As filed with the Securities and Exchange Commission on April 29, 1998
File No. 33-20795
811-05516
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
----
Pre-Effective Amendment No. ___ / /
Post-Effective Amendment No. 12 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
/ X /
Amendment No. 13 / X /
----
(Check appropriate box or boxes)
PIONEER AMERICA INCOME TRUST
(formerly Pioneer U.S. Government Trust)
(Exact name of registrant as specified in charter)
60 State Street, Boston, Massachusetts 02109
(Address of principal executive office) Zip Code
Registrant's Telephone Number, including Area Code: (617) 742-7825
Joseph P. Barri, Hale and Dorr LLP, 60 State Street, Boston, MA
02109 (Name and address of agent for service)
It is proposed that this filing will become effective:
____ immediately upon filing pursuant to paragraph (b)
_X_ on April 30, 1998 pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(1)
____ on [date] pursuant to paragraph(a)(1)
____ 75 days after filing pursuant to paragraph (a)(2)
____ on [date] pursuant to paragraph (a)(2)of Rule 485
If appropriate, check the following box:
___This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest (without
par value)
<PAGE>
PIONEER AMERICA INCOME TRUST
Cross-Reference Sheet Showing Location in Prospectus and Statement of
Additional Information of Information Required by Items of the Registration Form
Location in
Prospectus or
Statement of Additional
Form N-1A Item Number and Caption Information
1. Cover Page................................ Prospectus - Cover Page
2. Synopsis ................................. Prospectus - Expense Information
3. Condensed Financial Information........... Prospectus - Financial Highlights
4. General Description of
Registrant......... Prospectus -
Investment Objective and Policies;
Management of the Trust; Trust
Share Alternatives; Share Price;
How to Sell Trust Shares; How to
Exchange Trust Shares; The Trust
5. Management of the Fund.................... Prospectus - Management of the
Trust
5A.Management's Discussion of
Fund Performance.................... Not Applicable
6. Capital Stock and Other Securities........ Prospectus - Investment Objective
and Policies; Trust Share
Alternatives; Share Price; How to
Sell Trust Shares; How to Exchange
Trust Shares; The Trust
7. Purchase of Securities Being Offered...... Prospectus - Trust Share
Alternatives; Share Price; How to
Sell Trust Shares; How to Exchange
Trust Shares; The Trust;
Shareholder Services; Distribution
Plans
<PAGE>
Location in
Prospectus or
Statement of Additional
Form N-1A Item Number and Caption Information
8. Redemption or Repurchase.............. Prospectus - Trust Share
Alternatives; Share Price; How to
Sell Trust Shares; How to Exchange
Trust Shares; The Trust;
Shareholder Services
9. Pending Legal Proceedings............. Not Applicable
10.Cover Page............................ Statement of Additional
Information - Cover Page
11.Table of Contents..................... Statement of Additional
Information - Cover Page
12.General Information and History....... Statement of Additional
Information - Cover Page;
Description of Shares
13.Investment Objectives and Policy...... Statement of Additional
Information - Investment Policies
and Restrictions
14.Management of the Fund................ Statement of Additional
Information - Management of the
Trust; Investment Adviser
15.Control Persons and Principle Holders
of Securities....................... Statement of Additional
Information - Management of the
Trust
<PAGE>
16.Investment Advisory and Other
Services............................ Statement of Additional
Information - Management of the
Trust; Investment Adviser;
Principal Underwriter;
Distribution Plans; Shareholder
Servicing/Transfer Agent;
Custodian; Independent Public
Accountant
17.Brokerage Allocation and Other
Practices........................... Statement of Additional
Information - Portfolio
Transactions
18.Capital Stock and Other Securities.... Statement of Additional
Information - Description of
Shares; Certain Liabilities
19.Purchase Redemption and Pricing of
Securities Being Offered............ Statement of Additional
Information - Letter of Intent;
Systematic Withdrawal Plan;
Determination of Net Asset Value
20.Tax Status............................ Statement of Additional
Information - Tax Status
21.Underwriters.......................... Statement of Additional
Information - Principal
Underwriter; Distribution Plans
22.Calculation of Performance Data....... Statement of Additional
Information - Investment Results
23.Financial Statements.................. Statement of Additional
Information - Financial Statements
<PAGE>
[Pioneer Logo]
Pioneer America Income Trust
Class A, Class B and Class C Shares
Prospectus
April 30, 1998
Pioneer America Income Trust (the "Trust") seeks to provide as high a
level of current income as is consistent with preservation of capital and
prudent investment risk. The Trust seeks to achieve this objective by investing
its assets exclusively in securities backed by the full faith and credit of the
United States ("U.S.") and in "when issued" commitments and repurchase
agreements with respect to such securities.
Trust returns and share prices fluctuate and the value of your account
upon redemption may be more or less than your purchase price. Shares in the
Trust are not deposits or obligations of, or guaranteed or endorsed by, any bank
or other insured depository institution, and the shares are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other government agency.
This Prospectus provides information about the Trust that you should know
before investing. Please read and keep it for your future reference. More
information about the Trust is included in the Trust's Statement of Additional
Information, also dated April 30, 1998, as supplemented or revised from time to
time, which is incorporated into this Prospectus by reference. A copy of the
Statement of Additional Information may be obtained free of charge by calling
Shareholder Services at 1-800-225-6292 or by written request to the Trust at 60
State Street, Boston, Massachusetts 02109. Other information about the Trust has
been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request and without charge by calling 1-800-225-6292 or through
the SEC's Internet web site (http://www.sec.gov).
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
------------------------------------------------------- -----
<S> <C> <C>
I. EXPENSE INFORMATION ................................... 2
II. FINANCIAL HIGHLIGHTS .................................. 3
III. INVESTMENT OBJECTIVE AND POLICIES ..................... 5
IV. MANAGEMENT OF THE TRUST ............................... 6
V. TRUST SHARE ALTERNATIVES .............................. 7
VI. SHARE PRICE ........................................... 8
VII. HOW TO BUY TRUST SHARES ............................... 8
VIII. HOW TO SELL TRUST SHARES .............................. 11
IX. HOW TO EXCHANGE TRUST SHARES .......................... 13
X. DISTRIBUTION PLANS .................................... 13
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION ................. 14
XII. SHAREHOLDER SERVICES .................................. 15
Account and Confirmation Statements .................. 15
Additional Investments ............................... 15
Automatic Investment Plans ........................... 15
Financial Reports and Tax Information ................ 15
Distribution Options ................................. 15
Directed Dividends ................................... 15
Direct Deposit ....................................... 16
Voluntary Tax Withholding ............................ 16
Telephone Transactions ............................... 16
FactFoneSM ........................................... 16
Retirement Plans ..................................... 16
Telecommunications Device for the Deaf (TDD) ......... 16
Systematic Withdrawal Plans .......................... 16
Reinstatement Privilege (Class A Shares Only) ........ 16
XIII. THE TRUST ............................................. 17
XIV. INVESTMENT RESULTS .................................... 17
</TABLE>
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses that
you, as a shareholder, will bear directly or indirectly when you invest in the
Trust. The table reflects annual operating expenses based upon actual expenses
incurred for the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
Shareholder Transaction Expenses: Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Maximum Initial Sales Charge on
Purchases (as a percentage of
offering price) ........................ 4.50%(1) None None
Maximum Sales Charge on
Reinvestment of Dividends .............. None None None
Maximum Deferred Sales Charge (as a
percentage of purchase price or
redemption proceeds, as applicable)..... None(1) 4.00% 1.00%
Redemption Fee(2) ....................... None None None
Exchange Fee ............................ None None None
Annual Operating Expenses
(as a percentage of average net
assets):
Management Fee (after fee
reduction)(3) .......................... 0.37% 0.37% 0.37%
12b-1 Fees .............................. 0.25% 1.00% 1.00%
Other Expenses (including transfer
agent fee, custodian fees and
accounting and printing expenses) ...... 0.38% 0.38% 0.31%
----- ----- -----
Total Operating Expenses (after fee
reduction):(4) .......................... 1.00% 1.75% 1.68%
===== ===== =====
</TABLE>
- --------------------
(1) Purchases of $1 million or more and purchases by participants of certain
group plans are not subject to an initial sales charge but may be subject
to a contingent deferred sales charge ("CDSC"). See "How to Sell Trust
Shares."
(2) Separate fees (currently $10 and $20, respectively) apply to U.S. and
international wire transfers of redemption proceeds.
(3) Pioneering Management Corporation ("PMC"), the Trust's investment adviser,
has agreed not to impose a portion of its management fee as required to
limit the Class A shares expenses to 1.00% of the average daily net assets
attributable to Class A shares; the portion of Trust-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. This agreement is
voluntary and temporary and may be revised or terminated at any time by PMC.
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Expenses Absent Fee Reduction
Management Fee .................... 0.50% 0.50% 0.50%
Total Operating Expenses4 ......... 1.12% 1.88% 1.80%
</TABLE>
- --------------------
(4) Expenses are net of amounts paid in connection with third-party brokerage/
service and/or certain expense offset arrangements. In the absence of such
arrangements other expenses would have been 1.14%, 1.90% and 1.85% for Class
A, B and C shares, respectively. See "Financial Highlights."
Example:
You would pay the following expenses on a $1,000 investment, with or
without redemption at the end of each time period, assuming a 5% annual return,
reinvestment of all dividends and distributions and that the percentage amounts
listed under "Annual Operating Expenses" remain the same each year.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares ..................... $55 $75 $ 98 $162
Class B Shares .....................
--Assuming complete
redemption at end of
period ......................... $58 $85 $115 $186*
--Assuming no redemption .......... $18 $55 $ 95 $186*
Class C Shares** ...................
--Assuming complete
redemption at end of
period ......................... $27 $53 $ 91 $199
--Assuming no redemption .......... $17 $53 $ 91 $199
</TABLE>
- --------------------
*Class B shares convert to Class A shares eight years after purchase;
therefore, Class A share expenses are used after year eight.
**Class C shares redeemed during the first year after purchase are subject to a
1% CDSC.
THE EXAMPLE IS DESIGNED FOR INFORMATIONAL PURPOSES ONLY, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURNS. ACTUAL TRUST
EXPENSES AND RETURNS WILL VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN
THOSE SHOWN.
For further information regarding management fees, Rule 12b-1 fees and
other expenses of the Trust see "Management of the Trust," "Distribution Plans"
and "How To Buy Trust Shares" in this Prospectus and "Management of the Trust"
and "Underwriting Agreement and Distribution Plans" in the Statement of
Additional Information. The Trust's payment of Rule 12b-1 fees may result in
long-term shareholders paying more than the economic equivalent of the maximum
initial sales charge permitted under the Conduct Rules of the National
Association of Securities Dealers, Inc.
The maximum initial sales charge is reduced on purchases of specified
amounts of Class A shares and the value of shares owned in other Pioneer mutual
funds is taken into account in determining the applicable initial sales charge.
See "How to Buy Trust Shares." No sales charge is applied to exchanges of shares
of the Trust for shares of other publicly available Pioneer mutual funds. See
"How to Exchange Trust Shares."
2
<PAGE>
II. FINANCIAL HIGHLIGHTS
The following information has been audited by Arthur Andersen LLP,
independent public accountants. Arthur Andersen LLP's report on the Trust's
financial statements as of December 31, 1997 appears in the Trust's Annual
Report and is incorporated by reference into the Statement of Additional
Information. The information listed below should be read in conjunction with the
financial statements contained in the Trust's Annual Report. The Annual Report
includes more information about the Trust's performance and is available free of
charge by calling Shareholder Services at 1-800-225-6292.
Pioneer America Income Trust
Selected Data for a Class A Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
For the Year Ended December 31,
---------------------------------------------------
1997 1996 1995 1994
------------ ------------- ------------ -----------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period ............................. $ 9.77 $ 10.20 $ 9.41 $ 10.48
------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) ......... $ 0.64 $ 0.64 $ 0.68 $ 0.66
Net realized and unrealized
gain (loss) on investments .......... 0.16 (0.43) 0.79 (1.07)
------- ------- ------- -------
Net increase (decrease) from
investment operations ................. 0.80 $ 0.21 $ 1.47 $ (0.41)
Distribution to shareholders:
Net investment income ................. (0.64) (0.64) (0.68) (0.66)
Net realized gain ..................... -- -- -- --
------- ------- ------- -------
Net increase (decrease) in net
asset value ........................... $ 0.16 $ (0.43) $ 0.79 $ (1.07)
------- ------- ------- -------
Net asset value, end of period ......... $ 9.93 $ 9.77 $ 10.20 $ 9.41
======= ======= ======= =======
Total return* .......................... 8.51% 2.29% 16.06% (3.97)%
Ratios/Supplemental Data
Ratio of net expenses to average
net assets ............................ 1.02%+ 1.01%+ 1.02%+ 1.00%
Ratio of net investment income
(loss) to average net assets .......... 6.55%+ 6.51%+ 6.85%+ 6.84%
Portfolio turnover rate ................ 63% 43% 62% 61%
Net assets, end of period
(in thousands) ........................ $138,022 $145,408 $162,708 $161,858
Ratios assuming no waiver of
management fees by PMC and
no reduction for fees paid
indirectly:
Net expenses ......................... 1.14% 1.17% 1.22% 1.12%
Net investment income (loss) ......... 6.43% 6.35% 6.65% 6.72%
Ratios assuming waiver of
management fees by PMC and
reduction for fees paid indirectly:
Net expenses ......................... 1.00% 1.00% 1.00% --
Net investment income (loss) ......... 6.57% 6.52% 6.87% --
<CAPTION>
May 31
to
December 31,
1993 1992 1991 1990 1989 1988
------------ ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ............................. $ 10.27 $ 10.35 $ 10.03 $ 10.04 $ 9.86 $ 10.00
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) ......... $ 0.68 $ 0.73 $ 0.84 $ 0.87 $ 0.90 $ 0.51
Net realized and unrealized
gain (loss) on investments .......... 0.24 (0.07) 0.33 (0.02) 0.18 (0.14)
------- ------- ------- ------- ------- ---------
Net increase (decrease) from
investment operations ................. $ 0.92 $ 0.66 $ 1.17 $ 0.85 $ 1.08 $ 0.37
Distribution to shareholders:
Net investment income ................. (0.67) (0.73) (0.85) (0.86) (0.90) (0.51)
Net realized gain ..................... (0.04) (0.01) -- -- -- --
-------- ------- ------- ------- ------- ---------
Net increase (decrease) in net
asset value ........................... $ 0.21 $ (0.08) $ 0.32 $ (0.01) $ 0.18 $ (0.14)
-------- -------- ------- -------- ------- ---------
Net asset value, end of period ......... $ 10.48 $ 10.27 $ 10.35 $ 10.03 $ 10.04 $ 9.86
======== ======== ======= ======== ======= =========
Total return* .......................... 9.07% 6.67% 12.14% 8.99% 11.49% 3.76%
Ratios/Supplemental Data
Ratio of net expenses to average
net assets ............................ 1.00% 1.03% 0.75% 0.75% 0.75% 0.67%**
Ratio of net investment income
(loss) to average net assets .......... 6.37% 7.01% 8.07% 8.75% 9.10% 8.86%**
Portfolio turnover rate ................ 42% 55% 37% 69% 66% 61%**
Net assets, end of period
(in thousands) ........................ $105,892 $ 85,425 $43,711 $ 17,160 $10,533 $ 4,634
Ratios assuming no waiver of
management fees by PMC and
no reduction for fees paid
indirectly:
Net expenses ......................... 1.13% 1.25% 1.75% 1.81% 2.36% 3.01%**
Net investment income (loss) ......... 6.24% 6.79% 7.07% 7.69% 7.49% 6.52%**
Ratios assuming waiver of
management fees by PMC and
reduction for fees paid indirectly:
Net expenses ......................... -- -- -- -- -- --
Net investment income (loss) ......... -- -- -- -- -- --
</TABLE>
- -----------
+ Ratios assuming no reduction for fees paid indirectly.
* 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.
3
<PAGE>
II. FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Class B Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
For the Year
Ended December 31,
-------------------------------------
1997 1996 1995
------------ ----------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period ..................................................... $ 9.75 $ 10.17 $ 9.40
------- ------- --------
Increase (decrease) from investment operations:
Net investment income (loss) ............................................................ $ 0.57 $ 0.57 $ 0.61
Net realized and unrealized gain (loss) on investments .................................. 0.15 (0.42) 0.77
------- ------- --------
Net increase (decrease) from investment operations ....................................... $ 0.72 $ 0.15 $ 1.38
Distribution to shareholders:
Net investment income ................................................................... (0.57) (0.57) ( 0.61)
------- ------- --------
Net increase (decrease) in net asset value ............................................... $ 0.15 $ (0.42) $ 0.77
------- ------- --------
Net asset value, end of period ........................................................... $ 9.90 $ 9.75 $ 10.17
======= ======= ========
Total return* ............................................................................ 7.61% 1.59% 15.08%
Ratios/Supplemental Data
Ratio of net expenses to average net assets .............................................. 1.77%+ 1.75%+ 1.77%+
Ratio of net investment income (loss) to average net assets .............................. 5.78%+ 5.78%+ 5.92%+
Portfolio turnover rate .................................................................. 63% 43% 62%
Net assets, end of period (in thousands) ................................................. $11,935 $ 9,557 $ 6,992
Ratios assuming no waiver of management fees by PMC and no reduction for fees
paid indirectly:
Net expenses ........................................................................... 1.90% 1.91% 1.97%
Net investment income (loss) ........................................................... 5.65% 5.62% 5.72%
Ratios assuming waiver of managements fees by PMC and reduction for fees paid
indirectly:
Net expenses ........................................................................... 1.75% 1.73% 1.72%
Net investment income (loss) ........................................................... 5.80% 5.80% 5.97%
<CAPTION>
April 29, 1994
to December 31, 1994
---------------------
<S> <C>
Net asset value, beginning of period ..................................................... $ 9.85
--------
Increase (decrease) from investment operations:
Net investment income (loss) ............................................................ $ 0.40
Net realized and unrealized gain (loss) on investments .................................. (0.45)
---------
Net increase (decrease) from investment operations ....................................... $ (0.05)
Distribution to shareholders:
Net investment income ................................................................... (0.40)
---------
Net increase (decrease) in net asset value ............................................... $ (0.45)
---------
Net asset value, end of period ........................................................... $ 9.40
=========
Total return* ............................................................................ (0.57)%
Ratios/Supplemental Data
Ratio of net expenses to average net assets .............................................. 1.78%**
Ratio of net investment income (loss) to average net assets .............................. 6.35%**
Portfolio turnover rate .................................................................. 61%**
Net assets, end of period (in thousands) ................................................. $ 2,170
Ratios assuming no waiver of management fees by PMC and no reduction for fees paid
indirectly:
Net expenses ........................................................................... 1.90%**
Net investment income (loss) ........................................................... 6.23%**
Ratios assuming waiver of managements fees by PMC and reduction for fees paid indirectly:
Net expenses ........................................................................... --
Net investment income (loss) ........................................................... --
</TABLE>
Selected Data for a Class C Share Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
For the Year Ended
December 31, 1997
--------------------
<S> <C>
Net asset value, beginning of period ..................................................... $ 9.74
--------
Increase (decrease) from investment operations:
Net investment income (loss) ............................................................ $ 0.57
Net realized and unrealized gain (loss) on investments .................................. 0.16
--------
Net increase (decrease) from investment operations ....................................... $ 0.73
Distribution to shareholders:
Net investment income ................................................................... (0.57)
--------
Net increase (decrease) in net asset value ............................................... $ 0.16
--------
Net asset value, end of period ........................................................... $ 9.90
========
Total return* ............................................................................ 7.78%
Ratios/Supplemental Data
Ratio of net expenses to average net assets .............................................. 1.73%+
Ratio of net investment income (loss) to average net assets .............................. 5.74%+
Portfolio turnover rate .................................................................. 63%
Net assets, end of period (in thousands) ................................................. $ 3,780
Ratios assuming no waiver of management fees by PMC and no reduction for fees paid
indirectly:
Net expenses ........................................................................... 1.85%
Net investment income (loss) ........................................................... 5.62%
Ratios assuming waiver of managements fees by PMC and reduction for fees paid indirectly:
Net expenses ........................................................................... 1.68%
Net investment income (loss) ........................................................... 5.79%
<CAPTION>
For the Period January 31, 1996
through December 31, 1996
--------------------------------
<S> <C>
Net asset value, beginning of period ..................................................... $ 10.16
--------
Increase (decrease) from investment operations:
Net investment income (loss) ............................................................ 0.52
Net realized and unrealized gain (loss) on investments .................................. ( 0.42)
---------
Net increase (decrease) from investment operations ....................................... $ 0.10
Distribution to shareholders:
Net investment income ................................................................... ( 0.52)
---------
Net increase (decrease) in net asset value ............................................... $ (0.42)
---------
Net asset value, end of period ........................................................... $ 9.74
=========
Total return* ............................................................................ 1.04%
Ratios/Supplemental Data
Ratio of net expenses to average net assets .............................................. 1.80%**+
Ratio of net investment income (loss) to average net assets .............................. 5.73%**+
Portfolio turnover rate .................................................................. 43%
Net assets, end of period (in thousands) ................................................. $ 1,306
Ratios assuming no waiver of management fees by PMC and no reduction for fees paid
indirectly:
Net expenses ........................................................................... 1.95%**
Net investment income (loss) ........................................................... 5.58%**
Ratios assuming waiver of managements fees by PMC and reduction for fees paid
indirectly:
Net expenses ........................................................................... 1.76%**
Net investment income (loss) ........................................................... 5.77%**
</TABLE>
- -----------
*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 charge.
Total return would be reduced if sale charges were taken into account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
4
<PAGE>
III. INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Trust is to provide as high a level of
current income as is consistent with preservation of capital and prudent
investment risk. The Trust seeks to achieve this objective by investing its
assets exclusively in securities backed by the full faith and credit of the U.S.
and in "when-issued" commitments and repurchase agreements with respect to such
securities. The Trust may only invest in securities and engage in transactions
in securities that are legal under applicable Federal law, as of January 1,
1998, for federal credit unions.
U.S. Government Securities in which the Trust may invest include (1) U.S.
Treasury obligations, which differ only in their interest rates, maturities and
times of issuance: U.S. Treasury bills (maturities of one year or less), U.S.
Treasury notes (maturities of one to ten years) and U.S. Treasury bonds
(generally maturities of greater than ten years) and (2) obligations of varying
maturities issued by or fully guaranteed as to principal and interest by certain
agencies and instrumentalities of the U.S. Government, such as mortgage
participation certificates ("GNMA Certificates") guaranteed by the Government
National Mortgage Association ("GNMA") and Federal Housing Administration
("FHA") debentures, for which the U.S. Treasury unconditionally guarantees
payment of principal and interest. Although the payment when due of interest and
principal on U.S. Government Securities is backed by the full faith and credit
of the U.S., this guarantee does not extend to the market value of these
securities. Accordingly, the market value of these securities held in the
Trust's portfolio and the net asset value of the Trust's shares will fluctuate.
The Trust's portfolio will be managed by purchasing and selling securities,
as well as holding selected securities to maturity. The Trust's investment
manager, PMC, employs "cycle analysis" in the management of the Trust's
portfolio. Cycle analysis is the process of analyzing the business and credit
cycles of the economy to identify and monitor trends in interest rates and to
identify debt securities with characteristics most likely to meet the Trust's
objectives at given stages in all cycles. Relying on analysis of economic
indicators, as well as price, yield and maturity data of individual securities,
this process requires ongoing adjustments to the portfolio based on the relative
values or maturities of individual securities.
Any such change in the portfolio may result in increases or decreases in
the Trust's current income available for distribution to shareholders and in its
holding of debt securities which may sell at moderate to substantial premiums or
discounts from face value. If the Trust's expectations of changes in interest
rates or its evaluation of the normal yield relationships between two securities
is incorrect, the Trust's income, net asset value and potential gain may be
reduced or its potential loss may be increased.
The Trust may take advantage of the entire range of maturities offered by
U.S. Government Securities, and the average maturity of the Trust's portfolio
may vary significantly. Under normal circumstances, however, the dollar weighted
average portfolio maturity of the Trust is not expected to exceed twenty years.
Capital gains will not be a major consideration in the selection of investments.
The Trust will not normally engage in short-term trading but it may do so when
it believes a particular transaction will contribute to the achievement of its
investment objective.
The Trust may invest all or any portion of its assets in GNMA Certificates
but it is not obligated to do so; the portion of its assets so invested will
vary with management's view of the relative yields and values of GNMA
Certificates compared to U.S. Treasury obligations.
GNMA Certificates are mortgage-backed securities which evidence part
ownership of a pool of mortgage loans. The mortgages loans are made by lenders
such as mortgage bankers, commercial banks and savings and loan associations,
and are insured by the FHA or the Farmers' Home Administration ("FHMA"), or
guaranteed by the Veterans Administration ("VA"). The mortgages are grouped in
pools containing mortgages which are of similar types and maturities and bear
similar interest rates. Upon approval by GNMA of a pool, GNMA guarantees the
timely payment of principal and interest on securities backed by the pool. The
GNMA guarantee is backed by the full faith and credit of the U.S. Government.
GNMA is also empowered to borrow without limitation from the U.S. Treasury if
necessary to make any payments required under its guarantee.
The GNMA Certificates which the Trust purchases are the "modified
pass-through" type. Modified pass-through certificates entitle the holder to
receive all principal and interest owed on the mortgages in the pool, net of
fees paid to the issuer and GNMA, regardless of whether or not the mortgagor
actually makes the payment.
The average life of a GNMA Certificate is substantially less than the
original maturity of the underlying mortgage pools because of principal
prepayments and foreclosures. Foreclosures create no risk to principal invested
because of the GNMA guarantee. As prepayment rates of individual mortgage pools
will vary widely, it is not possible to predict accurately the average life of a
particular issue of GNMA Certificates. However, the Trust's team of portfolio
managers and analysts continuously monitors the average life changes of
mortgage-backed securities.
There are several factors that may cause the yield earned by the Trust to
be substantially different than the coupon rate of interest on the GNMA
Certificates and other securities held in the Trust's portfolio. First, as with
any fund consisting of fixed-income securities, repayments and prepayments of
principal require reinvestment which may be at a lower or higher interest rate.
This reinvestment risk is increased in the case of GNMA Certificates because
principal is repaid monthly rather than in a lump sum at maturity. Second,
prepayments of mortgage-backed GNMA Certificates will tend to increase when
general interest rates decline, requiring reinvestment at the lower market rate.
Higher interest rate mortgages will be more prone to prepayment. Third, the
Trust may purchase GNMA Certificates at a premium or discount, rather than at
par, causing actual yield to be lower or higher than the interest rate on the
GNMA Certificates. After issuance, GNMA Certificates may also trade in the
market at a premium or discount. Upon prepayment, the Trust may realize a loss
in the amount of any unamortized premiums paid upon purchase of GNMA
Certificates since prepayment may be at par.
5
<PAGE>
The values of the U.S. Government Securities, including GNMA Certificates,
in which the Trust invests will fluctuate with changes in interest rates.
Changes in the value of such securities will not affect interest income from
those obligations but will be reflected in the Trust's net asset value. Thus, a
decrease in interest rates will generally result in an increase in the value of
the Trust's shares and conversely during periods of rising interest rates the
value of the Trust's shares will generally decline. The magnitude of these
fluctuations will generally be greater when the Trust's average maturity is
longer.
GNMA Certificates may offer yields higher than those available from other
types of U.S. Government Securities, but because of their prepayment aspect may
be less effective than other types of securities as a means of "locking in"
attractive long-term interest rates. This is caused by the need to reinvest
prepayments of principal generally and the possibility of significant
unscheduled prepayments resulting from declines in mortgage interest rates.
These prepayments would have to be reinvested at the lower rates. As a result,
the Trust's GNMA Certificates may have less potential for capital appreciation
during periods of declining interest rates than other U.S. Government Securities
of comparable maturities, although such obligations may have a comparable risk
of decline in market value during periods of rising interest rates.
Prices of GNMA Certificates are readily available from securities dealers
and depend on, among other things, the level of market interest rates, the GNMA
Certificate's coupon rate and the prepayment history of the pool of mortgages
backing each GNMA Certificate.
For further information on GNMA Certificates, see "Investment Policies and
Restrictions" in the Statement of Additional Information.
"When-Issued" GNMA Certificates. The Trust may purchase and sell GNMA
Certificates on a when-issued or a delayed delivery basis. When-issued or
delayed delivery transactions arise when securities are purchased or sold by the
Trust with payment and delivery taking place in the future in order to secure
what is considered to be an advantageous price and yield which is fixed at the
time of entering into the transaction. However, the yield on a comparable GNMA
Certificate when the transaction is consummated may vary from the yield on the
GNMA Certificate at the time that the when-issued or delayed delivery
transaction was made. Also, the market value of the when-issued or delayed
delivery GNMA Certificate may increase or decrease as a result of changes in
general interest rates. When-issued and delayed delivery transactions involve
risk of loss if the value of the GNMA Certificate declines before the settlement
date. This risk is in addition to the risk of decline in the value of the
Trust's other assets. When the Trust engages in when-issued and delayed delivery
transactions, the Trust relies on the seller or buyer, as the case may be, to
consummate the transaction. Failure of the seller or buyer to do so may result
in the Trust missing the opportunity of obtaining a price or yield considered to
be advantageous. However, no payment or delivery is made by the Trust until it
receives payment or delivery from the other party to the transaction. To the
extent the Trust engages in when-issued and delayed delivery transactions, it
will do so for the purpose of acquiring or disposing of GNMA Certificates for
the Trust's portfolio consistent with the Trust's investment objective and
policies and not for the purpose of investment leverage.
The value of such purchase commitments at any time will not exceed the
value of the Trust's assets invested in U.S. Treasury Bills and other securities
having remaining maturities of less than six months. The Trust's investments in
when-issued or delayed delivery commitments and in repurchase agreements
(limited to seven days) may represent up to 25% of its assets.
The Trust's investment objective and its policy of investing exclusively in
U.S. Government Securities and when-issued commitments and repurchase agreements
with respect to such securities are fundamental policies which may not be
changed without shareholder approval. Except for these policies and certain
investment restrictions designated in the Statement of Additional Information as
fundamental, the investment policies described in this Prospectus and in the
Statement of Additional Information are not fundamental policies. The Trustees
may change any non-fundamental investment policy without shareholder approval.
IV. MANAGEMENT OF THE TRUST
The Trust's Board of Trustees has overall responsibility for management and
supervision of the Trust. The Board meets at least quarterly. By virtue of the
functions performed by PMC as investment adviser, the Trust requires no
employees other than its executive officers, all of whom receive their
compensation from PMC or other sources. The Statement of Additional Information
contains the name and general background of each Trustee and executive officer
of the Trust.
The Trust is managed under a contract with PMC which serves as investment
adviser to the Trust and is responsible for the overall management of the
Trust's business affairs, subject only to the authority of the Board of
Trustees. PMC is a wholly owned subsidiary of The Pioneer Group, Inc. ("PGI"), a
publicly traded Delaware corporation. Pioneer Funds Distributor, Inc. ("PFD"),
an indirect wholly owned subsidiary of PGI, is the principal underwriter of
shares of the Trust. John F. Cogan, Jr., Chairman and President of the Trust,
Chairman and a director of PMC, Chairman of PFD, and President and a Director of
PGI, owned approximately 14% of the outstanding capital stock of PGI as of the
date of this Prospectus.
Mr. David Tripple, President and Chief Investment Officer of PMC and
Executive Vice President of each Pioneer mutual fund, has general
responsibility for PMC's investment operations and chairs a committee of PMC's
fixed income managers which reviews PMC's research and portfolio operations,
including those of the Trust. Mr. Tripple joined PMC in 1974.
Research and management for the Trust is the responsibility of a team of
portfolio managers and analysts focusing on fixed income securities. Members of
the team meet regularly to discuss holdings, prospective investments and
portfolio composition. Mr. Sherman Russ, a Senior Vice President of
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PMC and Vice President of the Trust, is the senior member of the fixed income
team. Mr. Russ joined PMC in 1983.
Day-to-day management of the Trust has been the responsibility of Mr. Russ
since inception. Mr. Russ has over ten years of investment experience.
In addition to the Trust, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109. In an effort to avoid conflicts of
interest with the Trust, the Trust and PMC have adopted a Code of Ethics that is
designed to maintain a high standard of personal conduct by directing that all
personnel defer to the interests of the Trust and its shareholders in making
personal securities transactions.
Under the terms of its contract with the Trust, PMC assists in the
management of the Trust and is authorized in its discretion to buy and sell
securities for the account of the Trust, subject to the right of the Trust's
Trustees to disapprove any such purchase or sale. PMC pays all the ordinary
operating expenses, including executive salaries and the rental of office space
related to its services for the Trust, with the exception of the following which
are to be paid by the Trust: (a) charges and expenses for fund accounting,
pricing and appraisal services and related overhead, including, to the extent
such services are performed by personnel of PMC or its affiliates, office space
and facilities and personnel compensation, training and benefits; (b) the
charges and expenses of auditors; (c) the charges and expenses of any custodian,
transfer agent, plan agent, dividend disbursing agent and registrar appointed by
the Trust with respect to shares of the Trust; (d) issue and transfer taxes,
chargeable to the Trust in connection with securities transactions to which the
Trust is a party; (e) insurance premiums, interest charges, dues and fees for
membership in trade associations, and all taxes and corporate fees payable by
the Trust to federal, state or other governmental agencies; (f) fees and
expenses involved in registering and maintaining registrations of the Trust
and/or its shares with the SEC, state securities agencies and foreign
jurisdictions, including the preparation of Prospectuses and Statements of
Additional Information for filing with regulatory agencies; (g) all expenses of
shareholders' and Trustees' meetings and of preparing, printing and distributing
prospectuses, notices, proxy statements and all reports to shareholders and to
governmental agencies; (h) charges and expenses of legal counsel to the Trust
and to Trustees; (i) distribution fees paid by the Trust in accordance with Rule
12b-1 promulgated by the SEC pursuant to the Investment Company Act of 1940, as
amended (the "1940 Act"); (j) compensation of those Trustees of the Trust who
are not affiliated with or interested persons of PMC, the Trust (other than as
Trustees), PGI or PFD; (k) the cost of preparing and printing share
certificates; and (l) interest on borrowed money, if any. The Trust also pays
all brokers' and underwriting commissions chargeable to the Trust in connection
with its portfolio transactions.
Orders for the Trust's portfolio securities transactions are placed by PMC,
which strives to obtain the best price and execution for each transaction. In
circumstances where two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides brokerage or research services or sells shares of the
Pioneer mutual funds for which PMC or any affiliate serves as investment adviser
or manager. See the Statement of Additional Information for a further
description of PMC's brokerage allocation practices.
As compensation for its management services and certain expenses which PMC
incurs, PMC is entitled to a management fee equal to 0.50% per annum of the
Trust's average daily net assets. The fee is normally computed daily and paid
monthly. See "Expense Information" in this Prospectus and "Investment Adviser"
in the Statement of Additional Information.
Certain information technology experts currently predict the possibility of
a widespread failure of computer systems and certain other equipment which will
be triggered on or after certain dates--primarily January 1, 2000-due to a
systemic inability to process date-related information. This scenario, commonly
know as the "Year 2000 Problem," could have an adverse impact on individuals and
businesses, including the Trust and other mutual funds and financial
organizations. PMC and its affiliates are taking steps believed to be adequate
to address the Year 2000 Problem with respect to the systems and equipment
controlled by the Trust's investment adviser, broker-dealer and transfer agent.
In addition, other entities providing services to the Trust and its shareholders
are being asked to provide assurances that they have undertaken similar measures
with respect to their systems and equipment. Although PMC is not expecting any
adverse impact to it or its clients from the Year 2000 Problem, it cannot
provide complete assurances that its efforts or the efforts of its key vendors
will be successful.
V. TRUST SHARE ALTERNATIVES
The Trust continuously offers three Classes of shares designated as Class
A, Class B and Class C shares, as described more fully in "How to Buy Trust
Shares." If you do not specify in your instructions to the Trust which Class of
shares you wish to purchase, exchange or redeem, the Trust will assume that your
instructions apply to Class A shares.
Class A Shares. If you invest less than $1 million in Class A shares, you
will pay an initial sales charge. Certain purchases may qualify for reduced
initial sales charges. If you invest $1 million or more in Class A shares, no
sales charge will be imposed at the time of purchase. However, shares redeemed
within 12 months of purchase may be subject to a CDSC. Class A shares are
subject to distribution and service fees at a combined annual rate of up to
0.25% of the Trust's average daily net assets attributable to Class A shares.
Class B Shares. If you plan to invest up to $250,000, Class B shares are
available to you. Class B shares are sold without an initial sales charge, but
are subject to a CDSC of up to 4% if redeemed within six years. Class B shares
are subject to distribution and service fees at a combined annual rate of 1% of
the Trust's average daily net assets attributable
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<PAGE>
to Class B shares. Your entire investment in Class B shares is available to work
for you from the time you make your investment, but the higher distribution fee
paid by Class B shares will cause your Class B shares (until conversion) to have
a higher expense ratio and to pay lower dividends, to the extent dividends are
paid, than Class A shares. Class B shares will automatically convert to Class A
shares, based on relative net asset value, eight years after the initial
purchase.
Class C Shares. Class C shares are sold without an initial sales charge,
but are subject to a 1% CDSC if they are redeemed within the first year after
purchase. Class C shares are subject to distribution and service fees at a
combined annual rate of up to 1% of the Trust's average daily net assets
attributable to Class C shares. Your entire investment in Class C shares is
available to work for you from the time you make your investment, but the higher
distribution fee paid by Class C shares will cause your Class C shares to have a
higher expense ratio and to pay lower dividends, to the extent dividends are
paid, than Class A shares. Class C shares have no conversion feature.
Selecting a Class of Shares. The decision as to which Class to purchase
depends on the amount you invest, the intended length of the investment and your
personal situation. If you are making an investment that qualifies for reduced
sales charges, you might consider Class A shares. If you prefer not to pay an
initial sales charge on an investment of $250,000 or less and you plan to hold
the investment for at least six years, you might consider Class B shares. If you
prefer not to pay an initial sales charge and you plan to hold your investment
for one to eight years, you may prefer Class C shares.
Investment dealers and their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund and
shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the Trust originally purchased. Shares sold outside
the U.S. to persons who are not U.S. citizens may be subject to different sales
charges, CDSCs and dealer compensation arrangements in accordance with local
laws and business practices.
VI. SHARE PRICE
Shares of the Trust are sold at the public offering price, which is the net
asset value per share, plus any applicable sales charge. Net asset value per
share of a Class of the Trust is determined by dividing the value of its assets,
less liabilities attributable to that Class, by the number of shares of that
Class outstanding. The net asset value is computed once daily, on each day the
New York Stock Exchange (the "Exchange") is open, as of the close of regular
trading on the Exchange.
VII. HOW TO BUY TRUST SHARES
You may buy Trust shares from any securities broker-dealer which has a
sales agreement with PFD. If you do not have a securities broker-dealer, please
call 1-800-225-6292. Shares will be purchased at the public offering price, that
is, the net asset value per share next computed after receipt of a purchase
order, plus any applicable sales charge, except as set forth below.
The minimum initial investment is $1,000 for Class A, Class B and Class C
shares except as specified below. The minimum initial investment is $50 for
Class A accounts being established to utilize monthly bank drafts, government
allotments, payroll deduction and other similar automatic investment plans.
Separate minimum investment requirements apply to retirement plans and to
telephone and wire orders placed by broker-dealers; no sales charges or minimum
requirements apply to the reinvestment of dividends or capital gains
distributions. The minimum subsequent investment is $50 for Class A shares and
$500 for Class B and Class C shares except that the subsequent minimum
investment amount for Class B and Class C share accounts may be as little as $50
if an automatic investment plan is established (see "Automatic Investment
Plans").
Telephone Purchases. Your account is automatically authorized to have the
telephone purchase privilege unless you indicate otherwise on your Account
Application or by writing to Pioneering Services Corporation ("PSC"). The
telephone purchase option may be used to purchase additional shares for an
existing Pioneer mutual fund account; it may not be used to establish a new
account. Proper account identification will be required for each telephone
purchase. A maximum of $25,000 per account may be purchased by telephone each
day. The telephone purchase privilege is available to Individual Retirement
Accounts ("IRAs") but may not be available to other types of retirement plan
accounts. Call PSC for more information.
You are strongly urged to consult with your financial representative prior
to requesting a telephone purchase. To purchase shares by telephone, you must
establish your bank account of record by completing the appropriate section of
your Account Application or an Account Options Form. PSC will electronically
debit the amount of each purchase from this predesignated bank account.
Telephone purchases may not be made for 30 days after the establishment of your
bank of record or any change to your bank information.
Telephone purchases will be priced at the net asset value plus any
applicable sales charge next determined after PSC's receipt of a telephone
purchase instruction and receipt of good funds (usually three days after the
purchase instruction). You may always elect to deliver purchases to PSC by mail.
See "Telephone Transactions" for additional information.
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Class A Shares
You may buy Class A shares at the public offering price, including a sales
charge as follows:
<TABLE>
<CAPTION>
Sales Charge as a % of Dealer
----------------------- Allowance
Net as a % of
Offering Amount Offering
Amount of Purchase Price Invested Price
- ------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.00%
$100,000 but less than
$250,000 3.50 3.63 3.00
$250,000 but less than
$500,000 2.50 2.56 2.00
$500,000 but less than
$1,000,000 2.00 2.04 1.75
$1,000,000 or more -0- -0- see below
</TABLE>
The schedule of sales charges above is applicable to purchases of Class A
shares of the Trust by an (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
of a trust estate or fiduciary account or related trusts or accounts including
pension, profit-sharing and other employee benefit trusts qualified under
Section 401 or 408 of the Internal Revenue Code of 1986, as amended (the
"Code"), although more than one beneficiary is involved. The sales charges
applicable to a current purchase of Class A shares of the Trust by a person
listed above is determined by adding the value of shares to be purchased to the
aggregate value (at the then current offering price) of shares of any of the
other Pioneer mutual funds previously purchased and then owned, provided PFD is
notified by such person or his or her broker-dealer each time a purchase is made
which would qualify. Pioneer mutual funds include all mutual funds for which PFD
serves as principal underwriter. At the sole discretion of PFD, holdings of
funds domiciled outside the U.S., but which are managed by affiliates of PMC,
may be included for this purpose.
No sales charge is payable at the time of purchase on investments of $1
million or more or for participants in certain group plans (described below)
subject to a CDSC of 1% which may be imposed in the event of a redemption of
Class A shares within 12 months of purchase. See "How to Sell Trust Shares." PFD
may, in its discretion, pay a commission to broker-dealers who initiate and are
responsible for such purchases as follows: 1% on the first $5 million invested;
0.50% on the next $45 million; and 0.25% on the excess over $50 million. These
commissions will not be paid if the purchaser is affiliated with the
broker-dealer or if the purchase represents the reinvestment of a redemption
made during the previous 12 calendar months. Broker-dealers who receive a
commission in connection with Class A share purchases at net asset value by
401(a) or 401(k) retirement plans with 1,000 or more eligible participants or
with at least $10 million in plan assets will be required to return any
commission paid or a pro rata portion thereof if the retirement plan redeems its
shares within 12 months of purchase. See also "How to Sell Trust Shares." In
connection with PGI's acquisition of Mutual of Omaha Fund Management Company and
contingent upon the achievement of certain sales objectives, PFD may pay to
Mutual of Omaha Investor Services, Inc. 50% of PFD's retention of any sales
commission on sales of the Trust's Class A shares through such dealer. From time
to time, PFD may elect to reallow the entire initial sales charge to
participating dealers for all sales of Class A shares with respect to which
orders are placed during a particular period. Dealers to whom substantially the
entire sales charge is reallowed may be deemed to be underwriters under the
federal securities laws.
Qualifying for a Reduced Sales Charge. Class A shares of the Trust may be
sold at a reduced or eliminated sales charge to certain group plans ("Group
Plans") under which a sponsoring organization makes recommendations to, permits
group solicitation of, or otherwise facilitates purchases by, its employees,
members or participants. Information about such arrangements is available from
PFD.
Class A shares of the Trust may be sold at net asset value per share
without a sales charge to: (a) current or former Trustees and officers of the
Trust and partners and employees of its legal counsel; (b) current or former
directors, officers, employees or sales representatives of PGI or its
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which PMC serves as investment adviser, and the
subsidiaries or affiliates of such persons; (d) current or former officers,
partners, employees or registered representatives of broker-dealers which have
entered into sales agreements with PFD; (e) members of the immediate families of
any of the persons above; (f) any trust, custodian, pension, profit-sharing or
other benefit plan of the foregoing persons; (g) insurance company separate
accounts; (h) certain "wrap accounts" for the benefit of clients of financial
planners adhering to standards established by PFD; (i) other funds and accounts
for which PMC or any affiliate serves as investment adviser or manager; and (j)
certain unit investment trusts. Shares so purchased are purchased for investment
purposes and may not be resold except through redemption or repurchase by or on
behalf of the Trust. The availability of this privilege is conditioned upon the
receipt by PFD of written notification of eligibility. Class A shares of the
Trust may be sold at net asset value without a sales charge to 401(k) retirement
plans with 100 or more participants or at least $500,000 in plan assets. Class A
shares of the Trust may be sold at net asset value per share without a sales
charge to Optional Retirement Program (the "Program") participants if (i) the
employer has authorized a limited number of investment company providers for the
Program, (ii) all authorized investment company providers offer their shares to
Program participants at net asset value, (iii) the employer has agreed in
writing to actively promote the authorized investment providers to Program
participants and (iv) the Program provides for a matching contribution for each
participant contribution. Class A shares may also be sold at net asset value in
connection with certain reorganization, liquidation, or acquisition transactions
involving other investment companies or personal holding companies.
Investors who are clients of a broker-dealer with a current sales agreement
with PFD may purchase Class A shares of the Trust at net asset value, without a
sales charge, to the extent that the purchase price is paid out of proceeds from
one or more redemptions by the investor of shares of certain other mutual funds.
In order for a purchase to qualify for this privilege, the investor must
document to the broker-dealer that the redemption occurred within the 60 days
immediately
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<PAGE>
preceding the purchase of Class A shares; that the client paid a sales charge on
the original purchase of the shares redeemed; and that the mutual fund whose
shares were redeemed also offers net asset value purchases to redeeming
shareholders of any of the Pioneer mutual funds. Further details may be obtained
from PFD.
Reduced sales charges are available for purchases of $100,000 or more of
Class A shares (excluding any reinvestments of dividends and capital gains
distributions) made within a 13-month period pursuant to a Letter of Intent
("LOI") which may be established by completing the Letter of Intent section of
the Account Application. The reduced sales charge will be the charge that would
be applicable to the purchase of the specified amount of Class A shares as if
the shares had all been purchased at the same time. A purchase not made pursuant
to an LOI may be included if the LOI is submitted to PSC within 90 days of such
purchase. You may also obtain the reduced sales charge by including the value
(at current offering price) of all your Class A shares in the Trust and all
other Pioneer mutual funds held of record as of the date of your LOI in the
amount used to determine the applicable sales charge for the Class A shares to
be purchased under the LOI. Five percent of your total intended purchase amount
will be held in escrow by PSC, registered in your name, until the terms of the
LOI are fulfilled.
You are not obligated to purchase the amount specified in your LOI. If,
however, the amount actually purchased during the 13-month period is more or
less than that indicated in your LOI, an adjustment in the sales charge will be
made. If a payment to cover actual sales charges is due, it must be paid to PFD
within 20 days after PFD or your dealer sends you a written request otherwise
PFD will direct PSC to liquidate sufficient shares from your escrow account to
cover the amount due. See the Statement of Additional Information for more
information.
Class B Shares
You may buy Class B shares at the net asset value per share next computed
after receipt of a purchase order without the imposition of an initial sales
charge. However, Class B shares redeemed within six years of purchase will be
subject to a CDSC at the rates shown in the table below. The charge will be
assessed on the amount equal to the lesser of the current market value or the
original purchase cost of the shares being redeemed. No CDSC will be imposed on
increases in account value above the initial purchase price, including shares
derived from the reinvestment of dividends or capital gains distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of purchase until the time of redemption of Class B shares. For
the purpose of determining the number of years from the time of any purchase,
all payments during a quarter will be aggregated and deemed to have been made on
the first day of that quarter. In processing redemptions of Class B shares, the
Trust will first redeem shares not subject to any CDSC, and then shares held
longest during the six-year period. As a result, you will pay the lowest
possible CDSC.
The CDSC for Class B shares subject to a CDSC upon redemption will be
determined as follows:
<TABLE>
<CAPTION>
Year Since CDSC as a Percentage of Dollar
Purchase Amount Subject to CDSC
- -------------------------------- ---------------------------------
<S> <C>
First .......................... 4.0%
Second ......................... 4.0%
Third .......................... 3.0%
Fourth ......................... 3.0%
Fifth .......................... 2.0%
Sixth .......................... 1.0%
Seventh and thereafter ......... none
</TABLE>
Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Trust in connection with the sale of Class B shares, including the payment of
compensation to broker-dealers.
Class B shares will automatically convert into Class A shares at the end of
the calendar quarter that is eight years after the purchase date, except as
noted below. Class B shares acquired by exchange from Class B shares of another
Pioneer mutual fund will convert into Class A shares based on the date of the
initial purchase and the applicable CDSC. Class B shares acquired through
reinvestment of distributions will convert into Class A shares based on the date
of the initial purchase to which such shares relate. For this purpose, Class B
shares acquired through reinvestment of distributions will be attributed to
particular purchases of Class B shares in accordance with such procedures as the
Trustees may determine from time to time. The conversion of Class B shares to
Class A shares is subject to the availability of a ruling from the Internal
Revenue Service (the "IRS"), or an opinion of counsel that such conversions will
not constitute taxable events for federal tax purposes. There can be no
assurance that such ruling or opinion will be available. The conversion of Class
B shares to Class A shares will not occur if such ruling or opinion is not
available and, therefore, Class B shares would continue to be subject to higher
expenses than Class A shares for an indeterminate period.
Class C Shares
You may buy Class C shares at the net asset value per share next computed
after receipt of a purchase order without the imposition of an initial sales
charge; however, Class C shares redeemed within one year of purchase will be
subject to a CDSC of 1%. The charge will be assessed on the amount equal to the
lesser of the current market value or the original purchase cost of the shares
being redeemed. No CDSC will be imposed on increases in account value above the
initial purchase price, including shares derived from the reinvestment of
dividends or capital gains distributions. Class C shares do not convert to any
other Class of Trust shares.
For the purpose of determining the time of any purchase, all payments
during a quarter will be aggregated and deemed to have been made on the first
day of that quarter. In processing redemptions of Class C shares, the Trust will
first redeem shares not subject to any CDSC, and then shares held for the
shortest period of time during the one-year period. As a result, you will pay
the lowest possible CDSC.
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Proceeds from the CDSC are paid to PFD and are used in whole or in part to
defray PFD's expenses related to providing distribution-related services to the
Trust in connection with the sale of Class C shares, including the payment of
compensation to broker-dealers.
Waiver or Reduction of Contingent Deferred Sales Charge. The CDSC on Class
B shares may be waived or reduced for non-retirement accounts if: (a) the
redemption results from the death of all registered owners of an account (in the
case of an UGMA, an UTMA or a trust account, waiver applies upon the death of
all beneficial owners) or a total and permanent disability (as defined in
Section 72 of the Code) of all registered owners occurring after the purchase of
the shares being redeemed or (b) the redemption is made in connection with
limited automatic redemptions as set forth in "Systematic Withdrawal Plans"
(limited in any year to 10% of the value of the account in the Trust at the time
the withdrawal plan is established).
The CDSC on Class B shares may be waived or reduced for retirement plan
accounts if: (a) the redemption results from the death or a total and permanent
disability (as defined in Section 72 of the Code) occurring after the purchase
of the shares being redeemed of a shareholder or participant in an
employer-sponsored retirement plan; (b) the distribution is to a participant in
an IRA, 403(b) or employer-sponsored retirement plan, is part of a series of
substantially equal payments made over the life expectancy of the participant or
the joint life expectancy of the participant and his or her beneficiary or as
scheduled periodic payments to a participant (limited in any year to 10% of the
value of the participant's account at the time the distribution amount is
established; a required minimum distribution due to the participant's attainment
of age 701/2 may exceed the 10% limit only if the distribution amount is based
on plan assets held in Pioneer mutual funds); (c) the distribution is from a
401(a) or 401(k) retirement plan and is a return of excess employee deferrals or
employee contributions or a qualifying hardship distribution as defined by the
Code or results from a termination of employment (limited with respect to a
termination to 10% per year of the value of the plan's assets in the Trust as of
the later of the prior December 31 or the date the account was established
unless the plan's assets are being rolled over to or reinvested in the same
class of shares of a Pioneer mutual fund subject to the CDSC of the shares
originally held); (d) the distribution is from an IRA, 403(b) or
employer-sponsored retirement plan and is to be rolled over to or reinvested in
the same class of shares in a Pioneer mutual fund and which will be subject to
the applicable CDSC upon redemption; (e) the distribution is in the form of a
loan to a participant in a plan which permits loans (each repayment of the loan
will constitute a new sale which will be subject to the applicable CDSC upon
redemption); or (f) the distribution is from a qualified defined contribution
plan and represents a participant's directed transfer (provided that this
privilege has been pre-authorized through a prior agreement with PFD regarding
participant directed transfers).
The CDSC on Class C shares and on any Class A shares subject to a CDSC may
be waived or reduced as follows: (a) for automatic redemptions as described in
"Systematic Withdrawal Plans" (limited to 10% of the value of the account); (b)
if the redemption results from the death or a total and permanent disability (as
defined in Section 72 of the Code) occurring after the purchase of the shares
being redeemed of a shareholder or participant in an employer-sponsored
retirement plan; (c) if the distribution is part of a series of substantially
equal payments made over the life expectancy of the participant or the joint
life expectancy of the participant and his or her beneficiary; or (d) if the
distribution is to a participant in an employer-sponsored retirement plan and is
(i) a return of excess employee deferrals or contributions, (ii) a qualifying
hardship distribution as defined by the Code, (iii) from a termination of
employment, (iv) in the form of a loan to a participant in a plan which permits
loans, or (v) from a qualified defined contribution plan and represents a
participant's directed transfer (provided that this privilege has been
preauthorized through a prior agreement with PFD regarding participant directed
transfers).
The CDSC on any shares subject to a CDSC may be waived or reduced for
either non-retirement or retirement plan accounts if the redemption is made
pursuant to the Trust's right to liquidate or involuntarily redeem shares in a
shareholder's account. The CDSC on any shares subject to a CDSC will not be
applicable if the selling broker-dealer elects, with PFD's approval, to waive
receipt of the commission normally paid at the time of the sale.
Broker-Dealers. An order for any Class of Trust shares received by a
broker-dealer prior to the close of regular trading on the Exchange is confirmed
at the price appropriate for that Class as determined at the close of regular
trading on the Exchange on the day the order is received, provided the order is
received by PFD prior to PFD's close of business (usually, 5:30 p.m. Eastern
time). It is the responsibility of broker-dealers to transmit orders so that
they will be received by PFD prior to its close of business. PFD or its
affiliates may provide additional compensation to certain dealers or such
dealers' affiliates based on certain objective criteria established from time to
time by PFD. All such payments are made out of PFD's or the affiliate's own
assets. These payments will not change the price an investor will pay for shares
or the amount that the Trust will receive from such sale.
General. The Trust reserves the right in its sole discretion to withdraw
all or any part of the offering of shares when, in the judgment of the Trust's
management, such withdrawal is in the best interest of the Trust. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has been
confirmed in writing by PFD and payment has been received.
VIII. HOW TO SELL TRUST SHARES
You can arrange to sell (redeem) Trust shares on any day the Exchange is
open by selling (redeeming) either some or all of your shares to the Trust.
You may sell your shares either through your broker-dealer or directly to
the Trust. Please note the following:
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[bullet] If you are selling shares from a retirement account other than an
IRA, you must make your request in writing (except for exchanges to
other Pioneer mutual funds which can be requested by phone or in
writing). Call 1-800-622-0176 for more information.
[bullet] If you are selling shares from a non-retirement account, you may use
any of the methods described below.
Your shares will be sold at the share price next calculated after your
order is received in good order less any applicable CDSC. Sale proceeds
generally will be sent to you by check, bank wire or electronic funds transfer,
normally within seven days after your order is received in good order. The Trust
reserves the right to withhold payment of the sale proceeds until checks
received by the Trust in payment for the shares being sold have cleared, which
may take up to 15 calendar days from the purchase date.
In Writing. You may always sell your shares by delivering a written
request, signed by all registered owners, in good order to PSC; however, you
must use a written request, including a signature guarantee, to sell your shares
if any of the following applies:
[bullet] you wish to sell over $100,000 worth of shares,
[bullet] your account registration or address has changed within the last
30 days,
[bullet] the check is not being mailed to the address on your account
(address of record),
[bullet] the check is not being made out to the account owners, or
[bullet] the sale proceeds are being transferred to a Pioneer mutual fund
account with a different registration.
Your request should include your name, the Trust's name, your Trust account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described below.
Unless instructed otherwise, PSC will send the proceeds of the sale to the
address of record. Fiduciaries and corporations are required to submit
additional documents. For more information, contact PSC at 1-800-225-6292.
Written requests will not be processed until they are received in good
order by PSC. Good order means that there are no outstanding claims or requests
to hold redemptions on the account, any certificates are endorsed by the record
owner(s) exactly as the shares are registered and the signature(s) are
guaranteed by an eligible guarantor. You should be able to obtain a signature
guarantee from a bank, broker, dealer, credit union (if authorized under state
law), securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee. Signature
guarantees are not accepted by facsimile ("fax"). For additional information
about the necessary documentation for redemption by mail, please contact PSC at
1-800-225-6292.
By Telephone or by Fax. Your account is automatically authorized to have
the telephone redemption privilege unless you indicate otherwise on your Account
Application or by writing to PSC. Proper account identification will be required
for each telephone redemption. The telephone redemption option is not available
to retirement plan accounts, except IRAs. A maximum of $100,000 per account per
day may be redeemed by telephone or fax and the proceeds may be received by
check or by bank wire or electronic funds transfer. To receive the proceeds by
check: the check must be made payable exactly as the account is registered and
the check must be sent to the address of record which must not have changed in
the last 30 days. To receive the proceeds by bank wire or by electronic funds
transfer: the proceeds must be sent to your bank address of record which must
have been properly predesignated either on your Account Application or on an
Account Options Form and which must not have changed in the last 30 days. To
redeem by fax send your redemption request to 1-800-225-4240. You may always
elect to deliver redemption instructions to PSC by mail. See "Telephone
Transactions" below. Telephone and fax redemptions will be priced as described
above. You are strongly urged to consult with your financial representative
prior to requesting a telephone redemption.
Selling Shares Through Your Broker-Dealer. The Trust has authorized PFD to
act as its agent in the repurchase of shares of the Trust from qualified
broker-dealers and reserves the right to terminate this procedure at any time.
Your broker-dealer must receive your request before the close of business on the
Exchange and transmit it to PFD before PFD's close of business to receive that
day's redemption price. Your broker-dealer is responsible for providing all
necessary documentation to PFD and may charge you for its services.
Small Accounts. The minimum account value is $500. If you hold shares of
the Trust in an account with a net asset value of less than the minimum required
amount due to redemptions or exchanges, the Trust may redeem the shares held in
this account at net asset value if you have not increased the net asset value of
the account to at least the minimum required amount within six months of notice
by the Trust to you of the Trust's intention to redeem the shares.
CDSC on Class A Shares. Purchases of Class A shares of $1 million or more,
or by participants in a Group Plan which were not subject to an initial sales
charge, may be subject to a CDSC upon redemption. A CDSC is payable to PFD on
these investments in the event of a share redemption within 12 months following
the share purchase, at the rate of 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividend and capital gain distributions) or
the total cost of such shares. Shares subject to the CDSC which are exchanged
into another Pioneer mutual fund will continue to be subject to the CDSC until
the original 12-month period expires. However, no CDSC is payable upon
redemption with respect to Class A shares purchased by 401(a) or 401(k)
retirement plans with 1,000 or more eligible participants or with at least $10
million in plan assets.
General. Redemptions may be suspended or payment postponed during any
period in which any of the following conditions exist: the Exchange is closed
or trading on the Exchange is
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restricted; an emergency exists as a result of which disposal by the Trust of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust to fairly determine the value of the net assets of its
portfolio; or the SEC, by order, so permits.
Redemptions and repurchases are taxable transactions to shareholders. The
net asset value per share received upon redemption or repurchase may be more or
less than the cost of shares to an investor, depending on the market value of
the portfolio at the time of redemption or repurchase.
IX. HOW TO EXCHANGE TRUST SHARES
Written Exchanges. You may exchange your shares by sending a letter of
instruction to PSC. Your letter should include your name, the name of the Fund
out of which you wish to exchange and the name of the Pioneer mutual fund into
which you wish to exchange, your fund account number(s), the Class of shares to
be exchanged and the dollar amount or number of shares to be exchanged. Written
exchange requests must be signed by all record owner(s) exactly as the shares
are registered.
Telephone Exchanges. Your account is automatically authorized to have the
telephone exchange privilege unless you indicate otherwise on your Account
application or by writing to PSC. Proper account identification will be
required for each telephone exchange. Telephone exchanges may not exceed
$500,000 per account per day. Each telephone exchange request, whether by voice
or by FactFoneSM, will be recorded. You are strongly urged to consult with your
financial representative prior to requesting a telephone exchange. See
"Telephone Transactions" below.
Automatic Exchanges. You may automatically exchange shares from one Pioneer
mutual fund account for shares of the same Class in another Pioneer mutual fund
account on a monthly or quarterly basis. The accounts must have identical
registrations and the originating account must have a minimum balance of $5,000.
The exchange will be effective on the day of the month designated on your
Account Application or Account Options Form.
General. Exchanges must be at least $1,000. You may exchange your
investment from one Class of Trust shares at net asset value, without a sales
charge, for shares of the same Class of any other Pioneer mutual fund. Not all
Pioneer mutual funds offer more than one Class of shares. A new Pioneer mutual
fund account opened through an exchange must have a registration identical to
that on the original account.
Shares which would normally be subject to a CDSC upon redemption will not
be charged the applicable CDSC at the time of an exchange. Shares acquired in an
exchange will be subject to the CDSC of the shares originally held. For purposes
of determining the amount of any applicable CDSC, the length of time you have
owned shares acquired by exchange will be measured from the date you acquired
the original shares and will not be affected by any subsequent exchange.
Exchange requests received by PSC before 4:00 p.m. Eastern time, will be
effective on that day if the requirements below have been met, otherwise, they
will be effective on the next business day. PSC will process exchanges only
after receiving an exchange request in good order. There are currently no fees
or sales charges imposed at the time of an exchange. An exchange of shares may
be made only in states where legally permitted. For federal and (generally)
state income tax purposes, an exchange is considered to be a sale of the shares
of the Fund exchanged and a purchase of shares in another Pioneer mutual fund.
Therefore, an exchange could result in a gain or loss on the shares sold,
depending on the tax basis of these shares and the timing of the transaction,
and special tax rules may apply.
You should consider the differences in objectives and policies of the
Pioneer mutual funds, as described in each fund's current prospectus, before
making any exchange. For the protection of the Trust's performance and
shareholders, the Trust and PFD reserve the right to refuse any exchange request
or restrict, at any time without notice, the number and/or frequency of
exchanges to prevent abuses of the exchange privilege. Such abuses may arise
from frequent trading in response to short-term market fluctuations, a pattern
of trading by an individual or group that appears to be an attempt to "time the
market," or any other exchange request which, in the view of management, will
have a detrimental effect on the Trust's portfolio management strategy or its
operations. In addition, the Trust and PFD reserve the right to charge a fee for
exchanges or to modify, limit, suspend or discontinue the exchange privilege
with notice to shareholders as required by law.
X. DISTRIBUTION PLANS
The Trust has adopted a Plan of Distribution for each Class of shares (the
"Class A Plan," "Class B Plan," and "Class C Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution and service fees
are paid.
Pursuant to the Class A Plan, the Trust reimburses PFD for its actual
expenditures to finance any activity primarily intended to result in the sale of
Class A shares or to provide services to holders of Class A shares, provided the
categories of expenses for which reimbursement is made are approved by the
Trust's Board of Trustees. As of the date of this Prospectus, the Board of
Trustees has approved the following categories of expenses for Class A shares of
the Trust: (i) a service fee to be paid to qualified broker-dealers in an amount
not to exceed 0.25% per annum of the Trust's daily net assets attributable to
Class A shares; (ii) reimbursement to PFD for its expenditures for broker-dealer
commissions and employee compensation on certain sales of the Trust's Class
A shares with no initial sales charge (see "How to Buy Trust Shares"); and (iii)
reimbursement to PFD for expenses incurred in providing services to Class A
shareholders and supporting broker-dealers and other organizations (such as
banks and trust companies) in their efforts to provide such services. Banks are
currently prohibited under the Glass-Steagall Act from providing certain
underwriting or distribution services. If a bank was prohibited from acting in
any capacity or providing any of the described services, management would
consider what action, if any, would be appropriate.
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Expenditures of the Trust pursuant to the Class A Plan are accrued daily
and may not exceed 0.25% of the Trust's average daily net assets attributable to
Class A shares. Distribution expenses of PFD are expected to substantially
exceed the distribution fees paid by the Trust in a given year. The Class A Plan
may not be amended to increase materially the annual percentage limitation of
average net assets which may be spent for the services described therein without
approval of the shareholders of the Trust. The Class A Plan does not provide for
the carryover of reimbursable expenses beyond 12 months from the time the Trust
is first invoiced for an expense. For the fiscal year ended December 31, 1997,
there was an allowable carryover of distribution expenses reimbursable to PFD of
$20,022 (less than 0.01% of the net assets attributable to the Class A shares of
the Trust).
Both the Class B Plan and the Class C Plan provide that the Trust will pay
a distribution fee at the annual rate of 0.75% of the Trust's average daily net
assets attributable to the applicable Class of shares and will pay PFD a service
fee at the annual rate of 0.25% of the Trust's average daily net assets
attributable to that Class of shares. The distribution fee is intended to
compensate PFD for its distribution services to the Trust. The service fee is
intended to be additional compensation for personal services and/or account
maintenance services with respect to Class B or Class C shares. PFD also
receives the proceeds of any CDSC imposed on the redemption of Class B or Class
C shares.
Commissions of 4%, equal to 3.75% of the amount invested and a first year's
service fee equal to 0.25% of the amount invested in Class B shares, are paid to
broker-dealers who have sales agreements with PFD. PFD may advance to dealers
the first year service fee at a rate up to 0.25% of the purchase price of such
shares and, as compensation therefor, PFD may retain the service fee paid by the
Trust with respect to such shares for the first year after purchase. Dealers
will become eligible for additional service fees with respect to such shares
commencing in the 13th month following the purchase.
Commissions of up to 1% of the amount invested in Class C shares,
consisting of 0.75% of the amount invested and a first year's service fee of
0.25% of the amount invested, are paid to broker-dealers who have sales
agreements with PFD. PFD may advance to dealers the first year service fee at a
rate up to 0.25% of the purchase price of such shares and, as compensation
therefore, PFD may retain the service fee paid by the Trust with respect to such
shares for the first year after purchase. Commencing in the 13th month following
the purchase of Class C shares, dealers will become eligible for additional
annual distribution fees and service fees of up to 0.75% and 0.25%,
respectively, of the net asset value of such shares.
When a broker-dealer sells Class B or Class C shares and elects, with PFD's
approval, to waive its right to receive the commission normally paid at the time
of sale, PFD may cause all or a portion of the distribution fees described above
to be paid to the broker-dealer.
Dealers may from time to time be required to meet certain criteria in order
to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan or the Class C Plan for which there
is no dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Trust has elected to be treated, has qualified and intends to qualify
each year as a "regulated investment company" under Subchapter M of the Code, so
that it will not pay federal income tax on income and capital gains distributed
to shareholders as required under the Code.
Under the Code, the Trust will be subject to a nondeductible 4% federal
excise tax on a portion of its undistributed ordinary income and capital gains
if it fails to meet certain distribution requirements with respect to each
calendar year. The Trust intends to make distributions in a timely manner and
accordingly does not expect to be subject to the excise tax.
Each business day the Trust declares a dividend consisting of substantially
all of the Trust's net investment income (earned interest income less expenses).
Shareholders begin earning dividends on the first business day following receipt
of payment for purchased shares. Shares continue to earn dividends up to and
including the date of redemption. Dividends are normally paid on the last
business day of the month or shortly thereafter. Monthly distributions consist
of net investment income and may also include net short-term capital gains
realized by the Trust. The Trust's policy is to make distributions from net
long-term capital gains, if any, in December. Dividends from income and/or
capital gains may also be paid at such other times as may be necessary for the
Trust to avoid federal income or excise tax. Generally, dividends from the
Trust's net investment income, market discount income, and net short-term
capital gains are taxable under the Code as ordinary income, and dividends from
the Trust's net long-term capital gains are taxable as long-term capital gains.
The Trust's distributions of long-term capital gains to individuals or other
noncorporate taxpayers are subject to different maximum tax rates (which will be
indicated in the annual tax information the Trust provides to shareholders),
depending generally upon the sources of, and the Trust's holding periods for the
assets that produce, the gains. Unless shareholders specify otherwise, all
distributions will be automatically reinvested in additional full and fractional
shares of the Trust. For federal income tax purposes, all dividends are taxable
as described above whether a shareholder takes them in cash or reinvests them in
additional shares of the Trust. Information as to the federal tax status of
dividends and distributions will be provided to shareholders annually. For
further information on the distribution options available to shareholders, see
"Distribution Options" and "Directed Dividends" below.
The Trust's dividends and distributions will not qualify for any
dividends-received deduction available to corporate shareholders.
Dividends and other distributions and the proceeds of redemptions,
exchanges or repurchases of Trust shares paid
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to individuals and other non-exempt payees will be subject to 31% backup
withholding of federal income tax if the Trust is not provided with the
shareholder's correct taxpayer identification number and certification that the
number is correct and that the shareholder is not subject to backup withholding
or the Trust receives notice from the Internal Revenue Service ("IRS") or a
broker that such withholding applies. Please refer to the Account Application
for additional information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e., U.S. citizens or residents or U.S.
corporations, partnerships, trust or estates, and who are subject to U.S.
federal income tax. Non-U.S. shareholders and tax-exempt shareholders are
subject to different tax treatment that is not described above. A state income
(and possibly local income and/or intangible property) tax exemption is
generally available to the extent the Trust's distributions are derived from
interest on (or, in the case of intangible property taxes, the value of its
shares is attributable to) certain U.S. Government obligations, provided in some
states that certain concentration, designation, reporting or other requirements
are satisfied. The Trust will not attempt to and may not satisfy all such
requirements in all states. Shareholders should consult their own tax advisors
regarding state, local and other applicable tax laws, including the effect of
recent federal tax legislation, in their particular circumstances.
XII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the Trust.
PSC, a Massachusetts corporation, is a wholly owned subsidiary of PGI. PSC's
offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Shareholder Services, Pioneering Services
Corporation, P.O. Box 9014, Boston, Massachusetts 02205-9014. Brown Brothers
Harriman & Co. (the "Custodian") serves as custodian of the Trust's portfolio
securities and other assets. The principal business address of the mutual fund
division of the Custodian is 40 Water Street, Boston, Massachusetts 02109.
Account and Confirmation Statements
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing the
details of transactions are sent to shareholders as transactions occur, except
Automatic Investment Plan transactions which are confirmed quarterly. The
Pioneer Combined Account Statement, mailed quarterly, is available to
shareholders who have more than one Pioneer mutual fund account.
Shareholders whose shares are held in the name of an investment
broker-dealer or other party will not normally have an account with the Trust
and might not be able to utilize some of the services available to shareholders
of record. Examples of services which might not be available are purchases,
exchanges or redemptions of shares by mail or telephone, automatic reinvestment
of dividends and capital gains distributions, withdrawal plans, LOIs, rights of
accumulation, and newsletters.
Additional Investments
You may add to your account by sending a check (minimum of $50 for Class A
shares and $500 for Class B and Class C shares) to PSC (account number and Class
of shares should be clearly indicated). The bottom portion of a confirmation
statement may be used as a remittance slip to make additional investments.
Additions to your account, whether by check or through a Pioneer Investomatic
Plan, are invested in full and fractional shares of the Trust at the applicable
offering price in effect as of the close of regular trading on the Exchange on
the day of receipt.
Automatic Investment Plans
You may arrange for regular automatic investments of $50 or more through
government/military allotments, payroll deduction or through a Pioneer
Investomatic Plan. A Pioneer Investomatic Plan provides for a monthly or
quarterly investment by means of a preauthorized electonic funds transfer from
your bank account. Pioneer Investomatic Plan investments are voluntary, and you
may discontinue your plan at any time or change your plan elections for the
dollar amount, frequency or investment date by calling PSC at 1-800-225-6292, or
by sending a written request to Shareholder Services, Pioneering Servicing
Corporation, P.O. Box 9014, Boston, Massachusetts 02205-9014. A change to your
bank information must be made in writing on an Account Options Form. You should
allow up to five business days for PSC to make changes to an established plan.
PSC acts as agent for the purchaser, the broker-dealer and PFD in maintaining
these plans.
Financial Reports and Tax Information
As a shareholder, you will receive financial reports at least semiannually.
In January of each year, the Trust will mail you information about the tax
status of dividends and distributions.
Distribution Options
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the Trust, at the applicable net asset value
per share, unless you indicate another option on the Account Application. Two
other options available are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and capital gains
distributions in cash. These two options are not available, however, for
retirement plans or for an account with a net asset value of less than $500.
Changes in your distribution options may be made by written request to PSC.
If you elect to receive either dividends or dividends and capital gains in
cash and a distribution check issued to you is returned by the U.S. Postal
Service as not deliverable or a distribution check remains uncashed for six
months or more, the amount of the check may be reinvested in your account. Such
additional shares will be purchased at the then current net asset value.
Furthermore, the distribution option on the account will automatically be
changed to the reinvestment option until such time as you request a different
option by writing to PSC.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer mutual
fund account invested in a second Pioneer
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mutual fund account. The value of this second account must be at least $1,000
($500 for Pioneer Fund or Pioneer II). Invested dividends may be in any amount,
and there are no fees or charges for this service. Retirement plan shareholders
may only direct dividends to accounts with identical registrations.
Direct Deposit
If you have elected to take distributions, whether dividends or dividends
and capital gains, in cash, or have established a Systematic Withdrawal Plan,
you may choose to have those cash payments deposited directly into your savings,
checking or NOW bank account. You may also establish this service by completing
the appropriate section on the Account Application when opening a new account or
the Account Options Form for an existing account.
Voluntary Tax Withholding
You may request (in writing) that PSC withhold 28% of the dividends and
capital gains distributions paid from your account (before any reinvestment) and
forward the amount withheld to the IRS as a credit against your federal income
taxes. This option is not available for retirement plan accounts or for accounts
subject to backup withholding.
Telephone Transactions
Your account is automatically authorized to have telephone transaction
privileges unless you indicate otherwise on your Account Application or by
writing to PSC. You may purchase, sell or exchange Trust shares by telephone.
See "How to Buy Trust Shares," "How to Sell Trust Shares" and "How to Exchange
Trust Shares" for more information. For personal assistance, call 1-800-225-6292
between 8:00 a.m. and 9:00 p.m. Eastern time on weekdays. Computer-assisted
transactions may be available to shareholders who have prerecorded certain bank
information (see "FactFoneSM"). You are strongly urged to consult with your
financial representative prior to requesting any telephone transaction.
To confirm that each transaction instruction received by telephone is
genuine, PSC will record each telephone transaction, require the caller to
provide the personal identification number ("PIN") for the account and send you
a written confirmation of each telephone transaction. Different procedures may
apply to accounts that are registered to non-U.S. citizens or that are held in
the name of an institution or in the name of an investment broker-dealer or
other third-party. If reasonable procedures, such as those described above, are
not followed, the Trust may be liable for any loss due to unauthorized or
fraudulent instructions. The Trust may implement other procedures from time to
time. In all other cases, neither the Trust, PSC nor PFD will be responsible for
the authenticity of instructions received by telephone, therefore, you bear the
risk of loss for unauthorized or fraudulent telephone transactions.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Trust
by telephone to institute a redemption or exchange. You should communicate with
the Trust in writing if you are unable to reach the Trust by telephone.
FactFone(SM)
FactFone(SM) is an automated inquiry and telephone transaction system
available to Pioneer shareholders by dialing 1-800-225-4321. FactFone(SM) allows
you to obtain current information on your Pioneer mutual fund accounts and to
inquire about the prices and yields of all publicly available Pioneer mutual
funds. In addition, you may use FactFone(SM) to make computer-assisted telephone
purchases, exchanges and redemptions from your Pioneer mutual fund accounts if
you have activated your PIN. Telephone purchases and redemptions require the
establishment of a bank account of record. You are strongly urged to consult
with your financial representative prior to requesting any telephone
transaction. Shareholders whose accounts are registered in the name of a
broker-dealer or other third party may not be able to use FactFone(SM). See "How
to Buy Trust Shares," "How to Exchange Trust Shares," "How to Sell Trust Shares"
and "Telephone Transactions." Call PSC for assistance.
Retirement Plans
You should contact the Retirement Plans Department of PSC at 1-800-622-0176
for information relating to tax-deferred retirement plans for individuals,
businesses and tax-exempt organizations, all of which are available in
conjunction with investments in the Trust. The Account Application enclosed with
this Prospectus should not be used to establish any of these plans. Separate
applications are required.
Telecommunications for the Deaf (TDD)
If you have a hearing disability and access to TDD keyboard equipment, you
can call our TDD number toll-free at 1-800-225-1997, weekdays from 8:30 a.m. to
5:30 p.m. Eastern time to contact our telephone representatives with questions
about your account.
Systematic Withdrawal Plans
If your account has a total value of at least $10,000 you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B and Class C share accounts are limited to
10% of the value of the account at the time the SWP is implemented. See "Waiver
or Reduction of Contingent Deferred Sales Charge" for more information. Periodic
payments of $50 or more will be sent to you, or any person designated by you,
monthly or quarterly and your periodic redemptions may be taxable to you.
Payments can be made either by check or electronic transfer to a bank account
designated by you. If you direct that withdrawal payments be made to another
person after you have opened your account, a signature guarantee must accompany
your instructions. Purchases of Class A shares of the Trust at a time when you
have a SWP in effect may result in the payment of unnecessary sales charges and
may, therefore, be disadvantageous.
You may obtain additional information by calling PSC at 1-800-225-6292 or
by referring to the Statement of Additional Information.
Reinstatement Privilege (Class A Shares Only)
If you redeem all or part of your Class A shares of the Trust, you may
reinvest all or part of the redemption proceeds
16
<PAGE>
without a sales charge in Class A shares of the Trust if you send a written
request to PSC not more than 90 days after your shares were redeemed. Your
redemption proceeds will be reinvested at the next determined net asset value of
the Class A shares of the Trust in effect immediately after receipt of the
written request for reinstatement. You may realize a gain or loss for federal
income tax purposes as a result of the redemption, and special tax rules may
apply if a reinstatement occurs. Subject to the provisions outlined under "How
to Exchange Trust Shares" above, you may also reinvest in Class A shares of
other Pioneer mutual funds; in this case, you must meet the minimum investment
requirement for each fund you enter.
The 90-day reinstatement period may be extended by PFD for periods of up to
one year for shareholders living in areas that have experienced a natural
disaster, such as a flood, hurricane, tornado or earthquake.
----------------------------------------
The options and services available to shareholders, including the terms of
the Exchange Privilege and the Pioneer Investomatic Plan, may be revised,
suspended or terminated at any time by PFD or by the Trust. You may establish
the services described in this section when you open your account. You may also
establish or revise many of them on an existing account by completing an Account
Options Form, which you may request by calling 1-800-225-6292.
XIII. THE TRUST
The Trust is a diversified, open-end management investment company
(commonly referred to as a mutual fund) organized as a Massachusetts business
trust on March 17, 1988. Prior to July 1, 1994 the Trust was named Pioneer U.S.
Government Trust. The Trust has authorized an unlimited number of shares of
beneficial interest. As an open-end management investment company, the Trust
usually continuously offers its shares to the public and under normal conditions
must redeem its shares upon the demand of any shareholder at the then current
net asset value per share less any applicable sales charge. See "How to Sell
Trust Shares." The Trust is not required, and does not intend, to hold annual
shareholder meetings, although special meetings may be called for the purposes
of electing or removing Trustees, changing fundamental investment restrictions
or approving a management or subadvisory contract.
The Trustees have the authority, without further shareholder approval, to
classify and reclassify the shares of the Trust, or any additional series of the
Trust, into one or more classes. As of the date of this Prospectus, the Trustees
have authorized the issuance of three classes of shares, designated Class A,
Class B and Class C. The shares of each class represent an interest in the same
portfolio of investments of the Trust. Each class has equal rights as to voting,
redemption, dividends and liquidation, except that each class bears different
distribution and transfer agent fees and may bear other expenses properly
attributable to the particular class. Class A, Class B and Class C shareholders
have exclusive voting rights with respect to the Rule 12b-1 distribution plans
adopted by holders of those shares in connection with the distribution of
shares. The Trust reserves the right to create and issue additional series of
shares.
When issued and paid for in accordance with the terms of the Prospectus and
Statement of Additional Information, shares of the Trust are fully-paid and
non-assessable by the Trust. Shares will remain on deposit with the Trust's
transfer agent and certificates will not normally be issued. The Trust reserves
the right to charge a fee for the issuance of Class A share certificates;
certificates will not be issued for Class B or Class C shares.
XIV. INVESTMENT RESULTS
The Trust may from time to time include yield information in advertisements
or in information furnished generally to existing or prospective shareholders.
Yield information is computed in accordance with the SEC's standardized yield
formula. The calculation for all Classes is computed by dividing the net
investment income per share of a Class during a base period of 30 days, or one
month, by the maximum offering price per share of the applicable Class of the
Trust on the last day of such base period. The resulting "30-day yield" is then
annualized as described below. (Net investment income per share of a Class is
determined by dividing the Trust's net investment income attributable to a Class
during the base period by the average number of shares of that Class of the
Trust.) The 30-day yield is then "annualized" by a computation that assumes that
the net investment income per share of a Class is earned and reinvested for a
six-month period at the same rate as during the 30-day base period and that the
resulting six-month income will be generated over an additional six months.
The average annual total return (for a designated period of time) on an
investment in the Trust may also be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for each
Class is computed in accordance with the SEC's standardized formula. The
calculation for all Classes assumes the reinvestment of all dividends and
distributions at net asset value. In addition, for Class A shares the
calculation assumes the deduction of the maximum sales charge of 4.50%; for
Class B and Class C shares the calculation reflects the deduction of any
applicable CDSC. The periods illustrated would normally include one, five and
ten years (or since the commencement of the public offering of the shares of a
Class, if shorter) through the most recent calendar quarter.
Yield and average annual total return quotations of the Trust do not
reflect the impact of federal or state income taxes.
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These
17
<PAGE>
data may cover any period of the Trust's existence and may or may not include
the impact of sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indices,
indicators of economic activity or averages of mutual funds results may be cited
or compared with the investment results of the Trust. The Trust may also include
securities industry or comparative performance information generally and in
advertising or materials marketing the Trust's shares. Such performance
information may include rankings or listings by magazines, newspapers, or
independent statistical or ratings services, such as Lipper Analytical Services,
Inc. or Ibbotson Associates.
The Trust's investment results will vary from time to time depending on
market conditions, the composition of the Trust's portfolio and operating
expenses of the Trust. All quoted investment results are historical and should
not be considered representative of what an investment in the Trust may earn in
any future period. For further information about the calculation methods and
uses of the Trust's investment results, see the Statement of Additional
Information.
18
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Notes
19
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
Growth Funds
Global/International
Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Gold Shares
Pioneer India Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
United States
Pioneer Capital Growth Fund
Pioneer Growth Shares
Pioneer Micro-Cap Fund
Pioneer Mid-Cap Fund
Pioneer Small Company Fund
Growth and Income Funds
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
Income Funds
Taxable
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Short-Term Income Trust
Tax-Exempt*
Pioneer Intermediate Tax-Free Fund
Pioneer Tax-Free Income Fund
Money Market Fund
Pioneer Cash Reserves Fund
*Not suitable for retirement accounts
20
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[Pioneer Logo]
Pioneer America
Income Trust
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
SHERMAN B. RUSS, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR LLP
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-800-225-6292
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses,
applications and service forms
and telephone transactions .................................... 1-800-225-6292
FactFone(SM)
Automated fund yields and prices and account
information ................................................... 1-800-225-4321
Retirement plans ............................................... 1-800-622-0176
Toll-free fax .................................................. 1-800-225-4240
Telecommunications Device for the Deaf (TDD) ................... 1-800-225-1997
Visit our website ........................................ www.pioneerfunds.com
0498-5181
(C)Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER AMERICA INCOME TRUST
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A, Class B and Class C Shares
April 30, 1998
This Statement of Additional Information is not a Prospectus but should be read
in conjunction with the Prospectus dated April 30 1998 (the "Prospectus") of
Pioneer America Income Trust (the "Trust")as amended and/or supplemented from
time to time. A copy of the Prospectus can be obtained free of charge by calling
Shareholder Services at 1-800-225-6292 or by written request to the Trust at 60
State Street, Boston, Massachusetts 02109. The most recent Annual Report to
Shareholders is attached to this Statement of Additional Information and is
hereby incorporated into this Statement of Additional Information by reference.
TABLE OF CONTENTS
Page
1. Investment Policies and Restrictions.......... 2
2. Management of the Trust....................... 5
3. Investment Adviser............................ 10
4. Principal Underwriter ........................ 10
5. Underwriting Agreement and Distribution Plans. 11
6. Shareholder Servicing/Transfer Agent.......... 13
7. Custodian..................................... 13
8. Independent Public Accountants................ 14
9. Portfolio Transactions........................ 14
10. Tax Status.................................... 15
11. Description of Shares......................... 18
12. Certain Liabilities........................... 18
13. Letter of Intent.............................. 18
14. Systematic Withdrawal Plan.................... 19
15. Determination of Net Asset Value.............. 20
16. Investment Results............................ 20
17. Financial Statements.......................... 23
Appendix A - Description of Corporate Bond Ratings 24
Appendix B - Performance Statistics............... 30
Appendix C - Other Pioneer Information............ 40
-------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
1........INVESTMENT POLICIES AND RESTRICTIONS
.........The Prospectus identifies the investment objective and principal
investment policies of the Trust. Other investment policies and a further
description of some of the policies described in the Prospectus appear below.
Capitalized terms not otherwise defined herein have the meaning given to them in
the Prospectus.
.........The following policies and restrictions supplement those discussed
in the Prospectus. Whenever an investment policy or restriction states a maximum
percentage of the Trust's assets that may be invested in any security or
presents a policy regarding quality standards, this standard or other
restrictions shall be determined immediately after and as a result of the
Trust's investment. Accordingly, any later increase or decrease resulting from a
change in values, net assets or other circumstances will not be considered in
determining whether the investment complies with the Trust's investment
objective and policies.
Additional Information Regarding GNMA Certificates.
.........As prepayment rates of individual mortgage pools will vary widely,
it is not possible to predict with certainty the average life of a particular
issue of GNMA Certificates. However, statistics published by the FHA are
normally used as an indicator of the expected average life of GNMA Certificates.
The actual life of a particular issue of GNMA ertificates will depend on the
coupon rate of the underlying mortgages, with higher
interest rate mortgages being more prone to prepayment or refinancing.
.........The coupon rate of interest of GNMA Certificates is lower than the
interest rate paid on the VA-guaranteed or FHA-insured mortgages underlying the
GNMA Certificates, but only by the amount of the fees paid to GNMA and the
issuer. For the most common type of mortgage pool, containing single-family
dwelling mortgages, GNMA receives an annual fee of 6/100 of 1% of the
outstanding principal for providing its guarantee, and the issuer is paid an
annual fee of 44/100 of 1% for assembling the mortgage pool and for passing
through monthly payments of interest and principal to GNMA Certificate holders.
.........The coupon rate by itself, however, does not indicate the yield
that will be earned on GNMA Certificates for the reasons given in the section
"Investment Objective and Policies" in the Prospectus. In quoting yields for
GNMA Certificates, the customary practice is to assume that the GNMA
Certificates will have a 12-year life. Compared on this basis, GNMA Certificates
have historically yielded roughly 25/100 of 1% more than high grade corporate
bonds and 50/100 of 1% more than U.S. Government and U.S. Government agency
bonds. As the life of individual pools may vary widely, however, the actual
yield earned on any issue of GNMA Certificates may differ significantly from the
yield estimated on the assumption of a 12-year life.
.........Since the inception of the GNMA mortgage-backed securities program
in 1970, the amount of GNMA Certificates outstanding has grown rapidly. The size
of the market and the active participation in the secondary market by securities
dealers and many types of investors make the GNMA Certificates a highly liquid
instrument. Prices of GNMA Certificates are readily available from securities
dealers and depend on, among other things, the level of market interest rates,
the GNMA Certificate's coupon rate and the prepayment experience of the pools of
mortgages backing each GNMA Certificate.
Investment Restrictions
Fundamental Investment Restrictions. The Trust has adopted certain investment
restrictions which may not be changed without the affirmative vote of the
holders of a "majority of the outstanding voting securities" (as defined in the
1940 Act) of the Trust. The Trust may not:
.........(1) invest its assets, except in U.S. Government Securities (as
defined in the Prospectus) and in when-issued commitments and repurchase
agreements with respect to these securities;
.........(2) borrow money, except from banks to meet redemptions in amounts
not exceeding 33 1/3% (taken at the lower of cost or current value) of its total
assets (including the amount borrowed). The Trust does not intend to borrow
money during the coming year, and will do so only as a temporary measure for
extraordinary purposes or to facilitate redemptions. The Trust will not purchase
securities while any borrowings are outstanding;
.........(3) purchase securities on margin;
.........(4) make loans to any person, except by (a) the purchase of a debt
obligation in which the Trust is permitted to invest and (b) engaging in
repurchase agreements;
.........(5) act as an underwriter, except as it may be deemed to be an
underwriter in a sale of restricted securities; or
.........(6) issue senior securities, except as permitted by restrictions
nos. 2 and 4 above, and, for purposes of this restriction, the issuance of
shares of beneficial interest in multiple classes or series, the purchase or
sale of options, futures contracts and options on futures contracts, forward
commitments, forward foreign exchange contracts and repurchase agreements
entered into in accordance with the Trust's investment policies.
.........In order to register its shares in certain jurisdictions, the
Trust has agreed to adopt certain additional investment restrictions which are
not fundamental and may be changed by a vote of the Trust's Board of Trustees
and without shareholder approval or notification. Pursuant to these additional
restrictions, the Trust may not:
......... (a) make short sales of securities;
.........
.........(b) invest in any security, including any repurchase agreement
maturing in more than seven days, which is illiquid, if more than 15% of the net
assets of the Trust, taken at market value, would be invested in such
securities;
.........(c) pledge, mortgage or hypothecate its portfolio securities if at
the time of such action the value of the securities so pledged, mortgaged or
hypothecated would exceed 10% of the value of the Trust;
.........
.........
.........(d) purchase or sell real estate except that the Trust may (i) acquire
or lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (iii) invest in securities that are
secured by real estate or interests therein, (iv) purchase and sell
mortgage-related securities and (v) hold and sell real estate acquired by the
Trust as a result of the ownership or securities.
In order to qualify as a permissible investment for Federal credit
unions, the Trust has agreed to adopt the following additional investment
restrictions which are not fundamental and may be changed by a vote of the
Trust's Board of Trustees and without shareholder approval or notification:
(a) The Trust may contract for the purchase or sale of a security as
long as the delivery of the security is by regular-way settlement. Regular-way
settlement means delivery of a security from a seller to a buyer within the time
frame that the securities industry has established for that type of security.
(b) The Trust may invest in a variable rate investment, as long as the
index is tied to domestic interest rates and not, for example, to foreign
currencies, foreign interest rates, or domestic or foreign commodity prices,
equity prices, or inflation rates. For these purposes, the U.S.
dollar-denominated London Interbank Offered Rate (LIBOR) is a domestic interest
rate.
(c) The Trust may not invest in shares or deposits in a corporate
credit union.
(d) The Trust may not invest in a registered investment company or
collective investment fund.
(e) (1) The Trust may invest in a fixed or variable rate
CMO/REMIC only if the security meets all of the following
tests:
(i) Average Life Test. The CMO/REMIC's
estimated average life is 10 years or
less;
(ii) Average Life Sensitivity Test. The
CMO/REMIC's estimated average life extends by
four years or less, assuming an immediate and
sustained parallel shift in interest rates of up
to and including plus 300 basis points, and
shortens by six years or less, assuming an
immediate and sustained parallel shift in
interest rates of up to and including minus 300
basis points; and
(iii) Price Sensitivity Test. The CMO/REMIC's
estimated price change is 17 percent or less, as
a result of an immediate and sustained parallel
shift in interest rates of up to and including
plus and minus 300 basis points.
(2) The Trust must retest CMOs/REMICs at least quarterly, more
frequently if market or business conditions dictate.
(3) If the Trust uses individual prepayment estimates for
testing, the Trust must obtain estimates from all of the
prepayment sources listed in its investment policy. When the
Trust purchases a CMO/REMIC, the security must pass the tests
for each estimate. When the Trust retests the CMO/REMIC, the
security must pass the tests for a majority of the estimates.
(4) If the Trust uses a median prepayment estimate, the median
estimate at the time of purchase of a CMO/REMIC must be based on
at least five prepayment sources. When the Trust retests the
CMO/REMIC, the median estimate must be based on at least two
prepayment sources.
(f) The Trust may not invest in municipal securities.
(g) The Trust may not invest in any of the following instruments:
(1) Yankee dollar deposits;
(2) Eurodollar deposits;
(3) Banker's acceptances;
(4) Deposit notes; and
(5) Bank notes.
(h) The Trust may enter into a repurchase transaction as long as:
(1) The repurchase securities are of the type
described in the Prospectus for investment
by the Trust;
(2) The Trust receives a daily assessment of the market
value of the repurchase securities, including accrued
interest, and maintains adequate margin that reflects a
risk assessment of the repurchase securities and the terms
of the transaction; and
(3) The Trust has entered into signed contracts with all
approved counterparties.
(i) The Trust may not enter into reverse repurchase and collateralized
borrowing transactions.
(j) The Trust may not lend portfolio securities.
(k) (1) The Trust may trade securities, including engaging in
when-issued trading and pair-off transactions, as long as the
Trust's investment adviser can show that it has sufficient
resources, knowledge, systems, and procedures to handle the
risks.
(2) The Trust must record any security it purchases or sells
for trading purposes at fair value on the trade date. The trade
date is the date the Trust commits, orally or in writing, to
purchase or sell a security.
(3) At least monthly, the Trust must give its Board of
Trustees or the investment adviser's investment-related
committee a written report listing all purchase and sale
transactions of trading securities and the resulting gain or
loss on an individual basis.
(l) The Trust may not purchase or sell financial derivatives, such as
futures, options, interest rate swaps, or forward rate agreements.
(m) The Trust may not engage in adjusted trading or short sales.
Adjusted trading means any method or transaction used to defer a loss whereby
the Trust sells a security to a counterparty at a price above its then-current
market price and simultaneously purchases or commits to purchase from the
counterparty another security at a price above its then-current price.
(n) The Trust may not purchase stripped mortgage-backed securities,
residual interests in CMOs/REMICs, mortgage servicing rights, commercial
mortgage related securities, or small business related securities.
(o) The Trust may not purchase a zero coupon investment with a maturity
date that is more than 10 years from the settlement date.
2. MANAGEMENT OF THE TRUST
The Trust's Board of Trustees provides broad supervision over the
affairs of the Trust. The officers of the Trust are responsible for the Trust's
operations. The Trustees and executive officers of the Trust are listed below,
together with their principal occupations during the past five years. An
asterisk indicates those Trustees who are interested persons of the Trust within
the meaning of the 1940 Act.
JOHN F. COGAN, JR.*, Chairman of the Board, President and Trustee, DOB:
June 1926 President, Chief Executive Officer and a Director of The Pioneer
Group, Inc. ("PGI"); Chairman and a Director of Pioneering Management
Corporation ("PMC") and Pioneer Funds Distributor, Inc. ("PFD"); Director of
Pioneering Services Corporation ("PSC"), Pioneer Capital Corporation ("PCC"),
Pioneer Real Estate Advisors, Inc., Pioneer Forest, Inc., Pioneer Explorer,
Inc., Pioneer Management (Ireland) Ltd. ("PMIL") and Closed Joint Stock Company
"Forest-Starma"; President and Director of Pioneer Metals and Technology, Inc.
("PMT"), Pioneer International Corp. ("PIntl"), Pioneer First Russia, Inc.
("First Russia") and Pioneer Omega, Inc. ("Omega"); Chairman of the Board and
Director of Pioneer Goldfields Limited ("PGL") and Teberebie Goldfields Limited;
Chairman of the Supervisory Board of Pioneer Fonds Marketing, GmbH, Pioneer
First Polish Investment Fund Joint Stock Company, S.A. and Pioneer Czech
Investment Company, A.S.; Chairman, President and Trustee of all of the Pioneer
mutual funds; Director of Pioneer Global Equity Fund Plc, Pioneer Global Bond
Fund Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity Fund Plc, Pioneer
Central & Eastern Europe Fund Plc and Pioneer US Real Estate Fund Plc; and
Partner, Hale and Dorr LLP (counsel to PGI and the Trust).
MARY K. BUSH, Trustee, DOB: April 1948
4201 Cathedral Avenue, NW, Washington, DC 20016
President, Bush & Co., an international financial advisory firm; Director and
Trustee of Mortgage Guaranty Insurance Corporation, Novecon Management Company,
Hoover Institution, Folger Shakespeare Library, March of Dimes, Project 2000,
Inc. (not-for-profit educational organization), Small Enterprise Assistance Fund
and Wilberforce University; Advisory Board Member, Washington Mutual Investors
Fund, a registered investment company; and Trustee of all of the Pioneer mutual
funds, except Pioneer Variable Contracts Trust.
RICHARD H. EGDAHL, M.D., Trustee, DOB: December 1926
Boston University Health Policy Institute, 53 Bay State Road, Boston, MA 02115
Alexander Graham Bell Professor of Health Care Entrepreneurship, Boston
University; Professor of Management, Boston University School of Management;
Professor of Public Health, Boston University School of Public Health; Professor
of Surgery, Boston University School of Medicine; University Professor, Boston
University; Director, Boston University Health Policy Institute and Boston
University Program for Health Care Entrepreneurship; Director, CORE (management
of workers' compensation and disability costs - NASDAQ); Director, WellSpace
(provider of complementary health care); Trustee, Boston Medical Center;
Honorary Trustee, Franciscan Children's Hospital; and Trustee of all of the
Pioneer mutual funds.
MARGARET B.W. GRAHAM, Trustee, DOB: May 1947
The Keep, P.O. Box 110, Little Deer Isle, ME 04650
Founding Director, The Winthrop Group, Inc. (consulting firm); Manager of
Research Operations, Xerox Palo Alto Research Center, from 1991 to 1994;
Professor of Operations Management and Management of Technology and Associate
Dean, Boston University School of Management, from 1989 to 1993; and Trustee of
all of the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, Trustee, DOB: July 1917
6363 Waterway Drive, Falls Church, VA 22044
Professor Emeritus, George Washington University; Director, American
Productivity and Quality Center; Adjunct Scholar, American Enterprise Institute;
Economic Consultant; and Trustee of all of the Pioneer mutual funds, except
Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, Trustee, DOB: May 1948 One Boston Place, Suite 2635,
Boston, MA 02108 President, Newbury, Piret & Company, Inc. (merchant banking
firm); Trustee of Boston Medical Center; Member of the Board of Governors of the
Investment Company Institute; and Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, Trustee and Executive Vice President, DOB: February 1944
Executive Vice President and a Director of PGI; President, Chief Investment
Officer and a Director of PMC; Director of PFD, PCC, PIntl, First Russia, Omega,
Pioneer SBIC Corporation ("Pioneer SBIC"), PMIL, Pioneer Global Equity Fund Plc,
Pioneer Global Bond Fund Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity
Fund Plc, Pioneer Central & Eastern Europe Fund Plc and Pioneer US Real Estate
Fund Plc; and Executive Vice President and Trustee of all of the Pioneer mutual
funds.
STEPHEN K. WEST, Trustee, DOB: September 1928
125 Broad Street, New York, NY 10004
Of Counsel to Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus Funds
(mutual funds); and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, Trustee, DOB: June 1936 One North Adgers Wharf, Charleston,
SC 29401 President, John Winthrop & Co., Inc. (private investment firm);
Director of NUI Corp. (energy sales, services and distribution); and Trustee of
all of the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
WILLIAM H. KEOUGH, Treasurer, DOB: April 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI; Treasurer
of PFD, PMC, PSC, PCC, PIntl, PMT, PGL, First Russia, Omega and Pioneer SBIC;
and Treasurer of all of the Pioneer mutual funds.
JOSEPH P. BARRI, Secretary, DOB: August 1946
Corporate Secretary of PGI and most of its subsidiaries; Secretary of all of the
Pioneer mutual funds; and Partner, Hale and Dorr LLP.
ERIC W. RECKARD, Assistant Treasurer, DOB: June 1956
Manager of Business Planning and Internal Audit of PMC since September 1998;
Manager of Fund Accounting of PMC since May 1994; Manager of Auditing,
Compliance and Business Analysis for PGI prior to May 1994; and Assistant
Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, Assistant Secretary, DOB: March 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant Secretary
of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual funds;
Assistant Clerk of PFD and PSC; and junior partner of Hale and Dorr LLP prior to
1995.
SHERMAN B. RUSS, Vice President, DOB: July 1937
Senior Vice President of PMC; Vice President of Pioneer Bond Fund,
Pioneer Money Market Trust, and Pioneer Interest Shares.
The Trust's Amended and Restated Declaration of Trust (the "Declaration
of Trust") provides that the holders of two-thirds of its outstanding shares may
vote to remove a Trustee of the Trust at any meeting of shareholders. See
"Description of Shares" below. The business address of all officers is 60 State
Street, Boston, Massachusetts 02109.
All of the outstanding capital stock of PFD, PMC and PSC is owned, directly or
indirectly, by PGI, a publicly owned Delaware corporation. PMC, the Trust's
investment adviser, serves as the investment adviser for the Pioneer mutual
funds listed below and manages the investments of certain institutional
accounts.
The table below lists all the Pioneer U. S. mutual funds currently offered
to the public and the investment adviser and principal underwriter for each
fund.
Investment Principal
Fund Name Adviser Underwriter
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer World Equity Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Independence Fund PMC Note 1
Pioneer Micro-Cap Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Balanced Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares PMC Note 2
Pioneer Variable Contracts Trust PMC Note 3
Note 1 This fund is available to the general public only through Pioneer
Independence Plans, a systematic investment plan sponsored by PFD.
Note 2 This fund is a closed-end fund.
Note 3 This is a series of ten separate portfolios designed to provide
investment vehicles for the variable annuity and variable life insurance
contracts of various insurance companies or for certain qualified pension plans.
To the knowledge of the Trust, no officer or Trustee of the Trust owned
5% or more of the issued and outstanding shares of PGI as of March 31, 1998,
except Mr. Cogan who then owned approximately 14% of such shares.
As of March 31, 1998, the Trustees and Officers of the Trust owned
beneficially in the aggregate less than 1% of the outstanding shares of the
Trust. As of such date SEA TOI Fisheries Inc. Capital Construction Fund, RR 2
Box 482-M, Warrenton, OR 97146-9710 owned approximately 7.86% (26,114.682) and
Smith Barney Inc., 388 Greenwich Street, New York, NY 10013-2375 owned 5.06%
(16,814.683) of the outstanding Class C shares of the Trust. Compensation of
Officers and Trustees
The Trust pays no salaries or compensation to any of its officers. The
Trust pays an annual trustees' fee to each Trustee who is not affiliated with
PMC, PGI, PFD or PSC consisting of two components: (a) a base fee of $500 and
(b) a variable fee, calculated on the basis of the average net assets of the
Trust. In addition, the Trust pays a per meeting fee of $100 to each Trustee who
is not affiliated with PMC, PGI, PFD or PSC. The Trust also pays an annual
committee participation fee to trustees who serve as members of committees
established to act on behalf of one or more of the Pioneer mutual funds.
Committee fees are allocated to the Trust on the basis of the Trust's average
net assets. Each Trustee who is a member of the Audit Committee for the Pioneer
mutual funds receives an annual fee equal to 10% of the aggregate annual
trustees' fee, except the Committee Chairperson who receives an annual trustee's
fee equal to 20% of the aggregate annual trustee's fee. Members of the Pricing
Committee for the Pioneer mutual funds, as well as any other committee which
renders material functional services to the Board of Trustees for the Pioneer
mutual funds, receive an annual fee equal to 5% of the annual trustees' fee,
except the Committee Chairperson who receives an annual trustees' fee equal to
10% of the annual trustees' fee. Each Trustee who is not affiliated with PMC,
PGI, PFD or PSC also receives $375 per meeting for attendance at meetings of the
Non-Interested Trustees Committee, except for the Committee Chairperson who will
receive an additional $375 per meeting. Any such fees paid to affiliates or
interested persons of PMC, PGI, PFD or PSC are reimbursed to the Trust under its
management contract.
The following table provides information regarding the compensation
paid by the Trust and other Pioneer mutual funds to the Trustees for their
services.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Compensation
Pension or from the Trust and
Retirement Benefits all other Pioneer
Aggregate Accrued as Part of Mutual Funds**
Compensation from the Trust's Expenses
the Trust*
John F. Cogan, Jr. $ 500.00 $0 $12,000.00
Mary K. Bush+ 937.00 0 30,000.00
Richard H. Egdahl,M.D. 1,903.00 0 62,000.00
Margaret B.W. Graham 1,903.00 0 60,000.00
John W. Kendrick 1,765.00 0 55,800.00
Marguerite A. Piret 2,227.00 0 80,000.00
David D. Tripple 500.00 0 12,000.00
Stephen K. West 1,905.00 0 63,800.00
John Winthrop 2,144.00 0 69,000.00
---------
Total 13,784.00 0 $444,600.00
========= ===========
- -----------------------------
* As of December 31, 1997, the Trust's fiscal year end.
** For the calendar year ended December 31, 1997.
+ Mary K. Bush became a Trustee on June 23, 1997.
</TABLE>
3. INVESTMENT ADVISER
The Trust has contracted with PMC, 60 State Street, Boston,
Massachusetts 02109, to act as its investment adviser. The term of the contract
is one year, but it is renewable annually after such date by the vote of a
majority of the Board of Trustees of the Trust (including a majority of the
Trustees who are not parties to the contract or interested persons of any such
parties). The vote must be cast in person at a meeting called for the purpose of
voting on such renewal. This contract terminates if assigned and may be
terminated without penalty by either party by vote of its Board of Directors or
Trustees or a majority of its outstanding voting securities and the giving of
sixty days' written notice. The management contract was approved by the
shareholders of the Trust at a meeting of shareholders held on December 6, 1993.
As compensation for its management services and expenses incurred, PMC is
entitled to a management fee at the rate of 0.50% per annum of the Trust's
average daily net assets. The fee is normally computed and accrued daily and
paid monthly.
PMC has agreed not to impose a portion of its management fee as
required to limit the Class A shares expenses to 1.00% of the average daily net
assets attributable to Class A shares; the portion of Trust-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. See "Expense Information" and
"Management of the Trust" in the Prospectus. This agreement is voluntary and
temporary and may be revised or terminated at any time by PMC.
. Pursuant to the expense limitation discussed above, during the fiscal years
ended December 31, 1997, 1996 and 1995, the Trust's management fees were reduced
by $190,847, $264,316 and $331,265, respectively, resulting in actual management
fees paid during these periods to PMC of $556,816, $543,776 and
$489,986,respectively. See the Notes to the Financial Statements in the December
31, 1997Annual Report (incorporated herein by reference) for more information.
4. PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts 02109, serves as the
principal underwriter for the Trust in connection with the continuous offering
of its shares. During the Trust's fiscal years ended December 31, 1997, 1996 and
1995 net underwriting commissions retained by PFD in connection with the
offering of Trust shares were $19,509, $34,997 and $44,343, respectively.
Commissions reallowed to dealers by PFD in those periods were $133,597, $246,139
and $636,642, respectively.
The Trust will not generally issue Trust shares for
consideration other than cash. At the Trust's sole discretion, however, it may
issue Trust shares for consideration other than cash in connection with a
reorganization, statutory merger or other acquisition of portfolio securities.
5. UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS
The Trust has entered into an underwriting agreement, dated July 10,
1990, with PFD. The Trustees who are not, and were not at the time they voted,
interested persons of the Trust, as defined in the 1940 Act, approved the
underwriting agreement. The underwriting agreement will continue in effect from
year to year if annually approved by the Trustees. The underwriting agreement
provides that PFD will bear all expenses it incurs in providing services under
the underwriting agreement. Such expenses include compensation to its employees
and representatives and to securities dealers for distribution related services.
PFD also pays certain expenses in connection with the distribution of the
Trust's shares, including the cost of preparing, printing and distributing
advertising or promotional materials, and the cost of printing and distributing
prospectuses and supplements to prospective shareholders. The Trust bears the
cost of registering its shares under federal and state securities law. The Trust
and PFD have agreed to indemnify each other against certain liabilities,
including liabilities under the Securities Act of 1933, as amended. Under the
Underwriting Agreement, PFD will use its best efforts in rendering services to
the Trust.
The Trust has adopted plans of distribution pursuant to Rule 12b-1
promulgated by the Securities and Exchange Commission ("SEC") under the 1940 Act
with respect to Class A, Class B and Class C shares (the "Class A Plan," the
"Class B Plan" and the "Class C Plan") (together, the "Plans").
Class A Plan
Pursuant to the Class A Plan, the Trust reimburses PFD for its
expenditures in financing certain activities primarily intended to result in the
sale of the Class A shares. Certain categories of such expenditures have been
approved by the Board of Trustees and are set forth in the Prospectus. See
"Distribution Plans" in the Prospectus. The expenses of the Trust pursuant to
the Class A Plan are accrued daily at a rate which may not exceed the annual
rate of 0.25% of the Trust's average daily net assets attributable to Class A
shares. The Class A Plan became effective on October 15, 1990. The Class A Plan
does not provide for the carryover of reimbursable expenses beyond twelve months
from the time they are incurred.
Class B Plan
The Class B Plan provides that the Trust shall pay PFD, as the Trust's
distributor for its Class B shares, a daily distribution fee equal on an annual
basis to 0.75% of the Trust's average daily net assets attributable to Class B
shares and will pay PFD a service fee equal to 0.25% of the Trust's average
daily net assets attributable to Class B shares (which PFD will in turn pay to
securities dealers which enter into a sales agreement with PFD at a rate of up
to 0.25% of the Trust's average daily net assets attributable to Class B shares
owned by investors for whom that securities dealer is the holder or dealer of
record). This service fee is intended to be consideration for personal services
and/or account maintenance services rendered by the dealer with respect to Class
B shares. PFD will advance to dealers the first year's service fee at a rate
equal to 0.25% of the amount invested. As compensation therefor, PFD may retain
the service fee paid by the Trust with respect to such shares for the first year
after purchase. Dealers will become eligible for additional service fees with
respect to such shares commencing in the thirteenth month following purchase.
Dealers may from time to time be required to meet certain other criteria in
order to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is to
compensate PFD for its distribution services with respect to Class B shares of
the Trust. PFD pays commissions to dealers as well as expenses of printing
prospectuses and reports used for sales purposes, expenses with respect to the
preparation and printing of sales literature and other distribution-related
expenses, including, without limitation, the cost necessary to provide
distribution-related services or personnel, travel, office expenses and
equipment. The Class B Plan also provides that PFD will receive all CDSCs
attributable to Class B shares. (See "Distribution Plans" in the Prospectus.)
When a broker-dealer sells Class B shares and elects, with PFD's approval, to
waive its right to receive the commission normally paid at the time of the sale,
PFD may cause all or a portion of the distribution fees described above to be
paid to the broker-dealer.
Class C Plan
The Class C Plan provides that the Trust will pay PFD, as the Trust's
distributor for its Class C shares, a distribution fee accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Trust's average daily net
assets attributable to Class C shares and will pay PFD a service fee equal to
0.25% of the Trust's average daily net assets attributable to Class C shares.
PFD will in turn pay to securities dealers which enter into a sales agreement
with PFD a distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Trust's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first year's service fee at a
rate equal to 0.25% of the current value of the amount invested. As compensation
therefor, PFD may retain the service fee paid by the Trust with respect to such
shares for the first year after purchase. Commencing in the thirteenth month
following a purchase of Class C shares, dealers will become eligible for
additional service fees at a rate of up to 0.25% of the amount invested and
additional compensation at a rate of up to 0.75% of the net asset value of such
shares. Dealers may from time to time be required to meet certain other criteria
in order to receive service fees. PFD or its affiliates are entitled to retain
all service fees payable under the Class C Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is
to compensate PFD for its distribution services with respect to the Class C
shares of the Trust. PFD pays commissions to dealers as well as expenses of
printing prospectuses and reports used for sales purposes, expenses with respect
to the preparation and printing of sales literature and other
distribution-related expenses, including, without limitation, the cost necessary
to provide distribution-related services, or personnel, travel office expenses
and equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. (See "Distributions Plans" in the Prospectus.)
When a broker-dealer sells Class C shares and elects, with PFD's approval, to
waive its right to receive the commission normally paid at the time of the sale,
PFD may cause all or a portion of the distribution fees described above to be
paid to the broker-dealer.
General
In accordance with the terms of the Plans, PFD provides to the Trust
for review by the Trustees a quarterly written report of the amounts expended
under the respective Plan and the purposes for which such expenditures were
made. In the Trustees' quarterly review of the Plans, they will consider the
continued appropriateness and the level of reimbursement or compensation the
Plans provide.
No interested person of the Trust, nor any Trustee of the Trust who is
not an interested person of the Trust, has any direct or indirect financial
interest in the operation of the Plans except to the extent that PFD and certain
of its employees may be deemed to have such an interest as a result of receiving
a portion of the amounts expended under the Plans by the Trust and except to the
extent certain officers may have an interest in PFD's ultimate parent, PGI.
The Plans were adopted by a majority vote of the Board of Trustees,
including all of the Trustees who are not, and were not at the time they voted,
interested persons of the Trust, as defined in the 1940 Act (none of whom has or
have any direct or indirect financial interest in the operation of the Plans)
(the "Qualified Trustees"), cast in person at a meeting called for the purpose
of voting on the Plans. In approving the Plans, the Trustees identified and
considered a number of potential benefits which the Plans may provide. The Board
of Trustees believes that there is a reasonable likelihood that the Plans will
benefit the Trust and its current and future shareholders. Under their terms,
the Plans remain in effect from year to year provided such continuance is
approved annually by vote of the Trustees in the manner described above. The
Plans may not be amended to increase materially the annual percentage limitation
of average net assets which may be spent for the services described therein
without approval of the shareholders of the Class or Classes affected thereby,
and material amendments of the Plans must also be approved by the Trustees in
the manner described above. A Plan may be terminated at any time, without
payment of any penalty, by vote of the majority of the Qualified Trustees or by
a vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the respective Class of the Trust. A Plan will automatically
terminate in the event of its assignment (as defined in the 1940 Act).
During the fiscal year ended December 31, 1997 the Trust incurred distribution
fees of $340,346 pursuant to the Class A Plan, $98,813 pursuant to the Class B
Plan and $25,953 pursuant to the Class C Plan.
Upon redemption, Class A shares may be subject to a 1% CDSC, Class
B shares that are redeemed within six years of purchase are subject to a CDSC at
a rate declining from a maximum of 4% based on the lower of the cost or market
value of the shares and redemptions of Class C shares within one year of
purchase are subject to a 1% CDSC. During the fiscal year ended December 31,
1997, CDSCs in the amount of $33,502 were paid to PFD.
6. SHAREHOLDER SERVICING/TRANSFER AGENT
The Trust has contracted with PSC, 60 State Street, Boston,
Massachusetts 02109, to act as shareholder servicing and transfer agent for the
Trust. This contract terminates if assigned and may be terminated without
penalty by either party upon 90 days' written notice.
Under the terms of its contract with the Trust, PSC services
shareholder accounts, and its duties include: (i) processing sales, redemptions
and exchanges of shares of the Trust; (ii) distributing dividends and capital
gains associated with Trust portfolio accounts; and (iii) maintaining account
records and responding to shareholder inquiries.
PSC receives an annual fee of $30.00 per Class A, Class B and Class C
shareholder account from the Trust as compensation for the services described
above. PSC is also reimbursed by the Trust for its out-of-pocket expenditures.
This fee is set at an amount determined by vote of a majority of the Trustees
(including a majority of the Trustees who are not parties to the contract with
PSC or interested persons of any such parties) to be comparable to fees for such
services being paid by other investment companies.
The Trust may compensate entities which have agreed to provide certain
sub-accounting services, such as specific transaction processing and
recordkeeping services. Any such payments by the Trust would be in lieu of the
per account fee which would otherwise be paid by the Trust to PSC.
7. CUSTODIAN
Brown Brothers Harriman & Co.. 40 Water Street, Boston, Massachusetts
02109, is the custodian (the "Custodian") of the Trust's assets. The Custodian's
responsibilities include safekeeping and controlling the Trust's cash and
securities, handling the receipt and delivery of securities and collecting
interest and dividends on the Trust's investments. The Custodian does not
determine the investment policies of the Trust or decide which securities the
Trust will buy or sell. The Trust may, however, invest in securities, including
repurchase agreements, issued by the Custodian and may deal with the Custodian
as principal in securities transactions. Portfolio securities may be deposited
into the Federal Reserve-Treasury Department Book Entry System or the Depository
Trust Company.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street, Boston, Massachusetts 02110,
is the Trust's independent public accountants, providing audit services, tax
return review, and assistance and consultation with respect to the preparation
of filings with the SEC.
9. PORTFOLIO TRANSACTIONS
The Trust intends to fully manage its portfolio by buying and selling
securities, as well as holding securities to maturity. In managing its
portfolio, the Trust seeks to take advantage of market developments and yield
disparities, which may include use of the following strategies:
(1) shortening the average maturity of its portfolio in
anticipation of a rise in interest rates so as to minimize
depreciation of principal;
(2) lengthening the average maturity of its portfolio in
anticipation of a decline in interest rates so as to maximize yield;
(3) selling one type of debt security and buying another when
disparities arise in the relative values of each; and
(4) changing from one debt security to an essentially similar
debt security when their respective yields appear distorted due to
market factors.
The Trust engages in portfolio trading if it believes a transaction net
of costs (including taxes and custodian charges) will help in achieving the
Trust's investment objective.
Decisions relating to the purchase and sale of securities for the
Trust, the allocation of portfolio transactions and, where applicable, the
negotiation of commission rates are made by officers of PMC.
The primary consideration in placing portfolio security transactions is
execution at the most favorable prices under the circumstances. PMC has complete
freedom as to the markets in which and broker-dealers through which it seeks
this result. Debt securities are traded principally in the over-the-counter
market on a net basis through dealers acting for their own account and not as
brokers. The cost of securities purchased from underwriters includes an
underwriter's commission or concession, and the prices at which securities are
purchased and sold from and to dealers include a dealer's markup or markdown.
PMC generally attempts to negotiate with underwriters to decrease the commission
or concession for the benefit of the Trust. PMC normally seeks to deal directly
with the primary market makers unless, in its opinion, better prices are
available elsewhere.
Subject to the requirement of seeking execution at the best available
price, securities may, as authorized by PMC's management contract, be bought
from or sold to dealers who furnish statistical research and other information
or services to PMC and the Trust, or who sell shares of any of the Pioneer
mutual funds. Brokerage and research services may include advice concerning the
value of securities; the advisability of investing in, purchasing or selling
securities; the availability of securities or the purchasers or sellers of
securities; and furnishing analyses, manuals and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy,
performance of accounts, comparative fund statistics and credit rating service
information. PMC maintains a listing of dealers who provide such services on a
regular basis. Management believes that no exact dollar value can be calculated
for such services.
In addition to the Trust, PMC acts as investment adviser to the other
Pioneer mutual funds and certain private accounts with investment objectives
similar to those of the Trust. As such, securities may meet investment
objectives of the Trust, such other funds and such private accounts. In such
cases, the decision to recommend to purchase for one fund or account rather than
another is based on a number of factors. The determining factors in most cases
are the amount of securities of the issuer then outstanding, the value of those
securities and the market for them. Other factors considered in the investment
recommendations include other investments which each company presently has in a
particular industry or country and the availability of investment funds in each
mutual fund or account.
It is possible that, at times, identical securities will be held by
more than one mutual fund and/or account. However, the position of any mutual
fund or account in the same issue may vary and the length of time that any
mutual fund or account may choose to hold its investment in the same issue may
likewise vary. To the extent that the Trust, another Pioneer mutual fund or a
private account managed by PMC seeks to acquire the same security at about the
same time, the Trust may not be able to acquire as large a position in such
security as it desires or it may have to pay a higher price for the security.
Similarly, the Trust may not be able to obtain as large an execution of an order
to sell or as high a price for any particular portfolio security if PMC decides
to sell on behalf of another account the same portfolio security at the same
time. On the other hand, if the same securities are bought or sold at the same
time by more than one account, the resulting participation in volume
transactions could produce better executions for the Trust or other account. In
the event that more than one account purchases or sells the same security on a
given date, the purchases and sales will normally be made as nearly as
practicable on a pro rata basis in proportion to the amounts desired to be
purchased or sold by each.
The Trustees periodically review PMC's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Trust.
During the fiscal years ended December 31, 1995 and 1996 and 1997the
Trust did not pay any brokerage commissions.
10. TAX STATUS
It is the Trust's policy to meet the requirements of Subchapter M of the Code,
for qualification as a regulated investment company. These requirements relate
to the sources of the Trust's income, the diversification of its assets and the
distribution of its income to shareholders. If the Trust meets all such
requirements and distributes to its shareholders, in accordance with the Code's
timing requirements, all investment company taxable income and net capital gain,
if any, which it earns, the Trust will be relieved of the necessity of paying
federal income tax.
In order to qualify as a regulated investment company under Subchapter
M, the Trust must, among other things, derive at least 90% of its annual gross
income from interest, gains from the sale or other disposition of securities and
certain other income (the "90% income test") and satisfy certain annual
distribution and quarterly diversification requirements. For purposes of the 90%
income test, income the Trust earns from equity interests in certain entities
that are not treated as corporations (e.g., are treated as partnerships or
trusts) for U.S. tax purposes will generally have the same character for the
Trust as in the hands of such entities; consequently, the Trust may be required
to limit its equity investments in such entities that earn fee income, rental
income, or other nonqualifying income.
Dividends from investment company taxable income, which includes net investment
income and net short-term capital gain in excess of net long-term capital loss,
are taxable as ordinary income, whether received in cash or reinvested in
additional shares. Dividends from net long-term capital gain in excess of net
short-term capital loss ("net capital gain") if any, whether received in cash or
reinvested in additional shares, are taxable to the Trust's shareholders as
capital gains for federal income tax purposes without regard to the length of
time shares of the Trust have been held. As a result of the enactment of the
Taxpayer Relief Act of 1997 (the "1997 TRA") on August 5, 1997, gain recognized
after May 6, 1997 from the sale of a capital asset is taxable to individual
(noncorporate) investors at different maximum federal income tax rates,
depending generally upon the tax holding period for the asset, the federal
income tax bracket of the taxpayer, and the dates the asset was acquired and/or
sold. The Treasury Department has issued guidance under the 1997 TRA that
(subject to possible modification by future "technical corrections" legislation)
enable the Trust to pass through to its shareholders the benefits of the capital
gains tax rates enacted in the 1997 TRA. The Trust will provide appropriate
information to its shareholders about its distributions, including the tax
rate(s) applicable to its distributions from its long-term capital gains, in
accordance with this and any future guidance. Shareholders should consult their
own tax advisers on the correct application of these new rules in their
particular circumstances Any dividend declared by the Trust in October, November
or December as of a record date in such a month and paid during the following
January will be treated for federal income tax purposes as received by
shareholders on December 31 of the calendar year in which it is declared.
If the Trust invests in securities with original issue discount (or with market
discount if the Trust elects to include market discount in income currently),
the Trust must accrue income on such investments for each taxable year, which
generally will be prior to the receipt of the corresponding cash payments.
However, the Trust must distribute, at least annually, all or substantially all
of its net income, including such accrued income, to shareholders to qualify as
a regulated investment company under the Code and avoid Federal income and
excise taxes. Therefore, the Trust may have to dispose of its portfolio
securities under disadvantageous circumstances to generate cash, or may have to
leverage itself by borrowing the cash, to satisfy distribution requirements.
For federal income tax purposes, the Trust is permitted to carry forward a net
capital loss for any year to offset its capital gains, if any, during the eight
years following the year of the loss. To the extent subsequent capital gains are
offset by such losses, they would not result in federal income tax liability to
the Trust and therefore are not expected to be distributed as such to
shareholders. At December 31, 1997, the Trust had aggregate capital loss
carryforwards of $7,671,053, which will expire between 2002 and 2004 if not
utilized.
At the time of an investor's purchase of Trust shares, a portion of the purchase
price may be attributable to realized or unrealized appreciation in the Trust's
portfolio. Consequently, subsequent distributions by the Trust on these shares
from such appreciation may be taxable to such investor even if the net asset
value of the investor's shares is, as a result of the distributions, reduced
below the investor's cost for such shares and the distributions economically
represent a return of a portion of the investment.
Redemptions and exchanges are taxable events for shareholders that are subject
to tax. Shareholders should consult their own tax advisers with reference to
their individual circumstances to determine whether any particular transaction
in Trust shares is properly treated as a sale for tax purposes, as the following
discussion assumes, and the character of and tax rate applicable to any gains or
losses recognized in such transactions under the new rate structure enacted in
the 1997 TRA. Any loss realized by a shareholder upon the redemption, exchange
or other disposition of shares with a tax holding period of six months or less
will be treated as a long-term capital loss to the extent of any amounts treated
as distributions of long-term capital gain with respect to such shares.
In addition, if Class A shares redeemed or exchanged have been held for less
than 91 days, (1) in the case of a reinvestment in the Trust at net asset value
pursuant to the reinvestment privilege, the sales charge paid on such shares is
not included in their tax basis under the Code, and (2) in the case of an
exchange, all or a portion of the sales charge paid on such shares is not
included in their tax basis under the Code, to the extent a sales charge that
would otherwise apply to the shares received is reduced pursuant to the exchange
privilege. In either case, the portion of the sales charge not included in the
tax basis of the shares redeemed or surrendered in an exchange is included in
the tax basis of the shares acquired in the reinvestment or exchange. Losses on
redemptions or other dispositions of shares may be disallowed under "wash sale"
rules in the event of other investments in the Trust (including those made
pursuant to reinvestment of dividends and/or capital gain distributions) within
a period of 61 days beginning 30 days before and ending 30 days after a
redemption or other disposition of shares. In such a case, the disallowed
portion of any loss would be included in the federal tax basis of the shares
acquired in the other investments.
The Trust's dividends and distributions will not qualify for any
dividends-received deduction that might otherwise be available for certain
dividends received by shareholders that are corporations.
Different tax treatment, including penalties on certain excess contributions and
deferrals, certain pre-retirement and post-retirement distributions, and certain
prohibited transactions, is accorded to accounts maintained as qualified
retirement plans. Shareholders should consult their tax advisers for more
information.
A state income (and possibly local income and/or intangible property) tax
exemption is generally available to the extent the Trust's distributions are
derived from interest on (or, in the case of intangible property taxes, the
value of its assets is attributable to) certain U.S. Government obligations,
provided in some states that certain thresholds for holdings of such obligations
and/or reporting requirements are satisfied. The Trust will not seek to satisfy
any threshold or reporting requirements that may apply in particular taxing
jurisdictions, although the Trust may in its sole discretion provide relevant
information to shareholders.
Federal law requires that the Trust withhold (as "backup withholding") 31% of
reportable payments, including dividends, capital gain dividends and the
proceeds of redemptions (including exchanges) and repurchases to shareholders
who have not complied with IRS regulations. In order to avoid this withholding
requirement, shareholders must certify on their Account Applications, or on
separate IRS Forms W-9, that the Social Security Number or other Taxpayer
Identification Number they provide is their correct number and that they are not
currently subject to backup withholding, or that they are exempt from backup
withholding. The Trust may nevertheless be required to withhold if it receives
notice from the IRS or a broker that the number provided is incorrect or backup
withholding is applicable as a result of previous underreporting of interest or
dividend income.
If, as anticipated, the Trust continues to qualify as a regulated investment
company under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes.
The description of certain federal tax provisions above relates only to U.S.
federal income tax consequences for shareholders who are U.S. persons, i.e.,
U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. tax treatment,
including a possible 30% non-resident alien U.S. withholding tax (or
non-resident alien withholding tax at a lower treaty rate) on amounts treated as
ordinary dividends from the Trust and, unless an effective IRS Form W-8 or
authorized substitute for Form W-8 is on file, to 31% backup withholding on
certain other payments from the Trust. Shareholders should consult their own tax
advisers on these matters and on state, local and other applicable tax laws.
11. DESCRIPTION OF SHARES
The Trust's Declaration of Trust permits the Board of Trustees to
authorize the issuance of an unlimited number of full and fractional shares of
beneficial interest (without par value) which may be divided into such separate
series as the Trustees may establish. Currently, the Trust consists of only one
series. The Trustees may, however, establish additional series of shares, and
may divide or combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interests in the Trust.
The Declaration of Trust further authorizes the Trustees to classify or
reclassify any series of the shares into one or more classes. Pursuant thereto,
the Trustees have authorized the issuance of three classes of shares of the
Trust, Class A shares, Class B shares and Class C shares. Each share of a class
of the Trust represents an equal proportionate interest in the assets of the
Trust allocable to that class. Upon liquidation of the Trust, shareholders of
each class of the Trust are entitled to share pro rata in the Trust's net assets
allocable to such class available for distribution to shareholders. The Trust
reserves the right to create and issue additional series or classes of shares,
in which case the shares of each class of a series would participate equally in
the earnings, dividends and assets allocable to that class of the particular
series. Prior to July 1, 1994, the Trust was named Pioneer U.S. Government
Trust.
Shareholders are entitled to one vote for each share held and may vote
in the election of Trustees and on other matters submitted to meetings of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees. No amendment adversely affecting the rights of shareholders may be
made to the Trust's Declaration of Trust without the affirmative vote of a
majority of its shares. Shares have no preemptive or conversion rights. Shares
are fully paid and non-assessable by the Trust, except as stated below. See
"Certain Liabilities."
12. CERTAIN LIABILITIES
As a Massachusetts business trust, the Trust's operations are governed
by its Amended and Restated Declaration of Trust dated December 7, 1993, a copy
of which is on file with the Office of the Secretary of State of The
Commonwealth of Massachusetts. Shareholders of a Massachusetts business trust
may, under certain circumstances, be held personally liable for the obligations
of the trust. However, the Declaration of Trust contains an express disclaimer
of shareholder liability for acts or obligations of the Trust or any series of
the Trust and provides that notice of such disclaimer may be given in each
agreement, obligation or instrument entered into or executed by the Trust or its
Trustees. Moreover, the Declaration of Trust provides for the indemnification
out of Trust property of any shareholders held personally liable for any
obligations of the Trust or any series of the Trust. The Declaration of Trust
also provides that the Trust shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the Trust and
satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss beyond his or her investment because of shareholder liability
would be limited to circumstances in which the Trust itself will be unable to
meet its obligations. In light of the nature of the Trust's business and the
nature and amount of its assets, the possibility of the Trust's liabilities
exceeding its assets, and therefore a shareholder's risk of personal liability,
is remote.
The Declaration of Trust further provides that the Trust shall
indemnify each of its Trustees and officers against liabilities and expenses
reasonably incurred by them, in connection with, or arising out of, any action,
suit or proceeding, threatened against or otherwise involving such Trustee or
officer, directly or indirectly, by reason of being or having been a Trustee or
officer of the Trust. The Declaration of Trust does not authorize the Trust to
indemnify any Trustee or officer against any liability to which he or she would
otherwise be subject by reason of or for willful misfeasance, bad faith, gross
negligence or reckless disregard of such person's duties.
13. LETTER OF INTENT (Class A only)
A Letter of Intent ("LOI") may be established by completing the LOI
section of the Account Application. When you sign the Account Application, you
agree to irrevocably appoint PSC your attorney-in-fact to surrender for
redemption any or all shares held in escrow with full power of substitution. An
LOI is not a binding obligation upon the investor to purchase, or the Trust to
sell, the full amount indicated.
If the total purchases, less redemptions, exceed the amount specified
under the LOI and are in an amount which would qualify for a further quantity
discount, all transactions will be recomputed on the expiration date of the LOI
to effect the lower sales charge. Any difference in the sales charge resulting
from such recomputation will be either delivered to you in cash or invested in
additional shares at the lower sales charge. The dealer, by signing the Account
Application, agrees to return to PFD, as part of such retroactive adjustment,
the excess of the commission previously reallowed or paid to the dealer over
that which is applicable to the actual amount of the total purchases under the
LOI.
If the total purchases, less redemptions, are less than the amount
specified under the LOI, you must remit to PFD any difference between the sales
charge on the amount actually purchased and the amount originally specified in
the LOI section of the Account Application. When the difference is paid, the
shares held in escrow will be deposited to your account. If you do not pay the
difference in sales charge within 20 days after written request from PFD or your
dealer, PSC, after receiving instructions from PFD, will redeem the appropriate
number of shares held in escrow to realize the difference and release any
excess. See "How to Purchase Trust Shares Letter of Intent" in the Prospectus
for more information.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide a
convenient method of receiving fixed payments at regular intervals from shares
of the Trust deposited by the applicant under the SWP. Withdrawals pursuant to
the SWP are limited to 10% of the value of the account at the time the plan is
implemented if a CDSC applies (see the Prospectus). (You may, of course, redeem
your shares without limit outside the SWP.) In order to be eligible for the SWP,
your account must have a total value of not less than $10,000. Periodic payments
of $50 or more will be deposited monthly or quarterly directly into a bank
account designated by you, or will be sent by check to you, or any person
designated by you. A designation of a third party to receive payments requires
an acceptable signature guarantee. Withdrawals from Class B and Class C share
accounts are limited to 10% of the value of the account at the time the SWP is
implemented. See "Waiver or Reduction of Contingent Deferred Sales Charge" in
the Prospectus.
Any income dividends or capital gains distributions on shares under the
SWP will be credited to the SWP account on the payment date in full and
fractional shares at the net asset value per share in effect on the record date.
Payments under the SWP are made from the proceeds of the redemption of
shares deposited under the SWP in your SWP account. Such redemptions are taxable
transactions. To the extent that such redemptions for periodic withdrawals
exceed dividend income reinvested in the SWP account, such redemptions will
reduce and may ultimately exhaust the number of shares deposited in the SWP
account. In addition, the amounts received by a shareholder cannot be considered
as an actual yield or income on his or her investment because part of such
payments may be a return of his or her capital.
The SWP may be terminated at any time (1) by written notice to PSC or
from PSC to the shareholder; (2) upon receipt by PSC of appropriate evidence of
the shareholder's death; or (3) when all shares under the SWP have been
redeemed.
15. DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Class of the Trust is determined
as of the close of regular trading on the Exchange (normally 4:00 p.m., Eastern
time) on each day on which the Exchange is open for business. As of the date of
this Statement of Additional Information, the Exchange is open for trading every
weekday except for the following holidays: New Year's Day, Martin Luther King
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. The net asset value per share of each
Class of the Trust is also determined on any other day in which the level of
trading in its portfolio securities is sufficiently high that the current net
asset value per share might be materially affected by changes in the value of
its portfolio securities. The Trust is not required to determine its net asset
value per share on any day in which no purchase orders for the shares of the
Trust become effective and no shares are tendered for redemption.
The net asset value per share of each class of the Trust is computed by
taking the amount of the value of all the Trust's assets attributable to that
Class, less the Trust's liabilities attributable to that Class, and dividing the
result by the number of outstanding shares of that Class. For purposes of
determining net asset value, expenses of the Classes of the Trust are accrued
daily and taken into account.
16. INVESTMENT RESULTS
The Trust's yield quotations and average annual total return quotations
for each Class of its shares as that information may appear in the Prospectus,
this Statement of Additional Information or in advertising are calculated by
standard methods prescribed by the SEC.
Standardized Yield Quotations
Yield quotations for Class A, Class B and Class C shares are computed
by dividing the net investment income per share attributable to a Class during a
base period of 30 days, or one month, by the maximum offering price per share of
that class of the Trust on the last day of such base period in accordance with
the following formula:
a-b
YIELD= 2[ (------- +1)6-1]
cd
Where: a = interest earned during the period
b = net expenses accrued for the period
c = the average daily number of shares
outstanding during the period that
were entitled to receive dividends
d = the maximum offering price per
share on the last day of the period
For purposes of calculating interest earned on debt obligations as provided in
item "a" above:
(i) The yield to maturity of each obligation held by the Trust is
computed based on the market value of the obligation (including actual accrued
interest, if any) at the close of business each day during the 30-day base
period, or, with respect to obligations purchased during the month, the purchase
price (plus actual accrued interest, if any) on settlement date, and with
respect to obligations sold during the month the sale price (plus actual accrued
interest, if any) between the trade and settlement dates.
(ii) The yield to maturity of each obligation is then divided by 360 and
the resulting quotient is multiplied by the market value of the obligation
(including actual accrued interest, if any) to determine the interest income on
the obligation for each day. The yield to maturity calculation has been made on
each obligation during the 30 day base period.
(iii) Interest earned on all debt obligations during the 30-day or one
month period is then totaled.
(iv) The maturity of an obligation with a call provision(s) is the next
call date on which the obligation reasonably may be expected to be called or, if
none, the maturity date.
With respect to the treatment of discount and premium on mortgage or
other receivables-backed obligations which are expected to be subject to monthly
payments of principal and interest ("pay downs"), the Trust accounts for gain or
loss attributable to actual monthly pay downs as an increase or decrease to
interest income during the period. In addition, the Trust may elect (i) to
amortize the discount or premium remaining on a security, based on the cost of
the security, to the weighted average maturity date, if such information is
available, or to the remaining term of the security, if the weighted average
maturity date is not available, or (ii) not to amortize the discount or premium
remaining on a security.
The Trust's yield for the 30 days ended December 31, 1997, determined
in accordance with the formula above was 5.52% for Class A shares, 5.04% for
Class B shares and 5.11% for Class C shares, except that absent expense
limitations, the Trust's yield would have been 5.38% for Class A shares, 4.91%
for Class B shares and 4.98% for Class C shares.
Standardized Average Annual Total Return Quotations
One of the primary methods used to measure the performance of a class
of the Trust is "total return." "Total return" will normally represent the
percentage change in value of an account, or of a hypothetical investment in a
class of the Trust, over any period up to the lifetime of that class of the
Trust. Total return calculations will usually assume the reinvestment of all
dividends and capital gains distributions and will be expressed as a percentage
increase or decrease from an initial value, for the entire period or for one or
more specified periods within the entire period. Total return percentages for
periods of less than one year are cumulative; total return percentages for
periods longer than one year will usually be accompanied by total return
percentages for each year within the period and/or by the average annual
compounded total return for the period. The income and capital components of a
given return may be separated and portrayed in a variety of ways in order to
illustrate their relative significance. Performance may also be portrayed in
terms of cash or investment values, without percentages. Past performance cannot
guarantee any particular future result.
Average annual total return quotations for each Class of Trust shares
are computed by finding the average annual compounded rates of return that would
cause a hypothetical investment in that class made on the first day of a
designated period (assuming all dividends and distributions are reinvested) to
equal the ending redeemable value of such hypothetical investment on the last
day of the designated period in accordance with the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000,
less the maximum sales load for
Class A shares or the deduction of any
CDSC applicable to Class B or Class C
T = average annual total returnof the period
n = number of years
ERV = ending redeemable value of the hypothetical
$1,000 initial payment made at the
beginning of the designated period
(or fractional portion thereof)
For purposes of the above computation, it is assumed that the maximum sales
charge was deducted from the initial investment and that all dividends and
distributions made by the Trust are reinvested at net asset value during the
designated period. The average annual total return quotation is determined to
the nearest 1/100 of 1%.
In determining the average annual total return (calculated as provided
above), recurring fees, if any, that are charged to all shareholder accounts of
a particular class are taken into consideration. For any account fees that vary
with the size of the account, the account fee used for purposes of the above
computation is assumed to be the fee that would be charged to the class' mean
account size.
The average annual total return of the Trust for periods ended December
31, 1997:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 Year 5 Years Commencement
------ ------- ------------
Class A Shares 3.63% 5.21% 7.18% *
Class B Shares 3.61% N/A 5.57% **
Class C Shares 7.78% N/A 4.54%***
- -----------
* Commencement of operations, June 1, 1988.
** Class B shares first offered on April 29, 1994.
*** Class C shares first offered on January 31, 1996.
</TABLE>
Class A share results reflect the maximum sales charge of 4.50% at the
beginning of the period and assumes reinvestment of distributions at net asset
value. Class B share results reflect the deduction of the maximum applicable
CDSC at the end of the period and assumes reinvestment of distributions. The
maximum CDSC of 4% declines over six years. Class C share results reflect
deduction of a 1% CDSC at the end of the period and assumes reinvestment of
distributions. If PMC's voluntary fee and expense reduction agreement had not
been in place, total return would have been lower.
Other Quotations, Comparisons, and General Information
From time to time, in advertisements, in sales literature, or in
reports to shareholders, the past performance of the Trust may be illustrated
and/or compared with that of other mutual funds with similar investment
objectives, and to other relevant indices. For example, yield of the Trust's
classes may be compared to the Shearson Lehman Hutton Government Index, U.S
Government bond rates, or other comparable indices or investment vehicles.
In addition, the performance of the classes of the Trust may be
compared to alternative investment or savings vehicles and/or to indexes or
indicators of economic activity, e.g., inflation or interest rates. Performance
rankings and listings reported in newspapers or national business and financial
publications, such as Barron's, Business Week, Consumer's Digest, Consumer
Reports, Financial World, Forbes, Fortune, Investors Business Daily, Kiplinger's
Personal Finance Magazine, Money Magazine, the New York Times, Smart Money, USA
Today, U.S. News and World Report, The Wall Street Journal and Worth may also be
cited (if the Trust is listed in any such publication) or used for comparison,
as well as performance listings and rankings from various other sources
including Bloomberg Financial Systems, CDA/Wiesenberger Investment Companies
Service, Donoghue's Mutual Fund Almanac, Investment Company Data, Inc.,
Johnson's Charts, Kanon Bloch Carre & Co., Micropal, Inc., Morningstar, Inc.,
Schabacker Investment Management and Towers Data Systems.
In addition, from time to time, quotations from articles from financial
publications, such as those listed above, may be used in advertisements, in
sales literature or in reports to shareholders of the Trust.
The Trust may also present, from time to time, historical information
depicting the value of a hypothetical account in one or more classes of the
Trust since the Trust's inception.
In presenting investment results, the Trust may also include references
to certain financial planning concepts, including (a) an investor's need to
evaluate his financial assets and obligations to determine how much to invest;
(b) his need to analyze the objectives of various investments to determine where
to invest; and (c) his need to analyze his time frame for future capital needs
to determine how long to invest. The investor controls these three factors, all
of which affect the use of investments in building assets.
Automated Information Line
FactFoneSM, Pioneer's 24-hour automated information line, allows
shareholders to dial toll-free 1-800-225-4321 and hear recorded fund
information, including:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's fixed-income funds;
o annualized 7-day yields and 7-day effective (compound)
yields for Pioneer Cash Reserves Fund;
and
o dividends and capital gains distributions on all Pioneer
mutual funds.
Yields are calculated in accordance with SEC mandated standard
formulas.
In addition, by using a personal identification number ("PIN"),
shareholders may enter purchases, exchanges and redemptions, access their
account balance and last three transactions and may order a duplicate statement.
See "FactFoneSM" in the Prospectus for more information.
All performance numbers communicated through FactFoneSM represent past
performance, and figures for all quoted bond funds include the maximum
applicable sales charge. A shareholder's actual yield and total return will vary
with changing market conditions. The value of Class A, Class B and Class C
shares (except for Pioneer Cash Reserves Fund, which seeks to maintain a stable
$1.00 share price) will also vary and may be worth more or less at redemption
than their original cost.
17. FINANCIAL STATEMENTS
The Trust's Annual Report, filed with the SEC on February 20, 1998
(Accession No.0000831120-98-000005), is incorporated by reference into this
Statement of Additional Information. The financial statements in the Trust's
Annual Report, including the financial highlights, for the period ended December
31, 1997, included or incorporated by reference into the Prospectus and this
Statement of Additional Information, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect to the
financial statements, and are included in reliance upon the authority of Arthur
Andersen LLP as experts in accounting and auditing in giving their report.
<PAGE>
APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS1
MOODY'S CORPORATE BOND RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicated that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicated
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.
STANDARD & POOR'S SHORT-TERM ISSUE CREDIT RATINGS
A-1: A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.
A-2: A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
B: A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
C: A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D: A short-term obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
STANDARD & POOR'S CORPORATE BOND RATINGS
AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA: An obligation rated AA differs from the highest-rated obligations only in a
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB: An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.
BB: An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's capacity to meet its financial commitment on the obligation.
B: An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
CCC: An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.
D: An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments are jeopardized.
PLUS (+) OR MINUS (-): The rating from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major categories.
r: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk, such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
<PAGE>
APPENDIX B
PERFORMANCE STATISTICS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Pioneer America Income Trust Class A
Date Initial Offering Price Sales Charge Shares Net Asset Initial Net
Investment Purchased Value Asset
Included Per Share Value
6/1/88 $10,000 $10.47 4.50% 955.110 $10.0000 $9,550
Dividends and Capital Gains Reinvested
Value of Shares
Date From From Cap. From Dividends Total Value
Investment Gains Reinvested
Reinvested
12/31/88 $9,418 $0 $492 $9,910
12/31/89 $9,589 $0 $1,460 $11,049
12/31/90 $9,580 $0 $2,463 $12,043
12/31/91 $9,885 $0 $3,620 $13,505
12/31/92 $9,809 $0 $4,597 $14,406
12/31/93 $10,009 $52 $5,652 $15,713
12/31/94 $8,987 $47 $6,055 $15,089
12/31/95 $9,741 $51 $7,721 $17,513
12/31/96 $9,331 $49 $8,535 $17,915
12/31/97 $9,485 $49 $9,906 $19,440
<PAGE>
Pioneer America Income Trust Class B
Date Initial Offering Price Sales Charge Shares Net Asset Initial Net
Investment Purchased Value Asset
Included Per Share Value
4/29/94 $10,000 $9.8500 4.00% 1,015.228 $9.8500 $10,000
Dividends and Capital Gains Reinvested
Value of Shares
Date From From Cap. From Dividends Contingent Total Value CDSC
Investment Gains Reinvested Deferred Sales Percentage
Charge if
Redeemed
Reinvested
12/31/94 $9,543 $0 $400 $382 $9,561 4.00%
12/31/95 $10,324 $0 $1,118 $400 $11,042 4.00%
12/31/96 $9,898 $0 $1,726 $297 $11,327 3.00%
12/31/97 $10,050 $0 $2,458 $300 $12,208 3.00%
<PAGE>
Pioneer America Income Trust Class C
Date Initial Offering Price Shares Net Asset Initial Net
Investment Purchased Value Asset
Per Share Value
1/31/96 $10,000 $10.1600 984.252 $10.1600 $10,000
Date From From Cap. From Dividends Contingent Total Value CDSC
Investment Gains Reinvested Deferred Percentage
Reinvested Sales Charge
if Redeemed
12/31/96 $9,587 $0 $517 $96 $10,008 1.00%
12/31/97 $9,744 $0 $1,146 $0 $10,890 0.00%
</TABLE>
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The following securities indices are well known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may also be used, if appropriate. The
indices are not available for direct investment. The data presented are not
meant to be indicative of the performance of the Fund, do not reflect past
performance and do not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P 500 includes 500 of
the largest stocks (in terms of stock market value) in the U.S.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of stocks of 30 blue chip
companies widely held by individuals and institutional investors. The 30 stocks
represent about a fifth of the $8 trillion-plus market value of all U.S. stocks
and about a fourth of the value of stocks listed on the New York Stock Exchange
(NYSE).
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the NYSE, plus stocks listed on the American Stock Exchange and over the counter
with the same or less capitalization as the upper bound of the NYSE ninth
decile.
U.S. INFLATION
The Consumer Price Index for All Urban Consumers (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA Growth and Value Indexes are constructed by dividing the stocks in
the S&P 500 according to price-to-book ratios. The Growth Index contains stocks
with higher price-to-book ratios, and the Value Index contains stocks with lower
price-to-book ratios. Both indexes are market capitalization weighted.
MERRILL LYNCH MICRO-CAP INDEX
The Merrill Lynch Micro-Cap Index represents the performance of 2,036 stocks
ranging in market capitalization from $50 million to $220 million. Index returns
are calculated monthly.
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds after 1977 are constructed with
data from The Wall Street Journal and are calculated as the change in the flat
price or and-interest price. From 1926 to 1976, data are obtained from the
government bond file at the Center for Research in Security Prices (CRSP),
Graduate School of Business, University of Chicago. Each year, a one-bond
portfolio with a term of approximately 20 years and a reasonably current coupon
was used and whose returns did not reflect potential tax benefits, impaired
negotiability or special redemption or call privileges. Where callable bonds had
to be used, the term of the bond was assumed to be a simple average of the
maturity and first call dates minus the current date. The bond was "held" for
the calendar year and returns were computed.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of intermediate-term government bonds after 1987 are calculated
from The Wall Street Journal prices, using the change in flat price. Returns
from 1934 to 1986 are obtained from the CRSP government bond file.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than five years, and this bond is
"held" for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934 to 1942, almost all bonds
with maturities near five years were partially or fully tax-exempt and were
selected using the rules described above. Personal tax rates were generally low
in that period, so that yields on tax-exempt bonds were similar to yields on
taxable bonds. From 1926 to 1933, there are few bonds suitable for construction
of a series with a five-year maturity. For this period, five-year bond yield
estimates are used.
MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI")
MSCI's international indices are based on the share prices of approximately
1,700 companies listed on stock exchanges in the 22 countries that make up the
MSCI World Index. MSCI's emerging market indices are comprised of approximately
1000 stocks from 26 countries.
Countries in the MSCI EAFE Index are: Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and
United Kingdom.
Countries in the MSCI Emerging Markets Free Index are: Argentina, Brazil, Chile,
China Free, Czech Republic, Colombia, Greece, Hungary, India, Indonesia Free,
Israel, Jordan, Korea (at 50%), Malaysia Free, Mexico Free, Pakistan, Peru,
Philippines Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan (at 50%),
Thailand Free, Turkey and Venezuela.
6-MONTH CDs
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
Since 1969, corporate bond total returns are represented by the Salomon Brothers
Long-Term High-Grade Corporate Bond Index. As most large corporate bond
transactions take place over the counter, a major dealer is the natural source
of these data. The index includes nearly all Aaa- and Aa-rated bonds with at
least 10 years to maturity. If a bond is downgraded during a particular month,
its return for the month is included in the index before removing the bond from
future portfolios.
From 1926 to 1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946 to 1968,
Ibbotson and Sinquefield backdated the Salomon Brothers' index, using Salomon
Brothers' monthly yield data with a methodology similar to that used by Salomon
Brothers for 1969 to 1995. Capital appreciation returns were calculated from
yields assuming (at the beginning of each monthly holding period) a 20-year
maturity, a bond price equal to par, and a coupon equal to the
beginning-of-period yield. For the period 1926 to 1945, Standard & Poor's
monthly high-grade corporate composite yield data were used, assuming a 4%
coupon and a 20-year maturity. The conventional present-value formula for bond
price for the beginning and end-of-month prices was used. (This formula is
presented in Ross, Stephen A., and Westerfield, Randolph W. Corporate Finance,
Times Mirror/Mosby, St. Louis, 1990, p. 97 ["Level-Coupon Bonds"].) The monthly
income return was assumed to be one-twelfth the coupon.
U.S. (30-DAY) TREASURY BILLS
For the U.S. Treasury Bill Index, data from The Wall Street Journal are used
after 1977; the CRSP government bond file is the source until 1976. Each month a
one-bill portfolio containing the shortest-term bill having not less than one
month to maturity is constructed. (The bill's original term to maturity is not
relevant.) To measure holding period returns for the one-bill portfolio, the
bill is priced as of the last trading day of the previous month-end and as of
the last trading day of the current month.
NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUSTS
("NAREIT")EQUITY REIT INDEX
All of the data are based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMEX and NASDAQ. The data are
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighting at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income. Liquidating dividends, whether full or partial,
are treated as income.
RUSSELL U.S. EQUITY INDEXES
The Russell 3000(R) Index (the "Russell 3000") is comprised of the 3,000 largest
U.S. companies as determined by market capitalization representing approximately
98% of the U.S. equity market. The average market capitalization is
approximately $2.8 billion. The Russell 2500TM Index measures performance of the
2,500 smallest companies in the Russell 3000. The average market capitalization
is approximately $733.4 million, and the largest company in the index has an
approximate market capitalization of $2.9 billion. The Russell 2000(R) Index
measures performance of the 2,000 smallest stocks in the Russell 3000; the
largest company in the index has a market capitalization of approximately $1.1
billion. The Russell 1000(R) Index (the "Russell 1000") measures the performance
of the 1,000 largest companies in the Russell 3000. The average market
capitalization is approximately $7.6 billion. The smallest company in the index
has an approximate market capitalization of $1.1 billion. The Russell MidcapTM
Index measures performance of the 800 smallest companies in the Russell 1000.
The largest company in the index has an approximate market capitalization of
$8.0 billion.
The Russell indexes are reconstituted annually as of July 1, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The Wilshire Real Estate Securities Index is a market capitalization weighted
index of 120 publicly traded real estate securities, such as REITs, real estate
operating companies ("REOCs") and partnerships.
The index contains performance data on five major categories of property:
office, retail, industrial, apartment and miscellaneous. The companies in the
index are 91.66% equity and hybrid REITs and 8.33% REOCs.
STANDARD & POOR'S MIDCAP 400 INDEX
The S&P 400 is a market-capitalization-weighted index. The performance data for
the index were calculated by taking the stocks presently in the index and
tracking them backwards in time as long as there were prices reported. No
attempt was made to determine what stocks "might have been" in the S&P 400 five
or ten years ago had it existed. Dividends are reinvested on a monthly basis
prior to June 30, 1991, and are reinvested daily thereafter.
LIPPER BALANCED FUNDS INDEX
This index represents equally weighted performance, adjusted for capital gains
distributions and income dividends, of approximately 30 of the largest funds
with a primary objective of conserving principal by maintaining at all times a
balanced portfolio of stocks and bonds. Typically, the stock/bond ratio ranges
around 60%/40%.
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963 to 1987; and The Wall Street Journal thereafter.
Sources: Ibbotson Associates, Towers Data Systems,
Lipper Analytical Services, Inc., Merrill Lynch and PGI
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Dow S&P/ S&P/
S&P Jones U.S. Small BARRA BARRA Merrill Lynch
500 Industrial Stock U.S. 500 500 Micro-Cap
Average Index Inflation Growth Value Index
- ----------------------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 11.62 N/A 0.28 -1.49 N/A N/A N/A
Dec 1927 37.49 N/A 22.10 -2.08 N/A N/A N/A
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A N/A
Dec 1931 -43.34 -49.02 -49.75 -9.52 N/A N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A N/A
Dec 1933 53.99 73.72 142.87 0.51 N/A N/A N/A
Dec 1934 -1.44 8.08 24.22 2.03 N/A N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A N/A
Dec 1942 20.34 14.12 44.51 9.29 N/A N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C> <C>
Dow S&P/ S&P/
S&P Jones U.S. Small BARRA 500 BARRA Merrill Lynch
500 Industrial Stock U.S. Growth 500 Micro-Cap
Average Index Inflation Value Index
- ----------------------------------------------------------------------------------------------------------------------
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A N/A
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38 N/A
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93 N/A
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57 N/A
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16 27.76
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16 43.18
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59 32.32
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02 9.18
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04 33.62
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89 42.44
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52 -14.97
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68 22.89
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67 3.45
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68 -13.84
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67 22.76
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13 8.06
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85 -29.55
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56 57.44
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53 36.62
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60 31.32
Dec 1994 1.31 5.06 3.11 2.67 3.13 -0.64 1.81
Dec 1995 37.43 36.84 34.46 2.54 38.13 36.99 30.70
Dec 1996 23.07 28.84 17.62 3.32 23.96 21.99 13.88
Dec 1997 33.36 24.88 22.78 1.92 36.52 29.98 24.61
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C>
Long- Intermediate- MSCI Long-
Term Term U.S. EAFE 6- Term U.S. U.S.
U.S. Gov't Government (Net of Month Corporate T-Bill
Bonds Bonds Taxes) CDs Bonds (30-Day)
- ------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.10 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C>
Long- Intermediate- MSCI Long-
Term Term U.S. EAFE 6- Term U.S. U.S.
U.S. Gov't Government (Net of Month Corporate T-Bill
Bonds Bonds Taxes) CDs Bonds (30-Day)
- ------------------------------------------------------------------------------------------------------
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.17 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
Dec 1966 3.65 4.69 N/A 5.76 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.47 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.45 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.70 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.39 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.11 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 14.71
Dec 1982 40.36 29.10 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.59 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.30 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.80 11.21 5.21 27.20 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
Dec 1997 15.85 8.38 1.78 5.71 12.95 5.26
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C> <C>
NAREIT Lipper MSCI
Equity Russell Wilshire Balanced Emerging Bank
REIT 2000 Real Estate S&P Fund Markets Savings
Index Index Securities 400 Index Free Index Account
- -----------------------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 5.77 N/A 3.86
Dec 1961 N/A N/A N/A N/A 20.59 N/A 3.90
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C> <C>
NAREIT Lipper MSCI
Equity Russell Wilshire Balanced Emerging Bank
REIT 2000 Real Estate S&P Fund Markets Savings
Index Index Securities 400 Index Free Index Account
- -----------------------------------------------------------------------------------------------------------------------
Dec 1962 N/A N/A N/A N/A -6.80 N/A 4.08
Dec 1963 N/A N/A N/A N/A 13.10 N/A 4.17
Dec 1964 N/A N/A N/A N/A 12.36 N/A 4.19
Dec 1965 N/A N/A N/A N/A 9.80 N/A 4.23
Dec 1966 N/A N/A N/A N/A -5.86 N/A 4.45
Dec 1967 N/A N/A N/A N/A 15.09 N/A 4.67
Dec 1968 N/A N/A N/A N/A 13.97 N/A 4.68
Dec 1969 N/A N/A N/A N/A -9.01 N/A 4.80
Dec 1970 N/A N/A N/A N/A 5.62 N/A 5.14
Dec 1971 N/A N/A N/A N/A 13.90 N/A 5.30
Dec 1972 8.01 N/A N/A N/A 11.13 N/A 5.37
Dec 1973 -15.52 N/A N/A N/A -12.24 N/A 5.51
Dec 1974 -21.40 N/A N/A N/A -18.71 N/A 5.96
Dec 1975 19.30 N/A N/A N/A 27.10 N/A 6.21
Dec 1976 47.59 N/A N/A N/A 26.03 N/A 6.23
Dec 1977 22.42 N/A N/A N/A -0.72 N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 4.80 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 19.70 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 1.86 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.10 17.44 N/A 9.71
Dec 1984 20.93 -7.30 20.64 1.18 7.46 N/A 9.92
Dec 1985 19.10 31.05 22.20 35.58 29.83 N/A 9.02
Dec 1986 19.16 5.68 20.30 16.21 18.43 N/A 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 4.13 N/A 6.92
Dec 1988 13.49 24.89 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.24 2.37 35.54 19.70 64.96 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 0.66 -10.55 7.80
Dec 1991 35.70 46.05 20.03 50.10 25.83 59.91 4.61
Dec 1992 14.59 18.41 7.36 11.91 7.46 11.40 2.89
Dec 1993 19.65 18.91 15.24 13.96 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 -2.05 -7.32 4.96
Dec 1995 15.27 28.44 13.65 30.94 24.89 -5.21 5.24
Dec 1996 35.26 16.53 36.87 19.20 13.01 6.03 4.95
Dec 1997 20.29 22.36 19.80 32.26 20.05 -11.59 5.17
</TABLE>
<PAGE>
APPENDIX C
OTHER PIONEER INFORMATION
The Pioneer group of mutual funds was established in 1928 with the creation of
Pioneer Fund. Pioneer is one of the oldest and most experienced money managers
in the United States.
As of December 31, 1997, PMC employed a professional investment staff of 58,
with a combined average of 12 years' experience in the financial services
industry.
Total assets of all Pioneer mutual funds at December 31, 1997, were
approximately $19.8 billion representing 1,177,148 shareholder accounts, 791,468
non-retirement accounts and 385,680 retirement accounts.
<PAGE>
PIONEER AMERICA INCOME TRUST
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial statements of the Registrant are incorporated by
reference from the 1997 Annual Report to Shareholders which is
attached to and incorporated by reference into Part B, the Statement
of Additional Information (Accession Number 0000831120-98-000005).
(b) Exhibits:
1. Amended and Restated Declaration of Trust, dated December 7, 1993.*
1.2 Establishment and Designation of Classes.*
1.3 Establishment and Designation of Class C Shares.*
2. By-Laws.*
3. None.
4. None.
5. Management Contract with Pioneering Management Corporation,
dated January 1, 1994.*
6.1 Underwriting Agreement with Pioneer Funds Distributor, Inc.*
6.2 Form of Dealer Sales Agreement.*
7. None.
8. Custodian Agreement with Brown Brothers Harriman & Co.*
9. Investment Company Service Agreement with Pioneering Services
Corporation.*
10. Opinion and Consent of Counsel.*
11. Consent of Independent Public Accountants._
12. None.
13. Stock Purchase Agreement.*
14. None.
15.1 Class A Shares Distribution Plan.*
15.2 Class B Shares Distribution Plan.*
15.3 Class C Shares Distribution Plan.*
16. Description of Average Annual Total Return and Yield Calculation.*
17. Financial Data Schedule._
18.1 Multiple Class Plan for Class A and Class B Shares*
18.2 Multiple Class Plan for Class A, Class B and Class C Shares*
19. Powers of Attorney.*
19.1 Power of Attorney for Mary K. Bush_
- -------------------------------------
_ Filed herewith.
* Previously filed. Incorporated by reference from the exhibits filed with the
Registration Statement, as amended, of the Registrant (File Nos. 2-20795;
811-05516).
Item 25. Persons Controlled by or Under Common Control with Registrant
No person is controlled by the Registrant. A common control relationship
could exist from a management perspective because the Chairman and President of
the Registrant owns approximately 14%of the outstanding shares of The Pioneer
Group, Inc. (PGI), the parent company of the Registrant's investment adviser,
and certain Trustees or officers of the Registrant (i) hold similar positions
with other investment companies advised by PGI and (ii) are directors or
officers of PGI and/or its direct or indirect subsidiaries. The following lists
all U.S. and the principal non-U.S. subsidiaries of PGI and those registered
investment companies with a common or similar Board of Trustees advised by PGI.
OWNED BY PERCENT STATE/COUNTRY OF
COMPANY OF SHARES INCORPORATION
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneer Funds Distributor, Inc. (PFD) PMC 100% MA
Pioneer Explorer, Inc. (PEI) PMC 100% DE
Pioneer Fonds Marketing GmbH (GmbH) PFD 100% Germany
Pioneer Forest, Inc. (PFI) PGI 100% DE
CJSC "Forest-Starma" (Forest-Starma) PFI 95% Russia
Pioneer Metals and Technology, Inc. (PMT) PGI 100% DE
Pioneer Capital Corp. (PCC) PGI 100% DE
Pioneer SBIC Corp. PCC 100% MA
Pioneer Real Estate Advisors, Inc. (PREA) PGI 100% DE
Pioneer Management (Ireland) Ltd. (PMIL) PGI 100% Ireland
Pioneer Plans Corporation (PPC) PGI 100% DE
PIOGlobal Corp. (PIOGlobal) PGI 100% DE
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Goldfields Holdings, Inc. (PGH) PGI 100% DE
Pioneer Goldfields Ltd. (PGL) PGH 100% Guernsey
Teberebie Goldfields Ltd. (TGL) PGL 90% Ghana
Pioneer Omega, Inc. (Omega) PGI 100% DE
Pioneer First Russia, Inc. (First Russia) Omega 81.65% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer International Corp. (PIntl) PGI 100% DE
Pioneer First Polish Trust Fund JSC, S.A.
(First Polish) PIntl 100% Poland
Pioneer Czech Investment Company, A.S.
(Pioneer Czech) PIntl 100% Czech Republic
Registered investment companies that are parties to management contracts with
PMC:
BUSINESS
FUND TRUST
Pioneer International Growth Fund MA
Pioneer World Equity Fund DE
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Independence Fund DE
Pioneer Fund DE
Pioneer II DE
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Fund MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Balanced Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares DE
Pioneer Micro-Cap Fund DE
The following table lists John F. Cogan, Jr.'s positions with the investment
companies, PGI and principal direct or indirect PGI subsidiaries referenced
above and the Registrant's counsel.
TRUSTEE/
ENTITY CHAIRMAN PRESIDENT DIRECTOR OTHER
Pioneer mutual
funds X X X
PGL X X X
PGI X X X
PPC X X
PIC X X
PIntl X X
PMT X X
Omega X X
PIOGlobal X X
First Russia X X
PCC X
PSC X
PMIL X
PEI X
PFI X
PREA X
Forest-Starma X
PMC X X
PFD X X
TGL X X
First Polish Chairman of Supervisory
Board
GmbH Chairman of Supervisory
Board
Pioneer Czech Chairman of Supervisory
Board
0LLP Partner
Item 26. Number of Holders of Securities
The following table sets forth the approximate number of
record holders of each class of securities of the Registrant as of March 31,
1998:
Class A Class B Class C
Number of Record Holders: 7,602 698 149
Item 27. Indemnification
Except for the Amended and Restated Declaration of Trust dated
December 7, 1993 establishing the Registrant as a Trust under Massachusetts law,
there is no contract, arrangement or statute under which any director, officer,
underwriter or affiliated person of the Registrant is insured or indemnified.
The Declaration of Trust provides that no Trustee or officer will be indemnified
against any liability of which the Registrant would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties.
Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended (the "Act"), may be available to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment of the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 28. Business and other Connections of Investment Adviser
All of the information required by this item is set forth in
the Forms ADV, as amended, of Pioneering Management Corporation. The following
sections of such Forms ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2;
(b) Section 6, Business Background, of each Schedule D.
Item 29. Principal Underwriter
(a) See Item 25 above.
(b) Directors and Officers of PFD:
Positions and Offices Positions and Offices
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice President and
Trustee
Steven M. Graziano Senior Vice President None
Stephen W. Long Senior Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Bennett Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Mary Kleeman Vice President None
Steven R. Berke Assistant Vice President None
Steven H. Forss Assistant Vice President None
Mary Sue Hoban Assistant Vice President None
Debra A. Levine Assistant Vice President None
Junior Roy McFarland Assistant Vice President None
Marie E. Moynihan Assistant Vice President None
<PAGE>
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
The principle business address of each of these individuals is 60 State Street,
Boston, Massachusetts 02109-1820.
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts and records are maintained at the Registrant's
office at 60 State Street, Boston, Massachusetts; contact the Treasurer.
Item 31. Management Services
The Registrant is not a party to any management-related
service contract, except as described in the Prospectus and the Statement of
Additional Information.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, a copy of the Registrant's report to shareholders furnished pursuant to
and meeting the requirements of Rule 30d-1 from which the specified information
is incorporated by reference, unless such person currently holds securities of
the Registrant and otherwise has received a copy of such report, in which case
the Registrant shall state in the Prospectus that it will furnish, without
charge, a copy of such report on request, and the name, address and telephone
number of the person to whom such a request should be directed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to its Registration Statement on Form N-1A (which meets
all the requirements for effectiveness pursuant to Rule 485(b) under the
Securities Act of 1933) to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston and Commonwealth of Massachusetts, on the
29th day of April, 1998.
PIONEER AMERICA INCOME TRUST
By: /s/ David D. Tripple
David D. Tripple
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registrant's Registration Statement on Form N-1A
has been signed below by the following persons in the capacities and on the
dates indicated:
Title and Signature Date
Principal Executive Officer: )
)
)
John F. Cogan, Jr. )
John F. Cogan, Jr., President )
)
Principal Financial and )
Accounting Officer: )
)
)
/s/William H. Keough* )
William H. Keough, Treasurer )
A MAJORITY OF THE BOARD OF TRUSTEES:
John F. Cogan, Jr. )
John F. Cogan, Jr., Trustee )
)
Mary K. Bush* )
Mary K. Bush, Trustee )
)
Richard H. Egdahl, M.D.* )
Richard H. Egdahl, Trustee )
)
Margaret B.W. Graham* )
Margaret B.W. Graham, Trustee )
)
John W. Kendrick* )
John W. Kendrick, Trustee )
)
Marguerite A. Piret* )
Marguerite A. Piret, Trustee )
)
/s/David D. Tripple* )
David D. Tripple, Trustee )
)
Stephen K. West* )
Stephen K. West, Trustee )
)
John Winthrop* )
John Winthrop, Trustee )
*By: /s/ David D. Tripple Dated: April 29, 1998
David D. Tripple
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
11. Consent of Independent Public Accountants
17. Financial Data Schedule
19.1 Power of Attorney for Mary K. Bush
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report on Pioneer America Income Trust dated February 2, 1998 (and to all
references to our firm) included in or made a part of Post-Effective Amendment
No. 12 and Amendment No. 13 to Registration Statement File No.33-20795 and
811-05516.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
April 27, 1998
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<NUMBER> 001
<NAME> PIONEER AMERICA INCOME TRUST CLASS A
<S> <C>
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<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 149214232
<INVESTMENTS-AT-VALUE> 152408942
<RECEIVABLES> 1887181
<ASSETS-OTHER> 5735
<OTHER-ITEMS-ASSETS> 75715
<TOTAL-ASSETS> 154377573
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<REALIZED-GAINS-CURRENT> 363186
<APPREC-INCREASE-CURRENT> 1972746
<NET-CHANGE-FROM-OPS> 12068790
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9003410
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1872947
<NUMBER-OF-SHARES-REDEEMED> 3559994
<SHARES-REINVESTED> 701123
<NET-CHANGE-IN-ASSETS> (2534255)
<ACCUMULATED-NII-PRIOR> 3933
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<GROSS-EXPENSE> 1806311
<AVERAGE-NET-ASSETS> 137036220
<PER-SHARE-NAV-BEGIN> 9.77
<PER-SHARE-NII> .64
<PER-SHARE-GAIN-APPREC> .16
<PER-SHARE-DIVIDEND> .64
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.93
<EXPENSE-RATIO> 1.02
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
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<NUMBER> 002
<NAME> PIONEER AMERICA INCOME TRUST CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 149214232
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<TOTAL-LIABILITIES> 640635
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<PAID-IN-CAPITAL-COMMON> 158205299
<SHARES-COMMON-STOCK> 1205012
<SHARES-COMMON-PRIOR> 980598
<ACCUMULATED-NII-CURRENT> 7982
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7671053)
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 153736938
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11316474
<OTHER-INCOME> 0
<EXPENSES-NET> 1583616
<NET-INVESTMENT-INCOME> 9732858
<REALIZED-GAINS-CURRENT> 363186
<APPREC-INCREASE-CURRENT> 1972746
<NET-CHANGE-FROM-OPS> 12068790
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 574191
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 519608
<NUMBER-OF-SHARES-REDEEMED> 339383
<SHARES-REINVESTED> 44189
<NET-CHANGE-IN-ASSETS> (2534255)
<ACCUMULATED-NII-PRIOR> 3933
<ACCUMULATED-GAINS-PRIOR> (8034239)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 747663
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1806311
<AVERAGE-NET-ASSETS> 9885174
<PER-SHARE-NAV-BEGIN> 9.75
<PER-SHARE-NII> .57
<PER-SHARE-GAIN-APPREC> .15
<PER-SHARE-DIVIDEND> .57
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.90
<EXPENSE-RATIO> 1.77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
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<NAME> PIONEER AMERICA INCOME TRUST CLASS C
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<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 149214232
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<ASSETS-OTHER> 5735
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<TOTAL-LIABILITIES> 640635
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<PAID-IN-CAPITAL-COMMON> 158205299
<SHARES-COMMON-STOCK> 381852
<SHARES-COMMON-PRIOR> 134104
<ACCUMULATED-NII-CURRENT> 7982
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7671053)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3194710
<NET-ASSETS> 153736938
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11316474
<OTHER-INCOME> 0
<EXPENSES-NET> 1583616
<NET-INVESTMENT-INCOME> 9732858
<REALIZED-GAINS-CURRENT> 363186
<APPREC-INCREASE-CURRENT> 1972746
<NET-CHANGE-FROM-OPS> 12068790
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 151208
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 402752
<NUMBER-OF-SHARES-REDEEMED> 164594
<SHARES-REINVESTED> 9590
<NET-CHANGE-IN-ASSETS> (2534255)
<ACCUMULATED-NII-PRIOR> 3933
<ACCUMULATED-GAINS-PRIOR> (8034239)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 747663
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1806311
<AVERAGE-NET-ASSETS> 2599570
<PER-SHARE-NAV-BEGIN> 9.74
<PER-SHARE-NII> .57
<PER-SHARE-GAIN-APPREC> .16
<PER-SHARE-DIVIDEND> .57
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.90
<EXPENSE-RATIO> 1.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
PIONEER EMERGING MARKETS FUND
PIONEER EUROPE FUND
PIONEER GROWTH TRUST
PIONEER INDIA FUND
PIONEER INTERNATIONAL GROWTH FUND
PIONEER WORLD EQUITY FUND
PIONEER GROWTH SHARES
PIONEER MID-CAP FUND
PIONEER SMALL COMPANY FUND
PIONEER MICRO-CAP FUND
PIONEER BALANCED FUND
PIONEER FUND
PIONEER II
PIONEER REAL ESTATE SHARES
PIONEER AMERICA INCOME TRUST
PIONEER BOND FUND
PIONEER SHORT TERM INCOME TRUST
PIONEER INTERMEDIATE TAX-FREE FUND
PIONEER MONEY MARKET TRUST
POWER OF ATTORNEY
Dated October 7, 1997
I, the undersigned Trustee of each of the above-listed registered
investment companies (each a "Fund"), each a Delaware or a Massachusetts
business trust, do hereby constitute and appoint John F. Cogan, Jr., David D.
Tripple, and Joseph P. Barri, and each of them acting singly, to be my true,
sufficient and lawful attorneys, with full power to each of them, and each of
them acting singly, to sign for me, in my name and in my capacity as trustee,
any and all amendments to the Registration Statement on Form N-1A to be filed by
each Fund under the Investment Company Act of 1940, as amended (the "1940 Act"),
and under the Securities Act of 1933, as amended (the "1933 Act"), with respect
to the offering of its shares of beneficial interest and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in my capacity as trustee to enable each Fund to comply
with the 1940 Act and the 1933 Act, and all requirements of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by said attorneys or each of them to any and all amendments to
said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as of
the date first written above.
/s/ Mary K. Bush
Mary K. Bush, Trustee
