As Filed with
the Securities and Exchange Commission
on January 4, 1996
File Nos. 33-7592
811-4768
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /_X_/
Pre-Effective Amendment No. ___ /___/
Post-Effective Amendment No. 13 /_X_/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 / X /
Amendment No. 13 /_X_/
(Check appropriate box or boxes)
PIONEER INTERMEDIATE TAX-FREE FUND
(Exact name of registrant as specified in charter)
60 State Street, Boston, Massachusetts
02109
(Address of principal executive office)
Zip Code
Registrant's Telephone Number, including Area Code: (617) 742-7825
Joseph P. Barri, Hale and Dorr, 60 State Street, Boston, MA 02109
------------------------------------------------------------------
(Name and address of agent for service)
It is proposed that this filing will become effective (check appropriate box)
_X_ immediately upon filing pursuant to paragraph (b)
___ on [date] pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)
___ on [date] pursuant to paragraph (a) of Rule 485
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) of the Investment Company Act
of 1940. The Registrant has filed the Notice required by Rule 24f-2 for its most
recent fiscal year on or about February 28, 1995.
<PAGE>
PIONEER INTERMEDIATE TAX-FREE FUND
CLASS A AND CLASS B SHARES
Cross-Reference Sheet Showing Location in Prospectus and
Statement of Additional Information of
Information Required by Items of the Registration Form
Location in Prospectus
or Statement of
Form N-1A Item Number and Caption Additional Information
1. Cover Page............................ Prospectus - Cover Page
2. Synopsis.............................. Prospectus - Expense Information
3. Condensed Financial Information....... Prospectus - Financial
Highlights
4. General Description of Registrant..... Prospectus - Investment
Objective and Policies; The Fund
5. Management of the Fund................ Prospectus - Management of the
Fund
6. Capital Stock and Other Securities.... Prospectus -Investment Objective
and Policies; The Fund
7. Purchase of Securities Being Offered.. Prospectus - Fund Share
Alternatives; How to Buy
Fund Shares; Shareholder
Services; Distribution Plans
8. Redemption or Repurchase.............. Prospectus - Fund Share
Alternatives; How to Sell
Fund Shares; Shareholder
Services
9. Pending Legal Proceedings............. Not Applicable
10. Cover Page............................ Statement of Additional
Information - Cover Page
11. Table of Contents..................... Statement of Additional
Information - Cover Page
<PAGE>
12. General Information and History....... Statement of Additional
Information - Cover Page;
Description of Shares
13. Investment Objectives and Policies.... Statement of Additional
Information - Investment
Policies and Restrictions
14. Management of the Fund................ Statement of Additional
Information - Management of the
Fund; Investment Adviser
15. Control Persons and Principal Holders
of Securities....................... Statement of Additional
Information - Management of the
Fund
16. Investment Advisory and Other
Services............................ Statement of Additional
Information - Management of the
Fund; Investment Adviser;
Shareholder Servicing/Transfer
Agent; Underwriting Agreement
and Distribution Plans;
Custodian; Independent
Accountants
17. Brokerage Allocation and Other
Practices........................... Statement of Additional
Information - Portfolio
Transactions
18. Capital Stock and Other Securities.... Statement of Additional
Information - Description of
Shares; Certain Liabilities
19. Purchase Redemption and Pricing of
Securities Being Offered............ Statement of Additional
Information - Determination of
Net Asset Value; Letter of
Intention; Systematic Withdrawal
Plan
20. Tax Status............................ Statement of Additional
Information - Tax Status
<PAGE>
21. Underwriters.......................... Statement of Additional
Information - Principal
Underwriter; Underwriting
Agreement and Distribution Plans
22. Calculation of Performance Data....... Statement of Additional
Information - Investment Results
23. Financial Statements.................. Balance Sheet; Report of
Independent Public Accountants
<PAGE>
Pioneer
Intermediate
Tax-Free
Fund
Class A and Class B
Prospectus
April 28, 1995
(revised December 20, 1995)
The investment objective of Pioneer Intermediate Tax-Free Fund (the
"Fund") is to provide as high a level of current income exempt from Federal
income taxes from a high-quality portfolio of municipal bonds as is
consistent with prudent investment risk.
Fund returns and share prices fluctuate and the value of your account upon
redemption maybe more or less than your purchase price. Shares in the Fund
are not deposits or obligations of, or guaranteed or endorsed by, any bank or
other depository institution, and the shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board or any other
government agency.
This Prospectus (Part A of the Registration Statement) provides the
information about the Fund that you should know before investing. Please read
and keep it for your future reference. More information about the Fund is
included in Part B, the Statement of Additional Information, also dated April
28, 1995 (revised December 20, 1995), which is incorporated into this
Prospectus by reference. A copy of the Statement of Additional Information
may be obtained free of charge by calling Shareholder Services at
1-800-225-6292 or by written request to the Fund at 60 State Street, Boston,
Massachusetts 02109. Other information about the Fund has been filed with the
Securities and Exchange Commission (the "SEC") and is available upon request
and without charge.
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
- ------------------------------------------------------------------------
<S> <C> <C>
I. EXPENSE INFORMATION 2
II. FINANCIAL HIGHLIGHTS 3
III. INVESTMENT OBJECTIVE AND POLICIES 4
"When Issued" Securities 5
Portfolio Transactions and Turnover 5
IV. MANAGEMENT OF THE FUND 5
V. FUND SHARE ALTERNATIVES 6
VI. SHARE PRICE 7
VII. HOW TO BUY FUND SHARES 7
Class A Shares 7
Class B Shares 8
VIII. HOW TO SELL FUND SHARES 10
IX. HOW TO EXCHANGE FUND SHARES 11
X. DISTRIBUTION PLANS 11
XI. DIVIDENDS AND TAX STATUS 12
XII. SHAREHOLDER SERVICES 13
Account and Confirmation Statements 13
Additional Investments 13
Automatic Investment Plans 13
Financial Reports and Tax Information 13
Distribution Options 13
Directed Dividends 13
Direct Deposit 14
Telephone Transactions and Related Liabilities 14
FactFone(SM) 14
Telecommunications Device for the Deaf (TDD) 14
Systematic Withdrawal Plans 14
Reinstatement Privilege (Class A Shares Only) 14
XIII. THE FUND 15
XIV. INVESTMENT RESULTS 15
XV. APPENDIX 16
Taxable Equivalent Yields 16
</TABLE>
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
1
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses
that you, as a shareholder, will bear directly or indirectly when you invest
in the Fund. The table reflects actual expenses for the fiscal year ended
December 31, 1994.
<TABLE>
<CAPTION>
Shareholder Transaction Expenses: Class A Class B
<S> <C> <C>
Maximum Initial Sales Charge on Purchases (as a
percentage of the offering price) 3.50% None
Maximum Sales Charge on Reinvestment of Dividends None None
Maximum Deferred Sales Charge
(as a percentage of original purchase price or
redemption price, as applicable) None(1) 3.00%
Redemption Fee(2) None None
Exchange Fee None None
Annual Operating Expenses (as a percentage of net
assets):(4)
Management Fee (after Expense Limitation)(3) 0.28% 0.28%
12b-1 Fees 0.25% 1.00%
Other Expenses (including transfer agent fee,
custodian fees and accounting and printing
expenses) 0.47% 0.56%
---- ----
Total Operating Expenses:
(after Expense Limitation)(3) 1.00% 1.84%
==== ====
</TABLE>
(1) Purchases of $1,000,000 or more and purchases by participants in a "Group
Plan" (as described under "How to Buy Fund Shares") are not subject to an
initial sales charge but may be subject to a contingent deferred sales
charge as further described under "How to Buy Fund Shares."
(2) Separate fees (currently $10 and $20, respectively) apply to domestic or
international bank wire transfers of redemption proceeds.
(3) Effective January 3, 1994, Pioneering Management Corporation ("PMC"),
agreed not to impose a portion of its management fee and to make other
arrangements, if necessary, to the extent necessary to limit the
operating expenses of the Fund as listed below. This agreement is
voluntary and temporary and may be revised or terminated at any time.
<TABLE>
<CAPTION>
Class A Class B
--------- ---------
<S> <C> <C>
Management Fee 0.50% 0.50%
Expense Limitation 1.00% n/a*
Expenses Absent Limitation
Other Expenses n/a 0.64%
Total Operating Expenses 1.22% 1.84%
</TABLE>
- ------------
* The portion of fund-wide expenses attributable to Class B shares will be
reduced only to the extent such expenses are reduced for the Class A
shares of the Fund.
(4) For Class B shares, operating expenses are based on an estimate of the
expenses that would have been incurred if Class B shares had been
outstanding for the entire fiscal year.
Example:
You would pay the following dollar amounts on a $1,000 investment,
assuming a 5% annual return and redemption at the end of each of the time
periods:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------- -------- -------- ----------
<S> <C> <C> <C> <C>
Class A Shares $45 $66* $ 88* $153*
Class B Shares
-Assuming complete
redemption at end
of period $49 $78 $100 $194**
-Assuming no redemption $19 $58 $100 $194**
</TABLE>
- ------------
* These are cumulative totals; the average fees and expenses of Class A
shares paid over a 10-year period would be approximately $19.40 per year.
** Class B shares convert to Class A shares six years after purchase;
therefore, Class A expenses are used after year six.
The example is designed for informational purposes only, and should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return will vary from year to year and may be higher or lower
than those shown.
For further information regarding management fees, 12b-1 fees and other
expenses of the Fund, including information regarding the basis upon which
fees and expenses are paid, see "Management of the Fund," "Distribution
Plans" and "How To Buy Fund Shares" in this Prospectus and "Management of the
Fund" and "Underwriting Agreement and Distribution Plans" in the Statement of
Additional Information. The Fund's payment of a Rule 12b-1 fee may result in
long-term shareholders indirectly paying more than the economic equivalent of
the maximum sales charge permitted under the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. ("NASD").
The maximum initial sales charge is reduced on purchases of specified
amounts of Class A shares and the value of Class A shares owned in other
Pioneer mutual funds is taken into account in determining the applicable
initial charge. See "How to Buy Fund Shares." No sales charge is applied to
exchanges of shares of the Fund for shares of other publicly available
Pioneer mutual funds. See "How to Exchange Fund Shares."
2
<PAGE>
II. FINANCIAL HIGHLIGHTS
The following information has been derived from financial statements which
have been audited by Arthur Andersen LLP, independent public accountants, in
connection with their examination of the Fund's financial statements. Arthur
Andersen LLP's report on the Fund's financial statements as of December 31,
1994, appears in the Fund's Annual Report which is incorporated by reference
in the Statement of Additional Information. The Annual Report includes more
information about the Fund's performance and is available free of charge by
calling Shareholder Services at 1-800-225-6292.
Pioneer Intermediate Tax-Free Fund
For Each Class A Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
October 27,
1986 to
For the Year Ended December 31, December 31,
--------------------------------------------------------------------------------- --------------
1994+ 1993 1992 1991 1990 1989 1988 1987 1986
---------- -------- -------- -------- -------- -------- -------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 10.76 $ 10.32 $ 10.06 $ 9.63 $ 9.66 $ 9.40 $ 8.95 $ 10.01 $ 10.00
--------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income $ 0.494 $ 0.560 $ 0.587 $ 0.610 $ 0.627 $ 0.634 $ 0.628 $ 0.624 $ 0.050
Net realized and
unrealized gain
(loss) on
investments (1.134) 0.558 0.257 0.430 (0.033) 0.257 0.476 (1.024) (0.040)
--------- ------- ------- ------- ------- ------- ------- ------- -------
Total income (loss)
from investment
operations $(0.640) $ 1.118 $ 0.844 $ 1.040 $ 0.594 $ 0.891 $ 1.104 $(0.400) $ 0.010
Distribution to
shareholders from:
Net Investment Income (0.494) (0.558) (0.584) (0.610) (0.624) (0.631) (0.654) (0.660) --
In excess of net
investment income (0.002) -- -- -- -- -- -- -- --
Net realized capital
gains (0.004) (0.120) -- -- -- -- -- -- --
--------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease)
in net asset value $ (1.14) $ 0.44 $ 0.26 $ 0.43 $ (0.03) $ 0.26 $ 0.45 $ (1.06) $ 0.01
--------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 9.62 $ 10.76 $ 10.32 $ 10.06 $ 9.63 $ 9.66 $ 9.40 $ 8.95 $ 10.01
========= ======= ======= ======= ======= ======= ======= ======= =======
Total return* (6.02)% 11.08% 8.65% 11.17% 6.42% 9.77% 12.79% (3.91)% 0.10%
Ratio of net operating
expenses to average
net assets 1.00% 0.85% 0.85% 0.75% 0.66% 0.60% 0.50% (0.35)% 0.61%**
Ratio of net investment
income to average net
assets 4.89% 5.23% 5.78% 6.21% 6.56% 6.60% 6.89% 7.08% 9.73%**
Portfolio turnover rate 39.24% 13.93% 3.52% 4.61% 7.99% 4.09% 10.03% 0.06% --
Net assets, end of
period (in thousands) $76,674 $82,097 $57,353 $44,631 $34,118 $28,754 $20,121 $13,107 $ 3,066
Ratios assuming no
reduction of fees or
expenses
Net Operating
Expenses 1.22% 1.12% 1.27% 1.33% 1.17% 1.10% 1.28% 1.53% --
Net investment income --
4.67% 4.97% 5.36% 5.63% 6.05% 6.10% 6.11% 5.90%
</TABLE>
- ------------
+ Based upon average shares outstanding and average net assets for the
period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
3
<PAGE>
<TABLE>
<CAPTION>
April 29,
1994 to
For Each Class B Share Outstanding Throughout Each Period*** December 31,
1994+
-------------
<S> <C>
Net asset value, beginning of period $ 10.07
-------
Income from investment operations:
Net investment income $ 0.268
Net realized and unrealized gain (loss) on investments (0.415)
-------
Total income from investment operations $(0.147)
Distribution to shareholders:
From net investment income (0.268)
In excess of net investment income (0.003)
From net realized capital gains (0.002)
-------
Net increase (decrease) in net asset value $ (0.42)
-------
Net asset value, end of period $ 9.65
=======
Total return* (1.49)%
Ratio of net operating expenses to average net assets 1.84%**
Ratio of net investment income to average net assets 4.17%**
Portfolio turnover rate 39.24%
Net assets, end of period (in thousands) $ 1,529
Ratios assuming no reduction of fees or expenses
Net operating expenses 2.14%**
Net investment income 3.87%**
</TABLE>
- ------------
+ Based upon average shares outstanding and average net assets for the
period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
*** Class B shares were first publicly offered on April 29, 1994.
- -------------------------------------------------------------------------------
III. INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide as high a level of
current income exempt from federal income taxes from a high quality portfolio
of municipal bonds as is consistent with prudent investment risk.
The Fund's policy under normal conditions is to invest at least 80% of the
Fund's portfolio in bonds, notes and other debt instruments issued by or on
behalf of states, territories and possessions of the United States ("U.S.")
and the District of Columbia and their political subdivisions, agencies or
instrumentalities, the interest on which is exempt from federal income tax
(hereinafter "Municipal Bonds" or "tax-exempt securities"). As a defensive
measure during times of adverse market conditions, up to 50% of the Fund's
portfolio may be invested in the short-term taxable investments described in
paragraphs 3 and 4 below.
All of the Fund's investments will be made in accordance with the
investment policies set forth below. The Fund's investments will be limited
to:
(1) Tax-exempt securities which are rated AAA, AA, A or BBB by Standard &
Poor's Ratings Service ("S&P" ) or are rated Aaa, Aa, A or Baa by Moody's
Investor Service, Inc. ("Moody's");
(2) Notes of issuers having an issue of outstanding Municipal Bonds rated
AAA, AA or A by S&P or Aaa, Aa or A by Moody's or which are guaranteed by the
U.S. government;
(3) Obligations issued or guaranteed by the U.S. government or its
agencies or instrumentalities;
(4) Obligations of banks (including certificates of deposit and bankers'
acceptances) with $1 billion of assets and repurchase agreements with banks
and broker-dealers; and
(5) Tax-exempt securities which are not rated but which, in the opinion of
the Fund's investment adviser, are of at least comparable quality to the
three highest grades of S&P or Moody's.
Municipal bonds include general obligation bonds and revenue bonds.
General obligation bonds are backed by the taxing power of the issuing
municipality. Revenue bonds are backed by the revenues of a project or
facility such as the tolls from a toll bridge.
No more than 15% of the Fund's total portfolio will be invested in
securities which are not rated or which are rated BBB by S&P or Baa by
Moody's. Securities rated BBB by S&P or Baa by Moody's are considered
medium-grade, neither highly protected nor poorly secured, with some elements
of uncertainty over any great length of time and certain speculative
characteristics as well. The Fund will not invest in securities rated below
BBB by S&P or Baa by Moody's.
The dollar weighted average portfolio maturity of the Fund will not exceed
10 years. Under normal circumstances, the Fund will invest at least 80% of
its assets in securities with remaining maturities of 15 years or less. For
purposes of these policies, an instrument will be treated as having a
maturity earlier than its stated maturity date if the instrument has
technical features (such as puts, demand, prepayment or redemption features)
or a variable rate of interest which, based on projected cash flows from the
instrument, will in the judgment of PMC result in the instrument being valued
in the market as though it has the earlier maturity.
The Fund intends to minimize the distribution of taxable income to
shareholders. Thus, investments described in paragraphs 3 and 4 above will
generally be purchased only to meet short-term liquidity needs or to offset
Fund expenses. If
4
<PAGE>
the Fund cannot find suitable tax-exempt short-term instruments in the
quantity necessary, or if for any reason the Fund earns taxable income, a
portion of the dividends distributed to shareholders may be taxable as
ordinary income. See "Dividends and Tax Status."
The higher quality issues in which the Fund's portfolio will be
concentrated can generally be expected to produce lower yields than issues of
lower quality, though they are generally more marketable.
The net asset value of the shares of an open-end investment company such
as the Fund, which invests primarily in fixed-income tax-exempt securities,
changes as the general levels of interest rates fluctuate. When interest
rates rise, the value of a portfolio invested at lower yields can be expected
to decline. For a description of how to compare yields on Municipal Bonds and
taxable securities, see "Taxable Equivalent Yields" in the Appendix. For the
ratings of S&P and Moody's for Municipal Bonds and a general discussion of
Municipal Bonds and descriptions of short-term investments permitted as Fund
investments, see the Statement of Additional Information.
"When Issued" Securities
Some tax-exempt securities are purchased on a "when-issued" basis, which
means that it may take as long as 60 days or more before the securities are
delivered and paid for. The commitment to purchase a security for which
payment will be made on a future date may be deemed a separate security.
Although the amount of tax-exempt securities for which there may be purchase
commitments on a "when-issued" basis is not limited, it is expected that
under normal circumstances not more than 50% of the total assets of the Fund
will be committed to such purchases. The Fund does not start earning interest
on "when-issued" securities until they are issued. In order to invest the
assets of the Fund immediately while awaiting delivery of securities
purchased on a "when-issued" basis, short-term obligations that offer
same-day settlement and earnings will normally be purchased. Although
short-term investments will normally be in tax-exempt securities, short-term
taxable securities may be purchased if suitable short-term tax-exempt
securities are not available.
When a commitment to purchase a security on a "when-issued" basis is
made, procedures are established consistent with the General Statement of
Policy of the SEC concerning such purchases. Because that policy currently
recommends that an amount of the Fund's assets equal to the amount of the
purchase be held aside or segregated to be used to pay for the commitment,
cash or high quality debt securities sufficient to cover any commitments are
always expected to be available. However, although it is not intended that
such purchases would be made for speculative purposes, and although the Fund
intends to adhere to the provisions of the SEC policy, purchases of
securities on a "when-issued" basis may involve more risk than other types
of purchases. For example, when the time comes to pay for a "when-issued"
security, portfolio securities of the Fund may have to be sold in order for
the Fund to meets its payment obligations, and a sale of securities to meet
such obligations carries with it a greater potential for the realization of
capital gain, which is not tax-exempt.
Also, if it is necessary to sell the "when-issued" security before
delivery, the Fund may incur a loss because of market fluctuations since the
time the commitment to purchase the "when-issued" security was made.
Moreover, the Fund's distributions of any gain resulting from any such sale
would not be tax-exempt. Additionally, because of market fluctuations between
the time of commitment to purchase and the date of purchase, the
"when-issued" security may have a lesser (or greater) value at the time of
purchase than the Fund's payment obligations with respect to the security.
Portfolio Transactions and Turnover
The Fund will be fully managed by purchasing and selling securities, as
well as holding selected securities to maturity. In purchasing and selling
portfolio securities, the Fund seeks to take advantage of market
developments, yield disparities, and variations in the creditworthiness of
issuers. For a description of the strategies which may be used by the Fund in
purchasing and selling portfolio securities, see the Statement of Additional
Information.
While it is not possible to predict accurately the rate of turnover of the
Fund's portfolio on an annual basis, it is anticipated that the rate will not
materially exceed 85%. A portfolio turnover of 85% would occur if 85% of the
securities in the portfolio were changed once in a twelve-month period.
Computation of portfolio turnover excludes transactions in U.S. Treasury
obligations and securities having a maturity of one year or less.
The investment objective and policy to invest under normal circumstances
at least 80% of the Fund's portfolio in Municipal Bonds, may not be changed
without shareholder approval. Because all of the Fund's investments are
subject to fluctuations in yields and value due to changes in earnings,
economic conditions and other factors, there can be no assurance that the
Fund's investment objective will be achieved.
The Statement of Additional Information includes a discussion of other
investment policies and a listing of specific investment restrictions which
govern the Fund's investment policies. The specific investment restrictions
identified in the Statement of Additional Information as fundamental may not
be changed without shareholder approval.
IV. MANAGEMENT OF THE FUND
The Fund's Board of Trustees has overall responsibility for management and
supervision of the Fund. There are currently eight Trustees, six of whom are
not "interested persons" of the Fund as defined in the Investment Company Act
of 1940, as amended (the "1940 Act"). The Board meets at least quarterly. By
virtue of the functions performed by PMC as investment adviser, the Fund
requires no employees other than its executive officers, all of whom receive
their compensation from PMC or other sources. The Statement of Additional
Information contains the names and general background of each Trustee and
executive officer of the Fund.
Each domestic fixed income portfolio managed by PMC, including the Fund,
is overseen by the Domestic Fixed Income
5
<PAGE>
Portfolio Management Committee, which consists of PMC's most senior domestic
fixed income professionals. The committee is chaired by Mr. David Tripple,
PMC's President and Chief Investment Officer and Executive Vice President of
each of the Pioneer mutual funds. Mr. Tripple joined PMC in 1974 and has had
general responsibility for PMC's investment operations and specific portfolio
assignments for over five years. Fixed income investments at PMC, including
those made on behalf of the Fund, are under the general supervision of Mr.
Sherman Russ, Vice President of PMC. Mr. Russ joined PMC in 1983. Day-to-day
management of the Fund has been the responsibility of Kathleen D. McClaskey
since February 1990. Ms. McClaskey joined PMC in 1986 and is Vice President
of PMC. In certain instances where Ms. McClaskey is unavailable, primary
responsibility for the day-to-day management of the Fund may be assumed
temporarily by Mark Winter, Vice President of PMC. Mr. Winter joined PMC in
1993 and has been an investment manager of Pioneer Tax-Free Income Fund since
1986.
The Fund is managed under a contract with PMC. PMC serves as investment
adviser to the Fund and is responsible for the overall management of the
Fund's business affairs, subject only to the authority of the Board of
Trustees. PMC is a wholly-owned subsidiary of The Pioneer Group, Inc.
("PGI"), a Delaware corporation. Pioneer Funds Distributor, Inc. ("PFD"), an
indirect subsidiary of PGI, is the principal underwriter of shares of the
Fund.
In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive officers are located at 60
State Street, Boston, Massachusetts 02109.
Under the terms of its contract with the Fund, PMC assists in the
management of the Fund and is authorized in its discretion to buy and sell
securities for the account of the Fund. PMC pays all the ordinary operating
expenses, including executive salaries and the rental of certain office
space, related to its services for the Fund, with the exception of the
following which are to be paid by the Fund: (a) charges and expenses for fund
accounting, pricing and appraisal services and related overhead, including,
to the extent such services are performed by personnel of PMC or its
affiliates, office space and facilities and personnel compensation, training
and benefits; (b) the charges and expenses of auditors; (c) the charges and
expenses of any custodian, transfer agent, plan agent, dividend disbursing
agent and registrar appointed by the Fund; (d) issue and transfer taxes,
chargeable to the Fund in connection with securities transactions to which
the Fund is a party; (e) insurance premiums, interest charges, dues and fees
for membership in trade associations, and all taxes and corporate fees
payable by the Fund to federal, state or other governmental agencies; (f)
fees and expenses involved in registering and maintaining registrations of
the Fund and/or its shares with the SEC, individual states or blue sky
securities agencies, territories and foreign countries, including the
preparation of Prospectuses and Statements of Additional Information for
filing with the SEC; (g) all expenses of shareholders' and Trustees' meetings
and of preparing, printing and distributing prospectuses, notices, proxy
statements and all reports to shareholders and to governmental agencies; (h)
charges and expenses of legal counsel to the Fund and to Trustees; (i)
distribution fees paid by the Fund in accordance with Rule 12b-1 promulgated
by the SEC pursuant to the 1940 Act; (j) compensation of those Trustees of
the Fund who are not affiliated with or interested persons of PMC, the Fund
(other than as Trustees), PGI or PFD; (k) the cost of preparing and printing
share certificates; and (l) interest on borrowed money, if any. In addition
to the expenses described above, the Fund shall pay all brokers' and
underwriting commissions chargeable to the Fund in connection with securities
transactions to which the Fund is a party.
Orders for the Fund's portfolio securities transactions are placed by PMC,
which strives to obtain the best price and execution for each transaction. In
circumstances where two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides brokerage or research services or sells shares of the
Fund. See the Statement of Additional Information for a further description
of PMC's brokerage allocation practices.
As compensation for its management services and certain expenses which PMC
incurs, PMC is entitled to a management fee equal to 0.50% per annum of the
Fund's average daily net assets. The fee is normally computed daily and paid
monthly. During the fiscal year ended December 31, 1994, the Fund would,
absent an expense limitation agreement, have incurred expenses of $1,014,049
payable to PMC. Effective January 3, 1994, PMC voluntarily agreed not to
impose management fees to the extent necessary to limit total expenses to
1.00% of average daily net assets. This agreement is voluntary and temporary
and may be revised or terminated at any time. During the fiscal year ended
December 31, 1994, this arrangement resulted in a reduction of expenses for
the Fund of $183,384.
John F. Cogan, Jr., Chairman and President of the Fund, Chairman of PFD,
President and a Director of PGI and Chairman and a Director of PMC, owned
approximately 15% of the outstanding capital stock of PGI as of March 31,
1995.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers two Classes of shares designated as Class A
and Class B shares, as described more fully in "How to Buy Fund Shares." If
you do not specify in your instructions to the Fund which Class of shares you
wish to purchase, exchange or redeem, the Fund will assume that your
instructions apply to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase, however, shares
redeemed within 12 months of purchase may be subject to a contingent deferred
sales charge ("CDSC"). Class A shares are subject to distribution and service
fees at a combined annual rate of up to 0.25% of the Fund's average daily net
assets attributable to Class A shares.
6
<PAGE>
Class B Shares. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge,
but are subject to a CDSC of up to 3% if redeemed within four years. Class B
shares are subject to distribution and service fees at a combined annual rate
of 1.00% of the Fund's average daily net assets attributable to Class B
shares. Your entire investment in Class B shares is available to work for you
from the time you make your investment, but the higher distribution fee paid
by Class B shares will cause your Class B shares (until conversion) to have a
higher expense ratio and to pay lower dividends, to the extent dividends are
paid, than Class A shares. Class B shares will automatically convert to Class
A shares, based on relative net asset value, approximately six years after
the initial purchase.
Purchasing Class A or Class B Shares. The decision as to which Class to
purchase depends on the amount you invest, the intended length of the
investment and your personal situation. If you are making an investment that
qualifies for reduced sales charges, you might consider Class A shares. If
you prefer not to pay an initial sales charge on an investment of $250,000 or
less and you plan to hold the investment for at least four years, you might
consider Class B shares.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund
and shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the Fund originally purchased. Shares sold
outside the U.S. to persons who are not U.S. citizens may be subject to
different sales charges, CDSCs and dealer compensation arrangements in
accordance with local laws and business practices.
VI. SHARE PRICE
Shares of the Fund are sold at the public offering price, which is the net
asset value per share plus the applicable sales charge. Net asset value per
share of a Class of the Fund is determined by dividing the value of its
assets, less liabilities attributable to that Class, by the number of shares
of that Class outstanding. The net asset value is computed once daily, on
each day the New York Stock Exchange (the "Exchange") is open, as of the
close of regular trading on the Exchange.
VII. HOW TO BUY FUND SHARES
You may buy Fund shares at the public offering price from any securities
broker-dealer which has a sales agreement with PFD. If you do not have a
securities broker-dealer, please call 1-800-225-6292 for assistance.
The minimum initial investment is $1,000 for Class A and Class B shares
except as specified below. The minimum initial investment is $50 for Class A
accounts being established to utilize monthly bank drafts, government
allotments and other similar automatic investment plans. Separate minimum
investment requirements apply to retirement plans and to telephone and wire
orders placed by broker-dealers; no sales charges or minimum requirements
apply to the reinvestment of dividends or capital gains distributions. The
minimum subsequent investment is $50 for Class A shares and $500 for Class B
shares except that the subsequent minimum investment amount for Class B share
accounts may be as little as $50 if an automatic investment plan is
established (see "Automatic Investment Plans").
Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless you indicated otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing fund account; it may not be used to establish a new account. Proper
account identification will be required for each telephone purchase. A
maximum of $25,000 per account may be purchased by telephone each day. The
telephone purchase privilege is available to Individual Retirement Accounts
("IRAs") but may not be available to other types of retirement plan accounts.
Call PSC for more information.
You are strongly urged to consult with your financial representative prior
to requesting a telephone purchase. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section
of your Account Application or an Account Options Form. PSC will
electronically debit the amount of each purchase from this predesignated bank
account. Telephone purchases may not be made for 30 days after the
establishment of your bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any
applicable sales charge next determined after PSC's acceptance of a telephone
purchase instruction and receipt of good funds (usually three days after the
purchase instruction). You may always elect to deliver purchases to PSC by
mail. See "Telephone Transactions and Related Liabilities" for additional
information.
Class A Shares
You may buy Class A shares at the public offering price, that is, at the
net asset value per share next computed after receipt of a purchase order,
plus a sales charge as follows:
<TABLE>
<CAPTION>
Dealer
Sales Charge as a % Allowance
of as a % of
------------------- -----------
Net
Offering Amount Offering
Amount of Purchase Price Invested Price
- ------------------------------ -------- --------- -----------
<S> <C> <C> <C>
Less than $50,000 3.50% 3.62% 3.00%
$50,000 but less than $100,000 3.00 3.09 2.50
$100,000 but less than
$500,000 2.50 2.56 2.00
$500,000 but less than
$1,000,000 2.00 2.04 1.75
$1,000,000 or more -0- -0- see below
</TABLE>
The schedule of sales charges above is applicable to purchases of Class A
shares of the Fund by an (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other
fiduciary of a trust estate or fiduciary account or related trusts or
accounts including pension, profit-sharing and other employee benefit trusts
qualified under Section 401 or 408 of the Internal Revenue Code of 1986, as
amended (the "Code"), although more than
7
<PAGE>
one beneficiary is involved. The sales charges applicable to a current
purchase of Class A shares of the Fund by a person listed above is determined
by adding the value of shares to be purchased to the aggregate value (at the
then current offering price) of shares of any of the other Pioneer mutual
funds previously purchased and then owned (except the Class A shares of
Pioneer Money Market Trust), provided PFD is notified by such person or his
or her broker-dealer each time a purchase is made which would qualify.
Pioneer mutual funds include all mutual funds for which PFD serves as
principal underwriter. See the "Letter of Intention" section of the Account
Application.
No sales charge is payable at the time of purchase on investments of
$1,000,000 or more or for participants in certain Group Plans (described
below) subject to a CDSC of 0.50% which may be imposed in the event of a
redemption of Class A shares within 12 months of purchase. See "How to Sell
Fund Shares." PFD may, in its discretion, pay a commission to broker-dealers
who initiate and are responsible for such purchases as follows: 0.50% on the
first $1 million to $5 million; and 0.10% on the excess over $5 million.
These commissions will not be paid if the purchaser is affiliated with the
broker-dealer or if the purchase represents the reinvestment of a redemption
made during the previous 12 calendar months. Broker-dealers who receive a
commission in connection with Class A share purchases at net asset value by
401(a) or 401(k) retirement plans with 1,000 or more eligible participants or
with at least $10 million in plan assets will be required to return any
commission paid or a pro rata portion thereof if the retirement plan redeems
its shares within 12 months of purchase. See also "How to Sell Fund Shares."
In connection with PGI's acquisition of Mutual of Omaha Fund Management
Company and contingent upon the achievement of certain sales objectives, PFD
pays to Mutual of Omaha Investor Services, Inc. 50% of PFD's retention of any
sales commission on sales of the Fund's Class A shares through such dealer.
Qualifying for a Reduced Sales Charge. Class A shares of the Fund may be
sold at a reduced or eliminated sales charge to certain Group Plans under
which a sponsoring organization makes recommendations to, permits group
solicitation of, or otherwise facilitates purchases by, its employees,
members or participants. Class A shares of a Fund may be sold at net asset
value per share without a sales charge to Optional Retirement Program
participants if (i) the employer has authorized a limited number of
investment company providers for the Program, (ii) all authorized investment
company providers offer their shares to Program participants at net asset
value, (iii) the employer has agreed in writing to actively promote the
authorized investment providers to Program participants and (iv) the Program
provides for a matching contribution for each participant contribution.
Information about such arrangements is available from PFD.
Class A shares of the Fund may also be sold at net asset value per share
without a sales charge to: (a) current or former Trustees and officers of the
Fund and partners or employees of its legal counsel; (b) current or former
directors, officers, employees or sales representatives of PGI or its
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which PMC serves as investment adviser, and the
subsidiaries or affiliates of such persons; (d) current or former officers,
partners, employees or registered representatives of broker-dealers which
have entered into sales agreements with PFD; (e) members of the immediate
families of any of the foregoing persons; (f) any trust, custodian, pension,
profit-sharing or other benefit plan of the foregoing persons; (g) insurance
company separate accounts; (h) certain "wrap accounts" for the benefit of
clients of investment advisers adhering to standards established by PFD; (i)
other funds and accounts for which PMC or any of its affiliates serves as
investment adviser or manager; and (j) certain unit investment trusts. Shares
so purchased are purchased for investment purposes and may not be resold
except through redemption or repurchase by or on behalf of the Fund. The
availability of this privilege is conditioned on the receipt by PFD of
written notification of eligibility. Shares of the Fund may also be issued at
net asset value without a sales charge in connection with certain
reorganization, liquidation or acquisition transactions involving other
investment companies or personal holding companies.
Investors who are clients of a broker-dealer with a current sales
agreement with PFD may purchase shares of the Fund at net asset value,
without a sales charge, to the extent that the purchase price is paid out of
proceeds from one or more redemptions by the investor of shares of certain
other mutual funds. In order for a purchase to qualify for this privilege,
the investor must document to the broker-dealer that the redemption occurred
within 60 days immediately preceding the purchase of shares of the Fund; that
the client paid a sales charge on the original purchase of the shares
redeemed; and that the mutual fund whose shares were redeemed also offers net
asset value purchases to redeeming shareholders of any of the Pioneer mutual
funds. Further details may be obtained from PFD.
Reduced sales charges for Class A shares are available through an
agreement to purchase a specified quantity of Fund shares over a designated
13-month period by completing the "Letter of Intention" section of the
Account Application. Information about the Letter of Intention Procedure,
including its terms, is contained in the Statement of Additional Information.
Class B Shares
You may buy Class B shares at the net asset value per share next computed
after receipt of a purchase order without the imposition of an initial sales
charge; however, Class B shares redeemed within four years of purchase will
be subject to a CDSC at the rates shown in the table below. The charge will
be assessed on the amount equal to the lesser of the current market value or
the original purchase cost of the shares being redeemed. No CDSC will be
imposed on increases in account value above the initial purchase price,
including shares derived from the reinvestment of dividends or capital gains
distributions.
8
<PAGE>
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made
on the first day of that quarter. In processing redemptions of Class B
shares, the Fund will first redeem shares not subject to any CDSC, and then
shares held longest during the four-year period. As a result, you will pay
the lowest possible CDSC.
<TABLE>
<CAPTION>
Year Since CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
- ------------------------ ---------------------------------
<S> <C>
First 3.0%
Second 3.0%
Third 2.0%
Fourth 1.0%
Fifth and thereafter none
</TABLE>
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to
the Fund in connection with the sale of Class B shares, including the payment
of compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the end
of the calendar quarter that is six years after the purchase date, except as
noted below. Class B shares acquired by exchange from Class B shares of
another Pioneer mutual fund will convert into Class A shares based on the
date of the initial purchase and the applicable CDSC. Class B shares acquired
through reinvestment of distributions will convert into Class A shares based
on the date of the initial purchase to which such shares relate. For this
purpose, Class B shares acquired through reinvestment of distributions will
be attributed to particular purchases of Class B shares in accordance with
such procedures as the Trustees may determine from time to time. The
conversion of Class B shares to Class A shares is subject to the continuing
availability of a ruling from the Internal Revenue Service ("IRS"), which the
Fund has obtained, or an opinion of counsel that such conversions will not
constitute taxable events for federal tax purposes. There can be no assurance
that such ruling or opinion will continue to be in effect at the time any
particular conversion would occur. The conversion of Class B shares to Class
A shares will not occur if such ruling is no longer in effect and such an
opinion is not available and, therefore, Class B shares would continue to be
subject to higher expenses than Class A shares for an indeterminate period.
Waiver or Reduction of Contingent Deferred Sales Charge. The CDSC on Class
B shares and on any Class A shares subject to a CDSC may be waived or reduced
for non-retirement accounts if: (a) the redemption results from the death of
all registered owners of an account (in the case of UGMAs, UTMAs and trust
accounts, waiver applies upon the death of all beneficial owners) or a total
and permanent disability (as defined in section 72 of the Code) of all
registered owners occurring after the purchase of the shares being redeemed
or (b) the redemption is made in connection with limited automatic
redemptions as set forth in "Systematic Withdrawal Plans" (limited in any
year to 10% of the value of the account in the Fund at the time the
withdrawal plan is established).
The CDSC on Class B shares and on any Class A shares subject to a CDSC may
be waived or reduced for retirement plan accounts if: (a) the redemption
results from the death or a total and permanent disability (as defined in
Section 72 of the Code) occurring after the purchase of the shares being
redeemed of a shareholder or participant in an employer-sponsored retirement
plan; (b) the distribution is to a participant in an IRA, 403(b) or
employer-sponsored retirement plan, is part of a series of substantially
equal payments made over the life expectancy of the participant or the joint
life expectancy of the participant and his or her beneficiary or as scheduled
periodic payments to a participant (limited in any year to 10% of the value
of the participant's account at the time the distribution amount is
established; a required minimum distribution due to the participant's
attainment of age 70-1/2 may exceed the 10% limit only if the distribution
amount is based on plan assets held by Pioneer); (c) the distribution is from
a 401(a) or 401(k) retirement plan and is a return of excess employee
deferrals or employee contributions or a qualifying hardship distribution as
defined by the Code or results from a termination of employment (limited with
respect to a termination to 10% per year of the value of the plan's assets in
the Fund as of the later of the prior December 31 or the date the account was
established unless the plan's assets are being rolled over to or reinvested
in the same class of shares of a Pioneer mutual fund subject to the CDSC of
the shares originally held); (d) the distribution is from an IRA, 403(b) or
employer-sponsored retirement plan and is to be rolled over to or reinvested
in the same class of shares in a Pioneer mutual fund and which will be
subject to the applicable CDSC upon redemption; (e) the distribution is in
the form of a loan to a participant in a plan which permits loans (each
repayment of the loan will constitute a new sale which will be subject to the
applicable CDSC upon redemption); or (f) the distribution is from a qualified
defined contribution plan and represents a participant's directed transfer
(provided that this privilege has been pre-authorized through a prior
agreement with PFD regarding participant directed transfers).
The CDSC on Class B shares and on any Class A shares subject to a CDSC may
be waived or reduced for either non-retirement or retirement plan accounts
if: (a) the redemption is made by any state, county, or city, or any
instrumentality, department, authority, or agency thereof, which is
prohibited by applicable laws from paying a CDSC in connection with the
acquisition of shares of any registered investment management company; or (b)
the redemption is made pursuant to the Fund's right to liquidate or
involuntarily redeem shares in a shareholder's account.
Broker-Dealers. An order for either Class of Fund shares received by PFD
from a broker-dealer prior to the close of regular trading on the Exchange is
confirmed at the price appropriate for that Class as determined at the close
of regular trading on the Exchange on the day the order is received,
9
<PAGE>
provided the order is received prior to PFD's close of business (usually,
5:30 p.m. Eastern Time). It is the responsibility of broker-dealers to
transmit orders so that they will be received by PFD prior to its close of
business.
General. The Fund reserves the right in its sole discretion to withdraw
all or any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has
been confirmed in writing by PFD and payment has been received.
VIII. HOW TO SELL FUND SHARES
You can arrange to redeem Fund shares on any day the Exchange is open by
selling (redeeming) either some or all of your shares to the Fund.
You may sell your shares either through your broker-dealer or directly to
the Fund. Please note the following:
(bullet) If you are selling shares from a retirement account, you must make
your request in writing (except for exchanges to other Pioneer mutual
funds which can be requested by phone or in writing). Call
1-800-622-0176 for more information.
(bullet) If you are selling shares from a non-retirement account, you may use
any of the methods described below.
Your shares will be sold at the share price next calculated after your
order is received and accepted less any applicable CDSC. Sale proceeds
generally will be sent to you in cash, normally within seven days after your
order is accepted. The Fund reserves the right to withhold payment of the
sale proceeds until checks received by the Fund in payment for the shares
being sold have cleared, which may take up to 15 calendar days from the
purchase date.
In Writing. You may always sell your shares by delivering a written
request, signed by all registered owners, in good order to PSC, however, you
must use a written request, including a signature guarantee, to sell your
shares if any of the following situations applies:
(bullet) you wish to sell over $50,000 worth of shares,
(bullet) your account registration or address has changed within the last 30
days,
(bullet) the check is not being mailed to the address on your account (address
of record),
(bullet) the check is not being made out to the account owners, or
(bullet) the sale proceeds are being transferred to a Pioneer account with a
different registration.
Your request should include your name, the Fund's name, your fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described
below. Unless instructed otherwise, Pioneer will send the proceeds of the
sale to the address of record. Fiduciaries or corporations are required to
submit additional documents. For more information, contact PSC at
1-800-225-6292.
Written requests will not be processed until they are received in good
order and accepted by PSC. Good order means that there are no outstanding
claims or requests to hold redemptions on the account, certificates are
endorsed by the record owner(s) exactly as the shares are registered and the
signature(s) are guaranteed by an eligible guarantor. You should be able to
obtain a signature guarantee from a bank, broker, dealer, credit union (if
authorized under state law), securities exchange or association, clearing
agency or savings association. A notary public cannot provide a signature
guarantee. Signature guarantees are not accepted by facsimile ("fax"). For
additional information about the necessary documentation for redemption by
mail, please contact PSC at 1-800-225-6292.
By Telephone or by Fax. Your account is automatically authorized to have
the telephone redemption privilege unless you indicated otherwise on your
Account Application or by writing to PSC. Proper account identification will
be required for each telephone redemption. The telephone redemption option is
not available to retirement plan accounts. A maximum of $50,000 may be
redeemed by telephone or fax and the proceeds may be received by check or by
bank wire or electronic funds transfer. To receive the proceeds by check: the
check must be made payable exactly as the account is registered and the check
must be sent to the address of record which must not have changed in the last
30 days. To receive the proceeds by bank wire or by electronic funds
transfer: the proceeds must be sent to your bank address of record which must
have been properly pre-designated either on your Account Application or on an
Account Options Form and which must not have changed in the last 30 days. To
redeem by fax send your redemption request to 1-800-225-4240. You may always
elect to deliver redemption instructions to PSC by mail. See "Telephone
Transactions and Related Liabilities" below. Telephone and fax redemptions
will be priced as described above. You are strongly urged to consult with
your financial representative prior to requesting a telephone redemption.
Selling Shares Through Your Broker-Dealer. Your broker-dealer must
receive your request before the close of business on the Exchange and
transmit it to PFD before the close of business to receive that day's net
asset value. Your broker-dealer is responsible for providing all necessary
documentation to PFD and may charge you for its services.
Small Accounts. The minimum account value is $500. If you hold shares of
the Fund in an account with a net asset value of less than the minimum
required amount due to redemptions or exchanges, the Fund may redeem the
shares held in this account at net asset value if you have not increased the
net asset value of the account to at least the minimum required amount within
six months of notice by the Fund to you of the Fund's intention to redeem the
shares.
CDSC on Class A Shares. Purchases of Class A shares of $1,000,000 or more,
or by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months
following the share purchase, at the rate of 0.50% of
10
<PAGE>
the lesser of the value of the shares redeemed (exclusive of reinvested
dividend and capital gain distributions) or the total cost of such shares.
Shares subject to the CDSC which are exchanged into another Pioneer mutual
fund will continue to be subject to the CDSC until the original 12-month
period expires. However, no CDSC is payable with respect to purchases of
Class A shares by 401(a) or 401(k) retirement plans with 1,000 or more
eligible participants or with at least $10 million in plan assets.
General. The Fund has authorized PFD to act as its agent in the repurchase
of shares of the Fund and reserves the right to terminate this procedure at
any time. Redemptions may be suspended or payment postponed during any period
in which any of the following conditions exist: the Exchange is closed or
trading on the Exchange is restricted; an emergency exists as a result of
which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund to fairly
determine the value of the net assets of its portfolio; or the SEC, by order,
so permits.
Redemptions and repurchases are taxable transactions to shareholders. The
net asset value per share received upon redemption or repurchase may be more
or less than the cost of shares to an investor, depending on the market value
of the portfolio at the time of redemption or repurchase.
IX. HOW TO EXCHANGE FUND SHARES
Written Exchanges. You may exchange your shares by sending a letter of
instruction to PSC. Your letter should include your name, the name of the
Pioneer mutual fund out of which you wish to exchange and the name of the
Pioneer mutual fund into which you wish to exchange, your fund account
number(s), the Class of shares to be exchanged and the dollar amount or
number of shares to be exchanged. Written exchange requests must be signed by
all record owner(s) exactly as the shares are registered.
Telephone Exchanges. Your account is automatically authorized to have the
telephone exchange privilege unless you indicated otherwise on your Account
Application or by writing to the PSC. Proper account identification will be
required for each telephone exchange. Telephone exchanges may not exceed
$500,000 per account per day. Each telephone exchange request, whether by
voice or by FactFone, will be recorded. You are strongly urged to consult
with your financial representative prior to requesting a telephone exchange.
See "Telephone Transactions and Related Liabilities" below.
Automatic Exchanges. You may automatically exchange shares from one
Pioneer mutual fund account for shares of the same Class in another Pioneer
mutual fund account on a monthly or quarterly basis. The accounts must have
identical registrations and the originating account must have a minimum
balance of $5,000. The exchange will be effective on the 18th day of the
month.
General. Exchanges must be at least $1,000. You may exchange your
investment from one Class of Fund shares at net asset value, without a sales
charge, for shares of the same Class of any other Pioneer mutual fund. Not
all Pioneer mutual funds offer more than one Class of shares. A new Pioneer
mutual fund account opened through an exchange must have a registration
identical to that on the original account.
Class A or Class B shares which would normally be subject to a CDSC upon
redemption will not be charged the applicable CDSC at the time of an
exchange. Shares acquired in an exchange will be subject to the CDSC of the
shares originally held. For purposes of determining the amount of any
applicable CDSC, the length of time you have owned Class B shares acquired by
exchange will be measured from the date you acquired the original shares and
will not be affected by any subsequent exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern Time will be
effective on that day if the requirements below have been met, otherwise,
they will be effective on the next business day. PSC will process exchanges
only after receiving an exchange request in good order. There are currently
no fees or sales charges imposed at the time of an exchange. An exchange of
shares may be made only in states where legally permitted. For federal and
(generally) state income tax purposes, an exchange is considered to be a sale
of the shares of the Fund exchanged and a purchase of shares in another fund.
Therefore, an exchange could result in a taxable gain or loss on the shares
sold, depending on the tax basis of these shares and the timing of the
transaction.
You should consider the differences in objectives and policies of the
Pioneer mutual funds, as described in each fund's current prospectus, before
making any exchange. To prevent abuse of the exchange privilege to the
detriment of other Fund shareholders, the Fund and PFD reserve the right to
limit the number and/or frequency of exchanges and/or to charge a fee for
exchanges. The exchange privilege may be changed or discontinued and may be
subject to additional limitations, including certain restrictions on
purchases by market timer accounts.
X. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for both Class A shares
("Class A Plan") and Class B shares ("Class B Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution and service
fees are paid.
Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale
of Class A shares or to provide services to holders of Class A shares,
provided the categories of expenses for which reimbursement is made are
approved by the Fund's Board of Trustees. As of the date of this Prospectus,
the Board of Trustees has approved the following categories of expenses for
Class A shares of the Fund: (i) a service fee to be paid to qualified
broker-dealers in an amount not to exceed 0.25% per annum of the Fund's daily
net assets attributable to Class A shares; (ii) reimbursement to PFD for its
expenditures for broker- dealer commissions and employee compensation on
certain sales of the Fund's Class A shares with no initial sales charge (See
"How to Buy Fund Shares"); and (iii) reimbursement to PFD for expenses
incurred in providing services to Class A shareholders and supporting
broker-dealers and other organizations (such as banks and trust companies) in
their efforts to provide such services. Banks are currently prohibited under
the Glass-
11
<PAGE>
Steagall Act from providing certain underwriting or distribution services. If
a bank was prohibited from acting in any capacity or providing any of the
described services, management would consider what action, if any, would be
appropriate.
Expenditures of the Fund pursuant to the Class A Plan are accrued daily
and may not exceed 0.25% of the Fund's average daily net assets attributable
to Class A shares. Distribution expenses of PFD are expected to substantially
exceed the distribution fees paid by the Fund in a given year. The Class A
Plan does not provide for the carryover of reimbursable expenses beyond
twelve months from the time the Fund is first invoiced for an expense. The
limited carryover provision in the Class A Plan may result in an expense
invoiced to the Fund in one fiscal year being paid in the subsequent fiscal
year and thus being treated for purposes of calculating the maximum
expenditures of the Fund as having been incurred in the subsequent fiscal
year. In the event of termination or non-continuance of the Class A Plan, the
Fund has twelve months to reimburse any expense which it incurs prior to such
termination or non-continuance, provided that payments by the Fund during
such twelve-month period shall not exceed 0.25% of the Fund's average daily
net assets during such period. The Class A Plan may not be amended to
increase materially the annual percentage limitation of average net assets
which may be spent for the services described therein without approval of the
shareholders of the Fund.
The Class B Plan provides that the Fund will pay a distribution fee at the
annual rate of 0.75% of the Fund's average daily net assets attributable to
Class B shares and will pay PFD a service fee at the annual rate of 0.25% of
the Fund's average daily net assets attributable to Class B shares. The
distribution fee is intended to compensate PFD for its distribution services
to the Fund. The service fee is intended to be additional compensation for
personal services and/or account maintenance services with respect to Class B
shares. PFD also receives the proceeds of any CDSC imposed on the redemption
of Class B shares.
Commissions of 3%, equal to 2.75% of the amount invested and a first
year's service fee equal to 0.25% of the amount invested in Class B shares,
are paid to broker-dealers who have selling agreements with PFD. PFD may
advance to dealers the first year service fee at a rate up to 0.25% of the
purchase price of such shares and, as compensation therefore, PFD may retain
the service fee paid by the Fund with respect to such shares for the first
year after purchase. Dealers will become eligible for additional service fees
with respect to such shares commencing in the 13th month following the
purchase. Dealers may from time to time be required to meet certain criteria
in order to receive service fees. PFD or its affiliates are entitled to
retain all service fees payable under the Class B Plan for which there is no
dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance
services performed by PFD or its affiliates for shareholder accounts.
XI. DIVIDENDS AND TAX STATUS
The Fund has elected to be treated, has qualified, and intends to qualify
each year as a "regulated investment company" under the Internal Revenue Code
of 1986, as amended (the "Code"). Because the Fund intends to distribute all
or substantially all of its net investment income and net realized capital
gains to shareholders in a timely manner, it is not expected that the Fund
will be required to pay any Federal income taxes. The Code permits tax-exempt
interest received by the Fund and distributed to the Fund's shareholders to
flow through as tax-exempt "exempt-interest dividends," provided that the
Fund qualifies as a regulated investment company and at least 50% of the
value of the total assets of the Fund at the close of each quarter of its
taxable year consists of tax-exempt obligations. However, distributions
derived from interest on certain "private activity bonds" will be subject to
the federal alternative minimum tax for individuals, estates or trusts that
are subject to such tax; and all tax exempt distributions may result in or
increase a corporate shareholder's liability for the federal alternative
minimum tax.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Fund will not be deductible for federal income tax purposes to
the extent it is deemed related to the Fund's exempt-interest dividends. The
Fund may not be an appropriate investment for persons who are "substantial
users" of facilities financed by industrial revenue or private activity bonds
or persons related to substantial users. Shareholders receiving social
security or certain railroad retirement benefits may be subject to federal
income tax on a portion of such benefits as a result of receiving investment
income, including exempt-interest dividends and other distributions paid by
the Fund.
Under the Code, the Fund will be subject to a nondeductible 4% federal
excise tax on a portion of its undistributed ordinary (taxable) income (if
any) and net capital gains if it fails to meet certain distribution
requirements with respect to each calendar year. The Fund intends to make
distributions in a timely manner and accordingly does not expect to be
subject to the excise tax.
Each business day the Fund declares a dividend consisting of substantially
all of the Fund's net investment income. Shareholders begin earning dividends
on the first business day following receipt of payment for purchased shares.
Shares continue to earn dividends up to and including the date of redemption.
Dividends are normally paid on the last business day of the month or shortly
thereafter. The Fund's net investment income consists of the interest income
it earns, less expenses. In computing interest income, the Fund amortizes
premium or accrues discount on long-term debt securities only to the extent
required for federal income tax purposes.
While the Fund seeks to maximize the percentage of income distributed
which is not subject to federal income taxes, it is possible that under
certain circumstances (see "Investment Objective and Policies") a small
portion of the income dividends paid by the Fund will be subject to federal
income tax. Dividends from the Fund's taxable net investment income, if any,
market discount income and net short-term capital gains are taxable as
ordinary income, and dividends from the Fund's net long-term capital gains
are taxable as long-term capital gains. Fund distributions may also be
12
<PAGE>
subject to state and local income taxes. A state income (and possibly local
income and/or intangible property) tax exemption is generally available to
the extent the Fund's distributions are derived from interest on (or, in the
case of intangible taxes, the value of its assets is attributable to) certain
U.S. government obligations and/or tax-exempt municipal obligations issued by
or on behalf of the particular state or a political subdivision thereof,
provided in some states that certain thresholds for holdings of such
obligations and/or reporting requirements are satisfied. The federal income
tax status of all distributions will be reported to shareholders annually,
and shareholders are required to report all distributions, including
tax-exempt distributions, on their federal income tax returns.
Unless shareholders specify otherwise, all distributions will be
automatically reinvested in additional full and fractional shares of the
Fund. For federal income tax purposes, all dividends are taxable as described
above whether a shareholder takes them in cash or reinvests them in
additional shares of the Fund. Information as to the tax status of
distributions will be provided annually. See "Distribution Options" and
"Directed Dividends."
Taxable dividends and other distributions which are taxable and the
proceeds of redemptions (including exchanges) and repurchases of Fund shares
paid to individuals and other non-exempt payees may be subject to 31% backup
withholding of federal income tax if the Fund is not provided with the
shareholder's correct taxpayer identification number and certification that
the number is correct and the shareholder is not subject to such backup
withholding or if the Fund receives notice from the IRS or a broker that such
withholding applies. Please refer to the Account Application for additional
information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e., U.S. citizens or residents or
U.S. corporations, partnerships, trusts or estates and who are subject to
U.S. federal income tax. Non-U.S. shareholders and tax-exempt shareholders
are subject to different tax treatment that is not described above.
Shareholders should consult their own tax advisors regarding applicable
state, local and other tax laws in their particular situations.
XII. SHAREHOLDER SERVICES
PSC is the transfer agent for shares of the Fund. PSC, a Massachusetts
corporation, is a wholly-owned subsidiary of PGI. PSC's offices are located
at 60 State Street, Boston, Massachusetts 02109, and inquiries to PSC should
be mailed to Pioneering Services Corporation, P.O. Box 9014, Boston,
Massachusetts 02205-9014. Brown Brothers Harriman & Co. (the "Custodian")
serves as the custodian of the Fund's portfolio securities and other assets.
The principal business address of the mutual funds division of the Custodian
is 40 Water Street, Boston, Massachusetts 02109.
Account and Confirmation Statements
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing the
details of transactions are sent to shareholders quarterly for dividend
reinvestment transactions and more frequently for other types of
transactions. The Pioneer Combined Account Statement, mailed quarterly, is
available to all shareholders who have more than one Pioneer Account.
Shareholders whose shares are held in the name of a broker-dealer or other
party will not normally have an account with the Fund and might not be able
to utilize some of the services available to shareholders of record. Examples
of services which might not be available are investment or redemption of
shares by mail, automatic reinvestment of dividends and capital gains
distributions, withdrawal plans, Letters of Intention, Rights of
Accumulation, telephone exchanges and redemptions and newsletters.
Additional Investments
You may add to your account by sending a check ($50 minimum) to PSC;
please indicate your account number and Class of shares clearly. The bottom
portion of a confirmation statement may be used as a remittance slip to make
additional investments. Additions to a shareholder's account, whether by
check or through an Investomatic Plan, are invested in full and fractional
shares of the Fund at the applicable public offering price in effect as of
the close of regular trading on the Exchange on the day of receipt.
Automatic Investment Plans
You may arrange for regular automatic investments of $50 or more through
government/military allotments or through a Pioneer Investomatic Plan. A
Pioneer Investomatic Plan provides for a monthly or quarterly investment by
means of a preauthorized electronic funds transfer or draft drawn on a
checking account. Pioneer Investomatic Plan investments are voluntary, and
you may discontinue the Plan without penalty upon 30 days' written notice to
PSC. PSC acts as agent for the purchaser, the broker-dealer and PFD in
maintaining these plans.
Financial Reports and Tax Information
As a shareholder, you will receive financial reports at least
semiannually. In January of each year, the Fund will mail you information
about the tax status of dividends and distributions.
Distribution Options
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the same Class of the Fund, at the
applicable net asset value per share, unless you indicate another option on
the Account Application.
Two other options available are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and capital gains
distributions in cash. These two options are not available, however, for
retirement plans or for an account with a net asset value of less than $500.
Changes in your distribution options may be made by written request to PSC.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer
mutual fund account invested in a second Pioneer mutual fund account. The
value of this second account must
13
<PAGE>
be at least $1,000 ($500 for Pioneer Fund or Pioneer II). Invested dividends
may be in any amount, and there are no fees or charges for this service.
Direct Deposit
If you have elected to take distributions, whether dividends or dividends
and capital gains, in cash, or have established a Systematic Withdrawal Plan,
you may choose to have those cash payments deposited directly into your
savings, checking or NOW bank account. You may establish this service by
completing the appropriate section on the Account Application when opening a
new account or the Account Options Form for an existing account.
Telephone Transactions and Related Liabilities
Your account is automatically authorized to have telephone transaction
privileges unless you indicated otherwise on your Account Application or by
writing to PSC. See "Share Price," "How to Sell Fund Shares" and "Telephone
Exchanges" for more information. You may purchase, sell or exchange Fund
shares by telephone. See "Share Price" for more information. For personal
assistance, call 1-800-225-6292 between 8:00 a.m. and 9:00 p.m. Eastern Time
on weekdays. Computer-assisted transactions may be available to shareholders
who have pre-recorded certain bank information (See FactFone). You are
strongly urged to consult with your financial representative prior to
requesting any telephone transaction. See "Share Price" for more information.
To confirm that each transaction instruction received by telephone is
genuine, the Fund will record each telephone transaction, require the caller
to provide the personal identification number ("PIN") for the account and
send you a written confirmation of each telephone transaction. Different
procedures may apply to accounts that are registered to non-U.S. citizens or
are held in the name of an institution or in the name of an investment
broker-dealer or other third-party. If reasonable procedures, such as those
described above, are not followed, the Fund may be liable for any loss due to
unauthorized or fraudulent instructions. The Fund may implement other
procedures from time to time. In all other cases, neither the Fund, PSC or
PFD will be responsible for the authenticity of instructions received by
telephone; therefore, you bear the risk of loss for unauthorized or
fraudulent telephone transactions.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund
by telephone to institute a redemption or exchange. Your should communicate
with the Fund in writing if you are unable to reach the Fund by telephone.
FactFone(SM)
FactFone is an automated inquiry and telephone transaction system
available to Pioneer shareholders by dialing 1-800-225-4321. FactFone allows
you to obtain current information on your Pioneer mutual fund accounts and to
inquire about the prices and yields of all publicly available Pioneer mutual
funds. In addition, you may use FactFone to make computer-assisted telephone
purchases, exchanges and redemptions from your Pioneer accounts if you have
activated your PIN. Telephone purchases and redemptions require the
establishment of a bank account of record. You are strongly urged to consult
with your financial representative prior to requesting any telephone
transaction. Shareholders whose accounts are registered in the name of a
broker-dealer or other third party may not be able to use FactFone. See "How
to Buy Shares," "How to Exchange Fund Shares," "How to Sell Fund Shares" and
"Telephone Transactions and Related Liabilities." Call PSC for assistance.
Telecommunications Device for the Deaf (TDD)
If you have a hearing disability and your own TDD keyboard equipment, you
can call our TDD number toll-free at 1-800-225-1997, weekdays from 8:30 a.m.
to 5:30 p.m. Eastern Time, to contact our telephone representatives with
questions about your account.
Systematic Withdrawal Plans
If your account has a total value of at least $10,000 you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B shares accounts are limited to 10% of the
value of the account at the time the plan is implemented. See "Waiver or
Reduction of Contingent Deferred Sales Charge" for more information. Periodic
checks of $50 or more will be sent to you, monthly or quarterly. You may also
direct that withdrawal checks be paid to another person, although if you make
this designation after you have opened your account, a signature guarantee
must accompany your instructions. Purchases of Class A shares of the Fund at
a time when you have a SWP in effect may result in the payment of unnecessary
sales charges and may therefore be disadvantageous. Your periodic redemptions
of shares may be taxable.
You may obtain additional information by calling PSC at 1-800-225-6292 or
by referring to the Statement of Additional Information.
Reinstatement Privilege (Class A Shares Only)
If you redeem all or part of your Class A shares of the Fund, you may
reinvest all or part of the redemption proceeds without a sales commission in
Class A shares of the Fund if you send a written request to PSC not more than
90 days after your shares were redeemed. Your redemption proceeds will be
reinvested in shares of the Fund at the net asset value next determined after
receipt of the written request for reinstatement, together with the proceeds
that you wish to reinvest. You may realize a taxable gain or loss for federal
income tax purposes as a result of the redemption, and special tax rules may
apply if a reinstatement occurs. Subject to the provisions outlined under
"Exchange Privilege" above, you may also reinvest in any other Pioneer mutual
funds; in this case you must meet the minimum investment requirement for each
fund you enter.
The 90-day reinvestment period may be extended by PFD for periods of up to
one year for shareholders living in areas that have experienced a natural
disaster, such as a flood, hurricane, tornado, or earthquake.
------------
The options and services available to shareholders, including the terms of
the Exchange Privilege and the Pioneer Investomatic Plan, may be revised,
suspended
14
<PAGE>
or terminated at any time by PFD or by the Fund. You may establish the
services described in this section when you open your account. You may also
establish or revise many of them on an existing account by completing an
Account Option Form, which you may request by calling 1-800-225-6292.
XIII. THE FUND
The Fund is an open-end diversified management investment company
(commonly referred to as a mutual fund) organized as a Massachusetts business
trust on July 24, 1986. The Fund has authorized an unlimited number of shares
of beneficial interest and the Trustees are authorized to create additional
series of the Fund. The Fund is not required to hold annual meetings,
although special meetings may be called for the purposes of electing or
removing Trustees, changing fundamental investment restrictions or approving
a management contract. The Trustees have the authority, without further
shareholder approval, to classify and reclassify the shares of the Fund, or
any new series of the Fund, into one or more classes. As of the date of this
Prospectus, the Trustees have authorized the issuance of two Classes of
shares, designated Class A and Class B. The shares of each Class represent an
interest in the same portfolio of investments of the Fund. Each Class has
equal rights as to voting, redemption, dividends and liquidation, except that
each Class bears different distribution and transfer agent fees and may bear
other expenses properly attributable to the particular Class. Class A and
Class B shareholders have exclusive voting rights with respect to the Rule
12b-1 distribution plans adopted by holders of those shares in connection
with the distribution of shares.
XIV. INVESTMENT RESULTS
The Fund may from time to time include yield information in advertisements
or in information furnished generally to existing or proposed shareholders.
Whenever yield information is provided, it includes a standardized yield
calculation computed by dividing the Fund's net investment income per share
during a base period of 30 days, or one month, by the maximum offering price
per share of the Fund on the last day of such base period. (The Fund's net
investment income per share is determined by dividing the Fund's net
investment income during the base period by the average number of shares of
the Fund entitled to receive dividends during the base period.) The Fund's
30-day yield is then "annualized" by a computation that assumes that the
Fund's net investment income is earned and reinvested for a six-month period
at the same rate as during the 30-day base period and that the resulting
six-month income will be generated over an additional six months.
The Fund may also from time to time advertise its taxable equivalent
yield. The Fund's taxable equivalent yield is determined by dividing that
portion of the Fund's yield (calculated as described above) that is tax
exempt by one minus the stated federal income tax rate and adding the product
to that portion, if any, of the Fund's yield that is not tax exempt. For a
table of sample taxable equivalent yields, please see the Appendix.
The average annual total return (for a designated period of time) on an
investment in the Fund may be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for
each Class is computed in accordance with the SEC's standardized formula. The
calculation for all Classes assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal
or state income taxes. In addition, for Class A shares the calculation
assumes the deduction of the maximum sales charge of 3.50%; for Class B
shares the calculation reflects the deduction of any applicable CDSC. The
periods illustrated would normally include one, five and ten years (or since
the commencement of the public offering of the shares of a Class, if shorter)
through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share
values; or any graphic illustration of such data may also be used. These data
may cover any period of the Fund's existence and may or may not include the
impact of sales charges, taxes or other factors.
Other investments or savings vehicles and/or to unmanaged market indexes,
indicators of economic activity or averages of mutual funds results may be
cited or compared with the investment performance of the Fund. Rankings or
listings by magazines, newspapers or independent statistical or rating
services, such as Lipper Analytical Services, Inc., may also be referenced.
The Fund's investment results will vary from time to time depending on
market conditions, the composition of the Fund's portfolio and operating
expenses of the Fund. All quoted investment results are historical and should
not be considered representative of what an investment in the Fund may earn
in any future period. For further information about the calculation methods
and uses of the Fund's investment results, see the Statement of Additional
Information.
15
<PAGE>
- -------------------------------------------------------------------------------
XV. APPENDIX
Taxable Equivalent Yields*
The tables below show the approximate taxable yields which are equivalent
to hypothetical tax-exempt yields from 5% to 9% under federal income tax laws
applicable to individuals during 1995.
<TABLE>
<CAPTION>
Taxable Yield Required
Single Return Joint Return To Equal A Tax Free Yield Of:
- ----------------- --------------- Tax -----------------------------------
(Taxable Income)* Rate 5% 6% 7% 8% 9%
- ----------------------------------- ------ ----- ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Up to $23,350 Up to $39,000 15.0% 5.88 7.06 8.24 9.41 10.59
$23,351-$56,550 $39,001-$94,250 28.0% 6.94 8.33 9.72 11.11 12.50
$56,551-$117,950 $94,251-$143,600 31.0% 7.25 8.70 10.14 11.59 13.04
$117,951-$256,500 $143,601-$256,500 36.0% 7.81 9.38 10.94 12.50 14.06
Over $256,500 Over $256,500 39.6% 8.28 9.93 11.59 13.25 14.90
</TABLE>
*Net amount subject to Federal income tax after deductions and exemptions.
Table does not reflect the effect of the Deduction Limitation and Exemption
Phaseout described below** or of the alternative minimum tax, if any. Table
assumes person filing Single Return is not a married individual filing a
separate return, a surviving spouse, or a head of household.
**Deduction Limitation: Each $100 of adjusted gross income ("AGI") in excess
of $114,700 ($57,350 for marrieds filing separately) causes the loss of $3
of itemized deductions. This limitation affects all itemized deductions
other than medical expenses, investment interest, and casualty, theft and
wagering losses. However, not more than 80% of a taxpayer's itemized
deductions can be eliminated. The threshold amounts will be adjusted for
inflation from year to year.
Exemption Phaseout: Each $2,500 or fraction thereof of AGI in excess of
$172,050 for joint filers ($114,700 for single taxpayers) causes taxpayers
to lose 2% of their personal exemptions. The threshold amounts will be
adjusted for inflation from year to year.
The following formula can be used to calculate a taxable yield which is
equivalent to the corresponding tax-free yield:
Tax Free Yield
------------------
1-Your Tax Bracket = Taxable Equivalent Yield
For example, if you are in the 28% tax bracket and earn a tax-free yield of
7%, the taxable equivalent yield would be 9.72%.
7% = .07 = 9.72%
---- ----
1-28% .72
There can be no assurance that the Fund will achieve any specific tax-exempt
yield. While it is expected that a substantial portion of the interest income
distributed to investors in the Fund will be exempt from regular federal
income taxes, portions of such distributions may be subject to regular
federal income tax or federal alternative minimum tax. In addition, all or a
substantial portion of such distributions may be subject to state and local
taxes. Subsequent tax law changes could result in prospective or retroactive
changes in the tax brackets, tax rates and tax equivalent yields set forth
above.
16
<PAGE>
Notes
17
<PAGE>
Notes
18
<PAGE>
The Pioneer Family of Mutual Funds
International Growth Funds
Pioneer India Fund
Pioneer Emerging Markets Fund
Pioneer International Growth Fund
Pioneer Europe Fund
Growth Funds
Pioneer Gold Shares
Pioneer Growth Shares
Pioneer Capital Growth Fund
Pioneer Small Company Fund
Growth and Income Funds
Pioneer Three
Pioneer II
Pioneer Fund
Pioneer Real Estate Shares
Pioneer Equity-Income Fund
Income Funds
Pioneer Income Fund
Pioneer Bond Fund
Pioneer America Income Trust
Pioneer Short-Term Income Trust
Tax-Free Income Funds
Pioneer California Double Tax-Free Fund*
Pioneer Massachusetts Double Tax-Free Fund*
Pioneer New York Triple Tax-Free Fund*
Pioneer Tax-Free Income Fund*
Pioneer Intermediate Tax-Free Fund*
Money Market Funds
Pioneer Cash Reserves Fund
Pioneer U.S. Government Money Fund
*Not suitable for retirement accounts.
19
<PAGE>
Pioneer
Intermediate
Tax-Free
Fund
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
KATHLEEN D. McCLASKEY, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses, applications,
service forms
and telephone transactions ................................... 1-800-225-6292
FactFone(SM)
Automated fund yields, automated
prices and account information ............................... 1-800-225-4321
Retirement plans .............................................. 1-800-622-0176
Toll-free fax ................................................ 1-800-225-4240
Telecommunications Device for the Deaf (TDD) .................. 1-800-225-1997
1295-2941
(C)Pioneer Funds Distributor, Inc.
20
<PAGE>
PIONEER INTERMEDIATE TAX-FREE FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A and Class B Shares
April 28, 1995
(Revised December 20, 1995)
This Statement of Additional Information (Part B of the Registration Statement)
is not a Prospectus, but should be read in conjunction with the Prospectus (the
"Prospectus") dated April 28, 1995 (revised December 20, 1995) of Pioneer
Intermediate Tax-Free Fund (the "Fund"). A copy of the Prospectus can be
obtained free of charge by calling Shareholder Services at 1-800-225- 6292 or by
written request to the Fund at 60 State Street, Boston, Massachusetts 02109. The
most recent Annual and Semi-Annual Reports to Shareholders are attached to this
Statement of Additional Information and are incorporated into this Statement of
Additional Information by reference. Prior to January 3, 1994, the Fund was
known as "Pioneer Municipal Bond Fund."
TABLE OF CONTENTS
Page
1. Investment Policies and Restrictions..............................2
2. Management of the Fund............................................4
3. Investment Adviser................................................8
4 Underwriting Agreement and Distribution Plans.....................9
5. Shareholder Servicing/Transfer Agent..............................11
6. Custodian.........................................................11
7. Principal Underwriter.............................................11
8. Independent Public Accountants....................................12
9. Portfolio Transactions............................................12
10. Tax Status........................................................13
11. Description of Shares.............................................15
12. Certain Liabilities...............................................16
13. Determination of Net Asset Value..................................17
14. Systematic Withdrawal Plan........................................17
15. Letter of Intention...............................................18
16. Investment Results................................................18
17. Financial Statements..............................................22
Appendix A........................................................A-1
Appendix B........................................................B-1
Appendix C........................................................C-1
Appendix D........................................................D-1
--------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
1. INVESTMENT POLICIES AND RESTRICTIONS
The Fund's Prospectus identifies the investment objective and the
principal investment policies of the Fund. Other investment policies are set
forth below.
Portfolio Management
The Fund intends to manage its portfolio fully by buying and selling
securities, as well as holding securities to maturity. In managing its portfolio
the Fund seeks to take advantage of market developments and yield disparities,
which may include use of the following strategies:
(1) shortening the average maturity of its portfolio in anticipation
of a rise in interest rates so as to minimize depreciation of principal;
(2) lengthening the average maturity of its portfolio in anticipation
of a decline in interest rates so as to maximize tax-exempt yield;
(3) selling one type of debt security (e.g., revenue bonds) and buying
another (e.g., general obligation bonds) when disparities arise in the
relative values of each; and
(4) changing from one debt security to an essentially similar debt
security when their respective yields appear distorted due to market
factors.
The Fund engages in portfolio trading if it believes a transaction net
of costs (including custodian charges) will help in achieving its investment
objective.
Investment Restrictions
Fundamental Investment Restrictions. The Fund has adopted certain
fundamental investment restrictions which may not be changed without the
affirmative vote of the holders of a majority of the Fund's outstanding shares.
As used in the Prospectus and this Statement of Additional Information, such
approval means the approval of the lesser of (i) the holders of 67% or more of
the shares represented at a meeting if the holders of more than 50% of the
outstanding shares are present in person or by proxy, or (ii) the holders of
more than 50% of the outstanding shares.
The Fund may not:
(1) Borrow money, except as a temporary measure for
extraordinary or emergency purposes, and then only in an amount not
exceeding 10% of its gross assets, or pledge, mortgage or hypothecate
an amount of its assets taken at market value which would exceed 15% of
its gross assets, in each case taken at the lower of cost or market
value and subject to a 300% asset coverage requirement;
(2) Underwrite securities issued by other persons except
insofar as the Fund may technically be deemed an underwriter under the
Securities Act of 1933 in selling a portfolio security;
(3) Purchase or sell real estate (including limited
partnership interests, but excluding Municipal Bonds secured by real
estate or interests therein), interests in oil, gas or mineral leases
or exploration or development programs, commodities or commodity
contracts (except contracts for the future acquisition or delivery of
fixed-income securities) in the ordinary course of its business;
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(4) Make loans to other persons except through the use of
repurchase agreements. The purchase of debt securities by the Fund
pursuant to its investment objectives and other investment policies
shall not be considered loans for purposes of this restriction. Not
more than 10% of its total assets will be invested in repurchase
agreements maturing in more than seven days;
(5) Purchase the securities of any issuer if such purchase, at
the time thereof, would cause more than 5% of its total assets taken at
market value to be invested in the securities of such issuer, other
than securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities; or
(6) Purchase any securities or evidences of interest therein
on margin, except that the Fund may obtain such short-term credit as
may be necessary for the clearance of purchases and sales of
securities;
The Fund will not purchase securities while any borrowings are
outstanding.
Although the Fund may invest more than 25% of its assets in
industrial development revenue bonds, the Fund will not purchase a
security if, as a result, more than 25% of the Fund's assets would be
in industrial revenue bonds where payment of principal and interest is
the ultimate responsibility of issuers in the same industry.
Non-fundamental Investment Restrictions. The following
restrictions have been designated as non-fundamental and may be changed
by a vote of the Fund's Board of Trustees without approval of
shareholders.
The Fund may not:
(a) Purchase or retain the securities of any issuer,
if those individual officers, directors or trustees of the Fund, its
adviser or principal underwriter, each owning beneficially 0.50% of the
securities of such issuer, together own more than 5.0% of the
securities of such issuer;
(b) Sell any security which the Fund does not own
unless by virtue of its ownership of other securities it has at the
time of sale a right to obtain securities without payment of further
consideration equivalent in kind and amount to the securities sold and
provided that if such right is conditional the sale is made upon the
same conditions;
(c) Purchase or sell any put or call option or any
combination thereof, provided that this shall not prevent the purchase,
ownership, holding or sale of contracts for the future delivery of
fixed income securities; or
(d) Invest in any security, including any repurchase
agreement maturing in more than seven days, which is illiquid, if more
than 15% of the total assets of the Fund, taken at market value, would
be invested in such securities.
In addition, in connection with the offering of its shares in certain
jurisdictions, the Fund has agreed to adopt certain additional investment
restrictions which are not fundamental and may be changed by a vote of the
Fund's Board of Trustees. The Fund has agreed (1) to invest no more than 5% of
its total assets in warrants, valued at the lower of cost or market, and no more
than 2% of its total assets in warrants, so valued, which are not listed on
either the New York or American Stock Exchanges; (2) that (i) short sales at any
one time shall not exceed 25% of the net equity of the Fund and (ii) the value
of any one issuer in which the Fund is short may not exceed the lesser of 2.0%
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of the value of the Fund's net assets or 2.0% of the securities of any class of
any issuer; and (3) not to pledge, mortgage or hypothecate its portfolio
securities if the percentage of securities so pledged, mortgaged or hypothecated
plus the percentage of the sales charge on its shares would exceed 10%. In
addition, short sales may only be made in securities fully listed on a national
stock exchange.
Percentage Restrictions
If a percentage restriction on investment or utilization of assets set
forth above or in the Prospectus is adhered to at the time an investment is made
or assets are so utilized, a later change in percentage resulting from changes
in the value of the Fund's portfolio securities will not be considered a
violation of a policy.
The Fund has adopted the following operating policies which are not
fundamental and which may be changed without shareholder approval. The Fund may
enter into repurchase agreements (a purchase of and a simultaneous commitment to
resell a security at an agreed upon price on an agreed upon date) with
broker-dealers and member banks of the Federal Reserve System and only if
collateralized by U.S. Government securities. If the vendor of a repurchase
agreement fails to pay the sum agreed to on the agreed upon delivery date, the
Fund would have the right to sell the U.S. Government securities, but might
incur a loss in so doing and in certain cases may not be permitted to sell the
U.S. Government securities. As noted in Non-fundamental Investment Restriction
(d), the Fund may not invest more than 15% of its assets in repurchase
agreements maturing in more than seven days. The Fund does not anticipate
investing more than 5% of its total assets in repurchase agreements maturing in
more than 7 days in the foreseeable future.
For the purposes of the Fund's investment restrictions, the issuer of a
tax-exempt security is deemed to be the entity (public or private) ultimately
responsible for the payment of the principal of, and interest on, the security.
2. MANAGEMENT OF THE FUND
The Fund's Board of Trustees provides broad supervision over the
affairs of the Fund. The officers of the Fund are responsible for the Fund's
operations. The Trustees and executive officers of the Fund are listed below,
together with their principal occupations during the past five years. An
asterisk indicates those Trustees who are interested persons of the Fund within
the meaning of the Investment Company Act of 1940, as amended (the "1940 Act").
JOHN F. COGAN, JR.*, Chairman of the Board, President and Trustee, Date of Birth
("DOB"): 6/13/26
President and a Director of The Pioneer Group, Inc. ("PGI"); Chairman
and a Director of Pioneering Management Corporation ("PMC"); Chairman of the
Board and Director of Pioneer Funds Distributor, Inc. ("PFD"); Director of
Pioneering Services Corporation ("PSC"), Pioneer Capital Corporation ("PCC") and
Forest-Starma (a Russian corporation); President and Director of Pioneer Plans
Corporation ("PPC"), Pioneer Investment Corp. ("PIC"), Pioneer Metals and
Technology, Inc. ("PMT"), Pioneer International Corp. ("PIntl"), Luscina, Inc.,
Pioneer First Russia, Inc. ("First Russia"), Pioneer Omega, Inc. ("Omega") and
Theta Enterprises, Inc.; Chairman, President and a Director of Pioneer
Goldfields Limited ("PGL"); Chairman of the Supervisory Board of Pioneer Fonds
Marketing, GmbH ("Pioneer GmbH"); Member of the Supervisory Board of Pioneer
First Polish Trust Fund Joint Stock Company ("PFPT"); Chairman, President and
Trustee of all of the Pioneer mutual funds and Chairman and Partner, Hale and
Dorr (counsel to the Fund).
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RICHARD H. EGDAHL, M.D., Trustee, DOB: 12/13/26
Boston University Health Policy Institute, 53 Bay State Road, Boston, MA
Professor of Management, Boston University School of Management, since
1988; Professor of Public Health, Boston University School of Public Health;
Professor of Surgery, Boston University School of Medicine and Boston University
Health Policy Institute; Director, Boston University Medical Center; Executive
Vice President and Vice Chairman of the Board, University Hospital; Academic
Vice President for Health Affairs, Boston University; Director, Essex Investment
Management Company, Inc. (investment adviser), Health Payment Review, Inc.
(health care containment software firm), Mediplex Group, Inc. (nursing care
facilities firm), Peer Review Analysis, Inc. (health care utilization management
firm) and Springer-Verlag New York, Inc. (publisher); Honorary Trustee,
Franciscan Children's Hospital and Trustee of all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, Trustee, DOB: 5/12/47
The Keep, P.O. Box 110, Little Deer Isle, ME 04650
Founding Director, Winthrop Group, Inc., consulting firm since 1982;
Manager of Research Operations, Xerox Palo Alto Research Center, since September
1991 and 1994; Professor of Operations Management and Management of Technology,
Boston University School of Management between 1989 and 1993; Trustee of all of
the Pioneer mutual funds except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, Trustee, DOB: 7/27/17
6363 Waterway Drive, Falls Church, VA
Professor Emeritus and Adjunct Scholar, George Washington University;
Economic Consultant and Director, American Productivity and Quality Center;
American Enterprise Institute and Trustee of all of the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, Trustee, DOB: 5/10/48
One Boston Place, Suite 2363, Boston, MA
President, Newbury, Piret & Company, Inc. (merchant banking firm) and
Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, Trustee and Executive Vice President, DOB: 2/13/44
Executive Vice President and a Director of PGI; Director of PFD;
Director of PCC, PIC, PIntl and Pioneer SBIC Corporation; President, Chief
Investment Officer and a Director of PMC and Executive Vice President and
Trustee of all of the Pioneer mutual funds.
STEPHEN K. WEST, Trustee, DOB: 5/18/45
125 Broad Street, New York, New York
Partner, Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus
Funds (mutual funds) and Trustee of all of the Pioneer mutual funds except
Pioneer Variable Contracts Trust.
JOHN WINTHROP, Trustee, DOB: 6/22/36
One North Adgers Wharf, Charleston, South Carolina
President, John Winthrop & Co., Inc. (a private investment firm);
Director of NUI Corp.; Trustee of Alliance Capital Reserves, Alliance Government
Reserves and Alliance Tax Exempt Reserves and Trustee of all of the Pioneer
mutual funds.
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WILLIAM H. KEOUGH, Treasurer, DOB: 4/12/37
Senior Vice President, Chief Financial Officer and Treasurer of PGI and
Treasurer of PFD, PMC, PSC, PCC, PIC, PIntl, PMT, PGL and Pioneer SBIC
Corporation and Treasurer and Director of PPC and Treasurer of all of the
Pioneer mutual funds.
JOSEPH P. BARRI, Secretary, DOB: 8/11/46
Secretary of PGI, PMC, PPC, PIC, PIntl, PMT and PCC; Clerk of PFD and
PSC; Partner, Hale and Dorr (counsel to the Fund) and Secretary of all of the
Pioneer mutual funds.
ERIC W. RECKARD, Assistant Treasurer, DOB: 6/19/56
Manager of Fund Accounting and Compliance of PMC since May 1994,
Manager of Auditing and Business Analysis for PGI prior to May 1994 and
Assistant Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, Assistant Secretary, DOB: 3/7/64
General Counsel of PGI since 1995; formerly of Hale and Dorr (counsel
to the Fund) where he most recently served as junior partner and Assistant
Secretary of all of the Pioneer mutual funds except Pioneer Variable Contracts
Trust.
KATHLEEN D. MCCLASKEY, Vice President, DOB: 1/19/52
Vice President of PMC and Pioneer Tax-Free State Series Trust.
The Fund's Amended and Restated Declaration of Trust (the "Declaration
of Trust") provides that the holders of two-thirds of its outstanding shares may
vote to remove a Trustee of the Fund at any meeting of shareholders. See
"Description of Shares" below. The business address of all officers is 60 State
Street, Boston, Massachusetts 02109.
All of the outstanding capital stock of PFD, PMC and PSC is owned,
directly or indirectly, by PGI, a publicly-owned Delaware corporation. PMC, the
Fund's investment adviser, serves as the investment adviser for the Pioneer
mutual funds listed below and manages the investments of certain institutional
private accounts.
The table below lists all the Pioneer mutual funds currently offered to
the public and the investment adviser and principal underwriter for each fund.
Investment Principal
Fund Name Adviser Underwriter
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Three PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer India Fund PMC PFD
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Pioneer Emerging Markets Fund PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer Income Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer California Double Tax-Free Fund PMC PFD
Pioneer New York Triple Tax-Free Fund PMC PFD
Pioneer Massachusetts Double Tax-Free Fund PMC PFD
Pioneer Cash Reserve Fund PMC PFD
Pioneer U.S. Government Money Fund PMC PFD
Pioneer Interest Shares, Inc. PMC Note 1
Pioneer Variable Contracts Trust PMC Note 2
Note 1 This fund is a closed-end fund.
Note 2 This is a series of eight separate portfolios designed to provide
investment vehicles for the variable annuity and variable life
insurance contracts of various insurance companies or for certain
qualified pension plans.
To the knowledge of the Fund, no officer or Trustee of the Fund owned
5.0% or more of the issued and outstanding shares of PGI as of March 31, 1995,
except Mr. Cogan who then owned approximately 15% of such shares. To the
knowledge of the Fund, the following accounts owned more than 5% of the
outstanding Class B shares of the Fund: Donaldson Lufkin Jenrette Securities
Corporation, Jersey City, New Jersey (12,026 shares, 6%); Geraldine Crawford,
Huntington Station, New York (11,076 shares, 5%); and Dorothy M. Wilson Trustee
for Darlene Stadler U/A DTD 2-7-95, Pueblo, Colorado (10,558 shares, 5%). To the
knowledge of the management of the Fund, no entity owned more than 5% of the
outstanding shares of the Class A shares of the Fund as of March 31, 1995.
Compensation of Officers and Trustees
The Fund pays no salaries or compensation to any of its officers. The
Fund pays an annual trustees' fee of $1,000, and a payment of $100 plus expenses
per meeting attended, to each Trustee who is not affiliated with PMC, PFD or PSC
and pays an annual trustees' fee of $500 plus expenses to each Trustee
affiliated with PMC, PFD or PSC. Any such fees and expenses paid to affiliates
or interested persons of PMC, PFD or PSC are reimbursed to the Fund under its
management contract.
The following table sets forth certain information with respect to the
compensation of each Trustee of the Fund:
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Pension or Total
Retirement Compensation
Benefits from Fund and
Aggregate Accrued as Pioneer
Compensation Part of Family
Name of Trustee From the Fund* Fund's Expense of Funds**
John F. Cogan, Jr. $ 500 $0 $11,750
David D. Tripple 500 0 11,750
Richard H. Egdahl, M.D. 1,500 0 55,650
Margaret B.W. Graham 1,500 0 55,650
John W. Kendrick 1,500 0 55,650
Marguerite A. Piret 2,250 0 66,650
Stephen K. West 2,000 0 63,650
John Winthrop 2,000 0 63,650
* As of Fund's fiscal year end.
** As of December 31, 1994 (calendar year end for all Pioneer Funds).
At March 31, 1995, the Trustees and officers of the Fund owned in the
aggregate, less than 1% of the outstanding securities of the Fund.
3. INVESTMENT ADVISER
The Fund has contracted with PMC, 60 State Street, Boston,
Massachusetts, to act as its investment adviser. The term of the contract is one
year and is renewable annually by the vote of a majority of the Board of
Trustees of the Fund (including a majority of the Board of Trustees who are not
parties to the contract or interested persons of any such parties) cast in
person at a meeting called for the purpose of voting on such renewal. This
contract terminates if assigned and may be terminated without penalty by either
party by vote of its Board of Directors or Trustees or a majority of its
outstanding voting securities and the giving of sixty days' written notice.
Pursuant to the management contract, PMC will not be liable for any error of
judgment or mistake of law or for any loss sustained by reason of the adoption
of any investment policy or the purchase, sale or retention of any securities on
the recommendation of PMC. PMC, however, is not protected against liability by
reason of wilful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties under the respective management contract.
As compensation for its management services and expenses incurred, PMC
is entitled to a management fee at the rate of 0.50% per annum of the Fund's
average daily net assets. The fee is normally computed daily and paid monthly.
On an interim basis, PMC has agreed not to impose management fees for the Fund
and if necessary to limit or otherwise reduce other operating expenses to the
extent needed to limit the expenses of the Fund as described in the Prospectus
in Note 3 to the table set forth under "Expense Information." PMC's agreement is
voluntary and temporary and may be revised or terminated at any time. The
purpose of this policy is to enhance the Fund's dividend yield during the period
when, because of the Fund's size, fixed expenses have a more significant impact
on yield.
Pursuant to the expense limitation discussed above, during the fiscal
years ended December 31, 1994, 1993 and 1992, the management fees were reduced
by $183,384, $188,711 and $215,325, respectively, resulting in actual management
fees paid during those periods to PMC of $412,999, $171,943 and $37,930. See the
Notes to the Financial Statements in the December 31, 1994 Annual Report
(incorporated herein by reference) for more information.
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4. UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS
The Fund has entered into an Underwriting Agreement with PFD. The
Underwriting Agreement will continue from year to year if annually approved by
the Trustees. The Underwriting Agreement provides that PFD will bear any
distribution expenses not born by the Fund.
PFD bears all expenses it incurs in providing services under the
Underwriting Agreement. Such expenses include compensation to its employees and
representatives and to securities dealers for distribution related services
performed for the Fund. PFD also pays certain expenses in connection with the
distribution of the Fund's shares, including the cost of preparing, printing and
distributing advertising or promotional materials, and the cost of printing and
distributing prospectuses and supplements to prospective shareholders. The Fund
bears the cost of registering its shares under federal and state securities
laws. The Fund and PFD have agreed to indemnify each other against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Under the Underwriting Agreement, PFD will use its best efforts in rendering
services to the Fund.
The Fund has adopted a plan of distribution pursuant to Rule 12b-1
under the 1940 Act with respect to Class A shares (the "Class A Plan") and a
plan of distribution with respect to Class B shares (the "Class B Plan")
(together, the "Plans).
Class A Plan
Pursuant to the Class A Plan, the Fund may reimburse PFD for its
expenditures in financing any activity primarily intended to result in the sale
of Fund shares. Certain categories of such expenditures have been approved by
the Board of Trustees and are set forth in the Prospectus. See "Distribution
Plans" in the Prospectus. The expenses of the Fund pursuant to the Class A Plan
are accrued on a fiscal year basis and may not exceed, with respect to Class A
shares, the annual rate of 0.25% of the Fund's average annual net assets
attributable to Class A.
Class B Plan
The Class B Plan provides that the Fund shall pay PFD, as the Fund's
distributor for its Class B shares, a daily distribution fee equal on an annual
basis to 0.75% of the Fund's average daily net assets attributable to Class B
shares and will pay PFD a service fee equal to 0.25% of the Fund's average daily
net assets attributable to Class B shares (which PFD will in turn pay to
securities dealers which enter into a sales agreement with PFD at a rate of up
to 0.25% of the Fund's average daily net assets attributable to Class B shares
owned by investors for whom that securities dealer is the holder or dealer of
record). This service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class B shares. PFD will advance to dealers the first-year service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Dealers will become eligible for additional service
fees with respect to such shares commencing in the thirteenth month following
purchase. Dealers may from time to time be required to meet certain other
criteria in order to receive service fees. PFD or its affiliates are entitled to
retain all service fees payable under the Class B Plan for which there is no
dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is
to compensate PFD for its distribution services to the Fund. PFD pays
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commissions to dealers as well as expenses of printing prospectuses and reports
used for sales purposes, expenses with respect to the preparation and printing
of sales literature and other distribution related expenses, including without
limitation, the cost necessary to provide distribution- related services, or
personnel, travel office expenses and equipment. The Class B Plan also provides
that PFD will receive all CDSCs attributable to Class B shares. (See
"Distributions Plans" in the Prospectus.)
General
In accordance with the terms of the Plans, PFD provides to the Fund,
for review by the Trustees, a quarterly written report of the amounts expended
under the respective Plan and the purpose for which such expenditures were made.
In the Trustees' quarterly review of the Plans, they will consider the continued
appropriateness and the level of reimbursement or compensation the Plans
provide.
No interested person of the Fund, nor any Trustee of the Fund who is
not an interested person of the Fund, has any direct or indirect financial
interest in the operation of the Plans except to the extent that PFD and certain
of its employees may be deemed to have such an interest as a result of receiving
a portion of the amounts expended under the Plans by the Fund and except to the
extent certain officers may have an interest in PFD's ultimate parent, PGI.
The Plans were adopted by a majority vote of the Board of Trustees,
including all of the Trustees who are not, and were not at the time they voted,
interested persons of the Fund, as defined in the 1940 Act (none of whom had or
have any direct or indirect financial interest in the operation of the Plans),
cast in person at a meeting called for the purpose of voting on the Plans. In
approving the Plan, the Trustees identified and considered a number of potential
benefits which the Plans may provide. The Board of Trustees believes that there
is a reasonable likelihood that the Plans will benefit the Fund and its current
and future shareholders. Under their terms, the Plans remain in effect from year
to year provided such continuance is approved annually by vote of the Trustees
in the manner described above. The Plans may not be amended to increase
materially the annual percentage limitation of average net assets which may be
spent for the services described therein without approval of the shareholders of
the Fund affected thereby, and material amendments of the Plans must also be
approved by the Trustees in the manner described above. A Plan may be terminated
at any time, without payment of any penalty, by vote of the majority of the
Trustees who are not interested persons of the Fund and have no direct or
indirect financial interest in the operations of the Plan, or by a vote of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act). A Plan will automatically terminate in the event of its assignment
(as defined in the 1940 Act).
During the fiscal year ended December 31, 1994, the Fund incurred total
distribution fees of $204,976 and $6,089 pursuant to the Class A and Class B
Plan, respectively. Distribution fees were paid by the Fund to PFD in
reimbursement of expenses related to servicing of shareholder accounts and to
compensating dealers and sales personnel.
5. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston,
Massachusetts, to act as shareholder servicing agent and transfer agent for the
Fund. This contract terminates if assigned and may be terminated without penalty
by either party by vote of the Board of Directors or Trustees or a majority of
its outstanding voting securities and the giving of sixty days' written notice.
Under the terms of its contract with the Fund, PSC services shareholder
accounts, and its duties include: (i) processing sales, redemptions and
exchanges of shares of the Fund; (ii) distributing dividends and capital gains
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associated with Fund portfolio accounts; and (iii) maintaining account records
and responding to shareholder inquiries.
PSC receives an annual fee of $30.00 per Class A and Class B
shareholder account from the Fund as compensation for the services described
above. This fee is set at an amount determined by vote of a majority of the
Fund's Trustees (including a majority of the Trustees who are not parties to the
contract with PSC or interested persons of any such parties) to be comparable to
fees for such services being paid by other investment companies.
6. CUSTODIAN
Brown Brothers Harriman & Co. (the "Custodian") is the custodian of the
Fund's assets. The Custodian's responsibilities include safekeeping and
controlling the Fund's cash and securities, handling the receipt and delivery of
securities, and collecting interest and dividends on the Fund's investments. The
Custodian does not determine the investment policies of the Fund or decide which
securities the Fund will buy or sell. The Fund may, however, invest in
securities, including repurchase agreements, issued by the Custodian and may
deal with the Custodian as principal in securities transactions. Portfolio
securities may be deposited into the federal Reserve- Treasury Department Book
Entry System or the Depository Trust company.
7. PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts, serves as the principal
underwriter for the Fund in connection with the continuous offering of its
shares. During the Fund's 1994, 1993 and 1992 fiscal years, net underwriting
commissions retained by PFD in connection with its offering of Fund shares were
approximately $26,044, $93,000 and $45,000, respectively. Commissions reallowed
to dealers by PFD in those periods were approximately $299,506, $644,000 and
$401,000, respectively. See "Underwriting Agreement and Distribution Plans"
above for a description of the terms of the Underwriting Agreement with PFD.
The Fund will not generally issue Fund shares for consideration other
than cash. At the Fund's sole discretion, however, it may issue Fund shares for
consideration other than cash in connection with an acquisition of portfolio
securities (other than municipal debt securities issued by state political
subdivisions or their agencies or instrumentalities) pursuant to a bona fide
purchase of assets, merger or other reorganization provided (i) the securities
meet the investment objectives and policies of the Fund; (ii) the securities are
acquired by the Fund for investment and not for resale; (iii) the securities are
not restricted as to transfer either by law or liquidity of market; and (iv) the
securities have a value which is readily ascertainable. An exchange of
securities for Fund shares will generally be a taxable transaction to the
shareholder.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP are the Fund's independent public accountants,
providing audit services, tax return review, and assistance and consultation
with respect to the preparation of filings with the SEC.
9. PORTFOLIO TRANSACTIONS
Decisions relating to the purchase and sale of securities for the Fund,
the allocation of portfolio transactions and, where applicable, the negotiation
of commission rates are made by officers of PMC.
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The primary consideration in placing portfolio security transactions is
execution at the most favorable prices. PMC has complete freedom as to the
markets in and broker-dealers through which it seeks this result. Municipal
Bonds and other debt securities are traded principally in the over-the-counter
market on a net basis through dealers acting for their own account and not as
brokers. The cost of securities purchased from underwriters includes an
underwriter's commission or concession, and the prices at which securities are
purchased and sold from and to dealers include a dealer's mark-up or mark- down.
PMC attempts to negotiate with underwriters to decrease the commission or
concession for the benefit of the Fund. PMC normally seeks to deal directly with
the primary market makers unless, in its opinion, better prices are available
elsewhere.
Subject to the requirement of seeking execution at the best available
price, securities may, as authorized by PMC's management agreement, be bought
from or sold to dealers who furnish research services to the Fund and/or other
investment companies managed by PMC, or who sell shares of the Fund. Brokerage
and research services may include advice concerning the value of securities; the
advisability of investing in, purchasing or selling securities; the availability
of securities or the purchasers or sellers of securities; and furnishing
analyses, manuals and reports concerning issuers, securities, economic factors
and trends, portfolio strategy, performance of accounts, comparative fund
statistics and credit rating service information. PMC maintains a listing of
dealers who provide such services on a regular basis. Management believes that
no exact dollar value can be calculated for such services.
The Fund is managed by PMC which also serves as investment adviser to
other Pioneer mutual funds and certain private accounts with investment
objectives similar to those of the Fund. Securities frequently meet the
investment objectives of the Fund, such other mutual funds and such private
accounts. In such cases, the decision to recommend a purchase to one fund or
account rather than another is based on a number of factors. The determining
factors in most cases are the amount of securities of the issuer then
outstanding, the value of those securities and the market for them. Other
factors considered in the investment recommendations include other investments
which each client or account presently has in a particular industry and the
availability of investment funds in each client or account.
It is possible that at times identical securities will be held by more
than one fund and/or account. However, positions in the same issue may vary and
the length of time that any fund or account may choose to hold its investment in
the same issue may likewise vary. To the extent that the Fund, another Pioneer
mutual fund or a private account managed by PMC may not be able to acquire as
large a position in such security as it desires, it may have to pay a higher
price for the security. Similarly, the Fund may not be able to obtain as large
an execution of an order to sell or as high a price for any particular portfolio
security if PMC decides to sell on behalf of another account the same portfolio
security at the same time. On the other hand, if the same securities are bought
or sold at the same time by more than one account, the resulting participation
in volume transactions could produce better executions for the Fund or the
account. In the event that more than one account purchases or sells the same
security on a given date, the purchases and sales will normally be made as
nearly as practicable on a pro rata basis in proportion to the amounts desired
to be purchased or sold by each.
The Trustees periodically review PMC's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Fund.
10. TAX STATUS
It is the Fund's policy to meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), for qualification as a
regulated investment company. These requirements relate to the sources of its
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income, diversification of its assets and distribution of its income to
shareholders. If the Fund meets all such requirements and distributes to its
shareholders in accordance with the Code's timing requirements all investment
company taxable income and net capital gain, if any, which it receives, the Fund
will be relieved of the necessity of paying federal income tax. The Fund is not
subject to Massachusetts corporate excise or franchise taxes, and, provided that
the Fund qualifies as a regulated investment company for federal income tax
purposes, the Fund will also not be required to pay any Massachusetts income
tax.
In accordance with its investment objectives, the Fund invests its
assets in a manner which will provide as large a portion of tax-exempt income as
is consistent with the protection of shareholders' capital. Since the protection
of capital is an important aspect of the Fund's investment objectives, the Fund
may from time to time invest a portion of its portfolio in short-term
obligations and may engage in transactions generating income which is not
tax-exempt, e.g., purchase non-municipal securities, sell or lend portfolio
securities, enter into repurchase agreements, dispose of rights to when-issued
securities prior to issuance, acquire any security at a market discount, or
acquire certain stripped tax-exempt obligations or their coupons at a discount.
The Code permits tax-exempt interest received by the Fund to flow
through as tax-exempt "exempt-interest dividends" to the Fund's shareholders,
provided that the Fund qualifies as a regulated investment company and at least
50% of the value of the Fund's total assets at the close of each quarter of its
taxable year consists of tax-exempt obligations. That part of the Fund's net
investment income which is attributable to interest from tax-exempt securities
and which is distributed to shareholders will be designated by the Fund as an
"exempt-interest dividend" under the Code. Exempt-interest dividends are
excluded from a shareholder's gross income under the Code. The percentage of
income designated as tax-exempt is applied uniformly to all distributions made
during each taxable year and may differ from the actual tax- exempt percentage
for any particular month. That portion of net investment income distributions
not designated as tax-exempt and any distributions of the excess of net
short-term capital gain over net long-term capital loss are taxable to
shareholders as ordinary income, and any distributions of the excess of net
long-term capital gain over net short-term capital loss (after taking into
account any capital loss carryovers) are taxable to shareholders as long-term
capital gains, regardless of the shareholder's holding period for the shares.
Dividends declared by the Fund in October, November or December as of a record
date in such a month and paid the following January will be treated for federal
income tax purposes as received by shareholders on December 31 of the calendar
year in which they are declared.
For Federal income tax purposes, the Fund is permitted to carry forward
a net capital loss in any year to offset its capital gains, if any, during the
eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in Federal income tax
liability to the Fund and, as noted above, would not be distributed as such to
shareholders.
Because none of the Fund's income will arise from dividends, no part of
its distributions to its corporate shareholders will qualify for the dividends-
received deduction for corporations.
Redemptions, including exchanges, are taxable transactions. If Class A
shares redeemed (or surrendered in an exchange) have been held for less than 91
days, the sales charge paid on the acquisition of such shares is not included in
their federal tax basis for the purposes of determining gain or loss if a
reinvestment in the Fund or exchange into a different Fund occurs, in either
case to the extent a sales charge that would otherwise apply to acquisition of
the newly-acquired shares is reduced or eliminated pursuant to the reinvestment
or exchange privilege. Instead, the portion of the sales charge so disregarded
is carried over and included in the federal tax basis of the newly-acquired
shares. In addition, if a redemption results in a loss and an investment is made
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in the Fund within a period of 61 days beginning 30 days before and ending 30
days after the redemption, the loss may be disallowed for federal income tax
purposes under the "wash sale" rules. In such a case, the disallowed amount
would be included in the federal tax basis of the newly- acquired shares.
Any loss realized by a shareholder on the redemption, exchange or other
disposition of shares with a tax holding period of six months or less will be
disallowed to the extent of any distributions of exempt-interest dividends with
respect to such shares and, to the extent not thus disallowed, will be treated
as a long-term capital loss to the extent of any distributions of long- term
capital gains with respect to such shares.
At the time of an investor's purchase of Fund shares, a portion of the
purchase price may be attributable to realized or unrealized appreciation in the
Fund's portfolio. Consequently, subsequent distributions from this appreciation
may be taxable to the investor even if the net asset value of the investor's
shares is, as a result of the distributions, reduced below the investor's cost
for such shares and the distributions in reality represent a return of a portion
of the investment.
Interest on indebtedness incurred (directly or indirectly) by
shareholders to purchase or carry shares of the Fund will not be deductible for
federal income tax purposes to the extent it is deemed to relate to exempt-
interest dividends received from the Fund.
Federal law generally requires that the Fund withhold as "backup
withholding" 31% of reportable payments, including taxable income dividends (but
not including exempt-interest dividends), capital gain dividends, and the
proceeds of redemptions (including exchanges) to shareholders who have not
complied with Internal Revenue Service ("IRS") regulations. In order to avoid
this withholding requirement, shareholders must certify on their Account
Applications, or on separate W-9 Forms, that the Social Security or other
Taxpayer Identification Number they provide is their correct number and that
they are not currently subject to backup withholding, or that they are exempt
from backup withholding. The Fund may nevertheless be required to withhold if it
receives notice from the IRS or a broker that the number provided is incorrect
or backup withholding is applicable as a result of previous underreporting of
interest or dividends income. Backup withholding may be inapplicable for any
year in which the Fund reasonably estimates that at least 95% of its dividends
paid with respect to such year are exempt-interest dividends.
The description above relates only to U.S. federal income tax
consequences for shareholders who are U.S. persons, i.e., U.S. citizens or
residents, or U.S. corporations, partnerships, trusts or estates, and who are
subject to U.S. federal income tax. The description does not address special tax
rules applicable to certain classes of investors such as insurance companies and
financial institutions. Investors other than the U.S. persons may be subject to
different U.S. tax treatment including a possible 30% U.S. withholding tax (or
U.S. withholding tax at a lower treaty rate) on amounts treated as ordinary
dividends from the Fund and, unless an effective IRS Form W-8 or authorized
substitute is on file, to 31% backup withholding on certain other payments from
the Fund.
The exemption of exempt-interest dividends for Federal income tax
purposes does not necessarily result in exemption under the tax laws of any
state or local taxing authority, which vary with respect to the taxation of such
dividend income. Many states will exempt from tax that portion of an
exempt-interest dividend which represents interest received by the Fund on that
state's securities, subject in some cases to compliance with concentration
and/or reporting requirements, which the Fund makes no commitment to seek to
satisfy. However, the Fund will report annually to its shareholders the
percentage of interest income received by the Fund during the preceding year on
Municipal Bonds indicating, on a state-by-state basis only, the source of such
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income. Each shareholder is advised to consult his own tax adviser regarding the
exemption of exempt-interest dividends under applicable state and local law.
11. DESCRIPTION OF SHARES
The Fund's Declaration of Trust permits its Board of Trustees to
authorize the issuance of an unlimited number of full and fractional shares of
beneficial interest (without par value) which may be divided into such separate
series as the Trustees may establish. The Trustees may establish additional
series of shares, and may divide or combine the shares into a greater or lesser
number of shares without thereby changing the proportionate beneficial interests
in the Fund. The Declaration of Trust further authorizes the Trustees to
classify or reclassify any series of the shares into one or more classes.
Pursuant thereto, the Trustees have authorized the issuance of two classes of
shares of the Fund, Class A shares and Class B shares. Each share of a class of
the Fund represents an equal proportionate interest in the assets of the Fund
allocable to that class. Upon liquidation of the Fund, shareholders of each
class are entitled to share pro rata in the Fund's net assets allocable to such
class available for distribution to shareholders. The Fund reserves the right to
create and issue additional series or classes of shares, in which case the
shares of each class of a series would participate equally in the earnings,
dividends and assets allocable to that class of the particular series.
The shares of the Fund are entitled to vote separately to approve
investment advisory agreements or changes in investment restrictions, but
shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of the Fund vote together as a class on matters
that affect the Fund in substantially the same manner. As to matters affecting a
single class, shares of such class will vote separately.
Although Trustees are not elected annually by the shareholders,
shareholders have under certain circumstances the right to remove one or more
Trustees. No material amendment may be made to the Fund's Declaration of Trust
without the affirmative vote of a majority of its shares. Shares have no
pre-emptive or conversion rights. Shares are fully paid and non-assessable by
the Fund, except as set forth below. See "Certain Liabilities."
12. CERTAIN LIABILITIES
As a Massachusetts business trust, the Fund's operations are governed
by its Declaration of Trust dated July 24, 1986, a copy of which is on file with
the office of the Secretary of the Commonwealth of Massachusetts. Theoretically,
shareholders of a Massachusetts business trust may, under certain circumstances,
be held personally liable for the obligations of the trust. However, the
Declaration of Trust contains an express disclaimer of shareholder liability for
acts or obligations of the Fund and provides that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or executed by
the Fund or its Trustees. Moreover, the Declaration of Trust provides for the
indemnification out of Fund property of any shareholders held personally liable
for any obligations of the Fund. The Declaration of Trust also provides that the
Fund shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Fund and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss beyond his or
her investment because of shareholder liability would be limited to
circumstances in which the Fund itself will be unable to meet its obligations.
In light of the nature of the Fund's business and the nature and amount of its
assets, the possibility of the Fund's liabilities exceeding its assets, and
therefore a shareholder's risk of personal liability, is remote.
The Declaration of Trust further provides that the Fund shall indemnify
each of its Trustees and officers against liabilities and expenses reasonably
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incurred by them, in connection with, or arising out of, any action, suit or
proceeding, threatened against or otherwise involving such Trustee or officer,
directly or indirectly, by reason of being or having been a Trustee or officer
of the Fund. The Declaration of Trust does not authorize the Fund to indemnify
any Trustee or officer against any liability to which he or she would otherwise
be subject by reason of or for willful misfeasance, bad faith, gross negligence
or reckless disregard of such person's duties.
13. DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of the Fund is determined
as of the close of regular trading on the New York Stock Exchange (the
"Exchange") (currently 4:00 p.m., Eastern Time) on each day on which the
Exchange is open for trading. As of the date of this Statement of Additional
Information, the Exchange is open for trading every weekday except for the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset
value per share of each class of the Fund is also determined on any other day in
which the level of trading in its portfolio is sufficiently high so that the
current net asset value per share might be materially affected by changes in the
value of its portfolio securities. On any day in which no purchased orders for
the shares of the Fund become effective and no shares are tendered for
redemption, the net asset value per share is not determined.
The net asset value per share of each class of the Fund is computed by
taking the amount of the value of all of the Fund's assets, less the Fund's
liabilities attributable to the class, and dividing it by the number of
outstanding shares of the class. The Board of Trustees has directed that the
fair market value of the Fund's assets should be determined as follows.
Ordinarily, investments in debt securities are valued on the basis of
information furnished by a pricing service which utilizes primarily a matrix
system (which reflects such factors as security prices, yields, maturities and
ratings), supplemented by dealer and exchange quotations, to recommend
valuations for normal institutional-sized trading units of debt securities. In
addition, the Board has instructed advisory personnel not to rely exclusively on
this pricing service if the fair market value of certain securities may be more
accurately determined on the basis of information available from other sources.
Temporary cash investments are valued at amortized cost, which approximates
market value.
The Fund's maximum offering price per Class A share is determined by
adding the maximum sales charge to the net asset value per Class A share. Class
B shares are offered at net asset value without the imposition of an initial
sales charge.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP"), which is available for Class A
shares only, is designed to provide a convenient method of receiving fixed
payments at regular intervals from Class A shares of the Fund deposited by the
applicant under this SWP. The applicant must deposit or purchase for deposit
with PSC shares of the Fund having a total value of not less than $10,000.
Periodic checks of $50 or more will be sent to the applicant, or any person
designated by him, monthly or quarterly. Class B share accounts must meet the
minimum initial investment requirement prior to establishing a SWP. Withdrawals
from Class B share accounts are limited to 10% of the value at the time the SWP
is established. See "How to Sell Fund Shares" in the Prospectus.
Any income dividends or capital gains distributions on shares under the
SWP will be credited to the SWP account on the payment date in full and
fractional shares at the net asset value per share in effect on the record date.
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SWP payments are made from the proceeds of the redemption of shares
deposited under the SWP in a SWP account. Redemptions are potentially taxable
transactions to shareholders. To the extent that such redemptions for periodic
withdrawals exceed dividend income reinvested in the SWP account, such
redemptions will reduce and may ultimately exhaust the number of shares
deposited in the SWP account. In addition, the amounts received by a shareholder
cannot be considered as an actual yield or income on his or her investment
because part of such payments may be a return of his or her capital.
The SWP may be terminated at any time (1) by written notice to PSC or
from PSC to the shareholder; (2) upon receipt by PSC of appropriate evidence of
the shareholder's death; or (3) when all shares under the SWP have been
redeemed. The fees of PSC for maintaining SWPs are paid by the Fund.
15. LETTER OF INTENTION
Purchases of $100,000 or more of Class A shares (excluding any
reinvestments of dividends and capital gains distributions) made within a 13-
month period pursuant to a Letter of Intention provided to PFD will qualify for
a reduced sales charge. Such reduced sales charge will be the charge that would
be applicable to the purchase of all Class A shares purchased during such
13-month period pursuant to a Letter of Intention had such shares been purchased
all at once. See "How to Buy Fund Shares" in the Prospectus. For example, a
person who signs a Letter of Intention providing for a total investment in Class
A shares of $100,000 over a 13-month period would be charged at the 3.50% sales
charge rate with respect to all purchases during that period. Should the amount
actually purchased during the 13-month period be more or less than that
indicated in the Letter, an adjustment in the sales charge will be made. A
purchase not made pursuant to a Letter of Intention may be included thereafter
if the Letter is filed within 90 days of such purchase. Any shareholder may also
obtain the reduced sales charge by including the value (at current offering
price) of all Class A shares of record held in the Fund and other Pioneer mutual
funds, except directly purchased Class A shares of Pioneer Money Market Trust,
as of the date of the Letter of Intention as a credit toward determining the
applicable scale of sales charge for the Class A shares to be purchased under
the Letter of Intention.
The Letter of Intention authorizes PSC to escrow shares having a
purchase price equal to 5% of the stated investment in the Letter of Intention.
A Letter of Intention is not a binding obligation upon the investor to purchase,
or the Fund to sell, the full amount indicated and the investor should read the
provisions of the Letter of Intention set forth in detail in the Account
Application carefully before signing.
16. INVESTMENT RESULTS
The Fund's yield quotations and average annual total return quotations
as they may appear in the Prospectus, this Statement of Additional Information
or in advertising are calculated by standard methods prescribed by the SEC.
Quotations, Comparisons, and General Information
From time to time, in advertisements, in sales literature, or in
reports to shareholders, the past performance of the Fund may be illustrated
and/or compared with that of other mutual funds with similar investment
objectives, and to other relevant indices. For example, the Fund may compare a
class's yield and/or total return to the Shearson Lehman Hutton Municipal Bond
Index, or other comparable indices or investment vehicles.
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In addition, the performance of the classes of the Fund may be compared
to alternative investment or savings vehicles (such as individual securities,
bank deposits, or certificates of deposit) and/or indices or indicators of
economic activity, e.g., inflation, interest rates, or the Consumer Price Index.
Performance rankings and listings reported in newspapers or national business
and financial publications, such as Barron's, Business Week, Consumers Digest,
Consumer Reports, Financial World, Forbes, Fortune, Investors Business Daily,
Kiplinger's Personal Finance Magazine, Money Magazine, New York Times, Personal
Investor, Smart Money, USA Today, U.S. News and World Report, the Wall Street
Journal, and Worth may also be cited (if the Fund is listed in any such
publication) or used for comparison, as well as performance listings and
rankings from various other sources including CDA/Weisenberger Investment
Companies Service, Donoghue's Mutual Fund Almanac, Investment Company Data,
Inc., Ibbotson Associates, Johnson's Charts, Kanon Bloch Carre and Co., Lipper
Analytical Services, Inc., Micropal, Inc., Morningstar, Inc., Schabacker
Investment Management and Towers Data Systems, Inc.
One of the primary methods used to measure the performance of a class
of the Fund is "total return." "Total return" will normally represent the
percentage change in value of an account, or of a hypothetical investment in the
class, over any period up to the lifetime of the class. Total return
calculations will usually assume the reinvestment of all dividends and capital
gains distributions and will be expressed as a percentage increase or decrease
from an initial value, for the entire period or for one or more specified
periods within the entire period. Total return percentages for periods of less
than one year will usually be annualized; total return percentages for periods
longer than one year will usually be accompanied by total return percentages for
each year within the period and/or by the average annual compounded total return
for the period. The income and capital components of a given return may be
separated and portrayed in a variety of ways in order to illustrate their
relative significance. Performance may also be portrayed in terms of cash or
investment values, without percentages. Past performance cannot guarantee any
particular future result.
Other data that may be advertised or published about a class of the
Fund include the average portfolio quality, the average portfolio maturity, and
the average portfolio duration.
In determining the average annual total return (calculated as provided
above), recurring fees, if any, that are charged to all shareholder accounts are
taken into consideration. For any account fees that vary with the size of the
account, the account fee used for purposes of the above computation is assumed
to be the fee that would be charged to the Fund's mean account size.
Standardized Yield Quotations
The yield of a class is computed by dividing the class's net investment
income per share during a base period of 30 days, or one month, by the maximum
offering price per share of the class on the last day of such base period in
accordance with the following formula:
YIELD = 2[ (a-b +1 ) 6 -1]
cd
Where: a = interest earned during the period
b = net expenses accrued for the period
c = the average daily number of shares
outstanding during the period that were
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entitled to receive dividends
d = the maximum offering price per share on the
last day of the period
For purposes of calculating interest earned on debt obligations as provided in
item "a" above:
(i) The yield to maturity of each obligation held by the Fund is
computed based on the market value of the obligation (including actual accrued
interest, if any) at the close of business each day during the 30-day base
period, or, with respect to obligations purchased during the month, the purchase
price (plus actual accrued interest, if any) on settlement date, and with
respect to obligations sold during the month the sale price (plus actual accrued
interest, if any) between the trade and settlement dates;
(ii) The yield to maturity of each obligation is then divided by 360
and the resulting quotient is multiplied by the market value of the obligation
(including actual accrued interest, if any) to determine the interest income on
the obligation for each day. The yield to maturity calculation has been made on
each obligation during the 30 day base period;
(iii) Interest earned on all debt obligations during the 30-day or one
month period is then totaled;
(iv) The maturity of an obligation with a call provision(s) is the next
call date on which the obligation reasonably may be expected to be called or, if
none, the maturity date;
(v) Obligations with sinking fund call provisions may be regarded as
maturing as to that portion to be retired on each sinking fund call date or
during a twelve-month period; and
(vi) In the case of a tax exempt obligation issued without original
issue discount and having a current market discount, the coupon rate of interest
of the obligation is used in lieu of yield to maturity to determine interest
income earned on the obligation. In the case of a tax exempt obligation with
original issue discount where the discount based on the current market value of
the obligation exceeds the then remaining portion of original issue discount
(i.e. market discount), the yield to maturity used to determine interest income
earned on the obligation is the imputed rate based on the original issue
discount calculation. In the case of a tax exempt obligation with original issue
discount where the discount based on the current market value of the obligation
is less than the then remaining portion of the original issue discount (market
premium), the yield to maturity used to determine interest income earned on the
obligation is based on the market value of the obligation.
The yields of the Fund for the one-month period ended December 31, 1994
determined in accordance with the formula above were 5.01% for Class A shares
and 4.39% for Class B shares, except that absent expense limitations, the yields
on Class A shares and Class B shares of the Fund would have been 4.86% and
4.26%, respectively.
Taxable Equivalent Yield
The Fund may also from time to time advertise the taxable equivalent
yield of a class which is determined by dividing that portion of the class's
yield (calculated as described above) that is tax exempt by one minus the stated
federal income tax rate and adding the product to that portion, if any, of the
class's yield that is not tax exempt. For a description of how to compare yields
on municipal bonds and taxable securities, see the Taxable Equivalent Formula
set forth in Appendix A to the Prospectus. The taxable equivalent yield for a
Class A shareholder and a Class B shareholder in the 39.6% federal income tax
bracket for the one-month period ended December 31, 1994 determined in
accordance with such formula was 8.29% and 7.27%, respectively, except that
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absent expense limitations, the yield on Class A shares and Class B shares of
the Fund would have been 8.05% and 7.05%, respectively.
Standardized Average Annual Total Return Quotations
Average annual total return quotations for Class A and Class B shares
are computed by finding the average annual compounded rates of return that would
cause a hypothetical investment made on the first day of a designated period to
equal the ending redeemable value of such hypothetical investment on the last
day of the designated period in accordance with the following formula:
P(1+T) n = ERV
Where: P = a hypothetical initial payment of $1,000, less the
maximum sales load of $35 for Class A shares or the
deduction of the CDSC on Class B shares at the end of
the period
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000
initial payment made at the beginning of the designated
period (or fractional portion thereof)
The computation above assumes that all dividends and distributions made by the
Fund are reinvested at net asset value during the designated period. The average
annual total return quotation is determined to the nearest 1/100 of 1%. The
average annual total return on a Class A share of the Fund for the one-year and
five-year periods ended December 31, 1994 were -9.31% and 5.31%, respectively,
and for the period since inception (October 22, 1986) was 5.43%. The total
return on a Class B share of the Fund as of December 31, 1994 was - 4.37%.
Absent expense limitations in effect during these periods, the average annual
total return on a Class A share or a Class B share of the Fund would have been
lower than the returns quoted above.
Automated Information Line
FactFoneSM, Pioneer's 24-hour automated information line, allows
shareholders to dial toll-free 1-800-225-4321 and hear recorded fund
information, including:
(degree) net asset value prices for all Pioneer mutual funds;
(degree) annualized 30-day yields on Pioneer bond funds;
(degree) annualized 7-day yields and 7-day effective (compound)
yields for Pioneer money market funds; and
(degree) dividends and capital gains distributions on all
Pioneer mutual funds.
Yields are calculated in accordance with SEC mandated standard
formulas.
In addition, by using a personal identification number ("PIN"),
shareholders may enter purchases, exchanges and redemptions, access their
account balance and last three transactions and may order a duplicate statement.
See "FactFoneSM" in the Prospectus for more information.
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All performance numbers communicated through FactFoneSM represent past
performance, and figures for all quoted bond funds include the applicable
maximum sales charge. A shareholder's actual yield and total return will vary
with changing market conditions. The value of Class A and Class B shares (except
for Pioneer money market funds, which seek a stable $1.00 share price) will also
vary and may be worth more or less at redemption than their original cost.
17. FINANCIAL STATEMENTS
The financial highlights table included in the Prospectus and the
Fund's most recent Annual Report and Semi-Annual Report incorporated by
reference into the Statement of Additional Information have been so included and
incorporated in reliance upon the reports of Arthur Andersen, LLP, independent
public accountants, given on their authority as experts in accounting and
auditing.
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APPENDIX A
Description of Municipal Bonds
Municipal Bonds include debt obligations issued to obtain funds for
various public purposes, including the construction of a wide range of public
facilities such as bridges, highways, housing, mass transportation, schools,
streets and water and sewer works. Other public purposes for which Municipal
Bonds may be issued include refunding outstanding obligations, obtaining funds
for general operating expenses, and obtaining funds to loan to other public
institutions.
The two principal classifications of Municipal Bonds are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment for
principal and interest. The payment of such bonds may be dependent upon an
appropriation by the issuer's legislative body. The characteristics and
enforcement of general obligation bonds vary according to the law applicable to
the particular issuer. Revenue bonds are payable only from the revenues derived
from a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source. There are, of
course, variations in the security of Municipal Bonds, both within a particular
classification and between classifications, depending on numerous factors.
The yields on Municipal Bonds are dependent on a variety of factors,
including general money market conditions, supply and demand and general
conditions of the Municipal Bond market, size of a particular offering, the
maturity of the obligation and rating of the issue. The ratings of Moody's
Investor Service, Inc. and Standard & Poor's corporation represent their
opinions as to the quality of various Municipal Bonds. It should be emphasized,
however, that ratings are not absolute standards of quality. Consequently,
Municipal Bonds with the same maturity, coupon and rating may have different
yields while Bonds of the same maturity and coupon with different ratings may
have the same yield.
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APPENDIX B
Description of Municipal Bond Ratings1
Moody's Investor's Service, Inc.2
Aaa:Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are produced by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such change as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa:Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat bigger than in Aaa
securities.
A:Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest susceptibility to impairment sometime in the
future.
Baa:Bonds which are rated Baa are considered medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Standards & Poor's Corporation3
AAA:Bonds rated AAA are highest grade obligations. This rating
indicates an extremely strong capacity to pay principal and interest.
- --------
1 The ratings indicated herein are believed to be the most recent rating
available at the date of this Prospectus for the securities listed. Ratings are
generally given to securities at the time of issuance. While the rating agencies
may from time to time revise such ratings, they undertake no obligation to do
so, and ratings indicated do not necessarily represent ratings which will be
given to these securities on the date of the Fund's fiscal year-end.
2 Rates bonds of issuers which have $600,000 or more of debt, except bonds of
educational institutions, projects under construction, enterprises without
established earnings records and situations where current financial data is
unavailable.
3 Rates all governmental bodies having $1,000,000 or more of debt outstanding,
unless adequate information is not available.
<PAGE>
AA:Bonds rated AA also qualify as high-quality obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A:Bonds rated A have a strong capacity to pay principal and
interest, although they are more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB:Bonds rated BBB are regarded as having an adequate capacity
to pay principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
<PAGE>
APPENDIX C
Description of Certain Other Investments
U.S. Government Obligations - are issued by the Treasury and include bills,
certificates of indebtedness, notes, and bonds. Agencies and instrumentalities
of the U.S. Government are established under the authority of an act of Congress
and include, but are not limited to, the Government National Mortgage
Association, the Tennessee Valley Authority, the Bank for cooperatives, the
Farmers Home Administration, Federal Home Loan Banks, Federal Intermediate
Credit Banks, Federal Land Banks, and the Federal National Mortgage Association.
Certificates of Deposit - are certificates issued against funds deposited in a
commercial bank, are for a definite period of time, earn a specified rate of
return, and are normally negotiable.
Bankers' Acceptances - are short-term credit instruments used to finance the
import, export, transfer or storage of goods. They are termed "accepted" when a
bank guarantees their payment at maturity.
Repurchase Agreements - are agreements by which a person purchases a security
and simultaneously commits to resell that security to the seller (a member bank
of the Federal Reserve System or recognized securities dealer) at an agreed upon
price on an agreed upon date within a number of days (usually not more than
seven) form the date of purchase. The resale price reflects the purchase price
plus an agreed upon market rate of interest which is unrelated to the coupon
rate or maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is in
effect secured by the value of the underlying security, usually U.S. Government
or Government agency issues. Under the 1940 Act, repurchase agreements are
considered to be loans by the Fund. The Fund's risk is limited to the ability of
the seller to pay the agreed upon amount on the delivery date. In the opinion of
the Fund's adviser this risk is not material; if the seller defaults, the
underlying security constitutes collateral for the seller's obligation to pay
although the Fund may incur certain costs in liquidating this collateral and in
certain cases may not be permitted to liquidate this collateral.
C-1
<PAGE>
APPENDIX D
OTHER PIONEER INFORMATION
The Pioneer family of mutual funds was established in 1928 with the
creation of Pioneer Fund. Pioneer is one of the oldest, most respected and
successful money managers in the United States.
As of December 31, 1994, PMC employed a professional investment staff
of 46, with a combined average of 14 years' experience in the financial services
industry.
At December 31, 1994, there were 591,192 non-retirement shareholder
accounts and 337,577 retirement shareholder accounts in Pioneer's funds. Total
assets for all Pioneer Funds were $10,038,000,000 representing a total of
928,769 shareholder accounts.
<PAGE>
<TABLE>
<CAPTION>
Pioneer Intermediate Tax-Free Fund
Date Initial Investment Offering Price Sales Charge Shares Purchased Net Asset Value Initial Net Asset
Included Per Share Value
<S> <C> <C> <C> <C> <C> <C>
10/22/86 $10,000 $10.36 3.50% 965.25 $10.00 $9,653
</TABLE>
Dividends and Capital Gains Reinvested
<TABLE>
<CAPTION>
Value of Shares
Date From From Cap. Gains From Dividends Total Value
Investment Reinvested Reinvested
<S> <C> <C> <C> <C>
12/31/86 $9,662 $0 $0 $9,662
12/31/87 $8,639 $0 $645 $9,284
12/31/88 $9,074 $0 $1,389 $10,472
12/31/89 $9,324 $0 $2,170 $11,494
12/31/90 $9,295 $0 $2,937 $12,232
12/31/91 $9,710 $0 $3,888 $13,598
12/31/92 $9,962 $0 $4,813 $14,775
12/31/93 $10,387 $181 $5,844 $16,412
12/31/94 $9,286 $165 $5,973 $15,424
</TABLE>
<PAGE>
COMPARATIVE PERFORMANCE STATISTICS
<TABLE>
<CAPTION>
Municipal U.S. Long Term U.S. Long Term U.S. Interm. U.S.(30Day) Bank Savings
Long term Corporate Bds Govt Bonds Govt Bonds Treasury Bill Account 6 Month CD
%TR * %Total Return* %Total Return* %Total Return* %Total Return * %Total Return** %Total Return**
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dec 1928 0.55 2.84 0.10 0.92 3.56 N/A N/A
Dec 1929 3.22 3.27 3.42 6.01 4.75 N/A N/A
Dec 1930 6.52 7.98 4.66 6.72 2.41 5.30 N/A
Dec 1931 -3.53 -1.85 -5.31 -2.32 1.07 5.10 N/A
Dec 1932 8.19 10.82 16.84 8.81 0.96 4.10 N/A
Dec 1933 -2.17 10.38 -0.07 1.83 0.30 3.40 N/A
Dec 1934 21.66 13.84 10.03 9.00 0.16 3.50 N/A
Dec 1935 9.18 9.61 4.98 7.01 0.17 3.10 N/A
Dec 1936 -15.13 6.74 7.52 3.06 0.18 3.20 N/A
Dec 1937 28.38 2.75 0.23 1.56 0.31 3.50 N/A
Dec 1938 9.24 6.13 5.53 6.23 -0.02 3.50 N/A
Dec 1939 5.70 3.97 5.94 4.52 0.02 3.40 N/A
Dec 1940 10.52 3.39 6.09 2.96 0.00 3.30 N/A
Dec 1941 -0.80 2.73 0.93 0.50 0.06 3.10 N/A
Dec 1942 2.09 2.60 3.22 1.94 0.27 3.00 N/A
Dec 1943 6.51 2.83 2.08 2.81 0.35 2.90 N/A
Dec 1944 4.15 4.73 2.81 1.80 0.33 2.80 N/A
Dec 1945 5.76 4.08 10.73 2.22 0.33 2.50 N/A
Dec 1946 -3.77 1.72 -0.10 1.00 0.35 2.20 N/A
Dec 1947 -4.04 -2.34 -2.62 0.91 0.50 2.30 N/A
Dec 1948 3.79 4.14 3.40 1.85 0.81 2.30 N/A
Dec 1949 14.39 3.31 6.45 2.32 1.10 2.40 N/A
Dec 1950 4.15 2.12 0.06 0.70 1.20 2.50 N/A
Dec 1951 -3.65 -2.69 -3.93 0.36 1.49 2.60 N/A
Dec 1952 -3.21 3.52 1.16 1.63 1.66 2.70 N/A
Dec 1953 0.38 3.41 3.64 3.23 1.82 2.80 N/A
Dec 1954 3.74 5.39 7.19 2.68 0.86 2.90 N/A
Dec 1955 -1.21 0.48 -1.29 -0.65 1.57 2.90 N/A
Dec 1956 -7.61 -6.81 -5.59 -0.42 2.46 3.00 N/A
Dec 1957 5.92 8.71 7.46 7.84 3.14 3.30 N/A
Dec 1958 -2.56 -2.22 -6.09 -1.29 1.54 3.38 N/A
Dec 1959 -3.43 -0.97 -2.26 -0.39 2.95 3.53 N/A
Dec 1960 8.61 9.07 13.78 11.76 2.66 3.86 N/A
Dec 1961 2.37 4.82 0.97 1.85 2.13 3.90 N/A
Dec 1962 7.68 7.95 6.89 5.56 2.73 4.08 N/A
Dec 1963 -0.84 2.19 1.21 1.64 3.12 4.17 N/A
Dec 1964 4.59 4.77 3.51 4.04 3.54 4.19 4.18
Dec 1965 -2.74 -0.46 0.71 1.02 3.93 4.23 4.68
Dec 1966 0.58 0.20 3.65 4.69 4.76 4.45 5.75
Dec 1967 -4.41 -4.95 -9.18 1.01 4.21 4.67 5.48
Dec 1968 -0.96 2.57 -0.26 4.54 5.21 4.68 6.44
Dec 1969 -15.39 -8.09 -5.07 -0.74 6.58 4.80 8.71
Dec 1970 21.10 18.37 12.11 16.86 6.52 5.14 7.06
Dec 1971 12.26 11.01 13.23 8.72 4.39 5.30 5.36
Dec 1972 1.51 7.26 5.69 5.16 3.84 5.37 5.38
Dec 1973 4.27 1.14 -1.11 4.61 6.93 5.51 8.60
Dec 1974 -10.66 -3.06 4.35 5.69 8.00 5.96 10.20
Dec 1975 11.55 14.64 9.20 7.83 5.80 6.21 6.51
Dec 1976 15.79 18.65 16.75 12.87 5.08 6.23 5.22
Dec 1977 3.87 1.71 -0.69 1.41 5.12 6.39 6.12
Dec 1978 -3.98 -0.07 -1.18 3.49 7.18 6.56 10.21
Dec 1979 1.02 -4.18 -1.23 4.09 10.38 7.29 11.90
Dec 1980 -17.57 -2.76 -3.95 3.91 11.24 8.78 12.33
Dec 1981 -15.52 -1.24 1.86 9.45 14.71 10.71 15.50
Dec 1982 47.94 42.56 40.36 29.10 10.54 11.19 12.18
Dec 1983 3.34 6.26 0.65 7.41 8.80 9.71 9.65
Dec 1984 8.41 16.86 15.48 14.02 9.85 9.92 10.65
Dec 1985 24.03 30.09 30.97 20.33 7.72 9.02 7.82
Dec 1986 27.31 19.85 24.53 15.14 6.16 7.84 6.30
Dec 1987 -5.06 -0.27 -2.71 2.90 5.47 6.92 6.58
Dec 1988 11.47 10.70 9.67 6.10 6.35 7.20 8.15
Dec 1989 14.64 16.23 18.11 13.29 8.37 7.91 8.27
Dec 1990 6.54 6.78 6.18 9.73 7.81 7.8 7.85
Dec 1991 11.18 19.89 19.30 15.46 5.60 4.61 4.95
Dec 1992 10.80 9.39 8.05 7.19 3.51 2.89 3.27
Dec 1993 14.16 13.19 18.24 11.24 2.90 2.73 2.88
Dec 1994 -8.63 -5.76 -7.77 -5.14 3.90 4.96 5.4
</TABLE>
* Source: Ibbotson Associates
** Source: Towers Data Systems
<PAGE>
INDEX DESCRIPTIONS
LONG-TERM MUNICIPAL BOND PORTFOLIO *
For 1926-1984, returns are calculated form yields on 20-year prime issues from
Solomon Brothers' Analytical Record of Yields and Yields Spreads, assuming
coupon equals previous year-end yield and a 20-year maturity. For 1985-present,
returns are calculated using Moody's Bond Record, using the December average
municipal yield as the beginning-of-following year coupon (average of Aaa, Aa,
A, Baa grades).
LONG-TERM CORPORATE BONDS *
For 1969-1991, corporate bond total returns are represented by the Salomon
Brothers Long-Term High-Grade Corporate Bond Index. Since most large corporate
bond transactions take place over the counter, a major dealer is the natural
source of these data. The index includes nearly all Aaa- and Aa-rated bonds. If
a bond is downgraded during a particular month, its return for the month is
included in the index before removing the bond from future portfolios.
Over 1926-1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946-1968, Ibbotson
and Sinquefield backdated the Salomon Brothers' index, using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon for
1969-1991. Capital appreciation returns were calculated from yields assuming (at
the beginning of each monthly holding period) a 20-year maturity, a bond price
equal to par, and a coupon equal to the beginning-of-period yield. For the
period 1926-1945, the Standard and Poor's monthly High-Grade Corporate Composite
yield data were used, assuming a 4 percent coupon and a 20-year maturity. The
conventional present-value formula for bond price for the beginning and
end-of-month prices was used. (This formula is presented in Ross, Stephen A.,
and Randolph W. Westerfield, Corporate Finance, Times Mirror/Mosby, St. Louis,
1990, p. 97 ["Level-Coupon Bonds"].) The monthly income return was assumed to be
one-twelfth the coupon.
LONG-TERM GOVERNMENT BOND TOTAL RETURN *
The total returns on long-term government bonds from 1977 to 1991 are
constructed with data from The Wall Street Journal. Over 1926-1976, data are
obtained from the Government bond file at the Center for Research in Security
Prices (CRSP), Graduate School of Business, University of Chicago. Each year, a
one-bond portfolio with a term of approximately 20 years and a reasonably
current coupon was used, and whose returns did not reflect potential tax
benefits, impaired negotiability, or special redemption or call privileges.
Where callable bonds had to be used, the term of the bond was assumed to be a
simple average of the maturity and first call dates minus the current date. The
bond was "held" for the calendar year and returns were computed. Total returns
for 1977-1991 are calculated as the change in the flat price or and-interest
price.
<PAGE>
INTERMEDIATE-TERM GOVERNMENT BONDS TOTAL RETURN *
Total returns of the intermediate-term government bonds for 1977-1991 are
calculated from The Wall Street Journal prices, using the change in flat price.
Returns from 1934-1986 are obtained from the CRSP Government Bond File.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than 5 years, and this bond is "held"
for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934-1942, almost all bonds
with maturities near 5 years were partially or full tax-exempt and were selected
using the rules described above. Personal tax rates were generally low in that
period, so that yields on tax-exempt bonds were similar to yields on taxable
bonds. From 1926-1933, there are few bonds suitable for construction of a series
with a 5-year maturity. For this period, five year bond yield estimates are
used.
U.S. (30 DAY) TREASURY BILL TOTAL RETURNS *
For the U.S. Treasury bill index, data from The Wall Street Journal are used for
1977-1991; the CRSP U.S. Government Bond File is the source until 1976. Each
month a one-bill portfolio containing the shortest-term bill having not less
than one month to maturity is constructed. (The bill's original term to maturity
is not relevant.) To measure holding period returns for the one-bill portfolio,
the bill is priced as of the last trading day of the previous month-end and as
of the last trading day of the current month.
BANK SAVINGS ACCOUNT **
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963-1987 and The Wall Street Journal for the years 1988-1994.
6 MONTH CD **
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
<PAGE>
PIONEER INTERMEDIATE TAX-FREE FUND
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial highlights of the Registrant are included in Part A
of the Registration Statement. The financial statements of the
Registrant have been incorporated by reference into Part B of the
Registration Statement from the 1994 Annual Report to Shareholders
dated December 31, 1994 (filed electronically on April 27, 1995 as
Exhibit 12 to Post-Effective Amendment No. 11 to the Registration
Statement (811-4768; accession number 0000798172-95-000005)) and
from the 1995 Semi-Annual Report to Shareholders dated June 30,
1995 (filed electronically on August 23, 1995 (811-4768; accession
number 0000798172-95-000011)).
(b) Exhibits:
1. Amended and Restated Declaration of Trust_
1.1 Establishment and Designation of Classes_
2. By-Laws_
3. None
4. None
5. Management Contract_
6.1. Underwriting Agreement_
6.2. Form of Dealer Sales Agreement_
7. None
8.1 Form of Custodian Agreement with Brown Brothers Harriman
& Co._
9. Investment Company Service Agreement_
10. None
11. Consent of Arthur Andersen LLP
12. 1994 Annual Report to Shareholders_
13. Form of Stock Purchase Agreement_
C-1
<PAGE>
14. None
15. Distribution Plan_
15.1 Form of Class B Rule 12b-1 Distribution Plan_
16. Description of Average Annual Total Return
and Yield Calculation_
17. Financial Data Schedule
18. Power of Attorney_
- ------------------------
_ Previously filed. Incorporated by reference from the exhibits filed with the
Registration Statement (File No. 33-7592), as amended, of the Registrant.
Item 25. Persons Controlled By or Under
Common Control With Registrant
The Pioneer Group, Inc., a publicly-traded Delaware corporation ("PGI"), owns
100% of the outstanding capital stock of Pioneering Management Corporation, a
Delaware corporation ("PMC"), Pioneering Services Corporation ("PSC"), Pioneer
Funds Distributor, Inc. ("PFD"), Pioneer Capital Corporation ("PCC"), Pioneer
Fonds Marketing GmbH ("GmbH"), Pioneer SBIC Corp. ("SBIC"), Pioneer Associates,
Inc., Pioneer International Corporation, Pioneer Plans Corporation ("PPC"),
Pioneer Goldfields Limited ("PGL"), and Pioneer Investments Corporation ("PIC"),
all Massachusetts corporations. PGI also owns 100% of the outstanding capital
stock of Pioneer Metals and Technology, Inc. ("PMT"), a Delaware corporation,
Pioneer Fonds Marketing GmbH, a German corporation, and Pioneer First Polish
Trust Fund Joint Stock Company ("First Polish"), a Polish corporation. PGI owns
90% of the outstanding shares of Teberebie Goldfields Limited ("TGL"). Pioneer
Fund, Pioneer Europe Fund, Pioneer II, Pioneer Three, Pioneer U.S. Government
Trust, Pioneer Bond Fund, Pioneer Growth Trust, Pioneer International Growth
Fund, Pioneer Short-Term Income Trust, Pioneer Tax-Free State Series Trust, and
the Registrant (each of the foregoing are Massachusetts business trusts);
Pioneer Real Estate Shares, Pioneer Interest Shares, Inc. (a Nebraska
corporation); and Pioneer Growth Shares, Pioneer Money Market Trust, Pioneer
Income Fund, Pioneer Emerging Markets Fund, Pioneer India Fund, Pioneer Small
Company Fund and Pioneer Tax-Free Income Fund (each of the foregoing are
C-2
<PAGE>
Delaware business trusts) are all parties to management contracts with PMC. PCC
owns 100% of the outstanding capital stock of SBIC. SBIC is the sole general
partner of Pioneer Ventures Limited Partnership, a Massachusetts limited
partnership. John F. Cogan, Jr. owns approximately 15% of the outstanding shares
of PGI. Mr. Cogan is Chairman of the Board, President and Trustee of the
Registrant and of each of the Pioneer mutual funds; Director and President of
PGI; President and Director of PPC, PIC, Pioneer International Corporation and
PMT; Director of PCC and PSC; Chairman of the Board and Director of PMC, PFD and
TGL; Chairman, President and Director of PGL; Chairman of the Supervisory Board
of GmbH; Chairman and Member of Supervisory Board of First Polish and Chairman
and Partner, Hale and Dorr.
Item 26. Number of Holders of Securities
The following table sets forth the approximate number of recordholders
of each class of securities of the Registrant as of November 30, 1995:
Class A Class B
Number of Record Holders: 2,384 97
Item 27. Indemnification
Except for the Amended and Restated Declaration of Trust dated December
7, 1993, establishing the Registrant as a trust under Massachusetts law, there
is no contract, arrangement or statute under which any director, officer,
underwriter or affiliated person of the Registrant is insured or indemnified.
The Declaration of Trust provides that no Trustee or officer will be indemnified
against any liability to which the Registrant would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties.
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in the Form
ADV, as amended, of Pioneering Management Corporation. The following sections of
such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2;
C-3
<PAGE>
(b) Section IV, Business Background of
each Schedule D.
Item 29. Principal Underwriter
(a) See Item 25 above.
(b) Directors and Officers of PFD:
C-4
<PAGE>
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice
President and Trustee
Steven M. Graziano Senior None
Vice President
Stephen W. Long Senior None
Vice President
John W. Drachman Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Rice Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Steven R. Berke Assistant None
Vice President
C-5
<PAGE>
Mary Sue Hoban Assistant None
Vice President
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
C-6
<PAGE>
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts and records are maintained at the Registrant's
office at 60 State Street, Boston, Massachusetts; contact the Treasurer.
Item 31. Management Services
The Registrant is not a party to any management-related
service contract, except as described in the Prospectus and Statement of
Additional Information.
Item 32. Undertaking
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, a copy of the Registrant's annual report to shareholders furnished
pursuant to and meeting the requirements of Rule 30d-1 under the Investment
Company Act of 1940, as amended, from which the specified information is
incorporated by reference, unless such person currently holds securities of the
Registrant and otherwise has received a copy of such report, in which case the
Registrant shall state in the Prospectus that it will furnish, without charge, a
copy of such report on request, and the name, address and telephone number of
the person to whom such a request should be directed.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 13 to
its Registration Statement (the "Amendment") pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston and
Commonwealth of Massachusetts, on the 4th day of January, 1996.
PIONEER INTERMEDIATE TAX-FREE FUND
By: /s/Joseph P. Barri
Joseph P. Barri,
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 13 to the Registration Statement (File No. 33-7592)
has been signed below by the following persons in the capacities and on the date
indicated:
Signature Date
Principal Executive Officer: )
)
)
John F. Cogan, Jr.* )
John F. Cogan, Jr. )
) January 4, 1996
)
Principal Financial and )
Accounting Officer: )
)
)
William H. Keough* )
William H. Keough )
<PAGE>
A MAJORITY OF THE BOARD OF TRUSTEES:
John F. Cogan, Jr.* )
John F. Cogan, Jr. )
)
Richard H. Egdahl, M.D.* )
Richard H. Egdahl, M.D. )
)
John W. Kendrick* )
John W. Kendrick )
)
Marguerite A. Piret* )
Marguerite A. Piret )
)
David D. Tripple* )
David D. Tripple )
)
John Winthrop* )
John Winthrop )
)
Margaret B.W. Graham* )
Margaret B.W. Graham )
)
Stephen K. West* )
Stephen K. West
*By: /s/Joseph P. Barri
Joseph P. Barri, January 4, 1996
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
11. Consent of Arthur Andersen LLP
17. Financial Data Schedules
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our firm) included in or made a part of the Pioneer
Intermediate Tax-Free Fund Post-Effective Amendment No. 13 to Registration
Statement File No. 33-7592 and Amendment No. 13 to Registration Statement File
No. 811-4768.
/S/ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 3, 1996
[ARTICLE] 6
[CIK] 0000798172
[NAME] Pioneer Intermediate Tax-Free Fund
[SERIES]
[NUMBER] 0
[NAME] none
[MULTIPLIER] 1
[CURRENCY] U. S .Dollars
[PERIOD-TYPE] Year
[FISCAL-YEAR-END] DEC-31-1994
[PERIOD-START] JAN-01-1994
[PERIOD-END] DEC-31-1994
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 79,422,703
[INVESTMENTS-AT-VALUE] 76,769,627
[RECEIVABLES] 1,596,605
[ASSETS-OTHER] 4,491
[OTHER-ITEMS-ASSETS] 218,554
[TOTAL-ASSETS] 78,589,277
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 386,401
[TOTAL-LIABILITIES] 386,401
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 81,171,407
[SHARES-COMMON-STOCK] 8,124,784
[SHARES-COMMON-PRIOR] 7,633,039
[ACCUMULATED-NII-CURRENT] (16,448)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (299,007)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (2,653,076)
[NET-ASSETS] 78,202,876
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 4,865,497
[OTHER-INCOME] 0
[EXPENSES-NET] (830,665)
[NET-INVESTMENT-INCOME] 4,034,832
[REALIZED-GAINS-CURRENT] (299,222)
[APPREC-INCREASE-CURRENT] (8,771,933)
[NET-CHANGE-FROM-OPS] (5,036,323)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (4,056,382)
[DISTRIBUTIONS-OF-GAINS] (32,156)
[DISTRIBUTIONS-OTHER] (16,448)
[NUMBER-OF-SHARES-SOLD] 1,783,134
[NUMBER-OF-SHARES-REDEEMED] (1,549,992)
[SHARES-REINVESTED] 258,603
[NET-CHANGE-IN-ASSETS] (3,894,084)
[ACCUMULATED-NII-PRIOR] 21,550
[ACCUMULATED-GAINS-PRIOR] 6,138,656
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (412,999)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (1,014,049)
[AVERAGE-NET-ASSETS] 82,511,902
[PER-SHARE-NAV-BEGIN] 10.760
[PER-SHARE-NII] 0.494
[PER-SHARE-GAIN-APPREC] (1.134)
[PER-SHARE-DIVIDEND] (0.494)
[PER-SHARE-DISTRIBUTIONS] (0.006)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 9.620
[EXPENSE-RATIO] 1
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<PAGE>
[ARTICLE] 6
[CIK] 0000798172
[NAME] PIONEER INTERMEDIATE TAX FREE FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-END] JUN-30-1995
[INVESTMENTS-AT-COST] 78332302
[INVESTMENTS-AT-VALUE] 80917348
[RECEIVABLES] 1579920
[ASSETS-OTHER] 1749
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 82499017
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 341953
[TOTAL-LIABILITIES] 341953
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 80479349
[SHARES-COMMON-STOCK] 8059219<F1>
[SHARES-COMMON-PRIOR] 8124784<F2>
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 24811
[ACCUMULATED-NET-GAINS] (881537)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 2584063
[NET-ASSETS] 82157064
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 2405830
[OTHER-INCOME] 0
[EXPENSES-NET] 413143
[NET-INVESTMENT-INCOME] 1992687
[REALIZED-GAINS-CURRENT] (582530)
[APPREC-INCREASE-CURRENT] 5237139
[NET-CHANGE-FROM-OPS] 6647296
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1976239<F3>
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 24811<F4>
[NUMBER-OF-SHARES-SOLD] 414811<F5>
[NUMBER-OF-SHARES-REDEEMED] 605068<F6>
[SHARES-REINVESTED] 124692<F7>
[NET-CHANGE-IN-ASSETS] 3954188
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (299007)
[OVERDISTRIB-NII-PRIOR] 16448
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 202703
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 480820
[AVERAGE-NET-ASSETS] 81777461<F8>
[PER-SHARE-NAV-BEGIN] 9.62<F9>
[PER-SHARE-NII] 0.25<F10>
[PER-SHARE-GAIN-APPREC] 0.57<F12>
[PER-SHARE-DIVIDEND] 0.25<F13>
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.19<F14>
[EXPENSE-RATIO] 1.00<F15>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>shares-common-stock per class:
class a - 7827882
class b - 231337
<F2>shares-common-prior per class:
class a - 7966299
class b - 158485
<F3>distributions-of-income per class:
class a - 1935175
class b - 41064
<F4>class a shares only.
<F5>number-of-shares-sold
class a - 323875
class b - 90936
<F6>number-of-shares-redeemed per class:
class a - 584563
class b - 20505
<F7>shares-reinvested per class:
class a - 122271
class b - 2421
<F8>average-net-assets per class:
class a - 79736198
class b - 2041263
<F9>represents per-share-nav-begin for class a shares; per-share-nav-begin for
class b shares is 9.65.
<F10>represents per-share-nii for class a shares; per-shar-nii for class b
shares is 0.21.
<F12>represents per-share-gain-apprec for class a shares; per-share-gain-
apprec for class b shares is 0.56.
<F13>represents per-share-dividend for class a shares; per-share-dividend for
class b shares is 0.21.
<F14>represents per-share-nav-end for class a shares; per-share-nav-end for
class b shares is 10.21.
<F15>represents expense-ratio for class a shares; expense-ratio for class b
shares is 1.76.
</FN>
</TABLE>
