April 3, 1995
SUPPLEMENT
to the prospectuses for:
Pioneer II January 27, 1995
Pioneer Three January 27, 1995
Pioneer Capital Growth Fund February 24, 1995
Pioneer Equity-Income Fund February 24, 1995
Pioneer Gold Shares February 24, 1995
Pioneer Europe Fund February 28, 1995
Pioneer Bond Fund October 28, 1994
Pioneer California Double Tax-Free Fund January 27, 1995
Pioneer Massachusetts Double Tax-Free Fund January 27, 1995
Pioneer New York Triple Tax-Free Fund January 27, 1995
How to Buy Fund Shares
In addition to the exceptions listed in each Fund's prospectus, Class A shares
of a Fund may be sold at net asset value per share without a sales charge to
Optional Retirement Program participants if (i) the employer has authorized a
limited number of investment company providers for the Program, (ii) all
authorized investment company providers offer their shares to Program
participants at net asset value, (iii) the employer has agreed in writing to
actively promote the authorized investment company providers to Program
participants and (iv) the Program provides for a matching contribution for each
participant contribution.
0495-2419
(c) Pioneer Funds Distributor, Inc.
<PAGE>
[Pioneer Logo]
Pioneer California Double Tax-Free Fund
Pioneer New York Triple Tax-Free Fund
Pioneer Massachusetts Double Tax-Free Fund
Prospectus
January 27, 1995
Pioneer California Double Tax-Free Fund, Pioneer New York Triple Tax-Free Fund
and Pioneer Massachusetts Double Tax-Free Fund (the "Funds") are members of the
Pioneer family of mutual funds. The investment objective of each Fund is to
provide as high a level of current income exempt from federal income taxes and
from the personal income taxes of its respective state, and, if applicable,
city, as is consistent with prudent investment risk. Each Fund invests only in
investment grade securities.
Pioneer California Double Tax-Free Fund. A non-diversified portfolio consisting
primarily of municipal obligations issued by or on behalf of the State of
California and its political subdivisions, agencies and instrumentalities and
other obligations that are exempt from federal and California state personal
income taxes.
Pioneer New York Triple Tax-Free Fund. A non-diversified portfolio consisting
primarily of municipal obligations issued by or on behalf of the State of New
York and its political subdivisions, agencies and instrumentalities and other
obligations that are exempt from federal, New York State and New York City
personal income taxes.
Pioneer Massachusetts Double Tax-Free Fund. A non-diversified portfolio
consisting primarily of municipal obligations issued by or on behalf of the
Commonwealth of Massachusetts and its political subdivisions, agencies and
instrumentalities and other obligations that are exempt from federal and
Commonwealth of Massachusetts personal income taxes.
Each Fund's return and share price fluctuates and the value of your account upon
redemption may be more or less than your purchase price. Shares in the Funds 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 (Part A of the Registration Statement) provides information
about the Funds that you should know before investing. Please read and keep it
for your future reference.
More information about the Funds is included in Part B, the Statement of
Additional Information, also dated January 27, 1995, which is incorporated into
this Prospectus by reference. You may obtain a copy of the Statement of
Additional Information free of charge by calling Shareholder Services at
1-800-225-6292 or by written request to the Funds at 60 State Street, Boston,
Massachusetts 02109. Shares of the Funds are available only where they may
legally be sold.
TABLE OF CONTENTS PAGE
I. EXPENSE INFORMATION 2
II. FINANCIAL HIGHLIGHTS 2
III. THE TRUST 4
IV. THREE INVESTMENT PROGRAMS 4
Investment Objectives and Policies 4
Quality and Maturity of Investments 4
Other Eligible Investments 4
"When Issued" Securities 5
Puts, Demand Features and Standby Commitment 5
Fluctuations in Net Asset Value and Income 5
Portfolio Transactions and Turnover 5
Special Risk Considerations 5
V. MANAGEMENT OF THE TRUST 7
VI. DISTRIBUTION PLAN 7
VII. INFORMATION ABOUT SHARES 8
How to Purchase Shares 8
Net Asset Value and Pricing of Orders 9
Dividends, Distributions and Taxation 9
Redemptions and Repurchases 11
Redemption of Small Accounts 12
Description of Shares and Voting Rights 12
VIII. SHAREHOLDER SERVICES 13
Account and Confirmation Statements 13
Additional Investments 13
Automatic Investment Plans 13
Financial Reports and Tax Information 13
Distribution Options 13
Directed Dividends 14
Direct Deposit 14
Exchange Privilege 14
Telephone Transactions and Related Liabilities 14
Systematic Withdrawal Plans 14
Reinstatement Privilege 15
IX. INVESTMENT RESULTS 15
X. APPENDIX A 17
APPENDIX B 18
APPENDIX C 19
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help you understand the charges and expenses that you,
as a shareholder, will bear directly or indirectly when you invest in the Funds.
The information in the table below is an estimate based on actual expenses for
the fiscal year ended September 30, 1994 expressed as a percentage of the
average net assets of each Fund.
Pioneer Pioneer Pioneer
California New York Massachusetts
Double Triple Double
Tax-Free Tax-Free Tax-Free
Fund Fund Fund
Shareholder Transaction
Expenses:
Maximum Sales Charge on
Purchases 3.50% 3.50% 3.50%
Maximum Sales Charge on
Reinvestment of Dividends none none none
Deferred Sales Charge none(1) none(1) none(1)
Redemption Fee none(2) none(2) none(2)
Exchange Fee none none none
Annual Operating Expenses
(as a percentage of
average net assets):
Management Fees .60%(3) .60%(3) .60%(3)
12b-1 Fees 0.20% 0.12% 0.12%
Other Expenses 2.03% 2.93% 2.88%
Gross Operating Expenses 2.83% 3.65% 3.60%
Management Fee Reduction and
Expense Limitation (2.33)% (3.15)% (3.10)%
Net Operating Expenses: 0.50% 0.50% 0.50%
(1) Purchases of $1,000,000 or more and certain purchases by participants in a
"Group Plan" (as described under "How to Purchase Shares") are not subject to an
initial sales charge. A contingent deferred sales charge of 0.50% may, however,
be charged on redemptions by such accounts of shares held less than one year, as
further described under "Redemptions and Repurchases."
(2) Separate fees (currently $10 and $20) apply to domestic or international
bank wire transfers, respectively, of redemption proceeds.
(3) Effective February 1, 1994, the Funds' investment adviser, Pioneering
Management Corporation ("PMC"), voluntarily agreed not to impose any management
fees and to limit or otherwise absorb all other operating expenses except taxes
and interest on borrowed money, if any, in accordance with the following
schedule:
Expense limit as a percent
Net Assets of average daily net assets
Up to $20 million 0.50%
Up to $25 million 0.55%
Up to $30 million 0.60%
Up to $35 million 0.65%
Up to $40 million 0.70%
Over $40 million 0.75%
This agreement is voluntary and temporary and may be revised or terminated at
any time by PMC. The purpose of this policy is to enhance each Fund's dividend
yield during the period when, because of their smaller size, fixed expenses have
a more significant impact on yield.
Example:
You would pay the following fees and expenses on a $1,000 investment, assuming a
5% annual return with or without redemption at the end of each time period:
Pioneer Pioneer Pioneer
California New York Massachusetts
Double Triple Double
Tax-Free Tax-Free Tax-Free
Fund Fund Fund
One Year $40 $40 $40
Three Years $50 $50 $50
Five Years $62 $62 $62
Ten Years $96 $96 $96
The example above assumes reinvestment of all dividends and distributions and
that the percentage amounts listed under "Annual Operating Expenses" remain the
same each year.
The example is designed for information purposes only, and should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and returns vary from year to year and may be higher or lower than
those shown.
For further information regarding management fees, 12b-1 fees and other expenses
of the Funds, including information regarding the basis upon which fees and
expenses are reduced or reallocated, see "Management of the Trust,"
"Distribution Plan" and "How To Purchase Shares" in this Prospectus and
"Management of the Trust" and "Underwriting Agreement and Distribution Plan" in
the Statement of Additional Information. The Fund's payment of a Rule 12b-1 fee
may result in long-term shareholders indirectly paying more than the economic
equivalent of the maximum sales charge permitted under the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
("NASD").
The maximum sales charge is reduced on purchases of specified amounts and the
value of shares owned in other Pioneer mutual funds is taken into account in
determining the applicable sales charge. See "How to Purchase Shares." No sales
charge is applied to exchanges of shares of the Funds for shares of other
publicly available mutual funds in the Pioneer complex. See "Exchange
Privilege."
II. FINANCIAL HIGHLIGHTS
The following information has been derived from financial statements which have
been audited by Arthur Andersen LLP, independent public accountants, in
connection with their examination of each Fund's financial statements. Arthur
Anderson LLP's report on each Fund's financial statement as of September 30,
1994 appears in the Fund's Annual Report incorporated by reference in the Fund's
Statement of Additional Information. The Annual Report includes more information
about each Fund's performance and is available free of charge by calling
Shareholder Services at 1-800-225-6292.
<PAGE>
Pioneer California Double Tax-Free Fund
Selected Data for a Share Outstanding for the Periods Presented
<TABLE>
<CAPTION>
February 19, 1993
Year (Commencement of
Ended Operations) to
September 30, 1994 September 30, 1993
<S> <C> <C>
Net asset value, beginning of period $ 11.650 $ 11.240
Income from investment operations:
Net investment income $ 0.586 $ 0.377
Net realized and unrealized (loss) gain on investments (1.429) 0.410
Total (loss) income from investment operations $ (0.843) $ 0.787
Distributions to shareholders from:
Net investment income (0.586) (0.377)
Distributions in excess of net investment income (0.001) --
Net (decrease) increase in net asset value $ (1.430) $ 0.410
Net asset value, end of period $ 10.220 $ 11.650
Total return* (7.45%) 7.14%
Ratio of net operating expenses to average net assets 0.36% 0.00%**
Ratio of net investment income to average net assets 5.31% 5.37%**
Portfolio turnover rate 10.82% 0.00%
Net assets, end of period $6,188,795 $4,022,596
Ratios assuming no waiver of fees or assumption of expenses:
Net operating expenses 2.69% 4.15%**
Net investment income 2.98% 1.22%**
</TABLE>
Pioneer New York Triple Tax-Free Fund
Selected Data for a Share Outstanding for the Periods Presented
<TABLE>
<CAPTION>
February 19, 1993
Year (Commencement of
Ended Operations) to
September 30, 1994 September 30, 1993
<S> <C> <C>
Net asset value, beginning of period $ 11.570 $ 11.180
Income from investment operations:
Net investment income $ 0.566 $ 0.367
Net realized and unrealized (loss) gain on investments (1.179) 0.390
Total (loss) income from investment operations $ (0.613) $ 0.757
Distributions to shareholders from:
Net investment income (0.566) (0.367)
Distributions in excess of net investment income (0.001) --
Net (decrease) increase in net asset value $ (1.180) $ 0.390
Net asset value, end of period $ 10.390 $ 11.570
Total return* (5.45%) 6.91%
Ratio of net operating expenses to average net assets 0.36% 0.00%**
Ratio of net investment income to average net assets 5.15% 5.19%**
Portfolio turnover rate 1.96% 0.00%
Net assets, end of period $4,164,246 $3,019,279
Ratios assuming no waiver of fees or assumption of expenses:
Net operating expenses 3.51% 5.05%**
Net investment income 2.00% 0.14%**
</TABLE>
Pioneer Massachusetts Double Tax-Free Fund
Selected Data for a Share Outstanding for the Periods Presented
<TABLE>
<CAPTION>
February 19, 1993
Year (Commencement of
Ended Operations) to
September 30, 1994 September 30, 1993
<S> <C> <C>
Net asset value, beginning of period $ 11.580 $ 11.120
Income from investment operations:
Net investment income $ 0.576 $ 0.367
Net unrealized (loss) gain on investments (1.288) 0.460
Total (loss) income from investment operations $ (0.712) $ 0.827
Distribution to shareholders from:
Net investment income (0.576) (0.367)
Distributions in excess of net investment income (0.002) --
Net (decrease) increase in net asset value $ (1.290) $ 0.460
Net asset value, end of period $ 10.290 $ 11.580
Total return* (6.33%) 7.58%
Ratio of net operating expenses to average net assets 0.35% 0.00%**
Ratio of net investment income to average net assets 5.23% 5.22%**
Portfolio turnover rate 2.65% 0.00%
Net assets, end of period $3,773,911 $3,176,176
Ratios assuming no waiver of fees or assumption of expenses:
Net operating expenses 3.45% 4.89%**
Net investment income 2.13% 0.33%**
</TABLE>
* Assumes initial investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales charges.
Total return would be reduced if sales charges were taken into account.
**Annualized.
<PAGE>
III. THE TRUST
Pioneer California Double Tax-Free Fund, Pioneer New York Triple Tax-Free Fund
and Pioneer Massachusetts Double Tax-Free Fund are series of Pioneer Tax-Free
State Series Trust (the "Trust"), an open-end, management investment company
(commonly referred to as a mutual fund) organized as a Massachusetts business
trust on November 6, 1992. The Trust has authorized an unlimited number of
shares, which are currently organized into these three series, and continuously
offers its shares to the public. Under normal conditions, it must redeem shares
upon the demand of any shareholder.
IV. THREE INVESTMENT PROGRAMS
Investment Objectives and Policies
The investment objective of each Fund is to provide as high a level of current
income exempt from federal income taxes and from the personal income taxes of
its respective state, and, if applicable, city, as is consistent with prudent
investment risk.
As a matter of fundamental policy, under normal circumstances each Fund invests
at least 80% its net assets in securities the interest income on which is exempt
from federal and its respective state's personal income taxes and, if
applicable, city income taxes. These securities include municipal bonds and
notes and other debt instruments issued by or on behalf of the Fund's respective
state and such state's political subdivisions, agencies and instrumentalities,
including variable and floating rate obligations, and similar obligations issued
by the governments of Puerto Rico, Guam and the United States ("U.S.") Virgin
Islands. The remainder of each Fund's assets may be invested in Other Eligible
Investments as described below. Securities whose interest income is an item of
tax preference under the federal alternative minimum tax will not be considered
exempt from federal income tax for purposes of the 80% policy set forth above;
however, the Funds do not currently intend to invest any of their assets in such
securities.
Municipal bonds include general obligation bonds and revenue bonds. General
obligation bonds are backed by the taxing power of the issuing municipality and
are considered the safest type of bonds. Revenue bonds are backed by the
revenues of a project or facility such as the tolls from a toll bridge.
Municipal notes include bond anticipation notes, tax anticipation notes, revenue
anticipation notes, and construction loan notes. Bond, tax and revenue
anticipation notes are short-term obligations that will be retired with the
proceeds of an anticipated bond issue, tax revenue or facility revenue,
respectively. Construction loan notes are short-term obligations that will be
retired with the proceeds of long-term mortgage financing. In acquiring
municipal obligations, the Funds will rely upon an opinion of counsel of the
issuer to the effect that interest on the obligation is exempt from federal
income taxes, and, if applicable, personal income taxes of the applicable state
and its political subdivisions.
Each Fund may invest in variable rate and floating rate obligations the interest
on which may fluctuate based on changes in market rates. The interest rates
payable on variable rate obligations are adjusted at designated intervals. The
interest rates payable on floating rate obligations are adjusted whenever there
is a change in the market rate of interest on which the interest payable is
based. The value of floating and variable rate obligations generally is more
stable than that of fixed rate obligations in response to changes in interest
rate levels. Each Fund may consider the maturity of a variable or floating rate
municipal obligation to be shorter than its ultimate maturity if the Fund has
the right to demand prepayment of its principal at specified intervals prior to
the security's ultimate maturity. Each Fund may purchase certificates of
participation, a type of floating or variable rate obligation, which are
interests in a pool of municipal obligations held by a bank.
Quality and Maturity of Investments
Each of the Funds invests only in investment grade securities, which are
securities rated at the time of purchase within the top four grades by one or
more of the major rating services (i.e. "Baa" or higher by Moody's Investor
Services ("Moody's"), or "BBB" or higher by Standard & Poor's Ratings Group
("S&P")) or, if not rated, judged to be of comparable quality by the Funds'
investment adviser. Each Fund may invest up to 25% of its assets in unrated
securities and securities rated in the fourth highest grade. Obligations in the
lowest investment grade (Baa and BBB) have speculative characteristics, and
changes in economic conditions and other factors are more likely to lead to a
weakened capacity to pay principal and interest on these obligations than is the
case for higher rated obligations. If an obligation purchased by a Fund is
subsequently downgraded below investment grade the Fund may retain such
obligation until the adviser considers it prudent to dispose of it. However, at
no time may any Fund have more than 5% of its net assets invested in securities
rated below investment grade. Some securities owned by a Fund may be insured by
or backed by a letter of credit issued by a third party in which case credit
ratings and the ability to pay interest and repay principal may depend on the
third party's ability to meet its obligations. For a description of Moody's and
S&P's ratings of municipal bonds see Appendix B to the Funds' Statement of
Additional Information.
The Funds have no restrictions on portfolio maturity but the dollar weighted
average maturity of each Fund's portfolio is expected to be between 15 and 25
years.
Other Eligible Investments
Under normal circumstances, each Fund may invest up to 20% of its net assets in
Other Eligible Investments. Other Eligible Investments consist of (a) investment
grade debt securities the interest on which is exempt from federal income taxes,
but not personal income taxes, of a Fund's respective state and, if applicable,
city; (b) corporate commercial paper and other short-term commercial obligations
rated Prime-1 or MIG-1 by Moody's or A-1 or AAA by S&P; (c) obligations of banks
(including certificates of deposit, banker's acceptances and repurchase
agreements) with $1 billion or more of assets; (d) obligations issued or
guaranteed by the U.S. Government.
The Funds intend to minimize the distribution of taxable income to
shareholders, and investment in securities the
<PAGE>
interest on which is subject to federal income tax or the personal income taxes
of a Fund's respective state and, if applicable, city will generally be made
only to meet short term liquidity needs. If a Fund cannot find suitable federal
and state tax exempt securities for investment, investments will generally be
made in securities the interest on which is exempt from federal income taxes but
not the income taxes of the Fund's respective state and, if applicable, city.
However, a portion of the dividends distributed to shareholders may be subject
to state, or federal and state, income taxes. As a temporary defensive measure
during times of adverse market conditions, each Fund may invest up to 50% of its
assets in the Other Eligible Investments described above.
"When Issued" Securities
The Funds may purchase municipal securities on a "when issued" basis, which
means it may be 60 days or more before the securities are delivered and paid
for. The price and yield of the securities so purchased are generally fixed on
the date of purchase commitment. However, the market value of the securities may
fluctuate prior to delivery, and upon delivery the securities may be worth more
or less than the Fund agreed to pay for them. Purchases of securities on a "when
issued" basis may involve more risk than other types of purchases. The Funds
will maintain in segregated accounts sufficient assets to cover their purchase
obligations so long as such obligations continue.
Puts, Demand Features and Standby Commitments
In order to enhance the liquidity, stability or quality of a municipal
obligation, each Fund may acquire the right to sell the security to another
party for a guaranteed price and term. These rights may be referred to as puts,
demand features or standby commitments.
Fluctuations in Net Asset Value and Income
The net asset values of the shares of the series of an open-end investment
company such as the Trust, which invests primarily in fixed-income tax-exempt
securities, will fluctuate as the general levels of interest rates fluctuate.
When interest rates rise, the net asset value of a Fund invested at lower yields
can be expected to decline. Furthermore, the tax-exempt income provided by a
Fund will fluctuate over time. For a description of how to compare yields on
municipal bonds and taxable securities, see "Taxable Equivalent Yields" in the
Appendix.
Portfolio Transactions and Turnover
The Funds will be fully managed by purchasing and selling securities, as well as
holding selected securities to maturity. In purchasing and selling portfolio
securities, each Fund seeks to take advantage of market developments, yield
disparities and variations in the creditworthiness of issuers.
While it is not possible to predict accurately the rate of turnover of each
Fund's portfolio on an annual basis, it is anticipated that the rate will not
exceed 85%. A portfolio turnover of 85% would occur if 85% of the securities in
the portfolio were changed once in a twelve-month period. Computation of
portfolio turnover excludes transactions in U.S. Treasury obligations and
securities having a maturity of one year or less from purchase date.
The investment objective of each Fund is fundamental and may not be changed by
the Board of Trustees without shareholder approval. Because all of the Funds'
investments are subject to fluctuations in yields and value due to changes in
earnings, economic conditions and other factors, there can be no assurance that
any Fund's investment objective will be achieved.
The Statement of Additional Information includes a discussion of other
investment policies and a listing of specific investment restrictions which
govern each Fund's investment policies. The specific investment restrictions
identified in the Statement of Additional Information as fundamental may not be
changed without shareholder approval. If a percentage restriction or a rating
restriction on investments or utilization of assets is adhered to at the time an
investment is made or assets are so utilized, except in the case of borrowings,
a later change in percentage resulting from changes in the value of a Fund's
securities or from a change in the rating of a portfolio security will not be
considered a violation of policy.
Special Risk Considerations
Because each of the Funds is non-diversified and will concentrate investments in
securities issued by specific states (California, New York and Massachusetts)
and their political subdivisions and instrumentalities, each Fund is more
susceptible to factors adversely affecting these issuers than funds which are
diversified or otherwise do not concentrate in specific states. Tax-exempt
securities of a single state may be adversely affected by economic developments
and by legislation and other governmental activities in that state. In the past,
there have been developments which have adversely affected California, New York
and Massachusetts tax-exempt securities, and securities issued by all three
states have been downgraded by the major rating services in recent years.
Summaries of developments in those states are set forth below; see the Statement
of Additional Information for further discussion.
Pioneer California Double Tax-Free Fund. Pioneer California Double Tax-Free
Fund's investments can be affected by political and economic developments within
the State of California, and by the financial condition of California, its
public authorities and political subdivisions. From mid-1990 through 1993,
California experienced substantial financial difficulties related to weak
performance of the once-booming California economy, which caused substantial,
broad-based revenue shortfalls. The economy has entered a sustained recovery
since late 1993. California's long-term credit rating has been reduced in the
past and its ability to provide assistance to its public authorities and
political subdivisions has been, and could be further, impaired. Cutbacks in
state aid could adversely affect the financial condition of cities, counties and
education districts previously subject to severe fiscal constraints and facing a
fall in their own tax collections. California voters in the past have passed
amendments to the California Constitution and other measures that limit the
taxing and spending authority of California governmental entities and future
voter initiatives could result in adverse consequences affecting California
municipal bonds. On December 7, 1994, Orange County and its pooled investment
fund (the "Orange County Fund") filed for protection under Chapter 9 of
<PAGE>
the federal Bankruptcy Law, as a result of investment losses in the Orange
County Fund, which have been estimated at 27%, or some $2 billion, but which
could be higher. Over 180 government agencies, most but not all located in
Orange County, had investments in the Orange County Fund. The County and some of
the participating agencies in the Orange County Fund have defaulted on certain
of their obligations because of the bankruptcy, and others may in the future.
Pioneer California Income Tax-Free Fund had no exposure to direct obligations of
Orange County in December 1994. However, Pioneer California Income Tax-Free Fund
has exposure to Orange County Fund investors: Orange County Transportation
Authority and South Coast Water District (3.4% and 1.2% of total net assets,
respectively).
These factors, among others (including the outcome of related pending litigation
and the effects of several natural disasters such as the 1994 earthquake in
Southern California), could reduce the credit standing of certain issuers of
California municipal bonds. A more detailed discussion of the risks of investing
in California is included in the Statement of Additional Information.
Pioneer New York Triple Tax-Free Fund. Pioneer New York Triple Tax-Free Fund's
investments can be affected by political and economic developments within the
State of New York, and by the financial condition of the state, its public
authorities and political subdivisions, particularly the City of New York
("City"). New York (which has incurred an operating deficit for five successive
fiscal years), the City (which is constrained in its fiscal flexibility by an
already heavy local tax burden, urgent social needs and its extensive and
deteriorating infrastructure) and most suburban county governments are
experiencing serious fiscal problems related to the recessionary performance of
the regional economy, which has caused substantial, broad-based and recurring
revenue shortfalls. New York's credit rating has been recently, and could be
further, reduced, and its ability to provide assistance to its public
authorities and political subdivisions has been, and could be further, impaired.
A more detailed discussion of the risks of investing in New York is included in
the Statement of Additional Information.
Pioneer Massachusetts Double Tax-Free Fund. Pioneer Massachusetts Double
Tax-Free Fund's investments can be affected by political and economic
developments within The Commonwealth of Massachusetts, and by the financial
condition of the Commonwealth, its public authorities and political
subdivisions. Between 1982 and 1988, Massachusetts had a strong economy which
was evidenced by low unemployment and high personal income growth as compared to
national trends. However, Massachusetts subsequently experienced a significant
economic slowdown, with particular deterioration in the construction, real
estate, financial and manufacturing sectors, including certain high technology
areas. Fiscal years 1992, 1993 and 1994 (unaudited) ended with an operating
surplus; however, Massachusetts' financial difficulties resulted in operating
deficits in fiscal years 1987 through 1991. The ratings of the Commonwealth's
general obligation debt were upgraded in the fall of 1992 by S&P and by Moody's
and in the fall of 1993 by S&P. For a further description of the risks of
investing in securities issued by The Commonwealth of Massachusetts, see the
Statement of Additional Information.
There can be no assurance that the economic conditions on which the ratings of
California, New York and Massachusetts obligations in effect at any time are
based will continue or that particular bond issues may not be adversely affected
by changes in economic, political or other conditions. If California, New York
or Massachusetts, or any of their local governmental entities are unable to meet
their financial obligations, the corresponding Fund's income, net asset value,
ability to preserve or realize appreciation of capital or liquidity could be
adversely affected. Also, none of these Funds is a diversified fund (except to
the extent that diversification is required for federal income tax purposes).
For these tax purposes, with respect to 50% of the value of its total assets,
none of these Funds invests more than 5% of the value of its total assets in
securities of a single issuer (except U.S. Government securities or securities
of other regulated investment companies), nor, with respect to the other 50% of
the value of its total assets, does it invest more than 25% of the value of its
total assets in the securities of a single issuer (except U.S. Government
securities or securities of other regulated investment companies). Because they
may invest a larger percentage of their assets in the securities of fewer
issuers than do diversified funds, the Funds may be exposed to greater risk
because an adverse change in the condition of one or a small number of issuers
would have a greater impact on them.
Each of the Funds may also invest in obligations of U.S. possessions and
territories, such as those of the governments of Puerto Rico, the U.S. Virgin
Islands and Guam, to the extent that interest payments on these obligations are
exempt from personal income taxes of their respective state or city. Under
normal circumstances, however, no Fund will invest more than 35% of its total
assets in obligations of such possessions and territories in the aggregate, or
more than 5% of its net assets in the obligations of each of the U.S. Virgin
Islands and Guam. In particular, the Funds may be adversely affected by local
political and economic conditions and developments within Puerto Rico adversely
affecting the issuers of such obligations. The essence of Puerto Rico's credit
quality is the stability it derives from its economic, political and social ties
to the United States, which mitigate the relatively weak underlying credit
fundamentals. Puerto Rico receives significant economic benefits from Section
936 of the Internal Revenue Code of 1986, as amended (the "Code") which confers
significant tax credits upon U.S. corporations doing business in Puerto Rico.
The U.S. is its primary trading partner. The U.S. has provided further economic
incentives through the Caribbean Basin Initiative, which is designed to further
U.S. economic and political interests in the region.
Because of perceived abuses by certain corporations and the resultant revenue
loss of the federal government, Section 936 has been continually under attack in
the U.S. Congress. Should Puerto Rico achieve statehood, Section 936 would be
repealed or cease to apply. The effects of a repeal of Section 936 as a result
of statehood or otherwise would include: higher unemployment, reduction in
Puerto Rico's Gross Domestic Product and a decline in investment by U.S.
companies in Puerto Rico. As a result of the North American Free Trade
Agreement, the higher cost of labor in Puerto Rico rela-
<PAGE>
tive to other countries in the region, such as Mexico, provides a
disincentive to U.S. companies considering locating operations in Puerto
Rico.
Each Fund may also invest 25% or more of the value of its total assets in
municipal obligations in its respective state which obligations are related in
such a way that an economic, business or political development or change
affecting one municipal obligation would also affect the other municipal
obligations. For example, a Fund may so invest in municipal obligations the
interest on which is paid solely from revenues of similar projects such as
hospitals, electric utility systems, multi-family housing, nursing homes or life
care facilities. This fact makes the Funds more susceptible to adverse factors
affecting one or more of these projects than a fund that does not concentrate
its investments to this degree.
V. MANAGEMENT OF THE TRUST
The Trust's Board of Trustees has overall responsibility for management and
supervision of the Funds. There are currently eight Trustees, six of whom are
not "interested persons" of the Trust as defined in the Investment Company Act
of 1940, as amended (the "1940 Act"). The Board meets at least quarterly. By
virtue of the functions performed by Pioneering Management Corporation ("PMC" or
the "Manager") as investment adviser, the Trust requires no employees other than
its executive officers, all of whom receive their compensation from PMC or other
sources. The Statement of Additional Information contains the names and general
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 Delaware
corporation. Pioneer Funds Distributor, Inc. ("PFD"), a wholly owned subsidiary
of PGI, is the principal underwriter of shares of the Funds.
Each fixed income portfolio managed by PMC, including these Funds, is overseen
by a Fixed Income Committee, which consists of PMC's most senior fixed income
professionals, and a Portfolio Management Committee, which consists of PMC's
fixed income portfolio managers. Both committees are chaired by Mr. David
Tripple, PMC's President and Chief Investment Officer and Executive Vice
President of each of the Funds. Mr. Tripple joined PMC in 1974 and has had
general responsibility for PMC's investment operations and specific portfolio
assignments for more than the last five years. Fixed income investments at PMC,
including those made on behalf of the Funds, are under the general supervision
of Mr. Sherman Russ, Senior Vice President of PMC. Mr. Russ joined PMC in 1983.
Day-to-day management of the Trust is the responsibility of Ms. Kathleen
McClaskey, Vice President of the Trust and PMC. Ms. McClaskey joined Pioneer
in 1986 and has been primarily responsible for the Trust since its inception.
In certain instances where Ms. McClaskey is unavailable, primary
responsibility for the day-to-day management of the Trust may be temporarily
assumed by Mr. Mark Winter. Mr. Winter joined PMC in 1993 and is primarily
responsible for Pioneer Tax-Free Income Fund.
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.
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 each Fund in the Trust, subject to the right of the Trustees to
disapprove any such purchase or sale. PMC pays all the ordinary operating
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
of the Trust and the shares of each of its Funds with the SEC, individual
states, territories and foreign jurisdictions and of preparing reports to
government 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
fund; (m) bookkeeping and appraisal charges; and (n) distribution fees in
accordance with Rule 12b-1. Each Fund also pays all brokerage commissions in
connection with its portfolio transactions.
Orders for each Fund'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 the Fund. 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 0.60% per annum of each
Fund's average daily net assets. The fee is normally computed daily and paid
monthly. PMC has agreed temporarily not to impose any management fee and to
limit each Fund's expenses. See "Expense Information," above.
John F. Cogan, Jr., Chairman and President of the Trust, Chairman of PFD,
President and a Director of PGI and Chairman and a Director of PMC, owned
approximately 15% of the outstanding capital stock of PGI as of the date of this
Prospectus.
VI. DISTRIBUTION PLAN
The Trust has adopted a Plan of Distribution (the "Distribution Plan") in
accordance with Rule 12b-1 under the 1940 Act pursuant to which certain
distribution fees of each Fund are paid to PFD.
Pursuant to the Distribution Plan, each Fund shall reimburse PFD for its actual
expenditures to finance any activity primarily
<PAGE>
intended to result in the sale of Fund shares or to provide services to Fund
shareholders, provided the categories of expenses for which reimbursement is
made are approved by the Trust's Board of Trustees. As of the date of this
Prospectus, the Board of Trustees has approved the following categories of
expenses for the Funds: (i) a service fee (sometimes referred to as a "trail
commission") to be paid to qualified broker-dealers in an amount not to exceed
0.25% per annum of a Fund's average daily net assets; (ii) reimbursement to PFD
or PMC for its expenditures for broker-dealer commissions and employee
compensation on certain sales of a Fund's shares with no initial sales charge
(see "How to Purchase Shares"); and (iii) reimbursement to PFD for expenses
incurred in providing services to shareholders and supporting broker-dealers and
other organizations (such as banks and trust companies) in their efforts to
provide such services. Banks are currently prohibited under the Glass-Steagall
Act from providing certain underwriting or distribution services. If a bank was
prohibited from acting in any capacity or providing any of the described
services, management would consider what action, if any, would be appropriate.
Total expenses under the Distribution Plan may not exceed 0.25% of average daily
net assets. Distribution expenses of PFD are expected to substantially exceed
the distribution fees paid by a Fund in a given year. The Distribution Plan may
not be amended to increase materially the annual percentage limitation of
average net assets which may be spent for the services described therein without
approval of the shareholders of the Fund affected thereby.
The Distribution Plan does not provide for the carryover of reimbursable
expenses beyond 12 months from the time they are incurred. The limited carryover
provision in the Plan may result in an expense invoiced to a Fund in one fiscal
year being paid in the subsequent fiscal year and thus being treated for
purposes of calculating the maximum expenditures of the Fund as having been
incurred in the subsequent fiscal year. In the event of termination or
non-continuance of the Distribution Plan, a Fund may nevertheless, within 12
months of such termination or non-continuance reimburse any expense which it
incurs prior to such termination or non-continuance, provided that payments by
the Fund during such 12-month period shall not exceed 0.25% of the Fund's
average daily net assets during such period.
VII. INFORMATION ABOUT SHARES
How to Purchase Shares
You may purchase shares of any of the Funds in the Trust at the public offering
price from any securities broker-dealer having a sales agreement with PFD. The
minimum initial investment is $1,000, except for accounts being established to
utilize monthly bank drafts, government allotments and other similar automatic
investment plans. The minimum investment for such plans, as well as all other
subsequent additions to an account, is $50. No sales charge or minimum
investment requirements apply to the reinvestment of dividends or capital gains
distributions.
The public offering price is the net asset value per share next computed after
receipt of a purchase order, plus a sales charge as follows:
Dealer
Sales Charge as a % of Allowance
Net as a % of
Offering Amount Offering
Amount of Purchase Price Invested Price
Less than $50,000 3.50% 3.62% 3.00%
$50,000 but less than $100,000 3.00 3.09 2.50
$100,000 but less than $500,000 2.50 2.56 2.00
$500,000 but less than $1 million 2.00 2.04 1.75
$1,000,000 or more -0- -0- see below
No sales charge is payable at the time of purchases on investments of $1,000,000
or more, or for investments by certain group plans ("Group Plans"), but for such
investments a contingent deferred sales charge ("CDSC") of 0.50% is imposed in
the event of certain redemption transactions within one year of purchase. See
"Redemptions and Repurchases" below. PFD may, in its discretion, pay a
commission to broker-dealers who initiate and are responsible for such purchases
as follows: 0.50% on sales of $1 million to $5 million; and 0.10% on the excess
over $5 million. These commissions shall not be payable if the purchaser is
affiliated with the broker-dealer or if the purchase represents the reinvestment
of a redemption made during the previous twelve calendar months. Broker-dealers
who receive a commission in connection with purchases at net asset value by
401(a) or 401(k) retirement plans with 1,000 or more eligible participants or
with at least $10 million in plan assets will be required to return any
commission paid or a pro rata portion thereof if the retirement plan redeems its
shares within 12 months of purchase. See also "Redemptions and Repurchases." In
connection with PGI's acquisition of Mutual of Omaha Fund Management Company and
contingent upon the achievement of certain sales objectives, PFD pays to Mutual
of Omaha Investor Services, Inc. 50% of PFD's retention of any sales commission
on sales of the Funds' shares through such dealer. Shares sold outside the U.S.
to persons who are not U.S. citizens may be subject to different sales charges,
CDSC's and dealer compensation arrangements in accordance with local laws and
business practices.
The schedule of sales charges above is applicable to purchases of shares of a
Fund by (i) an individual, (ii) an individual, his or her spouse and children
under the age of 21 and (iii) a trustee or other fiduciary of a trust, estate or
fiduciary account or related trusts or accounts, including pension,
profit-sharing and other employee benefit trusts qualified under Section 401 or
408 of the Code although more than one beneficiary is involved.
The sales charge applicable to a current purchase of shares of a Fund by a
person listed above is determined by adding the value of shares to be purchased
to the aggregate value (at current offering price) of shares of any of the
Pioneer mutual funds previously purchased and then owned, provided PFD is
notified by such person or his or her broker-dealer each time a purchase is
made which would so qualify. For purposes of the preceding sentence, Pioneer
mutual funds include all mutual funds for which PFD serves as principal
underwriter. For example, a person investing $5,000 in a Fund who currently owns
shares of the Pioneer funds with a value of $100,000 would pay a sales charge of
2.5% of the offering price on the new investment.
<PAGE>
Sales charges may also be reduced through an agreement to purchase a specified
quantity of shares over a designated 13-month period by completing the "Letter
of Intention" section of the Account Application. Information about the Letter
of Intention procedure, including its terms, is contained on the back of the
Account Application as well as in the Statement of Additional Information.
Shares of a Fund may be sold at a reduced or eliminated sales charge to certain
group plans ("Group Plans") under which a sponsoring organization makes
recommendations to, permits group solicitation of, or otherwise facilitates
purchases by, its employees, members or participants. Information about such
arrangements is available from PFD.
Shares of a Fund may also be sold at net asset value per share without a sales
charge to: (a) current or former Trustees and officers of the Trust and partners
and employees of its legal counsel; (b) current or former directors, officers,
employees or sales representatives of PGI, its subsidiaries; (c) current or
former directors, officers, employees or sales representatives of any subadviser
or predecessor investment adviser to any investment company of which PMC serves
as investment adviser, and the subsidiaries or affiliates of such persons; (d)
current or former officers, partners, employees or registered representatives of
broker-dealers which have entered into sales agreements with PFD; (e) members of
the immediate families of any of the persons listed above; (f) any trust,
custodian, pension, profit-sharing or other benefit plan of the persons listed
above; (g) insurance company separate accounts; (h) certain "wrap accounts" for
the benefit of clients of investment advisers adhering to standards established
by PFD; (i) other funds and accounts for which PMC or any of its affiliates
serves as investment adviser or manager; and (j) certain unit investment trusts.
Shares so purchased are purchased for investment purposes and may not be resold
except through redemption or repurchase by or on behalf of the Fund. The
availability of this privilege is conditioned on the receipt by PFD of written
notification of eligibility. Shares of a Fund may also be sold at net asset
value without a sales charge in connection with certain reorganization,
liquidation or acquisition transactions involving other investment companies or
personal holding companies.
Net Asset Value and Pricing of Orders
Shares of each Fund are sold at the public offering price, which is the net
asset value per share plus the applicable sales charge. The net asset value per
share is determined by dividing the value of the assets allocable to a Fund,
less liabilities, by the number of shares 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 hours of the Exchange.
An order for shares received by a broker-dealer prior to the close of regular
trading of the Exchange (currently 4:00 p.m. Eastern Time) is confirmed at the
offering price determined at the close of the Exchange on the day the order is
received, provided the order is received by PFD prior to PFD's close of business
(normally 5:30 p.m. Eastern Time). It is the responsibility of broker-dealers to
transmit orders promptly so that they will be received by PFD prior to its close
of business. An order received by a broker-dealer following the close of regular
trading of the Exchange will be confirmed at the offering price as of the close
of regular trading of the Exchange on the next trading day.
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 a Fund. 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.
Inasmuch as the market for municipal obligations is a dealer market with no
central trading location or continuous quotation system, it is not feasible to
obtain the last transaction prices for most municipal obligations in each of the
Fund's portfolios, and such obligations, including those purchased on a
when-issued basis, will normally be valued on the basis of valuations furnished
by a pricing service. The pricing service uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities, various relationships between securities, and yield to
maturity in determining value. Taxable obligations for which price quotations
are readily available normally will be valued at the mean between the latest
available bid and asked prices. Other assets are valued at fair value using
methods determined in good faith by the Trustees.
Dividends, Distributions and Taxation
Federal Taxation
Each Fund has elected to be treated, has qualified and intends to qualify each
year as a separate "regulated investment company" under the Code so that it will
not pay federal income taxes on income and capital gains distributed to
shareholders at least annually. Because each of the Funds intends to distribute
all or substantially all of its taxable (if any) and tax-exempt net investment
income and net realized capital gains to shareholders in a timely manner, it is
not expected that the Funds will be required to pay any federal income taxes.
The Code permits tax-exempt interest received by a Fund that qualifies as a
regulated investment company to flow through as tax-exempt "exempt-interest
dividends" to the Fund's shareholders, provided that at least 50% of the value
of the total assets of the Fund at the close of each quarter of its taxable year
consists of tax-exempt obligations. The Funds do not presently plan to invest in
any "private activity bonds" subject to the federal alternative minimum tax for
individuals. All tax exempt distributions may result in or increase a corporate
shareholder's liability for the federal alternative minimum tax.
Interest on indebtedness incurred by a shareholder to purchase or carry shares
of a Fund will not be deductible for federal income tax purposes to the extent
the Fund's income dividends consist of exempt interest dividends. The Funds may
not be an appropriate investment for persons who are "substantial users" of
facilities financed by industrial revenue or private activity bonds or persons
related to substantial users. Shareholders receiving social security or certain
railroad retirement benefits may be subject to federal income tax on a portion
of such benefits as a result of receiving invest-
<PAGE>
ment income, including exempt-interest dividends and other distributions
paid by the Funds.
Under the Code, a Fund will be subject to a non-deductible 4% federal excise tax
on a portion of its undistributed ordinary income (if any) and net capital gains
if it fails to meet certain distribution requirements with respect to each
calendar year. Each Fund intends to make distributions in a timely manner and,
accordingly, does not expect to be subject to the excise tax.
Each business day each Fund declares a dividend consisting of substantially all
of its net investment income. 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. A
Fund's net investment income consists of the interest income it earns, less
expenses. In computing interest income, a Fund amortizes premium or accrues
discount on long-term debt securities only to the extent required for federal
income tax purposes. Distributions from net long-term and short term capital
gains, if any, will be made at least annually.
While the Funds seek to maximize the percentage of income distributed which is
not subject to federal income taxes, it is possible that under certain
circumstances (see "Three Investment Programs") a small portion of the income
dividends paid by the Funds will be subject to federal income tax. Dividends
from a Fund's taxable net investment income, if any, recognized market discount
income, and net short-term capital gains are taxable as ordinary income, and
dividends from a Fund's net long-term capital gains are taxable as long-term
capital gains. A portion of a Fund's distributions may also be subject to state
and local income taxes (see "State Taxation," below). The federal income tax
status of all distributions will be reported to shareholders annually, and
shareholders are required to report all distributions, including tax-exempt
distributions, on their federal income tax returns. For federal income tax
purposes, all dividends are treated as described above whether a shareholder
takes them in cash or reinvests them in additional shares of a Fund.
Taxable dividends and other taxable distributions and the proceeds of
redemptions (including exchanges) and repurchases of Fund shares paid to
individuals and other non-exempt payees may be subject to 31% backup withholding
of federal income tax if the Fund is not provided with the shareholder's correct
taxpayer identification number and certification that the number is correct and
the shareholder is not subject to such backup withholding or if the Fund
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 taxes.
State Taxation
Summaries of tax considerations for state income tax purposes for each of the
Funds are set forth below. A more detailed discussion of state and local tax
matters is included in the Statement of Additional Information. These
discussions are only summaries of generally applicable state tax laws, and
shareholders should consult their own tax advisers regarding the application of
state, local and other applicable tax laws in their particular situations.
Pioneer California Double Tax-Free Fund. The Trust has obtained an opinion of
Orrick, Herrington & Sutcliffe, special tax counsel to Pioneer California Double
Tax-Free Fund, substantially to the effect that individual shareholders of
Pioneer California Double Tax-Free Fund who are subject to California personal
income taxation will not be required to include in their California gross income
that portion of their federally tax-exempt dividends which the Fund clearly and
properly identifies as excludable for California purposes, provided that at
least 50 percent of the value of the Fund's total assets at the close of each
quarter of the Fund's taxable year consists of obligations the interest on which
is exempt from California personal income tax pursuant to federal or California
law. Other distributions representing income or gains realized by the Fund will
generally be subject to California personal income tax at the rates applicable
to ordinary income. Corporate shareholders of the Fund which are subject to the
California franchise tax generally will be required to include all distributions
of exempt-interest dividends, capital gains and other taxable income, if any, as
income subject to such tax.
Pioneer New York Triple Tax-Free Fund. The Trust has obtained an opinion of
Orrick, Herrington & Sutcliffe, special tax counsel to Pioneer New York Triple
Tax-Free Fund, substantially to the effect that individual shareholders of
Pioneer New York Triple Tax-Free Fund who are subject to New York State or New
York City personal income taxation will not be subject to New York State or City
personal income taxes (including the minimum taxes contained therein) on
distributions received from the Fund to the extent such distributions are
exempt-interest dividends attributable to interest on tax-exempt obligations of
the State of New York or a political subdivision thereof or derived from
interest on obligations of possessions of the United States (including Puerto
Rico, Guam and the U.S. Virgin Islands). Other distributions representing income
or gains realized by the Fund will generally be subject to New York State or New
York City personal income tax at the rates applicable to ordinary income.
Corporate shareholders of the Fund that are subject to the New York State
corporation franchise tax or the New York City general corporation tax generally
will be required to include all distributions of exempt-interest dividends,
capital gains and other taxable income, if any, as income subject to such taxes.
Pioneer Massachusetts Double Tax-Free Fund. The Trust has obtained an opinion of
Hale and Dorr, counsel to the Trust, substantially to the effect that, provided
that Pioneer Massachusetts Double Tax-Free Fund qualifies as a regulated
investment company and complies with certain notice requirements, shareholders
of Pioneer Massachusetts Double Tax-Free Fund that are individuals, estates or
trusts and are subject to the Massachusetts income tax will be treated in the
following manner for Massachusetts income tax purposes: Distributions that
qualify as "exempt-interest
<PAGE>
dividends" under the Code and are attributable to interest received by the Fund
on federally tax-exempt obligations issued by Massachusetts or a political
subdivision thereof or a possession of the United States (including Puerto Rico,
Guam and the U.S. Virgin Islands) and distributions of the Fund attributable to
interest received by the Fund on direct obligations of the U.S. Government will
not be subject to the Massachusetts income tax; distributions properly
designated by the Fund as capital gain dividends under the Code and attributable
to gain realized by the Fund on the sale of certain obligations issued pursuant
to Massachusetts statutes that specifically exempt such gain from Massachusetts
taxation will not be subject to the Massachusetts income tax; distributions
properly designated by the Fund as capital gain dividends under the Code other
than those described above will be treated as long-term capital gain for
Massachusetts income tax purposes, regardless of the length of time Fund shares
have been held; and distributions, other than those described above, that are
included in federal gross income under the Code will be included in income
subject to the Massachusetts income tax. Additionally, in determining the
Massachusetts excise tax on shareholders that are corporations subject to
Massachusetts taxation, distributions from the Fund that are included in federal
gross income under the Code or that are excluded from federal gross income by
virtue of Section 103(a) of the Code will be included in a corporate
shareholder's net income, and in the case of intangible property corporations,
shares of the Fund will be included in net worth.
Beginning in 1996, long-term capital gains will generally be taxed in
Massachusetts on a sliding scale at rates ranging from 5% to 0%, with the
applicable tax rate declining as the tax holding period of the asset (beginning
on the later of January 1, 1995 or the date of actual acquisition) increases
from more than one year to more than six years. It is not clear what
Massachusetts tax rate will be applicable to capital gain dividends for taxable
years beginning after 1995.
Redemptions and Repurchases
Redemption by Mail. As a shareholder, you have the right to offer your shares
for redemption by delivering to Pioneering Services Corporation ("PSC") a
written request for redemption, signed by all registered owners, in proper form
and, if applicable, your share certificates properly endorsed and in good order
for transfer. Redemptions will be made in cash at the net asset value per share
next determined following receipt by PSC of all necessary documents subject in
certain cases to the contingent deferred sales charge described below.
Good order means that there are no outstanding claims or requests to hold
redemptions on the account, the certificates must be endorsed by the record
owner(s) exactly as the shares are registered and the signature(s) must be
guaranteed by any of the following eligible guarantor institutions: (i) all
brokers, dealers, municipal securities dealers and/or brokers, who are members
of a clearing agency or whose net capital exceeds $100,000; (ii) all banks;
(iii) all credit unions; (iv) all savings associations, including all savings
and loan associations; (v) all national securities exchanges, registered
securities associations, and all clearing agencies; and (vi) all trust
companies. In addition, in some cases (involving fiduciary or corporate
transactions), good order may require the furnishing of additional documents.
Signature guarantees are not necessary for redemption requests of $50,000 or
less, provided that the request is in good order, the record holder executes the
redemption request, payment is directed to the record holder at the record
address, and the address was not changed during the previous 30 days. You cannot
provide a signature guarantee by facsimile ("fax"). Payment of redemptions
normally will be made within seven days after receipt of the appropriate
documents. The Trust reserves the right to withhold payment until checks
received in payment of shares purchased have cleared, which may take up to 15
calendar days from the purchase date. For additional information about the
necessary documentation for redemption by mail, please contact PSC at
1-(800)-225-6292.
Redemption by Telephone or Fax. Your account is automatically authorized to have
the telephone redemption privilege unless you indicated otherwise on your
Account Application or by writing to PSC. Proper account identification will be
required for each telephone redemption. The telephone redemption option is not
available to retirement plan accounts. A maximum of $50,000 may be redeemed by
telephone or fax and the proceeds may be received by check or by bank wire. To
receive the proceeds by check: the check must be made payable exactly as the
account is registered and the check must be sent to the address of record which
must not have changed in the last 30 days. To receive the proceeds by bank wire:
the wire must be sent to the bank wire address of record which must have been
properly pre-designated either on your Account Application or on an Account
Options Form and which must not have changed in the last 30 days. To redeem by
fax, send your redemption request to 1-800-225-4240. You may always elect to
deliver redemption instructions to PSC by mail. See "Telephone Transactions and
Related Liabilities" below. Telephone redemptions will be priced as described
above.
Additional Conditions of Redemption. For the convenience of shareholders, the
Trust has authorized PFD to act as its agent in the repurchase of shares of the
Funds. Offers to sell shares to a Fund may be communicated to PFD by wire or
telephone by broker-dealers for their customers. Each Fund repurchases shares
offered to it at the net asset value per share determined as of the close of
regular trading on the Exchange on the day the offer for repurchase is received
and accepted by the broker-dealer if the offer is received by PFD before the
close of business on that day.
A broker-dealer which receives an offer for repurchase is responsible for the
prompt transmittal of such offer to PFD. Payment of the repurchase proceeds will
be made in cash to the broker-dealer placing the order. Except for certain large
accounts subject to a CDSC (as described below) neither the Fund nor PFD charges
any fee or commission upon such repurchase which is then settled as an ordinary
transaction with the broker-dealer (which may charge the shareholder for this
service) delivering the shares repurchased. Payment will
<PAGE>
be made within seven days of the receipt by PSC of valid instructions, including
validly endorsed certificates, if appropriate, in good order as described above.
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 upon the market value
of the portfolio at the time of redemption or repurchase. Redemptions and
repurchases are taxable transactions.
Redemptions and repurchases 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 a Fund of securities owned by it is not reasonably practicable or it
is not reasonably practicable for the Fund to fairly determine the value of the
net assets of its portfolio; or the SEC, by order, so permits.
Purchases of $1,000,000 or more, and purchases by participants in a Group Plan
which have not been subject to a sales charge, may be subject to a CDSC upon
redemption or repurchase. A CDSC is payable to PFD on these investments in the
event of a share redemption within twelve months following the share purchase,
at the rate of 0.50% of the lesser of the value of the shares redeemed
(exclusive of reinvested dividend and capital gain distributions) or the total
cost of such shares. In determining whether a CDSC is payable, and, if so, the
amount of the charge, it is assumed that shares purchased with reinvested
dividend and capital gain distributions and then such other shares which are
held the longest will be the first redeemed. Shares subject to the CDSC which
are exchanged into another Pioneer fund will continue to be subject to the CDSC
until the original twelve-month period expires. However, no CDSC is payable with
respect to purchases of shares by 401(a) or 401(k) retirement plans with 1,000
or more eligible participants or with at least $10 million in plan assets.
Waiver or Reduction of Contingent Deferred Sales Charge. The CDSC on any shares
subject to a CDSC may be waived or reduced for non-retirement accounts if: (a)
the redemption results from the death of all registered owners of an account (in
the case of UGMAs, UTMAs and trust accounts, waiver applies upon the death of
all beneficial owners) or a total and permanent disability (as defined in
Section 72 of the Internal Revenue Code of 1986 (the "Code")) of all registered
owners occurring after the purchase of the shares being redeemed or (b) the
redemption is made in connection with limited automatic redemptions as set forth
in "Systematic Withdrawal Plans" (limited in any year to 10% of the value of the
account in the Fund at the time the withdrawal plan is established).
The CDSC on any shares subject to a CDSC may be waived or reduced for retirement
plan accounts if: (a) the redemption results from the death or a total and
permanent disability (as defined in Section 72 of the Code) occurring after the
purchase of the shares being redeemed of a shareholder or participant in an
employer-sponsored retirement plan; (b) the distribution is to a participant in
an IRA, 403(b) or employer-sponsored retirement plan, is part or a series of
substantially equal payments made over the life expectancy of the participant or
the joint life expectancy of the participant and his or her beneficiary or as
scheduled periodic payments to a participant (limited in any year to 10% of the
value of the participant's account at the time the distribution amount is
established; a required minimum distribution due to the participant's attainment
of age 70-1/2 may exceed the 10% limit only if the distribution amount is based
on plan assets held by Pioneer); (c) the distribution is from a 401(a) or 401(k)
retirement plan and is a return of excess employee deferrals or employee
contributions or a qualifying hardship distribution as defined by the Code or
results from a termination of employment (limited with respect to a termination
to 10% per year of the value of the plan's assets in the Fund as of the later of
the prior December 31 or the date the account was established unless the plan's
assets are being rolled over to or reinvested in the same class of shares of a
Pioneer mutual fund subject to the CDSC of the shares originally held); (d) the
distribution is from an IRA, 403(b) or employer-sponsored retirement plan and
is to be rolled over to or reinvested in the same class of shares in a Pioneer
mutual fund and which will be subject to the applicable CDSC upon redemption;
(e) the distribution is in the form of a loan to a participant in a plan which
permits loans (each repayment of the loan will constitute a new sale which will
be subject to the applicable CDSC upon redemption); or (f) the distribution is
from a qualified defined contribution plan and represents a participant's
directed transfer (providing that this privilege has been pre-authorized through
a prior agreement with PFD regarding participant directed transfers.)
The CDSC on any shares subject to a CDSC may be waived or reduced for either
non-retirement or retirement plan accounts if: (a) the redemption is made by any
state, county, or city, or any instrumentality, department, authority, or agency
thereof, which is prohibited by applicable laws from paying a contingent
deferred sales charge in connection with the acquisition of shares of any
registered investment management company; or (b) the redemption is made pursuant
to the Fund's right to liquidate or involuntarily redeem shares in a
shareholder's account.
Redemption of Small Accounts
If a shareholder holds shares of a Fund in an account with a net asset value of
less than $500 due to redemptions or exchanges, the Fund may redeem the shares
held in this account at net asset value if the shareholder has not increased the
net asset value of the shares in the account to at least $500 within six months
of written notice by the Fund to the shareholder of the Fund's intention to
redeem the shares.
Description of Shares and Voting Rights
Under the Trust's Declaration of Trust, the Trustees are authorized to issue an
unlimited number of shares of beneficial interest. The Trustees of the Trust are
responsible for the overall management and supervision of its affairs.
The shares of the Trust are currently divided into three series. Each share
represents an equal proportionate interest in a Fund with each other share.
Generally, shares of each Fund will vote as a single series on matters, such as
the elec-
<PAGE>
tion and removal of Trustees and the ratification of the selection of
independent public accountants, that affect all Funds in substantially the same
manner. As to matters affecting each Fund (e.g., changes in a Fund's investment
restrictions or investment advisory agreement), shares of each Fund will vote as
a separate series. Shares have no preemptive, subscription or conversion rights
and are freely transferable. Shareholders are entitled to one vote for each
share held and may vote in the election and removal of Trustees and on other
matters submitted to shareholders. Each fractional share shall be entitled to a
proportionate fractional vote. Shares are fully paid and, except as set forth in
the Statement of Additional Information, non-assessable.
The Trust does not currently intend to hold annual meetings, although special
meetings may be held for the purpose of voting on certain matters. The record
holders of 10% of the Trust's outstanding shares may cause the Trust to call a
special meeting of shareholders to consider the removal of one or more Trustees.
See "Management of the Trust" in the Statement of Additional Information. The
Trust reserves the right, without approval of shareholders, to create and issue
additional series of shares in addition to the three Funds currently available.
Each Fund currently has only one class of shares, entitled Shares of Beneficial
Interest. Shares of the Funds may also be divided into additional classes
subject to such terms as the Trustees may establish without further shareholder
action.
Under Massachusetts law, there is a remote possibility that shareholders of a
business trust could, under certain circumstances, be held personally liable as
partners for the obligations of such trust. The Declaration of Trust contains
provisions intended to limit such liability and to provide indemnification out
of Trust property of any shareholder charged or held personally liable for
obligations or liabilities of the Trust solely by reason of being or having been
a shareholder of a Fund and not because of such shareholder's acts or omissions
or for some other reason. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which
the Trust itself would be unable to meet its obligations.
In the interest of economy and convenience, the Funds do not issue certificates
representing Fund shares unless requested. Instead, the transfer agent maintains
a record of each shareholder's ownership. Certificates for fractional shares
will not be issued. Although there is currently no fee for the issuance of
certificates, the Trust reserves the right to charge such a fee.
VIII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the Trust. PSC,
a Massachusetts corporation, is a wholly owned subsidiary of PGI. PSC's offices
are located at 60 State Street, Boston, Massachusetts 02109, and inquiries to
PSC should be mailed to Pioneering Services Corporation, P.O. Box 9014, Boston,
Massachusetts 02205-9014. Brown Brothers Harriman & Co. (the "Custodian") serves
as the custodian of the Trust's portfolio securities and other assets. The
principal business address of the Mutual Fund Division of the Custodian is 40
Water Street, Boston, Massachusetts 02109. The fees of PSC and the Custodian are
paid by each Fund.
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 quarterly for dividend
reinvestment transactions and more frequently for other types of transactions.
The Pioneer Combined Account Statement, mailed quarterly, is available to all
shareholders who have more than one Pioneer account.
Shareholders whose shares are held in the name of an investment broker-dealer or
other party will not normally have an account with a Fund and might not be able
to utilize some of the services available to shareholders of record. Examples of
services that might not be available are investment or redemption of shares by
mail, automatic reinvestment of dividends and capital gains distributions,
systematic withdrawal plan, Letters of Intention, Rights of Accumulation,
telephone exchanges and redemptions, and newsletters.
Additional Investments
You may add to your account by sending a check ($50 minimum) to PSC; please
indicate your account number clearly. The designated portion of a confirmation
statement may be used as a remittance slip to make additional investments.
Additions to a shareholder's account, whether by check or through an
Investomatic Plan, are invested in full and fractional shares of the applicable
Fund at the applicable offering price in effect as of the close of the Exchange
on the day of receipt.
Automatic Investment Plans
You may arrange for regular automatic investments of $50 or more through payroll
deduction, government/military allotments or through a Pioneer Investomatic
Plan. A Pioneer Investomatic Plan provides for a monthly or quarterly investment
by means of a preauthorized electronic funds transfer or draft drawn on a
checking account. Pioneer Investomatic Plan investments are voluntary, and you
may discontinue the plan without penalty upon 30 days' written notice to PSC.
PSC acts as agent for the purchasers, the broker-dealer and PFD in maintaining
these plans.
Financial Reports and Tax Information
Shareholders will receive financial reports at least semiannually. Annual
reports will be audited by the Trust's independent public accountants. In
January of each year, each Fund will mail to shareholders 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 each Fund in which you maintain an investment,
at the applicable net asset value per share, unless you indicate another option
on the Account Application.
<PAGE>
Two other options available are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and distributions in
cash. These two options are not available, however, for an account with a net
asset value of less than $500. Changes in the distribution option may be made by
written request to PSC.
Directed Dividends
You may elect (in writing) to have the dividends paid by one Pioneer fund
account invested in a second Pioneer fund account. The value of this second
account must be at least $1,000 ($500 for Pioneer Fund or Pioneer II). Invested
dividends may be in any amount. There are no fees or charges for this service.
Direct Deposit
If you have elected to take distributions, whether dividends or dividends and
capital gains, in cash, or have established a Systematic Withdrawal Plan, you
may choose to have those cash payments deposited directly into your savings,
checking, or NOW bank account. You may establish this service by completing the
appropriate section on the Account Application when opening a new account or the
Account Options Form for an existing account.
Exchange Privilege
You may exchange your shares of any Fund in the Trust at net asset value,
without a sales charge, for shares of other Pioneer funds which do not offer
different classes of shares or for the Class A shares of those Pioneer funds
that offer more than one class of shares. There are currently no sales charges
or fees on exchanges.
Exchanges must be at least $1,000. In order to allow purchase transactions to
clear you can not exchange shares purchased by check within 15 days. A new
Pioneer 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 proper
form. The exchange privilege is available only in those states where the Pioneer
funds can be legally sold.
Written Exchanges. If the exchange request is in writing, it must be signed by
all record owner(s) exactly as the shares are registered. If your original
account includes an Investomatic or Systematic Withdrawal Plan and you open a
new account by exchange, you should specify whether the plans should continue in
your new account or remain with your original account. Written exchanges may be
sent by mail or fax.
Telephone Exchanges. Your account is automatically authorized to have the
telephone exchange privilege unless you indicated otherwise on your Account
Application or by writing to PSC. Proper account identification will be
required. Telephone exchanges may not exceed $500,000 per account per day, and
all telephone exchange requests will be recorded.
If an exchange request is received by PSC before 4:00 p.m. Eastern Time (or
before the time that the New York Stock Exchange closes for regular trading on
that day, if different), the exchange will be effective on that day if the
requirements above have been met. If the exchange request is received after this
time, the exchange will be effective on the following business day.
You should consider the differences in objectives and policies of the funds, as
described in each fund's current prospectus, before making any exchange. For
federal and (generally) state income tax purposes, an exchange represents a sale
of the shares exchanged and a purchase of shares in another 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.
To prevent abuse of the exchange privilege to the detriment of other Trust
shareholders, the Trust and PFD reserve the right to limit the number and/or
frequency of exchanges and/or to charge a fee for exchanges. The Trust will
notify shareholders at least 60 days prior to any modification or termination of
the exchange privilege.
Telephone Transactions and Related Liabilities
Your account is automatically authorized to have telephone transaction
privileges unless you indicated otherwise on your Account Application or by
writing to PSC. You may sell or exchange your Fund shares by telephone by
calling 1-800-225-6292 between 8:00 a.m. and 8:00 p.m. Eastern Time on
weekdays. See "Net Asset Value and Pricing of Orders," "Redemptions and
Repurchases" and "Exchange Privilege" for more information. To confirm that each
transaction instruction received by telephone is genuine, the Fund 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
Fund may be liable for any loss due to unauthorized or fraudulent instructions.
The Fund may implement other procedures from time to time. In all other cases,
neither the Fund, PSC or PFD will be responsible for the authenticity of
instructions received by telephone, therefore, you bear the risk of loss for
unauthorized or fraudulent telephone transactions.
During times of economic turmoil or market volatility or as a result of severe
weather or a natural disaster, it may be difficult to contact the Fund by
telephone to institute a redemption or exchange. You should communicate with the
Fund in writing if you are unable to reach the Fund by telephone.
Telecommunications Device for the Deaf (TDD). If you have a hearing disability
and you own TDD keyboard equipment, you can call our TDD number toll-free at
1-800-225-1997, weekdays from 8:30 a.m. to 5:30 p.m. Eastern Time, to contact
our telephone representatives with questions about your account.
Systematic Withdrawal Plans
If your account has a total value of at least $10,000, you may establish a
Systematic Withdrawal Plan providing for fixed payments at regular intervals.
Periodic checks of $50 or
<PAGE>
more will be sent to you monthly or quarterly, and your periodic redemptions of
shares may be taxable transactions. You may also direct that withdrawal checks
be paid to another person, although if you make this designation after you have
opened your account, a signature guarantee must accompany your instructions.
Purchases of shares of a Fund at a time when you have a Systematic Withdrawal
Plan in effect may result in the payment of unnecessary sales charges and may
therefore be disadvantageous.
You may obtain additional information by calling PSC at 1-800-225-6292 or by
referring to the Statement of Additional Information.
Reinstatement Privilege
If you redeem all or part of your shares of any Fund in the Trust, you may
reinvest all or part of the redemption proceeds, subject to minimum investment
requirements, without a sales commission in shares of the Fund or of any other
Pioneer fund if you send a written request to PSC not more than 90 days after
your shares were redeemed. Your redemption proceeds will be reinvested at the
next determined net asset value of the shares of the Fund after receipt of the
written request for reinstatement. You may realize a gain or loss for federal
income tax purposes as a result of the redemption, and special tax rules may
apply if a reinvestment occurs. The 90-day reinvestment period may be extended
by PFD for periods of up to one year for shareholders living in areas that have
experienced a natural disaster, such as a flood, hurricane, tornado, or
earthquake.
The options and services available to shareholders, including the terms of the
Exchange Privilege and the Pioneer Investomatic Plan, may be revised, suspended,
or terminated at any time by PFD or by the Trust. You may establish the services
described in this section when you open your account. You may also establish or
revise many of them on an existing account by completing an Account Options
Form, which you may obtain by calling 1-800-225-6292.
IX. INVESTMENT RESULTS
Each of the Funds may from time to time include yield information in
advertisements or in information furnished generally to existing or proposed
shareholders. Whenever yield information is provided, it includes a standardized
yield calculation computed by dividing a Fund's net investment income per share
during a base period of 30 days, or one month, by the maximum offering price per
share of the Fund on the last day of such base period. (A Fund's net investment
income per share is determined by dividing the Fund's net investment income
during the base period by the average number of shares of the Fund entitled to
receive dividends during the base period.) A Fund's 30-day yield is then
"annualized" by a computation that assumes that the Fund's net investment income
is earned and reinvested for a six-month period at the same rate as during the
30-day base period and that the resulting six-month income will be generated
over an additional six months.
Each of the Funds may also from time to time advertise its taxable equivalent
yield. A Fund's taxable equivalent yield is determined by dividing that portion
of the Fund's yield (calculated as described above) that is tax exempt by one
minus the combined federal, state and, if applicable, city tax rate, adjusted to
take into account the deductibility of state and, if applicable, city taxes on
an investor's Federal income tax return, and adding the result to that portion,
if any, of the Fund's yield that is not tax exempt. For a table of sample
taxable equivalent yields for each Fund, please see the Appendix.
Each of the Funds may also include in advertisements and furnish to existing or
prospective shareholders information concerning the average annual total return
on an investment in the Fund for a designated period of time. Whenever this
information is provided, it includes a standardized calculation of average
annual total return computed by determining the average annual compounded rate
of return that would cause a hypothetical investment (after deduction of the
maximum sales charge) made on the first day of the designated period (assuming
all dividends and distributions are reinvested) to equal the resulting net asset
value of such hypothetical investment on the last day of the designated period.
The periods illustrated would normally include one, five and ten years or such
other periods as the Fund has been in existence. These standard calculations do
not reflect the effect of federal or state taxes.
The computation methods above are prescribed for advertising and other
communications subject to SEC Rule 482. Communications not subject to this rule
may contain a number of different measures of performance, computation methods
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. These data may cover any period of a Fund's existence and may or may not
include the impact of sales charges, taxes or other factors.
Yield and average annual total return quotations of a Fund do not take into
account any required payments for any federal or state income taxes.
Each Fund's investment results will vary from time to time depending on market
conditions, the composition of the Fund's portfolio, and operating expenses of
the Fund. The temporary management fee reduction and expense limitation
arrangement by PMC has the effect of increasing yield and total return. These
factors and possible differences in the methods used in calculating investment
results should be considered when comparing performance information regarding a
Fund to information published for other investment companies and other
investment vehicles. You should also consider yields and return quotations
relative to changes in the value of a Fund's shares and the risks associated
with a Fund's investment objectives and policies. Sinking fund call provisions
and optional redemption features of portfolio securities may have the effect of
reducing the stated average maturity of a Fund's portfolio, thereby reducing the
Fund's yields. At any time in the future, yields and return quotations
<PAGE>
may be higher or lower than past yields or return quotations and there can be no
assurance that any historical yield or return quotation will continue in the
future.
The Funds may also include comparative performance information in advertising or
marketing their 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.
For more information about the calculation methods used to compute the Funds'
investment results, see the Statement of Additional Information.
<PAGE>
X. APPENDIX A
Taxable Equivalent Yields
PIONEER CALIFORNIA DOUBLE TAX-FREE FUND
The table below shows the effect of the tax status of bonds on the tax
equivalent yield received by their holders under the regular federal and
California State income tax rates for 1994 (State brackets are subject to
inflation adjustment). It gives the approximate yield a taxable security must
earn at various income brackets to produce after-tax yield equivalent to those
of tax exempt bonds yielding from 5% to 9%. See "Investment Results," in the
Prospectus for a discussion of how a Fund's taxable equivalent yield is
calculated.
<TABLE>
<CAPTION>
Combined
Federal A Federal and California State
and tax exempt yield of
CA State 5% 6% 7% 8% 9%
Single Return Joint Return tax is equivalent to a
(Taxable Income*) bracket** fully taxable yield of:
<S> <C> <C> <C> <C> <C> <C> <C>
Up to $22,750 Up to $38,000 20.10% 6.26% 7.51% 8.76% 10.01% 11.26%
$22,751-$55,100 $38,001-$91,850 34.70 7.66 9.19 10.72 12.25 13.78
$55,101-$115,000 N/A 37.90 8.05 9.66 11.27 12.88 14.49
N/A $91,851-$140,000 37.42 7.99 9.59 11.19 12.78 14.38
$115,001-$214,929 $140,001-$250,000 42.40 8.68 10.42 12.15 13.89 15.63
$214,930-$250,000 N/A 43.04 8.78 10.53 12.29 14.04 15.80
N/A $250,000-$429,858 45.64 9.20 11.04 12.88 14.72 16.56
Over $250,000 Over $429,858 46.24 9.30 11.16 13.02 14.88 16.74
</TABLE>
* Net amount subject to federal and California personal income tax after
allowable deductions and exemptions.
** The combined tax rates for the tax brackets shown in the left hand columns
are calculated using the highest California state rate applicable at the upper
portion of these brackets and assume that taxpayers deduct California state
income taxes paid on their federal income tax returns. An investor with taxable
income within these brackets may have a lower combined tax rate than the
combined rate shown and may, therefore, have a lower tax equivalent yield than
those indicated above. Investors who do not itemize deductions on their federal
income tax return may have a higher combined bracket and a higher taxable
equivalent yield than those indicated above. Yields shown are for illustration
purposes only and are not meant to represent the Fund's actual yield.
Note: The Federal Income Tax portion of above-indicated combined income tax
brackets assumes that a single filer is not a "head of household," a "married
individual filing a separate return" or a "surviving spouse" and does not take
into accounts the effect of a reduction in the deductibility of Itemized
Deductions (including California State Income Taxes) for taxpayers with Adjusted
Gross Income in excess of $108,450 (or, in the case of a separate return by a
married individual, $54,225). The tax brackets also do not show the effects of
phaseout of personal exemptions for single filers with Adjusted Gross Income in
excess of $108,450 and joint filers with Adjusted Gross Income in excess of
$162,700.
Of course, no assurance can be given that Pioneer California Double Tax-Free
Fund will achieve any specific tax exempt yield. While it is expected that the
Fund will invest principally in obligations the interest from which is exempt
from the regular federal income tax and California personal income taxes, other
income received by the Fund may be taxable. The table does not take into account
state or local taxes, if any, payable on Fund distributions except for
California personal income taxes. It should also be noted that the interest
earned on certain "private activity bonds" issued after August 7, 1986, while
exempt from the regular federal income tax, is treated as a tax preference item
which could subject a recipient to or increase his or her liability for federal
alternative minimum tax. Since the Fund does not presently intend to invest in
any bonds that will be subject to the federal alternative minimum tax, the
illustrations assume that the federal alternative minimum tax is not applicable
and do not take into account any tax credits that may be available.
The information set forth above is as of the date of this Prospectus. Subsequent
tax law changes could result in prospective or retroactive changes in the tax
brackets, tax rates and tax equivalent yields set forth above.
<PAGE>
APPENDIX B
PIONEER NEW YORK TRIPLE TAX-FREE FUND
The table below shows the effect of the tax status of bonds on the tax
equivalent yield received by their holders under the regular federal income tax
and New York State and New York City income tax laws in effect for 1994. It
gives the approximate yield a taxable security must earn at various income
brackets to produce after-tax yield equivalent to those of tax exempt bonds
yielding from 5% to 9%. See "Investment Results," in the Prospectus for a
discussion of how a Fund's taxable equivalent yield is calculated.
<TABLE>
<CAPTION>
Combined
Federal A Federal, New York State and New York City
and NY tax exempt yield of
State/City 5% 6% 7% 8% 9%
Single Return Joint Return tax is equivalent to a
(Taxable Income*) bracket** fully taxable yield of:
<S> <C> <C> <C> <C> <C> <C> <C>
Up to $22,750 Up to $38,000 25.19% 6.68% 8.02% 9.36% 10.69% 12.03%
$22,751-$55,100 $38,001-$91,850 36.64 7.89 9.47 11.05 12.63 14.20
$55,101-$115,000 $91,851-$140,000 39.32 8.24 9.89 11.54 13.18 14.83
$115,001-$250,000 $140,001-$250,000 43.71 8.88 10.66 12.44 14.21 15.99
Over $250,000 Over $250,000 46.88 9.41 11.29 13.18 15.06 16.94
</TABLE>
* Net amount subject to federal and New York State and New York City personal
income tax after allowable deductions and exemptions.
** The combined tax rates for the lowest federal income tax brackets shown in
the left hand columns are calculated using the highest State rate and New York
City rate applicable at the upper portion of these brackets and assume that
taxpayers deduct New York State and City income taxes paid on their federal
income tax returns. Therefore, an investor with taxable income below the highest
dollar amount in the lowest bracket may have a lower combined tax rate than the
combined rate shown for that bracket and may, therefore, have a lower tax
equivalent yield than those indicated above. The applicable State and New York
City rates are the maximum rate throughout all other brackets. Investors who do
not itemize deductions on their federal income tax return may have a higher
combined bracket and a higher taxable equivalent yield than those indicated
above. Yields shown are for illustration purposes only and are not meant to
represent the Fund's actual yield.
Note: Of course, no assurance can be given that Pioneer New York Triple Tax-Free
Fund will achieve any specific tax exempt yield. While it is expected that the
Fund will invest principally in obligations the interest from which is exempt
from the regular federal income tax and New York State and New York City
personal income taxes, other income received by the Fund may be taxable. The
table does not take into account state or local taxes, if any, payable on Fund
distributions except for New York State and New York City personal income taxes.
It should also be noted that the interest earned on certain "private activity
bonds" issued after August 7, 1986, while exempt from the regular federal income
tax, is treated as a tax preference item which could subject a recipient to or
increase his liability for Federal alternative minimum tax.
The above-indicated combined federal and New York State/City income brackets
assumes that a single filer is not a "head of household," a "married individual
filing a separate return" or a "surviving spouse" and do not take into account
the effect of a reduction in the deductibility of Itemized Deductions (including
New York State and City Income Taxes) for taxpayers with Adjusted Gross Income
in excess of $108,450 (or, in the case of a separate return by a married
individual, $54,225), nor do they reflect phaseout of personal exemptions for
single and joint filers with Adjusted Gross income in excess of $108,450 and
$162,700, respectively. Since the Fund does not presently intend to invest in
any bonds that will be subject to the federal alternative minimum tax, the
illustrations assume that the federal alternative minimum tax is not applicable
and do not take into account any tax credits that may be available.
The information set forth above is as of the date of this Prospectus. Subsequent
tax law changes could result in prospective or retroactive changes in the tax
brackets, tax rates and tax equivalent yields set forth above.
<PAGE>
APPENDIX C
PIONEER MASSACHUSETTS DOUBLE TAX-FREE FUND
The table below shows the effect of the tax status of bonds on the tax
equivalent yield received by their holders under the regular federal income tax
rates and Massachusetts income tax rates applicable for 1994 It gives the
approximate yield a taxable security must earn at various income brackets to
produce after-tax yield equivalent to those of tax exempt bonds yielding from 5%
to 9%. See "Investment Results," in the Prospectus for a discussion of how a
Fund's taxable equivalent yield is calculated.
<TABLE>
<CAPTION>
Combined
Federal A Federal and Massachusetts State
and tax exempt yield of
MA State 5% 6% 7% 8% 9%
Single Return Joint Return tax is equivalent to a
(Taxable Income*) bracket** fully taxable yield of:
<S> <C> <C> <C> <C> <C> <C> <C>
Up to $22,750 Up to $38,000 25.20% 6.68% 8.02% 9.36% 10.70% 12.03%
$22,751-$55,100 $38,001-$91,850 36.64 7.89 9.47 11.05 12.63 14.20
$55,101-$115,000 $91,851-$140,000 39.28 8.23 9.88 11.53 13.18 14.82
$115,001-$250,000 $140,001-$250,000 43.68 8.88 10.65 12.43 14.20 15.98
Over $250,000 Over $250,000 46.85 9.41 11.29 13.17 15.05 16.93
</TABLE>
* Net amount subject to federal and Massachusetts personal income tax after
allowable deductions and exemptions.
** The combined tax rates include a Massachusetts tax rate of 12% applicable to
taxable bond interest and dividends, and assume that Massachusetts taxes are
itemized deductions for federal income tax purposes. Investors who do not
itemize deductions on their federal income tax return may have a higher combined
bracket and a higher taxable equivalent yield than those indicated above. Yields
shown are for illustration purposes only and are not meant to represent the
Fund's actual yield.
Note: The Federal Income Tax portion of above-indicated combined income tax
brackets assumes that a single filer is not a "head of household", a "married
individual filing a separate return" or a "surviving spouse" and does not take
into account the effect of a reduction in the deductibility of Itemized
Deductions (including Massachusetts State Income Taxes) for taxpayers with
Adjusted Gross Income in excess of $111,800 (or, in the case of a separate
return by a married individual, $55,900). The tax brackets also do not show the
effects of phaseout of personal exemptions for single filers with Adjusted Gross
Income in excess of $111,800 or, in the case of married persons filing jointly,
$167,700.
Of course, no assurance can be given that Pioneer Massachusetts Double Tax-Free
Fund will achieve any specific tax exempt yield. While it is expected that the
Fund will invest principally in obligations the interest from which is exempt
from the regular federal income tax and Massachusetts personal income taxes,
other income received by the Fund may be taxable. The table does not take into
account state or local taxes, if any, payable on Fund distributions except for
Massachusetts personal income taxes. It should also be noted that the interest
earned on certain "private activity bonds" issued after August 7, 1986, while
exempt from the regular federal income tax, is treated as a tax preference item
which could subject the recipient to or increase his liability under the federal
alternative minimum tax. Since the Fund does not presently intend to invest in
any bonds that will be subject to the federal alternative minimum tax, the
illustrations do not include the effect of any federal alternative minimum tax.
The information set forth above is as of the date of this Prospectus. Subsequent
tax law changes could result in prospective or retroactive changes in the tax
brackets, tax rates and tax equivalent yields set forth above.
<PAGE>
[Back cover]
[Pioneer logo]
Pioneer California Double Tax-Free Fund
Pioneer New York Triple Tax-Free Fund
Pioneer Massachusetts Double Tax-Free Fund
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
KATHLEEN D. McCLASKEY, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
Telephone: (617) 742-7825
SERVICE INFORMATION
If you would like information on the following, please call...
Existing and new accounts,
prospectuses, applications,
service forms and
telephone transactions ...................................... 1-800-225-6292
Automated fund yields, prices and account information ....... 1-800-225-4321
Retirement plans ............................................ 1-800-622-0176
Toll-free fax ............................................... 1-800-225-4240
Telecommunications Device for the Deaf (TDD) ................ 1-800-225-1997
0195-2213
(C)Pioneer Funds Distributor, Inc.
