As filed with the Securities and Exchange Commission on April 26, 1996
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. 57 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 /_X_/
Amendment No. 26 /_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:
X on April 29, 1996 pursuant to paragraph (b) of Rule 485
---
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) of the Investment Company Act
of 1940. Registrant filed a Rule 24f-2 Notice for its fiscal year ended December
31, 1995 on or about February 29, 1996.
CALCULATION OF REGISTRATION FEE
Title of Amount of Proposed Proposed
Securities Shares Maximum Maximum Amount of
Being Being Offering Aggregate Registration
Registered Registered Price Per Unit Offering Price Fee
- ---------- ---------- -------------- -------------- ---
Shares of
Beneficial 1,052,855 $10.37 $9,242,374.91 $100*
Interest
*This calculation has been made pursuant to Rule 24e-2 under the Investment
Company Act of 1940. During its fiscal year ended December 31, 1995, the
Registrant redeemed or repurchased 5,060,726 shares of beneficial interest, of
which 4,035,836 were utilized by the Registrant on its Rule 24f-2 Notice filed
on or about February 29, 1996 and 1,024,890 are being used herein for purposes
of reducing the filing fee payable herewith under Rule 24e-2. No fee is required
for the registration of such 1,024,890 shares. An additional 27,965 shares being
registered hereby are valued at the public offering price of $10.37 as of April
18, 1996.
<PAGE>
PIONEER INCOME FUND
CLASS A, CLASS B AND CLASS C SHARES
Cross-Reference Sheet Showing Location in Prospectus and
Statement of Additional Information of
Information Required by Items of the Registration Form
Location in Prospectus
or Statement of
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
11. Table of Contents..................... Statement of Additional
Information - Cover Page
<PAGE>
Location in Prospectus
or Statement of
Form N-1A Item Number and Caption Additional Information
12. General Information and History....... Statement of Additional
Information - Cover Page;
Shares of the Fund
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
Information - Shares of the
Fund; Shareholder and Trustee
Liability
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
-2-
<PAGE>
Location in Prospectus
or Statement of
Form N-1A Item Number and Caption Additional Information
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
-3-
<PAGE>
[Pioneer logo]
Pioneer
Income
Fund
Prospectus
Class A, Class B and Class C Shares
April 29, 1996
Pioneer Income Fund (the "Fund") seeks 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 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, dated April 29, 1996, 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 5
IV. MANAGEMENT OF THE FUND 7
V. FUND SHARE ALTERNATIVES 8
VI. SHARE PRICE 8
VII. HOW TO BUY FUND SHARES 9
VIII. HOW TO SELL FUND SHARES 12
IX. HOW TO EXCHANGE FUND SHARES 13
X. DISTRIBUTION PLANS 13
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION 14
XII. SHAREHOLDER SERVICES 15
Account and Confirmation Statements 15
Additional Investments 15
Automatic Investment Plans 15
Financial Reports and Tax Information 15
Distribution Options 15
Directed Dividends 15
Direct Deposit 15
Voluntary Tax Withholding 15
Telephone Transactions and Related Liabilities 15
FactFoneSM 16
Retirement Plans 16
Telecommunications Device for the Deaf (TDD) 16
Systematic Withdrawal Plans 16
Reinstatement Privilege (Class A only) 16
XIII. THE FUND 16
XIV. INVESTMENT RESULTS 17
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 annual operating expenses based on actual
expenses for the fiscal year ended December 31, 1995. For Class C shares,
operating expenses are based on estimated expenses that would have been
incurred if Class C shares had been outstanding for the fiscal year ended
December 31, 1995.
Shareholder Transaction Expenses: Class A Class B Class C(+)
Maximum Initial Sales Charge on
Purchases (as a percentage of
offering price) 4.50%(1) None None
Maximum Sales Charge on Reinvestment of
Dividends None None None
Maximum Deferred Sales Charge None(1) 4.00% 1.00%
Redemption Fee2 None None None
Exchange Fee None None None
Annual Operating Expenses
(as a percentage of average net
assets):
Management Fees 0.48% 0.48% 0.48%
12b-1 Fees 0.25% 1.00% 1.00%
Other Expenses
(including accounting and transfer
agent fees, custodian fees and
printing expenses) 0.38% 0.30% 0.30%
------ ------ ---------
Total Operating Expenses: 1.11% 1.78% 1.78%
====== ====== =========
(+) Class C shares were first offered on January 31, 1996.
(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 ("CDSC") 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.
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 $58 $86 $116 $192*
- --Assuming no redemption $18 $56 $ 96 $192*
Class C Shares**
--Assuming complete
redemption at end of period $28 $56 $ 96 $209
- --Assuming no redemption $18 $56 $ 96 $209
*Class B shares convert to Class A shares eight years after purchase;
therefore, Class A expenses are used after year eight.
**Class C shares redeemed during the first year after purchase are subject to
a 1% CDSC.
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, 1995 has been
derived from financial statements of the Fund which have been audited by
Arthur Andersen LLP, independent public accountants. Arthur Andersen LLP's
report on the Fund's financial statements appears in the Fund's Annual Report
which is incorporated by reference into the Statement of Additional
Information. The information for the years from 1986 through 1993 has been
derived from financial statements which were audited by the Fund's then
independent public accountants, Coopers & Lybrand. Class C shares is a new
class of shares; no financial highlights exist for Class C 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,+
-----------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 9.11 $ 10.21 $ 10.13 $ 10.14 $ 9.14
----- ----- ----- ----- -------
Increase (decrease) from investment operations--
Net investment income $ 0.66 $ 0.66 $ 0.65 $ 0.65 $ 0.65
Net realized and unrealized gain (loss) on investments 1.29 (1.09) 0.37 0.09 1.00
----- ----- ----- ----- -------
Net increase (decrease) from investment operations $ 1.95 $ (0.43) $ 1.02 $ 0.74 $ 1.65
Distribution to shareholders from--
Net investment income (0.65) (0.67) (0.64) (0.66) (0.65)
Net realized capital gains (0.11) 0.00 (0.30) (0.09) 0.00
----- ----- ----- ----- -------
Net increase (decrease) in net asset value $ 1.19 $ (1.10) $ 0.08 $ (0.01) $ 1.00
----- ----- ----- ----- -------
Net asset value, end of year $ 10.30 $ 9.11 $ 10.21 $ 10.13 $ 10.14
===== ===== ===== ===== =======
Total return1 22.00% (4.31%) 10.24% 7.59% 18.62%
Ratio of net operating expenses to average net assets 1.13%+++ 1.11% 1.06% 0.99% 1.04%
Ratio of net investment income to average net assets 6.58%+++ 7.07% 6.52% 6.47% 6.73%
Portfolio turnover rate 25% 50% 69% 54% 43%
Net assets end of year (in thousands) $281,639 $259,970 $296,699 $250,033 $197,184
Ratios assuming a reduction for fees paid indirectly:
Net operating expenses 1.11%
Net investment income 6.60%
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31,+
-----------------------------------------------------
1990 1989 1988 1987 1986
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 9.53 $ 8.92 $ 8.67 $ 8.94 $ 9.17
----- ----- ----- ----- -------
Increase (decrease) from investment operations--
Net investment income $ 0.70 $ 0.74 $ 0.77 $ 0.76 $ 0.80
Net realized and unrealized gain (loss) on investments (0.38) 0.63 0.27 (0.14) 0.04
----- ----- ----- ----- -------
Net increase (decrease) from investment operations $ 0.32 $ 1.37 $ 1.04 $ 0.62 $ 0.84
Distribution to shareholders from--
Net investment income (0.71) (0.75) (0.76) (0.76) (0.80)
Net realized capital gains 0.00 (0.01) (0.03) (0.13) (0.27)
----- ----- ----- ----- -------
Net increase (decrease) in net asset value $ (0.39) $ 0.61 $ 0.25 $ (0.27) $ (0.23)
----- ----- ----- ----- -------
Net asset value, end of year $ 9.14 $ 9.53 $ 8.92 $ 8.67 $ 8.94
===== ===== ===== ===== =======
Total return1 3.59% 15.89% 12.29% 6.82% 9.29%
Ratio of net operating expenses to average net assets 0.94% 0.78% 0.80% 0.79% 0.77%
Ratio of net investment income to average net assets 7.67% 7.98% 8.55% 8.29% 8.46%
Portfolio turnover rate 44% 69% 87% 115% 76%
Net assets end of year (in thousands) $166,205 $169,607 $159,212 $149,659 $118,760
Ratios assuming a reduction for fees paid indirectly:
Net operating expenses
Net investment income
</TABLE>
+ Prior to December 1, 1993, Mutual of Omaha Fund Management Company ("FMC")
acted as the investment adviser to the Fund.
++ Ratios include fees paid indirectly.
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>
II. FINANCIAL HIGHLIGHTS (continued)
PIONEER INCOME FUND
Selected Data For a Class B Share Outstanding For The Years Presented
<TABLE>
<CAPTION>
April 28, 1995
Class B*** to December 31, 1995
--------------------
<S> <C>
Net asset value, beginning of period $ 9.55
------------------
Increase from investment operations:
Net investment income $ 0.39
Net realized and unrealized gain on investments 0.90
------------------
Total increase from investment operations $ 1.29
Distributions to shareholders from:
Net investment income (0.46)
Net realized gain (0.11)
------------------
Net increase in net asset value $ 0.72
------------------
Net asset value, end of period $10.27
==================
Total return* 13.74%
Ratio of net operating expenses to average net
assets 1.88%**+
Ratio of net investment income to average net assets 5.83%**+
Portfolio turnover rate 25%
Net assets, end of period (in thousands) $1,800
Ratios assuming reduction for fees paid indirectly:
Net operating expenses 1.78%**
Net investment income 5.93%**
</TABLE>
+ Ratios assuming no reductuion 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 B shares were first offered on April 28, 1995.
4
<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. Securities in the Fund's
portfolio will be sold whenever PMC believes that it is necessary without
regard to the length of time the particular security may have been held. This
policy is subject to certain requirements for continuing the Fund's
qualification as a regulated investment company under the Internal Revenue
Code of 1986, as amended (the "Code"). A high portfolio turnover rate (100%
or more) involves greater expenses to the Fund and may increase the
possibility of shareholders realizing taxable capital gains. See "Financial
Highlights" for actual turnover rates.
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 the 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 1995, 36% of the Fund's net
assets were invested in equity securities, 3% in cash and equivalents and 60%
in debt securities. Of the Fund's net assets, 16% 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, 7% rated A/A,
19% rated BBB/Baa, 13% rated BB/Ba and 13% rated B/B. Only 1% 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
5
<PAGE>
date as the option that the Fund has written. 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.
Restricted and Illiquid Securities
The Fund may invest in restricted securities (i.e., securities that would be
required to be registered prior to distribution to the public), including
securities eligible for resale to "qualified institutional buyers" in
accordance with Rule 144A under the Securities Act of 1933. In addition, the
Fund will not invest more than 15% of its net assets in illiquid securities,
which includes repurchase agreements maturing in more than seven days,
securities that are not readily marketable and restricted securities sold and
offered under Rule 144A that are illiquid either as a result of legal or
contractual restrictions or the absence of a trading market.
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 portfolio,
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 of the underlying obligations could be delayed or
limited, which could adversely affect the price the Fund receives for such
obli-
6
<PAGE>
gations. 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. Messrs. John A. Carey and Russ
have been the investment managers primarily responsible for the day-to-day
management of the Fund since December 1, 1993. 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. Pioneer Funds Distributor, Inc. ("PFD"), an
indirect wholly-owned subsidiary of PGI, is the principal underwriter of
shares of the Fund.
In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109.
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 regulatory agencies;
(vii) all expenses of shareholders' and Trustees' meetings and of preparing,
printing and distributing prospectuses, notices, proxy statements and all
reports to shareholders and to governmental agencies; (viii) charges and
expenses of legal counsel to the Fund and the Trustees; (ix) distribution
fees paid by the Fund in accordance with Rule 12b-1 promulgated by the SEC
pursuant to the 1940 Act; (x) compensation of those Trustees of the Fund who
are not affiliated with or interested persons of PMC, the Fund (other than as
Trustees), PGI or PFD; (xi) the cost of preparing and printing share
certificates; and (xii) interest on borrowed money, if any. In addition to
the expenses described above, the Fund shall pay all brokers' and
underwriting commissions
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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%
For the fiscal year ended December 31, 1995, the Fund paid a management fee
of $1,306,546 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 14% of the outstanding capital stock of PGI as of March 31,
1996.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers three Classes of shares designated as Class A,
Class B and Class C shares, as described more fully in "How to Buy Fund
Shares." If you do not specify in your instructions to the Fund which Class
of shares you wish to purchase, exchange or redeem, the Fund will assume that
your instructions apply to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase, however, shares
redeemed within 12 months of purchase may be subject to a CDSC. Class A
shares are subject to distribution 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.
Class C Shares. Class C shares are sold without an initial sales charge, but
are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined annual rate of up to 1.00% of the Fund's average daily net assets
attributable to Class C shares. Your entire investment in Class C shares is
available to work for you from the time you make your investment, but the
higher distribution fee paid by Class C shares will cause your Class C shares
to have a higher expense ratio and to pay lower dividends, to the extent
dividends are paid, than Class A shares. Class C shares have no conversion
feature.
Selecting a Class of Shares. The decision as to which Class to purchase
depends on the amount you invest, the intended length of the investment and
your personal situation. If you are making an investment that qualifies for
reduced sales charges, you might consider Class A shares. If you prefer not
to pay an initial sales charge on an investment of $250,000 or less and you
plan to hold the investment for at least six years, you might consider Class
B shares. If you prefer not to pay an initial sales charge and you plan to
hold your investment for one to eight years, you may prefer Class C shares.
Investment dealers 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 mutual fund
and shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the Pioneer mutual 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
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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 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 from any securities broker-dealer which has a sales
agreement with PFD. If you do not have a securities broker-dealer, please
call 1-800-225-6292. Shares will be purchased at the public offering price,
that is, the net asset value per share plus any applicable sales charge, next
computed after receipt of a purchase order, except as set forth below.
The minimum initial investment is $1,000 for Class A, Class B and Class C
shares except as specified below. The minimum initial investment is $50 for
Class A accounts being established to utilize monthly bank drafts, government
allotments, payroll deduction and other similar automatic investment plans.
Separate minimum investment requirements apply to retirement plans and to
telephone and wire orders placed by broker- dealers; no sales 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 and Class C shares except that the subsequent minimum
investment amount for Class B and Class C share accounts may be as little as
$50 if an automatic investment plan is established (see "Automatic Investment
Plans").
Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless you indicated otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing mutual fund account; it may not be used to establish a new account.
Proper account identification will be required for each telephone purchase. A
maximum of $25,000 per account may be purchased by telephone each day. The
telephone purchase privilege is available to Individual Retirement Plan
Accounts ("IRAs") but may not be available to other types of retirement plan
accounts. Call PSC for more information.
You are strongly urged to consult with your financial representative prior to
requesting a telephone purchase. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this pre-designated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any
applicable sales charge next determined after PSC's receipt of a telephone
purchase instruction and receipt of good funds (usually three days after the
purchase instruction). You may always elect to deliver purchases to PSC by
mail. See "Telephone Transactions and Related Liabilities" for additional
information.
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 $5 million invested; 0.50% on the next $45 million; and 0.25% on the
excess over $50 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 may pay
to Mutual of Omaha Investor Services, Inc. 50% of PFD's retention of any
sales commission on sales of the Fund's Class A shares through such dealer.
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other
fiduciary of a trust estate or fiduciary account or related trusts or
accounts including pension, profit-sharing and other employee benefit trusts
qualified under Section 401 or 408 of the Code, although more than one
beneficiary is involved. The sales 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, 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.
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<PAGE>
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be sold
at a reduced or eliminated sales charge to certain group plans ("Group
Plans") under which a sponsoring organization makes recommendations to,
permits group solicitation of, or otherwise facilitates purchases by, its
employees, members or participants. Class A shares of the Fund may be sold at
net asset value without a sales charge to 401(k) retirement plans with 100 or
more participants or at least $500,000 in plan assets. Information about such
arrangements is available from PFD.
Class A shares of the Fund may also be sold at net asset value per share
without a sales charge to: (a) current or former Trustees and officers of the
Fund and partners and employees of its legal counsel; (b) current or former
directors, officers, employees or sales representatives of PGI or its
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which PMC serves as investment adviser, and the
subsidiaries or affiliates of such persons; (d) current or former officers,
partners, employees or registered representatives of broker- dealers which
have entered into sales agreements with PFD; (e) members of the immediate
families of any of the persons above; (f) any trust, custodian, pension,
profit-sharing or other benefit plan of the foregoing persons; (g) insurance
company separate accounts; (h) certain "wrap accounts" for the benefit of
clients of financial planners adhering to standards established by PFD; (i)
other funds and accounts for which PMC or any of its affiliates serves as
investment adviser or manager; and (j) certain unit investment trusts. Shares
so purchased are purchased for investment purposes 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 be sold
at net asset value per share without a sales charge to Optional Retirement
Program (the "Program") participants if (i) the employer has authorized a
limited number of investment company providers for the Program, (ii) all
authorized investment company providers offer their shares to Program
participants at net asset value, (iii) the employer has agreed in writing to
actively promote the authorized investment providers to Program participants
and (iv) the Program provides for a matching contribution for each
participant contribution. 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 mutual
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
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<PAGE>
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.
Class C Shares
You may buy Class C shares at net asset value without the imposition of an
initial sales charge; however, Class C shares redeemed within one year of
purchase will be subject to a CDSC of 1.00%. The charge will be assessed on
the amount equal to the lesser of the current market value or the original
purchase cost of the shares being redeemed. No CDSC will be imposed on
increases in account value above the initial purchase price, including shares
derived from the reinvestment of dividends or capital gains distributions.
Class C shares do not convert to any other Class of Fund shares.
For the purpose of determining the 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 C shares, the Fund will
first redeem shares not subject to any CDSC, and then shares held for the
shortest period of time during the one-year period. As a result, you will pay
the lowest possible CDSC.
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to
the Fund in connection with the sale of Class C shares, including the payment
of compensation to broker-dealers.
Waiver or Reduction of Contingent Deferred Sales Charge.
The CDSC on Class B shares may be waived or reduced for non-retirement
accounts if: (a) the redemption results from the death of all registered
owners of an account (in the case of 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 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-
pant in an IRA, 403(b) or employer-sponsored retirement plan, is part of a
series of substantially equal payments made over the life expectancy of the
participant or the joint life expectancy of the participant and his or her
beneficiary or as scheduled periodic payments to a participant (limited in
any year to 10% of the value of the participant's account at the time the
distribution amount is established; a required minimum distribution due to
the participant's attainment of age 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 C shares and on any Class A shares subject to a CDSC may
be waived or reduced as follows: (a) for automatic redemptions as described
in "Systematic Withdrawal Plans" (limited to 10% of the value of the
account); (b) if the redemption results from the death or a total and
permanent disability (as defined in Section 72 of the Code) occurring after
the purchase of the shares being redeemed of a shareowner or participant in
an employer-sponsored retirement plan; (c) if the distribution is part of a
series of substantially equal payments made over the life expectancy of the
participant or the joint life expectancy of the participant and his or her
beneficiary; or (d) if the distribution is to a participant in an
employer-sponsored retirement plan and is (i) a return of excess employee
deferrals or contributions, (ii) a qualifying hardship distribution as
defined by the Code, (iii) from a termination of employment, (iv) in the form
of a loan to a participant in a plan which permits loans, or (v) from a
qualified defined contribution plan and represents a participant's directed
transfer (provided that this privilege has been pre-authorized through a
prior agreement with PFD regarding participant directed transfers).
The CDSC on Class B and Class C 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 any Class of Fund shares received by PFD from a
broker-dealer prior to the close of
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<PAGE>
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 judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has
been confirmed in writing by PFD and payment has been received.
VIII. HOW TO SELL FUND SHARES
You can arrange to sell (redeem) fund shares on any day the Exchange is open
by selling either some or all of your shares to the Fund.
You may sell your shares either through your broker-dealer or directly to
the Fund. Please note the following:
(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 in good order less any applicable CDSC. Sale proceeds generally
will be sent to you in cash, normally within seven days after your order is
received in good order. The Fund reserves the right to withhold payment of
the sale proceeds until checks received by the Fund in payment for the shares
being sold have cleared, which may take up to 15 calendar days from the
purchase date.
In Writing. You may sell your shares by delivering a written request, signed
by all registered owners, in good order to PSC, however, you must use a
written request, including a signature guarantee, to sell your shares if any
of the following 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.
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 PSC. You may redeem up to $50,000 of your shares
by telephone or fax and receive the proceeds by check or by bank wire or
electronic funds transfer. 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 or by electronic funds
transfer: the proceeds must be sent to your bank 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. You are strongly urged to
consult with your financial representative prior to requesting a telephone
redemption.
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
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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 upon redemption with respect to Class A
shares purchased by 401(a) or 401(k) retirement plans with 1,000 or more
eligible participants or with at least $10 million in plan assets.
General. Redemptions may be suspended or payment postponed during any period
in which any of the following conditions exist: the Exchange is closed or
trading on the Exchange is restricted; an emergency exists as a result of
which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund to fairly
determine the value of the net assets of its portfolio; or the SEC, by order,
so permits.
Redemptions and repurchases are taxable transactions to shareholders. The net
asset value per share received upon redemption or repurchase may be more or
less than the cost of shares to an investor, depending on the market value of
the portfolio at the time of redemption or repurchase.
IX. HOW TO EXCHANGE FUND SHARES
Written Exchanges. You may exchange your shares by sending a letter of
instruction to PSC. Your letter should include your name, the name of the
Pioneer mutual fund out of which you wish to exchange and the name of the
Pioneer mutual fund into which you wish to exchange, your fund account
number(s), the Class of shares to be exchanged and the dollar amount or
number of shares to be exchanged. Written exchange requests must be signed by
all record owner(s) exactly as the shares are registered.
Telephone Exchanges. Your account is automatically authorized to have the
telephone exchange privilege unless you indicated otherwise on your Account
Application or by writing to PSC. Proper account identification will be
required for each telephone exchange. Telephone exchanges may not exceed
$500,000 per account per day. Each telephone exchange request, whether by
voice or by FactFone, will be recorded. You are strongly urged to consult
with your financial representative prior to requesting a telephone exchange.
See "Telephone Transactions and Related Liabilities" below.
Automatic Exchanges. You may automatically exchange shares from one Pioneer
mutual fund account for shares of the same Class in another Pioneer mutual
fund account on a monthly or quarterly basis. The accounts must have
identical registrations and the originating account must have a minimum
balance of $5,000. The exchange will be effective on the 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.
Shares which would normally be subject to a CDSC upon redemption will not
be charged the applicable CDSC at the time of an exchange. Shares acquired in
an exchange will be subject to the CDSC of the shares originally held. For
purposes of determining the amount of any applicable CDSC, the length of time
you have owned shares acquired by exchange will be measured from the date you
acquired the original shares and will not be affected by any subsequent
exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern Time will be
effective on that day if the requirements above have been met, otherwise,
they will be effective on the next business day. PSC will process exchanges
only after receiving an exchange request in good order. There are currently
no fees or sales charges imposed at the time of an exchange. An exchange of
shares may be made only in states where legally permitted. For federal and
(generally) state income tax purposes, an exchange is considered to be a sale
of the shares of the Fund exchanged and a purchase of shares in another
Pioneer mutual fund. Therefore, an exchange could result in a gain or loss on
the shares sold, depending on the tax basis of these shares and the timing of
the transaction, and special tax rules may apply.
You should consider the differences in objectives and policies of the
Pioneer mutual funds, as described in each fund's current prospectus, before
making any exchange. For the protection of the Fund's performance and
shareholders, the Fund and PFD reserve the right to refuse any exchange
request or restrict, at any time without notice, the number and/or frequency
of exchanges to prevent abuses of the exchange privilege. Such abuses may
arise from frequent trading in response to short- term market fluctuations, a
pattern of trading by an individual or group that appears to be an attempt to
"time the market," or any other exchange request which, in the view of
management, will have a detrimental effect on the Fund's portfolio management
strategy or its operations. In addition, the Fund and PFD reserve the right
to charge a fee for exchanges or to modify, limit, suspend or discontinue the
exchange privilege with notice to shareholders as required by law.
X. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for each Class of shares (the
"Class A Plan," "Class B Plan," and "Class C Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution and service
fees are paid.
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
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(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.
Both the Class B Plan and the Class C Plan provide that the Fund will pay a
distribution fee at the annual rate of 0.75% of the Fund's average daily net
assets attributable to the applicable Class of shares and will pay PFD a
service fee at the annual rate of 0.25% of the Fund's average daily net
assets attributable to that Class of shares. The distribution fee is intended
to compensate PFD for its distribution services to the Fund. The service fee
is intended to be additional compensation for personal services and/or
account maintenance services with respect to Class B and Class C shares. PFD
also receives the proceeds of any CDSC imposed on the redemption of Class B
and Class C 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.
Commissions of up to 1% of the amount invested in Class C shares, consisting
of 0.75% of the amount invested and a first year's service fee of 0.25% of
the amount invested, are paid to broker-dealers who have 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. Commencing in the 13th month following the
purchase of Class C shares, dealers will become eligible for additional
annual distribution fees and service fees of up to 0.75% and 0.25%,
respectively, of the net asset value of such shares.
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 or the Class C Plan for which
there is no dealer of record or for which qualification standards have not
been met as partial consideration for personal services and/or account
maintenance services performed by PFD or its affiliates for shareholder
accounts.
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 other 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 shareholder takes them in cash or reinvests them in
additional shares of the Fund. Information as to the federal tax status of
dividends and distributions will be provided to shareholders annually. 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 31% backup withholding of federal income tax if the Fund
is
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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 mutual
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.
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 tele-
phone transaction privileges unless you indicated otherwise on your Account
Application or by writing to PSC. You may purchase, sell or exchange Fund
shares by telephone. See "Share Price" for more information. For personal
assistance, call 1-800-225-6292 between 8:00 a.m. and 9:00 p.m. East-
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ern Time on weekdays. Computer-assisted transactions may be available to
shareholders who have pre-recorded certain bank information (see
"FactFoneSM"). You are strongly urged to consult with your financial
representative prior to requesting any telephone transaction. To confirm that
each transaction instruction received by telephone is genuine, 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.
FactFone(SM)
FactFone(SM) is an automated inquiry and telephone transaction system
available to Pioneer mutual fund shareholders by dialing 1-800-225-4321.
FactFoneSM allows you to obtain current information on your Pioneer mutual
fund accounts and to inquire about the prices and yields of all publicly
available Pioneer mutual funds. In addition, you may use FactFone(SM) to make
computer-assisted telephone purchases, exchanges and redemptions from your
Pioneer accounts if you have activated your PIN. Telephone purchases and
redemptions require the establishment of a bank account of record. You are
strongly urged to consult with your financial representative prior to
requesting any telephone transaction. Shareholders whose accounts are
registered in the name of a broker-dealer or other third party may not be
able to use FactFoneSM. See "How to Buy Fund Shares," "How to Exchange Fund
Shares," "How to Sell Fund Shares" and "Telephone Transactions and Related
Liabilities." Call PSC for assistance.
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 and Class C share accounts will be
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 SWP in effect may result in the
payment of unnecessary sales charges and may therefore be disadvantageous.
You may obtain additional information by calling PSC at 1-800-225-6292 or by
referring to the Statement of Additional Information.
Reinstatement Privilege (Class A Shares Only)
If you redeem all or part of your Class A shares of the Fund, you may
reinvest all or part of the redemption proceeds without a sales charge in
Class A shares of the Fund if you send a written request to PSC not more than
90 days after your shares were redeemed. Your redemption proceeds will be
reinvested at the next determined net asset value of the Class A shares of
the Fund 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.
XIII. THE FUND
The Fund, an open-end, diversified 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
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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 three classes of shares, designated as Class A,
Class B and Class C. The shares of each class represent an interest in the
same portfolio of investments of the Fund. Each class has equal rights as to
voting, redemption, dividends and liquidation, except that each class bears
different distribution and transfer agent fees and may bear other expenses
properly attributable to the particular class. Class A, Class B and Class C
shareholders have exclusive voting rights with respect to the Rule 12b-1
distribution plans adopted by holders of those shares in connection with the
distribution of shares.
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 and
Class C shares the calculation reflects the deduction of any applicable CDSC.
The periods illustrated would normally include one, five and ten years (or
since the commencement of the public offering of the shares of a Class, if
shorter) through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share
values; or any graphic illustration of such data may also be used. These data
may cover any period of the Fund's existence and may or may not include the
impact of sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market 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.
17
<PAGE>
Notes
18
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
International Growth Funds
Pioneer International Growth Fund
Pioneer Europe Fund
Pioneer Emerging Markets Fund
Pioneer India Fund
Growth Funds
Pioneer Capital Growth Fund
Pioneer Mid-Cap Fund
Pioneer Growth Shares
Pioneer Small Company Fund
Pioneer Gold Shares
Growth and Income Funds
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer II
Pioneer Real Estate Shares
Income Funds
Pioneer Short-Term Income Trust
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Income Fund
Tax-Free Income Funds
Pioneer Intermediate Tax-Free Fund*
Pioneer Tax-Free Income Fund*
Money Market Fund
Pioneer Cash Reserves Fund
*Not suitable for retirement accounts
19
<PAGE>
[Pioneer logo]
Pioneer
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
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
FactFone(SM)
Automated fund yields, automated prices and
account information........................................... 1-800-225-4321
Retirement plans............................................... 1-800-622-0176
Toll-free fax.................................................. 1-800-225-4240
Telecommunications Device for the Deaf (TDD)................... 1-800-225-1997
0496-3266
(C)Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER INCOME FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A, Class B and Class C Shares
April 29, 1996
This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Prospectus (the "Prospectus") dated April 29, 1996
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. The most
recent Annual Report to Shareholders is attached to this Statement of Additional
Information and is hereby incorporated by reference.
TABLE OF CONTENTS
Page
1. Investment Objective and Policies...................................... 2
2. Investment Restrictions................................................ 3
3. Management of the Fund................................................. 5
4. Investment Adviser..................................................... 9
5. Underwriting Agreement and Distribution Plans.......................... 10
6. Shareholder Servicing/Transfer Agent................................... 12
7. Custodian.............................................................. 13
8. Principal Underwriter.................................................. 13
9. Independent Public Accountant.......................................... 13
10. Portfolio Transactions................................................. 13
11. Tax Status and Dividends............................................... 15
12. Shares of the Fund..................................................... 18
13. Determination of Net Asset Value....................................... 19
14. Systematic Withdrawal Plan............................................. 19
15. Letter of Intention.................................................... 20
16. Investment Results..................................................... 20
17. General Information.................................................... 24
18. Financial Statements................................................... 24
Appendix A............................................................. 25
Appendix B............................................................. 28
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
With respect to liquidity determinations generally, the Board of Trustees
has the ultimate responsibility for determining whether specific securities,
including Rule 144A securities, are liquid or illiquid. The Board has delegated
the function of making day to day determinations of liquidity to Pioneering
Management Corporation ("PMC"), pursuant to guidelines reviewed by the Trustees.
PMC takes into account a number of factors in reaching liquidity decisions.
These factors may include but are not limited to: (i) the frequency of trading
in the security; (ii) the number of dealers who make quotes in the securities;
(iii) the number of dealers who have undertaken to make a market in the
security; (iv) the number of potential purchasers; and (v) the nature of the
security and how trading is effected (e.g., the time needed to sell the
security, how offers are solicited and the mechanics of transfer). PMC will
monitor the liquidity of securities in the Fund's portfolio and report
periodically on such decisions to the Trustees.
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
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.
-2-
<PAGE>
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.
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 of 1986, as amended (the "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
-3-
<PAGE>
meeting if the holders of more than 50% of the outstanding 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;
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.
-4-
<PAGE>
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 Fund's Board of Trustees provides broad supervision over the affairs of
the Fund. The officers of the Fund are responsible for the Fund's operations.
The Trustees and executive officers of the Fund are listed below, together with
their principal occupations during the past five years. An asterisk indicates
those Trustees who are interested persons of the Fund within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act").
JOHN F. COGAN, JR.*, Chairman of the Board, President and Trustee, DOB: June
1926
President, Chief Executive Officer and a Director of The Pioneer Group,
Inc. ("PGI"); Chairman and a Director of Pioneering Management Corporation
("PMC") and Pioneer Funds Distributor, Inc. ("PFD"); Director of Pioneering
Services Corporation ("PSC"), Pioneer Capital Corporation ("PCC") and
Forest-Starma (Russian timber joint venture); President and Director of Pioneer
Plans Corporation ("PPC"), Pioneer Investment Corp. ("PIC"), Pioneer Metals and
Technology, Inc. ("PMT"), Pioneer International Corp. ("PIntl"), Pioneer First
Russia, Inc. ("First Russia") and Pioneer Omega, Inc. ("Omega"); Chairman of the
Board and Director of Pioneer Goldfields Limited ("PGL") and Teberebie
Goldfields Limited; Chairman of the Supervisory Board of Pioneer Fonds
Marketing, GmbH ("Pioneer GmbH"); Member of the Supervisory Board of Pioneer
First Polish Trust Fund Joint Stock Company ("PFPT"); Chairman, President and
Trustee of all of the Pioneer mutual funds and Partner, Hale and Dorr (counsel
to the Fund).
RICHARD H. EGDAHL, M.D., Trustee, DOB: December 1926
Boston University Health Policy Institute, 53 Bay State Rd., Boston, MA 02115
Professor of Management, Boston University School of Management; Professor
of Public Health, Boston University School of Public Health; Professor of
Surgery, Boston University School of Medicine; Director, Boston University
Health Policy Institute and Boston University Medical Center; Executive Vice
President and Vice Chairman of the Board, University Hospital; Academic Vice
President for Health Affairs, Boston University; Director, 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 facilities firm) and
Springer-Verlag New York, Inc. (publisher); Honorary Trustee, Franciscan
Children's Hospital and Trustee of all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, Trustee, DOB: May 1947
The Keep, P.O. Box 110. Little Deer Isle, ME 04650
Founding Director, Winthrop Group, Inc. (consulting firm) since 1982;
Manager of Research Operations, Xerox Palo Alto Research Center, from 1991 to
1994; Professor of Operations Management and Management of Technology, Boston
University School of Management ("BUSM"), from 1989 to 1993 and Trustee of all
of the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
-5-
<PAGE>
JOHN W. KENDRICK, Trustee, DOB: July 1917
6363 Waterway Drive, Falls Church, VA 22044
Professor Emeritus and Adjunct Scholar, George Washington University;
Economic Consultant and Director, American Productivity and Quality Center;
American Enterprise Institute and Trustee of all of the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, Trustee, DOB: May 1948
One Boston Place, Suite 2635, Boston, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm) and
Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, Trustee and Executive Vice President, DOB: February 1944
Executive Vice President and a Director of PGI; President, Chief Investment
Officer and a Director of PMC; Director of PFD, PCC, PIC, PIntl, First Russia,
Omega and Pioneer SBIC Corporation, Executive Vice President and Trustee of all
of the Pioneer mutual funds.
STEPHEN K. WEST, Trustee, DOB: September 1928
125 Broad Street, New York, NY 10004
Partner, Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus Funds
(mutual funds) and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, Trustee, DOB: June 1936
One North Adgers Wharf, Charleston, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director of
NUI Corp.; Trustee of Alliance Capital Reserves, Alliance Government Reserves
and Alliance Tax Exempt Reserves and Trustee of all of the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
WILLIAM H. KEOUGH, Treasurer, DOB: April 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PIC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC Corporation; Treasurer and Director of PPC and Treasurer of all of
the Pioneer mutual funds.
JOSEPH P. BARRI, Secretary, DOB: August 1946
Secretary of PGI, PMC, PPC, PIC, PIntl, PMT, First Russia, Omega and PCC;
Clerk of PFD and PSC; Partner, Hale and Dorr (counsel to the Fund) and Secretary
of all of the Pioneer mutual funds.
ERIC W. RECKARD, Assistant Treasurer, DOB: June 1956
Manager of Fund Accounting of PMC since May 1994, Manager of Auditing,
Compliance and Business Analysis for PGI prior to May 1994 and Assistant
Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, Assistant Secretary, DOB: March 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC: and formerly of Hale and Dorr (counsel to
the Fund) where he most recently served as junior partner.
SHERMAN B. RUSS, Vice President, DOB: July 1937
Senior Vice President of PMC; Vice President of Pioneer Money Market Trust,
Pioneer America Income Trust, Pioneer Bond Fund and Pioneer Interest Shares,
Inc.
JOHN A. CAREY, Vice President, DOB: May 1949
Vice President of PMC, Pioneer Equity-Income Fund and Pioneer Fund.
-6-
<PAGE>
The Fund's Amended and Restated Declaration of Trust (the "Declaration of
Trust") provides that the holders of two-thirds of its outstanding shares may
vote to remove a Trustee of the Fund at any meeting of shareholders. See
"Description of Shares" below. The business address of all officers is 60 State
Street, Boston, Massachusetts 02109.
All of the outstanding capital stock of PFD, PMC and PSC is owned, directly
or indirectly, by PGI, a publicly-owned Delaware corporation. PMC, the Fund's
investment adviser, serves as the investment adviser for the Pioneer mutual
funds listed below and manages the investments of certain institutional
accounts.
The table below lists all the Pioneer mutual funds currently offered to the
public and the investment adviser and principal underwriter for each fund.
Investment Principal
Fund Name Adviser Underwriter
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Income Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares, Inc. PMC Note 1
Pioneer Variable Contracts Trust PMC Note 2
Note 1 This fund is a closed-end fund.
Note 2 This is a series of eight separate portfolios designed to provide
investment vehicles for the variable annuity and variable life insurance
contracts of various insurance companies or for certain qualified pension plans.
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, 1996, 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 14% of such shares. As of
March 31, 1996, the officers and trustees held in the aggregate less than 1% of
the outstanding shares of the Fund. As of March 31, 1996, Donaldson Lufkin
Jenrette Securities Corporation Inc., P.O. Box 2052, Jersey City, NJ 07303-9998
owned approximately 67.56% (28,644) of the outstanding Class C
-7-
<PAGE>
shares of the Fund. PFD, 60 State Street, Boston, MA 02109 owned approximately
23.19% (9,834) of the outstanding Class C shares of the Fund.
Compensation of Officers and Trustees
The Fund pays no salaries or compensation to any of its officers.
Commencing on January 1, 1996, the Fund will pay an annual trustees' fee to each
Trustee who is not affiliated with PGI, PMC, PFD or PSC consisting of two
components: (a) a base fee of $500 and (b) a variable fee, calculated on the
basis of the average net assets of each series, estimated to be approximately
$282 for 1996. In addition, the Fund will pay a per meeting fee of $120 to each
Trustee who is not affiliated with PGI, PMC, PFD or PSC. The Fund also will pay
an annual committee participation fee to Trustees who serve as members of
committees established to act on behalf of one or more of the of Pioneer mutual
funds. Committee fees will be allocated to the Fund on the basis of the Fund's
average net assets. Each Trustee who is a member of the Audit Committee for the
Pioneer mutual funds will receive an annual fee equal to 10% of the aggregate
annual trustees' fee, except the Committee Chair who will receive an annual
trustees' fee equal to 20% of the aggregate annual trustees' fee. The 1996 fees
for Audit Committee members and the Audit Committee Chair are expected to be
approximately $6,000 and $12,000, respectively. Members of the Pricing Committee
for the Pioneer mutual funds, as well as any other committee which renders
material functional services to the Board of Trustees for the Pioneer mutual
funds, will receive an annual fee equal to 5% of the annual trustees' fee,
except the Committee Chair who will receive an annual trustees' fee equal to 10%
of the annual trustees' fee. The 1996 fees for Pricing Committee members and the
Pricing Committee Chair are expected to be approximately $3,000 and $6,000,
respectively. Any such fees paid to affiliates or interested persons of PGI,
PMC, PFD or PSC are reimbursed to the Fund under its management contract. The
Fund paid an annual fee of $1,000 plus $100 per meeting attended to each Trustee
who was not affiliated with PGI, PMC, PFD or PSC. The Fund paid the Chairman of
the Audit Committee an annual fee of $250 and paid 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 paid 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 provides information regarding the compensation paid by
the Fund and other Pioneer Funds to the Trustees for their services.
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from the Fund and
Compensation Accrued as Part of all other Pioneer
Name of Trustee from the Fund* the Fund's expenses Mutual Funds**
<S> <C> <C> <C>
John F. Cogan, Jr. $500 $0 $11,000
Richard H. Egdahl, M.D. $3674 $0 $63,315
Margaret B.W. Graham $3674 $0 $62,398
John W. Kendrick $3674 $0 $62,398
Margeurite A. Piret $4038 $0 $76,704
David D. Tripple $500 $0 $11,000
Stephen K. West $3666 $0 $68,180
John Winthrop $3904 $0 $71,199
----- -- -------
Total $23,630 $0 $426,194
======= == ========
</TABLE>
* As of Fund's fiscal year end.
** As of December 31, 1995 (calendar year end for all Pioneer Funds).
-8-
<PAGE>
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 had 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%
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 $1,228,585 in management fees to FMC 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 and $1,306,546 in management fees to PMC for the fiscal years ended
December 31, 1994 and December 31, 1995, respectively.
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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, 1993, 1994 or 1995.
5. UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS
The Fund entered into an Underwriting Agreement with PFD on December
1, 1993. 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 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, Class B and Class C shares (the
"Class A Plan," the "Class B Plan" and the "Class C Plan") (together, the
"Plans").
Class A Plan
Pursuant to the Class A Plan, the Fund may reimburse PFD for its
expenditures in financing any activity primarily intended to result in the sale
of the Class A 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
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affiliates are entitled to retain all service fees payable under the Class B
Plan for which there is no dealer of record or for which qualification standards
have not been met as partial consideration for personal services and/or account
maintenance services performed by PFD or its affiliates for shareholder
accounts.
The purpose of distribution payments to PFD under the Class B Plan is
to compensate PFD for its distribution services to the Fund. PFD pays
commissions to dealers as well as expenses of printing prospectuses and reports
used for sales purposes, expenses with respect to the preparation and printing
of sales literature and other distribution related expenses, including, without
limitation, the cost necessary to provide distribution-related services, or
personnel, travel office expenses and equipment. The Class B Plan also provides
that PFD will receive all CDSCs attributable to Class B shares. (See
"Distribution Plans" in the Prospectus.)
Class C Plan
The Class C Plan provides that the Fund will pay PFD, as the Fund's
distributor for its Class C shares, a distribution fee accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Fund's average daily net
assets attributable to Class C shares and will pay PFD a service fee equal to
0.25% of the Fund's average daily net assets attributable to Class C shares.
PFD will in turn pay to securities dealers which enter into a sales agreement
with PFD a distribution fee and a service fee at rates of up to 0.75% and
0.25%, respectively, of the Fund's average daily net assets attributable to
Class C shares owned by investors for whom that securities dealer is the holder
or dealer of record. The service fee is intended to be in consideration of
personal services and/or account maintenance services rendered by the dealer
with respect to Class C shares. PFD will advance to dealers the first-year
service fee at a rate equal to 0.25% of the amount invested. As compensation
therefor, PFD may retain the service fee paid by the Fund with respect to such
shares for the first year after purchase. Commencing in the thirteenth month
following a purchase of Class C shares, dealers will become eligible for
additional service fees at a rate of up to 0.25% of the amount invested and
additional compensation at a rate of up to 0.75% of the net asset value of such
shares. Dealers may from time to time be required to meet certain other
criteria in order to receive service fees. PFD or its affiliates are entitled
to retain all service fees payable under the Class C Plan for which there is no
dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is
to compensate PFD for its distribution services with respect to the Class C
shares of the Fund. PFD pays commissions to dealers as well as expenses of
printing prospectuses and reports used for sales purposes, expenses with
respect to the preparation and printing of sales literature and other
distribution-related expenses, including, without limitation, the cost
necessary to provide distribution-related services, or personnel, travel office
expenses and equipment. The Class C Plan also provides that PFD will receive
all CDSCs attributable to Class C shares. (See "Distribution Plans" in the
Prospectus.)
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
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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
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, 1995, the Fund incurred
total distribution fees pursuant to the Fund's Class A Plan and Class B Plan of
$674,096 and $4,628, respectively. The distribution fees were paid by the Fund
to PFD in reimbursement of expenses related to servicing of shareholder
accounts and to compensating dealers and sales personnel. The Fund had not
incurred any distribution fees pursuant to the Class C Plan. Class C shares
were first offered January 31, 1996.
During the fiscal year ended December 31, 1995, CDSCs, at a rate
declining from a maximum of 4.0% of the lower of the cost or market value of
the shares being redeemed, of $134 were charged to redemptions of Class B
shares made within 6 years of purchase (as described in "How to Buy Fund
Shares" in the Prospectus). Such CDSCs are paid to PFD in reimbursement of
expenses related to servicing of shareholder accounts and compensation paid to
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, Class B and Class C
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.
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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.
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
shares of the Fund. Under the Fund's previous underwriting agreement with FMC,
FMC received $2,376,000 in aggregate underwriting commissions for the period
from January 1 to November 30, 1993, of which $216,280 was retained. Under the
Fund's current Underwriting Agreement with PFD, PFD received $123,000,
$1,501,540 and $665,332, respectively, in aggregate underwriting commissions
for the period from December 1 through December 31, 1993 and for the fiscal
years ended December 31, 1994 and December 31, 1995 of which $15,107, $120,501
and $73,704, 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, 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.
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
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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 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 mutual 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 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
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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
$66,000, $78,278 and $33,565, respectively, for the fiscal years ended December
31, 1993, 1994 and 1995.
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.
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 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 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.
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<PAGE>
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 seek 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 from such appreciation or income 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.
Redemptions and exchanges are taxable events. Any loss realized upon
the redemption or other disposition of shares with a tax holding period of six
months or less will be treated as a long-term capital loss to the extent of any
amounts treated as distributions of long-term capital gain with respect to such
shares.
In addition, if Class A shares redeemed or exchanged have been held
for less than 91 days, (1) in the case of a reinvestment at net asset value
pursuant to the reinvestment privilege, the sales charge paid on such shares is
not included in their tax basis under the Code, and (2) in the case of an
exchange, all or a portion of the sales charge paid on such shares is not
included in their tax basis under the Code, to the extent a sales charge that
would otherwise apply to the shares received is reduced pursuant to the
exchange privilege. In either case, the portion of the sales charge not
included in the tax basis of the shares redeemed or surrendered in an exchange
is included in the tax basis of the shares acquired in the reinvestment or
exchange. Losses on certain redemptions may be disallowed under "wash sale"
rules in the event of other investments in the Fund (including pursuant to
automatic dividend reinvestments) 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. For the taxable year ended December 31, 1995, the Fund had no
capital loss carryforwards.
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
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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 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 in some cases. 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 (as "backup withholding")
31% of reportable payments, including dividends, capital gain dividends, and
the proceeds of redemptions (including exchanges) and repurchases, to
shareholders who have not complied with IRS regulations. In order to avoid this
withholding requirement, shareholders must certify on their Account
Applications, or on separate W-9 Forms, that the Social Security Number or
other Taxpayer Identification Number they provide is their correct number and
that they are not currently subject to backup withholding, or that they are
exempt from backup withholding. The Fund may nevertheless be required to
withhold if it receives notice from the IRS or a broker that the number
provided is incorrect or backup withholding is applicable as a result of
previous underreporting of interest or dividend income.
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 it should also not be required to pay
Delaware corporation income tax.
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
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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. nonresident alien
withholding tax (or nonresident alien withholding tax at a lower treaty rate) on
amounts treated as ordinary dividends from the Fund, and unless an effective IRS
Form W-8 or authorized substitute 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 a diversified, 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 three classes of shares, Class A, Class B and Class C.
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
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
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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") (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 that class, less
the Fund's liabilities attributable to that class, and dividing it by the
number of outstanding shares of that 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 and Class C shares are offered at net asset value without the imposition of
an initial sales charge.
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<PAGE>
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide a
convenient method of receiving fixed payments at regular intervals from shares
of the Fund deposited by the applicant under this SWP. The applicant must
deposit or purchase for deposit with PSC shares of the Fund having a total
value of not less than $10,000. Periodic checks of $50 or more will be sent to
the applicant, or any person designated by him, monthly or quarterly.
Withdrawals from Class B and Class C share accounts are limited to 10% of the
value at the time the SWP is implemented. See "How to Sell Fund Shares" in the
Prospectus.
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 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 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.
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<PAGE>
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 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.
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<PAGE>
(ii) The yield to maturity of each obligation is then divided by 360
and the resulting quotient is multiplied by the market value of the obligation
(including actual accrued interest, if any) to determine the interest income on
the obligation for each day. The yield to maturity calculation has been made on
each obligation during the 30 day base period.
(iii) Interest earned on all debt obligations during the 30-day or one
month period is then totaled.
(iv) The maturity of an obligation with a call provision(s) is the
next call date on which the obligation reasonably may be expected to be called
or, if none, the maturity date.
With respect to the treatment of discount and premium on mortgage or
other receivables-backed obligations which are expected to be subject to
monthly payments of principal and interest ("pay downs"), the Fund accounts for
gain or loss attributable to actual monthly pay downs as an increase or
decrease to interest income during the period. In addition, the Fund may elect
(i) to amortize the discount or premium 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, 1995 was
5.74% for Class A shares and 5.14% for Class B shares. Class C shares were
first offered January 31, 1996.
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 of 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 each Class of Fund shares
are computed by finding the average annual compounded rates of return that
would cause a hypothetical investment in that class made on the first day of a
designated period (assuming all dividends and distributions are reinvested) to
equal the ending redeemable value of such hypothetical investment on the last
day of the designated period in accordance with the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1000,
less the maximum sales load for Class A
shares or the deduction of the CDSC on Class
B or Class C shares at the end of the
period.
T = average annual total return
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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 total returns for Class A and Class B shares of the Fund as of
December 31, 1995 are as follows:
Average Annual Total Return (%)
One Year Five Years Ten Years Commencement*
Class A Shares 16.50 9.42 9.46 8.56
Class B Shares N/A N/A N/A 9.74
Class C Shares N/A N/A N/A N/A
*Commencement was 5/17/68 for Class A shares and 4/28/95 for Class B shares.
Class C Shares were first offered January 31, 1996.
Automated Information Line (FactFone)
FactFoneSM, Pioneer's 24-hour automated information line, allows
shareholders to dial toll-free 1-800-225-4321 and hear recorded fund
information, including:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's fixed income funds;
o annualized 7-day yields and 7-day effective (compound) yields for
Pioneer money market funds; and
o dividends and capital gains distributions on all Pioneer mutual
funds.
Yields are calculated in accordance with SEC mandated standard formulas.
In addition, by using a personal identification number ("PIN") shareholders
may enter purchases, exchanges and redemptions, access their account balance and
last three transactions and may order a duplicate statement. See "FactFoneSM" in
the Prospectus for more information.
All performance numbers communicated through FactFoneSM represent past
performance, and 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, Class B and Class C shares will also
vary, and such shares may be worth more or less at redemption than their
original cost.
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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 Fund's Annual Report dated December 31, 1995, is incorporated by
reference into this Statement of Additional Information in reliance upon the
report of Arthur Andersen LLP, independent public accountants, as experts. A
copy of the Fund's Annual Report 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.
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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.
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.
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<PAGE>
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.
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
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<PAGE>
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
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.
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<PAGE>
Pioneer Income Fund A
<TABLE>
<CAPTION>
Date Initial Offering Price Sales Charge Shares Net Asset Initial Net
Investment Purchased Value Asset
Included Per Share Value
<S> <C> <C> <C> <C> <C> <C>
12/31/85 $10,000 $9.600 4.50% 1,041.667 $9.1700 $9,550
</TABLE>
Dividends and Capital Gains Reinvested
Value of Shares
Date From From Cap. From Dividends Total Value
Investment Gains
Reinvested Reinvested
12/31/86 $9,313 $300 $827 $10,440
12/31/87 $9,031 $449 $1,671 $11,151
12/31/88 $9,292 $478 $2,752 $12,522
12/31/89 $9,927 $511 $4,075 $14,513
12/31/90 $9,521 $490 $5,022 $15,033
12/31/91 $10,562 $544 $6,727 $17,833
12/31/92 $10,553 $717 $7,916 $19,186
12/31/93 $10,635 $1,317 $9,197 $21,149
12/31/94 $9,491 $1,175 $9,573 $20,239
12/31/95 $10,729 $1,583 $12,379 $24,691
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Pioneer Income Fund B
<TABLE>
<CAPTION>
Date Initial Offering Price Sales Charge Shares Net Asset Initial Net
Investment Purchased Value Asset
Included Per Share Value
<S> <C> <C> <C> <C> <C> <C>
4/28/95 $10,000 $9.55 4.00% 1,047.120 $9.55 $10,000
</TABLE>
Dividends and Capital Gains Reinvested
Value of Shares
Date From From Cap. Gains From Dividends Total Value
Investment
Reinvested Reinvested
12/31/95 $10,753 $118 $503 $10,974
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<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The following securities indices are well-known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may be used, if appropriate. The indices
are not available for direct investment. The data presented is not meant to be
indicative of the performance of the Fund, reflects past performance and does
not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P 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.
U.S. SMALL STOCK INDEX
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.
U.S. INFLATION
The Consumer Price Index for All Urban Consumers (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA Growth and Value Indexes are constructed by dividing the stocks in
the S&P 500 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 U.S. GOVERNMENT BONDS
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
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<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
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 U.S. GOVERNMENT BONDS
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.
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.
6 MONTH CDs
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. 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
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
-31-
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
Mirror/Mosby, St. Louis, 1990, p. 97 ["Level-Coupon Bonds"].) The monthly income
return was assumed to be one-twelfth the coupon.
U.S. (30 DAY) TREASURY BILLS
For the U.S. Treasury bill index, data from The Wall Street Journal are used 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.
NAREIT-EQUITY INDEX
All of the data is based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMSE and the NASDAQ. The data is
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 Newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighing at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income. Liquidating dividends, whether full or partial,
are treated as income.
RUSSELL 2000 SMALL STOCK INDEX
Index of the 2,000 smallest stocks in the Russell 3000 Index (TM); the smallest
company has a market capitalization of approximately $13 million.
The Russell 30000 is comprised of the 3,000 largest US companies as determined
by market capitalization representing approximately 98% of the US equity market.
The largest company in the index has a market capitalization of $67 billion. The
Russell Indexes (TM) are reconstituted annually as of June 1st, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The Wilshire Real Estate Securities Index is a market capitalization-weighted
index which measures the performance of more than 85 securities.
The index contains performance data on five major categories of property;
office, retail, industrial, apartment and miscellaneous. Additionally, the Index
has real estate portfolio encumbered by 16% third party mortgages. The companies
in the WRESEC are 79% equity and hybrid REIT's and 21% real estate operating
companies. The capitalization is 47% NYSE, 33% AMEX and 20% OTC."
STANDARD & POOR'S MIDCAP 400 INDEX
The Standard and Poor's MidCap 400 Index is a market-value-weighted index. The
performance data for the MidCap 400 Index were calculated by taking the stocks
presently in the MidCap 400 Index and tracking them backwards in time as long as
there were prices reported. No attempt was made to determine what stocks "might
have been" in the MidCap 400 Index five or ten years ago had it existed.
Dividends are reinvested on a monthly basis prior to June 30, 1991, and are
reinvested daily thereafter.
-32-
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The S&P MidCap 400 Index and the S&P 500 together represent approximately 85% of
the total market capitalization of stocks traded in the United States.
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.
Source: Ibbotson Associates
-33-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
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
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A
-34-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
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
Dec 1995 37.43 36.84 34.46 2.74 38.13 36.99
-35-
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.1 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.18 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
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<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
Dec 1966 3.65 4.69 N/A 5.75 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.48 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.44 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.71 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.38 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.12 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 14.71
Dec 1982 40.36 29.1 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.58 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.3 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.8 11.21 5.21 26.39 5.60
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<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S & P Bank
NAREIT - Russell Wilshire Midcap Savings
Equity 2000 Real Estate 400 Account
Dec 1925 N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 3.86
Dec 1961 N/A N/A N/A N/A 3.90
Dec 1962 N/A N/A N/A N/A 4.08
Dec 1963 N/A N/A N/A N/A 4.17
Dec 1964 N/A N/A N/A N/A 4.19
Dec 1965 N/A N/A N/A N/A 4.23
Dec 1966 N/A N/A N/A N/A 4.45
Dec 1967 N/A N/A N/A N/A 4.67
Dec 1968 N/A N/A N/A N/A 4.68
Dec 1969 N/A N/A N/A N/A 4.80
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<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S & P Bank
NAREIT - Russell Wilshire Midcap Savings
Equity 2000 Real Estate 400 Account
Bank Savings Account
Dec 1970 N/A N/A N/A N/A 5.14
Dec 1971 N/A N/A N/A N/A 5.30
Dec 1972 8.01 N/A N/A N/A 5.37
Dec 1973 -15.52 N/A N/A N/A 5.51
Dec 1974 -21.40 N/A N/A N/A 5.96
Dec 1975 19.30 N/A N/A N/A 6.21
Dec 1976 47.59 N/A N/A N/A 6.23
Dec 1977 22.42 N/A N/A N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 11.19
Dec 1983 30.64 29.13 27.61 26.10 9.71
Dec 1984 20.93 -7.30 20.64 1.18 9.92
Dec 1985 19.10 31.05 22.20 35.58 9.02
Dec 1986 19.16 5.68 20.30 16.21 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 6.92
Dec 1988 13.49 24.89 24.18 20.87 7.20
Dec 1989 8.84 16.24 2.37 35.54 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 7.80
Dec 1991 35.7 46.05 20.03 50.1 4.61
Dec 1992 14.59 18.41 7.36 11.91 2.89
Dec 1993 19.65 18.91 15.24 13.96 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 4.96
Dec 1995 15.27 28.44 13.65 30.94 5.24
Source: Ibbotson Associates
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<PAGE>
APPENDIX B
Other Pioneer Information
The Pioneer group of mutual funds was established in 1928 with the creation
of Pioneer Fund. Pioneer is one of the oldest and most experienced money
managers in the United States.
As of December 31, 1995, PMC employed a professional investment staff of
44, with a combined average of 15 years' experience in the financial services
industry.
Total assets of all Pioneer mutual funds at December 31, 1995, were
approximately $12 billion representing 982,369 shareholder accounts - 637,060
non-retirement accounts and 345,309 retirement accounts.
-40-
<PAGE>
PIONEER INCOME FUND
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial highlights of the Registrant are included in
Part A of the Registration Statement. The financial statements
of the Registrant have been incorporated by reference into
Part B of the Registration Statement by reference from the
1995 Annual Report to Shareholders filed electronically on
February 29, 1996, accession no. 0000069405-96-000005, and
file no. 811-1605-3.
(b) Exhibits:
(1) (a) Form of Agreement and Declaration of Trust+.
(b) Establishment and Designation of Classes A, B & C
Shares+.
(2) By-Laws+.
(3) Inapplicable.
(4) Inapplicable.
(5) Management Contract with Pioneering Management
Corporation+.
(6) (a) Underwriting Agreement with Pioneer Funds
Distributor, Inc+.
(b) Form of Sales Agreement.
(7) Inapplicable.
(8) Custodian Agreement; and the Assignment dated August 28,
1990+.
(9) Service Agreement with Pioneering Services Corporation+.
(10) Opinion of Counsel.
<PAGE>
(11) Consent of Independent Public Accountants (Arthur
Andersen LLP).
(12) None.
(13) Understanding -- Incorporated herein by reference to
Post-Effective Amendment No. 31 filed March 18, 1980.
(14) Inapplicable.
(15) (a) Plan of Distribution+.
(b) Class B Plan of Distribution+.
(c) Class C Plan of Distribution.
(16) None.
(17) Financial Data Schedules.
(18) (a) Rule 18f-3 Plan for Class A and Class B Shares.
(b) Rule 18f-3 Plan for Class A, B and C Shares.
- ---------------
+ Filed electronically as part of Post-Effective Amendment No. 56 to the
Registration Statement and incorporated by reference herein.
C-2
<PAGE>
Item 25. Persons Controlled By or Under Common Control With Registrant
Percent State/Country
of of
Company Owned By Shares Incorporation
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer Capital Corp. (PCC) PGI 100% MA
Pioneer Fonds Marketing GmbH (GmbH) PGI 100% MA
Pioneer SBIC Corp. (SBIC) PGI 100% MA
Pioneer Associates, Inc. (PAI) PGI 100% MA
Pioneer International Corp. (PInt) PGI 100% MA
Pioneer Plans Corp. (PPC) PGI 100% MA
Pioneer Goldfields Ltd (PGL) PGI 100% MA
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Metals and Technology,
Inc. (PMT) PGI 100% DE
Pioneer First Polish Trust Fund
Joint Stock Co. (First Polish) PGI 100% Poland
Teberebie Goldfields Ltd. (TGL) PGI 90% Ghana
Pioneer Funds Distributor, Inc.
(PFD) PMC 100% MA
SBIC's outstanding capital stock PCC 100% MA
THE FUNDS: All are parties to management contracts with PMC.
BUSINESS
FUND TRUST
Pioneer International Growth Fund MA
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Fund MA
Pioneer II MA
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Fund MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Income Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Tax-Free State Series Trust MA
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares, Inc. NE Corporation
C-3
<PAGE>
OTHER:
. SBIC is the sole general partner of Pioneer Ventures Limited
Partnership, a Massachusetts limited partnership.
. ITI Pioneer AMC Ltd. (ITI Pioneer) (Indian Corp.), is a joint
venture between PMC and Investment Trust of India Ltd. (ITI) (Indian
Corp.)
. ITI and PMC own approximately 54% and 45%, respectively, of the
total equity capital of ITI Pioneer.
JOHN F. COGAN, JR.
Owns approximately 14% of the outstanding shares of PGI.
TRUSTEE/
ENTITY CHAIRMAN PRESIDENT DIRECTOR OTHER
Pioneer Family of
Mutual Funds X X X
PGL X X X
PGI X X X
PPC X X
PIC X X
Pintl X X
PMT X X
PCC X
PSC X
PMC X X
PFD X X
TGL X X
First Polish X Member of
Supervisory
Board
Hale and Dorr Partner
GmbH Chairman of
Supervisory
Board
C-4
<PAGE>
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of March 31, 1996
-------------- ---------------------
Class Class Class
Shares of Beneficial Interest A B C
Shares Shares Shares
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.
C-5
<PAGE>
Item 29. Principal Underwriter
(a) See Item 25 above.
(b) Directors and Officers of PFD:
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice
President and Trustee
Steven M. Graziano Senior None
Vice President
Stephen W. Long Senior None
Vice President
John W. Drachman Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Mary Kleeman Vice President None
Steven R. Berke Assistant None
Vice President
Mary Sue Hoban Assistant None
Vice President
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
(c) Not applicable.
C-6
<PAGE>
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.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 57 to
its Registration Statement (the "Amendment") pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this 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, 1996.
PIONEER INCOME FUND
/s/John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman
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 )
)
Principal Financial and )
Accounting Officer: )
)
)
William H. Keough* )
William H. Keough, Treasurer )
A MAJORITY OF THE BOARD OF TRUSTEES:
John F. Cogan, Jr.* )
John F. Cogan, Jr., Trustee )
)
Richard H. Egdahl, M.D.* )
Richard H. Egdahl, Trustee )
)
Margaret B.W. Graham* )
Margaret B.W. Graham, Trustee )
)
John W. Kendrick* )
John W. Kendrick, Trustee )
<PAGE>
)
Marguerite A. Piret* )
Marguerite A. Piret, Trustee )
)
David D. Tripple* )
David D. Tripple, Trustee )
)
Stephen K. West* )
Stephen K. West, Trustee )
)
John Winthrop* )
John Winthrop, Trustee )
*By /s/Joseph P. Barri April 25, 1996
Joseph P. Barri
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
(1)(b) Establishment and Designation of Classes A, B & C
Shares
(6)(b) Form of Sales Agreement
(10) Opinion of Counsel
(11) Consent of Independent Public Accountants (Arthur
Andersen LLP)
15(c) Class C Plan of Distribution
17 Financial Data Schedules
18(a) Rule 18f-3 Plan for Class A and B Shares
18(b) Rule 18f-3 Plan for Class A, B and C Shares
PIONEER INCOME FUND
Establishment and Designation
of
Class A Shares, Class B Shares and Class C 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 the Fund
(the "Shares") to create three classes of Shares of the Fund as follows:
1. The three classes of Shares established and designated hereby are
"Class A Shares," "Class B Shares" and "Class C Shares," respectively.
2. Class A Shares, Class B Shares and Class C 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, Class B Shares and Class C
Shares, the method of determining the net asset value of Class A
Shares, Class B Shares and Class C Shares and the relative dividend
rights of holders of Class A Shares, Class B Shares and Class C Shares
shall be established by the Trustees of the Trust in accordance with
the provisions of the Declaration and shall be set forth in the
Trust'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, Class C
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 4th
day of October, 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, ESQ.
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
PIONEER FUNDS DISTRIBUTOR, INC.
60 State Street
Boston, MA 02109
(617) 742-7825
SALES AGREEMENT
Gentlemen:
Pioneer Funds Distributor, Inc. (PFD), acts as principal underwriter, as
defined in the Investment Company Act of 1940, for the registered investment
companies (the "Funds") listed on Appendix A attached (as amended from time to
time by PFD.) Acting as a principal, PFD offers to sell shares of the Funds
subject to the conditions set forth in this agreement and subsequent amendments
thereto.
1. Shares purchased from PFD for sale to the public shall be offered and
sold at the price or prices, and on the terms and conditions, set forth in the
currently effective prospectus of the Funds, as amended or supplemented from
time to time (the "Prospectus" or "Prospectuses"). In the sale of such shares to
the public you shall act as dealer for your own account or as agent for your
customer and in no transaction shall you have any authority to act or hold
yourself out as agent for PFD, any of the Funds, the Funds' Custodians, the
Funds' Transfer agent, or any other party, and nothing in this agreement shall
constitute you a partner, employee or agent of ours or give you any authority to
act for PFD. Neither PFD nor the funds shall be liable for any of your acts or
obligations as a broker-dealer under this agreement. Nothing herein shall be
construed to prohibit your acting as agent for one or both customers in the sale
of shares by one customer to another and charging such customer(s) a reasonable
commission.
2. Shares purchased from PFD for sale to the public shall be purchased
only to cover orders previously received by you from your customers. Shares
purchased for your own bona fide investment shall not be reoffered or sold
except to the applicable Fund or to PFD. PFD also agrees to purchase shares only
for investment or to cover orders received.
3. If you purchase shares from your customers, you agree to pay such
customers not less than the redemption price in effect on the date of purchase,
as defined in the prospectus of the applicable Fund. Sales of shares at prices
reflecting a discount, concession, commission or other reallowance shall be made
only to registered broker-dealers which are members of the National Association
of Securities Dealers Inc. (NASD) and who also have entered into sales
agreements with PFD.
4. Only unconditional orders for a designated number of shares or dollar
amount of investment shall be accepted. Procedures relating to handling orders
shall be conveyed to you from time to time. All orders are subject to acceptance
or rejection by PFD in our sole discretion.
5. If any shares sold to or through you under the terms of this agreement
are repurchased by PFD or by the issuer or are tendered for redemption within
seven business days after the date of our confirmation of the original purchase
by you, we both agree to pay to the Fund all commissions on such shares.
6. Sales by you to the public shall earn a commission computed as a
percentage of the applicable offering price and which varies with the size and
nature of each such purchase. The terms and conditions affecting the applicable
offering prices on shares sold with a front-end sales charge , including
features such as combined purchase, rights of accumulation, Letters of Intention
and net asset value purchases, are described in the prospectuses. The schedules
of commissions generally payable with respect to sales of the Funds are outlined
on Appendix A to this agreement. Commission checks for less than $1 will not be
issued.
PFD may, from time to time, offer additional commissions or bonuses on
sales by you or your representatives without otherwise revising this agreement.
Any such additional commissions or bonuses shall take effect in accordance with
the terms and conditions contained in written notification to you.
7. Remittance of the net amount due for shares purchased from PFD shall
be made payable to Pioneering Services Corporation (PSC) Agent for the
Underwriter, in New York or Boston funds, within three days of our confirmation
of sale to you, or within such shorter time as specified by the rules of the
NASD or of a registered clearing agent through which the transaction is settled.
Payments made to PSC should be sent to Post Office Box 9014, Boston, MA 02205
(or wired to an account designated by PSC), along with your transfer
instructions on the appropriate copy of our confirmation of sale to you. If such
payment is not received by PSC, we reserve the right to liquidate the shares
purchased for your account and risk. Promptly upon receipt of payment, shares
sold to you shall be deposited by PSC to an account on the books of the Fund(s)
in accordance with your instructions. Certificates will not be issued unless
specifically requested and we reserve the right to levy a charge for issuance of
certificates.
8. You represent that you are and, at the time of purchasing any shares
of the Funds, will be registered as a broker-dealer with the US. Securities and
Exchange Commission (SEC) or are exempt from such registration; if required to
be registered as a broker-dealer you are a member in good standing of the NASD;
you are qualified to act as a broker-dealer in the states or jurisdictions in
which you intend to offer shares of the Funds; you will abide by all applicable
federal and state statutes and the rules of the NASD; and when making sales to
citizens or residents of foreign countries, that you will abide by all
applicable laws and regulations of that country. Expulsion or suspension from
the NASD or revocation or suspension of SEC registration shall act as an
immediate cancellation of this agreement.
9. No person is authorized to make any representations concerning shares
of any of the Funds except those contained in the then current Prospectus or
Statement of Additional Information for such Fund. In purchasing shares from PFD
you shall rely solely on the representations contained in such Prospectuses and
Statements of Additional Information.
10. Additional copies of the current prospectuses, Statements of
Additional Information (SAI), and other literature will be supplied in
reasonable quantities upon request.
<PAGE>
11. We reserve the right in our discretion to suspend sales or withdraw
the offering of shares of any Fund entirely. Either party hereto has the right
to cancel this agreement upon five days' written notice to the other party. We
reserve the right to amend this agreement at any time and you agree that an
order to purchase shares of any one of the Funds placed by you after notice of
such amendment has been sent to you shall constitute your agreement to any such
amendment.
12. All written communications to PFD should be sent to the above address.
All written communications to you will be sent to your address listed below.
13. This agreement shall become effective upon receipt by us of your
acceptance hereof and supersedes any prior agreement between us with respect to
the sales of Shares of any of the Funds.
14. This agreement shall be construed in accordance with the laws of
Massachusetts. The parties hereby agree that all disputes between us of whatever
subject matter, whether existing on the date hereof or arising hereafter, shall
be submitted to arbitration in accordance with the then current Code of
Arbitration Procedure of the NASD, the Uniform Arbitration Act or similar rules.
Arbitration shall take place in the city of Boston, Massachusetts. Any decision
that shall be made in such arbitration shall be final and binding and shall have
the same force and effect as a judgment made in a court of competent
jurisdiction.
15. You appoint the transfer agent for each Fund as your agent to execute
the purchase transactions of Shares of such Fund in accordance with the terms
and provisions of any account, program, plan or service established or used by
your customers and to confirm each purchase to your customers on your behalf,
except as modified in writing by the transfer agent, and you guarantee to us and
the Fund the legal capacity of your customers so purchasing such Shares and any
other person in whose name the Shares are to be registered.
PIONEER FUNDS DISTRIBUTOR, INC.
Date: ,
By:__________________________________
William A. Misata
Vice President
The undersigned hereby accepts the offer set forth in above letter.
By:__________________________________________________
Title:________________________________________________
RETAIN ONE COPY AND RETURN THE OTHER
<PAGE>
APPENDIX A
CLASS A
Schedule 1
<TABLE>
<CAPTION>
<S> <C> <C>
Pioneer Fund Pioneer Mid-Cap Fund* Pioneer Equity-Income Fund
Pioneer II Pioneer Gold Shares Pioneer Growth Shares
Pioneer International Growth Fund Pioneer Europe Fund Pioneer Real Estate Shares
Pioneer Capital Growth Fund Pioneer Emerging Markets Fund Pioneer Small Company Fund
Pioneer India Fund
Sales Charge
as % of Public Broker/Dealer
Purchase Amount Offering Price Commission
Less than $ 50,000.......... 5.75 5.00%
$ 50,000 - 99,999.......... 4.50 4.00
100,000 - 249,999.......... 3.50 3.00
250,000 - 499,999.......... 2.50 2.00
500,000 - 999,999.......... 2.00 1.75
1,000,000 or more .......... none a) see below
Schedule 2
Pioneer Bond Fund Pioneer America Income Trust Pioneer Tax-Free Income Fund
Pioneer Income Fund
Sales Charge
as % of Public Broker/Dealer
Purchase Amount Offering Price Commission
Less than $100,000.......... 4.50 4.00%
$100,000 - 249,999.......... 3.50 3.00
250,000 - 499,000......... 2.50 2.00
500,000 - 999,999......... 2.00 1.75
1,000,000 or more .......... none a) see below
Schedule 3
Pioneer Intermediate Tax-Free Fund
Sales Charge
as % of Public Broker/Dealer
Purchase Amount Offering Price Commission
Less than $ 50,000.......... 3.50 3.00%
$ 50,000 - 99,999......... 3.00 2.50
100,000 - 499,999.......... 2.50 2.00
500,000 - 999,999.......... 2.00 1.75
1,000,000 or more .......... none a) see below
Schedule 4
Pioneer Short-Term Income Trust
Sales Charge
as % of Public Broker/Dealer
Purchase Amount Offering Price Commission
Less than $ 50,000.......... 2.50 2.00%
$ 50,000 - 99,999......... 2.00 1.75
100,000 - 249,999.......... 1.50 1.25
250,000 - 999,999.......... 1.00 1.00
1,000,000 or more .......... none a) see below
</TABLE>
a) Purchases of $1 million or more, and certain group plans, are not subject to
an initial sales charge. PFD may pay a commission to broker-dealers who initiate
and are responsible for such purchases at the following rate: for funds listed
on schedules 1 and 2 above, the rate is as follows: 1% on the first $5 million
invested, .50 of 1% on the next $45 million and .25 of 1% on the excess over 50
million. For funds listed on schedules 3 and 4 : .50 of 1% on purchases of $1
million to $5 million and .10 of 1% on the excess over $5 million. A one-year
prepaid service fee is included in this commission. These commissions shall not
be payable if the purchaser is affiliated with the broker-dealer or if the
purchase represents the reinvestment of a redemption made during the previous 12
calendar months. A contingent deferred sales charge will be payable on these
investments in the event of share redemption within 12 months following the
share purchase, at the rate of 1% on funds in schedules 1 and 2 ; and .50 of 1%
on funds in schedules 3 and 4, 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. For additional information about the broker-dealer
commission and contingent deferred sales charge applicable to these
transactions, refer to the Fund's prospectus.
PLEASE RETAIN THIS COPY
<PAGE>
Schedule 5
Pioneer Cash Reserves Fund Pioneer U.S. Government Money Fund
No Load
CLASS B
Schedule 1 Schedule 2 Schedule 3
---------- ---------- ----------
<TABLE>
<CAPTION>
<S> <C> <C>
Pioneer Equity Income Fund Pioneer Intermediate Tax-Free Pioneer Short-Term
Pioneer Bond Fund Fund Income Trust
Pioneer Capital Growth Fund
Pioneer Europe Fund
Pioneer Gold Share
Pioneer America Income Trust
Pioneer Emerging Markets Fund
Pioneer India Fund
Pioneer Cash Reserves Fund
Pioneer Growth Shares
Pioneer Income Fund
Pioneer Tax-Free Income Fund
Pioneer Small Company Fund
Pioneer International Growth Fund
Pioneer Real Estate Shares
Pioneer Mid-Cap Fund*
</TABLE>
Broker/Dealer
Commission 4.00% 3.00% 2.00%
- ----------
Year Since
Purchase CDSC% CDSC% CDSC%
First 4.0 3.0 2.0
Second 4.0 3.0 2.0
Third 3.0 2.0 1.0
Fourth 3.0 1.0 none
Fifth 2.0 none none
Sixth 1.0 none To A Class
Seventh none To A Class
Eigth none
Ninth To A Class
a)Dealer Commission includes a first year service fee equal to 0.25% of the
amount invested in all Class B shares.
CLASS C
<TABLE>
<CAPTION>
<S> <C> <C>
Pioneer America Income Trust Pioneer Bond Fund Pioneer Capital Growth Fund
Pioneer Cash Reserves Funds Pioneer Emerging Markets Fund Pioneer Equity-Income Fund
Pioneer Europe Fund Pioneer Gold Shares Pioneer Growth Shares
Pioneer Income Fund Pioneer Real Estate Shares Pioneer India Fund
Pioneer Intermediate Tax-Free Fund Pioneer Small Company Fund Pioneer Tax-Free Income Fund
Pioneer International Growth Fund Pioneer Mid-Cap Fund*
</TABLE>
a) 1% Payout to Broker
b) 1% CDSC for One Year
*formerly Pioneer Three Fund
<PAGE>
PIONEER FUNDS DISTRIBUTOR, INC.
60 State Street
Boston, MA 02109
(617) 742-7825
SUPPLEMENTAL SALES AND SERVICE AGREEMENT
You have entered into a Sales Agreement with Pioneer Funds Distributor, Inc.
("PFD") with respect to the Pioneer mutual funds for which PFD serves as
principal underwriter ("the Funds").
This agreement incorporates and supplements that agreement. In consideration of
your sales of shares of the Funds, for providing services to shareholders of the
Funds and of the Pioneer money market funds and assisting PFD and its affiliates
in providing such services, we are authorized to pay you certain service fees as
specified herein. Receipt by you of any such service fees is subject to the
terms and conditions contained in the Funds' prospectuses and/or specified
below, as may be amended from time to time.
1. You agree to cooperate as requested with programs that the Funds, PFD or
their affiliates provide to enhance shareholder service.
2. You agree to take an active role in providing such shareholder services as
processing purchase and redemption transactions and, where applicable, exchanges
and account transfers; establishing and maintaining shareholder accounts;
providing certain information and assistance with respect to the Funds;
responding to shareholder inquiries or advising us of such inquiries where
appropriate.
3., You agree to assign an active registered representative to each shareholder
account on your and our records and to reassign accounts when registered
representatives leave your firm. You also agree, with respect to accounts which
are held in nominee or "street" name, to provide such documentation and
verification that active representatives are assigned to all such accounts as
PFD may require from time to time.
4. You agree to pay to the registered representatives assigned to shareholder
accounts a share of any service fees paid to you pursuant to this agreement. You
also agree to instruct your representatives to regularly contact shareholders
whose accounts are assigned to them.
5. You acknowledge that service fee payments are subject to terms and conditions
set forth herein and in the Funds' prospectuses, Statements of Additional
Information and Plans of Distribution and that this agreement may be terminated
by either party at any time by written notice to the other. Any order to
purchase or sell shares received by PFD from you subsequent to the date of our
notification to you of an amendment of the Agreement shall be deemed to be your
acceptance of such an amendment.
6. You acknowledge that your continued participation in this agreement is
subject to your providing a level of support to PFD's marketing and shareholder
retention efforts that is deemed acceptable by PFD. Factors which may be
considered by PFD in this respect include, but are not limited to, the level of
shareholder redemptions, the level of assistance in disseminating shareholder
communications, reasonable access to your offices and/or representatives by PFD
wholesalers or other employees and whether your compensation system or
"preferential list" unduly discriminates against the sale of shares of the
Funds.
7. Service fees will generally be paid quarterly, at the rates and under the
conditions specified on schedule A hereto.
8. All communications to PFD should be sent to the above address. Any notice to
you shall be duly given if mailed or telegraphed to the address specified by you
below. This agreement, in conjunction with the Sales Agreement, describes the
complete understanding of the parties.
This agreement shall be construed under the laws of the Commonwealth of
Massachusetts.
Accepted: Execute this Agreement in duplicate
and return one ofthe duplicate originals to us.
By:___________________________
By:_________________________________________
Title:________________________ William A. Misata
Vice President
RETAIN ONE COPY AND RETURN THE OTHER
<PAGE>
SUPPLEMENTAL SALES AND SERVICE AGREEMENT
WITH PIONEER FUNDS DISTRIBUTOR, INC.
SCHEDULE A
1. Except as specified in Section 4 below, service fees on the aggregate
net asset value of each account assigned to you in Pioneer Fund, Pioneer II, and
Pioneer Mid-Cap Fund** will be paid at the rate of:
a. 0.15% annually on shares acquired prior to August 19, 1991.
b. 0.25% annually on shares acquired on or after August 19, 1991.
2. Except as specified in Section 4 below, service fees on the aggregate
net asset value of each account assigned to you in:
Pioneer America Income Trust Pioneer International Growth Fund
Pioneer Bond Fund Pioneer Growth Shares
Pioneer Intermediate Tax-Free Fund Pioneer Real Estate Shares
Pioneer Europe Fund Pioneer Income Fund
Pioneer Capital Growth Fund Pioneer Tax-Free Income Fund
Pioneer Equity-Income Fund Pioneer Short-Term Income Trust
Pioneer Gold Shares Pioneer India Fund
Pioneer Emerging Markets Fund Pioneer Small Company Fund*
will be paid at the rate of:
a. 0.15% annually if the shares are acquired on or after August 19, 1991,
as a result of an exchange from Pioneer Fund, Pioneer II, or Pioneer Mid-Cap
Fund** of shares owned prior to August 19, 1991.
b. 0.25% annually on all other shares.
3. Except as specified in Section 4 below, service fees will be paid at an
annual rate of 0.15% of the aggregate net asset value of each account assigned
to you in:
Pioneer Cash Reserves Fund
Pioneer US. Government Money Fund
Pioneer California Double Tax-Free Fund
Pioneer Massachusetts Double Tax-Free Fund
Pioneer New York Triple Tax-Free Fund
4. Exceptions -- Service fees will not be paid on accounts representing:
a. Purchases by you or your affiliates, employees or
representatives.
b Shares which were purchased at net asset value, except for sales
of the money market funds or sales on which you are paid a
commission and which are subject to the contingent deferred sales
charge described in the funds' prospectuses.
c. "House" accounts or any other accounts not assigned to an active
registered representative(s).
d. Accounts established in Pioneer Bond Fund prior to January 1,
1986.
e. Service fees of less than $50 per calendar quarter will not be
paid.
f. Pioneer reserves the right to reduce the service fee paid on
individual accounts of more than $10 million.
g. First year services fees on shares subject to a CDSC are at the
rate of 0.25% and are prepaid as part of the initial sales
commission.
5. Service fees on shares sold with a front-end sales charge normally
begin to be earned as soon as the transaction settles, unless specified
otherwise in the fund prospectus. Since the commission on shares sold with a
CDSC includes a prepaid one year service fee , periodic service fees on such
shares are paid beginning one year following the transaction.
6. Service Fees of 1% on class C shares will begin after first year.
* Service fees begin accruing January 1, 1996
** Formerly Pioneer Three Fund
MORRIS, NICHOLS, ARSHT & TUNNELL
1201 NORTH MARKET STREET
P.O. BOX 1347
WILMINGTON, DE 19899-1347
April 25, 1996
Pioneer Income Fund
60 State Street
Boston, Massachusetts 02109
Re: Pioneer Income Fund
Ladies and Gentlemen:
We have acted as special Delaware counsel to Pioneer Income
Fund, a Delaware business trust (the "Trust"), in connection with certain
matters relating to the formation of the Trust and the issuance of Shares of
beneficial interest in the Trust. Capitalized terms used herein and not
otherwise herein defined are used as defined in the Agreement and Declaration of
Trust of the Trust dated June 16, 1994 (the "Governing Instrument").
We understand that you are about to register under the
Securities Act of 1933, as amended, 1,052,855 Shares of beneficial in the Trust
by Post-Effective Amendment No. 57 to the Trust's Registration Statement on Form
N-1A (the "Post-Effective Amendment").
In rendering this opinion, we have examined copies of the
following documents, each in the form provided to us: the Certificate of Trust
of the Trust as filed in the Office of the Secretary of State of the State of
Delaware (the "Recording Office") on June 20, 1994 (the "Certificate"); the
Governing Instrument; the By-laws of the Trust; certain resolutions of the
Trustees of the Trust; the Trust's Adoption of and Amendment to Notification of
Registration Filed Pursuant to Section 8(a) of the Investment Company Act of
1940 on Form N-8A filed with the Securities and Exchange Commission on June 24,
1994 by which the Trust adopted the Notification of Registration of Pioneer
Income Fund, Inc.; Post-Effective Amendment No. 54 to Pioneer Income Fund,
Inc.'s Registration Statement on Form N-1A by which the Trust adopted the
Registration Statement of Pioneer Income Fund, Inc. as filed with the Securities
and Exchange Commission on June 24, 1994; the Post-Effective Amendment; and a
certification of good standing of the Trust obtained as of a
<PAGE>
Pioneer Income Fund
April 25, 1996
Page 2
recent date from the Recording Office. In such examinations, we have assumed the
genuineness of all signatures, the conformity to original documents of all
documents submitted to us as copies or drafts of documents to be executed, and
the legal capacity of natural persons to complete the execution of documents. We
have further assumed for the purpose of this opinion: (i) the due authorization,
execution and delivery by, or on behalf of, each of the parties thereto of the
above-referenced instruments, certificates and other documents, and of all
documents contemplated by the Governing Instrument, the By-laws and applicable
resolutions of the Trustees to be executed by investors desiring to become
Shareholders; (ii) the payment of consideration for Shares, and the application
of such consideration, as provided in the Governing Instrument, and compliance
with the other terms, conditions and restrictions set forth in the Governing
Instrument and all applicable resolutions of the Trustees of the Trust in
connection with the issuance of Shares (including, without limitation, the
taking of all appropriate action by the Trustees to designate Series of Shares
and the rights and preferences attributable thereto as contemplated by the
Governing Instrument); (iii) that appropriate notation of the names and
addresses of, the number of Shares held by, and the consideration paid by,
Shareholders will be maintained in the appropriate registers and other books and
records of the Trust in connection with the issuance, redemption or transfer of
Shares; (iv) that no event has occurred subsequent to the filing of the
Certificate that would cause a termination or reorganization of the Trust under
Section 4 or Section 5 of Article IX of the Governing Instrument; (v) that the
activities of the Trust have been and will be conducted in accordance with the
terms of the Governing Instrument and the Delaware Business Trust Act, 12 Del.
C. ss.ss. 3801 et seq. (the "Delaware Act"); and (vi) that each of the documents
examined by us is in full force and effect and has not been modified,
supplemented or otherwise amended. No opinion is expressed herein with respect
to the requirements of, or compliance with, federal or state securities or blue
sky laws. Further, we express no opinion on the sufficiency or accuracy of any
registration or offering documentation relating to the Trust or the Shares. As
to any facts material to our opinion, other than those assumed, we have relied
without independent investigation on the above-referenced documents and on the
accuracy, as of the date hereof, of the matters therein contained.
<PAGE>
Pioneer Income Fund
April 25, 1996
Page 3
Based on and subject to the foregoing, and limited in all
respects to matters of Delaware law, it is our opinion that:
1. The Trust is a duly organized and validly existing business
trust in good standing under the laws of the State of Delaware.
2. The Shares covered by the Post-Effective Amendment, when
issued to Shareholders in accordance with the terms, conditions, requirements
and procedures set forth in the Governing Instrument, will constitute legally
issued, fully paid and non-assessable Shares of beneficial interest in the
Trust.
3. Under the Delaware Act and the terms of the Governing
Instrument, each Shareholder of the Trust, in such capacity, will be entitled to
the same limitation of personal liability as that extended to stockholders of
private corporations for profit organized under the general corporation law of
the State of Delaware; provided, however, that we express no opinion with
respect to the liability of any Shareholder who is, was or may become a named
Trustee of the Trust. Neither the existence nor exercise of the voting rights
granted to Shareholders under the Governing Instrument will, of itself, cause a
Shareholder to be deemed a trustee of the Trust under the Delaware Act.
Notwithstanding the foregoing or the opinion expressed in paragraph 2 above, we
note that, pursuant to Section 2 of Article VIII of the Governing Instrument,
the Trustees have the power to cause Shareholders, or Shareholders of a
particular Series, to pay certain custodian, transfer, servicing or similar
agent charges by setting off the same against declared but unpaid dividends or
by reducing Share ownership (or by both means).
<PAGE>
Pioneer Income Fund
April 25, 1996
Page 4
We hereby consent to the filing of a copy of this opinion with
the Securities and Exchange Commission as part of the Post-Effective Amendment.
In giving this consent, we do not thereby admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. Except as provided in this paragraph, the opinion set
forth above is expressed solely for the benefit of the addressee hereof and may
not be relied upon by, or filed with, any other person or entity for any purpose
without our prior written consent.
Sincerely,
/s/MORRIS, NICHOLS, ARSHT & TUNNELL
MORRIS, NICHOLS, ARSHT & TUNNELL
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 2, 1996 included in Pioneer Income Fund's 1995 Annual Report (and
to all references to our firm) included in or made a part of the Pioneer Income
Fund Post-Effective Amendment No. 57 to Registration Statement File No. 2-28273
and Amendment No. 26 to Registration File No. 811-1605.
/s/ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
April 25, 1996
CLASS C SHARES DISTRIBUTION PLAN
PIONEER INCOME FUND
CLASS C SHARES DISTRIBUTION PLAN, dated as of January 31, 1996 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 C 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 C Shares distribution plan (the "Class C 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 C Shares in connection with the Class C 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
C 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 C Shares in connection with the offering of Class C
Shares, (b) PFD may compensate any Dealer that sells Class C 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 C shares, its profits
or any other source available to it;
<PAGE>
WHEREAS, the Trust recognizes and agrees that PFD may impose certain
deferred sales charges in connection with the repurchase of Class C 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 C Plan, has evaluated such
information as it deemed necessary to an informed determination whether this
Class C 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 C Plan will
benefit the Trust and its Class C shareholders;
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this Class
C Plan for the Trust as a plan of distribution of Class C Shares in accordance
with Rule 12b-1, on the following terms and conditions:
I. (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 C
Shares. Such compensation shall be calculated and accrued daily and
paid monthly or at such other intervals as the Board of Trustees may
determine.
(b) The amount of compensation paid during any one year
for distribution services with respect to Class C Shares shall be
.75% of the Trust's average daily net assets attributable to Class
C Shares for 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) Dealers, brokers and other dealers
who are members of the National Association of Securities Dealers,
Inc. ("NASD") or their officers, sales representatives and
employees, (ii) 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 C Shares;
printing of reports and prospectuses for other than existing
shareholders; and preparation, printing and distribution of sales
literature and advertising materials.
-2-
<PAGE>
(d) The amount of compensation paid during any one year
for personal and account maintenance services and expenses shall
be .25% of the Trust's average daily net assets attributable to
Class C Shares for such year. As partial consideration for
personal services and/or account maintenance services provided by
PFD to the Class C Shares, PFD shall be entitled to be paid any
fees payable under this clause (d) with respect to Class C 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, 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 C 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 C 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.
II. The Trust understands that agreements between PFD and Dealers may
provide for payment of fees to Dealers in connection with the sale of Class C
Shares and the provision of services to shareholders of the Trust. Nothing in
this Class C 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 C 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-
<PAGE>
III. 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.
IV. This Class C Plan shall become effective upon approval by (i) a
"majority of the outstanding voting securities" of Class C of the Trust, (ii) a
vote of the Board of Trustees, and (iii) a vote of a majority of the Trustees
who are not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Class C Plan or in any agreements
related to the Class C Plan (the "Qualified Trustees"), such votes with respect
to (ii) and (iii) above to be cast in person at a meeting called for the purpose
of voting on this Class C Plan.
V. This Class C 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 C Plan shall expire on
January 31, 1997.
VI. This Class C Plan may be amended at any time by the Board of Trustees,
provided that this Class C Plan may not be amended to increase materially the
limitations on the annual percentage of average net assets which may be expended
hereunder without the approval of holders of a "majority of the outstanding
voting securities" of Class C 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 C 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 C of the Trust.
VII. 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 C Plan and the purposes for which such
expenditures were made.
VIII. While this Class C 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.
-4-
<PAGE>
IX. For the purposes of this Class C Plan, the terms "assignment,"
"interested persons," "majority of the outstanding voting securities" and
"specifically approved at least annually" are used as defined in the 1940 Act.
X. The Trust shall preserve copies of this Class C 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.
XI. This Class C Plan shall be construed in accordance with the laws of The
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
XII. If any provision of this Class C Plan shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Class C Plan
shall not be affected thereby.
-5-
[ARTICLE] 6
[CIK] 0000069405
[NAME] PIONEER INCOME FUND
[SERIES]
[NUMBER] 001
[NAME] PIONEER INCOME FUND CLASS A
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-END] DEC-31-1995
[INVESTMENTS-AT-COST] 255379406
[INVESTMENTS-AT-VALUE] 279286676
[RECEIVABLES] 4527213
[ASSETS-OTHER] 6521
[OTHER-ITEMS-ASSETS] 146838
[TOTAL-ASSETS] 283967248
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 528843
[TOTAL-LIABILITIES] 528843
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 260323316
[SHARES-COMMON-STOCK] 27342663
[SHARES-COMMON-PRIOR] 28542765
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (788813)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 23903902
[NET-ASSETS] 283438405
[DIVIDEND-INCOME] 5617968
[INTEREST-INCOME] 15162658
[OTHER-INCOME] 0
[EXPENSES-NET] (2999927)
[NET-INVESTMENT-INCOME] 17780699
[REALIZED-GAINS-CURRENT] 2830576
[APPREC-INCREASE-CURRENT] 33075737
[NET-CHANGE-FROM-OPS] 53687012
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (17646195)
[DISTRIBUTIONS-OF-GAINS] (2813942)
[DISTRIBUTIONS-OTHER] (83040)
[NUMBER-OF-SHARES-SOLD] 2103203
[NUMBER-OF-SHARES-REDEEMED] 5050730
[SHARES-REINVESTED] 1747425
[NET-CHANGE-IN-ASSETS] 23467948
[ACCUMULATED-NII-PRIOR] 251982
[ACCUMULATED-GAINS-PRIOR] (1121099)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1306546
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 3056454
[AVERAGE-NET-ASSETS] 268985592
[PER-SHARE-NAV-BEGIN] 9.11
[PER-SHARE-NII] 0.66
[PER-SHARE-GAIN-APPREC] 1.29
[PER-SHARE-DIVIDEND] (0.65)
[PER-SHARE-DISTRIBUTIONS] (0.11)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.30
[EXPENSE-RATIO] 1.13
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<PAGE>
[ARTICLE] 6
[CIK] 0000069405
[NAME] PIONEER INCOME FUND
[SERIES]
[NUMBER] 002
[NAME] PIONEER INCOME FUND CLASS B
[PERIOD-TYPE] OTHER
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-END] DEC-31-1995
[INVESTMENTS-AT-COST] 255379406
[INVESTMENTS-AT-VALUE] 279286676
[RECEIVABLES] 4527213
[ASSETS-OTHER] 6521
[OTHER-ITEMS-ASSETS] 146838
[TOTAL-ASSETS] 283967248
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 528843
[TOTAL-LIABILITIES] 528843
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 260323316
[SHARES-COMMON-STOCK] 175212
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (788813)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 23903902
[NET-ASSETS] 283438405
[DIVIDEND-INCOME] 5617968
[INTEREST-INCOME] 15162658
[OTHER-INCOME] 0
[EXPENSES-NET] (2999927)
[NET-INVESTMENT-INCOME] 17780699
[REALIZED-GAINS-CURRENT] 2830576
[APPREC-INCREASE-CURRENT] 33075737
[NET-CHANGE-FROM-OPS] 53687012
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (40696)
[DISTRIBUTIONS-OF-GAINS] (16634)
[DISTRIBUTIONS-OTHER] (491)
[NUMBER-OF-SHARES-SOLD] 180493
[NUMBER-OF-SHARES-REDEEMED] 9996
[SHARES-REINVESTED] 4715
[NET-CHANGE-IN-ASSETS] 23467948
[ACCUMULATED-NII-PRIOR] 251982
[ACCUMULATED-GAINS-PRIOR] (1121099)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1306546
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 3056454
[AVERAGE-NET-ASSETS] 688389
[PER-SHARE-NAV-BEGIN] 9.55
[PER-SHARE-NII] 0.39
[PER-SHARE-GAIN-APPREC] 0.90
[PER-SHARE-DIVIDEND] (0.46)
[PER-SHARE-DISTRIBUTIONS] (0.11)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.27
[EXPENSE-RATIO] 1.88
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
PIONEER INCOME FUND
Multiple Class Plan Pursuant to Rule 18f-3
Class A Shares and Class B Shares
October 4, 1995
Each class of shares of PIONEER INCOME FUND (the "Fund"), will have the
same relative rights and privileges and be subject to the same sales charges,
fees and expenses, except as set forth below. The Board of Trustees of the Fund
may determine in the future that other distribution arrangements, allocations of
expenses (whether ordinary or extraordinary) or services to be provided to a
class of shares are appropriate and amend this Plan accordingly without the
approval of shareholders of any class. Except as set forth in the Fund's
prospectus, shares may be exchanged only for shares of the same class of another
Pioneer mutual fund.
Article I. Class A Shares
Class A Shares are sold at net asset value and subject to the initial sales
charge schedule or contingent deferred sales charge ("CDSC") and minimum
purchase requirements as set forth in the Fund's prospectus. Class A Shares
shall be entitled to the shareholder services set forth from time to time in the
Fund's prospectus with respect to Class A Shares. Class A Shares are subject to
fees calculated as a stated percentage of the net assets attributable to Class A
shares under the Fund's Class A Rule 12b-1 Distribution Plan as set forth in
such Distribution Plan. The Class A Shareholders have exclusive voting rights,
if any, with respect to the Class A Rule 12b-1 Distribution Plan. Transfer
agency fees are allocated to Class A Shares on a per account basis except to the
extent, if any, such an allocation would cause the Fund to fail to satisfy any
requirement necessary to obtain or rely on a private letter ruling from the
Internal Revenue Service ("IRS") relating to the issuance of multiple classes of
shares. Class A shares shall bear the costs and expenses associated with
conducting a shareholder meeting for matters relating to Class A shares.
<PAGE>
Article II. Class B Shares
Class B Shares are sold at net asset value per share without the imposition
of an initial sales charge. However, Class B shares redeemed within a specified
number of years of purchase will be subject to a CDSC as set forth in the Fund's
prospectus. Class B Shares are sold subject to the minimum purchase requirements
set forth in the Fund's prospectus. Class B Shares shall be entitled to the
shareholder services set forth from time to time in the Fund's prospectus with
respect to Class B Shares. Class B Shares are subject to fees calculated as a
stated percentage of the net assets attributable to Class B shares under the
Class B Rule 12b-1 Distribution Plan as set forth in such Distribution Plan. The
Class B Shareholders of the Fund have exclusive voting rights, if any, with
respect to the Fund's Class B Rule 12b-1 Distribution Plan. Transfer agency fees
are allocated to Class B Shares on a per account basis except to the extent, if
any, such an allocation would cause the Fund to fail to satisfy any requirement
necessary to obtain or rely on a private letter ruling from the IRS relating to
the issuance of multiple classes of shares. Class B shares shall bear the costs
and expenses associated with conducting a shareholder meeting for matters
relating to Class B shares.
Class B Shares will automatically convert to Class A Shares of the Fund at
the end of a specified number of years after the initial purchase date of Class
B shares, except as provided in the Fund's prospectus. Such conversion will
occur at the relative net asset value per share of each class without the
imposition of any sales charge, fee or other charge. The conversion of Class B
Shares to Class A Shares may be suspended if it is determined that the
conversion constitutes or is likely to constitute a taxable event under federal
income tax law.
The initial purchase date for Class B shares acquired through (i)
reinvestment of dividends on Class B Shares or (ii) exchange from another
Pioneer mutual fund will be deemed to be the date on which the original Class B
shares were purchased.
Article III. Approval by Board of Trustees
This Plan shall not take effect until it has been approved by the vote of a
majority (or whatever greater percentage may, from time to time, be required
under Rule 18f-3 under the Investment Company Act of 1940, as amended (the
"Act")) of (a) all of the Trustees of the Fund, and (b) those of the Trustees
who are not "interested persons" of the Fund, as such term may be from time to
time defined under the Act.
Article IV. Amendments
No material amendment to the Plan shall be effective unless it is approved
by the Board of Trustees in the same manner as is provided for approval of this
Plan in Article III.
-2-
PIONEER INCOME FUND
Multiple Class Plan Pursuant to Rule 18f-3
Class A Shares, Class B Shares and Class C Shares
January 31, 1996
Each class of shares of PIONEER INCOME FUND (the "Fund"), will have the
same relative rights and privileges and be subject to the same sales charges,
fees and expenses, except as set forth below. The Board of Trustees may
determine in the future that other distribution arrangements, allocations of
expenses (whether ordinary or extraordinary) or services to be provided to a
class of shares are appropriate and amend this Plan accordingly without the
approval of shareholders of any class. Except as set forth in the Fund's
prospectus, shares may be exchanged only for shares of the same class of another
Pioneer mutual fund.
Article I. Class A Shares
Class A Shares are sold at net asset value and subject to the initial sales
charge schedule or contingent deferred sales charge ("CDSC") and minimum
purchase requirements as set forth in the Fund's prospectus. Class A Shares
shall be entitled to the shareholder services set forth from time to time in the
Fund's prospectus with respect to Class A Shares. Class A Shares are subject to
fees calculated as a stated percentage of the net assets attributable to Class A
shares under the Fund's Class A Rule 12b-1 Distribution Plan as set forth in
such Distribution Plan. The Class A Shareholders have exclusive voting rights,
if any, with respect to the Class A Rule 12b-1 Distribution Plan. Transfer
agency fees are allocated to Class A Shares on a per account basis except to the
extent, if any, such an allocation would cause the Fund to fail to satisfy any
requirement necessary to obtain or rely on a private letter ruling from the
Internal Revenue Service ("IRS") relating to the issuance of multiple classes of
shares. Class A shares shall bear the costs and expenses associated with
conducting a shareholder meeting for matters relating to Class A shares.
Article II. Class B Shares
Class B Shares are sold at net asset value per share without the imposition
of an initial sales charge. However, Class B
<PAGE>
shares redeemed within a specified number of years of purchase will be subject
to a CDSC as set forth in the Fund's prospectus. Class B Shares are sold subject
to the minimum purchase requirements set forth in the Fund's prospectus. Class B
Shares shall be entitled to the shareholder services set forth from time to time
in the Fund's prospectus with respect to Class B Shares. Class B Shares are
subject to fees calculated as a stated percentage of the net assets attributable
to Class B shares under the Class B Rule 12b-1 Distribution Plan as set forth in
such Distribution Plan. The Class B Shareholders of the Fund have exclusive
voting rights, if any, with respect to the Fund's Class B Rule 12b-1
Distribution Plan. Transfer agency fees are allocated to Class B Shares on a per
account basis except to the extent, if any, such an allocation would cause the
Fund to fail to satisfy any requirement necessary to obtain or rely on a private
letter ruling from the IRS relating to the issuance of multiple classes of
shares. Class B shares shall bear the costs and expenses associated with
conducting a shareholder meeting for matters relating to Class B shares.
Class B Shares will automatically convert to Class A Shares of the Fund at
the end of a specified number of years after the initial purchase date of Class
B shares, except as provided in the Fund's prospectus. Such conversion will
occur at the relative net asset value per share of each class without the
imposition of any sales charge, fee or other charge. The conversion of Class B
Shares to Class A Shares may be suspended if it is determined that the
conversion constitutes or is likely to constitute a taxable event under federal
income tax law.
The initial purchase date for Class B shares acquired through (i)
reinvestment of dividends on Class B Shares or (ii) exchange from another
Pioneer mutual fund will be deemed to be the date on which the original Class B
shares were purchased.
Article III. Class C Shares
Class C Shares are sold at net asset value per share without the imposition
of an initial sales charge. However, Class C shares redeemed within one year of
purchase will be subject to a CDSC as set forth in the Fund's prospectus. Class
C Shares are sold subject to the minimum purchase requirements set forth in the
Fund's prospectus. Class C Shares shall be entitled to the shareholder services
set forth from time to time in the Fund's prospectus with respect to Class C
Shares. Class C Shares are subject to fees calculated as a stated percentage of
the net assets attributable to Class C shares under the Class C Rule 12b-1
Distribution Plan as set forth in such Distribution Plan. The Class C
Shareholders of the Fund have exclusive voting rights, if any, with respect to
the Fund's Class C Rule 12b-1 Distribution Plan. Transfer agency fees are
allocated to Class C Shares on a
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per account basis except to the extent, if any, such an allocation would cause
the Fund to fail to satisfy any requirement necessary to obtain or rely on a
private letter ruling from the IRS relating to the issuance of multiple classes
of shares. Class C shares shall bear the costs and expenses associated with
conducting a shareholder meeting for matters relating to Class C shares.
The initial purchase date for Class C shares acquired through (i)
reinvestment of dividends on Class C Shares or (ii) exchange from another
Pioneer mutual fund will be deemed to be the date on which the original Class C
shares were purchased.
Article IV. Approval by Board of Trustees
This Plan shall not take effect until it has been approved by the vote of a
majority (or whatever greater percentage may, from time to time, be required
under Rule 18f-3 under the Investment Company Act of 1940, as amended (the
"Act")) of (a) all of the Trustees of the Trust, on behalf of the Fund, and (b)
those of the Trustees who are not "interested persons" of the Trust, as such
term may be from time to time defined under the Act.
Article V. Amendments
No material amendment to the Plan shall be effective unless it is approved
by the Board of Trustees in the same manner as is provided for approval of this
Plan in Article IV.
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