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PIONEER
Pioneer
Income
Fund
SEMIANNUAL REPORT
JUNE 30, 1995
<PAGE>
PIONEER INCOME FUND
DEAR SHAREOWNERS:
The first six months of 1995 saw strong rallies in the U.S. bond and stock
markets. Income-oriented investors enjoyed significant total returns as interest
rates fell. The bond rally -- sparked by foreign central banks buying U.S.
government bonds to defend the U.S. dollar -- was fueled by signs of weaker
economic growth, low inflation and expectations of the Federal Reserve moving to
lower short-term interest rates. The stock market rose as investors began to
expect the U.S. economy to experience a "soft landing," rather than recession,
and a quick resumption of good earnings growth. Pioneer Income Fund was a
substantial beneficiary of the improved conditions for bond and stock investors.
How Your Fund Performed
We report the following results for Pioneer Income Fund for the six months ended
June 30, 1995:
o Class A -- Shareowners received a total of $0.32 per share in income
dividends. The Fund provided a 5.77% 30-day SEC yield on June 30, based on
net asset value. Net asset value was $9.79 per share on June 30, versus
$9.11 at December 31, 1994. Over the first six months of 1995, total return
was 11.08% based on net asset value and assuming reinvestment of the two
quarterly income dividends. For shareowners who paid the maximum 4.50%
sales charge, total return was 6.08%.
The table below shows the Fund's performance over longer periods.
Average Annual Total Returns
(as of June 30, 1995)
--------------------------------------------------------------------------------
Net Asset Public Offering
Period Value *Price*
--------------------------------------------------------------------------------
10 Years 9.95% 9.44%
--------------------------------------------------------------------------------
5 Years 8.63 7.65
--------------------------------------------------------------------------------
One Year 11.29 6.33
--------------------------------------------------------------------------------
On April 28, 1995, we introduced Class B shares to Pioneer Income Fund.
Following is performance information for these shares for the period from April
28 through June 30.
o Class B -- Shareowners received $0.15 per share in income dividends. The
Fund's 30-day SEC yield was 5.22% as of June 30. Net asset value was $9.78
per share on June 30, versus $9.55 on April 28. The Fund generated a 3.97%
total return, based on net asset value, assuming shares were held
throughout the abbreviated period. Total return was -0.03% assuming shares
were sold, and the 4% contingent deferred sales charge paid, on June 30.
The unmanaged Lehman Brothers Corporate Bond Index showed a total return of
13.80% for the six months ended June 30, while the unmanaged Standard & Poor's
500 Index rose 20.15%. We are pleased to have positive returns to report after
the difficult conditions of 1994.
* Reflects deduction of the maximum 4.50% sales charge at the beginning of the
period and assumes reinvestment of all distributions at net asset value.
Past performance does not guarantee future results. Share price and return
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
<PAGE>
How Pioneer Managed Your Investment
Pioneer Income Fund's principal objective is to generate a high yield based on
current income. Accordingly, the Fund makes significant investment in bonds and
dividend-paying stocks. We kept the asset allocation of the Fund roughly the
same during the first six months of the year, approximately 60% bonds and 40%
stocks. We did slightly reduce the allocation to bonds and increase holdings in
preferred and common stocks. However, the main additions on the equity side were
convertible preferred stocks. The current yields on preferreds we purchased,
ranging from 6.7% to 8.2%, compared quite favorably with yields on other
income-oriented investments eligible for the portfolio.
With respect to bonds, we continued to whittle away at the average maturity. At
June 30, 1995, the average maturity was 9.3 years, versus 10.8 years at December
31, 1994. We also continued to reduce the Fund's exposure to foreign bonds,
which went from about 6% of total assets at December 31 to about 3% at June 30.
Both actions were aimed at reducing the volatility of the portfolio. Otherwise,
we made a number of substitutions in the portfolio. We added positions in six
bonds and liquidated holdings in seven. Overall, we enlarged the Fund's
investments in industrial bonds to take advantage of attractive returns, and we
reduced holdings in U.S. government securities.
On the equity side, we added the convertible preferred shares of Bethlehem
Steel, Reynolds Metals and Sprint. The Sprint shares are actually convertible
not into Sprint itself, but rather into shares of Southern New England Telephone
owned by Sprint. Otherwise, we made one substitution each in the financial and
utilities sectors. New positions there were in the common shares of Boatmen's
Bancshares, a regional bank headquartered in St. Louis, Missouri, and Western
Resources, a Kansas-based electric and gas utility.
Looking Ahead
Interest rates remain the most important influence on income-oriented investors.
So far this year, their effect has been benign and encouraging as interest rates
generally have declined. However, we are ever mindful that the direction of
rates can quickly reverse. Inflation, which often drives interest rates, has
generally stayed at modest levels. Also, the economy has appeared to slow, and
that may mean a slightly lower rate of growth in demand for loans. On the other
hand, the weakness of the dollar versus some key foreign currencies persists as
a concern. As always, we shall structure the portfolio around individual bond
and stock issues that we feel are sound investments for the long term,
regardless of the vagaries of current market conditions.
The following pages contain the audited list of portfolio holdings and set of
financial statements as of June 30, 1995. Please get in touch with your
investment representative if you have any questions about your investment in
Pioneer Income Fund, or call Pioneer directly at 1-800-225-6292. Thank you for
your support.
Respectfully submitted,
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman and President,
Pioneer Income Fund
August 10, 1995
2
<PAGE>
PIONEER INCOME FUND
SCHEDULE OF INVESTMENTS
June 30, 1995
<TABLE>
<CAPTION>
Standard
& Poor's
/Moody's
Principal Ratings
Amount (unaudited) Value
----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT IN SECURITIES -- 100.0%
BONDS--60.7%
Industrials--31.9%
<C> <C> <S> <C>
$ 2,000,000 BB+/Baa3 AMR Corp., 9.75%, 2000............................................. $ 2,194,200
4,950,000 BB+/Baa3 AMR Corp., 9.88%, 2020 ............................................ 5,661,463
2,500,000 BBB/Baa1 Ashland Oil, Inc., 8.8%, 2012...................................... 2,793,750
2,000,000 B+/B1 Bethlehem Steel Corp., 10.375%, 2003............................... 1,990,000
5,000,000 BBB-/Baa1 Bowater, Inc., 9.0%, 2009.......................................... 5,768,350
5,000,000 AA-/A1 BP America, Inc., 10.0%, 2018...................................... 5,645,100
2,000,000 BBB-/Baa3 Centex Corp., 8.75%, 2007.......................................... 2,133,580
5,000,000 BB+/Baa2 Delta Air Lines, Inc., 9.2%, 2014.................................. 5,362,500
2,750,000 BB-/Ba1 Domtar, Inc., 11.25%, 2017......................................... 2,935,625
4,000,000 BB-/Ba1 Federated Department Stores Inc., 10.0%, 2001...................... 4,290,000
5,000,000 BBB+/A3 General Motors Corp., 9.4%, 2021................................... 5,969,500
4,000,000 BBB-/Baa2 Georgia - Pacific Corp., 9.875%, 2021 ............................. 4,518,920
3,000,000 BB-/B1 Huntsman Corp., 10.625%, 2001...................................... 3,165,000
1,500,000 A/A2 The May Department Stores Co., 9.875%, 2000........................ 1,693,590
4,000,000 BBB/Baa2 Shopko Stores Inc., 9.25%, 2022 ................................... 4,350,040
3,000,000 BB-/B1 Stone Container Corp., 10.75%, 2002................................ 3,142,500
5,000,000 BBB-/Ba1 Time Warner, Inc., 9.15%, 2023 .................................... 5,185,850
1,000,000 BB-/Ba3 Unisys Corp., 10.625%, 1999 ....................................... 1,075,000
8,000,000 BB+/Baa3 USX Corp., 9.375%, 2012 ........................................... 8,646,560
2,000,000 BB-/B1 Viacom International Inc., 10.25%, 2001 ........................... 2,210,000
3,500,000 B/B2 Weirton Steel Corp., 10.75%, 2005 ................................. 3,272,500
3,000,000 BBB-/Ba1 Westinghouse Electric Corp., 8.625%, 2012 ......................... 3,115,530
------------
Total ............................................................. $ 85,119,558
------------
Utilities--Electric--17.5%
2,500,000 NR/Aaa Big Rivers Electric Cooperative, 9.5% , 2017 ...................... $ 2,746,875
2,000,000 AAA/Aaa Cajun Electric Power Cooperative, 8.92%, 2019 ..................... 2,190,360
3,000,000 AAA/Aaa Cajun Electric Power Cooperative, 9.52%, 2019 ..................... 3,543,240
5,000,000 BBB/Baa2 Commonwealth Edison Co., 9.75%, 2020 .............................. 5,594,650
2,970,000 A/A2 Public Service Electric & Gas Co., 9.75%, 2020* ................... 3,213,867
10,000,000 AAA/Aaa Rural Electric Cooperative (Kansas Electric Power), 9.73%, 2017 ... 11,010,800
11,000,000 AAA/Aaa Rural Electric Cooperative (Soyland), 9.7%, 2017 .................. 11,962,500
6,000,000 BBB/Baa2 Texas Utilities Electric Co., 10.625%, 2020 ....................... 6,495,180
------------
Total ............................................................. $ 46,757,472
------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE>
PIONEER INCOME FUND
SCHEDULE OF INVESTMENTS
June 30, 1995 (Continued)
<TABLE>
<CAPTION>
Standard
& Poor's
/Moody's
Principal Ratings
Amount (unaudited) Value
----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Banks and Financial--3.0%
$ 5,000,000 AAA/Aaa General Electric Capital Corp., 8.85%, 2005 ....................... $ 5,755,200
2,000,000 BBB+/A3 General Motors Acceptance Corp., 8.5%, 2003 ....................... 2,172,440
------------
Total.............................................................. $ 7,927,640
------------
Utilities--Natural Gas--2.9%
5,000,000 BB+/Ba2 NorAm Energy Corp., 10.0%, 2019 ................................... $ 5,375,000
2,000,000 BB+/Baa3 Coastal Corp., 9.625%, 2012........................................ 2,273,260
------------
Total ............................................................. $ 7,648,260
------------
U.S. Government and Agency Obligations -- 2.3%
5,840,000 AAA United States Treasury Note, 8.5%, 1997............................ $ 6,099,121
------------
Foreign Bonds -- 3.1%
4,850,000 A+/A2 Hydro-Quebec, 9.75%, 2018 ......................................... $ 5,481,373
4,831,325 NR/NR Mexico City - Toluca Toll Road, 11.0%, 2002 ....................... 2,802,169
------------
Total.............................................................. $ 8,283,542
------------
TOTAL BONDS (COST $159,889,975) ................................... $161,835,593
------------
CONVERTIBLE BONDS--2.0%
40,000 Atlantic Richfield Co., Exchangeable Notes, Conv., 9.0%, 1997 ..... $ 1,040,000
3,500,000 Raymond Corp., Conv. Deb., 6.5%, 2003 ............................. 4,296,250
------------
TOTAL CONVERTIBLE BONDS (COST $4,490,000) ......................... $ 5,336,250
------------
Shares
------------
PREFERRED STOCKS--8.5%
50,000 Bethlehem Steel, Conv., $3.50 ..................................... $ 2,350,000
117,000 Elf Overseas, Ltd., 8.5% .......................................... 3,027,374
50,000 Reynolds Metals Co., Conv., 7.00% ................................. 2,412,500
65,000 Rouse Co., Conv., 6.5% ............................................ 3,315,000
38,150 Sprint Corp., Conv., 8.25% ........................................ 1,325,713
102,000 United Water Resources Inc., 7.625% ............................... 10,098,000
------------
TOTAL PREFERRED STOCKS (COST $22,279,839).......................... $ 22,528,587
------------
COMMON STOCKS--28.8%
Basic Industries--1.1%
42,000 E.I. du Pont de Nemours and Co. ................................... $ 2,887,500
------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
PIONEER INCOME FUND
SCHEDULE OF INVESTMENTS
June 30, 1995 (Continued)
<TABLE>
<CAPTION>
Shares Value
----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
Consumer Durables--1.9%
100,000 Ford Motor Company ................................................ $ 2,975,000
22,600 The May Department Stores Co. ..................................... 940,725
20,000 Sears, Roebuck & Co. .............................................. 1,197,500
------------
Total.............................................................. $ 5,113,225
------------
Non-Durables--3.5%
50,000 CPC International, Inc. ........................................... $ 3,087,500
50,000 Flowers Industries, Inc. .......................................... 987,500
100,000 Heinz, H.J. & Co. ................................................. 4,437,500
24,000 Quaker Oats Co. ................................................... 789,000
------------
Total.............................................................. $ 9,301,500
------------
Energy--2.8%
50,000 Atlantic Richfield Co. ............................................ $ 5,487,500
30,000 Texaco, Inc. ...................................................... 1,968,750
------------
Total.............................................................. $ 7,456,250
------------
Financial--3.2%
50,000 Boatmen's Bancshares .............................................. $ 1,762,500
17,850 FirsTier Financial, Inc............................................ 655,988
206,000 Huntington Bancshares Inc. ........................................ 4,274,500
50,000 Northern Trust Corp. .............................................. 2,012,500
------------
Total.............................................................. $ 8,705,488
------------
Real Estate--4.2%
100,000 BRE Properties, Inc. (Class A) .................................... $ 3,100,000
180,100 Carr Realty Corp. ................................................. 3,106,725
120,800 Health Care REIT, Inc. ............................................ 2,491,500
54,000 Taubman Centers, Inc. ............................................. 513,000
133,100 United Dominion Realty Trust ...................................... 1,963,225
------------
Total.............................................................. $ 11,174,450
------------
Services--1.3%
50,000 Johnson & Johnson ................................................. $ 3,381,250
------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE>
PIONEER INCOME FUND
SCHEDULE OF INVESTMENTS
June 30, 1995 (Continued)
<TABLE>
<CAPTION>
Shares Value
----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
Utilities--10.8%
200,000 Allegheny Power System, Inc. ...................................... $ 4,700,000
72,780 AT & T Corp. ...................................................... 3,866,437
96,000 Ameritech Corp..................................................... 4,224,000
40,000 Brooklyn Union Gas Co. ............................................ 1,050,000
89,200 E'Town Corp. ...................................................... 2,419,550
45,600 Lakehead Pipeline Partner, L.P. ................................... 1,174,200
100,000 Nynex Corp. ....................................................... 4,025,000
100,000 Pacific Telesis Group ............................................. 2,675,000
40,000 U.S. West, Inc. ................................................... 1,665,000
100,000 Western Resources, Inc. ........................................... 3,087,500
------------
Total.............................................................. $ 28,886,687
------------
TOTAL COMMON STOCKS (COST $70,404,190)............................ $ 76,906,350
------------
TOTAL INVESTMENT IN SECURITIES--100.0% (COST $257,064,004) (a)(b) $266,606,780
============
</TABLE>
<TABLE>
* Bond was called on July 3, 1995.
(a) At June 30, 1995, the net unrealized appreciation on investments based
on cost for federal income tax purposes of $257,064,004 was as
follows:
<S> <C>
Aggregate gross unrealized appreciation for all investments in which
there is an excess of value over tax cost............................. $ 17,328,375
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value.................... (7,785,599)
------------
Net unrealized appreciation........................................... $ 9,542,776
============
(b) 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.
Purchases and sales of securities (excluding temporary cash investments)
for the six months ended June 30, 1995 aggregated $29,069,599 and
$36,448,317, respectively.
The accompanying notes are an integral part of these financial statements.
</TABLE>
6
<PAGE>
PIONEER INCOME FUND
BALANCE SHEET
June 30, 1995
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investment in securities, at value (cost $257,064,004;
see Schedule of Investments and Note 1) ................................................... $266,606,780
Receivables--
Dividends.................................................................................. 432,980
Interest .................................................................................. 3,962,142
Trust shares sold ......................................................................... 221,368
Other ....................................................................................... 1,462
------------
Total assets .............................................................................. $271,224,732
------------
Liabilities:
Payables--
Due to bank ............................................................................... $ 566,151
Trust shares repurchased .................................................................. 121,933
Dividends ................................................................................. 1,310
Accrued expenses--
Management fees (Note 2) .................................................................. 14,331
Other (Notes 2, 3 and 4) .................................................................. 311,589
------------
Total liabilities ........................................................................... $ 1,015,314
------------
Net Assets:
Paid-in capital (Note 1) .................................................................. $261,159,746
Accumulated undistributed net investment income ........................................... 407,155
Accumulated net realized loss on investments .............................................. (900,259)
Net unrealized gain on investments ....................................................... 9,542,776
------------
Total net assets ........................................................................ $270,209,418
------------
Net Asset Value Per Share:
Class A -- (based on $269,944,841/27,572,807 shares of beneficial interest outstanding --
unlimited number of shares authorized) .................................................. $19.79
======
Class B -- (based on $264,577/27,056 shares of beneficial interest outstanding --
unlimited number of shares authorized) .................................................. $19.78
======
Maximum Offering Price:
Class A ................................................................................... $10.25
======
The accompanying notes are an integral part of these financial statements.
</TABLE>
7
<PAGE>
PIONEER INCOME FUND
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1995
<TABLE>
<S> <C>
Investment Income (Note 1):
Interest................................................................................... $ 7,732,659
Dividends.................................................................................. 2,745,480
-----------
Total investment income.................................................................. $10,478,139
-----------
Expenses:
Management fees (Note 2)................................................................... $ 636,742
Distribution fees (Note 4)
Class A.................................................................................. 329,719
Class B.................................................................................. 305
Transfer agent fees (Note 3)
Class A.................................................................................. 412,120
Class B.................................................................................. 128
Registration fees.......................................................................... 23,660
Professional fees.......................................................................... 42,320
Accounting (Note 2)........................................................................ 30,030
Custodian fees............................................................................. 18,200
Fees and expenses of nonaffiliated trustees................................................ 14,100
Printing................................................................................... 9,100
Miscellaneous.............................................................................. 9,408
-----------
Total expenses........................................................................... $ 1,525,832
-----------
Net investment income.................................................................... $ 8,952,307
-----------
Realized and Unrealized Gain on Investments:
Net realized gain on investments (Note 1).................................................. $ 220,840
Increase in net unrealized gain on investments............................................. 18,714,611
-----------
Net gain on investments.................................................................... $18,935,451
-----------
Net increase in net assets resulting from operations..................................... $27,887,758
===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
8
<PAGE>
PIONEER INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1995 and the Year Ended December 31, 1994
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1995 December 31, 1994
---------------- -----------------
<S> <C> <C>
From Operations:
Net investment income ...................................................... $ 8,952,307 $ 18,819,632
Net realized gain (loss) on investments .................................... 220,840 (1,121,099)
Increase (decrease) in net unrealized gain on investments .................. 18,714,611 (30,351,285)
------------ ------------
Net increase (decrease) in net assets resulting from operations .......... $ 27,887,758 $(12,652,752)
------------ ------------
Equalization (Note 1):
Net undistributed investment income included in price of
shares sold, net of shares repurchased ................................... $ -- $ (1,217)
------------ ------------
Distributions to Shareholders From:
Net investment income ---
Class A ($0.32 and $0.67 per share, respectively) ........................ $ (8,793,178) $(19,110,002)
Class B ($0.15 and $0.00 per share, respectively) ........................ (3,956) --
Net realized gain on investments ---
Class A ($0.00 and $0.00 per share, respectively) ........................ -- (108,415)
------------ ------------
Decrease in net assets resulting from distributions to shareholders ........ $ (8,797,134) $(19,218,417)
------------ ------------
From Trust Share Transactions:
Net proceeds from sale of shares ........................................... $ 10,579,368 $ 33,801,549
Net asset value of shares issued to shareholders in reinvestment of dividends 7,355,284 15,932,724
Cost of shares repurchased ................................................. (26,786,315) (54,590,110)
------------ ------------
Decrease in net assets resulting from trust share transactions ........... $ (8,851,663) $ (4,855,837)
------------ ------------
Net increase (decrease) in net assets ...................................... $ 10,238,961 $(36,728,223)
Net Assets:
Beginning of period ........................................................ 259,970,457 296,698,680
------------ ------------
End of period (including undistributed net investment income of
$407,155 and $251,982, respectively) ..................................... $270,209,418 $259,970,457
------------ ------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
9
<PAGE>
PIONEER INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1995 and the
Year Ended December 31, 1994 (Continued)
<TABLE>
<CAPTION>
Period ended June 30, 1995 Year Ended December 31, 1994
-----------------------------------------------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold ................................... 1,088,327 $10,292,506 3,500,927 $33,801,549
Shares issued to shareholders in
reinvestment of distributions ............... 767,375 7,351,590 1,691,536 15,932,724
Less shares repurchased ....................... (2,825,660) (26,759,360) (5,703,841) (54,590,110)
--------- ----------- --------- -----------
Net decrease ................................ (969,958) $(9,115,264) (511,378) $(4,855,837)
========= =========== ========= ===========
<S> <C> <C>
CLASS B *
Shares sold ................................... 29,403 $ 286,862
Shares issued to shareholders in
reinvestment of distributions ............... 376 3,694
Less shares repurchased ....................... (2,723) (26,955)
--------- -----------
Net increase ................................ 27,056 $ 263,601
========= ===========
* Class B shares were first publicly offered on April 28, 1995.
The accompanying notes are an integral part of these financial statements.
</TABLE>
10
<PAGE>
PIONEER INCOME FUND
FINANCIAL HIGHLIGHTS - SELECTED DATA FOR A SHARE OUTSTANDING
FOR THE PERIODS PRESENTED
<TABLE>
<CAPTION>
Six Months
Ended
June 30, For the Years Ended December 31,
---------- --------------------------------------------------------------------------------------
CLASS A 1995 1994 1993+ 1992 1991 1990 1989 1988 1987 1986 1985
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 9.11 $10.21 $10.13 $10.14 $ 9.14 $ 9.53 $ 8.92 $ 8.67 $ 8.94 $ 9.17 $ 8.78
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Increase (decrease) from
investment operations:
Net investment income $ 0.33 $ 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 0.67 (1.09) 0.37 0.09 1.00 (0.38) 0.63 0.27 (0.14) 0.04 1.09
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total increase (decrease) from
investment operations $ 1.00 $(0.43)$ 1.02 $ 0.74 $ 1.65 $ 0.32 $ 1.37 $ 1.04 $ 0.62 $ 0.84 $ 1.89
Distributions to shareholders
from:
Net investment income (0.32) (0.67) (0.64) (0.66) (0.65) (0.71) (0.75) (0.76) (0.76) (0.80) (0.80)
Net realized gain -- -- (0.30) (0.09) -- -- (0.01) (0.03) (0.13) (0.27) (0.20)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
in net asset value $ 0.68 $(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 period $ 9.79 $ 9.11 $10.21 $10.13 $10.14 $ 9.14 $ 9.53 $ 8.92 $ 8.67 $ 8.94 $ 9.17
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return* 11.08% (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 1.16%** 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 6.82%** 7.07% 6.52% 6.47% 6.73% 7.67% 7.98% 8.55% 8.29% 8.46% 9.05%
Portfolio turnover rate 23%** 50% 69% 54% 43% 44% 69% 87% 115% 76% 136%
Net assets, end of period
(in thousands) $269,945 $259,970 $296,699 $250,033 $197,184 $166,205 $169,607 $159,212 $149,659 $118,760 $75,365
+ Prior to the assumption of the management agreement on December 1, 1993 by Pioneering Management Corporation, the Fund was
advised by Mutual of Omaha Fund Management Company.
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the
complete redemption of the investment at net asset value at the end of each period and no sales charges. Total return
would be reduced if sales charges were taken into account.
** Annualized
The accompanying notes are an integral part of these financial statements.
</TABLE>
11
<PAGE>
PIONEER INCOME FUND
FINANCIAL HIGHLIGHTS - SELECTED DATA FOR A SHARE OUTSTANDING
FOR THE PERIODS PRESENTED (Continued)
April 28, 1995
CLASS B*** to June 30, 1995(a)
------------------
Net asset value, beginning of period $ 9.55
------
Increase from investment operations:
Net investment income $ 0.04
Net realized and unrealized gain on investments 0.34
------
Total increase from investment operations $ 0.38
Distributions to shareholders from:
Net investment income (0.15)
------
Net increase in net asset value $ 0.23
------
Net asset value, end of period $ 9.78
------
Total return* 3.97%
Ratio of net operating expenses to average net assets 1.97%**
Ratio of net investment income to average net assets 6.27%**
Portfolio turnover rate 23%**
Net assets, end of period (in thousands) $ 265
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
*** Class B shares were first publicly offered on April 28, 1995.
(a) The per share data is based on average shares and average net assets
outstanding for the period presented.
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
PIONEER INCOME FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
1. Pioneer Income Fund (the Fund) is a Delaware business trust registered under
the Investment Company Act of 1940 as a diversified, open-end management
company. On December 1, 1993, Mutual of Omaha Fund Management Company (FMC) was
sold to The Pioneer Group, Inc. (PGI). Concurrent with the sale of FMC to PGI,
the Fund's shareholders approved a new investment management agreement with
Pioneering Management Corporation (PMC), a wholly owned subsidiary of PGI.
The Board of Trustees has authorized the issuance of two share classes of
the Fund, designated as Class A and Class B shares. Class B shares were first
publicly offered on April 28, 1995. Shares issued and outstanding prior to April
28, 1995 were designated as Class A shares. The shares of each class represent
an interest in the same portfolio of investments of the Fund and have equal
rights to voting, redemptions, dividends and liquidations, except that each
class of shares can bear different transfer agent and distribution fees and have
exclusive voting rights with respect to the distribution plans that have been
adopted by holders of Class A and Class B shares, respectively.
The following is a summary of significant accounting policies consistently
followed by the Fund, which are in conformity with those generally accepted in
the investment company industry.
A. Security Valuation -- Security transactions are recorded on the date the
securities are purchased or sold. Debt securities are valued based on valuations
furnished by an independent pricing service that utilizes a matrix system. This
matrix system reflects such factors as security prices, yields, maturities, and
ratings, and is supplemented by dealer and exchange quotations and fair market
value information from other sources. Market discount and premium are accreted
or amortized daily on a straight-line basis. Equity securities are valued each
day at the last sale price on the principal exchange where they are traded.
Equity securities that have not traded on the date of valuation or for which
sale prices are not generally reported are valued at the mean between the last
bid and asked prices. Temporary cash investments are valued at cost plus accrued
interest, which approximates market value. Dividend income is recorded on the
ex-dividend date and interest income is recorded on the accrual basis.
Gains and losses from sales of investments are calculated on the
"identified cost" method for both financial reporting and federal income tax
purposes. It is the Fund's practice first to select for sale those securities
that have the highest cost and also qualify for long-term capital gain or loss
treatment for tax purposes.
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. Included in Net realized gain on investments is
$65,026 of class action settlements received by the Fund during the six months
ended June 30, 1995.
B. Federal taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if any, to
its shareholders. Therefore, no federal tax provisions are required.
The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying
financial statements as either from or in excess of net investment income or net
realized gain on investment transactions, or from capital, depending on the type
of book/tax differences that may exist.
C. Trust Shares -- The Fund records sales and repurchases of its trust
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 $36,685 in underwriting
commissions on the sale of trust shares during the six months ended June 30,
1995. Dividends and distributions to shareholders are recorded on ex-dividend
date. Dividends paid by the Fund, if any, with respect to each class of shares
are calculated in the same manner, at the same time, on the same day and are in
13
<PAGE>
PIONEER INCOME FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 1995 (Continued)
the same amount, except that Class A and Class B shares can bear different
transfer agent and distribution fees.
D. Class Allocations -- Distribution expenses are calculated based on the
average daily net asset value attributable to Class A and Class B shares of the
Fund, respectively. Shareholders of Class A and Class B share all expenses and
fees paid to the transfer service organization, Pioneering Services Corporation
(PSC), for their services, that are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses (see
Note 3). Income, common expenses and realized and unrealized gains (losses) are
calculated at the Fund level and allocated daily to each class of shares based
on the respective percentage of adjusted net assets at the beginning of the day.
E. Equalization -- Through December 31, 1994, the Fund followed the
accounting practice known as equalization by which a portion of the proceeds
from sales and cost 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 the trust shares.
2. PMC is the Fund's investment adviser manages and the Fund's portfolio.
Management fees are calculated at the annual rates set forth as a percentage of
average daily net assets. Such rates are effective until December 1, 1995.
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%
In addition, under the management agreement, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Fund. Included in Accrued expenses - Other is $1,983 in accounting
fees payable to PMC at June 30, 1995.
3. 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 $93,543 in transfer agent fees payable to PSC at
June 30, 1995.
4. The Fund has adopted a Plan of Distribution for both Class A shares (Class A
Plan) and Class B shares (Class B Plan) in accordance with Rule 12b-1 under the
Investment Company Act of 1940 pursuant to which certain distribution fees are
paid to PFD.
Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activities primarily intended to result in the sale
of Class A shares or to provide services to holders of Class A shares.
Reimbursement for such expenditures, if any, may not exceed 0.25% of the Fund's
average daily net assets attributable to Class A shares. The Class B Plan
provides that the Fund may pay a distribution fee at an annual rate of 0.75% of
the Fund's average daily net assets attributable to Class B shares and may pay
PFD a service fee at the annual rate of 0.25% of the Fund's average daily net
assets attributable to Class B shares. Included in Accrued expenses - Other is
$170,902 in distribution fees payable to PFD at June 30, 1995.
Class B shares that are redeemed within six years of purchase are subject
to a contingent deferred sales charge (CDSC) at declining rates beginning at
4.0% of the lesser of the current market value at the time of redemption or the
original purchase cost of the shares being redeemed. Proceeds from the CDSC are
paid to PFD. For the period ended June 30, 1995, no CDSC was paid to PFD.
14
<PAGE>
PIONEER INCOME FUND
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND THE BOARD OF TRUSTEES OF PIONEER INCOME FUND:
We have audited the accompanying balance sheet of Pioneer Income Fund,
including the schedule of investments, as of June 30, 1995, and the related
statement of operations, statements of changes in net assets and financial
highlights for the six months ended June 30, 1995 and the year ended December
31, 1994. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the nine years ended December 31,
1993 were audited by other auditors, whose report dated February 22, 1994
expressed an unqualified opinion.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1995 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Pioneer Income Fund as of June 30, 1995, the results of its operations and the
changes in its net assets for the periods presented and financial highlights for
the six months ended June 30, 1995 and the year ended December 31, 1994, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
July 28, 1995
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
TRUSTEES
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
INVESTMENT ADVISER
PIONEERING MANAGEMENT
CORPORATION
CUSTODIAN
BROWN BROTHERS
HARRIMAN &CO.
SHAREHOLDER
SERVICES AND
TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts
02109
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 shareowners 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.
0895-2633
(C) Pioneer Funds Distributor, Inc.
