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[LOGO]
PIONEER
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Pioneer
Intermediate Tax-Free
Fund
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ANNUAL REPORT 12/31/98
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<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
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 12/31/98
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Dear Shareowner,
- --------------------------------------------------------------------------------
I am pleased to introduce this annual report for Pioneer Intermediate Tax-Free
Fund, covering the year ended December 31, 1998. On behalf of your investment
team, I thank you for your interest and this opportunity to comment on today's
investing environment.
Not too long ago we sent you a package that included a proxy card and related
materials asking you to vote on an important proposal. If the proposal is
approved, shareowners of Pioneer Intermediate Tax-Free Fund will become
shareowners of Pioneer Tax-Free Income Fund. The Board of Trustees, whose
primary role is to protect your interests as a shareowner, believe the proposed
changes will help current shareowners by offering them a more diversified
investment in a larger fund with a similar investment objective and a lower
expense ratio.
We recently changed, and we think strengthened, the structure of the Funds'
management team. Day-to-day management of the Funds is now the responsibility of
a team of fixed-income portfolio managers and analysts supervised by Sherman B.
Russ. Mr. Russ, who has over 36 years of investment experience, has supervised
your Fund's portfolio management group for 12 years.
I encourage you to read the pages that follow, including the Portfolio
Management Discussion where Fund performance is reviewed. If you have questions,
please contact your investment professional, or Pioneer at 1-800-225-6292.
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 12/31/98
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Portfolio Quality
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[GRAPHIC OMITTED]
[The following table was depicted as a pie chart in the printed material]
Short-Term Cash Equivalents 5%
AAA 37%
AA 54%
A 4%
Portfolio Maturity
- --------------------------------------------------------------------------------
(Effective life as a percentage of total investment portfolio)
[GRAPHIC OMITTED]
[The following table was depicted as a pie chart in the printed material]
0-2 Years 7%
2-5 Years 23%
5-7 Years 17%
7-10 Years 25%
10-15 Years 21%
15+ Years 7%
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of long-term holdings)
- --------------------------------------------------------------------------------
1. ADA & Canyon Counties Idaho Joint School District #2,
5.5%, 7/30/11 3.84%
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2. Kansas State Department of Transportation Highway Revenue,
6.125%, 9/1/09 2.88
- --------------------------------------------------------------------------------
3. Grand River Dam Authority Electric Revenue, 5.75%, 6/1/06 2.74
- --------------------------------------------------------------------------------
4. Texas State General Obligation, 5.8%, 10/1/04 2.73
- --------------------------------------------------------------------------------
5. University of Maryland System Auxiliary Facility and Tuition Revenue,
5.4%, 4/1/06 2.69
- --------------------------------------------------------------------------------
6. Northshore Washington School District, General Obligation,
5.0%, 6/15/13 1.93
- --------------------------------------------------------------------------------
7. California State General Obligation, 6.0%, 9/1/09 1.91
- --------------------------------------------------------------------------------
8. Phoenix Civic Improvement Corporation Water Revenue,
6.5%, 7/1/06 1.91
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9. Arizona State Transportation Board Highway Revenue,
6.0%, 7/1/08 1.90
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10. Greenville Waterworks Revenue, 6.0%, 2/1/08 1.89
Fund holdings will vary for other periods.
2
<PAGE>
Pioneer Intermediate Tax-Free Fund
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PERFORMANCE UPDATE 12/31/98 CLASS A SHARES
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Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value
per Share 12/31/98 12/31/97
$10.35 $10.45
Distributions per Share Income Short-Term Long-Term
(12/31/97 - 12/31/98) Dividends Capital Gains Capital Gains
$0.413 - $0.226
Investment Returns
- --------------------------------------------------------------------------------
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.
-------------------------------------
Average Annual Total Returns
(As of December 31, 1998)
Net Asset Public Offering
Period Value Price*
10 Years 6.87% 6.49%
5 Years 4.39 3.65
1 Year 5.28 1.59
-------------------------------------
* Reflects deduction of the maximum
3.5% sales charge at the beginning
of the period and assumes
reinvestment of distributions at
net asset value.
[GRAPHIC OMITTED]
[The following table was depicted as a line chart in the printed material]
Label A B
--------------------------------------------------------------------
Label Inter Tax-Free Class A Lehman Brothers
--------------------------------------------------------------------
1 12/31/88 9650 10000
--------------------------------------------------------------------
2 10594 11080
--------------------------------------------------------------------
3 12/31/90 11274 11887
--------------------------------------------------------------------
4 12533 13331
--------------------------------------------------------------------
5 12/31/92 13617 14508
--------------------------------------------------------------------
6 15126 16289
--------------------------------------------------------------------
7 12/31/94 14216 15447
--------------------------------------------------------------------
8 16177 18144
--------------------------------------------------------------------
9 12/31/96 16668 18947
--------------------------------------------------------------------
10 17814 20693
--------------------------------------------------------------------
11 12/31/98 18755 21826
--------------------------------------------------------------------
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
<PAGE>
Pioneer Intermediate Tax-Free Fund
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PERFORMANCE UPDATE 12/31/98 CLASS B SHARES
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Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value
per Share 12/31/98 12/31/97
$10.39 $10.47
Distributions per Share Income Short-Term Long-Term
(12/31/97 - 12/31/98) Dividends Capital Gains Capital Gains
$0.303 - $0.226
Investment Returns
- --------------------------------------------------------------------------------
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.
-------------------------------------
Average Annual Total Returns
(As of December 31, 1998)
If If
Period Held Redeemed*
Life-of-Fund 5.01% 5.01%
(4/29/94)
1 Year 4.37 1.39
-------------------------------------
* Reflects deduction of the maximum
applicable contingent deferred
sales charge (CDSC) at the end of
the period and assumes reinvestment
of distributions. The maximum CDSC
of 3% declines over four years.
[GRAPHIC OMITTED]
[The following table was depicted as a line chart in the printed material]
Label A B
--------------------------------------------------------------------
Label Inter Tax-Free Class B Lehman Brothers
--------------------------------------------------------------------
1 4/30/94 10000 10000
--------------------------------------------------------------------
2 10038 10025
--------------------------------------------------------------------
3 10046 10094
--------------------------------------------------------------------
4 12/31/94 9851 9949
--------------------------------------------------------------------
5 10420 10653
--------------------------------------------------------------------
6 10636 10910
--------------------------------------------------------------------
7 10832 11224
--------------------------------------------------------------------
8 12/31/95 11102 11686
--------------------------------------------------------------------
9 10980 11546
--------------------------------------------------------------------
10 10976 11634
--------------------------------------------------------------------
11 11133 11901
--------------------------------------------------------------------
12 12/31/96 11351 12204
--------------------------------------------------------------------
13 11255 12176
--------------------------------------------------------------------
14 11537 12597
--------------------------------------------------------------------
15 11799 12976
--------------------------------------------------------------------
16 12/31/97 12042 13328
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17 12098 13482
--------------------------------------------------------------------
18 12197 13686
--------------------------------------------------------------------
19 12566 14107
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20 12/31/98 12568 14058
--------------------------------------------------------------------
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 12/31/98 CLASS C SHARES
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Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value
per Share 12/31/98 12/31/97
$10.34 $10.48
Distributions per Share Income Short-Term Long-Term
(12/31/97 - 12/31/98) Dividends Capital Gains Capital Gains
$0.354 - $0.226
Investment Returns
- --------------------------------------------------------------------------------
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.
-------------------------------------
Average Annual Total Returns
(As of December 31, 1998)
If If
Period Held Redeemed*
Life-of-Fund 3.94% 3.94%
(1/31/96)
1 Year 4.29 4.29
-------------------------------------
* Assumes reinvestment of distribu-
tions. The 1% contingent deferred
sales charge (CDSC) applies to
redemptions made within one year
of purchase.
[GRAPHIC OMITTED]
[The following table was depicted as a line chart in the printed material]
Label A B
--------------------------------------------------------------------
Label Inter Tax-Free Class C Lehman Brothers
--------------------------------------------------------------------
1 1/31/96 10000 10000
--------------------------------------------------------------------
2 9813 9805
--------------------------------------------------------------------
3 9809 9880
--------------------------------------------------------------------
4 9930 10107
--------------------------------------------------------------------
5 12/31/96 10122 10364
--------------------------------------------------------------------
6 10037 10340
--------------------------------------------------------------------
7 10289 10697
--------------------------------------------------------------------
8 10524 11020
--------------------------------------------------------------------
9 12/31/97 10734 11319
--------------------------------------------------------------------
10 10753 11449
--------------------------------------------------------------------
11 10857 11623
--------------------------------------------------------------------
12 11181 11980
--------------------------------------------------------------------
13 12/31/98 11194 11939
--------------------------------------------------------------------
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 12/31/98
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Pioneer Intermediate Tax-Free Fund's fiscal year closed on December 31, 1998. It
was a good year for municipal bonds. As U.S. interest rates fell to historic
lows, municipal bonds produced solid returns. A healthy economic climate boosted
tax revenues and strengthened the creditworthiness of many municipalities, which
lifted bond prices.
Sherman B. Russ leads the investment team responsible for the Fund's daily
activities. In the following discussion, Mr. Russ reviews the environment and
strategies that influenced your Fund's performance and provides his outlook for
the first half of 1999.
Q: How did the Fund perform over the past 12 months?
A: The Fund performed well. For the year ended December 31, the Fund's Class A
shares returned 5.28%. In comparison, the 148 intermediate municipal debt
funds followed by Lipper, Inc. returned an average of 5.35%. Lipper is an
independent company that ranks mutual fund performance. (Returns do not
reflect sales charges.)
The Fund also generated a good level of tax-free income. On December 31, for
example, Class A shares offered a tax-free 30-day SEC yield of 3.07%. That
translates into a taxable equivalent yield of 5.08% for an investor in the
39.6% maximum federal tax bracket.
Q: What was the environment for intermediate municipal bonds?
A: It was a positive environment. Long-term interest rates fell to historic
lows, driving municipal bond prices higher. Many municipalities took
advantage of the lower rates by refinancing higher cost debt. A combination
of moderate-to-strong economic growth and low inflation translated into
increased tax revenues and greater cash flows for many state and local
governments. Healthier balance sheets also prompted many municipalities to
embark on major projects such as improving roads, upgrading computer systems
or paying long-standing liabilities.
6
<PAGE>
Pioneer Intermediate Tax-Free Fund
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- --------------------------------------------------------------------------------
Periods of heavy bond issuance and limited investor buying curbed the rise of
municipal bond prices, however, keeping yields attractive - particularly
compared to U.S. Treasurys. In the second half of the year, international
economies and financial markets grew increasingly fragile. The situation
prompted a "flight to quality" - extraordinary demand for the safety and
liquidity of Treasurys - and short-term interest rate cuts by the Federal
Reserve. The combination of these actions pushed Treasury prices
significantly higher - and yields so low that they mirrored municipal bond
yields. Typically AAA-rated municipal bonds provide about 85% of the yield of
Treasurys with comparable maturities. During this period the yields were
almost even.
Q: With investors focused on safety and liquidity, did the Fund's emphasis on
quality help performance?
A: We believe it did, even though the municipal market never experienced as
dramatic a "flight-to-quality" as Treasurys. We also found that higher-rated
bonds provided better relative value, while lower-rated bonds offered limited
yield advantages, if any. In short, investors were not being paid to take
additional risk. On December 31, 1998 over 90% of the portfolio was invested
in bonds rated AAA or AA, which gave the portfolio an average quality AA.
(Ratings apply to underlying securities, not Fund shares.) The Fund also
stayed well-diversified, and now has 55 different issues in 32 states.
Q: What other strategies did you use to improve total return?
A: We sold bonds whose total return potential was limited because of approaching
"call dates" and then reinvested proceeds in bonds with longer maturities and
better call protection. A "call date" is a predetermined date on which the
issuer has the option of "calling" the bond from its holder - something that
often happens when interest rates decline so that issuers can refinance
older, higher cost debt at lower rates.
7
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 12/31/98 (continued)
- --------------------------------------------------------------------------------
We also kept the Fund's duration fairly stable - 6.57 years on December 31,
1998 - because in our opinion, bonds with durations in that range provided
the best balance of interest rate sensitivity and yield. Expressed in years,
duration measures a portfolio's sensitivity to interest rate changes.
Lengthening duration increases the sensitivity to changes in interest rates,
building total return potential when interest rates fall and raising the risk
of price declines when interest rates rise. In contrast, shortening duration
makes a portfolio less sensitive to interest rate changes, enhancing price
stability.
Q: What is your outlook for municipal bonds over the next six months?
A: We are optimistic. In our opinion, the municipal bond market represents value
and opportunity. Investors can secure the tax-advantages of municipal bonds
at levels that rival their taxable counterparts - and also acquire the
highest quality bonds available. We expect municipalities to continue to take
advantage of their stronger cash flows in this low interest rate environment
by issuing bonds to rebuild their infrastructures and pursue other projects
that may have been postponed. These projects should ensure an ample supply of
new bonds. In this environment, municipal bond prices should remain stable
and yields attractive.
Early reports suggest a healthy domestic economy for the early months of
1999. As the year progresses, we expect economic growth to slow to a rate of
about 2.5% versus an estimated 4% in 1998, as a slowdown in international
economies - particularly Asia and Latin America - reduces domestic economic
strength. If the U.S. economy slows and inflation remains negligible, we
believe interest rates could gradually move lower especially short-term
rates.
8
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/
Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
TAX-EXEMPT OBLIGATIONS - 94.9%
Arizona - 7.0%
$1,000,000 AA/Aa Arizona State Transportation Board
Highway Revenue, 6.0%, 7/1/08 $ 1,144,870
1,000,000 AA-/Aa3 Phoenix Civic Improvement Corporation
Water Revenue, 6.5%, 7/1/06 1,152,220
1,000,000 AA/Aa2 Salt River Project Agricultural Improvement
and Power District, 5.75%, 1/1/07 1,113,740
1,000,000 AA/Aa3 Tucson Arizona General Obligation,
5.4%, 7/1/21 1,063,610
------------
$ 4,474,440
------------
California - 1.8%
1,000,000 A+/Aa3 California State General Obligation,
6.0%, 9/1/09 $ 1,152,760
------------
Colorado - 3.3%
1,000,000 AAA/Aaa Denver, Colorado City and County
Airport Revenue, 5.7%, 11/15/25 $ 1,066,580
1,000,000 AA/Aa2 Denver, Colorado City and County
General Obligation, 5.0%, 8/1/07 1,063,640
------------
$ 2,130,220
------------
Connecticut - 3.5%
1,000,000 AA/Aa3 Connecticut State General Obligation,
6.0%, 10/1/04 $ 1,111,240
1,000,000 AAA/Aaa Connecticut State Special Tax Obligation,
5.25%, 10/1/09 1,091,190
------------
$ 2,202,430
------------
Delaware - 1.6%
1,000,000 AA/A Delaware Transportation Authority,
Transportation System Revenue,
5.2%, 7/1/01 $ 1,038,170
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 9
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/98 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/
Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
Florida - 3.4%
$1,000,000 AA/Aa3 Gainsville Utilities Revenue,
5.75%, 10/1/06 $ 1,114,510
1,000,000 AA/Aa1 Orlando Utilities, Community Water &
Electric Revenue, 5.6%, 10/1/03 1,079,750
------------
$ 2,194,260
------------
Georgia - 6.8%
1,000,000 AA/Aa3 Clayton County Water Authority Revenue,
5.1%, 5/1/14 $ 1,051,920
1,000,000 AAA/Aaa Georgia Municipal Electric Authority
Power Revenue, 5.5%, 1/1/12 1,091,430
1,000,000 AAA/Aaa Georgia State Tollway Authority,
5.0%, 7/1/10 1,064,390
1,000,000 AA/Aa1 Private Colleges & Universities Revenue,
5.5%, 11/1/05 1,089,040
------------
$ 4,296,780
------------
Hawaii - 1.7%
1,000,000 AAA/Aaa Honolulu, Hawaii City and Counties
General Obligation, 5.5%, 11/1/09 $ 1,100,440
------------
Idaho - 3.6%
2,105,000 AA/AA- ADA & Canyon Counties Idaho Joint School
District #2, 5.5%, 7/30/11 $ 2,321,268
------------
Illinois - 4.5%
1,000,000 AA+/Aa1 Illinois Education Facilities Authority,
Northwestern University Revenue,
5.5%, 12/1/13 $ 1,086,620
1,000,000 AAA/Aa2 Illinois State Sales Tax Revenue,
5.25%, 6/5/10 1,074,420
675,000 AA-/A1 Metropolitan Pier and Exposition Authority,
Dedicated State Tax Revenue,
5.75%, 6/15/02 715,932
------------
$ 2,876,972
------------
</TABLE>
10 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/
Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
Indiana - 3.5%
$1,000,000 AAA/Aaa Indiana University Revenue,
5.8%, 11/15/10 $ 1,130,410
1,000,000 AA+/AA2 Purdue University Revenue,
5.75%, 7/1/04 1,089,240
------------
$ 2,219,650
------------
Kansas - 4.5%
1,500,000 AA/Aa3 Kansas State Department of Transportation
Highway Revenue, 6.125%, 9/1/09 $ 1,740,915
1,045,000 AAA/Aaa Sedgwick County Kansas School District
#267 General Obligation, 5.25%, 11/1/12 1,120,752
------------
$ 2,861,667
============
Kentucky - 1.7%
1,000,000 AAA/Aaa Kentucky State Turnpike Authority,
Economic Development Revenue,
5.25%, 7/1/05 $ 1,073,890
------------
Maine - 1.7%
1,000,000 AAA/Aaa Maine State Turnpike Authority Revenue,
6.0%, 7/1/05 $ 1,112,880
------------
Maryland - 2.6%
1,500,000 AA+/Aa3 University of Maryland System Auxiliary
Facility and Tuition Revenue, 5.4%, 4/1/06 $ 1,624,560
------------
Massachusetts - 3.5%
1,000,000 AAA/Aaa Commonwealth of Massachusetts
Consolidated Loan General Obligation,
5.5%, 6/1/03 $ 1,068,610
1,000,000 AAA/Aaa Massachusetts Water Pollution Abatement
Trust Sewer Revenue, 6.0%, 2/1/07 1,125,760
------------
$ 2,194,370
============
Michigan - 1.8%
1,000,000 AAA/Aaa Detroit Michigan Water Supply Revenue,
5.75%, 7/1/11 $ 1,118,010
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/98 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/
Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
Minnesota - 1.8%
$1,000,000 AA/Aa2 University of Minnesota Revenue,
5.75%, 7/1/18 $ 1,112,680
------------
Missouri - 1.7%
1,000,000 AA/Aa3 Kansas City, Missouri Water Revenue,
5.0%, 12/1/08 $ 1,064,470
------------
Nebraska - 1.7%
1,000,000 AAA/NR Omaha Public Power District Electric System
Revenue, 6.5%, Prerefunded, 2/1/02* $ 1,095,260
------------
Nevada - 0.1%
55,000 AA/Aa2 Nevada Housing Division Single Family
Program Revenue, 8.0%, 4/1/09 $ 55,617
------------
New Jersey - 1.8%
1,000,000 AA+/Aa1 New Jersey Sales Tax General Obligation,
5.8%, 2/15/07 $ 1,118,430
------------
New Mexico - 1.6%
1,000,000 AA+/Aa2 New Mexico State Highway Commission
Revenue, 4.5%, 6/15/03 $ 1,027,350
------------
New York - 1.7%
1,000,000 AAA/Aaa Long Island Power Authority New York Electric
System Revenue, 5.5%, 12/1/10 $ 1,097,330
------------
Ohio - 3.5%
1,000,000 AAA/Aaa Ohio State Water Development Authority,
6.0%, 12/1/06 $ 1,126,010
1,000,000 AAA/Aaa Ohio Turnpike Commission Turnpike Revenue,
FDIC Insured, 5.5%, 2/15/16 1,085,810
------------
$ 2,211,820
------------
Oklahoma - 2.6%
1,500,000 A-/A2 Grand River Dam Authority Electric Revenue,
5.75%, 6/1/06 $ 1,652,010
------------
</TABLE>
12 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/
Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
Pennsylvania - 1.7%
$1,000,000 AA-/Aa3 Pennsylvania State Turnpike Commission
Highway Revenue, 5.45%, 12/1/02 $ 1,058,370
------------
South Carolina - 5.2%
1,000,000 AA/Aa3 Columbia Waterworks and Sewer System
Revenue, 5.5%, 2/1/09 $ 1,103,250
1,000,000 AA/Aa1 Greenville Waterworks Revenue,
6.0%, 2/1/08 1,138,610
1,000,000 AAA/Aaa South Carolina General Obligation,
5.75%, 8/1/03 1,085,130
------------
$ 3,326,990
------------
Texas - 6.4%
1,000,000 AA/Aa2 Port Houston Authority Revenue,
5.0%, 10/1/05 $ 1,055,860
1,000,000 AAA/Aaa Texas Dallas-Fort Worth Regional Airport
Revenue, 5.5%, 11/1/04 1,080,160
1,500,000 AA/Aa2 Texas State General Obligation,
5.8%, 10/1/04 1,646,655
250,000 AAA/AAA University of Texas Permanent University
Fund, Escrowed to Maturity in Government
Securities, 8.0%, 7/1/04 300,162
------------
$ 4,082,837
------------
Virginia - 1.7%
1,000,000 AA/Aa Virginia State Public School Authority,
Special Obligation, 5.4%, 6/1/04 $ 1,074,690
------------
Washington - 3.5%
1,000,000 AAA/AAA Northshore Washington School District,
General Obligation, 5.0%, 6/15/13 $ 1,167,923
1,145,000 AA+/Aa1 Washington State General Obligation,
6.0%, 5/1/02 1,070,380
------------
$ 2,238,303
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/98 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/
Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
Wisconsin - 3.4%
$1,000,000 AAA/Aaa Southeast Wisconsin Professional Baseball
Park District Sales Tax Revenue,
5.5%, 12/15/15 $ 1,086,640
1,000,000 AA/Aa2 Wisconsin State General Obligation,
5.3%, 11/1/12 1,081,870
------------
$ 2,168,510
------------
TOTAL TAX-EXEMPT OBLIGATIONS
(Cost $57,740,565)(a) $ 60,377,434
------------
TEMPORARY CASH INVESTMENTS - 5.1%
Short-Term Tax-Exempt Obligations - 4.4%
100,000 California Pollution Control Revenue,
3.1%, 10/1/09** $ 100,000
300,000 California Pollution Control Revenue,
2.7%, 10/1/11** 300,000
1,700,000 Colorado Health Facilities Authority Revenue,
3.25%, 5/15/20*** 1,700,000
700,000 Jackson County, Mississippi Pollution
Control Revenue, 3.15%, 12/1/16** 700,000
============
$ 2,800,000
------------
Total Short-Term Tax-Exempt Obligations
Shares
Tax-Exempt Money Market Mutual Fund - 0.7%
440,882 Lehman Brothers Munifund $ 440,882
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $3,240,882) $ 3,240,882
------------
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $60,981,447)(b) $ 63,618,316
============
</TABLE>
14 The accompanying notes are an integral 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, 1998.
*** Security with weekly "put" feature with resetting interest rates. Coupon
rate disclosed is as of December 30, 1998.
(a) The concentration of securities, by type of obligation/market sector, is
as follows:
General Obligation 26.6%
Escrowed in U.S. Government Securities 2.3
Revenue Bonds:
Education 11.7
Housing 0.1
Insured 25.4
Pollution Control 1.9
Power 8.2
Sales Tax 3.0
Transportation 11.7
Water & Sewer 9.1
(b) At December 31, 1998, the net unrealized gain on investments
based on cost for federal income tax purposes of $60,981,447
was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $ 2,647,283
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (10,414)
------------
Net unrealized gain $ 2,636,869
============
Purchases and sales of securities (excluding temporary cash investments) for the
year ended December 31, 1998 aggregated $21,465,915 and $28,789,579,
respectively.
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
BALANCE SHEET 12/31/98
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including temporary cash
investments of $3,240,882) (cost $60,981,447) $63,618,316
Cash 33
Receivables -
Fund shares sold 263,327
Interest 876,255
Other 3,248
-----------
Total assets $64,761,179
-----------
LIABILITIES:
Payables -
Investment securities purchased $ 2,296,429
Fund shares repurchased 136,582
Dividends 69,989
Due to affiliates 124,753
Accrued expenses 74,752
-----------
Total liabilities $ 2,702,505
-----------
NET ASSETS:
Paid-in capital $59,204,523
Accumulated undistributed net investment income 20,397
Accumulated undistributed net realized gain on investments 196,885
Net unrealized gain on investments 2,636,869
-----------
Total net assets $62,058,674
-----------
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $57,538,868/5,561,494 shares) $ 10.35
-----------
Class B (based on $3,648,827/351,026 shares) $ 10.39
-----------
Class C (based on $870,979/84,260 shares) $ 10.34
-----------
MAXIMUM OFFERING PRICE:
Class A $ 10.73
-----------
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 12/31/98
INVESTMENT INCOME:
Interest $ 3,176,297
-----------
EXPENSES:
Management fees $ 323,064
Transfer agent fees
Class A 61,559
Class B 3,843
Class C 1,085
Distribution fees
Class A 142,382
Class B 29,592
Class C 3,821
Accounting 29,000
Custodian fees 16,068
Registration fees 48,128
Professional fees 43,939
Printing 21,758
Fees and expenses of nonaffiliated trustees 21,922
Miscellaneous 29,213
-----------
Total expenses $ 775,374
Less management fees waived by
Pioneering Investment Management, Inc. (111,283)
Less fees paid indirectly (11,649)
-----------
Net expenses $ 652,442
-----------
Net investment income $ 2,523,855
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments $ 1,446,152
Change in net unrealized gain on investments (774,778)
-----------
Net gain on investments $ 671,374
-----------
Net increase in net assets resulting from operations $ 3,195,229
-----------
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 12/31/98 and 12/31/97
<TABLE>
<CAPTION>
Year Ended Year Ended
FROM OPERATIONS: 12/31/98 12/31/97
<S> <C> <C>
Net investment income $ 2,523,855 $ 2,963,928
Net realized gain on investments 1,446,152 1,112,008
Change in net unrealized gain on investments (774,778) 579,896
------------ ------------
Net increase in net assets resulting from operations $ 3,195,229 $ 4,655,832
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.41 and $0.44 per share, respectively) $ (2,408,660) $ (2,841,400)
Class B ($0.30 and $0.37 per share, respectively) (84,468) (101,513)
Class C ($0.35 and $0.34 per share, respectively) (12,413) (7,472)
Net realized gain:
Class A ($0.23 and $0.08 per share, respectively) (1,235,055) (511,871)
Class B ($0.23 and $0.08 per share, respectively) (76,378) (22,707)
Class C ($0.23 and $0.08 per share, respectively) (20,563) (2,343)
------------ ------------
Total distributions to shareholders $ (3,837,537) $ (3,487,306)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 12,952,539 $ 3,967,917
Reinvestment of distributions 2,619,607 2,280,319
Cost of shares repurchased (21,406,160) (15,334,302)
------------ ------------
Net decrease in net assets resulting from
fund share transactions $ (5,834,014) $ (9,086,066)
------------ ------------
Net decrease in net assets $ (6,476,322) $ (7,917,540)
NET ASSETS:
Beginning of year 68,534,996 76,452,536
------------ ------------
End of year (including accumulated undistributed
net investment income of $20,397 and $2,083,
respectively) $ 62,058,674 $ 68,534,996
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
CLASS A '98 Shares '98 Amount '97 Shares '97 Amount
<S> <C> <C> <C> <C>
Shares sold 476,860 $ 4,986,448 290,169 $ 3,000,480
Reinvestment of distributions 241,604 2,514,602 212,121 2,189,076
Less shares repurchased (1,396,842) (14,596,211) (1,404,597) (14,465,457)
---------- ------------ ---------- ------------
Net decrease (678,378) $ (7,095,161) (902,307) $ (9,275,901)
=========== ============= =========== ============
CLASS B
Shares sold 472,676 $ 4,971,733 85,716 $ 882,162
Reinvestment of distributions 8,925 93,264 7,998 82,765
Less shares repurchased (418,110) (4,392,254) (84,079) (868,240)
---------- ------------ ---------- ------------
Net increase 63,491 $ 672,743 9,635 $ 96,687
========== ============ ========== ============
CLASS C
Shares sold 285,437 $ 2,994,358 8,221 $ 85,275
Reinvestment of distributions 1,128 11,741 819 8,478
Less shares repurchased (230,885) (2,417,695) (58) (605)
---------- ------------ ---------- ------------
Net increase 55,680 $ 588,404 8,982 $ 93,148
---------- ------------ ---------- ------------
</TABLE>
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 12/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Year Year Year Year
Ended Ended Ended Ended Ended
CLASS A 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94(a)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 10.45 $ 10.28 $ 10.44 $ 9.62 $ 10.76
-------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.42 $ 0.44 $ 0.46 $ 0.49 $ 0.49
Net realized and unrealized gain (loss) on investments 0.12 0.25 (0.15) 0.82 (1.13)
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations 0.54 $ 0.69 $ 0.31 $ 1.31 $ (0.64)
Distributions to shareholders:
Net investment income (0.41) (0.44) (0.47) (0.49) (0.49)
Net realized gain (0.23) (0.08) - - (0.01)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (0.10) $ 0.17 $ (0.16) $ 0.82 $ (1.14)
-------- -------- -------- -------- --------
Net asset value, end of year $ 10.35 $ 10.45 $ 10.28 $ 10.44 $ 9.62
======== ======== ======== ======== ========
Total return* 5.28% 6.87% 3.03% 13.80% (6.02)%
Ratio of net expenses to average net assets 1.01%+ 1.02%+ 1.03%+ 1.02%+ 1.00%
Ratio of net investment income to average net assets 3.91%+ 4.23%+ 4.47%+ 4.77%+ 4.89%
Portfolio turnover rate 34% 35% 34% 29% 39%
Net assets, end of year (in thousands) $ 57,539 $65,225 $ 73,387 $ 79,432 $ 76,674
Ratios assuming no waiver of management fees by
PIM and no reduction for fees paid indirectly:
Net expenses 1.16% 1.17% 1.14% 1.12% 1.22%
Net investment income 3.76% 4.08% 4.36% 4.67% 4.67%
Ratios assuming waiver of management fees by
PIM and reduction for fees paid indirectly:
Net expenses 1.00% 1.00% 1.00% 1.00% -
Net investment income 3.92% 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 12/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Year Year Year 4/29/94
Ended Ended Ended Ended to
CLASS B 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94(a)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.47 $ 10.31 $ 10.46 $ 9.65 $ 10.07
-------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.33 $ 0.36 $ 0.38 $ 0.41 $ 0.27
Net realized and unrealized gain (loss) on investments 0.12 0.25 (0.15) 0.80 (0.42)
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 0.45 $ 0.61 $ 0.23 $ 1.21 $ (0.15)
Distributions to shareholders:
Net investment income (0.30) (0.37) (0.38) (0.40) (0.27)
Net realized gain (0.23) (0.08) - - -
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (0.08) $ 0.16 $ (0.15) $ 0.81 $ (0.42)
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.39 $ 10.47 $ 10.31 $ 10.46 $ 9.65
======== ======== ======== ======== ========
Total return* 4.37% 6.08% 2.25% 12.71% (1.49)%
Ratio of net expenses to average net assets 1.78%+ 1.81%+ 1.81%+ 1.86%+ 1.84%**
Ratio of net investment income to average net assets 3.11%+ 3.44%+ 3.68%+ 3.90%+ 4.17%**
Portfolio turnover rate 34% 35% 34% 29% 39%
Net assets, end of period (in thousands) $ 3,649 $ 3,010 $ 2,864 $ 2,553 $ 1,529
Ratios assuming no waiver of management fees
by PIM and no reduction for
fees paid indirectly:
Net expenses 1.93% 1.96% 1.91% 1.96% 2.14%**
Net investment income 2.96% 3.29% 3.58% 3.80% 3.87%**
Ratios assuming waiver of management fees by
PIM and reduction for fees paid indirectly:
Net expenses 1.74% 1.79% 1.76% 1.82% -
Net investment income 3.15% 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 12/31/98
- --------------------------------------------------------------------------------
Year Ended Year Ended 1/31/96 to
CLASS C 12/31/98 12/31/97 12/31/96
Net asset value, beginning of period $10.48 $10.29 $10.51
------ ------ ------
Increase (decrease) from investment
operations:
Net investment income $ 0.34 $ 0.35 $ 0.33
Net realized and unrealized gain (loss)
on investments 0.10 0.26 (0.21)
------ ------ ------
Net increase from investment operations $ 0.44 $ 0.61 $ 0.12
Distributions to shareholders:
Net investment income (0.35) (0.34) (0.33)
In excess of net investment income - - (0.01)
Net realized gain (0.23) (0.08) -
------ ------ ------
Net increase (decrease) in net asset value $(0.14) $ 0.19 $(0.22)
------ ------ ------
Net asset value, end of period $10.34 $10.48 $10.29
====== ====== ======
Total return* 4.29% 6.04% 1.22%
Ratio of net expenses to average net assets 1.93%+ 1.84%+ 1.97%**+
Ratio of net investment income to average
net assets 2.87%+ 3.41%+ 3.51%**+
Portfolio turnover rate 34% 35% 34%
Net assets, end of period (in thousands) $ 871 $ 300 $ 202
Ratios assuming no waiver of management
fees by PIM and no reduction for fees
paid indirectly:
Net expenses 2.01% 1.99% 2.08%**
Net investment income 2.79% 3.26% 3.40%**
Ratios assuming waiver of management fees
by PIM and reduction for fees paid
indirectly:
Net expenses 1.82% 1.82% 1.89%**
Net investment income 2.98% 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 12/31/98
- --------------------------------------------------------------------------------
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 at
prices supplied by independent pricing services, which consider such
factors as Treasury spreads, yields, maturities and ratings, and
valuations may be supplemented by dealers and 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.
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.
22
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
In order to comply with federal income tax regulations, the Fund has
designated $1,428,696 as a capital gain dividend for the purposes of the
dividend paid deduction.
In order to comply with federal income tax regulations, the Fund has
designated $2,523,855 as tax-exempt interest dividends. For purposes of
the corporate dividend exclusion, none of the distributions per share
qualify for the exclusion.
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 $6,414 in
underwriting commissions on the sale of the fund shares during the year
ended December 31, 1998.
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
23
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/98 (continued)
- --------------------------------------------------------------------------------
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
Pioneer Investment Management, Inc. (PIM) (formerly Pioneering Management
Corp.), 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 average daily net assets.
PIM 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. PIM's agreement is voluntary and temporary and may be revised or
terminated at any time.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At December 31, 1998, $100,686 was payable to
PIM related to management fees, administrative 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 $6,248 in transfer agent fees payable to PSC at December 31, 1998.
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 $17,819 distribution fees payable to
PFD at December 31, 1998.
24
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 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%. Proceeds from the CDSCs are paid to
PFD. For the year ended December 31, 1998, CDSCs in the amount of $9,773 were
paid to PFD.
5. Expense Offsets
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, 1998,
the Fund's expenses were reduced by $11,649 under such arrangements.
6. Line of Credit Facility
Effective April 14, 1998, the Fund, along with certain other funds in the
Pioneer Family of Funds (the Funds), collectively participate in a $50 million
committed, unsecured revolving line of credit facility. Borrowings are used
solely for temporary or emergency purposes. The Fund may borrow up to the lesser
of $50 million or the limits set by its prospectus for borrowings. Interest on
collective borrowings of up to $25 million is payable at the Federal Funds Rate
plus 3/8% on an annualized basis, or at the Federal Funds Rate plus 1/2% if the
borrowing exceeds $25 million at any one time. The Funds pay an annual
commitment fee for this facility. The commitment fee is allocated among such
Funds based on their respective borrowing limits.
The average daily amount of borrowings outstanding during the period from April
14, 1998 through December 31, 1998 was $6,922. The average daily shares
outstanding during the period were 6,132,633, resulting in an average borrowing
per share of less than one cent. The related weighted average annualized
interest rate of 5.91%, and the total interest expense on such borrowings was
$298.
7. Other
The Fund has entered into an agreement and plan of reorganization (the
agreement) with Pioneer Tax-Free Income Fund. The agreement is subject to
shareowner approval and would, if approved, result in a tax free exchange of the
Fund's assets and liabilities for shares of Pioneer Tax-Free Income Fund. A
special meeting of the Fund's shareowners will be held in March 1999 to vote on
the agreement.
25
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareowners 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, 1998, and
the related statement of operations, the statements 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, 1998, 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, 1998, 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 12, 1999
26
<PAGE>
Pioneer Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees
John F. Cogan, Jr.
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
John W. Kendrick
Marguerite A. Piret
David D. Tripple
Stephen K. West
John Winthrop
Officers
John F. Cogan, Jr., Chairman and President
David D. Tripple, Executive Vice President
John A. Boynton, Treasurer
Joseph P. Barri, Secretary
Investment Adviser
Pioneer Investment Management, Inc.
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.
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Automatic Exchange Program
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 distributions 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 for accounts with a value of $10,000 or more.)
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For information about any Pioneer mutual fund, please contact your investment
representative, or call Pioneer at 1-800-225-6292. Ask for a free fund
information kit, which includes a fund prospectus. Please read the prospectus
carefully before you invest or send money.
Growth Funds Income Funds
Global/International Taxable
Pioneer Emerging Markets Fund Pioneer America Income Trust
Pioneer Europe Fund Pioneer Bond Fund
Pioneer Gold Shares Pioneer Short-Term Income Trust*
Pioneer India Fund
Pioneer International Growth Fund Tax-Exempt
Pioneer World Equity Fund Pioneer Intermediate Tax-Free Fund
Pioneer Tax-Free Income Fund
United States
Pioneer Capital Growth Fund Money Market Fund
Pioneer Growth Shares Pioneer Cash Reserves Fund
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
*0ffers Class A and B Shares only
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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 Investment Management, Inc.
[LOGO] 60 State Street
PIONEER Boston, Massachusetts 02109
- ------- www.pioneerfunds.com
0299-6028
(C) Pioneer Funds Distributor, Inc.
[LOGO] Printed on Recycled Paper
