As filed with the Securities and Exchange Commission on April 30, 1998
File Nos. 33-7592
811-04768
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. __ / /
Post-Effective Amendment No. 16 / X /
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / X /
---
Amendment No. 16 / X /
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(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 Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 742-7825
Joseph P. Barri, Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
___ immediately upon filing pursuant to paragraph (b)
X on April 30, 1998 pursuant to paragraph (b)
---
___ 60 days after filing pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on [date] pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
(without par value)
<PAGE>
PIONEER INTERMEDIATE TAX-FREE FUND
Class A, Class B and Class C Shares
Cross-Reference Sheet Showing Location in Prospectus and Statement of
Additional Information of Information
Required by Items of the Registration Form
FORM N-1A ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS OR STATEMENT
OF 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 - Cover Page; Investment
Objective and Policies; Management of
the Fund; Fund Share Alternatives;
Share Price; How to Buy Fund Shares;
How to Sell Fund Shares; How to
Exchange Fund Shares; The Fund
5. Management of the Fund Prospectus - Management of the Fund;
Shareholder Services
5A. Management's Discussion of Fund
Performance Not Applicable
6. Capital Stock and Other Securities Prospectus - Investment Objective and
Policies; Management of the Fund; Fund
Share Alternatives; Share Price; How to
Buy Fund Shares; How to Sell Fund
Shares; How to Exchange Fund Shares;
Dividends and Tax Status; The Fund
7. Purchase of Securities Being
Offered Prospectus - Management of the Fund;
Distribution Plans; Fund Share
Alternatives; Share Price; How to Buy
Fund Shares; How to Sell Fund Shares;
How to Exchange Fund Shares;
Shareholder Services
8. Redemption or Repurchase Prospectus - Fund Share Alternatives;
How to Buy Fund Shares; How to Sell
Fund Shares; How to Exchange Fund
Shares; Shareholder Services
9. Pending Legal Proceedings Not Applicable
<PAGE>
10. Cover Page Statement of Additional Information -
Cover Page
11. Table of Contents Statement of Additional Information -
Cover Page
12. General Information and History Statement of Additional Information -
Description of Shares
13. Investment Objectives and Policies Statement of Additional Information -
Investment Policies and Restrictions;
Appendix A; Appendix B
14. Management of the Fund Statement of Additional Information -
Management of the Fund
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; Underwriting Agreement and
Distribution Plans; Shareholder
Servicing/Transfer Agent; Custodian;
Principal Underwriter; Independent
Public Accountants; Appendix D
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
19. Purchase, Redemption and Pricing
of Securities Being Offered Statement of Additional Information -
Letter of Intent; Systematic Withdrawal
Plan; Determination of Net Asset Value
20. Tax Status Statement of Additional Information -
Tax Status
21. Underwriters Statement of Additional Information -
Underwriting Agreement and Distribution
Plans; Principal Underwriter
22. Calculation of Performance Data Statement of Additional Information -
Investment Results; Appendix C
23. Financial Statements Statement of Additional Information -
Financial Statements
<PAGE>
[PIONEER LOGO]
Pioneer
Intermediate
Tax-Free
Fund
CLASS A, CLASS B AND CLASS C SHARES
PROSPECTUS
APRIL 30, 1998
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 MAY BE MORE OR LESS THAN YOUR PURCHASE PRICE. SHARES IN THE FUND ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER
DEPOSITORY INSTITUTION, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY.
This Prospectus provides the information about the Fund that you should
know before investing. Please read and retain it for your future reference. More
information about the Fund is included in the Statement of Additional
Information, also dated April 30, 1998, as supplemented or revised from time to
time, 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 by calling 1-800-225-6292 or through
the SEC's Internet web site (http://www.sec.gov).
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
--------------------------------------------------------- -----
<S> <C> <C>
I. EXPENSE INFORMATION ..................................... 2
II. FINANCIAL HIGHLIGHTS .................................... 3
III. INVESTMENT OBJECTIVE AND POLICIES ....................... 5
IV. MANAGEMENT OF THE FUND .................................. 6
V. FUND SHARE ALTERNATIVES ................................. 7
VI. SHARE PRICE ............................................. 8
VII. HOW TO BUY FUND SHARES .................................. 8
VIII. HOW TO SELL FUND SHARES ................................. 11
IX. HOW TO EXCHANGE FUND SHARES ............................. 12
X. DISTRIBUTION PLANS ...................................... 13
XI. DIVIDENDS AND TAX STATUS ................................ 14
XII. SHAREHOLDER SERVICES .................................... 15
Account and Confirmation Statements .................... 15
Additional Investments ................................. 15
Automatic Investment Plans ............................. 15
Financial Reports and Tax Information .................. 15
Distribution Options ................................... 15
Directed Dividends ..................................... 16
Direct Deposit ......................................... 16
Telephone Transactions ................................. 16
FactFone(SM) ........................................... 16
Telecommunications Device for the Deaf (TDD) ........... 16
Systematic Withdrawal Plans ............................ 16
Reinstatement Privilege (Class A Shares Only) .......... 16
XIII. THE FUND ................................................ 17
XIV. INVESTMENT RESULTS ...................................... 17
XV. APPENDIX--Taxable Equivalent Yields ..................... 18
</TABLE>
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses that
you, as a shareholder, will bear directly or indirectly when you invest in the
Fund. The table reflects annual operating expenses based upon actual expenses
incurred for the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES: CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Maximum Initial Sales Charge on Purchases
(as a percentage of the offering price) ......... 3.50%(1) None None
Maximum Sales Charge on Reinvestment of
Dividends ....................................... None None None
Maximum Deferred Sales Charge
(as a percentage of purchase price or
redemption proceeds, as applicable) ............. None(1) 3.00% 1.00%
Redemption Fee(2) ................................. None None None
Exchange Fee ...................................... None None None
ANNUAL OPERATING EXPENSES (as a percentage
of average net assets):
Management Fee (after fee reduction)(3) ........... 0.35% 0.35% 0.35%
12b-1 Fees ........................................ 0.24% 1.00% 1.00%
Other Expenses (including transfer agent fee,
custodian fees and accounting and printing
expenses) ....................................... 0.41% 0.44% 0.47%
---- ---- ----
Total Operating Expenses (after fee
reductions)(4) ................................. 1.00% 1.79% 1.82%
==== ==== ====
</TABLE>
- --------------------
1 Purchases of $1 million or more and purchases by participants in a group plan
are not subject to an initial sales charge but may be subject to a contingent
deferred sales charge ("CDSC") as further described under "How to Sell Fund
Shares."
2 Separate fees (currently $10 and $20, respectively) apply to United States
("U.S.") or international 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 reduce Class A expenses to 1.00% of the average daily net
assets attributable to Class A shares. The portion of Fund-wide expenses
attributable to Class B and Class C shares will be reduced only to the extent
such expenses are reduced for Class A shares. This agreement is voluntary and
temporary and may be revised or terminated at any time.
<TABLE>
<CAPTION>
EXPENSES ABSENT WAIVER CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Management Fee .................... 0.50% 0.50% 0.50%
Total Operating Expenses(4) ....... 1.15% 1.94% 1.97%
</TABLE>
- --------------------
4Expenses are net of amounts paid in connection with certain expense offset
arrangements. See "Financial Highlights."
EXAMPLE:
You would pay the following expenses on a $1,000 investment, with or
without redemption at the end of each time period, assuming a 5% annual return,
reinvestment of all dividends and distributions and that the percentage amounts
listed under "Annual Operating Expenses" remain the same each year.
<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 $48 $76 $97 $190
-Assuming no redemption $18 $56 $97 $190
Class C shares**
-Assuming complete
redemption at end
of period $28 $57 $99 $214
-Assuming no redemption $18 $57 $99 $214
</TABLE>
- --------------------
* Class B shares convert to Class A shares six years after purchase;
therefore, Class A share expenses are used after year six.
** Class C shares redeemed during the first year after purchase are subject to
a 1% CDSC.
THE EXAMPLE IS DESIGNED FOR INFORMATION PURPOSES ONLY, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL FUND
EXPENSES AND RETURN WILL VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN
THOSE SHOWN.
For further information regarding management fees, Rule 12b-1 fees and
other expenses of the Fund, 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 paying more than the economic equivalent of the maximum sales
charge permitted under the Conduct Rules of the National Association of
Securities Dealers, Inc.
The maximum initial sales charge is reduced on purchases of specified
amounts of Class A shares and the value of shares owned in other Pioneer mutual
funds is taken into account in determining the applicable initial 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 audited by Arthur Andersen LLP,
independent public accountants. Arthur Andersen LLP's report on the Fund's
financial statements as of December 31, 1997 appears in the Fund's Annual Report
which is incorporated by reference into the Statement of Additional Information.
The information listed below should be read in conjunction with those financial
statements. 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
SELECTED DATA FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1997 1996 1995 1994+
-------------- -------------- -------------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period ....................... $ 10.28 $ 10.44 $ 9.62 $ 10.76
------- ------- ------- -------
Increase (decrease) from
investment operations:
Net investment income
(loss) ......................... $ 0.44 $ 0.46 $ 0.49 $ 0.49
Net realized and
unrealized gain (loss)
on investments ................. 0.25 (0.15) 0.82 (1.13)
------- ------- ------- -------
Net increase
(decrease) from
investment operations .......... $ 0.69 $ 0.31 $ 1.31 $ (0.64)
Distributions
shareholders:
Net investment income ........... (0.44) (0.47) (0.49) (0.49)
Net realized gain ............... (0.08) -- -- (0.01)
------- ------- ------- -------
Net increase (decrease) in net
asset value ..................... $ 0.17 $ (0.16) $ 0.82 $ (1.14)
------- ------- ------- -------
Net asset value, end
of period ....................... $ 10.45 $ 10.28 $ 10.44 $ 9.62
======= ======= ======= =======
Total return* .................... 6.87% 3.03% 13.80% (6.02)%
RATIOS/SUPPLEMENTAL DATA
Ratio of net expenses to
average net assets .............. 1.02%++ 1.03%++ 1.02%++ 1.00%
Ratio of net investment income
(loss) to average net assets 4.23%++ 4.47%++ 4.77%++ 4.89%
Portfolio turnover rate .......... 35% 34% 29% 39%
Net assets, end of period
(in thousands) .................. $65,225 $73,387 $79,432 $76,674
Ratios assuming no waiver of
management fees by PMC and no
reduction for fees
paid indirectly:
Net expenses .................... 1.17% 1.14% 1.12% 1.22%
Net investment income
(loss) .......................... 4.08% 4.36% 4.67% 4.67%
Ratios assuming waiver of
management fees by PMC and
reduction for fees paid
indirectly:
Net expenses ................... 1.00% 1.00% 1.00% --
Net investment income
(loss) ........................ 4.25% 4.50% 4.79% --
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ....................... $ 10.32 $ 10.06 $ 9.63 $ 9.66 $ 9.40 $ 8.95
------- ------- ------- ------ ------ -------
Increase (decrease) from
investment operations:
Net investment income
(loss) ......................... $ 0.56 $ 0.59 $ 0.61 $ 0.63 $ 0.63 $ 0.63
Net realized and
unrealized gain (loss)
on investments ................. 0.56 0.25 0.43 (0.04) 0.26 0.47
------- ------- ------- ------- ------ -------
Net increase
(decrease) from
investment operations .......... $ 1.12 $ 0.84 $ 1.04 $ 0.59 $ 0.89 $ 1.10
Distributions
shareholders:
Net investment income ........... (0.56) (0.58) (0.61) (0.62) (0.63) (0.65)
Net realized gain ............... (0.12) -- -- -- -- --
------- ------- ------- ------- ------- -------
Net increase (decrease) in net
asset value ..................... $ 0.44 $ 0.26 $ 0.43 $ (0.03) $ 0.26 $ 0.45
------- ------- ------- ------- ------- -------
Net asset value, end
of period ....................... $ 10.76 $ 10.32 $ 10.06 $ 9.63 $ 9.66 $ 9.40
======= ======= ======= ======= ======= =======
Total return* .................... 11.08% 8.65% 11.17% 6.42% 9.77% 12.79%
RATIOS/SUPPLEMENTAL DATA
Ratio of net expenses to
average net assets .............. 0.85% 0.85% 0.75% 0.66% 0.60% 0.50%
Ratio of net investment income
(loss) to average net assets 5.23% 5.78% 6.21% 6.56% 6.60% 6.89%
Portfolio turnover rate .......... 14% 4% 5% 8% 4% 10%
Net assets, end of period
(in thousands) .................. $82,907 $57,353 $44,631 $34,118 $28,754 $20,121
Ratios assuming no waiver of
management fees by PMC and
no reduction for fees
paid indirectly:
Net expenses .................... 1.12% 1.27% 1.33% 1.17% 1.10% 1.28%
Net investment income
(loss) .......................... 4.97% 5.36% 5.63% 6.05% 6.10% 6.11%
Ratios assuming waiver of
management fees by PMC and
reduction for fees paid
indirectly:
Net expenses ................... -- -- -- -- -- --
Net investment income
(loss) ........................ -- -- -- -- -- --
</TABLE>
- -------------
+ Per share data based upon average shares outstanding for the period
presented.
++ Ratio assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales charges.
Total return would be reduced if sales charges were taken into account.
3
<PAGE>
II. FINANCIAL HIGHLIGHTS (continued)
Pioneer Intermediate Tax-Free Fund
SELECTED DATA FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
FOR THE YEAR APRIL 29,
ENDED FOR THE YEAR ENDED 1994 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
-------------- --------------------- ------------
1997 1996 1995 1994+
-------------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $10.31 $10.46 $ 9.65 $10.07
------ ------ ------ ------
Increase (decrease) from investment operations:
Net investment income (loss) ............................... $ 0.36 $ 0.38 $ 0.41 $ 0.27
Net realized and unrealized gain (loss) on investments ..... 0.25 (0.15) 0.80 (0.42)
------ ------ ------ -------
Net increase (decrease) from investment operations .......... $ 0.61 $ 0.23 $ 1.21 $(0.15)
Distributions to shareholders:
Net investment income ...................................... (0.37) (0.38) (0.40) (0.27)
Net realized gain .......................................... (0.08) -- -- --
------ ------ ------ -------
Net increase (decrease) in net asset value .................. $ 0.16 $(0.15) $ 0.81 $(0.42)
------ ------ ------ -------
Net asset value, end of period .............................. $10.47 $10.31 $10.46 $ 9.65
====== ====== ====== =======
Total return* ............................................... 6.08% 2.25% 12.71% (1.49)%
RATIOS/SUPPLEMENTAL DATA
Ratio of net expenses to average net assets ................. 1.81%++ 1.81%++ 1.86%++ 1.84%**
Ratio of net investment income (loss) to average net assets . 3.44%++ 3.68%++ 3.90%++ 4.17%**
Portfolio turnover rate ..................................... 35% 34% 29% 39%
Net assets, end of period (in thousands) .................... $3,010 $2,864 $2,553 $1,529
Ratios assuming no waiver of management fees by PMC and
no reduction for fees paid indirectly:
Net expenses ............................................... 1.96% 1.91% 1.96% 2.14%**
Net investment income (loss) ............................... 3.29% 3.58% 3.80% 3.87%**
Ratios assuming waiver of management fees by PMC and
reduction for fees paid indirectly:
Net expenses ............................................... 1.79% 1.76% 1.82% --
Net investment income (loss) ............................... 3.46% 3.73% 3.94% --
</TABLE>
SELECTED DATA FOR A CLASS C SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, JANUARY 31, 1996
1997 TO DECEMBER 31, 1996
------------------- ---------------------
<S> <C> <C>
Net asset value, beginning of period .......................... $10.29 $10.51
------ ------
Increase (decrease) from investment operations:
Net investment income (loss) ................................. $ 0.35 $ 0.33
Net realized and unrealized gain (loss) on investments ....... 0.26 (0.21)
------ -------
Net increase (decrease) from investment operations ........... $ 0.61 $ 0.12
Distributions to shareholders:
Net investment income ........................................ (0.34) (0.33)
In excess of net investment income ........................... -- (0.01)
Net realized gain ............................................ (0.08) --
------ -------
Net increase (decrease) in net asset value .................... $ 0.19 $(0.22)
------ -------
Net asset value, end of period ................................ $10.48 $10.29
====== =======
Total return* ................................................. 6.04% 1.22%
RATIOS/SUPPLEMENTAL DATA
Ratio of net expenses to average net assets ................... 1.84%++ 1.97%++**
Ratio of net investment income (loss) to average net assets ... 3.41%++ 3.51%++**
Portfolio turnover rate ....................................... 35% 34%
Net assets, end of period (in thousands) ...................... $ 300 $ 202
Ratios assuming no waiver of management fees by PMC and no
reduction for fees paid indirectly:
Net expenses ................................................. 1.99% 2.08%**
Net investment income (loss) ................................. 3.26% 3.40%**
Ratios assuming waiver of management fees by PMC and
reduction for fees paid indirectly:
Net expenses ................................................. 1.82% 1.89%**
Net investment income (loss) ................................. 3.43% 3.59%**
</TABLE>
- -------------
+ Per share data based upon average shares outstanding for the period
presented.
++ Ratio assuming no reduction for fees paid indirectly.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales charges.
Total return would be reduced if sales charges were taken into account.
** Annualized.
4
<PAGE>
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 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 Group ("S&P" ) or are rated Aaa, Aa, A or Baa by Moody's
Investors 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. If the Fund
cannot find suitable tax-exempt short-term instruments in the quantity
necessary, or if for any reason the Fund earns taxable income or net short-term
capital gains, 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
Fund's 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
5
<PAGE>
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 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, a 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%. Securities in the Fund's portfolio will be sold whenever
PMC believes that it is necessary without regard to the length of time the
particular security may have been held. See "Financial Highlights" for actual
turnover rates. 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. 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 name
and general background of each Trustee and executive officer of the Fund.
Mr. David Tripple, President and Chief Investment Officer of PMC and
Executive Vice President of each Pioneer mutual fund, has general
responsibility for PMC's investment operations and chairs a committee of PMC's
fixed income managers which reviews PMC's research and portfolio operations,
including those of the Fund. Mr. Tripple joined PMC in 1974.
Research and management of the Fund is the responsibility of a team of
portfolio managers and analysts focusing on fixed income securities. Members of
the team meet regularly to discuss holdings, prospective investments and
portfolio composition. Mr. Sherman Russ, a Senior Vice President of PMC and
Vice President of the Fund, is the senior member of the team. Mr. Russ joined
PMC in 1983.
Day-to-day management of the Fund has been the responsibility of Ms.
Kathleen D. McClaskey, a Vice President of PMC and the Fund, since February,
1990. Ms. McClaskey joined PMC in 1986 and has over 16 years of investment
experience.
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 publicly traded
Delaware corporation. Pioneer Funds Distributor, Inc. ("PFD"), an indirect
wholly owned subsidiary of PGI, is the principal underwriter of the Fund. John
F. Cogan, Jr., Chairman and President of the Fund, President and a Director of
PGI and Chairman and a Director of PMC and PFD, owned approximately 14% of the
outstanding capital stock of PGI as of the date of this Prospectus.
In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109. In an effort to avoid conflicts of
interest with the Fund, the Fund and PMC have adopted a Code of Ethics that is
designed to maintain a high standard of personal conduct by directing that all
personnel defer to the interests of the Fund and its shareholders in making
personal securities transactions.
Under the terms of its contract with the Fund, PMC 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
6
<PAGE>
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
regulatory agencies, 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 Investment
Company Act of 1940, as amended (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 any 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 in which 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 investment research services or sells shares
of any Pioneer mutual fund or other funds for which PMC or any affiliate serves
as investment adviser or manager. 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.
Certain information technology experts currently predict the possibility of
a widespread failure of computer systems and certain other equipment which will
be triggered on or after certain dates--primarily January 1, 2000--due to a
systemic inability to process date-related information. This scenario, commonly
known as the "Year 2000 Problem," could have an adverse impact on individuals
and businesses, including the Fund and other mutual funds and financial
organizations. PMC and its affiliates are taking steps believed to be adequate
to address the Year 2000 Problem with respect to the systems and equipment
controlled by the Fund's investment adviser, broker-dealer and transfer agent.
In addition, other entities providing services to the Fund and its shareholders
are being asked to provide assurances that they have undertaken similar measures
with respect to their systems and equipment. Although PMC is not expecting any
adverse impact on it or its clients from the Year 2000 Problem, it cannot
provide complete assurances that its efforts or the efforts of its key vendors
will be successful.
V. FUND SHARE ALTERNATIVES
The Fund continuously offers three Classes of shares designated as Class A,
Class B and Class C shares, as described more fully in "How to Buy Fund Shares."
If you do not specify in your instructions to the Fund which Class of shares you
wish to purchase, exchange or redeem, the Fund will assume that your
instructions apply to Class A shares.
CLASS A SHARES. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase; however, shares redeemed
within 12 months of purchase may be subject to a CDSC. Class A shares are
subject to distribution and service fees at a combined annual rate of up to
0.25% of the Fund's average daily net assets attributable to Class A shares.
CLASS B SHARES. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge, but
are subject to a CDSC of up to 3% if redeemed within four years. Class B shares
are subject to distribution and service fees at a combined annual rate of 1% 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.
CLASS C SHARES. Class C shares are sold without an initial sales charge,
but are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined annual rate of up to 1% of the Fund's average daily net assets
attributable to Class C shares. Your entire investment in Class C shares is
available to work for you from the time you make your investment, but the higher
distribution fee paid by Class C shares will cause your Class C shares to have a
higher expense ratio and to pay lower dividends, to the extent dividends are
paid, than Class A shares. Class C shares have no conversion feature.
SELECTING A CLASS OF SHARES. The decision as to which Class to purchase
depends on the amount you invest, the intended length of the investment and your
personal situation. If you are making an investment that qualifies for reduced
sales charges, you might consider Class A shares. If you prefer not to pay an
initial sales charge on an investment of $250,000 or less and you plan to hold
the investment for
7
<PAGE>
at least four years, you might consider Class B shares. If you prefer not to pay
an initial sales charge and you plan to hold your investment for one to eight
years, you may prefer Class C shares.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund and
shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the Pioneer mutual fund originally purchased. Shares
sold outside the U.S. to persons who are not U.S. citizens may be subject to
different sales charges, CDSCs and dealer compensation arrangements in
accordance with local laws and business practices.
VI. SHARE PRICE
Shares of the Fund are sold at the public offering price, which is the net
asset value per share, plus any applicable sales charge. Net asset value per
share of a Class of Fund shares is determined by dividing the value of its
assets, less liabilities attributable to that Class, by the number of shares of
that Class outstanding. The net asset value is computed once daily, on each day
the New York Stock Exchange (the "Exchange") is open, as of the close of regular
trading on the Exchange.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation or securities for which sales prices are not generally reported are
valued at the mean between the current bid and asked prices. All assets of the
Fund for which there is no other readily available valuation method are valued
at their fair value as determined in good faith by the Trustees.
VII. HOW TO BUY FUND SHARES
YOU MAY BUY FUND SHARES FROM ANY SECURITIES BROKER-DEALER WHICH HAS A SALES
AGREEMENT WITH PFD. IF YOU DO NOT HAVE A SECURITIES BROKER-DEALER, PLEASE CALL
1-800-225-6292. SHARES WILL BE PURCHASED AT THE PUBLIC OFFERING PRICE, THAT IS,
THE NET ASSET VALUE PER SHARE NEXT COMPUTED AFTER RECEIPT OF A PURCHASE ORDER,
PLUS ANY APPLICABLE SALES CHARGE, EXCEPT AS SET FORTH BELOW.
The minimum initial investment is $1,000 for Class A, Class B and Class C
shares except as specified below. The minimum initial investment is $50 for
Class A accounts being established to utilize monthly bank drafts, government
allotments, payroll deductions and other similar automatic investment plans.
Separate minimum investment requirements apply to retirement plans and to
telephone and wire orders placed by broker-dealers; no sales charges or minimum
requirements apply to the reinvestment of dividends or capital gains
distributions. The minimum subsequent investment is $50 for Class A shares and
$500 for Class B and Class C shares except that the subsequent minimum
investment amount for Class B and Class C share accounts may be as little as $50
if an automatic investment plan is established (see "Automatic Investment
Plans").
TELEPHONE PURCHASES. Your account is automatically authorized to have the
telephone purchase privilege unless you indicate 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 Pioneer mutual fund account; it may not be used to establish a new
account. Proper account identification will be required for each telephone
purchase. A maximum of $25,000 per account may be purchased by telephone each
day. The telephone purchase privilege is available to Individual Retirement
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 receipt of a telephone
purchase instruction and receipt of good funds (usually three days after the
purchase instruction). You may always elect to deliver purchases to PSC by mail.
See "Telephone Transactions" for additional information.
Class A Shares
You may buy Class A shares at the public offering price, including a sales
charge, as follows:
<TABLE>
<CAPTION>
DEALER
ALLOWANCE
SALES CHARGE AS A % 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 (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 one beneficiary is involved. The sales charges
applicable to a current purchase of Class A shares of the Fund by a person
listed above is determined by adding the value of shares to be purchased to the
aggregate value (at the then current offering price) of shares of any of the
other Pioneer mutual funds previously purchased and then owned, provided PFD is
notified by such person or his or her broker-dealer each time a purchase is made
which would qualify. Pioneer mutual funds include all mutual funds for which
8
<PAGE>
PFD serves as principal underwriter. At the sole discretion of PFD, holdings of
funds domiciled outside the U.S., but which are managed by affiliates of PMC,
may be included for this purpose.
No sales charge is payable at the time of purchase on investments of $1
million or more or for purchases by 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 may pay to
Mutual of Omaha Investor Services, Inc. 50% of PFD's retention of any sales
commission on sales of the Fund's Class A shares through such dealer. From time
to time, PFD may elect to reallow the entire initial sales charge to
participating dealers for all Class A sales with respect to which orders are
placed during a particular period. Dealers to whom substantially the entire
sales charge is reallowed may be deemed to be underwriters under the federal
securities laws.
QUALIFYING FOR A REDUCED SALES CHARGE. Class A shares of the Fund may be
sold at a reduced or eliminated sales charge to certain group plans ("Group
Plans") under which a sponsoring organization makes recommendations to, permits
group solicitation of, or otherwise facilitates purchases by, its employees,
members or participants. Class A shares of the Fund may be sold at net asset
value without a sales charge to 401(k) retirement plans with 100 or more
participants or at least $500,000 in plan assets. Information about such
arrangements is available from PFD.
Class A shares of the Fund may also be sold at net asset value per share
without a sales charge to: (a) current or former Trustees and officers of the
Fund and partners 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 financial planners adhering to standards established by PFD; (i)
other funds and accounts for which PMC or any affiliate 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. Class A shares of the Fund may be sold at net asset value per share
without a sales charge to Optional Retirement Program (the "Program")
participants if (i) the employer has authorized a limited number of investment
company providers for the Program, (ii) all authorized investment company
providers offer their shares to Program participants at net asset value, (iii)
the employer has agreed in writing to actively promote the authorized investment
providers to Program participants and (iv) the Program provides for a matching
contribution for each participant contribution. Class A shares of the Fund may
also be sold at net asset value without a sales charge in connection with
certain reorganization, liquidation or acquisition transactions involving other
investment companies or personal holding companies.
Reduced sales charges are available for 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 Intent
("LOI") which may be established by completing the Letter of Intent section of
the Account Application. The reduced sales charge will be the charge that would
be applicable to the purchase of the specified amount of Class A shares as if
the shares had all been purchased at the same time. A purchase not made pursuant
to an LOI may be included if the LOI is submitted to PSC within 90 days of such
purchase. You may also obtain the reduced sales charge by including the value
(at current offering price) of all your Class A shares in the Fund and all other
Pioneer mutual funds held of record as of the date of your LOI in the amount
used to determine the applicable sales charge for the Class A shares to be
purchased under the LOI. Five percent of your total intended purchase amount
will be held in escrow by PSC, registered in your name, until the terms of the
LOI are fulfilled.
You are not obligated to purchase the amount specified in your LOI. If,
however, the amount actually purchased during the 13-month period is more or
less than that indicated in your LOI, an adjustment in the sales charge will be
made. If a payment to cover actual sales charges is due, it must be paid to PFD
within 20 days after PFD or your dealer sends you a written request otherwise
PFD will direct PSC to liquidate sufficient shares from your escrow account to
cover the amount due. See the Statement of Additional Information for more
information.
Investors who are clients of a broker-dealer with a current sales agreement
with PFD may purchase Class A shares of the Fund at net asset value, without a
sales charge, to the extent that the purchase price is paid out of proceeds from
one or more redemptions by the investor of shares of certain other mutual funds.
In order for a purchase to qualify for this
9
<PAGE>
privilege, the investor must document to the broker-dealer that the redemption
occurred within 60 days immediately preceding the purchase of Class A shares;
that the client paid a sales charge on the original purchase of the shares
redeemed; and that the mutual fund whose shares were redeemed also offers net
asset value purchases to redeeming shareholders of any of the Pioneer mutual
funds. Further details may be obtained from PFD.
Class B Shares
You may buy Class B shares at 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.
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.
The CDSC for Class B shares subject to a CDSC upon redemption will be
determined as follows:
<TABLE>
<CAPTION>
YEAR SINCE CDSC AS A % 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
beginning 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 (the "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.
Class C Shares
You may buy Class C 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 C shares redeemed within one year of purchase will be
subject to a CDSC of 1%. The charge will be assessed on the amount equal to the
lesser of the current market value or the original purchase cost of the shares
being redeemed. No CDSC will be imposed on increases in account value above the
initial purchase price, including shares derived from the reinvestment of
dividends or capital gains distributions. Class C shares do not convert to any
other Class of Fund shares.
For the purpose of determining the time of any purchase, all payments
during a quarter will be aggregated and deemed to have been made on the first
day of that quarter. In processing redemptions of Class C shares, the Fund will
first redeem shares not subject to any CDSC, and then shares held for the
shortest period of time during the one-year period. As a result, you will pay
the lowest possible CDSC.
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Fund in connection with the sale of Class C shares, including the payment of
compensation to broker-dealers.
WAIVER OR REDUCTION OF CONTINGENT DEFERRED SALES CHARGE. The CDSC on Class
B shares may be waived or reduced for non-retirement accounts if: (a) the
redemption results from the death of all registered owners of an account (in the
case of an UGMA, an UTMA or a trust account, waiver applies upon the death of
all beneficial owners) or a total and permanent disability (as defined in
section 72 of the Code) of all registered owners occurring after the purchase of
the shares being redeemed or (b) the redemption is made in connection with
limited automatic redemptions as set forth in "Systematic Withdrawal Plans"
(limited in any year to 10% of the value of the account in the Fund at the time
the withdrawal plan is established).
The CDSC on Class B shares may be waived or reduced for retirement plan
accounts if: (a) the redemption results from the death or a total and permanent
disability (as defined in Section 72 of the Code) occurring after the purchase
of the shares being redeemed of a shareholder or participant in an
employer-sponsored retirement plan; (b) the distribution is to a 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
10
<PAGE>
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 701/2 may exceed the 10% limit only if the distribution amount is based
on plan assets held in Pioneer mutual funds); (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 preauthorized through a prior agreement with PFD regarding
participant directed transfers).
The CDSC on Class C shares and on any Class A shares subject to a CDSC may
be waived or reduced as follows: (a) for automatic redemptions as described in
"Systematic Withdrawal Plans" (limited to 10% of the value of the account); (b)
if the redemption results from the death or a total and permanent disability (as
defined in Section 72 of the Code) occurring after the purchase of the shares
being redeemed of a shareholder or participant in an employer-sponsored
retirement plan; (c) if the distribution is part of a series of substantially
equal payments made over the life expectancy of the participant or the joint
life expectancy of the participant and his or her beneficiary; or (d) if the
distribution is to a participant in an employer-sponsored retirement plan and is
(i) a return of excess employee deferrals or contributions, (ii) a qualifying
hardship distribution as defined by the Code, (iii) from a termination of
employment, (iv) in the form of a loan to a participant in a plan which permits
loans, or (v) from a qualified defined contribution plan and represents a
participant's directed transfer (provided that this privilege has been
preauthorized through a prior agreement with PFD regarding participant directed
transfers).
The CDSC on any shares subject to a CDSC may be waived or reduced for
either non-retirement or retirement plan accounts if the redemption is made
pursuant to the Fund's right to liquidate or involuntarily redeem shares in a
shareholder's account. The CDSC on any shares subject to a CDSC will not be
applicable if the selling broker-dealer elects, with PFD's approval, to waive
receipt of the commission normally paid at the time of the sale.
BROKER-DEALERS. An order for any Class of Fund shares received by a
broker-dealer prior to the close of regular trading on the Exchange is confirmed
at the price appropriate for that Class as determined at the close of regular
trading on the Exchange on the day the order is received, provided the order is
received 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 PFD's close of business. PFD or its affiliates may
provide additional compensation to certain dealers or such dealers' affiliates
based on certain objective criteria established from time to time by PFD. All
such payments are made out of PFD's or the affiliate's own assets. These
payments will not change the price an investor will pay for shares or the amount
that the Fund will receive from such sale.
GENERAL. The Fund reserves the right in its sole discretion to withdraw all
or any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has been
confirmed in writing by PFD and payment has been received.
VIII. HOW TO SELL FUND SHARES
YOU CAN ARRANGE TO SELL (REDEEM) FUND SHARES ON ANY DAY THE EXCHANGE IS
OPEN BY SELLING EITHER SOME OR ALL OF YOUR SHARES TO THE FUND.
You may sell your shares either through your broker- dealer or directly to
the Fund. Please note the following:
[bullet] If you are selling shares from a retirement account, other than an
IRA, 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 or an IRA,
you may use any of the methods described below.
Your shares will be sold at the share price next calculated after your
order is received in good order less any applicable CDSC. Sale proceeds
generally will be sent to you by check, bank wire, or electronic funds transfer
normally within seven days after your order is received in good order. The Fund
reserves the right to withhold payment of the sale proceeds until checks
received by the Fund in payment for the shares being sold have cleared, which
may take up to 15 calendar days from the purchase date.
IN WRITING. You may 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 applies:
[bullet] you wish to sell over $100,000 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),
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[bullet] the check is not being made out to the account owners, or
[bullet] the sale proceeds are being transferred to a Pioneer mutual fund
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, PSC will send the proceeds of the sale to the
address of record. Fiduciaries and 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 by PSC. Good order means that there are no outstanding claims or requests
to hold redemptions on the account, any 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 indicate 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 except IRAs. A maximum of $100,000 per account per
day 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 wire address of record which
must have been properly predesignated 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" below. Telephone and fax redemptions will be priced as described
above. YOU ARE STRONGLY URGED TO CONSULT WITH YOUR FINANCIAL REPRESENTATIVE
PRIOR TO REQUESTING A TELEPHONE REDEMPTION.
SELLING SHARES THROUGH YOUR BROKER-DEALER. The Fund 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. Your broker-dealer must receive your
request before the close of business on the Exchange and transmit it to PFD
before PFD's close of business to receive that day's redemption price. Your
broker-dealer is responsible for providing all necessary documentation to PFD
and may charge you for its services.
SMALL ACCOUNTS. The minimum account value is $500. If you hold shares of
the Fund in an account with a net asset value of less than the minimum required
amount due to redemptions or exchanges, the Fund may redeem the shares held in
this account at net asset value if you have not increased the net asset value of
the account to at least the minimum required amount within six months of notice
by the Fund to you of the Fund's intention to redeem the shares.
CDSC ON CLASS A SHARES. Purchases of Class A shares of $1 million 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 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 of the shares originally held until the original 12-month period
expires. However, no CDSC is payable upon redemption with respect to Class A
shares purchased by 401(a) or 401(k) retirement plans with 1,000 or more
eligible participants or with at least $10 million in plan assets.
GENERAL. Redemptions may be suspended or payment postponed during any
period in which any of the following conditions exist: the Exchange is closed or
trading on the Exchange is restricted; an emergency exists as a result of which
disposal by the Fund of securities owned by it is not reasonably practicable or
it is not reasonably practicable for the Fund to fairly determine the value of
the net assets of its portfolio; or the SEC, by order, so permits.
Redemptions and repurchases are taxable transactions to shareholders. The
net asset value per share received upon redemption or repurchase may be more or
less than the cost of shares to an investor, depending on the market value of
the portfolio at the time of redemption or repurchase.
IX. HOW TO EXCHANGE FUND SHARES
WRITTEN EXCHANGES. You may exchange your shares by sending a letter of
instruction to PSC. Your letter should include your name, the name of the
Pioneer mutual fund out of which you wish to exchange and the name of the
Pioneer mutual fund into which you wish to exchange, your fund account
number(s), the Class of shares to be exchanged and the dollar amount or number
of shares to be exchanged. Written exchange requests must be signed by all
record owner(s) exactly as the shares are registered.
TELEPHONE EXCHANGES. Your account is automatically authorized to have the
telephone exchange privilege unless you indicate otherwise on your Account
Application or by writing to PSC. Proper account identification will be required
for each telephone exchange. Telephone exchanges may not exceed $500,000 per
account per day. Each telephone exchange request, whether by voice or by
FactFone(SM), will be recorded. YOU ARE STRONGLY URGED TO CONSULT WITH YOUR
FINANCIAL REPRESENTATIVE PRIOR TO REQUESTING A TELEPHONE EXCHANGE. See
"Telephone Transactions" below.
AUTOMATIC EXCHANGES. You may automatically exchange shares from one
Pioneer mutual fund account for shares of
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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 day of the month designated on your Account Application or Account Options
Form.
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.
Shares which would normally be subject to a CDSC upon redemption will not
be charged the applicable CDSC at the time of an exchange. Shares acquired in an
exchange will be subject to the CDSC of the shares originally held. For purposes
of determining the amount of any applicable CDSC, the length of time you have
owned shares acquired by exchange will be measured from the date you acquired
the original shares and will not be affected by any subsequent exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern time will be
effective on that day if the requirements above have been met, otherwise, they
will be effective on the next business day. PSC will process exchanges only
after receiving an exchange request in good order. There are currently no fees
or sales charges imposed at the time of an exchange. An exchange of shares may
be made only in states where legally permitted. For federal and (generally)
state income tax purposes, an exchange is considered to be a sale of the shares
of the Fund exchanged and a purchase of shares in another Pioneer mutual fund.
Therefore, an exchange could result in a gain or loss on the shares sold,
depending on the tax basis of these shares and the timing of the transaction,
and special tax rules may apply.
You should consider the differences in objectives and policies of the
Pioneer mutual funds, as described in each fund's current prospectus, before
making any exchange. For the protection of the Fund's performance and
shareholders, the Fund and PFD reserve the right to refuse any exchange request
or restrict, at any time without notice, the number and/or frequency of
exchanges to prevent abuses of the exchange privilege. Such abuses may arise
from frequent trading in response to short-term market fluctuations, a pattern
of trading by an individual or group that appears to be an attempt to "time the
market," or any other exchange request which, in the view of management, will
have a detrimental effect on the Fund's portfolio management strategy or its
operations. In addition, the Fund and PFD reserve the right to charge a fee for
exchanges or to modify, limit, suspend or discontinue the exchange privilege
with notice to shareholders as required by law.
X. DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution for each Class of shares (the
"Class A Plan," "Class B Plan," and "Class C Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution and service fees
are paid to PFD.
Pursuant to the Class A Plan, the Fund reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale of
Class A shares or to provide services to holders of Class A shares, provided the
categories of expenses for which reimbursement is made are approved by the
Fund's Board of Trustees. As of the date of this Prospectus, the Board of
Trustees has approved the following categories of expenses for Class A shares of
the Fund: (i) a service fee to be paid to qualified broker-dealers in an amount
not to exceed 0.25% per annum of the Fund's daily net assets attributable to
Class A shares; (ii) reimbursement to PFD for its expenditures for broker-dealer
commissions and employee compensation on certain sales of the Fund's Class A
shares with no initial sales charge (see "How to Buy Fund Shares"); and (iii)
reimbursement to PFD for expenses incurred in providing services to Class A
shareholders and supporting broker-dealers and other organizations (such as
banks and trust companies) in their efforts to provide such services. Banks are
currently prohibited under the Glass-Steagall Act from providing certain
underwriting or distribution services. If a bank was prohibited from acting in
any capacity or providing any of the described services, management would
consider what action, if any, would be appropriate.
Expenditures of the Fund pursuant to the Class A Plan are accrued daily and
may not exceed 0.25% of the Fund's average daily net assets attributable to
Class A shares. Distribution expenses of PFD are expected to substantially
exceed 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 Class A shareholders of the Fund.
Both the Class B Plan and the Class C Plan provide that the Fund will pay a
distribution fee at the annual rate of 0.75% of the Fund's average daily net
assets attributable to the applicable Class of shares and will pay PFD a service
fee at the annual rate of 0.25% of the Fund's average daily net assets
attributable to that Class of shares. The distribution fee is intended to
compensate PFD for its Class B and Class C distribution services to the Fund.
The service fee is intended to be additional compensation for personal services
and/or account maintenance services with respect to Class B and Class C shares.
PFD also receives the proceeds of any CDSC imposed on the redemption of Class B
and Class C shares.
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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 sales agreements with PFD. PFD may advance to dealers
the first-year service fee at a rate up to 0.25% of the purchase price of such
shares and, as compensation therefore, PFD may retain the service fee paid by
the Fund with respect to such shares for the first year after purchase. Dealers
will become eligible for additional service fees with respect to such shares
commencing in the 13th month following the purchase.
Commissions of up to 1% of the amount invested in Class C shares,
consisting of 0.75% of the amount invested and a first year's service fee of
0.25% of the amount invested, are paid to broker-dealers who have sales
agreements with PFD. PFD may advance to dealers the first-year service fee at a
rate up to 0.25% of the purchase price of such shares and, as compensation
therefore, PFD may retain the service fee paid by the Fund with respect to such
shares for the first year after purchase. Commencing in the 13th month following
the purchase of Class C shares, dealers will become eligible for additional
annual distribution fees and service fees of up to 0.75% and 0.25%,
respectively, of the net asset value of such shares. When a broker-dealer sells
Class B or Class C shares and elects, with PFD's approval, to waive its right to
receive the commission normally paid at the time of the sale, PFD may cause all
or a portion of the distribution fees described above to be paid to the
broker-dealer.
Dealers may from time to time be required to meet certain criteria in order
to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan or the Class C Plan for which there
is no dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
XI. DIVIDENDS AND TAX STATUS
The Fund has elected to be treated, has qualified and intends to qualify
each year as a "regulated investment company" under Subchapter M of the Code, so
that it will not pay federal income tax on income and capital gains distributed
to shareholders as required under the Code. The Code permits the Fund's
shareholders to treat tax-exempt interest received by the Fund and distributed
to them in the form of "exempt-interest dividends" as tax-exempt interest,
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 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. The Fund will make distributions from net long-term capital gains, if
any, in December. Dividends from net short-term capital gains, if any, may be
paid with such dividends; dividends from income and/or capital gains may also be
paid at such other times as may be necessary for the Fund to avoid federal
income or excise tax.
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.
Generally, dividends from the Fund's taxable net investment income, if any,
market discount income and net short-term capital gains are taxable under the
Code as ordinary income, and dividends from the Fund's net long-term capital
gains are taxable as long-term capital gains. The Fund's distributions of
long-term capital gains to individuals or other noncorporate taxpayers are
subject to different maximum tax rates (which will be indicated in the annual
tax information the Fund provides to shareholders), depending generally upon the
sources of, and the Fund's holding periods for the assets that produce, the
gains. The Fund's dividends and distributions will not qualify for any
dividends-received deduction available to corporate shareholders. Fund
distributions may also be 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 property taxes, the value of its
shares 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
concentration, designation, reporting or other requirements are satisfied. The
Fund will not
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attempt to and may not satisfy all such requirements in all states. Shareholders
are required to report all dividends and 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 federal tax status of distributions will be
provided to shareholders annually. See "Distribution Options" and "Directed
Dividends."
Dividends (other than exempt-interest dividends) and other distributions
and the proceeds of redemptions, exchanges or 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
that the shareholder is not subject to backup withholding or 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 tax treatment that is not described above. Shareholders should
consult their own tax advisors regarding state, local and other applicable tax
laws, including the effect of recent federal tax legislation, in their
particular circumstances.
XII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the Fund.
PSC, a Massachusetts corporation, is a wholly owned subsidiary of PGI. PSC's
offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Shareholder Services, 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 fund
division of the Custodian is 40 Water Street, Boston, Massachusetts 02109.
Account and Confirmation Statements
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing the
details of transactions are sent to shareholders as transactions occur, except
Automatic Investment Plan transactions which are confirmed quarterly. The
Pioneer Combined Account Statement, mailed quarterly, is available to all
shareholders who have more than one Pioneer mutual fund account.
Shareholders whose shares are held in the name of an investment
broker-dealer or other party will not normally have an account with the Fund and
might not be able to utilize some of the services available to shareholders of
record. Examples of services which might not be available are purchases,
exchanges or redemptions of shares by mail or telephone, automatic reinvestment
of dividends and capital gains distributions, withdrawal plans, LOIs, rights of
accumulation and newsletters.
Additional Investments
You may add to your account by sending a check ($50 minimum for Class A
shares and $500 for Class B and Class C shares) to PSC (account number and Class
of shares should be clearly indicated). The bottom portion of a confirmation
statement may be used as a remittance slip to make additional investments.
Additions to your account, whether by check or through a Pioneer Investomatic
Plan, are invested in full and fractional shares of the Fund at the applicable
offering price in effect as of the close of regular trading on the Exchange on
the day of receipt.
Automatic Investment Plans
You may arrange for regular automatic investments of $50 or more through
government/military allotments, payroll deduction or through a Pioneer
Investomatic Plan. A Pioneer Investomatic Plan provides for a monthly or
quarterly investment by means of a preauthorized electronic funds transfer from
your bank account. Pioneer Investomatic Plan investments are voluntary, and you
may discontinue your plan at any time or change your plan elections for the
dollar amount, frequency or investment date by calling PSC at 1-800-225-6292, or
by sending a written request to Shareholder Services, Pioneering Services
Corporation, P.O. Box 9014, Boston, Massachusetts 02205-9014. A change to your
bank information must be made in writing on an Account Options Form. You should
allow up to five business days for PSC to make changes to an established plan.
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 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.
If you elect to receive either dividends or dividends and capital gains in
cash and a distribution check issued to you is returned by the U.S. Postal
Service as not deliverable or a distribution check remains uncashed for six
months or more, the amount of the check may be reinvested in your account.
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Such additional shares will be purchased at the then current net asset value.
Furthermore, the distribution option on the account will automatically be
changed to the reinvestment option until such time as you request a different
option by writing 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 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
Your account is automatically authorized to have telephone transaction
privileges unless you indicate otherwise on your Account Application or by
writing to PSC. See "How to Buy Fund Shares," "How to Sell Fund Shares" and "How
to Exchange Fund Shares" 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 are available to shareholders who have
prerecorded certain bank information (See "FactFone(SM)"). YOU ARE STRONGLY
URGED TO CONSULT WITH YOUR FINANCIAL REPRESENTATIVE PRIOR TO REQUESTING ANY
TELEPHONE TRANSACTION. To confirm that each transaction instruction received by
telephone is genuine, PSC will record each telephone transaction, require the
caller to provide the personal identification number ("PIN") for the account and
send you a written confirmation of each telephone transaction. Different
procedures may apply to accounts that are registered to non-U.S. citizens or
that are held in the name of an institution or in the name of an investment
broker-dealer or other third party. If reasonable procedures, such as those
described above, are not followed, the Fund may be liable for any loss due to
unauthorized or fraudulent instructions. The Fund may implement other procedures
from time to time. In all other cases, neither the Fund, PSC nor PFD will be
responsible for the authenticity of instructions received by telephone;
therefore, you bear the risk of loss for unauthorized or fraudulent telephone
transactions.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund by
telephone to institute a redemption or exchange. You should communicate with the
Fund in writing if you are unable to reach the Fund by telephone. FactFone(SM)
FactFone(SM) is an automated inquiry and telephone transaction system
available to Pioneer mutual fund shareholders by dialing 1-800-225-4321.
FactFone(SM) allows you to obtain current information on your Pioneer mutual
fund accounts and to inquire about the prices and yields of all publicly
available Pioneer mutual funds. In addition, you may use FactFone(SM) to make
computer-assisted telephone purchases, exchanges and redemptions from your
Pioneer mutual fund 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(SM). See "How to Buy Fund Shares," "How to Exchange Fund Shares," "How
to Sell Fund Shares" and "Telephone Transactions." Call PSC for assistance.
Telecommunications Device for the Deaf (TDD)
If you have a hearing disability and access to TDD keyboard equipment, you
can call our TDD number toll-free at 1-800-225-1997, weekdays from 8:30 a.m. to
5:30 p.m. Eastern time, to contact our telephone representatives with questions
about your account.
Systematic Withdrawal Plans
If your account has a total value of at least $10,000 you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B and Class C shares accounts are limited to
10% of the value of the account at the time the SWP is implemented. See "Waiver
or Reduction of Contingent Deferred Sales Charge" for more information. Periodic
payments of $50 or more will be sent to you, or any person designated by you,
monthly or quarterly and your periodic redemptions of shares may be taxable to
you. Payments can be made either by check or electronic transfer to a bank
account designated by you. If you direct that withdrawal checks be paid to
another person after you have opened your account, a signature guarantee must
accompany your instructions. Purchases of Class A shares of the Fund at a time
when you have a SWP in effect may result in the payment of unnecessary sales
charges and may, therefore, be disadvantageous.
You may obtain additional information by calling PSC at 1-800-225-6292 or
by referring to the Statement of Additional Information.
Reinstatement Privilege (Class A Shares Only)
If you redeem all or part of your Class A shares of the Fund, you may
reinvest all or part of the redemption proceeds without a sales charge in Class
A shares of the Fund if you send a written request to PSC not more than 90 days
after your shares were redeemed. Your redemption proceeds will be reinvested at
the next determined net asset value of the Class A shares of the Fund in effect
immediately after receipt of the written request for reinstatement. You may
realize a gain or loss for federal income tax purposes as a result of the
redemption, and special tax rules may apply if a reinstatement occurs. In
addition, if a redemption resulted in a loss and an investment is made in shares
of the Fund within 30 days before or after the redemption, you may not be able
to recognize the loss for federal income tax purposes. Subject
16
<PAGE>
to the provisions outlined under "How to Exchange Fund Shares" above, you may
also reinvest in Class A shares of other Pioneer mutual funds; in this case you
must meet the minimum investment requirement for each fund you enter.
The 90-day reinstatement period may be extended by PFD for periods of up to
one year for shareholders living in areas that have experienced a natural
disaster, such as a flood, hurricane, tornado or earthquake.
----------------------------------------------
THE OPTIONS AND SERVICES AVAILABLE TO SHAREHOLDERS, INCLUDING THE TERMS OF THE
EXCHANGE PRIVILEGE AND THE PIONEER INVESTOMATIC PLAN, MAY BE REVISED, SUSPENDED
OR TERMINATED AT ANY TIME BY PFD OR BY THE FUND. YOU MAY ESTABLISH THE SERVICES
DESCRIBED IN THIS SECTION WHEN YOU OPEN YOUR ACCOUNT. YOU MAY ALSO ESTABLISH OR
REVISE MANY OF THEM ON AN EXISTING ACCOUNT BY COMPLETING AN ACCOUNT OPTIONS
FORM, WHICH YOU MAY REQUEST BY CALLING 1-800-225-6292.
XIII. THE FUND
The Fund is a diversified, open-end 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. As an open-end management investment company, the Fund continuously
offers its shares to the public and under normal conditions must redeem its
shares upon the demand of any shareholder at the then current net asset value
per share less any applicable CDSC. See "How to Sell Fund Shares." The Fund is
not required, and does not intend, to hold annual shareholder meetings although
special meetings may be called for the 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 three classes of shares, designated Class A, Class B
and Class C. The shares of each class represent an interest in the same
portfolio of investments of the Fund. Each class has equal rights as to voting,
redemption, dividends and liquidation, except that each class bears different
distribution and transfer agent fees and may bear other expenses properly
attributable to the particular class. Class A, Class B and Class C shareholders
have exclusive voting rights with respect to the Rule 12b-1 distribution plans
adopted by holders of those share in connection with the distribution of shares.
When issued and paid for in accordance with the terms of the Prospectus and
Statement of Additional Information, shares of the Fund are fully paid and
non-assessable. Shares will remain on deposit with the Fund's transfer agent and
certificates will not normally be issued. The Fund reserves the right to charge
a fee for the issuance of Class A share certificates; certificates will not be
issued for Class B or Class C shares.
XIV. INVESTMENT RESULTS
The Fund may from time to time include yield information in advertisements
or in information furnished generally to existing or prospective 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, 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 and Class C shares
the calculation reflects the deduction of any applicable CDSC. The periods
illustrated would normally include one, five and ten years (or since the
commencement of the public offering of the shares of a class, if shorter)
through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the Fund's existence and may or may not include the impact of
sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indices,
indicators of economic activity or averages of mutual funds results may be cited
or compared with the investment results of the Fund. The Fund may also include
securities industry or comparative performance information generally and in
advertising or materials marketing the Fund's shares. Such performance
information may include rankings or listings by magazines, newspapers or
indepen-
17
<PAGE>
dent statistical or ratings services, such as Lipper Analytical Services, Inc.
or Ibbotson Associates.
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.
- --------------------------------------------------------------------------------
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 1998.
<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 $25,350 Up to $42,350 15.0% 5.88 7.06 8.24 9.41 10.59
$ 25,351-$61,400 $ 42,351-$102,300 28.0% 6.94 8.33 9.72 11.11 12.50
$ 61,401-$128,100 $102,301-$155,950 31.0% 7.25 8.70 10.14 11.59 13.04
$128,101-$278,450 $155,951-$278,450 36.0% 7.81 9.38 10.94 12.50 14.06
Over $278,450 Over $278,450 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
$124,500 ($62,250 for married 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
$186,800 for joint filers ($124,500 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
------------------- = Taxable Equivalent Yield
1-Your Tax Bracket
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 the Fund's 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.
18
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
GROWTH FUNDS
GLOBAL/INTERNATIONAL
Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Gold Shares
Pioneer India Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
UNITED STATES
Pioneer Capital Growth Fund
Pioneer Growth Shares
Pioneer Micro-Cap Fund
Pioneer Mid-Cap Fund
Pioneer Small Company Fund
GROWTH AND INCOME FUNDS
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
INCOME FUNDS
TAXABLE
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Short-Term Income Trust
TAX-EXEMPT*
Pioneer Intermediate Tax-Free Fund
Pioneer Tax-Free Income Fund
MONEY MARKET FUND
Pioneer Cash Reserves Fund
*Not suitable for retirement accounts
19
<PAGE>
[PIONEER LOGO]
Pioneer
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 LLP
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 and
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
Visit our web site:...................................... www.pioneerfunds.com
0498-5190
(C) Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER INTERMEDIATE TAX-FREE FUND
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A, Class B and Class C Shares
APRIL 30, 1998
This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Prospectus, dated April 30, 1998, 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 Report to Shareholders is attached to this Statement of
Additional Information and is hereby incorporated in 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.............................................................. 12
7. Principal Underwriter.................................................. 12
8. Independent Public Accountants......................................... 13
9. Portfolio Transactions................................................. 13
10. Tax Status............................................................. 14
11. Description of Shares.................................................. 17
12. Certain Liabilities.................................................... 17
13. Determination of Net Asset Value....................................... 18
14. Systematic Withdrawal Plan............................................. 18
15. Letter of Intent....................................................... 19
16. Investment Results..................................................... 19
17. Financial Statements................................................... 23
Appendix A - Description of Municipal Bonds and
Bond Ratings........................................................... 24
Appendix B - Description of Certain Other Investments.................. 27
Appendix C - Performance and Statistics................................ 28
Appendix D - Other Pioneer Information................................. 41
-------------------------
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 Prospectus identifies the investment objective and the principal
investment policies of the Fund. Additional investment policies and a further
description of some of the policies described in the Prospectus appear below.
This Statement of Additional Information should be read in conjunction with the
Prospectus. Capitalized terms not otherwise defined herein have the meaning
given to them in the Prospectus.
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 Fund's 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 Fund's 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
2
<PAGE>
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;
(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 objective 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) 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; or
(b) 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) 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% of
the value of the Fund's net assets or 2% of the securities of any class of any
issuer; and (2) 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.
3
<PAGE>
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
(b), the Fund may not invest more than 15% of its assets in illiquid securities
including 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 seven 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
1940 Act.
JOHN F. COGAN, JR.*, CHAIRMAN OF THE BOARD, PRESIDENT AND TRUSTEE,
DOB: JUNE 1926
President, Chief Executive Officer and a Director of The Pioneer Group,
Inc. ("PGI"); Chairman and a Director of Pioneering Management Corporation
("PMC") and Pioneer Funds Distributor, Inc. ("PFD"); Director of Pioneering
Services Corporation ("PSC"), Pioneer Capital Corporation ("PCC"), Pioneer Real
Estate Advisors, Inc., Pioneer Forest, Inc., Pioneer Explorer, Inc., Pioneer
Management (Ireland) Ltd. ("PMIL") and Closed Joint Stock Company
"Forest-Starma"; President and Director of Pioneer Metals and Technology, Inc.
("PMT"), Pioneer International Corp. ("PIntl"), Pioneer First Russia, Inc.
("First Russia") and Pioneer Omega, Inc. ("Omega"); Chairman of the Board and
Director of Pioneer Goldfields Limited ("PGL") and Teberebie Goldfields Limited;
Chairman of the Supervisory Board of Pioneer Fonds Marketing, GmbH, Pioneer
First Polish Investment Fund Joint Stock Company, S.A. and Pioneer Czech
Investment Company, A.S.; Chairman, President and Trustee of all of the Pioneer
mutual funds; Director of Pioneer Global Equity Fund Plc, Pioneer Global Bond
Fund Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity Fund Plc, Pioneer
Central & Eastern Europe Fund Plc and Pioneer US Real Estate Fund Plc; and
Partner, Hale and Dorr LLP (counsel to PGI and the Fund).
MARY K. BUSH, TRUSTEE, DOB: APRIL 1948
4201 CATHEDRAL AVENUE, NW, WASHINGTON, DC 20016
President, Bush & Co., an international financial advisory firm;
Director and/or Trustee of Mortgage Guaranty Insurance Corporation, Novecon
Management Company, Hoover Institution, Folger Shakespeare Library, March of
Dimes, Project 2000, Inc. (not-for-profit educational organization), Small
Enterprise Assistance Fund and Wilberforce University; Advisory Board member,
Washington Mutual
4
<PAGE>
Investors Fund, a registered investment company; and Trustee of all of the
Pioneer mutual funds, except Pioneer Variable Contracts Trust.
RICHARD H. EGDAHL, M.D., TRUSTEE, DOB: DECEMBER 1926
BOSTON UNIVERSITY HEALTH POLICY INSTITUTE, 53 BAY STATE ROAD, BOSTON, MA 02115
Alexander Graham Bell Professor of Health Care Entrepreneurship, Boston
University; Professor of Management, Boston University School of Management;
Professor of Public Health, Boston University School of Public Health; Professor
of Surgery, Boston University School of Medicine; University Professor, Boston
University; Director, Boston University Health Policy Institute and Boston
University Program for
Health Care Entrepreneurship; Director, CORE (management of workers'
compensation and disability costs-NASDAQ); Director, WellSpace (provider of
complementary health care); Trustee, Boston Medical Center; Honorary Trustee,
Franciscan Children's Hospital; and Trustee of all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, TRUSTEE, DOB: MAY 1947
THE KEEP, P.O. BOX 110, LITTLE DEER ISLE, ME 04650
Founding Director, The Winthrop Group, Inc. (consulting firm); Manager of
Research Operations, Xerox Palo Alto Research Center, from 1991 to 1994;
Professor of Operations Management and Management of Technology and Associate
Dean, Boston University School of Management, from 1989 to 1993; and Trustee of
all of the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, TRUSTEE, DOB: JULY 1917
6363 WATERWAY DRIVE, FALLS CHURCH, VA 22044
Professor Emeritus, George Washington University; Director, American
Productivity and Quality Center; Adjunct Scholar, American Enterprise Institute;
Economic Consultant; and Trustee of all of the Pioneer mutual funds, except
Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
ONE BOSTON PLACE, SUITE 2635, BOSTON, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm); Trustee
of Boston Medical Center; Member of the Board of Governors of the Investment
Company Institute; and Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Executive Vice President and a Director of PGI; President, Chief Investment
Officer and a Director of PMC; Director of PFD, PCC, PIntl, First Russia, Omega,
Pioneer SBIC Corporation ("Pioneer SBIC"), PMIL, Pioneer Global Equity Fund Plc,
Pioneer Global Bond Fund Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity
Fund Plc, Pioneer Central & Eastern Europe Fund Plc and Pioneer US Real Estate
Fund Plc; and Executive Vice President and Trustee of all of the Pioneer mutual
funds.
STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 BROAD STREET, NEW YORK, NY 10004
Of Counsel to Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus
Funds (mutual funds); and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, TRUSTEE, DOB: JUNE 1936
ONE NORTH ADGERS WHARF, CHARLESTON, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director of
NUI Corp. (energy sales, services and distribution); and Trustee of all of the
Pioneer mutual funds, except Pioneer Variable Contracts Trust.
5
<PAGE>
WILLIAM H. KEOUGH, TREASURER, DOB: APRIL 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC; and Treasurer of all of the Pioneer mutual funds.
JOSEPH P. BARRI, SECRETARY, DOB: AUGUST 1946
Secretary of PGI and most of its subsidiaries; Secretary of all of the
Pioneer mutual funds; and Partner, Hale and Dorr LLP.
ERIC W. RECKARD, ASSISTANT TREASURER, DOB: JUNE 1956
Manager of Business Planning and Internal Audit of PMC since September
1996; Manager of Fund Accounting of PMC since May 1994; Manager of Auditing,
Compliance and Business Analysis for PGI prior to May 1994; and Assistant
Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC: and junior partner of Hale and Dorr LLP
prior to 1995.
KATHLEEN D. MCCLASKEY, VICE PRESIDENT, DOB: JANUARY 1952
Vice President of PMC.
The Fund's Amended and Restated Declaration of Trust, dated December 7,
1993 (the "Declaration"), provides that the holders of two-thirds of its
outstanding shares may vote to remove a Trustee of the Fund at any meeting of
shareholders. See "Description of Shares" below. The business address of all
officers is 60 State Street, Boston, Massachusetts 02109.
All of the outstanding capital stock of PFD, PMC and PSC is owned, directly
or indirectly, by PGI, a publicly owned Delaware corporation. PMC, the Fund's
investment adviser, serves as the investment adviser for the Pioneer mutual
funds listed below and manages the investments of certain institutional
accounts.
The table below lists all the Pioneer mutual funds currently offered to the
public and the investment adviser and principal underwriter for each fund.
Investment Principal
FUND NAME ADVISER UNDERWRITER
Pioneer World Equity Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Independence Fund PMC Note 1
Pioneer Micro-Cap Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Balanced Fund PMC PFD
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Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares PMC Note 2
Pioneer Variable Contracts Trust PMC Note 3
Note 1 This fund is available to the general public only through Pioneer
Independence Plans, a systematic investment plan sponsored by PFD.
Note 2 This fund is a closed-end fund.
Note 3 This is a series of ten 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% or
more of the issued and outstanding shares of PGI as of the date of this
Statement of Additional Information, except Mr. Cogan who then owned
approximately 14% of such shares. At March 31, 1998, the Trustees and officers
of the Fund owned beneficially in the aggregate less than 1% of the outstanding
shares of the Fund. As of such date, no shareholder owned more than 5% of the
outstanding Class A or Class B shares of the Fund; PFD, 60 State Street, Boston,
MA 02109-1800 owned approximately 70.67% (10,372) of the outstanding Class C
shares of the Fund; Mazie M. Schaackey, 421 S. Curtis Road, Boise, ID 83705-1070
owned approximately 9.38% (1,378) of the outstanding Class C shares of the Fund;
and Merrill Lynch Pierce Fenner & Smith, Inc. for the Sole Benefit of its
Customers, Mutual Fund Administration, 4800 Deer Lake Drive East, Jacksonville,
FL 32246-6486 owned approximately 6.65% (964) of the outstanding Class C shares
of the Fund.
COMPENSATION OF OFFICERS AND TRUSTEES
The Fund pays no salaries or compensation to any of its officers. The Fund
pays an annual trustees' fee to each Trustee who is not affiliated with PGI,
PMC, PFD or PSC consisting of two components: (a) a base fee of $500 and (b) a
variable fee, calculated on the basis of the average net assets of the Fund. In
addition, the Fund pays a per meeting fee of $100 to each Trustee who is not
affiliated with PGI, PMC, PFD or PSC and pays an annual trustees' fee of $500
plus expenses to each Trustee affiliated with PGI, PMC, PFD or PSC. The Fund
also pays an annual committee participation fee to Trustees who serve as members
of committees established to act on behalf of one or more of the of Pioneer
mutual funds. Committee fees will be allocated to the Fund on the basis of the
Fund's average net assets. Each Trustee who is a member of the Audit Committee
for the Pioneer mutual funds receives an annual fee equal to 10% of the
aggregate annual trustees' fee, except the Committee Chair who receives an
annual trustees' fee equal to 20% of the aggregate annual trustees' fee. Members
of the Pricing Committee for the Pioneer mutual funds, as well as any other
committee which renders material functional services to the Boards of Trustees
for the Pioneer mutual funds, receives an annual fee equal to 5% of the annual
trustees' fee, except the Committee Chair who receives an annual trustees' fee
equal to 10% of the annual trustees' fee. Each Trustee who is not affiliated
with PGI, PMC, PFD or PSC also receives $375 per meeting for
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attendance at meetings of the Non-Interested Trustees Committee, except for
the Committee Chair who receives an additional $375 per meeting. Any such fees
paid to interested Trustees 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 for the year ended December 31, 1997:
<TABLE>
<CAPTION>
PENSION OR RETIREMENT TOTAL COMPENSATION FROM
BENEFITS ACCRUED AS THE FUND AND OTHER
AGGREGATE PART OF FUND EXPENSES PIONEER MUTUAL FUNDS
COMPENSATION FROM
NAME OF TRUSTEE THE FUND
<S> <C> <C> <C>
John F. Cogan, Jr. $ 500 $0 $ 12,000
Mary K. Bush 892 0 30,000
Richard H. Egdahl, M.D. 1,797 0 62,000
Margaret B.W. Graham 1,797 0 60,000
John W. Kendrick 1,667 0 55,800
Marguerite A. Piret 2,058 0 80,000
David D. Tripple 500 0 12,000
Stephen K. West 1,789 0 63,800
John Winthrop 2,016 0 69,000
------- - --------
Totals $13,015 $0 $444,600
</TABLE>
3. INVESTMENT ADVISER
The Fund has contracted with PMC, 60 State Street, Boston, Massachusetts
02109, 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 the Fund's
outstanding voting securities and the giving of 60 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 willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties under the 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 all or a portion of its
management fee and to make other arrangements, if necessary, to reduce Class A
expenses to 1.00% of the average daily net assets attributable to Class A
shares. The portion of Fund-wide expenses attributable to Class B and Class C
shares will be reduced only to the extent such expenses are reduced for Class A
shares. PMC's agreement is voluntary and temporary and may be revised or
terminated at any time.
Pursuant to the expense limitation discussed above, during the fiscal years
ended December 31, 1997, 1996 and 1995, management fees were reduced by
$104,683, $87,136 and $89,114, respectively, resulting
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in actual management fees paid during those periods to PMC of $246,524,
$309, 407 and $319,383, respectively.
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 borne by the Fund.
PFD bears all expenses it incurs in providing services under the
underwriting agreement. Such expenses include compensation to its employees and
representatives and to securities dealers for distribution related services
performed for the Fund. PFD also pays certain expenses in connection with the
distribution of the Fund's shares, including the cost of preparing, printing and
distributing advertising or promotional materials, and the cost of printing and
distributing prospectuses and supplements to prospective shareholders. The Fund
bears the cost of registering its shares under federal and state securities
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 each class of shares (the "Class A Plan," "Class B
Plan" and "Class C Plan") (together, the "Plans").
CLASS A PLAN
Pursuant to the Class A Plan, the Fund may reimburse PFD for its
expenditures in financing any activity primarily intended to result in the sale
of 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 shares.
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.
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<PAGE>
The purpose of distribution payments to PFD under the Class B Plan is to
compensate PFD for its distribution services with respect to Class B shares of
the Fund. PFD pays commissions to dealers as well as expenses of printing
prospectuses and reports used for sales purposes, expenses with respect to the
preparation and printing of sales literature and other distribution related
expenses, including without limitation, the cost necessary to provide
distribution related services, or personnel, travel, office expenses and
equipment. The Class B Plan also provides that PFD will receive all CDSCs
attributable to Class B shares. (See "Distribution Plans" in the Prospectus.)
When a broker-dealer sells Class B shares and elects, with PFD's approval, to
waive its right to receive the commission normally paid at the time of the sale,
PFD may cause all or a portion of the distribution fees described above to be
paid to the broker-dealer.
CLASS C PLAN
The Class C Plan provides that the Fund will pay PFD, as the Fund's
distributor for its Class C shares, a distribution fee accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Fund's average daily net
assets attributable to Class C shares and will pay PFD a service fee equal to
0.25% of the Fund's average daily net assets attributable to Class C shares. PFD
will in turn pay to securities dealers which enter into a sales agreement with
PFD a distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first-year service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the thirteenth month following a
purchase of Class C shares, dealers will become eligible for additional service
fees at a rate of up to 0.25% of the current value of the amount invested and
additional compensation at a rate of up to 0.75% of the net asset value of such
shares. Dealers may from time to time be required to meet certain other criteria
in order to receive service fees. PFD or its affiliates are entitled to retain
all service fees payable under the Class C Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is to
compensate PFD for its distribution services with respect to the Class C shares
of the Fund. PFD pays commissions to dealers as well as expenses of printing
prospectuses and reports used for sales purposes, expenses with respect to the
preparation and printing of sales literature and other distribution related
expenses, including, without limitation, the cost necessary to provide
distribution related services, or personnel, travel, office expenses and
equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. (See "Distribution Plans" in the Prospectus.)
When a broker-dealer sells Class C shares and elects, with PFD's approval to
waive its right to receive the commission normally paid at the time of the sale,
PFD may cause all or a portion of the distribution fees described above to be
paid to the broker-dealer.
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 Plans 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
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<PAGE>
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 Plans, the Trustees identified and considered a number of
potential benefits which the Plans may provide. The Board of Trustees believes
that there is a reasonable likelihood that the Plans will benefit the Fund and
its current and future shareholders. Under their terms, the Plans remain in
effect from year to year provided such continuance is approved annually by vote
of the Trustees in the manner described above. The Plans may not be amended to
increase materially the annual percentage limitation of average net assets which
may be spent for the services described therein without approval of the
shareholders of the Fund affected thereby, and material amendments 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 who 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 (as defined in the 1940
Act) of the respective class of the Fund. A Plan will automatically terminate in
the event of its assignment (as defined in the 1940 Act).
During the fiscal year ended December 31, 1997, the Fund incurred total
distribution fees pursuant to the Fund's Class A Plan, Class B Plan and Class C
Plan of $159,818, $28,341 and $2,297, respectively. Distribution fees were paid
by the Fund to PFD in reimbursement of or as compensation for expenses related
to servicing shareholder accounts and to compensate dealers and sales personnel.
Redemptions of each class of shares may be subject to a CDSC. A CDSC of
1.00% may be imposed on redemptions of certain net asset value purchases of
Class A shares within one year of purchase. Class B shares that are redeemed
within four years of purchase are subject to a CDSC at declining rates beginning
at 3.0% based on the lower of cost or market value of shares being redeemed.
Redemptions of Class C shares within one year of purchase are subject to a CDSC
of 1.00%. During the fiscal year ended December 31, 1997, CDSCs in the amount of
$4,065 were paid to PFD.
5. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston, Massachusetts
02109, to act as shareholder servicing and transfer agent. This contract may be
terminated without penalty by either party upon 90 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 Fund shares; (ii) distributing dividends and capital gains
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, Class B and Class C
shareholder account from the Fund as compensation for the services described
above. PSC is also reimbursed by the Fund for its out-of-pocket expenditures.
This fee is set at an amount determined by vote of a majority of the Trustees
(including a majority of the Trustees who are not parties to the contract with
PSC or interested persons of any such parties) to be comparable to fees for such
services being paid by other investment companies. The Fund may compensate
entities which have agreed to provide certain sub-accounting services such as
specific transaction processing and record keeping services. Any such payments
by the Fund would be in lieu of the per account fee which would otherwise be
paid by the Fund to PSC.
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<PAGE>
6. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109, is the custodian (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 02109, serves as the principal
underwriter for the Fund in connection with the continuous offering of its
shares.
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 or a merger or other reorganization.
During the fiscal years ending December 31, 1997, 1996 and 1995, net
underwriting commissions retained by PFD were $5,138, $11,322 and $16,256,
respectively, in connection with its offering of Class A, Class B and Class C
shares. Commissions reallowed to dealers by PFD in the same periods were
$27,255, $207,180 and $116,073, respectively. See "Underwriting Agreement and
Distribution Plans" above for a description of the terms of the underwriting
agreement with PFD.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street, Boston, Massachusetts 02110, is
the Fund's independent public accountants, providing audit services, tax return
review, and assistance and consultation with respect to the preparation of
filings with the 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.
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 accounts 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 markup or markdown.
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 contract, be bought
from or sold to dealers who furnish statistical research services and other
information or services to PMC and the Fund and/or other investment
12
<PAGE>
companies managed by PMC, or who sell shares of any of the Pioneer mutual
funds. 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; providing stock price quotation services; 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; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement). PMC
maintains a listing of broker-dealers who provide such services on a regular
basis. However, because it is anticipated that many transactions on behalf of
the Fund and other investment companies or accounts managed by PMC are placed
with broker-dealers (including broker-dealers on the listing) without regard to
the furnishing of such services, it is not possible to estimate the proportion
of such transactions directed to such dealers solely because such services were
provided.
The research received from broker-dealers may be useful to PMC in rendering
investment management services to the Fund as well as other investment companies
or other accounts managed by PMC, although not all such research may be useful
to the Fund. Conversely, such information provided by brokers or dealers who
have executed transaction orders on behalf of such other PMC clients may be
useful to PMC in carrying out its obligations to the Fund. The receipt of such
research has not reduced PMC's normal independent research activities; however,
it enables PMC to avoid the additional expenses which might otherwise be
incurred if it were to attempt to develop comparable information through its own
staff.
In addition to the Fund, PMC acts as investment adviser to other Pioneer
mutual funds and certain private accounts with investment objectives similar to
those of the Fund. As such, securities may frequently meet the investment
objectives of the Fund, such other funds and such private accounts. In such
cases, the decision to recommend a purchase to one fund or account rather than
another is based on a number of factors. The determining factors in most cases
are the amount of securities of the issuer then outstanding, the value of those
securities and the market for them. Other factors considered in the investment
recommendations include other investments which each fund or account presently
has in a particular industry and the availability of investment funds in each
fund or account.
It is possible that at times identical securities will be held by more than
one fund and/or account. However, positions in the same issue may vary and the
length of time that any fund or account may choose to hold its investment in the
same issue may likewise vary. To the extent that the Fund, another Pioneer
mutual fund or a private account managed by PMC seeks to acquire the same
security at about the same time, the Fund may not be able to acquire as large a
position in such security as it desires or it may have to pay a higher price for
the security. Similarly, the Fund may not be able to obtain as large an
execution of an order to sell or as high a price for any particular portfolio
security if PMC decides to sell on behalf of another account the same portfolio
security at the same time. On the other hand, if the same securities are bought
or sold at the same time by more than one fund or account, the resulting
participation in volume transactions could produce better executions for the
Fund or the account. In the event 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.
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10. TAX STATUS
It is the Fund's policy to meet the requirements of Subchapter M of the
Code for qualification as a regulated investment company. These requirements
relate to the sources of the Fund's income, the diversification of its assets
and the 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 earns, the Fund will be relieved of the necessity of paying
federal income tax.
In order to qualify as a regulated investment company under Subchapter M,
the Fund must, among other things, derive at least 90% of its annual gross
income from interest, gains from the sale or other disposition of securities and
certain other income derived with respect to its business of investing in such
securities (the "90% income test") and satisfy certain annual distribution and
quarterly diversification requirements.
In accordance with its investment objective, 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 objective, the Fund may
from time to time invest a portion of its portfolio in short-term obligations
and may engage in transactions generating gains or 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 debt obligation at a market discount,
or acquire certain stripped tax-exempt obligations or their coupons. The Fund's
distributions from such gains or income will not be "exempt-interest dividends"
and, accordingly, will be taxable.
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, i.e., obligations described in Section
103(a) of the Code. That part of the Fund's net investment income which is
attributable to interest from tax-exempt obligations 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 earned by the Fund during any
particular month. That portion of the Fund's dividends and distributions not
designated as tax-exempt will be taxable as described below.
Dividends from investment company taxable income, which includes taxable
net investment income and net short-term capital gain in excess of net long-term
capital loss, are taxable as ordinary income, whether received in cash or
reinvested in additional shares. Dividends from net long-term capital gain in
excess of net short-term capital loss ("net capital gain"), if any, whether
received in cash or reinvested in additional shares, are taxable to the Fund's
shareholders as capital gains for federal income tax purposes without regard to
the length of time shares of the Fund have been held. As a result of the
enactment of the Taxpayer Relief Act of 1997 (the "1997 TRA") on August 5, 1997,
gain recognized after May 6, 1997 from the sale of a capital asset is taxable to
individual (noncorporate) investors at different maximum federal income tax
rates, depending generally upon the tax holding period for the asset, the
federal income tax bracket of the taxpayer, and the dates the asset was acquired
and/or sold. The Treasury Department has issued guidance under the 1997 TRA that
(subject to possible modification by future "technical corrections" legislation)
enables the Fund to pass through to its shareholders the benefits of the capital
gains tax rates enacted in the 1997 TRA. The Fund will provide appropriate
information to its shareholders about its distributions, including the tax
rate(s) applicable to its distributions from long-term capital gains, in
accordance with this and any future guidance. Shareholders should consult their
own tax advisers on the correct application of these new rules in their
particular circumstances.
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Any dividend declared by the Fund in October, November or December as of a
record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
If the Fund invests in certain pay-in-kind securities ("PIKs"), zero coupon
securities, deferred interest securities or, in general, any other securities
with original issue discount (or with market discount if the Fund elects to
include market discount in income currently), the Fund must accrue income on
such investments for each taxable year, which generally will be prior to the
receipt of the corresponding cash payments. However, the Fund must distribute,
at least annually, all or substantially all of its net taxable and tax-exempt
income, including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid federal income and excise taxes.
Therefore, the Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.
For federal income tax purposes, the Fund is permitted to carry forward a
net capital loss for 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 therefore are not expected to be distributed as such
to shareholders. As of the end of its most recent taxable year, the Fund had no
capital loss carryforwards.
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 by the Fund on these
shares from such appreciation may be taxable to such investor even if the net
asset value of the investor's shares is, as a result of the distributions,
reduced below the investor's cost for such shares and the distributions
economically represent a return of a portion of the investment.
Redemptions and exchanges are taxable events for shareholders
that are subject to tax. Shareholders should consult their own tax advisers with
reference to their individual circumstances to determine whether any particular
transaction in Fund shares is properly treated as a sale for tax purposes, as
the following discussion assumes, and the character of and tax rate applicable
to any gains or losses recognized in such transactions under the new rate
structure enacted in the 1997 TRA. 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 exempt-interest
dividends paid with respect to such shares, and any portion of such loss that
exceeds the amount disallowed will be treated as a long-term capital loss to the
extent of any distributions treated as long-term capital gain with respect to
such shares.
In addition, if Class A shares redeemed or exchanged have been held for
less than 91 days, (1) in the case of a reinvestment in the Fund at net asset
value pursuant to the reinvestment privilege, the sales charge paid on such
shares is not included in their tax basis under the Code, and (2) in the case of
an exchange, all or a portion of the sales charge paid on such shares is not
included in their tax basis under the Code, to the extent a sales charge that
would otherwise apply to the shares received is reduced pursuant to the exchange
privilege. In either case, the portion of the sales charge not included in the
tax basis of the shares redeemed or surrendered in an exchange is included in
the tax basis of the shares acquired in the reinvestment or exchange. Losses on
redemptions or other dispositions of shares may be disallowed under "wash sale"
rules in the event of other investments in the Fund (including those made
pursuant to reinvestment of dividends and/or capital gain distributions) within
a period of 61 days beginning 30 days before and ending 30 days after a
redemption or other disposition of shares. In such a case, the disallowed
portion of any loss would be included in the federal tax basis of the shares
acquired in the other investments.
The Fund's dividends and distributions will not qualify for any
dividends-received deduction that might otherwise be available for certain
dividends received by shareholders that are corporations.
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A state income (and possibly local income and/or intangible property) tax
exemption is generally available to the extent (if any) the Fund's distributions
are derived from interest on (or, in the case of intangible property taxes, the
value of its assets is attributable to) certain U.S. government obligations,
provided in some states that certain thresholds for holdings of such obligations
and/or reporting requirements are satisfied. The Fund will not seek to satisfy
any threshold or reporting requirements that may apply in particular taxing
jurisdictions, although the Fund may in its sole discretion provide relevant
information to shareholders.
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 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 federally tax-exempt
obligations indicating, on a state-by-state basis only, the source of such
income. Each shareholder is advised to consult his own tax adviser regarding the
exemption, if any, of exempt-interest dividends under the state and local laws
applicable to the shareholder.
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 under the Code and applicable
regulations to relate to exempt-interest dividends received from the Fund.
Federal law requires that the Fund withhold (as "backup withholding") 31%
of reportable payments, including taxable dividends, capital gain dividends and
the proceeds of redemptions (including exchanges) and repurchases to
shareholders who have not complied with IRS regulations. In order to avoid this
withholding requirement, shareholders must certify on their Account
Applications, or on separate IRS Forms W-9, that the Social Security Number or
other Taxpayer Identification Number they provide is their correct number and
that they are not currently subject to backup withholding, or that they are
exempt from backup withholding. The Fund may nevertheless be required to
withhold if it receives notice from the IRS or a broker that the number provided
is incorrect or backup withholding is applicable as a result of previous
underreporting of interest or dividend income. 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.
If, as anticipated, the Fund continues to qualify as a regulated investment
company under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes.
The description of certain federal tax provisions 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. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. tax treatment,
including a possible 30% non-resident alien U.S. withholding tax (or
non-resident alien withholding tax at a lower treaty rate) on amounts treated as
ordinary dividends from the Fund and, unless an effective IRS Form W-8 or
authorized substitute for Form W-8 is on file, to 31% backup withholding on
certain other payments from the Fund. Shareholders should consult their own tax
advisers on these matters and on state, local and other applicable tax laws.
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11. DESCRIPTION OF SHARES
The Declaration 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 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 three classes of shares of the Fund, Class A shares,
Class B shares and Class C 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 Declaration 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
the Declaration, a copy of which is on file with the office of the Secretary of
State of the Commonwealth of Massachusetts. Shareholders of a Massachusetts
business trust may, under certain circumstances, be held personally liable for
the obligations of the trust. However, the Declaration 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 provides for the indemnification out of Fund property of any
shareholders held personally liable for any obligations of the Fund or any
series of the Fund. The Declaration 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 further provides that the Fund shall indemnify each of its
Trustees and officers against liabilities and expenses reasonably 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 does not authorize the Fund to indemnify any Trustee or officer
against any liability to which he or she would
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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 Exchange (normally 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, Martin Luther King,
Jr. 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. The net asset value per share of the Fund is not
determined on any day in which no purchase orders in good order for the shares
of the Fund are received and no shares are tendered for redemption.
The net asset value per share of each class of the Fund is computed by
taking the value of all of the Fund's assets attributable to a class, less the
Fund's liabilities attributable to that class, and dividing the result by the
number of outstanding shares of the class. For purposes of determining net asset
value, expenses of the classes of the Fund are accrued daily.
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 and
Class C shares are offered at net asset value without the imposition of an
initial sales charge.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide a convenient
method of receiving fixed payments at regular intervals from shares of the Fund
deposited by the applicant under the 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 payments of $50 or more will be deposited monthly or quarterly
directly into a bank account designated by the applicant or will be sent by
check to the applicant, or any person designated by the applicant. Withdrawals
from Class B and Class C share accounts are limited to 10% of the value of the
account at the time the SWP is established. See "Waiver or Reduction of
Contingent Deferred Sales Charge" in the Prospectus. Designation of another
person to receive the payments subsequent to opening an account must be
accompanied by a signature guarantee.
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. 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. Redemptions are potentially taxable transactions
to shareholders. In addition, the amounts received by a shareholder cannot be
considered as an actual yield or income on his or her investment because part of
such payments may be a return of his or her investment.
The SWP may be terminated at any time (1) by written notice to PSC or from
PSC to the shareholder; (2) upon receipt by PSC of appropriate evidence of the
shareholder's death; or (3) when all shares under the SWP have been redeemed.
15. LETTER OF INTENT
A Letter of Intent ("LOI") may be established by completing the LOI
section of the Account Application. When you sign the Account Application, you
agree to irrevocably appoint PSC your attorney-in-fact to surrender for
redemption any or all shares held in escrow with full power of substitution. An
LOI is not a binding obligation upon the investor to purchase, or the Fund to
sell, the full amount indicated.
If the total purchases, less redemptions, exceed the amount specified
under the LOI and are in an amount which would qualify for a further quantity
discount, all transactions will be recomputed on the expiration date of the LOI
to effect the lower sales charge. Any difference in the sales charge resulting
from such recomputation will be either delivered to you in cash or invested in
additional shares at the lower sales charge. The dealer, by signing the Account
Application, agrees to return to PFD, as part of such retroactive adjustment,
the excess of the commission previously reallowed or paid to the dealer over
that which is applicable to the actual amount of the total purchases under the
LOI.
If the total purchases, less redemptions, are less than the amount
specified under the LOI, you must remit to PFD any difference between the sales
charge on the amount actually purchased and the amount originally specified in
the LOI section of the Account Application. When the difference is paid, the
shares held in escrow will be deposited to your account. If you do not pay the
difference in sales charge within 20 days after written request from PFD or your
dealer, PSC, after receiving instructions from PFD, will redeem the appropriate
number of shares held in escrow to realize the difference and release any
excess. See "How to Purchase Fund Shares - Letter of Intent" in the Prospectus
for more information.
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' yield
and/or total return to the Lehman Brothers Municipal Bond Index, or other
comparable indices or investment vehicles.
In addition, the performance of the classes of the Fund may be compared to
alternative investment or savings vehicles (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
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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 BLOOMBERG FINANCIAL MARKETS,
CDA/WEISENBERGER, 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.
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.
STANDARDIZED YIELD QUOTATIONS
The yield of a class is computed by dividing the class' 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[superscript]-1]
---
cd
Where: a = interest earned during the period
b = net expenses accrued for the period
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on
the last day of the period
For purposes of calculating interest earned on debt obligations as provided
in item "a" above:
(i)The yield to maturity of each obligation held by the Fund is computed
based on the market value of the obligation (including actual accrued interest,
if any) at the close of business each day during the 30-day base period, or,
with respect to obligations purchased during the month, the purchase price (plus
actual accrued interest, if any) on settlement date, and with respect to
obligations sold during the month the sale price (plus actual accrued interest,
if any) between the trade and settlement dates;
(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;
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(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 12-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 on Class A, Class B and Class C shares of the Fund for the
30-day period ended December 31, 1997 computed as above were 3.41%, 2.71% and
2.82%, respectively, except that absent expense limitations, the yields on Class
A, Class B and Class C shares of the Fund would have been 3.33%, 2.64% and
2.75%, 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' 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' yield that is not tax exempt. For a description of how to compare yields
on Municipal Bonds and taxable securities, see the APPENDIX to the Prospectus.
The taxable equivalent yields for a Class A shareholder, Class B shareholder and
Class C shareholder in the 39.6% federal income tax bracket for the one-month
period ended December 31, 1997 determined in accordance with such formula were
5.65%, 4.49% and 4.67%, respectively, except that absent expense limitations,
such tax-equivalent yields on Class A shares, Class B shares and Class C shares
of the Fund would have been 5.51%, 4.37% and 4.55%, respectively.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS
One of the primary methods used to measure the performance of a class of
the Fund is "total return." Total return will normally represent the percentage
change in value of an account, or of a hypothetical investment in 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 or by reference to historical information depicting the value of a
hypothetical account in the Fund since the Fund's inception. Past performance
cannot guarantee any particular future result.
Average annual total return quotations for each class of 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
(assuming all dividends and distributions are reinvested) to equal the ending
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redeemable value of such hypothetical investment on the last day of the
designated period in accordance with the following formula:
P(1+T)n[superscript] = 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 any CDSC on Class B or Class C shares at
the end of the period
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $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%.
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 class' mean account size.
The average annual total returns for Class A, Class B and Class C shares of
the Fund as of December 31, 1997 are as follows:
AVERAGE ANNUAL TOTAL RETURN (%)
ONE YEAR FIVE YEARS TEN YEARS SINCE INCEPTION*
Class A Shares 3.16 4.78 7.23 6.06
Class B Shares 3.08 N/A N/A 4.94
Class C Shares 6.04 N/A N/A 3.75
*Inception was October 22, 1986 for Class A shares; April 29, 1994 for Class B
shares; and January 31, 1996 for Class C shares.
PMC temporarily agreed to reduce its management fee and made other
arrangements to limit certain other expenses of the Fund. Had PMC not made such
an arrangement, the total returns for the periods would have been lower.
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:
[bullet] net asset value prices for all Pioneer mutual funds;
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[bullet] annualized 30-day yields on Pioneer fixed income funds;
[bullet] annualized 7-day yields and 7-day effective (compound) yields for
Pioneer Cash Reserves Fund; and
[bullet] 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 balances and last three transactions and may order a duplicate
statement. See "FactFoneSM" in the Prospectus for more information.
All performance numbers communicated through FactFoneSM represent past
performance and include the maximum applicable sales charge. A shareholder's
actual yield and total return will vary with changing market conditions. The
value of Class A, Class B and Class C shares (except for Pioneer Cash Reserves
Fund, which seeks to maintain 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 Fund's Annual Report, filed with the SEC on February 23, 1998 (Accession
No. 0000798172-98-000003), is incorporated by reference into this Statement of
Additional Information. The financial statements in the Fund's Annual Report,
including the financial highlights, for the period ended December 31, 1997,
included or incorporated by reference into the Prospectus and this Statement of
Additional Information, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect to the financial
statements, and are included in reliance upon the authority of Arthur Andersen
LLP as experts in accounting and auditing in giving their report.
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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
Investors Service, Inc. and Standard & Poor's Ratings Group 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 Municipal Bonds of the same maturity and coupon with different
ratings may have the same yield.
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DESCRIPTION OF BOND RATINGS1
MOODY'S INVESTORS SERVICE, INC.
DEBT RATINGS - U.S. TAX-EXEMPT MUNICIPAL
There are nine basic rating categories for long-term obligations. They range
from Aaa (highest quality) to C (lowest quality). The Fund does not invest in
securities rated below Baa by Moody's or BBB by Standard Poor's. Moody's applies
numerical modifiers 1, 2, and 3 in each generic rating classification from Aa to
Baa. The modifier 1 indicates that the issue ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic
category. Advance refunded issues that are secured by escrowed funds held in
cash, held in trust, reinvested in direct non-callable U.S. government
obligations or non-callable obligations unconditionally guaranteed by the U.S.
government are identified with a # symbol, e.g., #Aaa.
Aaa: Bonds that are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds that 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 that make the long-term risks appear somewhat larger than in Aaa
securities.
A: Bonds that 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 that
suggest susceptibility to impairment sometime in the future.
Baa: Bonds that are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Con. (...): Bonds for which the security depends upon the completion of some act
or the fulfillment of some condition are rated conditionally. These are bonds
secured by: (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals that begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
---------------------------------------------
1THE RATINGS INDICATED HEREIN ARE BELIEVED TO BE THE MOST RECENT RATINGS
AVAILABLE AT THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION 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 THE RATINGS INDICATED DO NOT
NECESSARILY REPRESENT RATINGS WHICH WILL BE GIVEN TO THESE SECURITIES ON THE
DATE OF THE FUND'S FISCAL YEAR-END.
25
<PAGE>
STANDARD & POOR'S RATINGS GROUP
PUBLIC FINANCE - LONG-TERM ISSUE CREDIT RATINGS
AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA: An obligation rated AA differs from the highest-rated obligations only
in a small degree. The obligor's capacity to meet its financial commitment on
the obligation is very strong.
A: An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB: An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
PLUS (+) OR MINUS (-): The ratings from AA to BBB may be modified by the
addition of a plus or minus sign to show relative standing within the major
categories.
p: The letter "p" indicates that the rating is provisional. A provisional rating
assumes the successful completion of the project financed by the debt being
rated and indicates that payment of debt service requirements is largely or
entirely dependent upon the successful timely completion of the project.
L: The letter "L" indicates that the rating pertains to the principal amount of
those bonds to the extent that the underlying deposit collateral is federally
insured and interest is adequately collateralized. In the case of certificates
of deposit, the letter "L" indicates that the deposit, combined with other
deposits being held in the same right and capacity, will be honored for
principal and pre-default interest up to the federal insurance limits within 30
days after closing of the insured institution or, in the event that the deposit
is assumed by a successor insured institution, upon maturity.
r: The "r" is attached to highlight derivatives, hybrids and certain other
obligations that Standard & Poor's believes may experience high volatility or
high variability in expected returns as a result of noncredit risks. Examples of
such obligations are securities whose principal or interest return is indexed to
equities, commodities or other instruments. The absence of an "r" symbol should
not be taken as an indication that an obligation will exhibit no volatility or
variability in total return.
NR: Not rated.
26
<PAGE>
APPENDIX B
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) from 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.
27
<PAGE>
APPENDIX C
PIONEER INTERMEDIATE TAX-FREE
CLASS A SHARES
<TABLE>
<CAPTION>
INITIAL
DATE INITIAL OFFERING SALES CHARGE SHARES NET ASSET VALUE ASSET
INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C> <C>
10/22/86 $10,000 $10.3600 3.50% 965.251 $10.0000 $9,650
</TABLE>
DIVIDENDS AND CAPITAL GAINS REINVESTED
VALUE OF SHARES
<TABLE>
<CAPTION>
FROM CAPITAL
GAINS
FROM INVESTMENT REINVESTED FROM DIVIDENDS
DATE REINVESTED TOTAL VALUE
<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 $9,073 $0 $1,398 $10,471
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
12/31/95 $10,078 $179 $7,295 $17,552
12/31/96 $9,923 $177 $7,985 $18,085
12/31/97 $10,087 $332 $8,909 $19,328
</TABLE>
28
<PAGE>
PIONEER INTERMEDIATE TAX-FREE
CLASS B SHARES
<TABLE>
<CAPTION>
DATE INITIAL SHARES NET ASSET VALUE INITIAL NET ASSET
INVESTMENT OFFERING PRICE PURCHASED PER SHARE VALUE
<S> <C> <C> <C> <C> <C>
4/29/94 $10,000 $10.0700 993.049 $10.0700 $10,000
</TABLE>
DIVIDENDS AND CAPITAL GAINS REINVESTED
VALUE OF SHARES
<TABLE>
<CAPTION>
CONTINGENT
FROM CAPITAL GAINS FROM DIVIDENDS DEFERRED SALES
FROM REINVESTED REINVESTED CHARGE IF REDEEMED TOTAL VALUE CDSC
DATE INVESTMENT IF REDEEMED PERCENTAGE
<S> <C> <C> <C> <C> <C> <C>
12/31/94 $9,584 $2 $265 $288 $9,563 3.00%
12/31/95 $10,388 $2 $712 $300 $10,802 3.00%
12/31/96 $10,238 $2 $1,111 $200 $11,151 2.00%
12/31/97 $10,397 $97 $1,548 $100 $11,942 1.00%
</TABLE>
29
<PAGE>
PIONEER INTERMEDIATE TAX-FREE
CLASS C SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE INITIAL NET
INITIAL OFFERING PRICE SHARES PER SHARE ASSET
DATE INVESTMENT PURCHASED VALUE
<S> <C> <C> <C> <C> <C>
1/31/96 $10,000 $10.5100 951.475 $10.5100 $10,000
</TABLE>
DIVIDENDS AND CAPITAL GAINS REINVESTED
VALUE OF SHARES
<TABLE>
<CAPTION>
CONTINGENT
FROM CAPITAL GAINS FROM DIVIDENDS DEFERRED SALES
FROM REINVESTED REINVESTED CHARGE IF REDEEMED TOTAL VALUE CDSC
DATE INVESTMENT IF REDEEMED PERCENTAGE
<S> <C> <C> <C> <C> <C> <C>
12/31/96 $9,791 $0 $331 $98 $10,024 1.00%
12/31/97 $9,972 $84 $678 $0 $10,734 0.00%
</TABLE>
30
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The following securities indices are well known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may also be used, if appropriate. The
indices are not available for direct investment. The data presented are not
meant to be indicative of the performance of the Fund, do not reflect past
performance and do not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P 500 includes 500 of
the largest stocks (in terms of stock market value) in the U.S.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of stocks of 30 blue chip
companies widely held by individuals and institutional investors. The 30 stocks
represent about a fifth of the $8 trillion-plus market value of all U.S. stocks
and about a fourth of the value of stocks listed on the New York Stock Exchange
(NYSE).
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the NYSE, plus stocks listed on the American Stock Exchange and over the counter
with the same or less capitalization as the upper bound of the NYSE ninth
decile.
U.S. INFLATION
THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S.
Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA GROWTH AND VALUE INDEXES are constructed by dividing the stocks in
the S&P 500 according to price-to-book ratios. The GROWTH INDEX contains stocks
with higher price-to-book ratios, and the VALUE INDEX contains stocks with lower
price-to-book ratios. Both indexes are market capitalization weighted.
MERRILL LYNCH MICRO-CAP INDEX
The MERRILL LYNCH MICRO-CAP INDEX represents the performance of 2,036 stocks
ranging in market capitalization from $50 million to $220 million. Index returns
are calculated monthly.
31
<PAGE>
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds after 1977 are constructed with
data from The Wall Street Journal and are calculated as the change in the flat
price or and-interest price. From 1926 to 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.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of intermediate-term government bonds after 1987 are calculated
from The Wall Street Journal prices, using the change in flat price. Returns
from 1934 to 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 five 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 to 1942, almost all bonds
with maturities near five years were partially or fully 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 to 1933, there are few bonds suitable for construction
of a series with a five-year maturity. For this period, five-year bond yield
estimates are used.
MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI")
MSCI's international indices are based on the share prices of approximately
1,700 companies listed on stock exchanges in the 22 countries that make up the
MSCI World Index. MSCI's emerging market indices are comprised of approximately
1000 stocks from 26 countries.
Countries in the MSCI EAFE INDEX are: Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and
United Kingdom.
Countries in the MSCI EMERGING MARKETS FREE INDEX are: Argentina, Brazil, Chile,
China Free, Czech Republic, Colombia, Greece, Hungary, India, Indonesia Free,
Israel, Jordan, Korea (at 50%), Malaysia Free, Mexico Free, Pakistan, Peru,
Philippines Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan (at 50%),
Thailand Free, Turkey and Venezuela.
6-MONTH CDS
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
Since 1969, corporate bond total returns are represented by the Salomon Brothers
Long-Term High-Grade Corporate Bond Index. As 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 with at
least 10 years to maturity. 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.
From 1926 to 1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946 to 1968,
Ibbotson and Sinquefield backdated the Salomon Brothers' index, using Salomon
Brothers' monthly yield data with a methodology similar to that used by Salomon
32
<PAGE>
Brothers for 1969 to 1995. 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 to 1945, Standard & Poor's
monthly high-grade corporate composite yield data were used, assuming a 4%
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 Westerfield, Randolph W., 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.
U.S. (30-DAY) TREASURY BILLS
For the U.S. TREASURY BILL INDEX, data from The Wall Street Journal are used
after 1977; the CRSP 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.
NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUSTS ("NAREIT")EQUITY REIT
INDEX
All of the data are based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMEX and NASDAQ. The data are
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighting at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income. Liquidating dividends, whether full or partial,
are treated as income.
RUSSELL U.S. EQUITY INDEXES
The RUSSELL 3000(R) INDEX (the "Russell 3000") is comprised of the 3,000 largest
U.S. companies as determined by market capitalization representing approximately
98% of the U.S. equity market. The average market capitalization is
approximately $2.8 billion. The RUSSELL 2500TM INDEX measures performance of the
2,500 smallest companies in the Russell 3000. The average market capitalization
is approximately $733.4 million, and the largest company in the index has an
approximate market capitalization of $2.9 billion. The RUSSELL 2000(R) INDEX
measures performance of the 2,000 smallest stocks in the Russell 3000; the
largest company in the index has a market capitalization of approximately $1.1
billion. The RUSSELL 1000(R) INDEX (the "Russell 1000") measures the performance
of the 1,000 largest companies in the Russell 3000. The average market
capitalization is approximately $7.6 billion. The smallest company in the index
has an approximate market capitalization of $1.1 billion. The RUSSELL MIDCAPTM
INDEX measures performance of the 800 smallest companies in the Russell 1000.
The largest company in the index has an approximate market capitalization of
$8.0 billion.
The Russell indexes are reconstituted annually as of July 1, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The WILSHIRE REAL ESTATE SECURITIES INDEX is a market capitalization weighted
index of 120 publicly traded real estate securities, such as REITs, real estate
operating companies ("REOCs") and partnerships.
The index contains performance data on five major categories of property:
office, retail, industrial, apartment and miscellaneous. The companies in the
index are 91.66% equity and hybrid REITs and 8.33% REOCs.
33
<PAGE>
STANDARD & POOR'S MIDCAP 400 INDEX
The S&P 400 is a market-capitalization-weighted index. The performance data for
the index were calculated by taking the stocks presently in the index and
tracking them backwards in time as long as there were prices reported. No
attempt was made to determine what stocks "might have been" in the S&P 400 five
or ten years ago had it existed. Dividends are reinvested on a monthly basis
prior to June 30, 1991, and are reinvested daily thereafter.
LIPPER BALANCED FUNDS INDEX
This index represents equally weighted performance, adjusted for capital gains
distributions and income dividends, of approximately 30 of the largest funds
with a primary objective of conserving principal by maintaining at all times a
balanced portfolio of stocks and bonds. Typically, the stock/bond ratio ranges
around 60%/40%.
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 to 1987; and The Wall Street Journal thereafter.
Sources: Ibbotson Associates, Towers Data Systems, Lipper Analytical Services,
Inc., Merrill Lynch and PGI
34
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
DOW S&P/ S&P/
S&P JONES U.S. SMALL BARRA BARRA MERRILL LYNCH
500 INDUSTRIAL STOCK U.S. 500 500 MICRO-CAP
AVERAGE INDEX INFLATION GROWTH VALUE INDEX
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 11.62 N/A 0.28 -1.49 N/A N/A N/A
Dec 1927 37.49 N/A 22.10 -2.08 N/A N/A N/A
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A N/A
Dec 1931 -43.34 -49.02 -49.75 -9.52 N/A N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A N/A
Dec 1933 53.99 73.72 142.87 0.51 N/A N/A N/A
Dec 1934 -1.44 8.08 24.22 2.03 N/A N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A N/A
Dec 1942 20.34 14.13 44.51 9.29 N/A N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A N/A
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
DOW S&P/ S&P/
S&P JONES U.S. SMALL BARRA 500 BARRA MERRILL LYNCH
500 INDUSTRIAL STOCK U.S. GROWTH 500 MICRO-CAP
AVERAGE INDEX INFLATION VALUE INDEX
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A N/A
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38 N/A
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93 N/A
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57 N/A
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16 27.76
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16 43.18
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59 32.32
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02 9.18
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04 33.62
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89 42.44
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52 -14.97
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68 22.89
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67 3.45
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68 -13.84
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67 22.76
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13 8.06
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85 -29.55
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56 57.44
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53 36.62
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60 31.32
Dec 1994 1.31 5.06 3.11 2.67 3.13 -0.64 1.81
Dec 1995 37.43 36.84 34.46 2.54 38.13 36.99 30.70
Dec 1996 23.07 28.84 17.62 3.32 23.96 21.99 13.88
Dec 1997 33.36 24.88 22.78 1.92 36.52 29.98 24.61
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
LONG- INTERMEDIATE- MSCI LONG-
TERM TERM U.S. EAFE 6- TERM U.S. U.S.
U.S. GOV'T GOVERNMENT (Net of MONTH CORPORATE T-BILL
BONDS BONDS Taxes) CDS BONDS (30-Day)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.10 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
LONG- INTERMEDIATE- MSCI LONG-
TERM TERM U.S. EAFE 6- TERM U.S. U.S.
U.S. GOV'T GOVERNMENT (Net of MONTH CORPORATE T-BILL
BONDS BONDS Taxes) CDS BONDS (30-Day)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.17 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
Dec 1966 3.65 4.69 N/A 5.76 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.47 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.45 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.70 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.39 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.11 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 14.71
Dec 1982 40.36 29.10 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.59 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.30 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.80 11.21 5.21 27.20 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
Dec 1997 15.85 8.38 1.78 5.71 12.95 5.26
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT LIPPER MSCI
EQUITY RUSSELL WILSHIRE BALANCED EMERGING BANK
REIT 2000 REAL ESTATE S&P FUND MARKETS SAVINGS
INDEX INDEX SECURITIES 400 INDEX FREE INDEX ACCOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 5.77 N/A 3.86
Dec 1961 N/A N/A N/A N/A 20.59 N/A 3.90
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT LIPPER MSCI
EQUITY RUSSELL WILSHIRE BALANCED EMERGING BANK
REIT 2000 REAL ESTATE S&P FUND MARKETS SAVINGS
INDEX INDEX SECURITIES 400 INDEX FREE INDEX ACCOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1962 N/A N/A N/A N/A -6.80 N/A 4.08
Dec 1963 N/A N/A N/A N/A 13.10 N/A 4.17
Dec 1964 N/A N/A N/A N/A 12.36 N/A 4.19
Dec 1965 N/A N/A N/A N/A 9.80 N/A 4.23
Dec 1966 N/A N/A N/A N/A -5.86 N/A 4.45
Dec 1967 N/A N/A N/A N/A 15.09 N/A 4.67
Dec 1968 N/A N/A N/A N/A 13.97 N/A 4.68
Dec 1969 N/A N/A N/A N/A -9.01 N/A 4.80
Dec 1970 N/A N/A N/A N/A 5.62 N/A 5.14
Dec 1971 N/A N/A N/A N/A 13.90 N/A 5.30
Dec 1972 8.01 N/A N/A N/A 11.13 N/A 5.37
Dec 1973 -15.52 N/A N/A N/A -12.24 N/A 5.51
Dec 1974 -21.40 N/A N/A N/A -18.71 N/A 5.96
Dec 1975 19.30 N/A N/A N/A 27.10 N/A 6.21
Dec 1976 47.59 N/A N/A N/A 26.03 N/A 6.23
Dec 1977 22.42 N/A N/A N/A -0.72 N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 4.80 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 19.70 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 1.86 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.10 17.44 N/A 9.71
Dec 1984 20.93 -7.30 20.64 1.18 7.46 N/A 9.92
Dec 1985 19.10 31.05 22.20 35.58 29.83 N/A 9.02
Dec 1986 19.16 5.68 20.30 16.21 18.43 N/A 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 4.13 N/A 6.92
Dec 1988 13.49 24.89 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.24 2.37 35.54 19.70 64.96 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 0.66 -10.55 7.80
Dec 1991 35.70 46.05 20.03 50.10 25.83 59.91 4.61
Dec 1992 14.59 18.41 7.36 11.91 7.46 11.40 2.89
Dec 1993 19.65 18.91 15.24 13.96 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 -2.05 -7.32 4.96
Dec 1995 15.27 28.44 13.65 30.94 24.89 -5.21 5.24
Dec 1996 35.26 16.53 36.87 19.20 13.01 6.03 4.95
Dec 1997 20.29 22.36 19.80 32.26 20.05 -11.59 5.17
</TABLE>
40
<PAGE>
APPENDIX C
OTHER PIONEER INFORMATION
The Pioneer group of mutual funds was established in 1928 with the creation of
Pioneer Fund. Pioneer is one of the oldest and most experienced money managers
in the United States.
As of December 31, 1997, PMC employed a professional investment staff of 58,
with a combined average of 12 years' experience in the financial services
industry.
Total assets of all Pioneer mutual funds at December 31, 1997, were
approximately $19.8 billion representing 1,177,148 shareholder accounts, 791,468
non-retirement accounts and 385,680 retirement accounts.
g:\edgar\sai\current\it498sai.doc
41
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial highlights of the Registrant for the fiscal year
ended December 31, 1997 are included in Part A of the Registration
Statement and the financial statements of the Registrant for the
fiscal year ended December 31, 1997 are part of the 1997 Annual
Report to Shareholders (filed electronically on February 23, 1998;
File No. 811-04768; Accession No. 0000798172-98-000003) which is
incorporated by reference into Part B of the Registration
Statement.
(b) Exhibits:
1. Amended and Restated Declaration of Trust.1
1.1 Form of Establishment and Designation of Classes.1
1.2 Restated Establishment and Designation of Classes.2
2. By-Laws.1
3. None.
4. None.
5. Management Contract between the Registrant and
Pioneering Management Corporation.1
6.1 Underwriting Agreement between the Registrant and
Pioneer Funds Distributor, Inc.1
6.2 Form of Dealer Sales Agreement.2
7. None.
8.1 Form of Custodian Agreement between the Registrant and
Brown Brothers Harriman & Co.1
9. Investment Company Service Agreement between the
Registrant and Pioneering Services Corporation.2
10. None.
11. Consent of Independent Public Accountants.3
12. None.
13. Stock Purchase Agreement.1
14. None.
15. Class A Distribution Plan.1
15.1 Class B Distribution Plan.1
15.2 Class C Distribution Plan.2
C-1
<PAGE>
16. Description of Average Annual Total Return
and Yield Calculation.1
17. Financial Data Schedules.3
18.1 Multiple Class Plan for Class A and Class B
shares pursuant to Rule 18f-3.2
18.2 Multiple Class Plan for Class A, Class B and
Class C shares pursuant to Rule 18f-3.2
19. Powers of Attorney.3
- ------------------------
1Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 11 to the Registrant's Registration Statement
(File No. 33-7592) as filed with the Securities and Exchange Commission (the
"SEC") on April 27, 1995 (Accession No.0000798172-95-000005).
2Previously filed. Incorporated herein by reference from the exhibits
filed with Post-Effective Amendment No. 14 to the Registration Statement as
filed with the SEC on April 25, 1996 (Accession No. 0000798172-96-000010).
3Filed herewith.
Item 25. Persons Controlled by or Under Common Control with Registrant
No person is controlled by the Registrant. A common control
relationship could exist from a management perspective because the Chairman and
President of the Registrant owns approximately 14% of the outstanding shares of
The Pioneer Group, Inc. (PGI), the parent company of the Registrant's investment
adviser, and certain Trustees or officers of the Registrant (i) hold similar
positions with other investment companies advised by PGI and (ii) are directors
or officers of PGI and/or its direct or indirect subsidiaries. The following
lists all U.S. and the principal non-U.S. subsidiaries of PGI and those
registered investment companies with a common or similar Board of Trustees
advised by PGI.
OWNED PERCENT STATE/COUNTRY OF
COMPANY BY OF SHARES INCORPORATION
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneer Funds Distributor, Inc. (PFD) PMC 100% MA
Pioneer Explorer, Inc. (PEI) PMC 100% DE
Pioneer Fonds Marketing GmbH (GmbH) PFD 100% Germany
Pioneer Forest, Inc. (PFI) PGI 100% DE
CJSC "Forest-Starma" (Forest-Starma) PFI 95% Russia
Pioneer Metals and Technology, Inc. (PMT) PGI 100% DE
Pioneer Capital Corp. (PCC) PGI 100% DE
Pioneer SBIC Corp. PCC 100% MA
Pioneer Real Estate Advisors, Inc. (PREA) PGI 100% DE
Pioneer Management (Ireland) Ltd. (PMIL) PGI 100% Ireland
Pioneer Plans Corporation (PPC) PGI 100% DE
PIOGlobal Corp. (PIOGlobal) PGI 100% DE
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Goldfields Holdings, Inc. (PGH) PGI 100% DE
Pioneer Goldfields Ltd. (PGL) PGH 100% Guernsey
Teberebie Goldfields Ltd. (TGL) PGL 90% Ghana
Pioneer Omega, Inc. (Omega) PGI 100% DE
Pioneer First Russia, Inc. (First Russia) Omega 81.65% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer International Corp. (PIntl) PGI 100% DE
Pioneer First Polish Investment Fund
JSC, S.A. (First Polish) PIntl 100% Poland
Pioneer Czech Investment Company, A.S.
(Pioneer Czech) PIntl 100% Czech Republic
C-2
<PAGE>
Registered investment companies that are parties to management contracts with
PMC:
FUNDS BUSINESS TRUST
Pioneer International Growth Fund MA
Pioneer World Equity Fund DE
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Independence Fund DE
Pioneer Fund DE
Pioneer II DE
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Trust MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Balanced Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares DE
Pioneer Micro-Cap Fund DE
The following table lists John F. Cogan, Jr.'s positions with the
investment companies, PGI and principal direct or indirect PGI subsidiaries
referenced above and the Registrant's counsel.
TRUSTEE/
ENTITY CHAIRMAN PRESIDENT DIRECTOR OTHER
Pioneer mutual
funds X X X
PGL X X X
PGI X X X
PPC X X
PIC X X
PIntl X X
PMT X X
Omega X X
PIOGlobal X X
First Russia X X
PCC X
PSC X
PMIL X
PEI X
PFI X
PREA X
Forest-Starma X
PMC X X
PFD X X
TGL X X
First Polish Chairman of Supervisory
Board
GmbH Chairman of Supervisory
Board
Pioneer Czech Chairman of Supervisory
Board
Hale and Dorr LLP Partner
C-3
<PAGE>
Item 26. Number of Holders of Securities
(1)
Title of Class (2)
Shares of Beneficial Interest Number of Record Holders
(without par value) as of March 30, 1998
Class A shares 1,753
Class B shares 87
Class C shares 12
Item 27. Indemnification
Except for the Amended and Restated Declaration of Trust (the
"Declaration"), dated December 7, 1993, establishing the Registrant as a
business trust under Massachusetts law, there is no contract, arrangement or
statute under which any Trustee, officer, underwriter or affiliated person of
the Registrant is insured or indemnified. The Declaration provides that no
Trustee or officer will be indemnified against any liability to which the
Registrant would otherwise be subject by reason of or for willful misfeasance,
bad faith, gross negligence or reckless disregard of such person's duties.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be available to Trustees, officers
and controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in the Form
ADV, as amended, of PMC, the Registrant's investment adviser. The following
sections of such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2; and
(b) Section 6, Business Background, of each Schedule D.
Item 29. Principal Underwriters
(a) See Item 25 above.
(b) Directors and officers of PFD:
POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
NAME UNDERWRITER 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 Vice President None
Stephen W. Long Senior Vice President None
Barry G. Knight Vice President None
C-4
<PAGE>
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Bennett Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Mary Kleeman Vice President None
Steven R. Berke Assistant Vice President None
Steven H. Forss Assistant Vice President None
Mary Sue Hoban Assistant Vice President None
Debra A. Levine Assistant Vice President None
Junior Roy McFarland Assistant Vice President None
Marie E. Moynihan Assistant Vice President None
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
The principal business address of each of these individuals is 60 State Street,
Boston, Massachusetts 02109-1820.
(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
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
C-5
<PAGE>
(c) The Registrant undertakes to deliver or cause to be delivered with
the Prospectus, to each person to whom the Prospectus is sent or
given, a copy of the Registrant's report to shareholders furnished
pursuant to and meeting the requirements of Rule 30d-1 under the
Investment Company Act of 1940, 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-6
<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. 16 to
its Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment No. 16 to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Boston and Commonwealth of Massachusetts, on the
30th day of April, 1998.
PIONEER INTERMEDIATE TAX-FREE FUND
By: /s/ John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 15 to the Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the date
indicated:
Signature Title
/s/ John F. Cogan, Jr. Chairman of the Board )
John F. Cogan, Jr. and President )
(Principal Executive )
Officer) )
)
)
/s/ William H. Keough Chief Financial Officer )
William H. Keough and Treasurer (Principal )
Financial and Accounting )
Officer) )
)
)
Trustees: )
)
)
Mary K. Bush* )
Mary K. Bush )
)
)
/s/ John F. Cogan, Jr. )
John F. Cogan, Jr. )
)
)
Richard H. Egdahl* )
Richard H. Egdahl )
<PAGE>
)
)
Margaret B. W. Graham* )
Margaret B. W. Graham )
)
)
)
John W. Kendrick )
)
)
)
Marguerite A. Piret )
)
)
David D. Tripple* )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )
)
)
)
John Winthrop )
)
)
*By: /s/ John F. Cogan, Jr. Dated: April 30, 1998)
John F. Cogan, Jr.
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
11. Consent of Independent Public Accountants
17. Financial Data Schedules
19. Powers of Attorney
ARTHUR ANDERSEN LLP
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our report
on Pioneer Intermediate Tax-Free Fund dated February 2, 1998 (and to all
references to our firm) included in or made a part of Post-Effective Amendment
No. 16 and Amendment No. 16 to Registration Statement File Nos. 33-7592 and
811-04768, respectively.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Boston, Massachusetts
April 27, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED DECEMBER 31, 1997 FOR PIONEER INTERMEDIATE TAX-FREE FUND AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000798172
<NAME> PIONEER INTERMEDIATE TAX-FREE FUND
<SERIES>
<NUMBER> 001
<NAME> PIONEER INTERMEDIATE TAX-FREE FUND CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 65194446
<INVESTMENTS-AT-VALUE> 68606093
<RECEIVABLES> 1155107
<ASSETS-OTHER> 7688
<OTHER-ITEMS-ASSETS> 15121
<TOTAL-ASSETS> 69784009
<PAYABLE-FOR-SECURITIES> 1046994
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 202019
<TOTAL-LIABILITIES> 1249013
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 65038537
<SHARES-COMMON-STOCK> 6239872
<SHARES-COMMON-PRIOR> 7142179
<ACCUMULATED-NII-CURRENT> 13543
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 71269
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3411647
<NET-ASSETS> 68534996
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3690600
<OTHER-INCOME> 0
<EXPENSES-NET> 726672
<NET-INVESTMENT-INCOME> 2963928
<REALIZED-GAINS-CURRENT> 1112008
<APPREC-INCREASE-CURRENT> 579896
<NET-CHANGE-FROM-OPS> 4655832
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2841400
<DISTRIBUTIONS-OF-GAINS> 511871
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 290169
<NUMBER-OF-SHARES-REDEEMED> 1404597
<SHARES-REINVESTED> 212121
<NET-CHANGE-IN-ASSETS> (7917540)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (503818)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 351207
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 845680
<AVERAGE-NET-ASSETS> 67171834
<PER-SHARE-NAV-BEGIN> 10.28
<PER-SHARE-NII> .44
<PER-SHARE-GAIN-APPREC> .25
<PER-SHARE-DIVIDEND> .44
<PER-SHARE-DISTRIBUTIONS> .08
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.45
<EXPENSE-RATIO> 1.02
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED DECEMBER 31, 1997 FOR PIONEER INTERMEDIATE TAX-FREE FUND AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000798172
<NAME> PIONEER INTERMEDIATE TAX-FREE FUND
<SERIES>
<NUMBER> 002
<NAME> PIONEER INTERMEDIATE TAX-FREE FUND CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 65194446
<INVESTMENTS-AT-VALUE> 68606093
<RECEIVABLES> 1155107
<ASSETS-OTHER> 7688
<OTHER-ITEMS-ASSETS> 15121
<TOTAL-ASSETS> 69784009
<PAYABLE-FOR-SECURITIES> 1046994
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 202019
<TOTAL-LIABILITIES> 1249013
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 65038537
<SHARES-COMMON-STOCK> 287535
<SHARES-COMMON-PRIOR> 277900
<ACCUMULATED-NII-CURRENT> 13543
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 71269
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3411647
<NET-ASSETS> 68534996
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3690600
<OTHER-INCOME> 0
<EXPENSES-NET> 726672
<NET-INVESTMENT-INCOME> 2963928
<REALIZED-GAINS-CURRENT> 1112008
<APPREC-INCREASE-CURRENT> 579896
<NET-CHANGE-FROM-OPS> 4655832
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 101513
<DISTRIBUTIONS-OF-GAINS> 22707
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 85716
<NUMBER-OF-SHARES-REDEEMED> 84079
<SHARES-REINVESTED> 7998
<NET-CHANGE-IN-ASSETS> (7917540)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (503818)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 351207
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 845680
<AVERAGE-NET-ASSETS> 2835397
<PER-SHARE-NAV-BEGIN> 10.31
<PER-SHARE-NII> .36
<PER-SHARE-GAIN-APPREC> .25
<PER-SHARE-DIVIDEND> .37
<PER-SHARE-DISTRIBUTIONS> .08
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.47
<EXPENSE-RATIO> 1.81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED DECEMBER 31, 1997 FOR PIONEER INTERMEDIATE TAX-FREE FUND AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000798172
<NAME> PIONEER INTERMEDIATE TAX-FREE FUND
<SERIES>
<NUMBER> 003
<NAME> PIONEER INTERMEDIATE TAX-FREE FUND CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 65194446
<INVESTMENTS-AT-VALUE> 68606093
<RECEIVABLES> 1155107
<ASSETS-OTHER> 7688
<OTHER-ITEMS-ASSETS> 15121
<TOTAL-ASSETS> 69784009
<PAYABLE-FOR-SECURITIES> 1046994
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 202019
<TOTAL-LIABILITIES> 1249013
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 65038537
<SHARES-COMMON-STOCK> 28580
<SHARES-COMMON-PRIOR> 19598
<ACCUMULATED-NII-CURRENT> 13543
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 71269
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3411647
<NET-ASSETS> 68534996
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3690600
<OTHER-INCOME> 0
<EXPENSES-NET> 726672
<NET-INVESTMENT-INCOME> 2963928
<REALIZED-GAINS-CURRENT> 1112008
<APPREC-INCREASE-CURRENT> 579896
<NET-CHANGE-FROM-OPS> 4655832
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7472
<DISTRIBUTIONS-OF-GAINS> 2343
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8221
<NUMBER-OF-SHARES-REDEEMED> 58
<SHARES-REINVESTED> 819
<NET-CHANGE-IN-ASSETS> (7917540)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (503818)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 351207
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 845680
<AVERAGE-NET-ASSETS> 226765
<PER-SHARE-NAV-BEGIN> 10.29
<PER-SHARE-NII> .35
<PER-SHARE-GAIN-APPREC> .26
<PER-SHARE-DIVIDEND> .34
<PER-SHARE-DISTRIBUTIONS> .08
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.48
<EXPENSE-RATIO> 1.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
PIONEER EMERGING MARKETS FUND
PIONEER EUROPE FUND
PIONEER GROWTH TRUST
PIONEER INDIA FUND
PIONEER INTERNATIONAL GROWTH FUND
PIONEER WORLD EQUITY FUND
PIONEER GROWTH SHARES
PIONEER MID-CAP FUND
PIONEER SMALL COMPANY FUND
PIONEER MICRO-CAP FUND
PIONEER BALANCED FUND
PIONEER FUND
PIONEER II
PIONEER REAL ESTATE SHARES
PIONEER AMERICA INCOME TRUST
PIONEER BOND FUND
PIONEER SHORT TERM INCOME TRUST
PIONEER INTERMEDIATE TAX-FREE FUND
PIONEER MONEY MARKET TRUST
POWER OF ATTORNEY
Dated October 7, 1997
I, the undersigned Trustee of each of the above-listed registered
investment companies (each a "Fund"), each a Delaware or a Massachusetts
business trust, do hereby constitute and appoint John F. Cogan, Jr., David D.
Tripple, and Joseph P. Barri, and each of them acting singly, to be my true,
sufficient and lawful attorneys, with full power to each of them, and each of
them acting singly, to sign for me, in my name and in my capacity as trustee,
any and all amendments to the Registration Statement on Form N-1A to be filed by
each Fund under the Investment Company Act of 1940, as amended (the "1940 Act"),
and under the Securities Act of 1933, as amended (the "1933 Act"), with respect
to the offering of its shares of beneficial interest and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in my capacity as trustee to enable each Fund to comply
with the 1940 Act and the 1933 Act, and all requirements of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by said attorneys or each of them to any and all amendments to
said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as
of the date first written above.
/s/ Mary K. Bush
Mary K. Bush, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned trustee of Pioneer Bond Fund, Pioneer Europe Fund,
Pioneer Fund, Pioneer Growth Trust, Pioneer International Growth Fund, Pioneer
Money Market Trust, Pioneer Municipal Bond Fund, Pioneer Short-Term Income
Trust, Pioneer Tax-Free State Series Trust, Pioneer II, Pioneer Three and
Pioneer U.S. Government Trust (collectively, the "Funds"), all Massachusetts
business trusts, do hereby constitute and appoint John F. Cogan, Jr., Joseph P.
Barri and William H. Keough, and each of them acting singly, to be my true,
sufficient and lawful attorneys, with full power to each of them, and each of
them acting singly, to sign for me, in my name and in the capacity indicated
below, any and all amendments to the Registration Statements on Forms N-1A to be
filed by the Funds under the Investment Company Act of 1940, as amended, and
under the Securities Act of 1933, as amended, with respect to the offering of
the Funds' shares of beneficial interest, no par value, and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in the capacity indicated to enable the Funds to comply
with the Investment Company Act of 1940, as amended, and the Securities Act of
1933, as amended, and all requirements of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
said attorneys or each of them to any and all amendments to said Registration
Statements.
IN WITNESS WHEREOF, I have hereunder set my hand on the date set
opposite my signature.
Dated: 09/27/93 /s/ Stephen K. West
Stephen K. West
Trustee
<PAGE>
POWER OF ATTORNEY
We, the undersigned trustees of Pioneer Money Market Trust, Pioneer
Bond Fund, Pioneer U.S. Government Trust, Pioneer Fund, Pioneer II, Pioneer
Three, Pioneer Europe Fund, Pioneer Growth Trust, Pioneer Municipal Bond Fund
and Pioneer Short-Term Income Trust (collectively, the "Funds"), all
Massachusetts business trusts, do hereby severally constitute and appoint John
F. Cogan, Jr., Joseph P. Barri and William H. Keough, and each of them acting
singly, to be our true, sufficient and lawful attorneys, with full power to each
of them, and each of them acting singly, to sign for each of us, in the name of
each of us and in the capacities indicated below, any and all amendments to the
Registration Statements on Forms N-1A to be filed by the Funds under the
Investment Company Act of 1940, as amended, and under the Securities Act of
1933, as amended, with respect to the offering of the Funds' shares of
beneficial interest, no par value, and any and all other documents and papers
relating thereto, and generally to do all such things in the name of each of us
and on behalf of each of us in the capacities indicated to enable the Funds to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended, and all requirements of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming the signature of each of
us as it may be signed by said attorneys or each of them to any and all
amendments to said Registration Statements.
IN WITNESS WHEREOF, we have hereunder set our hands on the dates set
opposite our respective signatures.
Dated: 2/5/93 /s/ Richard H. Egdahl
Richard H. Egdahl, M.D.
Trustee
Dated: 2/5/93 /s/ Margaret BW Graham
Margaret B. W. Graham
Trustee
[strikeout]
Dated: __________________________ ________________________________
William H. Keough
Principal Financial and
Accounting Officer
[end strikeout]
