PIONEER BALANCED FUND, 485APOS, 1996-11-27

PIONEER BALANCED FUND
485APOS, 1996-11-27

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As filed with the Securities and Exchange Commission on November 27, 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. 58 / X /
-- ----

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT ____
OF 1940 /_X_/
----
Amendment No. 27 /_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 February 1, 1997 pursuant to paragraph (a) 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.

<PAGE>

PIONEER INCOME FUND

(to be renamed Pioneer Balanced 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

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

21. Underwriters.......................... Statement of Additional
Information - Principal
Underwriter; Underwriting
Agreement and
Distribution Plans

22. Calculation of Performance Data....... Statement of Additional
Information - Investment
Results

23. Financial Statements.................. Balance Sheet; Report of
Independent Public
Accountants

<PAGE>

Pioneer [Pioneer logo]
Balanced
Fund

Prospectus
Class A, Class B and Class C Shares
February 1, 1997

Pioneer Balanced Fund (the "Fund") seeks capital growth and current income by
actively managing investments in a diversified portfolio of equity securities
and bonds. The Fund's equity investments may include common stocks, including
real estate investment trusts ("REITs"), and securities with common stock
characteristics, such as convertible bonds and preferred stocks. The Fund's bond
investments may include debt securities, commercial paper, United States
("U.S.") Government securities and collateralized mortgage obligations ("CMOs").

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 February 1, 1997, 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>

<CAPTION>
TABLE OF CONTENTS PAGE
-------- ------------------------------------------------------ -------
<S> <C> <C>
I. EXPENSE INFORMATION 2
II. FINANCIAL HIGHLIGHTS 3
III. INVESTMENT OBJECTIVE, POLICIES AND RISKS 6
IV. MANAGEMENT OF THE FUND 7
V. FUND SHARE ALTERNATIVES 8
VI. SHARE PRICE 8
VII. HOW TO BUY FUND SHARES 8
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
FactFone(SM) 16
Retirement Plans 16
Telecommunications Device for the Deaf (TDD) 16
Systematic Withdrawal Plans 16
Reinstatement Privilege (Class A Shares only) 16
XIII. THE FUND 16
XIV. INVESTMENT RESULTS 17
APPENDIX 17
</TABLE>

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. Management fees have
been restated to reflect the fee payable to Pioneering Management Corporation
("PMC") under the most recently approved management contract. For the fiscal
year ended December 31, 1995, actual management fees were 0.48% for each
Class of shares and total operating expenses were 1.11% for Class A shares
and 1.78% for Class B and Class C shares. 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 Fee(2) None None None
Exchange Fee None None None
Annual Operating Expenses
(as a percentage of average net
assets):
Management Fee 0.65% 0.65% 0.65%
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: 1.28% 1.95% 1.95%
========== ========== ===========

+ Class C shares were first offered on January 31, 1996.

(1) Purchases of $1 million 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 expenses on a $1,000 investment in the Fund,
assuming 5% annual return with or without redemption at the end of each time
period:

1 Year 3 Years 5 Years 10 Years
Class A Shares $57 $84 $112 $ 193
Class B Shares
--Assuming complete redemption
at end of period $60 $91 $125 $210*
- --Assuming no redemption $20 $61 $105 $210*
Class C Shares**
--Assuming complete redemption
at end of period $30 $61 $105 $ 227
- --Assuming no redemption $20 $61 $105 $ 227

*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 PAST OR FUTURE EXPENSES OR RETURN. ACTUAL FUND
EXPENSES AND RETURN WILL VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER
THAN THOSE SHOWN.

For further information regarding management fees, 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 Fund" and "Underwriting Agreement and Distribution Plans"
in the Statement of Additional Information. The Fund's payment of a Rule
12b-1 fee may result in long-term shareholders indirectly paying more than
the economic equivalent of the maximum sales charge permitted under the
Conduct Rules 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."

<PAGE>

II. FINANCIAL HIGHLIGHTS

The following information has been audited by Arthur Andersen LLP,
independent public accountants. Arthur Andersen LLP's report on the Fund's
financial statements appears in the Fund's Annual Report which are 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. 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 BALANCED FUND
Selected Data For a Class A Share Outstanding For The Periods Presented:

Six Months
Ended For the Year Ended December 31,+
June 30, ----------------------------------------------
1996 1995 1994 1993 1992
---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
the period $ 10.30 $ 9.11 $ 10.21 $ 10.13 $ 10.14
---------- --------- --------- --------- ----------
Increase (decrease) from
investment operations--
Net investment income $ 0.32 $ 0.66 $ 0.66 $ 0.65 $ 0.65
Net realized and unrealized
gain (loss) on investments (0.21) 1.29 (1.09) 0.37 0.09
---------- --------- --------- --------- ----------
Net increase (decrease)
from investment
operations $ 0.11 $ 1.95 $ (0.43) $ 1.02 $ 0.74
Distribution to shareholders
from--
Net investment income (0.32) (0.65) (0.67) (0.64) (0.66)
Net realized capital gains -- (0.11) 0.00 (0.30) (0.09)
---------- --------- --------- --------- ----------
Net increase (decrease) in net
asset value $ (0.21) $ 1.19 $ (1.10) $ 0.08 $ (0.01)
---------- --------- --------- --------- ----------
Net asset value, end of the
period $ 10.09 $ 10.30 $ 9.11 $ 10.21 $ 10.13
========== ========= ========= ========= ==========
Total return(1) 1.11% 22.00% (4.31%) 10.24% 7.59%
Ratio of net operating expenses
to average net assets 1.12%*+++ 1.13%+++ 1.11% 1.06% 0.99%
Ratio of net investment income
to average net assets 6.12%*+++ 6.58%+++ 7.07% 6.52% 6.47%
Portfolio turnover rate 35% 25% 50% 69% 54%
Average commission rate paid
per exchange listed
transaction $ 0.0579
Net assets end of year
(in thousands) $270,399 $281,639 $259,970 $296,699 $250,033
Ratios assuming a reduction for
fees paid indirectly:
Net operating expenses 1.10%* 1.11%
Net investment income 6.14%* 6.60%
</TABLE>

<TABLE>
<CAPTION>
1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
the period $ 9.14 $ 9.53 $ 8.92 $ 8.67 $ 8.94 $ 9.17
--------- --------- --------- --------- --------- ----------
Increase (decrease) from
investment operations--
Net investment income $ 0.65 $ 0.70 $ 0.74 $ 0.77 $ 0.76 $ 0.80
Net realized and unrealized
gain (loss) on investments 1.00 (0.38) 0.63 0.27 (0.14) 0.04
--------- --------- --------- --------- --------- ----------
Net increase (decrease)
from investment
operations $ 1.65 $ 0.32 $ 1.37 $ 1.04 $ 0.62 $ 0.84
Distribution to shareholders
from--
Net investment income (0.65) (0.71) (0.75) (0.76) (0.76) (0.80)
Net realized capital gains 0.00 0.00 (0.01) (0.03) (0.13) (0.27)
--------- --------- --------- --------- --------- ----------
Net increase (decrease) in net
asset value $ 1.00 $ (0.39) $ 0.61 $ 0.25 $ (0.27) $ (0.23)
--------- --------- --------- --------- --------- ----------
Net asset value, end of the
period $ 10.14 $ 9.14 $ 9.53 $ 8.92 $ 8.67 $ 8.94
========= ========= ========= ========= ========= ==========
Total return(1) 18.62% 3.59% 15.89% 12.29% 6.82% 9.29%
Ratio of net operating expenses
to average net assets 1.04% 0.94% 0.78% 0.80% 0.79% 0.77%
Ratio of net investment income
to average net assets 6.73% 7.67% 7.98% 8.55% 8.29% 8.46%
Portfolio turnover rate 43% 44% 69% 87% 115% 76%
Average commission rate paid
per exchange listed
transaction
Net assets end of year
(in thousands) $197,184 $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
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

<PAGE>

II. FINANCIAL HIGHLIGHTS (continued)

PIONEER BALANCED FUND
Selected Data For a Class B Share Outstanding For The Periods Presented:

Six Months
Ended April 28, 1995
Class B*** June 30, 1996 to December 31, 1995
------------- ---------------------
<S> <C> <C>
Net asset value, beginning of period $10.27 $ 9.55
------------- ---------------------
Increase from investment operations:
Net investment income $ 0.25 $ 0.39
Net realized and unrealized gain on investments (0.18) 0.90
------------- ---------------------
Total increase from investment operations $ 0.07 $ 1.29
Distributions to shareholders from:
Net investment income (0.25) (0.46)
Net realized gain (0.03) (0.11)
------------- ---------------------
Net increase in net asset value $(0.21) $ 0.72
------------- ---------------------
Net asset value, end of period $10.06 $10.27
============= =====================
Total return* 0.71% 13.74%
Ratio of net operating expenses to average net assets 1.85%**+ 1.88%**+
Ratio of net investment income to average net assets 5.48%**+ 5.83%**+
Portfolio turnover rate 35%** 25%
Average commission rate paid per exchange listed
transaction $ 0.0579
Net assets, end of period (in thousands) $4,520 $1,800
Ratios assuming reduction for fees paid indirectly:
Net operating expenses 1.81%** 1.78%**
Net investment income 5.52%** 5.93%**
</TABLE>

+ Ratios assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
*** Class B shares were first offered on April 28, 1995.

<PAGE>

II. FINANCIAL HIGHLIGHTS (continued)

PIONEER BALANCED FUND
Selected Data For a Class C Share Outstanding For The Periods Presented:

January 31, 1996
Class C*** to June 30, 1996
----------------
Net asset value, beginning of period $10.39
Income from investment operations:
Net investment income $0.20
Net realized and unrealized gain (loss) on investments (0.23)
----------------
Total decrease from investment operations $(0.03)
Distribution to shareholders from--
Net investment income (0.20)
In excess of net investment income (0.07)
----------------
Net increase (decrease) in net asset value $(0.30)
----------------
Net asset value, end of period $10.09
================
Total return* (0.26)%
Ratio of net expenses to average net assets 1.86%**+
Ratio of net investment income to average net assets 5.64%**+
Portfolio turnover rate 35%**
Average commission rate paid per exchange listed
transaction $0.0579
Net assets end of period (in thousands) $517
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.80%**
Net investment income 5.70%**

<PAGE>

III. INVESTMENT OBJECTIVE, POLICIES AND RISKS

The Fund's investment objective is to seek capital growth and current income
by actively managing investments in a diversified portfolio of equity securities
and bonds. The Fund's equity investments may include common stocks, including
real estate investment trusts ("REITs"), and securities with common stock
characteristics, such as convertible bonds and preferred stocks. The Fund's bond
investments may include debt securities (defined below), commercial paper,
United States ("U.S.") Government securities and collateralized mortgage
obligations ("CMOs"). The Fund's investment objective and certain investment
restrictions designated as fundamental in the Statement of Additional
Information may be changed by the Board of Trustees only with shareholder
approval. Certain other investment policies, strategies and restrictions on
investments are noted throughout the Prospectus and are set forth in the
Statement of Additional Information. These non-fundamental investment policies,
strategies and restrictions may be changed at any time by a vote of the Board of
Trustees.

Normally, equity securities and bonds will each represent 35% to 65% of the
Fund's assets. The assets of the Fund allocated to equity securities will be
invested in common stocks and in securities with common stock characteristics,
such as convertible bonds and preferred stocks. Normally, Fund assets allocated
to bonds will be invested in (1) investment grade debt securities as rated by
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc.
("Moody's") or, if unrated, judged by Pioneering Management Corporation ("PMC"),
the Fund's investment adviser to be of comparable quality, (2) commercial paper
of comparable quality and (3) U.S. Government Securities, GNMA Certificates and
CMOs. Investment grade securities are debt securities rated at least BBB by S&P
or Baa by Moody's or, if unrated, determined by PMC to be of comparable quality.
The Fund may, however, invest up to 10% of its total assets in below investment
grade debt securities as rated by S&P or by Moody's, or, if unrated, judged by
PMC to be of comparable quality, and in commercial paper that is of comparable
quality. The allocation of the Fund's assets between stocks and bonds will vary
in response to conclusions drawn from PMC's continual assessment of
business, economic and market conditions. See "GNMA Certificates and CMOs" and
"Risks of Lower Rated Debt Securities" in the Appendix.

The Fund may invest up to 25% of its total assets in the securities of REITs
and up to 10% of its total assets in foreign securities. See the Appendix to
this Prospectus for a description of these securities and associated risks.

Investment Management Techniques

The Fund may enter into repurchase agreements, not to exceed seven days,
with broker-dealers and any member bank of the Federal Reserve System. The
Board of Trustees of the Fund will review and monitor the creditworthiness of
any institution which enters into a repurchase agreement with the Fund. Such
repurchase agreements will be fully collateralized with U.S. Treasury and/or
agency obligations with a market value of not less than 100% of the
obligations, valued daily. Collateral will be held by the Fund's custodian in
a segregated, safekeeping account for the benefit of the Fund. In the event
that a repurchase agreement is not fulfilled, the Fund could suffer a loss to
the extent that the value of the collateral falls below the repurchase price.

The Fund may lend portfolio securities to member firms of the New York
Stock Exchange (the "Exchange"). As with other extensions of credit, there
are risks of delay in recovery or even loss of rights in the collateral
should the borrower of the securities fail financially. The Fund will lend
portfolio securities only to firms which have been approved in advance by the
Board of Trustees, which will monitor the creditworthiness of any such firms.
At no time will the value of securities loaned exceed 30% of the value of the
Fund's total assets. These investment strategies are also described in the
Statement of Additional Information.

In pursuit of its objective, the Fund may employ certain active investment
management techniques including forward foreign currency exchange contacts and
options and futures contracts relating to foreign currencies. The Fund will use
forward foreign currency contracts in the normal course of business to lock in
an exchange rate in connection with purchases and sales of securities
denominated in foreign currencies. Other currency management strategies may be
employed in an attempt to hedge currency and other risks associated with the
Fund's portfolio securities. See the Appendix to this Prospectus and the
Statement of Additional Information for a description of these investment
practices and associated risks.

Portfolio Turnover

The Fund is substantially fully invested at all times. It is the policy of
the Fund not to engage in trading for short-term profits. Nevertheless,
changes in the portfolio will be made promptly when determined to be
advisable by reason of developments not foreseen at the time of the initial
investment decision and usually without reference to the length of time a
security has been held. Accordingly, portfolio turnover rate is not
considered a limiting factor in the execution of investment decisions. See
"Financial Highlights" for the Fund's actual turnover rate.

The Fund's investment objective was changed effective February 1, 1997.
Portfolio turnover may be greater than 50% per year for the year following the
change. High portfolio turnover (over 100%) involves correspondingly higher
brokerage commissions and other transaction costs, which will be borne directly
by the Fund, and could involve realization of taxable gains that would be
taxable when distributed to shareholders.

For temporary defensive purposes, the Fund may invest up to 100% of its
total assets in short-term investments. The Fund will assume a temporary
defensive posture when economic and other factors are such that PMC believes
there to be extraordinary risks in being substantially invested in the
securities in which the Fund normally concentrates its investments.

<PAGE>

IV. MANAGEMENT OF THE FUND

The Board of Trustees of the Fund has overall responsibility for
management and supervision of the 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 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.

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.

Each equity portfolio managed by PMC is overseen by an Equity Investment
Committee. Each fixed income portfolio managed by PMC is overseen by a Fixed
Income Investment Committee. Both Committees consist of PMC's most senior
investment professionals and are chaired by David D. Tripple, PMC's
President and Chief Investment Officer. Mr. Tripple joined PMC in 1974
and has had general responsibility for PMC's investment operations and
specific portfolio assignments for more than five years. Fixed income
investments made by PMC are under the general supervision of Sherman B.
Russ, Senior Vice President of PMC. Mr. Russ joined PMC in 1983.

Day-to-day management of the Fund's investments is the responsibility of
William C. Field, Vice President of PMC. Mr. Field joined PMC in 1991.

In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109. In an effort to avoid conflicts of
interest with the Fund, the Fund, and PMC have adopted a Code of Ethics that
is designed to maintain a high standard of personal conduct by directing that
all personnel defer to the interests of the Fund and its shareholders in
making personal securities transactions.

Under the terms of its contract with the Fund, PMC 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 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 any Pioneer mutual fund. See the Statement of Additional
Information for a further description of PMC's brokerage allocation
practices.

Effective February 1, 1997 as compensation for its management services for
the Fund and certain expenses which PMC incurs, PMC is entitled to a
management fee equal to 0.65% per annum of the Fund's average daily net
assets up to $1 billion, 0.60% of the next $4 billion and 0.55% of the excess
over $5 billion.

Prior to February 1, 1997, as compensation for its management services for
the Fund and certain expenses which PMC incurred, PMC was entitled to a
management fee equal to 0.50% of the Fund's average daily net assets up to
$250 million, 0.48% of the next $50 million, and 0.45% of the excess over
$300 million. 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 the date of
this Prospectus.

<PAGE>

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 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

<PAGE>

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.
From time to time, PFD may elect to reallow the entire initial sales charge
to participating dealers for all Class A shares with respect to which orders
are placed during a particular period. Dealers to whom substantially the
entire sales charge is reallowed may be deemed to be underwriters under the
federal securities laws.

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.

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-

<PAGE>

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 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.

<PAGE>

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 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. PFD or its
affiliates may provide additional compensation to certain dealers or such
dealers' affiliates based on certain objective criteria established from time to
time by PFD. All such payments are made out of PFD's or the affiliate's own
assets. These payments will not change the price an investor will pay for shares
or the amount that the Fund will receive from such sale.

General. The Fund reserves the right in its sole discretion to withdraw all or
any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has been
confirmed in writing by PFD and payment has been received.

<PAGE>

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 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 reason-

<PAGE>

ably 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 (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

<PAGE>

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 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.

<PAGE>

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 Pioneer Combined Account Statement, mailed quarterly, is available to
shareholders who have more than one Pioneer mutual fund account.

Shareholders whose shares are held in the name of an investment
broker-dealer or other party will not normally have an account with the Fund
and might not be able to utilize some of the services available to
shareholders of record. Examples of services which might not be available are
purchases, exchanges or redemptions by mail or telephone, automatic
reinvestment of dividends and capital gains distributions, withdrawal plans,
Letters of Intention, Rights of Accumulation 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 and Class C shares) to PSC (account number and
Class of shares should be clearly indicated). The bottom portion of a
confirmation statement may be used as a remittance slip to make additional
investments. Additions to your account, whether by check or through a Pioneer
Investomatic Plan, are invested in full and fractional shares of the Fund at
the applicable offering price in effect as of the close of regular trading on
the Exchange on the day of receipt.

Automatic Investment Plans

You may arrange for regular automatic investments of $50 or more through
government/military allotments, payroll deduction or through a Pioneer
Investomatic Plan. A Pioneer Investomatic Plan provides for a monthly or
quarterly investment by means of a pre-authorized electronic funds transfer
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. Eastern 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

<PAGE>

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 FactFoneSM 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 are limited to
10% of the value of the account at the time the SWP is implemented. See
"Waiver or Reduction of Contingent Deferred Sales Charge" for more
information. Periodic 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. Payments can be made either by check or
electronic transfer to a bank account designated by 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
reinstatement occurs. In addition, if a redemption resulted in a loss and an
investment is made in shares of the Fund within 30 days before or after the
redemption, you may not be able to recognize the loss for federal income tax
purposes. Subject to the provisions outlined under "How to Exchange Fund
Shares" above, you may also reinvest in Class A shares of other Pioneer
mutual funds; in this case you must meet the minimum investment 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.
Prior to February 1, 1997, the Fund was known as Pioneer Income Fund. The Fund
has authorized an unlimited number of shares of beneficial interest. As an
open-end management investment company, the Fund continuously offers its shares
to the public and under normal conditions must redeem its shares upon the demand
of any shareholder at the then current net asset value per share. See "How to
Sell Fund Shares." The Fund is not required, and does

<PAGE>

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.

APPENDIX

This Appendix provides a brief description of certain securities in which
the Fund may invest and certain transactions it may make. For a more complete
discussion of these and other securities and practices, see "Investment
Objective and Policies" in this Prospectus and "Investment Policies and
Restrictions" in the Statement of Additional Information.

<PAGE>

GNMA Certificates and CMOs

The Fund may invest a portion of its assets allocated to debt securities
in GNMA Certificates and CMOs. GNMA Certificates are mortgage participation
certificates, that is, an interest in pools of residential mortgage loans
issued by U.S. governmental or private lenders, which may be of varying
maturity guaranteed by the Government National Mortgage Association. Although
the payment when due of interest and principal on GNMA Certificates is backed
by the full faith and credit of the U.S., this guarantee does not extend to
the market value of these securities. The GNMA Certificates which the
Portfolio may purchase are the "modified pass-through" type. Modified
pass-through certificates entitle the holder to receive all principal and
interest owed on the mortgages in the pool, net of fees paid to the issuer
and GNMA, regardless of whether or not the mortgagor actually makes the
payment.

CMOs are mortgage-backed bonds which may be issued by U.S. government
agencies and instrumentalities as well as private lenders. CMOs are issued in
multiple classes and the principal of and interest on the underlying mortgage
assets may be allocated among the several classes in various ways. Each class
of CMO, often called a "tranche," is issued at a specific adjustable or fixed
interest rate and must be fully retired no later than its final distribution
date. Because of principal prepayments and foreclosures with respect to
mortgages underlying GNMA certificates and CMOs, such investments may be less
effective than other types of securities as a means of "locking in"
attractive long-term interest rates. Prepayments generally can be invested
only at lower rates.

"When-Issued" GNMA Certificates

When-issued or delayed delivery transactions arise when securities are
purchased or sold by the Fund with payment and delivery taking place in the
future in order to secure what is considered to be an advantageous price and
yield which is fixed at the time of entering into the transaction. However,
the yield on a comparable GNMA Certificate when the transaction is
consummated may vary from the yield on the GNMA Certificate at the time that
the when-issued or delayed delivery transaction was made. Also, the market
value of the when-issued or delayed delivery GNMA Certificate may increase
or decrease as a result of changes in general interest rates. When-issued and
delayed delivery transactions involve risk of loss if the value of a GNMA
Certificate declines before the settlement date.

The value of when-issued GNMA Certificate purchase commitments at any time
will not exceed the value of the Fund's assets invested in U.S. Treasury
bills (i.e., U.S. Treasury obligations with maturities of one year or less)
and other debt securities having remaining maturities of less than six
months. In addition, the Fund's aggregate investments in when-issued or
delayed delivery commitments and repurchase agreements may not exceed 25% of
its assets.

Real Estate Investment Trusts and Associated Risk Factors

The Fund may invest up to 25% of its total assets in REITS. REITs are
pooled investment vehicles which primarily invest in income producing real
estate or real estate related loans or interests. REITs are generally
classified as equity REITs, mortgage REITs or a combination of equity and
mortgage REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents.
Equity REITs can also realize capital gains by selling properties that have
appreciated in value. Mortgage REITs invest the majority of their assets in
real estate mortgages and derive income from the collection of interest
payments. REITs are not taxed on income distributed to shareholders provided
they comply with several requirements of the Code. The Fund will indirectly
bear its proportionate share of any expenses paid by REITs in which it
invests in addition to the expenses paid by the Fund.

Investing in REITs involves certain unique risks. Equity REITs may be
affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified,
and are subject to the risks of financing projects. REITs are subject to
heavy cash flow dependency, default by borrowers, self-liquidation, and the
possibilities of failing to qualify for the exemption from tax for
distributed income under the Code and failing to maintain their exemptions
from the 1940 Act. REITs whose underlying assets include long-term health
care properties, such as nursing, retirement and assisted living homes, may
be impacted by federal regulations concerning the health care industry.

REITs (especially mortgage REITs) are also subject to interest rate risks.
When interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise,
the value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will
gradually align themselves to reflect changes in market interest rates,
causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed rate
obligations.

Investing in REITs involves risks similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume and may be
subject to more abrupt or erratic price movements than larger company
securities. Historically, REITs, like small capitalization stocks, have been
more volatile in price than the larger capitalization stocks included in the
Standard & Poor's Index of 500 Common Stocks.

Foreign Investments and Associated Risk Factors

The Fund may invest up to 10% of its total assets in foreign securities.
Investing in securities of foreign companies involves certain considerations
and risks which are not typically associated with investing in securities of
domestic companies. Foreign companies are not subject to uniform accounting,
auditing and financial standards and requirements comparable to those
applicable to U.S. companies. There may also be less publicly available
information about

<PAGE>

foreign companies compared to reports and ratings published about U.S.
companies. In addition, foreign securities markets have substantially less
volume than domestic markets and securities of some foreign companies are
less liquid and more volatile than securities of comparable U.S. companies.
There may also be less government supervision and regulation of foreign
securities exchanges, brokers and listed companies than exists in the United
States. Dividends or interest paid by foreign issuers may be subject to
withholding and other foreign taxes which will decrease the net return on
such investments as compared to dividends or interest paid to the Fund by
domestic companies. Finally, there may be the possibility of expropriations,
confiscatory taxation, political, economic or social instability or
diplomatic developments which could adversely affect assets of the Fund held
in foreign countries.

The value of foreign securities may also be adversely affected by
fluctuations in the relative rates of exchange between the currencies of
different nations and by exchange control regulations. For example, the value
of a foreign security held by the Fund as measured in U.S. dollars will
decrease if the foreign currency in which the security is denominated
declines in value against the U.S. dollar. In such event, this will cause an
overall decline in the Fund's net asset value and may also reduce net
investment income and capital gains, if any, to be distributed in U.S.
dollars to shareholders of the Fund.

Forward Foreign Currency Exchange Contacts

The Fund has the ability to hold a portion of its assets in foreign
currencies and to enter into forward foreign currency contracts to facilitate
settlement of foreign securities transactions or to protect against changes
in foreign currency exchange rates. The Fund might sell a foreign currency on
either a spot or forward basis to hedge against an anticipated decline in the
dollar value of securities in its portfolio or securities it intends or has
contracted to sell or to preserve the U.S. dollar value of dividends,
interest or other amounts it expects to receive. Although this strategy could
minimize the risk of loss due to a decline in the value of the hedged foreign
currency, it could also limit any potential gain which might result from an
increase in the value of the currency. Alternatively, the Fund might purchase
a foreign currency or enter into a forward purchase contract for the currency
to preserve the U.S. dollar price of the securities it is authorized to
purchase or has contracted to purchase.

If the Fund enters into a forward contract to buy foreign currency, the
Fund will be required to place cash or high grade liquid securities in a
segregated account of the Fund maintained by the Fund's custodian in an
amount equal to the value of the Fund's total assets committed to the
consummation of the forward contract.

Options and Futures Contracts on Foreign Currencies

The Fund may purchase put and call options on foreign currencies for the
purpose of protecting against declines in the dollar value of foreign
portfolio securities and against increases in the U.S. dollar cost of foreign
securities to be acquired. The purchase of an option on a foreign currency
may constitute an effective hedge against exchange rate fluctuations.

To hedge against changes in currency exchange rates, the Fund may purchase
and sell futures contracts on currency, and purchase and write call and put
options on any of such futures contracts. The Fund may also enter into
closing purchase and sale transactions with respect to any of such contracts
and options. The futures contracts will be based on foreign currencies. The
Fund will engage in futures and related options transactions for bona fide
hedging purposes only. These transactions involve brokerage costs, require
margin deposits and require that the Fund segregate assets to cover such
contacts and options.

Limitations and Risks Associated with Currency Transactions

The Fund may enter into forward foreign currency exchange contracts and
may buy and sell options and futures relating to foreign currencies. Each of
these currency management strategies involves (1) liquidity risk that
contractual positions cannot be easily closed out in the event of market
changes or generally in the absence of a liquid secondary market, (2)
correlation risk that changes in the value of hedging positions may not match
the securities market and foreign currency fluctuations intended to be
hedged, and (3) market risk that an incorrect prediction of securities prices
or exchange rates by PMC may cause the Fund to perform less favorably than if
such positions had not been entered. The ability to terminate
over-the-counter options is more limited than with exchange traded options.
Forward foreign currency exchange contracts and options and futures contracts
relating to foreign currency transactions may involve the risk that the
counter-party to the

<PAGE>

transaction will not fulfill its obligations. The use of forward foreign
currency exchange contracts and options and futures relating to foreign
currencies are highly specialized activities which involve investment
techniques and risks that are different from those associated with ordinary
portfolio transactions. The Fund may not enter into futures contracts and
options on futures contracts for speculative purposes. The Fund will only
invest in currency management strategies to the extent that it invests in
foreign securities. The loss that may be incurred by the Fund in entering
into futures contracts and written options thereon and forward foreign
currency exchange contracts is potentially unlimited. The Fund may not invest
more than 5% of its total assets in purchased options other than protective
put options.

Risks of Lower Rated Debt Securities

The Fund may invest up to 10% of its total 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 then
investment-grade 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 market value either in response to
changes in the economy or the financial markets or to meet redemption
requests.

<PAGE>

Notes

<PAGE>

Notes

<PAGE>

THE PIONEER FAMILY OF MUTUAL FUNDS

Growth Funds
Global/International

Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Gold Shares
Pioneer India Fund
Pioneer International Growth Fund
Pioneer World Equity Fund

United States

Pioneer Capital Growth Fund
Pioneer Growth Shares
Pioneer Mid-Cap Fund
Pioner Small Company Fund

Growth and Income Funds

Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II

Income Funds
Taxable

Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Short-Term Income Trust*

Tax-Free Income

Pioneer Intermediate Tax-Free Fund
Pioneer Tax-Free Income Fund

Money Market Fund

Pioneer Cash Reserves Fund
*Offers Class A and B Shares only

<PAGE>

Pioneer [PIONEER LOGO]
Income
Fund

60 State Street
Boston, Massachusetts 02109

OFFICERS

JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary

INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION

PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.

CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.

INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP

LEGAL COUNSEL
HALE AND DORR

0197-3947

(Copyright) Pioneer Funds Distributor, Inc.

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

<PAGE>

PIONEER BALANCED FUND

60 State Street
Boston, Massachusetts 02109

STATEMENT OF ADDITIONAL INFORMATION

Class A, Class B and Class C Shares

February 1, 1997

This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Prospectus (the "Prospectus") dated
February 1, 1997 of Pioneer Balanced 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 and Semi-Annual Reports to Shareholders are
attached to this Statement of Additional Information and are hereby incorporated
by reference.

TABLE OF CONTENTS

Page

1. Investment Objective and Policies....................................2
2. Investment Restrictions..............................................4
3. Management of the Fund...............................................5
4. Investment Adviser...................................................10
5. Underwriting Agreement and Distribution Plans........................11
6. Shareholder Servicing/Transfer Agent.................................14
7. Custodian............................................................14
8. Principal Underwriter................................................14
9. Independent Public Accountant........................................15
10. Portfolio Transactions...............................................15
11. Tax Status and Dividends.............................................16
12. Shares of the Fund...................................................20
13. Determination of Net Asset Value.....................................21
14. Systematic Withdrawal Plan...........................................22
15. Letter of Intention..................................................22
16. Investment Results...................................................23
17. General Information..................................................26
18. Financial Statements.................................................26
Appendix A...........................................................27
Appendix B...........................................................42

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

The Fund's current Prospectus presents the investment objective and the
principal investment policies of the Fund. Additional investment policies and a
further description of some of the policies described in the Prospectus appear
below.

The following policies and restrictions supplement those discussed in the
Prospectus. Whenever an investment policy or restriction states a maximum
percentage of the Fund's assets that may be invested in any security or presents
a policy regarding quality standards, this standard or other restrictions shall
be determined immediately after and as a result of the Fund's investment.
Accordingly, any later increase or decrease resulting from a change in values,
net assets or other circumstances will not be considered in determining whether
the investment complies with the Fund's investment objectives and policies.

Lending of Portfolio Securities

The Fund may lend portfolio securities to member firms of the New York Stock
Exchange, under agreements which would require that the loans be secured
continuously by collateral in cash, cash equivalents or United States ("U.S.")
Treasury Bills maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The Fund would continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
loaned as well as the benefit of an increase in the market value of the
securities loaned and would also receive compensation based on investment of the
collateral. The Fund would not, however, have the right to vote any securities
having voting rights during the existence of the loan, but would call the loan
in anticipation of an important vote to be taken among holders of the securities
or of the giving or withholding of consent on a material matter affecting the
investment.

As with other extensions of credit there are risks of delay in recovery or even
loss of rights in the collateral should the borrower of the securities fail
financially. The Fund will lend portfolio securities only to firms which have
been approved in advance by the Board of Trustees, which will monitor the
creditworthiness of any such firms. At no time would the value of the securities
loaned exceed 30% of the value of the Fund's total assets.

Forward Foreign Currency Transactions

The Fund may engage in forward foreign currency transactions. These transactions
may be conducted on a spot, i.e., cash basis, at the spot rate for purchasing or
selling currency prevailing in the foreign exchange market. The Fund also has
authority to deal in forward foreign currency exchange contracts involving
currencies of the different countries in which the Fund will invest as a hedge
against possible variations in the foreign exchange rate between these
currencies and the U.S. dollar. This is accomplished through contractual
agreements to purchase or sell a specified currency at a specified future date
and price set at the time of the contract. The Fund's dealings in forward
foreign currency contracts will be limited to hedging either specific
transactions or portfolio positions. Transaction hedging is the purchase or sale
of forward foreign currency contracts with respect to specific receivables or
payables of the Fund, accrued in connection with the purchase and sale of their
portfolio securities denominated in foreign currencies. Portfolio hedging is the
use of forward foreign currency contracts to offset portfolio security positions
denominated or quoted in such foreign currencies. There is no

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<PAGE>

guarantee that the Fund will be engaged in hedging activities when adverse
exchange rate movements occur. The Fund will not attempt to hedge all of its
foreign portfolio positions, and will enter into such transactions only to the
extent, if any, deemed appropriate by the investment adviser. The Fund will not
enter into speculative forward foreign currency contracts.

If the Fund enters into a forward contract to purchase foreign currency, the
custodian bank will segregate cash or high grade liquid debt securities in a
separate account in an amount equal to the value of the total assets committed
to the consummation of such forward contract. Those assets will be valued at
market daily and if the value of the assets in the separate account declines,
additional cash or securities will be placed in the accounts so that the value
of the account will equal the amount of the Fund's commitment with respect to
such contracts.

Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the devaluation level they anticipate.

The cost to the Fund of engaging in foreign currency transactions varies with
such factors as the currency involved, the size of the contract, the length of
the contract period and the market conditions then prevailing. Since
transactions in foreign currency and forward contracts are usually conducted on
a principal basis, no fees or commissions are involved. The Fund may close out a
forward position in a currency by selling the forward contract or by entering
into an offsetting forward contract.

Options on Foreign Currencies

The Fund may purchase options on foreign currencies for hedging purposes in a
manner similar to that of transactions in forward contracts. For example, a
decline in the dollar value of a foreign currency in which portfolio securities
are denominated will reduce the dollar value of such securities, even if their
value in the foreign currency remains constant. In order to protect against such
decreases in the value of portfolio securities, the Fund may purchase put
options on the foreign currency. If the value of the currency declines, the Fund
will have the right to sell such currency for a fixed amount of dollars which
exceeds the market value of such currency. This would result in a gain that may
offset, in whole or in part, the negative effect of currency depreciation on the
value of the Fund's securities denominated in that currency.

Conversely, if a rise in the dollar value of a currency is projected for those
securities to be acquired, thereby increasing the cost of such securities, the
Fund may purchase call options on such currency. If the value of such currency
increased, the purchase of such call options would enable the Fund to purchase
currency for a fixed amount of dollars which is less than the market value of
such currency. Such a purchase would result in a gain that may offset, at least
partially, the effect of any currency related increase in the price of
securities the Fund intends to acquire. As in the case of other types of options
transactions, however, the benefit the Fund derives from purchasing foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, if currency exchange rates do not move in the
direction or to the extent anticipated, the Fund could sustain losses on
transactions in foreign currency options which would deprive it of a portion or
all of the benefits of advantageous changes in such rates.

-3-
<PAGE>

The Fund may close out its position in a currency option by either selling the
option it has purchased or entering into an offsetting option.

Repurchase Agreements

The Fund may enter into repurchase agreements with "primary dealers" in U.S.
Government securities and banks which furnish collateral at least equal in value
or market price to the amount of their repurchase obligation. The Fund may also
enter into repurchase agreements involving certain foreign government
securities. The primary risk associated with repurchase agreements is that, if
the seller defaults, the Fund might suffer a loss to the extent that the
proceeds from the sale of the underlying securities and other collateral held by
the Fund in connection with the related repurchase agreement are less than the
repurchase price. Another risk is that, in the event of bankruptcy of the
seller, the Fund could be delayed or prohibited from disposing of the underlying
securities and other collateral held by the Fund in connection with the related
repurchase agreement pending court proceedings. In evaluating whether to enter a
repurchase agreement, PMC will carefully consider the creditworthiness of the
seller pursuant to procedures reviewed and approved by the Trustees. See
"Repurchase Agreements" in the Prospectus.

Lower Quality Debt Obligations

The Fund may invest up to 10% of its net assets in debt securities which are
rated below investment grade by Standard & Poor's Ratings Group ("Standard &
Poor's") or by Moody's Investors Service, Inc. ("Moody's") (i.e., ratings lower
than BBB by Standard & Poor's or Baa by Moody's) or, if unrated by such rating
organizations, determined to be of comparable quality by the Fund's PMC.

Bonds rated below BBB or Baa or comparable unrated securities are commonly
referred to as "junk bonds" and are considered speculative and may be
questionable as to principal and interest payments. In some cases, such bonds
may be highly speculative, have poor prospects for reaching investment standing
and be in default. As a result, investment in such bonds will entail greater
speculative risks than those associated with investment in investment grade
bonds (i.e., bonds rated BBB or better by Standard & Poor's or Baa or better by
Moody's or, if unrated by such rating organizations, determined to be of
comparable quality by PMC).

The amount of junk bond securities outstanding has proliferated in conjunction
with the increase in merger and acquisition and leveraged buyout activity. An
economic downturn could severely affect the ability of highly leveraged issuers
to service their debt obligations or to repay their obligations upon maturity.
Factors having an adverse impact on the market value of lower quality securities
will have an adverse effect on the Fund's net asset value to the extent that it
invests in such securities. In addition, the Fund may incur additional expenses
to the extent it is required to seek recovery upon a default in payment of
principal or interest on its portfolio holdings.

The secondary market for junk bond securities, which is concentrated in
relatively few market makers, may not be as liquid as the secondary market for
more highly rated securities, a factor which may have an adverse effect on the
Fund's ability to dispose of a particular security when necessary to meet its
liquidity needs. Under adverse market or economic conditions, the secondary
market for junk bond securities could contract further, independent of any
specific adverse changes in the condition of a particular issuer. As a result,
the Fund could find it more difficult to sell these securities or may be able to
sell the securities only at prices lower than if such securities were widely
traded. Prices realized upon the sale of such lower rated or unrated

-4-
<PAGE>

securities, under these circumstances, may be less than the prices used in
calculating the Fund's net asset value.

Certain proposed and recently enacted federal laws including the required
divestiture by federally insured savings and loan associations of their
investments in junk bonds and proposals designed to limit the use, or tax and
other advantages, of junk bond securities could adversely affect the Fund's net
asset value and investment practices. Such proposals could also adversely affect
the secondary market for junk bond securities, the financial condition of
issuers of these securities and the value of outstanding junk bond securities.
The form of such proposed legislation and the possibility of such legislation
being passed are uncertain.

Since investors generally perceive that there are greater risks associated with
lower quality debt securities of the type in which the Fund may invest a portion
of its assets, the yields and prices of such securities may tend to fluctuate
more than those for higher rated securities. In the lower quality segments of
the debt securities market, changes in perceptions of issuers' creditworthiness
tend to occur more frequently and in a more pronounced manner than do changes in
higher quality segments of the debt securities market, resulting in greater
yield and price volatility.

Lower rated and comparable unrated debt securities tend to offer higher yields
than higher rated securities with the same maturities because the historical
financial condition of the issuers of such securities may not have been as
strong as that of other issuers. Since lower rated securities generally involve
greater risks of loss of income and principal than higher rated securities,
investors should consider carefully the relative risks associated with
investment in securities which carry lower ratings and in comparable unrated
securities. In addition to the risk of default, there are the related costs of
recovery on defaulted issues. PMC will attempt to reduce these risks through
portfolio diversification and by analysis of each issuer and its ability to make
timely payments of income and principal, as well as broad economic trends and
corporate developments.

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 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.

-5-
<PAGE>

2. INVESTMENT RESTRICTIONS

Fundamental Investment Restrictions. The Fund has adopted certain additional
investment restrictions which may not be changed without the affirmative vote of
the holders of a "majority" (as defined in the Investment Company Act of 1940,
as amended (the "1940 Act")) of the Fund's outstanding voting securities. As
used in the Prospectus and this Statement of Additional Information, such
approval means the approval of the lesser of: (i) the record holders of 67% or
more of the voting securities present at a special or annual meeting if the
record holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy, or (ii) more than 50% of the Fund's
outstanding shares.

The Fund may not:

1. Issue senior securities, except as permitted by the Fund's borrowing, lending
and commodity restrictions, and for purposes of this restriction, the issuance
of shares of beneficial interest in multiple classes or series, the purchase or
sale of options, futures contracts, options on futures contracts, forward
commitments, forward foreign exchange contracts, repurchase agreements, reverse
repurchase agreements, dollar rolls, swaps and any other financial transaction
entered into pursuant to the Fund's investment policies as described in the
Prospectus and this Statement of Additional Information and in accordance with
applicable SEC pronouncements, as well as the pledge, mortgage or hypothecation
of the Fund's assets within the meaning of the Fund's fundamental investment
restriction regarding pledging, are not deemed to be senior securities.

2. Borrow money, except from banks as a temporary measure to facilitate the
meeting of redemption requests or for extraordinary or emergency purposes and
except pursuant to reverse repurchase agreements or dollar rolls, in all cases
in amounts not exceeding 10% of the Fund's total assets (including the amount
borrowed) taken at market value.

3. Purchase securities on margin, but it may obtain such short-term credits as
may be necessary for clearance of purchases and sales of securities.

4. 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.

5. Act as an underwriter, except as it may be deemed to be an underwriter in a
sale of restricted securities held in its portfolio.

6. Invest in real estate, commodities or commodity contracts, except that the
Fund may invest in financial futures contracts and related options and in any
other financial instruments which may be deemed to be commodities or commodity
contracts in which the Fund is not prohibited from investing by the Commodity
Exchange Act and the rules and regulations thereunder.

7. 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

-6-
<PAGE>

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.

8. Participate on a joint or joint-and-several basis in any securities trading
account.

9. 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.

10. 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 1940 Act.

It is the fundamental policy of the Fund not to concentrate its
investments in securities of companies in any particular industry. In the
opinion of the staff of the Securities and Exchange Commission (the
"Commission"), the Fund's investments are concentrated in a particular industry
if such investments aggregate 25% or more of the Fund's total assets. The Fund's
policy does not apply to investments in U.S. Government Securities.

The Fund does not intend to enter into any reverse repurchase
agreements or dollar rolls as described in fundamental investment restrictions
(1) and (2) above, during the coming year. In addition, in compliance with an
informal position taken by the staff of the Commission regarding leverage, the
Fund will not purchase securities during the coming year at any time that
outstanding borrowings exceed 5% of the Fund's total assets.

Non-Fundamental Investment Restrictions. The following restrictions have been
designated as non-fundamental and may be changed by a vote of the Fund's Board
of Trustees without approval of shareholders.

The Fund may not:

1. Invest in securities of other registered investment companies, except by
purchases in the open market including only customary brokers' commissions, and
except as they may be acquired as part of a merger, a consolidation or an
acquisition of assets.

2. 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.

In order to register its shares in certain jurisdictions, the Fund has agreed to
adopt certain additional investment restrictions, which are non-fundamental and
which may be changed by a vote of the Fund's Board of Trustees. Pursuant to
these additional investment restrictions, the Fund may not (i) invest more than
2% of its assets in warrants, valued at the lower of cost or market, provided
that it may invest up to 5% of its total assets, as so valued, in warrants
listed on a nationally recognized U.S. or foreign stock exchange, (ii) invest in
interests in oil, gas or other mineral exploration or development leases or
programs.

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<PAGE>

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 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.

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

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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.

WILLIAM C. FIELD, Vice President of PMC, September 1964
Research analyst since 1991 and has served as an assistant portfolio manager for
certain institutional accounts since January 1996.

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

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adviser for the Pioneer mutual funds listed below and manages the investments of
certain institutional accounts.

The table below lists all the Pioneer mutual funds currently offered to the
public and the investment adviser and principal underwriter for each fund.

Investment Principal
Fund Name Adviser Underwriter

Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD

Pioneer World Equity Fund PMC PFD

Pioneer Emerging Markets Fund PMC PFD
Pioneer 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 Balanced Portfolio 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 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. As of October 31, 1996, to the knowledge
of the Fund, no officer or Trustee of the Fund owned [ ]% or more of the issued
and outstanding shares of PGI, except Mr. Cogan who then owned approximately [
]% of such shares. As of October 31, 1996, the officers and trustees held in the
aggregate less than [ ]% of the outstanding shares of the Fund. As of October
31, 1996, Donaldson Lufkin Jenrette Securities Corporation Inc., P.O. Box 2052,
Jersey City, NJ 07303-9998 owned approximately [ % ( )] of the outstanding Class
C shares of the Fund. PFD, 60 State Street, Boston, MA 02109 owned approximately
[ ]% ( )] of the outstanding Class C shares of the Fund.

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<PAGE>

Compensation of Officers and Trustees

The Fund pays no salaries or compensation to any of its officers. The
Fund pays 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.

Pension or Total
Retirement Compensation
Benefits from the Fund
Aggregate Accrued and all other
Compensation as Part of Pioneer
TrusteeFrom the Fund* the Fund's Expenses Mutual Funds**

John F. Cogan, Jr. $ 500* $0 $13,000*
Richard H. Egdahl, M.D. $3,674 $0 $63,315
Margaret B.W. Graham $3,674 $0 $62,398
John W. Kendrick $3,674 $0 $62,398
Marguerite A. Piret $4,038 $0 $76,704
David D. Tripple $ 500 $0 $11,000*
Stephen K. West $3,666 $0 $68,180
John Winthrop $3,904 $0 $71,199
Stephen G. Kasnet $ 0 $0 $ 0
---------------------------------------------------

Totals $23,630 $0 $426,694
======= == ========

* As of December 31, 1996 the Fund's fiscal year end.

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<PAGE>

** As of December 31, 1995 (calendar year end for all Pioneer Funds).

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.

Under the most recently approved management contract, PMC is entitled
to compensation for its management services and certain expenses PMC incurs on
behalf of the Fund equal to 0.65% of the Fund's average daily net assets up to
$1 billion, 0.60% of the next $4 billion and 0.55% of the excess over $5
million. The fee is computed daily and paid monthly. Under the prior contract,
PMC was entitled to compensation for management services and certain expenses
PMC incurred on behalf of the Fund of 0.50% of the Fund's average daily net
assets up to $250 million, 0.48% of the next $50 million, and 0.45% of the
excess over $300 million. The fee was computed daily and paid monthly.

PMC had agreed that until December 1, 1995, its fee would 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, although no such law currently applies.

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

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<PAGE>

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. For the six months ended June 30, 1996, the Fund paid
$693,788 in management fees to PMC.

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 or for the six months ended
June 30, 1996.

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

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<PAGE>

a sales agreement with PFD at a rate of up to 0.25% of the Fund's average daily
net assets attributable to Class B shares owned by investors for whom that
securities dealer is the holder or dealer of record). This service fee is
intended to be in consideration of personal services and/or account maintenance
services rendered by the dealer with respect to Class B shares. PFD will advance
to dealers the first-year service fee at a rate equal to 0.25% of the amount
invested. As compensation therefor, PFD may retain the service fee paid by the
Fund with respect to such shares for the first year after purchase. Dealers will
become eligible for additional service fees with respect to such shares
commencing in the thirteenth month following purchase. Dealers may from time to
time be required to meet certain other criteria in order to receive service
fees. PFD or its affiliates are entitled to retain all service fees payable
under the Class B Plan for which there is no dealer of record or for which
qualification standards have not been met as partial consideration for personal
services and/or account maintenance services performed by PFD or its affiliates
for shareholder accounts.

The purpose of distribution payments to PFD under the Class B Plan is
to compensate PFD for its distribution services to the Fund. PFD pays
commissions to dealers as well as expenses of printing prospectuses and reports
used for sales purposes, expenses with respect to the preparation and printing
of sales literature and other distribution related expenses, including, without
limitation, the cost necessary to provide distribution-related services, or
personnel, travel office expenses and equipment. The Class B Plan also provides
that PFD will receive all 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.)

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<PAGE>

General

In accordance with the terms of the Plans, PFD provides to the Fund for
review by the Trustees a quarterly written report of the amounts expended under
the respective Plan and the purpose for which such expenditures were made. In
the Trustees' quarterly review of the Plans, they will consider the continued
appropriateness and the level of reimbursement or compensation the Plans
provide.

No interested person of the Fund, nor any Trustee of the Fund who is
not an interested person of the Trust, has any direct or indirect financial
interest in the operation of the Plans except to the extent that PFD and certain
of its employees may be deemed to have such an interest as a result of receiving
a portion of the amounts expended under the Plans by the Fund and except to the
extent certain officers may have an interest in PFD's ultimate parent, PGI.

The Plans were adopted by a majority vote of the Board of Trustees,
including all of the Trustees who are not, and were not at the time they voted,
interested persons of the Fund, as defined in the 1940 Act (none of whom had or
have any direct or indirect financial interest in the operation of the Plan),
cast in person at a meeting called for the purpose of voting on the Plans. In
approving the Plans, the Trustees identified and considered a number of
potential benefits which the Plans may provide. The Board of Trustees believes
that there is a reasonable likelihood that the Plans will benefit the Fund and
its current and future shareholders. Under their terms, the Plans remain in
effect from year to year provided such continuance is approved annually by vote
of the Trustees in the manner described above. The Plans may not be amended to
increase materially the annual percentage limitation of average net assets which
may be spent for the services described therein without approval of the
shareholders of the Fund affected thereby, and material amendments to the Plans
must also be approved by the Trustees in the manner described above. A Plan may
be terminated at any time, without payment of any penalty, by vote of the
majority of the Trustees who are not interested persons of the Fund and have no
direct or indirect financial interest in the operations of the Plan, or by a
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 Fund had not incurred any distribution
fees pursuant to the Class C Plan. Class C shares were first offered January 31,
1996. During the six months ended June 30, 1996, the Fund incurred total
distribution fees pursuant to the Fund's Class A Plan, Class B and Class C Plan
of $343,975, $16,160 and $1,531, 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

Redemptions of each Class of shares may be subject to a CDSC. A CDSC of
1.00% may be imposed on certain net asset purchases of Class A shares that are
redeemed within one year of purchase. Class B shares that are redeemed within
six years of purchase are subject to a CDSC at declining rates beginning at 4.0%
based on the lower of cost or market value of shares being redeemed. Redemptions
of Class C shares within one year of purchase are subject to a CDSC of 1.00%.
See " How to Buy Fund Shares" in the Prospectus. During the fiscal year ended
December 31, 1995, CDSCs in the amount of $134 were paid to PFD. For the six
months ended June 30, 1996, CDSCs in the amount of $1,191 were paid to PFD. Such
CDSCs are paid to PFD in reimbursement of expenses related to servicing of
shareholder accounts and compensation paid to dealers and sales personnel.

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<PAGE>

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.

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. For the six months ended June 30, 1996, PFD
received $XXX in aggregate underwriting commissions.

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

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<PAGE>

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

Arthur Andersen LLP, One International Place, Boston, Massachusetts
02110, is the Fund's independent public accountants, providing audit services,
tax return review, and assistance and consultation with respect to the
preparation of filings with the Commission.

10. PORTFOLIO TRANSACTIONS

All orders for the purchase or sale of portfolio securities are placed
on behalf of the Fund by PMC pursuant to authority contained in the Fund's
management contract. In selecting broker-dealers, PMC will consider various
relevant factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer; the broker-dealer's execution services
rendered on a continuing basis; and the reasonableness of any broker-dealer
spreads.

PMC may select broker-dealers which provide brokerage and/or research
services to the Fund and/or other investment companies managed by PMC or who
sell shares of the Pioneer Funds. In addition, if PMC determines in good faith
that the amount of commissions charged by a broker-dealer is reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, the Fund may pay commissions to such broker-dealer in an amount
greater than the amount another firm may charge. Such services may include
advice concerning the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement). PMC
maintains a listing of broker-dealers who provide such services on a regular
basis. However, because it is anticipated that many transactions on behalf of
the Fund and other investment companies managed by PMC are placed with
broker-dealers (including broker-dealers on the listing) without regard to the
furnishing of such services, it is not possible to estimate the proportion of
such transactions directed to such broker-dealers solely because such services
were provided.

The research received from broker-dealers may be useful to PMC in
rendering investment management services to the Fund as well as other investment
companies managed by PMC, although not all such research may be useful to the
Fund. Conversely, such information provided by brokers or dealers who have
executed transaction orders on behalf of such other PMC clients may be useful to
PMC in carrying out its obligations to the Fund. The receipt of such research
has not reduced PMC's normal independent research activities; however, it
enables PMC to avoid the additional expenses which might otherwise be incurred
if it were to attempt to develop comparable information through its own staff.

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<PAGE>

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 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. For the six months ended June 30, 1996, the Fund paid
$XXXX in brokerage or underwriting commissions.

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.

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<PAGE>

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.

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.

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<PAGE>

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 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

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<PAGE>

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 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.

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<PAGE>

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 February 1, 1997, the Fund was known as Pioneer Income Fund.
Prior to June 30, 1994, the Fund was known as Pioneer Income Fund, Inc. and
prior to December 1, 1993, the Fund was known as Mutual of Omaha 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 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

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<PAGE>

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

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<PAGE>

should carefully read the provisions of the Letter of Intention set forth in the
Account Application before signing.

16. INVESTMENT RESULTS

Other Quotations, Comparisons, and General Information

From time to time, in advertisements, in sales literature, or in
reports to shareholders, the past performance of the Fund may be illustrated
and/or compared with that of other mutual funds with similar investment
objectives, and to other relevant indices. For example, the Fund may compare its
yield to the Shearson Lehman Hutton Government Index, U.S Government bond rates,
or other comparable indices or investment vehicles. In addition, the performance
of the classes of the Fund may be compared to alternative investment or savings
vehicles and/or to indices or indicators of economic activity, e.g., inflation
or interest rates. Data for economic indicators may come from Bloomberg
Financial Systems, Towers Data Systems, the financial press and other sources.
Performance rankings and listings reported in newspapers or national business
and financial publications, such as Barron's, Business Week, Consumers Digest,
Consumer Reports, Financial World, Forbes, Fortune, Investors Business Daily,
Kiplinger's Personal Finance Magazine, Money, New York Times, Smart Money, USA
Today, U.S. News and World Report, The Wall Street Journal and Worth may also be
cited (if the Fund is listed in any such publication) or used for comparison, as
well as performance listings and rankings from various other sources including
CDA/Weisenberger, Donoghue's Mutual Fund Almanac, Ibbotson Associates Investment
Company Data, Inc., Johnson's Charts, Kanon Bloch Carre and Co., Lipper
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

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<PAGE>

For purposes of calculating interest earned on debt obligations as provided in
item "a" above:

(i) The yield to maturity of each obligation held by the Fund is
computed based on the market value of the obligation (including actual accrued
interest, if any) at the close of business each day during the 30-day base
period, or, with respect to obligations purchased during the month, the purchase
price (plus actual accrued interest, if any) on settlement date, and with
respect to obligations sold during the month the sale price (plus actual accrued
interest, if any) between the trade and settlement dates.

(ii) The yield to maturity of each obligation is then divided by 360
and the resulting quotient is multiplied by the market value of the obligation
(including actual accrued interest, if any) to determine the interest income on
the obligation for each day. The yield to maturity calculation has been made on
each obligation during the 30 day base period.

(iii) Interest earned on all debt obligations during the 30-day or one
month period is then totaled.

(iv) The maturity of an obligation with a call provision(s) is the next
call date on which the obligation reasonably may be expected to be called or, if
none, the maturity date.

With respect to the treatment of discount and premium on mortgage or
other receivables-backed obligations which are expected to be subject to monthly
payments of principal and interest ("pay downs"), the Fund accounts for gain or
loss attributable to actual monthly pay downs as an increase or decrease to
interest income during the period. In addition, the Fund may elect (i) to
amortize the discount or premium 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

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<PAGE>

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

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, Class B and Class C 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;

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<PAGE>

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.

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 and Semi-Annual Report
dated June 30, 1996, are 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
and Semi-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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<PAGE>

APPENDIX A

MOODY'S CORPORATE BOND RATINGS

Aaa

Bonds which are rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

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.

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.

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.

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.

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<PAGE>

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.

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.

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.

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.

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.

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<PAGE>

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.

Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.

CCC

Debt rated CCC has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.

The rating CC is typically applied to debt subordinated to senior debt that is
assigned an actual or implied CCC rating.

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.

The rating CI is reserved for income bonds on which no interest is being paid.

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 Balanced Fund A

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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<PAGE>

Pioneer Balanced Fund B

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

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<PAGE>

COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS

used, the term of the bond was assumed to be a simple average of the maturity
and first call datesminus 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

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<PAGE>

COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS

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, TimesMirror/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
3000 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."

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<PAGE>

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.

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

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<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

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<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

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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 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

-41-
<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

-42-
<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

-43-
<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.

-44-

<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 the 1996 Semi-Annual
Report to Shareholders filed electronically on August
26, 1996, accession no. 0000069405-96-000016 (file no.

811-1605-3).

(b) Exhibits:

(1) (a) Form of Agreement and Declaration of
Trust.+

(b) Establishment and Designation of Class B
Shares.+

(d) Form of Amendment to Agreement and
Declaration of Trust.

(2) By-Laws.+

(3) Inapplicable.

(4) Inapplicable.

(5) Form of Management Contract with Pioneering
Management Corporation.

(6) (a) Underwriting Agreement with Pioneer Funds
Distributor, Inc.+

(b) Form of Sales Agreement.*

(7) Inapplicable.

C-1
<PAGE>

(8) Custodian Agreement; and the Assignment dated
August 28, 1990.+

(9) Service Agreement with Pioneering Services
Corporation.+

(10) Inapplicable.

(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.+

(16) None.

(17) Inapplicable.

(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.

* Filed electronically as part of Post-Effective Amendment No. 57 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 World Equity Fund DE
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE

Pioneer Fund DE
Pioneer II DE

Pioneer Real Estate Shares DE
Pioneer Short-Term Income Fund MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Income Fund DE
Pioneer Intermediate Tax-Free Fund MA

C-3
<PAGE>

Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares DE

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

C-4
<PAGE>

Hale and Dorr Partner

GmbH Chairman of Supervisory
Board

Item 26. Number of Holders of Securities

Number of Record Holders

Title of Class as of October 31, 1996
-------------- -----------------------

Class Class Class
Shares of Beneficial Interest A B C

Shares Shares Shares
------ ------ ------
18,817 475 27

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:

C-5
<PAGE>

(a) Items 1 and 2 of Part 2;

(b) Section IV, Business Background, of
each Schedule D.

Item 29. Principal Underwriter

(a) See Item 25 above.
(b) Directors and Officers of PFD:

Positions and Offices Positions and Offices
Name with Underwriter with Registrant

John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee

Robert L. Butler Director and President None

David D. Tripple Director Executive Vice
President and Trustee

Steven M. Graziano Senior 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

C-6
<PAGE>

William H. Keough Treasurer Treasurer

Roy P. Rossi Assistant Treasurer None

Joseph P. Barri Clerk Secretary

Robert P. Nault Assistant Clerk Assistant Secretary

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>

<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.
58 to its Registration Statement (the "Amendment") pursuant to Rule 485(a)
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 27th day of
November, 1996.

PIONEER INCOME FUND

/s/John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman and President

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: )
)
)
/s/William H. Keough* )
--------------------- )
William H. Keough, Treasurer )

A MAJORITY OF THE BOARD OF TRUSTEES:

/s/John F. Cogan, Jr. )
---------------------- )
John F. Cogan, Jr., Trustee )
)
/s/Richard H. Egdahl, M.D.* )
--------------------------- )
Richard H. Egdahl, Trustee )
)
/s/Margaret B.W. Graham* )
------------------------ )
Margaret B.W. Graham, Trustee )

C-8
<PAGE>

)
/s/John W. Kendrick* )
-------------------- )
John W. Kendrick, Trustee )
)
/s/Marguerite A. Piret* )
----------------------- )
Marguerite A. Piret, Trustee )
)
/s/David D. Tripple* )
-------------------- )
David D. Tripple, Trustee )
)
/s/Stephen K. West* )
------------------- )
Stephen K. West, Trustee )
)
/s/John Winthrop* )
----------------- )
John Winthrop, Trustee )

*By /s/John F. Cogan, Jr. November 27, 1996
------------------------

John F. Cogan, Jr.
Attorney-in-fact

C-9
<PAGE>

Exhibit Index

Exhibit
Number Document Title

(1)(d) Form of Amendment to Agreement and
Declaration of Trust.

(5) Form of Management Contract with Pioneering Management
Corporation.

(11) Consent of Independent Public Accountants (Arthur
Andersen LLP).

C-10

AMENDMENT TO THE AGREEMENT AND DECLARATION OF TRUST
OF
PIONEER INCOME FUND

The undersigned, being at least a majority of the Trustees of Pioneer
Income Fund, a Delaware business trust, acting pursuant to Article IX, Section 8
of the Agreement and Declaration of Trust dated June 16, 1994 (the
"Declaration"), do hereby amend the Declaration as follows, such amendment to
become effective February 1, 1997:

Section 1.1 of the Declaration is hereby deleted and replaced with the
following:

Section 1.1 Name. The name of the Trust created hereby is "Pioneer Balanced
Fund" (the "Trust").

The second sentence of Section 5.1 is hereby deleted and replaced with the
following:

Without limiting the authority of the Trustees to establish and designate
any further Series, the Trustees hereby establish a single Series which shall be
designated Pioneer Balanced Fund.

<PAGE>

IN WITNESS WHEREOF, the undersigned being all the Trustees of the Trust
have executed this instrument as of the date first above-written.

------------------------------------
John F. Cogan, Jr.
As Trustee and not individually

------------------------------------
Richard H. Egdahl
As Trustee and not individually

------------------------------------
Margaret B. W. Graham
As Trustee and not individually

------------------------------------
John W. Kendrick
As Trustee and not individually

------------------------------------
Marguerite A. Piret
As Trustee and not individually

------------------------------------
David D. Tripple
As Trustee and not individually

------------------------------------
Stephen K. West
As Trustee and not individually

------------------------------------
John Winthrop
As Trustee and not individually

-2-

EXHIBIT A

MANAGEMENT CONTRACT

THIS AGREEMENT dated this day of February, 1997 between Pioneer Balanced
Fund, a Delaware business trust (the "Fund"), and Pioneering Management
Corporation, a Delaware corporation (the "Manager").

W I T N E S S E T H

WHEREAS, the Fund is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement") for the
purpose of registering its shares for public offering under the Securities Act
of 1933, as amended,

WHEREAS, the parties hereto deem it mutually advantageous that the Manager
should be engaged, subject to the supervision of the Fund's Board of Trustees
and officers, to manage the Fund,

NOW, THEREFORE, in consideration of the mutual covenants and benefits set
forth herein, the Fund and the Manager do hereby agree as follows:

1. (a) The Manager will regularly provide the Fund with investment research,
advice and supervision and will furnish continuously an investment program for
the Fund consistent with the investment objectives and policies of the Fund. The
Manager will determine from time to time what securities shall be purchased for
the Fund, what securities shall be held or sold by the Fund and what portion of
the Fund's assets shall be held uninvested as cash, subject always to the
provisions of the Fund's Agreement and Declaration of Trust, By-Laws and its
registration statements under the 1940 Act and under the Securities Act of 1933
covering the Fund's shares, as filed with the Securities and Exchange
Commission, and to the investment objectives, policies and restrictions of the
Fund, as each of the same shall be from time to time in effect, and subject,
further, to such policies and instructions as the Board of Trustees of the Fund
may from time to time establish. To carry out such determinations, the Manager
will exercise full discretion and act for the Fund in the same manner and with
the same force and effect as the Fund itself might or could do with respect to
purchases, sales or other transactions, as well as with respect to all other
things necessary or incidental to the furtherance or conduct of such purchases,
sales or other transactions.

(b) The Manager will, to the extent reasonably required in the conduct of the
business of the Fund and upon the Fund's request, furnish to the Fund research,
statistical and advisory reports upon the industries, businesses, corporations
or securities as to which such requests shall be made, whether or not the Fund
shall at the time have any investment in such industries, businesses,
corporations or securities. The Manager will use its best efforts in the
preparation of such reports and will endeavor to consult the persons and sources
believed by it to have information available with respect to such industries,
businesses, corporations or entities.

A-1
<PAGE>

(c) The Manager will maintain all books and records with respect to the
Fund's securities transactions required by sub-paragraphs (b)(5),(6),(9) and
(10) and paragraph (f) of Rule 31a-1 under the 1940 Act (other than those
records being maintained by the custodian or transfer agent appointed by the
Fund) and preserve such records for the periods prescribed therefor by Rule
31a-2 of the 1940 Act. The Manager will also provide to the Board of Trustees
such periodic and special reports as the Board may reasonably request. >

2. (a) Except as otherwise provided herein, the Manager, at its own expense,
shall furnish to the Fund office space in the offices of the Manager or in such
other place as may be agreed upon from time to time, and all necessary office
facilities, equipment and personnel for managing the Fund's affairs and
investments, and shall arrange, if desired by the Fund, for members of the
Manager's organization to serve as officers or agents of the Fund.

(b) The Manager shall pay directly or reimburse the Fund for: (i) the
compensation (if any) of the Trustees who are affiliated with, or interested
persons of, the Manager and all officers of the Fund as such; and (ii) all
expenses not hereinafter specifically assumed by the Fund where such expenses
are incurred by the Manager or by the Fund in connection with the management of
the affairs of, and the investment and reinvestment of the assets of, the Fund.

(c) The Fund shall assume and shall pay: (i) charges and expenses for fund
accounting, pricing and appraisal services and related overhead, including, to
the extent such services are performed by personnel of the Manager or its
affiliates, office space and facilities and personnel compensation, training and
benefits; (ii) the charges and expenses of auditors; (iii) the charges and
expenses of any custodian, transfer agent, plan agent, dividend disbursing agent
and registrar appointed by the Fund with respect to the Fund; (iv) issue and
transfer taxes, chargeable to the Fund in connection with securities
transactions to which the Fund is a party; (v) insurance premiums, interest
charges, dues and fees for membership in trade associations and all taxes and
corporate fees payable by the Fund to federal, state or other governmental
agencies; (vi) fees and expenses involved in registering and maintaining
registrations of the Fund and/or its shares with the Commission, state or blue
sky securities agencies and foreign countries, including the preparation of
Prospectuses and Statements of Additional Information for filing with 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 Commission
pursuant to the 1940 Act; (x) compensation of those Trustees of the Fund who are
not affiliated with or interested persons of the Manager, the Fund (other than
as Trustees), The Pioneer Group, Inc. or Pioneer Funds Distributor, Inc.; (xi)
the cost of preparing and printing share certificates; and (xii) interest on
borrowed money, if any.

(d) In addition to the expenses described in Section 2(c) above, the Fund
shall pay all brokers' and underwriting commissions chargeable to the Fund in
connection with securities transactions to which the Fund is a party.

A-2
<PAGE>

3. (a) The Fund shall pay to the Manager, as compensation for the Manager's
services hereunder, a fee at the rates per annum of the Fund's average daily net
assets as follows: 0.65% of the Fund's average daily net assets up to $1
billion, 0.60% of the next $4 billion and 0.55% of the excess over $5 billion.
The management fee payable hereunder shall be computed daily and paid monthly in
arrears. In the event of termination of this Agreement, the fee provided in this
Section shall be computed on the basis of the period ending on the last business
day on which this Agreement is in effect subject to a pro rata adjustment based
on the number of days elapsed in the current month as a percentage of the total
number of days in such month.

(b) If the operating expenses of the Fund in any year exceed the limits set
by state securities laws or regulations in states in which shares of the Fund
are sold, the amount payable to the Manager under subsection (a) above will be
reduced (but not below $0), and the Manager shall make other arrangements
concerning expenses but, in each instance, only as and to the extent required by
such laws or regulation. If amounts have already been advanced to the Manager
under this Agreement, the Manager will return such amounts to the Fund to the
extent required by the preceding sentence.

(c) In addition to the foregoing, the Manager may from time to time agree not
to impose all or a portion of its fee otherwise payable hereunder (in advance of
the time such fee or a portion thereof would otherwise accrue) and/or undertake
to pay or reimburse the Fund for all or a portion of its expenses not otherwise
required to be borne or reimbursed by the Manager. Any such fee reduction or
undertaking may be discontinued or modified by the Manager at any time.

4. The Manager will not be liable for any error of judgment or mistake of law
or for any loss sustained by reason of the adoption of any investment policy or
the purchase, sale, or retention of any security on the recommendation of the
Manager, whether or not such recommendation shall have been based upon its own
investigation and research or upon investigation and research made by any other
individual, firm or corporation, but nothing contained herein will be construed
to protect the Manager against any liability to the Fund or its shareholders by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties under this Agreement.

5. (a) Nothing in this Agreement will in any way limit or restrict the
Manager or any of its officers, directors, or employees from buying, selling or
trading in any securities for its or their own accounts or other accounts. The
Manager may act as an investment advisor to any other person, firm or
corporation, and may perform management and any other services for any other
person, association, corporation, firm or other entity pursuant to any contract
or otherwise, and take any action or do any thing in connection therewith or
related thereto; and no such performance of management or other services or
taking of any such action or doing of any such thing shall be in any manner
restricted or otherwise affected by any aspect of any relationship of the
Manager to or with the Fund or deemed to violate or give rise to any duty or
obligation of the Manager to the Fund except as otherwise imposed by law. The
Fund recognizes that Manager, in effecting transactions for its various
accounts, may not always be able to take or liquidate investment positions in
the same security at the same time and at the same price.

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(b) In connection with purchases or sales of fund securities for the account
of the Fund, neither the Manager nor any of its Trustees, officers or employees
will act as a principal or agent or receive any commission except as permitted
by the 1940 Act. The Manager shall arrange for the placing of all orders for the
purchase and sale of fund securities for the Fund's account with brokers or
dealers selected by the Manager. In the selection of such brokers or dealers and
the placing of such orders, the Manager is directed at all times to seek for the
Fund the most favorable execution and net price available except as described
herein. It is also understood that it is desirable for the Fund that the Manager
have access to supplemental investment and market research and security and
economic analyses provided by brokers who may execute brokerage transactions at
a higher cost to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the Manager is authorized to place orders for the purchase
and sale of securities for the Fund with such brokers, subject to review by the
Fund's Trustees from time to time with respect to the extent and continuation of
this practice. It is understood that the services provided by such brokers may
be useful to the Manager in connection with its or its affiliates services to
other clients.

(c) On occasions when the Manager deems the purchase or sale of a security to
be in the best interest of the Fund as well as other clients, the Manager, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be sold or purchased in order to obtain the best execution and
lower brokerage commissions, if any. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction, will
be made by the Manager in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to such clients.

6. This Agreement shall become effective on the date hereof and shall remain
in force until May 31, 1998 and from year to year thereafter, but only so long
as its continuance is approved annually by a vote of the Trustees of the Fund
voting in person, including a majority of its Trustees who are not parties to
this Agreement or interested persons (as the term "interested persons" is
defined in the 1940 Act) of any such parties, at a meeting of Trustees called
for the purpose of voting on such approval or by a vote of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Fund, subject
to the right of the Fund and the Manager to terminate this contract as provided
in Section 7 hereof.

7. Either party hereto may, without penalty, terminate this Agreement by
vote of its Board of Trustees or by vote of a "majority of its outstanding
voting securities" (as defined in the 1940 Act) of the Fund and the giving of 60
days' written notice to the other party.

8. This Agreement shall automatically terminate in the event of its
assignment. For purposes of this Agreement, the term "assignment" shall have
the meaning given it by Section 2(a)(4) of the 1940 Act.

9. The Fund agrees that in the event that neither the Manager nor any of its
affiliates acts as an investment adviser to the Fund, the name of the Fund, and
any fund thereof, will be changed to one that does not contain the name
"Pioneer" or otherwise suggest an affiliation with the Manager.

10. The Manager is an independent contractor and not an employee of the
Fund for any purpose. If any occasion should arise in which the Manager gives
any advice to

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its clients concerning the shares of the Fund, the Manager will act solely as
investment counsel for such clients and not in any way on behalf of the Fund
or Fund.

11. This Agreement states the entire agreement of the parties hereto, and is
intended to be the complete and exclusive statement of the terms hereof. It may
not be added to or changed orally, and may not be modified or rescinded except
by a writing signed by the parties hereto and in accordance with the 1940 Act,
when applicable.

12. This Agreement and all performance hereunder shall be governed by the
laws of The Commonwealth of Massachusetts, which apply to contracts made and
to be performed in The Commonwealth of Massachusetts.

13. Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms or provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.

14. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers and their seal to be hereto affixed
as of the day and year first above written.

ATTEST: PIONEER BALANCED FUND

- ----------------------------- ----------------------------------
Joseph P. Barri John F. Cogan, Jr.
Secretary President

PIONEERING MANAGEMENT
ATTEST: CORPORATION

- ----------------------------- ----------------------------------
Joseph P. Barri David D. Tripple
Secretary President

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As independent public accountants, we hereby consent to the use of our
report dated August 1, 1996 included in the 1996 Semi-Annual Report for Pioneer
Income (the Fund) (and to all references to our firm) included in or made a part
of the Fund's Post-Effective Amendment No. 58 to Registration Statement File No.
2-28273 and Amendment No. 27 to Registration Statement File No. 811-1605.

Arthur Andersen LLP

Boston, Massachusetts
November 26, 1996