As filed with the Securities and Exchange Commission on April 9, 1998
File Nos. 33-47613
811-06657
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. 7 / X /
---
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 8 / 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 Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 742-7825
Joseph P. Barri, Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
X immediately upon filing pursuant to paragraph (b)
---
___ on [date] pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on [date] pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
(without par value)
<PAGE>
PIONEER EMERGING MARKETS FUND
STATEMENT OF INCORPORATION BY REFERENCE
The prospectus describing Class A and Class B shares filed with the
Commission as part of Post-Effective Amendment No. 6 to the Registrant's
Registration Statement on Form N-1A filed March 30, 1998 (Accession No.
0001016964-98-000022) is incorporated herein by reference.
<PAGE>
PIONEER SHORT-TERM INCOME TRUST
Cross-Reference Sheet Showing Location in Prospectus and Statement of
Additional Information of Information
Required by Items of the Registration Form
Locations noted apply to the Class A and Class B Prospectus and the Class Y
Prospectus unless otherwise noted
FORM N-1A ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS OR STATEMENT
OF ADDITIONAL INFORMATION
1. Cover Page Prospectus - Cover Page
2. Synopsis Prospectus - Expense Information
3. Condensed Financial Information Prospectus - Financial Highlights
4. General Description of Registrant Prospectus - Cover Page; Investment
Objective and Policies; Management of
the Trust; Trust Share Alternatives
(Class A and Class B Prospectus); Trust
Shares (Class Y Prospectus); Share
Price; How to Buy Trust Shares (Class A
and Class B Prospectus); Purchasing
Class Y Shares (Class Y Prospectus);
How to Sell Trust Shares (Class A and
Class B Prospectus); Redeeming Class Y
Shares (Class Y Prospectus); How to
Exchange Trust Shares (Class A and
Class B Prospectus); Exchanging Class Y
Shares (Class Y Prospectus); The Trust
5. Management of the Fund Prospectus - Management of the Trust;
Shareholder Services
5A. Management's Discussion of Fund
Performance Not Applicable
6. Capital Stock and Other Securities Prospectus - Investment Objective and
Policies; Management of the Trust;
Trust Share Alternatives (Class A and
Class B Prospectus); Trust Shares
(Class Y Prospectus); Share Price; How
to Buy Trust Shares (Class A and Class
B Prospectus); Purchasing Class Y
Shares (Class Y Prospectus); How to
Sell Trust Shares (Class A and Class B
Prospectus); Redeeming Class Y Shares
(Class Y Prospectus); How to Exchange
Trust Shares (Class A and Class B
Prospectus); Exchanging Class Y Shares
(Class Y Prospectus); Dividends,
Distributions and Taxation; The Trust
7. Purchase of Securities Being
Offered Prospectus - Management of the Trust;
Distribution Plans (Class A and Class B
Prospectus); Distribution of Class Y
Shares (Class Y Prospectus); Trust
Share Alternatives (Class A and Class B
Prospectus); Trust Shares (Class Y
Prospectus); Share Price; How to Buy
Trust Shares (Class A and Class B
Prospectus); Purchasing Class Y Shares
(Class Y Prospectus); How to Exchange
Trust Shares (Class A and Class B
Prospectus); Exchanging Class Y Shares
(Class Y Prospectus); Shareholder
Services
8. Redemption or Repurchase Prospectus - Trust Share Alternatives
(Class A and Class B Prospectus); Trust
Shares (Class Y Prospectus); Share
<PAGE>
Price; How to Sell Trust Shares (Class
A and Class B Prospectus); Redeeming
Class Y Shares (Class Y Prospectus);
How to Exchange Trust Shares (Class A
and Class B Prospectus); Exchanging
Class Y Shares (Class Y Prospectus);
Shareholder Services
9. Pending Legal Proceedings Not Applicable
10. Cover Page Statement of Additional Information -
Cover Page
11. Table of Contents Statement of Additional Information -
Cover Page
12. General Information and History Statement of Additional Information -
Description of Shares
13. Investment Objectives and Policies Statement of Additional Information -
Investment Policies and Restrictions;
Appendix A
14. Management of the Fund Statement of Additional Information -
Management of the Trust
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; Underwriting Agreement and
Distribution Plans; Shareholder
Servicing/Transfer Agent; Custodian;
Principal Underwriter; Independent
Public Accountants; Appendix C
17. Brokerage Allocation and Other
Practices Statement of Additional Information -
Portfolio Transactions
18. Capital Stock and Other Securities Statement of Additional Information -
Description of Shares
19. Purchase, Redemption and Pricing
of Securities Being Offered Statement of Additional Information -
Letter of Intent; Systematic Withdrawal
Plan; Determination of Net Asset Value
20. Tax Status Statement of Additional Information -
Tax Status
21. Underwriters Statement of Additional Information -
Underwriting Agreement and Distribution
Plans; Principal Underwriter
22. Calculation of Performance Data Statement of Additional Information -
Investment Results; Appendix B
23. Financial Statements Statement of Additional Information -
Financial Statements
<PAGE>
<PAGE>
Pioneer
Short-Term Income
Trust
Class Y Shares
Prospectus
April 9, 1998
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 dated March 30, 1998, as supplemented or revised from time to time,
which is incorporated into this Prospectus by reference. A copy of the
[PIONEER LOGO]
obtained free of charge by calling Shareholder Services at
1-800-225-6292 or by written request to the Trust at 60 State Street, Boston,
Massachusetts 02109. Other information about the Trust has been filed with the
Securities and Exchange Commission (the "SEC") and is available upon request
and without charge by calling 1-800-225-6292 or through the SEC's Internet web
site (http://www.sec.gov).
TABLE OF CONTENTS PAGE
- -------------------------------------------------------------------
I. EXPENSE INFORMATION ............................. 2
II. FINANCIAL HIGHLIGHTS ............................ 3
III. INVESTMENT OBJECTIVE AND POLICIES ............... 3
IV. MANAGEMENT OF THE TRUST ......................... 5
V. TRUST SHARES .................................... 6
VI. SHARE PRICE ..................................... 6
VII. PURCHASING CLASS Y SHARES ....................... 7
VIII. REDEEMING CLASS Y SHARES ........................ 7
IX. EXCHANGING CLASS Y SHARES ....................... 8
X. DISTRIBUTION OF CLASS Y SHARES .................. 9
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION ........... 9
XII. SHAREHOLDER SERVICES ............................ 10
Account and Confirmation Statements ............ 10
Financial Reports and Tax Information .......... 10
Distribution Options ........................... 10
Telephone Transactions ......................... 10
FactFone(SM) ................................... 11
XIII. THE TRUST ....................................... 11
XIV. INVESTMENT RESULTS .............................. 11
--------------------
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 investors understand the charges and
expenses that an investor will bear directly or indirectly when investing in
the Trust. Operating expenses for Class Y shares are based on expenses that
would have been incurred for the fiscal year ended November 30, 1997 had such
shares been outstanding for the entire fiscal year.+
Shareholder Transaction Expenses: Class Y
Maximum Initial Sales Charge on Purchases
(as a percentage of offering price) ..................... None
Maximum Sales Charge on Reinvestment of Dividends ......... None
Maximum Deferred Sales Charge
(as a percentage of original purchase price
or redemption proceeds, as applicable) ................. None
Redemption Fee ............................................ None
Exchange Fee .............................................. None
Annual Operating Expenses
(As a Percentage of Average Net Assets):
Management Fee (after fee reduction)(1) ................... 0.00%
12b-1 Fee ................................................. None
Other Expenses (estimated)
(including accounting and transfer agent fees,
custodian fees and printing expenses)(1) ................ 0.60%
----
Total Operating Expenses ................................... 0.60%
====
- --------------------
+ Class Y shares were first offered April 9, 1998.
(1) 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 Y 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 Y
Management Fee .......................... 0.50%
Other Expenses .......................... 0.69%
Total Operating Expenses ................ 1.19%
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 Y Shares $6 $19 $33 $75
The example is designed for information purposes only, and should not be
considered a representation of past or future expenses or return. 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 and other expenses of
the Trust, see "Management of the Trust" and "Distribution of Class Y Shares"
in this Prospectus and "Management of the Trust" and "Underwriting Agreement
and Distribution Plans" in the Statement of Additional Information.
2
<PAGE>
II. FINANCIAL HIGHLIGHTS
Class Y shares are a new class of shares; financial highlights are not
currently available for Class Y shares. Arthur Andersen LLP's report on the
Trust's audited financial statements as of November 30, 1997 for Class A and
Class B shares appears in the Trust's Annual Report which is incorporated by
reference into the Statement of Additional Information. 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.
III. INVESTMENT OBJECTIVES 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, Inc. 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 U.S. 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
3
<PAGE>
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 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 U.S. 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 U.S.
Interest or, in some cases, capital gains from foreign investments may be
subject to withholding or other foreign taxes which will decrease the net
return on such investments as compared to the return on the Trust's U.S.
investments. 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.
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 U.S. 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 curren-
4
<PAGE>
cies 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 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 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. Portfolio
turnover rates were 31% and 65% for the fiscal years ended November 30, 1997
and 1996, respectively.
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 the
management and supervision of the Trust. The Board meets at least quarterly. By
virtue of the functions performed by PMC as investment adviser, the Trust
requires no employees other than its executive officers, all of whom receive
their compensation from PMC or other sources. The Statement of Additional
Information contains the name and general business and professional background
of each Trustee and executive officer of the Trust.
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.
John F. Cogan, Jr., Chairman and President of the Trust, President and a
Director of PGI, and Chairman and a Director of PMC and PFD, owned
approximately 14% of the outstanding capital stock of PGI as of the date of
this Prospectus.
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
equity 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 11 years of investment
experience.
In addition to the Trust, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. PMC's and PFD's executive offices are located at 60
State Street, Boston, Massachusetts 02109. In an effort to avoid conflicts of
interest with the Trust, the Trust and PMC have adopted a Code of Ethics that
is designed to maintain a high standard of personal conduct by directing that
all personnel defer to the interests of the Trust and its shareholders in
making personal securities transactions.
Under the terms of its contract with the Trust, PMC assists in the
management of the Trust and is authorized in its discretion to buy and sell
securities for the account of the Trust.
5
<PAGE>
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 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) charges and expenses for
determining from time to time the value of the Trust's net assets and the
keeping of its books and records; and (n) certain distribution fees pursuant to
its plan of distribution. The Trust also pays any 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 other
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.
Certain information technology experts currently predict the possibility
of a widespread failure of computer systems and certain other equipment which
will be triggered on or after certain dates--primarily January 1, 2000--due to
a systemic inability to process date-related information. This scenario,
commonly known as the "Year 2000 Problem," could have an adverse impact on
individuals and businesses, including the Trust and other mutual funds and
financial organizations. PMC and its affiliates are taking steps believed to be
adequate to address the Year 2000 Problem with respect to the systems and
equipment controlled by the Trust's investment adviser, broker-dealer and
transfer agent. In addition, other entities providing services to the Trust and
its shareholders are being asked to provide assurances that they have
undertaken similar measures with respect to their systems and equipment.
Although PMC is not expecting any adverse impact to it or its clients from the
Year 2000 Problem, it cannot provide complete assurances that its efforts or
the efforts of its key vendors will be successful.
V. TRUST SHARES
The Trust continuously offers three Classes of shares designated as Class
A, Class B and Class Y shares. Class A and Class B shares are offered in a
separate prospectus which may be obtained by contacting your sales
representative or by calling Pioneering Services Corporation ("PSC") at
1-800-225-6292.
Class Y shares are sold at net asset value, without either an initial
sales charge or a contingent deferred sales charge. Class Y shares are not
subject to any ongoing service fee or distribution fee and do not convert to
any other class of shares. Class Y shares are described more fully in
"Purchasing Class Y Shares" in this Prospectus.
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.
Shares sold outside the U.S. to persons who are not U.S. citizens may be
subject to different sales charges, contingent deferred sales charges and
dealer compensation arrangements in accordance with local laws and business
practices.
VI. SHARE PRICE
Class Y shares of the Trust are sold at the net asset value per share. 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. The net asset value per
share of Class Y shares will generally be higher than the net asset value per
share of the Trust's other two classes of shares because Class Y shares are not
subject to any ongoing distribution fee, and certain other expenses are
expected to be lower.
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
6
<PAGE>
affecting the value of such securities occur during such period, then these
securities may be 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. PURCHASING CLASS Y SHARES
To open an account for an individual or other non-institutional investor,
a completed Account Application must be received by PSC by mail or by fax prior
to the purchase of Class Y shares. All other investors should call PSC at
1-888-294-4480 to obtain an account set-up kit and to obtain an account number.
A bank wire address of record (your predesignated bank account) must be
provided to PSC at the time an account is established.
The minimum initial investment for Class Y shares is $5 million which may
be invested in one or more of the Pioneer mutual funds that currently offer
Class Y shares. There is no minimum additional investment amount. Class Y
shares will be purchased at the net asset value per share next computed after
receipt of a purchase order without the imposition of an initial sales charge
and are not subject to a contingent deferred sales charge. All purchases must
be made in U.S. dollars.
The $5 million minimum investment requirement will be waived if:
(i) a trust company or bank trust department is initially investing at least
$1 million in any of the Pioneer mutual funds and, at the time of the
purchase, such assets are held in a fiduciary, advisory, custodial or
similar capacity over which the trust company or bank trust department has
full or shared investment discretion; or
(ii) the investment is made by an employer sponsored retirement plan that
meets the requirements of Sections 401, 403 or 457 of the Code, provided
that the number of employees covered by the plan is 5,000 or more or the
plan has assets of $25 million or more; or
(iii) the investment is at least $1 million in any of the Pioneer mutual funds
and the purchaser is an insurance company separate account; or
(iv) the investment is made by an employer sponsored retirement plan
established for the benefit of (1) employees of PGI or employees of PGI's
affiliates or (2) employees or affiliates of broker-dealers who have a
Class Y shares sales agreement with PFD.
Payment By Wire. Funds may be wired in payment of a request to purchase
Class Y shares provided that such funds are wired to a Class Y shares account.
See above for information on establishing an account. To wire funds in payment
of a request to purchase Class Y shares instruct your bank to wire funds to:
Receiving Bank State Street Bank and Trust Company
Address 225 Franklin Street
Boston, MA 02101
ABA Routing No. 011000028
For further credit to: Shareholder Name
Existing Pioneer Account No.
Pioneer Short-Term Income Trust
A request to purchase shares must be received by PSC or by your
broker-dealer by the close of regular trading on the Exchange (currently 4:00
p.m. Eastern time) in order to purchase shares at the price determined on that
day. Funds wired in payment of such requests must be received by State Street
Bank and Trust Company by 11:00 a.m. Eastern time on the next business day
following receipt of the request to purchase shares. If wired funds are not
received by State Street Bank and Trust Company by 11:00 a.m. on the next
business day following receipt of the request to purchase shares, the
transaction will be canceled at the expense and risk of the purchaser. Wire
transfers normally take two or more hours to complete and a fee may be charged
by the sending bank. Wire transfers may be restricted on holidays and at
certain other times. Questions on wire transfers should be directed to PSC or
your broker-dealer.
By Mail. Purchases of Class Y shares may always be made by mail. For
accounts registered to individuals or non-institutional investors, make your
check payable to Pioneer Short-Term Income Trust and mail a completed Account
Application to PSC at: P.O. Box 9150, Boston, Massachusetts 02205-8573. For
accounts registered to institutions, completed account set-up kit materials
must be sent to PSC with payment. Checks written on non-U.S. banks will delay
purchases until U.S. funds are received and a collection charge may be imposed.
Broker-Dealers. An order for Class Y shares received by a broker-dealer
prior to the close of regular trading on the Exchange is confirmed at the price
for Class Y shares 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 from the broker-dealer prior to PFD's close of business (usually, 5:30 p.m.
Eastern time), except as described above for wire transfers. It is the
responsibility of broker-dealers to transmit orders so that they will be
received by PFD prior to its close of business.
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. REDEEMING CLASS Y SHARES
Class Y shares will be redeemed at the share price next calculated after a
redemption request is received in good order as described below. Redemption
proceeds generally will be sent to the registered owner by check or by wire
transfer, normally within seven days after the request is received in good
order. The Trust reserves the right to withhold payment of the redemption
proceeds until checks or wire transfers 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. Class Y shares may not be redeemed by check.
In Writing. Class Y shares may be redeemed by delivering a written
request, signed by all registered owners, in good order to PSC. A written
request, including a signature guaran-
7
<PAGE>
tee, must be used to redeem Class Y shares if any of the following applies:
[bullet] the requested redemption is for over $100,000 and there is no
record of a predesignated bank account,
[bullet] the requested redemption is for over $100,000 and the account
registration or address of record has changed within the last 30
days,
[bullet] the requested redemption is for over $5 million,
[bullet] the check for the amount of the redemption proceeds is not being
mailed to the address of record,
[bullet] the check for the amount of the redemption proceeds is not being
made payable to the account's record owners, or
[bullet] the redemption proceeds are being transferred to a Pioneer mutual
fund account with a different registration.
Include in the request the account's registration name, the Trust's name,
the Trust account number, the Class of shares to be redeemed, the dollar amount
or number of shares to be redeemed, and any other applicable requirements as
described below. Redemption requests for accounts registered in the name of a
corporation or other fiduciary must name an authorized person and must be
accompanied by a certified copy of a current corporate resolution, certificate
of incumbency or similar legal document showing that the named individual is
authorized to act on behalf of the record owner. Unless instructed otherwise,
PSC will send the proceeds of the redemption by check to the address of record.
For more information, contact PSC at 1-888-294-4480.
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 share certificates are endorsed by the
record owner(s) exactly as the shares are registered and the signature(s) on
the share certificate are guaranteed by an eligible guarantor. A bank, broker,
dealer, credit union (if authorized under state law), securities exchange or
association, clearing agency or savings association will generally be able to
provide a signature guarantee. 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 1-888-294-4480.
A signature guarantee must also accompany any request to change your
predesignated bank account information.
By Telephone or Fax. Class Y share accounts are automatically authorized
to have the telephone redemption privilege unless indicated otherwise on the
Account Application or by writing to PSC. Proper account identification will be
required for each telephone redemption. A maximum of $5 million per account per
day may be redeemed by telephone or fax if PSC has a predesignated bank account
number on record. If there is no predesignated bank account number on file, a
maximum of $100,000 may be redeemed by telephone or fax. The proceeds of a
telephone or fax redemption may be received by bank wire, electronic funds
transfer or by check. Proceeds of a telephone or fax request will normally be
mailed or transmitted the next business day.
To redeem by telephone, see "Shareholder Services-- Telephone Transactions"
for more information.
To redeem by fax, send your redemption request to 1-888-294-4485.
To receive the proceeds by bank wire: the proceeds must be sent to the
bank wire address of record which must have been properly predesignated either
on your Account Application or on an Account Options Form and which must not
have changed in the last 30 days.
To 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.
You may always elect to deliver redemption instructions to PSC by mail.
Redeeming Shares Through a 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.
Broker-dealers must receive redemption requests prior to the close of business
of the Exchange and must transmit each redemption request to PFD before PFD's
close of business to receive that day's redemption price. Broker-dealers are
responsible for providing all necessary documentation to PFD and may charge for
their services.
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
unless the account qualifies as tax-exempt. 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. EXCHANGING CLASS Y SHARES
Exchanges of Class Y shares must be at least $1,000. You may exchange your
investment from one Class of Trust shares at net asset value, without a sales
charge, for shares of the same Class of any other Pioneer mutual fund. Not all
Pioneer mutual funds offer Class Y shares. A new Pioneer mutual fund account
opened through an exchange must have a registration identical to that on the
original account.
PSC will process exchanges only after receiving an exchange request in
good order. Exchange requests received by PSC before the close of the Exchange,
generally 4:00 p.m. Eastern time, will be effective on that day if the
requirements above have been met, otherwise, they will be effective on the next
business day. There are currently no fees or sales charges imposed at the time
of an exchange. An exchange of shares may be made only in states where legally
permitted.
8
<PAGE>
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.
Telephone and Fax Exchanges. Class Y share accounts are automatically
authorized to have the telephone exchange privilege unless indicated otherwise
on the Account Application or by writing to PSC. Proper account identification
will be required for each telephone exchange. Telephone exchanges or fax
exchanges of Class Y shares may not exceed $5 million per account per day. Each
telephone exchange request will be recorded. See "Telephone Transactions"
below.
Written Exchanges. Class Y shares may be exchanged by sending a letter of
instruction to PSC. Include in your letter the record name on the account, the
name of the Pioneer mutual fund out of which to exchange and the name of the
Pioneer mutual fund into which to exchange, the 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. Written documentation may be required for
accounts registered in the name of a corporation or fiduciary.
X. DISTRIBUTION OF CLASS Y SHARES
PFD incurs the expenses of distributing the Trust's Class Y shares, none
of which are reimbursed or paid for by the Trust. These expenses include fees
paid to, or on account of, broker-dealers and other qualifying institutions
which have sales agreements with PFD, advertising expenses, the cost of
printing and mailing prospectuses to potential investors and other direct and
indirect expenses associated with the sale of Trust's Class Y shares.
PFD or its affiliates may make payments out of its own resources to
dealers and other persons who distribute shares of the Trust, including Class Y
shares. Such payments may be calculated by reference to the net asset value of
shares sold by such person or otherwise. Dealers and other persons may from
time to time be required to meet certain criteria in order to receive such
payments. 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.
The Trust has adopted a Plan of Distribution for each Class of shares,
other than Class Y shares, in accordance with Rule 12b-1 under the 1940 Act
pursuant to which certain distribution fees are paid to PFD. For more
information, see "Underwriting Agreement and Distribution Plans" in the
Statement of Additional Information.
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
Internal Revenue Code of 1986, as amended, (the "Code"), so that it will not
pay federal income tax on income and capital gains distributed to shareholders
as required under the Code. Under the Code, the Trust will be subject to a
nondeductible 4% federal excise tax on a portion of its undistributed ordinary
income and capital gains if it fails to meet certain distribution requirements
with respect to each calendar year. The Trust intends to make distributions in
a timely manner and accordingly does not expect to be subject to the excise
tax.
Each business day the Trust declares a dividend consisting of
substantially all of the Trust's net investment income (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.
The Trust's distributions of long-term capital gains to individuals or
other noncorporate taxpayers are subject to different maximum tax rates (which
will be indicated in the annual tax information the Trust provides to
shareholders), depending generally upon the sources of, and the Trust's holding
periods for the assets that produce, the gains.
Unless shareholders specify otherwise, all distributions will be
automatically reinvested in additional full and fractional shares of the Trust.
For federal income tax purposes,
9
<PAGE>
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" 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 a 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 if 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 that is not described above. A state income (and
possibly local income and/or intangible property) tax exemption is generally
available to the extent the Trust's distributions are derived from interest on
(or, in the case of intangible property taxes, the value of its 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, including the effect of
recent federal tax legislation, in their particular circumstances.
XII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the
Trust. PSC, a Massachusetts corporation, is a wholly owned subsidiary of PGI.
PSC's offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Shareholder Services, Pioneering Services
Corporation, P.O. Box 9150, Boston, Massachusetts 02205-8573. 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.
Financial Reports and Tax Information
As a shareholder, you will receive financial reports at least
semiannually. In January of each year the Trust will mail 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 the distribution option may be made by written request to PSC.
If you elect to receive either dividends or dividends and capital gains in
cash and a distribution check issued to you is returned by the U.S. Postal
Service as not deliverable or a distribution check remains uncashed for six
months or more, the amount of the check may be reinvested in your account. Such
additional shares will be purchased at the then current net asset value.
Furthermore, the distribution option on the account will automatically be
changed to the reinvestment option until such time as you request a different
option by writing to PSC.
Telephone Transactions
Class Y accounts are automatically authorized to have telephone
transaction privileges as described above . To redeem or exchange Class Y
shares by telephone, call 1-888-294-4480 between the hours of 9:00 a.m. and
6:00 p.m. Eastern time on weekdays. See "Selling Class Y Shares" and
"Exchanging Class Y Shares" for more information.
To confirm that each transaction instruction received by telephone is
genuine, the Trust 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. In all other cases, neither the Trust, PSC nor PFD
will be responsible for the authenticity of instructions received by telephone;
therefore, you bear the risk of loss for unauthorized or fraudulent telephone
transactions. The Trust may implement other procedures from time to time.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be dif-
10
<PAGE>
ficult 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
shareholder access to current information on Pioneer mutual fund accounts and
to the prices and yields of all publicly available Pioneer mutual funds.
Computer assisted telephone purchases, exchanges and redemptions of Class Y
shares are not currently available through FactFone(SM).
The options and services available to shareholders 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 1-888-294-4480.
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
shareholder meetings although special meetings may be called for the purposes
of electing or removing Trustees, changing fundamental investment restrictions
or approving a management contract. The Trustees have the authority, without
further shareholder approval, to classify and reclassify the shares of the
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 three Classes
of shares, designated Class A, Class B and Class Y. 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.
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. 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 fund 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 may also
include securities industry or comparative performance information in
advertising or materials marketing the Trust's shares. Such performance
information may include rankings or listings by magazines, newspapers, or
independent statistical or ratings services, such as Lipper Analytical
Services, Inc. or Ibbotson Associates.
The Trust's investment results will vary from time to time depending on
market conditions, the composition of the Trust's portfolio and operating
expenses of the Trust. All quoted investment results are historical and should
not be considered representative of what an investment in the Trust may earn in
any future period. For further information about the calculation methods and
uses of the Trust's investment results, see the Statement of Additional
Information.
11
<PAGE>
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
[PIONEER LOGO]
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: 1-888-294-4480
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses,
applications, service forms
and telephone transactions................................... 1-888-294-4480
FactFone(SM)
Automated fund yields and prices and
account information.......................................... 1-800-225-4321
Toll-free fax................................................. 1-888-294-4485
Visit our website:...................................... www.pioneerfunds.com
0498-5101
(C)Pioneer Funds Distributor, Inc.
<PAGE>
PIONEER SHORT-TERM INCOME TRUST
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
CLASS A, CLASS B AND CLASS Y SHARES
MARCH 30, 1998
(AS REVISED APRIL 9, 1998)
This Statement of Additional Information is not a Prospectus, but should
be read in conjunction with the Class A and Class B Shares Prospectus dated
March 30, 1998 and the Class Y Shares Prospectus dated April 8, 1998 (each, a
"Prospectus," and together, the "Prospectuses"), as amended and/or supplemented
from time to time, of Pioneer Short-Term Income Trust (the "Trust"). A copy of
each 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 Trust's most recent Annual Report to Shareholders is
attached to this Statement of Additional Information and is hereby incorporated
in this Statement of Additional Information by reference.
TABLE OF CONTENTS
PAGE
1. Investment Policies and Restrictions....................... 2
2. Management of the Trust.................................... 7
3. Investment Adviser......................................... 11
4. Underwriting Agreement and Distribution Plans.............. 12
5. Shareholder Servicing/Transfer Agent....................... 14
6. Custodian.................................................. 14
7. Principal Underwriter...................................... 15
8. Independent Public Accountants............................. 15
9. Portfolio Transactions..................................... 15
10. Tax Status................................................. 17
11. Description of Shares...................................... 20
12. Certain Liabilities........................................ 21
13. Determination of Net Asset Value........................... 22
14. Systematic Withdrawal Plan................................. 22
15. Letter of Intent........................................... 23
16. Investment Results......................................... 23
17. Financial Statements....................................... 27
Appendix A - Description of Short-Term Debt
and Corporate Bond Ratings................................. 28
Appendix B - Performance Statistics........................ 33
Appendix C - Other Pioneer Information..................... 45
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.
1
<PAGE>
1. INVESTMENT POLICIES AND RESTRICTIONS
The Prospectuses identify 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 Prospectuses. Capitalized terms not otherwise defined herein have the
meaning given to them in the Prospectuses. 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 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.
2
<PAGE>
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
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 enter into
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 transactions 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 PMC. 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 Exchange
under agreements which would require that the loans be secured continuously by
collateral in cash,
3
<PAGE>
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 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.
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, as amended (the "1933 Act"). 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.
4
<PAGE>
(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 1933 Act.
(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.
(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 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.
5
<PAGE>
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.
(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 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.
6
<PAGE>
(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"), Pioneer Real
Estate Advisors, Inc., Pioneer Forest, Inc., Pioneer Explorer, Inc., Pioneer
Management (Ireland) Ltd. ("PMIL") and Closed Joint Stock Company
"Forest-Starma"; President and Director of Pioneer Metals and Technology, Inc.
("PMT"), Pioneer International Corp. ("PIntl"), Pioneer First Russia, Inc.
("First Russia") and Pioneer Omega, Inc. ("Omega"); Chairman of the Board and
Director of Pioneer Goldfields Limited ("PGL") and Teberebie Goldfields Limited;
Chairman of the Supervisory Board of Pioneer Fonds Marketing, GmbH, Pioneer
First Polish Investment Fund Joint Stock Company, S.A. and Pioneer Czech
Investment Company, A.S.; Chairman, President and Trustee of all of the Pioneer
mutual funds; Director of Pioneer Global Equity Fund Plc, Pioneer Global Bond
Fund Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity Fund Plc, Pioneer
Central & Eastern Europe Fund Plc and Pioneer US Real Estate Fund Plc; and
Partner, Hale and Dorr LLP (counsel to PGI and the Trust).
MARY K. BUSH, TRUSTEE, DOB: APRIL 1948
4201 CATHEDRAL AVENUE, NW, WASHINGTON, DC 20016
President, Bush & Co., an international financial advisory firm; Director
and/or Trustee of Mortgage Guaranty Insurance Corporation, Novecon Management
Company, Hoover Institution, Folger Shakespeare Library, March of Dimes, Project
2000, Inc. (not-for-profit educational organization), Small Enterprise
Assistance Fund and Wilberforce University; Advisory Board member, Washington
Mutual Investors Fund, a registered investment company; and Trustee of all of
the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
RICHARD H. EGDAHL, M.D., PH.D., TRUSTEE, DOB: DECEMBER 1926
BOSTON UNIVERSITY HEALTH POLICY INSTITUTE, 53 BAY STATE ROAD, BOSTON, MA 02115
Alexander Graham Bell Professor of Health Care Entrepreneurship, Boston
University; Professor of Management, Boston University School of Management;
Professor of Public Health, Boston University School of Public Health; Professor
of Surgery, Boston University School of Medicine; University Professor, Boston
University; Director, Boston University Health Policy Institute and Boston
University Program for Health Care Entrepreneurship
7
<PAGE>
Director, CORE (management of workers' compensation and disability costs -
NASDAQ); Director, WellSpace (provider of complementary health care); Trustee,
Boston Medical Center; Honorary Trustee, Franciscan Children's Hospital; and
Trustee of all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, TRUSTEE, DOB: MAY 1947
THE KEEP, P.O. BOX 110, LITTLE DEER ISLE, ME 04650
Founding Director, The Winthrop Group, Inc (consulting firm); Manager of
Research Operations, Xerox Palo Alto Research Center, from 1991 to 1994;
Professor of Operations Management and Management of Technology and Associate
Dean, Boston University School of Management, from 1989 to 1993; and Trustee of
all of the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, TRUSTEE, DOB: JULY 1917
6363 WATERWAY DRIVE, FALLS CHURCH, VA 22044
Professor Emeritus, George Washington University; Director, American
Productivity and Quality Center; Adjunct Scholar, American Enterprise Institute;
Economic Consultant; and Trustee of all of the Pioneer mutual funds, except
Pioneer Variable Contracts Trust.
MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
ONE BOSTON PLACE, SUITE 2635, BOSTON, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm); Trustee
of Boston Medical Center; Member of the Board of Governors of the Investment
Company Institute; and Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Executive Vice President and a Director of PGI; President, Chief Investment
Officer and a Director of PMC; Director of PFD, PCC, PIntl, First Russia, Omega,
Pioneer SBIC Corporation ("Pioneer SBIC"), PMIL, Pioneer Global Equity Fund Plc,
Pioneer Global Bond Fund Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity
Fund Plc, Pioneer Central & Eastern Europe Fund Plc and Pioneer US Real Estate
Fund Plc; and Executive Vice President and Trustee of all of the Pioneer mutual
funds.
STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 BROAD STREET, NEW YORK, NY 10004
Of Counsel to Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus Funds
(mutual funds); and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, TRUSTEE, DOB: JUNE 1936
ONE NORTH ADGERS WHARF, CHARLESTON, SC 29401
President, John Winthrop & Co., Inc. (private investment firm); Director of
NUI Corp. (energy sales, services and distribution); and Trustee of all of the
Pioneer mutual funds, except Pioneer Variable Contracts Trust.
WILLIAM H. KEOUGH, TREASURER, DOB: APRIL 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC; and Treasurer of all of the Pioneer mutual funds.
8
<PAGE>
JOSEPH P. BARRI, SECRETARY, DOB: AUGUST 1946
Secretary of PGI and most of its subsidiaries; Secretary of all of the
Pioneer mutual funds; and Partner, Hale and Dorr LLP.
ERIC W. RECKARD, ASSISTANT TREASURER, DOB: JUNE 1956
Manager of Fund Accounting of PMC since May 1994, Manager of Auditing;
Compliance and Business Analysis for PGI prior to May 1994; and Assistant
Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC; and junior partner of Hale and Dorr LLP
prior to 1995.
RICHARD A. SCHLANGER, VICE PRESIDENT, DOB: JULY 1948
Vice President of PMC.
The Trust's Declaration of Trust, dated April 30, 1992 (the
"Declaration"), 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 Independence 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
9
<PAGE>
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 ten separate portfolios designed to provide
investment vehicles for the variable annuity and variable life
insurance contracts of various insurance companies or for certain
qualified pension plans.
To the knowledge of the Trust, no officer or Trustee of the Trust owned 5% or
more of the issued and outstanding shares of PGI on the date of this Statement
of Additional Information, except Mr. Cogan who then owned approximately 14% of
such shares. As of the date of this Statement of Additional Information, the
Trustees and officers of the Trust owned beneficially in the aggregate
approximately 5.95% of the Trust's outstanding Class A shares (5.19% of the
outstanding shares of the Trust). As of March 30, 1998, John F. Cogan, Jr., The
Pioneer Group, Inc., 60 State Street, Boston, Massachusetts 02109 owned of
record approximately 660,217 Class A shares (5.80% of the Class A shares
outstanding) of the Trust.
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 $120 to each Trustee who
is not affiliated with PGI, PMC, PFD or PSC and pays an annual trustees' fee of
$500 plus expenses to each Trustee affiliated with PGI, PMC, PFD or PSC. The
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
Pioneer mutual funds. Committee fees are allocated to the Trust on the basis of
the Trust's average net assets. Each Trustee who is a member of the Audit
Committee for the Pioneer mutual funds receives an annual fee equal to 10% of
the aggregate annual trustees' fee, except the Committee Chair who receives an
annual trustees' fee equal to 20% of the aggregate annual trustees' fee. Members
of the Pricing Committee for the Pioneer mutual funds, as well as any other
committee which renders material functional services to the Boards of Trustees
for the Pioneer mutual funds, receives an annual fee equal to 5% of the annual
trustees' fee, except the Committee Chair who receives an annual trustees' fee
equal to 10% of the annual trustees' fee. Each Trustee who is not affiliated
with PGI, PMC, PFD or PSC also receives $375 per meeting for attendance at
meetings of the Non-Interested Trustees Committee, except for the Committee
Chair who receives an additional $375 per meeting. Any such fees paid to
affiliated 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:
10
<PAGE>
<TABLE>
<CAPTION>
PENSION OR RETIREMENT TOTAL COMPENSATION FROM
BENEFITS ACCRUED AS THE TRUST AND OTHER
AGGREGATE PART OF TRUST EXPENSES PIONEER MUTUAL FUNDS**
COMPENSATION FROM
NAME OF TRUSTEE THE TRUST*
<S> <C> <C> <C>
John F. Cogan, Jr. $ 500 $0 $ 12,000
Mary K. Bush 733 0 30,000
Richard H. Egdahl, M.D. 1,774 0 62,000
Margaret B.W. Graham 1,774 0 60,000
John W. Kendrick 1,774 0 55,800
Marguerite A. Piret 2,019 0 80,000
David D. Tripple 500 0 12,000
Stephen K. West 1,886 0 63,800
John Winthrop 1,989 0 69,000
----- - ------
Totals $12,949 $0 $444,600
</TABLE>
* For the fiscal year ended November 30, 1997.
** For the calendar year ended December 31, 1997.
3. INVESTMENT ADVISER
The Trust has contracted with PMC, 60 State Street, Boston, Massachusetts 02109,
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 60 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, 1997, 1996 and 1995, PMC would have
earned management fees of $253,266, $274,726 and $291,294, respectively, if the
voluntary expense limitation had not been in effect. PMC voluntarily agreed not
to impose a management fee during each of these periods.
11
<PAGE>
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 1933 Act. 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"). The Trust has not adopted a plan of distribution with respect to its
Class Y shares.
CLASS A PLAN
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
12
<PAGE>
and/or account maintenance services performed by PFD or its affiliates for
shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is to
compensate PFD for its distribution services with respect to Class B shares of
the Trust. PFD pays commissions to dealers as well as expenses of printing
prospectuses and reports used for sales purposes, expenses with respect to the
preparation and printing of sales literature and other distribution related
expenses, including, without limitation, the cost necessary to provide
distribution-related services or personnel, travel, office expenses and
equipment. The Class B Plan also provides that PFD will receive all CDSCs
attributable to Class B shares. (See "Distribution Plans" in the Prospectus.)
When a broker-dealer sells Class B shares and elects, with PFD's approval, to
waive its right to receive the commission normally paid at the time of the sale,
PFD may cause all or a portion of the distribution fees described above to be
paid to the broker-dealer.
CLASS Y SHARES
PFD incurs the expenses of distributing the Trust's Class Y shares, none of
which are reimbursed or paid for by the Trust. These expenses include any
commissions or account servicing fees paid to, or on account of, broker-dealers
which have sales agreements with PFD and certain qualifying registered
investment advisers and other financial institutions.
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 Plans and the purpose for which such expenditures were made. In the
Trustees' quarterly review of the Plans, they will consider the continued
appropriateness and the level of reimbursement or compensation the Plans
provide.
No interested person of the 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 identified and considered a number of potential benefits
which the Plans may provide. The Board of Trustees believes that there is a
reasonable likelihood that the Plans will benefit the Trust and its current and
future shareholders. Under their terms, the Plans remain in effect from year to
year provided such continuance is approved annually by vote of the Trustees in
the manner described above. The Plans may not be amended to increase materially
the annual percentage limitation of average net assets which may be spent for
the services described therein without approval of the shareholders of the class
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
13
<PAGE>
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, 1997, the Trust incurred total
distribution fees pursuant to the Class A and Class B Plans of $114,554 and
$48,316, respectively. Distribution fees were paid by the Trust to PFD in
reimbursement of or as compensation for expenses related to servicing
shareholder accounts and to compensate dealers and sales personnel.
Redemptions of each class of shares may be subject to a CDSC. A CDSC of 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, 1997, CDSCs in the amount of $47,504 were paid to PFD.
5. SHAREHOLDER SERVICING/TRANSFER AGENT
The Trust has contracted with PSC, 60 State Street, Boston, Massachusetts 02109,
to act as shareholder servicing and transfer agent for the Trust. This contract
may be terminated without penalty by either party upon 90 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 shareholder account from the Trust as
compensation for the services described above. PSC is also reimbursed by the
Trust for its cash out-of-pocket expenditures. The annual fee is set at an
amount determined by vote of a majority of the Trustees (including a majority of
the Trustees who are not parties to the contract with PSC or interested persons
of any such parties) to be comparable to fees for such services being paid by
other investment companies. The Trust may compensate entities which have agreed
to provide certain sub-accounting services such as specific transaction
processing and record keeping 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, is
the custodian (the "Custodian") of the Trust's assets. The Custodian's
responsibilities include safekeeping and controlling the Trust's cash and
securities, handling the receipt and delivery of securities, and collecting
interest and dividends on the Trust's investments. The Custodian does not
determine the investment policies of the Trust or decide which securities the
Trust will buy or sell. The Trust may, however, invest in securities, including
repurchase agreements, issued by the Custodian and may deal with the Custodian
as principal in securities transactions. Portfolio securities may be deposited
into the Federal Reserve-Treasury Department Book Entry System or the Depository
Trust Company.
14
<PAGE>
7. PRINCIPAL UNDERWRITER
PFD, 60 State Street, Boston, Massachusetts 02109, serves as the principal
underwriter for the Trust in connection with the continuous offering of its
shares.
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, 1997, 1996 and 1995, net underwriting
commissions retained by PFD were approximately $16,197, $21,000 and $24,247,
respectively, in connection with its offering of Class A and Class B shares.
Commissions reallowed to dealers by PFD in the same periods were approximately
$70,902, $94,000 and $107,008, 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.
15
<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 the broker-dealers through which it seeks this result. Debt
securities are traded principally in the over-the-counter market on a net basis
through dealers acting for their own accounts and not as brokers. The cost of
securities purchased from underwriters includes an underwriter's commission or
concession, and the prices at which securities are purchased and sold from and
to dealers include a dealer's markup or markdown. PMC attempts to negotiate with
underwriters to decrease the commission or concession for the benefit of the
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; providing stock price quotation services; furnishing analyses,
manuals and reports concerning issuers, securities, economic factors and trends,
portfolio strategy, performance of accounts, comparative fund statistics and
credit rating service information; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement). PMC
maintains a listing of broker-dealers who provide such services on a regular
basis. However, because it is anticipated that many transactions on behalf of
the Trust and other investment companies or accounts managed by PMC are placed
with broker-dealers (including broker-dealers on the listing) without regard to
the furnishing of such services, it is not possible to estimate the proportion
of such transactions directed to such dealers solely because such services were
provided.
The research received from broker-dealers may be useful to PMC in rendering
investment management services to the Trust as well as other investment
companies or other accounts managed by PMC, although not all such research may
be useful to the Trust. Conversely, such information provided by brokers or
dealers who have executed transaction orders on behalf of such other PMC clients
may be useful to PMC in carrying out its obligations to the Trust. The receipt
of such research has not reduced PMC's normal independent research activities;
however, it enables PMC to avoid the additional expenses which might otherwise
be incurred if it were to attempt to develop comparable information through its
own staff.
The Trustees periodically review PMC's performance of its responsibilities in
connection with the placement of portfolio transactions on behalf of the Trust.
In addition to the Trust, PMC acts as investment adviser to other Pioneer mutual
funds and certain private accounts with investment objectives similar to those
of the Trust. As such, securities may 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
16
<PAGE>
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.
10. TAX STATUS
It is the Trust's policy to meet the requirements of Subchapter M of the Code
for qualification as a regulated investment company. These requirements relate
to the sources of the Trust's income, the diversification of its assets and the
distribution of its income to shareholders. If the Trust meets all such
requirements and distributes to its shareholders, in accordance with the Code's
timing requirements, all investment company taxable income and net capital gain,
if any, which it earns, the Trust will be relieved of the necessity of paying
federal income tax.
In order to qualify as a regulated investment company under Subchapter M, the
Trust must, among other things, derive at least 90% of its annual gross income
from 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") 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 ("net capital
gain"), if any, whether received in cash or reinvested in additional shares, are
taxable to the Trust's shareholders as capital gains for federal income tax
purposes without regard to the length of time shares of the Trust have been
held. As a result of the enactment of the Taxpayer Relief Act of 1997 (the "1997
TRA") on August 5, 1997, gain recognized after May 6, 1997 from the sale of a
capital asset is taxable to individual (noncorporate) investors at different
maximum federal income tax rates, depending generally upon the tax holding
period for the asset, the federal income tax bracket of the taxpayer, and the
dates the asset was acquired and/or sold. The Treasury Department has issued
guidance under the 1997 TRA that (subject to possible modification by future
"technical corrections" legislation) enables the Trust to pass through to its
shareholders the benefits of the capital gains tax rates enacted in the 1997
TRA. The Trust will provide appropriate information to its shareholders about
its distributions, including the tax rate(s) applicable to its distributions
from long-term capital gains, in accordance with this and any future guidance.
Shareholders should consult their own tax advisers on the correct application of
these new rules in their particular circumstances.
Any dividend declared by the Trust in October, November or December as of a
record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
17
<PAGE>
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. Under future regulations, 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 90% income
test. 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 such as is inherent
in a convertible bond) in certain foreign corporations that receive at least 75%
of their annual gross income from passive sources (such as interest, dividends,
certain rents and royalties, or capital gains) 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. An election may generally be available that would ameliorate these
adverse tax consequences, but any such election could require the Trust to
recognize taxable income or gain (subject to distribution requirements) without
the concurrent receipt of cash. These investments could also result in the
treatment of associated capital gains as ordinary income. 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.
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 by the Trust on these shares
from such appreciation may be taxable to such investor even if the net asset
value of the investor's shares is, as a result of the distributions, reduced
below the investor's cost for such shares and the distributions economically
represent a return of a portion of the investment.
18
<PAGE>
Redemptions and exchanges are taxable events for shareholders that are subject
to tax. Shareholders should consult their own tax advisers with reference to
their individual circumstances to determine whether any particular transaction
in Trust shares is properly treated as a sale for tax purposes, as the following
discussion assumes, and the character of and tax rate applicable to any gains or
losses recognized in such transactions under the new rate structure enacted in
the 1997 TRA. Any loss realized by a shareholder upon the redemption, exchange
or other disposition of shares with a tax holding period of six months or less
will be treated as a long-term capital loss to the extent of any amounts treated
as distributions of long-term capital gain with respect to such shares.
In addition, if Class A shares redeemed or exchanged have been held for less
than 91 days, (1) in the case of a reinvestment in the Trust at net asset value
pursuant to the reinvestment privilege, the sales charge paid on such shares is
not included in their tax basis under the Code, and (2) in the case of an
exchange, all or a portion of the sales charge paid on such shares is not
included in their tax basis under the Code, to the extent a sales charge that
would otherwise apply to the shares received is reduced pursuant to the exchange
privilege. In either case, the portion of the sales charge not included in the
tax basis of the shares redeemed or surrendered in an exchange is included in
the tax basis of the shares acquired in the reinvestment or exchange. Losses on
redemptions or other dispositions of shares may be disallowed under "wash sale"
rules in the event of other investments in the Trust (including those made
pursuant to reinvestment of dividends and/or capital gain distributions) within
a period of 61 days beginning 30 days before and ending 30 days after a
redemption or other disposition of shares. In such a case, the disallowed
portion of any loss would be included in the federal tax basis of the shares
acquired in the other investments.
Certain foreign currency forward contracts may cause the Trust to recognize
gains or losses from marking-to-market 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. Additionally, the Trust may be
required to recognize gain if a forward contract or other transaction that is
not subject to the mark to market rules is treated as a "constructive sale" of
an "appreciated financial position" held by the Trust under Section 1259 of the
Code. Any net mark to market gains and/or gains from constructive sales may also
have to be distributed to satisfy the distribution requirements referred to
above even though no corresponding cash amounts may concurrently be received,
possibly requiring the disposition of portfolio securities or borrowing to
obtain the necessary cash. 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.
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.
19
<PAGE>
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 IRS regulations. In order to avoid this withholding
requirement, shareholders must certify on their Account Applications, or on
separate IRS Forms W-9, that the Social Security Number or other Taxpayer
Identification Number they provide is their correct number and that they are not
currently subject to backup withholding, or that they are exempt from backup
withholding. The Trust may nevertheless be required to withhold if it receives
notice from the IRS or a broker that the number provided is incorrect or backup
withholding is applicable as a result of previous underreporting of interest or
dividend income.
If, as anticipated, the Trust continues to qualify as a regulated investment
company under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes.
The description of certain federal tax provisions above relates only to U.S.
federal income tax consequences for shareholders who are U.S. persons, i.e. U.S.
citizens or residents or U.S. corporations, partnerships, trusts or estates, and
who are subject to U.S. federal income tax. This description does not address
the special tax rules that may be applicable to particular types of investors,
such as financial institutions, insurance companies, securities dealers, or
tax-exempt or tax-deferred plans, accounts or entities. Investors other than
U.S. persons may be subject to different U.S. tax treatment, including a
possible 30% non-resident alien U.S. withholding tax (or non-resident alien
withholding tax at a lower treaty rate) on amounts treated as ordinary dividends
from the Trust and, unless an effective IRS Form W-8 or authorized substitute
for Form W-8 is on file, to 31% backup withholding on certain other payments
from the Trust. Shareholders should consult their own tax advisers on these
matters and on state, local and other applicable tax laws.
11. DESCRIPTION OF SHARES
The Declaration permits its Board of Trustees to authorize the issuance of an
unlimited number of full and fractional shares of beneficial interest (without
par value) which may be divided into such separate series as the Trustees may
establish. The Trustees may establish additional series
20
<PAGE>
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 further authorizes the Trustees to classify or
reclassify any series of the shares into one or more classes. Pursuant thereto,
the Trustees have authorized the issuance of three classes of shares of the
Trust, Class A shares, Class B shares and Class Y 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 Declaration 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 the
Declaration, a copy of which is on file with the Office of the Secretary of
State of the Commonwealth of Massachusetts. Shareholders of a Massachusetts
business trust may, under certain circumstances, be held personally liable for
the obligations of the trust. However, the Declaration contains an express
disclaimer of shareholder liability for acts or obligations of the 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 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 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 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 does not authorize the Trust to indemnify any Trustee or officer
against
21
<PAGE>
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
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 Exchange is open for trading. As of the date of this Statement of Additional
Information, the Exchange is open for trading every weekday except for the
following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. The net asset value per share of each class of the 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 net asset value per share of the Trust is not determined on any
day in which no purchase orders in good order for the shares of the Trust are
received 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 the Trust's assets attributable to a class, less the Trust's
liabilities attributable to that class, and dividing the result by the number of
outstanding shares of the class. For purposes of determining net asset value,
expenses of the classes of the 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 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,
but are subject to a CDSC. Class Y shares are offered without an initial sales
charge and are not subject to a CDSC. See "Trust Share Alternatives" in the
Prospectus.
14. SYSTEMATIC WITHDRAWAL PLAN (CLASS A AND CLASS B SHARES ONLY)
The Systematic Withdrawal Plan ("SWP") is designed to provide a convenient
method of receiving fixed payments at regular intervals from 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. Withdrawals
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. Designation of another person to receive the
payments subsequent to opening an account must be accompanied by a signature
guarantee.
22
<PAGE>
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. To the extent that such redemptions for periodic
withdrawals exceed dividend income reinvested in the SWP account, such
redemptions will reduce and may ultimately exhaust the number of shares
deposited in the SWP account. Redemptions are potentially taxable transactions
to shareholders. In addition, the amounts received by a shareholder cannot be
considered as an actual yield or income on his or her investment because part of
such payments may be a return of his or her investment.
The SWP may be terminated at any time (1) by written notice to PSC or from PSC
to the shareholder; (2) upon receipt by PSC of appropriate evidence of the
shareholder's death; or (3) when all shares under the SWP have been redeemed.
The fees of PSC for maintaining SWPs are paid by the Trust.
15. LETTER OF INTENT
A Letter of Intent ( "LOI") may be established by completing the LOI section of
the Account Application. When you sign the Account Application, you agree to
irrevocably appoint PSC your attorney-in-fact to surrender for redemption any or
all shares held in escrow with full power of substitution. An LOI is not a
binding obligation upon the investor to purchase, or the Trust to sell, the full
amount indicated.
If the total purchases, less redemptions, exceed the amount specified under the
LOI and are in an amount which would qualify for a further quantity discount,
all transactions will be recomputed on the expiration date of the LOI to effect
the lower sales charge. Any difference in the sales charge resulting from such
recomputation will be either delivered to you in cash or invested in additional
shares at the lower sales charge. The dealer, by signing the Account
Application, agrees to return to PFD, as part of such retroactive adjustment,
the excess of the commission previously reallowed or paid to the dealer over
that which is applicable to the actual amount of the total purchases under the
LOI.
If the total purchases, less redemptions, are less than the amount specified
under the LOI, you must remit to PFD any difference between the sales charge on
the amount actually purchased and the amount originally specified in the LOI
section of the Account Application. When the difference is paid, the shares held
in escrow will be deposited to your account. If you do not pay the difference in
sales charge within 20 days after written request from PFD or your dealer, PSC,
after receiving instructions from PFD, will redeem the appropriate number of
shares held in escrow to realize the difference and release any excess. See "How
to Purchase Trust Shares - Letter of Intent" in the Prospectus for more
information.
16. INVESTMENT RESULTS
The Trust's yield 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.
23
<PAGE>
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
Merrill Lynch 1-3 Year Government Bond 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' 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[superscript]-1]
cd
Where: a = interest earned during the period
b = net expenses accrued for the period
c = the average daily number of shares
outstanding during the period that were entitled to receive
dividends
24
<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 CLASS A AND CLASS B accrued
during any base period, if any, pursuant to the RESPECTIVE Distribution Plans
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, 1997 computed as above was 5.12% and 4.41%, respectively, except
that absent expense limitations, the yield on Class A and Class B shares of the
Trust would have been 4.74% and 4.08%, respectively.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS AND OTHER PERFORMANCE
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
25
<PAGE>
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 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[superscript] = 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; for
Class Y shares, no sales load or deduction
of a CDSC is applicable
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 of shares 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, 1997 were:
Average Annual Total Return (%)
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION*
------ ------- -------- ---------------
Class A Shares 2.93% 4.85 N/A 4.72%
Class B Shares 2.60% N/A N/A 4.78%
Class Y Shares N/A N/A N/A N/A
*Inception was August 10, 1992 for Class A shares; April 4, 1994 for Class B
Shares; and April 9, 1998 for Class Y shares.
26
<PAGE>
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
FactFoneSM, Pioneer's 24-hour automated information line, allows shareholders to
dial toll-free 1-800-225-4321 and hear recorded fund information, including:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's fixed-income funds;
o annualized 7-day yields and 7-day effective (compound) yields
for Pioneer'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 balances and
last three transactions and may order a duplicate statement. See "FactFoneSM" in
the Prospectus for more information.
All performance numbers communicated through FactFoneSM represent past
performance and include the maximum applicable sales charge. A shareholder's
actual yield and total return will vary with changing market conditions. The
value of Class A, Class B and Class Y shares (except for Pioneer Cash Reserves
Fund, which seeks to maintain a stable $1.00 share price) will also vary and may
be worth more or less at redemption than their original cost. Certain FactFoneSM
features are not available to Class Y shareholders.
17. FINANCIAL STATEMENTS
The Trust's Annual Report, filed with the SEC on January 28, 1998 (Accession
No. 0000887228-98-000003), is incorporated by reference into this Statement of
Additional Information. The financial statements in the Trust's Annual Report,
including the financial highlights, for the period ended November 30, 1997,
included or incorporated by reference into the Prospectus for the Trust's Class
A and Class B shares and this Statement of Additional Information, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect to the financial statements, and are included in
reliance upon the authority of Arthur Andersen LLP as experts in accounting and
auditing in giving their report.
27
<PAGE>
APPENDIX A
DESCRIPTION OF SHORT-TERM DEBT AND CORPORATE BOND RATINGS1
MOODY'S INVESTORS SERVICE, INC. SHORT-TERM PRIME RATING SYSTEM - TAXABLE DEBT
AND DEPOSITS GLOBALLY
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations. These obligations have an original maturity
not exceeding one year, unless explicitly noted.
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
Leading market positions in well-established industries. High rates of
return on funds employed.
Conservative capitalization structure with moderate reliance on debt
and ample asset protection. Broad margins in earnings coverage of fixed
financial charges and high internal cash generation. Well-established
access to a range of financial markets and assured sources of alternate
liquidity.
PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3: Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating
categories.
Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's Sovereign Rating for Bank Deposits.
- --------
1 The ratings indicated herein are believed to be the most recent ratings
available at the date of this Statement of Additional Information for the
securities listed. Ratings are generally given to securities at the time of
issuance. While the rating agencies may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings indicated do not
necessarily represent ratings which will be given to these securities on the
date of the Trust's fiscal year-end.
28
<PAGE>
Such branch obligations are rated at the lower of the bank's rating or
Moody's Sovereign Rating for Bank Deposits for the country in which the branch
is located.
When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by actions of the government controlling the currency of denomination.
In addition, risks associated with bilateral conflicts between an investor's
home country and either the issuer's home country or the country where an
issuer's branch is located are not incorporated into Moody's short-term debt
ratings.
If an issuer represents to Moody's that its short-term debt obligations are
supported by the credit of another entity or entities, then the name or names of
such supporting entity or entities are listed within the parenthesis beneath the
name of the issuer, or there is a footnote referring the reader to another page
for the name or names of the supporting entity or entities. In assigning ratings
to such issuers, Moody's evaluates the financial strength of the affiliated
corporations, commercial banks, insurance companies, foreign governments or
other entities, but only as one factor in the total rating assessment.
MOODY'S CORPORATE BOND RATINGS
AAA: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA: Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
29
<PAGE>
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
NOTE: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicated that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicated
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.
STANDARD & POOR'S SHORT-TERM ISSUE CREDIT RATINGS
A-1: A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.
A-2: A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
B: A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
C: A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D: A short-term obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
30
<PAGE>
STANDARD & POOR'S CORPORATE BOND RATINGS
AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA: An obligation rated AA differs from the highest-rated obligations only in a
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB: An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.
BB: An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's capacity to meet its financial commitment on the obligation.
B: An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
CCC: An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.
D: An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments are jeopardized.
31
<PAGE>
PLUS (+) OR MINUS (-): The rating from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major categories.
R: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk, such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
32
<PAGE>
APPENDIX B
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 $4.10 2.50% 2,439.024 4.00 $9,750
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
FROM INVESTMENT FROM CAPITAL FROM DIVIDENDS TOTAL
DATE GAINS REINVESTED REINVESTED VALUE
<S> <C> <C> <C> <C>
12/31/92 $9,659 $0 $256 $9,915
12/31/93 $9,634 $0 $863 $10,497
12/31/94 $9,122 $0 $1,395 $10,517
12/31/95 $9,390 $0 $2,190 $11,580
12/31/96 $9,195 $0 $2,893 $12,088
12/31/97 $9,196 $0 $3,643 $12,839
</TABLE>
33
<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% 2,570.694 $3.89 $10,000
</TABLE>
VALUE OF SHARES
DIVIDENDS AND CAPITAL GAINS REINVESTED
<TABLE>
<CAPTION>
FROM FROM CAPITAL FROM DIVIDENDS DEFERRED SALES TOTAL VALUE CDSC
DATE INVESTMENT 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%
12/31/97 $9,692 $0 $2,251 $0 $11,943 0.00%
</TABLE>
34
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The following securities indices are well known, unmanaged measures of market
performance. Advertisements and sales literature for the Trust may refer to
these indices or may present comparisons between the performance of the Trust
and one or more of the indices. Other indices may also be used, if appropriate.
The indices are not available for direct investment. The data presented are not
meant to be indicative of the performance of the Trust, do not reflect past
performance and do not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P 500 includes 500 of
the largest stocks (in terms of stock market value) in the U.S.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of stocks of 30 blue chip
companies widely held by individuals and institutional investors. The 30 stocks
represent about a fifth of the $8 trillion-plus market value of all U.S. stocks
and about a fourth of the value of stocks listed on the New York Stock Exchange
(NYSE).
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the NYSE, plus stocks listed on the American Stock Exchange and over the counter
with the same or less capitalization as the upper bound of the NYSE ninth
decile.
U.S. INFLATION
THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA GROWTH AND VALUE INDEXES are constructed by dividing the stocks in
the S&P 500 according to price-to-book ratios. The GROWTH INDEX contains stocks
with higher price-to-book ratios, and the VALUE INDEX contains stocks with lower
price-to-book ratios. Both indexes are market capitalization weighted.
MERRILL LYNCH MICRO-CAP INDEX
The MERRILL LYNCH MICRO-CAP INDEX represents the performance of 2,036 stocks
ranging in market capitalization from $50 million to $220 million. Index returns
are calculated monthly.
35
<PAGE>
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds after 1977 are constructed with
data from The Wall Street Journal and are calculated as the change in the flat
price or and-interest price. From 1926 to 1976, data are obtained from the
government bond file at the Center for Research in Security Prices (CRSP),
Graduate School of Business, University of Chicago. Each year, a one-bond
portfolio with a term of approximately 20 years and a reasonably current coupon
was used and whose returns did not reflect potential tax benefits, impaired
negotiability or special redemption or call privileges. Where callable bonds had
to be used, the term of the bond was assumed to be a simple average of the
maturity and first call dates minus the current date. The bond was "held" for
the calendar year and returns were computed.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of intermediate-term government bonds after 1987 are calculated
from The Wall Street Journal prices, using the change in flat price. Returns
from 1934 to 1986 are obtained from the CRSP government bond file.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than five years, and this bond is
"held" for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934 to 1942, almost all bonds
with maturities near five years were partially or fully tax-exempt and were
selected using the rules described above. Personal tax rates were generally low
in that period, so that yields on tax-exempt bonds were similar to yields on
taxable bonds. From 1926 to 1933, there are few bonds suitable for construction
of a series with a five-year maturity. For this period, five-year bond yield
estimates are used.
MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI")
MSCI's international indices are based on the share prices of approximately
1,700 companies listed on stock exchanges in the 22 countries that make up the
MSCI World Index. MSCI's emerging market indices are comprised of approximately
1000 stocks from 26 countries.
Countries in the MSCI EAFE INDEX are: Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and
United Kingdom.
Countries in the MSCI EMERGING MARKETS FREE INDEX are: Argentina, Brazil, Chile,
China Free, Czech Republic, Colombia, Greece, Hungary, India, Indonesia Free,
Israel, Jordan, Korea (at 50%), Malaysia Free, Mexico Free, Pakistan, Peru,
Philippines Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan (at 50%),
Thailand Free, Turkey and Venezuela.
6-MONTH CDS
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
Since 1969, corporate bond total returns are represented by the Salomon Brothers
Long-Term High-Grade Corporate Bond Index. As most large corporate bond
transactions take place over the counter, a major dealer is the natural source
of these data. The index includes nearly all Aaa- and Aa-rated bonds with at
least 10 years to maturity. If a bond is downgraded during a particular month,
its return for the month is included in the index before removing the bond from
future portfolios.
36
<PAGE>
From 1926 to 1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946 to 1968,
Ibbotson and Sinquefield backdated the Salomon Brothers' index, using Salomon
Brothers' monthly yield data with a methodology similar to that used by Salomon
Brothers for 1969 to 1995. Capital appreciation returns were calculated from
yields assuming (at the beginning of each monthly holding period) a 20-year
maturity, a bond price equal to par, and a coupon equal to the
beginning-of-period yield. For the period 1926 to 1945, Standard & Poor's
monthly high-grade corporate composite yield data were used, assuming a 4%
coupon and a 20-year maturity. The conventional present-value formula for bond
price for the beginning and end-of-month prices was used. (This formula is
presented in Ross, Stephen A., and Westerfield, Randolph W., Corporate Finance,
Times Mirror/Mosby, St. Louis, 1990, p. 97 ["Level-Coupon Bonds"].) The monthly
income return was assumed to be one-twelfth the coupon.
U.S. (30-DAY) TREASURY BILLS
For the U.S. TREASURY BILL INDEX, data from The Wall Street Journal are used
after 1977; the CRSP government bond file is the source until 1976. Each month a
one-bill portfolio containing the shortest-term bill having not less than one
month to maturity is constructed. (The bill's original term to maturity is not
relevant.) To measure holding period returns for the one-bill portfolio, the
bill is priced as of the last trading day of the previous month-end and as of
the last trading day of the current month.
NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUSTS ("NAREIT")EQUITY REIT
INDEX
All of the data are based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMEX and NASDAQ. The data are
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighting at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income. Liquidating dividends, whether full or partial,
are treated as income.
RUSSELL U.S. EQUITY INDEXES
The RUSSELL 3000(R) INDEX (the "Russell 3000") is comprised of the 3,000 largest
U.S. companies as determined by market capitalization representing approximately
98% of the U.S. equity market. The average market capitalization is
approximately $2.8 billion. The RUSSELL 2500TM INDEX measures performance of the
2,500 smallest companies in the Russell 3000. The average market capitalization
is approximately $733.4 million, and the largest company in the index has an
approximate market capitalization of $2.9 billion. The RUSSELL 2000(R) INDEX
measures performance of the 2,000 smallest stocks in the Russell 3000; the
largest company in the index has a market capitalization of approximately $1.1
billion. The RUSSELL 1000(R) INDEX (the "Russell 1000") measures the performance
of the 1,000 largest companies in the Russell 3000. The average market
capitalization is approximately $7.6 billion. The smallest company in the index
has an approximate market capitalization of $1.1 billion. The RUSSELL MIDCAPTM
INDEX measures performance of the 800 smallest companies in the Russell 1000.
The largest company in the index has an approximate market capitalization of
$8.0 billion.
The Russell indexes are reconstituted annually as of July 1, based on May 31
market capitalization rankings.
37
<PAGE>
WILSHIRE REAL ESTATE SECURITIES INDEX
The WILSHIRE REAL ESTATE SECURITIES INDEX is a market capitalization weighted
index of 120 publicly traded real estate securities, such as REITs, real estate
operating companies ("REOCs") and partnerships.
The index contains performance data on five major categories of property:
office, retail, industrial, apartment and miscellaneous. The companies in the
index are 91.66% equity and hybrid REITs and 8.33% REOCs.
STANDARD & POOR'S MIDCAP 400 INDEX
The S&P 400 is a market-capitalization-weighted index. The performance data for
the index were calculated by taking the stocks presently in the index and
tracking them backwards in time as long as there were prices reported. No
attempt was made to determine what stocks "might have been" in the S&P 400 five
or ten years ago had it existed. Dividends are reinvested on a monthly basis
prior to June 30, 1991, and are reinvested daily thereafter.
LIPPER BALANCED FUNDS INDEX
This index represents equally weighted performance, adjusted for capital gains
distributions and income dividends, of approximately 30 of the largest funds
with a primary objective of conserving principal by maintaining at all times a
balanced portfolio of stocks and bonds. Typically, the stock/bond ratio ranges
around 60%/40%.
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963 to 1987; and The Wall Street Journal thereafter.
Sources: Ibbotson Associates, Towers Data Systems, Lipper Analytical Services,
Inc., Merrill Lynch and PGI
38
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
DOW S&P/ S&P/
S&P JONES U.S. SMALL BARRA BARRA MERRILL LYNCH
500 INDUSTRIAL STOCK U.S. 500 500 MICRO-CAP
AVERAGE INDEX INFLATION GROWTH VALUE INDEX
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 11.62 N/A 0.28 -1.49 N/A N/A N/A
Dec 1927 37.49 N/A 22.10 -2.08 N/A N/A N/A
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A N/A
Dec 1931 -43.34 -49.02 -49.75 -9.52 N/A N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A N/A
Dec 1933 53.99 73.72 142.87 0.51 N/A N/A N/A
Dec 1934 -1.44 8.08 24.22 2.03 N/A N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A N/A
Dec 1942 20.34 14.13 44.51 9.29 N/A N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A N/A
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
DOW S&P/ S&P/
S&P JONES U.S. SMALL BARRA 500 BARRA MERRILL LYNCH
500 INDUSTRIAL STOCK U.S. GROWTH 500 MICRO-CAP
AVERAGE INDEX INFLATION VALUE INDEX
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A N/A
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38 N/A
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93 N/A
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57 N/A
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16 27.76
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16 43.18
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59 32.32
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02 9.18
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04 33.62
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89 42.44
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52 -14.97
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68 22.89
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67 3.45
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68 -13.84
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67 22.76
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13 8.06
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85 -29.55
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56 57.44
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53 36.62
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60 31.32
Dec 1994 1.31 5.06 3.11 2.67 3.13 -0.64 1.81
Dec 1995 37.43 36.84 34.46 2.54 38.13 36.99 30.70
Dec 1996 23.07 28.84 17.62 3.32 23.96 21.99 13.88
Dec 1997 33.36 24.88 22.78 1.92 36.52 29.98 24.61
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
LONG- INTERMEDIATE- MSCI LONG-
TERM TERM U.S. EAFE 6- TERM U.S. U.S.
U.S. GOV'T GOVERNMENT (Net of MONTH CORPORATE T-BILL
BONDS BONDS Taxes) CDS BONDS (30-Day)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.10 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
LONG- INTERMEDIATE- MSCI LONG-
TERM TERM U.S. EAFE 6- TERM U.S. U.S.
U.S. GOV'T GOVERNMENT (Net of MONTH CORPORATE T-BILL
BONDS BONDS Taxes) CDS BONDS (30-Day)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.17 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
Dec 1966 3.65 4.69 N/A 5.76 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.47 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.45 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.70 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.39 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.11 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 14.71
Dec 1982 40.36 29.10 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.59 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.30 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.80 11.21 5.21 27.20 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
Dec 1997 15.85 8.38 1.78 5.71 12.95 5.26
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT LIPPER MSCI
EQUITY RUSSELL WILSHIRE BALANCED EMERGING BANK
REIT 2000 REAL ESTATE S&P FUND MARKETS SAVINGS
INDEX INDEX SECURITIES 400 INDEX FREE INDEX ACCOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 5.77 N/A 3.86
Dec 1961 N/A N/A N/A N/A 20.59 N/A 3.90
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
NAREIT LIPPER MSCI
EQUITY RUSSELL WILSHIRE BALANCED EMERGING BANK
REIT 2000 REAL ESTATE S&P FUND MARKETS SAVINGS
INDEX INDEX SECURITIES 400 INDEX FREE INDEX ACCOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dec 1962 N/A N/A N/A N/A -6.80 N/A 4.08
Dec 1963 N/A N/A N/A N/A 13.10 N/A 4.17
Dec 1964 N/A N/A N/A N/A 12.36 N/A 4.19
Dec 1965 N/A N/A N/A N/A 9.80 N/A 4.23
Dec 1966 N/A N/A N/A N/A -5.86 N/A 4.45
Dec 1967 N/A N/A N/A N/A 15.09 N/A 4.67
Dec 1968 N/A N/A N/A N/A 13.97 N/A 4.68
Dec 1969 N/A N/A N/A N/A -9.01 N/A 4.80
Dec 1970 N/A N/A N/A N/A 5.62 N/A 5.14
Dec 1971 N/A N/A N/A N/A 13.90 N/A 5.30
Dec 1972 8.01 N/A N/A N/A 11.13 N/A 5.37
Dec 1973 -15.52 N/A N/A N/A -12.24 N/A 5.51
Dec 1974 -21.40 N/A N/A N/A -18.71 N/A 5.96
Dec 1975 19.30 N/A N/A N/A 27.10 N/A 6.21
Dec 1976 47.59 N/A N/A N/A 26.03 N/A 6.23
Dec 1977 22.42 N/A N/A N/A -0.72 N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 4.80 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 19.70 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 1.86 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.10 17.44 N/A 9.71
Dec 1984 20.93 -7.30 20.64 1.18 7.46 N/A 9.92
Dec 1985 19.10 31.05 22.20 35.58 29.83 N/A 9.02
Dec 1986 19.16 5.68 20.30 16.21 18.43 N/A 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 4.13 N/A 6.92
Dec 1988 13.49 24.89 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.24 2.37 35.54 19.70 64.96 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 0.66 -10.55 7.80
Dec 1991 35.70 46.05 20.03 50.10 25.83 59.91 4.61
Dec 1992 14.59 18.41 7.36 11.91 7.46 11.40 2.89
Dec 1993 19.65 18.91 15.24 13.96 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 -2.05 -7.32 4.96
Dec 1995 15.27 28.44 13.65 30.94 24.89 -5.21 5.24
Dec 1996 35.26 16.53 36.87 19.20 13.01 6.03 4.95
Dec 1997 20.29 22.36 19.80 32.26 20.05 -11.59 5.17
</TABLE>
44
<PAGE>
APPENDIX C
OTHER PIONEER INFORMATION
The Pioneer group of mutual funds was established in 1928 with the creation of
Pioneer Fund. Pioneer is one of the oldest and most experienced money managers
in the United States.
As of December 31, 1997, PMC employed a professional investment staff of 58,
with a combined average of 12 years' experience in the financial services
industry.
Total assets of all Pioneer mutual funds at December 31, 1997, were
approximately $19.8 billion representing 1,177,148 shareholder accounts, 791,468
non-retirement accounts and 385,680 retirement accounts.
g:\edgar\sai\current\stit398.doc
45
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial highlights of the Registrant for the fiscal year
ended November 30, 1997 are included in Part A of the Registration
Statement and the financial statements of the Registrant for the
fiscal year ended November 30, 1997 are part of the 1997 Annual
Report to Shareholders (filed electronically on January 28, 1998;
File No. 811-06657; Accession No. 0000887228-98-000003) which is
incorporated by reference into Part B of the Registration
Statement.
(b) Exhibits:
1.1 Declaration of Trust*
1.2 Establishment and Designation of Classes*
1.3 Restated 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*
C-1
<PAGE>
9. Form of Investment Company Service Agreement*
10. None
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 Schedules+
18.1 Rule 18f-3 Plan Coverning Three Classes of Shares
pursuant to Rule 18f-3+
19. Powers of Attorney*
19.1 Power of Attorney for Mary K. Bush***
- ------------------------
+Filed herewith.
*Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 3 to the Registrant's Registration Statement
(File No. 33-47613) as filed with the Securities and Exchange Commission (the
"SEC") on March 29, 1995 (Accession No. 0000887228-95-000011).
**Previously filed. Incorporated herein by reference from the exhibit
filed with Post-Effective Amendment No. 5 to the Registration Statement as filed
with the SEC on March 27, 1997 (Accession No. 0000950146-97-000440).
***Previously filed. Incorporated herein by reference from the exhibit
filed with Post-Effective Amendment No. 6 to the Registration Statement as filed
with the SEC on March 30, 1998 (Accession No. 0001016964-98-000022).
Item 25. Persons Controlled by or Under Common Control with Registrant
No person is controlled by the Registrant. A common control
relationship could exist from a management perspective because the Chairman and
President of the Registrant owns approximately 14% of the outstanding shares of
C-2
<PAGE>
The Pioneer Group, Inc. (PGI), the parent company of the Registrant's investment
adviser, and certain Trustees or officers of the Registrant (i) hold similar
positions with other investment companies advised by PGI and (ii) are directors
or officers of PGI and/or its direct or indirect subsidiaries. The following
lists all U.S. and the principal non-U.S. subsidiaries of PGI and those
registered investment companies with a common or similar Board of Trustees
advised by PGI.
OWNED PERCENT STATE/COUNTRY OF
COMPANY BY OF SHARES INCORPORATION
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneer Funds Distributor, Inc. (PFD) PMC 100% MA
Pioneer Explorer, Inc. (PEI) PMC 100% DE
Pioneer Fonds Marketing GmbH (GmbH) PFD 100% Germany
Pioneer Forest, Inc. (PFI) PGI 100% DE
CJSC "Forest-Starma" (Forest-Starma) PFI 95% Russia
Pioneer Metals and Technology, Inc. (PMT) PGI 100% DE
Pioneer Capital Corp. (PCC) PGI 100% DE
Pioneer SBIC Corp. PCC 100% MA
Pioneer Real Estate Advisors, Inc. (PREA) PGI 100% DE
Pioneer Management (Ireland) Ltd. (PMIL) PGI 100% Ireland
Pioneer Plans Corporation (PPC) PGI 100% DE
PIOGlobal Corp. (PIOGlobal) PGI 100% DE
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Goldfields Holdings, Inc. (PGH) PGI 100% DE
Pioneer Goldfields Ltd. (PGL) PGH 100% Guernsey
Teberebie Goldfields Ltd. (TGL) PGL 90% Ghana
Pioneer Omega, Inc. (Omega) PGI 100% DE
Pioneer First Russia, Inc. (First Russia) Omega 81.65% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer International Corp. (PIntl) PGI 100% DE
Pioneer First Polish Investment
Fund JSC, S.A. (First Polish) PIntl 100% Poland
Pioneer Czech Investment Company, A.S.
(Pioneer Czech) PIntl 100% Czech Republic
Registered investment companies that are parties to management contracts with
PMC:
FUNDS BUSINESS TRUST
Pioneer International Growth Fund MA
Pioneer World Equity Fund DE
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
C-3
<PAGE>
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Independence Fund DE
Pioneer Fund DE
Pioneer II DE
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Trust MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Balanced Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares DE
Pioneer Micro-Cap Fund DE
The following table lists John F. Cogan, Jr.'s positions with the
investment companies, PGI and principal direct or indirect PGI subsidiaries
referenced above and the Registrant's counsel.
TRUSTEE/
ENTITY CHAIRMAN PRESIDENT DIRECTOR OTHER
Pioneer mutual
funds X X X
PGL X X X
PGI X X X
PPC X X
PIC X X
PIntl X X
PMT X X
Omega X X
PIOGlobal X X
First Russia X X
PCC X
PSC X
PMIL X
PEI X
PFI X
PREA X
Forest-Starma X
PMC X X
PFD X X
TGL X X
C-4
<PAGE>
First Polish Chairman of Supervisory
Board
GmbH Chairman of Supervisory
Board
Pioneer Czech Chairman of Supervisory
Board
Hale and Dorr LLP Partner
Item 26. Number of Holders of Securities
(1)
Title of Class (2)
Shares of Beneficial Interest Number of Record Holders
(without par value) as of February 28, 1998
Class A shares 2,261
Class B shares 311
Item 27. Indemnification
Except for the Declaration of Trust (the "Declaration"),
dated April 30, 1992, establishing the Registrant as a business trust under
Massachusetts law, there is no contract, arrangement or statute under which any
Trustee, officer, underwriter or affiliated person of the Registrant is insured
or indemnified. The Declaration provides that no Trustee or officer will be
indemnified against any liability to which the Registrant would otherwise be
subject by reason of or for willful misfeasance, bad faith, gross negligence or
reckless disregard of such person's duties.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be available to Trustees, officers
and controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in the Form
ADV, as amended, of PMC, the Registrant's investment adviser. The following
sections of such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2; and
(b) Section 6, Business Background, of each Schedule D.
Item 29. Principal Underwriters
(a) See Item 25 above.
(b) Directors and officers of PFD:
C-5
<PAGE>
POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
NAME UNDERWRITER REGISTRANT
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice President and
Trustee
Steven M. Graziano Senior Vice President None
Stephen W. Long Senior Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Bennett Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Mary Kleeman Vice President None
Steven R. Berke Assistant Vice President None
Steven H. Forss Assistant Vice President None
Mary Sue Hoban Assistant Vice President None
Debra A. Levine Assistant Vice President None
Junior Roy McFarland Assistant Vice President None
Marie E. Moynihan Assistant Vice President None
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
The principal business address of each of these individuals is 60 State Street,
Boston, Massachusetts 02109-1820.
(c) Not applicable.
C-6
<PAGE>
Item 30. Location of Accounts and Records
The accounts and records are maintained at the Registrant's office at
60 State Street, Boston, Massachusetts; contact the Treasurer.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to deliver or cause to be delivered with
the Prospectus, to each person to whom the Prospectus is sent or
given, a copy of the Registrant's report to shareholders furnished
pursuant to and meeting the requirements of Rule 30d-1 under the
Investment Company Act of 1940, as amended, from which the
specified information is incorporated by reference, unless such
person currently holds securities of the Registrant and otherwise
has received a copy of such report, in which case the Registrant
shall state in the Prospectus that it will furnish, without charge,
a copy of such report on request, and the name, address and
telephone number of the person to whom such a request should be
directed.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 7 to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment No. 7 to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston and Commonwealth of Massachusetts, on the 9th
day of April, 1998.
PIONEER SHORT-TERM INCOME TRUST
By: /s/ Joseph P. Barri
Joseph P. Barri
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 7 to the Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the date
indicated:
Signature Title
John F. Cogan, Jr.* Chairman of the Board )
John F. Cogan, Jr. and President )
(Principal Executive )
Officer) )
)
)
/s/ William H. Keough Chief Financial Officer )
William H. Keough and Treasurer (Principal )
Financial and Accounting )
Officer) )
)
)
Trustees: )
)
)
Mary K. Bush* )
Mary K. Bush )
)
)
John F. Cogan, Jr.* )
John F. Cogan, Jr. )
)
)
Richard H. Egdahl* )
Richard H. Egdahl, M.D., Ph.D. )
<PAGE>
)
)
Margaret B. W. Graham* )
Margaret B. W. Graham )
)
)
John W. Kendrick* )
John W. Kendrick )
)
)
Marguerite A. Piret* )
Marguerite A. Piret )
)
)
David D. Tripple* )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )
)
)
John Winthrop* )
John Winthrop )
)
)
*By: /s/ Joseph P. Barri Dated: April 9, 1998)
Joseph P. Barri
Attorney-in-fact
<PAGE>
Exhibit Index
Exhibit
Number Document Title
1.2 Establishment and Designation of Classes
11. Consent of Independent Public Accountants
17. Financial Data Schedules
18.1 Rule 18f-3 Plan Coverning Three Classes of Shares
pursuant to Rule 18f-3
PIONEER SHORT-TERM INCOME TRUST
Establishment and Designation
of
Class A Shares, Class B Shares, Class C Shares and Class Y Shares
of Beneficial Interest of
Pioneer Short-Term Income Trust
The undersigned, being a majority of the Trustees of Pioneer Short-Term
Income Trust, a Massachusetts business trust (the "Fund"), acting pursuant to
Article V, Sections 5.1 and 5.11 of the Amended and Restated Declaration of
Trust dated April 30, 1992 of the Fund (the "Declaration"), do hereby divide the
shares of beneficial interest of the Fund (the "Shares") to create four classes
of Shares of the Fund as follows:
1. The four classes of Shares established and designated hereby are "Class A
Shares," "Class B Shares," "Class C Shares" and "Class Y Shares,"
respectively.
2. Class A Shares, Class B Shares, Class C Shares and Class Y Shares shall
each be entitled to all of the rights and preferences accorded to Shares
under the Declaration.
3. The purchase price of Class A Shares, Class B Shares, Class C Shares and
Class Y Shares, the method of determining the net asset value of Class A
Shares, Class B Shares, Class C Shares and Class Y Shares and the relative
dividend rights of holders of Class A Shares, Class B Shares, Class C
Shares and Class Y Shares shall be established by the Trustees of the Trust
in accordance with the provisions of the Declaration and shall be set forth
in the Trust's Registration Statement on Form N-1A under the Securities Act
of 1933 and/or the Investment Company Act of 1940, as amended and as in
effect at the time of issuing such Shares.
4. The Trustees, acting in their sole discretion, may determine that any
Shares of the Fund issued are Class A Shares, Class B Shares, Class C
Shares, Class Y Shares, or Shares of any other class of the Fund
hereinafter established and designated by the Trustees.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument this 1st
day of July, 1996.
/s/ John F. Cogan, Jr. /s/ Marguerite A. Piret
John F. Cogan, Jr. Marguerite A. Piret
as Trustee and not individually as Trustee and not individually
975 Memorial Drive, #802 162 Washington Street
Cambridge, MA 02138 Belmont, MA 02178
/s/ Mary K. Bush /s/ David D. Tripple
Mary K. Bush David D. Tripple
as Trustee and not individually as Trustee and not individually
Health Policy Institute 6 Woodbine Road
53 Bay State Road Belmont, MA 02178
Boston, MA 02215
/s/ Richard H. Egdahl /s/ Stephen K. West
Richard H. Egdahl, M.D. Stephen K. West, Esq.
as Trustee and not individually as Trustee and not individually
Health Policy Institute Sullivan & Cromwell
53 Bay State Road 125 Board Street
Boston, MA 02215 New York, NY 10004
/s/ Margaret B.W. Graham /s/ John Winthrop
Margaret B.W. Graham John Winthrop
as Trustee and not individually as Trustee and not individually
The Keep One Adgers Wharf
P.O. Box 110 Charlestown, SC 29401
Little Deer Isle, ME 04650
/s/ John W. Kendrick
John W. Kendrick
as Trustee and not individually
6363 Waterway Drive
Falls Church, VA 22044
ARTHUR ANDERSEN LLP
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 5, 1998
for Pioneer Short-Term Income Trust and to all references to our firm included
in or made a part of Post-Effective Amendment No. 7 and Amendment No. 8 to
registration statement file Nos. 33-47613 and 811-06657, respectively.
/s/ Arthur Andersen LLP
Boston, Massachusetts
March 26, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED NOVEMBER 30, 1997 FOR PIONEER SHORT-TERM INCOME TRUST AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000887228
<NAME> PIONEER SHORT-TERM INCOME TRUST
<SERIES>
<NUMBER> 001
<NAME> PIONEER SHORT-TERM INCOME TRUST CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 46632382
<INVESTMENTS-AT-VALUE> 46575845
<RECEIVABLES> 823117
<ASSETS-OTHER> 4406
<OTHER-ITEMS-ASSETS> 764
<TOTAL-ASSETS> 47404132
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 158506
<TOTAL-LIABILITIES> 158506
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50669174
<SHARES-COMMON-STOCK> 11150229
<SHARES-COMMON-PRIOR> 14398261
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 10351
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 3356660
<ACCUM-APPREC-OR-DEPREC> (56537)
<NET-ASSETS> 47245626
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3538771
<OTHER-INCOME> 0
<EXPENSES-NET> 469802
<NET-INVESTMENT-INCOME> 3068969
<REALIZED-GAINS-CURRENT> (315856)
<APPREC-INCREASE-CURRENT> (88164)
<NET-CHANGE-FROM-OPS> 2664949
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2774220
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6898656
<NUMBER-OF-SHARES-REDEEMED> 10708837
<SHARES-REINVESTED> 562149
<NET-CHANGE-IN-ASSETS> (12359796)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 48615
<OVERDIST-NET-GAINS-PRIOR> 3056577
<GROSS-ADVISORY-FEES> 253266
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 770505
<AVERAGE-NET-ASSETS> 45908787
<PER-SHARE-NAV-BEGIN> 3.79
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .23
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 3.77
<EXPENSE-RATIO> .87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE ANNUAL REPORT
ON FORM N-SAR DATED NOVEMBER 30, 1997 FOR PIONEER SHORT-TERM INCOME TRUST AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000887228
<NAME> PIONEER SHORT-TERM INCOME TRUST
<SERIES>
<NUMBER> 002
<NAME> PIONEER SHORT-TERM INCOME TRUST CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 46632382
<INVESTMENTS-AT-VALUE> 46575845
<RECEIVABLES> 823117
<ASSETS-OTHER> 4406
<OTHER-ITEMS-ASSETS> 764
<TOTAL-ASSETS> 47404132
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 158506
<TOTAL-LIABILITIES> 158506
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50669174
<SHARES-COMMON-STOCK> 1377961
<SHARES-COMMON-PRIOR> 1311811
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 10351
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 3356660
<ACCUM-APPREC-OR-DEPREC> (56537)
<NET-ASSETS> 47245626
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3538771
<OTHER-INCOME> 0
<EXPENSES-NET> 469802
<NET-INVESTMENT-INCOME> 3068969
<REALIZED-GAINS-CURRENT> (315856)
<APPREC-INCREASE-CURRENT> (88164)
<NET-CHANGE-FROM-OPS> 2664949
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 257396
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2657915
<NUMBER-OF-SHARES-REDEEMED> 2638370
<SHARES-REINVESTED> 46605
<NET-CHANGE-IN-ASSETS> (12359796)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 48615
<OVERDIST-NET-GAINS-PRIOR> 3056577
<GROSS-ADVISORY-FEES> 253266
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 770505
<AVERAGE-NET-ASSETS> 4849257
<PER-SHARE-NAV-BEGIN> 3.79
<PER-SHARE-NII> .20
<PER-SHARE-GAIN-APPREC> (.03)
<PER-SHARE-DIVIDEND> .20
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 3.76
<EXPENSE-RATIO> 1.67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
PIONEER SHORT-TERM INCOME TRUST
ON BEHALF OF
PIONEER SHORT-TERM INCOME TRUST
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
CLASS A SHARES, CLASS B SHARES AND CLASS Y SHARES
APRIL 9, 1998
Each class of shares of Pioneer Short-Term Income Trust (the "Fund"), a
series 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 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 Fund'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 Fund's prospectus. Class A Shares
shall be entitled to the shareholder services set forth from time to time in the
Fund'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 Fund'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 Fund 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
<PAGE>
shares redeemed within a specified number of years of purchase will be
subject to a CDSC as set forth in the Fund's prospectus. Class B Shares are sold
subject to the minimum purchase requirements set forth in the Fund's prospectus.
Class B Shares shall be entitled to the shareholder services set forth from time
to time in the Fund'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 Fund have
exclusive voting rights, if any, with respect to the Fund'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
Fund 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 Fund
at the end of a specified number of years after the initial purchase date of
Class B shares, except as provided in the Fund'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. CLASS Y SHARES
Class Y Shares are sold at net asset value per share without the
imposition of an initial sales charge. Class Y Shares are not subject to a CDSC
upon redemption regardless of the length of the period of time such shares are
held. Class Y Shares are sold subject to the minimum purchase requirements set
forth in the Fund's prospectus. Class Y Shares shall be entitled to the
shareholder services set forth from time to time in the Fund's prospectus with
respect to Class Y Shares. Class Y Shares are not subject to fees payable under
a distribution or other plan adopted to Rule 12b-1. The Class Y Shareholders of
the Fund have exclusive voting rights, if any, with respect to the Fund's
possible future adoption of a Class Y Rule 12b-1 Distribution Plan. Transfer
agency fees are allocated to Class Y Shares on a per account basis except to the
extent, if any, such an allocation
<PAGE>
would cause the Fund 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 Y shares shall bear the costs and expenses
associated with conducting a shareholder meeting for matters relating to Class Y
shares.
The initial purchase date for Class Y shares acquired through (i)
reinvestment of dividends on Class Y Shares or (ii) exchange from another
Pioneer mutual fund will be deemed to be the date on which the original Class Y
shares were purchased.
ARTICLE IV. 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, on behalf of the Fund, 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 V. 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 V.
