Pioneer [LOGO]
Pioneer
Intermediate Tax-Free
Fund
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ANNUAL REPORT 12/31/97
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<PAGE>
Table of Contents
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Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule of Investments 9
Financial Statements 16
Notes to Financial Statements 22
Report of Independent Public Accountants 26
Trustees, Officers and Service Providers 27
Programs and Services for Pioneer Shareowners 28
<PAGE>
Pioneer Intermediate Tax-Free Fund
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LETTER FROM THE CHAIRMAN 12/31/97
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Dear Shareowner,
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I am pleased to present this report for Pioneer Intermediate Tax-Free Fund,
covering its fiscal year ended December 31, 1997. On behalf of the Fund's
investment team, I thank you for your interest and this opportunity to comment
briefly on today's investing environment.
Since October, investors have shown increasing demand for U.S. bonds, as the
world's stock markets have been exceptionally volatile. Asian markets plunged in
the face of severe instability in currencies and economic growth. Here in the
United States, the Dow Jones Industrial Average experienced - in the space of
two days - both its biggest one-day point drop and its biggest one-day point
gain. Although it recovered, its pace has since been unsteady. European markets
bounced around, shaken by the drop in Asia and then heartened by the speedy U.S.
rebound. Even Latin American markets were affected, mostly in a chain reaction
from nervous investors.
After consecutive quarters of robust growth in stocks, this fast-paced change
forced individuals and institutions to rethink their investment strategy. Money
has poured into the bond market, with demand spilling over into tax-free
markets. These positive conditions are driving prices up and yields down. Many
investors have moved away from stocks and into high-quality, U.S. fixed-income
securities - like those held by your Fund - to shelter their portfolio. We have
always believed it is important to allocate assets among both stocks and bonds,
and recent market conditions demonstrate this importance.
I encourage you to read on to learn more about your Fund. Please contact your
investment representative, or us at 1-800-225-6292, if you have questions about
Pioneer Intermediate Tax-Free Fund.
Respectfully,
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.,
Chairman and President
1
<PAGE>
Pioneer Intermediate Tax-Free Fund
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PORTFOLIO SUMMARY 12/31/97
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Portfolio Quality
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(As a percentage of total investment portfolio)
[The following table was a pie chart in the printed materials.]
AAA 36%
AA 46%
A 16%
Short-Term Cash Equivalents 2%
Portfolio Maturity
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(Effective life as a percentage of total investment portfolio)
[The following table was a pie chart in the printed materials.]
0-2 Years 8%
2-5 Years 9%
5-7 Years 14%
7-10 Years 32%
10-15 Years 31%
15+ Years 6%
10 Largest Holdings
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(As a percentage of long-term holdings)
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1. Pennsylvania State General Obligation, 6.25%, 2010 2.57%
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2. Kansas State Department of Transportation Highway
Revenue, 6.125%, 2009 2.55
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3. Indiana Municipal Power Agency, Power Supply System
Revenue, 6.0%, 2012 2.51
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4. Connecticut State Special Tax Obligation Revenue, 6.0%, 2006 2.50
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5. Grand River Dam Authority Electric Revenue, 5.75%, 2006 2.44
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6. Texas State General Obligation, 5.8%, 2004 2.44
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7. Georgia State General Obligation, 5.5%, 2006 2.42
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8. Maine State General Obligation, 5.375%, 2006 2.40
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9. University of Maryland System Auxiliary Facility and Tuition
Revenue, 5.4%, 2006 2.39
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10. Maryland Community Development Administration Single Family
Mortgage Revenue, 5.95%, 2006 2.33
Fund holdings will vary for other periods.
2
<PAGE>
Pioneer Intermediate Tax-Free Fund
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PERFORMANCE UPDATE 12/31/97 CLASS A SHARES
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Share Prices and Distributions
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Net Asset Value
per Share 12/31/97 12/31/96
$10.45 $10.28
Distributions per Share Income Short-Term Long-Term
(12/31/96 - 12/31/97) Dividends Capital Gains Capital Gains
$0.435 $0.0019 $0.0809
Investment Returns
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The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Intermediate Tax-Free Fund at public offering price, compared to the
growth of the Lehman Brothers Municipal Bond Index.
[The following table was a mountain chart in the printed materials.]
Growth of $10,000
Pioneer Intermediate Lehman Brothers
Tax-Free Fund* Municipal Bond
Index
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12/31/87 9,650 10,000
10,889 11,016
12/31/89 11,953 12,205
12,721 13,094
12/31/91 14,141 14,684
15,364 15,979
12/31/93 17,067 17,942
16,039 17,014
12/31/95 18,253 19,984
18,806 20,869
12/31/97 20,099 22,787
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[boxed text]
Average Annual Total Returns
(As of December 31, 1997)
Net Asset Public Offering
Period Value Price*
10 Years 7.61% 7.23%
5 Years 5.52 4.78
1 Year 6.87 3.16
- -------------------------------------------------
* Reflects deduction of the maximum 3.5% sales charge at the beginning of
the period and assumes reinvestment of distributions at net asset value.
The Lehman Brothers Municipal Bond Index is an unmanaged measure of
approximately 15,000 municipal bonds. Bonds in the Index have a minimum credit
rating of BBB, were part of at least a $50 million issuance made within the past
five years and have a maturity of at least two years. Index returns are
calculated monthly, assume reinvestment of dividends and, unlike Fund returns,
do not reflect any fees, expenses or sales charges. You cannot invest directly
in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
3
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Pioneer Intermediate Tax-Free Fund
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PERFORMANCE UPDATE 12/31/97 CLASS B SHARES
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Share Prices and Distributions
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Net Asset Value
per Share 12/31/97 12/31/96
$10.47 $10.31
Distributions per Share Income Short-Term Long-Term
(12/31/96 - 12/31/97) Dividends Capital Gains Capital Gains
$0.370 $0.0019 $0.0809
Investment Returns
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The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Intermediate Tax-Free Fund, compared to the growth of the Lehman
Brothers Municipal Bond Index.
[The following table was a mountain chart in the printed materials.]
Growth of $10,000
Pioneer Intermediate Lehman Brothers
Tax-Free Fund* Municipal Bond
Index
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4/30/94 10,000 10,000
6/30/94 10,038 10,025
10,046 10,094
12/31/94 9,851 9,949
10,420 10,653
6/30/95 10,636 10,909
10,832 11,223
12/31/95 11,102 11,686
10,980 11,545
6/30/96 10,976 11,634
11,133 11,900
12/31/95 11,351 12,204
11,255 12,174
6/30/97 11,537 12,594
11,799 12,973
12/31/97 11,942 13,325
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[boxed text]
Average Annual Total Returns
(As of December 31, 1997)
If If
Period Held Redeemed*
Life-of-Fund 5.18% 4.94%
(4/29/94)
1 Year 6.08 3.08
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* Reflects deduction of the maximum appli cable contingent deferred sales
charge (CDSC) at the end of the period and assumes rein vestment of
distributions. The maximum CDSC of 3% declines over four years.
The Lehman Brothers Municipal Bond Index is an unmanaged measure of
approximately 15,000 municipal bonds. Bonds in the Index have a minimum credit
rating of BBB, were part of at least a $50 million issuance made within the past
five years and have a maturity of at least two years. Index returns are
calculated monthly, assume reinvestment of dividends and, unlike Fund returns,
do not reflect any fees, expenses or sales charges. You cannot invest directly
in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
4
<PAGE>
Pioneer Intermediate Tax-Free Fund
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PERFORMANCE UPDATE 12/31/97 CLASS C SHARES
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Share Prices and Distributions
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Net Asset Value
per Share 12/31/97 12/31/96
$10.48 $10.29
Distributions per Share Income Short-Term Long-Term
(12/31/96 - 12/31/97) Dividends Capital Gains Capital Gains
$0.336 $0.0019 $0.0809
Investment Returns
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The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Intermediate Tax-Free Fund, compared to the growth of the Lehman
Brothers Municipal Bond Index.
[The following table was a mountain chart in the printed materials.]
Growth of $10,000
Pioneer Intermediate Lehman Brothers
Tax-Free Fund* Municipal Bond
Index
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1/31/96 10,000 10,000
9,964 9,932
3/31/96 9,813 9,806
9,786 9,778
9,759 9,774
6/30/96 9,809 9,881
9,889 9,970
9,872 9,968
9/30/96 9,930 10,107
10,026 10,221
10,172 10,408
12/31/96 10,122 10,365
10,130 10,384
10,187 10,480
3/31/97 10,037 10,340
10,074 10,426
10,202 10,583
6/30/97 10,289 10,696
10,547 10,992
10,405 10,889
9/30/97 10,524 11,018
10,552 11,089
10,580 11,155
12/31/97 10,734 11,317
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[boxed text]
Average Annual Total Returns
(As of December 31, 1997)
If If
Period Held Redeemed*
Life-of-Fund 3.75% 3.75%
(1/31/96)
1 Year 6.04 6.04
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* Assumes reinvestment of distributions. The 1% contingent deferred sales
charge (CDSC) applies to redemptions made within one year of purchase.
The Lehman Brothers Municipal Bond Index is an unmanaged measure of
approximately 15,000 municipal bonds. Bonds in the Index have a minimum credit
rating of BBB, were part of at least a $50 million issuance made within the past
five years and have a maturity of at least two years. Index returns are
calculated monthly, assume reinvestment of dividends and, unlike Fund returns,
do not reflect any fees, expenses or sales charges. You cannot invest directly
in the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
5
<PAGE>
Pioneer Intermediate Tax-Free Fund
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PORTFOLIO MANAGEMENT DISCUSSION 12/31/97
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Pioneer Intermediate Tax-Free Fund's fiscal year came to a close on December 31,
1997. We saw a variety of conditions in the bond market in 1997. Interest rates
rose early on then moved to historic lows when trouble overseas sparked a
tremendous year-end rally in taxable bonds. Happily, this positive momentum
spilled over into municipal bond markets. When all was said and done, the Fund
posted a solid return, both from price appreciation and paying steady income.
For this report, we offer a discussion with Kathleen D. McClaskey, portfolio
manager of Pioneer Intermediate Tax-Free Fund. She leads the investment team
responsible for handling day-to-day management of your portfolio, and has been
managing the Fund for 11 years.
Q: How did the Fund perform over the past 12 months?
A: Municipal bond prices were strong for much of the year. As measured by the
Lehman Brothers Municipal Bond Index, munis returned 9.19% for the year,
above the 7.16% average return generated by intermediate municipal debt
funds followed by Lipper Analytical Services. (Lipper is an independent
company that tracks fund performance.)
Your Fund's total return of 6.87% for Class A Shares at net asset value
was close to that of other funds. Of course, by design your Fund is more
conservative than longer-term bond funds, and you should not expect it to
match their performance when long-term interest rates fall. Importantly,
at year-end your Fund offered a tax-free 30-day yield of 3.41%. This was
quite an attractive rate - equal to a taxable yield of 5.65% for investors
in the maximum 39.6% tax bracket. We are pleased to report these
competitive returns, especially since they were achieved with a moderate
amount of risk and without sacrificing quality.
Q: What fundamental factors shaped the U.S. bond market this year?
A: Early in the year, all eyes were fixed on the economy. We experienced
substantial economic growth powered by low unemployment - a traditional
harbinger of inflation. The Federal Reserve, after months of "hands-off"
policing of the economy, increased the federal funds rate by 0.25
percentage points to 5.50% on March 25. Bond prices fell both before and
after the much anticipated Fed move.
6
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Pioneer Intermediate Tax-Free Fund
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Although temporarily affected by the Fed's hike, municipal bonds benefited
from several positive trends throughout 1997. Moderate demand for munis
was matched with moderate supply, and with few new issues coming into the
market, prices held fairly steady. Fears of a "flat tax" evaporated,
restoring confidence in municipal bonds. Most importantly, both taxable
and tax-free bond prices prospered as the economy resumed its "Goldilocks"
condition - economic growth at a pace that was "not too hot, not too
cold." Inflationary pressures cooled, and interest rates descended. These
prime con ditions gave bond prices a boost and made a vital contribution
to year-end performance.
Q: How did global troubles affect U.S. bonds?
A: In the fourth quarter, financial markets fell apart in Pacific Rim
countries such as South Korea and Indonesia. The effects reached the
United States, where stocks experienced - in the span of two October days
- both their largest-ever point loss and gain. However, the effects were
positive for fixed-income investments, including municipal bonds.
Increased volatility in stocks caused many investors to allocate more
assets to bonds. A "flight to quality" resulted as investors demanded
historically "safer" investments, especially high-quality fixed-income
securities. This mindset spilled over into the U.S. municipal bond market,
and helped drive up prices of securities like those in your Fund.
Q: With all these changes in 1997, how did you position the Fund?
A: We kept the portfolio well diversified; it now has 63 holdings spread over
33 states. We also focused on high-quality issues. At year-end, AAA-rated
securities accounted for 36% of the portfolio, and AA securities were 46%.
(Ratings are assigned by Standard & Poor's or Moody's Investor Services;
AAA is the highest quality rating these agencies apply to debt issuers.)
The average quality of Fund holdings remained a steady AA, as we expect it
will for the foreseeable future.
With interest rates at historic lows, a wave of refinancing is taking
place and bonds with plump coupon rates are being "called" by their
issuers. (When interest rates fall, issuers "call" existing debt, buying
7
<PAGE>
Pioneer Intermediate Tax-Free Fund
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PORTFOLIO MANAGEMENT DISCUSSION 12/31/97 (continued)
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it back from investors and replacing it with a new issue tied to lower
interest rates.) In response, we searched diligently for other investment
options. One effective strategy was to continue buying non-callable bonds
throughout the year. These pay interest for the life of the bond, and if
interest rates continue to decline, your Fund will benefit from a set
income stream. This approach also slightly increased the Fund's effective
average maturity. At year-end, average maturity was 8.89 years, up from
8.06 years at the end of 1996. This is still solidly medium range and, we
think, strikes a good balance between risk and reward.
Our dedication to quality showed in our focus on insured bonds, now 19.7%
of the portfolio. These securities give the Fund an extra modicum of price
stability because third-party insurers guarantee that interest and
principal payments will be made on time and in full, even if the issuer of
the debt is unable to pay. Of course this guarantee applies to individual
securities, not to the price or yield of Fund shares.
Q: What's ahead for the Fund?
A: We're still optimistic about municipal bonds. For one thing, demand is
helping push prices higher. As more and more baby boomers approach
retirement, we're likely to see them shift a larger percentage of assets
into the historically lower-risk categories of fixed-income and tax-free
investments. And even after the Taxpayer Relief Act of 1997, we think
investors will want to protect their income and investments from taxes.
Clearly, the effects of the Asian crisis are far reaching. They have
certainly put a hold on any further interest rate intervention by the Fed,
which we expect to continue its "wait and see attitude." The U.S. eco nomy
continues to move forward at a steady pace, even with Asia's problems in
the background. Inflation still appears to be contained. All of these are
prime ingredients for continued low interest rates. In fact, we could see
bond prices move even higher if rates continue to drop. But no matter
which direction interest rates take, we will continue to focus on a
portfolio of quality bonds with an overall intermediate maturity to help
carry your Fund through 1998.
8
<PAGE>
Pioneer Intermediate Tax-Free Fund
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SCHEDULE OF INVESTMENTS 12/31/97
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<TABLE>
<CAPTION>
S&P/
Moody's
Principal Ratings
Amount (Unaudited) Value
<C> <C> <S> <C>
TAX-EXEMPT OBLIGATIONS - 98.0%
Arizona - 4.9%
$1,000,000 AA/Aa Arizona Transportation Board Highway Revenue,
6.0%, 2008 $1,131,590
1,000,000 AA-/Aa Phoenix Civic Improvement Corporation
Water Revenue, 6.5%, 2006 1,152,950
1,000,000 AA/Aa Salt River Project Agricultural Improvement and
Power District, 5.75%, 2007 1,101,000
----------
$3,385,540
----------
California - 1.6%
1,000,000 A+/A1 California State General Obligation, 6.0%, 2009 $1,132,980
----------
Connecticut - 4.0%
1,000,000 AA-/Aa3 Connecticut State General Obligation,
6.0%, 2004 $1,101,810
1,500,000 AAA/Aaa Connecticut State Special Tax
Obligation, 6.0%, 2006 1,680,150
----------
$2,781,960
----------
District of Columbia - 0.8%
500,000 A+/A1 Georgetown University General Obligation
Revenue, 8.125%, 2008 $ 515,115
----------
Delaware - 1.5%
1,000,000 AA/A1 Delaware Transportation Authority, Transportation
System Revenue, 5.2%, 2001 $1,037,510
----------
Florida - 4.8%
1,000,000 AA/Aa Gainesville Utilities Revenue, 5.75%, 2006 $1,103,590
1,000,000 AA/Aa1 Orlando Utilities, Community Water & Electric
Revenue, 5.6%, 2003 1,071,320
1,000,000 AAA/Aaa Palm Beach County Criminal Justice Revenue,
5.75%, 2013 1,104,920
----------
$3,279,830
----------
</TABLE>
The accompanying footnotes are an integral
part of these financial statements. 9
<PAGE>
Pioneer Intermediate Tax-Free Fund
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SCHEDULE OF INVESTMENTS 12/31/97 (continued)
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<TABLE>
<CAPTION>
S&P/
Moody's
Principal Ratings
Amount (Unaudited) Value
<C> <C> <S> <C>
Georgia - 6.2%
$ 400,000 A/A3 Georgia Municipal Electric Authority Power
Revenue, 7.65%, 1998 $ 408,000
1,000,000 A/A3 Georgia Municipal Electric Authority Power
Revenue, 6.2%, 2010 1,114,010
1,500,000 AA+/Aaa Georgia State General Obligation, 5.5%, 2006 1,628,445
1,000,000 AA/Aa1 Private Colleges &Universities Revenue,
5.5%, 2005 1,079,170
----------
$4,229,625
----------
Illinois - 6.3%
1,000,000 AA/Aa1 Illinois Education Facilities Authority
Northwestern University Revenue, 5.5%, 2013 $1,062,320
1,000,000 AAA/Aa3 Illinois State Sales Tax Revenue, 5.25%, 2000 1,056,220
1,000,000 A+/A1 Illinois State Toll Highway Authority Revenue,
6.3%, 2012 1,143,920
1,000,000 A+/A2 Metropolitan Pier and Exposition Authority,
Dedicated State Tax Revenue, 5.75%, 2002 1,059,870
----------
$4,322,330
----------
Indiana - 6.4%
1,500,000 AAA/Aaa Indiana Municipal Power Agency, Power Supply
System Revenue, 6.0%, 2012 $1,683,600
500,000 A+/A1 Indiana Transportation Finance Authority Highway
Revenue, 8.0%, Prerefunded, 2008* 518,570
1,000,000 AAA/Aaa Indiana University Revenue, 5.8%, 2010 1,113,470
1,000,000 AA-/Aa2 Purdue University Revenue, 5.75%, 2004 1,082,650
----------
$4,398,290
----------
Kansas - 2.5%
1,500,000 AA/Aa Kansas State Department of Transportation
Highway Revenue, 6.125%, 2009 $1,716,315
----------
Kentucky - 2.7%
1,000,000 AAA/Aaa Kentucky State Turnpike Authority, Economic
Development Revenue, 5.25%, 2005 $1,061,670
750,000 AAA/A1 Lexington-Fayette Urban County Government
Revenue, 7.0%, 2006 812,813
----------
$1,874,483
----------
</TABLE>
The accompanying footnotes are an integral
10 part of these financial statements.
<PAGE>
Pioneer Intermediate Tax-Free Fund
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/
Moody's
Principal Ratings
Amount (Unaudited) Value
<C> <C> <S> <C>
Maine - 4.0%
$1,500,000 AA+/Aa3 Maine State General Obligation, 5.375%, 2006 $1,610,430
1,000,000 AAA/Aaa Maine State Turnpike Authority Revenue,
6.0%, 2005 1,107,330
----------
$2,717,760
----------
Maryland - 4.6%
1,500,000 NR/Aa2 Maryland Community Development Administration,
Single Family Mortgage Revenue, 5.95%, 2006 $1,563,720
1,500,000 AA+/Aa3 University of Maryland System Auxiliary Facility
and Tuition Revenue, 5.4%, 2006 1,608,960
----------
$3,172,680
----------
Massachusetts - 4.7%
1,000,000 AAA/Aaa Commonwealth of Massachusetts Consolidated
Loan General Obligation, 5.5%, 2003 $1,063,210
1,000,000 A+/A1 Massachusetts Bay Transportation Revenue,
5.5%, 2009 1,079,660
1,000,000 AAA/Aaa Massachusetts Water Pollution Abatement Trust
Sewer Revenue, 6.0%, 2007 1,119,490
----------
$3,262,360
----------
Michigan - 3.2%
1,000,000 AAA/Aaa Detroit Michigan Water Supply Revenue,
5.75%, 2011 $1,097,770
1,000,000 AA-/A1 Michigan State Trunk Line Sales Tax Revenue,
5.625%, 2003 1,068,890
----------
$2,166,660
----------
Minnesota - 4.3%
750,000 AAA/Aaa Minnesota Public Facilities Authority Water
Pollution Control Revenue, 7.0%, 2009 $ 791,677
1,000,000 AAA/Aaa Minnesota Public Facilities Authority Water
Pollution Control Revenue, 5.0%, 2006 1,046,110
1,000,000 AA/Aa3 University of Minnesota Revenue, 5.75%, 2018 1,091,440
----------
$2,929,227
----------
</TABLE>
The accompanying footnotes are an integral
part of these financial statements. 11
<PAGE>
Pioneer Intermediate Tax-Free Fund
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SCHEDULE OF INVESTMENTS 12/31/97 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/
Moody's
Principal Ratings
Amount (Unaudited) Value
<C> <C> <S> <C>
Nebraska - 1.6%
$1,000,000 AAA/NR Omaha Public Power District Electric System
Revenue, 6.5%, Prerefunded, 2002* $1,100,590
----------
Nevada - 0.1%
65,000 AA/Aa2 Nevada Housing Division Single Family Program
Revenue, 8.0%, 2009 $ 66,528
----------
New Hampshire - 0.8%
500,000 AAA/Aaa New Hampshire Turnpike System Revenue,
7.375%, Prerefunded, 2000* $ 545,070
----------
New Jersey - 2.8%
750,000 AA-/Aaa New Jersey Highway Authority Garden State
Parkway Senior Revenue, 7.25%,
Prerefunded, 1999* $ 790,358
1,000,000 AA+/Aa1 New Jersey Sales Tax Revenue, 5.8%, 2007 1,104,200
----------
$1,894,558
----------
New Mexico - 1.5%
1,000,000 AA/Aa Bernalillo County, New Mexico, Gross Receipts
Tax Revenue, 5.0%, 2013 $1,019,210
----------
New York - 1.5%
1,000,000 A/A3 New York State Local Government Assistance
Corp. Revenue, 5.5%, 2017 $1,066,390
----------
Ohio - 1.6%
1,000,000 AAA/Aaa Ohio State Water Development Authority,
6.0%, 2006 $1,120,200
----------
Oklahoma - 2.4%
1,500,000 A-/A Grand River Dam Authority Electric Revenue,
5.75%, 2006 $1,638,015
----------
</TABLE>
The accompanying footnotes are an integral
12 part of these financial statements.
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/
Moody's
Principal Ratings
Amount (Unaudited) Value
<C> <C> <S> <C>
Pennsylvania - 4.1%
$1,500,000 AA-/A1 Pennsylvania State General Obligation,
6.25%, 2010 $1,730,205
1,000,000 A/A1 Pennsylvania State Turnpike Commission Highway
Revenue, 5.45%, 2002 1,054,520
----------
$2,784,725
----------
Puerto Rico - 1.7%
1,000,000 AAA/Aaa University of Puerto Rico
Revenue, MBIA Insured, 6.25%, 2008 $1,150,680
----------
South Carolina - 4.8%
1,000,000 AA/Aa Columbia Waterworks & Sewer System
Revenue, 5.5%, 2009 $1,083,750
1,000,000 AA/Aa1 Greenville Waterworks Revenue, 6.0%, 2008 1,126,520
1,000,000 AAA/Aaa South Carolina General Obligation, 5.75%, 2003 1,079,490
----------
$3,289,760
----------
Texas - 7.1%
1,000,000 AA/Aa2 Port Houston Authority Revenue, 5.0%, 2005 $1,041,980
750,000 AAA/Aaa San Antonio Prior Lien Water
Revenue, 7.125%, Prerefunded, 1999* 792,307
1,000,000 AAA/Aaa Texas Municipal Power Revenue, 5.5%, 2010 1,086,610
1,500,000 AA/Aa2 Texas State General Obligation, 5.8%, 2004 1,637,385
250,000 AAA/Aaa University of Texas Permanent University Fund,
Escrowed to Maturity in Government
Securities, 8.0%, 2004 302,050
----------
$4,860,332
----------
Utah - 0.0%
25,000 AA/Aa Utah Housing Finance Agency,
Single Family Mortgage Purchase Revenue,
7.3%, 2003 $ 25,395
----------
Vermont - 0.8%
500,000 AAA/Aaa Vermont Municipal Bond Bank, 7.9%,
Prerefunded, 1998* $ 528,465
----------
</TABLE>
The accompanying footnotes are an integral
part of these financial statements. 13
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/97 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/
Moody's
Principal Ratings
Amount (Unaudited) Value
<C> <C> <S> <C>
Virginia - 1.6%
$1,000,000 AA/Aa Virginia State Public School Authority, Special
Obligation, 5.4%, 2004 $ 1,064,650
-----------
Washington - 1.6%
1,000,000 AA/Aa1 Washington State General Obligation,
6.0%, 2002 $ 1,074,130
-----------
Wisconsin - 1.5%
1,000,000 AA/Aa2 Wisconsin State General Obligation,
5.3%, 2012 $ 1,054,730
-----------
TOTAL TAX-EXEMPT OBLIGATIONS
(Cost $63,794,446)(a) $67,206,093
-----------
TEMPORARY CASH INVESTMENTS - 2.0%
100,000 California Pollution Control Revenue,
4.9%, 2000** $ 100,000
100,000 California Pollution Control Revenue,
4.9%, 2011** 100,000
500,000 Jackson County, Mississippi Pollution Control
Revenue, 3.55%, 2023** 500,000
200,000 Uinta County, Wyoming Pollution Control Revenue,
3.8%, 2010** 200,000
200,000 Uinta County, Wyoming Pollution Control Revenue,
3.55%, 2020** 200,000
300,000 Uinta County, Wyoming Pollution Control Revenue,
5.0%, 2022** 300,000
-----------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $1,400,000) $ 1,400,000
-----------
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $65,194,446)(b) $68,606,093
===========
</TABLE>
The accompanying footnotes are an integral
14 part of these financial statements.
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NR Not rated.
* Prerefunded bond has been collateralized by U.S. Treasury securities which
are held in escrow and used to pay principal and interest in the
tax-exempt issue and to retire the bond in full at the earliest refunding
date.
** Security with daily "put" feature with resetting interest rates. Coupon
rate disclosed is as of December 31, 1997.
(a) The concentration of securities, by type of obligation/market sector, is
as follows:
General Obligation 21.1%
Escrowed in U.S. Government Securities 9.0
Revenue Bonds:
Education 11.9
Housing 5.7
Insured 19.8
Power 9.0
Sales Tax 6.3
Transportation 12.2
Water 5.0
(b) At December 31, 1997, the net unrealized gain on investments based on cost
for federal income tax purposes of $65,194,446 was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $ 3,411,647
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value --
------------
Net unrealized gain $ 3,411,647
============
Purchases and sales of securities (excluding temporary cash investments) for the
year ended December 31, 1997 aggregated $23,834,960 and $33,755,948,
respectively.
The accompanying footnotes are an integral
part of these financial statements. 15
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
BALANCE SHEET 12/31/97
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including temporary cash
investments of $1,400,000) (cost $65,194,446) $68,606,093
Cash 15,121
Receivables -
Fund shares sold 60,542
Interest 1,094,565
Other 7,688
-----------
Total assets $69,784,009
-----------
LIABILITIES:
Payables -
Investment securities purchased $ 1,046,994
Dividends 77,788
Due to affiliates 76,326
Accrued expenses 47,905
-----------
Total liabilities $ 1,249,013
-----------
NET ASSETS:
Paid-in capital $65,038,537
Accumulated undistributed net investment income 2,083
Accumulated undistributed net realized gain on investments 82,729
Net unrealized gain on investments 3,411,647
-----------
Total net assets $68,534,996
===========
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $65,225,339/6,239,872 shares) $ 10.45
===========
Class B (based on $3,010,001/287,535 shares) $ 10.47
===========
Class C (based on $299,656/28,580 shares) $ 10.48
===========
MAXIMUM OFFERING PRICE:
Class A $ 10.83
===========
16 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended 12/31/97
INVESTMENT INCOME:
Interest $3,690,600
----------
Total investment income $3,690,600
----------
EXPENSES:
Management fees $ 351,207
Transfer agent fees
Class A 71,832
Class B 3,720
Class C 367
Distribution fees
Class A 159,818
Class B 28,341
Class C 2,297
Accounting 72,885
Custodian fees 19,244
Registration fees 37,173
Professional fees 40,350
Printing 10,676
Fees and expenses of nonaffiliated trustees 13,311
Miscellaneous 34,459
----------
Total expenses $ 845,680
Less management fees waived by
Pioneering Management Corporation (104,683)
Less fees paid indirectly (14,325)
----------
Net expenses $ 726,672
----------
Net investment income $2,963,928
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $1,112,008
Change in net unrealized gain on investments 579,896
----------
Net gain on investments $1,691,904
----------
Net increase in net assets resulting from operations $4,655,832
==========
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Years Ended 12/31/97 and 12/31/96
<TABLE>
<CAPTION>
Year Ended Year Ended
FROM OPERATIONS: 12/31/97 12/31/96
<S> <C> <C>
Net investment income $ 2,963,928 $ 3,540,782
Net realized gain on investments 1,112,008 196,137
Change in net unrealized gain on investments 579,896 (1,494,178)
------------ ------------
Net increase in net assets resulting from operations $ 4,655,832 $ 2,242,741
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.44 and $0.47 per share, respectively) $ (2,841,400) $ (3,461,175)
Class B ($0.37 and $0.38 per share, respectively) (101,513) (105,009)
Class C ($0.34 and $0.33 per share, respectively) (7,472) (6,042)
In excess of net investment income:
Class A ($0.00 and $0.00 per share, respectively) - (5,392)
Class C ($0.00 and $0.01 per share, respectively) - (238)
Net realized gain:
Class A ($0.08 and $0.00 per share, respectively) (511,871) -
Class B ($0.08 and $0.00 per share, respectively) (22,707) -
Class C ($0.08 and $0.00 per share, respectively) (2,343) -
------------ ------------
Total distributions to shareholders $ (3,487,306) $ (3,577,856)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 3,967,917 $ 8,160,271
Reinvestment of distributions 2,280,319 2,196,836
Cost of shares repurchased (15,334,302) (14,554,121)
------------ ------------
Net decrease in net assets resulting from
fund share transactions $ (9,086,066) $ (4,197,014)
------------ ------------
Net decrease in net assets $ (7,917,540) $ (5,532,129)
------------ ------------
NET ASSETS:
Beginning of year 76,452,536 81,984,665
------------ ------------
End of year (including accumulated undistributed
net investment income of $2,083 and $0, respectively) $ 68,534,996 $ 76,452,536
============ ============
<CAPTION>
CLASS A '97 Shares '97 Amount '96 Shares '96 Amount
<S> <C> <C> <C> <C>
Shares sold 290,169 $ 3,000,480 678,298 $ 6,961,860
Reinvestment of distributions 212,121 2,189,076 206,717 2,116,538
Less shares repurchased (1,404,597) (14,465,457) (1,352,057) (13,837,542)
---------- ------------ ---------- ------------
Net decrease (902,307) $ (9,275,901) (467,042) $ (4,759,144)
========== ============ ========== ============
CLASS B
Shares sold 85,716 $ 882,162 95,563 $ 984,982
Reinvestment of distributions 7,998 82,765 7,217 74,044
Less shares repurchased (84,079) (868,240) (68,872) (701,579)
---------- ------------ ---------- ------------
Net increase 9,635 $ 96,687 33,908 $ 357,447
========== ============ ========== ============
CLASS C*
Shares sold 8,221 $ 85,275 20,459 $ 213,429
Reinvestment of distributions 819 8,478 611 6,254
Less shares repurchased (58) (605) (1,472) (15,000)
---------- ------------ ---------- ------------
Net increase 8,982 $ 93,148 19,598 $ 204,683
========== ============ ========== ============
</TABLE>
* Class C shares were first publicly offered on January 31, 1996.
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 12/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Year Year Year Year
Ended Ended Ended Ended Ended
CLASS A 12/31/97 12/31/96 12/31/95 12/31/94(a) 12/31/93
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 10.28 $ 10.44 $ 9.62 $ 10.76 $ 10.32
------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.44 $ 0.46 $ 0.49 $ 0.49 $ 0.56
Net realized and unrealized gain (loss) on investments 0.25 (0.15) 0.82 (1.13) 0.56
------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.69 $ 0.31 $ 1.31 $ (0.64) $ 1.12
Distributions to shareholders:
Net investment income (0.44) (0.47) (0.49) (0.49) (0.56)
Net realized gain (0.08) - - (0.01) (0.12)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.17 $ (0.16) $ 0.82 $ (1.14) $ 0.44
------- ------- ------- ------- -------
Net asset value, end of year $ 10.45 $ 10.28 $ 10.44 $ 9.62 $ 10.76
======= ======= ======= ======= =======
Total return* 6.87% 3.03% 13.80% (6.02)% 11.08%
Ratio of net expenses to average net assets 1.02%+ 1.03%+ 1.02%+ 1.00% 0.85%
Ratio of net investment income to average net assets 4.23%+ 4.47%+ 4.77%+ 4.89% 5.23%
Portfolio turnover rate 35% 34% 29% 39% 14%
Net assets, end of year (in thousands) $65,225 $73,387 $79,432 $76,674 $82,907
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% 1.12%
Net investment income 4.08% 4.36% 4.67% 4.67% 4.97%
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 4.25% 4.50% 4.79% -- --
</TABLE>
(a) The per share data presented above is based upon the average shares
outstanding for the period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of 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.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
Pioneer Intermediate Tax-Free Fund
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 12/31/97
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Year Year 4/29/94
Ended Ended Ended to
CLASS B 12/31/97 12/31/96 12/31/95 12/31/94(a)
<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 $ 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)%
Ratio of net expenses to average net assets 1.81%+ 1.81%+ 1.86%+ 1.84%**
Ratio of net investment income 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 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 3.46% 3.73% 3.94% --
</TABLE>
(a) The per share data presented above is based upon the average shares
outstanding for the period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of 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.
+ Ratio assuming no reduction for fees paid indirectly.
20 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Intermediate Tax-Free Fund
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 12/31/97
- -------------------------------------------------------------------------------
Year Ended 1/31/96 to
CLASS C 12/31/97 12/31/96
Net asset value, beginning of period $ 10.29 $ 10.51
------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.35 $ 0.33
Net realized and unrealized gain (loss)
on investments 0.26 (0.21)
------- -------
Net increase 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%
Ratio of net expenses to average net assets 1.84%+ 1.97%**+
Ratio of net investment income 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 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 3.43% 3.59%**
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of 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.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 21
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/97
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Intermediate Tax-Free Fund (the Fund) is a Massachusetts business trust
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The investment objective of the Fund is to seek a
high level of current income exempt from federal income taxes.
The Fund offers three classes of shares - Class A, Class B, and Class C shares.
Shares of Class A, Class B, and Class C each represent an interest in the same
portfolio of investments of the Fund and have equal rights to voting,
redemptions, dividends and liquidation, except that each class of shares can
bear different transfer agent and distribution fees and have exclusive voting
rights with respect to the distribution plans that have been adopted by Class A,
Class B, and Class C shareholders, respectively.
The Fund's financial statements have been prepared in conformity with generally
accepted accounting principles that require the management of the Fund to, among
other things, make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
consistently followed by the Fund, which are in conformity with those generally
accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded on trade date. Securities are valued
based on valuations furnished by independent pricing services that utilize
matrix systems. These matrix systems reflect such factors as security
prices, yields, maturities, and ratings and are supplemented by dealer and
exchange quotations and fair market value information from other sources,
as required. Market discount and premium are accreted or amortized daily
on a straight-line basis. Original issue discount is accreted daily into
interest income on a yield-to-maturity basis with a corresponding increase
in the cost basis of the security. Interest income is recorded on the
accrual basis. Temporary cash investments are valued at amortized cost.
22
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
It is the Fund's practice to first select for sale those securities that
have the highest cost and also qualify for long-term capital gain or loss
treatment for tax purposes.
B. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareholders. Therefore, no federal tax provision is required.
The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with federal income tax
rules. Therefore, the source of the Fund's distributions may be shown in
the accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
At December 31, 1997, the Fund reclassified $11,460 from accumulated
undistributed net investment income to accumulated undistributed net
realized gain on investments. The reclassification has no impact on the
net asset value of the Fund and is designed to present the Fund's capital
accounts on a tax basis.
In order to comply with federal income tax regulations, the Fund has
des-ignated $608,190 as a capital gain dividend for the purposes of the
dividend paid deduction. Of this amount, $90,367 and $517,823 are subject
to the maximum 28% and 20% federal income tax rates, respectively.
In order to comply with federal income tax regulations, the Fund has
designated $2,952,468 as tax-exempt interest dividends. For purposes of
the dividend exclusion, none of the distributions per share qualify for
the exclusion.
23
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/97 (continued)
- --------------------------------------------------------------------------------
C. Fund Shares
The Fund records sales and repurchases of its shares on trade date. Net
losses, if any, as a result of cancellations are absorbed by Pioneer Funds
Distributor, Inc. (PFD), the principal underwriter for the Fund and an
indirect subsidiary of The Pioneer Group, Inc. (PGI). PFD earned $5,138 in
underwriting commissions on the sale of the fund shares during the year
ended December 31, 1997.
D. Class Allocations
Distribution fees are calculated based on the average daily net asset
value attributable to Class A, Class B, and Class C shares of the Fund,
respectively. Shareholders of each class share all expenses and fees paid
to the transfer agent, Pioneering Services Corporation (PSC), for their
services, which are allocated based on the number of accounts in each
class and the ratable allocation of related out-of-pocket expense (see
Note 3). Income, common expenses and realized and unrealized gains and
losses are calculated at the Fund level and allocated daily to each class
of shares based on the respective percentage of adjusted net assets at the
beginning of the day. The Fund declares as daily dividends substantially
all of its net investment income. All dividends are paid on a monthly
basis. Short-term capital gain distributions, if any, may be declared with
the daily dividends. Distributions to shareholders are recorded as of the
ex-dividend date. Distributions paid by the Fund with respect to each
class of shares are calculated in the same manner, at the same time, and
in the same amount, except that Class A, Class B, and Class C shares can
bear different transfer agent and distribution fees.
2. Management Agreement
Pioneering Management Corporation (PMC), the Fund's investment adviser, manages
the Fund's portfolio and is a wholly owned subsidiary of PGI. Management fees
are calculated daily at the annual rate of 0.50% of the Fund's average daily net
assets.
PMC has agreed not to impose a portion of its management fee and to assume other
operating expenses of the Fund to the extent necessary to limit Class A expenses
to 1.00% of the average daily net assets attributable to Class A shares; the
portion of the Fund-wide expenses attributable to Class B and Class C shares
will be reduced only to the extent that such expenses are reduced for Class A
shares. PMC's agreement is voluntary and temporary and may be revised or
terminated at any time.
24
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In addition, under the management agreement, certain other services and costs,
including accounting, regulatory reporting and insurance premiums, are paid by
the Fund. At December 31, 1997, $25,667 was payable to PMC related to management
fees and certain other services.
3. Transfer Agent
PSC, a wholly owned subsidiary of PGI, provides substantially all transfer agent
and shareholder services to the Fund at negotiated rates. Included in due to
affiliates is $7,965 in transfer agent fees payable to PSC at December 31, 1997.
4. Distribution Plans
The Fund adopted a Plan of Distribution for each class of shares (Class A Plan,
Class B Plan, and Class C Plan) in accordance with Rule 12b-1 of the Investment
Company Act of 1940. Pursuant to the Class A Plan, the Fund pays PFD a service
fee of up to 0.25% of the Fund's average daily net assets in reimbursement of
its actual expenditures to finance activities primarily intended to result in
the sale of Class A shares. Pursuant to the Class B Plan and the Class C Plan,
the Fund pays PFD 1.00% of the average daily net assets attributable to each
class of shares. The fee consists of a 0.25% service fee and a 0.75%
distribution fee paid as compensation for personal services and/or account
maintenance services or distribution services with regard to Class B and Class C
shares. Included in due to affiliates is $42,694 in distribution fees payable to
PFD at December 31, 1997.
In addition, redemptions of each class of shares may be subject to a contingent
deferred sales charge (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 six years of purchase are subject to a
CDSC at declining rates beginning at 3%, 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%. Proceeds from the CDSC are paid to PFD.
For the year ended December 31, 1997, CDSCs in the amount of $4,065 were paid to
PFD.
5. Expense Reductions
The Fund has entered into certain expense offset arrangements resulting in a
reduction in the Fund's total expenses. For the year ended December 31, 1997,
the Fund's expenses were reduced by $14,325 under such arrangements.
25
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and the Board of Trustees of Pioneer Intermediate Tax-Free
Fund:
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer Intermediate Tax-Free Fund, as of December 31, 1997, and
the related statement of operations, the state ments of changes in net assets,
and the financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Intermediate Tax-Free Fund as of December 31, 1997, the results of its
operations, the changes in its net assets and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 2, 1998
26
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr. John F. Cogan, Jr., Chairman and President
Mary K. Bush David D. Tripple, Executive Vice President
Richard H. Egdahl, M.D. Kathleen D. McClaskey, Vice President
Margaret B.W. Graham William H. Keough, Treasurer
John W. Kendrick Joseph P. Barri, Secretary
Marguerite A. Piret
David D. Tripple
Stephen K. West
John Winthrop
Investment Adviser
Pioneering Management Corporation
Custodian
Brown Brothers Harriman & Co.
Independent Public Accountants
Arthur Andersen LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneering Services Corporation
27
<PAGE>
- --------------------------------------------------------------------------------
PROGRAMS AND SERVICES FOR PIONEER SHAREOWNERS
- --------------------------------------------------------------------------------
Your investment professional can give you additional information on Pioneer's
programs and services. If you want to order literature on any of the following
items directly, simply call Pioneer at 1-8O0-225-6292.
FactFone(SM)
Our automated account information service, available to you 24 hours a day,
seven days a week. FactFone gives you a quick and easy way to check fund share
prices, yields, dividends and distributions, as well as information about your
own account. Simply call 1-800-225-4321. For specific account information, have
your 13-digit account number and four-digit personal identification number at
hand.
9O-Day Reinstatement Privilege (for Class A Shares)
Enables you to reinvest all or a portion of the money you redeem from your
Pioneer account - without paying a sales charge - within 90 days of your
redemption. You have the choice of investing in any Pioneer fund, as long as you
meet its minimum investment requirement.
Investomatic Plan
An easy and convenient way for you to invest on a regular basis. All you need to
do is authorize a set amount of money to be moved out of your bank account into
the Pioneer fund of your choice. Investomatic also allows you to change the
dollar amount, frequency and investment date right over the phone. By putting
aside affordable amounts of money regularly, you can build a long-term
investment - without sacrificing your current standard of living.
Payroll Investment Program (PIP)
Lets you invest in a Pioneer fund directly through your paycheck. All that's
involved is for your employer to fill out an authorization form allowing Pioneer
to deduct from participating employees' paychecks. You specify the dollar amount
you want to invest into the Pioneer fund(s) of your choice.
28
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Automatic Exchange Program
A simple way to move money from one Pioneer fund to another over a period of
time. Just invest a lump sum in one fund, and select the other Pioneer funds you
wish to invest in. You choose the amounts and dates for Pioneer to sell shares
of your original fund and use the proceeds to buy shares of the funds you have
chosen. Over time, your investment will be shifted out of the original fund.
(Automatic Exchange is available for originating accounts with a balance of
$5,000 or more.)
Directed Dividends
Lets you invest cash dividends from one Pioneer fund to an account in another
Pioneer fund with no sales charge or fee. Simply fill out the applicable
information on a Pioneer Account Options Form. (This program is available for
dividend payments only; capital gains distri butions are not eligible at this
time.)
Direct Deposit
Lets you move money into your bank account using electronic funds transfer
(EFT). EFT moves your money faster than you would receive a check, eliminates
unnecessary paper and mail, and avoids lost checks. Simply fill out a Pioneer
Direct Deposit Form, giving your instructions.
Systematic Withdrawal Plan (SWP)
Lets you establish automatic withdrawals from your account at set intervals. You
decide the frequency and the day of the month you want. Pioneer will send the
proceeds by check to the address you designate, or electronically to your bank
account. You also can authorize Pioneer to make the redemptions payable to
someone else. (SWPs are available only for accounts with a value of $10,000 or
more.)
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HOW TO CONTACT PIONEER
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We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
Call us for:
Account Information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
Pioneering Services Corporation
60 State Street
Boston, Massachusetts 02109
Our toll-free fax 1-800-225-4240
Our Internet e-mail address [email protected]
(for general questions about Pioneer only)
Visit our web site: www.pioneerfunds.com
This report must be preceded or accompanied by a current Fund prospectus.
[PIONEER LOGO] Pioneer Funds Distributor, Inc.
60 State Street
Boston, Massachusetts 02109
www.pioneerfunds.com
0298-4807
(C) Pioneer Funds Distributor, Inc.
[RECYCLE LOGO] Printed on Recycled Paper
