[Pioneer Logo]
Pioneer
Income
Fund
Semiannual Report
June 30, 1996
<PAGE>
Pioneer Income Fund
Dear Shareowners:
The first six months of 1996 saw mixed results in U.S. financial markets.
Corporate earnings generally remained strong, if no longer increasing robustly,
but interest rates moved up noticeably. Consequently, prices of different types
of securities went in different directions. Many stocks continued to perform
well, particularly those in high-growth sectors. Interest-rate-sensitive
securities such as utility and insurance stocks tended to lag or even decline in
price, and bonds fell across the board.
It was an exciting period for speculators in "hot new issues" in software and
networking technology, biotechnology and other glamorous areas. Managing your
Fund, which concentrates on bonds and higher dividend-paying stocks, we found
ourselves in what seemed at times like an investment backwater. As we write, a
serious "correction" appears to be in progress, and much of the unwarranted
differential in performance between market sectors has vanished. What the rest
of the year holds in store we do not know, but we are hopeful financial markets
will not fluctuate quite so wildly and that relative valuations will again
become more reasonable.
HOW YOUR FUND PERFORMED
Following are the results for Pioneer Income Fund for the six months ended
June 30, 1996:
CLASS A SHARES
* The Fund provided a 5.47% 30-day yield on June 30, 1996, based on net asset
value.
* Shareowners received a total of $0.32 per share in income dividends during
the six months.
* Net asset value was $10.09 per share on June 30, 1996, versus $10.30 at
December 31, 1995. After adjusting for the payment of distributions, the
Fund's share price was little changed.
* The Fund produced a six-month total return of 1.11% based on net asset value,
and -3.48% for shareowners who paid the maximum 4.5% sales charge at the
beginning of the period. Total return assumes reinvestment of distributions
at net asset value.
CLASS B SHARES
* Class B shares offered a 30-day yield of 5.20% as of June 30.
* Income dividends paid to shareowners during the six months totaled $0.28 per
share.
* Net asset value per share was $10.06 at June 30, versus $10.27 at December
31, 1995. After adjusting for the payment of distributions, the Fund's share
price was little changed.
* For the six months, the Fund provided a total return of 0.71% at net asset
value. If shares were sold and the maximum 4% contingent deferred sales
charge paid at the end of the period, total return was -3.21%. Total return
assumes reinvestment of all distributions.
CLASS C SHARES
The Fund introduced Class C shares on January 31, 1996. We report the following
results since that time:
* On June 30, Class C shares provided a 30-day yield of 7.37%.
* Since January 31, shareowners received $0.27 per share in income dividends.
<PAGE>
* Net asset value was $10.09 per share on June 30, versus $10.39 on January 31.
* The Fund generated a total return of -0.26% if shares were held throughout
the abbreviated period, and -1.23% if shares were sold and the 1% contingent
deferred sales charged deducted on June 30.
By way of comparison, the unmanaged Lehman Brothers Corporate Bond Index
recorded a total return of -2.53% for the six months ended June 30, 1996. The
unmanaged Standard & Poor's 500 Index of stocks rose by 10.08% over the period.
The following table shows the Fund's returns over longer time periods.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(As of June 30, 1996)
Class A Shares Net Asset Value Public Offering Price*
-------------- --------------- ----------------------
10 Years 9.02% 8.51%
5 Years 9.22 8.23
1 Year 11.04 6.06
Class B Shares If Held If Redeemed**
-------------- ------- -------------
Life-of-Fund
(4/28/95) 12.20% 8.87%
1 Year 10.17 6.17
- --------------------------------------------------------------------------------
HOW PIONEER MANAGED YOUR INVESTMENT
The Fund continued to have a balance of about 60% bonds and 30% stocks, with
10% in "hybrid" instruments such as convertible preferred stocks,
convertible debentures and real estate investment trusts.
During the first six months of 1996, bond prices in general moved lower as
yields on United States Treasury securities drifted higher by about 1%. Bond
investors became concerned once again about the potential for price-and-wage
inflation. On a positive note, corporate debt securities, the bulk of the Fund's
fixed-income investments, did not decline in price quite as much as Treasurys.
In addition, issues with medium-range maturities, where the portfolio is
concentrated, did not suffer to the full extent that longer maturity bonds did.
Most, 69%, of the Fund's bonds have an effective maturity of less than 10 years.
Overall, the fixed-income securities in the portfolio have an average effective
maturity of nine years, and an average quality rating of A.
The principal change in bond holdings was an increase in industrial bonds and a
corresponding decrease in utility bonds. We took advantage of the weak market to
add positions in the debt securities of Hook SupeRx, Kansas City Southern
Industries, New America Holdings, Tele-Communications and Tenet Healthcare. We
sold electric-cooperative bonds.
On the stock side, we added a number of positions to give the portfolio more
diversification. Chrysler, the automobile and truck manufacturer, Greif
Brothers, a packaging company, and Gorman-Rupp, a maker of pumps, enhance the
portfolio's cyclical exposure. We substituted Mobil for Texaco in the
oil-and-gas sector. Eastman Kodak, the premier film producer, is in the midst of
an improvement attributable to new management. Among convertible stocks, we sold
the Raymond issue, which had performed very well, and purchased a convertible
preferred issue of Kmart, also a company with new management and the potential
for improvement in earnings.
- ----------
*Reflects deduction of the maximum 4.5% sales charge at the beginning of the
period and assumes reinvestment of all distributions at net asset value.
**Reflects deduction of the maximum 4% contingent deferred sales charge at the
end of the period and assumes reinvestment of all distributions.
Past performance does not guarantee future results. Returns and share prices
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
2
<PAGE>
LOOKING AHEAD
So far, 1996 has been as rocky as 1995 was smooth. Investors should keep in mind
that securities prices do not move steadily but rather fluctuate around "trend
lines" over longer periods of time. Overall, stocks generally reflect the
direction of corporate earnings, and bond prices reflect (inversely) the
direction of interest rates. However, stocks, too, are affected by interest
rates. Corporate borrowing costs are often an important part of company
expenses, and higher bond yields also compete directly with stocks for
investors' hard-earned savings. Pioneer Income Fund, through its diversified
bond and stock portfolio, permits the investor to participate in both markets.
On a final note, we are pleased to announce that we will be giving semiannual
and annual reports a facelift, including easy-to-find and use graphic summaries.
Your annual report dated December 31, 1996, will reflect these enhancements. We
wish to thank all of you who took the time to respond to our questions about
what you want to see in fund reports.
On the following pages, please find the Fund's audited Schedule of Investments
and financial statements as of June 30, 1996. If you do wish to speak to someone
about your investment in Pioneer Income Fund, please contact your investment
representative, or call us directly at 1-800-225-6292. Thank you for your
continuing support.
Respectfully submitted,
/s/John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman and President,
Pioneer Income Fund
3
<PAGE>
Pioneer Income Fund
Schedule of Investments
June 30, 1996
<TABLE>
<CAPTION>
Standard &
Poor's/Moody's
Principal Rating
Amount (unaudited) Value
- ------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
INVESTMENT IN SECURITIES -- 99.6%
DEBT OBLIGATIONS -- 62.3%
INDUSTRIALS -- 40.9%
$2,000,000 BB+/Baa3 AMR Corp., 9.75%, 2000 ................................ $ 2,158,700
4,950,000 BB+/Baa3 AMR Corp., 9.88%, 2020 ................................ 5,753,335
2,500,000 BBB/Baa1 Ashland Oil ........................................... 2,751,575
2,000,000 B+/B1 Bethlehem Steel Corp., 10.375%, 2003 .................. 2,120,000
2,000,000 BBB-/Baa1 Bowater, Inc., 9.0%, 2009 ............................. 2,207,460
3,000,000 BBB/Baa1 Bowater, Inc., 9.375%, 2021 ........................... 3,459,060
5,000,000 AA-/A1 BP America, Inc., 10.0%, 2018 ......................... 5,492,250
3,000,000 A/A2 Caterpillar Inc., 9.75%, 2019 ......................... 3,352,890
2,000,000 BBB-/Baa3 Centex Corp., 8.75%, 2007 ............................. 2,051,180
5,000,000 BB+/Baa2 Delta Air Lines Trust, 9.2%, 2014 ..................... 5,482,600
3,000,000 BB-/Ba1 Domtar Inc., 11.25%, 2017 ............................. 3,180,000
4,000,000 BB-/Ba1 Federated Department Stores Inc., 10.0%, 2001 ......... 4,210,000
5,000,000 BBB+/A3 General Motors Corp., 9.4%, 2021 ...................... 5,844,250
4,000,000 BBB-/Baa2 Georgia-Pacific Corp., 9.875%, 2021 ................... 4,332,480
1,000,000 BBB-/Ba1 Hook-SupeRx, Inc., 10.125%, 2002 ...................... 1,068,750
3,000,000 BBB/Ba1 Joy Technologies Inc., 10.25%, 2003 ................... 3,300,000
3,000,000 BBB+/Baa2 Kansas City Southern Industries, Inc., 8.8%, 2022 ..... 3,119,460
1,500,000 A/A2 The May Department Stores Co., 9.875%, 2000 ........... 1,644,990
5,000,000 BBB/Baa3 New America Holdings, Inc., 10.125%, 2012 ............. 5,622,500
4,100,000 BBB/Baa1 Phillips Petroleum Co., 8.86%, 2022 ................... 4,351,945
1,500,000 BB-/B1 Rexene Corp., 11.75%, 2004 ............................ 1,552,500
1,500,000 BBB/Baa2 Shopko Stores Inc., 9.25%, 2022 ....................... 1,571,250
3,000,000 BB-/B1 Stone Container Corp., 10.75%, 2002 ................... 3,030,000
2,400,000 BBB-/Ba1 Tele-Communications, Inc., 8.75%, 2023 ................ 2,264,448
2,000,000 BB/Ba1 Tenet Healthcare Corp., 8.625%, 2003 .................. 2,027,500
2,000,000 B+/Ba3 Tenet Healthcare Corp., 10.125%, 2005 ................. 2,110,000
5,000,000 BBB-/Ba1 Time Warner, Inc., 9.15%, 2023 ........................ 5,169,700
1,000,000 BB-/Ba3 Unisys Corp., 13.5%, 1997 ............................. 1,057,500
8,000,000 BB+/Baa3 USX Corp., 9.375%, 2012 ............................... 8,820,320
2,000,000 BB-/B1 Viacom International Inc., 10.25%, 2001 ............... 2,140,000
3,000,000 A/A2 Virginia Electric and Power Co., 8.75%, 2021 .......... 3,144,000
3,500,000 B/B2 Weirton Steel Corp., 10.75%, 2005 ..................... 3,325,000
2,000,000 BBB-/Ba1 Westinghouse Electric Corp., 8.625%, 2012 ............. 1,930,340
------------
$109,645,983
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Pioneer Income Fund
<TABLE>
Schedule of Investments
June 30, 1996 (Continued)
<CAPTION>
Standard &
Poor's/Moody's
Principal Rating
Amount (unaudited) Value
- ------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
UTILITIES -- 12.1%
$2,500,000 NR/Aaa Big Rivers Electric Cooperative, 9.5%, 2017 ........... $ 2,720,925
2,000,000 AAA/Aaa Cajun Electric Power Cooperative, 8.92%, 2019 ......... 2,190,000
3,000,000 AAA/Aaa Cajun Electric Power Cooperative, 9.52%, 2019 ......... 3,264,990
2,000,000 BB+/Baa3 Coastal Corp., 9.625%, 2012 ........................... 2,278,380
5,000,000 BBB/Baa2 Commonwealth Edison Co., 9.75%, 2020 .................. 5,651,800
5,000,000 BB+/Ba2 NorAm Energy Corp., 10.0%, 2019 ....................... 5,469,700
7,000,000 AAA/Aaa Rural Electric Cooperative (Kansas Electric Power),
9.73%, 2017 ......................................... 7,554,050
3,000,000 AAA/Aaa Rural Electric Cooperative (Soyland), 9.7%, 2017 ...... 3,236,790
------------
$ 32,366,635
------------
BANKS AND FINANCIAL -- 2.9%
5,000,000 AAA/Aaa General Electric Capital Corp., 8.85%, 2005 ........... $ 5,524,100
2,000,000 BBB+/A3 General Motors Acceptance Corp., 8.5%, 2003 ........... 2,129,660
------------
$7,653,760
------------
U.S. GOVERNMENT OBLIGATIONS -- 4.0%
1,500,000 AAA/Aaa United States Treasury Note, 6.375%, 2000 ............. $ 1,499,760
4,000,000 AAA/Aaa United States Treasury Note, 7.75%, 2001 .............. 4,203,760
5,000,000 AAA/Aaa United States Treasury Note, 8.5%, 1997 ............... 5,105,450
------------
$ 10,808,970
------------
FOREIGN BONDS -- 2.4%
4,850,000 A+/A2 Hydro-Quebec, 9.75%, 2018 ............................. $ 5,376,759
1,872,868 NR/NR Mexico City - Toluca Toll Road, 11.0%, 2002, 144A ..... 1,114,356
------------
$ 6,491,115
------------
TOTAL DEBT OBLIGATIONS (Cost $166,379,807)............. $166,966,463
------------
CONVERTIBLE BOND -- 0.4%
990,000 Atlantic Richfield Co., Exchangeable Notes,
9.0%, 1997........................................... $ 975,000
------------
TOTAL CONVERTIBLE BOND (Cost $990,000)................. $ 975,000
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
Pioneer Income Fund
<TABLE>
Schedule of Investments
June 30, 1996 (Continued)
<CAPTION>
Shares Value
- ------------------------------------------------------------------------------------------------
<C> <S> <C>
PREFERRED STOCKS -- 5.6%
50,000 Bethlehem Steel, Conv., $3.50, 1996 ................... $ 2,087,500
50,000 Reynolds Metals Co., Conv., 7.00%, 1996 ............... 2,318,750
35,000 Kmart Financing Corp., Conv., 7.75%, 2016 ............. 1,898,750
117,000 Elf Overseas, 8.5% .................................... 2,954,250
10,200 United Dominion Realty (Class A) ...................... 258,825
65,700 Rouse Co., Conv., 6.5%, 1996 .......................... 3,999,488
38,150 Sprint Corp., Conv., 8.25%, 2000 ...................... 1,535,537
------------
TOTAL PREFERRED STOCKS (Cost $14,132,600) $ 15,053,100
------------
COMMON STOCKS -- 31.3%
CHEMICALS -- 1.2%
42,000 E.I. du Pont de Nemours and Co. ....................... $ 3,323,250
------------
CONSUMER DURABLES -- 2.5%
27,500 Chrysler Corp. ........................................ $ 1,705,000
125,000 Ford Motor Co. ........................................ 4,046,875
22,600 The May Department Stores Co. ......................... 988,750
------------
$ 6,740,625
------------
CONSUMER NON-DURABLES -- 3.0%
50,000 CPC International, Inc. ............................... $ 3,600,000
150,000 H.J. Heinz & Co. ...................................... 4,556,250
------------
$ 8,156,250
------------
CONTAINERS -- 0.4%
30,800 Greif Brothers Corp. (Class A) ........................ $ 985,600
------------
ELECTRONICS -- 0.2%
26,000 DuPont Photomask, Inc. ................................ $ 533,000
------------
ENERGY -- 0.3%
5,700 Atlantic Richfield Co. ................................ $ 675,450
------------
FINANCIAL -- 3.8%
50,000 Boatmen's Bancshares, Inc. ............................ $ 2,006,250
216,300 Huntington Bancshares Inc. ............................ 5,164,163
50,000 Northern Trust Corp. .................................. 2,887,500
------------
$10,057,913
------------
OIL & GAS EXTRACTION -- 1.0%
25,000 Mobil Corp. ........................................... $ 2,803,125
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Pioneer Income Fund
<TABLE>
Schedule of Investments
June 30, 1996 (Continued)
<CAPTION>
Shares Value
- ------------------------------------------------------------------------------------------------
<C> <S> <C>
PHOTO/INSTRUMENTATION -- 1.5%
50,000 Eastman Kodak Co. ..................................... $ 3,887,500
------------
PRODUCER GOODS -- 0.3%
60,000 The Gorman-Rupp Co. ................................... $ 795,000
------------
REAL ESTATE -- 5.8%
200,000 BRE Properties, Inc. (Class A) ........................ $ 3,900,000
180,100 Carr Realty Corp. ..................................... 4,322,400
120,800 Health Care REIT, Inc. ................................ 2,597,200
333,100 United Dominion Realty Trust, Inc. .................... 4,788,313
------------
$ 15,607,913
------------
TELECOMMUNICATIONS -- 7.5%
96,000 Ameritech Corp. ....................................... $ 5,700,000
39,600 AT & T Corp. .......................................... 2,455,200
100,000 Nynex Corp. ........................................... 4,750,000
175,000 Pacific Telesis Group ................................. 5,906,250
40,000 U.S. West, Inc. ....................................... 1,275,000
------------
$ 20,086,450
------------
TRANSPORTATION -- 0.2%
23,700 Canadian National Railway Co.+......................... $ 435,487
------------
UTILITIES -- 3.6%
200,000 Allegheny Power System, Inc. .......................... $ 6,175,000
40,000 Brooklyn Union Gas Co. ................................ 1,090,000
89,200 E'Town Corp. .......................................... 2,475,300
------------
$ 9,740,300
------------
TOTAL COMMON STOCKS (Cost $68,627,177) ................ $ 83,827,863
------------
TOTAL INVESTMENT IN SECURITIES (Cost $250,129,584) .... $266,822,426
------------
Principal
Amount
- ----------
TEMPORARY CASH INVESTMENT -- 0.4%
COMMERCIAL PAPER -- 0.4%
$1,168,000 Ford Motor Credit Co., 5.5%, 7/1/96 ................... $ 1,168,000
------------
TOTAL TEMPORARY CASH INVESTMENT (Cost $1,168,000) ..... $ 1,168,000
------------
TOTAL INVESTMENT IN SECURITIES AND
TEMPORARY CASH INVESTMENT -- 100.0%
(Cost $251,297,584) (a) ............................... $267,990,426
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
Pioneer Income Fund
Schedule of Investments
June 30, 1996 (Continued)
- --------------------------------------------------------------------------------
+ Security purchased on an installment basis. Market value reflects only
those payments made through June 30, 1996. Additional subscription payment
of C$10.75 will be required on November 26, 1996.
144A Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 1996,
the value of these securities amounted to $1,114,356 or 0.4% of total net
assets.
NR Not rated.
(a) At June 30, 1996, the net unrealized gain on investments based on cost for
federal income tax purposes of $251,297,584 was as follows:
Aggregate gross unrealized gain for all investments
in which there is an excess of value over tax cost......... $ 21,480,342
Aggregate gross unrealized loss for all investments
in which there is an excess of tax cost over value......... (4,787,500)
------------
Net unrealized gain........................................ $ 16,692,842
============
Purchases and sales of securities (excluding temporary cash investments)
for the six months ended June 30, 1996 were as follows:
Purchases Sales
----------- -----------
Long-term U.S. Government $12,162,642 $11,810,156
Other Long-term Securities 35,875,349 36,010,031
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
Pioneer Income Fund
Balance Sheet
June 30, 1996
ASSETS:
Investment in securities, at value (including temporary
cash investment of $1,168,000) (cost $251,297,584; see
Schedule of Investments and Note 1)............................. $267,990,426
Cash ............................................................. 61,386
Receivables --
Investment securities sold...................................... 3,309,178
Fund shares sold ............................................... 257,335
Dividends and interest ......................................... 4,339,230
Other ............................................................ 1,115
------------
Total assets ................................................. $275,958,670
------------
LIABILITIES:
Payables --
Fund shares repurchased ........................................ $ 94,557
Dividends ...................................................... 234
Due to affiliates (Notes 2, 3 and 4) ........................... 379,215
Accrued expenses ............................................... 47,890
------------
Total liabilities ............................................ $ 521,896
------------
NET ASSETS:
Paid-in capital (Note 1) ....................................... $258,034,503
Distributions in excess of net investment income (Note 1)....... (115,467)
Accumulated undistributed net realized gain
on investments (Note 1) ...................................... 824,896
Net unrealized gain on investments.............................. 16,692,842
------------
Total net assets............................................ $275,436,774
============
NET ASSET VALUE PER SHARE:
Class A -- (based on $270,398,854 / 26,806,764 shares of
beneficial interest outstanding -- unlimited number
of shares authorized) ........................................ $10.09
======
Class B -- (based on $4,520,453 / 449,214 shares of
beneficial interest outstanding -- unlimited number
of shares authorized) ........................................ $10.06
======
Class C -- (based on $517,467 / 51,278 shares of
beneficial interest outstanding --
unlimited number of shares authorized)........................ $10.09
======
MAXIMUM OFFERING PRICE:
Class A ........................................................ $10.57
======
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
Pioneer Income Fund
Statement of Operations
For the Six Months Ended June 30, 1996
INVESTMENT INCOME (NOTE 1):
Dividends (net of foreign taxes withheld of $2,351) ............ $ 2,500,801
Interest ....................................................... 7,586,498
-----------
Total investment income ...................................... $10,087,299
-----------
EXPENSES:
Management fees (Note 2) ....................................... $ 693,788
Distribution fees (Note 4)
Class A ...................................................... 343,975
Class B ...................................................... 16,160
Class C ...................................................... 1,531
Transfer agent fees (Note 3)
Class A ...................................................... 373,515
Class B ...................................................... 4,092
Class C ...................................................... 397
Registration fees .............................................. 35,820
Professional fees .............................................. 18,233
Accounting (Note 2) ............................................ 31,500
Custodian fees ................................................. 22,705
Printing ....................................................... 5,390
Fees and expenses of nonaffiliated trustees .................... 9,220
Miscellaneous .................................................. 20,850
-----------
Total expenses ............................................... $ 1,577,176
Less fees paid indirectly (Note 5) ........................... (32,996)
-----------
Net expenses ................................................. $ 1,544,180
-----------
Net investment income ...................................... $ 8,543,119
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments (Note 1) ...................... $ 1,613,709
Change in net unrealized gain on investments ................... (7,211,060)
-----------
Net loss on investments ...................................... $(5,597,351)
-----------
Net increase in net assets resulting from operations ....... $ 2,945,768
===========
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
Pioneer Income Fund
Statements of Changes in Net Assets
For the Six Months Ended June 30, 1996 and the Year Ended December 31, 1995
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, December 31,
1996 1995
---------- ------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income ........................................... $ 8,543,119 $ 17,780,699
Net realized gain on investments ................................ 1,613,709 2,830,576
Change in net unrealized gain/loss on investments ............... (7,211,060) 33,075,737
------------ ------------
Net increase in net assets resulting from operations .......... 2,945,768 $ 53,687,012
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A ($0.32 and $0.65 per share, respectively) ............. (8,444,663) $(17,646,195)
Class B ($0.25 and $0.46 per share, respectively) ............. (89,674) (40,696)
Class C ($0.20 and $0.00 per share, respectively) ............. (8,782) --
In excess of net investment income
Class A ($0.00 and $0.00 per share, respectively) ............. (96,324) --
Class B ($0.03 and $0.00 per share, respectively) ............. (15,524) --
Class C ($0.07 and $0.00 per share, respectively) ............. (3,619) --
From net realized gain on investments
Class A ($0.00 and $0.11 per share, respectively) ............. -- (2,813,942)
Class B ($0.00 and $0.11 per share, respectively) ............. -- (16,634)
In excess of net realized gain on investments
Class A ($0.00 and $0.00 per share, respectively) ............. -- (83,040)
Class B ($0.00 and $0.00 per share, respectively) ............. -- (491)
------------ ------------
Decrease in net assets resulting from distributions
to shareholders ............................................... $ (8,658,586) $(20,600,998)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares ................................ 17,949,210 $ 22,365,044
Net asset value of shares issued to shareholders in
reinvestment of distributions ................................. 7,281,971 17,287,840
Cost of shares repurchased ...................................... (27,519,994) (49,270,950)
------------ ------------
Net decrease in net assets resulting from
fund share transactions...................................... $ (2,288,813) $ (9,618,066)
------------ ------------
Net increase (decrease) in net assets ......................... (8,001,631) $ 23,467,948
NET ASSETS:
Beginning of period ............................................. 283,438,405 259,970,457
------------ ------------
End of period (including distributions in excess of
net investment income of $115,467 and $0, respectively) ....... $275,436,774 $283,438,405
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
Pioneer Income Fund
Statements of Changes in Net Assets
For the Six Months Ended June 30, 1996 and the Year Ended December 31, 1995
(Continued)
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1996 December 31, 1995
-------------------------- --------------------------
Shares Amount Shares Amount
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold ........................ 1,412,853 $ 14,461,882 2,103,203 $ 20,546,527
Shares issued to shareholders in
reinvestment of distributions .... 715,305 7,185,185 1,747,425 17,240,367
Less shares repurchased ............ (2,664,057) (27,262,378) (5,050,730) (49,169,717)
---------- ----------- ---------- -----------
Net decrease ..................... (535,899) $ (5,615,311) (1,200,102) $(11,382,823)
========== =========== ========== ===========
CLASS B*
Shares sold ........................ 290,267 $ 2,966,920 180,493 $ 1,818,517
Shares issued to shareholders in
reinvestment of distributions .... 8,950 89,640 4,715 47,473
Less shares repurchased ............ (25,215) (256,516) (9,996) (101,233)
---------- ------------ ---------- ------------
Net increase ..................... 274,002 $ 2,800,044 175,212 $ 1,764,757
========== ============ ========== ============
CLASS C**
Shares sold ........................ 50,672 $ 520,408
Shares issued to shareholders in
reinvestment of distributions .... 714 7,146
Less shares repurchased ............ (108) (1,100)
---------- ------------
Net increase ..................... 51,278 $ 526,454
========== ============
<FN>
*Class B shares were first publicly offered on April 28, 1995.
**Class C shares were first publicly offered on January 31, 1996.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<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 1996 1995 1994 1993++ 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.30 $ 9.11 $10.21 $10.13 $10.14 $ 9.14 $ 9.53 $ 8.92 $ 8.67 $ 8.94 $ 9.17
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Increase (decrease) from
investment operations:
Net investment income $ 0.32 $ 0.66 $ 0.66 $ 0.65 $ 0.65 $ 0.65 $ 0.70 $ 0.74 $ 0.77 $ 0.76 $ 0.80
Net realized and unrealized
gain (loss) on investments (0.21) 1.29 (1.09) 0.37 0.09 1.00 (0.38) 0.63 0.27 (0.14) 0.04
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase (decrease) from
investment operations 0.11 $ 1.95 $(0.43) $ 1.02 $ 0.74 $ 1.65 $ 0.32 $ 1.37 $ 1.04 $ 0.62 $ 0.84
Distributions to
shareholders from:
Net investment income (0.32) (0.65) (0.67) (0.64) (0.66) (0.65) (0.71) (0.75) (0.76) (0.76) (0.80)
Net realized gain -- (0.11) -- (0.30) (0.09) -- -- (0.01) (0.03) (0.13) (0.27)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
in net asset value $(0.21) $ 1.19 $(1.10) $ 0.08 $(0.01) $ 1.00 $(0.39) $ 0.61 $ 0.25 $(0.27) $(0.23)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $10.09 $10.30 $ 9.11 $10.21 $10.13 $10.14 $ 9.14 $ 9.53 $ 8.92 $ 8.67 $ 8.94
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return* 1.11% 22.00% (4.31%) 10.24% 7.59% 18.62% 3.59% 15.89% 12.29% 6.82% 9.29%
Ratio of net expenses to average
net assets 1.12%**+ 1.13%+ 1.11% 1.06% 0.99% 1.04% 0.94% 0.78% 0.80% 0.79% 0.77%
Ratio of net investment income
to average net assets 6.12%**+ 6.58%+ 7.07% 6.52% 6.47% 6.73% 7.67% 7.98% 8.55% 8.29% 8.46%
Portfolio turnover rate 35%** 25% 50% 69% 54% 43% 44% 69% 87% 115% 76%
Average commission rate paid per
exchange listed transaction $ 0.0579 -- -- -- -- -- -- -- -- -- --
Net assets, end of period
(in thousands) $270,399 $281,639 $259,970 $296,699 $250,033 $197,184 $166,205 $169,607 $159,212 $149,659 $118,760
Ratios assuming reduction for
fees paid indirectly:
Net expenses 1.10%** 1.11% -- -- -- -- -- -- -- -- --
Net investment income 6.14%** 6.60% -- -- -- -- -- -- -- -- --
<FN>
+ Ratios assuming no reduction for fees paid indirectly.
++ 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.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
Pioneer Income Fund
Financial Highlights - Selected Data for a Share Outstanding
for the Periods Presented (Continued)
<TABLE>
<CAPTION>
April 28,
Six Months 1995, to
Ended December 31,
June 30, 1996 1995
------------- ------------
<S> <C> <C>
CLASS B
Net asset value, beginning of period $ 10.27 $ 9.55
------- -------
Increase (decrease) from
investment operations:
Net investment income $ 0.25 $ 0.39
Net realized and unrealized gain
(loss) on investments (0.18) 0.90
------- -------
Net increase from
investment operations $ 0.07 $ 1.29
Distributions to shareholders:
From net investment income (0.25) (0.46)
In excess of net investment income (0.03) --
From net realized gain -- (0.11)
------- -------
Net increase (decrease) in net asset value $ (0.21) $ 0.72
------- -------
Net asset value, end of period $ 10.06 $ 10.27
======= =======
Total return* 0.71% 13.74%
Ratio of net expenses
to average net assets 1.85%**+ 1.88%**+
Ratio of net investment income
to average net assets 5.48%**+ 5.83%**+
Portfolio turnover rate 35%** 25%
Average commission rate paid per
exchange listed transaction $0.0579 --
Net assets, end of period (in thousands) $ 4,520 $ 1,800
Ratios assuming reduction for fees paid indirect
ly:
Net expenses 1.81%** 1.78%**
Net investment income 5.52%** 5.93%**
January 31, 1996
to June 30, 1996
----------------
CLASS C***
Net asset value, beginning of period $ 10.39
-------
Increase (decrease) from investment operations:
Net investment income $ 0.20
Net realized and unrealized loss
on investments (0.23)
-------
Net decrease from investment operations $ (0.03)
Distributions to shareholders:
From net investment income (0.20)
In excess of net investment income (0.07)
-------
Net decrease in net asset value $ (0.30)
-------
Net asset value, end of period $ 10.09
=======
Total return* (0.26%)
Ratio of net expenses
to average net assets 1.86%**+
Ratio of net investment income
to average net assets 5.64%**+
Portfolio turnover rate 35%**
Average commission rate paid per
exchange listed transaction $0.0579
Net assets, end of period (in thousands) $ 517
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.80%**
Net investment income 5.70%**
<FN>
+ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
*** Class C shares were first publicly offered on January 31, 1996.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
Pioneer Income Fund
Notes To Financial Statements
June 30, 1996
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
investment company. The investment objective of the Fund is to seek current
income consistent with preservation and conservation of capital. Growth of
capital is a secondary consideration.
The Fund offers three classes of shares -- Class A, Class B and Class C
shares. Class C shares were first publicly offered on January 31, 1996. The
shares of Class A, Class B and Class C represent an interest in the same
portfolio of investments of the Fund and have equal rights to voting,
redemptions, dividends and liquidation, 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 Class A,
Class B and Class C shareholders, respectively.
The Fund's financial statements have been prepared in conformity with
generally accepted accounting principles that require the management of the Fund
to, among other things, make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates. 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 trade date.
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, as required. Market discount and premium are accreted or amortized
daily on a straight-line basis. Equity securities are valued 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 securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. Securities for which market quotations are not readily available
are valued at their fair values as determined by, or under the direction of, the
Board of Trustees. Temporary cash investments are valued at amortized cost.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis.
Gains and losses on 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 to first 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 from investments is
$65,026 of class action settlements received by the Fund during the year ended
December 31, 1995.
B. Federal Income 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 income tax provision
is 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 paid-in capital, depending on
the type of book/tax differences that may exist.
C. Fund Shares -- The Fund records sales and repurchases of its shares on
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 an indirect wholly owned subsidiary of The Pioneer Group, Inc. (PGI). PFD
earned $46,271 in underwriting commissions on the sale of fund shares during the
six months ended June 30, 1996. Distributions to shareholders are recorded as of
the ex-dividend date. Distributions paid by the Fund, if any, with respect to
each class of shares are calculated in the same manner, at the same time, on
15
<PAGE>
Pioneer Income Fund
Notes To Financial Statements
June 30, 1996 (Continued)
the same day and in the same amount, except that Class A, Class B and Class C
shares can bear different transfer agent and distribution fees.
D. Class Allocations -- Distribution fees are calculated based on the
average daily net asset value attributable to Class A, Class B and Class C
shares of the Fund, respectively. Shareholders of each class share all expenses
and fees paid to the transfer agent, Pioneering Services Corporation (PSC), for
their services, which 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 and 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.
2. Pioneering Management Corporation (PMC), the Fund's investment adviser,
manages the Fund's portfolio and is a wholly owned subsidiary of PGI. Management
fees are calculated daily at the annual rate of 0.50% of the Fund's average
daily net assets up to $250 million; 0.48% of the next $50 million; and 0.45% of
the excess over $300 million.
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 due to affiliates is $112,317 and $5,429 in
management fees and accounting fees, respectively, payable to PMC at June 30,
1996.
3. PSC, a wholly owned subsidiary of PGI, provides substantially all transfer
agent and shareholder services to the Fund at negotiated rates. Included in due
to affiliates is $80,542 in transfer agent fees payable to PSC at June 30, 1996.
4. The Fund adopted a Plan of Distribution for each Class of shares (Class A
Plan, Class B Plan and Class C Plan) in accordance with Rule 12b-1 of the
Investment Company Act of 1940. Pursuant to the Class A Plan, the Fund pays PFD
a service fee of up to 0.25% of the Fund's average daily net assets in
reimbursement of its actual expenditures to finance activities primarily
intended to result in the sale of Class A shares. Pursuant to the Class B Plan
and Class C Plan, the Fund pays PFD 1.00% of the average daily net assets
attributable to each class of shares. The fee consists of a 0.25% service fee
and a 0.75% distribution fee paid as compensation for personal services and/or
account maintenance services or distribution services with regard to Class B and
Class C shares. Included in due to affiliates is $180,927 in distribution fees
payable to PFD at June 30, 1996.
In addition, redemptions of each class of shares may be subject to a
contingent deferred sales charge (CDSC). A CDSC of 1.00% may be imposed on
certain net asset value purchases of Class A shares that are redeemed within one
year of purchase. Class B shares that are redeemed within six years of purchase
are subject to a CDSC at declining rates beginning at 4.0% based on the lower of
cost or market value of shares being redeemed. Redemptions of Class C shares
within one year of purchase are subject to a CDSC of 1.00%. Proceeds from the
CDSC are paid to PFD. For the six months ended June 30, 1996, CDSCs in the
amount of $1,191 were paid to PFD.
5. The Fund has entered into certain expense offset arrangements resulting in a
reduction in the Fund's total expenses. For the six months ended June 30, 1996,
the Fund's expenses were reduced by $32,996 under such arrangements.
16
<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, 1996, and the related
statement of operations for the period then ended, and statements of changes in
net assets for the periods presented and financial highlights for the periods
ended June 30, 1996, December 31, 1995 and 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 eight 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, 1996 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, 1996, the results of its operations for the
period then ended, and the changes in its net assets for the periods presented,
and financial highlights for the periods ended June 30, 1996, December 31, 1995
and December 31, 1994, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
August 1, 1996
17
<PAGE>
PIONEER INCOME FUND
60 State Street
Boston, Massachusetts 02109
OFFICERS TRUSTEES
JOHN F. COGAN, JR. JOHN F. COGAN, JR.
Chairman and President MARGARET B. W. GRAHAM
DAVID D. TRIPPLE JOHN W. KENDRICK
Executive Vice President MARGUERITE A. PIRET
JOHN A. CAREY DAVID D. TRIPPLE
Vice President STEPHEN K. WEST
SHERMAN B. RUSS JOHN WINTHROP
Vice President
WILLIAM H. KEOUGH
Treasurer
JOSEPH P. BARRI
Secretary
INVESTMENT ADVISER PRINCIPAL UNDERWRITER
Pioneering Management Pioneer Funds
Corporation Distributor, Inc.
CUSTODIAN LEGAL COUNSEL
Brown Brothers Hale and Dorr
Harriman & Co.
SHAREHOLDER INDEPENDENT
SERVICES AND PUBLIC
TRANSFER AGENT ACCOUNTANTS
Pioneering Services Corporation Arthur Andersen LLP
60 State Street
Boston, Massachusetts
02109
- --------------------------------------------------------------------------------
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 a current prospectus, which discusses the objectives,
policies and other information about the Fund. 0896-3599 Copy Rights Pioneer
Funds Distributor, Inc.
0896-3599
[Copyright] Pioneer Funds Distributor, Inc.
