
obtaining the net asset value, securities listed or traded on a national or
foreign securities exchange shall be valued at their last sales price on the day
of valuation or, if there are no sales on that day, at the latest bid quotation.
Equity securities traded over-the-counter for which the last sales price on the
day of valuation is available shall be valued at that price. All other
over-the-counter equity securities for which reliable quotations are readily
available shall be valued at their latest bid quotation. Convertible securities
traded over-the-counter for which reliable quotations are readily available
shall be valued on the basis of valuations furnished by pricing services which
utilize electronic data processing techniques to determine the valuations for
normal institutional-size trading units of such securities. Securities not
valued by the pricing service for which reliable quotations are readily
available, shall be valued at market values furnished by recognized dealers in
such securities. Short-term obligations with remaining maturities of 60 days or
less shall be valued at amortized cost. Securities and other assets for which
reliable quotations are not readily available, shall be valued at their fair
value as determined in good faith under consistently applied guidelines
established by and under the general supervision of the Board of Trustees of the
Fund, although the actual calculations may be made by persons acting pursuant to
the direction of the Board.
The Fund's 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
-25-
<PAGE>
shares are offered at net asset value without the imposition of an initial sales
charge.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP"), which is available for Class A
Shares only, 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. Periodic
checks of $50 or more will be sent to the applicant, or any person designated by
him, monthly or quarterly. A designation of a third party to receive checks
requires an acceptable signature guarantee. The CDSC on any share subject to a
CDSC (See "How to Buy Fund Shares" in the Prospectus) may be waived or reduced
for non-retirement accounts if the redemption is made in connection with a
systematic withdrawal plan (limited in any year to 10% of the value of the
account at the time the withdrawal plan is established).
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. Redemptions are taxable transactions
to shareholders. 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 SWP
account. 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 SWP have been redeemed.
15. LETTER OF INTENTION
Purchases in the Fund of $100,000 or over of Class A Shares (excluding any
reinvestments of dividends and capital gains distributions) made within a
13-month period pursuant to a Letter of Intention provided to PFD will qualify
for a reduced sales charge. Such reduced sales charge will be the charge that
would be applicable to the purchase of all Class A Shares purchased during such
13-month period pursuant to a Letter of Intention had such shares been purchased
all at once. See "How to Buy Fund Shares" in the Prospectus. For example, a
-26-
<PAGE>
person who signs a Letter of Intention providing for a total investment in Fund
Class A Shares of $100,000 over a 13-month period would be charged at the 3.50%
sales charge rate with respect to all purchases during that period. Should the
amount actually purchased during the 13-month period be more or less than that
indicated in the Letter, an adjustment in the sales charge will be made. A
purchase not made pursuant to a Letter of Intention may be included thereafter
if the Letter is filed within 90 days of such purchase. Any shareholder may also
obtain the reduced sales charge by including the value (at current offering
price) of all his Class A Shares in the Fund and other Pioneer funds, except
directly purchased Class A shares of Pioneer Money Market Trust, held of record
as of the date of his or her Letter of Intention as a credit toward determining
the applicable scale of sales charge for the Class A Shares to be purchased
under the Letter of Intention.
The Letter of Intention authorizes PSC to escrow Class A Shares having a
purchase price equal to 5% of the stated investment specified in the Letter of
Intention. A Letter of Intention is not a binding obligation upon the investor
to purchase, or the Fund to sell, the full amount indicated and the investor
should carefully read the provisions of the Letter of Intention set forth in the
Account Application before signing.
16. INVESTMENT RESULTS
Other 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 its yield 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. Data for economic indicators may come from Bloomberg
Financial Systems, Towers Data Systems, the financial press and other sources.
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, New York Times, 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 any such publication) or used for comparison, as
well as performance listings and rankings from various other sources including
CDA/Weisenberger, Donoghue's Mutual Fund Almanac, Ibbotson Associates Investment
Company Data, Inc., Johnson's Charts, Kanon Bloch Carre and Co., Lipper
-27-
<PAGE>
Analytical Services, Inc., Micropal, Inc., Morningstar, Inc., Schabacker
Investment Management and Towers Data Systems, Inc.
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 are calculated by standard methods prescribed by the Securities
and Exchange Commission.
Standardized Yield Quotations
The Fund's yield is computed by dividing the Fund's net investment income
per share during a base period of 30 days, or one month, by the maximum offering
price per share of the Fund on the last day of such base period in accordance
with the following formula:
a-b
YIELD = 2[( ----- +1)6-1]
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.
-28-
<PAGE>
(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 remaining on a 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
remaining on a security.
The Fund's 30-day SEC yield for the period ended December 31, 1994 was
6.94%.
Standardized Average Annual Total Return Quotations
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 the Fund, over any period up to the lifetime of that class of the Fund.
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 will usually 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.
Average annual total return quotations for Class A and Class B Shares are
computed by finding the average annual compounded rates 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
-29-
<PAGE>
Where: P = a hypothetical initial payment of $1000,
less the maximum sales load for Class A
Shares or the deduction of the CDSC on
Class B 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 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 Fund's average annual total returns, with respect to Class A Shares,
for the one- , five-, ten-year and life-of-fund periods ended December 31, 1994
were -8.60%, 5.90%, 9.62% and 8.08%, respectively.
Automated Information Line (FactFone)
FactFone, 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 funds;
o annualized 30-day yields on Pioneer's bond funds;
o annualized 7-day yields and 7-day effective (compound) yields for the
Pioneer money market funds; and
o dividends and capital gains distributions on all funds.
Yields are calculated in accordance with SEC mandated standard formulas.
In addition, by using a personal identification number (PIN), shareholders
may access their account balance and last three transactions and may order a
duplicate statement.
-30-
<PAGE>
All performance numbers communicated through FactFone represent past
performance, and figures for all bond funds 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 and Class B Shares (except for Pioneer
money market funds, which seek a stable $1.00 share price) will also vary, and
such shares may be worth more or less at redemption than their original cost.
17. GENERAL INFORMATION
The Fund is registered with the SEC as a diversified open-end management
investment company. Such registration does not involve supervision by the SEC of
the management or policies of the Fund. For further information with respect to
the Fund and the securities offered hereby, reference is made to the
registration statement filed with the SEC, including all exhibits thereto.
Annual and semiannual reports of the Fund are mailed to each shareholder.
18. FINANCIAL STATEMENTS
The audited financial statements and related report of Arthur Andersen LLP
contained in the Fund's 1994 Annual Report are attached hereto. A copy of the
Annual Report which is incorporated by reference herein may be obtained without
charge by calling Shareholder Services at 1-800-225-6292 or by written request
to the Fund at 60 State Street, Boston, Massachusetts 02109.
<PAGE>
APPENDIX A
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 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 posses many favorable investment attributes 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
other good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
A-1
<PAGE>
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 B in its corporate bond rating system. The
modifier 1 indicated that the security ranks in the higher end of its generic
rating category; the modifier 2 indicated a mid-range ranking and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
STANDARD AND POOR'S RATINGS GROUP CORPORATE BOND RATINGS
AAA
Debt rated AAA has the highest rating assigned by Standard and Poor's. Capacity
to pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay principal and
differs from the higher rated issues only in small degree.
A
Debt rated A has a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
A-2
<PAGE>
BBB
Debt rated BBB is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions of changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
BB
Debt rated BB has less near-term vulnerability to default than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The BB rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied BBB-rating.
B
Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC
Debt rated CCC has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC
The rating CC is typically applied to debt subordinated to senior debt that is
assigned an actual or implied CCC rating.
C
The C rating is typically applied to debt subordinated to senior debt which is
assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI
A-3
<PAGE>
The rating CI is reserved for income bonds on which no interest is being paid.
D
Debt rated D is in payment default. The D rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P 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 if debt service payments are jeopardized.
PLUS (+) OR MINUS (-)
The rating from AAA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major categories.
A-4
<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, most respected and successful
money managers in the United States.
As of December 31, 1994, PMC employed a professional investment staff of
46, with a combined average of 14 years' experience in the financial services
industry.
At December 31, 1994, there were 591,192 non-retirement shareholder
accounts and 337,577 retirement shareholder accounts in the Fund. Total assets
for all Pioneer Funds at December 31, 1994 were approximately $10,038,000,000
representing 928,769 shareholder accounts.
B-1
<PAGE>
<TABLE>
<CAPTION>
Pioneer Income Fund
Date Initial Investment Offering Price Sales Charge Shares Purchased Net Asset Value Initial Net Asset
Included Per Share Value
<S> <C> <C> <C> <C> <C> <C>
1/1/85 $10,000 $8.67 4.50% 1153.403 $8.28 $9,550
</TABLE>
<TABLE>
<CAPTION>
Dividends and Capital Gains Reinvested
Value of Shares
Date From From Cap. Gains From Dividends Total Value
Investment Reinvested Reinvested
<S> <C> <C> <C> <C>
12/31/85 $10,576 $250 $1,001 $11,827
12/31/86 $10,312 $614 $2,000 $12,926
12/31/87 $10,000 $792 $3,016 $13,808
12/31/88 $10,288 $835 $4,382 $15,505
12/31/89 $10,992 $892 $6,086 $17,970
12/31/90 $10,542 $856 $7,216 $18,614
12/31/91 $11,695 $949 $9,436 $22,080
12/31/92 $11,683 $1,164 $10,908 $23,755
12/31/93 $11,776 $1,909 $12,502 $26,187
12/31/94 $10,508 $1,703 $12,848 $25,059
</TABLE>
<PAGE>
INDEX DESCRIPTIONS
S&P 500 *
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P Composite Index
includes 500 of the largest stocks (in terms of stock market value) in the
United States; prior to March 1957 it consisted of 90 of the largest stocks.
DOW JONES INDUSTRIAL AVERAGE *
This is a total return index based on the performance of 30 blue chip stocks.
SMALL CAPITALIZATION STOCKS *
This index is a market value weighted index of the ninth and tenth deciles of
the New York Stock Exchange (NYSE), plus stocks listed on the American Stock
Exchange (AMEX) and over-the-counter (OTC) with the same or less capitalization
as the upper bound of the NYSE ninth decile.
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 Index 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."
LONG-TERM MUNICIPAL BOND PORTFOLIO *
For 1926-1984, returns are calculated form yields on 20-year prime issues from
Solomon Brothers' Analytical Record of Yields and Yields Spreads, assuming
coupon equals previous year-end yield and a 20-year maturity. For 1985-present,
returns are calculated using Moody's Bond Record, using the December average
municipal yield as the beginning-of-following year coupon (average of Aaa, Aa,
A, Baa grades).
LONG-TERM CORPORATE BONDS *
For 1969-1991, corporate bond total returns are represented by the Salomon
Brothers Long-Term High-Grade Corporate Bond Index. Since 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. If
<PAGE>
INDEX DESCRIPTIONS
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.
Over 1926-1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946-1968, Ibbotson
and Sinquefield backdated the Salomon Brothers' index, using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon for
1969-1991. 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 1926-1945, the Standard and Poor's monthly High-Grade Corporate Composite
yield data were used, assuming a 4 percent 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 Randolph W. Westerfield, 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.
LONG-TERM GOVERNMENT BOND TOTAL RETURN *
The total returns on long-term government bonds from 1977 to 1991 are
constructed with data from The Wall Street Journal. Over 1926-1976, 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. Total returns
for 1977-1991 are calculated as the change in the flat price or and-interest
price.
INTERMEDIATE-TERM GOVERNMENT BONDS TOTAL RETURN *
Total returns of the intermediate-term government bonds for 1977-1991 are
calculated from The Wall Street Journal prices, using the change in flat price.
Returns from 1934-1986 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 5 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 1934-1942, almost all bonds
with maturities near 5 years were partially or full 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 1926-1933, there are few bonds suitable for construction of a series
with a 5-year maturity. For this period, five year bond yield estimates are
used.
<PAGE>
INDEX DESCRIPTIONS
U.S. (30 DAY) TREASURY BILL TOTAL RETURNS *
For the U.S. Treasury bill index, data from The Wall Street Journal are used for
1977-1991; the CRSP U.S. 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.
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 1963-1987 and The Wall Street Journal for the years 1988-1994.
6 MONTH CD **
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
MSCI
Morgan Stanley Capital International Indices, developed by the Capital
International S.A., are based on share prices of some 1470 companies listed on
the stock exchanges around the world.
Countries in the MSCI EAFE Portfolio *are:
Australia; Austria; Belgium; Denmark; Finland; France; Germany; Hong Kong;
Italy; Japan; Netherlands; N. Zealand; Norway; Singapore/Malaysia; Spain;
Sweden; Switzerland; United Kingdom.
Countries in the MSCI EUROPE 14 Portfolio *** are:
Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy,
Netherlands, Norway, Spain, Sweden, Switzerland, United Kingdom
Countries in the MSCI WORLD Portfolio *** are:
Australia; Austria; Belgium; Canada; Denmark; Finland; France; Germany; Hong
Kong; Italy; Japan; Netherlands; N. Zealand; Norway; Singapore/Malaysia; Spain;
Sweden; Switzerland; United Kingdom; United States.
INTERNATIONAL FINANCE CORPORATION COMPOSITE *
An index representing the performance of a composite of Latin America
(Argentina, Brazil, Chile, Columbia, Mexico, Peru, Venezuela), East Asia (China,
Korea, Philippines, Taiwan), South Asia (India, Indonesia, Malaysia, Pakistan,
Sri Lanka, Thailand), Europe/Mideast/Africa (Greece, Hungary, Jordan, Nigeria,
Poland, Portugal, Turkey, Zimbabwe).
Sources: * Ibbotson Associates
** Towers Data Systems
*** Lipper Analytical Services
<PAGE>
<TABLE>
<CAPTION>
EQUITY COMPARATIVE PERFORMANCE STATISTICS
Dow Jones U.S. Small S&P/BARRA S&P/BARRA
S&P500 Ind'l Avg Stock Index U.S. Inflation Growth Value
%TR %TR %TR %TR %TR %TR
<S> <C> <C> <C> <C> <C> <C>
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A
Dec 1931 -43.34 -49.03 -49.75 -9.52 N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A
Dec 1933 53.99 73.71 142.87 0.51 N/A N/A
Dec 1934 -1.44 8.07 24.22 2.03 N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A
Dec 1942 20.34 14.12 44.51 9.29 N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A
<PAGE>
EQUITY COMPARATIVE PERFORMANCE STATISTICS
Dow Jones U.S. Small S&P/BARRA S&P/BARRA
S&P500 Ind'l Avg Stock Index U.S. Inflation Growth Value
%TR %TR %TR %TR %TR %TR
<S> <C> <C> <C> <C> <C> <C>
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60
Dec 1994 1.31 5.06 3.11 2.78 3.13 -0.64
</TABLE>
Source: Ibbotson Associates
PIONEER INCOME FUND
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial statements of Pioneer Income Fund (the
"Registrant") are incorporated by reference from the 1994 Annual
Report to Shareholders which is incorporated by reference into
Part B, the Statement of Additional Information. The 1994 Annual
Report to Shareholders is attached hereto as Exhibit 12.
(b) Exhibits:
(1)(a) Form of Agreement and Declaration of Trust -- Incorporated
herein by reference to Post-Effective Amendment No. 54 filed June
24, 1994_.
(b) Establishment and Designation of Class B Shares__.
(2) By-Laws -- Incorporated herein by reference to Post-effective
Amendment No. 54 filed June 24, 1994_.
(3) Inapplicable.
(4) Inapplicable.
(5) Management Contract with Pioneering Management Corporation --
Incorporated herein by reference to Post-Effective Amendment No.
53 filed April 27, 1994_.
(6) Underwriting Agreement with Pioneer Funds Distributor, Inc. --
Incorporated herein by reference to Post-Effective Amendment No.
53 filed April 27, 1994_.
(7) Inapplicable.
(8) Custodian Agreement -- Incorporated herein by reference to
Post-Effective Amendment No. 41 filed April 6, 1988; and the
Assignment dated August 28, 1990 incorporated herein by reference
to Post-Effective Amendment No. 47 filed April 30, 1991_.
<PAGE>
(9) Service Agreement with Pioneering Services Corporation --
Incorporated herein by reference to Post-Effective Amendment No.
53 filed April 27, 1994_.
(10) Inapplicable.
(11) (a) Consent of Independent Public Accountants (Coopers & Lybrand
LLP)__.
(b) Consent of Independent Public Accountants (Arthur Andersen
LLP)__.
(12) 1994 Annual Report to Shareholders__.
(13) Understanding -- Incorporated herein by reference to
Post-Effective Amendment No. 31 filed March 18, 1980.
(14) Inapplicable.
(15) (a) Plan of Distribution -- Incorporated herein by reference to
Post-Effective Amendment No. 53 filed April 27, 1994_.
(b) Class B Plan of Distribution -- Incorporated herein by reference
to Post-Effective Amendment No. 55 filed February 28, 1995_.
(16) None.
(17) Financial Data Schedule
(18) Powers of Attorney -- None.
---------------
_ Refiled electronically herewith in accordance with EDGAR
requirements.
__ Filed electronically herewith in accordance with EDGAR
requirements.
<PAGE>
Item 25. Persons Controlled By or Under
Common Control With Registrant
The Pioneer Group, Inc., a Delaware corporation ("PGI"), owns 100% of the
outstanding capital stock of Pioneering Management Corporation, a Delaware
corporation ("PMC"), Pioneering Services Corporation ("PSC"), Pioneer Capital
Corporation ("PCC"), Pioneer Fonds Marketing GmbH ("GmbH"), Pioneer SBIC Corp.
("SBIC"), Pioneer Associates, Inc., Pioneer International Corporation, Pioneer
Plans Corporation ("PPC"), Pioneer Goldfields Limited ("PGL"), and Pioneer
Investments Corporation ("PIC"), all Massachusetts corporations. PGI also owns
100% of the outstanding capital stock of Pioneer Metals and Technology, Inc.
("PMT"), a Delaware corporation, and Pioneer First Polish Trust Fund Joint Stock
Company ("First Polish"), a Polish corporation. PGI owns 90% of the outstanding
shares of Teberebie Goldfields Limited ("TGL"). PMC owns 100% of the outstanding
capital stock of Pioneer Funds Distributor, Inc. ("PFD"), a Massachusetts
corporation. Pioneer Winthrop Advisers ("PWA"), a Massachusetts general
partnership, is a joint venture between PGI and Winthrop Financial Associates, a
Limited Partnership, a Delaware limited partnership. Pioneer Fund, Pioneer II,
Pioneer Three, Pioneer Bond Fund, Pioneer Intermediate Tax-Free Fund, Pioneer
Growth Trust, Pioneer Europe Fund, Pioneer International Growth Fund, Pioneer
Short-Term Income Trust, Pioneer Tax-Free State Series Trust, Pioneer Money
Market Trust, Pioneer America Income Trust and the Registrant (each of the
foregoing, a Massachusetts business trust), and Pioneer Interest Shares, Inc. (a
Nebraska corporation) and Pioneer Growth Shares, Pioneer Income Fund, Pioneer
India Fund, Pioneer Tax-Free Income Fund and Pioneer Emerging Markets Fund (each
of the foregoing, a Delaware business trust) are all parties to management
contracts with PMC. Pioneer Winthrop Real Estate Investment Fund is a party to a
sub-investment management contract with PMC. PCC owns 100% of the outstanding
capital stock of SBIC. SBIC is the sole general partner of Pioneer Ventures
Limited Partnership, a Massachusetts limited partnership. John F. Cogan, Jr.
owns approximately 15% of the outstanding shares of PGI. Mr. Cogan is Chairman
of the Board, President and Trustee of the Registrant and of each of the Pioneer
investment companies; Director and President of PGI; President and Director of
PPC, PIC, Pioneer International Corporation and PMT; Director of PCC and PSC;
Chairman of the Board and Director of PMC, PFD and TGL; Chairman, President and
Director of PGL; Chairman of the Supervisory Board of GmbH; Chairman and Chief
Executive Officer of PWA; Chairman and Member of Supervisory Board of First
Polish; and Partner, Hale and Dorr.
<PAGE>
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of March 31, 1995
-------------- --------------------
Class Class
Shares of Beneficial Interest A B
Shares Shares
21,210 0
Item 27. Indemnification
Except for the Agreement and Declaration of Trust establishing the
Registrant as a Trust under Delaware law, there is no contract, arrangement or
statute under which any trustee, officer, underwriter or affiliated person of
the Registrant is insured or indemnified. The Agreement and Declaration of Trust
provides that no Trustee or officer will be indemnified against any liability to
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.
Insofar as indemnification for liability arising under the Securities Act
of 1933, as amended (the "Act"), may be available to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment of the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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.
<PAGE>
Item 29. Principal Underwriter
(a) See Item 25 above.
(b) Trustees and Officers of PFD:
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
<S> <C> <C>
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
James L. Spencer Director and Executive None
Vice President
David D. Tripple Director Executive Vice
President and Trustee
Stephen W. Long Senor Vice President None
Alicja Malecka Vice President None
Richard C. Dolan,
Jr. Vice President None
John W. Drachman Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Constance S. Spiros Vice President None
Marcy Supovitz Vice President None
Steven R. Berke Assistant Vice None
President
Gail A. Smyth Assistant Vice None
President
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
<PAGE>
Joseph P. Barri Clerk Secretary
</TABLE>
(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; contact the Treasurer.
Item 31. Management Services
The Registrant is not a party to any management-related service contract,
except as described in the Prospectus and the Statement of Additional
Information.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant 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
under the Investment Company Act of 1940 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 has duly caused this
Post-Effective Amendment No. 56 to its Registration Statement (the "Amendment")
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Boston and The Commonwealth of Massachusetts, on the 25th day of April,
1995.
PIONEER INCOME FUND
/s/Joseph P. Barri
Joseph P. Barri
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the following persons in the capacities and on the
dates indicated:
Title and Signature Date
Principal Executive Officer: )
)
)
/s/John F. Cogan, Jr. )
John F. Cogan, Jr., President* )
) April 25, 1995
Principal Financial and )
Accounting Officer: )
)
)
/s/William H. Keough )
William H. Keough, Treasurer* )
A MAJORITY OF THE BOARD OF TRUSTEES:
/s/John F. Cogan, Jr. )
John F. Cogan, Jr., Trustee* )
)
/s/Richard H. Egdahl, M.D. )
Richard H. Egdahl, Trustee* )
)
/s/Margaret B.W. Graham )
Margaret B.W. Graham, Trustee* )
)
/s/John W. Kendrick )
John W. Kendrick, Trustee* )
)
/s/Marguerite A. Piret )
Marguerite A. Piret, Trustee* )
)
/s/David D. Tripple )
David D. Tripple, Trustee* )
)
/s/Stephen K. West )
Stephen K. West, Trustee* )
)
/s/John Winthrop )
John Winthrop, Trustee* )
*By /s/Joseph P. Barri April 25, 1995
Joseph P. Barri
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
(1)(a) Form of Agreement and Declaration of Trust
(1)(b) Establishment and Designation of Class B
Shares
(2) By-Laws
(5) Management Contract with Pioneering Management Corporation
(6) Underwriting Agreement with Pioneer Funds Distributor,
Inc.
(8) Custodian Agreement
(9) Service Agreement with Pioneering Services Corporation
(11)(a) Consent of Independent Public Accountants (Coopers &
Lybrand LLP)
(11)(b) Consent of Independent Public Accountants (Arthur
Andersen LLP)
(12) 1994 Annual Report to Shareholders
(15)(a) Plan of Distribution
(15)(b) Class B Plan of Distribution
PIONEER INCOME FUND
AGREEMENT AND DECLARATION OF TRUST
This AGREEMENT AND DECLARATION OF TRUST is made on June 16, 1994 by John F.
Cogan, Jr., Richard H. Egdahl, M.D., Margaret B.W. Graham, John W. Kendrick,
Marguerite A. Piret, David D. Tripple, Stephen K. West and John Winthrop
(together with all other persons from time to time duly elected, qualified and
serving as Trustees in accordance with the provisions of Article II hereof, the
"Trustees").
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the Trust shall be held and managed in trust pursuant to this
Agreement and Declaration of Trust.
ARTICLE I
NAME AND DEFINITIONS
Section 1. Name. The name of the Trust created by this Agreement and Declaration
of Trust is "Pioneer Income Fund."
Section 2. Definitions. Unless otherwise provided or required by the context:
(a) "Administrator" means the party, other than the Trust, to the contract
described in Article III, Section 3 hereof.
(b) "By-laws" means the By-laws of the Trust adopted by the Trustees, as
amended from time to time, which By-laws are expressly herein incorporated by
reference as part of the "governing instrument" within the meaning of the
Delaware Act.
(c) "Class" means each class of Shares of a Series established pursuant to
Article V.
(d) "Commission," "Interested Person" and "Principal Underwriter" have the
meanings provided in the 1940 Act. Except as such term may be otherwise defined
<PAGE>
by the Trustees in conjunction with the establishment of any Class or Series of
Shares, the term "vote of a majority of the Shares outstanding and entitled to
vote" shall have the same meaning as is assigned to the term "vote of a majority
of the outstanding voting securities" in the 1940 Act.
(e) "Covered Person" means a person so defined in Article IV, Section 3.
(f) "Custodian" means any Person other than the Trust who has custody of
any Trust Property as required by Section 17(f) of the 1940 Act, but does not
include a system for the central handling of securities described in said
Section 17(f).
(g) "Declaration" shall mean this Agreement and Declaration of Trust, as
amended or restated from time to time. Reference in this Declaration of Trust to
"Declaration," "hereof," "herein," and "hereunder" shall be deemed to refer to
this Declaration rather than exclusively to the article or section in which such
words appear unless the context clearly requires otherwise.
(h) "Delaware Act" means Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to time.
(i) "Distributor" means the party, other than the Trust, to the contract
described in Article III, Section 1 hereof.
(j) "His" shall include the feminine and neuter, as well as the masculine,
genders.
(k) "Investment Adviser" means the party, other than the Trust, to the
contract described in Article III, Section 2 hereof.
(l) "Net Asset Value" means the net asset value of each Series of the
Trust, determined as provided in Article VI, Section 3.
(m) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures, estates and other entities, and
governments and agencies and political subdivisions, thereof, whether domestic
or foreign.
2
<PAGE>
(n) "Series" means a series of Shares established pursuant to Article V.
(o) "Shareholder" means a record owner of Outstanding Shares;
(p) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest of each Series or Class is divided from time
to time (including whole Shares and fractions of Shares). "Outstanding Shares"
means Shares shown in the books of the Trust or its transfer agent as then
issued and outstanding, but does not include Shares which have been repurchased
or redeemed by the Trust and which are held in the treasury of the Trust.
(q) "Transfer Agent" means any Person other than the Trust who maintains
the Shareholder records of the Trust, such as the list of Shareholders, the
number of Shares credited to each account, and the like.
(r) "Trust" means Pioneer Income Fund, the Delaware business trust
established hereby, and reference to the Trust, when applicable to one or more
Series or Classes, refers to such Series or Classes.
(s) "Trustees" means the persons who have signed this Declaration of Trust,
so long as they shall continue in office in accordance with the terms hereof,
and all other persons who may from time to time be duly qualified and serving as
Trustees in accordance with Article II, in all cases in their capacities as
Trustees hereunder.
(t) "Trust Property" means any and all property, real or personal, tangible
or intangible, which is owned or held by or for the Trust or any Series or the
Trustees on behalf of the Trust or any Series or Class.
(u) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.
3
<PAGE>
ARTICLE II
THE TRUSTEES
Section 1. Management of the Trust. The business and affairs of the Trust
shall be managed by or under the direction of the Trustees, and they shall have
all powers necessary or desirable to carry out that responsibility. The Trustees
may execute all instruments and take all action they deem necessary or desirable
to promote the interests of the Trust. Any determination made by the Trustees in
good faith as to what is in the interests of the Trust shall be conclusive. In
construing the provisions of this Declaration, the presumption shall be in favor
of a grant of power to the Trustees.
Section 2. Powers. The Trustees in all instances shall act as principals,
free of the control of the Shareholders. The Trustees shall have full power and
authority to take or refrain from taking any action and to execute any contracts
and instruments that they may consider necessary or desirable in the management
of the Trust. The Trustees shall not in any way be bound or limited by current
or future laws or customs applicable to trust investments, but shall have full
power and authority to make any investments which they, in their sole
discretion, deem proper to accomplish the purposes of the Trust. The Trustees
may exercise all of their powers without recourse to any court or other
authority. Subject to any applicable limitation herein or in the By-laws or
resolutions of the Trust, the Trustees shall have power and authority, without
limitation:
(a) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations.
(b) To invest in, hold for investment, or reinvest in, cash; securities,
including common, preferred and preference stocks; warrants; subscription
rights; profit-sharing interests or participations and all other contracts for
or evidence of equity interests; bonds, debentures, bills, time notes and all
other evidences of indebtedness; negotiable or non-negotiable instruments;
government securities, including securities of any state, municipality or other
political subdivision thereof, or any governmental or quasi-governmental agency
or instrumentality; and money market instruments
4
<PAGE>
including bank certificates of deposit, finance paper, commercial paper,
bankers' acceptances and all kinds of repurchase agreements, of any corporation,
company, trust, association, firm or other business organization however
established, and of any country, state, municipality or other political
subdivision, or any governmental or quasi-governmental agency or
instrumentality; or any other security, property or instrument in which the
Trust or any of its Series or Classes shall be authorized to invest.
(c) To acquire (by purchase, subscription or otherwise), to hold, to trade
in and deal in, to acquire any rights or options to purchase or sell, to sell or
otherwise dispose of, to lend and to pledge any such securities, to enter into
repurchase agreements, reverse repurchase agreements, firm commitment agreements
and forward foreign currency exchange contracts, to purchase and sell options on
securities, securities indices, currency and other financial assets, futures
contracts and options on futures contracts of all descriptions and to engage in
all types of hedging and risk-management transactions.
(d) To exercise all rights, powers and privileges of ownership or interest
in all securities and repurchase agreements included in the Trust Property,
including the right to vote thereon and otherwise act with respect thereto and
to do all acts for the preservation, protection, improvement and enhancement in
value of all such securities and repurchase agreements.
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, including cash or foreign currency, and any interest therein.
(f) To borrow money or other property in the name of the Trust exclusively
for Trust purposes and in this connection issue notes or other evidence of
indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; and to endorse, guarantee, or
undertake the performance of any obligation or engagement of any other Person
and to lend Trust Property.
5
<PAGE>
(g) To aid by further investment any corporation, company, trust,
association or firm, any obligation of or interest in which is included in the
Trust Property or in the affairs of which the Trustees have any direct or
indirect interest; to do all acts and things designed to protect, preserve,
improve or enhance the value of such obligation or interest; and to guarantee or
become surety on any or all of the contracts, stocks, bonds, notes, debentures
and other obligations of any such corporation, company, trust, association or
firm.
(h) To adopt By-laws not inconsistent with this Declaration providing for
the conduct of the business of the Trust and to amend and repeal them to the
extent such right is not reserved to the Shareholders.
(i) To elect and remove such officers and appoint and terminate such agents
as they deem appropriate.
(j) To employ as custodian of any assets of the Trust, subject to any
provisions herein or in the By-laws, one or more banks, trust companies or
companies that are members of a national securities exchange, or other entities
permitted by the Commission to serve as such.
(k) To retain one or more transfer agents and shareholder servicing agents,
or both.
(l) To provide for the distribution of Shares either through a Principal
Underwriter as provided herein or by the Trust itself, or both, or pursuant to a
distribution plan of any kind.
(m) To set record dates in the manner provided for herein or in the
By-laws.
(n) To delegate such authority as they consider desirable to any officers
of the Trust and to any agent, independent contractor, manager, investment
adviser, custodian or underwriter.
(o) To hold any security or other property (i) in a form not indicating any
trust, whether in bearer, book entry, unregistered or other negotiable form, or
6
<PAGE>
(ii) either in the Trust's or Trustees' own name or in the name of a custodian
or a nominee or nominees, subject to safeguards according to the usual practice
of business trusts or investment companies.
(p) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes, and with
separate Shares representing beneficial interests in such Series, and to
establish separate Classes, all in accordance with the provisions of Article V.
(q) To the full extent permitted by Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series
and assets, liabilities and expenses to a particular Class or to apportion the
same between or among two or more Series or Classes, provided that any
liabilities or expenses incurred by a particular Series or Class shall be
payable solely out of the assets belonging to that Series or Class as provided
for in Article V, Section 4.
(r) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern whose securities are held
by the Trust; to consent to any contract, lease, mortgage, purchase, or sale of
property by such corporation or concern; and to pay calls or subscriptions with
respect to any security held in the Trust.
(s) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes.
(t) To make distributions of income, capital gains, returns of capital (if
any) and redemption proceeds to Shareholders in the manner hereinafter provided
for.
(u) To establish committees for such purposes, with such membership, and
with such responsibilities as the Trustees may consider proper, including a
committee consisting of fewer than all of the Trustees then in office, which may
act for and bind the Trustees and the Trust with respect to the institution,
prosecution, dismissal, settlement, review or investigation of any legal action,
suit or proceeding, pending or threatened.
7
<PAGE>
(v) To issue, sell, repurchase, redeem, cancel, retire, acquire, hold,
resell, reissue, dispose of and otherwise deal in Shares; to establish terms and
conditions regarding the issuance, sale, repurchase, redemption, cancellation,
retirement, acquisition, holding, resale, reissuance, disposition of or dealing
in Shares; and, subject to Articles V and VI, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any funds or
property of the Trust or of the particular Series with respect to which such
Shares are issued.
(w) To invest part or all of the Trust Property (or part or all of the
assets of any Series), or to dispose of part or all of the Trust Property (or
part or all of the assets of any Series) and invest the proceeds of such
disposition, in securities issued by one or more other investment companies
registered under the 1940 Act all without any requirement of approval by
Shareholders. Any such other investment company may (but need not) be a trust
(formed under the laws of the State of New York or of any other state) which is
classified as a partnership for federal income tax purposes.
(x) To sell or exchange any or all of the assets of the Trust, subject to
Article IX, Section 4.
(y) To enter into joint ventures, partnerships and other combinations and
associations.
(z) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such Committee, depositary or trustee as the Trustees shall deem
proper.
(aa) To purchase and pay for entirely out of Trust Property such insurance
as the Trustees may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
8
<PAGE>
of the Trust or payment of distributions and principal on its portfolio
investments, and, subject to applicable law and any restrictions set forth in
the By-Laws, insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers, Principal Underwriters, or independent
contractors of the Trust, individually, against all claims and liabilities of
every nature arising by reason of holding Shares, holding, being or having held
any such office or position, or by reason of any action alleged to have been
taken or omitted by any such Person as Trustee, officer, employee, agent,
investment adviser, Principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such Person against
liability.
(bb) To adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans and trusts, including the purchasing of life insurance and annuity
contracts as a means of providing such retirement and other benefits, for any or
all of the Trustees, officers, employees and agents of the Trust.
(cc) To enter into contracts of any kind and description.
(dd) To interpret the investment policies, practices or limitations of any
Series or Class.
(ee) To guarantee indebtedness and contractual obligations of others.
(ff) To carry on any other business in connection with or incidental to any
of the foregoing powers, to do everything necessary or desirable to accomplish
any purpose or to further any of the foregoing powers, and to take every other
action incidental to the foregoing business or purposes, objects or powers.
The clauses above shall be construed as objects and powers, and the
enumeration of specific powers shall not limit in any way the general powers of
the Trustees. Any action by one or more of the Trustees in their capacity as
such hereunder shall be deemed an action on behalf of the Trust or the
applicable Series, and not an action in an individual capacity. No one dealing
9
<PAGE>
with the Trustees shall be under any obligation to make any inquiry concerning
the authority of the Trustees, or to see to the application of any payments made
or property transferred to the Trustees or upon their order. In construing this
Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
Section 3. Certain Transactions. Except as prohibited by applicable law,
the Trustees may, on behalf of the Trust, buy any securities from or sell any
securities to, or lend any assets of the Trust to, any Trustee or officer of the
Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with any investment adviser, administrator,
distributor or transfer agent for the Trust or with any Interested Person of
such person. The Trust may employ any such person or entity in which such person
is an Interested Person, as broker, legal counsel, registrar, investment
adviser, administrator, distributor, transfer agent, dividend disbursing agent,
custodian or in any other capacity upon customary terms.
Section 4. Initial Trustees; Election and Number of Trustees. The initial
Trustees shall be the persons initially signing this Declaration. The number of
Trustees (other than the initial Trustees) shall be fixed from time to time by a
majority of the Trustees; provided, that there shall be at least one (1) Trustee
and no more than fifteen (15). The Shareholders shall elect the Trustees (other
than the initial Trustees) on such dates as the Trustees may fix from time to
time.
Section 5. Term of Office of Trustees. Each Trustee shall hold office for
life or until his successor is elected or the Trust terminates; except that (a)
any Trustee may resign by delivering to the other Trustees or to any Trust
officer a written resignation effective upon such delivery or a later date
specified therein; (b) any Trustee may be removed with or without cause at any
time by a written instrument signed by at least a majority of the then Trustees,
specifying the effective date of removal; (c) any Trustee who requests to be
retired, or who is declared bankrupt or has become physically or mentally
incapacitated or is otherwise unable to serve, may be retired by a written
10
<PAGE>
instrument signed by a majority of the other Trustees, specifying the effective
date of retirement; and (d) any Trustee may be removed at any meeting of the
Shareholders by a vote of at least two-thirds of the Outstanding Shares.
Section 6. Vacancies; Appointment of Trustees. Whenever a vacancy shall
exist in the Board of Trustees, regardless of the reason for such vacancy, the
remaining Trustees shall appoint any person as they determine in their sole
discretion to fill that vacancy, consistent with the limitations under the 1940
Act. Such appointment shall be made by a written instrument signed by a majority
of the Trustees or by a resolution of the Trustees, duly adopted and recorded in
the records of the Trust, specifying the effective date of the appointment. The
Trustees may appoint a new Trustee as provided above in anticipation of a
vacancy expected to occur because of the retirement, resignation or removal of a
Trustee, or an increase in number of Trustees, provided that such appointment
shall become effective only at or after the expected vacancy occurs. As soon as
any such Trustee has accepted his appointment in writing, the trust estate shall
vest in the new Trustee, together with the continuing Trustees, without any
further act or conveyance, and he shall be deemed a Trustee hereunder. The
Trustees' power of appointment is subject to Section 16(a) of the 1940 Act.
Whenever a vacancy in the number of Trustees shall occur, until such vacancy is
filled as provided in this Article II, the Trustees in office, regardless of
their number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by the Declaration. The
death, declination to serve, resignation, retirement, removal or incapacity of
one or more Trustees, or all of them, shall not operate to annul the Trust or to
revoke any existing agency created pursuant to the terms of this Declaration of
Trust.
Section 7. Temporary Vacancy or Absence. Whenever a vacancy in the Board of
Trustees shall occur, until such vacancy is filled, or while any Trustee is
absent from his domicile (unless that Trustee has made arrangements to be
informed about, and to participate in, the affairs of the Trust during such
absence), or is physically or mentally incapacitated, the remaining Trustees
shall have all the powers hereunder and their certificate as to such vacancy,
11
<PAGE>
absence, or incapacity shall be conclusive. Any Trustee may, by power of
attorney, delegate his powers as Trustee for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees.
Section 8. Chairman. The Trustees shall appoint one of their number to be
Chairman of the Board of Trustees. The Chairman shall preside at all meetings of
the Trustees, shall be responsible for the execution of policies established by
the Trustees and the administration of the Trust, and may be the chief
executive, financial and/or accounting officer of the Trust.
Section 9. Action by the Trustees. The Trustees shall act by majority vote
at a meeting duly called at which a quorum is present, including a meeting held
by conference telephone, teleconference or other electronic media or
communication equipment by means of which all persons participating in the
meeting can communicate with each other; or by written consent of a majority of
Trustees (or such greater number as may be required by applicable law) without a
meeting. A majority of the Trustees shall constitute a quorum at any meeting.
Meetings of the Trustees may be called orally or in writing by the President or
by any one of the Trustees. Notice of the time, date and place of all Trustees'
meetings shall be given to each Trustee as set forth in the By-laws; provided,
however, that no notice is required if the Trustees provide for regular or
stated meetings. Notice need not be given to any Trustee who attends the meeting
without objecting to the lack of notice or who signs a waiver of notice either
before or after the meeting. The Trustees by majority vote may delegate to any
Trustee or Trustees or committee authority to approve particular matters or take
particular actions on behalf of the Trust. Any written consent or waiver may be
provided and delivered to the Trust by facsimile or other similar electronic
mechanism.
Section 10. Ownership of Trust Property. The Trust Property of the Trust
and of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. Legal title in and beneficial ownership of all of the
assets of the Trust shall at all times be considered as vested in the Trust,
12
<PAGE>
except that the Trustees may cause legal title in and beneficial ownership of
any Trust Property to be held by, or in the name of one or more of the Trustees
acting for and on behalf of the Trust, or in the name of any person as nominee
acting for and on behalf of the Trust. No Shareholder shall be deemed to have a
severable ownership in any individual asset of the Trust or of any Series or any
right of partition or possession thereof, but each Shareholder shall have, as
provided in Article V, a proportionate undivided beneficial interest in the
Trust or Series or Class thereof represented by Shares. The Shares shall be
personal property giving only the rights specifically set forth in this Trust
Instrument. The Trust, or at the determination of the Trustees one or more of
the Trustees or a nominee acting for and on behalf of the Trust, shall be deemed
to hold legal title and beneficial ownership of any income earned on securities
of the Trust issued by any business entities formed, organized, or existing
under the laws of any jurisdiction, including the laws of any foreign country.
Upon the resignation or removal of a Trustee, or his otherwise ceasing to be a
Trustee, he shall execute and deliver such documents as the remaining Trustees
shall require for the purpose of conveying to the Trust or the remaining
Trustees any Trust Property held in the name of the resigning or removed
Trustee. Upon the incapacity or death of any Trustee, his legal representative
shall execute and deliver on his behalf such documents as the remaining Trustees
shall require as provided in the preceding sentence.
Section 11. Trustees, etc. as Shareholders. Subject to any restrictions in
the By-laws, any Trustee, officer, agent or independent contractor of the Trust
may acquire, own and dispose of Shares to the same extent as any other
Shareholder; the Trustees may issue and sell Shares to and buy Shares from any
such person or any firm or company in which such person is interested, subject
only to any general limitations herein.
Section 12. Series of Trustees. In connection with the establishment of one
or more Series or Classes, the Trustees establishing such Series or Class may
appoint, to the extent permitted by the Delaware Act, separate Trustees with
respect to such Series or Classes (the "Series Trustees"). Series Trustees may,
but are not required to, serve as Trustees of the Trust or any other Series or
13
<PAGE>
Class of the Trust. The Series Trustees shall have, to the exclusion of any
other Trustee of the Trust, all the powers and authorities of Trustees hereunder
with respect to such Series or Class as to which they are Series Trustees, but
shall have no power or authority with respect to any other Series or Class. Any
provision of this Declaration relating to election of Trustees by Shareholders
only shall entitle the Shareholders of a Series or Class for which Series
Trustees have been appointed to vote with respect to the election of such Series
Trustees and the Shareholders of any other Series or Class shall not be entitled
to participate in such vote. In the event that Series Trustees are appointed,
the Trustees initially appointing such Series Trustees shall, without the
approval of any Outstanding Shares, amend either the Declaration or the By-laws
to provide for the respective responsibilities of the Trustees and the Series
Trustees in circumstances where an action of the Trustees or Series Trustees
affects all Series of the Trust or two or more Series represented by different
Trustees.
ARTICLE III
CONTRACTS WITH SERVICE PROVIDERS
Section 1. Underwriting Contract. The Trustees may in their discretion from
time to time enter into an exclusive or nonexclusive distribution contract or
contracts providing for the sale of the Shares whereby the Trustees may either
agree to sell the Shares to the other party to the contract or appoint such
other party as their sales agent for the Shares, and in either case on such
terms and conditions, if any, as may be prescribed in the By-laws, and such
further terms and conditions as the Trustees may in their discretion determine
not inconsistent with the provisions of this Article III or of the By-laws; and
such contract may also provide for the repurchase of the Shares by such other
party as agent of the Trustees.
Section 2. Advisory or Management Contract. The Trustees may in their
discretion from time to time enter into one or more investment advisory or
management contracts or, if the Trustees establish multiple Series, separate
14
<PAGE>
investment advisory or management contracts with respect to one or more Series
whereby the other party or parties to any such contracts shall undertake to
furnish the Trust or such Series management, investment advisory,
administration, accounting, legal, statistical and research facilities and
services, promotional or marketing activities, and such other facilities and
services, if any, as the Trustees shall from time to time consider desirable and
all upon such terms and conditions as the Trustees may in their discretion
determine. Notwithstanding any provisions of the Declaration, the Trustees may
authorize the Investment Adviser or persons to whom the Investment Adviser
delegates certain or all of their duties, or any of them, under any such
contracts (subject to such general or specific instructions as the Trustees may
from time to time adopt) to effect purchases, sales, loans or exchanges of
portfolio securities and other investments of the Trust on behalf of the
Trustees or may authorize any officer, employee or Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations of such
Investment Advisers, or any of them (and all without further action by the
Trustees). Any such purchases, sales, loans and exchanges shall be deemed to
have been authorized by all of the Trustees.
Section 3. Administration Agreement. The Trustees may in their discretion
from time to time enter into an administration agreement or, if the Trustees
establish multiple Series or Classes separate administration agreements with
respect to each Series or Class, whereby the other party to such agreement shall
undertake to manage the business affairs of the Trust or of a Series or Class
thereof of the Trust and furnish the Trust or a Series or a Class thereof with
office facilities, and shall be responsible for the ordinary clerical,
bookkeeping and recordkeeping services at such office facilities, and other
facilities and services, if any, and all upon such terms and conditions as the
Trustees may in their discretion determine.
Section 4. Service Agreement. The Trustees may in their discretion from
time to time enter into service agreements with respect to one or more Series or
Classes of Shares whereby the other parties to such Service Agreements will
provide administration and/or support services pursuant to administration plans
15
<PAGE>
and service plans, and all upon such terms and conditions as the Trustees in
their discretion may determine.
Section 5. Transfer Agent. The Trustees may in their discretion from time
to time enter into a transfer agency and shareholder service contract whereby
the other party to such contract shall undertake to furnish transfer agency and
shareholder services to the Trust. The contract shall have such terms and
conditions as the Trustees may in their discretion determine not inconsistent
with the Declaration. Such services may be provided by one or more Persons.
Section 6. Custodian. The Trustees may appoint or otherwise engage one or
more banks or trust companies, each having an aggregate capital, surplus and
undivided profits (as shown in its last published report) of at least two
million dollars ($2,000,000), or any other entity satisfying the requirements of
the 1940 Act, to serve as Custodian with authority as its agent, but subject to
such restrictions, limitations and other requirements, if any, as may be
contained in the By-laws of the Trust. The Trustees may also authorize the
Custodian to employ one or more sub-custodians, including such foreign banks and
securities depositories as meet the requirements of applicable provisions of the
1940 Act, and upon such terms and conditions as may be agreed upon between the
Custodian and such sub-custodian, to hold securities and other assets of the
Trust and to perform the acts and services of the Custodian, subject to
applicable provisions of law and resolutions adopted by the Trustees.
Section 7. Affiliations of Trustees or Officers, Etc. The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust or
any Series thereof is a shareholder, director, officer, partner, trustee,
employee, manager, adviser or distributor of or for any partnership,
corporation, trust, association or other organization or of or for any
parent or affiliate of any organization, with which a contract of the
character described in this Article III or for services as Custodian,
Transfer Agent or disbursing agent or for related services may have been or
may hereafter be made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder of or has an interest in the Trust, or
that
16
<PAGE>
(ii) any partnership, corporation, trust, association or other
organization with which a contract of the character described in Sections
1, 2, 3 or 4 of this Article III or for services as Custodian, Transfer
Agent or disbursing agent or for related services may have been or may
hereafter be made also has any one or more of such contracts with one or
more other partnerships, corporations, trusts, associations or other
organizations, or has other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE IV
COMPENSATION, LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Compensation. The Trustees as such shall be entitled to
reasonable compensation from the Trust, and they may fix the amount of such
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking or other
services and payment for the same by the Trust.
Section 2. Limitation of Liability. All persons contracting with or having
any claim against the Trust or a particular Series shall look only to the assets
of all Series or such particular Series for payment under such contract or
claim; and neither the Trustees nor, when acting in such capacity, any of the
Trust's officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Every written instrument or obligation on behalf of
the Trust or any Series shall contain a statement to the foregoing effect, but
the absence of such statement shall not operate to make any Trustee or officer
of the Trust liable thereunder. Provided they have exercised reasonable care and
have acted in the reasonable belief that their actions are in the best interest
of the Trust, the Trustees and officers of the Trust shall not be responsible or
liable for any act or omission or for neglect or wrongdoing of them or any
officer, agent, employee, investment adviser or independent contractor of the
Trust, but nothing contained in this Declaration or in the Delaware Act shall
protect any Trustee or officer of the Trust against liability to the Trust or to
Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
17
<PAGE>
Section 3. Indemnification. (a) Subject to the exceptions and limitations
contained in subsection (b) below:
(i)every person who is, or has been, a Trustee or an officer, employee
or agent of the Trust (including any individual who serves at its
request as director, officer, partner, trustee or the like of another
organization in which it has any interest as a shareholder, creditor
or otherwise) ("Covered Person") shall be indemnified by the Trust or
the appropriate Series to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him
in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or
having been a Covered Person and against amounts paid or incurred by
him in the settlement thereof; and
(ii) as used herein, the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or proceedings
(civil, criminal or other, including appeals), actual or threatened,
and the words "liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i)who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office, or (B) not to have acted in good faith in the
reasonable belief that his action was in the best interest of the
Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office; (A) by the court or
other body approving the settlement; (B) by at least a majority of
those Trustees who are neither Interested Persons of the Trust nor are
parties to the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); (C) by written opinion of
independent legal counsel based upon a review of readily available
facts (as opposed to a full trial-type inquiry) or (D) by a vote of a
majority of the Outstanding Shares entitled to vote (excluding any
Outstanding Shares owned of record or beneficially by such
individual).
18
<PAGE>
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, and shall inure to the benefit of the heirs, executors and
administrators of a Covered Person.
(d) To the maximum extent permitted by applicable law, expenses in
connection with the preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in subsection (a) of this
Section may be paid by the Trust or applicable Series from time to time prior to
final disposition thereof upon receipt of an undertaking by or on behalf of such
Covered Person that such amount will be paid over by him to the Trust or
applicable Series if it is ultimately determined that he is not entitled to
indemnification under this Section; provided, however, that either (i) such
Covered Person shall have provided appropriate security for such undertaking,
(ii) the Trust is insured against losses arising out of any such advance
payments or (iii) either a majority of the Trustees who are neither Interested
Persons of the Trust nor parties to the matter, or independent legal counsel in
a written opinion, shall have determined, based upon a review of readily
available facts (as opposed to a full trial-type inquiry) that there is reason
to believe that such Covered Person will not be disqualified from
indemnification under this Section.
(e) Any repeal or modification of this Article IV by the Shareholders, or
adoption or modification of any other provision of the Declaration or By-laws
inconsistent with this Article, shall be prospective only, to the extent that
such repeal, or modification would, if applied retrospectively, adversely affect
any limitation on the liability of any Covered Person or indemnification
available to any Covered Person with respect to any act or omission which
occurred prior to such repeal, modification or adoption.
Section 4. Indemnification of Shareholders. If any Shareholder or former
Shareholder of any Series shall be held personally liable solely by reason of
his being or having been a Shareholder and not because of his acts or omissions
or for some other reason, the Shareholder or former Shareholder (or his heirs,
executors, administrators or other legal representatives or in the case of any
entity, its general successor) shall be entitled out of the assets belonging to
the applicable Series to be held harmless from and indemnified against all loss
and expense arising from such liability. The Trust, on behalf of the affected
Series, shall, upon request by such Shareholder, assume the defense of any claim
made against such Shareholder for any act or obligation of the Series and
satisfy any judgment thereon from the assets of the Series.
19
<PAGE>
Section 5. No Bond Required of Trustees. No Trustee shall be obligated to
give any bond or other security for the performance of any of his duties
hereunder.
Section 6. No Duty of Investigation; Notice in Trust Instruments, Etc. No
purchaser, lender, transfer agent or other Person dealing with the Trustees or
any officer, employee or agent of the Trust or a Series thereof shall be bound
to make any inquiry concerning the validity of any transaction purporting to be
made by the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or a
Series thereof or undertaking, and every other act or thing whatsoever executed
in connection with the Trust shall be conclusively presumed to have been
executed or done by the executors thereof only in their capacity as Trustees
under this Declaration or in their capacity as officers, employees or agents of
the Trust or a Series thereof. Every written obligation, contract, instrument,
certificate, Share, other security of the Trust or a Series thereof or
undertaking made or issued by the Trustees may recite that the same is executed
or made by them not individually, but as Trustees under the Declaration, and
that the obligations of the Trust or a Series thereof under any such instrument
are not binding upon any of the Trustees or Shareholders individually, but bind
only the Trust Property or the Trust Property of the applicable Series, and may
contain any further recital which they may deem appropriate, but the omission of
such recital shall not operate to bind the Trustees individually. The Trustees
shall at all times maintain insurance for the protection of the Trust Property
or the Trust Property of the applicable Series, its Shareholders, Trustees,
officers, employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
Section 7. Reliance on Experts, Etc. Each Trustee, officer or employee of
the Trust or a Series thereof shall, in the performance of his duties, powers
and discretions hereunder be fully and completely justified and protected with
regard to any act or any failure to act resulting from reliance in good faith
upon the books of account or other records of the Trust or a Series thereof,
upon an opinion of counsel, or upon reports made to the Trust or a Series
thereof by any of its officers or employees or by the Investment Adviser, the
Administrator, the Distributor, Transfer Agent, selected dealers, accountants,
appraisers or other experts or consultants selected with reasonable care by the
Trustees, officers or employees of the Trust, regardless of whether such counsel
or expert may also be a Trustee.
20
<PAGE>
ARTICLE V
SERIES; CLASSES; SHARES
Section 1. Establishment of Series or Class. The Trust shall consist of one
or more Series. The Trustees hereby establish a single Series which shall be
designated Pioneer Income Fund. Each additional Series shall be established and
is effective upon the adoption of a resolution of a majority of the Trustees or
any alternative date specified in such resolution. The Trustees may designate
the relative rights and preferences of the Shares of each Series. The Trustees
may divide the Shares of any Series into Classes. The Shares of the existing
Series and each Class thereof herein established and designated and any Shares
of any further Series and Classes that may from time to time be established and
designated by the Trustees shall be established and designated, and the
variations in the relative rights and preferences as between the different
Series shall be fixed and determined, by the Trustees; provided, that all Shares
shall be identical except for such variations as shall be fixed and determined
between different Series or Classes by the Trustees in establishing and
designating such Class or Series. All references to Shares in this Declaration
shall be deemed to be Shares of any or all Series or Classes as the context may
require. The Trust shall maintain separate and distinct records for each Series
and hold and account for the assets thereof separately from the other assets of
the Trust or of any other Series. A Series may issue any number of Shares or any
Class thereof and need not issue Shares. Each Share of a Series shall represent
an equal beneficial interest in the net assets of such Series. Each holder of
Shares of a Series or a Class thereof shall be entitled to receive his pro rata
share of all distributions made with respect to such Series or Class. Upon
redemption of his Shares, such Shareholder shall be paid solely out of the funds
and property of such Series. The Trustees may adopt and change the name of any
Series or Class.
Section 2. Shares. The beneficial interest in the Trust shall be divided
into transferable Shares of one or more separate and distinct Series or Classes
established by the Trustees. The number of Shares of each Series and Class is
unlimited and each Share shall have no a par value or such par value per share
as the Trustees may establish. All Shares issued hereunder shall be fully paid
and nonassessable. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust. The
Trustees shall have full power and authority, in their sole discretion and
21
<PAGE>
without obtaining Shareholder approval, to issue original or additional Shares
at such times and on such terms and conditions as they deem appropriate; to
issue fractional Shares and Shares held in the treasury; to establish and to
change in any manner Shares of any Series or Classes with such preferences,
terms of conversion, voting powers, rights and privileges as the Trustees may
determine (but the Trustees may not change Outstanding Shares in a manner
materially adverse to the Shareholders of such Shares); to divide or combine the
Shares of any Series or Classes into a greater or lesser number; to classify or
reclassify any unissued Shares of any Series or Classes into one or more Series
or Classes of Shares; to abolish any one or more Series or Classes of Shares; to
issue Shares to acquire other assets (including assets subject to, and in
connection with, the assumption of liabilities) and businesses; and to take such
other action with respect to the Shares as the Trustees may deem desirable.
Shares held in the treasury shall not confer any voting rights on the Trustees
and shall not be entitled to any dividends or other distributions declared with
respect to the Shares.
Section 3. Investment in the Trust. The Trustees shall accept investments
in any Series or Class from such persons and on such terms as they may from time
to time authorize. At the Trustees' discretion, such investments, subject to
applicable law, may be in the form of cash or securities in which that Series is
authorized to invest, valued as provided in Article VI, Section 3. Investments
in a Series shall be credited to each Shareholder's account in the form of full
Shares at the Net Asset Value per Share next determined after the investment is
received or accepted as may be determined by the Trustees; provided, however,
that the Trustees may, in their sole discretion, (a) impose a sales charge upon
investments in any Series or Class, (b) issue fractional Shares, (c) determine
the Net Asset Value per Share of the initial capital contribution or (d)
authorize the issuance of Shares at a price other than Net Asset Value to the
extent permitted by the 1940 Act or any rule, order or interpretation of the
Commission thereunder. The Trustees shall have the right to refuse to accept
investments in any Series at any time without any cause or reason therefor
whatsoever.
Section 4. Assets and Liabilities of Series. All consideration received by
the Trust for the issue or sale of Shares of a particular Series, together with
all assets in which such consideration is invested or reinvested, all income,
22
<PAGE>
earnings, profits, and proceeds thereof (including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be), shall
be held and accounted for separately from the assets of every other Series and
are referred to as "assets belonging to" that Series. The assets belonging to a
Series shall belong only to that Series for all purposes, and to no other
Series, subject only to the rights of creditors of that Series. Any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more Series as the Trustees
deem fair and equitable. Each such allocation shall be conclusive and binding
upon the Shareholders of all Series for all purposes, and such assets, earnings,
income, profits or funds, or payments and proceeds thereof shall be referred to
as assets belonging to that Series. The assets belonging to a Series shall be so
recorded upon the books of the Trust, and shall be held by the Trustees in trust
for the benefit of the Shareholders of that Series. The assets belonging to a
Series shall be charged with the liabilities of that Series and all expenses,
costs, charges and reserves attributable to that Series, except that liabilities
and expenses allocated solely to a particular Class shall be borne by that
Class. Any general liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any particular Series
or Class shall be allocated and charged by the Trustees between or among any one
or more of the Series or Classes in such manner as the Trustees deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series or Classes for all purposes.
Without limiting the foregoing, but subject to the right of the Trustees to
allocate general liabilities, expenses, costs, charges or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Series shall be
enforceable against the assets of such Series only, and not against the assets
of any other Series. Notice of this contractual limitation on liabilities among
Series may, in the Trustees' discretion, be set forth in the certificate of
trust of the Trust (whether originally or by amendment) as filed or to be filed
in the Office of the Secretary of State of the State of Delaware pursuant to the
Delaware Act, and upon the giving of such notice in the certificate of trust,
the statutory provisions of Section 3804 of the Delaware Act relating to
limitations on liabilities among Series (and the statutory effect under Section
3804 of setting forth such notice in the certificate of trust) shall become
applicable to the Trust and each Series. Any person extending credit to,
23
<PAGE>
contracting with or having any claim against any Series may look only to the
assets of that Series to satisfy or enforce any debt, with respect to that
Series. No Shareholder or former Shareholder of any Series shall have a claim on
or any right to any assets allocated or belonging to any other Series.
Section 5. Ownership and Transfer of Shares. The Trust or a transfer or
similar agent for the Trust shall maintain a register containing the names and
addresses of the Shareholders of each Series and Class thereof, the number of
Shares of each Series and Class held by such Shareholders, and a record of all
Share transfers. The register shall be conclusive as to the identity of
Shareholders of record and the number of Shares held by them from time to time.
The Trustees may authorize the issuance of certificates representing Shares and
adopt rules governing their use. The Trustees may make rules governing the
transfer of Shares, whether or not represented by certificates. Except as
otherwise provided by the Trustees, Shares shall be transferable on the books of
the Trust only by the record holder thereof or by his duly authorized agent upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer, together with a Share certificate if one is outstanding,
and such evidence of the genuineness of each such execution and authorization
and of such other matters as may be required by the Trustees. Upon such
delivery, and subject to any further requirements specified by the Trustees or
contained in the By-laws, the transfer shall be recorded on the books of the
Trust. Until a transfer is so recorded, the Shareholder of record of Shares
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor the Trust, nor any transfer agent or registrar or any
officer, employee or agent of the Trust, shall be affected by any notice of a
proposed transfer.
Section 6. Status of Shares; Limitation of Shareholder Liability. Shares
shall be deemed to be personal property giving Shareholders only the rights
provided in this Declaration. No Shareholder, by virtue of having acquired a
Share, shall be held expressly to have assented to and agreed to be bound by the
terms of this Declaration and to have become a party hereto. No Shareholder
shall be personally liable for the debts, liabilities, obligations and expenses
incurred by, contracted for, or otherwise existing with respect to, the Trust or
any Series. The death, incapacity, dissolution, termination or bankruptcy of a
Shareholder during the existence of the Trust shall not operate to terminate the
Trust, nor entitle the representative of any such Shareholder to an accounting
or to take any action in court or elsewhere against the Trust or the Trustees,
but entitles such representative only to the rights of such Shareholder under
this Trust. Ownership of Shares shall not entitle the Shareholder to any title
24
<PAGE>
in or to the whole or any part of the Trust Property or right to call for a
partition or division of the same or for an accounting, nor shall the ownership
of Shares constitute the Shareholders as partners. Neither the Trust nor the
Trustees shall have any power to bind any Shareholder personally or to demand
payment from any Shareholder for anything, other than as provided herein or as
otherwise agreed by the Shareholder. Shareholders shall have the same limitation
of personal liability as is extended to shareholders of a private corporation
for profit incorporated in the State of Delaware. Every written obligation of
the Trust or any Series shall contain a statement to the effect that such
obligation may only be enforced against the assets of the appropriate Series or
all Series; however, the omission of such statement shall not operate to bind or
create personal liability for any Shareholder or Trustee.
ARTICLE VI
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions. The Trustees or a committee of one or more
Trustees and one or more officers may declare and pay dividends and other
distributions, including dividends on Shares of a particular Series and other
distributions from the assets belonging to that Series. No dividend or
distribution, including, without limitation, any distribution paid upon
termination of the Trust or of any Series (or Class) with respect to, nor any
redemption or repurchase of, the Shares of any Series (or Class) shall be
effected by the Trust other than from the assets held with respect to such
Series, nor shall any Shareholder of any particular Series otherwise have any
right or claim against the assets held with respect to any other Series except
to the extent that such Shareholder has such a right or claim hereunder as a
Shareholder of such other Series. The Trustees shall have full discretion to
determine which items shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive and binding upon the
Shareholders. The amount and payment of dividends or distributions and their
form, whether they are in cash, Shares or other Trust Property, shall be
determined by the Trustees. Dividends and other distributions may be paid
pursuant to a standing resolution adopted once or more often as the Trustees
determine. All dividends and other distributions on Shares of a particular
Series shall be distributed pro rata to the Shareholders of that Series in
proportion to the number or net asset value of Shares of that Series they held
on the record date established for such payment, except that such dividends and
distributions shall appropriately reflect expenses allocated to a particular
Class of such Series. The Trustees may adopt and offer to Shareholders such
dividend reinvestment plans, cash dividend payout plans or similar plans as the
Trustees deem appropriate.
25
<PAGE>
Section 2. Redemptions. Each Shareholder of a Series shall have the right
at such times as may be permitted by the Trustees to require the Series to
redeem all or any part of his Shares at a redemption price per Share equal to
the Net Asset Value per Share at such time as the Trustees shall have prescribed
by resolution, or, to the extent permitted by the 1940 Act, at such other
redemption price and at such times as the Trustees shall prescribe by
resolution. In the absence of such resolution, the redemption price per Share
shall be the Net Asset Value next determined after receipt by the Series of a
request for redemption in proper form less such charges as are determined by the
Trustees and described in the Trust's Registration Statement for that Series
under the Securities Act of 1933. The Trustees may specify conditions, prices,
and places of redemption, may specify binding requirements for the proper form
or forms of requests for redemption and may specify the amount of any deferred
sales charge to be withheld from redemption proceeds. Payment of the redemption
price may be wholly or partly in securities or other assets at the value of such
securities or assets used in such determination of Net Asset Value, or may be in
cash. After redemption, Shares may be reissued from time to time. The Trustees
may require Shareholders to redeem Shares for any reason under terms set by the
Trustees, including, but not limited to, the failure of a Shareholder to supply
a taxpayer identification number or tax related certification if required to do
so, or to have the minimum investment required, or to pay when due for the
purchase of Shares issued to him. To the extent permitted by law, the Trustees
may retain the proceeds of any redemption of Shares required by them for payment
of amounts due and owing (i) by a Shareholder to the Trust or any Series or
Class or any governmental authority or (ii) by the Trust or any series to any
taxing authority in satisfaction of tax withholding and/or deposit requirements
with respect to the payment or crediting by the Trust or the Series to the
shareholders of dividends, capital gains distributions, proceeds or redemptions
or similar payments. Notwithstanding the foregoing, the Trustees may postpone
payment of the redemption price and may suspend the right of the Shareholders to
require any Series or Class to redeem Shares during any period of time when and
to the extent permissible under the 1940 Act.
Section 3. Determination of Net Asset Value. The Trustees shall cause the
Net Asset Value of Shares of each Series or Class to be determined from time to
time in a manner consistent with applicable laws and regulations. The Trustees
may delegate the power and duty to determine Net Asset Value per Share to one or
more Trustees or officers of the Trust or to a custodian, depository or other
agent appointed for such purpose. The Net Asset Value of Shares shall be
26
<PAGE>
determined separately for each Series or Class at such times as may be
prescribed by the Trustees or, in the absence of action by the Trustees, as of
the close of regular trading on the New York Stock Exchange on each day for all
or part of which such Exchange is open for unrestricted trading.
Section 4. Suspension of Right of Redemption. If, as referred to in Section
2 of this Article, the Trustees postpone payment of the redemption price and
suspend the right of Shareholders to redeem their Shares, such suspension shall
take effect at the time the Trustees shall specify, but not later than the close
of business on the business day next following the declaration of suspension.
Thereafter Shareholders shall have no right of redemption or payment until the
Trustees declare the end of the suspension. If the right of redemption is
suspended, a Shareholder may either withdraw his request for redemption or
receive payment based on the Net Asset Value per Share next determined after the
suspension terminates.
Section 5. Repurchase by Agreement. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the Net
Asset Value per Share determined as of the time when the purchase or contract of
purchase is made or the Net Asset Value as of any time which may be later
determined, provided payment is not made for the Shares prior to the time as of
which such Net Asset Value is determined.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. The Shareholders shall have power to vote only
with respect to (a) the election of Trustees as provided in Section 6 of Article
II; (b) the removal of Trustees as provided in Article II, Section 5(d); (c) any
investment advisory or management contract as provided in Article III, Section
2; (d) any termination of the Trust as provided in Article IX, Section 4; (e)
the amendment of this Declaration to the extent and as provided in Article IX,
27
<PAGE>
Section 8; and (f) such additional matters relating to the Trust as may be
required or authorized by law, this Declaration, or the By-laws or any
registration of the Trust with the Commission or any State, or as the Trustees
may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares shall be
voted by individual Series or Class, except (a) when required by the 1940 Act,
Shares shall be voted in the aggregate and not by individual Series or Class,
and (b) when the Trustees have determined that the matter affects the interests
of more than one Series or Class, then the Shareholders of all such Series or
Classes shall be entitled to vote thereon. Each whole Share shall be entitled to
one vote as to any matter on which it is entitled to vote, and each fractional
share shall be entitled to a proportionate fractional vote. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy or in any manner provided for in the By-laws. The By-laws may provide
that proxies may be given by any electronic or telecommunications device or in
any other manner, but if a proposal by anyone other than the officers or
Trustees is submitted to a vote of the Shareholders of any Series or Class, or
if there is a proxy contest or proxy solicitation or proposal in opposition to
any proposal by the officers or Trustees, Shares may be voted only in person or
by written proxy. Until Shares of a Series are issued, as to that Series the
Trustees may exercise all rights of Shareholders and may take any action
required or permitted to be taken by Shareholders by law, this Declaration or
the By-laws. Meetings of Shareholders shall be called and notice thereof and
record dates therefor shall be given and set as provided in the By-laws.
Section 2. Quorum; Required Vote. One-third of the Outstanding Shares of
each Series or Class, or one-third of the Outstanding Shares of the Trust,
entitled to vote in person or by proxy shall be a quorum for the transaction of
business at a Shareholders' meeting with respect to such Series or Class, or
with respect to the entire Trust, respectively. Any lesser number shall be
sufficient for adjournments. Any adjourned session of a Shareholders' meeting
may be held within a reasonable time without further notice. Except when a
larger vote is required by law, this Declaration or the By-laws, a majority of
the Shares voting at a Shareholders' meeting in person or by proxy shall decide
any matters to be voted upon with respect to the entire Trust and a plurality of
such Shares shall elect a Trustee; provided, that if this Declaration or
applicable law permits or requires that Shares be voted on any matter by
individual Series or Classes, then a majority of the Shares of that Series or
28
<PAGE>
Class voting at a Shareholders' meeting in person or by proxy on the matter
shall decide that matter (or, if required by law, a majority of the Shares
outstanding and entitled to vote of that Series or Class) insofar as that Series
or Class is concerned. Shareholders may act as to the Trust or any Series or
Class by the written consent of a majority (or such other amount as may be
required by applicable law) of the Outstanding Shares of the Trust or of such
Series or Class, as the case may be.
Section 3. Additional Provisions. The By-laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VIII
EXPENSES OF THE TRUST AND SERIES
Section 1. Payment of Expenses by the Trust. Subject to Article V, Section
4, the Trust or a particular Series shall pay, or shall reimburse the Trustees
from the assets belonging to all Series or the particular Series, for their
expenses (or the expenses of a Class of such Series) and disbursements,
including, but not limited to, interest charges, taxes, brokerage fees and
commissions; expenses of issue, repurchase and redemption of Shares; certain
insurance premiums; applicable fees, interest charges and expenses of third
parties, including the Trust's investment advisers, managers, administrators,
distributors, custodians, transfer agents and fund accountants; fees of pricing,
interest, dividend, credit and other reporting services; costs of membership in
trade associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and its
Series and maintaining its existence; costs of preparing and printing the
prospectuses of the Trust and each Series, statements of additional information
and Shareholder reports and delivering them to Shareholders; expenses of
meetings of Shareholders and proxy solicitations therefor; costs of maintaining
books and accounts; costs of reproduction, stationery and supplies; fees and
expenses of the Trustees; compensation of the Trust's officers and employees and
costs of other personnel performing services for the Trust or any Series; costs
of Trustee meetings; Commission registration fees and related expenses; state or
foreign securities laws registration fees and related expenses; and for such
non-recurring items as may arise, including litigation to which the Trust or a
Series (or a Trustee or officer of the Trust acting as such) is a party, and for
all losses and liabilities by them incurred in administering the Trust. The
Trustees shall have a lien on the assets belonging to the appropriate Series, or
in the case of an expense allocable to more than one Series, on the assets of
each such Series, prior to any rights or interests of the Shareholders thereto,
for the reimbursement to them of such expenses, disbursements, losses and
liabilities.
29
<PAGE>
Section 2. Payment of Expenses by Shareholders. The Trustees shall have the
power, as frequently as they may determine, to cause each Shareholder, or each
Shareholder of any particular Series, to pay directly, in advance or arrears,
for charges of the Trust's custodian or transfer, shareholder servicing or
similar agent, an amount fixed from time to time by the Trustees, by setting off
such charges due from such Shareholder from declared but unpaid dividends owed
such Shareholder and/or by reducing the number of Shares in the account of such
Shareholder by that number of full and/or fractional Shares which represents the
outstanding amount of such charges due from such Shareholder subject to any
limitations applicable under the Internal Revenue Code that must be observed in
order to enable the Series to qualify as a regulated investment company.
ARTICLE IX
MISCELLANEOUS
Section 1. Trust Not a Partnership. This Declaration creates a trust and
not a partnership. No Trustee shall have any power to bind personally either the
Trust's officers or any Shareholder.
Section 2. Trustee Action. The exercise by the Trustees of their powers and
discretion hereunder in good faith and with reasonable care under the
circumstances then prevailing shall be binding upon everyone interested. Subject
to the provisions of Article IV, the Trustees shall not be liable for errors of
judgment or mistakes of fact or law.
Section 3. Record Dates. The Trustees may fix in advance a date up to
ninety (90) days before the date of any Shareholders' meeting or a meeting of
the holders of any Series or Class, or the date for the payment of any dividends
or other distributions, or the date for the allotment of rights, or the date
when any change or conversion or exchange of Shares shall go into effect as a
record date for the determination of the Shareholders or holders of any Series
or Class entitled to notice of, and to vote at, any such meeting, or entitled to
receive payment of such dividend or other distribution, or to receive any such
allotment of rights, or to exercise such rights in respect of any such change,
conversion or exchange of Shares. Without fixing a record date, the Trustees may
for distribution purposes close the register or transfer books for one or more
Series (or Classes) any time prior to the payment of a distribution. Nothing in
this Section shall be construed as precluding the Trustees from setting
different record dates for different Series (or Classes, subject to any
limitations applicable under the Internal Revenue Code that must be observed in
order to enable the Series to qualify as a regulated investment company).
30
<PAGE>
Section 4. Termination of the Trust. (a) This Trust shall have perpetual
existence. Subject to the vote of a majority of the Shares outstanding and
entitled to vote of the Trust or of each Series to be affected, the Trustees may
(i)sell and convey all or substantially all of the assets of all
Series or any affected Series to another Series or to another entity
which is an open-end investment company as defined in the 1940 Act, or
is a series thereof, for adequate consideration, which may include the
assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust or any affected
Series, and which may include shares of or interests in such Series,
entity, or series thereof; or
(ii) at any time sell and convert into money all or substantially all
of the assets of all Series or any affected Series.
Upon making reasonable provision for the payment of all known liabilities of all
Series or any affected Series in either (i) or (ii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds or assets (as
the case may be) ratably among the Shareholders of all Series or any affected
Series; however, the payment to any particular Class of such Series may be
reduced by any fees, expenses or charges allocated to that Class.
(b) The Trustees may take any of the actions specified in subsection (a)
(i) and (ii) above without obtaining the vote of a majority of the Shares
Outstanding and entitled to vote of the Trust or any Series if a majority of the
Trustees determines that the continuation of the Trust or Series is not in the
best interests of the Trust, such Series, or their respective Shareholders as a
result of factors or events adversely affecting the ability of the Trust or such
Series to conduct its business and operations in an economically viable manner.
Such factors and events may include the inability of the Trust or a Series to
maintain its assets at an appropriate size, changes in laws or regulations
governing the Trust or the Series or affecting assets of the type in which the
Trust or Series invests, or economic developments or trends having a significant
adverse impact on the business or operations of the Trust or such Series.
(c) Upon completion of the distribution of the remaining proceeds or assets
pursuant to subsection (a), the Trust or affected Series shall terminate and the
31
<PAGE>
Trustees and the Trust shall be discharged of any and all further liabilities
and duties hereunder with respect thereto and the right, title and interest of
all parties therein shall be canceled and discharged. Upon termination of the
Trust, following completion of winding up of its business, the Trustees shall
cause a certificate of cancellation of the Trust's certificate of trust to be
filed in accordance with the Delaware Act, which certificate of cancellation may
be signed by any one Trustee.
Section 5. Reorganization. (a) Notwithstanding anything else herein, to
change the Trust's form or place of organization the Trustees may, without
Shareholder approval unless such approval is required by the 1940 Act or other
applicable federal law, (i) cause the Trust to merge or consolidate with or into
one or more entities, if the surviving or resulting entity is the Trust or
another open-end management investment company under the 1940 Act, or a series
thereof, that will succeed to or assume the Trust's registration under the 1940
Act, (ii) cause the Shares to be exchanged under or pursuant to any state or
federal statute to the extent permitted by law, or (iii) cause the Trust to
incorporate under the laws of Delaware or any other U.S. jurisdiction. Any
agreement of merger or consolidation or certificate of merger may be signed by a
majority of Trustees and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.
(b) Pursuant to and in accordance with the provisions of Section 3815(f) of
the Delaware Act, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 5 may effect any amendment to the
Declaration or effect the adoption of a new trust instrument of the Trust if it
is the surviving or resulting trust in the merger or consolidation.
(c) The Trustees may create one or more business trusts to which all or any
part of the assets, liabilities, profits or losses of the Trust or any Series or
Class thereof may be transferred and may provide for the conversion of Shares in
the Trust or any Series or Class thereof into beneficial interests in any such
newly created trust or trusts or any series or classes thereof.
Section 6. Declaration of Trust. The original or a copy of this Declaration
of Trust and of each amendment hereto or Declaration of Trust supplemental shall
32
<PAGE>
be kept at the office of the Trust where it may be inspected by any Shareholder.
Anyone dealing with the Trust may rely on a certificate by a Trustee or an
officer of the Trust as to the authenticity of the Declaration of Trust or any
such amendments or supplements and as to any matters in connection with the
Trust. The masculine gender herein shall include the feminine and neuter
genders. Headings herein are for convenience only and shall not affect the
construction of this Declaration of Trust. This Declaration of Trust may be
executed in any number of counterparts, each of which shall be deemed an
original.
Section 7. Applicable Law. This Declaration and the Trust created hereunder
are governed by and construed and administered according to the Delaware Act and
the applicable laws of the State of Delaware; provided, however, that there
shall not be applicable to the Trust, the Trustees or this Declaration of Trust
(a) the provisions of Section 3540 of Title 12 of the Delaware Code, or (b) any
provisions of the laws (statutory or common) of the State of Delaware (other
than the Delaware Act) pertaining to trusts which relate to or regulate (i) the
filing with any court or governmental body or agency of trustee accounts or
schedules of trustee fees and charges, (ii) affirmative requirements to post
bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding of trust assets, or (vii) the establishment of fiduciary or
other standards of responsibilities or limitations on the acts or powers of
trustees, which are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees set forth or referenced in this
Declaration. The Trust shall be of the type commonly called a Delaware business
trust, and, without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust under Delaware law. The
Trust specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts under
the Delaware Act, and the absence of a specific reference herein to any such
power, privilege or action shall not imply that the Trust may not exercise such
power or privilege or take such actions.
Section 8. Amendments. The Trustees may, without any Shareholder vote,
33
<PAGE>
amend or otherwise supplement this Declaration by making an amendment, a
Declaration of Trust supplemental hereto or an amended and restated trust
instrument; provided, that Shareholders shall have the right to vote on any
amendment (a) which would affect the voting rights of Shareholders granted in
Article VII, Section l, (b) to this Section 8, (c) required to be approved by
Shareholders by law or by the Trust's registration statement(s) filed with the
Commission, and (d) submitted to them by the Trustees in their discretion. Any
amendment submitted to Shareholders which the Trustees determine would affect
the Shareholders of any Series shall be authorized by vote of the Shareholders
of such Series and no vote shall be required of Shareholders of a Series not
affected. Notwithstanding anything else herein, any amendment to Article IV
which would have the effect of reducing the indemnification and other rights
provided thereby to Trustees, officers, employees, and agents of the Trust or to
Shareholders or former Shareholders, and any repeal or amendment of this
sentence shall each require the affirmative vote of the holders of two-thirds of
the Outstanding Shares of the Trust entitled to vote thereon.
Section 9. Derivative Actions. In addition to the requirements set forth in
Section 3816 of the Delaware Act, a Shareholder may bring a derivative action on
behalf of the Trust only if the following conditions are met:
(a) Shareholders eligible to bring such derivative action under the
Delaware Act who hold at least 10% of the Outstanding Shares of the Trust, or
10% of the Outstanding Shares of the Series or Class to which such action
relates, shall join in the request for the Trustees to commence such action; and
(b) the Trustees must be afforded a reasonable amount of time to consider
such shareholder request and to investigate the basis of such claim. The
Trustees shall be entitled to retain counsel or other advisers in considering
the merits of the request and shall require an undertaking by the Shareholders
making such request to reimburse the Trust for the expense of any such advisers
in the event that the Trustees determine not to bring such action.
Section 10. Fiscal Year. The fiscal year of the Trust shall end on a
specified date as set forth in the By-laws. The Trustees may change the fiscal
year of the Trust without Shareholder approval.
34
<PAGE>
Section 11. Severability. The provisions of this Declaration are severable.
If the Trustees determine, with the advice of counsel, that any provision hereof
conflicts with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Declaration; provided, however, that such determination shall not affect any of
the remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination. If any provision hereof
shall be held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision only in such jurisdiction
and shall not affect any other provision of this Declaration.
35
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
date first written above.
/s/ JOHN F. COGAN, JR.
John F. Cogan, Jr.,
as Trustee and not individually
975 Memorial Drive, #802
Cambridge, Massachusetts 02138
/s/ RICHARD H. EGDAHL
Richard H. Egdahl, M.D.
as Trustee and not individually
53 Bay State Road
Boston, Massachusetts 02215
/s/ MARGARET B.W. GRAHAM
Margaret B.W. Graham,
as Trustee and not individually
776 Garland Drive
Palo Alto, California 94303
/s/ JOHN W. KENDRICK
John W. Kendrick,
as Trustee and not individually
6363 Waterway Drive
Falls Church, Virginia 22046
/s/ MARGUERITE A. PIRET
Marguerite A. Piret,
as Trustee and not individually
162 Washington Street
Belmont, Massachusetts 02178
/s/ DAVID D. TRIPPLE
David D. Tripple,
as Trustee and not individually
6 Woodbine Road
Belmont, Massachusetts 02178
/s/ STEPHEN K. WEST
Stephen K. West,
as Trustee and not individually
125 Broad Street
New York, New York 10004
/s/ JOHN WINTHROP
John Winthrop
as Trustee and not individually
52 King Street
Charleston, South Carolina 29401
36
PIONEER INCOME FUND
Establishment and Designation
of
Class A Shares and Class B Shares
of Beneficial Interest of
Pioneer Income Fund
The undersigned, being a majority of the Trustees of Pioneer Income Fund, a
Delaware business trust (the "Fund"), acting pursuant to Article V, Section 1 of
the Agreement and Declaration of Trust dated June 16, 1994 of the Fund (the
"Declaration"), do hereby divide the shares of beneficial interest of Pioneer
Income Fund (the "Shares") to create two classes of Shares of the Fund as
follows:
1. The two classes of Shares established and designated hereby are "Class
A Shares" and "Class B Shares," respectively.
2. Class A Shares and Class B Shares shall each be entitled to all of the
rights and preferences accorded to Shares under the Declaration.
3. The purchase price of Class A Shares and of Class B Shares, the method
of determining the net asset value of Class A Shares and of Class B
Shares, and the relative dividend rights of holders of Class A Shares
and of holders of Class B Shares shall be established by the Trustees
of the Fund in accordance with the provisions of the Declaration of
Trust and shall be set forth in the Fund's Registration Statement on
Form N-1A under the Securities Act of 1933 and/or the Investment
Company Act of 1940, as amended and as in effect at the time of
issuing such Shares.
4. The Trustees, acting in their sole discretion, may determine that any
Shares of the Fund issued are Class A Shares, Class B Shares or Shares
of any other class of the Fund hereinafter established and designated
by the Trustees.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument this 10th
day of March, 1995.
/s/John F. Cogan, Jr. /s/Marguerite A. Piret
John F. Cogan, Jr. Marguerite A. Piret
as Trustee and not individually as Trustee and not individually
975 Memorial Drive, #802 162 Washington Street
Cambridge, MA 02138 Belmont, MA 02178
/s/Richard H. Egdahl, M.D. /s/David D. Tripple
Richard H. Egdahl, M.D. David D. Tripple
as Trustee and not individually as Trustee and not individually
Health Policy Institute 6 Woodbine Road
53 Bay State Road Belmont, MA 02178
Boston, MA 02215
/s/Margaret B.W. Graham /s/Stephen K. West
Margaret B.W. Graham Stephen K. West, Esq.
as Trustee and not individually as Trustee and not individually
The Keep Sullivan & Cromwell
P.O. Box 110 125 Broad Street
Little Deer Isle, ME 04650 New York, NY 10004
/s/John W. Kendrick /s/John Winthrop
John W. Kendrick John Winthrop
as Trustee and not individually as Trustee and not individually
6363 Waterway Drive One North Adgers Wharf
Falls Church, VA 22044 Charleston, SC 29401
BY-LAWS
OF
PIONEER INCOME FUND
ARTICLE I
DEFINITIONS
All capitalized terms have the respective meanings given them in the
Declaration of Trust of Pioneer Income Fund dated June 16, 1994, as amended or
restated from time to time.
ARTICLE II
OFFICES
Section 1. Principal Office. Until changed by the Trustees, the principal
office of the Trust shall be in Boston, Massachusetts.
Section 2. Other Offices. The Trust may have offices in such other places
without as well as within the State of Delaware as the Trustees may from time to
time determine.
Section 3. Registered Office and Registered Agent. The Board of Trustees
shall establish a registered office in the State of Delaware and shall appoint
as the Trust's registered agent for service of process in the State of Delaware
an individual resident of the State of Delaware or a Delaware corporation or a
corporation authorized to transact business in the State of Delaware; in each
case the business office of such registered agent for service of process shall
be identical with the registered Delaware office of the Trust.
ARTICLE III
SHAREHOLDERS
Section 1. Meetings. Meetings of the Shareholders of the Trust or a Series
or Class thereof shall be held as provided in the Declaration of Trust at such
place within or without the State of Delaware as the Trustees shall designate.
<PAGE>
The holders of one-third of the Outstanding Shares of the Trust or a Series or
Class thereof present in person or by proxy and entitled to vote shall
constitute a quorum at any meeting of the Shareholders of the Trust or a Series
or Class thereof.
Section 2. Notice of Meetings. Notice of all meetings of the Shareholders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail or telegraphic or electronic means to each Shareholder at his
address as recorded on the register of the Trust mailed at least (10) days and
not more than ninety (90) days before the meeting, provided, however, that
notice of a meeting need not be given to a Shareholder to whom such notice need
not be given under the proxy rules of the Commission under the 1940 Act and the
Securities Exchange Act of 1934, as amended. Only the business stated in the
notice of the meeting shall be considered at such meeting. Any adjourned meeting
may be held as adjourned without further notice. No notice need be given to any
Shareholder who shall have failed to inform the Trust of his current address or
if a written waiver of notice, executed before or after the meeting by the
Shareholder or his attorney thereunto authorized, is filed with the records of
the meeting.
Section 3. Record Date for Meetings and Other Purposes. For the purpose of
determining the Shareholders who are entitled to notice of and to vote at any
meeting, or to participate in any distribution, or for the purpose of any other
action, the Trustees may from time to time close the transfer books for such
period, not exceeding thirty (30) days, as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date not more than
ninety (90) days prior to the date of any meeting of Shareholders or
distribution or other action as a record date for the determination of the
persons to be treated as Shareholders of record for such purposes, except for
dividend payments which shall be governed by the Declaration of Trust.
Section 4. Proxies. At any meeting of Shareholders, any holder of Shares
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
2
<PAGE>
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken. A
proxy shall be deemed signed if the shareholder's name is placed on the proxy
(whether by manual signature, typewriting, telegraphic transmission, facsimile,
other electronic means or otherwise) by the shareholder or the shareholder's
attorney-in-fact. Proxies may be given by any electronic or telecommunication
device except as otherwise provided in the Declaration of Trust. Proxies may be
solicited in the name of one or more Trustees or one or more of the officers of
the Trust. Only Shareholders of record shall be entitled to vote. Each whole
share shall be entitled to one vote as to any matter on which it is entitled by
the Declaration of Trust to vote and fractional shares shall be entitled to a
proportionate fractional vote. When any Share is held jointly by several
persons, any one of them may vote at any meeting in person or by proxy in
respect of such Share, but if more than one of them shall be present at such
meeting in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in respect
of such Share. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise,
and the burden of proving invalidity shall rest on the challenger. If the holder
of any such share is a minor or a person of unsound mind, and subject to
guardianship or the legal control of any other person as regards the charge or
management of such Share, he may vote by his guardian or such other person
appointed or having such control, and such vote may be given in person or by
proxy.
Section 5. Abstentions and Broker Non-Votes. Outstanding Shares represented
in person or by proxy (including Shares which abstain or do not vote with
respect to one or more of any proposals presented for Shareholder approval) will
be counted for purposes of determining whether a quorum is present at a meeting.
Abstentions will be treated as Shares that are present and entitled to vote for
purposes of determining the number of Shares that are present and entitled to
vote with respect to any particular proposal, but will not be counted as a vote
in favor of such proposal. If a broker or nominee holding Shares in "street
3
<PAGE>
name" indicates on the proxy that it does not have discretionary authority to
vote as to a particular proposal, those Shares will not be considered as present
and entitled to vote with respect to such proposal.
Section 6. Inspection of Records. The records of the Trust shall be open to
inspection by Shareholders to the same extent as is permitted shareholders of a
Delaware business corporation.
Section 7. Action without Meeting. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Outstanding Shares
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law) consent to the action in writing and the written consents are
filed with the records of the meetings of Shareholders. Such consents shall be
treated for all purposes as a vote taken at a meeting of Shareholders.
ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their discretion
provide for regular or stated meetings of the Trustees. Notice of regular or
stated meetings need not be given. Meetings of the Trustees other than regular
or stated meetings shall be held whenever called by the President, the Chairman
or by any one of the Trustees, at the time being in office. Notice of the time
and place of each meeting other than regular or stated meetings shall be given
by the Secretary or an Assistant Secretary or by the officer or Trustee calling
the meeting and shall be mailed to each Trustee at least two days before the
meeting, or shall be given by telephone, cable, wireless, facsimile or other
electronic mechanism to each Trustee at his business address, or personally
delivered to him at least one day before the meeting. Such notice may, however,
be waived by any Trustee. Notice of a meeting need not be given to any Trustee
if a written waiver of notice, executed by him before or after the meeting, is
filed with the records of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him. A notice or waiver of notice need not specify the purpose of any meeting.
4
<PAGE>
The Trustees may meet by means of a telephone conference circuit or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall be deemed to have been held at a place designated by the Trustees at the
meeting. Participation in a telephone conference meeting shall constitute
presence in person at such meeting. Any action required or permitted to be taken
at any meeting of the Trustees may be taken by the Trustees without a meeting if
a majority of the Trustees consent to the action in writing and the written
consents are filed with the records of the Trustees' meetings.
Such consents shall be treated as a vote for all purposes.
Section 2. Quorum and Manner of Acting. A majority of the Trustees shall be
present in person at any regular or special meeting of the Trustees in order to
constitute a quorum for the transaction of business at such meeting and (except
as otherwise required by law, the Declaration of Trust or these By-laws) the act
of a majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
a quorum shall be present. Notice of an adjourned meeting need not be given.
ARTICLE V
COMMITTEES
Section 1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three (3) members to hold office at the
pleasure of the Trustees, which shall have the power to conduct the current and
ordinary business of the Trust while the Trustees are not in session, including
the purchase and sale of securities and the designation of securities to be
delivered upon redemption of Shares of the Trust or a Series thereof, and such
other powers of the Trustees as the Trustees may delegate to them, from time to
time, except those powers which by law, the Declaration of Trust or these
By-laws they are prohibited from delegating. The Trustees may also elect from
5
<PAGE>
their own number other Committees from time to time; the number composing such
Committees, the powers conferred upon the same (subject to the same limitations
as with respect to the Executive Committee) and the term of membership on such
Committees to be determined by the Trustees. The Trustees may designate a
chairman of any such Committee. In the absence of such designation the Committee
may elect its own Chairman.
Section 2. Meetings, Quorum and Manner of Acting. The Trustees may (1)
provide for stated meetings of any Committee, (2) specify the manner of calling
and notice required for special meetings of any Committee, (3) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (4) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (5) authorize the members of a Committee to meet by means
of a telephone conference circuit.
The Executive Committee shall keep regular minutes of its meetings and
records of decisions taken without a meeting and cause them to be recorded in a
book designated for that purpose and kept in the office of the Trust.
ARTICLE VI
OFFICERS
Section 1. General Provisions. The officers of the Trust shall be a
President, a Treasurer and a Secretary, who shall be elected by the Trustees.
The Trustees may elect or appoint such other officers or agents as the business
of the Trust may require, including one or more Vice Presidents, one or more
Assistant Secretaries, and one or more Assistant Treasurers. The Trustees may
delegate to any officer or committee the power to appoint any subordinate
officers or agents.
Section 2. Term of Office and Qualifications. Except as otherwise provided
by law, the Declaration of Trust or these By-laws, the President, the Treasurer,
the Secretary and any other officer shall each hold office at the pleasure of
6
<PAGE>
the Board of Trustees or until his successor shall have been duly elected and
qualified. The Secretary and the Treasurer may be the same person. A Vice
President and the Treasurer or a Vice President and the Secretary may be the
same person, but the offices of Vice President, Secretary and Treasurer shall
not be held by the same person. The President shall hold no other office. Except
as above provided, any two offices may be held by the same person. Any officer
may be but none need be a Trustee or Shareholder.
Section 3. Removal. The Trustees, at any regular or special meeting of the
Trustees, may remove any officer with or without cause, by a vote of a majority
of the Trustees then in office. Any officer or agent appointed by an officer or
committee may be removed with or without cause by such appointing officer or
committee.
Section 4. Powers and Duties of the Chairman. The Trustees may, but need
not, appoint from among their number a Chairman. When present he shall preside
at the meetings of the Shareholders and of the Trustees. He may call meetings of
the Trustees and of any committee thereof whenever he deems it necessary. He
shall be an executive officer of the Trust and shall have, with the President,
general supervision over the business and policies of the Trust, subject to the
limitations imposed upon the President, as provided in Section 5 of this Article
VI.
Section 5. Powers and Duties of the President. The President may call
meetings of the Trustees and of any Committee thereof when he deems it necessary
and shall preside at all meetings of the Shareholders. Subject to the control of
the Trustees and to the control of any Committees of the Trustees, within their
respective spheres, as provided by the Trustees, he shall at all times exercise
a general supervision and direction over the affairs of the Trust. He shall have
the power to employ attorneys and counsel for the Trust or any Series or Class
thereof and to employ such subordinate officers, agents, clerks and employees as
he may find necessary to transact the business of the Trust or any Series or
Class thereof. He shall also have the power to grant, issue, execute or sign
such powers of attorney, proxies or other documents as may be deemed advisable
7
<PAGE>
or necessary in furtherance of the interests of the Trust or any Series thereof.
The President shall have such other powers and duties, as from time to time may
be conferred upon or assigned to him by the Trustees.
Section 6. Powers and Duties of Vice Presidents. In the absence or
disability of the President, the Vice President or, if there be more than one
Vice President, any Vice President designated by the Trustees, shall perform all
the duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees and the President.
Section 7. Powers and Duties of the Treasurer. The Treasurer shall be the
principal financial and accounting officer of the Trust. He shall deliver all
funds of the Trust or any Series or Class thereof which may come into his hands
to such Custodian as the Trustees may employ. He shall render a statement of
condition of the finances of the Trust or any Series or Class thereof to the
Trustees as often as they shall require the same and he shall in general perform
all the duties incident to the office of a Treasurer and such other duties as
from time to time may be assigned to him by the Trustees. The Treasurer shall
give a bond for the faithful discharge of his duties, if required so to do by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
Section 8. Powers and Duties of the Secretary. The Secretary shall keep the
minutes of all meetings of the Trustees and of the Shareholders in proper books
provided for that purpose; he shall have custody of the seal of the Trust; he
shall have charge of the Share transfer books, lists and records unless the same
are in the charge of a transfer agent. He shall attend to the giving and serving
of all notices by the Trust in accordance with the provisions of these By-laws
and as required by law; and subject to these By-laws, he shall in general
perform all duties incident to the office of Secretary and such other duties as
from time to time may be assigned to him by the Trustees.
Section 9. Powers and Duties of Assistant Officers. In the absence or
disability of the Treasurer, any officer designated by the Trustees shall
perform all the duties, and may exercise any of the powers, of the Treasurer.
8
<PAGE>
Each officer shall perform such other duties as from time to time may be
assigned to him by the Trustees. Each officer performing the duties and
exercising the powers of the Treasurer, if any, and any Assistant Treasurer,
shall give a bond for the faithful discharge of his duties, if required so to do
by the Trustees, in such sum and with such surety or sureties as the Trustees
shall require.
Section 10. Powers and Duties of Assistant Secretaries. In the absence or
disability of the Secretary, any Assistant Secretary designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Secretary. Each Assistant Secretary shall perform such other duties as from time
to time may be assigned to him by the Trustees.
Section 11. Compensation of Officers and Trustees and Members of the
Advisory Board. Subject to any applicable provisions of the Declaration of
Trust, the compensation of the officers and Trustees and members of an advisory
board shall be fixed from time to time by the Trustees or, in the case of
officers, by any Committee or officer upon whom such power may be conferred by
the Trustees. No officer shall be prevented from receiving such compensation as
such officer by reason of the fact that he is also a Trustee.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Trust shall begin on the first day of January in
each year and shall end on the last day of December in each year, provided,
however, that the Trustees may from time to time change the fiscal year. The
taxable year of each Series of the Trust shall be as determined by the Trustees
from time to time.
9
<PAGE>
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall have
such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE IX
SUFFICIENCY AND WAIVERS OF NOTICE
Whenever any notice whatever is required to be given by law, the
Declaration of Trust or these By-laws, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. A notice shall be deemed to
have been sent by mail, telegraph, cable, wireless, facsimile or other
electronic means for the purposes of these By-laws when it has been delivered to
a representative of any company holding itself out as capable of sending notice
by such means with instructions that it be so sent.
ARTICLE X
AMENDMENTS
These By-laws, or any of them, may be altered, amended or repealed, or new
By-laws may be adopted by (a) vote of a majority of the Outstanding Shares
voting in person or by proxy at a meeting of Shareholders and entitled to vote
or (b) by the Trustees, provided, however, that no By-law may be amended,
adopted or repealed by the Trustees if such amendment, adoption or repeal
requires, pursuant to law, the Declaration of Trust or these By-laws, a vote of
the Shareholders.
END OF BY-LAWS
MANAGEMENT CONTRACT
THIS AGREEMENT dated this 30th day of June, 1994 between Pioneer
Income Fund, a Delaware business trust (the "Fund"), and Pioneering Management
Corporation, a Delaware corporation, (the "Manager").
W I T N E S S E T H
WHEREAS, the Fund 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 with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Registration
Statement") for the purpose of registering its shares for public offering under
the Securities Act of 1933, as amended,
WHEREAS, the parties hereto deem it mutually advantageous that the
Manager should be engaged, subject to the supervision of the Fund's Board of
Trustees and officers, to manage the Fund,
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, the Fund and the Manager do hereby agree as follows:
1. (a) The Manager will regularly provide the Fund with
investment research, advice and supervision and will furnish continuously an
investment program for the Fund consistent with the investment objectives and
policies of the Fund. The Manager will determine from time to time what
securities shall be purchased for the Fund, what securities shall be held or
sold by the Fund and what portion of the Fund's assets shall be held uninvested
as cash, subject always to the provisions of the Fund's Agreement and
Declaration of Trust, By-Laws and its registration statements under the 1940 Act
and under the Securities Act of 1933 covering the Fund's shares, as filed with
the Securities and Exchange Commission, and to the investment objectives,
policies and restrictions of the Fund, as each of the same shall be from time to
time in effect, and subject, further, to such policies and instructions as the
Board of Trustees of the Fund may from time to time establish. To carry out such
determinations, the Manager will exercise full discretion and act for the Fund
in the same manner and with the same force and effect as the Fund itself might
or could do with respect to purchases, sales or other transactions, as well as
with respect to all other things necessary or incidental to the furtherance or
conduct of such purchases, sales or other transactions.
(b) The Manager will, to the extent reasonably required in
the conduct of the business of the Fund and upon the Fund's request, furnish to
the Fund research, statistical and advisory reports upon the industries,
businesses, corporations or securities as to which such requests shall be made,
whether or not the Fund shall at the time have any investment in such
industries, businesses, corporations or securities. The Manager will use its
best efforts in the preparation of such reports and will endeavor to consult the
persons and sources believed by it to have information available with respect to
such industries, businesses, corporations or entities.
(c) The Manager will maintain all books and records with
respect to the Fund's securities transactions required by
sub-paragraphs(b)(5),(6),(9) and (10) and paragraph (f) of Rule 31a-1 under the
1940 Act (other than those records being maintained by the custodian or transfer
agent appointed by the Fund) and preserve such records for the periods
prescribed therefor by Rule 31a-2 of the 1940 Act. The Manager will also provide
to the Board of Trustees such periodic and special reports as the Board may
reasonably request.
2. (a) Except as otherwise provided herein, the Manager, at its
own expense, shall furnish to the Fund office space in the offices of the
Manager or in such other place as may be agreed upon from time to time, and all
necessary office facilities, equipment and personnel for managing the Fund's
affairs and investments, and shall arrange, if desired by the Fund, for members
of the Manager's organization to serve as officers or agents of the Fund.
(b) The Manager shall pay directly or reimburse the Fund
for: (i) the compensation (if any) of the Trustees who are affiliated with, or
interested persons of, the Manager and all officers of the Fund as such; and
<PAGE>
(ii) all expenses not hereinafter specifically assumed by the Fund where such
expenses are incurred by the Manager or by the Fund in connection with the
management of the affairs of, and the investment and reinvestment of the assets
of, the Fund.
(c) The Fund shall assume and shall pay: (i) charges and
expenses for fund accounting, pricing and appraisal services and related
overhead, including, to the extent such services are performed by personnel of
the Manager or its affiliates, office space and facilities and personnel
compensation, training and benefits; (ii) the charges and expenses of auditors;
(iii) the charges and expenses of any custodian, transfer agent, plan agent,
dividend disbursing agent and registrar appointed by the Fund with respect to
the Fund; (iv) issue and transfer taxes, chargeable to the Fund in connection
with securities transactions to which the Fund is a party; (v) insurance
premiums, interest charges, dues and fees for membership in trade associations
and all taxes and corporate fees payable by the Fund to federal, state or other
governmental agencies; (vi) fees and expenses involved in registering and
maintaining registrations of the Fund and/or its shares with the Commission,
state or blue sky securities agencies and foreign countries, including the
preparation of Prospectuses and Statements of Additional Information for filing
with the Commission; (vii) all expenses of shareholders' and Trustees' meetings
and of preparing, printing and distributing prospectuses, notices, proxy
statements and all reports to shareholders and to governmental agencies; (viii)
charges and expenses of legal counsel to the Fund and the Trustees; (ix)
distribution fees paid by the Fund in accordance with Rule 12b-1 promulgated by
the Commission pursuant to the 1940 Act; (x) compensation of those Trustees of
the Fund who are not affiliated with or interested persons of the Manager, the
Fund (other than as Trustees), The Pioneer Group, Inc. or Pioneer Funds
Distributor, Inc.; (xi) the cost of preparing and printing share certificates;
and (xii) interest on borrowed money, if any.
(d) In addition to the expenses described in Section 2(c)
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.
3. (a) The Fund shall pay to the Manager, as compensation for
the Manager's services hereunder, a fee at the rates per annum of the Fund's
average daily net assets set forth in Schedule A hereto; provided, however, that
until November 30, 1995, the fee payable by the Fund shall not exceed the fee
determined at the rates per annum of the Fund's average daily net assets set
forth in Schedule B hereto. The agreement set forth in the proviso to the
preceding sentence shall not survive the merger, consolidation or other business
combination of the Fund with one or more other entities unless the Fund is the
surviving entity. The management fee payable hereunder shall be computed daily
and paid monthly in arrears. In the event of termination of this Agreement, the
fee provided in this Section shall be computed on the basis of the period ending
on the last business day on which this Agreement is in effect subject to a pro
rata adjustment based on the number of days elapsed in the current month as a
percentage of the total number of days in such month.
(b) If the operating expenses of the Fund in any year
exceed the limits set by state securities laws or regulations in states in which
shares of the Fund are sold, the amount payable to the Manager under subsection
(a) above will be reduced (but not below $0), and the Manager shall make other
arrangements concerning expenses but, in each instance, only as and to the
extent required by such laws or regulation. If amounts have already been
advanced to the Manager under this Agreement, the Manager will return such
amounts to the Fund to the extent required by the preceding sentence.
(c) In addition to the foregoing, the Manager may from time
to time agree not to impose all or a portion of its fee otherwise payable
hereunder (in advance of the time such fee or a portion thereof would otherwise
accrue) and/or undertake to pay or reimburse the Fund for all or a portion of
its expenses not otherwise required to be borne or reimbursed by the Manager.
Any such fee reduction or undertaking may be discontinued or modified by the
Manager at any time.
4. The Manager 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 security on the
recommendation of the Manager, whether or not such recommendation shall have
been based upon its own investigation and research or upon investigation and
2
<PAGE>
research made by any other individual, firm or corporation, but nothing
contained herein will be construed to protect the Manager against any liability
to the Fund or its shareholders by reason of willful 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 this Agreement.
5. (a) Nothing in this Agreement will in any way limit or
restrict the Manager or any of its officers, directors, or employees from
buying, selling or trading in any securities for its or their own accounts or
other accounts. The Manager may act as an investment advisor to any other
person, firm or corporation, and may perform management and any other services
for any other person, association, corporation, firm or other entity pursuant to
any contract or otherwise, and take any action or do any thing in connection
therewith or related thereto; and no such performance of management or other
services or taking of any such action or doing of any such thing shall be in any
manner restricted or otherwise affected by any aspect of any relationship of the
Manager to or with the Fund or deemed to violate or give rise to any duty or
obligation of the Manager to the Fund except as otherwise imposed by law. The
Fund recognizes that Manager, in effecting transactions for its various
accounts, may not always be able to take or liquidate investment positions in
the same security at the same time and at the same price.
(b) In connection with purchases or sales of fund
securities for the account of the Fund, neither the Manager nor any of its
Trustees, officers or employees will act as a principal or agent or receive any
commission except as permitted by the 1940 Act. The Manager shall arrange for
the placing of all orders for the purchase and sale of fund securities for the
Fund's account with brokers or dealers selected by the Manager. In the selection
of such brokers or dealers and the placing of such orders, the Manager is
directed at all times to seek for the Fund the most favorable execution and net
price available except as described herein. It is also understood that it is
desirable for the Fund that the Manager have access to supplemental investment
and market research and security and economic analyses provided by brokers who
may execute brokerage transactions at a higher cost to the Fund than may result
when allocating brokerage to other brokers on the basis of seeking the most
favorable price and efficient execution. Therefore, the Manager is authorized to
place orders for the purchase and sale of securities for the Fund with such
brokers, subject to review by the Fund's Trustees from time to time with respect
to the extent and continuation of this practice. It is understood that the
services provided by such brokers may be useful to the Manager in connection
with its or its affiliates services to other clients.
(c) On occasions when the Manager deems the purchase or
sale of a security to be in the best interest of the Fund as well as other
clients, the Manager, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be sold or purchased in order to
obtain the best execution and lower brokerage commissions, if any. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Manager in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such clients.
6. This Agreement shall become effective on the date hereof and
shall remain in force until November 30, 1995 and from year to year thereafter,
but only so long as its continuance is approved annually by a vote of the
Trustees of the Fund voting in person, including a majority of its Trustees who
are not parties to this Agreement or interested persons (as the term "interested
persons" is defined in the 1940 Act) of any such parties, at a meeting of
Trustees called for the purpose of voting on such approval or by a vote of a
"majority of the outstanding voting securities" (as defined in the 1940 Act) of
the Fund, subject to the right of the Fund and the Manager to terminate this
contract as provided in Section 7 hereof.
7. Either party hereto may, without penalty, terminate this
Agreement by vote of its Board of Trustees or by vote of a "majority of its
outstanding voting securities" (as defined in the 1940 Act) of the Fund and the
giving of 60 days' written notice to the other party.
8. This Agreement shall automatically terminate in the event of
its assignment. For purposes of this Agreement, the term "assignment" shall have
the meaning given it by Section 2(a)(4) of the 1940 Act.
3
<PAGE>
9. The Fund agrees that in the event that neither the Manager
nor any of its affiliates acts as an investment adviser to the Fund, the name of
the Fund, and any fund thereof, will be changed to one that does not contain the
name "Pioneer" or otherwise suggest an affiliation with the Manager.
10. The Manager is an independent contractor and not an employee
of the Fund for any purpose. If any occasion should arise in which the Manager
gives any advice to its clients concerning the shares of the Fund, the Manager
will act solely as investment counsel for such clients and not in any way on
behalf of the Fund or Fund.
11. This Agreement states the entire agreement of the parties
hereto, and is intended to be the complete and exclusive statement of the terms
hereof. It may not be added to or changed orally, and may not be modified or
rescinded except by a writing signed by the parties hereto and in accordance
with the 1940 Act, when applicable.
12. This Agreement and all performance hereunder shall be
governed by the laws of The Commonwealth of Massachusetts, which apply to
contracts made and to be performed in The Commonwealth of Massachusetts.
13. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms or provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
14. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers and their seal to be hereto
affixed as of the day and year first above written.
ATTEST: PIONEER INCOME FUND
/s/ JOSEPH P. BARRI /s/ JOHN F. COGAN, JR.
Joseph P. Barri John F. Cogan, Jr
Secretary President
ATTEST: PIONEERING MANAGEMENT CORPORATION
/s/ JOSEPH P. BARRI /s/ ROBERT L. BUTLER
Joseph P. Barri David D. Tripple
Secretary President
4
UNDERWRITING AGREEMENT
THIS UNDERWRITING AGREEMENT, dated this 30th day of June, 1994 by and
between Pioneer Income Fund, a Delaware business trust (the "Fund"), and Pioneer
Funds Distributor, Inc. (the "Underwriter").
W I T N E S S E T H
WHEREAS, the Fund 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, a corporation organized under the laws of
the Commonwealth of Massachusetts in 1989, 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 Fund's shares of beneficial interest; and
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, Fund and the Underwriter hereby agree as follows:
1. The Fund hereby grants to the Underwriter the right and option to
purchase shares of beneficial interest of the Fund (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 Fund 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 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 Board of Trustees of the Fund and as further
outlined in the Fund's Prospectus. The offering price shall be subject to any
<PAGE>
provisions set forth in the Prospectus from time to time with respect thereto,
including, without limitation, rights of accumulation, letters of intention,
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, all or a portion of applicable sales charges may 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 Board of
Trustees of the Fund voting in person, including a majority of the Trustees who
are not "interested persons" of the Fund and who have no direct or indirect
financial interest in the operation of the Underwriting Agreement (the
"Qualified Trustees"), at a meeting of the Board 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 Fund on 60 days' written notice to
the Underwriter, or by the Underwriter upon similar notice to the Fund. 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. Finally, this Agreement may also be
terminated by the Fund 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
sold by the Underwriter during such period.
5. The compensation for the services of the Underwriter as a
principal underwriter under this Agreement shall be (i) that part of the sales
charge which is retained by the Underwriter after allowance of discounts to
dealers as set forth 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 for the Fund which may be in effect. Nothing
contained herein shall relieve the Fund of any obligation under its management
contract or any other contract with any affiliate of the Underwriter.
6. This Agreement shall automatically terminate in the event of its
assignment (as that term is defined in the 1940 Act).
2
<PAGE>
7. In the event of any dispute between the parties, this Agreement
shall be construed according to the laws of The Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers and their seal to be hereto
affixed as of day and year first above written.
ATTEST: PIONEER INCOME FUND
/s/ JOSEPH P. BARRI /s/ JOHN F. COGAN, JR.
Joseph P. Barri John F. Cogan, Jr.
Secretary President
ATTEST: PIONEER FUNDS DISTRIBUTOR, INC.
/s/ JOSEPH P. BARRI /s/ ROBERT L. BUTLER
Joseph P. Barri Robert L. Butler
Clerk President
3
AGREEMENT BETWEEN
BROWN BROTHERS HARRIMAN & CO.
AND
PIONEER INCOME FUND, INC.
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made this 1st day of December 1993 between PIONEER INCOME FUND, INC.
(the "Fund") and Brown Brothers Harriman & Co. (the "Custodian");
WITNESSETH: That in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
1. Employment of Custodian: The Fund hereby employs and appoints the Custodian
as a custodian for the term and subject to the provisions of this Agreement. The
Custodian shall not be under any duty or obligation to require the Fund to
deliver to it any securities or funds owned by the Fund and shall have no
responsibility or liability for or on account of securities or funds not so
delivered. The Fund will deposit with the Custodian copies of the Declaration of
Trust or Certificate of Incorporation and By-Laws (or comparable documents) of
the Fund and all amendments thereto, and copies of such votes and other
proceedings of the Fund as may be necessary for or convenient to the Custodian
in the performance of its duties.
2. Powers and Duties of the Custodian with respect to Property of the Fund held
by the Custodian: Except for securities and funds held by any Subcustodians or
held by the Custodian through a non-U.S. securities depository appointed
pursuant to the provisions of Section 3 hereof, the Custodian shall have and
perform the following powers and duties:
A. Safekeeping - To keep safely the securities and other assets of the Fund that
have been delivered to the Custodian and, on behalf of the Fund, from time to
time to receive delivery of securities for safekeeping.
B. Manner of Holding Securities - To hold securities of the Fund (1) by physical
possession of the share certificates or other instruments representing such
securities in registered or bearer form, or (2) in book-entry form by a
Securities System (as said term is defined in Section 2U).
C. Registered Name; Nominee - To hold registered securities of the Fund (1) in
the name or any nominee name of the Custodian or the Fund, or in the name or any
nominee name of any Agent appointed pursuant to Section 6F, or (2) in street
certificate form, so-called, and in any case with or without any indication of
fiduciary capacity, provided that securities are held in an account of the
Custodian containing only assets of the Fund or only assets held as fiduciary or
custodian for customers.
<PAGE>
D. Purchases - Upon receipt of Proper Instructions, as defined in Section X on
Page 18, insofar as funds are available for the purpose, to pay for and receive
securities purchased for the account of the Fund, payment being made only upon
receipt of the securities (1) by the Custodian, or (2) by a clearing corporation
of a national securities exchange of which the Custodian is a member, or (3) by
a Securities System. However, (i) in the case of repurchase agreements entered
into by the Fund, the Custodian (as well as an Agent) may release funds to a
Securities System or to a Subcustodian prior to the receipt of advice from the
Securities System or Subcustodian that the securities underlying such repurchase
agreement have been transferred by book entry into the Account (as defined in
Section 2U) of the Custodian (or such Agent) maintained with such Securities
System or Subcustodian, so long as such payment instructions to the Securities
System or Subcustodian include a requirement that delivery is only against
payment for securities, (ii) in the case of foreign exchange contracts, options,
time deposits, call account deposits, currency deposits, and other deposits,
contracts or options pursuant to Sections 2J, 2L, 2M and 2N, the Custodian may
make payment therefor without receiving an instrument evidencing said deposit,
contract or option so long as such payment instructions detail specific
securities to be acquired, and (iii) in the case of securities in which payment
for the security and receipt of the instrument evidencing the security are under
generally accepted trade practice or the terms of the instrument representing
the security expected to take place in different locations or through separate
parties, such as commercial paper which is indexed to foreign currency exchange
rates, derivatives and similar securities, the Custodian may make payment for
such securities prior to delivery thereof in accordance with such generally
accepted trade practice or the terms of the instrument representing such
security.
E. Exchanges - Upon receipt of proper instructions, to exchange securities held
by it for the account of the Fund for other securities in connection with any
reorganization, recapitalization, split-up of shares, change of par value,
conversion or other event relating to the securities or the issuer of such
securities and to deposit any such securities in accordance with the terms of
any reorganization or protective plan. Without proper instructions, the
Custodian may surrender securities in temporary form for definitive securities,
may surrender securities for transfer into a name or nominee name as permitted
in Section 2C, and may surrender securities for a different number of
certificates or instruments representing the same number of shares or same
principal amount of indebtedness, provided the securities to be issued are to be
delivered to the Custodian.
F. Sales of Securities - Upon receipt of proper instructions, to make delivery
of securities which have been sold for the account of the Fund, but only against
payment therefor (1) in cash, by a certified check, bank cashier's check, bank
credit, or bank wire transfer, or (2) by credit to the account of the Custodian
with a clearing corporation of a national securities exchange of which the
Custodian is a member, or (3) by credit to the account of the Custodian or an
Agent of the Custodian with a Securities System; provided, however, that (i) in
the case of delivery of physical certificates or instruments representing
2
<PAGE>
securities, the Custodian may make delivery to the broker buying the securities,
against receipt therefor, for examination in accordance with "street delivery"
custom, provided that the payment therefor is to be made to the Custodian (which
payment may be made by a broker's check) or that such securities are to be
returned to the Custodian, and (ii) in the case of securities referred to in
clause (iii) of the last sentence of Section 2D, the Custodian may make
settlement, including with respect to the form of payment, in accordance with
generally accepted trade practice relating to such securities or the terms of
the instrument representing said security.
G. Depositary Receipts - Upon receipt of proper instructions, to instruct a
Subcustodian or an Agent to surrender securities to the depositary used by an
issuer of American Depositary Receipts or International Depositary Receipts
(hereinafter collectively referred to as "ADRs") for such securities against a
written receipt therefor adequately describing such securities and written
evidence satisfactory to the Subcustodian or Agent that the depositary has
acknowledged receipt of instructions to issue with respect to such securities
ADRs in the name of the Custodian, or a nominee of the Custodian, for delivery
to the Custodian in Boston, Massachusetts, or at such other place as the
Custodian may from time to time designate.
Upon receipt of proper instructions, to surrender ADRs to the issuer thereof
against a written receipt therefor adequately describing the ADRs surrendered
and written evidence satisfactory to the Custodian that the issuer of the ADRs
has acknowledged receipt of instructions to cause its depositary to deliver the
securities underlying such ADRs to a Subcustodian or an Agent.
H. Exercise of Rights; Tender Offers - Upon timely receipt of proper
instructions, to deliver to the issuer or trustee thereof, or to the agent of
either, warrants, puts, calls, rights or similar securities for the purpose of
being exercised or sold, provided that the new securities and cash, if any,
acquired by such action are to be delivered to the Custodian, and, upon receipt
of proper instructions, to deposit securities upon invitations for tenders of
securities, provided that the consideration is to be paid or delivered or the
tendered securities are to be returned to the Custodian.
I. Stock Dividends, Rights, Etc. - To receive and collect all stock dividends,
rights and other items of like nature; and to deal with the same pursuant to
proper instructions relative thereto.
J. Options - Upon receipt of proper instructions, to receive and retain
confirmations or other documents evidencing the purchase of writing of an option
on a security or securities index by the Fund; to deposit and maintain in a
segregated account, either physically or by book-entry in a Securities System,
securities subject to a covered call option written by the Fund; and to release
and/or transfer such securities or other assets only in accordance with the
provisions of any agreement among the Fund, the Custodian and a broker-dealer
relating to such securities or other assets a notice or other communication
evidencing the expiration, termination or exercise of such covered option
3
<PAGE>
furnished by The Options Clearing Corporation, the securities or options
exchange on which such covered option is traded or such other organization as
may be responsible for handling such options transactions.
K. Borrowings - Upon receipt of proper instructions, to deliver securities of
the Fund to lenders or their agents as collateral for borrowings effected by the
Fund, provided that such borrowed money is payable to or upon the Custodian's
order as Custodian for the Fund.
L. Demand Deposit Bank Accounts - To open and operate an account or accounts in
the name of the Fund on the Custodian's books subject only to draft or order by
the Custodian. All funds received by the Custodian from or for the account of
the Fund shall be deposited in said account(s). The responsibilities of the
Custodian to the Fund for deposits accepted on the Custodian's books shall be
that of a U. S. bank for a similar deposit.
If and when authorized by proper instructions, the Custodian may open and
operate an additional account(s) in such other banks or trust companies as may
be designated by the Fund in such instructions (any such bank or trust company
so designated by the Fund being referred to hereafter as a "Banking
Institution"), provided that such account(s) (hereinafter collectively referred
to as "demand deposit bank accounts") shall be in the name of the Custodian for
account of the Fund and subject only to the Custodian's draft or order. Such
demand deposit accounts may be opened with Banking Institutions in the United
States and in other countries and may be denominated in either U. S. Dollars or
other currencies as the Fund may determine. All such deposits shall be deemed to
be portfolio securities of the Fund and accordingly the responsibility of the
Custodian therefore shall be the same as and no greater than the Custodian's
responsibility in respect of other portfolio securities of the Fund.
M Interest Bearing Call or Time Deposits - To place interest bearing fixed term
and call deposits with such banks and in such amounts as the Fund may authorize
pursuant to proper instructions. Such deposits may be placed with the Custodian
or with Subcustodians or other Banking Institutions as the Fund may determine.
Deposits may be denominated in U. S. Dollars or other currencies and need not be
evidenced by the issuance or delivery of a certificate to the Custodian,
provided that the Custodian shall include in its records with respect to the
assets of the Fund appropriate notation as to the amount and currency of each
such deposit, the accepting Banking Institution and other appropriate details,
and shall retain such forms of advice or receipt evidencing the deposit, if any,
as may be forwarded to the Custodian by the Banking Institution. Such deposits,
other than those placed with the Custodian, shall be deemed portfolio securities
of the Fund and the responsibilities of the Custodian therefor shall be the same
as those for demand deposit bank accounts placed with other banks, as described
in Section K of this Agreement. The responsibility of the Custodian for such
deposits accepted on the Custodian's books shall be that of a U.S. bank for a
similar deposit.
N. Foreign Exchange Transactions and Futures Contracts - Pursuant to proper
instructions, to enter into foreign exchange contracts or options to purchase
and sell foreign currencies for spot and future delivery on behalf and for the
4
<PAGE>
account of the Fund. Such transactions may be undertaken by the Custodian with
such Banking Institutions, including the Custodian and Subcustodian(s) as
principals, as approved and authorized by the Fund. Foreign exchange contracts
and options other than those executed with the Custodian, shall be deemed to be
portfolio securities of the Fund and the responsibilities of the Custodian
therefor shall be the same as those for demand deposit bank accounts placed with
other banks as described in Section 2L of this agreement. Upon receipt of proper
instructions, to receive and retain confirmations evidencing the purchase or
sale of a futures contract or an option on a futures contract by the Fund; to
deposit and maintain in a segregated account, for the benefit of any futures
commission merchant or to pay to such futures commission merchant, assets
designated by the fund as initial, maintenance or variation "margin" deposits
intended to secure the Fund's performance of its obligations under any futures
contracts purchased or sold or any options on futures contracts written by the
Fund, in accordance with the provisions of any agreement or agreements among any
of the Fund, the Custodian and such futures commission merchant, designated to
comply with the rules of the Commodity Futures Trading Commission and/or any
contract market, or any similar organization or organizations, regarding such
margin deposits; and to release and/or transfer assets in such margin accounts
only in accordance with any such agreements or rules.
0. Stock Loans - Upon receipt of proper instructions, to deliver securities of
the Fund, in connection with loans of securities by the Fund, to the borrower
thereof prior to receipt of the collateral, if any, for such borrowing, provided
that for stock loans secured by cash collateral the Custodian's instructions to
the Securities System require that the Securities System may deliver the
securities to the borrower thereof only upon receipt of the collateral for such
borrowing.
P. Collections - To collect, receive and deposit in said account or accounts all
income, payments of principal and other payments with respect to the securities
held hereunder, and in connection therewith to deliver the certificates or other
instruments representing the securities to the issuer thereof or its agent when
securities are called, redeemed, retired or otherwise become payable; provided,
that the payment is to be made in such form and manner and at such time, which
may be after delivery by the Custodian of the instrument representing the
security, as is in accordance with the terms of the instrument representing the
security, or such proper instructions as the Custodian may receive, or
governmental regulations, the rules of Securities Systems or other U.S.
securities depositories and clearing agencies or, with respect to securities
referred to in clause (iii) of the last sentence of Section 2D, in accordance
with generally accepted trade practice; (ii) to execute ownership and other
certificates and affidavits for all federal and state tax purposes in connection
with receipt of income or other payments with respect to securities of the Fund
or in connection with transfer of securities, and (iii) pursuant to proper
instructions to take such other actions with respect to collection or receipt of
funds or transfer of securities which involve an investment decision.
Q. Dividends, Distributions and Redemptions - Upon receipt of proper
instructions from the Fund, or upon receipt of instructions from the Fund's
5
<PAGE>
shareholder servicing agent or agent with comparable duties (the "Shareholder
Servicing Agent") (given by such person or persons and in such manner on behalf
of the Shareholder Servicing Agent as the Fund shall have authorized), the
Custodian shall release funds or securities to the Shareholder Servicing Agent
or otherwise apply funds or securities, insofar as available, for the payment of
dividends or other distributions to Fund shareholders. Upon receipt of proper
instructions from the Fund, or upon receipt of instructions from the Shareholder
Servicing Agent (given by such person or persons and in such manner on behalf of
the Shareholder Servicing Agent as the Fund shall have authorized), the
Custodian shall release funds or securities, insofar as available, to the
Shareholder Servicing Agent or as such Agent shall otherwise instruct for
payment to Fund shareholders who have delivered to such Agent a request for
repurchase or redemption of their shares of capital stock of the Fund.
R. Proxies, Notices, Etc. - Promptly to deliver or mail to the Fund all forms of
proxies and all notices of meetings and any other notices or announcements
affecting or relating to securities owned by the Fund that are received by the
Custodian, and upon receipt of proper instructions, to execute and deliver or
cause its nominee to execute and deliver such proxies or other authorizations as
may be required. Neither the Custodian nor its nominee shall vote upon any of
such securities or execute any proxy to vote thereon or give any consent or take
any other action with respect thereto (except as otherwise herein provided)
unless ordered to do so by proper instructions.
S. Nondiscretionary Details - Without the necessity of express authorization
from the Fund, (1) to attend to all nondiscretionary details in connection with
the sale, exchange, substitution, purchase, transfer or other dealings with
securities, funds or other property of the Portfolio held by the Custodian
except as otherwise directed from time to time by the Directors or Trustees of
the Fund, and (2) to make payments to itself or others for minor expenses of
handling securities or other similar items relating to the Custodian's duties
under this Agreement, provided that all such payments shall be accounted for to
the Fund.
T. Bills - Upon receipt of proper instructions, to pay or cause to be paid,
insofar as funds are available for the purpose,, bills, statements, or other
obligations of the Fund.
U. Deposit of Fund Assets in Securities Systems - The Custodian may deposit
and/or maintain securities owned by the Fund in (i) The Depository Trust
Company, (ii) any book-entry system as provided in Subpart 0 of Treasury
Circular No. 300, 31 CFR 306, Subpart B of 31 CFR Part 350, or the book-entry
regulations of federal agencies substantially in the form of Subpart 0, or (iii)
any other domestic clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 which acts
as a securities depository and whose use the Fund has previously approved in
writing (each of the foregoing being referred to in this Agreement as a
"Securities System"). Utilization of a Securities System shall be in accordance
with applicable Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following provisions:
6
<PAGE>
1) The Custodian may deposit and/or maintain Fund securities, either directly or
through one or more Agents appointed by the Custodian (provided that any such
agent shall be qualified to act as a custodian of the Fund pursuant to the
Investment Company Act of 1940 and the rules and regulations thereunder), in a
Securities System provided that such securities are represented in an account
("Account") of the Custodian or such Agent in the Securities System which shall
not include any assets of the Custodian or Agent other than assets held as a
fiduciary, custodian, or otherwise for customers;
2) The records of the Custodian with respect to securities of the Fund which are
maintained in a Securities System shall identify by book-entry those securities
belonging to the Fund;
3) The Custodian shall pay for securities purchased for the account of the Fund
upon (i) receipt of advice from the Securities System that such securities have
been transferred to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the account of the
Fund. The Custodian shall transfer securities sold for the account of the Fund
upon (i) receipt of advice from the Securities System that payment for such
securities has been transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer and payment for the
account of the Fund. Copies of all advices from the Securities System of
transfers of securities for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian or an Agent as referred to above, and
be provided to the Fund at its request. The Custodian shall furnish the Fund
confirmation of each transfer to or from the account of the Fund in the form of
a written advice or notice and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transactions in the Securities System
for the account of the Fund on the next business day;
4) The Custodian shall provide the Fund with any report obtained by the
Custodian or any Agent as referred to above on the Securities System's
accounting system, internal accounting control and procedures for safeguarding
securities deposited in the Securities System; and the Custodian and such Agents
shall send to the Fund such reports on their own systems of internal accounting
control as the Fund may reasonably request from time to time.
5) At the written request of the Fund, the Custodian will terminate the use of
any such Securities System on behalf of the Fund as promptly as practicable.
V. Other Transfers - Upon receipt of proper instructions, to deliver securities,
funds and other property of the Fund to a Subcustodian or another custodian of
the Fund; and, upon receipt of proper instructions, to make such other
disposition of securities, funds or other property of the Fund in a manner other
than or for purposes other than as enumerated elsewhere in this Agreement,
provided that the instructions relating to such disposition shall include a
statement of the purpose for which the delivery is to be made, the amount of
securities to be delivered and the name of the person or persons to whom
delivery is to be made.
7
<PAGE>
W. Investment Limitations - In performing its duties generally, and more
particularly in connection with the purchase, sale and exchange of securities
made by or for the Fund, the Custodian may assume unless and until notified in
writing to the contrary that proper instructions received by it are not in
conflict with or in any way contrary to any provisions of the Fund's Declaration
of Trust or Certificate of Incorporation or By-Laws (or comparable documents) or
votes or proceedings of the shareholders or Directors of the Fund. The Custodian
shall in no event be liable to the Fund and shall be indemnified by the Fund for
any violation which occurs in the course of carrying out instructions given by
the Fund of any investment limitations to which the Fund is subject or other
limitations with respect to the Fund's powers to make expenditures, encumber
securities, borrow or take similar actions affecting the Fund.
X. Restricted Securities. Notwithstanding any other provision of this Agreement,
the Custodian shall not be liable for failure to take any action in respect of a
"restricted security" (as hereafter defined) if the Custodian has not received
Proper Instructions to take such action (including but not limited to the
failure to exercise in a timely manner any right in respect of any restricted
security) unless the Custodian's responsibility to take such action is set forth
in a writing, agreed upon by the Custodian and the Fund or the investment
adviser of the Fund, which specifies particular actions the Custodian is to take
without Proper Instructions in respect of specified rights and obligations
pertaining to a particular restricted security. Further, the Custodian shall not
be responsible for transmitting to the Fund information concerning a restricted
security, such as with respect to exercise periods and expiration dates for
rights relating to the restricted security, except such information which the
Custodian actually receives or which is published in a source which is publicly
distributed and generally recognized as a major source of information with
respect to corporate actions of securities similar to the particular restricted
security. As used herein, the term "restricted securities" shall mean securities
which are subject to restrictions on transfer, whether by reason of contractual
restrictions or federal, state or foreign securities or similar laws, or
securities which have special rights or contractual features which do not apply
to publicly-traded shares of, or comparable interests representing, such
security.
Y. Proper Instructions - Proper instructions shall mean a tested telex from the
Fund or a written request, direction, instruction or certification signed or
initialled on behalf of the Pund by one or more person or persons as the Board
of Directors or Trustees of the Fund shall have from time to time authorized,
provided, however, that no such instructions directing the delivery of
securities or the payment of funds to an authorized signatory of the Fund shall
be signed by such person. Those persons authorized to give proper instructions
may be identified by the Board of Directors or Trustees by name, title or
position and will include at least one officer empowered by the Board to name
other individuals who are authorized to give proper instructions on behalf of
the Fund. Telephonic or other oral instructions given by any one of the above
persons will be considered proper instructions if the Custodian reasonably
believes them to have been given by a person authorized to give such
8
<PAGE>
instructions with respect to the transaction involved. Oral instructions will be
confirmed by tested telex or in writing in the manner set forth above but the
lack of such confirmation shall in no way affect any action taken by the
Custodian in reliance upon such oral instructions. The Fund authorizes the
Custodian to tape record any and all telephonic or other oral instructions given
to the Custodian by or on behalf of the Fund (including any of its officers,
Directors, Trustees, employees or agents) and will deliver to the Custodian a
similar authorization from any investment manager or adviser or person or entity
with similar reponsibilities which is authorized to give proper instructions on
behalf of the Fund to the Custodian. Proper instructions may relate to specific
transactions or to types or classes of transactions, and may be in the form of
standing instructions.
Proper instructions may include communications effected directly between
electromechanical or electronic devices or systems, in addition to tested telex,
provided that the Fund and the Custodian agree to the use of such device or
system.
Z. Segregated Account - The Custodian shall upon receipt of proper instructions
establish and maintain on its books a segregated account or accounts for and on
behalf of the Fund, into which account or accounts may be transferred cash
and/or securities of the Fund, including securities maintained by the Custodian
pursuant to Section 2U hereof, (i) in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc. (or any futures commission merchant registered under
the Commodity Exchange Act) relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market), or any
similar organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Fund, (ii) for purposes of segregating cash
or securities in connection with options purchased, sold or written by the Fund
or commodity futures contracts or options thereon purchased or sold by the Fund,
(iii) for the purposes of compliance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or releases
of the Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies, and (iv) as mutually
agreed from time to time between the Fund and the Custodian.
3. Powers and Duties of the Custodian with Respect to the Appointment of
Subcustodians: The Fund hereby authorizes and instructs the Custodian to hold
securities, funds and other property of the Fund which are maintained outside
the United States at subcustodians appointed pursuant to the provisions of this
Section 3 (a "Subcustodian"). The Fund shall approve in writing (1) the
appointment of each Subcustodian and the subcustodian agreement to be entered
into between such Subcustodian and the Custodian, and (2) if the Subcustodian is
organized under the laws of a country other than the United States, the country
or countries in which the Subcustodian is authorized to hold securities, cash
and other property of the Fund. The Fund hereby further authorizes and instructs
the Custodian and any Subcustodian to utilize such securities depositories
located outside the United States which are approved in writing by the Fund to
hold securities, cash and other property of the Fund. Upon such approval by the
Fund, the Custodian is authorized on behalf of the Fund to notify each
Subcustodian of its appointment as such. The Custodian may, at any time in its
discretion, remove any Subcustodian that has been appointed as such but will
promptly notify the Fund of any such action.
9
<PAGE>
Those Subcustodians, and the countries where and the securities depositories
through which they or the Custodian may hold securities, cash and other property
of the Fund which the Fund has approved to date are set forth on Appendix A
hereto. Such Appendix shall be amended from time to time as Subcustodians,
and/or countries and/or securities depositories are changed, added or deleted.
The Fund shall be responsible for informing the Custodian sufficiently in
advance of a proposed investment which is to be held in a country not listed on
Appendix A, in order that there shall be sufficient time for the Fund to give
the approval required by the preceding paragraph and for the Custodian to put
the appropriate arrangements in place with such Subcustodian, including
negotiation of a subcustodian agreement and submission of such subcustodian
agreement to the Fund for approval.
If the Fund shall have invested in a security to be held in a country before the
foregoing procedures have been completed, such security shall be held by such
agent as the Custodian may appoint. In any event, the Custodian shall be liable
to the Fund for the actions of such agent if and only to the extent the
Custodian shall have recovered from such agent for any damages caused the Fund
by such agent. At the request of the Fund, Custodian agrees to remove any
securities held on behalf of the Fund by such agent, if practical, to an
approved Subcustodian. Under such circumstances Custodian will collect income
and respond to corporate actions on a best efforts basis.
With respect to securities and funds held by a Subcustodian, either directly or
indirectly (including by a securities depository or clearing agency),
notwithstanding any provision of this Agreement to the contrary, payment for
securities purchased and delivery of securities sold may be made prior to
receipt of the securities or payment, respectively, and securities or payment
may be received in a form, in accordance with governmental regulations, rules of
securities depositories and clearing agencies, or generally accepted trade
practice in the applicable local market.
In the event that any Subcustodian appointed pursuant to the provisions of this
Section 3 fails to perform any of its obligations under the terms and conditions
of the applicable subcustodian agreement, the Custodian shall use its best
efforts to cause such Subcustodian to perform such obligations. In the event
that the Custodian is unable to cause such Subcustodian to perform fully its
obligations thereunder, the Custodian shall forthwith upon the Fund's request
terminate such Subcustodian in accordance with the termination provisions under
the applicable subcustodian agreement and, if necessary or desirable, appoint
another subcustodian in accordance with the provisions of this Section 3. At the
election of the Fund, it shall have the right to enforce, to the extent
permitted by the subcustodian agreement and applicable law, the Custodian's
rights against any such Subcustodian for loss or damage caused the Fund by such
Subcustodian.
The Custodian will not amend any subcustodian agreement or agree to change or
permit any changes thereunder except upon the prior written approval of the
Fund.
The Custodian may, at any time in its discretion upon notification to the Fund,
terminate any Subcustodian of the Fund in accordance with the termination
provisions under the applicable Subcustodian Agreement, and at the written
request of the Fund, the Custodian will terminate any Subcustodian in accordance
with the termination provisions under the applicable Subcustodian Agreement.
10
<PAGE>
If necessary or desirable, the Custodian may appoint another subcustodian to
replace a Subcustodian terminated pursuant to the foregoing provisions of this
Section 3, such appointment to be made upon approval of the successor
subcustodian by the Fund's Board of Directors or Trustees in accordance with the
provisions of this Section 3.
In the event the Custodian receives a claim from a Subcustodian under the
indemnification provisions of any subcustodian agreement, the Custodian shall
promptly give written notice to the Fund of such claim. No more than thirty days
after written notice to the Fund of the Custodian's intention to make such
payment, the Fund will reimburse the Custodian the amount of such payment except
in respect of any negligence or misconduct of the Custodian.
4. Assistance by the Custodian as to Certain Matters: The Custodian may assist
generally in the preparation of reports to Fund shareholders and others, audits
of accounts, and other ministerial matters of like nature.
5. Powers and Duties of the Custodian with Respect to its Role as Financial
Agent: The Fund hereby also appoints the Custodian as the Funds financial agent.
With respect to the appointment as financial agent, the Custodian shall have and
perform the following powers and duties:
A. Records - To create, maintain and retain such records relating to its
activities and obligations under this Agreement as are required under the
Investment Company Act of 1940 and the rules and regulations thereunder
(including Section 31 thereof and Rules 3la-1 and 3la-2 thereunder) and under
applicable Federal and State tax laws. All such records will be the property of
the Fund and in the event of termination of this Agreement shall be delivered to
the successor custodian.
B. Accounts - To keep books of account and render statements, including interim
monthly and complete quarterly financial statements, or copies thereof, from
time to time as reasonably requested by proper instructions.
C. Access to Records - The books and records maintained by the Custodian
pursuant to Sections 5A and 5B shall at all times during the Custodian's regular
business hours be open to inspection and audit by officers of, attorneys for and
auditors employed by the Fund and by employees and agents of the Securities and
Exchange Commission, provided that all such individuals shall observe all
security requirements of the Custodian applicable to its own employees having
access to similar records with in the Custodian and such regulations as may be
reasonably imposed by the Custodian.
D. Disbursements - Upon receipt of proper instructions, to pay or cause to be
paid, insofar as funds are available for the purpose, bills, statements and
other obligations of the Fund (including but not limited to interest charges,
taxes, management fees, compensation to Fund officers and employees, and other
operating expenses of the Fund).
6. Standard of Care and Related Matters:
A. Liability of the Custodian with Respect to Proper Instructions; Evidence of
Authority, Etc. The Custodian shall not be liable for any action taken or
omitted in reliance upon proper instructions believed by it to be genuine or
upon any other written notice, request, direction, instruction, certificate or
other instrument believed by it to be genuine and signed by the proper party or
parties.
11
<PAGE>
The Secretary or Assistant Secretary of the Fund shall certify to the Custodian
the names, signatures and scope of authority of all persons authorized to give
proper instructions or any other such notice, request, direction, instruction,
certificate or instrument on behalf of the Fund, the names and signatures of the
officers of the Fund, the name and address of the Shareholder Servicing Agent,
and any resolutions, votes, instructions or directions of the Fund's Board of
Directors or Trustees or shareholders. Such certificate may be accepted and
relied upon by the Custodian as conclusive evidence of the facts set forth
therein and may be considered in full force and effect until receipt of a
similar certificate to the contrary.
So long as and to the extent that it is in the exercise of reasonable care, the
Custodian shall not be responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered by it pursuant
to this Agreement.
The Custodian shall be entitled, at the expense of the Fund, to receive and act
upon advice of (i) counsel regularly retained by the Custodian in respect of
custodian matters, (ii) counsel for the Fund, or (iii) such other counsei as the
Fund and the Custodian may agree upon, with respect to all matters, and the
Custodian shall be without liability for any action reasonably taken or omitted
pursuant to such advice.
B. Liability of the Custodian with Respect to Use of Securities System - With
respect to the portfolio securities, cash and other property of the Fund held by
a Securities System, the Custodian shall be liable to the Fund only for any loss
or damage to the Fund resulting from use of the Securities System if caused by
any negligence, misfeasance or misconduct of the Custodian or any of its agents
or of any of its or their employees or from any failure of the Custodian or any
such agent to enforce effectively such rights as it may have against the
Securities System. At the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to any claim against the
Securities System or any other person which the Custodian may have as a
consequence of any such loss or damage to the Fund if and to the extent that the
Fund has not been made whole for any such loss or damage.
C. Liability of the Custodian with Respect to Subcustodians - The Custodian
shall be liable to the Fund for any loss or damage to the Fund caused by or
resulting from the acts or omissions of any Subcustodian to the extent that
under the terms set forth in the subcustodian agreement between the Custodian
and the Subcustodian (or in the subcustodian agreement between a Subcustodian
and any secondary Subcustodian), the Subcustodian (or secondary Subcustodian)
has failed to perform in accordance with the standard of conduct imposed under
such subcustodian agreement as determined in accordance with the law which is
adjudicated to govern such agreement and in accordance with any determination of
any court as to the duties of said Subcustodian pursuant to said agreement. The
Custodian shall also be liable to the Fund for its own negligence in
transmitting any instructions received by it from the Fund and for its own
negligence in connection with the delivery of any securities or funds held by it
to any Subcustodian.
D. Standard of Care; Liability; Indemnification - The Custodian shall be held
only to the exercise of reasonable care and diligence in carrying out the
provisions of this Agreement, provided that the Custodian shall not thereby be
required to take any action which is in contravention of any applicable law. The
12
<PAGE>
Fund agrees to indemnify and hold harmless the Custodian and its nominees from
all claims and liabilities (including counsel fees) incurred or assessed against
it or its nominees in connection with the performance of this Agreement, except
such as may arise from its or its nominee's breach of the relevant standard of
conduct set forth in this Agreement. Without limiting the foregoing
indemnification obligation of the Fund, the Fund agrees to indemnify the
Custodian and any nominee in whose name portfolio securities or other property
of the Fund is registered against any liability the Custodian or such nominee
may incur by reason of taxes assessed to the Custodian or such nominee or other
costs, liability or expense incurred by the Custodian or such nominee resulting
directly or indirectly from the fact that portfolio securities or other property
of the Fund is registered in the name of the Custodian or such nominee.
It is also understood that the Custodian shall not be liable for any loss
involving any securities, currencies, deposits or other property of the Fund,
whether maintained by it, a Subcustodian, a securities depository, an agent of
the Custodian or a Subcustodian, a Securities System, or a Banking Institution,
or for any loss arising from a foreign currency transaction or contract, where
the loss results from a Sovereign Risk or where the entity maintaining such
securities, currencies, deposits or other property of the Fund, whether the
Custodian, a Subcustodian, a securities depository, an agent of the Custodian or
a Subcustodian, a Securities System or a Banking Institution, has exercised
reasonable care maintaining such property or in connection with the transaction
involving such property. A "Sovereign Risk" shall mean nationalization,
expropriation, devaluation, revaluation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de facto or de
jure; or enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting the Fund's property; or acts of war,
terrorism, insurrection or revolution; or any other act or event beyond the
Custodian's control.
E. Reimbursement of Advances - The Custodian shall be entitled to receive
reimbursement from the Fund on demand, in the manner provided in Section 7, for
its cash disbursements, expenses and charges (including the fees and expenses of
any Subcustodian or any Agent) in connection with this Agreement, but excluding
salaries and usual overhead expenses.
F. Security for Obligations to Custodian - If the Fund shall require the
Custodian to advance cash or securities for any purpose for the benefit of the
Fund, including in connection with foreign exchange contracts or options
(collectively, an "Advance"), or if the Custodian or any nominee thereof shall
incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Agreement (collectively a
"Liability"), except such as may arise from its or such nominee's breach of the
relevant standard of conduct set forth in this Agreement, then in such event any
property at any time held for the account of the Fund by the Custodian or a
Subcustodian shall be security for such Advance or Liability and if the Fund
shall fail to repay or indemnify the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of the Fund's property,
including securities, to the extent necessary to obtain reimbursement or
indemnification.
G. Appointment of Agents - The Custodian may at any time or times in its discret
ion appoint (and may at any time remove) any other bank or trust company as its
agent (an "Agent") to carry out such of the provisions of this Agreement as the
Custodian may from time to time direct, provided, however, that the appointment
13
<PAGE>
of such Agent (other than an Agent appointed pursuant to the third paragraph of
Section 3) shall not relieve the Custodian of any of its responsibilities under
this agreement.
H. Powers of Attorney - Upon request, the Fund shall deliver to the Custodian
such proxies, powers of attorney or other instruments as may be reasonable and
necessary or desirable in connection with the performance by the Custodian or
any Subcustodian of their respective obligations under this Agreement or any
applicable subcustodian agreement.
7. Compensation of the Custodian: The Fund shall pay the Custodian a custody fee
based on such fee schedule as may from time to time be agreed upon in writing by
the Custodian and the Fund. Such fee, together with all amounts for which the
Custodian is to be reimbursed in accordance with Section 6D, shall be billed to
the Fund in such a manner as to permit payment by a direct cash payment to the
Custodian.
8. Termination; Successor Custodian: This Agreement shall continue in full force
and effect until terminated by either party by an instrument in writing
delivered or mailed, postage prepaid, to the other party, such termination to
take effect not sooner than seventy five (75) days after the date of such
delivery or mailing. In the event of termination the Custodian shall be entitled
to receive prior to delivery of the securities, funds and other property held by
it all accrued fees and unreimbursed expenses the payment of which is
contemplated by Sections 6D and 7, upon receipt by the Fund of a statement
setting forth such fees and expenses.
In the event of the appointment of a successor custodian, it is agreed that the
funds and securities owned by the Fund and held by the Custodian or any
Subcustodian shall be delivered to the successor custodian, and the Custodian
agrees to cooperate with the Fund in execution of documents and performance of
other actions necessary or desirable in order to substitute the successor
custodian for the Custodian under this Agreement.
9. Amendment: This Agreement constitutes the entire understanding and agreement
of the parties hereto with respect to the subject matter hereof. No provision of
this Agreement may be amended or terminated except by a statement in writing
signed by the party against which enforcement of the amendment or termination is
sought.
In connection with the operation of this Agreement, the Custodian and the Fund
may agree in writing from time to time on such provisions interpretative of or
in addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. No interpretative or
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Agreement.
The section headings in this Agreement are for the convenience of the parties
and in no way alter, amend, limit or restrict the contractual obligations of the
parties set forth in this Agreement.
10. Governing Law: This instrument is executed and delivered in The Commonwealth
of Massachusetts and shall be governed by and construed according to the laws of
said Commonwealth.
14
<PAGE>
11. Notices: Notices and other writings delivered or mailed postage prepaid to
the Fund addressed to the Fund at 60 State Street, Boston, Massachusetts 02109
or to such other address as the Fund may have designated to the Custodian in
writing, or to the Custodian at 40 Water Street, Boston, Massachusetts 02109,
Attention: Manager, Securities Department, or to such other address as the
Custodian may have designated to the Fund in writing, shall be deemed to have
been properly delivered or given hereunder to the respective addressee.
12. Binding Effect: This Agreement shall be binding on and shall inure to the
benefit of the Fund and the Custodian and their respective successors and
assigns, provided that neither party hereto may assign this Agreement or any of
its rights or obligations hereunder without the prior written consent of the
other party.
13. Counterparts: This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original. This Agreement shall become effective
when one or more counterparts have been signed and delivered by each of the
parties.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
in its name and behalf on the day and year first above written.
PIONEER INCOME FUND, INC. BROWN BROTHERS
HARRIMAN & CO.
By ______________________ per pro
- ---------------------
15
INVESTMENT COMPANY SERVICE AGREEMENT
June 30, 1994
Pioneer Income Fund, a Delaware business trust, with its principal
place of business at 60 State Street, Boston, Massachusetts 02109 ("Customer")
and Pioneering Services Corporation, a Massachusetts corporation ("PSC"), hereby
agree as follows:
1. SERVICES TO BE PROVIDED BY PSC. During the term of this Agreement,
PSC will provide the Customer with the services described in Exhibits A, B, C,
and D (collectively, the "Exhibits") that are attached hereto and incorporated
herein by reference. It is understood that PSC may subcontract any of such
services to one or more firms designated by PSC, provided that PSC (i) shall be
solely responsible for all compensation payable to any such firm and (ii) shall
be liable to Customer for the acts or omissions of any such firm to the same
extent as PSC would be liable to Customer with respect to any such act or
omission hereunder.
2. EFFECTIVE DATE. This Agreement shall become effective on the date
hereof (the "Effective Date") and shall continue in effect until it is
terminated in accordance with Section 11 below.
3. DELIVERY, VERIFICATION AND RECEIPT FOR DATA AND ASSETS. Prior to
the Effective Date, Customer agrees to deliver to PSC all such documentation,
data and materials as PSC may reasonably prescribe to enable it to perform the
services contemplated by this Agreement. If PSC so requests, Customer agrees to
confirm the accuracy of any starting records of Customer's assets and accounts
produced from PSC's computer or held in other recording systems. In the event
Customer does not, prior to the Effective Date, comply fully with any of the
foregoing provisions of this Section 3, the date for commencement of PSC's
services hereunder may be postponed by PSC until such compliance has taken
place.
Customer shall, from time to time, while this Agreement is in effect
deliver all such materials and data as may be necessary or desirable to enable
PSC to perform its services hereunder, including without limitation, those
described in Section 12 hereof.
4. REPORTS AND MAINTENANCE OF RECORDS BY PSC. PSC will furnish to
Customer and to properly authorized auditors, examiners, distributors, dealers,
underwriters, salesmen, insurance companies, investors, and others designated by
<PAGE>
Customer in writing, such books, any and all records and reports at such times
as are prescribed for each service in the Exhibits attached hereto. Customer
agrees to examine or to ask any other authorized recipient to examine each such
report or copy promptly and will report or cause to be reported any errors or
discrepancies therein of which Customer then has any knowledge. PSC may at its
option at any time, and shall forthwith upon Customer's demand, turn over to
Customer and cease to retain in PSC's files, any and all records and documents
created and maintained by PSC pursuant to this Agreement which are no longer
needed by PSC in the performance of its services or for its protection.
If not so turned over to Customer, such documents and reports will be
retained by PSC for six years from the year of creation, during the first two of
which the same will be in readily accessible form. At the end of six years, such
records and documents, will be turned over to Customer by PSC unless Customer
authorizes their destruction.
5. PSC'S DUTY OF CARE. PSC shall at all time use reasonable care and
act in good faith in performing its duties hereunder. PSC shall incur no
liability to Customer in connection with its performance of services hereunder
except to the extent that it does not comply with the foregoing standards.
PSC shall at all times adhere to various procedures and systems
consistent with industry standards in order to safeguard Customer's checks,
records and other data from loss or damage attributable to fire or theft. PSC
shall maintain insurance adequate to protect against the costs of reconstructing
checks, records and other data in the event of such loss and shall notify
Customer in the event of a material adverse change in such insurance coverage.
In the event of damage or loss occurring to Customer's records or data such that
PSC is unable to meet the terms of this Agreement, PSC shall transfer all
records and data to a transfer agent of Customer's choosing upon Customer's
written authorization to do so.
Without limiting the generality of the foregoing, PSC shall not be
liable or responsible for delays or errors occurring by reason of circumstances
beyond its control including acts of civil, military or banking authority,
national emergencies, labor difficulties, fire, flood or other catastrophes,
acts of God, insurrection, war, riots, failure of transportation, communication
or power supply.
6. CONFIDENTIALITY. PSC will keep confidential all records and
information provided by Customer or by the shareholders of the Customer to PSC,
except to the extent disclosures are required by this Agreement, are required by
the Customer's Prospectus and Statement of Additional Information, or are
required by a valid subpoena or warrant issued by a court of competent
jurisdiction or by a state or federal agency or governmental authority.
7. CUSTOMER INSPECTION. Upon reasonable notice, in writing signed by
Customer, PSC shall make available, during regular business hours, all records
and other data created and maintained pursuant to this Agreement for reasonable
2
<PAGE>
audit and inspection by Customer or Customer's agents, including reasonable
visitation by Customer or Customer's agent, including inspecting PSC's operation
facilities. PSC shall not be liable for injury to or responsible in any way for
the safety of any individual visiting PSC's facilities under the authority of
this section. Customer will keep confidential and will cause to keep
confidential all confidential information obtained by its employees or agents or
any other individual representing Customer while on PSC's premises. Confidential
information shall include (1) any information of whatever nature regarding PSC's
operations, security procedures, and data processing capabilities, (2) financial
information regarding PSC, its affiliates, or subsidiaries, and (3) any
information of whatever kind or description regarding any customer of PSC, its
affiliates or subsidiaries.
8. RELIANCE BY PSC ON INSTRUCTIONS AND ADVICE; INDEMNITY. PSC shall
be entitled to seek advice of Customer's legal counsel with respect to PSC's
responsibilities and duties hereunder and shall in no event be liable to
Customer for any action taken pursuant to such advice, except to the extent that
Customer's legal counsel determines in its sole discretion that the rendering of
advice to PSC would result in a conflict of interest.
Whenever PSC is authorized to take action hereunder pursuant to
proper instructions from Customer, PSC shall be entitled to rely upon any
certificate, letter or other instrument or telephone call reasonably believed by
PSC to be genuine and to have been properly made or signed by an officer or
other authorized agent of Customer, and shall be entitled to receive as
conclusive proof of any fact or matter required to be ascertained by it
hereunder a certificate signed by an officer of Customer or any other person
authorized by Customer's Board of Trustees.
Subject to the provisions of Section 13 of this Agreement, Customer
agrees to indemnify and hold PSC, its employees, agents and nominees harmless
from any and all claims, demands, actions and suits, whether groundless or
otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising out of or in any way relating to PSC's action or non-action
upon information, instructions or requests given or made to PSC by Customer.
Notwithstanding the above, whenever Customer may be asked to
indemnify or hold PSC harmless, Customer shall be advised of all pertinent facts
arising from the situation in question. Additionally, PSC will use reasonable
care to identify and notify Customer promptly concerning any situation which
presents, actually or potentially, a claim for indemnification against Customer.
Customer shall have the option to defend PSC against any claim for which PSC is
entitled to indemnification from Customer under the terms hereof, and in the
event Customer so elects, it will notify PSC and, thereupon, Customer shall take
over complete defense of the claim and PSC shall sustain no further legal or
other expenses in such a situation for which indemnification shall be sought or
entitled. PSC may in no event confess any claim or make any compromise in any
case in which Customer will be asked to indemnify PSC except with Customer's
prior written consent.
3
<PAGE>
9. MAINTENANCE OF DEPOSIT ACCOUNTS. PSC shall maintain on behalf of
Customer such deposit accounts as are necessary or desirable from time to time
to enable PSC to carry out the provisions of this Agreement.
10. COMPENSATION AND REIMBURSEMENT TO PSC. For the services rendered
by PSC under this Agreement, Customer agrees to pay an annual fee of $22.45 per
account to PSC, such fee to be payable in equal monthly installments. In
addition, Customer shall reimburse PSC monthly for out-of-pocket expenses such
as postage, forms, envelopes, checks, "outside" mailings, telephone line and
other charges, mailgrams, mail insurance on certificates and data processing
file recovery insurance.
11. TERMINATION. Either PSC or Customer may at any time terminate
this Agreement by giving 90 days' prior written notice to the other.
After the date of termination, for so long as PSC in fact continues
to perform any one or more of the services contemplated by this Agreement or any
exhibit hereto, the provisions of this Agreement, including without limitation
the provisions of Section 8 dealing with indemnification, shall where applicable
continue in full force and effect.
12. REQUIRED DOCUMENTS. Customer agrees to furnish to PSC prior to
the Effective Date the following (to the extent not previously provided):
A. Two (2) copies of the Agreement of Declaration of Trust of
Customer, and of any amendments thereto, certified by the
proper official of the state of Delaware.
B. Two (2) copies of the following documents, currently
certified by the Secretary of Customer:
a. Customer's By-laws and any amendment thereto.
b. Certified copies of resolutions of Customer's
Board of Trustees covering the following
matters.
(1) Approval of this Agreement.
(2) Authorization of specified officers
of Customers to instruct PSC
hereunder (if different from other
officers of Customer previously
4
<PAGE>
specified by Customer as to other
Customer accounts being serviced by
PSC).
C. List of all officers of Customer together with specimen
signatures of those officers who are authorized to sign
share certificates and to instruct PSC in all other
matters.
D. Two (2) copies of the following:
a. Prospectus
b. Statement of Additional Information
c. Management Agreement
d. Registration Statement
E. Opinion of counsel for Customer as to the due
authorization by and binding effect of this Agreement on
Customer, the applicability of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as
amended, and the approval by such public authorities as
may be prerequisite to lawful sale and deliver in the
various states.
F. Amendments to, and changes in, any of the foregoing
forthwith upon such amendments and changes being
available, but in no case later than the effective date.
13. MISCELLANEOUS. In connection with the operation of this
Agreement, PSC and Customer may agree from time to time on such provisions
interpretive of or in addition to the provisions of this Agreement as may in
their joint opinion be consistent with the general tenor of this Agreement. Any
such interpretive or additional provisions are to be signed by both parties and
annexed hereto, but no such provision shall contravene any applicable Federal
and state law or regulation, and no such provision shall be deemed to be an
amendment of this Agreement.
This Agreement shall be construed in accordance with the laws of The
Commonwealth of Massachusetts.
5
<PAGE>
IN WITNESS WHEREOF, Customer and PSC have caused this Agreement to be
executed in their respective names by their respective officers thereunto duly
authorized as of the date first written above.
ATTEST: PIONEERING SERVICES CORPORATION
/s/ JOSEPH P. BARRI /s/ WILLIAM H. SMITH, JR.
Joseph P. Barri William H. Smith, Jr.
Secretary President
PIONEER INCOME FUND
/s/ JOSEPH P. BARRI /s/ JOHN F. COGAN, JR.
Joseph P. Barri John F. Cogan, Jr.
Secretary President
6
<PAGE>
EXHIBIT A - TO INVESTMENT COMPANY SERVICE AGREEMENT
Shareholder Account Service:
As Servicing Agent for fund accounts and in accordance with the provisions of
the standard fund application and Customer's prospectus, PSC will:
1. Open, maintain and close accounts.
2. Purchase shares for the shareholder.
3. Out of the money received in payment for sales of Customer's shares pay
to the Customer's custodian the net asset value per share and pay to
the underwriter and to the dealer their commission, if any, on a
bimonthly basis.
4. Redeem shares by systematic withdrawal orders. (See Exhibit B)
5. Issue share certificates, upon instruction, resulting from withdrawals
from share accounts (It is the policy of PSC to issue share
certificates only upon request of the shareholder). Maintain records
showing name, address, certificate numbers and number of shares.
6. Deposit certificates to shareholder accounts when furnished with such
documents as PSC deems necessary to authorize the deposit.
7. Reinvest or disburse dividends and other distributions upon direction
of shareholder.
8. Establish the proper registration of ownership of shares.
9. Pass upon the adequacy of documents submitted by a shareholder or his
legal representative to substantiate the transfer of ownership of
shares from the registered owner to transferees.
10.Make transfers from time to time upon the books of the Customer in
accordance with properly executed transfer instructions furnished to
PSC.
11.Upon receiving appropriate detailed instructions and written materials
prepared by Customer and, where applicable, proxy proofs checked by
Customer, mail shareholder reports, proxies and related materials of
suitable design for automatic enclosing, receive and tabulate executed
proxies, and furnish an annual meeting list of shareholders when
required.
12. Respond to shareholder inquiries in a timely manner.
13. Maintain dealer and salesperson records.
14.Maintain and furnish to Customer such shareholder information as
Customer may reasonably request for the purpose of compliance by
Customer with the applicable tax and securities law of various
jurisdictions.
15.Mail confirmations of transactions to shareholders in a timely
fashion.
16.Provide Customer with such information regarding correspondence as
well as enable Customer to comply with related N-SAR requirements.
17. Maintain continuous proof of the outstanding shares of Customer.
18. Solicit taxpayer identification numbers.
19.Provide data to enable Customer to file abandoned property reports for
those accounts that have been indicated by the Post Office to be not at
the address of record with no forwarding address.
20. Maintain bank accounts and reconcile same on a monthly basis.
21.Provide management information reports on a quarterly basis to
Customer's Board of Trustees/Directors outlining the level of service
provided.
22.Provide sale/statistical reporting for purposes of providing fund
management with information to maximizing the return to shareholders.
<PAGE>
EXHIBIT B - TO INVESTMENT COMPANY SERVICE AGREEMENT
Redemption Service:
In accordance with the provisions of the Customer's Prospectus, as servicing
agent for the redemptions, PSC will:
1. Where applicable, establish accounts payable based on information
furnished to PSC on behalf of Customer (i.e., copies of trade
confirmations and other documents deemed necessary or desirable by PSC
on the first business day following the trade date).
2. Receive for redemption either:
a. Share certificates, supported by appropriate documentation; or
b. Written or telephone authorization (where no share certificates are
issued).
3. Verify there are sufficient available shares in an account to cover
redemption requests.
4. Transfer the redeemed or repurchased shares to Customer's treasury
share account or, if applicable, cancel such shares for retirement.
5. Pay the applicable redemption or repurchase price to the shareholder in
accordance with Customer's Prospectus and Declaration of Trust on or
before the seventh calendar day succeeding any receipt of certificates
or requests for redemption or repurchase in "good order" as defined in
the Prospectus.
6. Notify Customer and the underwriter on behalf of Customer of the total
number of shares presented and covered by such requests within a
reasonable period of time following receipt.
7. Promptly notify the shareholder if any such certificate or request for
redemption or repurchase is not in "good order" together with notice of
the documents required to comply with the good order standards. Upon
receipt of the necessary documents PSC shall effect such redemption at
the net asset value applicable at the date and time of receipt of such
documents.
8. Produce periodic reports of unsettled items, if any.
9. Adjust unsettled items, if any, relative to dividends and
distributions.
10.Report to Customer any late redemptions which must be included in
Customer's N-SAR.
<PAGE>
EXHIBIT C - TO INVESTMENT COMPANY SERVICE AGREEMENT
Exchange Service:
1. Receive and process exchanges in accordance with a duly executed
exchange authorization. PSC will redeem existing shares and use the
proceeds to purchase new shares. Shares of Customer purchased directly
or acquired through reinvestment of dividends on such shares may be
exchanged for shares of other Pioneer funds (which funds have sales
charges) only by payment of the applicable sales charge, if any, as
described in Customer's Prospectus. Shares of Customer acquired by
exchange and through reinvestment of dividends on such shares may be
re-exchanged to another Pioneer fund at their respective net asset
values.
2. Make authorized deductions of fees, if any.
3. Register new shares identically with the shares surrendered for
exchange. Mail new shares certificates, if requested, or an account
statement confirming the exchange by first class mail to the address of
record.
4. Maintain a record of unprocessed exchanges and produce a periodic
report.
<PAGE>
EXHIBIT D - TO INVESTMENT COMPANY SERVICE AGREEMENT
Income Accrual and Disbursing Service:
1. Distribute income dividends and/or capital gain distributions, either
through reinvestment or in cash, in accordance with shareholder
instructions.
2. On the mailing date, Customer shall make available to PSC collected
funds to make such distribution.
3. Adjust unsettled items relative to dividends and distribution.
4. Reconcile dividends and/or distributions with Customer.
5. Prepare and file annual Federal and State information returns of
distributions and, in the case of Federal returns, mail information
copies to shareholders and report and pay Federal income taxes withheld
from distributions made to non-resident aliens.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Pioneer Income Fund, Inc.:
We consent to the incorporation by reference in Post-Effective
Amendment No. 55-24 to the Registration Statement of Pioneer Income Fund, Inc.
on Form N-1A (File No. 33-2-28273), of our report dated February 22, 1994 on our
audit of the financial statements and financial highlights of the Fund, which
report is included in the Annual Report to Shareholders for the year ended
December 31, 1993, which is incorporated by reference in the Registration
Statement.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
April 28, 1995
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our report
(and to all references to our firm) included in or made a part of the Pioneer
Income Fund Post-Effective Amendment No. 56 to Registration Statement File No.
2-28273 and Amendment No. 25 to Registration Statement File No. 811-1605-3.
Arthur Andersen LLP
Boston, Massachusetts
April 20, 1995
[Logo]
PIONEER
Pioneer
Income
Fund
ANNUAL REPORT
DECEMBER 31, 1994
<PAGE>
PIONEER INCOME FUND
DEAR SHAREOWNERS:
The past year was difficult for income-oriented investors. The substantial rise
in interest rates, both short- and long-term, led to sharp reductions in the
price of bonds, preferred issues, and utility and financial stocks, among other
securities. For Pioneer Income Fund, higher interest rates translated into a
high current yield and an attractive income stream, although it was difficult to
avoid some decline in share price.
How Your Fund Performed
We report the following performance for Pioneer Income Fund for the year ended
December 31, 1994.
o Shareowners received a total of $0.67 per share in income dividends.
o The Fund provided an attractive 8.34% current yield on December 31, 1994,
based on net asset value. The Fund's 30-day SEC yield was 6.94% at year
end. The Fund's yields were up sharply from the end of 1993.
o At the close of the fiscal year, the Fund's net asset value was $9.11 per
share, compared to $10.21 one year earlier, in part reflecting the payment
of distributions.
o The Fund's total return was -4.31% over the past 12 months, based on the
change in net asset value and assuming reinvestment of the distributions.
Over the same period, the unmanaged Lehman Brothers Corporate Bond Index
returned -3.93% and the unmanaged Standard & Poor's 500 Index rose 1.36%.
Despite the difficulties of the past year, Pioneer Income Fund continued to
offer shareowners solid long-term returns. For additional performance
information, please turn to page 3.
How Pioneer Managed Your Investment
There is no doubt that 1994 disappointed investors who had become accustomed to
steadily rising principal, in addition to regular income. On the bright side,
however, Pioneer Income Fund maintained a substantial dividend yield throughout
the year, meeting its objective of providing high current income. Naturally we
can make no projections of upcoming dividend payments; changes in the investment
portfolio and market conditions, as well as changes in the number of Fund shares
outstanding and our overall expense ratio, will dictate their level. However, we
plan no significant changes in portfolio composition, and we intend to continue
working to achieve the most attractive current yield possible without exposing
shareowners to undue risk.
In the bond portion of the portfolio (67%), management worked to reduce risk by
decreasing the average maturity of issues in the Fund's portfolio. As of
December 31, 1994, average maturity was 10.9 years, down from 12 years at June
30 and the close of 1993. We held the average quality rating solidly in the
investment-grade category, and it was A at year end.
<PAGE>
Average Maturity of Bond Holdings
(as of December 31, 1994)
[THE FOLLOWING TABLE IS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT]
0-2 Years 6%
2-5 Years 35%
5-10 Years 18%
10-20 Years 19%
20+ Years 22%
We also adjusted portfolio holdings in an effort to reduce volatility and take
advantage of good values. Since we last reported to you, we added seven bonds,
including one convertible, and sold 10. To further reduce risk, management
increased the Fund's holdings in industrial and convertible securities, while
decreasing investments in banks, financial companies, electric utilities, and
foreign entities.
Preferred and common stocks played a slightly larger role by the end of the
year, 33% versus 24% at June 30 and 30% at the close of 1993. The utility sector
was the Fund's largest weighting at year-end. Your management sold two equity
holdings and added three. The addition of Rouse Co. 61/2% convertible preferred
gives the portfolio an additional participation in commercial real estate. Ford
Motor Company is one of the largest automobile manufacturers in the world and is
recording sharply higher earnings as the economy expands, with dividends
increasing as well. Lakehead Pipeline Partners generates income from the United
States' portion of a 3,200-mile oil pipeline originating in Western Canada.
Looking Ahead
Interest rates are one of the most powerful influences on the financial markets,
almost by definition. The long decline in interest rates from the early 1980s
through 1993 caused many to forget the risks of securities priced primarily on
the basis of yield. Going forward, it would appear that the risks will be better
understood.
As we move into 1995, we believe Pioneer Income Fund is well positioned to
continue to provide shareowners with high current income, despite the vagaries
of interest rates and economic growth. No one can fully predict the direction of
the stock and bond markets; however, we believe shareowners ultimately will
benefit from the Fund's emphasis on active management and a diversified
portfolio.
The following pages include the Fund's audited list of portfolio holdings and
financial statements as of December 31, 1994. If you have any questions
regarding your investment in Pioneer Income Fund, please contact your investment
representative, or call Pioneer at 1-800-225-6292. We appreciate your support.
Respectfully submitted,
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman and President,
Pioneer Income Fund
February 10, 1995
2
<PAGE>
GROWTH OF A $10,000 INVESTMENT*
This chart shows the growth of a $10,000 investment made in Pioneer Income Fund
at public offering price, compared to the growth of the Lehman Brothers
Corporate Bond Index and the Standard & Poor's 500 Index.
Average Annual Total Returns as of December 31, 1994
1 Year 5 Years 10 Years
------ ------- --------
Net Asset Value -4.31% 6.88% 10.13%
Offering Price* -8.60 5.90 9.62
[THE FOLLOWING TABLE IS REPRESENTED AS A PERFORMANCE GRAPH
IN THE PRINTED DOCUMENT]
Pioneer S&P 500 Wilshire
------- ------- --------
Oct-93 $ 9,426 $10,000 $10,000
Nov-93 $ 8,906 $ 8,871 $ 9,684
Dec-93 $ 8,067 $10,037 $ 9,553
Jan-94 $ 9,097 $10,383 $ 8,839
Feb-94 $ 8,606 $10,051 $10,242
Mar-94 $ 9,398 $ 9,859 $ 9,787
Apr-94 $ 9,460 $ 9,771 $ 8,877
May-94 $ 9,588 $ 9,882 $10,082
Jun-94 $ 9,288 $ 9,701 $ 9,884
Jul-94 $ 9,072 $10,008 $ 8,806
Aug-94 $ 9,261 $10,382 $ 9,888
Sep-94 $ 8,882 $10,175 $ 9,734
Oct-94 $ 8,692 $10,387 $ 9,378
Nov-94 $ 8,145 $ 9,977 $ 9,011
Dec-94 $ 8,088 $10,173 $ 9,708
The Lehman Brothers Corporate Bond Index is an unmanaged measure of
investment-grade domestic and yankee bonds. Bonds in the Index must be publicly
issued, fixed-rate and non-convertible. Index returns assume monthly
reinvestment of dividends and, unlike Fund returns, do not reflect any fees,
expenses or sales charges. Investors cannot directly invest in the Index.
The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely
held common stocks listed on the New York Stock Exchange, American Stock
Exchange and the Over-the-Counter market. Index returns assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. Investors cannot directly invest in the Index.
*Reflects deduction of the 4.50% maximum sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
Past performance does not guarantee future results. Returns and share prices
will fluctuate so that an investor's shares, when redeemed, may be worth more
or less than their original cost.
3
<PAGE>
PIONEER INCOME FUND
SCHEDULE OF INVESTMENTS
December 31, 1994
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating
Amount (unaudited) Value
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INVESTMENT IN SECURITIES--98.1%
BONDS--63.7%
Industrials--25.6%
$ 2,000,000 BB+ AMR Corp., 9.75%, 2000............................................. $ 2,010,900
4,950,000 BB+ AMR Corp., 9.88%, 2020............................................. 4,691,858
2,500,000 BBB Ashland Oil, Inc., 8.8%, 2012...................................... 2,504,350
5,000,000 BBB- Bowater Inc., 9.0%, 2009........................................... 4,930,150
2,000,000 BBB- Centex Corp., 8.75%, 2007.......................................... 1,897,100
2,000,000 BB+ Coastal Corp., 9.625%, 2012 ....................................... 2,058,780
5,000,000 BB+ Delta Air Lines, Inc., 9.2%, 2014 ................................. 4,380,750
5,000,000 BBB+ General Motors Corp., 9.4%, 2021................................... 5,191,050
4,000,000 BBB- Georgia - Pacific Corp., 9.875%, 2021 ............................. 4,116,680
3,000,000 BB- Huntsman Corp., 10.625, 2001....................................... 3,060,000
1,500,000 A The May Department Stores Co., 9.875%, 2000 ....................... 1,580,970
4,000,000 BBB+ Shopko Stores Inc., 9.25%, 2022 ................................... 3,972,760
3,000,000 BBB- Tele-Communications, Inc., 8.75%, 2023............................. 2,606,790
3,000,000 BBB- Time Warner, Inc., 9.15%, 2023..................................... 2,643,390
1,000,000 BB- Unisys Corp., 10.625, 1999......................................... 1,010,000
8,000,000 BB+ USX Corp., 9.375%, 2012 ........................................... 7,902,720
2,000,000 B+ Viacom International, 10.25%, 2001 ................................ 2,045,000
2,600,000 BB- Vons Companies, Inc., 9.625%, 2002................................. 2,548,000
3,500,000 B Weirton Steel, 10.875%, 1999....................................... 3,456,250
3,000,000 BBB Westinghouse Electric Corp., 8.625%, 2012 ......................... 2,702,790
1,250,000 A Westvaco Corp., 12.65%, 2014....................................... 1,323,588
-------------
Total ............................................................. $ 66,633,876
-------------
Financials--2.7%
5,000,000 AAA General Electric Capital Corp., 8.85%, 2005 ....................... $ 5,170,500
2,000,000 BBB+ General Motors Acceptance Corp., 8.5%, 2003 ....................... 1,970,780
-------------
Total.............................................................. $ 7,141,280
-------------
Utilities--Electric--17.4%
2,500,000 AAA Big Rivers Electric Cooperative, 9.5% , 2017 ...................... $ 2,637,500
2,000,000 AAA Cajun Electric Power Cooperative, 8.92%, 2019 ..................... 2,046,520
3,000,000 AAA Cajun Electric Power Cooperative, 9.52%, 2019 ..................... 3,167,970
5,000,000 BBB Commonwealth Edison Co., 9.75%, 2020............................... 4,884,200
2,970,000 A Public Service Electric & Gas Co., 9.75%, 2020..................... 3,220,401
10,000,000 AAA Rural Electric Cooperative (Kansas Electric Power), 9.73%, 2017.... 10,748,600
11,000,000 AAA Rural Electric Cooperative (Soyland), 9.7%, 2017 .................. 11,841,500
6,000,000 BBB Texas Utilities Electric Co., 10.625%, 2020 ....................... 6,568,860
-------------
Total ............................................................. $ 45,115,551
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
PIONEER INCOME FUND
SCHEDULE OF INVESTMENTS
December 31, 1994 (Continued)
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating
Amount (unaudited) Value
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
Utilities--Natural Gas--4.2%
$ 5,000,000 BB+ NorAm Energy Corp., 10.0%, 2019.................................... $ 4,850,000
6,000,000 B+ Transco Energy, 9.625%, 2000....................................... 6,090,000
-------------
Total ............................................................. $ 10,940,000
-------------
U.S. Government and Agency Obligations--7.8%
19,860,000 AAA United States Treasury Note, 8.5%, 1997............................ $ 20,157,554
-------------
Foreign Bonds--6.0%
835,356 NR Aid to the Korean Republic, 8.95%, 2002............................ $ 885,857
5,000,000 AA- BP America Inc., 10.0%, 2018....................................... 5,423,650
4,850,000 A+ Hydro-Quebec, 9.75%, 2018 ......................................... 5,174,222
4,891,566 NR Mexico City--Toluca Toll Road, 11.0%, 2002 ......................... 4,206,747
-------------
Total.............................................................. $ 15,690,476
-------------
TOTAL BONDS (COST $174,411,324) ................................... $165,678,737
-------------
CONVERTIBLE BONDS--1.9%
40,000 Atlantic Richfield, Conv., 9.0%, 1997 ............................. $ 1,045,000
3,500,000 Raymond Corp., Conv. Deb., 6.5%, 2003 ............................. 3,920,000
-------------
TOTAL CONVERTIBLE BONDS (COST $4,490,000) ......................... $ 4,965,000
-------------
Shares
- ------------
PREFERRED STOCKS--5.9%
117,000 Elf Overseas, Ltd., 8.5% Pfd....................................... $ 2,764,125
65,000 Rouse Co., 6.5% Pfd................................................ 3,152,500
102,000 United Water Resources, 7.625% Pfd. ............................... 9,537,000
-------------
TOTAL PREFERRED STOCKS (COST $16,416,738) ......................... $ 15,453,625
-------------
COMMON STOCKS--26.6%
Basic Industries--0.9%
42,000 E.I. du Pont de Nemours and Co. ................................... $ 2,362,500
-------------
Consumer Durables--1.7%
100,000 Ford Motor Company................................................. $ 2,800,000
22,600 The May Department Stores Co. ..................................... 762,750
20,000 Sears, Roebuck & Co................................................ 920,000
-------------
Total ............................................................. $ 4,482,750
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
PIONEER INCOME FUND
SCHEDULE OF INVESTMENTS
December 31, 1994 (Continued)
<TABLE>
<CAPTION>
Shares Value
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
Non-Durables--3.1%
50,000 CPC International, Inc. ........................................... $ 2,662,500
50,000 Flowers Industries, Inc. .......................................... 906,250
100,000 Heinz, H.J. & Co. ................................................. 3,675,000
24,000 Quaker Oats Co. ................................................... 738,000
-------------
Total ............................................................. $ 7,981,750
-------------
Energy--2.6%
50,000 Atlantic Richfield Co. ............................................ $ 5,087,500
30,000 Texaco, Inc........................................................ 1,796,250
-------------
Total ............................................................. $ 6,883,750
-------------
Financial--2.5%
17,850 FirsTier Financial, Inc. .......................................... $ 564,506
206,000 Huntington Bancshares Inc. ........................................ 3,553,500
20,200 Lincoln National Corp. ............................................ 707,000
50,000 Northern Trust Corp. .............................................. 1,750,000
-------------
Total ............................................................. $ 6,575,006
-------------
Real Estate--4.3%
100,000 BRE Properties, Inc., Class A...................................... $ 3,087,500
180,100 Carr Realty Corp. ................................................. 3,241,800
120,800 Health Care REIT, Inc. ............................................ 2,431,100
54,000 Taubman Centers, Inc. ............................................. 526,500
133,100 United Dominion Realty Trust....................................... 1,913,313
-------------
Total ............................................................. $ 11,200,213
-------------
Services--1.1%
50,000 Johnson & Johnson.................................................. $ 2,737,500
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
PIONEER INCOME FUND
SCHEDULE OF INVESTMENTS
December 31, 1994 (Continued)
<TABLE>
<CAPTION>
Shares Value
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
Utilities--10.3%
200,000 Allegheny Power System, Inc. ...................................... $ 4,350,000
72,780 AT&T Corp. ........................................................ 3,657,195
96,000 Ameritech Corp. ................................................... 3,876,000
40,000 Brooklyn Union Gas Co.............................................. 890,000
60,000 E'Town Corp........................................................ 1,582,500
45,600 Lakehead Pipeline Partner-LP....................................... 1,202,700
100,000 Nynex Corp. ....................................................... 3,675,000
100,000 Oklahoma Gas and Electric Co. ..................................... 3,312,500
100,000 Pacific Telesis Group ............................................. 2,850,000
40,000 U.S. West, Inc. ................................................... 1,425,000
-------------
Total ............................................................. $ 26,820,895
-------------
TOTAL COMMON STOCKS (COST $68,995,496) ............................ $ 69,044,364
-------------
TOTAL INVESTMENT IN SECURITES (COST $264,313,561) ................. $255,141,726
-------------
Principal
Amount
---------- TEMPORARY CASH INVESTMENTS--0.2%
$ 532,000 Household Financial Corp., 5.65%, due 1/3/95 ...................... $ 532,084
-------------
ALL OTHER ASSETS, LESS LIABILITIES--1.7%............................ $ 4,296,647
-------------
NET ASSETS--100%.................................................... $259,970,457
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
PIONEER INCOME FUND
BALANCE SHEET
December 31, 1994
<TABLE>
<S> <C>
Assets:
Investments in securities, at market value (identified cost and cost for federal income tax purposes
$264,313,561; see Schedule of Investments and Notes 1, 2 and 3)............................ $255,141,726
Temporary cash investment, at approximate market value
(See Schedule of Investments and Note 1)................................................... 532,084
Cash......................................................................................... 70,565
Receivables--
Interest................................................................................... 4,059,361
Dividends.................................................................................. 453,947
Trust shares sold.......................................................................... 140,452
Other........................................................................................ 22,427
------------
Total assets............................................................................. $260,420,562
------------
Liabilities:
Payables--
Trust shares repurchased................................................................... $ 189,214
Accrued expenses--
Management fees (Note 4)................................................................... 10,363
Other (Notes 4, 5 and 6)................................................................... 250,528
------------
Total liabilities........................................................................ $ 450,105
------------
Net Assets:
Trust shares (100,000,000 shares authorized), amount
paid in on 28,542,765 shares outstanding (Notes 1 and 7) .................................. $270,011,409
Accumulated undistributed net investment income.............................................. 251,982
Accumulated net realized loss on investments (Notes 2 and 7) ................................ (1,121,099)
Net unrealized loss on investments (Note 2).................................................. (9,171,835)
------------
Total net assets (equivalent to $9.11 per share based on
28,542,765 trust shares outstanding)................................................... $259,970,457
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
PIONEER INCOME FUND
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994
<TABLE>
<CAPTION>
Investment Income (Note 1):
<S> <C>
Interest................................................................................... $ 16,844,205
Dividends.................................................................................. 4,648,824
Other ..................................................................................... 273,582
------------
Total investment income.................................................................. $ 21,766,611
------------
Expenses:
Management fees (Note 4)................................................................... $ 1,341,020
Transfer fees (Note 5)..................................................................... 694,616
Distribution fees (Note 6)................................................................. 696,271
Registration fees.......................................................................... 53,197
Custodian fees............................................................................. 35,070
Professional fees.......................................................................... 45,093
Accounting................................................................................. 56,607
Fees and expenses of nonaffiliated directors............................................... 23,057
Miscellaneous expenses..................................................................... 2,048
------------
Total expenses........................................................................... $ 2,946,979
------------
Net investment income.................................................................. $ 18,819,632
------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments........................................................... $ (1,121,099)
Net decrease in unrealized gain on investments............................................. (30,351,285)
------------
Net loss on investments.................................................................. $(31,472,384)
------------
Net decrease in net assets resulting from operations................................. $(12,652,752)
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
PIONEER INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
------------- ------------
From Operations:
<S> <C> <C>
Net investment income ...................................................... $ 18,819,632 $ 17,620,359
Net realized gain (loss) on investments .................................... (1,121,099) 8,651,277
Net increase (decrease) in unrealized gain on investments................... (30,351,285) 609,251
------------- ------------
Net increase (decrease) in net assets resulting from operations........... $ (12,652,752) $ 26,880,887
------------- ------------
Equalization:
Net undistributed investment income included in price of
shares sold, net of shares repurchased (Notes 1 and 7).................... $ (1,217) $ 212,294
------------- ------------
Distributions to Shareholders From:
Net investment income--($0.67 and $0.64 per share, respectively) ............ $ (19,110,002) $(17,220,854)
Net realized gain on investments ($0.00 and $0.30 per share, respectively).. (108,415) (8,400,015)
------------- ------------
Decrease in net assets resulting from distributions to shareholders....... $ (19,218,417) $(25,620,869)
------------- ------------
From Fund Share Transactions: Shares
--------------------------
Net proceeds from sale of shares............... 3,500,927 6,243,795 $ 33,801,549 $ 65,102,577
Net asset value of shares issued to
shareholders in reinvestment of
dividends ................................... 1,691,536 2,075,347 15,932,724 21,408,431
Cost of shares repurchased .................... (5,703,841) (3,957,673) (54,590,110) (41,317,307)
---------- ---------- ------------- ------------
Increase (decrease) in net assets resulting
from fund share transactions............... (511,378) 4,361,469 $ (4,855,837) $ 45,193,701
=========== ========== ------------- ------------
Net increase (decrease) in net assets..................................... $ (36,728,223) $ 46,666,013
Net Assets:
Beginning of year........................................................... 296,698,680 250,032,667
------------- ------------
End of year (including accumulated undistributed net investment income
of $251,982 and $399,505, respectively)................................... $259,970,457 $296,698,680
============ ============
</TABLE>
The accompanying notes are an integral part of thesefinancial statements.
10
<PAGE>
PIONEER INCOME FUND
FINANCIAL HIGHLIGHTS -- SELECTED DATA FOR A SHARE OUTSTANDING
<TABLE>
<CAPTION>
For the Year Ended December 31,
-----------------------------------------------------------------------------------------
1994 1993+ 1992 1991 1990 1989 1988 1987 1986 1985
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $10.21 $10.13 $10.14 $ 9.14 $ 9.53 $ 8.92 $ 8.67 $ 8.94 $ 9.17 $ 8.28
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations--
Net investment income $ 0.66 $ 0.65 $ 0.65 $ 0.65 $ 0.70 $ 0.74 $ 0.77 $ 0.76 $ 0.80 $ 0.80
Net realized and unrealized
gain (loss) on investments (1.09) 0.37 0.09 1.00 (0.38) 0.63 0.27 (0.14) 0.04 1.09
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations $(0.43) $ 1.02 $ 0.74 $ 1.65 $ 0.32 $ 1.37 $ 1.04 $ 0.62 $ 0.84 $ 1.89
Distribution to shareholders
from--
Net investment income (0.67) (0.64) (0.66) (0.65) (0.71) (0.75) (0.76) (0.76) (0.80) (0.80)
Net realized capital gains 0.00 (0.30) (0.09) 0.00 0.00 (0.01) (0.03) (0.13) (0.27) (0.20)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
in net asset value $(1.10) $ 0.08 $(0.01) $ 1.00 $(0.39) $ 0.61 $ 0.25 $(0.27) $(0.23) $ 0.89
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $ 9.11 $10.21 $10.13 $10.14 $ 9.14 $ 9.53 $ 8.92 $ 8.67 $ 8.94 $ 9.17
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return* (4.31%) 10.24% 7.59% 18.62% 3.59% 15.89% 12.29% 6.82% 9.29% 23.84%
Ratio of net operating expenses
to average net assets 1.11% 1.06% 0.99% 1.04% 0.94% 0.78% 0.80% 0.79% 0.77% 0.80%
Ratio of net investment income
to average net assets 7.07% 6.52% 6.47% 6.73% 7.67% 7.98% 8.55% 8.29% 8.46% 9.05%
Portfolio turnover rate 50% 69% 54% 43% 44% 69% 87% 115% 76% 136%
Net assets, end of year
(in thousands) $259,970 $296,699 $250,033 $197,184 $166,205 $169,607 $159,212 $149,659 $118,760 $75,365
</TABLE>
+ Prior to the assumption of the management agreement on December 1, 1993 by
Pioneering Management Corporation, the Fund was advised by Mutual of Omaha
Fund Management Company.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all dividends and 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.
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
PIONEER INCOME FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
1. Pioneer Income Fund (the Fund), a Delaware business trust, is registered
under the Investment Company Act of 1940 as a diversified, open-end management
company. On December 1, 1993, Mutual of Omaha Fund Management Company (FMC) was
sold to The Pioneer Group, Inc. (PGI). Concurrent with the sale of FMC to PGI,
the Fund's shareholders approved a new investment management agreement with
Pioneering Management Corporation (PMC), a wholly owned subsidiary of PGI.
The following is a summary of significant accounting policies consistently
followed by the Fund, which are in conformity with those generally accepted in
the investment company industry.
A. Investment Securities--Security transactions are recorded on the date
the securities are purchased or sold. Debt securities (other than short-term
obligations), including listed issues, are valued on the basis of valuations
furnished by a pricing service which utilizes both dealer-supplied valuations
and electronic data processing techniques which take into account appropriate
factors such as institution-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other
market data. Temporary cash investments are stated at cost plus accrued
interest, which approximates market value. Interest income is recorded on the
accrual basis. Settlements from litigation and class action suits are recognized
when the fund acquires an enforceable right to such awards. These settlements
are included in other income to the extent that they are not identifiable with
realized or unrealized losses. Market discount is accreted daily on a
straight-line basis.
Gains and losses from sales of investments are calculated on the
"identified cost" method for both financial reporting and federal income tax
purposes. It is the Fund's practice first to select for sale those securities
which have the highest cost and also qualify for long-term capital gain or loss
treatment for tax purposes.
B. Federal Income Taxes--It is the policy of the Fund to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its net investment income and net realized
capital gains, if any, to its shareholders. Therefore, no federal tax provisions
are required.
The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with income tax rules. Therefore,
the source of a portfolio's distributions may be shown in the accompanying
financial statements as either from or in excess of net investment income or net
realized gain of investment transactions, or from capital, depending on the type
of book/tax differences that may exist.
C. Fund Shares--The Fund records sales and repurchases of its fund shares
on the trade date. Net losses, if any, as a result of cancellations, are
absorbed by Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for
the Fund and wholly owned subsidiary of PGI. PFD earned $120,501 in underwriting
commissions on the sale of fund shares during the year ended December 31, 1994.
Dividends and distributions to shareholders are recorded as of the ex-dividend
date.
D. Equalization--The Fund follows the accounting practice known as
equalization by which a portion of the proceeds from sales and costs of
repurchases of fund shares, which is equivalent, on a per share basis, to the
amount of undistributed net income on the date of the transaction, is credited
or charged to fund shares.
2. At December 31, 1994, the total cost of securities, the net realized gain,
the accumulated net realized gain and the increase in net unrealized loss for
federal income tax purposes were identical to those on a financial reporting
basis. Aggregate gross unrealized gain on securities in which there was an
excess of market value over tax cost was $7,602,607. Aggregate gross unrealized
12
<PAGE>
PIONEER INCOME FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1994 (Continued)
loss on securities in which there was an excess of tax cost over market value
was $16,774,442. Net unrealized loss for tax purposes was $9,171,835.
At December 31, 1994, the Fund had a net capital loss carryforward of
$1,121,099 which will expire in the year 2002 if not utilized.
3. During the year ended December 31, 1994, the cost of purchases and the
proceeds from sales of securities, other than temporary cash investments, were
as follows:
Purchases Sales
----------- ------------
Long-term U.S. Government $57,270,281 $38,408,544
Other Long-term Securities 85,124,285 99,026,755
4. Pioneering Management Corporation (PMC) is the Fund's investment adviser and
a wholly owned subsidiary of PGI. PMC has agreed that until December 1, 1995,
its management fee shall not exceed the fee that would have been payable under
the prior management contract with Mutual of Omaha Fund Management Company
(FMC). Management fees are presently calculated in accordance with the prior
management contract, at the annual rates set forth below as a percentage of
average daily net assets.
Net Assets Annual Fee
- --------- ----------
For assets up to $100,000,000 .............................. 50%
For assets in excess of $100,000,000
to $200,000,000 .......................................... 48%
For assets in excess of $200,000,000
to $300,000,000 .......................................... 46%
For assets in excess of $300,000,000
to $400,000,000 .......................................... 44%
For assets in excess of $400,000,000
to $500,000,000 .......................................... 42%
Over $500,000,000 .......................................... 40%
Beginning on December 1, 1995, management fees will be calculated at the
annual rates set forth as a percentage of average daily net assets.
Net Assets Annual Fee
- --------- ----------
For assets up to $250,000,000 .............................. .50%
For assets in excess of $250,000,000
to $300,000,000 .......................................... .48%
Over $300,000,000 .45%
PMC furnishes investment advice, provides office facilities, and pays
executive salaries and certain other operating expenses under the management
agreement. No officer of the Fund receives any compensation directly from the
Fund. All officers of the Fund are directors and/or officers of the investment
adviser and/or principal underwriter. In addition, certain other services and
costs, including fund accounting, regulatory reporting and insurance premiums,
are paid by the Fund under the management agreement. Included in Accrued
expenses--Other is $5,346 in accounting fees payable to PMC at
December 31, 1994.
5. Pioneering Services Corporation (PSC), a wholly owned subsidiary of PGI,
provides substantially all transfer agent and shareholder services to the Fund
at negotiated rates. Included in Accrued expenses--Other is $54,638 in transfer
fees payable to PSC at December 31, 1994.
6. The Fund has adopted a Plan of Distribution (the Plan) in accordance with
Rule 12b-1 pursuant to the Investment Company Act of 1940. The Plan generally
provides that the Fund will reimburse PFD for PFD's actual expenditures to
finance activities intended to result in the sale of the Fund's shares or to
provide services to the Fund's shareholders. Expenditures of the Fund pursuant
to the Plan may not exceed 0.25% of the Fund's average annual net assets.
Included in Accrued expenses--Other is $167,457 in distribution fees payable to
PFD at December 31, 1994.
13
<PAGE>
PIONEER INCOME FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1994 (Continued)
7. The Fund has adopted the provisions of Statement of Position 93-2 (SOP 93-2),
"Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies". SOP
93-2 requires the Fund to report the accumulated net investment income (loss)
and accumulated net realized capital gain (loss) accounts to approximate amounts
available for future distributions on a tax basis (or to offset future realized
capital gains). As a result, the Fund has reclassified the amount of $142,847
from accumulated net realized loss to net investment income. This
reclassification has no impact on the net asset value of the Fund and is
designed to present the Fund's capital accounts on a tax basis.
PIONEER INCOME FUND
TAX TREATMENT OF DISTRIBUTIONS MADE DURING THE YEAR ENDED DECEMBER 31, 1994
During the year ended December 31, 1994, the Fund paid the following
distributions:
<TABLE>
<CAPTION>
Distributions Per Share
-----------------------------------
From Net
To Shareholders Investment From Short-term
of Record Payment Date Income Capital Gains
------------------ ------------------ ---------- --------------
<S> <C> <C> <C> <C>
March 17, 1994 March 31, 1994 $0.16 --
June 16, 1994 June 30, 1994 0.16 --
September 15, 1994 September 30, 1994 0.16 --
December 21, 1994 December 28, 1994 0.19 --
----- -----
TOTAL $0.67 $0.00
===== =====
</TABLE>
For purposes of the dividend exclusion, none of the $0.67 per share qualifies
for the exclusion.
TRUSTEES' FEES, PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF TRUSTEES AND
OFFICERS
- --------------------------------------------------------------------------------
The aggregate direct remuneration paid by the Fund to nonaffiliated trustees and
officers during the year ended December 31, 1994 was approximately $23,217, plus
expenses incurred in attending trustees meetings of approximately $1,621. Fees
of trustees who are affiliated with or "interested persons" of Pioneering
Management Corporation and Pioneer Funds Distributor, Inc., investment adviser
and principal underwriter, respectively, of Fund ($1,000 in 1994), are
reimbursed to the Fund by Pioneering Management Corporation in accordance with
the management contract with the Trust. At December 31, 1994, the trustees and
officers of the Fund did not own any shares of the Fund. The Pioneer Group,
Inc., is a publicly-held corporation of which Mr. Cogan owned approximately 15%
of the outstanding shares of capital stock at December 31, 1994.
14
<PAGE>
PIONEER INCOME FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND THE BOARD OF DIRECTORS OF PIONEER INCOME FUND:
We have audited the accompanying balance sheet of Pioneer Income Fund,
including the schedule of investments, as of December 31, 1994, and the related
statement of operations, statement of changes in net assets and financial
highlights for the year then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit. The financial statements as of December 31, 1993 and the
financial highlights for each of the nine years in the period ended December 31,
1993 were audited by other auditors, whose report dated February 22, 1994
expressed an unqualified opinion on those financial statements and financial
highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Pioneer Income Fund as of December 31, 1994, the results of its operations,
changes in its net assets and financial highlights for the year then ended, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 3, 1995
15
<PAGE>
PIONEER INCOME FUND
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR.
Chairman and President
DAVID D. TRIPPLE
Executive Vice President
JOHN A. CAREY
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.
SHAREHOLDER
SERVICES AND
TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts
02109
DIRECTORS
JOHN F. COGAN, JR.
RICHARD H. EGDAHL, M.D.
MARGARET B. W. GRAHAM
JOHN W. KENDRICK
MARGUERITE A. PIRET
DAVID D. TRIPPLE
STEPHEN K. WEST
JOHN WINTHROP
PRINCIPAL UNDERWRITER
PIONEER FUNDS
DISTRIBUTOR, INC.
LEGAL COUNSEL
HALE AND DORR
INDEPENDENT
PUBLIC
ACCOUNTANTS
ARTHUR ANDERSEN LLP
Please call Pioneer for information on:
Existing accounts, new accounts, prospectuses,
applications and service forms................................ 1-800-225-6292
Fund yields and prices........................................ 1-800-225-4321
Toll-free fax................................................. 1-800-225-4240
Retirement plans.............................................. 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
When distributed to persons who are not shareholders of the Fund, this report
must be accompanied by an official prospectus, which discusses the objectives,
policies, sales charges and other information about the Fund.
0295-2260
(C) Pioneer Funds Distributor, Inc.
DISTRIBUTION PLAN
Pioneer Income Fund
DISTRIBUTION PLAN, dated as of June 30, 1994 of Pioneer Income Fund,
a Delaware business trust (the "Fund").
WITNESSETH
WHEREAS, the Fund 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 Fund intends to distribute its shares of beneficial
interest (the "Shares") 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 Distribution Plan (the "Plan") as a plan of distribution
pursuant to such rule;
WHEREAS, the Fund desires to engage Pioneer Funds Distributor, Inc.,
a Massachusetts corporation ("PFD"), to provide certain distribution services
for the Fund in connection with the Plan;
WHEREAS, the Fund desires to enter into an underwriting agreement
with PFD, whereby PFD will provide facilities and personnel and render services
to the Fund in connection with the offering and distribution of Shares (the
"Underwriting Agreement");
WHEREAS, the Fund also recognizes and agrees that (a) PFD may retain
the services of firms or individuals to act as dealers or wholesalers
(collectively, the "Dealers") of the Shares in connection with the offering of
Shares, (b) PFD may compensate any Dealer that sells Shares in the manner and at
the rate or rates to be set forth in an agreement between PFD and such Dealer,
and (c) PFD may make such payments to the Dealers for distribution services out
of the fee paid to PFD hereunder, its profits or any other source available to
it; and
WHEREAS, the Board of Trustees of the Fund, in considering whether
the Fund should adopt and implement this Plan, has evaluated such information as
it deemed necessary to make an informed determination whether this 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 Fund for
such purposes, and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Fund and its
shareholders;
NOW, THEREFORE, the Board of Trustees of the Fund hereby adopts this
Plan for the Fund as a plan of distribution in accordance with Rule 12b-1, on
the following terms and conditions:
1. The Fund may expend pursuant to this Plan amounts not to exceed
0.25 of 1% of the Fund's average daily net assets per annum.
2. Subject to the limit in paragraph 1, the Fund shall reimburse PFD
for amounts expended by PFD to finance any activity which is primarily intended
to result in the sale of shares of the Fund or the provision of services to
shareholders of the Fund, including but not limited to commissions or other
payments to Dealers and salaries and other expenses of PFD relating to selling
or servicing efforts, provided, that the Board of Trustees of the Fund shall
approve categories of expenses for which reimbursement shall be made pursuant to
this paragraph 2 and, without limiting the generality of the foregoing, the
initial categories of such expenses shall be (i) a service fee to be paid to
qualified broker-dealers in an amount not to exceed .25 of 1% per annum of the
Fund's daily net assets; (ii) reimbursement to PFD for its expenditures for
broker-dealer commissions and employee compensation on certain sales of the
Fund's Shares; and (iii) reimbursement to PFD for expenses incurred providing
services to shareholders and supporting broker-dealers and other organizations,
such as banks and trust companies, in their effort to provide such services (any
addition of such categories shall be subject to the approval of the Qualified
Trustees, as defined below, of the Fund). Such reimbursement shall be paid ten
(10) days after the end of the month or quarter, as the case may be, in which
such expenses are incurred. The Fund acknowledges that PFD will charge a sales
load in connection with sales of such shares and that PFD will reallow to
Dealers all or a portion of such sales load, as described in the Fund's
Prospectus from time to time. Nothing contained herein is intended to have any
effect whatsoever on PFD's ability to charge any such sales load or to reallow
all or any portion thereof to Dealers.
3. The Fund understands that agreements between PFD and Dealers may
provide for payment of fees to Dealers in connection with the sale of Shares and
the provision of services to shareholders of the Fund. Nothing in this Plan
shall be construed as requiring the Fund to make any payment to any Dealer or to
have any obligations to any Dealer in connection with services as a dealer of
the Shares. PFD shall agree and undertake that any agreement entered into
between PFD and any Dealer shall provide that such Dealer shall look solely to
PFD for compensation for its services thereunder and that in no event shall such
Dealer seek any payment from the Fund.
4. Nothing herein contained shall be deemed to require the Fund to
take any action contrary to its Agreement and Declaration of Trust 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 Fund's Board of Trustees of the
responsibility for and control of the conduct of the affairs of the Fund.
5. This Plan shall become effective upon approval by a vote of the
Board of Trustees and a vote of a majority of the Trustees who are not
"interested persons" of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to the Plan
(the "Qualified Trustees"), such votes to be cast in person at a meeting called
for the purpose of voting on this Plan and (ii) a vote of a majority of the
outstanding voting securities of the Fund.
6. This 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 Fund and a majority of the Qualified Trustees.
If such annual approval is not obtained, this Plan shall expire on June 30,
1994.
7. This Plan may be amended at any time by the Board of Trustees,
provided that this Plan may not be amended to increase materially the limitation
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 the Fund and may not be materially amended in any case without a
vote of a majority of both the Trustees and the Qualified Trustees. Any
amendment of this Plan to increase or modify the expense categories initially
designated by the Trustees in paragraph 2 above shall only require approval of a
majority of the Trustees and the Qualified Trustees if such amendment does not
include an increase in the expense limitation set forth in paragraph 1 above.
This Plan may be terminated at any time 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 the Fund.
8. In the event of termination or expiration of the Plan, the Fund
may nevertheless, within twelve months of such termination or expiration
reimburse any expenses which have been incurred prior to such termination or
expiration, provided that payments by the Fund during such twelve-month period
shall not exceed .25 of 1% of the Fund's average net daily assets during such
period and provided further that such payments are specifically approved by the
Board of Trustees, including a majority of the Qualified Trustees.
9. The Fund and PFD shall provide to the Fund's Board of Trustees,
and the Board of Trustees shall review, at least quarterly, a written report of
the amounts expended under this Plan and the purposes for which such
expenditures were made.
10. While this 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 Fund.
11. For the purposes of this 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.
12. The Fund shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 9 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.
13. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
14. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers and their seal to be hereto
affixed as of day and year first above written.
ATTEST: PIONEER INCOME FUND
Joseph P. Barri, John F. Cogan, Jr.
Secretary President
ATTEST: PIONEER FUNDS DISTRIBUTOR, INC.
Joseph P. Barri, Robert L. Butler
Clerk President
FORM OF
CLASS B DISTRIBUTION PLAN
PIONEER INCOME FUND
CLASS B DISTRIBUTION PLAN, dated as of April __, 1995 of PIONEER INCOME
FUND, a Massachusetts 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 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"), provide certain distribution services for the
Trust's Class B Shares in connection with the Class B Plan;
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 such Rule
12b-1) with PFD, whereby PFD 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) PFD 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) PFD 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 PFD and
such Dealer and (c) PFD may make such payments to the Dealers for distribution
services out of the fee paid to PFD hereunder, any deferred sales charges
imposed by PFD in connection with the repurchase of Class B shares, its profits
or any other source available to it;
WHEREAS, the Trust recognizes and agrees that PFD may impose certain
deferred sales charges in connection with the repurchase of Class B shares by
the Trust, and PFD 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 PFD for (1) distribution
services and (2) personal and account maintenance services performed
and expenses incurred by PFD in connection with the Trust's Class B
shares. Such compensation shall be calculated and accrued daily and
paid quarterly or at such other intervals as the Board of Trustees may
determine.
(b) The amount of compensation paid during any one year for
distribution services shall be .75% of the average daily net assets of
the Trust attributable to such year.
(c) Distribution services and expenses for which PFD may be
compensated pursuant to this Plan include, without limitation:
compensation to and expenses (including allocable overhead, travel and
telephone expenses), of (i) brokers and dealers who are members of the
National Association of Securities Dealers, Inc. ("NASD") or their
officers, sales representatives and employees; (ii) compensation to
and expenses of PFD 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 amount of compensation paid for personal and account
maintenance services and expenses shall be .25% of the average daily
net assets of the Trust attributable to such year. As partial
consideration for personal services and/or account maintenance
services provided by PFD to the Class B shares, PFD shall be entitled
to be paid any fees payable under this clause (d) 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.
(e) Personal and account maintenance services for which PFD 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
PFD or any of its affiliates, banks, or 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.
(f) PFD may impose certain deferred sales charges in connection with
the repurchase of Class B shares by the Trust and PFD may retain (or
receive from the Trust as the case may be) all such deferred sales
charges.
(g) 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 subsection (d) of Section 26 of Article III of the Rules of
Fair Practice of the NASD.
2. The Trust understands that agreements between PFD 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. PFD shall agree and undertake that
any agreement entered into between PFD and any Dealer shall provide that such
Dealer shall look solely to PFD for compensation for its services thereunder and
that in no event shall such Dealer seek any payment from the Trust.
3. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its 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.
4. This Class B Plan shall become effective upon approval by a vote of the
Board of Trustees and 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 to be cast in person at
a meeting called for the purpose of voting on this Class B Plan.
5. 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
____________, 1995.
6. This Class B Plan may be amended at any time by the Board of Trustees,
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
Class B voting securities" 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 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.
7. The Trust and PFD 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
[ARTICLE] 6
[CIK] 0000069405
[NAME] Pioneer Income Fund
[SERIES]
[NUMBER] 0
[NAME] NONE
[MULTIPLIER] 1
[CURRENCY] U. S .Dollars
[PERIOD-TYPE] Year
[FISCAL-YEAR-END] DEC-31-1994
[PERIOD-START] JAN-01-1994
[PERIOD-END] DEC-31-1994
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 264,313,561
[INVESTMENTS-AT-VALUE] 255,141,726
[RECEIVABLES] 4,653,760
[ASSETS-OTHER] 22,427
[OTHER-ITEMS-ASSETS] 602,649
[TOTAL-ASSETS] 260,420,562
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 450,105
[TOTAL-LIABILITIES] 450,105
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 270,011,409
[SHARES-COMMON-STOCK] 28,542,765
[SHARES-COMMON-PRIOR] 29,054,143
[ACCUMULATED-NII-CURRENT] 251,982
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (1,121,099)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (9,171,835)
[NET-ASSETS] 259,970,457
[DIVIDEND-INCOME] 4,648,824
[INTEREST-INCOME] 16,844,205
[OTHER-INCOME] 273,582
[EXPENSES-NET] (2,946,979)
[NET-INVESTMENT-INCOME] 18,819,632
[REALIZED-GAINS-CURRENT] (1,121,099)
[APPREC-INCREASE-CURRENT] (30,351,285)
[NET-CHANGE-FROM-OPS] (12,652,752)
[EQUALIZATION] (1,217)
[DISTRIBUTIONS-OF-INCOME] (19,011,002)
[DISTRIBUTIONS-OF-GAINS] (108,415)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 3,500,927
[NUMBER-OF-SHARES-REDEEMED] (5,703,841)
[SHARES-REINVESTED] 1,691,536
[NET-CHANGE-IN-ASSETS] (36,728,223)
[ACCUMULATED-NII-PRIOR] 399,505
[ACCUMULATED-GAINS-PRIOR] 21,430,712
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (1,341,020)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (2,946,979)
[AVERAGE-NET-ASSETS] 266,189,986
[PER-SHARE-NAV-BEGIN] 10.210
[PER-SHARE-NII] 0.660
[PER-SHARE-GAIN-APPREC] (1.090)
[PER-SHARE-DIVIDEND] (0.670)
[PER-SHARE-DISTRIBUTIONS] 0.000
[RETURNS-OF-CAPITAL] 0.000
[PER-SHARE-NAV-END] 9.110
[EXPENSE-RATIO] 1.110
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.000
