File No. 2-42352
File No. 811-2239
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Check the appropriate box:
[ ] Preliminary proxy statements [ ] Confidential, for Use
of the Commission
Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Pioneer Interest Shares
(Name of Registrant as Specified in Its Charter
Pioneer Interest Shares
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2).
<PAGE>
PIONEER INTEREST SHARES, INC.
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
1-800-241-6580
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 20, 1996
The Annual Meeting of Shareholders (the "Meeting") of Pioneer Interest
Shares, Inc. (the "Fund") will be held at the offices of Hale and Dorr, counsel
to the Fund, at 60 State Street, 26th floor, Boston, Massachusetts 02109 on
Thursday, June 20, 1996 at 2:00 p.m. (Boston time) to consider and act upon the
following proposals:
1. To elect the Directors named in the attached Proxy Statement to serve on
the Fund's Board of Directors until their successors have been duly
elected and qualified;
2. To approve an Agreement and Plan of Reorganization pursuant to which the
Fund will be reorganized as a Delaware business trust;
3. To ratify the selection of Arthur Andersen LLP as the Fund's independent
public accountants for the fiscal year ending December 31, 1996; and
4. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
Shareholders of record as of the close of business on May 3, 1996 are
entitled to vote at the Meeting or any adjournment thereof.
By Order of the Board of Directors,
Joseph P. Barri, Secretary
Boston, Massachusetts
May 13, 1996
--------
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE AND
RETURN THE ENCLOSED PROXY CARD. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
MEETING.
0596-3248
<PAGE>
PIONEER INTEREST SHARES, INC.
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
1-800-241-6580
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
OF PIONEER INTEREST SHARES, INC.
TO BE HELD ON JUNE 20, 1996
INTRODUCTION
This Proxy Statement is furnished to shareholders of Pioneer Interest
Shares, Inc., a Nebraska corporation (the "Fund"), in connection with the
solicitation of proxies by the Fund's Board of Directors for use at the Annual
Meeting of Shareholders (the "Meeting") to be held at the offices of Hale and
Dorr, counsel to the Fund, at 60 State Street, 26th floor, Boston, Massachusetts
02109 on Thursday, June 20, 1996 at 2:00 p.m. (Boston time) and at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders.
The attached Notice, this Proxy Statement (the "Proxy Statement") and the
enclosed proxy card are being mailed to shareholders on or after May 13, 1996.
THE FUND'S ANNUAL REPORT FOR ITS FISCAL PERIOD ENDED DECEMBER 31, 1995 MAY BE
OBTAINED FREE OF CHARGE BY WRITING TO THE FUND AT ITS EXECUTIVE OFFICES, 60
STATE STREET, BOSTON, MASSACHUSETTS 02109 OR BY CALLING 1-800-225-6292.
Shareholders of record as of the close of business on May 3, 1996 (the
"Record Date") are entitled to vote on all business of the Meeting or any
adjournments thereof. As of the Record Date, 7,332,922 shares of Common Stock of
the Fund were outstanding. To the knowledge of the management of the Fund, no
person beneficially owned more than 5% of the outstanding shares of the Fund as
of April 30, 1996, except that Cede and Co., Box 20, Bowling Green Station, New
York, NY 10004-0001, held 4,017,133 (55%) shares of Common Stock as nominee.
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PROPOSAL 1.
ELECTION OF BOARD OF DIRECTORS
The persons named on the accompanying proxy card intend to vote at the
Meeting (unless otherwise directed) FOR the election of the eight (8) nominees
named below as Directors of the Fund. All of the nominees currently serve as
Directors.
Each Director will be elected to hold office until the next meeting of
shareholders or until his or her successor is elected and qualified. Each
nominee has consented to being named herein and indicated his or her willingness
to serve if elected. In addition, if Proposal 2 regarding the reorganization of
the Fund as a Delaware business trust is approved by shareholders, the election
of Directors of the Fund shall also be deemed to constitute election as Trustees
of the Successor Fund (as defined in Proposal 2). If any such nominee should be
unable to serve, an event not now anticipated, the persons named as proxies may
vote for such other person as shall be designated by the Board of Directors.
The following table sets forth each nominee's position(s) with the Fund,
age, address, principal occupation or employment during the past five years and
directorships, and indicates the date on which he or she first became a Director
of the Fund. The table also shows the number of shares of Common Stock of the
Fund beneficially owned by each nominee, directly or indirectly, on May 10,
1996.
<TABLE>
<CAPTION>
SHARES OF THE COMMON
STOCK OF THE FUND
BENEFICIALLY OWNED AND
NAME, AGE, PRINCIPAL OCCUPATION FIRST PERCENTAGE OF TOTAL
POSITION(S) WITH THE OR EMPLOYMENT BECAME A SHARES OUTSTANDING ON
FUND AND ADDRESS AND DIRECTORSHIPS(1) DIRECTOR MAY 10, 1996(2)
<S> <C> <C> <C>
JOHN F. COGAN, JR., 69* President, Chief Executive Officer and a 1993 1,000
Chairman of the Board, Director of The Pioneer Group, Inc., a (0.0)%
President and Director public company ("PGI"); Chairman and a
60 State Street Director of Pioneering Management
Boston, MA 02109 Corporation ("PMC"), Pioneer Funds
Distributor, Inc. ("PFD"), Pioneer
Goldfields Limited ("PGL") and Teberebie
Goldfields Limited; Director of Pioneering
Services Corporation ("PSC"), Pioneer Capital
Corporation ("PCC") and Forest- Starma (a
Russian timber joint venture); President and
Director of Pioneer Plans Corporation
("PPC"), Pioneer Investment Corporation
("PIC"), Pioneer Metals and Technology, Inc.
("PMT"), Pioneer First Russia, Inc., Pioneer
Omega, Inc. and Pioneer International
Corporation ("P.Intl."); 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, S.A. ("PFPT")
and Pioneer Czech Investment Company, A.S.;
and Partner, Hale and Dorr (Counsel to the
Fund)
</TABLE>
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<TABLE>
<CAPTION>
SHARES OF THE COMMON
STOCK OF THE FUND
BENEFICIALLY OWNED AND
NAME, AGE, PRINCIPAL OCCUPATION FIRST PERCENTAGE OF TOTAL
POSITION(S) WITH THE OR EMPLOYMENT BECAME A SHARES OUTSTANDING ON
FUND AND ADDRESS AND DIRECTORSHIPS(1) DIRECTOR MAY 10, 1996(2)
<S> <C> <C> <C>
RICHARD H. EGDAHL, M.D., 69 Professor of Management, Boston University 1993 -0-
Director School of Management; Professor of Public
Boston University Health, Boston University School of Public
Health Policy Institute Health; Professor of Surgery, Boston
53 Bay State Road University School of Medicine; Director,
Boston, MA 02115 Boston University Health Policy Institute
and 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., an investment adviser, Health
Payment Review, Inc., a health care
containment software firm, Mediplex Group,
Inc., a nursing care facilities firm, Peer
Review Analysis, Inc., a health care
utilization management firm, and Springer-
Verlag New York, Inc., a publisher; and
Honorary Director, Franciscan Children's
Hospital
MARGARET B.W. GRAHAM, 48 Founding Director, Winthrop Group, Inc., 1993 -0-
Director a consulting firm, since 1982; Manager
The Keep of Research Operations, Xerox Palo Alto
P.O. Box 110 Research Center, between 1991 and 1994;
Little Deer Isle, Professor of Operations Management and
ME 04650 Management of Technology, Boston University
School of Management, between 1989 and 1993
JOHN W. KENDRICK, 78 Professor Emeritus of Economics, George 1993 300
Director Washington University; and Economic (0.0)%
6363 Waterway Dr. Consultant and Director, American
Falls Church, VA 22044 Productivity and Quality Center
MARGUERITE A. PIRET, 47 President, Newbury, Piret & Company, Inc., 1993 100
Director a merchant banking firm (0.0)%
One Boston Place
Suite 2635
Boston, MA 02108
</TABLE>
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<TABLE>
<CAPTION>
SHARES OF THE COMMON
STOCK OF THE FUND
BENEFICIALLY OWNED AND
NAME, AGE, PRINCIPAL OCCUPATION FIRST PERCENTAGE OF TOTAL
POSITION(S) WITH THE OR EMPLOYMENT BECAME A SHARES OUTSTANDING ON
FUND AND ADDRESS AND DIRECTORSHIPS(1) DIRECTOR MAY 10, 1996(2)
<S> <C> <C> <C>
DAVID D. TRIPPLE, 52* Director and Executive Vice President of 1993 100
Executive Vice President PGI; President, Chief Investment Officer (0.0)%
and Director and a Director of PMC; Director of PFD,
60 State Street PCC, Pioneer SBIC Corporation, Pioneer
Boston, MA 02109 First Russia, Inc., Pioneer Omega, Inc.,
P. Intl. and PIC; and Member of the
Supervisory Board of PFPT
STEPHEN K. WEST, 67 Partner, Sullivan & Cromwell, a law firm 1993 300
Director (0.0)%
125 Broad Street
New York, NY 10004
JOHN WINTHROP, 59 President, John Winthrop & Co., a private 1993 101
Director investment firm; Director of NUI Corp.; (0.0)%
One North Adgers Wharf and Trustee of Alliance Capital Reserve,
Charleston, SC 29401 Alliance Government Reserve and Alliance
Tax Exempt Reserve
* Messrs. Cogan and Tripple are "interested persons" of the Fund and PMC
within the meaning of Section 2(a)(19) of the Investment Company Act of
1940, as amended (the "1940 Act").
(1) Each nominee also serves as a trustee for each of the 21 open-end investment
companies (mutual funds) in the Pioneer Family of Mutual Funds and for each
of the eight portfolios of the Pioneer Variable Contracts Trust (except
Messrs. Kendrick and Winthrop and Ms. Graham who do not serve as Trustees
for Pioneer Variable Contracts Trust). Each Director was elected by the
shareholders of the Fund in 1995.
(2) As of April 30, 1996, the Directors and officers of the Fund beneficially
owned, directly or indirectly, in the aggregate less than 1% of the Fund's
outstanding shares.
</TABLE>
Ms. Piret, Mr. West and Mr. Winthrop serve on the Audit Committee of the
Board of Directors. The functions of the Audit Committee include recommending
independent auditors to the Directors, monitoring the independent auditors'
performance, reviewing the results of audits and responding to certain other
matters deemed appropriate by the Directors. Ms. Graham, Ms. Piret and Mr.
Winthrop also serve on the Nominating Committee of the Board of Directors. The
primary responsibility of the Nominating Committee is the selection and
nomination of candidates to serve as independent directors. The Nominating
Committee will also consider nominees recommended by shareholders to serve as
Directors provided that shareholders submitting such recommendations comply with
all relevant provisions of Rule 14a-8 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
During the fiscal year ended December 31, 1995, the Board of Directors held
twelve meetings, the Audit Committee held eight meetings and the Nominating
Committee did not meet. All of the current Directors and Committee Members then
serving attended at least 75% of the meetings of the Board of Directors or
applicable committee, if any, held during the fiscal year ended December 31,
1995.
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OTHER EXECUTIVE OFFICERS
In addition to Messrs. Cogan and Tripple, who serve as executive officers of
the Fund, the following table provides information with respect to the other
executive officers of the Fund. Each executive officer is elected by the Board
of Directors and serves until his successor is chosen and qualified or until his
resignation or removal by the Board. The business address of all officers of the
Fund is 60 State Street, Boston, Massachusetts 02109.
<TABLE>
<CAPTION>
NAME, AGE AND
POSITION WITH THE FUND PRINCIPAL OCCUPATION(S)
<S> <C>
WILLIAM H. KEOUGH, 59, Senior Vice President, Chief Financial
Treasurer Officer and Treasurer of PGI and Treasurer
of PFD, PMC, PSC, PPC, Pioneer SBIC
Corporation, PIC, PMT, P. Intl. and each
fund in the Pioneer Family of Mutual Funds.
JOSEPH P. BARRI, 49, Secretary of PGI, PMC and PCC and each fund
Secretary in the Pioneer Family of Mutual Funds;
Clerk of PFD and PSC and Partner, Hale
and Dorr (counsel to the Fund).
</TABLE>
REMUNERATION OF DIRECTORS AND OFFICERS
The following table provides information regarding the compensation paid by
the Fund and the other investment companies in the Pioneer Family of Mutual
Funds to the Directors for their services as indicated below. Compensation paid
by the Fund to Messrs. Cogan and Tripple, interested persons of PMC, is
reimbursed to the Fund by PMC. The Fund pays no salary or other compensation to
its officers.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
FROM THE FUND
AGGREGATE AND OTHER FUNDS IN
COMPENSATION THE PIONEER FAMILY
DIRECTOR FROM THE FUND+ OF MUTUAL FUNDS++
<S> <C> <C>
John F. Cogan, Jr. $500* $11,000*
Richard H. Egdahl, M.D. 3,614 63,315
Margaret B.W. Graham 3,614 62,398
John W. Kendrick 3,614 62,398
Marguerite A. Piret 3,917 76,704
David D. Tripple 500* 11,000*
Stephen K. West 3,590 68,180
John Winthrop 3,825 71,199
Totals $23,174 $426,194
* PMC fully reimbursed the Fund and the other funds in the Pioneer Family of
Mutual Funds for compensation paid to Messrs. Cogan and Tripple.
+ For the fiscal year ended December 31, 1995.
++ For the calendar year ended December 31, 1995.
</TABLE>
<PAGE>
6
<PAGE>
INVESTMENT ADVISER
PMC, whose executive offices are located at 60 State Street, Boston,
Massachusetts 02109, serves as investment adviser to the Fund.
PMC is a wholly owned subsidiary of PGI. As of April 30, 1996, Mr. Cogan
beneficially owned 3,588,741 shares (14.20%) of the outstanding Common Stock of
PGI. Mr. Cogan's beneficial holdings included 696,386 shares held in trusts with
respect to which Mr. Cogan may be deemed to be a beneficial owner by reason of
his interest as a beneficiary and/or position as a trustee and shares which Mr.
Cogan has the right to acquire under outstanding options within sixty days of
April 30, 1996. At such date, Robert L. Butler and David D. Tripple, PMC's other
directors, each owned beneficially less than 2% of the outstanding Common Stock
of PGI. As of April 30, 1996, officers and directors of PMC and Directors and
officers of the Fund beneficially owned an aggregate of 4,432,581 shares of
Common Stock of PGI, approximately 17.56% of the outstanding Common Stock of
PGI. During PGI's fiscal year ended March 31, 1996, there were no transactions
in PGI Common Stock by any officer, Director or nominee for election as Director
of the Fund, PMC and/or PFD in an amount equal to or exceeding 1% of the
outstanding Common Stock of PGI.
REQUIRED VOTE
In accordance with the Fund's Articles of Incorporation, the vote of a
plurality of all of the shares of the Fund voted at the Meeting is sufficient to
elect the nominees.
PROPOSAL 2.
APPROVAL OF AN AGREEMENT AND PLAN PROVIDING FOR THE
REORGANIZATION OF THE FUND FROM A NEBRASKA CORPORATION
TO A SERIES OF A DELAWARE BUSINESS TRUST
GENERAL
At a meeting of the Board of Directors of the Fund held on March 5, 1996,
the Directors that were present at the meeting unanimously approved, subject to
the approval of shareholders of the Fund, an Agreement and Plan of
Reorganization (the "Plan of Reorganization") in the form attached to this Proxy
Statement as Exhibit A. The Plan of Reorganization provides for the
reorganization (the "Reorganization") of the Fund from a Nebraska corporation to
a series of a Delaware business trust.
The Reorganization will entail creating a Delaware business trust (the
"Delaware Trust" or the "Successor Fund"). Following the Reorganization, the
Successor Fund will carry on the business of the Fund. The Successor Fund will
have investment objectives, policies and restrictions that are identical to the
investment objectives, policies and restrictions applicable to the Fund. The
shares of the Successor Fund,
7
<PAGE>
like those of the Fund, will be listed on the New York Stock Exchange (the
"Exchange"). The Successor Fund will also enter into an Investment Management
Contract and other service agreements which provide the same services on the
same terms as the agreements currently applicable to the Fund. Shareholders
should be aware that there may be deemed to occur a momentary inconsistency with
certain of the Fund's policies and restrictions (such as restrictions on
investments in any one issuer and investments in other investment companies)
during the Reorganization. The principal differences between a Delaware business
trust and a Nebraska corporation as forms of organization are discussed below
under the caption "Comparison of Nebraska Corporations and Delaware Business
Trusts."
Approval of the Reorganization also constitutes approval of the dissolution
of the Fund in accordance with Nebraska law.
Following the Reorganization, PMC, the Fund's investment adviser, will serve
as investment adviser for the Successor Fund under an Investment Management
Contract substantially identical to the Fund's existing Investment Management
Contract.
REASONS FOR THE PROPOSED REORGANIZATION
The Fund is organized as a Nebraska corporation. The Directors of the Fund
that were present at their March 5, 1996 meeting unanimously voted to recommend
reorganization of the Fund into a Delaware business trust which will succeed to
the business of the Fund. The Directors have determined that a Delaware business
trust affords advantages to the operations of the Fund greater than those
currently available under Nebraska law. See "Comparison of Nebraska Corporations
and Delaware Business Trusts."
In making their determination in favor of reorganizing the Fund, the
Directors considered the fact that, as discussed under "Comparison of Nebraska
Corporations and Delaware Business Trusts," certain actions by Delaware business
trusts either do not require shareholder approval when such approval would be
required under Nebraska law or require approval by a lower percentage of the
outstanding shares of the Fund than is required by Nebraska law. For example, if
the Successor Fund were to enter into a transaction identical to the
Reorganization, such transaction could, under certain circumstances, be
accomplished by the Board of Directors without the need for shareholder approval
and would, in any event, require the approval of only a majority of the
Successor Fund's shareholders compared to two-thirds of the outstanding shares
of the Fund.
The Directors also considered the fact that a Delaware business trust offers
greater operational flexibility than a Nebraska corporation. See "Comparison of
Nebraska Corporations and Delaware Business Trusts." For example, the Fund's
Articles of Incorporation currently permit the Fund to issue only a single
series of its Common Stock representing interests in a single portfolio of
securities. Under the
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Delaware Trust's Declaration of Trust, the Delaware Trust would be authorized to
offer different classes of its shares and series thereof, including various
types of preferred shares. At times, a closed-end investment company may desire
to issue such preferred shares to attempt to increase its rate of return to
common shareholders. This would occur if the proceeds from any preferred share
offering are invested in investments that pay a higher return than the sum of
the dividend rate of the preferred shares and the expenses associated with such
shares. While the Delaware Trust has no current plans to offer any class or
series of its shares other than the shares corresponding to those of the Fund,
it may do so in the future.
The Directors believe that the Delaware business trust form of organization
will enable the Successor Fund to adopt new methods of operation and employ new
technologies that are expected to reduce costs of operation when, and if,
implemented. For example, Delaware law authorizes electronic or telephonic
communications between shareholders and the Delaware business trust. The
Directors hope to take advantage of this provision to improve shareholder voting
procedures and reduce associated costs.
BOARD OF DIRECTORS' RECOMMENDATION
After considering the matters discussed above and other matters deemed to be
relevant, the Directors determined that the Reorganization (i) is in the best
interest of the Fund and (ii) will not result in dilution of the interests of
the shareholders of the Fund. The Directors present at their March 5, 1996
meeting unanimously voted to recommend to the shareholders of the Fund that they
approve the Reorganization.
Approval of the Plan of Reorganization requires the affirmative vote of
two-thirds of the outstanding shares of the Fund's Common Stock.
THE DIRECTORS RECOMMEND THAT SHAREHOLDERS OF THE FUND APPROVE THE PLAN OF
REORGANIZATION PROVIDING FOR THE REORGANIZATION OF THE FUND FROM A NEBRASKA
CORPORATION TO A SERIES OF A DELAWARE BUSINESS TRUST.
SUMMARY OF THE PLAN OF REORGANIZATION
The following discussion summarizes certain terms of the Plan of
Reorganization. The summary of the Plan of Reorganization is qualified in its
entirety by the provisions of the form of Plan of Reorganization, which is
attached to this Proxy Statement as Exhibit A.
In order to accomplish the Reorganization, the Delaware Trust will be formed
pursuant to a Declaration of Trust. On the closing date of the Reorganization
(the "Closing Date"), the Fund will transfer all of its assets to the Successor
Fund in exchange for the assumption by the Successor Fund of all the liabilities
of the Fund
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and the issuance to the Fund of shares of beneficial interest of the Successor
Fund ("Successor Fund shares") equal to the value (as determined by using the
procedures set forth in the Fund's current prospectus) on the date of the
exchange of the Fund's net assets. The Fund, as a sole shareholder of the
Successor Fund, will vote on certain matters discussed below. Immediately
thereafter, the Fund will liquidate and distribute Successor Fund shares to each
shareholder pro rata in proportion to such shareholder's beneficial interest in
the Fund in exchange for his or her shares of the Fund. After this distribution
of Successor Fund shares, the Fund will, as soon as practicable thereafter, be
dissolved in accordance with Nebraska law. A confirmation will be mailed to each
shareholder informing him or her of the number of Successor Fund shares
registered to such shareholder's account. Certificates evidencing full or
fractional Successor Fund shares will not be issued. Upon completion of the
Reorganization, each shareholder will be the owner of full and fractional
Successor Fund shares equal in number and aggregate net asset value to his or
her shares of the Fund as of the date of the exchange.
As described above, the Plan of Reorganization authorizes the Fund, as the
then sole shareholder of the Delaware Trust (i) to elect as Trustees of the
Delaware Trust the persons who currently serve as Directors of the Fund; (ii) to
ratify the selection of the independent accountants; and (iii) to approve an
Investment Management Contract for the Successor Fund. With respect to items (i)
and (ii) the Fund will vote in accordance with shareholder voting at the Meeting
on Proposals 1 and 3 of this Proxy Statement.
The newly elected Trustees will hold office without limit in time except
that (i) any Trustee may resign; (ii) any Trustee may be removed by written
instrument signed by at least a majority of the number of Trustees prior to
removal; and (iii) a Trustee may be removed at any special meeting of the
shareholders by a vote of two-thirds of the outstanding shares of the Delaware
Trust. In case a vacancy shall for any reason exist, the remaining Trustees will
fill such vacancy by appointing another Trustee so long as, immediately after
such appointment, at least two-thirds of the Trustees have been elected by
shareholders.
Assuming the Plan of Reorganization is approved, it is currently
contemplated that the Reorganization will become effective on July 1, 1996.
If, at any time prior to the closing of the Reorganization, the Directors
determine that it would not be in the best interest of the Fund or the
shareholders to proceed with the Reorganization, the Reorganization will not go
forward, notwithstanding the approval of the Reorganization by the shareholders
at the Meeting. The obligations of the Delaware Trust and the Fund under the
Plan of Reorganization are subject to various conditions as stated therein. In
order to provide against unforeseen events, the Plan of Reorganization may be
terminated or amended at any time prior to Reorganization by action of the
Directors of the Fund or the Trustees of the Delaware Trust, if (i) there is a
material breach by the other party of any representation, warranty or agreement
contained in the Plan of Reorganization or (ii) it reasonably appears that a
party cannot meet a condition of the Plan of Reorganization. The Fund
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<PAGE>
and the Delaware Trust may at any time waive compliance with any of the
covenants and conditions contained in, or may amend, the Plan of Reorganization;
provided that such waiver or amendment does not materially adversely affect the
interests of shareholders of the Fund.
CONTINUATION OF SHAREHOLDER ACCOUNTS AND SERVICES
The Delaware Trust's transfer agent, Pioneering Services Corporation, will
establish accounts for all shareholders of the Fund containing the appropriate
number of Successor Fund shares to be received by that shareholder under the
Plan of Reorganization. Such accounts will be identical in all material respects
to the accounts currently maintained by the Fund for each shareholder.
NEW YORK STOCK EXCHANGE LISTING
Under the Plan of Reorganization, the Delaware Trust will apply for listing
of the Successor Fund's shares on the Exchange. It is a condition to the
consummation of the Reorganization that such application for listing be accepted
by the Exchange. There is no reason to believe that the application for listing
will not be accepted. However, the timing of approval of listing could
nevertheless delay the closing of the Reorganization beyond the currently
expected date. In the unlikely event that the Reorganization is not consummated
because the listing of Successor Fund shares is not approved, the Fund will
continue its current operations uninterrupted.
APPRAISAL RIGHTS
Under Nebraska law, shareholders of a corporation engaging in a transaction
such as the Reorganization are entitled to appraisal rights pursuant to which a
dissenting shareholder can receive the court determined fair value for his
shares rather than the consideration to be given in the Reorganization. The Fund
determines its net asset value daily, which it believes reflects the fair value
of its assets, and is not permitted under the 1940 Act to enter into
transactions for its shares except at a price based upon its net asset value.
The staff of the Securities and Exchange Commission (the "SEC") has taken the
position that in a transaction such as the Reorganization state appraisal rights
are inconsistent with Rule 22c-1 under the 1940 Act and, therefore, are
preempted by federal law and not available to the Fund's shareholders.
Consequently, dissenting Fund shareholders will not have appraisal rights in
connection with the Reorganization.
EXPENSES OF THE REORGANIZATION
The Fund will bear its expenses associated with the transactions
contemplated by the Plan of Reorganization. In the event that the Reorganization
is successfully completed, such expenses will be assumed by the Successor Fund.
It is presently estimated that the expenses of the Reorganization will be
approximately $10,000.
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TAX CONSEQUENCES OF THE REORGANIZATION
It is a condition to the consummation of the Reorganization that the Fund
and the Delaware Trust receive on or before the Closing Date an opinion from
counsel, Hale and Dorr, substantially to the effect that, among other things,
for federal income tax purposes the transactions contemplated by the Plan of
Reorganization will constitute a reorganization and that no gain or loss will be
recognized for federal income tax purposes by the Fund or the shareholders of
the Fund upon (1) the transfer of all of the Fund's assets to the Successor Fund
in exchange solely for Successor Fund shares and the assumption by the Successor
Fund of the Fund's liabilities or (2) the distribution by the Fund of the
Successor Fund shares, in liquidation of the Fund, to the shareholders in
exchange for their shares of the Fund. The opinion will further state, among
other things, that (i) the federal tax basis of the Successor Fund shares to be
received by shareholders of the Fund will be the same as the federal tax basis
of the shares of the Fund surrendered in exchange therefor and (ii) each
shareholder's federal tax holding period for his or her Successor Fund shares
will include such shareholder's holding period for the shares of the Fund
surrendered in exchange therefor, provided that such shares of the Fund were
held as capital assets on the date of the exchange.
DESCRIPTION OF CERTAIN PROVISIONS OF THE DECLARATION OF TRUST
The following is a summary of certain provisions of the Delaware Trust's
Declaration of Trust.
Classes and Series. As discussed above, the Declaration of Trust would
permit the Delaware Trust to issue additional classes of its shares and series
thereof with different dividend, liquidation and certain other rights. As also
discussed above, preferred shares are at times issued by closed-end investment
companies for the purpose of attempting to increase the return on common shares.
This may be accomplished if the proceeds from a preferred shares offering are
invested in instruments which pay a higher return than the dividends that must
be paid to preferred shareholders plus the expenses associated with preferred
shares. The use of preferred shares in this manner constitutes investment
"leverage" and involves certain risks, including the risk that preferred share
dividend requirements and expenses will exceed the return of the invested
proceeds from a preferred shares offering thereby lowering the return on common
shares. In addition, preferred shares typically have liquidation rights that
would entitle preferred shareholders to have their investment paid back in full
before any payments are made to common shareholders in the event of bankruptcy,
insolvency or similar occurrence. Preferred shareholders typically also have
certain preferential voting rights, including the ability to elect a certain
percentage of Trustees apart from common shareholders. The Successor Fund has no
current intention in the current fiscal year to issue any class or series of
shares other than the shares corresponding to those of the Fund.
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Limitations on Derivative Actions. In addition to the requirements under
Delaware law, the Declaration of Trust provides that a shareholder of the
Delaware Trust may bring a derivative action on behalf of the Delaware Trust
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 Delaware Trust, or 10% of the outstanding shares of
the class or series of 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
Delaware Trust for the expense of any such advisers in the event that the
Trustees determine not to bring such action.
Shareholder Meetings and Voting Rights. The Delaware Trust is not required
by the Declaration of Trust to hold annual meetings of shareholders but intends
to continue to do so as a condition to the listing of the Successor Fund's
shares on the Exchange. Each share of the Delaware Trust shall be entitled to
one vote on all matters presented to shareholders including the election of
Trustees. Unlike the Fund, shareholders of the Delaware Trust do not have
cumulative voting rights in connection with the election of Trustees. Meetings
of shareholders of the Delaware Trust, or any class or series thereof, may be
called by the Trustees, certain officers or upon the written request of holders
of 10% or more of the shares entitled to vote at such meeting. The shareholders
of the Delaware Trust shall only have the right to vote with respect to the
limited number of matters specified in the Declaration of Trust and such other
matters as the Trustees shall determine or shall be required by law.
Indemnification. The Declaration of Trust provides for indemnification of
Trustees, officers and agents of the Delaware Trust provided that no such
indemnification shall be provided to any person who is adjudicated (i) to be
liable by reason of willful misfeasance, bad faith, gross negligence and
reckless disregard of the duties involved in the conduct of such person's office
or (ii) not to have acted in good faith in the reasonable belief that such
person's actions were in the best interest of the Delaware Trust.
The Declaration of Trust provides that if any shareholder or former
shareholder shall be held personally liable solely by reason of his being or
having been a shareholder and not because of his acts or omissions or for some
other reason, the shareholder or former shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of any entity, its
general successor) shall be entitled out of the assets belonging to the Delaware
Trust to be held harmless from and indemnified against all loss and expense
arising from such liability. The Delaware Trust shall, upon request by such
shareholder, assume the defense of any claim made against such shareholder for
any act or obligation of the Delaware Trust and satisfy any judgment thereon
from the assets of the Delaware Trust.
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Termination. The Declaration of Trust would permit termination of the
Delaware Trust or of any class or series of the Delaware Trust (i) by a majority
of the shareholders at a meeting of shareholders of the Delaware Trust, class or
series; (ii) by a majority of the Trustees if the Trustees determine that such
action is in the best interest of the Trust or its shareholders. The factors and
events that the Trustees may take into account in making such determination
include (i) the inability of the Delaware Trust, class or series to maintain its
assets at an appropriate size; (ii) changes in laws or regulations governing it
or affecting assets of the type in which it invests; or (iii) economic
developments or trends having a significant adverse impact on its business or
operations. Dissolution of the Fund requires the approval of two-thirds of the
outstanding shares of Common Stock of the Fund.
Merger, Consolidation, Sale of Assets, Etc. The Declaration of Trust would
specifically permit the Delaware Trust to merge or consolidate with any other
entity so long as the surviving entity is either the Delaware Trust or another
investment company. The Delaware Trust may also sell, lease or exchange all or
substantially all of the property belonging to the Delaware Trust upon the
approval of a majority of the outstanding shares, either at a meeting of
shareholders or by written consent. A merger, consolidation or sale of assets of
the Fund requires the approval of two-thirds of the outstanding shares of Common
Stock of the Fund.
Conversion. The Declaration of Trust would permit the Trustees, subject to
approval by holders of a majority of the Delaware Trust's outstanding shares, to
convert the Delaware Trust into an open-end investment company and to adopt
corresponding amendments to the Declaration of Trust. Open-end investment
companies, unlike closed-end companies, make a continuous offering of their
shares. The shares of open-end companies do not trade on an exchange and rarely
have an active secondary market. Instead, shares are purchased directly from the
company and often through a distribution network at a price based on their net
asset value (often including a sales charge). Shares are sold by redemption with
the company at net asset value (less any deferred sales charge if applicable).
The Delaware Trust has no current intention in the current fiscal year of
proposing to shareholders that they approve the conversion of the Delaware Trust
into an open-end fund. Conversion of the Fund from a closed-end investment
company to an open-end investment company requires the approval of two-thirds of
the outstanding shares of Common Stock of the Fund.
Amendments. The Declaration of Trust would permit the Trustees to amend the
Declaration of Trust without a shareholder vote; provided that shareholders of
the Delaware Trust shall have the right to vote on any amendment (i) that would
affect the voting rights of shareholders, (ii) with respect to which shareholder
approval is required by law; (iii) that would amend this provision of the
Declaration of Trust; (iv) to be made in connection with the conversion of the
Delaware Trust from a closed-end investment company to an open-end investment
company and (v) with respect to any other matter that the Trustees determine to
submit to shareholders.
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COMPARISON OF NEBRASKA CORPORATIONS AND DELAWARE BUSINESS TRUSTS
There are numerous differences between a corporation organized under the
laws of the State of Nebraska and a business trust organized under the laws of
the State of Delaware. In general, a Delaware business trust provides the board
of trustees with greater flexibility in managing the affairs of a fund than is
possessed by the board of directors of a Nebraska corporation. Delaware law
permits a Delaware business trust's governing instrument to give trustees broad
power to adapt the trust entity to changed circumstances without shareholder
approval. The governing instrument may grant trustees the power to (i) amend the
business trust's governing instrument to create a class, group or series of
beneficial interests that was not previously outstanding (or for any other
purpose), (ii) appoint trustees, (iii) merge or consolidate the business trust
with another entity, (iv) dissolve the business trust or (v) sell, lease,
exchange, transfer, pledge or otherwise dispose of all or any part of the
business trust's assets. While such actions may also be approved by the
directors of a Nebraska corporation, the trustees' actions are either not
subject to shareholder approval or are subject to approval by a lower percentage
of the outstanding shares of the fund. In addition, the governing instrument may
(i) provide for classes, groups or series of trustees or shareholders, or
classes, groups or series of beneficial interests, having such relative rights,
powers and duties as the governing instrument may provide, (ii) provide for the
establishment of designated series of trustees, shareholders or beneficial
interests having separate rights, powers or duties with respect to specified
property or obligations, (iii) grant or withhold voting rights to or from all or
certain trustees or shareholders on any matter, (iv) establish requirements
relating to shareholder meetings or any other meetings, including notice, quorum
and other requirements and (v) provide for the creation of one or more business
trusts and the conversion of beneficial interests in an existing business trust
or series thereof into beneficial interests in a separate business trust or
series thereof.
The Fund's structure as an investment company with only a single class of
securities is illustrative of the operational differences between the Fund and a
Delaware business trust. The Fund's Articles of Incorporation currently permit
the Fund to issue only a single series of its Common Stock representing
interests in a single portfolio of securities. Under its Declaration of Trust,
the Delaware Trust would be authorized to offer different classes or series of
its shares.
A Delaware business trust is not required to, although the Delaware Trust
still intends to as a condition to the listing of its shares on the Exchange,
hold annual meetings of shareholders and the Trustees serve for indefinite terms
and appoint new trustees to fill any vacancies, subject to the requirements of
the 1940 Act that a majority of the trustees be elected by shareholders.
Nebraska corporations are required to hold meetings and to elect directors
annually, although an investment company may amend its articles of incorporation
to elect not to be subject to such requirement. Shareholders of the Fund have
not approved such an amendment.
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Delaware business trusts also generally require the approval of a majority
of outstanding shares to approve liquidations, reorganizations, conversions of
closed- end investment companies to open-end investment companies or similar
transactions or to amend the declaration of trust. In some circumstances,
certain of these transactions can be consummated and the declaration of trust
can be amended without shareholder action. Such corporate transactions and
amendments to the articles of incorporation of a Nebraska corporation require
the approval of two-thirds of the outstanding shares. While the lower voting
requirement reduces the ability of shareholders of Delaware business trusts to
prevent certain transactions, the higher voting requirement of Nebraska law also
makes solicitations of proxies for beneficial corporate changes more difficult
and expensive. As required by the 1940 Act, shareholders of an investment
company organized as a Delaware business trust retain their right to vote on
certain matters, including (i) changes in fundamental investment policies and
limitations, (ii) ratification of the board's selection of independent public
accountants, (iii) election of trustees in the event that less than a majority
of the current trustees has been elected by shareholders and (iv) approval of
investment advisory contracts. Shareholders of an investment company organized
as a Delaware business trust also retain their right to require a shareholder
meeting upon application to the board of trustees by holders of 10% or more of
the shares affected by the matter to be considered at such meeting.
A shareholder of a Nebraska corporation may bring a derivative action on
behalf of such corporation provided that statutory requirements are met.
Delaware law grants shareholders of a Delaware business trust the right to bring
derivative actions in the Delaware Court of Chancery. However, Delaware law
provides that the business trust's governing instrument may subject this right
to standards and restrictions (in addition to those contained in Delaware law),
including the requirement that holders of a specified percentage interest in the
trust join in such an action. Therefore, it appears that a Delaware business
trust may significantly curtail, or perhaps even eliminate, the power of its
shareholders to bring derivative actions. See "Description of Certain Terms of
the Declaration of Trust -- Limitations on Derivative Actions."
Delaware law provides that a Delaware business trust's governing instrument
may set forth provisions related to voting in any manner. This provision appears
to permit trustee and shareholder voting through computer or electronic media.
For an investment company with a significant number of institutional
shareholders, all with access to computer or electronic networks, the use of
such voting methods could significantly reduce the costs of shareholder voting.
However, the advantage of such methods may not be realizable unless the SEC
modifies its proxy rules. Also, as required by the 1940 Act, votes on certain
matters by trustees would still need to be taken at actual in-person meetings.
Delaware law provides that, except to the extent otherwise provided in the
business trust's governing instrument, trustees will not be personally liable to
any person (other than the business trust or a shareholder thereof) for any act,
omission
16
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or obligation of the business trust or any trustee thereof. Delaware law also
provides that a trustee's actions under a Delaware business trust's governing
instrument will not subject him to liability to the business trust or its
shareholders if the trustee takes such action in good faith reliance on the
provisions of the business trust's governing instrument. The articles of
incorporation of a Nebraska corporation may limit the liability of a director,
who is not also an officer of the corporation, for breach of fiduciary duty
except for, among other things, any act or omission not in good faith which
involves intentional misconduct or a knowing violation of law or any transaction
from which such director derives an improper direct or indirect financial
benefit.
PROPOSAL 3.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP has served as the Fund's independent public
accountant since 1994. Audit services during the fiscal year ending December 31,
1996 will consist of examinations of the Fund's financial statements and reviews
of the Fund's filings with the SEC.
The Board of Directors, including a majority of the non-interested Directors
(as defined in the 1940 Act), has selected Arthur Andersen LLP (formerly known
as Arthur Andersen & Co.) as the Fund's independent public accountants for the
fiscal year ending December 31, 1996, subject to shareholder ratification at the
Meeting. A representative of Arthur Andersen LLP is expected to be available at
the Meeting to make a statement if he or she desires to do so and to respond to
appropriate questions. Arthur Anderson LLP has advised the Fund that it has no
direct or indirect financial interest in the Fund.
REQUIRED VOTE
The ratification of the selection of Arthur Andersen LLP as the Fund's
independent public accountants for the fiscal year ending December 31, 1996
requires the affirmative vote of a majority of the shares of Common Stock of the
Fund, present in person or by proxy at the Meeting.
THE DIRECTORS RECOMMEND THAT THE SHAREHOLDERS VOTE IN FAVOR OF THE
RATIFICATION OF ARTHUR ANDERSEN LLP AS THE FUND'S INDEPENDENT PUBLIC
ACCOUNTANTS.
OTHER MATTERS
SHAREHOLDER PROPOSALS
Shareholder proposals to be presented at the next meeting of shareholders,
whenever held, must be received at the Fund's offices, 60 State Street, Boston,
Massachusetts 02109, at a reasonable time prior to the Directors' solicitation
of proxies for such meeting and must comply with the requirements of Rule 14a-8
under the Exchange Act. The Fund currently expects to hold the next annual
shareholders' meeting on or about June 17, 1997, which date is subject to
change.
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PROXIES, QUORUM AND VOTING AT THE MEETING
Any person giving a proxy has the power to revoke it at any time prior to
its exercise by executing a superseding proxy or by submitting a notice of
revocation to the Secretary of the Fund. In addition, although mere attendance
at the Meeting will not revoke a proxy, a shareholder present at the Meeting may
withdraw his or her proxy and vote in person. All properly executed and
unrevoked proxies received in time for the Meeting will be voted in accordance
with the instructions contained in the proxies. If no instruction is given, the
persons named as proxies will vote the shares represented thereby in favor of
the Proposals described above and will use their best judgment in connection
with the transaction of such other business as may properly come before the
Meeting or any adjournment thereof.
With respect to Proposal 1 (election of directors), every shareholder voting
at the election of directors may combine such shareholder's votes and give one
candidate a number of votes equal to the number of directors (eight) to be
elected multiplied by the number of votes to which the shareholder's shares are
entitled, or distribute the shareholder's votes on the same principle among as
many candidates as the shareholder thinks fit. On all other matters, each share
has one vote.
A majority of the shares entitled to vote -- present in person or
represented by proxy -- constitutes a quorum for the transaction of business
with respect to any Proposal (unless otherwise noted in the Proxy Statement). In
the event that at the time any session of the Meeting is called to order and a
quorum is not present in person or by proxy, the persons named as proxies may
vote those proxies which have been received to adjourn such Meeting to a later
date. In the event that a quorum is present at the Meeting but sufficient votes
in favor of any Proposal, including the electing of the nominees to the Board of
Directors, have not been received, the persons named as proxies may propose one
or more adjournments of such Meeting to permit further solicitation of proxies
with respect to such Proposal. Any such adjournment will require the affirmative
vote of a majority of the shares present in person or by proxy at the session of
the Meeting to be adjourned. The persons named as proxies will vote those
proxies which they are entitled to vote in favor of any such Proposal in favor
of such adjournment and will vote those proxies required to be voted against any
such Proposal against such adjournment. A shareholder vote may be taken on one
or all of the Proposals prior to such adjournment if sufficient votes for the
Proposal's approval have been received and it is otherwise appropriate. Such
vote will be considered final regardless of whether the Meeting is adjourned to
permit additional solicitation with respect to any other Proposal.
Shares of the Fund represented at the Meeting (including shares which
abstain or do not vote with respect to one or more of the Proposals) will be
counted for purposes of determining whether a quorum is present at the Meeting.
Abstentions will be treated as shares that are present and entitled to vote for
purposes of determining the number of shares that are present and entitled to
vote with respect to any
<PAGE>
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particular Proposal, but will not be counted as a vote in favor of such
Proposal. Accordingly, an abstention from voting on a Proposal has the same
legal effect as a vote against the Proposal.
Adoption by the shareholders of Proposal 2 requires the affirmative vote of
at least two-thirds of the outstanding shares of the Fund. If a broker or
nominee holding shares in "street name" indicates on the proxy that it does not
have discretionary authority to vote as to Proposal 2, those shares will not be
considered as present and entitled to vote as to that Proposal. Accordingly,
because shares represented by a "broker non-vote" are considered outstanding
shares, a "broker non-vote" has the same legal effect as a vote against Proposal
2.
OTHER BUSINESS
While the Meeting has been called to transact any business that may properly
come before it, the only matters that the Directors intend to present are those
matters stated in the attached Notice of Annual Meeting of Shareholders.
However, if any additional matters properly come before the Meeting, and on all
matters incidental to the conduct of the Meeting, it is the intention of the
persons named in the enclosed proxy to vote the proxy in accordance with their
judgment on such matters unless instructed to the contrary.
METHODS OF SOLICITATION AND EXPENSES
The cost of preparing, assembling and mailing this proxy statement and the
attached Notice of Annual Meeting of Shareholders and the accompanying proxy
card will be borne by the Fund. In addition to soliciting proxies by mail, the
Fund may, at its expense, have one or more of its officers, representatives or
compensated third-party agents, including PMC, PSC and PFD, aid in the
solicitation of proxies by personal interview or telephone and telegraph and may
request brokerage houses and other custodians, nominees and fiduciaries to
forward proxy soliciting materials to the beneficial owners of the shares held
of record by such persons.
Persons holding shares as nominees will be reimbursed by the Fund, upon
request, for the reasonable expense of mailing soliciting materials to the
principals of the accounts.
PIONEER INTEREST SHARES, INC.
May 13, 1996
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made as of the 14th day of
June, 1996, by and between Pioneer Interest Shares, Inc., a Nebraska corporation
(the "Current Fund"), and Pioneer Interest Shares, a business trust duly formed
under the laws of the State of Delaware (the "Successor Fund").
This Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368 (a)(1) of the U.S. Internal Revenue Code of
1986, as amended (the "Code"), and is intended to effect the reorganization (a
"reorganization") of the Current Fund as the Successor Fund. The reorganization
will involve the transfer of all of the assets of the Current Fund to the
Successor Fund solely in exchange for (1) assumption by the Successor Fund of
all liabilities of the Current Fund and (2) the issuance of shares of beneficial
interest (the "Successor Shares") by the Successor Fund to the Current Fund,
followed by the pro rata distribution on the Closing Date (as defined below) of
the Successor Shares to the holders of the Common Stock of the Current Fund (the
"Current Fund Shareholders") in exchange for their shares of Common Stock of the
Current Fund in liquidation and dissolution of the Current Fund, all upon the
terms and conditions hereinafter set forth in this Agreement.
In consideration of the premises and of the covenants and agreements
hereinafter set forth the parties hereto covenant and agree as follows.
1. TRANSFER OF ASSETS OF THE CURRENT FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ISSUANCE OF SUCCESSOR SHARES OF THE SUCCESSOR FUND;
DISSOLUTION OF THE CURRENT FUND
1.1 Subject to the terms and conditions set forth herein and on the basis
of the representations and warranties contained herein, the Current Fund
agrees to transfer all of the assets of the Current Fund as set forth in
paragraph 1.2 and assign and transfer all of its liabilities to the
Successor Fund which has been organized solely for the purpose of acquiring
all of the assets and assuming all of the liabilities of the Current Fund.
The Successor Fund has not issued any Shares or commenced operations. The
Successor Fund agrees that in exchange for all of the assets of the Current
Fund (1) the Successor Fund shall assume all of the liabilities of the
Current Fund, whether contingent or otherwise, then existing, and further
(2) the Successor Fund shall deliver to the Current Fund the number of full
and fractional Successor Shares equal to the value of the assets of the
Current Fund transferred to the Successor Fund, minus the liabilities of the
Current Fund assumed by the Successor Fund (the "Net Assets"), as described
in paragraph 3.1 on the Closing Date provided for in paragraph 3.1. Such
transactions shall take place at the Closing provided for in paragraph 3.1.
1.2 The assets of the Current Fund to be acquired by the Successor Fund
shall include, without limitation, all cash, cash equivalents, securities,
receivables (including interest and dividends receivable), any claims or
rights of action or rights to register shares under applicable securities
laws, any books or
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records of the Current Fund and other property owned by the Current Fund and
any deferred or prepaid expenses shown as assets on the books of the Current
Fund on the Closing Date provided for in paragraph 3.1.
1.3 Immediately upon delivery to the Current Fund of Successor Shares,
any duly authorized officer of the Current Fund shall cause the Current
Fund, as the then sole shareholder of the Successor Fund, to (i) elect as
Trustees of the Successor Fund the persons who currently serve as Directors
of the Current Fund; (ii) ratify the selection of the independent
accountants; (iii) approve an investment advisory agreement for the
Successor Fund in the form currently approved by the shareholders of the
Current Fund; and (iv) adopt, on behalf of the Successor Fund, the
investment objectives, investment policies and investment restrictions of
the Current Fund.
1.4 As provided in paragraph 3.4, on the Closing Date the Current Fund
will distribute in liquidation the Successor Shares pro rata in proportion
to the Current Fund's shares of Common Stock ("Current Fund Shares") to
Current Fund Shareholders of record determined as of the close of business
on the Closing Date, in exchange for the Current Fund Shares. Such
distribution will be accomplished by the transfer of the Successor Shares
then credited to the account of the Current Fund on the share records of the
Successor Fund to open accounts on those records in the names of the Current
Fund Shareholders and representing the respective pro rata number of the
Successor Shares received from the Successor Fund due the Current Fund
Shareholders. The Successor Fund shall not issue certificates representing
Successor Shares in connection with such distribution. Fractional Successor
Shares shall be rounded to the third place after the decimal point.
1.5 As soon as practicable after the distribution of the Successor Shares
as set forth in Section 1.4, the Current Fund shall be dissolved and any
such further actions shall be taken in connection therewith as are required
by applicable law.
1.6 Ownership of the Successor Shares of each Successor Fund Shareholder
shall be maintained separately on the books of Pioneering Services
Corporation as the Successor Fund's shareholder services and transfer agent.
1.7 Any transfer taxes payable upon issuance of Successor Shares in a
name other than the registered holder of the Current Fund Shares on the
books of the Current Fund as of that time shall be paid by the person to
whom such Successor Shares are to be distributed as a condition of such
transfer.
2. VALUATION
2.1 The value of the Current Fund's Net Assets to be acquired by the
Successor Fund hereunder shall be the net asset value computed as of the
valuation time provided in the Current Fund's prospectus on the Closing Date
using the valuation procedures set forth in the Current Fund's current
prospectus or statement of additional information.
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2.2 The value of full and fractional Successor Shares to be issued in
exchange for the Current Fund's Net Assets shall be equal to the value of
the Net Assets of the Current Fund on the Closing Date, and the number of
such Successor Shares shall equal the number of full and fractional Current
Fund Shares.
2.3 All computations of value shall be made by Pioneering Services
Corporation as the Current Fund's and the Successor Fund's shareholder
services and transfer agent.
3. CLOSING AND CLOSING DATE
3.1 The transfer of the Current Fund's assets in exchange for the
assumption by the Successor Fund of the Current Fund's liabilities and the
issuance of Successor Shares to the Current Fund, as described above,
together with related acts necessary to consummate such acts (the
"Closing"), shall occur at the offices of Hale and Dorr at 60 State Street,
Boston, Massachusetts 02109 on July 1, 1996 ("Closing Date"), or at such
other place or date on or prior to August 1, 1996 as the parties may agree
in writing. All acts taking place at the Closing shall be deemed to take
place simultaneously as of the last daily determination of the net asset
value of any Current Fund or at such other time and/or place as the parties
may agree.
3.2 In the event that on the Closing Date (a) the New York Stock Exchange
is closed to trading or trading thereon is restricted or (b) trading or
reporting of trading on said Exchange or in any market in which portfolio
securities of the Current Fund are traded is disrupted so that accurate
appraisal of the value of the total net assets of the Current Fund is
impracticable, the Closing shall be postponed until the first business day
upon which trading shall have been fully resumed and reporting shall have
been restored.
3.3 The Current Fund shall deliver at the Closing a certificate or
separate certificates of an authorized officer stating that it has notified
the Custodian, as custodian for the Current Fund, of the Current Fund's
reorganization as the Successor Fund.
3.4 Pioneering Services Corporation as shareholder services and transfer
agent for the Current Fund, shall deliver at the Closing a certificate as to
the conversion on its books and records of the Current Fund Shareholder
account to an account as a holder of Successor Shares. The Successor Fund
shall issue and deliver to the Current Fund a confirmation evidencing the
Successor Shares to be credited on the Closing Date or provide evidence
satisfactory to the Current Fund that such Successor Shares have been
credited to the Current Fund's account on the books of the Successor Fund.
At the Closing, each party shall deliver to the other such bills of sale,
checks, assignments, stock certificates, receipts or other documents as such
other party or its counsel may reasonably request.
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3.5 Portfolio securities that are not held in book-entry form in the name
of the Custodian as record holder for the Current Fund shall be presented by
the Current Fund to the Custodian for examination no later than five
business days preceding the Closing Date. Portfolio securities which are not
held in book-entry form shall be delivered by the Current Fund to the
Custodian for the account of the Successor Fund on the Closing Date, duly
endorsed in proper form for transfer, in such condition as to constitute
good delivery thereof in accordance with the custom of brokers, and shall be
accompanied by all necessary federal and state stock transfer stamps or a
check for the appropriate purchase price thereof. Portfolio securities held
of record by the Custodian in book-entry form on behalf of the Current Fund
shall be delivered to the Successor Fund by the Custodian by recording the
transfer of beneficial ownership thereof on its records. The cash delivered
shall be in the form of currency or by the Custodian crediting the Successor
Fund's account maintained with the Custodian with immediately available
funds.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Current Fund represents and warrants as follows:
4.1.A. The Current Fund is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nebraska and
has the power to own all of its properties and assets and, subject to
approval by the shareholders of the Current Fund, to perform its
obligations under this Agreement. The Current Fund is not required to
qualify to do business in any jurisdiction in which it is not so
qualified or where failure to qualify would not subject it to any
material liability or disability. The Current Fund has all necessary
federal, state and local authorizations to own all of its properties and
assets and to carry on its business as now being conducted;
4.1.B. The Current Fund is a registered investment company classified
as a management company of the closed-end type and its registration with
the Securities and Exchange Commission (the "Commission") as an
investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"), is in full force and effect;
4.1.C. The Current Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of any
provision of its Declaration of Trust or By-laws, or any agreement,
indenture, instrument, contract, lease or other undertaking to which the
Current Fund is a party or by which the Current Fund is bound;
4.1.D. The Current Fund has no material contracts or other
commitments (other than this Agreement or agreements for the purchase of
securities entered into in the ordinary course of business and consistent
with its obligations under this Agreement) that will not be terminated
without liability to the Current Fund on or prior to the Closing Date;
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4.1.E. No material litigation or administrative proceeding or
investigation of or before any court or governmental body presently is
pending or threatened against the Current Fund or any of its properties
or assets. The Current Fund knows of no facts that might form the basis
for the institution of such proceedings and the Current Fund is not a
party to, or subject to, the provisions of any order, decree or judgment
of any court or governmental body that materially and adversely affects
its business or its ability to consummate the transactions herein
contemplated;
4.1.F. At the date hereof and at the Closing Date, all federal, state
and other tax returns and reports, including information returns and
payee statements, of the Current Fund required by law to have been filed
or furnished by such dates shall have been filed or furnished and all
federal, state and other taxes, interest and penalties shall have been
paid so far as due or provision shall have been made for the payment
thereof and no such return is currently under audit and no assessment has
been asserted with respect to any of such returns or reports;
4.1.G. The Current Fund has elected to be treated as a regulated
investment company under Subchapter M of the Code, has qualified as such
for each taxable year since its inception, and will qualify as such as of
the Closing Date;
4.1.H. The authorized capital of the Current Fund consists of Fifty
Million (50,000,000) shares of common stock. All issued and outstanding
shares of common stock of the Current Fund are, and at the Closing Date
will be, duly and validly issued and outstanding, fully paid and
nonassessable. The Current Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any of its shares
of common stock, nor is there outstanding any security convertible into
any of its shares of common stock;
4.1.I. The information to be furnished by the Current Fund for use in
applications for orders, registration statements, proxy materials and
other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete and shall
comply in all material respects with federal securities and other laws
and regulations thereunder applicable thereto;
4.1.J. All of the issued and outstanding Current Fund Shares will at
the time of the Closing be held by the persons and in the amounts as
certified in accordance with the provisions of paragraph 3.4;
4.1.K. At the Closing Date, the Current Fund will have good and
marketable title to the assets to be transferred to the Successor Fund
pursuant to paragraph 1.1, and full right, power and authority to sell,
assign, transfer and deliver such assets hereunder, and upon delivery and
in payment for such assets, the Successor Fund will acquire good and
marketable title thereto subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the Securities
Act of 1933, as amended;
A-5
<PAGE>
4.1.L. The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
action on the part of the Current Fund and this Agreement constitutes a
valid and binding obligation of the Current Fund enforceable in
accordance with its terms, subject to the approval of the Current Fund's
Shareholders; and
4.1.M. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Current
Fund of the transactions contemplated herein, except such as shall have
been obtained prior to the Closing Date.
4.2 The Successor Fund represents and warrants as follows:
4.2.A. The Successor Fund is a business trust duly organized, validly
existing and in good standing under the laws of the State of Delaware and
has the power to own all of its properties and assets and to perform its
obligations under this Agreement; the Successor Fund is not required to
qualify to do business in any jurisdiction in which it is not so
qualified or where failure to qualify would not subject it to any
material liability or disability; and the Successor Fund has all
necessary federal, state and local authorizations to own all of its
properties and assets and to carry on its business as now being
conducted.
4.2.B. The Successor Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of any
provision of the Declaration of Trust or By-laws of the Successor Fund or
any agreement, indenture, instrument, contract, lease or other
undertaking to which the Successor Fund is a party or by which the
Successor Fund is bound;
4.2.C. No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or threatened against the Successor Fund or any of its properties
or assets. The Successor Fund knows of no facts that might form the basis
for the institution of such proceedings, and the Successor Fund is not a
party to, or subject to, the provisions of any order, decree or judgment
of any court or governmental body that materially and adversely affects
its business or its ability to consummate the transactions herein
contemplated;
4.2.D. The Successor Fund will qualify as a regulated investment
company under subchapter M of the Code for the taxable year in which the
Closing occurs and intends to continue to qualify as such for each
taxable year;
4.2.E. Prior to the Closing Date, there shall be no issued and
outstanding Successor Shares or any other securities of the Successor
Fund; Successor Shares issued in connection with the transactions
contemplated herein will be duly and validly issued and outstanding and
fully paid and nonassessable;
A-6
<PAGE>
4.2.F. The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of the Successor
Fund, and this Agreement constitutes a valid and binding obligation of
the Successor Fund enforceable against the Successor Fund in accordance
with its terms;
4.2.G. On the Closing Date, the Successor Fund shall have obtained
approval of the listing on the Successor Shares on the New York Stock
Exchange (the "Exchange") on substantially the same terms and conditions
as the listing of the Current Fund Shares, as well as well as approval
for the Successor Shares to commence trading on the Exchange immediately
following the Closing;
4.2.H. The information to be furnished by the Successor Fund for use
in applications for orders, registration statements, proxy materials and
other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete and shall
comply in all material respects with Federal securities and other laws
and regulations applicable thereto; and
4.2.I. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Successor
Fund of the transactions contemplated herein, except such as shall have
been obtained prior to the Closing Date.
5. COVENANTS OF THE CURRENT FUND AND THE SUCCESSOR FUND
5.1 The Current Fund covenants that the Successor Shares are not being
acquired for the purpose of making any distribution thereof, other than in
accordance with the terms of this Agreement.
5.2 The Current Fund covenants that it will assist the Successor Fund in
obtaining such information as the Successor Fund reasonably requests
concerning the beneficial ownership of Current Fund Shares.
5.3 The Current Fund will, from time to time, as and when requested by
the Successor Fund execute and deliver, or cause to be executed and
delivered, all such assignments and other instruments, and will take or
cause to be taken such further action, as the Successor Fund may deem
necessary or desirable in order to vest in, and confirm to, the Successor
Fund, title to, and possession of, all the assets of the Current Fund to be
sold, assigned, transferred and delivered hereunder and otherwise to carry
out the intent and purpose of this Agreement.
5.4 The Successor Fund will, from time to time, as and when requested by
the Current Fund, execute and deliver or cause to be executed and delivered
all such assignments and other instruments, and will take or cause to be
taken such further action, as the Current Fund may deem necessary or
desirable in order to vest in, and confirm to, the Current Fund title to,
and possession of, the Successor Shares issued, sold, assigned, transferred
and delivered hereunder and otherwise to carry out the intent and purpose of
this Agreement.
A-7
<PAGE>
5.5 The Successor Fund shall apply for listing of the Successor Shares on
the Exchange on substantially the same terms and conditions as the listing
of the Current Fund Shares and shall use all reasonable efforts to obtain
such listing by the Closing Date.
5.6 The Successor Fund shall use all reasonable efforts to obtain the
approvals and authorizations required by the Securities Act of 1933, the
Securities Exchange Act of 1934, the 1940 Act, the rules and regulations of
the Exchange (or any successor securities exchange on which the Successor
Shares may in the future be listed) and such state securities laws as it may
deem appropriate in order to operate after the Closing Date.
5.7 Subject to the provisions of this Agreement, the Successor Fund and
the Current Fund each will take, or cause to be taken, all action and will
do or cause to be done all things reasonably necessary, proper or advisable
to consummate and make effective the transactions contemplated by this
Agreement.
5.8 As promptly as practicable, but in any event within 60 days after the
Closing Date, the Current Fund shall furnish to the Successor Fund, in such
form as is reasonably satisfactory to the Successor Fund, a statement of the
earnings and profits of the Current Fund for federal income tax purposes,
and of any capital loss carryovers and other items that will be carried over
to the Successor Fund as a result of Section 381 of the Code, and which
statement will be certified by the President or Treasurer of the Current
Fund.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CURRENT FUND
The obligations of the Current Fund to consummate the transactions
provided for herein shall be subject to the performance by the Successor
Fund of all the obligations to be performed by the Successor Fund hereunder
on or before the Closing Date and, in addition thereto, to the following
further conditions:
6.1 All representations and warranties of the Successor Fund contained in
this Agreement shall be true and correct in all material respects as of the
date hereof except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date, with the same force and effect as
if made on and as of the Closing Date; and
6.2 The Successor Fund shall have delivered on the Closing Date to the
Current Fund a certificate executed in the Successor Fund's name by its
President or Vice President, in form and substance satisfactory to the
Current Fund, dated as of the Closing Date, to the effect that the
representations and warranties of the Successor Fund made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and as to such
other matters as the Current Fund shall reasonably request.
A-8
<PAGE>
6.3 The Successor Fund shall have delivered on the Closing Date to the
Current Fund such evidence as the Current Fund deems necessary that the
Successor Shares have been approved for listing on the Exchange on
substantially the same terms and conditions as the listing of the Current
Fund Shares.
Each of the foregoing conditions precedent may be waived by the Current
Fund.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SUCCESSOR FUND
The obligations of the Successor Fund to consummate the transactions
provided for herein shall be subject to the performance by the Current Fund
of all the obligations to be performed by the Current Fund hereunder on or
before the Closing Date and, in addition thereto, to the following further
conditions:
7.1 All representations and warranties of the Current Fund contained in
this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date, with the same force
and effect as if made on and as of the Closing Date;
7.2 The Current Fund shall have delivered to the Successor Fund on the
Closing Date a statement of the Current Fund's assets and liabilities,
prepared in accordance with generally accepted accounting principles
consistently applied, together with a certificate of the Treasurer or
Assistant Treasurer of the Current Fund as to its portfolio securities and
the Current Fund's federal income tax basis and holding period for each such
portfolio security as of the Closing Date; and
7.3 The Current Fund shall have delivered to the Successor Fund on the
Closing Date a certificate executed in the Current Fund's name by its
President or Vice President, in form and substance satisfactory to the
Successor Fund, dated as of the Closing Date, to the effect that the
representations and warranties of the Current Fund made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and as to such
other matters as the Successor Fund shall reasonably request.
Each of the foregoing conditions precedent may be waived by the Successor
Fund.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CURRENT FUND AND
THE SUCCESSOR FUND
The obligations of the Current Fund and the Successor Fund are each
subject to the further conditions that on or before the Closing Date:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the Current Fund's Shareholders in
accordance with applicable law;
A-9
<PAGE>
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection
with, the transactions contemplated hereby;
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those
of the Commission and of state securities authorities) deemed necessary by
the Successor Fund or the Current Fund to permit consummation, in all
material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order or permit
would not involve a risk of a material adverse effect on the assets or
properties of the Successor Fund or the Current Fund, provided that either
party hereto may for itself waive any of such conditions;
8.4 The President or a Vice President of the Successor Fund shall have
delivered a certificate to the Current Fund on the Closing Date certifying
that the Successor Fund has taken all necessary action so that it shall be a
registered open-end investment company under the 1940 Act; and
8.5 The Current Fund and the Successor Fund shall have received on or
before the Closing Date an opinion of Hale and Dorr satisfactory to the
Current Fund and the Successor Fund, substantially to the effect that for
federal income tax purposes:
8.5.A. The acquisition of all of the assets of the Current Fund by
the Successor Fund solely in exchange for the issuance of Successor
Shares to the Current Fund and the assumption by the Successor Fund of
all of the liabilities of the Current Fund, followed by the distribution
in liquidation by the Current Fund of such Successor Shares to the
Current Fund Shareholders in exchange for their Current Fund Shares and
the dissolution of the Current Fund, will constitute a reorganization
within the meaning of Section 368(a)(1) of the Code, and the Current Fund
and the Successor Fund will each be "a party to a reorganization" within
the meaning of Section 368(b) of the Code;
8.5.B. No gain or loss will be recognized by the Current Fund upon
(i) the transfer of all of its assets to the Successor Fund solely in
exchange for the issuance of Successor Shares to the Current Fund and the
assumption by the Successor Fund of the Current Fund's liabilities and
(ii) the distribution by the Current Fund of the Successor Shares to the
Current Fund Shareholders;
8.5.C. No gain or loss will be recognized by the Successor Fund upon
its receipt of all of the Current Fund's assets solely in exchange for
the issuance of the Successor Shares to the Current Fund and the
assumption by the Successor Fund of all of the liabilities of the Current
Fund;
8.5.D. The tax basis of the assets acquired by the Successor Fund
from the Current Fund will be, in each instance, the same as the tax
basis of those assets in the Current Fund's hands immediately before the
transfer;
A-10
<PAGE>
8.5.E. The tax holding period of the assets of the Current Fund in
the hands of the Successor Fund will include the Current Fund's tax
holding period for those assets;
8.5.F. The Current Fund's Shareholders will not recognize gain or
loss upon the exchange of all of their Current Fund Shares solely for
Successor Shares as part of the transaction;
8.5.G. The tax basis of the Successor Shares received by Current Fund
Shareholders in the transaction will be, for each shareholder, the same
as the tax basis of the Current Fund Shares surrendered in exchange
therefor; and
8.5.H. The tax holding period of the Successor Shares received by
Current Fund Shareholders will include, for each such Shareholder, the
tax holding period for the Current Fund Shares surrendered in exchange
therefor, provided that such Current Fund Shares were held as capital
assets on the date of the exchange.
The Current Fund and Successor Fund each agree to make and provide
representations with respect to the Current Fund and the Successor Fund
which are reasonably necessary to enable Hale and Dorr to deliver an opinion
substantially as set forth in this paragraph 8.5, which opinion may address
such other federal income tax consequences, if any, as Hale and Dorr
believes to be material to the transaction.
Each of the foregoing conditions precedent to the obligations of a party,
except for the receipt of the opinion of Hale and Dorr set forth in
paragraph 8.5, may be waived by that party.
9. BROKERAGE FEES AND EXPENSES
9.1 The Successor Fund and the Current Fund each represent and warrant to
the other that there are no broker's or finder's fees payable in connection
with the transactions contemplated hereby.
9.2 The Current Fund and the Successor Fund shall each be liable for its
own expenses incurred in connection with entering into and carrying out the
provisions of this Agreement whether or not the transactions contemplated
hereby are consummated; if the transactions are consummated, such expenses
of the Current Fund will be assumed by the Successor Fund as part of the
transactions.
10. ENTIRE AGREEMENT
The Successor Fund and the Current Fund agree that neither party has made
any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties. The
representations, warranties and covenants contained herein or in any
document delivered pursuant hereto or in connection herewith shall survive
the consummation of the transactions contemplated hereunder.
A-11
<PAGE>
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Successor Fund and the Current Fund. In addition, either the Successor Fund
or the Current Fund may at its option terminate this Agreement at or prior
to the Closing Date because:
11.1.A. There exists a material breach by the other party of any
representations, warranties or agreements contained herein to be
performed at or prior to the Closing Date; or
11.1.B. A condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably
appears that it will not or cannot be met.
11.2 In the event of any such termination, there shall be no liability
for damages on the part of the Successor Fund or the Current Fund, or their
respective trustees, directors or officers, to the other party or its
trustees, directors or officers.
12. AMENDMENT
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the parties; provided, however,
that following the approval of this Agreement by the Current Funds'
Shareholders, no such amendment may have the effect of changing the
provisions for determining the number of Successor Shares to be paid to the
Current Fund Shareholders under this Agreement to the detriment of the
Current Fund Shareholders without their further approval.
13. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
13.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts.
13.4 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation other than the parties
hereto and their respective successors and assigns any rights or remedies
under or by reason of this Agreement.
A-12
<PAGE>
13.5 All persons dealing with the Successor Fund must look solely to the
property of the Successor Fund for the enforcement of any claims against the
Successor Fund as neither the Trustees, officers, agents nor shareholders of
the Successor Fund assume any personal liability for obligations entered
into on behalf of the Successor Fund. No other series of the Successor Fund
hereafter established shall be responsible for any obligations assumed by
the Successor Fund on behalf of the Successor Fund under this Agreement.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
prepaid telegraph, telecopy or certified mail addressed to the Current Fund
or the Successor Fund, each at 60 State Street, Boston, Massachusetts 02109,
Attention: Secretary.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officer.
PIONEER INTEREST SHARES, INC.
By:
-------------------------------------------
John F. Cogan, Jr.
President
PIONEER INTEREST SHARES
By:
-------------------------------------------
David D. Tripple
Executive Vice President
A-13
<PAGE>
PROXY PROXY
PIONEER INTEREST SHARES, INC.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
To be held June 20, 1996
The undersigned, having received notice of the meeting and management's
proxy statement therefor, and revoking all prior proxies, hereby appoint(s) John
F. Cogan, Jr., David D. Tripple, Robert P. Nault and Joseph P. Barri, and each
of them, attorneys or attorney of the undersigned (with full power of
substitution in them and each of them) for and in the name(s) of the undersigned
to attend the Annual Meeting of Shareholders of Pioneer Interest Shares, Inc.
(the "Fund") to be held on Thursday, June 20, 1996 at 2:00 p.m. (Boston time) at
the offices of Hale and Dorr, counsel to the Fund, 60 State Street, 26th Floor,
Boston, Massachusetts 02109 (the "Meeting"), and any adjourned session or
sessions thereof, and there to vote and act upon the following matters (as more
fully described in the accompanying Proxy Statement) in respect of all shares of
the Fund which the undersigned will be entitled to vote or act upon, with all
the powers the undersigned would possess if personally present:
(1) To elect Directors:
The nominees for Directors are: J.F. Cogan, Jr., Dr. R.H. Egdahl,
M.B.W. Graham, J.W. Kendrick, M.A. Piret, D.D. Tripple, S.K. West
and J. Winthrop.
/ / FOR electing all the nominees
(EXCEPT AS MARKED TO THE CONTRARY ABOVE)
TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE OF THE NOMINEES,
CIRCLE THOSE NOMINEES' NAMES ABOVE.
/ / WITHHOLD authority to vote for all nominees
(2) To approve an Agreement and Plan of Reorganization pursuant to
which the Fund will be reorganized as a Delaware business trust:
FOR |_| AGAINST |_| ABSTAIN |_|
(3) To ratify the selection of Arthur Andersen LLP as the Fund's
independent public accountants for the fiscal year ending
December 31, 1996:
FOR |_| AGAINST |_| ABSTAIN |_|
<PAGE>
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
PROPOSALS.
DATED: ......................, 1996
...................................
...................................
Signature(s)
In signing, please write name(s)
exactly as appearing hereon. When
signing as attorney, executor,
administrator or other fiduciary,
please give your full title as
such. Joint owners should each sign
personally.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE FUND AND
SHOULD BE RETURNED AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED
<PAGE>
Pioneer Interest Shares, Inc.
60 State Street
Boston, MA 02109-1820
May 1996
Dear Shareowner,
I am writing to let you know that the annual meeting for shareowners of Pioneer
Interest Shares, Inc., will be held June 20, 1996. As a shareowner in the Fund,
you have the opportunity to voice your opinion on a number of important
proposals.
This package contains information about the proposals, along with the proxy card
for you to use when voting by mail. Please take a moment to read the enclosed
materials and cast your vote on the proxy card.
Your prompt vote will help save the Fund money. If a majority of the Fund's
shareowners have not voted prior to the meeting, we must try to obtain their
votes with additional mailings or phone solicitation. That is a costly process.
(callout in margin) VOTING YOUR SHARES BY MAIL IS QUICK AND EASY. EVERYTHING YOU
NEED IS ENCLOSED.
Each of the proposals up for approval has been reviewed by Pioneer Interest
Shares' Board of Directors, whose primary role is to protect your interests as a
shareowner. In the Directors' opinion, the proposals are fair and reasonable.
The Directors recommend that you vote FOR each proposal.
(callout in margin) THE FUND'S BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
EACH PROPOSAL.
HERE IS WHAT A FOR VOTE MEANS FOR EACH OF THE PROPOSALS BEING CONSIDERED.
PROPOSAL 1:
ELECT EIGHT DIRECTORS TO THE BOARD. The Directors supervise the Fund's
activities and review contractual arrangements with companies that provide
services to the Fund. All of the nominees currently serve as Directors.
PROPOSAL 2:
ALLOW THE FUND TO BE REORGANIZED AS A DELAWARE BUSINESS TRUST. Currently, the
Fund is registered as a Nebraska corporation. Registering as a Delaware business
trust will provide the Fund with additional operating flexibility.
PROPOSAL 3:
RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS THE FUND'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1996.
Cast your vote by completing and signing the proxy card enclosed in this
package. Please mail your completed and signed proxy card as quickly as
possible, using the postage-paid envelope provided.
(callout in margin) PLEASE VOTE! YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER HOW
MANY SHARES YOU OWN.
Please feel free to call Chemical Mellon Shareholder Services, LLC at
1-800-241-6580 if you have any questions about the proposals or the process for
voting your shares. Thank you for your prompt response.
Sincerely,
John F. Cogan, Jr.
Chairman and President
0596-3245
<PAGE>
PIONEER INTEREST SHARES, INC.
60 State Street
Boston, MA 02109-1820
URGENT
PLEASE VOTE YOUR SHARES
TODAY
Dear Shareowner,
Not too long ago we sent you a proxy card and materials explaining the proposals
up for a vote at the June 20, 1996, shareowner meeting for Pioneer Interest
Shares, Inc. WE NEED YOU TO CAST YOUR VOTE!
If you have not already completed and returned the proxy card included in our
earlier package, PLEASE TAKE A MOMENT NOW TO COMPLETE THE ENCLOSED PROXY CARD
AND MAIL IT TO US IN THE POSTAGE-PAID ENVELOPE PROVIDED.
The proposals up for approval have been reviewed by Pioneer Interest Shares'
Board of Directors, whose primary role is to protect your interests as a
shareowner. In the Directors' opinion, the proposals are fair and reasonable.
The Directors recommend that you vote FOR each proposal. For your easy
reference, on the back of this page is a summary of what a FOR vote would mean
for each proposal.
PLEASE VOTE! YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER HOW MANY SHARES YOU
OWN.
Please feel free to call Chemical Mellon Shareholder Services, LLC at
1-800-241-6580 if you have any questions about the proposals or the process for
voting your shares. Thank you for your prompt response.
Sincerely,
John F. Cogan, Jr.
Chairman and President
<PAGE>
[back side of page]
HERE IS WHAT A FOR VOTE MEANS FOR EACH OF THE PROPOSALS BEING CONSIDERED.
PROPOSAL 1:
ELECT EIGHT DIRECTORS TO THE BOARD. The Directors supervise the Fund's
activities and review contractual arrangements with companies that provide
services to the Fund. All of the nominees currently serve as Directors.
PROPOSAL 2:
ALLOW THE FUND TO BE REORGANIZED AS A DELAWARE BUSINESS TRUST. Currently, the
Fund is registered as a Nebraska corporation. Registering as a Delaware business
trust will provide the Fund with additional operating flexibility.
PROPOSAL 3:
RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS THE FUND'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1996.
PLEASE VOTE! YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER HOW MANY SHARES YOU
OWN.
0596-3246
<PAGE>
PIONEER INTEREST SHARES, INC.
60 State Street
Boston, MA 02109-1820
URGENT
PLEASE VOTE YOUR
SHARES TODAY
Dear Shareowner,
TIME IS RUNNING OUT. You have not yet returned the proxy cards we sent for you
to use in voting on the proposals up for consideration at Pioneer Interest
Shares' June 20, 1996, shareowner meeting. WE NEED YOU TO CAST YOUR VOTE TODAY!
Voting now will help save money. If a majority of the Fund's shareowners have
not voted before June 20, we must delay the meeting and begin the proposal and
voting process all over again. This would be extremely costly.
If you have not already completed and returned the proxy cards included in our
earlier packages, PLEASE TAKE A MOMENT NOW TO COMPLETE THE ENCLOSED PROXY CARD
AND MAIL IT TO US TODAY IN THE POSTAGE-PAID ENVELOPE PROVIDED.
The proposals up for approval have been reviewed by Pioneer Interest Shares'
Board of Directors, whose primary role is to protect your interests as a
shareowner. In the Directors' opinion, the proposals are fair and reasonable.
The Directors recommend that you vote FOR each proposal. For your easy
reference, on the back of this page is a summary of what a FOR vote would mean
for each proposal.
VOTE TODAY! YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN.
Please feel free to call Chemical Mellon Shareholder Services, LLC at
1-800-241-6580 if you have any questions about the proposals or the process for
voting your shares. Thank you for your immediate response.
Sincerely,
John F. Cogan, Jr.
Chairman and President
<PAGE>
0596-3247
back page
Here is what a FOR vote means for each of the proposals being considered.
PROPOSAL 1:
ELECT EIGHT DIRECTORS TO THE BOARD. The Directors supervise the Fund's
activities and review contractual arrangements with companies that provide
services to the Fund. All of the nominees currently serve as Directors.
PROPOSAL 2:
ALLOW THE FUND TO BE REORGANIZED AS A DELAWARE BUSINESS TRUST. Currently, the
Fund is registered as a Nebraska corporation. Registering as a Delaware business
trust will provide the Fund with additional operating flexibility.
PROPOSAL 3:
RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS THE FUND'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1996.
PLEASE VOTE TODAY! YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER HOW MANY SHARES
YOU OWN.
