As filed with the Securities and Exchange Commission on March 27, 1997.
File Nos. 33-47613
811-6657
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. 5 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
Amendment No. 6 [X]
(Check appropriate box or boxes)
PIONEER SHORT-TERM INCOME 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, Esq.,
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:
[X] on March 30, 1997 pursuant to paragraph (b) of Rule 485
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) of the Investment Company Act
of 1940. Registrant filed a Rule 24f-2 Notice for its fiscal year ending
November 30, 1996 on or about January 28, 1997.
<PAGE>
PIONEER SHORT-TERM INCOME TRUST
CLASS A AND CLASS B SHARES
Cross-Reference Sheet Showing Location in Prospectus and
Statement of Additional Information of
Information Required by Items of the Registration Form
Location in Prospectus
or Statement of
Form N-1A Item Number and Caption Additional Information
1. Cover Page Prospectus - Cover Page
2. Synopsis Prospectus - Expense Information
3. Condensed Financial
Information Prospectus - Financial Highlights
4. General Description of
Registrant Prospectus - Investment Objective and
Policies; The Trust
5. Management of the Fund Prospectus - Management of the Trust
6. Capital Stock and Other Prospectus - Investment Objective and
Securities Policies; The Trust
7. Purchase of Securities Being
Offered Prospectus - Trust Share Alternatives;
How to Buy Trust Shares; Shareholder
Services; Distribution Plans
8. Redemption or Repurchase Prospectus - Trust Share Alternatives;
How to Sell Trust Shares; Shareholder
Services
<PAGE>
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 Statement of Additional Information -
Policies Investment Policies and Restrictions
14. Management of the Fund Statement of Additional Information -
Management of the Trust; Investment
Adviser
15. Control Persons and Principal
Holders of Securities Statement of Additional Information -
Management of the Trust
16. Investment Advisory and
Other Services Statement of Additional Information -
Management of the Trust; Investment
Adviser; Shareholder Servicing/Transfer
Agent; Underwriting Agreement and
Distribution Plans; Custodians;
Independent Accountants
17. Brokerage Allocation and
Other Practices Statement of Additional Information -
Portfolio Transactions
<PAGE>
18. Capital Stock and Other
Securities Statement of Additional Information -
Description of Shares; Certain
Liabilities
19. Purchase Redemption and Pricing
of Securities Being Offered Statement of Additional Information -
Determination of Net Asset Value;
Letter of Intention; Systematic
Withdrawal Plan
20. Tax Status Statement of Additional Information -
Tax Status
21. Underwriters Statement of Additional Information -
Principal Underwriter; Underwriting
Agreement and Distribution Plans
22. Calculation of Performance
Data Statement of Additional Information -
Investment Results
23. Financial Statements Balance Sheet; Report of Independent
Public Accountants
<PAGE>
[Pioneer logo]
PIONEER
SHORT-TERM INCOME
TRUST
CLASS A AND CLASS B SHARES
PROSPECTUS
MARCH 27, 1997
Pioneer Short-Term Income Trust (the "Trust") seeks a high level of
current income consistent with a relatively high level of principal stability.
The Trust is a diversified open-end investment company.
In seeking to achieve its investment objective, the Trust invests
primarily in high grade, short-term debt securities, including securities issued
or guaranteed by the United States ("U.S.") government or its agencies or
instrumentalities and other debt securities of U.S. and foreign issuers. The
Trust invests only in securities with remaining maturities of five years or
less. Under normal circumstances, the Trust will maintain a dollar-weighted
average maturity of not more than three years. See "Investment Objective and
Policies" in this Prospectus.
The Trust is designed for investors seeking:
[bullet] a higher level of current income than normally provided by money
market investments; and
[bullet] less price volatility than investments in intermediate and
long-term fixed income securities.
Unlike certain money market instruments, an investment in the Trust is
neither insured nor guaranteed and its net asset value will fluctuate. The
Trust's yield will normally be more sensitive to interest rate fluctuations than
that of a fund investing primarily in securities with intermediate or long-term
remaining maturities.
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 DEPOSITORY INSTITUTION, AND THE
SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
This Prospectus provides the information about the Trust that you should
know before investing. Please read and retain it for your future reference. More
information about the Trust is included in the Statement of Additional
Information also dated March 27, 1997, 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.
Additional information about the Trust has also been filed with the Securities
and Exchange Commission (the "SEC") and is available upon request and without
charge.
TABLE OF CONTENTS PAGE
-------------------------------------------------------- ----
I. EXPENSE INFORMATION ................................. 2
II. FINANCIAL HIGHLIGHTS ................................. 3
III. INVESTMENT OBJECTIVE AND POLICIES .................. 5
IV. MANAGEMENT OF THE TRUST .............................. 7
V. TRUST SHARE ALTERNATIVES ........................... 8
VI. SHARE PRICE .......................................... 8
VII. HOW TO BUY TRUST SHARES .............................. 9
VIII. HOW TO SELL TRUST SHARES ........................... 12
IX. HOW TO EXCHANGE TRUST SHARES ........................ 13
X. DISTRIBUTION PLANS ................................. 14
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION ............... 15
XII. SHAREHOLDER SERVICES ................................. 15
Account and Confirmation Statements ............... 15
Additional Investments .............................. 16
Automatic Investment Plans ........................... 16
Financial Reports and Tax Information ............... 16
Distribution Options .............................. 16
Directed Dividends ................................. 16
Direct Deposit .................................... 16
Voluntary Tax Withholding ........................... 16
Telephone Transactions And Related Liabilities ...... 16
FactFone(SM) ........................................ 16
Retirement Plans .................................... 17
Telecommunications Device For The Deaf (TDD) ....... 17
Systematic Withdrawal Plans ........................ 17
Reinstatement Privilege (Class A Shares Only) ...... 17
XIII. THE TRUST .......................................... 17
XIV. INVESTMENT RESULTS ................................. 18
--------------------
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 on actual expenses of
Class A and Class B shares incurred for the fiscal year ended November 30, 1996.
CLASS A CLASS B
------- -------
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Initial Sales Charge on Purchases
(as a percentage of offering price) ......... 2.50% none
Maximum Sales Charge on Reinvestment
of Dividends ................................. none none
Maximum Deferred Sales Charge
(as a percentage of purchase price or
redemption proceeds, as applicable) ............ none(1) 2.00%
Redemption fee(2)................................ none none
Exchange fee .................................... none none
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets):
Management fee (after fee reduction)(3) ......... 0.04% 0.04%
12b-1 fees .................................... 0.25% 1.00%
Other Expenses (including transfer agent fee,
custodian fees and accounting and printing
expenses) (after expense reduction)(3)........... 0.56% 0.63%
------ -----
Total Operating Expenses (after fee and expense
reductions)(3) ................................. 0.85% 1.67%
====== =====
- ---------
(1) Purchases of $1 million or more and purchases by participants in certain
group plans are not subject to an initial sales charge but may be subject to
a contingent deferred sales charge ("CDSC") as further described under "How
to Sell Trust Shares."
(2) Separate fees (currently $10 and $20, respectively) apply to domestic and
international wire transfers of redemption proceeds.
(3) Pioneering Management Corporation ("PMC") has agreed not to impose all or a
portion of its management fee and to make other arrangements, if necessary,
to limit other operating expenses of the Trust to the extent required to
reduce Class A expenses to 0.85% of the average daily net assets
attributable to Class A shares; the portion of trust-wide expenses
attributable to Class B shares will be reduced only to the extent such
expenses are reduced for Class A shares. This agreement is voluntary and
temporary and may be revised or terminated at any time.
EXPENSES ABSENT FEE AND EXPENSE REDUCTIONS CLASS A CLASS B
---------- ---------
Management Fee ........................... 0.50% 0.50%
Total Operating Expenses .................. 1.31% 2.13%
EXAMPLE:
You would pay the following expenses on a $1,000 investment, 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.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- ---------- ---------- ----------
Class A Shares ............ $33 $51 $71 $127
Class B Shares
- --Assuming complete
redemption at end of
period .................. $37 $63 $91 $146*
- --Assuming no redemption $17 $53 $91 $146*
- ---------
* Class B shares convert to Class A shares five years after purchase; therefore,
Class A share expenses are used after year five.
THE EXAMPLE IS DESIGNED FOR INFORMATION PURPOSES ONLY, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURNS. ACTUAL TRUST
EXPENSES AND RETURN VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
For further information regarding management fees, 12b-1 fees and other
expenses of the 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 a 12b-1 fee may result in long-term
shareholders indirectly paying more than the economic equivalent of the maximum
sales charge permitted under the Conduct Rules of the National Association of
Securities Dealers, Inc. ("NASD").
The maximum initial sales charge is reduced on purchases of specified
amounts of Class A shares and the value of 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 for the fiscal year ending November 30, 1996 appears in the
Trust's Annual Report, which is incorporated by reference in the Statement of
Additional Information. The information listed below should be read in
conjunction with those financial statements. The Annual Report includes more
information about the Trust's performance and is available free of charge by
calling Shareholder Services at 1-800-225-6292.
PIONEER SHORT-TERM INCOME TRUST
SELECTED DATA FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED NOVEMBER 30,
--------------------------------------------------
1996 1995 1994+ 1993
------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ................................. $ 3.84 $ 3.75 $ 3.95 $ 3.95
-------- -------- ------ ------
Increase (decrease) from investment operations:
Net investment income (loss) .......................................... $ 0.24 $ 0.25 $ 0.22 $ 0.24
Net realized and unrealized gain (loss) on investments ............... (0.05) 0.10 (0.21) 0.00
-------- -------- ------ ------
Net increase (decrease) from investment operations .................. $ 0.19 $ 0.35 $ 0.01 $ 0.24
-------- -------- ------ ------
Distributions to shareholders from:
Net investment income ................................................ $ (0.24) $ (0.26) $(0.21) $(0.24)
-------- -------- ------ ------
Net increase (decrease) in net asset value ........................... $ (0.05) $ 0.09 $(0.20) $ 0.00
-------- -------- ------ ------
Net asset value, end of period ....................................... $ 3.79 $ 3.84 $ 3.75 $ 3.95
======== ======== ====== ======
Total return* ......................................................... 5.20% 9.64% 0.32% 6.28%
Ratio of net operating expenses to average net assets .................. 0.87%++ 0.86%++ 0.85% 0.66%
Ratio of net investment income to average net assets .................. 6.25%++ 6.43%++ 5.89% 5.80%
Portfolio turnover rate ................................................ 65% 110% 144% 83%
Net assets, end of period (in thousands) .............................. $54,637 $53,860 $59,088 $57,482
Ratios assuming no reduction of fees or expenses by PMC and no reduction
for fees paid indirectly:
Net operating expenses ................................................ 1.33% 1.38% 1.20% 1.33%
Net investment income ................................................ 5.79% 5.92% 5.54% 5.13%
Ratios assuming a reduction of fees and expenses by PMC and a reduction
for fees paid indirectly:
Net operating expenses ................................................ 0.85% 0.85% -- --
Net investment income ................................................ 6.27% 6.44% -- --
</TABLE>
AUGUST 10
TO
NOVEMBER 30,
1992
------------
Net asset value, beginning of period ...................... $ 4.00
--------
Increase (decrease) from investment operations:
Net investment income (loss) ............................... $ 0.08
Net realized and unrealized gain (loss) on investments .... (0.05)
--------
Net increase (decrease) from investment operations ....... $ 0.03
--------
Distributions to shareholders from:
Net investment income ..................................... $ (0.08)
--------
Net increase (decrease) in net asset value ................ $ (0.05)
--------
Net asset value, end of period ............................ $ 3.95
========
Total return* .............................................. 0.79%
Ratio of net operating expenses to average net assets ....... 0.50%**
Ratio of net investment income to average net assets ....... 5.93%**
Portfolio turnover rate ..................................... 146%**
Net assets, end of period (in thousands) ................... $15,588
Ratios assuming no reduction of fees or expenses by PMC
and no reduction for fees paid indirectly:
Net operating expenses ..................................... 3.40%**
Net investment income ..................................... 3.03%**
Ratios assuming a reduction of fees and expenses by PMC
and a reduction for fees paid indirectly:
Net operating expenses ..................................... --
Net investment income ..................................... --
- -----------
+Based upon average shares outstanding and average net assets for the period
presented.
++Ratios include fees paid indirectly.
*Assumes initial investment at net asset value at the beginning of each period,
reinvestment of all distributions, the complete redemption of the investment
at net asset value at the end of each period, and no sales charges. Total
return would be reduced if sales charges were taken into account.
**Annualized.
3
<PAGE>
II. FINANCIAL HIGHLIGHTS (CONTINUED)
PIONEER SHORT-TERM INCOME TRUST
SELECTED DATA FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
FOR THE YEAR ENDED
NOVEMBER 30,
--------------------
1996 1995
-------- --------
Net asset value, beginning of period .................. $ 3.85 $ 3.75
-------- --------
Increase (decrease) from investment operations:
Net investment income (loss) ........................ $ 0.21 $ 0.22
Net realized and unrealized gain (loss) on investments (0.05) 0.11
-------- --------
Net increase (decrease) from investment operations ... $ 0.16 $ 0.33
-------- --------
Distributions to shareholders from:
Net investment income ................................. $ (0.21) $ (0.23)
-------- --------
In excess of net investment income ..................... (0.01) --
Net increase (decrease) in net asset value ............ $ (0.06) $ 0.10
-------- --------
Net asset value, end of period ........................ $ 3.79 $ 3.85
======== ========
Total return* .......................................... 4.37% 8.93%
Ratio of net operating expenses to average net assets 1.69%++ 1.63%++
Ratio of net investment income to average net assets ... 5.40%++ 5.61%++
Portfolio turnover rate ................................. 65% 110%
Net assets, end of period (in thousands) ............... $ 4,969 $ 2,924
Ratios assuming no reduction of fees or expenses by PMC
and no reduction for fees paid indirectly:
Net operating expenses .............................. 2.15% 2.17%
Net investment income ................................. 4.94% 5.08%
Ratios assuming a reduction of fees and expenses by PMC
and a reduction for fees paid indirectly:
Net operating expenses .............................. 1.67% 1.60%
Net investment income ................................. 5.42% 5.64%
APRIL 4
TO
NOVEMBER 30,
1994+
------------
Net asset value, beginning of period ......................... $ 3.89
--------
Increase (decrease) from investment operations:
Net investment income (loss) ............................... $ 0.15
Net realized and unrealized gain (loss) on investments ....... (0.16)
--------
Net increase (decrease) from investment operations .......... $ (0.01)
--------
Distributions to shareholders from:
Net investment income ........................................ $ (0.13)
--------
In excess of net investment income ............................ --
Net increase (decrease) in net asset value ................... $ (0.14)
--------
Net asset value, end of period ............................... $ 3.75
========
Total return* ................................................. (0.24%)
Ratio of net operating expenses to average net assets ....... 1.41%**
Ratio of net investment income to average net assets .......... 6.05%**
Portfolio turnover rate ........................................ 144%
Net assets, end of period (in thousands) ...................... $ 3,182
Ratios assuming no reduction of fees or expenses by PMC
and no reduction for fees paid indirectly:
Net operating expenses ..................................... 1.82%**
Net investment income ........................................ 5.64%**
Ratios assuming a reduction of fees and expenses by PMC
and a reduction for fees paid indirectly:
Net operating expenses ..................................... --
Net investment income ........................................ --
- -----------
+Based upon average shares outstanding and average net assets for the period
presented.
++Ratios include fees paid indirectly.
*Assumes initial investment at net asset value at the beginning of each period,
reinvestment of all distributions, the complete redemption of the investment
at net asset value at the end of each period, and no sales charges. Total
return would be reduced if sales charges were taken into account.
**Annualized.
4
<PAGE>
III. INVESTMENT OBJECTIVE AND POLICIES
The Trust's investment objective is a high level of current income
consistent with a relatively high level of principal stability. The Trust
invests in:
[bullet] Debt securities issued or guaranteed by the U.S. government or
its agencies or instrumentalities;
[bullet] Other debt securities including corporate debt securities such as
bonds, notes and debentures; mortgage-backed securities including
collateralized mortgage obligations ("CMOs"); other asset-backed
securities; debt securities of foreign issuers including foreign
corporations, banks, governments and supranational organizations;
and commercial paper, including variable and floating rate paper;
and
[bullet] Short-term money market instruments including time deposits and
certificates of deposit maturing in one year or less, repurchase
agreements maturing in one week or less, and banker's
acceptances.
Although the Trust may invest without limit in short-term obligations of foreign
issuers when PMC as the Trust's investment adviser deems it advantageous to do
so, under normal circumstances not more than 25% of the Trust's total assets
will be invested in securities of foreign issuers (see "Foreign Investments"
below). The Trust may also purchase securities on a "when-issued" or forward
commitment basis and may lend portfolio securities having a value up to 5% of
its total assets.
QUALITY
Under normal circumstances, the Trust invests at least 85% of its total
assets in securities that are issued or guaranteed by the U.S. government or its
agencies or instrumentalities or that are rated in the highest three grades by
the major recognized rating services or, if unrated, are judged to be of
comparable quality by PMC. The remainder of the Trust's investments must be
rated within the four highest grades of the major rating services (i.e., at
least "Baa" by Moody's Investors Service or "BBB" by Standard & Poor's Ratings
Group, or their equivalents) or, if not rated, judged to be of comparable
quality. Securities rated BBB or Baa are considered investment grade securities
having adequate capacity to pay interest and repay principal. Such securities
may have speculative characteristics, however, and changes in economic and other
conditions are more likely to lead to a weakened capacity of the issuer of such
securities to make principal and interest payments than is the case with higher
rated securities. In the event that the credit quality of a security falls below
investment grade subsequent to purchase, the Trust will sell such security as
soon as PMC determines it is prudent to do so. No more than 5% of the Trust's
assets may be invested in securities that are rated below investment grade. For
a description of ratings, see the Statement of Additional Information.
MATURITY
The dollar-weighted average maturity of the Trust's portfolio will not
exceed three years. Generally, the Trust invests only in securities with
remaining maturities of five years or less. For purposes of these policies, an
instrument will be treated as having a maturity earlier than its stated maturity
date if the instrument has technical features (such as puts, demand, prepayment
or redemption features) or a variable rate of interest which, based on projected
cash flows from the instrument, will in the judgment of PMC result in the
instrument being valued in the market as though it has the earlier maturity. If
a security's estimated remaining maturity changes from under five years to over
five years, PMC will decide either to sell or retain the security based on its
determination of the best interests of the Trust.
U.S. GOVERNMENT SECURITIES AND MORTGAGE AND OTHER ASSET BACKED SECURITIES
Subject to its policies concerning remaining maturities and average
portfolio maturity, the Trust may invest in a variety of U.S. government
securities, including (1) U.S. Treasury obligations, which differ only in their
interest rates, stated maturities and times of issuance: U.S. Treasury bills
(stated maturities of one year or less), U.S. Treasury notes (stated maturities
of one to ten years) and U.S. Treasury bonds (generally stated maturities of
greater than ten years) and (2) obligations of varying stated maturities issued
or guaranteed by certain agencies and instrumentalities of the U.S. government,
such as mortgage participation certificates guaranteed by the Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC")
and Federal Housing Administration debentures.
Certain U.S. government securities, including U.S. Treasury bills, notes
and bonds, and GNMA certificates, are supported by the full faith and credit of
the United States. Certain other U.S. government securities issued or guaranteed
by Federal agencies or government sponsored enterprises, such as securities of
the Federal Home Loan Banks, are not supported by the full faith and credit of
the U.S., but may be supported by the right of the issuer to borrow from the
U.S. Treasury. Other obligations, such as those of FHLMC and FNMA, are supported
by the discretionary authority of the U.S. government to purchase the agency's
securities although it has no legal obligation to do so. Still other obligations
are supported only by the credit of the instrumentality itself.
GNMA, FHLMC and FNMA, as well as private entities, issue mortgage-backed
securities which provide monthly payments which are, in effect, a "pass-through"
of the monthly interest and principal payments (including any prepayments) made
by the individual borrowers on the pooled mortgage loans. Private issuers of
such securities include banks, broker-dealers, mortgage corporations and other
financial institutions.
The Trust may invest in CMOs, which are obligations fully collateralized by
a portfolio of mortgages or mortgage-related securities. Payments of principal
and interest on the mortgages are passed through to the holders of the CMOs on
the same schedule as they are received, although certain classes of CMOs have
priority over others with respect to the receipt of prepayments on the
mortgages. Therefore, depending on the type of CMOs in which the Trust invests,
the investment may be subject to a greater or lesser risk of prepayment than
other types of mortgage-related securities. A real estate mortgage investment
conduit ("REMIC") is a form of CMO that qualifies for special tax treatment
under the Internal Revenue Code of 1986, as
5
<PAGE>
amended (the "Code"). The Trust may acquire "regular" interests in REMICs but
does not intend, under current tax law, to acquire residual interests in REMICs.
Mortgage-backed securities may be less effective than traditional debt
obligations of similar maturity at maintaining yields during periods of
declining interest rates.
Other asset-backed securities in which the Trust may invest represent
interests in pools of consumer loans unrelated to mortgage loans and most often
are structured as pass-through securities. Interest and principal payments
ultimately depend on payment of the underlying loans by individuals, although
the securities may be supported by letters of credit or other credit
enhancements. The value of such asset-backed securities may also depend on the
creditworthiness of the servicing agent for the loan pool, the originator of the
loans or the financial institution providing the credit enhancement.
FOREIGN INVESTMENTS
Under normal circumstances the Trust does not invest more than 25% of its
total assets in the securities of foreign issuers (which term excludes for these
purposes Canadian issuers). When PMC believes, however, that it is in the best
interest of the Trust, the Trust may invest without any limitation in short-term
foreign debt securities. These foreign investments may be issued by foreign
governments, banks or corporations, as well as foreign branches of U.S. banks
and certain supranational organizations such as the World Bank and the European
Union. The Trust's foreign investments may be denominated in U.S. dollars or
selected foreign currencies. The Trust does not currently hold any non-U.S.
dollar denominated security and does not intend to purchase such securities in
the coming year. Foreign investments are subject to the Trust's quality and
maturity policies described above.
Investing in securities of foreign companies and countries involves certain
considerations and risks which are not typically associated with investing in
U.S. government securities and securities of domestic companies. Foreign
companies are not subject to uniform accounting, auditing and financial
standards and requirements comparable to those applicable to U.S. companies.
There may also be less government supervision and regulation of foreign
securities exchanges, brokers and listed companies than exists in the United
States. Interest paid by foreign issuers may be subject to withholding and other
foreign taxes which will decrease the net return on such investments as compared
to interest paid to the Trust by the U.S. government or by domestic companies.
In addition, there may be the possibility of expropriation, confiscatory
taxation, political, economic or social instability, or diplomatic developments
which could affect assets of the Trust held in foreign countries.
In addition, the value of foreign securities may also be adversely affected
by fluctuations in the relative rates of exchange between the currencies of
different nations and by exchange control regulations. There may be less
publicly available information about foreign companies compared to reports and
ratings published about U.S. companies. Foreign securities markets have
substantially less trading volume than domestic markets and securities of some
foreign companies are less liquid and more volatile than securities of
comparable U.S. companies. Transaction costs on foreign securities exchanges are
generally higher than in the U.S.
The Trust's investments in securities denominated in foreign currencies are
also subject to currency risk, as the U.S. dollar value of these securities may
be favorably or unfavorably affected by changes in foreign currency exchange
rates and exchange control regulations. Currency exchange rates may fluctuate
significantly over short periods of time causing, among other factors, the
Trust's net asset value to fluctuate as well. Currency exchange rates are
generally determined by forces of supply and demand and the perceived relative
merits of investments in various countries, but can be affected unpredictably by
intervention from U.S. and foreign governments or central banks, political
events and currency control measures.
The Trust has the ability to hold a portion of its assets in foreign
currencies and to enter into forward foreign currency contracts to facilitate
settlement of foreign securities transactions or to protect against changes in
foreign currency exchange rates. A forward foreign currency contract involves an
obligation to purchase or sell a specific currency on a future date, at a price
set at the time of the contract. The Trust might sell a foreign currency on
either a spot or forward basis to hedge against an anticipated decline in the
dollar value of securities in its portfolio or securities it intends or has
contracted to sell or to preserve the U.S. dollar value of dividends, interest
or other amounts it expects to receive. Although this strategy could minimize
the risk of loss due to a decline in the value of the hedged foreign currency,
it could also limit any potential gain which might result from an increase in
the value of the currency. Alternatively, the Trust might purchase a foreign
currency or enter into a forward purchase contract for the currency to preserve
the U.S. dollar price of securities it is authorized to purchase or has
contracted to purchase.
The Trust may also engage in cross-hedging by using forward contracts in
one currency to hedge against fluctuations in the value of securities
denominated in a different currency, if PMC determines that there is a pattern
of correlation between the two currencies. Cross-hedging may also include
entering into a forward transaction involving two foreign currencies, using one
foreign currency as a proxy for the U.S. dollar to hedge against variations in
the other foreign currency if PMC determines that there is a pattern of
correlation between the proxy currency and the U.S. dollar. To the extent that
the expected correlation between two particular currencies is imperfect, a
forward transaction will not be an effective hedge and the Trust may be exposed
to a loss, which loss may exceed the loss that would have occurred if a cross-
hedge were not attempted.
If the Trust enters into a forward contract to buy foreign currency for any
purpose, the Trust will be required to place cash or high grade liquid debt
securities in a segregated account of the Trust in an amount equal to the value
of the Trust's total assets committed to the consummation of the forward
contract. The Trust may enter into forward currency contracts having an
intrinsic value of up to 25% of its net
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assets. Forward contracts are subject to the risk that the counterparty to such
contract will default on its obligations. Since a forward contract is not
guaranteed by an exchange or clearinghouse, a default would deprive the Trust of
unrealized profits or the benefits of a currency hedge and may force the Trust
to cover its purchase or sale commitments, if any, at the current market price.
PORTFOLIO TRADING
The Trust's portfolio is fully managed by purchasing and selling
securities, as well as holding selected securities to maturity. While the Trust
does not normally engage in trading for short-term profits, the Trust engages in
portfolio trading of securities regardless of the length of time the Trust has
held the securities if it believes a transaction net of costs (including
custodian's fees) will contribute to the achievement of its investment
objective.
Any such changes 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 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
prove to be incorrect, the Trust's income, net asset value and potential gain
may be reduced or its potential loss may be increased. An increase in interest
rates will generally reduce the value of portfolio investments (and, therefore,
the net asset value of the shares of the Trust), and a decline in interest rates
will generally increase their value. See "Financial Highlights" for actual
turnover rates.
REPURCHASE AGREEMENTS
The Trust may enter into repurchase agreements, generally not exceeding
seven days. Such repurchase agreements will be fully collateralized with U.S.
Treasury and/or U.S. government agency obligations with a market value of not
less than 100% of the obligation, valued daily. Collateral will be held by the
Trust's custodian in a segregated, safekeeping account for the benefit of the
Trust. In the event that a repurchase agreement is not fulfilled, the Trust
could suffer a loss to the extent that the value of the collateral falls below
the repurchase price or if the Trust is prevented from realizing the value of
the collateral by reason of an order of a court with jurisdiction over an
insolvency proceeding with respect to the other party to the repurchase
agreement.
---------------------
The Trust's investment objective is fundamental and cannot be changed
without shareholder approval. Other investment policies and restrictions are
described in the Trust's Statement of Additional Information. Since all
investments are subject to risks and fluctuations in value due to economic
conditions and other factors, there can be no assurance that the Trust will
achieve its investment objective.
IV. MANAGEMENT OF THE TRUST
The Trust's Board of Trustees has overall responsibility for management and
supervision of the Trust. There are currently eight Trustees, six of whom are
not "interested persons" of the Trust as defined in the Investment Company Act
of 1940, as amended (the "1940 Act"). The Board meets at least quarterly. By
virtue of the functions performed by PMC as investment adviser, the 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 names and general business and professional background
of each Trustee and executive officer of the Trust.
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 of 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 PMC and Vice
President of the Trust, is the senior member of the team. Mr. Russ joined PMC in
1983.
Day-to-day management of the Trust has been the responsibility of Mr.
Richard A. Schlanger, a Vice President of PMC and the Trust, since August, 1992.
Mr. Schlanger joined PMC in 1988 and has over 10 years of investment experience.
The Trust is managed under a contract with PMC. PMC 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 the
shares of the Trust.
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. PMC pays all the expenses, including
executive salaries and the rental of office space, relating to its services for
the Trust, with the exception of the following which are to be paid by the
Trust: (a) taxes and other governmental charges, if any; (b) interest on
borrowed money, if any; (c) legal fees and expenses; (d) auditing fees; (e)
insurance premiums; (f) dues and fees for membership in trade associations; (g)
fees and expenses of registering and maintaining registrations by the Trust of
its shares with regulatory agencies, individual states, territories and foreign
jurisdictions and of preparing reports to regulatory agencies; (h) fees and
expenses of Trustees not affiliated with or interested persons of PMC; (i) fees
and
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expenses of the custodian, dividend disbursing agent, transfer agent and
registrar; (j) issue and transfer taxes chargeable to the Trust in connection
with securities transactions to which the Trust is a party; (k) costs of reports
to shareholders, shareholders' meetings and Trustees' meetings; (l) the cost of
certificates representing shares of the Trust; (m) bookkeeping and appraisal
charges; and (n) certain distribution fees pursuant to its plan of distribution.
The Trust also pays all brokerage commissions 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 in which two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides investment research or brokerage services or sells shares
of any Pioneer mutual fund or other funds for which PMC or any affiliate or
subsidiary 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 up to $100 million, 0.45% of the next $200
million, and 0.40% on assets over $300 million. The fee is normally computed
daily and paid monthly.
PMC has agreed not to impose all or a portion of its management fee and to
make other arrangements, if necessary, to limit other operating expenses of the
Trust to the extent required to reduce Class A expenses to 0.85% of the average
daily net assets attributable to Class A shares; the portion of trust-wide
expenses attributable to Class B shares will be reduced only to the extent such
expenses are reduced for Class A shares. This agreement is voluntary and
temporary and may be revised or terminated at any time. During the fiscal year
ended November 30, 1996, as a result of this agreement, PMC imposed a portion of
its management fee. See "Expense Information" of this Prospectus and "Investment
Adviser" of the Statement of Additional Information.
John F. Cogan, Jr., Chairman and President of the Trust, Chairman of PFD,
President and a Director of PGI and Chairman and a Director of PMC, owned
approximately 14% of the outstanding capital stock of PGI as of the date of this
Prospectus.
V. TRUST SHARE ALTERNATIVES
The Trust continuously offers two Classes of shares designated as Class A
and Class B 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 2% if redeemed within three 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 to Class B shares. Your entire
investment in Class B shares is available to work for you from the time you make
your investment, but the higher distribution fee paid by Class B shares will
cause your Class B shares (until conversion) to have a higher expense ratio and
to pay lower dividends, to the extent dividends are paid, than Class A shares.
Class B shares will automatically convert to Class A shares, based on relative
net asset value, approximately five years after the initial purchase.
PURCHASING CLASS A OR CLASS B SHARES. The decision as to which Class to
purchase depends on the amount you invest, the intended length of the investment
and your personal situation. If you are making an investment that qualifies for
reduced sales charges, you might consider Class A shares. If you prefer not to
pay an initial sales charge on an investment of $250,000 or less and you plan to
hold the investment for at least three years, you might consider Class B shares.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund and
shares acquired in the exchange will continue to be subject to any CDSC
applicable to the shares of the 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. The net asset value per
share of each 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.
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Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation, or securities for which sales prices are not generally reported, are
valued at the mean between the current bid and asked prices. Securities quoted
in foreign currencies are converted to U.S. dollars utilizing foreign exchange
rates employed by the Trust's independent pricing services. Generally, trading
in foreign securities is substantially completed each day at various times prior
to the close of regular trading on the Exchange. The values of such securities
used in computing the net asset value of the Trust's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of regular trading on the Exchange. Occasionally, events which
affect the values of such securities and such exchange rates may occur between
the times at which they are determined and the close of regular trading on the
Exchange and will therefore not be reflected in the computation of the Trust's
net asset value. If events materially affecting the value of such securities
occur during such period, then these securities are valued at their fair value
as determined in good faith by the Trustees. All assets of the Trust for which
there is no other readily available valuation method are valued at their fair
value as determined in good faith by the Trustees.
VII. HOW TO BUY 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 PLUS ANY APPLICABLE SALES CHARGE, NEXT
COMPUTED AFTER RECEIPT OF A PURCHASE ORDER, EXCEPT AS SET FORTH BELOW.
The minimum initial investment is $5,000 for Class A and Class B shares
except as specified below. The minimum initial investment is $100 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 $100 for Class A shares and
$500 for Class B shares except that the subsequent minimum investment amount for
Class B share accounts may be as little as $50 if an automatic investment plan
is established (see "Automatic Investment Plans").
TELEPHONE PURCHASES. Your account is automatically authorized to have the
telephone purchase privilege unless you 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 and Related Liabilities" for additional information.
CLASS A SHARES
You may buy Class A shares at the public offering price, including a sales
charge, as follows:
SALES CHARGE AS A % OF DEALER
--------------------------- ALLOWANCE
NET AS A % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
- ------------------------ ----------- ----------- ----------
Less than $50,000 2.50% 2.56% 2.00%
$50,000 but less than
$100,000 2.00 2.06 1.75
$100,000 but less than
$250,000 1.50 1.52 1.25
$250,000 but less than
$1,000,000 1.00 1.01 1.00
$1,000,000 or more -0- -0- see below
The schedule of sales charges above is applicable to purchases of Class A
shares of the Trust by (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
of a trust estate or fiduciary account or related trusts or accounts including
pension, profit-sharing and other employee benefit trusts qualified under
Section 401 or 408 of the 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 purchases by participants in certain group plans
(described below) subject to a CDSC of 0.50% which may be imposed in the event
of a redemption of Class A shares within 12 months of purchase. See "How to Sell
Trust Shares." PFD may, in its discretion, pay a commission to
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broker-dealers who initiate and are responsible for such purchases as follows:
0.50% on sales of $1 million to $5 million; and 0.10% on the excess over $5
million. These commissions will not be paid if the purchaser is affiliated with
the broker-dealer or if the purchase represents the reinvestment of a
redemption made during the previous 12 calendar months. Broker-dealers who
receive a commission in connection with Class A share purchases at net asset
value by 401(a) or 401(k) retirement plans with 1,000 or more eligible
participants or with at least $10 million in plan assets will be required to
return any commission paid or a pro rata portion thereof if the retirement plan
redeems its shares within 12 months of purchase. See also "How to Sell 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. 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. Information about such
arrangements is available from PFD.
Class A shares of the Trust may also 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 or employees of its legal counsel; (b) current or former
directors, officers, employees or sales representatives of PGI or its
subsidiaries; (c) current or former directors, officers, employees or sales
representatives of any subadviser or predecessor investment adviser to any
investment company for which PMC serves as investment adviser, and the
subsidiaries or affiliates of such persons; (d) current or former officers,
partners, employees or registered representatives of broker-dealers which have
entered into sales agreements with PFD; (e) members of the immediate families of
any of the 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 of its affiliates serves as investment adviser or manager;
and (j) certain unit investment trusts. Shares so purchased are purchased for
investment purposes and may not be resold except through redemption or
repurchase by or on behalf of the Trust. The availability of this privilege is
conditioned on 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
Optional Retirement Program (the "Program") participants if (i) the employer has
authorized a limited number of investment company providers for the Program,
(ii) all authorized investment company providers offer their shares to Program
participants at net asset value, (iii) the employer has agreed in writing to
actively promote the authorized investment providers to Program participants and
(iv) the Program provides for a matching contribution for each participant
contribution. Class A shares of the Trust may also be sold at net asset value
without a sales charge in connection with certain reorganization, liquidation or
acquisition transactions involving other investment companies or personal
holding companies.
Reduced sales charges are available for purchases of $50,000 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.
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 60 days
immediately preceding the purchase of Class A shares; that the client paid a
sales charge on the original purchase of the shares redeemed; and that the
mutual fund whose shares were redeemed also offers net asset value purchases to
redeeming shareholders of any of the Pioneer mutual funds. Further details may
be obtained from PFD.
CLASS B SHARES
You may buy Class B shares at the net asset value next computed after
receipt of a purchase order without the impo-
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sition of an initial sales charge. However, Class B shares redeemed within three
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 three-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:
YEAR SINCE CDSC AS A PERCENTAGE OF DOLLAR
PURCHASE AMOUNT SUBJECT TO CDSC
- ----------------------- --------------------------------
First 2.0%
Second 2.0%
Third 1.0%
Fourth and thereafter none
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 five years after the purchase date, except as noted
below. Class B shares acquired by exchange from Class B shares of another
Pioneer mutual fund will convert into Class A shares based on the date of the
initial purchase and the applicable CDSC. Class B shares acquired through
reinvestment of distributions will convert into Class A shares based on the date
of the initial purchase to which such shares relate. For this purpose, Class B
shares acquired through reinvestment of distributions will be attributed to
particular purchases of Class B shares in accordance with such procedures as the
Trustees may determine from time to time. The conversion of Class B shares to
Class A shares is subject to the continuing availability of a ruling from the
Internal Revenue Service ("IRS"), which the Trust has obtained, or an opinion of
counsel that such conversions will not constitute taxable events for federal tax
purposes. There can be no assurance that such ruling or opinion will continue to
be in effect at the time any particular conversion would normally occur. The
conversion of Class B shares to Class A shares will not occur if such ruling or
opinion is no longer available and, therefore, Class B shares would continue to
be subject to higher expenses than Class A shares for an indeterminate period.
WAIVER OR REDUCTION OF CONTINGENT DEFERRED SALES CHARGE. The CDSC on Class
B shares and on any Class A shares subject to a CDSC may be waived or reduced
for non-retirement accounts if: (a) the redemption results from the death of all
registered owners of an account (in the case of UGMAs, UTMAs and trust accounts,
waiver applies upon the death of all beneficial owners) or a total and permanent
disability (as defined in Section 72 of the Code) of all registered owners
occurring after the purchase of the shares being redeemed or (b) the redemption
is made in connection with limited automatic redemptions as set forth in
"Systematic Withdrawal Plans" (limited in any year to 10% of the value of the
account in the Trust at the time the withdrawal plan is established).
The CDSC on Class B shares and on any Class A shares subject to a CDSC may
be waived or reduced for retirement plan accounts if: (a) the redemption results
from the death or a total and permanent disability (as defined in Section 72 of
the Code) occurring after the purchase of the shares being redeemed of a
shareholder or participant in an employer-sponsored retirement plan; (b) the
distribution is to a participant in an IRA, 403(b) or employer-sponsored
retirement plan, is part of a series of substantially equal payments made over
the life expectancy of the participant or the joint life expectancy of the
participant and his or her beneficiary or as scheduled periodic payments to a
participant (limited in any year to 10% of the value of the participant's
account at the time the distribution amount is established; a required minimum
distribution due to the participant's attainment of age 701/2 may exceed the 10%
limit only if the distribution amount is based on plan assets held by Pioneer);
(c) the distribution is from a 401(a) or 401(k) retirement plan and is a return
of excess employee deferrals or employee contributions or a qualifying hardship
distribution as defined by the Code or results from a termination of employment
(limited with respect to a termination to 10% per year of the value of the
plan's assets in the 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 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 either Class of Trust shares received by PFD
from a broker-dealer prior to the close of
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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 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.
[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 or IRA 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 in cash, 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 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 $50,000 worth of shares,
[bullet] your account registration or address has changed within the last
30 days,
[bullet] the check is not being mailed to the address on your account
(address of record),
[bullet] the check is not being made out to the account owners, or
[bullet] the sale proceeds are being transferred to a Pioneer mutual fund
account with a different registration.
Your request should include your name, the Trust's name, your fund account
number, the Class of shares to be redeemed, the dollar amount or number of
shares to be redeemed, and any other applicable requirements as described below.
Unless instructed otherwise, PSC will send the proceeds of the sale to the
address of record. Fiduciaries and corporations are required to submit
additional documents. For more information, contact PSC at 1-800-225-6292.
Written requests will not be processed until they are received in good
order by PSC. Good order means that there are no outstanding claims or requests
to hold redemptions on the account, any certificates are endorsed by the record
owner(s) exactly as the shares are registered and the signature(s) are
guaranteed by an eligible guarantor. You should be able to obtain a signature
guarantee from a bank, broker, dealer, credit union (if authorized under state
law), securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee. Signature
guarantees are not accepted by facsimile ("fax"). For additional information
about the necessary documentation for redemption by mail, please contact PSC at
1-800-225-6292.
BY TELEPHONE OR BY FAX. Your account is automatically authorized to have
the telephone redemption privilege unless you indicate otherwise on your Account
Application or by writing to PSC. Proper account identification will be required
for each telephone redemption. A maximum of $50,000 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 tranfer. 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 and
Related Liabilities" below. Telephone and fax redemptions will be priced as
described above. YOU ARE STRONGLY URGED TO CONSULT WITH YOUR FINANCIAL
REPRESENTATIVE PRIOR TO REQUESTING A TELEPHONE REDEMPTION.
BY CHECK. IF REQUESTED BY YOU, THE TRUST WILL ESTABLISH A CHECKING ACCOUNT
FOR YOU WITH THE FIRST NATIONAL BANK OF OMAHA (THE "BANK"). CHECKS MAY BE DRAWN
FOR NOT LESS THAN $500 NOR MORE THAN $250,000. When a check is presented to the
Bank for payment, it will cause the Trust to redeem, at the net asset value next
determined after presentation, a sufficient number of your shares to cover the
check. You will receive the daily dividends declared on your shares until the
day the check clears. Please allow 1 to 2 weeks for receipt of personalized
checks.
The checking account will be subject to the Bank's rules and regulations
governing checking accounts. If there is an insufficient number of shares in
your account when a check is presented to the Bank for payment, the check will
be returned.
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Since the aggregate value of a shareholder's account in the Trust changes
each day, you should not attempt to withdraw the full amount in your account by
using a check. The checkwriting privilege is generally not available for
retirement plan accounts or accounts subject to backup withholding (see
"Retirement Plans" below).
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 0.50% of the lesser of the value of the
shares redeemed (exclusive of reinvested dividend and capital gain
distributions) or the total cost of such shares. Shares subject to the CDSC,
which are exchanged into another Pioneer mutual fund, will continue to be
subject to the CDSC until the original 12-month period expires. However, no CDSC
is payable upon redemption with respect to Class A shares purchased by 401(a) or
401(k) retirement plans with 1,000 or more eligible participants or with at
least $10 million in plan assets.
GENERAL. Redemptions may be suspended or payment postponed during any
period in which any of the following conditions exist: the Exchange is closed or
trading on the Exchange is restricted; an emergency exists as a result of which
disposal by the 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
YOU MAY NOT EXCHANGE CLASS A SHARES OF THE TRUST, EXCEPT AS NOTED BELOW,
FOR SHARES OF ANY OTHER PIONEER MUTUAL FUNDS FOR A PERIOD OF 12 MONTHS FOLLOWING
THEIR PURCHASE; following this 12-month period, you may exchange your Class A
shares of the Trust at net asset value, without a sales charge, for shares of
the same Class of any other publicly available Pioneer mutual fund. Accounts
established under a Group Plan and Class A shares purchased at net asset value
without a sales charge are exempt from the 12-month holding period requirement.
Accounts established to utilize Automatic Exchange (see below) for scheduled
periods of 12 months or longer meet this minimum holding period. Not all Pioneer
mutual funds offer more than one Class of 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
FactFone(SM), will be recorded. YOU ARE STRONGLY URGED TO CONSULT WITH YOUR
FINANCIAL REPRESENTATIVE PRIOR TO REQUESTING A TELEPHONE EXCHANGE. See
"Telephone Transactions and Related Liabilities" below.
AUTOMATIC EXCHANGES. You may automatically exchange shares from one Pioneer
mutual fund account for shares of the same Class in another Pioneer mutual fund
account on a monthly or quarterly basis. The accounts must have identical
registrations and the originating account must have a minimum balance of $5,000.
The exchange will be effective on the day of the month designated on your
Account Application or Account Options Form.
GENERAL. Exchanges must be at least $1,000. 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
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where legally permitted. For federal and (generally) state income tax purposes,
an exchange is considered to be a sale of the shares of the Trust 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 both Class A shares
("Class A Plan") and Class B shares ("Class B Plan") in accordance with Rule
12b-1 under the 1940 Act pursuant to which certain distribution and service fees
are paid.
Pursuant to the Class A Plan, the 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.
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. The limited carryover provision in the Class A
Plan may result in an expense invoiced to the Trust in one fiscal year being
paid in the subsequent fiscal year and thus being treated for purposes of
calculating the maximum expenditures of the Trust as having been incurred in the
subsequent fiscal year. In the event of termination or non-continuance of the
Class A Plan, the Trust has 12 months to reimburse any expense which it incurs
prior to such termination or non-continuance, provided that payments by the
Trust during such 12-month period shall not exceed 0.25% of the Trust's average
daily net assets during such period. For the fiscal year ended December 31,
1996, there was an allowable carryover of distribution expenses reimbursable to
PFD of $21,883 (approximately .04% of the net assets attributable to the Class A
shares of the Trust).
The Class B Plan provides 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
Class B 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 Class B 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
shares. PFD also receives the proceeds of any CDSC imposed on the redemption of
Class B shares.
Commissions of 2%, equal to 1.75% of the amount invested and a first year's
service fee equal to 0.25% of the amount invested in Class B shares, are paid to
broker-dealers who have selling agreements with PFD. PFD may advance to dealers
the first year service fee at a rate up to 0.25% of the purchase price of such
shares and, as compensation therefore, PFD may retain the service fee paid by
the 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.
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.
Dealers may from time to time be required to meet certain criteria in order
to receive service fees. PFD or its affiliates are entitled to retain all
service fees payable under the Class B Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
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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% 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 (which includes earned interest and
certain other 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 a
portion of any market discount, income from securities lending, certain net
foreign exchange gains, and 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, annually, generally 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, income from securities lending,
certain net foreign exchange gains, 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.
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 generally will not qualify for any
dividends-received deduction available to corporate shareholders.
The Trust may be subject to foreign withholding taxes or other foreign
taxes on income (possibly including capital gains) from certain of its foreign
investments, which will reduce the yield on or return from those investments.
If, as anticipated, the Trust does not qualify to pass such taxes through to its
shareholders, they will neither treat such taxes as additional income nor be
entitled to any associated foreign tax credits or deductions.
Dividends and other distributions and the proceeds of redemptions,
exchanges or repurchases of Trust shares paid 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 IRS or a broker that such withholding applies. Please refer to the
Account Application for additional information.
The description above relates only to U.S. federal income tax consequences
for shareholders who are U.S. persons, i.e., U.S. citizens or residents or U.S.
corporations, partnerships, trusts or estates, and who are subject to U.S.
federal income tax. Non-U.S. shareholders and tax-exempt shareholders are
subject to tax treatment different than 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 assets 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.
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 Pioneering Services Corporation, P.O. Box
9014, Boston, Massachusetts 02205-9014. Brown Brothers Harriman & Co. ("the
Custodian") serves as the custodian of the Trust's portfolio securities and
other assets. The principal business address of the mutual funds division of the
Custodian is 40 Water Street, Boston, Massachusetts 02109.
ACCOUNT AND CONFIRMATION STATEMENTS
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing the
details of transactions are sent to shareholders as transactions occur, except
automatic investment plan transactions which are confirmed quarterly. The
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 a 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 that might not be available are purchases, exchanges or redemptions of
shares by mail, automatic reinvestment of dividends and capital gains
distributions, withdrawal plans, Letters of Intention, Rights of Accumulation,
telephone exchanges and redemptions and newsletters.
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ADDITIONAL INVESTMENTS
You may add to your account by sending a check ($100 minimum for Class A
shares and $500 for Class B 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 pre-authorized electronic funds transfer or
draft drawn on a checking account. Pioneer Investomatic Plan investments are
voluntary and you may discontinue the Plan at any time without penalty upon 30
days' written notice to PSC. PSC acts as agent for the purchaser, the broker-
dealer and PFD in maintaining these plans.
FINANCIAL REPORTS AND TAX INFORMATION
As a shareholder, you will receive financial reports at least
semi-annually. In January of each year, the Trust will mail to 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 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 capital gains or both 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 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; i.e., "PGI IRA Cust for John Smith" may only go
into another account registered "PGI IRA Cust for John Smith."
DIRECT DEPOSIT
If you have elected to take distributions, whether dividends or dividends
and capital gains, in cash, or have established a Systematic Withdrawal Plan,
you may choose to have those cash payments deposited directly into your savings,
checking or NOW bank account. You may establish this service by completing the
appropriate section on the Account Application when opening a new account or the
Account Options Form for an existing account.
VOLUNTARY TAX WITHHOLDING
You may request (in writing) that PSC withhold 28% of the dividends and
capital gains distributions paid from an 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 AND RELATED LIABILITIES
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 pre-recorded certain bank
information (see "FactFone(SM)"). YOU ARE STRONGLY URGED TO CONSULT WITH YOUR
FINANCIAL REPRESENTATIVE PRIOR TO REQUESTING ANY TELEPHONE TRANSACTION. To
confirm that each transaction instruction received by telephone is genuine, PSC
will record each telephone transaction, require the caller to provide the
personal identification number ("PIN") for the account and send you a written
confirmation of each telephone transaction. Different procedures may apply to
accounts that are registered to non-U.S. citizens or that are held in the name
of an institution or in the name of an investment broker-dealer or other
third-party. If reasonable procedures, such as those described above, are not
followed, the 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 or PFD will be responsible for the
authenticity of instructions received by telephone, therefore, you bear the risk
of loss for unauthorized or fraudulent telephone transactions.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the 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
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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 and Related Liabilities." Call PSC for assistance.
RETIREMENT PLANS
Interested persons should contact the Retirement Plans Department of PSC at
1-800-622-0176 for information relating to retirement plans for businesses,
age-weighted profit sharing plans, Simplified Employee Pension Plans, IRAs,
Section 401(k) salary reduction plans and Section 403(b) retirement plans for
employees of certain non-profit organizations and public school systems, all of
which are available in conjunction with investments in the Trust. The Account
Application accompanying this Prospectus should not be used to establish such
plans. Separate applications are required.
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD)
If you have a hearing disability and access to TDD keyboard equipment, you
can call our TDD number toll-free at 1-800-225-1997, weekdays from 8:30 a.m. to
5:30 p.m. Eastern Time, to contact our telephone representatives with questions
about your account.
SYSTEMATIC WITHDRAWAL PLANS
If your account has a total value of at least $10,000, you may establish a
Systematic Withdrawal Plan ("SWP") providing for fixed payments at regular
intervals. Withdrawals from Class B share accounts are limited to 10% of the
value of the account at the time the plan is implemented. See "Waiver or
Reduction of Contingent Deferred Sales Charge" for more information. Periodic
payments of $50 or more will be sent to you, or any person designated by you,
monthly or quarterly, and your periodic redemptions of shares may be taxable to
you. Payments can be made either by check or electronic transfer to a bank
account designated by you. If you direct that withdrawal checks be paid to
another person after you have opened your account, a signature guarantee must
accompany your instructions. Purchases of Class A shares of the 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 Trust's 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 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. In
addition, if redemption resulted in a loss and an investment is made in shares
of the Trust within 30 days before or after the redemption, you may not be able
to recognize the loss for federal income tax purposes. 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 requirements 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 OBTAIN 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
August 10, 1992. The Trust has authorized an unlimited number of shares of
beneficial interest and the Trustees are authorized to create additional series
of the Trust. The Trust is not required to hold annual meetings, although
special meetings may be called for the purposes of electing or removing
Trustees, changing fundamental investment restrictions or approving a management
contract. The Trustees have the authority, without further shareholder approval,
to classify and reclassify the shares of the Trust, or any new series of the
Trust, into one or more classes. As of the date of this Prospectus, the Trustees
have authorized the issuance of two Classes of shares, designated Class A and
Class B. The shares of each Class represent an interest in the same portfolio of
investments of the 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 and Class B shareholders have exclusive voting rights
with respect to the Rule 12b-1 distribution plans adopted by holders of those
shares in connection with the distribution of shares.
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. 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 shares.
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XIV. INVESTMENT RESULTS
The average annual total return (for a designated period of time) on an
investment in the Trust may be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for each
Class is computed in accordance with the SEC's standardized formula. The
calculation for all Classes assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal or
state income taxes. In addition, for Class A shares the calculation assumes the
deduction of the maximum sales charge of 2.50%; for Class B shares the
calculation reflects the deduction of any applicable CDSC. The periods
illustrated would normally include one, five and ten years (or since the
commencement of the public offering of the shares of a Class, if shorter)
through the most recent calendar quarter.
One or more additional measures and assumptions, including but not limited
to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the 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. Rankings or listings by
magazines, newspapers or independent statistical or rating services, such as
Lipper Analytical Services, Inc., may also be referenced.
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.
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<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 Mid-Cap Fund
Pioneer Small Company Fund
Pioneer Micro-Cap 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
*Offers Class A and B Shares only
**Not suitable for retirement accounts
19
<PAGE>
[Pioneer logo]
PIONEER
SHORT-TERM
INCOME TRUST
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
RICHARD A. SCHLANGER, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR LLP
0397-4069
(C) 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 accounts and new accounts, prospectuses,
applications, service forms and
telephone transactions .................................... 1-800-225-6292
FactFone(SM)
Automated fund yields, automated prices
and account information .................................... 1-800-225-4321
Retirement plans ............................................. 1-800-622-0176
Toll-free fax ................................................ 1-800-225-4240
Telecommunications Device for the Deaf (TDD) .................. 1-800-225-1997
<PAGE>
PIONEER SHORT-TERM INCOME TRUST
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A and Class B Shares
March 27, 1997
This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectus (the "Prospectus") dated March 27, 1997, as
amended and/or supplemented from time to time, of Pioneer Short-Term Income
Trust (the "Trust"). 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........................................... 6
3. Investment Adviser................................................ 9
4. Underwriting Agreement and Distribution Plans..................... 10
5. Shareholder Servicing/Transfer Agent.............................. 12
6. Custodian......................................................... 12
7. Principal Underwriter............................................. 13
8. Independent Public Accountants.................................... 13
9. Portfolio Transactions............................................ 13
10. Tax Status........................................................ 14
11. Description of Shares............................................. 17
12. Certain Liabilities............................................... 18
13. Determination of Net Asset Value.................................. 18
14. Systematic Withdrawal Plan........................................ 19
15. Letter of Intention............................................... 20
16. Investment Results................................................ 21
17. Financial Statements.............................................. 24
Appendix A - Description of Bond Ratings.......................... 25
Appendix B - Comparative Performance Statistics...................
Appendix C - Additional Pioneer Information.......................
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 of the Trust identifies the investment objective and the
principal investment policies of the Trust. Additional investment policies of
the Trust are set forth below. This Statement of Additional Information should
be read in conjunction with the Prospectus. Capitalized terms not otherwise
defined herein have the meaning given to them in the Prospectus. The Trust's
investment adviser is Pioneering Management Company ("PMC").
Asset-Backed Securities
The Trust may invest in asset-backed securities, which are securities that
represent a participation in, or are secured by and payable from, a stream of
payments generated by particular assets, most often a pool or pools of similar
assets (e.g., trade receivables). The credit quality of these securities depends
primarily upon the quality of the underlying assets and the level of credit
support and/or enhancement provided.
The underlying assets (e.g., loans) are subject to prepayments which shorten the
securities' weighted average maturity and may lower their return. If the credit
support or enhancement is exhausted, losses or delays in payment may result if
the required payments of principal and interest are not made. The value of these
securities also may change because of changes in the market's perception of the
creditworthiness of the servicing agent for the pool, the originator of the
pool, or the financial institution or trust providing the credit support or
enhancement.
Mortgage-Backed Securities
The Trust may invest in mortgage-backed securities issued or guaranteed by the
United States ("U.S.") government, its agencies or instrumentalities and private
entities. Some of these securities, such as GNMA certificates, are backed by the
full faith and credit of the U.S. Treasury while others, such as Freddie Mac
certificates, are not.
Mortgage-backed securities are securities representing interests in a pool of
mortgages. Principal and interest payments made on the mortgages in the
underlying mortgage pool are passed through to the Trust. Unscheduled
prepayments of principal shorten the securities' weighted average life and may
lower their total return. The value of these securities also may change because
of changes in the market's perception of the creditworthiness of the federal
agency that issued them. In addition, the mortgage securities market in general
may be adversely affected by changes in governmental regulations or tax
policies.
When-Issued Securities
The Trust may from time to time purchase securities on a "when-issued" basis,
provided that at any time not more than 5% of the Trust's net assets may consist
of "when-issued" securities. The price of such securities, which may be
expressed in yield terms, is fixed at the time the commitment to purchase is
made, but delivery and payment for the when-issued securities take place at a
later date. It is possible that the value of such securities will increase or
decrease prior to the Trust's actual receipt of them.
Normally, the settlement date occurs within one month of the purchase.
Securities of Foreign Issuers
The Trust may invest in securities issued by foreign issuers and securities of
foreign branches of U.S. banks, such as negotiable certificates of deposit. Such
investments are subject to the Trust's quality and maturity standards (set forth
in the Prospectus).
Forward Foreign Currency Transactions
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The foreign currency transactions of the Trust may be conducted on a spot, i.e.,
cash, basis at the spot rate for purchasing or selling currency prevailing in
the foreign exchange market. The Trust also has authority to deal in forward
foreign currency exchange contracts involving currencies of the different
countries in which it will invest as a hedge against possible variations in the
foreign exchange rate between these currencies and the U.S. dollar. This is
accomplished through contractual agreements to purchase or sell a specified
currency at a specified future date and price set at the time of the contract.
The Trust's dealings in forward foreign currency contracts will be limited to
hedging either specific transactions or portfolio positions. Transaction hedging
is the purchase or sale of forward foreign currency contracts with respect to
specific receivables or payables of the Trust accruing in connection with the
purchase and sale of its portfolio securities denominated in foreign currencies.
Portfolio hedging is the use of forward foreign currency contracts to offset
portfolio security positions denominated or quoted in such foreign currencies.
There is no guarantee that the Trust will be engaged in hedging activities when
adverse exchange rate movements occur. The Trust will not attempt to hedge all
of its foreign portfolio positions and will enter into such transactions only to
the extent, if any, deemed appropriate by the Trust's investment adviser. The
Trust will not enter into speculative forward foreign currency contracts.
If the Trust enters into a forward contract to purchase foreign currency, its
custodian bank will segregate cash or high grade liquid debt securities in a
separate account of the Trust in an amount equal to the value of the Trust's
total assets committed to the consummation of such forward contract. Those
assets will be valued at market daily and if the value of the assets in the
separate account declines, additional cash or securities will be placed in the
account so that the value of the account will equal the amount of the Trust's
commitment with respect to such contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for the Trust to hedge against a devaluation that is so generally
anticipated that the Trust is not able to contract to sell the currency at a
price above the devaluation level it anticipates.
The cost to the Trust of engaging in foreign currency transactions varies with
such factors as the currency involved, the size of the contract, the length of
the contract period and the market conditions then prevailing. Since
transactions in foreign currency and forward contracts are usually conducted on
a principal basis, no fees or commissions are involved. The Trust may close out
a forward position in a currency by selling the forward contract or entering
into an offsetting forward contract.
Lending of Portfolio Securities
The Trust may lend portfolio securities to member firms of the New York Stock
Exchange, under agreements which would require that the loans be secured
continuously by collateral in cash, cash equivalents or U.S. Treasury Bills
maintained on a current basis at an amount at least equal to the market value of
the securities loaned. The Trust would continue to receive the equivalent of the
interest paid by the issuer on the securities loaned and would also receive
compensation based on investment of the collateral. The Trust would not,
however, have the right to vote any securities having voting rights during the
existence of the loan, but would call the loan in anticipation of an important
vote to be taken among holders of the securities or of the giving or withholding
of their consent on a material matter affecting the investment.
As with other extensions of credit there are risks of delay in recovery or even
loss of rights in the collateral should the borrower of the securities fail
financially. The Trust has no present intention to engage in any material
portfolio lending in the future. The Trust will lend portfolio securities only
to firms which have been approved in advance by the Trust's Board of Trustees,
which will monitor the creditworthiness of any such firms. The value of the
securities loaned will not exceed 5% of the value of the Trust's total assets.
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<PAGE>
Restricted Securities
The Trust may invest up to 5% of its total assets in "restricted securities"
(i.e., securities that would be required to be registered prior to distribution
to the public), including restricted securities eligible for resale to certain
institutional investors pursuant to Rule 144A under the Securities Act of 1933.
The Board of Trustees may adopt guidelines and delegate to PMC the daily
function of determining and monitoring the liquidity of restricted securities.
The Board, however, will retain sufficient oversight and be ultimately
responsible for the determinations. Since it is not possible to predict with
assurance exactly how this market for restricted securities sold and offered
under Rule 144A will develop, the Board will carefully monitor the Trust's
investments in these securities, focusing on such important factors, among
others, as valuation, liquidity and availability of information. This investment
practice could have the effect of increasing the level of illiquidity in the
Trust to the extent that qualified institutional buyers become for a time
uninterested in purchasing these restricted securities.
Investment Restrictions
Fundamental Investment Restrictions. The Trust has adopted certain fundamental
investment restrictions which may not be changed without the affirmative vote of
the holders of a majority of the Trust's outstanding voting securities. As used
in the Prospectus and Statement of Additional Information, such approval means
the approval of the lesser of (i) the holders of 67% or more of the shares
represented at a meeting if the holders of more than 50% of the outstanding
shares are present in person or by proxy, or (ii) the holders of more than 50%
of the outstanding shares.
The Trust may not:
(1)Issue senior securities, except as permitted by paragraphs (2), (6)
and (7) below. 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 policy, and the pledge,
mortgage or hypothecation of the Trust's assets within the meaning of paragraph
(3) below are not deemed to be senior securities.
(2)Borrow money, except from banks as a temporary measure for
extraordinary emergency purposes in amounts not to exceed 33 1/3% of the Trust's
total assets (including the amount borrowed) taken at market value. The Trust
will not use leverage to attempt to increase income. The Trust will not purchase
securities while outstanding borrowings exceed 5% of the Trust's total assets.
(3)Pledge, mortgage, or hypothecate its assets, except to secure
indebtedness permitted by paragraph (2) above and then only if such pledging,
mortgaging or hypothecating does not exceed 33 1/3% of the Trust's total assets
taken at market value.
(4)Act as an underwriter, except to the extent that, in connection with
the disposition of portfolio securities, the Trust may be deemed to be an
underwriter for purposes of the Securities Act of 1933.
(5)Purchase or sell real estate or any interest therein, except that
the Trust may invest in securities secured by real estate or marketable
interests therein or securities issued by companies (other than real estate
limited partnerships) that invest in real estate or interests therein.
(6)Make loans, except that the Trust may lend portfolio securities,
enter into repurchase agreements, and purchase bank certificates of deposit, a
portion of an issue of publicly distributed bonds, bank loan participation
agreements, bankers' acceptances, debentures and other securities, whether or
not the purchase is made upon the original issuance of the securities, in
accordance with its investment policies.
4
<PAGE>
(7)Invest in commodities or commodity contracts or in puts, calls, or
combinations of both, except interest rate futures contracts, options on
securities, securities indices, currency and other financial instruments,
futures contracts on securities, securities indices, currency and other
financial instruments and options on such futures contracts, forward foreign
currency exchange contracts, forward commitments, securities index put or call
warrants and repurchase agreements entered into in accordance with the Trust's
investment policies.
(8)Purchase securities of an issuer (other than the U.S. Government,
its agencies or instrumentalities), if
(a)such purchase would cause more than 5% of the Trust's total assets
taken at market value to be invested in the securities of such issuer, or
(b)such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the Trust.
With the exception of forward foreign currency exchange contracts, forward
commitments and repurchase agreements, the Trust does not intend to invest more
than 5% of its assets during the current fiscal year in any of the investments
permitted by the exceptions set forth in paragraph (7) above.
It is a fundamental policy of the Trust not to concentrate its investments in
securities of companies in any particular industry. Following the current
opinion of the staff of the Securities and Exchange Commission (the "SEC"),
investments are concentrated in a particular industry if such investments
aggregate 25% or more of the Trust's total assets. The Trust's policy does not
apply to investments in U.S. Government Securities.
Non-fundamental Investment Restrictions. The following restrictions have been
designated as non-fundamental and may be changed by a vote of the Trust's Board
of Trustees without approval of shareholders. The Trust has agreed to many of
these non-fundamental restrictions in connection with the offering of its shares
in various states and foreign countries.
The Trust may not:
(a)Participate on a joint-and-several basis in any securities trading
account. The "bunching" of orders for the sale or purchase of marketable
portfolio securities with other accounts under the management of the investment
adviser to save commissions or to average prices among them is not deemed to
result in a securities trading account.
(b)Purchase securities on margin or make short sales unless by virtue
of its ownership of other securities, the Trust has the right to obtain
securities equivalent in kind and amount to the securities sold and, if the
right is conditional, the sale is made upon the same conditions, except that the
Trust may obtain such short-term credits as may be necessary for the clearance
of purchases and sales of securities and in connection with transactions
involving forward foreign currency exchange transactions.
(c)Purchase a security if, as a result, (i) more than 10% of the
Trust's assets would be invested in securities of closed-end investment
companies, (ii) such purchase would result in more than 3% of the total
outstanding voting securities of any one such closed-end investment company
being held by the Trust, or (iii) more than 5% of the Trust's assets would be
invested in any one such closed-end investment company. The Trust will not
invest in the securities of any open-end investment company.
(d)Purchase securities of any issuer which, together with any
predecessor, has a record of less than three years' continuous operations prior
to the purchase if such purchase would cause investments of the Trust in all
such issuers to exceed 5% of the value of the total assets of the Trust.
(e) Invest in companies for the purpose of exercising control or
management.
5
<PAGE>
(f)Purchase warrants of any issuer, if, as a result of such purchases,
more than 2% of the value of the Trust's net assets would be invested in
warrants which are not listed on the New York Stock Exchange or the American
Stock Exchange or more than 5% of the value of the net assets of the Trust would
be invested in warrants generally, whether or not so listed. For these purposes,
warrants are to be valued at the lesser of cost or market, but warrants acquired
by the Trust in units with or attached to debt securities shall be deemed to be
without value.
(g)Knowingly purchase or retain securities of an issuer if one or more
of the Trustees or officers of the Trust or directors or officers of the
investment adviser or any investment management subsidiary of the investment
adviser individually owns beneficially more than 0.5% and together own
beneficially more than 5% of the securities of such issuer.
(h)Purchase interests in oil, gas or other mineral leases or
exploration programs; however, this policy will not prohibit the acquisition of
securities of companies engaged in the production or transmission of oil, gas or
other minerals.
(i)Invest in any security, including any repurchase agreement maturing
in more than seven days, which is illiquid if more than 15% of the total assets
of the Trust, taken at market value, would be invested in such securities.
(j)Purchase puts, calls, straddles, spreads and any combination thereof
if the value of its investment in such securities will exceed 5% of its total
assets.
(k)Write put or call options, or enter into futures contracts with
respect to more than 25% of its net assets.
Many of these restrictions may not be changed without the approval of the
regulatory agencies in such states or foreign countries.
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
Investment Company Act of 1940, as amended (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") and Forest-Starma (a
Russian timber joint venture); President and Director of Pioneer Plans
Corporation ("PPC"), Pioneer Investment Corp. ("PIC"), Pioneer Metals and
Technology, Inc. ("PMT"), Pioneer International Corp. ("PIntl"), Luscina, Inc.,
Pioneer First Russia, Inc. ("First Russia"), Pioneer Omega, Inc. ("Omega") and
Theta Enterprises, Inc.; Chairman 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 GmbH"); Member of
the Supervisory Board of Pioneer First Polish Trust Fund Joint Stock Company
("PFPT"); Chairman, President and Trustee of all of the Pioneer mutual funds and
Partner, Hale and Dorr LLP (counsel to the Trust).
RICHARD H. EGDAHL, M.D., Trustee, DOB: December 1926
Boston University Health Policy Institute, 53 Bay State Rd., Boston, MA 02115
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;
6
<PAGE>
Director, Boston University Health Policy Institute and Boston University
Medical Center; Executive Vice President and Vice Chairman of the Board,
University Hospital; Academic Vice President for Health Affairs, Boston
University; Director, Essex Investment Management Company, Inc. (investment
adviser), Health Payment Review, Inc. (health care containment software firm),
Mediplex Group, Inc. (nursing care facilities firm), Peer Review Analysis, Inc.
(health care facilities firm) and Springer-Verlag New York, Inc. (publisher);
Honorary Trustee, Franciscan Children's Hospital and Trustee of all of the
Pioneer mutual funds.
MARGARET B.W. GRAHAM, Trustee, DOB: May 1947
The Keep, P.O. Box 110. Little Deer Isle, ME 04650
Founding Director, 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, Boston University School of
Management ("BUSM"), 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 and Adjunct Scholar, George Washington University; Economic
Consultant and Director, American Productivity and Quality Center; American
Enterprise Institute and Trustee of all of the Pioneer mutual funds, except
Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, Trustee, DOB: May 1948
One Boston Place, Suite 2635, Boston, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm) and Trustee of
all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, Trustee and Executive Vice President, DOB: February 1944
Executive Vice President and a Director of PGI; President, Chief Investment
Officer and a Director of PMC; Director of PFD, PCC, PIC, PIntl , First Russia,
Omega and Pioneer SBIC Corporation, 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
Partner, 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.; Trustee of Alliance Capital Reserves, Alliance Government Reserves and
Alliance Tax Exempt Reserves 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, PIC, PIntl, PMT, PGL, First Russia, Omega and Pioneer
SBIC Corporation; Treasurer and Director of PPC and Treasurer of all of the
Pioneer mutual funds.
JOSEPH P. BARRI, Secretary, DOB: August 1946
Secretary of PGI, PMC, PPC, PIC, PIntl, PMT, First Russia, Omega and PCC; Clerk
of PFD and PSC; Partner, Hale and Dorr LLP (counsel to the Trust) and Secretary
of all of the Pioneer mutual funds.
ERIC W. RECKARD, Assistant Treasurer, DOB: June 1956
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.
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<PAGE>
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 formerly of Hale and Dorr LLP (counsel to the
Trust) where he most recently served as junior partner.
RICHARD A. SCHLANGER, Vice President, DOB: July 1948
Vice President of PMC.
The Trust's 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 mutual funds currently offered to the
public and the investment adviser and principal underwriter for each fund.
Investment Principal
Fund Name Adviser Underwriter
- --------- ---------- -----------
Pioneer World Equity Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Balanced Fund 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 1
Pioneer Variable Contracts Trust PMC Note 2
- --------------------------------
Note 1 This fund is a closed-end fund.
Note 2 This is a series of eight separate portfolios designed to provide
investment vehicles for the variable annuity and variable life
insurance contracts of various insurance companies or for certain
qualified pension plans.
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At February 29, 1996, the Trustees and officers of the Trust
beneficially owned, in the aggregate, less than 1% of the outstanding shares of
the Trust. At February 29, 1997, Merrill Lynch Pierce Fenner & Smith, Inc. 4800
Deer Lake Drive East, Jacksonville, Florida, owned of record, respectively,
867,266 Class A shares (6.70% of the Class A shares outstanding), and 198,768
Class B shares (15.36% of the Class B shares outstanding) of the Trust. To the
knowledge of the Trust, no individual officer or Trustee of the Trust owned 5%
or more of the issued and outstanding shares of PGI on the date of the
Prospectus, except Mr. Cogan who then owned approximately 14% of such shares.
Compensation of Officers and Trustees
The Trust pays no salaries or compensation to any of its officers,
however, the Trust pays an annual trustees' fee to each Trustee who is not
affiliated with PGI, PMC, PFD or PSC consisting of two components: (a) a base
fee of $500 and (b) a variable fee, calculated on the basis of the average net
assets of the Trust. In addition, the Trust pays a per meeting fee of $100 to
each Trustee who is not affiliated with PGI, PMC, PFD or PSC. The Trust also
pays an annual committee participation fee to each Trustee who serves as a
member of any committees established to act on behalf of one or more of the of
Pioneer mutual funds. Committee fees will be 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 Chair who receives an
annual trustees' fee equal to 20% of the aggregate annual trustees' fee. Members
of the Pricing Committee for the Pioneer mutual funds, as well as any other
committee which renders material functional services to the Board of Trustees
for the Pioneer mutual funds, receives an annual fee equal to 5% of the annual
trustees' fee, except the Committee Chair who receives an annual trustees' fee
equal to 10% of the annual trustees' fee. Any such fees paid to affiliates or
interested persons of PGI, PMC, PFD or PSC are reimbursed to the Trust under its
management contract..
The following table sets forth certain information with respect to
compensation of each Trustee of the Trust.
<TABLE>
<CAPTION>
Total Compensa-
tion from the
Pension or Trust and other
Aggregate Retirement funds in the
Compensation Benefits Pioneer Family
Trustee From the Trust* Accrued of Mutual Funds**
- ------- -------------- ---------- -----------------
<S> <C> <C> <C>
John F. Cogan, Jr. $ 500 $0 $ 11,083*
Richard H. Egdahl, M.D. 1,857 0 59,858
Margaret B.W. Graham 1,957 0 59,858
John W. Kendrick 1,957 0 59,858
Marguerite A. Piret 2,214 0 79,842
David D. Tripple 500 0 11,083*
Stephen K. West 2,073 0 67,850
John Winthrop 2,141 0 66,442
----------------------------------------------------
Totals $13,115 $0 $417,052
====================================================
</TABLE>
- --------
* For the fiscal year ended November 30, 1996.
** For the calendar year ended December 31, 1996.
3. INVESTMENT ADVISER
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The Trust has contracted with PMC, 60 State Street, Boston,
Massachusetts, to act as its investment adviser. 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 Trustees to disapprove any
such purchase or sale. A description of the services provided to the Trust under
the management contract and the expenses paid by the Trust is set forth in the
Prospectus under the caption "Management of the Trust."
The management contract is renewable annually by the vote of a majority
of the Board of Trustees of the Trust (including a majority of the Board of
Trustees who are not parties to the contract or interested persons of any such
parties) cast in person at a meeting called for the purpose of voting on such
renewal. This contract terminates if assigned and may be terminated without
penalty by either party, by the giving of sixty days' written notice.
As compensation for its management services and expenses incurred, PMC
is entitled to a management fee at the rate of 0.50% per annum on the first $100
million; 0.45% on the next $200 million; and 0.40% on assets over $300 million.
The fee is normally computed daily and paid monthly.
Effective December 1, 1993, PMC agreed not to impose all or a portion
of its management fee to the extent necessary to limit the Trust's expenses to
0.85% of its average daily net assets. This agreement is voluntary and temporary
and may be revised or terminated at any time.
During the fiscal years ended November 30, 1996, 1995 and 1994 , PMC
would have earned management fees of $274,726, $291,294 and $337,731,
respectively, if a voluntary expense limitation had not been in effect. However,
pursuant to the expense limitation agreement described above, PMC reduced its
management fee during the fiscal year ended November 30, 1994 by $235,347. PMC
voluntarily agreed not to impose a management fee during the fiscal year ended
November 30, 1995 and voluntarily agreed to impose a portion of its management
fees during the fiscal year ended November 30, 1955.
4. UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS
The Trust has entered into an Underwriting Agreement with PFD. The
Underwriting Agreement provides that PFD will bear any distribution expenses not
borne by the Trust.
PFD bears all expenses it incurs in providing services under the
Underwriting Agreement. Such expenses include compensation to its employees and
representatives and to securities dealers for distribution related services
performed for the Trust. 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, state and foreign
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 a plan of distribution pursuant to Rule 12b-1
under the 1940 Act with respect to Class A shares (the "Class A Plan") and a
plan of distribution with respect to Class B shares (the "Class B Plan")
(together, the "Plans").
Class A Plan
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<PAGE>
Pursuant to the Class A Plan, the Trust may reimburse PFD for its
expenditures in financing any activity primarily intended to result in the sale
of 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 on a fiscal year basis and may not exceed, with respect to Class A
shares, the annual rate of 0.25% of the Trust's average annual net assets
attributable to Class A shares. The Plan does not provide for the carryover of
reimbursable expenses beyond twelve months from the date 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 service fee at a rate
equal to 0.25% of the amount invested. As compensation therefore, 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 to 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 contingent deferred sales charges ("CDSCs")
attributable to Class B shares. (See "Distribution Plans" in the Prospectus.)
When the broker-dealer effecting the sale of Class B shares waives its right to
receive commissions on such sales, PFD may cause the distribution fees described
above to be paid to that 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 purpose for which such expenditures were made.
In the Trustees' quarterly review of the Plans, they will consider the continued
appropriateness and the level of reimbursement or compensation the Plans
provide.
No interested person of the 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 had or
have any direct or indirect financial interest in the operation of the Plans),
cast in person at a meeting called for the purpose of voting on the Plans. In
approving the Plans, the Trustees
11
<PAGE>
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 Trust affected thereby, and
material amendments of the Plans must also be approved by the Trustees in the
manner described above. A Plan may be terminated at any time, without payment of
any penalty, by vote of the majority of the Trustees who are not interested
persons of the Trust and have no direct or indirect financial interest in the
operation of the Plan, or by a vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the respective class of the Trust. A
Plan will automatically terminate in the event of its assignment (as defined in
the 1940 Act).
During the fiscal year ended November 30, 1996, the Trust incurred
total distribution fees pursuant to the Class A and Class B Plans of $127,915
and $37,792, respectively. Distribution fees were paid by the Trust to PFD in
reimbursement of expenses related to compensating dealers and sales personnel.
Redemptions of each class of shares may be subject to a CDSC. A CDSC of
0.50% may be imposed on redemptions of certain net asset value purchases of
Class A shares within one year of purchase. Class B shares that are redeemed
within three years of purchase are subject to a CDSC at declining rates starting
at 2.0%, which are based on the lower of the cost or market value of the shares
being redeemed. Proceeds of the CDSC are paid to PFD. For the fiscal year ended
November 30, 1996, CDSCs in the amount of $14,647 were paid to PFD. Such CDSCs
are paid to PFD in reimbursement of expenses related to servicing of
shareholders accounts and compensation paid to dealers and sales personnel (as
described in "How to Buy Trust Shares" in the Prospectus).
5. SHAREHOLDER SERVICING/TRANSFER AGENT
The Trust has contracted with PSC, 60 State Street, Boston,
Massachusetts, to act as shareholder servicing agent and transfer agent for the
Trust. 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 ninety days'
written notice.
Under the terms of its contract with the Trust, PSC will service
shareholder accounts, and its duties will 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 routine shareholder inquiries.
PSC receives an annual fee of $30.00 per Class A and Class B
shareholder account from the Trust as compensation for the services described
above. 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 subaccounting 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.
6. CUSTODIAN
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109 (the "Custodian") is 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
12
<PAGE>
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.
7. PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts, serves as the principal
underwriter for the Trust in connection with the continuous offering of its
shares.
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 an acquisition of portfolio
securities or a merger or other reorganization.
The Trust has elected to be governed by Rule 18f-1 under the 1940 Act
pursuant to which the Trust is obligated to redeem shares solely in cash up to
the lesser of $250,000 or 1% of the Trust's net asset value during any 90-day
period for any one shareholder.
During the fiscal years ended November 30, 1996, 1995 and 1994, net
underwriting commissions retained by PFD in connection with its offering of
Trust shares were approximately $21,000, $24,247 and $49,173, respectively.
Commissions reallowed to dealers by PFD in the same periods were approximately
$94,000, $107,008 and $257,537, respectively.
8. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street, Boston, Massachusetts 02110,
is the Trust's independent public accountant, 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 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.
13
<PAGE>
The primary consideration in placing portfolio security transactions is
execution at the most favorable prices. PMC has complete freedom as to the
markets in which and thebroker-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 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,
securities, economic factors and trends, portfolio strategy, performance of
accounts, comparative fund statistics and credit rating service information. PMC
maintains a listing of dealers who provide such services on a regular basis.
Management believes that no exact dollar value can be calculated for such
services.
The Trustees periodically review PMC's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Trust and review the dealer spreads paid by the Trust over
representative periods of time to determine if they are reasonable in relation
to the benefits to the Trust.
The Trust is managed by PMC which also serves as investment adviser to
other Pioneer mutual funds and certain private accounts with investment
objectives similar to those of the Trust. Securities frequently meet the
investment objectives of the Trust, such other funds and such private accounts.
In such cases, the decision to recommend a purchase to one fund or account
rather than another is based on a number of factors. The determining factors in
most cases are the amount of securities of the issuer then outstanding, the
value of those securities and the market for them. Other factors considered in
the investment recommendations include other investments which each fund or
account presently has in a particular industry and the availability of
investment funds in each fund or account.
It is possible that at times identical securities will be held by more
than one fund and/or account. However, positions in the same issue may vary and
the length of time that any fund or account may choose to hold its investment in
the same issue may likewise vary. To the extent that the Trust, another mutual
fund in the Pioneer group or a private account managed by PMC may not be able to
acquire as large a position in such security as it desires, it may have to pay a
higher price for the security. Similarly, the 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 fund or account, the
resulting participation in volume transactions could produce better executions
for the Trust or the account. In the event 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.
During the fiscal years ended November 30, 1996, 1995 and 1994, the
Trust paid no brokerage or underwriting commissions.
10. TAX STATUS
14
<PAGE>
It is the Trust's policy to meet the requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"), for qualification as
a regulated investment company. These requirements relate to the sources of 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 dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock, securities or foreign
currencies, or other income (including gains from forward contracts) derived
with respect to its business of investing in such stock, securities or
currencies (the "90% income test"), limit its gains from the sale of stock,
securities and certain other positions held for less than three months to less
than 30% of its annual gross income (the "30% test") and satisfy certain annual
distribution and quarterly diversification requirements.
Dividends from investment company taxable income, which includes net
investment income, net short-term capital gain in excess of net long-term
capital loss, and certain net foreign exchange gains, 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, if
any, whether received in cash or reinvested in additional shares, are taxable to
the Trust's shareholders as long-term capital gains for federal income tax
purposes without regard to the length of time shares of the Trust have been
held. The federal income tax status of all distributions will be reported to
shareholders annually.
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.
Foreign exchange gains and losses realized by the Trust in connection
with certain transactions involving foreign currency-denominated debt
securities, foreign currency forward contracts, foreign currencies, or payables
or receivables denominated in a foreign currency are subject to Section 988 of
the Code, which generally causes such gains and losses to be treated as ordinary
income and losses and may affect the amount, timing and character of
distributions to shareholders. Any such transactions that are not directly
related to the Trust's investments in stock or securities may need to be limited
in order to enable the Trust to satisfy the limitations described in the second
paragraph above that are applicable to the income or gains recognized by a
regulated investment company. If the net foreign exchange loss for a year were
to exceed the Trust's investment company taxable income (computed without regard
to such loss), the resulting ordinary loss for such year would not be deductible
by the Trust or its shareholders in future years.
If the Trust acquires any equity interest (under proposed regulations,
generally including not only stock but also an option to acquire stock) in
certain foreign corporations that receive at least 75% of their annual gross
income from passive sources (such as interest, dividends, rents, royalties or
capital gain) or hold at least 50% of their assets in investments producing such
passive income ("passive foreign investment companies"), the Trust could be
subject to federal income tax and additional interest charges on "excess
distributions" received from such companies or gain from the sale of stock in
such companies, even if all income or gain actually received by the Trust is
timely distributed to its shareholders. The Trust would not be able to pass
through to its shareholders any credit or deduction for such a tax. Certain
elections may, if available, ameliorate these adverse tax consequences, but any
such election would require the Trust to recognize taxable income or gain
without the concurrent receipt of cash. The Trust may limit and/or manage its
holdings in passive foreign investment companies to minimize its tax liability
or maximize its return from these investments.
15
<PAGE>
If the Trust invests in certain pay-in-kind securities ("PIKs"), zero
coupon securities, deferred interest securities or, in general, any other
securities with original issue discount (or with market discount if the 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. As of the end of its most recent taxable year, the Trust
had no capital loss carryforwards.
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 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. 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 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.
Certain foreign currency forward contracts may cause the Trust to
recognize gains or losses from marking-to-market at the end of its taxable year
even though such forward contracts may not have been performed or closed out.
Forward contracts relating to foreign currency are subject to Section 988, as
described above, and accordingly generally produce ordinary income or loss.
Losses on certain forward contracts and/or offsetting positions (portfolio
securities or other positions with respect to which the Trust's risk of loss is
substantially diminished by one or more forward contracts) may also be deferred
under the tax straddle rules of the Code, which may also affect the
characterization of capital gains or losses from straddle positions and certain
successor positions as long-term or short-term. Certain tax elections may be
available that would enable the Trust to ameliorate some adverse effects of the
tax rules described in this paragraph. The tax rules applicable to forward
contracts and straddles may affect the amount, timing and character of the
Trust's income and losses and hence of its distributions to shareholders.
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<PAGE>
The Trust's dividends and distributions will generally not qualify for
any dividends-received deduction that might otherwise be available for certain
dividends received by shareholders that are corporations.
The Trust may be subject to withholding and other taxes imposed by
foreign countries, including taxes on interest, dividends and capital gains,
with respect to its investments in those countries. Tax conventions between
certain countries and the U.S. may reduce or eliminate such taxes in some cases.
The Trust does not expect to satisfy the requirements for passing through to its
shareholders their pro rata shares of qualified foreign taxes paid by the Trust,
with the result that shareholders will not include such taxes in their gross
incomes and will not be entitled to a tax deduction or credit for such taxes on
their own tax returns.
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 Internal Revenue Service ("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 qualifies 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 its Board of Trustees to
authorize the issuance of an unlimited number of full and fractional shares of
beneficial interest (without par value) which may be
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<PAGE>
divided into such separate series as the Trustees may establish. The Trustees
may establish additional series of shares, and may divide or combine the shares
into a greater or lesser number of shares without thereby changing the
proportionate beneficial interests in the 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 two classes of shares of the Trust, Class A shares and Class B
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, the shareholders of each class 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.
The shares of the Trust are entitled to vote separately to approve
investment advisory agreements or changes in investment restrictions, but
shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of the Trust vote together as a class on
matters that affect the Trust in substantially the same manner. As to matters
affecting a single class, shares of such class will vote separately.
Although Trustees are not elected annually by the shareholders,
shareholders holding 10% or more of the outstanding shares of the Trust may
cause the Trust to hold a meeting of shareholders for the purpose of voting upon
the question of the removal of one or more trustees. Removal shall require the
affirmative vote of the holders of two-thirds of the shares of the Trust
outstanding and entitled to vote at a meeting called for such purpose. No
amendment that adversely affects 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, except as set forth below. See "Certain Liabilities."
12. CERTAIN LIABILITIES
As a Massachusetts business trust, the Trust's operations are governed
by its Declaration of Trust dated April 30, 1992, 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 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. DETERMINATION OF NET ASSET VALUE
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The net asset value per share of each class of the Trust is determined
as of the close of regular trading (normally 4:00 p.m., Eastern Time) on each
day on which the New York Stock Exchange (the "Exchange") is open for trading.
As of the date of this Statement of Additional Information, the Exchange is open
for trading every weekday except for the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The net asset value per share of each class
of the Trust is also determined on any other day in which the level of trading
in its portfolio securities is sufficiently high so that the current net asset
value per share might be materially affected by changes in the value of its
portfolio securities. The 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 value of all of its assets, less the Trust's liabilities attributable
to the class, and dividing it by the number of outstanding shares of the class.
For purposes of determining net asset value, expenses of the classes of the
Trust are accrued daily.
The Board of Trustees has directed that the fair market value of the
Trust's assets should be determined as follows. Ordinarily, investments in debt
securities are valued on the basis of information furnished by a pricing service
which utilizes primarily a matrix system (which reflects such factors as
security prices, yields, maturities and ratings), supplemented by dealer and
exchange quotations, to recommend valuations for normal institutional-sized
trading units of debt securities. In addition, the Board has instructed advisory
personnel not to rely exclusively on this pricing service if the fair market
value of certain securities may be more accurately determined on the basis of
information available from other sources. Temporary cash investments are valued
at cost, which approximates market value.
The Trust's maximum offering price per Class A share is determined by
adding the maximum sales charge to the net asset value per Class A share. Class
B shares are offered at net asset value without the imposition of an initial
sales charge.
14. SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan ("SWP") is designed to provide a
convenient method of receiving fixed payments at regular intervals from shares
of the Trust deposited by the applicant under this SWP. The applicant must
deposit or purchase for deposit with PSC shares of the Trust having a total
value of not less than $10,000. Periodic payments of $50 or more will be
deposited monthly or quarterly directly into a bank account designated by the
applicant, or will be sent by check to the applicant, or any person designated
by the applicant. A designation of a third party to receive checks subsequent to
opening an account requires an acceptable signature guarantee. Withdrawals under
a SWP from Class B share accounts are limited to 10% of the value of the account
at the time the SWP is established. See "Waiver or Reduction of Contingent
Deferred Sales Charge" in the prospectus.
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.
SWP payments are made from the proceeds of the redemption of shares
deposited under the SWP in a SWP account. Share redemptions are taxable
transactions to shareholders. To the extent that such redemptions for periodic
withdrawals exceed dividend income reinvested in the SWP account, such
redemptions will reduce and may ultimately exhaust the number of shares
deposited in the SWP account. In addition, the amounts received by a shareholder
cannot be considered as an actual yield or income on his or her investment
because part of such payments may be a return of his or her investment.
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The SWP may be terminated at any time (1) by written notice to PSC or
from PSC to the shareholder; (2) upon receipt by PSC of appropriate evidence of
the shareholder's death; or (3) when all shares under the SWP have been
redeemed. The fees of PSC for maintaining SWPs are paid by the Trust.
15. LETTER OF INTENTION
A Letter of Intent (a "Letter") may be established by completing the
Letter of Intent 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. A Letter of Intent 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 Letter of Intention and are in an amount which would qualify for a
further quantity discount, all transactions will be recomputed on the expiration
date of the Letter of Intention 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 Letter of Intention.
If the total purchases, less redemptions, are less than the amount
specified under the Letter of Intention, you must remit to PFD any difference
between the sales charge on the amount actually purchased and the amount
originally specified in the Letter of Intention 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 Buy Trust Shares" in the Prospectus for more information.
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<PAGE>
16. INVESTMENT RESULTS
The Trust's yield quotations and average annual total return quotations
as they may appear in the Prospectus, this Statement of Additional Information
or in advertising are calculated by standard methods prescribed by the SEC.
Quotations, Comparisons, and General Information
From time to time, in advertisements, in sales literature, or in
reports to shareholders, the past performance of the Trust may be illustrated
and/or compared with that of other mutual funds with similar investment
objectives, and to other relevant indices. For example, the Trust may compare
its yield 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 indices 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 Digest, Consumer
Reports, Financial World, Forbes, Fortune, Investors Business Daily, Kiplinger's
Personal Finance Magazine, Money Magazine, New York Times, Personal Investor,
Smart Money, USA Today, U.S. News and World Report, The Wall Street Journal, and
Worth may also be cited (if the 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 Markets, CDA Wiesenberger, Donoghue's
Mutual Fund Almanac, Investment Company Data, Inc., Ibbotson Associates,
Johnson's Charts, Kanon Block Carre and Co., Lipper Analytical Services, Inc.,
Micropal, Inc., Morningstar, Inc., Schabacker Investment Management and Towers
Data Systems, Inc.
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.
In representing investment results of a class, 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.
Standardized Yield Quotations
The yield of a class is computed by dividing the class's net investment
income per share during a base period of 30 days, or one month, by the maximum
offering price per share of the class on the last day of such base period in
accordance with the following formula:
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
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<PAGE>
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 remaining discount
or premium on a security.
For purposes of computing yield, interest income is recognized by
accruing 1/360 of the stated interest rate of each obligation in the Trust's
portfolio each day that the obligation is in the portfolio. Expenses of a class
accrued during any base period, if any, pursuant to the respective Distribution
Plan are included among the expenses accrued during the base period.
The yield on Class A and Class B shares of the Trust for the 30-day
period ended November 30, 1996 computed as above was 5.14% and 4.44%,
respectively, except that absent expense limitations, the yield on Class A and
Class B shares of the Fund would have been 4.76% and 4.11%, respectively.
Standardized Average Annual Total Return Quotations and Other
Peformance 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 the
class, over any period up to the lifetime of the class. Total return
calculations will usually assume the reinvestment of all dividends and capital
gains distributions and will be expressed as a percentage increase or decrease
from an initial value, for the entire period or for one or more specified
periods within the entire period. Total return percentages for periods of less
than one year will not usually be annualized; total return percentages for
periods longer than one year will usually be accompanied by total return
percentages for each year within the period and/or by the average annual
compounded total return for the period. The income and capital components of a
given return may be separated and portrayed in a variety of ways in order to
illustrate their relative significance. Performance may also be portrayed in
terms of cash or investment values, without percentages or by
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<PAGE>
reference to historical information depicting the value of a hypothetical
account in the Trust since the Trust's inception. Past performance cannot
guarantee any particular future result.
Average annual total return quotations for Class A and Class B shares
are computed by finding the average annual compounded rates of return that would
cause a hypothetical investment in the 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 of $25 for Class A shares or the deduction of
the CDSC on Class B shares at the end of the period.
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 initial
payment made at the beginning of the designated period (or
fractional portion thereof)
For purposes of the above computation, it is assumed that the maximum
sales charge of 2.5% 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 returns for period ending November 30, 1996
were:
1 Year 5 Years 10 Years Life-of-Fund
------ ------- -------- ------------
Class A Shares 2.53% N/A N/A 4.50% *
Class B Shares** 2.40% N/A N/A 4.51%
* Commencement of operations, August 10, 1992.
** Class B shares were first offered on April 4, 1994.
Class A share results reflect the maximum sales charge of 2.50%. Class
B share results reflect the effect of the CDSC that would have been charged if
shares were redeemed at the end of each period. If PMC's voluntary fee and
expense reduction agreement had not been in place, total return would have been
lower.
Automated Information Line
FactFone(SM), 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;
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<PAGE>
o annualized 30-day yields on Pioneer's fixed-income funds;
o annualized 7-day yields and 7-day effective (compound) yields
for Pioneer's money market 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 "FactFone(SM)" in the Prospectus for more information.
All performance numbers communicated through FactFone(SM) represent
past performance; 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 and Class B shares (except
for Pioneer's money market fund, which seeks 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 audited financial statements for the year ended November
30, 1996 are included in the Trust's Annual Report to Shareholders, which report
is incorporated by reference into and attached to this Statement of Additional
Information. The Trust's Annual Report to Shareholders is so incorporated and
attached in reliance upon the report of Arthur Andersen LLP, independent public
accountants, as experts in accounting and auditing.
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<PAGE>
APPENDIX A
Description of Bond Ratings(1)
Moody's Investor's Service, Inc.(2)
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are 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 bigger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors givingsecurity to
principal and interest are considered adequate but elements may be present which
suggest susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered 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.
Standard & Poor's Corporation(3)
AAA: Bonds rated AAA are highest grade obligations. This rating indicates an
extremely strong capacity to pay principal and interest.
AA: Bonds rated AA also qualify as high-quality obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest, although
they are more susceptible to the adverse effects of changes in circumstances and
economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
- ------------
(1) The ratings described below are believed to be the most recent ratings
available at the date of this Prospectus for the securities listed. Ratings are
generally given to securities at the time of issuance. While the rating agencies
may from time to time revise such ratings, they undertake no obligation to do
so, and the ratings indicated do not necessarily represent ratings which will be
given to these securities on the date of the Trust's fiscal year-end.
(2) Rates bonds of issuers which have $600,000 or more of debt, except
bonds of educational institutions, projects under construction, enterprises
without established earnings records and situations where current financial data
is unavailable.
(3) Rates all governmental bodies having $1,000,000 or more of debt
outstanding, unless adequate information is not available.
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<PAGE>
Pioneer Short-Term Income Trust
Class A Shares
<TABLE>
<CAPTION>
Net Asset Initial Net
Initial Offering Sales Charge Shares Value Asset
Date Investment Price Included Purchased Per Share Value
<S> <C> <C> <C> <C> <C> <C>
8/10/92 $10,000 $4.1000 2.50% 2,439.024 4.00 $9,750.00
</TABLE>
Value of Shares
Dividends and Capital Gains Reinvested
<TABLE>
<CAPTION>
From From Capital From Dividends Total
Date Investment Gains Reinvested Reinvested Value
<S> <C> <C> <C> <C>
12/31/92 $9,659 $0 $256 $9,915
12/31/93 $11,237 $0 $863 $10,497
12/31/94 $10,986 $0 $1395 $10,517
12/31/95 $12,431 $0 $2190 $11,580
12/31/96 14,604 $0 $2893 $12,088
</TABLE>
26
<PAGE>
Pioneer Short-Term Income Trust
Class B Shares
<TABLE>
<CAPTION>
Net Asset Initial Net
Initial Offering Sales Charge Shares Value Asset
Date Investment Price Included Purchased Per Share Value
<S> <C> <C> <C> <C> <C> <C>
4/4/94 $10,000 $3.89 2.50% 2,570.69 $3.89 $10,000
</TABLE>
Value of Shares
Dividends and Capital Gains Reinvested
<TABLE>
<CAPTION>
From Investment From Capital From Dividends Deferred Sales Total Value CDSC
Date Gains Reinvested Reinvested Charge if Redeemed Percentage
---- ---------------- ----------- ------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
12/31/94 $9,589 $0 $385 $192 $9,782 2.00%
12/31/95 $9,897 $0 $1,021 $198 $10,720 2.00%
12/31/96 $9,666 $0 $1,640 $97 $11,209 1.00%
</TABLE>
27
<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 be used, if appropriate. The indices
are not available for direct investment. The data presented is not meant to be
indicative of the performance of the Fund, reflects past performance and does
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 Composite Index
includes 500 of the largest stocks (in terms of stock market value) in the
United States; prior to March 1957 it consisted of 90 of the largest stocks.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of 30 blue chip stocks.
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the New York Stock Exchange (NYSE), plus stocks listed on the American Stock
Exchange (AMEX) and over-the-counter (OTC) 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 Index 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.
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds from 1977 to 1991 are
constructed with data from The Wall Street Journal. Over 1926-1976, data are
obtained from the Government bond file at the Center for Research in Security
Prices (CRSP), Graduate School of Business, University of Chicago. Each year, a
one-bond portfolio with a term of approximately 20 years and a reasonably
current coupon was used, and whose returns did not reflect potential tax
benefits, impaired negotiability, or special redemption or call privileges.
Where callable bonds had to be used, the term of the bond was assumed to be a
simple average of the maturity and first call dates minus the current date. The
bond was "held" for the calendar year and returns were computed. Total returns
for 1977-1991 are calculated as the change in the flat price or and-interest
price.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of the intermediate-term government bonds for 1977-1991 are
calculated from The Wall Street Journal prices, using the change in flat price.
Returns from 1934-1986 are obtained from the CRSP Government Bond File.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than 5 years, and this bond is "held"
for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934-1942, almost all bonds
with maturities near 5 years were partially or full tax-exempt and were selected
using the rules described above. Personal tax rates were generally low in that
period, so that yields on tax-exempt bonds were similar to yields on taxable
bonds. From 1926-1933, there are few bonds suitable for construction of a series
with a 5-year maturity. For this period, five year bond yield estimates are
used.
MSCI
Morgan Stanley Capital International Indices, developed by the Capital
International S.A., are based on share prices of some 1470 companies listed on
the stock exchanges around the world.
Countries in the MSCI EAFE Portfolio are:
Australia; Austria; Belgium; Denmark; Finland; France; Germany; Hong Kong;
Italy; Japan; Netherlands; N. Zealand; Norway; Singapore/Malaysia; Spain;
Sweden; Switzerland; United Kingdom.
Countries in the MSCI EMERGING MARKET FREE INDEX are: Argentina, Brazil, Chile,
China, Czech Republic, Colombia, Greece, Hungary, India, Indonesia, Israel,
Jordan, Korea Free (at 50%), Malaysia, Mexico Free, Pakistan, Peru, Philippines
Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan, Thailand, Turkey,
Venezuela Free
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
6 MONTH CDs
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
For 1969-1991, corporate bond total returns are represented by the Salomon
Brothers Long-Term High-Grade Corporate Bond Index. Since most large corporate
bond transactions take place over the counter, a major dealer is the natural
source of these data. The index includes nearly all Aaa- and Aa-rated bonds. If
a bond is downgraded during a particular month, its return for the month is
included in the index before removing the bond from future portfolios.
Over 1926-1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946-1968, Ibbotson
and Sinquefield backdated the Salomon Brothers' index, using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon for
1969-1991. Capital appreciation returns were calculated from yields assuming (at
the beginning of each monthly holding period) a 20-year maturity, a bond price
equal to par, and a coupon equal to the beginning-of-period yield. For the
period 1926-1945, the Standard and Poor's monthly High-Grade Corporate Composite
yield data were used, assuming a 4 percent coupon and a 20-year maturity. The
conventional present-value formula for bond price for the beginning and
end-of-month prices was used. (This formula is presented in Ross, Stephen A.,
and Randolph W. Westerfield, Corporate Finance, Times Mirror/Mosby, St. Louis,
1990, p. 97 ["Level-Coupon Bonds"].) The monthly income return was assumed to be
one-twelfth the coupon.
U.S. (30 DAY) TREASURY BILLS
For the U.S. Treasury bill index, data from The Wall Street Journal are used for
1977-1991; the CRSP U.S. Government Bond File is the source until 1976. Each
month a one-bill portfolio containing the shortest-term bill having not less
than one month to maturity is constructed. (The bill's original term to maturity
is not relevant.) To measure holding period returns for the one-bill portfolio,
the bill is priced as of the last trading day of the previous month-end and as
of the last trading day of the current month.
NAREIT-EQUITY INDEX
All of the data is based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMSE and the NASDAQ. The data is
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 weighing at the beginning of the period.
Only those REITs listed for the entire period are
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
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 2000 SMALL STOCK INDEX
Index of the 2,000 smallest stocks in the Russell 3000 Index (TM); the smallest
company has a market capitalization of approximately $13 million. The Russell
3000 is comprised of the 3,000 largest US companies as determined by market
capitalization representing approximately 98% of the US equity market. The
largest company in the index has a market capitalization of $67 billion. The
Russell Indexes (TM) are reconstituted annually as of June 1st, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The Wilshire Real Estate Securities Index is a market capitalization-weighted
index which measures the performance of more than 85 securities.
The index contains performance data on five major categories of property;
office, retail, industrial, apartment and miscellaneous. Additionally, the Index
has real estate portfolio encumbered by 16% third party mortgages. The companies
in the WRESEC are 79% equity and hybrid REIT's and 21% real estate operating
companies. The capitalization is 47% NYSE, 33% AMEX and 20% OTC."
STANDARD & POOR'S MIDCAP 400 INDEX
The Standard and Poor's MidCap 400 Index is a market-value-weighted index. The
performance data for the MidCap 400 Index were calculated by taking the stocks
presently in the MidCap 400 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 MidCap 400 Index 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.
The S&P MidCap 400 Index and the S&P 500 together represent approximately 85% of
the total market capitalization of stocks traded in the United States.
LIPPER BALANCED FUNDS INDEX
Equally-weighted performance indices, 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%.
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963-1987 and The Wall Street Journal for the years 1988-1994.
Source: Ibbotson Associates
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
- --------------------------------------------------------------------------------
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A
Dec 1931 -43.34 -49.03 -49.75 -9.52 N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A
Dec 1933 53.99 73.71 142.87 0.51 N/A N/A
Dec 1934 -1.44 8.07 24.22 2.03 N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A
Dec 1942 20.34 14.12 44.51 9.29 N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
S&P 500 Dow U.S. Small S&P/ S&P/
Jones Stock U.S. BARRA BARRA
Industrials Index Inflation Growth Value
- --------------------------------------------------------------------------------
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60
Dec 1994 1.31 5.06 3.11 2.78 3.13 -0.64
Dec 1995 37.43 36.84 34.46 2.74 38.13 36.99
Dec 1996 23.07 28.84 17.62 3.58 23.96 21.99
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
- --------------------------------------------------------------------------------
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 0.1 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
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 4.18 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
<PAGE>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
Intermediate MSCI Long-
Long-Term -Term U.S. EAFE 6 Term U.S. U.S.
U.S. Gov't Government - Net of MONTH Corporate (30 Day)
Bonds Bonds Taxes CDs Bonds T- Bill
- --------------------------------------------------------------------------------
Dec 1966 3.65 4.69 N/A 5.75 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.48 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.44 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.71 -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 5.38 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 6.12 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 29.1 -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 6.58 -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 19.3 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 16.8 11.21 5.21 26.39 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
<PAGE>
<TABLE>
<CAPTION>
RUSSELL LIPPER MSCI EMERGING
2000 WILSHIRE REAL S&P MIDCAP BALANCED MARKETS FREE BANK
NAREIT-EQUITY INDEX ESTATE 400 FUND INDEX SAVINGS ACCOUNT
SECURITIES INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 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
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
<PAGE>
RUSSELL LIPPER MSCI EMERGING
2000 WILSHIRE REAL S&P MIDCAP BALANCED MARKETS FREE BANK
NAREIT-EQUITY INDEX ESTATE 400 FUND INDEX SAVINGS ACCOUNT
SECURITIES INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
Source: Lipper
<PAGE>
APPENDIX C
ADDITIONAL 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, 1996, PMC employed a professional investment staff
of 53, with a combined average of twelve years' experience in the financial
services industry.
Total assets of all Pioneer mutual funds at December 31, 1996, were
approximately $15.8 billion representing 1,086,554 shareholder accounts, 722,661
non-retirement accounts and 363,893 retirement accounts.
<PAGE>
PIONEER SHORT-TERM INCOME TRUST
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial highlights of the Registrant are
included in Part A of the Registration Statement and
the financial statements of the Registrant are
incorporated by reference into Part B of the
Registration Statement from the 1996 Annual Report to
Shareholders for the year ended November 30, 1996
(filed electronically on January 28, 1997; file no.
33-47613; accession number 0000887228-97-000009).
(b) Exhibits:
1.1 Declaration of Trust*
1.2 Establishment and Designation of Classes*
2. By-Laws*
3. None
4. Specimen Stock Certificate*
5. Form of Management Contract*
6.1 Form of Underwriting Agreement*
6.2 Form of Dealer Sales Agreement*
7. None
8. Form of Custodian Agreement*
9. Form of Investment Company Service Agreement*
10. Opinion of Hale and Dorr LLP**
11. Consent of Independent Public Accountants+
12. None
13. Stock Purchase Agreement*
14. None
15.1 Amended Form of Distribution Plan*
15.2 Form of Class B Rule 12b-1 Distribution Plan*
16.1 Schedule of Computation of Total Return*
16.2 Schedule of Computation of Yield*
17. Financial Data Schedule+
18. Rule 18f-3 Plan Convering Two Classes of Shares+
19. Powers of Attorney*
---------------
* Incorporated by reference from the Registrant's Registration
Statement on Form N-1A (File No. 33-47613 and 811-6657) as
filed electronically with the Securities and Exchange
Commission as Post-Effective Amendment No. 3 on March 29,
1995.
** Incorporated by reference from the Registrant's Registration
Statement on Form N-1A (File No. 33-47613 and 811-6657) as
filed electronically with the Securities and Exchange
Commission as Post-Effective Amendment No. 4 on March 29,
1996.
+ Filed electronically herewith in accordance with EDGAR
requirements.
Item 25. Persons Controlled By or Under
Common Control With Registrant
PERCENT STATE/COUNTRY
OF OF
COMPANY OWNED BY SHARES INCORPORATION
------- -------- ------ -------------
Pioneering Management Corp. (PMC) PGI 100% DE
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<PAGE>
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer Capital Corp. (PCC) PGI 100% MA
Pioneer Funds Marketing GmbH (GmbH) PGI 100% MA
Pioneer SBIC Corp. (SBIC) PGI 100% MA
Pioneer Associates, Inc. (PAI) PGI 100% MA
Pioneer International Corp. (PInt) PGI 100% MA
Pioneer Plans Corp. (PPC) PGI 100% MA
Pioneer Goldfields Ltd (PGL) PGI 100% MA
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Metals and Technology, Inc.(PMT) PGI 100% DE
Pioneer First Polish Trust Fund
Joint Stock Co. (First Polish) PGI 100% Poland
Teberebie Goldfields Ltd. (TGL) PGI 90% Ghana
Pioneer Funds Distributor, Inc. (PFD) PMC 100% MA
SBIC's outstanding capital stock PCC 100% MA
THE FUNDS: All are parties to management contracts with PMC.
BUSINESS
FUND TRUST
Pioneer World Equity Fund DE
Pioneer International Growth Fund MA
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Micro-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Fund MA
Pioneer II MA
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Trust MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Balanced Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares, Inc. DE
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<PAGE>
OTHER:
[bullet] SBIC is the sole general partner of Pioneer Ventures Limited
Partnership, a Massachusetts limited partnership.
[bullet] ITI Pioneer AMC Ltd. (ITI Pioneer) (Indian Corp.), is a joint venture
between PMC and Investment Trust of India Ltd. (ITI) (Indian Corp.)
[bullet] ITI and PMC own approximately 46% and 49%, respectively, of the total
equity capital of ITI Pioneer.
JOHN F. COGAN, JR.
OWNS APPROXIMATELY 14% OF THE OUTSTANDING SHARES OF PGI.
TRUSTEE/
ENTITY CHAIRMAN PRESIDENT DIRECTOR OTHER
------ -------- --------- -------- -----
Pioneer Family
of 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
PCC X
PSC X
PMC X X
PFD X X
TGL X X
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<PAGE>
First Polish X Member of
Supervisory
Board
Hale and Dorr LLP Partner
GmbH Chairman of
Supervisory
Board
Item 26. Number of Holders of Securities
The following table sets forth the approximate number of
recordholders of each class of securities of the Registrant as of February 28,
1997:
Class A Class B
------- -------
Number of Record Holders: 2,449 284
Item 27. Indemnification
Except for the Declaration of Trust dated April 30, 1992,
establishing the Registrant as a trust under Massachusetts law, there is no
contract, arrangement or statute under which any director, officer, underwriter
or affiliated person of the Registrant is insured or indemnified. The
Declaration of Trust provides that no Trustee or officer will be indemnified
against any liability to which the Registrant would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "Act"), may be available to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the 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 by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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<PAGE>
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 the Registrant's Manager, Pioneering Management
Corporation. The following sections of each such Form ADV are incorporated
herein by reference:
(a) Items 1 and 2 of Part 2;
(b) Section IV, 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
Name with Underwriter with Registrant
- ---- ---------------- ---------------
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice
President and Trustee
Steven M. Graziano Senior None
Vice President
Stephen W. Long Senior None
Vice President
John W. Drachman Vice President None
Mary Kleeman Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
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<PAGE>
Elizabeth B. Bennett Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Steven R. Berke Assistant None
Vice President
Mary Sue Hoban Assistant None
Vice President
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
(c) 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 a party to one contract, described in the
Prospectus and the Statement of Additional Information, under which it receives
management and advisory services from Pioneering Management Corporation.
Item 32. Undertakings
(A) None.
(B) None.
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<PAGE>
(C) The Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, a copy of the Registrant's annual report to shareholders furnished
pursuant to and meeting the requirements of Rule 30d-1 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 No. 5 to its Registration Statement (the "Amendment")
(which meets all the requirements for effectiveness pursuant to paragraph (b) of
Rule 485 and the Securities Act of 1933) to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston and The
Commonwealth of Massachusetts, on the 27th day of March, 1997.
PIONEER SHORT-TERM INCOME TRUST
By: /s/ John F. Cogan, Jr.
----------------------
John F. Cogan, Jr.
Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 5 to the Registration Statement of Pioneer
Short-Term Income Trust (File Nos. 33-47613; 811-6657) has been signed below by
the following persons in the capacities and on the dates indicated:
Signature Title
--------- -----
/s/ John F. Cogan, Jr.* Chairman of the Board )
- ------------------------------------ and President (Principal )
John F. Cogan, Jr. Executive Officer) )
)
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<PAGE>
)
/s/ William H. Keough* Chief Financial Officer )
- ------------------------------------ and Treasurer (Principal )
William H. Keough, Treasurer Financial and Accounting )
Officer) )
March 27, 1997
A MAJORITY OF THE BOARD OF TRUSTEES:
/s/ John F. Cogan, Jr.* )
- ------------------------------------ )
John F. Cogan, Jr. )
)
)
/s/ Richard H. Egdahl, M.D.* )
- ------------------------------------ )
Richard H. Egdahl, M.D.* )
)
)
/s/ Margaret B.W. Graham* )
- ------------------------------------ )
Margaret B.W. Graham )
)
)
/s/ John W. Kendrick* ) March 27,
- ------------------------------------ ) 1997
John W. Kendrick )
)
)
/s/ Marguerite A. Piret* )
- ------------------------------------ )
Marguerite A. Piret )
)
)
/s/ David D. Tripple* )
- ------------------------------------ )
David D. Tripple )
)
)
/s/ Stephen K. West* )
- ------------------------------------ )
Stephen K. West )
)
)
/s/ John Winthrop* )
- ------------------------------------ )
John Winthrop )
)
)
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<PAGE>
*By: /s/ John F. Cogan Jr.
-------------------------
John F. Cogan Jr.
Attorney-in-fact
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<PAGE>
EXHIBIT INDEX
Exhibit
Number Document Title
11. Consent of Independent Public Accountants
17. Financial Data Schedule
18. Rule 18f-3 Plan
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 3, 1997 for
Pioneer Short-Term Income Trust and to all references to our firm included in or
made a part of Post-Effective Amendment No. 5 and Amendment No. 6 to
registration statement File Nos. 33-47613 and 811-6657, respectively.
Boston, Massachusetts
March 24, 1997
PIONEER SHORT-TERM INCOME TRUST
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
CLASS A SHARES AND CLASS B SHARES
OCTOBER 4, 1995
Each class of shares of PIONEER SHORT-TERM INCOME TRUST (the "Trust"), will
have the same relative rights and privileges and be subject to the same sales
charges, fees and expenses, except as set forth below. The Board of Trustees of
the Fund may determine in the future that other distribution arrangements,
allocations of expenses (whether ordinary or extraordinary) or services to be
provided to a class of shares are appropriate and amend this Plan accordingly
without the approval of shareholders of any class. Except as set forth in the
Trust's prospectus, shares may be exchanged only for shares of the same class of
another Pioneer mutual fund.
ARTICLE I. CLASS A SHARES
Class A Shares are sold at net asset value and subject to the initial sales
charge schedule or contingent deferred sales charge ("CDSC") and minimum
purchase requirements as set forth in the Trust's prospectus. Class A Shares
shall be entitled to the shareholder services set forth from time to time in the
Trust's prospectus with respect to Class A Shares. Class A Shares are subject to
fees calculated as a stated percentage of the net assets attributable to Class A
shares under the Trust's Class A Rule 12b-1 Distribution Plan as set forth in
such Distribution Plan. The Class A Shareholders have exclusive voting rights,
if any, with respect to the Class A Rule 12b-1 Distribution Plan. Transfer
agency fees are allocated to Class A Shares on a per account basis except to the
extent, if any, such an allocation would cause the Trust to fail to satisfy any
requirement necessary to obtain or rely on a private letter ruling from the
Internal Revenue Service ("IRS") relating to the issuance of multiple classes of
shares. Class A shares shall bear the costs and expenses associated with
conducting a shareholder meeting for matters relating to Class A shares.
ARTICLE II. CLASS B SHARES
Class B Shares are sold at net asset value per share without the imposition
of an initial sales charge. However, Class B shares redeemed within a specified
number of years of purchase will be subject to a CDSC as set forth in the
Trust's prospectus. Class B Shares are sold subject to the minimum purchase
requirements set forth in the Trust's prospectus. Class B Shares shall be
entitled to the shareholder services set forth from time to time in the Trust's
prospectus with respect to Class B Shares. Class B Shares are subject to fees
calculated as a stated percentage of the net assets attributable to Class B
shares under the Class B Rule 12b-1 Distribution Plan as set forth in such
Distribution Plan. The Class B Shareholders of the Trust have exclusive voting
rights, if any, with respect to the Trust's Class B Rule 12b-1 Distribution
Plan. Transfer agency fees are allocated to Class B Shares on a per account
basis except to the extent, if any, such an allocation would cause the Trust to
fail to satisfy any requirement necessary to obtain or rely on a private letter
ruling from the IRS relating to the issuance of multiple classes of shares.
Class B shares shall bear the costs and expenses associated with conducting a
shareholder meeting for matters relating to Class B shares.
Class B Shares will automatically convert to Class A Shares of the Trust at
the end of a specified number of years after the initial purchase date of Class
B shares, except as provided in the Trust's prospectus. Such conversion will
occur at the relative net asset value per share of each class without the
imposition of any sales charge, fee or other charge. The conversion of Class B
Shares to Class A Shares may be suspended if it is determined that the
conversion constitutes or is likely to constitute a taxable event under federal
income tax law.
The initial purchase date for Class B shares acquired through (i)
reinvestment of dividends on Class B Shares or (ii) exchange from another
Pioneer mutual fund will be deemed to be the date on which the original Class B
shares were purchased.
ARTICLE III. APPROVAL BY BOARD OF TRUSTEES
This Plan shall not take effect until it has been approved by the vote of a
majority (or whatever greater percentage may, from time to time, be required
under Rule 18f-3 under the Investment Company Act of 1940, as amended (the
"Act")) of (a) all of the Trustees of the Trust, and (b) those of the Trustees
who are not "interested persons" of the Trust, as such term may be from time to
time defined under the Act.
ARTICLE IV. AMENDMENTS
No material amendment to the Plan shall be effective unless it is approved
by the Board of Trustees in the same manner as is provided for approval of this
Plan in Article III.
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