As filed with the Securities and Exchange Commission on July 3, 2007
File No. 333-_______
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. _____
Post-Effective Amendment No. ______
(Check appropriate box or boxes)
PIONEER BOND FUND
(Exact Name of Registrant as Specified in Charter)
1-800-622-3265
(Area Code and Telephone Number)
60 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices: Number, Street, City, State, Zip Code)
Dorothy E. Bourassa, Esq.
Pioneer Investment Management, Inc.
60 State Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copies to: Christopher P. Harvey, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is due because of reliance on Section 24(f) of the Investment Company Act of
1940, which permits registration of an indefinite number of securities.
Title of Securities Being Registered: Shares of beneficial interest of the
Registrant.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment, which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall be effective
on such date as the Commission, acting pursuant to Section 8(a), may determine.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR _________ , 2007
To the Shareholders of Pioneer Interest Shares:
This is the formal agenda for your fund's shareholder meeting (the
"meeting"). It tells you what matters will be voted on and the time and place
of the meeting, in case you want to attend in person.
A special shareholder meeting for your fund will be held at the offices of
Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, 26th Floor, Boston,
Massachusetts on ____________, 2007, at __ p.m., Eastern Time, to consider the
following:
1. A proposal to approve an Agreement and Plan of Reorganization between
your fund and Pioneer Bond Fund. Under this Agreement and Plan of
Reorganization, your fund (a closed-end fund) will transfer all of its
assets to an open-end fund, Pioneer Bond Fund, in exchange for Class Y
shares of Pioneer Bond Fund. Class Y shares of Pioneer Bond Fund will be
distributed to your fund's shareholders in proportion to their holdings
of the shares of your fund on the closing date of the reorganization.
Pioneer Bond Fund also will assume all of your fund's liabilities. Your
fund will then be dissolved.
2. Any other business that may properly come before the meeting.
YOUR TRUSTEES RECOMMEND THAT YOU VOTE IN FAVOR OF THE PROPOSAL.
Shareholders of record as of the close of business on ____________, 2007
are entitled to vote at the meeting and any related follow-up meetings.
By Order of the Board of Trustees,
/s/ Dorothy E. Bourassa
Dorothy E. Bourassa
Secretary
Boston, Massachusetts
____________, 2007
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE
ENCLOSED PROXY. If shareholders do not return their proxies in sufficient
numbers, your fund may be required to make additional solicitations.
COMBINED PROXY STATEMENT
OF
PIONEER INTEREST SHARES
(a closed-end fund)
AND
PROSPECTUS FOR
CLASS Y SHARES OF PIONEER BOND FUND
(an open-end fund)
(each, a "Pioneer Fund" and together, the "Pioneer Funds")
The address and telephone number of each Pioneer Fund is:
60 State Street
Boston, Massachusetts 02109
1-800-622-3265
This combined proxy statement/prospectus, dated __________, 2007 (the
"Proxy Statement/Prospectus"), contains information you should know before
voting on the proposed Agreement and Plan of Reorganization that provides for
the reorganization of Pioneer Interest Shares into Pioneer Bond Fund (the
"Reorganization"). Please read carefully (and retain for future reference) the
Proxy Statement/Prospectus. Additional information about each Pioneer Fund,
including a statement of additional information for this Proxy
Statement/Prospectus, dated __________, 2007 (the "SAI"), has been filed with
the Securities and Exchange Commission (the "SEC") (http://www.sec.gov) and is
available upon oral or written request and without charge. See "Where to Get
More Information" below. The SAI has been incorporated herein by reference.
Shares of the Pioneer Bond Fund have not been approved or disapproved by
the SEC. The SEC has not passed upon the adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
An investment in Pioneer Bond Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
1
INTRODUCTION
This combined Proxy Statement/Prospectus is being furnished to
shareholders of Pioneer Interest Shares in connection with the solicitation by
the Board of Trustees (the "Board" or the "Trustees") of Pioneer Interest
Shares of proxies to be used at a special meeting of the shareholders of
Pioneer Interest Shares to be held at the offices of Wilmer Cutler Pickering
Hale and Dorr LLP, 26th Floor, Boston, Massachusetts on ____________, 2007, at
p.m., Eastern Time. The Proxy Statement/Prospectus is being mailed to
shareholders of Pioneer Interest Shares on or about ____________, 2007.
The purpose of this Proxy Statement/Prospectus is to obtain shareholder approval
to terminate Pioneer Interest Shares by transferring its assets into Pioneer
Bond Fund, an open-end fund (commonly referred to as a "mutual fund"). Pioneer
Bond Fund and your fund have the same investment adviser, Pioneer Investment
Management, Inc. ("Pioneer"), portfolio manager and team of investment
professionals, as well as similar investment objectives and policies. However,
Pioneer Bond Fund's management fee rate is lower than your fund's management fee
rate. Reorganizing your fund into Pioneer Bond Fund will also enable you to
share in certain other benefits, which are described in greater detail below,
while also eliminating the discount to net asset value at which shares of your
fund have traded historically. It should be noted that past performance is no
assurance of future results.
The Proxy Statement/Prospectus contains information you should know before
voting on the proposed Reorganization of your fund into Pioneer Bond Fund.
Please read carefully (and retain for future reference) the Proxy
Statement/Prospectus, including Exhibit A and Exhibit B, because they are a
part of this Proxy Statement/Prospectus and contain details that are not in the
summary. You should read carefully the specific discussion regarding your
fund's Reorganization beginning on page .
The Trustees recommend that you vote FOR this proposal.
Additional information about each Pioneer Fund has been filed with the SEC
(http://www.sec.gov) and is available upon oral or written request and without
charge. See "Where to Get More Information" below.
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Where to Get More Information
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Pioneer Bond Fund's current Class Y shares prospectus, On file with the SEC (http://www.sec.gov) and available at
current multi-class statement of additional information, and no charge by calling our toll-free number: 1-800-622-3265.
any applicable supplements.
On file with the SEC (http://www.sec.gov) and available at
Each Pioneer Fund's most recent annual and semi-annual no chargeby calling our toll-free number: 1-800-622-3265.
reports to shareholders. See "Available Information."
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The SAI for this Proxy Statement/Prospectus, containing On file with the SEC (http://www.sec.gov) and available at
additional information about the Pioneer Funds. no charge by calling our toll-free number: 1-800-622-3265.
This SAI is incorporated by reference into this Proxy
Statement/Prospectus.
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To ask questions about this Proxy Statement/Prospectus. Call our toll-free telephone number: 1-800-622-3265.
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The date of this Proxy Statement/Prospectus is __________, 2007.
2
How the Reorganization Will Work
o The Reorganization is scheduled to occur as of the close of business on
__________, 2007 but may occur on such later date as the parties may agree
in writing (the "Closing Date").
o Your fund will transfer all of its assets to an open-end fund, Pioneer
Bond Fund. Pioneer Bond Fund will assume all of your fund's liabilities.
o Pioneer Bond Fund will issue to your fund Class Y shares with an aggregate
net asset value equal to the aggregate net asset value of your fund. Your
fund's net asset value can be expected to vary from the market value
attributable to your fund's common shares. The net asset value of both
Pioneer Funds will be computed as of the close of regular trading on the
New York Stock Exchange ("NYSE") on the Closing Date. Class Y shares of
Pioneer Bond Fund will then be distributed to your fund's shareholders of
record as of the close of business on the Closing Date in proportion to
the relative net asset value (not market value) of their share holdings on
the Closing Date. On the Closing Date, each shareholder will receive Class
Y shares of Pioneer Bond Fund with the same aggregate net asset value as
their holdings of common shares of Pioneer Interest Shares immediately
prior to the Reorganization. All Class Y shares of Pioneer Bond Fund are
offered without a sales load or Rule 12b-1 fee.
o Pioneer Interest Shares will be terminated and dissolved after the
Closing Date.
o The Reorganization is intended to result in no income, gain or loss for
federal income tax purposes to Pioneer Bond Fund, your fund or the
shareholders of either Pioneer Fund and will not take place unless both
Pioneer Funds involved in the Reorganization receive a satisfactory
opinion concerning the tax consequences of the Reorganization from Wilmer
Cutler Pickering Hale and Dorr LLP, counsel to the Pioneer Funds.
o In recommending the Reorganization, the Board of Trustees of each Pioneer
Fund, including all of the Trustees who are not "interested" persons (as
defined in the Investment Company Act of 1940, as amended (the "1940
Act")) (the "Independent Trustees"), determined that the Reorganization is
in the best interest of each Pioneer Fund and will not dilute the
interests of shareholders of the Pioneer Funds. The Trustees have made
this determination based on factors that are discussed below and in
greater detail under the proposal.
Why Your Fund's Trustees Recommend the Reorganization
The Trustees believe that reorganizing your fund into Pioneer Bond Fund
offers you potential benefits, which are highlighted by the following
discussion of key differences between the two funds. These potential benefits
and considerations include:
o Primary consideration. A shareholder of your fund has commenced a proxy
contest seeking to replace Pioneer and your fund's Board of Trustees. The
shareholder recently filed a notice of intent to propose an alternate
slate of trustees at the next annual meeting of shareholders. The
shareholder also intends to submit proposals and solicit proxies at the
annual meeting to (1) adopt a managed distribution policy that would pay
a monthly distribution of $0.15 per share, (2) change the investment
objective of your fund to seek capital appreciation with current income
as a secondary objective, by investing primarily in U.S. and non-U.S.
companies, and (3) terminate the advisory agreement with Pioneer. Your
fund's current investment objective is to seek interest income by
investing in a diversified portfolio of debt obligations, primarily
investment grade, with the objective of obtaining as high a yield as
possible consistent with this type of investment.
If the managed distribution policy, as proposed by the shareholder,
were adopted for your fund, it would have resulted in a return of
capital of $9,111,043 or 68.45% of the distributions in 2006. Assuming
income and capital gains at the same rate for the remainder of this
year, the return of capital would be $9,531,884 or 71.61% of the
distributions in 2007. The Trustees oppose the proposed distribution
policy. A policy of returning capital continuously over time will
ultimately lead to your fund's gradual demise and liquidation.
The Trustees believe that the change in the nature of your fund from a
bond fund to a "go anywhere" fund is not appropriate, given your fund's
purpose since its inception to operate as a bond fund. Further, in
addition to the proxy contest that will most likely occur at the annual
meeting, the Trustees believe, based on the current role of activists in
the industry waging proxy contests to promote various causes, that, even
if the shareholder's proposals are defeated, your fund will likely
continue to be the subject of proxy contests in the future, which could
increase its expense ratio to non-competitive levels.
It is primarily for these reasons, notwithstanding whether this
shareholder actually succeeds in electing his trustees and having his
proposals adopted if the Reorganization is not approved, that the Trustees
strongly recommend that you vote in favor of the Reorganization. The
Reorganization would maintain your fund as a bond fund, eliminate the
discount of the market price from its
3
net asset value, permit daily redemption of your shares at their net asset
value, and allow each shareholder to choose the timing of any recognition
of taxable gain or loss occasioned by the redemption of shares.
o Portfolio management. The similarity in investment objectives and
principal investment strategies of both Pioneer Funds, as well as the
fact that they have the same lead portfolio manager and team of
investment professionals.
o Performance. Pioneer Bond Fund's comparable historical performance. As of
March 31, 2007, your fund's average annual returns for the past one,
three and five year periods were 5.92%, 3.71% and 5.59%, respectively, as
compared to Pioneer Bond Fund's Class Y shares' average annual returns,
which were 6.22%, 3.84% and 6.41% for the same periods.
o Lower operating expenses. The pro forma expense ratio for the combined
fund's Class Y shares is anticipated to be lower than the historical
expense ratio of your fund's common shares. As of December 31, 2006, your
fund's expense ratio was 1.00%, compared to Pioneer Bond Fund's Class Y
shares' expense ratio of 0.57% and the combined fund's Class Y shares'
anticipated pro forma expense ratio of 0.58%, before fee waivers.
o Lower management fees. Pioneer Bond Fund's lower management fee rate.
Your fund's current management fee rate and the combined fund's
anticipated pro forma management fee rate of 0.50% is lower than your
fund's current management fee rate of 0.57%.
o Liquidity at net asset value. The additional benefit of an open-end fund
that permits redeeming or purchasing shares at net asset value. The
Trustees noted that, because shares of closed-end funds, such as your
fund, are not redeemable and instead are bought and sold on the open
market, the market price of these shares is influenced by a number of
factors and, at times, may trade at a discount (or premium) to net asset
value. Your fund's net asset value per share can be expected to vary from
the market price of its shares, and your fund's shares generally have
traded at a discount to net asset value, ranging from -14.03% (high) to
-1.72% (low) over the past three years ended May 31, 2007 and currently
have traded at a discount of -2.63% as of May 31, 2007. The Trustees
noted that the reorganization of your fund into Pioneer Bond Fund
effectively would provide your fund's shareholders with liquidity for
their shares at net asset value, thereby eliminating the discount at
which your fund's shares historically have traded. All Class Y shares of
Pioneer Bond Fund are offered without a front-end sales load, deferred
sales charge or Rule 12b-1 fee and are redeemable at the net asset value
per share each business day with no discount.
o Tax free reorganization. The transaction is expected to qualify as a tax
free reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code") and therefore will not be treated as a
taxable sale of your fund's shares.
o Alternatives. The Trustees believe this Reorganization is the best
alternative to the shareholder's proposals. If the Reorganization is not
approved, in light of the probable continuation of future proxy contests,
the Trustees will liquidate your fund to provide all shareholders the
opportunity to receive their net asset value and make their own choices
as to how to invest their assets.
o Other differences. Differences in shareholder voting rights apply.
Generally, listed closed-end fund shareholders have greater voting
rights, including rights to vote at annual meetings for the election of
trustees in accordance with NYSE rules. Your voting rights are described
in more detail below.
Therefore, your fund's Trustees recommend that you vote FOR the
Reorganizations.
What are the Federal Income Tax Consequences of the Reorganization
The Reorganization will not result in any income, gain or loss being
recognized for federal income tax purposes by either Pioneer Fund or their
shareholders as a direct result of the Reorganization. However, in accordance
with the Pioneer Funds' policy that each Pioneer Fund distributes its
investment company taxable income, net tax-exempt income and net capital gains
for each taxable year (in order to qualify for tax treatment as a regulated
investment company and avoid federal income tax thereon at the fund level), it
is expected, subject to approval by the Board of Trustees, that your fund will
declare and pay a distribution of such income and gains to its shareholders
shortly before the Reorganization. Such distribution will be taxable to your
fund's shareholders. Additionally, following the Reorganization, Pioneer Bond
Fund will declare and pay before the end of 2007 a distribution of such income
and gains to its shareholders. Those distributions will be fully taxable to all
shareholders of Pioneer Bond Fund, including former shareholders of your fund,
even though those distributions may include a portion of Pioneer Bond Fund's
income and gains that were realized before the Closing Date.
Who Bears the Expenses Associated with the Reorganization
Pioneer has agreed to pay 75% of the costs of preparing and printing the
Proxy Statement/Prospectus and the solicitation costs incurred in connection
with the Reorganization. Your fund will pay the remaining 25% of the costs
incurred in connection with the Reorganization.
4
What Happens if the Reorganization is Not Approved
If the required approval of shareholders of your fund is not obtained,
Pioneer and your Board have determined that it would be in your fund's best
interest to be liquidated. Liquidation will not require a shareholder vote.
Who is Eligible to Vote?
Shareholders of record on ____________, 2007 are entitled to attend and
vote at the meeting or any adjourned meeting. Each share is entitled to one
vote (or, in the case of fractional shares, a proportionate fractional vote).
Shares represented by properly executed proxies, unless revoked before or at
the meeting, will be voted according to shareholders' instructions. If you sign
a proxy but do not fill in a vote, your shares will be voted to approve the
Agreement and Plan of Reorganization. If any other business comes before the
meeting, your shares will be voted at the discretion of the persons named as
proxies.
5
TABLE OF CONTENTS
Page
---
INTRODUCTION ............................................................. 2
PROPOSAL 1 -- PIONEER INTEREST SHARES AND PIONEER BOND FUND .............. 7
TERMS OF THE AGREEMENT AND PLAN OF REORGANIZATION ........................ 24
TAX STATUS OF THE REORGANIZATION ......................................... 24
VOTING RIGHTS AND REQUIRED VOTE .......................................... 25
COMPARISON OF A CLOSED-END FUND AND AN OPEN-END MUTUAL FUND .............. 26
ADDITIONAL INFORMATION ABOUT THE PIONEER FUNDS ........................... 27
FINANCIAL HIGHLIGHTS ..................................................... 37
INFORMATION CONCERNING THE MEETING ....................................... 39
OWNERSHIP OF SHARES OF THE PIONEER FUNDS ................................. 40
EXPERTS .................................................................. 40
AVAILABLE INFORMATION .................................................... 41
EXHIBIT A -- FORM OF AGREEMENT AND PLAN OF REORGANIZATION ................ A-1
EXHIBIT B -- PORTFOLIO MANAGEMENT DISCUSSION OF FUND PERFORMANCE ......... B-1
6
PIONEER INTEREST SHARES
AND
PIONEER BOND FUND
PROPOSAL 1
SUMMARY
The following is a summary of more complete information appearing later in
this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the form of
Agreement and Plan of Reorganization attached as Exhibit A, because they
contain details that are not in the summary.
If Proposal 1 is approved, your fund will be terminated and reorganized
into Pioneer Bond Fund, as described above.
Both your fund and Pioneer Bond Fund have similar investment objectives
and, consequently, both Pioneer Funds have similar investment policies and
risks. Each Pioneer Fund invests primarily in investment grade debt securities
issued or guaranteed by the U.S. government or its agencies and
instrumentalities, debt securities issued by U.S. corporations and cash
equivalents. However, your fund may invest a greater portion of its assets in
debt securities issued by non-U.S. corporate and government issuers than
Pioneer Bond Fund, and is therefore subject to additional risks (and the
potential higher or lower returns) associated with such investments. Your fund
is a closed-end investment management company, which means that shareholders do
not have the right to redeem or exchange their shares. Instead, shareholders of
your fund must sell their shares on the NYSE at the prevailing market price.
Market prices can be expected to deviate from the net asset value per share of
your fund. Your fund's shares generally have traded at a discount to net asset
value over the past three years ended May 31, 2007, ranging from -14.03% (high)
to -1.72% (low). Pioneer Bond Fund is an open-end management investment
company, which means that it issues redeemable securities on an ongoing basis
and pays its shareholders the net asset value of such shares upon redemption. A
more complete discussion of these differences is provided under the heading,
"Comparison of a Closed-End Fund and an Open-End Fund."
The table below provides a comparison of the Pioneer Funds. In the table
below, if a row extends across the entire table, the policy disclosed applies
to both your fund and Pioneer Bond Fund. The percentage restrictions on
investments or utilization of assets set forth below apply only at the time an
investment is made or a utilization of assets occurs. All investment policies
described below are non-fundamental, unless noted as fundamental. Fundamental
policies cannot be changed without approval by a "majority" of the applicable
Pioneer Fund's outstanding voting securities which means: (i) 67% or more of
the Pioneer Fund's shares present at a meeting if the holders of more than 50%
of the outstanding shares are present in person or by proxy, or (ii) more than
50% of the Pioneer Fund's outstanding shares, whichever is less.
Non-fundamental policies can be changed by the Trustees of the applicable
Pioneer Fund without a shareholder vote.
Comparison of Pioneer Interest Shares to Pioneer Bond Fund
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Pioneer Interest Shares Pioneer Bond Fund
Business A diversified, closed-end management A diversified, open-end management investment
investment company organized as a Delaware company organized as a Delaware statutory
statutory trust. Pioneer Interest Shares trust. Pioneer Bond Fund originally was
originally was organized as a Nebraska organized as a Massachusetts corporation on
corporation on November 3, 1971 and August 16, 1978, reorganized as a
reorganized as a Delaware statutory Massachusetts business trust on December 31,
trust on July 15, 1996. 1985 and reorganized as a Delaware statutory
trust on May 17, 1999.
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Net assets as of $90.4 million $963.7 million
March 31, 2007
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7
Pioneer Interest Shares Pioneer Bond Fund
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Investment adviser and Investment Adviser:
portfolio manager Pioneer Investment Management, Inc.
Portfolio Manager:
Day-to-day management of each Pioneer Fund's portfolio is the responsibility of Kenneth J.
Taubes. Mr. Taubes is supported by the fixed income team. Members of this team manage other
Pioneer funds investing primarily in fixed income securities. The portfolio manager and the
team also may draw upon the research and investment management expertise of the global
research team, which provides fundamental research on companies and includes members from
Pioneer's affiliate, Pioneer Investment Management Limited. Mr. Taubes is responsible for
overseeing the U.S. and global fixed income teams. He joined Pioneer as a senior vice president
in September 1998 and has been an investment professional since 1982. The SAI provides
additional information about Mr. Taubes' compensation, other accounts he manages and his
ownership of securities in each Pioneer Fund.
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Investment objective(s) Pioneer Interest Shares seeks interest income Pioneer Bond Fund seeks to provide current
by investing in a diversified portfolio of debt income from an investment grade portfolio
obligations, primarily investment grade, with the with due regard to preservation of capital and
objective of obtaining as high a yield as possible prudent investment risk. Pioneer Bond Fund
consistent with this type of investment. This is a also seeks a relatively stable level of
fundamental policy that may only be changed dividends; however, the level of dividends
with a shareholder vote. will be maintained only if consistent with
preserving the investment grade quality of
Pioneer Bond Fund's portfolio. This is a
fundamental policy that may only be changed
with a shareholder vote.
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Primary investments Pioneer Interest Shares invests at least 80% Normally, Pioneer Bond Fund invests at least
of its total assets in the following types of 80% of its net assets (plus the amount of
interest-bearing debt securities: borrowings, if any, for investment purposes)
in the following securities:
o Investment grade debt securities (that is,
securities which are rated Aaa, AA, A or Baa o Debt securities issued or guaranteed by the
by Moody's Investors Services, Inc. or AAA, U.S. government or its agencies and
AA, A or BBB by Standard & Poor's Ratings instrumentalities,
Group,
o Debt securities, including convertible debt,
o Obligations of the U.S. government or its of corporate and other issuers rated at least
agencies, instrumentalities and sponsored investment grade at the time of investment,
entities, or and comparably rated commercial paper, or
o Commercial paper, other money market o Cash and cash equivalents, certificates of
instruments and cash items. deposit, repurchase agreements maturing in
one week or less and bankers' acceptances.
Other money market instruments include, but
are not limited to, repurchase agreements, Pioneer Bond Fund will provide written notice
certificates of deposit and bankers' to shareholders at least 60 days prior to any
acceptances. Cash items include cash change to the requirement that it invest at
balances, accrued interest and receivables for least 80% of its assets as described above.
items such as the proceeds, not yet received,
from the sale of Pioneer Interest Shares' Cash and cash equivalents include cash
portfolio investments. balances, accrued interest and receivables for
items such as the proceeds, not yet received,
from the sale of Pioneer Bond Fund's portfolio
investments.
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8
Pioneer Interest Shares Pioneer Bond Fund
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Below investment grade debt Pioneer Interest Shares may invest up to 20% of Pioneer Bond Fund may invest up to 20% of its
its total assets in debt securities rated below net assets in debt securities rated below
investment grade or, if unrated, of equivalent investment grade or, if unrated, of equivalent
quality as determined by Pioneer. No securities credit quality as determined by Pioneer. Pioneer
acquired will be convertible or exchangeable Bond Fund may invest in debt securities rated
into common stock or common stock equivalents. "D" or better.
This is a fundamental policy that may only be
changed with a shareholder vote.
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Foreign securities Pioneer Interest Shares may invest up to 30% of Pioneer Bond Fund may invest up to 15% of its
its total assets in debt securities issued by total assets in equity and debt securities of
non-U.S. corporations and governments. This is a non-U.S. corporate issuers and in debt
fundamental policy that may only be changed with securities of non-U.S. government issuers.
a shareholder vote. Pioneer Bond Fund will not invest more than 5%
of its total assets in the securities of
emerging markets issuers. Pioneer Bond Fund
invests in non-U.S. securities to diversify its
portfolio when they offer similar or greater
potential to provide income and capital gains
compared to U.S. securities. Pioneer Bond Fund
may invest in securities of Canadian issuers to
the same extent as securities of U.S. issuers
(non-U.S. issuers do not include Canadian
issuers).
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See "Other Investment Policies" below for additional details on the investment policies of each Pioneer Fund.
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Investment strategies Pioneer, each Pioneer Fund's investment adviser, considers both broad economic factors and issuer
specific factors in selecting a portfolio designed to achieve the Pioneer Fund's investment
objective(s). In assessing the appropriate maturity and sector weighting of each Pioneer Fund's
portfolio, Pioneer considers a variety of factors that are expected to influence economic
activity and interest rates. These factors include fundamental economic indicators, such as the
rates of economic growth and inflation, Federal Reserve monetary policy and the relative value of
the U.S. dollar compared to other currencies. Once Pioneer determines the preferable portfolio
characteristics, Pioneer selects individual securities based upon the terms of the securities
(such as yields compared to U.S. Treasuries or comparable issues) and sector diversification.
In making portfolio decisions, Pioneer relies on the knowledge, experience and judgment of its
staff and the staff of its affiliates who have access to a wide variety of research.
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Temporary defensive Normally, each Pioneer Fund invests substantially all of its assets to meet its investment
strategies objective(s). Each Pioneer Fund may invest the remainder of its assets in securities with
remaining maturities of less than one year, cash equivalents or may hold cash. For temporary
defensive purposes, including during periods of unusual cash flows, each Pioneer Fund may depart
from its principal investment strategies and invest part or all of its assets in these securities
or may hold cash. During such periods, a Pioneer Fund may not be able to achieve its investment
objective(s).
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Short-term trading Each Pioneer Fund usually does not trade for short-term profits. Each Pioneer Fund will sell an
investment, however, even if it has only been held for a short time, if it no longer meets the
Pioneer Fund's investment criteria. If a Pioneer Fund does a lot of trading, it may incur
additional operating expenses, which would reduce performance, and could cause shareholders to
incur a higher level of taxable income or capital gains.
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9
Pioneer Interest Shares Pioneer Bond Fund
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Sales charges and fees Shares purchased on the secondary market are not o Class Y shares are offered without an
subject to sales charges but may be subject to initial sales charge.
brokerage commissions or other charges.
o Class Y shares are not subject to a
contingent deferred sales charge.
o Class Y shares are not subject to
distribution and service (12b-1) fees.
o Class Y shares purchased through a broker
or dealer may be subject to brokerage
commissions or other charges.
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Management fees Pioneer's management fee is equal to 0.625% of Pioneer's management fee is equal to 0.50% of
Pioneer Interest Shares' average daily net Pioneer Bond Fund's average daily net assets.
assets up to $50 million and 0.50% of average
daily net assets over $50 million. A discussion regarding the basis for the Board
of Trustees' approval of the management
A discussion regarding the basis for the Board contract is available in Pioneer Bond Fund's
of Trustees' approval of the management contract December 31, 2006 semi-annual report to
is available in Pioneer Interest Shares' shareholders.
December 31, 2006 annual report to shareholders.
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Buying, Selling and Exchanging Shares
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Buying shares Shares of Pioneer Interest Shares are listed on You may buy Class Y shares from any investment
the NYSE and may be purchased in the secondary firm that has a sales agreement with Pioneer
market through an authorized broker and subject Funds Distributor, Inc. ("PFD"), Pioneer Bond
to brokerage commission or other fees charged by Fund's distributor. You can buy Class Y shares
such broker. at net asset value per share after Pioneer
Bond Fund receives your purchase request in
Pioneer Interest Shares does not issue new good order. You also may exchange securities
shares except in connection with its dividend you own for shares of Pioneer Bond Fund
reinvestment plan ("Plan"). provided that Pioneer, in its sole discretion,
determines that the securities are consistent
with Pioneer Bond Fund's investment objectives
and policies and their acquisition is in the
best interests of Pioneer Bond Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Minimum initial investment Not applicable. See "Buying Shares" above. No minimum initial investment is required
pursuant to the Reorganization. There is no
minimum additional investment amount for Class
Y shares. If you seek to open another account
in Class Y shares, your initial investment
must be at least $5,000,000 for Class Y
shares. You may qualify for lower initial or
subsequent investment minimums if you are
opening a retirement plan account,
establishing an automatic investment plan or
placing your trade through your investment
firm.
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum purchase amount Not applicable. See "Buying Shares" above. There is no maximum purchase amount for Class
Y shares.
- ------------------------------------------------------------------------------------------------------------------------------------
10
Pioneer Interest Shares Pioneer Bond Fund
- ------------------------------------------------------------------------------------------------------------------------
Exchanging shares Not applicable. See "Buying Shares" above. You may exchange your Class Y shares for
Class Y shares of another Pioneer mutual
fund. Your exchange request must be for at
least $1,000. You may exchange your Class Y
shares at net asset value without being
charged either an initial or contingent deferred
shares charge at the time of the exchange. An
exchange generally is treated as a sale and a
new purchase of shares for federal income
tax purposes.
After you establish an eligible fund account,
you can exchange fund shares by telephone,
mail or fax.
- ------------------------------------------------------------------------------------------------------------------------
Selling shares Shares of Pioneer Interest Shares are listed on Your shares will be sold at the next net asset
the NYSE and may be sold in the secondary value per share calculated after Pioneer Bond
market through an authorized broker at the Fund receives your request in good order. Net
market value. asset value is calculated every day the NYSE
is open when regular trading closes (normally
4:00 p.m. Eastern time).
- ------------------------------------------------------------------------------------------------------------------------
You can sell some or all of your Class Y
shares by writing directly to Pioneer Bond
Fund if the account is registered in your
name. You may sell up to $5 million per
account per day by telephone or fax if the
proceeds are directed to your bank account
of record. You may only sell up to $100,000
per account per day by telephone or fax if the
proceeds are not directed to your bank
account of record.
- ------------------------------------------------------------------------------------------------------------------------
You may sell Pioneer Bond Fund shares held
in a retirement plan account by telephone only
if your account is an eligible IRA (tax penalties
may apply). You may not sell your shares by
phone if you have changed your address (for
checks) or your bank information (for wires
and transfers) in the last 30 days.
- ------------------------------------------------------------------------------------------------------------------------
Net asset value Each Pioneer Fund's net asset value is the value of its portfolio of securities plus any other
assets minus its operating expenses and any other liabilities. Each Pioneer Fund calculates a net
asset value for each class of shares every day the NYSE is open when regular trading closes
(normally 4:00 p.m. Eastern time).
- ------------------------------------------------------------------------------------------------------------------------
Comparison of Principal Risks of Investing in the Pioneer Funds
Because each Pioneer Fund has similar investment objectives and investment
strategies, the Pioneer Funds are subject to some of the same principal risks.
You could lose money on your investment or not make as much as if you invested
elsewhere if:
o Interest rates go up causing the value of the Pioneer Fund's investments
to decline. This is known as interest rate risk (this risk may be greater
for securities with longer maturities).
o The issuer of a security owned by the Pioneer Fund defaults on its
obligation to pay principal and/or interest or has its credit rating
downgraded. This is known as credit risk.
11
o During periods of declining interest rates, the issuer of a security may
exercise its option to prepay principal earlier than scheduled, forcing
the Pioneer Fund to reinvest in lower yielding securities. This is known
as call or prepayment risk.
o During periods of rising interest rates, the average life of certain
types of securities may be extended because of slower than expected
principal payments. This may lock-in a below market interest rate,
increase the security's duration (the estimated period until the security
is paid in full) and reduce the value of the security. This is known as
extension risk.
o Pioneer's judgment about the attractiveness, relative value or potential
appreciation of a particular sector, security or investment strategy
proves to be incorrect.
o To the extent that the Pioneer Fund invests in high yield securities, its
exposure to credit risks associated with such securities may be greater,
its income and net asset value may be more volatile and it may be more
difficult to achieve preservation of principal.
o Each Pioneer Fund is subject to the risks of investing in
government-sponsored entities. Government sponsored entities such as the
Federal Home Loan Mortgage Corporation (Freddie Mac), the Federal
National Mortgage Association (FNMA) and the Federal Home Loan Banks
(FHLBs), although chartered or sponsored by Congress, are not funded by
congressional appropriations and the debt and mortgage-backed securities
issued by them are neither guaranteed nor issued by the U.S. government.
o To the extent either Pioneer Fund invests significantly in
mortgage-backed securities, its exposure to prepayment and extension
risks may be greater than other investments in fixed income securities.
Market segment risks. To the extent either Pioneer Fund emphasizes, from
time to time, investments in a market segment, the fund will be subject to a
greater degree to the risks particular to the industries in that segment, and
may experience greater market fluctuation, than a fund without the same focus.
Industries in the financial segment, such as banks, insurance companies,
broker-dealers and real estate investment trusts, may be sensitive to changes in
interest rates and general economic activity and are subject to extensive
government regulation.
Investment in non-U.S. securities. These risks may include:
o Less information about non-U.S. issuers or markets may be available due
to less rigorous disclosure or accounting standards or regulatory
practices
o Many non-U.S. markets are smaller, less liquid, more volatile and may be
subject to a heightened level of inflation and default risk relative to
U.S. issuers. In a changing market, Pioneer may not be able to sell a
Pioneer Fund's portfolio securities at times, in amounts and at prices it
considers reasonable
o Adverse effect of currency exchange rates or controls on the value of the
Pioneer Fund's investments
o The economies of non-U.S. countries may grow at slower rates than
expected or may experience a downturn or recession
o Economic, political and social developments may adversely affect the
securities markets
o Withholding and other non-U.S. taxes may decrease the Pioneer Fund's
return
Additional Principal Risk of Investing in Pioneer Interest Shares
Because Pioneer Interest Shares is a closed-end fund, it is subject to the
risk that its shares may trade at prices lower than net asset value. This is a
risk that is not applicable to open-end funds, such as Pioneer Bond Fund,
because shares of open-end funds are not traded on a secondary market and are
redeemable at their net asset value on any day the NYSE is open. A more
complete discussion on these differences is provided under the heading,
"Comparison of a Closed-End Fund and an Open-End Fund."
The Pioneer Funds' Fees and Expenses
Shareholders of both Pioneer Funds pay various fees and expenses, either
directly or indirectly. The tables below show the fees and expenses that you
would pay if you were to buy and hold shares of each Pioneer Fund. The expenses
in the tables appearing below are based on (i) for your fund, the expenses of
your fund for the twelve-month period ended December 31, 2006 and (ii) for
Pioneer Bond Fund, the expenses of Class Y shares of Pioneer Bond Fund for the
twelve-month period ended December 31, 2006. Future expenses for all share
classes may be greater or less. The tables also show the pro forma expenses of
the combined fund assuming the Reorganization occurred on December 31, 2006.
12
Combined
Pioneer
Pioneer Pioneer Bond Fund
Interest Shares Bond Fund (Pro Forma
(12 months ended (12 months ended 12 months ended
December 31, 2006) December 31, 2006) December 31, 2006)
------------------ ------------------ -----------------
Shareholder transaction fees Common
(paid directly from your investment) Shares Class Y Class Y
Maximum sales charge (load) when you buy shares as a
percentage of offering price ............................................ None(1) None None
Maximum deferred sales charge (load) as a percentage of offering price
or the amount you receive when you sell shares, whichever is less ....... None(1) None None
Dividend reinvestment plan fees .......................................... None(2) None None
Redemption fee as a percentage of amount redeemed, if applicable ......... None(3) None None
Annual Fund Operating Expenses (deducted from fund assets)
as a % of average daily net assets
Management Fee ........................................................... 0.57% 0.50% 0.50%
Distribution and Service (12b-1) Fee ..................................... None(1) None None
Other Expenses ........................................................... 0.43% 0.07% 0.08%
Total Annual Fund Operating Expenses(4) .................................. 1.00% 0.57% 0.58%
- -----------------------------------------------------------------------------------------------------------------------------------
Less: Fee Waiver ......................................................... N/A N/A (0.01)%(5)
Net Expenses ............................................................. 1.00% 0.57% 0.57%(5)
The hypothetical example below helps you compare the cost of investing in
each Pioneer Fund. It assumes that: (a) you invest $10,000 in each Pioneer Fund
for the time periods shown, (b) you reinvest all dividends and distributions at
net asset value (although Pioneer Interest Shares' Plan provides that such
dividends and distributions are (i) returned as cash to participants when the
net asset value exceeds the market value per share in effect at the time and
(ii) reinvested to purchase shares at the greater of the net asset value or 95%
of the market value per share when the market value exceeds the net asset value
per share), (c) your investment has a 5% return each year, (d) each Pioneer
Fund's total operating expenses remain the same and (e) the contractual fee
waiver for the combined fund is in effect for year one. Pro forma expenses are
included assuming a Reorganization with your fund and Pioneer Bond Fund. Since
no redemption fees or deferred sales charges are imposed by either Pioneer Fund,
the 1, 3, 5 and 10 year cost projections are the same regardless of whether you
choose to redeem your shares at the end of a period.
The examples are for comparison purposes only and are not a representation
of either Pioneer Fund's actual expenses or returns, either past or future.
Combined
Pioneer
Pioneer Pioneer Bond Fund
Number of years Interest Shares Bond Fund (Class Y Shares)
you own your shares (Common Shares) (Class Y Shares) (Pro Forma)
- ------------------- --------------- ---------------- -----------
Year 1 .............. $ 102 $ 58 $ 58
Year 3 .............. $ 318 $183 $185
Year 5 .............. $ 552 $318 $323
Year 10 ............. $1,225 $714 $725
- ----------
(1) Shares of Pioneer Interest Shares purchased on the secondary market are not
subject to sales charges, deferred sales charges (or 12b-1 fees) but may be
subject to brokerage commissions or other charges. The table does not
reflect the underwriting commission paid by Pioneer Interest Shares'
shareholders in connection with the initial offering of common shares.
(2) A shareholder that directs the dividend reinvestment plan agent to sell
shares held in a dividend reinvestment account will pay brokerage charges.
(3) Shares of Pioneer Interest Shares are not redeemable, and any sales of
shares must be effected in the secondary market.
(4) The funds' total annual operating expenses in the table have not been
reduced by any expense offset arrangements.
(5) Net expenses in the table reflect the fee waiver that will be in effect
upon the closing of the Reorganization, assuming your fund's shareholders
approve the Reorganization, under which Pioneer Bond Fund's transfer agent
has contractually agreed not to impose all of its fees applicable to Class
Y shares.
13
This fee waiver is contingent on the successful closing and completion of
the Reorganization and will be in effect from the closing date of the
Reorganization through November 1, 2008. There can be no assurance that
Pioneer will extend the fee waiver beyond such time.
Comparison of the Pioneer Funds' Performance
The following table shows your fund's highest and lowest NYSE market price
per share for each quarter over the past two fiscal years and the quarter ended
March 31, 2007. Also included in the table is the net asset value per share of
your fund on that date and the percentage discount or premium to net asset
value (expressed as a percentage) that the sales price represents.
- -----------------------------------------------------------------------------------------------------------
(Discount)/Premium
NYSE Market Price* Net Asset Value Percentage
- -----------------------------------------------------------------------------------------------------------
Quarter Ended High Low High Low High Low
- -----------------------------------------------------------------------------------------------------------
March 31, 2005 $ 11.85 $ 10.82 $ 12.81 $ 12.37 (12.67%) ( 6.64%)
- -----------------------------------------------------------------------------------------------------------
June 30, 2005 $ 11.54 $ 10.75 $ 12.74 $ 12.44 (13.77%) ( 8.39%)
- -----------------------------------------------------------------------------------------------------------
September 30, 2005 $ 11.55 $ 11.05 $ 12.67 $ 12.38 (10.89%) ( 7.74%)
- -----------------------------------------------------------------------------------------------------------
December 31, 2005 $ 11.14 $ 10.65 $ 12.39 $ 12.19 (12.92%) (10.02%)
- -----------------------------------------------------------------------------------------------------------
March 31, 2006 $ 11.18 $ 10.77 $ 12.38 $ 12.12 (11.91%) ( 9.03%)
- -----------------------------------------------------------------------------------------------------------
June 30, 2006 $ 11.15 $ 10.71 $ 12.15 $ 11.83 (11.41%) ( 7.19%)
- -----------------------------------------------------------------------------------------------------------
September 30, 2006 $ 11.25 $ 10.67 $ 12.25 $ 11.86 (10.56%) ( 7.10%)
- -----------------------------------------------------------------------------------------------------------
December 31, 2006 $ 11.47 $ 11.00 $ 12.41 $ 12.12 ( 9.76%) ( 6.97%)
- -----------------------------------------------------------------------------------------------------------
March 31, 2007 $ 12.08 $ 11.14 $ 12.39 $ 12.13 ( 8.44%) ( 1.88%)
- -----------------------------------------------------------------------------------------------------------
As of May 31, 2007, your fund had a market value per share of $11.87 and a net
asset value per share of $12.19, resulting in a -2.63% discount to net asset
value.
* Market price refers to the inter-dealer price, without retail mark-up,
mark-down or commission, and may not necessarily represent actual
transactions.
The following charts provide some indication of the risk of investing in
your fund or Pioneer Bond Fund by showing changes in each Pioneer Fund's
performance from year to year and by showing how each fund's average annual
returns for 1, 5 and 10 years compare with those of a broad measure of market
performance.
The bar charts below show the year-by-year net asset value performance of
Pioneer Interest Shares and Pioneer Bond Fund's Class Y shares for the past 10
years. The chart does not reflect any sales charge you may pay when you buy or
sell Pioneer Fund shares. Any sales charge will reduce your return. You do not
pay any sales charge on purchases or redemptions of common shares of Pioneer
Interest Shares or Class Y shares of Pioneer Bond Fund.
The table below shows the average annual total returns for Pioneer
Interest Shares (at net asset value and at market price) and average annual
total returns (before and after taxes) for Pioneer Bond Fund's Class Y shares
over time, each compared with a broad-based securities market index. Past
performance (before and after taxes) does not indicate future results.
14
Yearly Net Asset Value Performance
(Year ended December 31)
The performance of Class Y shares of Pioneer Bond Fund for the period
prior to the commencement of operations of Class Y shares on September 20, 2001
is the net asset value performance of Pioneer Bond Fund's Class A shares, which
has not been restated to reflect any differences in expenses, including Rule
12b-1 fees applicable to Class A shares.
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
Pioneer Pioneer Bond Fund
Interest Shares* Class Y Shares**
'97 11.01 9.16
'98 6.89 7.69
'99 -2.13 -3.20
'00 7.54 8.45
'01 6.90 7.66
'02 5.86 9.18
'03 8.69 9.31
'04 6.11 6.35
'05 2.51 2.77
'06 3.78 3.98
* During the period shown in the bar chart, Pioneer Interest Shares' highest
quarterly return was 4.80% for the quarter ended June 20, 2003, and the lowest
quarterly return was -2.03% for the quarter ended June 30, 2004. For the
period from January 1, 2007 to March 31, 2007, Pioneer Interest Shares'
return was 1.64%.
** During the period shown in the bar chart, the highest quarterly return of
Class Y shares of Pioneer Bond Fund was 4.69% for the quarter ended
6/30/2003, and the lowest quarterly return was -1.84% for the quarter ended
6/30/2004. For the period from January 1, 2007 to March 31, 2007, the return
of Class Y shares of Pioneer Bond Fund was 1.44%.
Average Annual Total Returns
(for periods ended December 31, 2006)
- ---------------------------------------------------------------------------------------
1 Year 5 Years 10 Years
- ---------------------------------------------------------------------------------------
Pioneer Interest Shares
- ---------------------------------------------------------------------------------------
Common Shares (at net asset value before taxes)(1) 3.78% 5.37% 5.66%
- ---------------------------------------------------------------------------------------
Common Shares (at market value before taxes)(1) 7.78% 5.45% 5.58%
- ---------------------------------------------------------------------------------------
Pioneer Bond Fund
- ---------------------------------------------------------------------------------------
Class Y -- Before Taxes 3.98% 6.29% 6.07%
- ---------------------------------------------------------------------------------------
Class Y -- After Taxes on Distribution(2) 2.26% 4.20% 3.68%
- ---------------------------------------------------------------------------------------
Class Y -- After Taxes on Distributions and Sale
of Fund Shares(2) 2.56% 4.13% 3.70%
- ---------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index
(reflects no deduction for taxes)(3) 4.33% 5.06% 6.24%
- ---------------------------------------------------------------------------------------
(1) The average annual total returns reflect reinvestment of all dividends and
distributions. Distributions are assumed, for this calculation, to be
reinvested at prices obtained under the dividend reinvestment plan. The
performance does not reflect any brokerage commissions associated with the
purchase or sale of the common shares on the NYSE, any underwriting spread
or sales charges paid in Pioneer Interest Shares' initial public offering of
its common shares or the deduction of taxes a shareholder would pay on
distributions or the sale of common shares.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on the investor's tax situation
and may differ from those shown. Furthermore, the after-tax returns shown
are not relevant to shareholders who hold Pioneer Bond Fund shares through
tax-deferred arrangements such as 401(k) plans or individual retirement
accounts.
(3) The Lehman Brothers Aggregate Bond Index is a measure of the U.S. bond
market.
The most recent portfolio management discussion of each Pioneer Fund's
performance is attached as Exhibit B.
15
Other Investment Policies
In addition to the principal investment policies described in the synopsis
above, each Pioneer Fund is subject to the following investment policies:
Pioneer Interest Shares Pioneer Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Lending Pioneer Interest Shares may not make loans, Pioneer Bond Fund may not make loans,
except that Pioneer Interest Shares may except by the purchase of debt obligations,
purchase debt securities in private placements by entering into repurchase agreements or
in an amount up to 10% of the value of though the lending of portfolio securities.
Pioneer Interest Shares' total assets, purchase This is a fundamental policy that may only
repurchase agreements as outlined in the be changed with a shareholder vote.
investment objective, policies and restrictions,
and may make both short-term (nine months
or less) and long-term loans of its portfolio
securities to the extent of 40% of the value of
Pioneer Interest Shares' total assets computed
at the time of making such loans. This is a
fundamental policy that may only be changed
with a shareholder vote.
- ------------------------------------------------------------------------------------------------------------------------------------
Securities lending Pioneer Interest Shares may make both short- See above with respect to Pioneer Bond
term (nine months or less) and long-term Fund's policy on loans.
loans of its portfolio securities only to the
extent permitted by the 1940 Act.
- ------------------------------------------------------------------------------------------------------------------------------------
Borrowing / Senior securities Pioneer Interest Shares may not borrow Pioneer Bond Fund may not borrow money,
money, except from banks for temporary except that Pioneer Bond Fund may: (a) borrow
purposes, and then not in excess of 5% of the from banks or through reverse repurchase
value of its total assets, or mortgage, pledge agreements in an amount up to 331/3% of the
or hypothecate its assets to secure such fund's total assets (including the amount
borrowing except in an amount not exceeding borrowed); (b) to the extent permitted by
15% of the value of its total assets. This is a applicable law, borrow up to an additional 5%
fundamental policy that may only be changed of the fund's assets for temporary purposes;
with a shareholder vote. (c) obtain such short-term credits as are
necessary for the clearance of portfolio
Pioneer Interest Shares may not issue senior transactions; (d) purchase securities on
securities (as defined in the Investment margin to the extent permitted by applicable
Company Act of 1940) except insofar as law; and (e) engage in transactions in
borrowings are permitted in the paragraph mortgage dollar rolls that are accounted for
above that sets forth the fund's current as financings. In the opinion of the SEC, a
borrowing restriction. This is a fundamental fund's limitation on borrowing includes any
policy that may only be changed with a pledge, mortgage or hypothecation of its
shareholder vote. assets. This is a fundamental policy that may
only be changed with a shareholder vote. The
italicized statement is not part of the
fundamental policy.
Pioneer Bond Fund may not purchase
securities while borrowings are in excess of
5% of total assets.
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16
Pioneer Interest Shares Pioneer Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Illiquid and restricted Pioneer Interest Shares may not invest more Pioneer Bond Fund may not invest more than
securities than 10% of the value of its total assets in 15% of its net assets in illiquid and other
debt securities that are not publicly offered, securities that are not readily marketable.
including restricted securities purchased in Repurchase agreements maturing in more
private placements. This is a fundamental than seven days will be included for purposes
policy that may only be changed with a of the foregoing limit. Securities subject to
shareholder vote. restrictions on resale under the Securities Act
of 1933, as amended (the "1933 Act"), are
considered illiquid unless they are eligible for
resale pursuant to Rule 144A or another
exemption from the registration requirements
of the 1933 Act and are determined to be
liquid by Pioneer.
- ------------------------------------------------------------------------------------------------------------------------------------
Beneficial ownership Pioneer Interest Shares may not invest or hold No restrictions.
securities of any issuer if, to its knowledge,
one or more officers or directors of Pioneer
Interest Shares or its investment adviser
individually own beneficially more than 1/2 of
1% of the securities of such issuer, or together
own more than 5% of the securities of such
issuer. This is a fundamental policy that may
only be changed with a shareholder vote.
- ------------------------------------------------------------------------------------------------------------------------------------
Real estate Pioneer Interest Shares may not invest in any Pioneer Bond Fund may not invest in real
interest in real estate, except (a) that Pioneer estate, except that Pioneer Bond Fund may
Interest Shares may invest in securities of invest in securities of issuers that invest in
issuers that invest in real estate or interests real estate or interests therein, securities that
therein, securities of real estate investment are secured by real estate or interests therein,
trusts, mortgage-backed securities and other securities of real estate investment trusts
securities that represent a similar indirect and mortgage-backed securities. This is a
interest in real estate; and (b) Pioneer Interest fundamental policy that may only be changed
Shares may acquire real estate or interests with a shareholder vote.
therein through exercising rights or remedies
with regard to an instrument or security. This
is a fundamental policy that may only be
changed with a shareholder vote.
- ------------------------------------------------------------------------------------------------------------------------------------
Short sales Pioneer Interest Shares may not make short Pioneer Bond Fund may not sell securities
sales of securities, or purchase securities on short, except to the extent that Pioneer Bond
margin, but Pioneer Interest Shares may obtain Fund contemporaneously owns or has the
such short-term credits as may be necessary right to acquire at no additional cost securities
for the clearance of purchases and sales of identical to those sold short, or purchase
securities. This is a fundamental policy that securities on margin.
may only be changed with a shareholder vote.
- ------------------------------------------------------------------------------------------------------------------------------------
Underwriting Pioneer Interest Shares may not act as a Pioneer Bond Fund may not act as an
securities underwriter, except to the extent that underwriter, except as it may be deemed to be
in connection with the disposition of portfolio an underwriter in a sale of restricted securities
debt securities, Pioneer Interest Shares may be held in its portfolio. This is a fundamental
deemed to be an underwriter under certain policy that may only be changed with a
federal securities laws. This is a fundamental shareholder vote.
policy that may only be changed with a
shareholder vote.
- ------------------------------------------------------------------------------------------------------------------------------------
17
Pioneer Interest Shares Pioneer Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Concentration Pioneer Interest Shares may not invest or Pioneer Bond Fund may not invest 25%
concentrate more than 25% of the value all of or more of its total assets in the securities
its total assets in the securities of issuers of of one or more issuers (excluding the
which conduct their principal business U.S. government or its agencies or
activities in the same industry. Utility instrumentalities) conducting their principal
companies, such as gas, electric, water and business activities in the same industry. For
telephone companies, and financial companies purposes of this restriction the electric, utility,
such as banks, personal credit institutions, natural gas utility, and telephone industries
business credit institutions, saving and loan shall be considered separate industries. This
associations and insurance companies, shall be is a fundamental policy that may only be
considered, for purposes of this policy, to be changed with a shareholder vote.
separate industries. This is a fundamental
policy that may only be changed with a
shareholder vote.
- ------------------------------------------------------------------------------------------------------------------------------------
Commodities Pioneer Interest Shares may not invest in Pioneer Bond Fund may not invest in
commodities or commodity contracts. This is a commodities or commodities contracts,
fundamental policy that may only be changed except that Pioneer Bond Fund may invest in
with a shareholder vote. currency instruments and contracts and
financial instruments and contracts that might
be deemed to be commodities and commodity
contracts. This is a fundamental policy that
may only be changed with a shareholder vote.
- ------------------------------------------------------------------------------------------------------------------------------------
Diversification As to 75% of the value of its total assets, Pioneer Bond Fund may not make any
Pioneer Interest Shares may not invest more investment inconsistent with its status as a
than 5% of the value of its total assets in diversified investment company under the
the securities of any one issuer (other than 1940 Act. This is a fundamental policy that
obligations of the United States Government may only be changed with a shareholder
and its instrumentalities). This is a vote. Section 5 of the 1940 Act defines a
fundamental policy that may only be changed "diversified company" as a fund that, with
with a shareholder vote. respect to 75% of the value of its total assets,
limits its investments in any single issuer to
Pioneer Interest Shares may not invest in any an amount not exceeding: (i) 5% of the value
class of voting securities or in more than 10% of the fund's total assets and (ii) 10% of that
of any other class of securities of any one issuer's outstanding voting securities.
issuer. This is a fundamental policy that may
only be changed with a shareholder vote.
- ------------------------------------------------------------------------------------------------------------------------------------
Other investment companies Pioneer Interest Shares may not acquire the Pioneer Bond Fund generally may invest in the
securities of other domestic or non-U.S. securities of other investment companies to
investment companies, except to the extent the extent permitted by the 1940 Act.
permitted by the 1940 Act.
- ------------------------------------------------------------------------------------------------------------------------------------
Control Pioneer Interest Shares may not invest in Pioneer Bond Fund may not invest in
companies for the purpose of exercising companies for the purpose of exercising
control or management. control or management.
- ------------------------------------------------------------------------------------------------------------------------------------
18
Pioneer Interest Shares Pioneer Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Mortgage-related securities Each Pioneer Fund may, but is not required to, invest a substantial portion of its assets in
mortgage-related securities, which represent interests in pools of mortgage loans assembled for
sale to investors by various U.S. governmental agencies, government-related organizations and
private issuers. These investments may include mortgage-related derivative securities, such as
collateralized mortgage obligations (CMOs). A CMO is a mortgage-backed bond that separates
mortgage pools into different maturity classes. The holder of an interest in collateralized
mortgage obligations is entitled to receive specified cash flows from a pool of mortgages.
Depending upon the category of CMO purchased, the holder may be entitled to payment before the
cash flow from the pool is used to fund other CMOs or, alternatively, the holder may be paid only
after the cash flow has been used to fund other CMOs first.
- ------------------------------------------------------------------------------------------------------------------------------------
Other investments Pioneer Bond Fund's investments may have fixed
or variable principal payments and all types of
interest rate payment and reset terms,
including fixed rate, floating rate, zero
coupon, contingent, deferred, payment-in-kind
and auction rate features. Pioneer Bond Fund
may invest and has in the past invested in
securities with a broad range of maturities and
maintains an average portfolio maturity which
varies based upon the judgment of Pioneer.
- ------------------------------------------------------------------------------------------------------------------------------------
Floating rate loans are provided by banks and
other financial institutions to large corporate
customers. These loans are rated below
investment grade, but typically are secured
with specific collateral and have a senior
position in the capital structure of the
borrower. These loans typically have rates of
interest that are reset periodically by
reference to a base lending rate, such as the
London Interbank Offered Rate (LIBOR), plus a
premium. Floating rate loans may not be readily
marketable or may be subject to restrictions on
resale.
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Bond Fund may invest in inverse
floating rate obligations (a type of derivative
instrument). The interest rate on inverse
floating rate obligations will generally
decrease as short-term interest rates increase,
and increase as short-term rates decrease. Due
to their leveraged structure, the sensitivity
of the market value of an inverse floating rate
obligation to changes in interest rates is
generally greater than a comparable long-term
bond issued by the same issuer and with similar
credit quality, redemption and maturity
provisions. Inverse floating rate obligations
may be volatile and involve leverage risk.
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19
Pioneer Interest Shares Pioneer Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Bond Fund may, but is not required to,
use futures and options on securities, indices
and other derivatives. A derivative is a
security or instrument whose value is
determined by reference to the value or the
change in value of one or more securities,
currencies, indices or other financial
instruments. Although there is no specific
limitation on investing in derivatives, Pioneer
Bond Fund does not use derivatives as a primary
investment technique and generally limits its
use to hedging. However, Pioneer Bond Fund may
use derivatives for a variety of non-principal
purposes, including:
o As a hedge against adverse changes in the
market prices of securities, interest rates
or currency exchange rates
o As a substitute for purchasing or selling
securities
o To increase Pioneer Bond Fund's return as a
non-hedging strategy that may be considered
speculative.
Pioneer Bond Fund may enter into credit default
swaps, which can be used to transfer the credit
risk of a security without buying or selling
the security.
Even a small investment in derivatives can have
a significant impact on Pioneer Bond Fund's
exposure to the market prices of securities,
interest rates or currency exchange rates. If
changes in a derivative's value do not
correspond to changes in the value of Pioneer
Bond Fund's other investments, Pioneer Bond
Fund may not fully benefit from or could lose
money on the derivative position. In addition,
some derivatives involve risk of loss if the
person who issued the derivative defaults on
its obligation. Certain derivatives may be less
liquid and more difficult to value. Pioneer
Bond Fund will only invest in derivatives to
the extent Pioneer believes these investments
do not prevent Pioneer Bond Fund from seeking
its investment objectives.
- ------------------------------------------------------------------------------------------------------------------------------------
20
CAPITALIZATION
The following table sets forth the capitalization of each Pioneer Fund as
of March 31, 2007 and the pro forma combined capitalization of the combined
fund as if the Reorganization had occurred on that date. If the Reorganization
is consummated, the actual exchange ratios on the Closing Date may vary from
the exchange ratios indicated. This is due to changes in the market value of
the portfolio securities of both Pioneer Funds between March 31, 2007 and the
Closing Date, changes in the amount of undistributed net investment income and
net realized capital gains of both Pioneer Funds during that period resulting
from income and distributions, and changes in the accrued liabilities of both
Pioneer Funds during the same period.
Pro Forma
Pioneer Pioneer Pioneer
Interest Shares Bond Fund Bond Fund (1)
(March 31, 2007) (March 31, 2007) (March 31, 2007)
------------------ ------------------ -------------------
Net Assets ........................ $90,356,309 $963,703,436 $1,054,059,745
Class A .......................... N/A $289,377,176 $ 289,377,176
Class B .......................... N/A $ 39,607,807 $ 39,607,807
Class C .......................... N/A $ 31,124,688 $ 31,124,688
Class Y .......................... N/A $597,539,424 $ 687,895,733
Class R .......................... N/A $ 6,054,341 $ 6,054,341
Common Shares .................... $90,356,309 N/A N/A
Net Asset Value Per Share .........
Class A .......................... N/A $ 9.14 $ 9.14
Class B .......................... N/A $ 9.09 $ 9.09
Class C .......................... N/A $ 9.05 $ 9.05
Class Y .......................... N/A $ 9.06 $ 9.06
Class R .......................... N/A $ 9.23 $ 9.23
Common Shares .................... $ 12.22 N/A N/A
Shares Outstanding ................
Class A .......................... N/A 31,668,492 31,668,492
Class B .......................... N/A 4,358,321 4,358,321
Class C .......................... N/A 3,439,690 3,439,690
Class Y .......................... N/A 65,937,931 75,908,668
Class R .......................... N/A 655,643 655,643
Common Shares .................... 7,395,024 N/A N/A
- ----------
(1) The pro forma data reflects adjustments to account for the costs of the
Reorganization to be borne by Pioneer Interest Shares, which are estimated
to be $50,000.
It is impossible to predict how many shares of Pioneer Bond Fund actually
will be received and distributed by your fund on the Closing Date. The table
should not be relied upon to determine the amount of Pioneer Bond Fund shares
that actually will be received and distributed.
PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION
The Reorganization
o The Reorganization is scheduled to occur as of the close of business on
____________, 2007 but may occur on such later date as the parties may
agree in writing.
o Your fund will transfer all of its assets to an open-end fund, Pioneer
Bond Fund. Pioneer Bond Fund will assume all of your fund's liabilities.
o Pioneer Bond Fund will issue to your fund Class Y shares with an
aggregate net asset value equal to the aggregate net assets in your fund.
Your fund's net asset value can be expected to vary from the market value
attributable to your fund's common shares. The net asset value of both
Pioneer Funds will be computed as of the close of regular trading on the
NYSE on the Closing Date. Class Y shares of Pioneer Bond Fund will then
be distributed to your fund's shareholders of record as of the close of
business on the Closing Date in proportion to the relative net asset
value (not market value) of their common share holdings on the Closing
21
Date. On the Closing Date, each shareholder will receive Class Y shares
of Pioneer Bond Fund with the same aggregate net asset value as their
holdings of common shares of Pioneer Interest Shares immediately prior to
the Reorganization. Class Y shares of Pioneer Bond Fund are offered
without a sales load or Rule 12b-1 fee.
o Pioneer Interest Shares will be terminated and dissolved after the
Closing Date.
o The Reorganization is intended to result in no income, gain or loss for
federal income tax purposes to Pioneer Bond Fund, your fund or the
shareholders of either Pioneer Fund and will not take place unless both
Pioneer Funds involved in the Reorganization receive a satisfactory
opinion concerning the tax consequences of the Reorganization from Wilmer
Cutler Pickering Hale and Dorr LLP, counsel to the Pioneer Funds.
o In recommending the Reorganization, the Board of Trustees of each Pioneer
Fund, including all of the Independent Trustees, determined that the
Reorganization is in the best interest of each Pioneer Fund and will not
dilute the interests of shareholders of the Pioneer Funds. The Trustees
have made this determination based on factors that are discussed below
and in greater detail under the proposal.
Reasons for the Proposed Reorganization
The Trustees believe that reorganizing your fund into Pioneer Bond Fund
offers you potential benefits. These potential benefits and considerations
include:
o Primary consideration. A shareholder of your fund has commenced a proxy
contest seeking to replace Pioneer and your fund's Board of Trustees. The
shareholder recently filed a notice of intent to propose an alternate
slate of trustees at the next annual meeting of shareholders. The
shareholder also intends to submit proposals and solicit proxies at the
annual meeting to (1) adopt a managed distribution policy that would pay
a monthly distribution of $0.15 per share, (2) change the investment
objective of your fund to one of seeking capital appreciation with
current income as a secondary objective, by investing primarily in U.S.
and non-U.S. companies, and (3) terminate the advisory agreement with
Pioneer. Your fund's current investment objective is to seek interest
income by investing in a diversified portfolio of debt obligations,
primarily investment grade, with the objective of obtaining as high a
yield as possible consistent with this type of investment.
If the managed distribution policy, as proposed by the shareholder, were
adopted for your fund, it would have resulted in a return of capital of
$9,111,043 or 68.45% of the distributions in 2006. Assuming income and
capital gains at the same rate for the remainder of this year, the return
of capital would be $9,531,884 or 71.61% of the distributions in 2007.
The Trustees oppose the proposed distribution policy. A policy of
returning capital continuously over time will ultimately lead to your
fund's gradual demise and liquidation.
The Trustees believe that the change in the nature of your fund from a
bond fund to a "go anywhere" fund is not appropriate, given your fund's
purpose since its inception to operate as a bond fund. Further, in
addition to the proxy contest that most likely will occur at the annual
meeting, the Trustees believe, based on the current role of activists in
the industry waging proxy contests to promote various causes, that, even
if the shareholder's proposals are defeated, your fund likely will
continue to be the subject of proxy contests in the future, which could
increase its expense ratio to non-competitive levels.
It is primarily for these reasons, notwithstanding whether this
shareholder actually succeeds in electing his trustees and having his
proposals adopted if the Reorganization is not approved, that the
Trustees strongly recommend that you vote in favor of the Reorganization.
The Reorganization would maintain your fund as a bond fund, eliminate the
discount of the market price from its net asset value, permit daily
redemption of your shares at their net asset value, and allow each
shareholder to choose the timing of any recognition of taxable gain or
loss occasioned by the redemption of shares.
o Portfolio management. The similarity in investment objectives and
principal investment strategies of both Pioneer Funds, as well as the
fact that they have the same lead portfolio manager and team of
investment professionals.
o Performance. Pioneer Bond Fund's comparable historical performance. As of
March 31, 2007, your fund's average annual returns for the past one,
three and five year periods were 5.92%, 3.71% and 5.59%, respectively, as
compared to Pioneer Bond Fund's Class Y shares' average annual returns,
which were 6.22%, 3.84% and 6.41% for the same periods.
o Lower operating expenses. The pro forma expense ratio for the combined
fund's Class Y shares is anticipated to be lower than the historical
expense ratio of your fund's common shares. As of December 31, 2006, your
fund's expense ratio was 1.00%, compared to Pioneer Bond Fund's Class Y
shares' expense ratio of 0.57% and the combined fund's Class Y shares'
anticipated pro forma expense ratio of 0.58%, before fee waivers.
22
o Lower management fees. Pioneer Bond Fund's lower management fee rate.
Your fund's current management fee rate and the combined fund's
anticipated pro forma management fee rate of 0.50% is lower than your
fund's current management fee rate of 0.57%.
o Liquidity at net asset value. The additional benefit of an open-end fund
that permits redeeming or purchasing shares at net asset value. The
Trustees noted that, because shares of closed-end funds, such as your
fund, are not redeemable and instead are bought and sold on the open
market, the market price of these shares is influenced by a number of
factors and, at times, may trade at a discount (or premium) to net asset
value. Your fund's net asset value per share can be expected to vary from
the market price of its shares, and your fund's shares generally have
traded at a discount to net asset value, ranging from -14.03% (high) to
-1.72% (low) over the past three years ended May 31, 2007 and traded at a
discount of -2.63% as of May 31, 2007. The Trustees noted that the
reorganization of your fund into Pioneer Bond Fund effectively would
provide your fund's shareholders with liquidity for their shares at net
asset value, thereby eliminating the discount at which your fund's shares
historically have traded. All Class Y shares of Pioneer Bond Fund are
offered without a front-end sales load, deferred sales charge or Rule
12b-1 fee and are redeemable at the net asset value per share each
business day with no discount.
o Tax free reorganization. The transaction is expected to qualify as a tax
free reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code") and therefore will not be treated as a
taxable sale of your fund's shares.
o Alternatives. The Trustees believe this Reorganization is the best
alternative to the shareholder's proposals. If the Reorganization is not
approved, in light of the probable continuation of future proxy contests,
the Trustees will liquidate your fund to provide all shareholders the
opportunity to receive their net asset value and make their own choices
as to how to invest their assets.
o Other differences. Differences in shareholder voting rights apply.
Generally, listed closed-end fund shareholders have greater voting
rights, including rights to vote at annual meetings for the election of
trustees in accordance with NYSE rules. Your voting rights are described
in more detail below.
The Boards of both Pioneer Funds considered that your fund will bear one
quarter of all of the expenses associated with the preparation, printing and
mailing of any shareholder communications, including this Proxy
Statement/Prospectus, and any filings with the SEC and other governmental
agencies in connection with the Reorganization. Pioneer will bear the remaining
expenses. The Boards of both Pioneer Funds estimate that these expenses in the
aggregate will be approximately $200,000.
The Boards of both Pioneer Funds considered that the Pioneer Funds'
investment adviser and principal distributor would benefit from the
Reorganization. For example, Pioneer might achieve cost savings from managing
one larger fund compared to managing more than one fund with similar investment
strategies. Pioneer also will avoid the potential cost, burden and adverse
consequences associated with proxy contests, including the possible termination
of Pioneer as investment adviser to your fund and the consequent loss of
investment advisory fees by Pioneer. The Board also considered that your fund
was in receipt of a proposal to change its primary investment objective and
adopt a managed distribution plan. Pioneer believes this proposal, if
successful, also would likely result in the termination of Pioneer's role as
investment adviser to your fund. The Board also considered the fact that
Pioneer Bond Fund shareholders pay Pioneer and its affiliates fees for
administrative services, including transfer agency fees. The Boards believe,
however, that these savings and revenues will not amount to a significant
economic benefit to Pioneer or PFD. Further, it should be noted that Pioneer's
advisory fee rate is lower for Pioneer Bond Fund than for your fund.
The Boards of Trustees of both Pioneer Funds also considered that the
Reorganization presents an excellent opportunity for the shareholders of Pioneer
Interest Shares to become investors in a combined fund that has (i) lower
advisory fees, (ii) lower operating expenses (historically), and (iii) a larger
asset size than either Pioneer Fund alone without the obligation to pay
commissions or other transaction costs that a fund normally incurs when
purchasing securities. This opportunity provides an immediate economic benefit
to Pioneer Interest Shares and its shareholders and the potential for benefit
for Pioneer. While the Board of Trustees considered alternatives to the
Reorganization, it concluded that the Reorganization offered a method to
eliminate the discount to net asset value on a tax-free basis, while offering
continuity of portfolio management.
Therefore, your fund's Trustees recommend that you vote FOR the
Reorganization.
23
BOARDS' EVALUATION AND RECOMMENDATION
For the reasons described above, the Board of Trustees of your fund,
including the Independent Trustees, approved the Reorganization. In particular,
the Trustees determined that the Reorganization is in the best interest of your
fund and that the interests of your fund's shareholders would not be diluted as
a result of the Reorganization. Similarly, the Board of Trustees of Pioneer
Bond Fund, including the Independent Trustees, approved the Reorganization.
They also determined that the Reorganization is in the best interests of
Pioneer Bond Fund and that the interests of Pioneer Bond Fund's shareholders
would not be diluted as a result of the Reorganization.
The Trustees of your fund recommend that shareholders of your fund vote
FOR the proposal to approve the Agreement and Plan of Reorganization.
TERMS OF THE AGREEMENT AND PLAN OF REORGANIZATION
Agreement and Plan of Reorganization
The shareholders of your fund are being asked to approve an Agreement and
Plan of Reorganization, the form of which is attached as Exhibit A to this
Proxy Statement/Prospectus and incorporated herein by this reference. The
description of the Agreement and Plan of Reorganization contained herein, which
includes the material provisions of the Agreement and Plan of Reorganization,
is qualified in its entirety by the attached copy.
Cancellation of Share Certificates. If your shares are represented by one
or more share certificates before the Closing Date, on the Closing Date all
certificates will be canceled, they will no longer evidence ownership of your
fund's shares and will evidence ownership of the corresponding Pioneer Bond Fund
shares. Pioneer Bond Fund will not issue share certificates in the
Reorganization.
Conditions to Closing the Reorganization. The obligation of your fund to
consummate the Reorganization is subject to the satisfaction of certain
conditions, including the performance by Pioneer Bond Fund of all of its
obligations under the Agreement and Plan of Reorganization and the receipt of
all consents, orders and permits necessary to consummate the Reorganization (see
Agreement and Plan of Reorganization, Section 6).
The obligation of Pioneer Bond Fund to consummate the Reorganization is
subject to the satisfaction of certain conditions, including your fund's
performance of all of its obligations under the Agreement and Plan of
Reorganization, the receipt of certain documents and financial statements from
your fund and the receipt of all consents, orders and permits necessary to
consummate the Reorganization (see Agreement and Plan of Reorganization,
Section 7).
The obligations of your fund and Pioneer Bond Fund are subject to approval
of the Agreement and Plan of Reorganization by the necessary vote of the
outstanding shares of your fund in accordance with the provisions of your
fund's declaration of trust and by-laws. The funds' obligations also are
subject to the receipt of a favorable opinion of Wilmer Cutler Pickering Hale
and Dorr LLP as to the federal income tax consequences of the Reorganization
(see Agreement and Plan of Reorganization, Section 8.5).
Termination of Agreement and Plan of Reorganization. The Board of Trustees
of your fund or Pioneer Bond Fund may terminate the Agreement and Plan of
Reorganization (even if the shareholders of your fund already have approved it)
by their mutual agreement at any time before the Closing Date, if the Boards
believe that proceeding with the Reorganization would no longer be advisable.
Expenses of the Reorganization. Your fund will bear one quarter of all the
expenses incurred in connection with the Reorganization, including the costs of
printing, mailing, legal fees, audit fees and solicitation expenses. Pioneer
will bear the remainder of these expenses.
TAX STATUS OF THE REORGANIZATION
The Reorganization is not intended to result in any income, gain or loss
for U.S. federal income tax purposes and will not take place unless the funds
receive a satisfactory opinion from Wilmer Cutler Pickering Hale and Dorr LLP,
counsel to the funds, that the Reorganization will be a "reorganization" within
the meaning of Section 368(a) of the Code.
As a result, for federal income tax purposes:
o No gain or loss will be recognized by your fund upon (1) the transfer of
all of its assets to Pioneer Bond Fund as described above or (2) the
distribution by your fund of Pioneer Bond Fund shares to your fund's
shareholders;
o No gain or loss will be recognized by Pioneer Bond Fund upon the receipt
of your fund's assets solely in exchange for the issuance of Class Y
shares of Pioneer Bond Fund to your fund and the assumption of your
fund's liabilities by Pioneer Bond Fund;
24
o The basis of the assets of your fund acquired by Pioneer Bond Fund will
be the same as the basis of those assets in the hands of your fund
immediately before the transfer;
o The tax holding period of the assets of your fund in the hands of Pioneer
Bond Fund will include your fund's tax holding period for those assets;
o You will not recognize gain or loss upon the exchange of your shares of
your fund solely for the Class Y shares of Pioneer Bond Fund as part of
the Reorganization;
o The basis of Class Y shares of Pioneer Bond Fund received by you in the
Reorganization will be the same as the basis of the shares of your fund
you surrender in exchange; and
o The tax holding period of Class Y shares of Pioneer Bond Fund you receive
will include the tax holding period of the shares of your fund that you
surrender in exchange, provided that the shares of your fund were held by
you as capital assets on the date of the exchange.
In rendering such opinion, counsel shall rely upon, among other things,
reasonable assumptions as well as representations of Pioneer Bond Fund and your
fund.
No tax ruling has been or will be received from the Internal Revenue
Service ("IRS") in connection with the Reorganization. An opinion of counsel is
not binding on the IRS or a court, and no assurance can be given that the IRS
would not assert, or a court would not sustain, a contrary position.
The foregoing consequences may not apply to certain classes of taxpayers
who are subject to special circumstances, such as shareholders who are not
citizens of or residents of the United States, insurance companies, tax-exempt
organizations, financial institutions, dealers in securities or foreign
currencies, or persons who hold their shares as part of a straddle or
conversion transaction. You should consult your tax adviser for the particular
tax consequences to you of the transaction, including the applicability of any
state, local or foreign tax laws.
VOTING RIGHTS AND REQUIRED VOTE
Each share of your fund is entitled to one vote (or, in the case of
fractional shares, a proportionate fractional vote). A quorum is required to
conduct business at the meeting. With respect to your fund, the presence in
person or by proxy of one-third of the shares entitled to cast votes at the
meeting will constitute a quorum. Pursuant to Article IX, Section 4 of the
Agreement and Declaration of Trust, a favorable vote of a "majority of the
shares outstanding and entitled to vote" of your fund is required to approve
the proposal with respect to your fund. For this purpose, a "majority of the
shares outstanding and entitled to vote" means the affirmative vote of the
lesser of:
1. 67% or more of the shares of your fund present at the meeting, if the
holders of more than 50% of the outstanding shares of your fund entitled
to vote are present or represented by proxy, or
2. more than 50% of the outstanding shares of your fund.
The table below shows how shares will be treated for the purposes of
quorum and voting requirements.
- ----------------------------------------------------------------------------------------------------------------------
Shares Quorum Voting
- ----------------------------------------------------------------------------------------------------------------------
In General All shares "present" in person or by Shares "present" in person will be voted in
proxy are counted toward a quorum. person at the meeting. Shares present by
proxy will be voted in accordance with
instructions.
- ----------------------------------------------------------------------------------------------------------------------
Signed Proxy with no Voting Considered "present" at meeting for Voted "for" the proposal.
Instruction (other than Broker purposes of quorum.
Non-Vote)
- ----------------------------------------------------------------------------------------------------------------------
Broker Non-Vote (where the Considered "present" at meeting for Broker non-votes do not count as a vote "for"
underlying holder had not purposes of quorum. the proposal and effectively result in a vote
voted and the broker does not "against" the proposal.
have discretionary authority
to vote the shares)
- ----------------------------------------------------------------------------------------------------------------------
25
- ----------------------------------------------------------------------------------------------------------------------
Shares Quorum Voting
- ----------------------------------------------------------------------------------------------------------------------
Vote to Abstain Considered "present" at meeting for Abstentions do not constitute a vote "for"
purposes of quorum. the proposal and effectively result in a vote
"against" the proposal.
- ----------------------------------------------------------------------------------------------------------------------
If the required approval of shareholders is not obtained, the meeting may
be adjourned as more fully described in this Proxy Statement/Prospectus. If the
required approval of shareholders of your fund is not obtained, Pioneer and your
Board have determined that it would be in your fund's best interest to be
liquidated. Liquidation will not require a shareholder vote.
COMPARISON OF A CLOSED-END FUND AND AN OPEN-END FUND
As described in Proposal 1, it is proposed that your fund be reorganized
into Pioneer Bond Fund. Although each fund is a Delaware statutory trust, your
fund is a closed-end fund whose shares are traded on the NYSE whereas Pioneer
Bond Fund is an open-end fund that operates as a mutual fund. The differences
between the rights of shareholders of Pioneer Interest Shares and those of
Pioneer Bond Fund relate primarily to the different characteristics of a
closed-end fund and an open-end fund. Below is a summary of the principal
differences between a closed-end fund and an open-end fund.
Closed-end investment companies neither redeem their outstanding shares
nor engage in the ongoing sale of new shares, and thus operate with a
relatively fixed capitalization. Shares of closed-end investment companies
typically are bought and sold on national securities exchanges. Pioneer
Interest Shares' common shares currently are traded on the NYSE and during the
last few years have traded at a discount from net asset value, although at
other times these shares traded at a premium above net asset value.
Pioneer Bond Fund is registered as an open-end investment company under
the 1940 Act. Open-end investment companies are commonly referred to as "mutual
funds" and generally issue redeemable securities on an ongoing basis. Open-end
fund shares are redeemable each day the NYSE is open at their net asset value.
Pioneer Bond Fund engages in a continuous offering of its shares of beneficial
interest. Class Y shares of Pioneer Bond Fund are sold at net asset value and
are not subject to any sales charges or redemption fees. Other classes have
different features. Shareholders of Pioneer Bond Fund may, on any day the NYSE
is open, redeem their shares of Pioneer Bond Fund and receive the net asset
value of the shares next computed after the receipt of the redemption request
in good order.
In addition to the methods of acquiring and disposing of shares and their
potential impact on portfolio management, there are a number of other
differences between the funds that should be considered by Pioneer Interest
Shares' shareholders:
(i) Effect of redemption rights on value of shares. As stated above, the
shareholders of open-end funds redeem their shares at the "public offering
price," meaning net asset value for a no-load fund, such as Class Y shares of
Pioneer Bond Fund. The right to transact at the public offering price (or net
asset value) is established by Section 22(d) of the 1940 Act. This provision
effectively eliminates any discount that may occur when shares of a closed-end
fund trade on the secondary market. Conversely, this provision precludes the
possibility of ever receiving a premium over net asset value, at which shares
of a closed-end fund may trade on the secondary market.
(ii) Shareholder services. Shareholders of Pioneer Bond Fund may
participate in an exchange privilege allowing them to exchange their shares for
Class Y shares of other Pioneer funds, which are not available to shareholders
of closed-end funds, such as Pioneer Interest Shares. In addition, shareholders
of Pioneer Bond Fund receive other shareholder services and privileges that are
not provided to shareholders of Pioneer Interest Shares, as discussed under
"Additional Information About The Pioneer Funds."
(iii) Dividend reinvestment plan. For the period prior to the proposed
Reorganization, shareholders of Pioneer Interest Shares participating in the
Plan will continue to have their dividends reinvested in shares of Pioneer
Interest Shares in accordance with the Plan unless they elect otherwise. The
Plan is expected to be suspended, however, with respect to any dividend payable
on the business day immediately preceding and up through the Closing Date. Any
such dividend will be paid to Plan participants in cash. Following the
reorganization, former shareholders of Pioneer Interest Shares who participated
in the Plan may have their dividends reinvested in Class Y shares of Pioneer
Bond Fund at net asset value.
(iv) Shareholder meetings. The NYSE listing regulations require that
Pioneer Interest Shares hold an annual meeting of shareholders. Pioneer Bond
Fund is not required to and generally does not hold such annual meetings.
26
ADDITIONAL INFORMATION ABOUT THE PIONEER FUNDS
Investment Adviser
Pioneer serves as the investment adviser to each Pioneer Fund. As each
fund's investment adviser, Pioneer provides the funds with investment research,
advice and supervision and furnishes an investment program for each fund
consistent with that fund's investment objectives and policies, subject to the
supervision of that fund's Trustees. Pioneer determines what portfolio
securities will be purchased or sold, arranges for the placing of orders for
the purchase or sale of portfolio securities, selects brokers or dealers to
place those orders, maintains books and records with respect to the fund's
securities transactions and reports to the Trustees on each fund's investments
and performance.
Pioneer is an indirect, wholly owned subsidiary of UniCredito Italiano
S.P.A., one of the largest banking groups in Italy. Pioneer is part of the
global asset management group providing investment management and financial
services to mutual funds, institutional and other clients. As of March 31,
2007, assets under management were approximately $310 billion worldwide,
including over $81 billion in assets under management by Pioneer. Pioneer's
main office is at 60 State Street, Boston, Massachusetts 02109. Pioneer's U.S.
mutual fund investment history includes creating one of the first mutual funds
in 1928.
Board of Trustees
The Board of Trustees provides broad supervision over the affairs of each
Pioneer Fund. Specifically, the Board of the Pioneer Funds is responsible for
overseeing the performance of Pioneer Funds' investment adviser and determining
whether to approve and renew the Pioneer Funds' investment management
agreements.
Margaret B.W. Graham is a resident of Canada and may be presumed to have
all of her assets located outside the United States; this may be expected to
adversely affect enforcement of federal securities laws due to an inability to
effect service of process, bring actions in Canadian courts or enforce judgments
in the United States or Canada.
Administrator, Custodian, Distributor and Transfer Agent
Because your fund is a closed-end fund traded on the NYSE, your fund does
not have an underwriting agreement with a distributor to distribute shares. PFD
is the distributor of Pioneer Bond Fund's shares.
Pioneer Investment Management Shareholder Services, Inc. ("PIMSS") is each
fund's transfer agent. The principal business address of PIMSS is P.O. Box
55150 Boston, MA 02205-5150. PIMSS hired American Stock Transfer & Trust
Company ("AST") to serve as your fund's sub-transfer agent on July 17, 2006.
The principal business address of AST is 59 Maiden Lane, Plaza Level, New York,
NY 10038.
Brown Brothers Harriman & Co. ("BBH") is each fund's custodian. The
principal business address of Brown Brothers Harriman & Co. is 40 Water Street,
Boston, MA 02109.
Pioneer is each fund's administrator. For a fee at the annual rate of
0.0225% of average daily net assets, Pioneer provides to each fund certain
accounting, administration and legal services.
Pioneer Bond Fund compensates PFD, PIMSS and BBH for their services. Your
fund compensates PIMSS and BBH for their services. PIMSS is responsible for
paying the fees of AST. PFD and PIMSS are affiliates of Pioneer.
Capital Stock (Pioneer Interest Shares)
Your fund's Declaration of Trust authorizes issuance of only one class of
shares, the holders of which have the right to receive any dividends payable.
There will be no cumulative voting in the election of Trustees. On all matters,
each share has one vote (or, in the case of fractional shares, a proportionate
fractional vote). Shares are non-assessable. There are no preemptive rights,
conversion rights, redemption provisions or sinking fund provisions.
27
Pioneer Interest Shares Outstanding Securities -- Common Shares
(As of __________, ____)
- ---------------------------------------------------------------------------------------------------
(3) Amount Held by (4) Amount Outstanding
(1) Title of Class (2) Amount Authorized Pioneer Interest Exclusive of Amount
Shares for its Account shown under (3)
- ---------------------------------------------------------------------------------------------------
Common Shares _____________ _____________ _____________
- ---------------------------------------------------------------------------------------------------
Description of Shares (Pioneer Bond Fund)
Pioneer Bond Fund's Declaration of Trust authorizes the Trustees to
classify or reclassify any series of the shares into one or more classes. The
Trustees have authorized the issuance of the following classes of shares of the
fund, designated as Class A shares, Class B shares, Class C shares, Class R
shares, Class Y shares and Class Z shares. The shares of each class represent
an interest in the same portfolio of investments of Pioneer Bond Fund. Each
class has equal rights as to voting, redemption, dividends and liquidation,
except that each class bears different distribution and transfer agent fees and
may bear other expenses properly attributable to the particular class. Class A,
Class B, Class C and Class R shareholders have exclusive voting rights with
respect to the rule 12b-1 fees adopted by holders of those shares in connection
with the distribution of those shares.
Shareholders are entitled to one vote for each share held (or, in the case
of fractional shares, a proportionate fractional vote) and may vote in the
election of the Trustees and on other matters submitted to a meeting of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees. Pioneer Bond Fund is not required, and does not intend, to hold annual
shareholder meetings although special meetings may be called for such purposes
as electing or removing Trustees, changing fundamental investment restrictions
or approving a management contract. The shares of each series of the fund are
entitled to vote separately to approve investment advisory agreements or changes
in investment restrictions, but shareholders of all series vote together in the
election and selection of Trustees and accountants. Shares of all series of the
fund vote together as a class on matters that affect all series of Pioneer Bond
Fund in substantially the same manner. As to matters affecting a single series
or class, shares of such series or class will vote separately. No amendment
adversely affecting the rights of shareholders may be made to the Declaration of
Trust without the affirmative vote of a majority of Pioneer Bond Fund's shares.
Dividend Reinvestment Plan (Pioneer Interest Shares)
Your fund maintains a Plan whereby a shareholder who desires to
participate (a "Participant") may reinvest cash dividends and distributions in
the purchase of additional shares of your fund. Participants have the right to
withdraw from the Plan at any time without penalty or to reenter at any time;
provided, however, that written notice of withdrawal from, or resumption of,
the Plan by a Participant to be effective as to any dividend or distribution
must be received by PIMSS at least 15 days before the record date for such
dividend or distribution.
Under the Plan when a dividend or distribution is declared, the number of
whole and fractional shares credited to a Participant's account, or the cash
distributed to a Participant, is determined as follows:
(i) if the market value of your fund is less than the net asset value of
your fund in effect at the time, the dividend or distribution is
returned as cash to Participants, and
(ii) if the market value of your fund is equal to or greater than the net
asset value of your fund at that time, the dividend or distribution is
reinvested to purchase whole and fractional shares at the greater of
the net asset value or 95% of the market value per share.
Capital gains and income realized upon a dividend or distribution are
borne by Participants at the time of distribution, regardless of whether cash or
shares are received under the Plan. Contact PIMSS at the address given above
for additional information about your fund's Plan. Participants holding Plan
shares in a brokerage account may not be able to transfer the shares to another
broker and continue to participate in the Plan.
Disclosure of Portfolio Holdings (Pioneer Bond Fund)
Pioneer Bond Fund's policies and procedures with respect to the disclosure
of portfolio securities are described in the statement of additional
information.
28
Buying, Exchanging and Selling Shares
Net Asset Value. Each Pioneer Fund's net asset value is the value of its
portfolio of securities plus any other assets minus its operating expenses and
any other liabilities. Each Pioneer Fund calculates a net asset value for each
class of shares every day the NYSE is open when regular trading closes
(normally 4:00 p.m. Eastern time).
Each Pioneer Fund generally values its portfolio securities using closing
market prices or readily available market quotations. When closing market
prices or market quotations are not available or are considered by Pioneer to
be unreliable, the fund uses a security's fair value. All methods of
determining the value of a security used by the Pioneer Fund, including those
discussed below, on a basis other than market value, are forms of fair value.
All valuations of securities on a fair value basis are made pursuant to
procedures adopted by the Board of Trustees. The use of fair value pricing by a
Pioneer Fund may cause the net asset value of its shares to differ from the net
asset value that would be calculated using only market prices. For market
prices and quotations, as well as for some fair value methods, the Pioneer
Funds rely upon securities prices provided by pricing services.
Each Pioneer Fund uses the fair value of a security, including a non-U.S.
security, when Pioneer determines that the closing market price on the primary
exchange where the security is traded no longer accurately reflects the value
of the security at the time the Pioneer Fund calculates its net asset value.
This may occur for a variety of reasons that affect either the relevant
securities markets generally or the specific issuer. For example, with respect
to non-U.S. securities held by the Pioneer Fund, developments relating to the
securities market or the specific issuer may occur between the time the primary
market closes and the time the Pioneer Fund determines its net asset value. In
those circumstances, the Pioneer Fund may use the fair value of the security.
International securities markets may be open on days when the U.S. markets are
closed. For this reason, the values of any international securities owned by
the Pioneer Fund could change on a day you cannot buy or sell shares of the
Pioneer Fund.
Certain types of securities, including those discussed in this paragraph,
are priced using fair value rather than market prices. Each Pioneer Fund uses a
pricing matrix to determine the value of fixed income securities that do not
trade daily. A pricing matrix is a means of valuing a debt security on the
basis of current market prices for other debt securities and historical trading
patterns in the market for fixed income securities. Each Pioneer Fund values
cash equivalent securities with remaining maturities of 60 days or less at
amortized cost. To the extent that a Pioneer Fund invests in the shares of
other registered open-end investment companies that are not traded on an
exchange (mutual funds), such shares are valued at their published net asset
values per share as reported by the funds. The prospectuses of these funds
explain the circumstances under which the funds will use fair value pricing and
the effects of using fair value pricing.
Additional Payments to Financial Intermediaries (Pioneer Bond Fund).
Pioneer and its affiliates may make additional payments to your financial
intermediary through which you will hold Pioneer Bond Fund shares. These
payments by Pioneer may provide your financial intermediary with an incentive
to favor the Pioneer funds over other mutual funds or assist the distributor in
its efforts to promote the sale of a fund's shares. Financial intermediaries
include broker-dealers, banks (including bank trust departments), registered
investment advisers, financial planners, retirement plan administrators and
other types of intermediaries.
Pioneer makes these additional payments (sometimes referred to as "revenue
sharing") to financial intermediaries out of its own assets. Revenue sharing is
not an expense of the Pioneer funds. Pioneer may base these payments on a
variety of criteria, including the amount of sales or assets attributable to
the financial intermediary or as a per transaction fee.
Not all financial intermediaries receive additional compensation and the
amount of compensation paid varies for each financial intermediary. In certain
cases, these payments could be significant. Pioneer determines which firms to
support and the extent of the payments it is willing to make, generally
choosing firms that have a strong capability to effectively distribute shares
of the Pioneer funds and that are willing to cooperate with Pioneer's
promotional efforts. Pioneer also may compensate financial intermediaries for
providing certain administrative services and transaction processing services.
Pioneer may benefit from revenue sharing if the intermediary features the
Pioneer funds in its sales system (such as by placing certain Pioneer funds on
its preferred fund list or giving access on a preferential basis to members of
the financial intermediary's sales force or management). In addition, the
financial intermediary may agree to participate in the distributor's marketing
efforts (such as by helping to facilitate or provide financial assistance for
conferences, seminars or other programs at which Pioneer personnel may make
presentations on the funds to the intermediary's sales force). To the extent
intermediaries sell more shares of the Pioneer funds or retain shares of the
Pioneer funds in their clients' accounts, Pioneer receives greater management
and other fees due to the increase in the Pioneer funds' assets. Although an
intermediary may request additional compensation from Pioneer to offset costs
incurred by the financial intermediary in servicing its clients, the
intermediary may earn a profit on these payments if the amount of the payment
may exceed the intermediary's costs.
29
The compensation that Pioneer pays to financial intermediaries is
discussed in more detail in the Pioneer fund's statement of additional
information. Your intermediary may charge you additional fees or commissions
other than those disclosed in this prospectus. Intermediaries may categorize
and disclose these arrangements differently than the discussion above and in
the statement of additional information. You can ask your financial
intermediary about any payments it receives from Pioneer or the Pioneer funds,
as well as about fees and/or commissions it charges.
Pioneer and its affiliates may have other relationships with your
financial intermediary relating to the provision of services to the funds, such
as providing omnibus account services or effecting portfolio transactions for
the Pioneer funds. If your intermediary provides these services, Pioneer or the
Pioneer funds may compensate the intermediary for these services. In addition,
your intermediary may have other relationships with Pioneer or its affiliates
that are not related to the funds.
Opening Your Account (Pioneer Bond Fund). If your shares are held in your
investment firm's name, the options and services available to you may be
different from those described herein or in Pioneer Bond Fund's prospectus. Ask
your investment professional for more information.
If you invest in Pioneer Bond Fund through investment professionals or
other financial intermediaries, including wrap programs and fund supermarkets,
additional conditions may apply to your investment in Pioneer Bond Fund, and
the investment professional or intermediary may charge you a transaction-based
or other fee for its services. These conditions and fees are in addition to
those imposed by Pioneer Bond Fund and its affiliates. You should ask your
investment professional or financial intermediary about its services and any
applicable fees.
Account Options (Pioneer Bond Fund). You must complete an account
application to select options and privileges for your account. You can change
your selections at any time by sending a completed account options form to the
transfer agent. You may be required to obtain a signature guarantee to make
certain changes to an existing account.
Call or write to the transfer agent for account applications, account
options forms and other account information:
PIONEER INVESTMENT MANAGEMENT SHAREHOLDER SERVICES, INC.
P.O. Box 55150
Boston, Massachusetts 02205-5150
Telephone 1-800-622-3265
Telephone Transaction Privileges (Pioneer Bond Fund). If your account is
registered in your name, you can exchange or sell shares of Pioneer Bond Fund
by telephone. If you do not want your account to have telephone transaction
privileges, you must indicate that choice on your account application or by
writing to the transfer agent.
When you request a telephone transaction the transfer agent will try to
confirm that the request is genuine. The transfer agent records the call,
requires the caller to provide validating information for the account and sends
you a written confirmation. Pioneer Bond Fund may implement other confirmation
procedures from time to time. Different procedures may apply if you have a
non-U.S. account or if your account is registered in the name of an
institution, broker-dealer or other third party.
Share Price (Pioneer Bond Fund). If you place an order to purchase,
exchange, or sell shares with the transfer agent, your PFD-affiliated
investment firm or your PFD-affiliated plan administrator by the close of
regular trading on the NYSE (currently 4:00 p.m. Eastern time), your
transaction will be completed at the share price determined as of the close of
trading on the NYSE on that day. If your order is placed with such transfer
agent, investment firm or plan administrator after 4:00 p.m., or your order is
not in good order, your transaction will be completed at the share price next
determined after your order is received in good order by Pioneer Bond Fund.
Your investment firm or plan administrator is responsible for transmitting your
order to Pioneer Bond Fund in a timely manner.
Good order means that:
o You have provided adequate instructions
o There are no outstanding claims against your account
o There are no transaction limitations on your account
o If you have any Pioneer fund share certificates, you submit them and they
are signed by each record owner exactly as the shares are registered
30
o Your request includes a signature guarantee if you:
-- Are selling over $100,000 and want the sale proceeds sent to an
address other than your bank account of record or payable to someone
other than the account's record owners
-- Changed the account registration, address of record or bank account of
record within the last 30 days
-- Are selling or exchanging over $5 million worth of shares
-- Are transferring the sale proceeds to a Pioneer mutual fund account
with a different registration
Buying Pioneer Fund Shares (Pioneer Bond Fund). You may buy Class Y shares
of Pioneer Bond Fund from any investment firm that has a sales agreement with
PFD. If you do not have an investment firm that has a sales agreement with PFD,
please call 1-800-622-3265 for information on how to locate an investment
professional in your area. Participants in retirement plans generally must
contact the plan's administrator to purchase shares.
You can buy shares of Pioneer Bond Fund at the offering price. PFD may
reject any order until it has confirmed the order in writing and received
payment. Pioneer Bond Fund reserves the right to stop offering any class of
shares.
Exchanging Shares (Pioneer Bond Fund). You may exchange your Class Y
shares of Pioneer Bond Fund for Class Y shares of another Pioneer mutual fund.
Your exchange request must be for at least $1,000. Pioneer Bond Fund allows you
to exchange your Class Y shares at net asset value without charging you either
an initial or contingent deferred sales charge. Your exchanges are subject to
certain limitations.
Before you request an exchange, consider each fund's investment objective
and policies as described in the fund's prospectus.
Selling Shares (Pioneer Bond Fund). Your shares will be sold at net asset
value per share next calculated after Pioneer Bond Fund or its authorized
agent, such as broker-dealers, receives your request in good order. If a
signature guarantee is required, you must submit your request in writing.
Pioneer Bond Fund generally will send your sale proceeds by check, bank
wire or electronic funds transfer. Normally you will be paid within seven days.
Other Requirements (Pioneer Bond Fund). If you must use a written request
to exchange or sell your Class Y shares and your account is registered in the
name of a corporation or other fiduciary you must include the name of an
authorized person and a certified copy of a current corporate resolution,
certificate of incumbency or similar legal document showing that the named
individual is authorized to act on behalf of the record owner. You may have to
pay income taxes on a sale or an exchange.
31
- --------------------------------------------------------------------------------------------------------------------------
Buying Shares Exchanging Shares
- --------------------------------------------------------------------------------------------------------------------------
THROUGH YOUR Normally, your investment firm will send your Normally, your investment firm will send your
INVESTMENT FIRM purchase request to the Pioneer Bond Fund's exchange request to the Pioneer Bond Fund's
transfer agent. transfer agent.
Consult your investment professional for more Consult your investment professional for more
information. information about exchanging your shares.
Your investment firm may receive a
commission from PFD for your purchase of
fund shares, and may receive additional
compensation from Pioneer for your purchase
of Pioneer Bond Fund shares.
- ----------------------------------------------------------------------------------------------------------------------------
BY PHONE OR WIRE You may wire funds to purchase Class Y You may exchange Pioneer Bond Fund's
shares if you have an existing Class Y account. shares by phone after establishing a Class Y
Note, however, that: account if:
o State Street Bank must receive your wire no o You are exchanging into an existing account
later than 11:00 a.m. Eastern time on the or using the exchange to establish a new
business day after the fund receives your account, provided the new account has a
request to purchase shares registration identical to the original
account
o If State Street Bank does not receive your
wire by 11:00 a.m. Eastern time on the next o The fund into which you are exchanging offers
business day, your transaction will be Class Y shares
canceled at your expense and risk
o You are not exchanging more than $5 million
o Wire transfers normally take two or more worth of shares per account per day
hours to complete and a fee may be charged
by the sending bank o You can provide the proper account
identification information
o Wire transfers may be restricted on holidays
and at certain other times
- ----------------------------------------------------------------------------------------------------------------------------
IN WRITING, BY MAIL OR You can purchase Pioneer Bond Fund shares You can exchange Pioneer Bond Fund shares
BY FAX for an existing fund account by mailing a by mailing or faxing a letter of instruction to
check to the transfer agent. Make your check the transfer agent. You can exchange Pioneer
payable to Pioneer Bond Fund. Neither initial Bond Fund shares directly through the Pioneer
nor subsequent investments should be made Bond Fund only if your account is registered
by third party check. Your check must be in in your name. However, you may not fax an
U.S. dollars and drawn on a U.S. bank. Include exchange request for more than $5 million.
in your purchase request Pioneer Bond Fund's Include in your letter:
name, the account number and the name or
names in the account registration. o The name and signature of all registered
owners
If you are registering an account in the name
of a corporation or other fiduciary, you must o A signature guarantee for each registered
send your completed account set-up forms to owner if the amount of the exchange is more
the transfer agent prior to making your than $5 million
purchase.
o The name of the fund out of which you are
exchanging and the name of the fund into
which you are exchanging
o The dollar amount or number of shares you are
exchanging
- --------------------------------------------------------------------------------------------------------------------------
32
- -------------------------------------------------------------------------------------------------------------------------------
Selling Shares How to Contact Pioneer
- -------------------------------------------------------------------------------------------------------------------------------
Normally, your investment firm will send your request to sell BY PHONE
shares to the Pioneer Bond Fund's transfer agent. For information or to request a telephone
transaction between 9:00 a.m. and 5:30 p.m.
Consult your investment professional for more information. (Eastern time) by speaking with a shareholder
services representative call 1-800-622-3265
Pioneer Bond Fund has authorized PFD to act as its agent in
the repurchase of its shares from qualified investment firms. To request a transaction using FactFone(SM) call
Pioneer Bond Fund reserves the right to terminate this 1-800-225-4321
procedure at any time.
Telecommunications Device for the Deaf (TDD)
1-800-225-1997
- -------------------------------------------------------------------------------------------------------------------------------
You may sell up to $5 million per account per day by telephone BY MAIL
if the proceeds are directed to your bank account of record. Send your written instructions to: PIONEER
You may only sell up to $100,000 per account per day by INVESTMENT MANAGEMENT SHAREHOLDER SERVICES, INC.
telephone if the proceeds are not directed to your bank account P.O. Box 55150 Boston, Massachusetts 02205-5150
of record. You may sell Pioneer Bond Fund shares held in a
retirement plan account by phone only if your account is an PIONEER WEBSITE
eligible IRA (tax penalties may apply). You may not sell your www.pioneerinvestments.com
shares by phone if you have changed your address (for
checks) or your bank information (for wires and transfers) in BY FAX
the last 30 days. Fax your exchange and sale requests to:
1-800-294-4485
You may receive your sale proceeds:
o By check, provided the check is made payable
exactly as your account is registered
o By bank wire or by electronic funds transfer,
provided the sale proceeds are being sent to
your bank address of record
- -------------------------------------------------------------------------------------------------------------------------------
You can sell some or all of your Pioneer Bond Fund shares by
writing directly to the Pioneer Bond Fund only if your account
is registered in your name. Include in your request your name,
the fund's name, the fund account number, dollar amount or
number of Class Y shares to be sold and any other applicable
requirements as described below.
The transfer agent will send the sale proceeds to your address
of record unless you provide other instructions. Your request
must be signed by all registered owners and be in good order.
The transfer agent will not process your request until it is
received in good order.
You may sell up to $5 million per account per day by fax if the
proceeds are directed to your bank account of record. You may
only sell up to $100,000 per account per day by fax if the
proceeds are not directed to your bank account of record.
- -------------------------------------------------------------------------------------------------------------------------------
33
Shareholder Account Policies (Pioneer Bond Fund)
Signature Guarantees and Other Requirements. You are required to obtain a
signature guarantee when you are:
o Requesting certain types of exchanges or sales of Pioneer Bond Fund
shares
o Requesting certain types of changes for your existing account
You can obtain a signature guarantee from most broker-dealers, banks,
credit unions (if authorized under state law) and federal savings and loan
associations. You cannot obtain a signature guarantee from a notary public.
Pioneer Bond Fund generally will accept only medallion signature
guarantees. A medallion signature guarantee may be obtained from a domestic
bank or trust company, broker, dealer, clearing agency, savings association, or
other financial institution that is participating in a medallion program
recognized by the Securities Transfer Association. Signature guarantees from
financial institutions that are not participating in one of these programs are
not accepted as medallion signature guarantees. Pioneer Bond Fund may accept
other forms of guarantee from financial intermediaries in limited
circumstances.
Fiduciaries and corporations are required to submit additional documents
to sell Pioneer Bond Fund shares.
Distribution Options (Pioneer Bond Fund). Pioneer Bond Fund offers three
distribution options. Any Pioneer Bond Fund shares you buy by reinvesting
distributions will be priced at the applicable net asset value per share.
1. Unless you indicate another option on your account application, any
dividends and capital gain distributions paid to you by Pioneer Bond
Fund will automatically be invested in additional Pioneer Bond Fund
shares.
2. You may elect to have the amount of any dividends paid to you in cash
and any capital gain distributions reinvested in additional shares.
3. You may elect to have the full amount of any dividends and/or capital
gain distributions paid to you in cash.
Options (2) or (3) are not available to retirement plan accounts or accounts
with a current value of less than $500.
If your distribution check is returned to the transfer agent or you do not cash
the check for six months or more, the transfer agent may reinvest the amount of
the check in your account and automatically change the distribution on your
account to option (1) until you request a different option in writing. These
additional shares will be purchased at the then current net asset value.
Excessive Trading (Pioneer Bond Fund). Frequent trading into and out of
Pioneer Bond Fund can disrupt portfolio management strategies, harm Pioneer
Bond Fund's performance by forcing Pioneer Bond Fund to hold excess cash or to
liquidate certain portfolio securities prematurely and increase expenses for
all investors, including long-term investors who do not generate these costs.
An investor may use short-term trading as a strategy, for example, if the
investor believes that the valuation of Pioneer Bond Fund's portfolio
securities for purposes of calculating its net asset value does not fully
reflect the then current fair market value of those holdings. Pioneer Bond Fund
discourages, and does not take any intentional action to accommodate, excessive
and short-term trading practices, such as market timing. Although there is no
generally applied standard in the marketplace as to what level of trading
activity is excessive, we may consider trading in Pioneer Bond Fund's shares to
be excessive for a variety of reasons, such as if:
o You sell shares within a short period of time after the shares were
purchased;
o You make two or more purchases and redemptions within a short period of
time;
o You enter into a series of transactions that is indicative of a timing
pattern or strategy; or
o We reasonably believe that you have engaged in such practices in
connection with other mutual funds.
Pioneer Bond Fund's Board of Trustees has adopted policies and procedures
with respect to frequent purchases and redemptions of Pioneer Bond Fund's
shares by fund investors. Pursuant to these policies and procedures, we monitor
selected trades on a daily basis in an effort to detect excessive short-term
trading. If we determine that an investor or a client of a broker has engaged
in excessive short-term trading that we believe may be harmful to Pioneer Bond
Fund, we will ask the investor or broker to cease such activity and we will
refuse to process purchase orders (including purchases by exchange) of such
investor, broker or accounts that we believe are under their control. In
determining whether to take such actions, we seek to act in a manner that is
consistent with the best interests of Pioneer Bond Fund's shareholders.
While we use our reasonable efforts to detect excessive trading activity,
there can be no assurance that our efforts will be successful or that market
timers will not employ tactics designed to evade detection. If we are not
successful, your return from an investment in
34
Pioneer Bond Fund may be adversely affected. Frequently, Pioneer Bond Fund
shares are held through omnibus accounts maintained by financial intermediaries
such as brokers and retirement plan administrators, where the holdings of
multiple shareholders, such as all the clients of a particular broker, are
aggregated. Our ability to monitor trading practices by investors purchasing
shares through omnibus accounts is limited and dependent upon the cooperation
of the financial intermediary in taking steps to limit this type of activity.
Pioneer Bond Fund may reject a purchase or exchange order before its
acceptance or an order prior to issuance of shares. Pioneer Bond Fund may also
restrict additional purchases or exchanges in an account. Each of these steps
may be taken, for any reason, without prior notice, including transactions that
Pioneer Bond Fund believes are requested on behalf of market timers. Pioneer
Bond Fund reserves the right to reject any purchase request by any investor or
financial institution if Pioneer Bond Fund believes that any combination of
trading activity in the account or related accounts is potentially disruptive
to Pioneer Bond Fund. A prospective investor whose purchase or exchange order
is rejected will not achieve the investment results, whether gain or loss, that
would have been realized if the order were accepted and an investment made in
Pioneer Bond Fund. Pioneer Bond Fund and its shareholders do not incur any gain
or loss as a result of a rejected order. Pioneer Bond Fund may impose further
restrictions on trading activities by market timers in the future. Pioneer Bond
Fund's prospectus will be amended or supplemented to reflect any material
additional restrictions on trading activities intended to prevent excessive
trading.
To limit the negative effects of excessive trading, Pioneer Bond Fund has
adopted the following restriction on investor transactions. If an investor
redeems $5,000 or more (including redemptions that are a part of an exchange
transaction) from Pioneer Bond Fund, that investor shall be prevented (or
"blocked") from purchasing shares of Pioneer Bond Fund (including purchases
that are a part of an exchange transaction) for 30 calendar days after the
redemption. This policy does not apply to systematic withdrawal plan
transactions, transactions made through employer-sponsored retirement plans
described under Section 401(a), 403(b) or 457 of the Internal Revenue Code or
employee benefit plans, scheduled (Internal Revenue Code Section 72(t)
election) or mandatory (required minimum distribution) withdrawals from IRAs,
rebalancing transactions made through certain asset allocation or "wrap"
programs, or to transactions by other Pioneer funds that invest in Pioneer Bond
Fund. This policy does not apply to purchase or redemption transactions of less
than $5,000 or to the Pioneer money market funds.
We rely on financial intermediaries that maintain omnibus accounts to
apply to their customers either Pioneer Bond Fund's policy described above or
their own policies or restrictions designed to limit excessive trading of
Pioneer Bond Fund's shares. However, we do not impose this policy at the
omnibus account level.
Minimum Account Size (Pioneer Bond Fund). Pioneer Bond Fund requires that
you maintain a minimum account value of $500. If you hold less than $500 in
your account, Pioneer Bond Fund reserves the right to notify you that it
intends to sell your shares and close your account. You will be given 60 days
from the date of the notice to make additional investments to avoid having your
shares sold. This policy does not apply to certain qualified retirement plan
accounts.
Telephone and Website Access (Pioneer Bond Fund). You may have difficulty
contacting Pioneer Bond Fund by telephone during times of market volatility or
disruption in telephone service. On NYSE holidays or on days when the exchange
closes early, Pioneer will adjust the hours for the telephone center and for
online transaction processing accordingly. If you are unable to reach Pioneer
Bond Fund by telephone, you should communicate with the fund in writing.
Share Certificates (Pioneer Bond Fund). Pioneer Bond Fund does not offer
share certificates. Shares are electronically recorded. Any existing
certificated shares can only be sold by returning your certificate to the
transfer agent, along with a letter of instruction or a stock power (a separate
written authority transferring ownership) and a signature guarantee.
Other Policies (Pioneer Bond Fund). Pioneer Bond fund and PFD reserve the
right to:
o reject any purchase or exchange order for any reason, without prior
notice
o charge a fee for exchanges or to modify, limit or suspend the exchange
privilege at any time without notice. Pioneer Bond Fund will provide 60
days' notice of material amendments to or termination of the exchange
privilege
o revise, suspend, limit or terminate the account options or services
available to shareowners at any time, except as required by the rules of
the SEC
Pioneer Bond Fund reserves the right to:
o suspend transactions in shares when trading on the NYSE is closed or
restricted, or when the SEC determines an emergency or other
circumstances exist that make it impracticable for Pioneer Bond Fund to
sell or value its portfolio securities
35
o redeem in kind by delivering to you portfolio securities owned by
Pioneer Bond Fund rather than cash. Securities you receive this way may
increase or decrease in value while you hold them and you may incur
brokerage and transaction charges and tax liability when you convert the
securities to cash
Dividends and Capital Gains. Pioneer Interest Shares' policy is to
distribute each quarter substantially all of its net investment income and
annually substantially all of its net realized capital gains, if any. It is
Pioneer Interest Shares' policy to offset capital gains with any capital
loss-carryforward before making additional capital gains distributions. Pioneer
Bond Fund declares a dividend daily. Dividends are normally paid on the last
business day of each month. Pioneer Bond Fund generally pays any distributions
of net short-and long-term capital gains in November. Each Pioneer Fund may
also pay dividends and capital gain distributions at other times if necessary
for such Pioneer Fund to avoid U.S. federal income or excise tax. If you invest
in a Pioneer Fund close to the time that the Pioneer Fund makes a distribution,
generally you will pay a higher price per share and you will pay taxes on the
amount of the distribution whether you reinvest the distribution or receive it
as cash.
Taxes. For U.S. federal income tax purposes, distributions from each
Pioneer Fund's net long-term capital gains (if any) are considered long-term
capital gains and may be taxable to you at different maximum rates depending
upon their source and other factors. Distributions from a Pioneer Fund's net
short-term capital gains are taxable as ordinary income. Dividends are taxable
either as ordinary income or, if so designated by a Pioneer Fund and certain
other conditions, including holding period requirements, are met by the Pioneer
Fund and the shareholder, as "qualified dividend income" taxable to individual
shareholders at a maximum 15% U.S. federal income tax rate. Generally, none of
the dividends of either Pioneer Fund meet the requirements to be treated as
qualified dividend income. Dividends and distributions are taxable, whether you
take payment in cash or reinvest them to buy additional Pioneer Fund shares.
When you sell or exchange Pioneer Fund shares you will generally recognize
a capital gain or capital loss in an amount equal to the difference between the
net amount of sale proceeds (or, in the case of an exchange, the fair market
value of the shares) that you receive and your tax basis for the shares that
you sell or exchange. In January of each year each Pioneer Fund will mail to
you information about your dividends, distributions and any shares you sold in
the previous calendar year.
You must provide your social security number or other taxpayer
identification number to the Pioneer Fund along with the certifications
required by the IRS when you open an account. If you do not or if it is
otherwise legally required to do so, the Pioneer Fund will withhold 28% "backup
withholding" tax from your dividends and distributions, sale proceeds and any
other payments to you.
You should ask your tax adviser about any federal, state, local and
foreign tax considerations, including possible application of the alternative
minimum tax or additional withholding taxes for non-U.S. shareholders. You may
also consult Pioneer Bond Fund's statement of additional information and each
Pioneer Fund's most recent shareholder reports for a more detailed discussion
of qualified dividend income and other U.S. federal income tax considerations
that may affect the Pioneer Fund and its shareowners.
Share Classes. Pioneer Bond Fund offers six share classes (designated
Class A, B, C, R, Y and Z, respectively) that have different sales loads, 12b-1
fees and/or other class-specific expenses. As the investors in the other share
classes do have loads, 12b-1 fees and/or higher class-specific expenses, the
NAV and performance of each class varies. Class Y has one of the lowest
class-specific expense ratios. Shareholders are only offered Class Y shares by
means of this prospectus.
36
FINANCIAL HIGHLIGHTS
PIONEER INTEREST SHARES FINANCIAL HIGHLIGHTS
The following table shows the financial performance of your fund for the
past ten fiscal years. The total returns in the tables represent the rate that
your investment would have increased or decreased during each period (assuming
reinvestment of all dividends and distributions at net asset value).
The information below for the fiscal years ended December 31, 2002 through
December 31, 2006 has been audited by Ernst & Young LLP, your fund's
independent registered public accounting firm, whose report is included in your
fund's annual report along with your fund's financial statements. The
information below for the fiscal years ended December 31, 1997 through December
31, 2001 has been audited by Arthur Andersen LLP, the fund's previous
independent accountants. Arthur Andersen ceased operations in 2002. The annual
report is available upon request.
Year Year Year Year
Ended Ended Ended Ended
12/31/06 12/31/05 12/31/04 (a) 12/31/03
Net asset value, beginning of period $ 12.30 $ 12.61 $ 12.58 $ 12.22
------- ------- ------- -------
Increase (decrease) from
investment operations:
Net investment income $ 0.52 $ 1.81 $ 0.61 $ 0.69
Net realized and unrealized gain
(loss) on investments (0.07) (1.50) 0.14 0.35
------- ------- ------- -------
Net increase (decrease) from
investment operations $ 0.45 $ 0.31 $ 0.75 $ 1.04
Distributions to shareowners:
Net investment income (0.59) ( 0.62) (0.72) (0.68)
------- ------- ------- -------
In excess of net investment income -- -- -- --
------- ------- ------- -------
Net increase (decrease) in
net asset value $ (0.14) $ (0.31) $ 0.03 $ 0.36
------- ------- ------- -------
Net asset value, end of period $ 12.16 $ 12.30 $ 12.61 $ 12.58
======= ======= ======= =======
Market value, end of period $ 11.14 $ 10.85 $ 11.45 $ 11.53
======= ======= ======= =======
Total return*++ 8.28% 0.11% 5.48%(c) 8.91%
Ratio of net expenses to average
net assets+ 1.00% 0.81% 0.77% 0.90%
Ratio of net investment income
to average net assets+ 4.33% 4.51% 4.82% 5.53%
Portfolio turnover rate 27% 42% 47% 71%
Net assets, end of period
(in thousands) $89,933 $90,928 $93,286 $93,014
Ratios assuming no reduction
for fees paid indirectly:
Net expenses 1.00% 0.81% 0.77% 0.90%
Net investment income 4.33% 4.51% 4.87% 5.53%
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 12/31/97
Net asset value, beginning of period $ 12.33 $ 12.36 $ 12.39 $ 13.62 $ 13.74 $ 13.40
------- ------- ------- ------- -------- --------
Increase (decrease) from
investment operations:
Net investment income $ 0.82 $ 0.85 $ 0.93 $ 0.96 $ 1.04 $ 1.06
Net realized and unrealized gain
(loss) on investments (0.12) (0.01) (0.03) (1.24) (0.12) 0.36
------- ------- ------- ------- -------- --------
Net increase (decrease) from
investment operations $ 0.70 $ 0.84 $ 0.90 $ (0.28) $ 0.92 $ 1.42
Distributions to shareowners:
Net investment income (0.81) (0.87) (0.93) (0.95) (1.04) (1.07)
------- ------- ------- ------- -------- --------
In excess of net investment income -- -- -- -- -- (0.01)
------- ------- ------- ------- -------- --------
Net increase (decrease) in
net asset value $ (0.11) $ (0.03) $ (0.03) $ (1.23) $ (0.12) $ 0.34
------- ------- ------- ------- -------- --------
Net asset value, end of period $ 12.22 $ 12.33 $ 12.36 $ 12.39 $ 13.62 $ 13.74
======= ======= ======= ======= ======== ========
Market value, end of period $ 11.23 $ 11.40 $ 11.25 $ 10.25 $ 13.56 $ 14.00
======= ======= ======= ======= ======== ========
Total return*++ 5.58%(b) 9.13% 19.49% (17.96)% 4.66% 17.83%
Ratio of net expenses to average
net assets+ 0.84% 0.92% 0.79% 0.88% 0.80% 0.87%
Ratio of net investment income
to average net assets+ 7.15% 6.76% 7.55% 7.28% 7.53% 7.81%
Portfolio turnover rate 43% 52% 48% 59% 51% 27%
Net assets, end of period
(in thousands) $90,334 $91,193 $91,380 $91,621 $100,567 $101,192
Ratios assuming no reduction
for fees paid indirectly:
Net expenses 0.84% 0.92% 0.79% 0.88% 0.80% 0.87%
Net investment income 7.15% 6.76% 7.55% 7.28% 7.53% 7.81%
* Total investment return is calculated assuming a purchase of shares at the
current market value on the first day and a sale at the current market value
on the last day of the period reported. Dividends and distributions, if any,
are assumed for purposes of this calculation to be reinvested at prices
obtained under the Fund's dividends reinvestment plan. Total investment
return does not reflect brokerage commissions.
++ Assumes initial investment at market value at the beginning of each period,
reinvestment of all distributions and the complete redemption of the
investment at market value at the end of each period.
+ Ratios assuming no reduction for fees paid indirectly.
(a) The per share data presented is based upon the average shares outstanding
for the period presented.
(b) Previously reported 2.40% which was based on net asset value at the
beginning of the period, reinvestment of all distributions and the complete
redemption of the investment at net asset value at the end of the period.
(c) Previously reported 6.11% which was based on net asset value at the
beginning of the period, reinvestment of all distributions and the complete
redemption of the net asset value at the end of the period.
37
PIONEER BOND FUND FINANCIAL HIGHLIGHTS
The following table shows the financial performance of Pioneer Bond Fund
for the past five fiscal years and the most recent semi-annual period. Certain
information reflects financial results for a single Pioneer Bond Fund Class Y
share. The total returns in the tables represent the rate that your investment
in Pioneer Bond Fund's Class Y shares would have increased or decreased during
each period (assuming reinvestment of all dividends and distributions).
The information below has been audited by Ernst & Young LLP, Pioneer Bond
Fund's independent registered public accounting firm, whose report is included
in Pioneer Bond Fund's annual report along with Pioneer Bond Fund's financial
statements. The annual report is available upon request. The information for
the semi-annual period ended December 31, 2006 has not been audited.
Six Months
Ended
12/31/06 Year Ended Year Ended
Class Y (unaudited) 6/30/06 6/30/05
Net asset value, beginning of period $ 8.83 $ 9.33 $ 9.12
-------- -------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.23 $ 0.39 $ 0.44
Net realized and unrealized gain (loss) on investments 0.20 (0.46) 0.28
-------- -------- -------
Net increase (decrease) from investment operations $ 0.43 $ (0.07) $ 0.72
Distributions to shareowners:
Net investment income (0.23) (0.43) (0.51)
-------- -------- -------
Net increase (decrease) in net asset value $ 0.20 $ (0.50) $ 0.21
-------- -------- -------
Net asset value, end of period $ 9.03 $ 8.83 $ 9.33
======== ======== =======
Total return* 4.86% (0.77)% 8.07%
Ratio of net expenses to average net assets+ 0.57%** 0.58% 0.61%
Ratio of net investment income to average net assets+ 4.91%** 4.20% 4.43%
Portfolio turnover rate 17%** 60% 49%
Net assets, end of period (in thousands) $593,706 $521,480 $21,027
Ratios with no assumption of expenses by Pioneer and
no reduction for fees paid indirectly:
Net expenses 0.57%** 0.58% 0.61%
Net investment income 4.91%** 4.20% 4.43%
Ratios with assumption of expenses by Pioneer and reduction
for fees paid indirectly:
Net expenses 0.57%** 0.58% 0.61%
Net investment income 4.91%** 4.20% 4.43%
9/20/01(a)
Year Ended Year Ended to
Class Y 6/30/04 6/30/03 6/30/02(b)
Net asset value, beginning of period $ 9.35 $ 8.87 $ 8.85
------- ------- ------
Increase (decrease) from investment operations:
Net investment income $ 0.46 $ 0.51 $ 0.43
Net realized and unrealized gain (loss) on investments (0.14) 0.51 0.04
------- ------- ------
Net increase (decrease) from investment operations $ 0.32 $ 1.02 $ 0.47
Distributions to shareowners:
Net investment income (0.55) (0.54) (0.45)
------- ------- ------
Net increase (decrease) in net asset value $ (0.23) $ 0.48 $ 0.02
------- ------- ------
Net asset value, end of period $ 9.12 $ 9.35 $ 8.87
======= ======= ======
Total return* 3.48% 11.86% 5.48%(c)
Ratio of net expenses to average net assets+ 0.58% 0.67% 0.64%**
Ratio of net investment income to average net assets+ 5.05% 5.54% 6.28%**
Portfolio turnover rate 63% 48% 59%(c)
Net assets, end of period (in thousands) $13,617 $ 7,719 $4,051
Ratios with no assumption of expenses by Pioneer and
no reduction for fees paid indirectly:
Net expenses 0.58% 0.67% 0.64%**
Net investment income 5.05% 5.54% 6.28%**
Ratios with assumption of expenses by Pioneer and reduction
for fees paid indirectly:
Net expenses 0.58% 0.67% 0.64%**
Net investment income 5.05% 5.54% 6.28%**
(a) Class Y shares were first publicly offered on September 20, 2001.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, and the complete redemption of
the investment at net asset value at each end of each period.
** Annualized
+ Ratio with no reduction for fees paid indirectly.
(b) As a result of a change in accounting principle, the effect due to mandatory
accretion of discounts and amortization of premiums on debt securities
resulted in a reduction of net investment income of $0.02 per share, an
increase in net realized and unrealized gain (loss) on investments of $0.02
per share, and the ratio of net investment income to average net assets
decreased by 0.23%.
(c) Not annualized.
38
INFORMATION CONCERNING THE MEETING
Solicitation of Proxies
In addition to the mailing of these proxy materials, proxies may be
solicited by telephone, by fax or in person by the Trustees, officers and
employees of your fund; by personnel of Pioneer or PIMSS, or by broker-dealer
firms. Pioneer and its affiliates, together with a third party solicitation
firm, have agreed to provide proxy solicitation services to your fund at a cost
of approximately $50,000. Pioneer has agreed to pay 75% of the costs of
preparing and printing the Proxy Statement/Prospectus and the solicitation
costs incurred in connection with the Reorganization. With respect to the
Reorganization, your fund will pay the remaining 25% of the costs incurred in
connection with the Reorganization.
Revoking Proxies
Each shareholder of your fund signing and returning a proxy has the power
to revoke it at any time before it is exercised:
o By filing a written notice of revocation with your fund's transfer
agent, Pioneer Investment Management Shareholder Services, Inc., 60
State Street, Boston, Massachusetts 02109, or
o By returning a duly executed proxy with a later date before the time of
the meeting, or
o If a shareholder has executed a proxy but is present at the meeting and
wishes to vote in person, by notifying the secretary of your fund
(without complying with any formalities) at any time before it is voted.
Being present at the meeting alone does not revoke a previously executed
and returned proxy.
Outstanding Shares
Only shareholders of record on ____________, 2007 (the "record date") are
entitled to notice of and to vote at the meeting. As of the record date, the
following number of common shares of your fund was outstanding:
Shares Outstanding on the record date
Pioneer Fund ( / /, 2007)
- ------------ --------------------------------------
Pioneer Interest Shares
Common shares .......................... _____________
Other Business
Your fund's Board of Trustees knows of no business to be presented for
consideration at the meeting other than Proposal 1. If other business is
properly brought before the meeting, proxies will be voted according to the
best judgment of the persons named as proxies.
Adjournments
If, by the time scheduled for the meeting, a quorum of shareholders of
your fund is not present or if a quorum is present but sufficient votes "for"
the proposal have not been received, the persons named as proxies may propose
an adjournment of the meeting to another date and time, and the meeting may be
held as adjourned within a reasonable time after the date set for the original
meeting without further notice. Any such adjournment will require the
affirmative vote of a majority of the votes cast in person or by proxy at the
session of the meeting to be adjourned. The persons named as proxies will vote
all proxies in favor of the adjournment that voted in favor of the proposal or
that abstained. They will vote against such adjournment those proxies required
to be voted against the proposal. Broker non-votes will be disregarded in the
vote for adjournment. If the adjournment requires setting a new record date or
the adjournment is for more than 120 days of the original meeting (in which
case the Board of Trustees of your fund will set a new record date), your fund
will give notice of the adjourned meeting to its shareholders.
Telephone and Internet Voting
In addition to soliciting proxies by mail, by fax or in person, your fund
may also arrange to have votes recorded by telephone, the Internet or other
electronic means. The voting procedures used in connection with such voting
methods are designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions and to confirm that their instructions have been properly
recorded. If these procedures were subject to a successful legal challenge,
such votes would not be counted at the shareholder meeting. The Pioneer Funds
are unaware of any such challenge at this time. In the case of telephone
39
voting, shareholders would be called at the phone number PIMSS has in its
records for their accounts and would be asked for their Social Security numbers
or other identifying information. The shareholders would then be given an
opportunity to authorize proxies to vote their shares at the meeting in
accordance with their instructions. In the case of automated telephone and
Internet voting, shareholders would be required to provide their identifying
information and will receive a confirmation of their instructions.
Shareholders' Proposals
Your fund holds an annual meeting of shareholders each year. In accordance
with your fund's by-laws, any shareholder desiring to present a proposal for
consideration at the next annual meeting of shareholders must submit the
proposal in writing, so that it is received by your fund at 60 State Street,
Boston, Massachusetts 02109 no later than the close of business on the 90th day
(and no earlier than the close of business on the 120th day) prior to the one
year anniversary of the date on which notice of the preceding year's annual
meeting was mailed. Last year's mailing of notice for the annual shareholders
meeting occurred on July 24, 2006, so proposals for this year's annual
shareholder meeting should have been received by your fund no later than the
close of business on April 25, 2007 and no earlier than the close of business
on March 26, 2007.
OWNERSHIP OF SHARES OF THE PIONEER FUNDS
As of April 30, 2007, the Trustees and officers of each Pioneer Fund owned
in the aggregate less than 1% of the outstanding shares of the Pioneer Fund.
To the knowledge of each Pioneer Fund, as of the record date for the
meeting on , 2007, the following persons owned of record or
beneficially 5% or more of the outstanding shares of a class of each Pioneer
Fund, respectively.
- -----------------------------------------------------------------------------------------------------------
Percent of Class(1)
total percentage
(portion held Percent of Pioneer
beneficially/portion Bond Fund after
Record Holder Share Class Number of Shares held on record) Reorganization(2)
- -----------------------------------------------------------------------------------------------------------
Pioneer Interest Shares
- -----------------------------------------------------------------------------------------------------------
name and address Common shares
- -----------------------------------------------------------------------------------------------------------
name and address Common shares
- -----------------------------------------------------------------------------------------------------------
Pioneer Bond Fund
- -----------------------------------------------------------------------------------------------------------
name and address
- -----------------------------------------------------------------------------------------------------------
name and address
- -----------------------------------------------------------------------------------------------------------
* Indicates persons who control either fund by virtue of beneficial ownership
of 25% or more of the outstanding voting securities of that fund.
** Indicates persons who have a material interest in the Reorganization beside
that stemming from their ownership of securities and associated pro rata
participation in the benefits of the Reorganization. These persons are
affiliates of a fund by virtue of their 5% or greater shareholding therein,
and further information about any material interests they might have in the
Reorganization is included below.
(1) The first percentage indicates total shareholdings in that class of shares,
while the second and third percentages following in parenthesis indicate
the portion thereof held beneficially and of record, respectively.
(2) Calculated on the basis of each record holder's present holdings and
commitments as of the record date, and assuming the Reorganization took
place on that same day.
EXPERTS
The financial highlights and financial statements of each Pioneer Fund for
its most recent fiscal year end, and the most recent semi-annual period for
Pioneer Bond Fund, are incorporated by reference into this Proxy
Statement/Prospectus. The financial highlights and financial statements of each
Pioneer Fund for its most recent fiscal year end have been audited by Ernst &
Young LLP, an independent registered public accounting firm, as set forth in
their reports thereon incorporated by reference into this registration
statement. Such financial statements and financial highlights are incorporated
by reference herein in reliance upon such reports given on the authority of
such firm as experts in accounting and auditing.
40
AVAILABLE INFORMATION
You can obtain more free information about the Pioneer Funds from your
investment firm or by writing to Pioneer Investment Management Shareholder
Services, Inc., 60 State Street, Boston, Massachusetts 02109. You may also call
1-800-622-3265.
Pioneer Bond Fund's statement of additional information and each Pioneer
Fund's shareholder reports are available free of charge on Pioneer's website at
www.pioneerinvestments.com.
Shareholder reports. Annual and semi-annual reports to shareholders, and
quarterly reports filed with the SEC, provide information about each Pioneer
Fund's investments. The annual report discusses market conditions and
investment strategies that significantly affected each Pioneer Fund's
performance during its last fiscal year.
Visit our website www.pioneerinvestments.com
Each Pioneer Fund is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended and the 1940 Act and files reports,
proxy statements and other information with the SEC. These reports, proxy
statements and other information filed by the funds and their predecessors can
be inspected and copied (for a duplication fee) at the public reference
facilities of the SEC at 100 F Street, N.E., Washington, D.C. Copies of these
materials also can be obtained by mail from the Public Reference Branch, Office
of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates. In addition, copies of
these documents may be viewed on-screen or downloaded from the SEC's Internet
site at http://www.sec.gov. Since your fund is listed on the NYSE, information
concerning your fund also can be inspected at the Exchange.
41
EXHIBIT A -- FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
the [________ day of ________, 2007], by and between Pioneer Bond Fund, a
Delaware statutory trust (the "Acquiring Fund")], with its principal place of
business at 60 State Street, Boston, Massachusetts 02109, and Pioneer Interest
Shares, a Delaware statutory trust (the "Acquired Fund"), with its principal
place of business at 60 State Street, Boston, Massachusetts 02109. The
Acquiring Fund and the Acquired Fund are sometimes referred to collectively
herein as the "Funds" and individually as a "Fund."
This Agreement is intended to be and is adopted as a plan of a
"reorganization" as defined in Section 368(a)(1)(C) of the United States
Internal Revenue Code of 1986, as amended (the "Code") and the Treasury
Regulations thereunder. The reorganization (the "Reorganization") will consist
of (1) the transfer of all of the assets of the Acquired Fund to the Acquiring
Fund solely in exchange for (A) the issuance of Class Y shares of beneficial
interest of the Acquiring Fund (collectively, the "Acquiring Fund Shares" and
each, an "Acquiring Fund Share") to the Acquired Fund, and (B) the assumption
by the Acquiring Fund of all of the liabilities of the Acquired Fund on the
closing date of the Reorganization (the "Closing Date") (collectively, the
"Assumed Liabilities"), and (2) the distribution by the Acquired Fund, on or
promptly after the Closing Date as provided herein, of the Acquiring Fund
Shares to the shareholders of the Acquired Fund in liquidation and dissolution
of the Acquired Fund, all upon the terms and conditions hereinafter set forth
in this Agreement.
WHEREAS, the Acquiring Fund is a registered investment company classified
as a management company of the open-end type, and the Acquired Fund is a
registered investment company classified as a management company of the
closed-end type.
WHEREAS, the Acquiring Fund is authorized to issue shares of beneficial
interest.
WHEREAS, the Board of Trustees of the Acquiring Fund and the Acquired Fund
have determined that the Reorganization is in the best interests of the
Acquiring Fund shareholders and the Acquired Fund shareholders, respectively,
and is not dilutive of the interests of those shareholders.
NOW, THEREFORE, in consideration of the premises of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING FUND
SHARES AND ASSUMPTION OF THE ASSUMED LIABILITIES; LIQUIDATION AND
TERMINATION OF THE ACQUIRED FUND.
1.1 Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Acquired Fund will
transfer all of its assets as set forth in Paragraph 1.2 (the "Acquired
Assets") to the Acquiring Fund free and clear of all liens and encumbrances
(other than those arising under the Securities Act of 1933, as amended (the
"Securities Act"), liens for taxes not yet due and contractual restrictions on
the transfer of the Acquired Assets) and the Acquiring Fund agrees in exchange
therefor: (i) to issue to the Acquired Fund the number of Acquiring Fund
Shares, including fractional Acquiring Fund Shares, having an aggregate net
asset value ("NAV") equal to the NAV of the Acquired Fund's shares, as
determined in the manner set forth in Paragraphs 2.1 and 2.2; and (ii) to
assume the Assumed Liabilities. Such transactions shall take place at the
Closing (as defined in Paragraph 3.1 below).
1.2 (a) The Acquired Assets shall consist of all of the Acquired Fund's
property, including, without limitation, all portfolio securities and
instruments, dividends and interest receivables, cash, goodwill, contractual
rights and choses in action of the Acquired Fund or the Acquired Fund in
respect of the Acquired Fund, all other intangible property owned by the
Acquired Fund, originals or copies of all books and records of the Acquired
Fund, and all other assets of the Acquired Fund on the Closing Date. The
Acquiring Fund shall also be entitled to receive copies of all records that the
Acquired Fund is required to maintain under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), and the rules of the Securities and
Exchange Commission (the "Commission") thereunder to the extent such records
pertain to the Acquired Fund.
(b) The Acquired Fund has provided the Acquiring Fund with a list of
all of the Acquired Fund's securities and other assets as of the date of
execution of this Agreement, and the Acquiring Fund has provided the
Acquired Fund with a copy of the current fundamental investment policies
and restrictions and fair value procedures applicable to the Acquiring
Fund. The Acquired Fund reserves the right to sell any of such securities
or other assets before the Closing Date (except to the extent sales may be
limited by representations of the Acquired Fund contained herein and made
in connection with the issuance of the tax opinion provided for in
Paragraph 8.5 hereof) and agrees not to acquire any portfolio security that
is not an eligible investment for, or that would violate an investment
policy or restriction of, the Acquiring Fund.
A-1
1.3 The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations that are or will become due prior to the Closing.
1.4 On or as soon after the Closing Date as is conveniently practicable
(the "Liquidation Date"), the Acquired Fund shall liquidate and distribute pro
rata to its shareholders of record, determined as of the close of regular
trading on the New York Stock Exchange on the Closing Date (the "Acquired Fund
Shareholders"), the Acquiring Fund Shares received by the Acquired Fund
pursuant to Paragraph 1.1 hereof. Each Acquired Fund Shareholder shall receive
the number of Acquiring Fund Shares having an aggregate NAV equal to the
aggregate NAV of the shares of beneficial interest in the Acquired Fund (the
"Acquired Fund Shares") held of record by such Acquired Fund Shareholder on the
Closing Date. Such liquidation and distribution will be accomplished by the
Acquired Fund instructing the Acquiring Fund to transfer the Acquiring Fund
Shares then credited to the account of the Acquired Fund on the books of the
Acquiring Fund to open accounts on the share records of the Acquiring Fund
established and maintained by the Acquiring Fund's transfer agent in the names
of the Acquired Fund Shareholders and representing the respective pro rata
number of the Acquiring Fund Shares due the Acquired Fund Shareholders. The
Acquired Fund shall promptly provide the Acquiring Fund with evidence of such
liquidation and distribution. All issued and outstanding Acquired Fund Shares
will simultaneously be cancelled on the books of the Acquired Fund, and the
Acquired Fund will be dissolved. The Acquiring Fund shall not issue
certificates representing the Acquiring Fund Shares in connection with such
exchange.
1.5 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent. Any certificates representing ownership of
Acquired Fund Shares that remain outstanding on the Closing Date shall be
deemed to be cancelled and shall no longer evidence ownership of Acquired Fund
Shares.
1.6 Any transfer taxes payable upon issuance of Acquiring Fund Shares in a
name other than the registered holder of the Acquired Fund Shares on the books
of the Acquired Fund as of that time shall, as a condition of such issuance and
transfer, be paid by the person to whom such Acquiring Fund Shares are to be
issued and transferred.
1.7 Any reporting responsibility of the Acquired Fund for taxable periods
ending on or before the Closing Date, including, but not limited to, the
responsibility for filing of regulatory reports, Tax Returns (as defined in
Paragraph 4.1), or other documents with the Commission, any state securities
commissions, and any federal, state or local tax authorities or any other
relevant regulatory authority, is and shall remain the responsibility of the
Acquired Fund.
2. VALUATION
2.1 The NAV of the Acquiring Fund Shares and the NAV of the Acquired Fund
shall, in each case, be determined as of the close of regular trading on the
New York Stock Exchange (generally, 4:00 p.m., Boston time) on the Closing Date
(the "Valuation Time"). Pioneer Investment Management, Inc. (the "Acquiring
Fund Adviser") shall compute the NAV per Acquiring Fund Share in the manner set
forth in the Acquiring Fund's Agreement and Declaration of Trust (the
"Declaration"), or By-Laws, and the Acquiring Fund's then-current prospectus
and statement of additional information. The Acquiring Fund Adviser shall
compute the NAV per share of the Acquired Fund in the manner set forth in the
Acquired Fund's Agreement and Declaration of Trust or By-laws. The Acquiring
Fund Adviser shall confirm to the Acquiring Fund the NAV of the Acquired Fund.
2.2 The number of Acquiring Fund Shares to be issued (including fractional
shares, if any) in exchange for the Acquired Assets and the assumption of the
Assumed Liabilities shall be determined by the Acquiring Fund Adviser by
dividing the NAV of the Acquired Fund, as determined in accordance with
Paragraph 2.1, by the NAV of each Acquiring Fund Share, as determined in
accordance with Paragraph 2.1.
2.3 The Acquiring Fund and the Acquired Fund shall cause the Acquiring
Fund Adviser to deliver a copy of its valuation report to the other party at
Closing (as defined in Paragraph 3.1). All computations of value shall be made
by the Acquiring Fund Adviser in accordance with its regular practice as
pricing agent for the Acquiring Fund and the Acquired Fund.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be __________, or such later date as the
parties may agree to in writing. All acts necessary to consummate the
Reorganization (the "Closing") shall be deemed to take place simultaneously as
of 5:00 p.m. (Eastern time) on the Closing Date unless otherwise provided. The
Closing shall be held at the offices of Wilmer Cutler Pickering Hale and Dorr
LLP, 60 State Street, Boston, Massachusetts, or at such other place as the
parties may agree.
3.2 Portfolio securities that are held other than in book-entry form in
the name of Brown Brothers Harriman & Co. (the "Acquired Fund Custodian") as
record holder for the Acquired Fund shall be presented by the Acquired Fund to
Brown Brothers Harriman & Co. (the "Acquiring Fund Custodian") for examination
no later than three business days preceding the Closing Date. Such portfolio
securities shall be delivered by the Acquired Fund to the Acquiring Fund
Custodian for the account of the Acquiring Fund on the Closing Date, duly
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endorsed in proper form for transfer, in such condition as to constitute good
delivery thereof in accordance with the custom of brokers, and shall be
accompanied by all necessary federal and state stock transfer stamps or a check
for the appropriate purchase price thereof. Portfolio securities held of record
by the Acquired Fund Custodian in book-entry form on behalf of the Acquired
Fund shall be delivered by the Acquired Fund Custodian through the Depository
Trust Company to the Acquiring Fund Custodian and by the Acquiring Fund
Custodian recording the beneficial ownership thereof by the Acquiring Fund on
the Acquiring Fund Custodian's records. Any cash shall be delivered by the
Acquired Fund Custodian transmitting immediately available funds by wire
transfer to the Acquiring Fund Custodian the cash balances maintained by the
Acquired Fund Custodian and the Acquiring Fund Custodian crediting such amount
to the account of the Acquiring Fund.
3.3 The Acquiring Fund Custodian shall deliver within one business day
after the Closing a certificate of an authorized officer stating that: (a) the
Acquired Assets have been delivered in proper form to the Acquiring Fund on the
Closing Date, and (b) all necessary transfer taxes including all applicable
federal and state stock transfer stamps, if any, have been paid, or provision
for payment has been made in conjunction with the delivery of portfolio
securities as part of the Acquired Assets.
3.4 If on the Closing Date (a) the New York Stock Exchange is closed to
trading or trading thereon shall be restricted or (b) trading or the reporting
of trading on such exchange or elsewhere is disrupted so that accurate
appraisal of the NAV of the Acquiring Fund Shares or the Acquired Fund pursuant
to Paragraph 2.1 is impracticable, the Closing Date shall be postponed until
the first business day after the day when trading shall have been fully resumed
and reporting shall have been restored.
3.5 The Acquired Fund shall deliver at the Closing a list of the names,
addresses, federal taxpayer identification numbers and backup withholding and
nonresident alien withholding status and certificates of the Acquired Fund
Shareholders and the number and percentage ownership of outstanding Acquired
Fund Shares owned by each Acquired Fund Shareholder as of the Valuation Time,
certified by the President or a Secretary of the Acquired Fund and its
Treasurer, Secretary or other authorized officer (the "Shareholder List") as
being an accurate record of the information (a) provided by the Acquired Fund
Shareholders, (b) provided by the Acquired Fund Custodian, or (c) derived from
the Acquired Fund's records by such officers or one of the Acquired Fund's
service providers. The Acquiring Fund shall issue and deliver to the Acquired
Fund a confirmation evidencing the Acquiring Fund Shares to be credited on the
Closing Date, or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Shares have been credited to the Acquired Fund's account on the
books of the Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, stock certificates, receipts or
other documents as such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 Except as set forth on a disclosure schedule previously provided by
the Acquired Fund to the Acquiring Fund, the Acquired Fund represents, warrants
and covenants to the Acquiring Fund, which representations, warranties and
covenants will be true and correct on the date hereof and on the Closing Date
as though made on and as of the Closing Date, as follows:
(a) The Acquired Fund is a statutory trust validly existing and in good
standing under the laws of the State of Delaware and has the power to own
all of its properties and assets and, subject to approval by the Acquired
Fund's shareholders, to perform its obligations under this Agreement. The
Acquired Fund is not required to qualify to do business in any jurisdiction
in which it is not so qualified or where failure to qualify would subject
it to any material liability or disability. The Acquired Fund has all
necessary federal, state and local authorizations to own all of its
properties and assets and to carry on its business as now being conducted;
(b) The Acquired Fund is a registered investment company classified as
a management company of the closed-end type, and its registration with the
Commission as an investment company under the Investment Company Act is in
full force and effect;
(c) The Acquired Fund is not in violation of, and the execution and
delivery of this Agreement and the performance of its obligations under
this Agreement will not result in a violation of, any provision of the
Acquired Fund's Declaration or By-Laws or any material agreement,
indenture, instrument, contract, lease or other undertaking with respect to
which the Acquired Fund is a party or by which the Acquired Fund or any of
its assets are bound;
(d) No litigation or administrative proceeding or investigation of or
before any court or governmental body is currently pending or to its
knowledge threatened against the Acquired Fund or any of the Acquired
Fund's properties or assets. The Acquired Fund knows of no facts that might
form the basis for the institution of such proceedings. The Acquired Fund
is not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially adversely
affects the Acquired Fund's business or its ability to consummate the
transactions contemplated herein or would be binding upon the Acquiring
Fund as the successor to the Acquired Fund;
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(e) The Acquired Fund has no material contracts or other commitments
(other than this Agreement or agreements for the purchase and sale of
securities entered into in the ordinary course of business and consistent
with its obligations under this Agreement) which will not be terminated at
or prior to the Closing Date and no such termination will result in
liability to the Acquired Fund (or the Acquiring Fund);
(f) The statement of assets and liabilities of the Acquired Fund, and
the related statements of operations and changes in net assets, as of and
for the fiscal year ended December 31, 2006, have been audited by an
independent registered public accounting firm retained by the Acquired
Fund, and are in accordance with generally accepted accounting principles
("GAAP") consistently applied and fairly reflect, in all material respects,
the financial condition of the Acquired Fund as of such date and the
results of its operations for the period then ended, and all known
liabilities, whether actual or contingent, of the Acquired Fund as of the
date thereof are disclosed therein. The Statement of Assets and Liabilities
will be in accordance with GAAP consistently applied and will fairly
reflect, in all material respects, the financial condition of the Acquired
Fund as of such date and the results of its operations for the period then
ended. Except for the Assumed Liabilities, the Acquired Fund will not have
any known or contingent liabilities on the Closing Date. No significant
deficiency, material weakness, fraud, significant change or other factor
that could significantly affect the internal controls of the Acquired Fund
has been disclosed or is required to be disclosed in the Acquired Fund's
reports on Form N-CSR to enable the chief executive officer and chief
financial officer or other officers of the Acquired Fund to make the
certifications required by the Sarbanes-Oxley Act, and no deficiency,
weakness, fraud, change, event or other factor exists that will be required
to be disclosed in the Acquiring Fund's Form N-CSR after the Closing Date;
(g) Since the most recent fiscal year end, except as specifically
disclosed by the Acquired Fund, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities,
business or prospects, or any incurrence by the Acquired Fund of
indebtedness, except for normal contractual obligations incurred in the
ordinary course of business or in connection with the settlement of
purchases and sales of portfolio securities. For the purposes of this
subparagraph (g) (but not for any other purpose of this Agreement), a
decline in NAV per Acquired Fund Share arising out of its normal investment
operations or a decline in market values of securities in the Acquired
Fund's portfolio or a decline in the market value at which shares of the
Acquired Fund have been trading shall not constitute a material adverse
change;
(h) (A) For each taxable year of its operation since its inception, the
Acquired Fund has satisfied, and for the current taxable year it will
satisfy, the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company. The Acquired Fund will qualify
as such as of the Closing Date and will satisfy the diversification
requirements of Section 851(b)(3) of the Code without regard to the last
sentence of Section 851(d) of the Code. The Acquired Fund has not taken any
action, caused any action to be taken or caused any action to fail to be
taken which action or failure could cause the Acquired Fund to fail to
qualify as a regulated investment company under the Code;
(B) Within the times and in the manner prescribed by law, the
Acquired Fund has properly filed on a timely basis all Tax Returns (as
defined below) that it was required to file, and all such Tax Returns
were complete and accurate in all material respects. The Acquired Fund
has not been informed by any jurisdiction that the jurisdiction
believes that the Acquired Fund was required to file any Tax Return
that was not filed; and the Acquired Fund does not know of any basis
upon which a jurisdiction could assert such a position;
(C) The Acquired Fund has timely paid, in the manner prescribed by
law, all Taxes (as defined below), which were due and payable or which
were claimed to be due;
(D) All Tax Returns filed by the Acquired Fund constitute complete
and accurate reports of the respective Tax liabilities and all
attributes of the Acquired Fund or, in the case of information returns
and payee statements, the amounts required to be reported, and
accurately set forth all items required to be included or reflected in
such returns;
(E) The Acquired Fund has not waived or extended any applicable
statute of limitations relating to the assessment or collection of
Taxes;
(F) The Acquired Fund has not been notified that any examinations
of the Tax Returns of the Acquired Fund are currently in progress or
threatened, and no deficiencies have been asserted or assessed against
the Acquired Fund as a result of any audit by the Internal Revenue
Service or any state, local or foreign taxing authority, and, to its
knowledge, no such deficiency has been proposed or threatened;
(G) The Acquired Fund has no actual or potential liability for any
Tax obligation of any taxpayer other than itself. The Acquired Fund is
not and has never been a member of a group of corporations with which
it has filed (or been required to file) consolidated, combined or
unitary Tax Returns. The Acquired Fund is not a party to any Tax
allocation, sharing, or indemnification agreement;
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(H) The unpaid Taxes of the Acquired Fund for tax periods through
the Closing Date do not exceed the accruals and reserves for Taxes
(excluding accruals and reserves for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on
the Statement of Assets and Liabilities, as defined in paragraph 5.7,
rather than in any notes thereto (the "Tax Reserves"). All Taxes that
the Acquired Fund is or was required by law to withhold or collect have
been duly withheld or collected and, to the extent required, have been
timely paid to the proper governmental agency;
(I) The Acquired Fund has delivered to the Acquiring Fund or made
available to the Acquiring Fund complete and accurate copies of all Tax
Returns of the Acquired Fund, together with all related examination
reports and statements of deficiency for all periods not closed under
the applicable statutes of limitations and complete and correct copies
of all private letter rulings, revenue agent reports, information
document requests, notices of proposed deficiencies, deficiency
notices, protests, petitions, closing agreements, settlement
agreements, pending ruling requests and any similar documents submitted
by, received by or agreed to by or on behalf of the Acquired Fund. The
Acquired Fund has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662
of the Code;
(J) The Acquired Fund has not undergone, has not agreed to undergo,
and is not required to undergo (nor will it be required as a result of
the transactions contemplated in this Agreement to undergo) a change in
its method of accounting resulting in an adjustment to its taxable
income pursuant to Section 481 of the Code. The Acquired Fund will not
be required to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) change in
method of accounting for a taxable period ending on or prior to the
Closing Date under Section 481(c) of the Code (or any corresponding or
similar provision of state, local or foreign income Tax law); (ii)
"closing agreement" as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income
Tax law) executed on or prior to the Closing Date; (iii) installment
sale or open transaction disposition made on or prior to the Closing
Date; or (iv) prepaid amount received on or prior to the Closing Date;
(K) The Acquired Fund will not have taken or agreed to take any
action, and will not be aware of any agreement, plan or other
circumstance, that is inconsistent with the representations set forth
in the Acquired Fund Representation Certificate to be delivered
pursuant to paragraph 7.4;
(L) There are (and as of immediately following the Closing there
will be) no liens on the assets of the Acquired Fund relating to or
attributable to Taxes, except for Taxes not yet due and payable;
(M) The Tax bases of the assets of the Acquired Fund are accurately
reflected on the Acquired Fund's Tax books and records; and
(N) For purposes of this Agreement, "Taxes" or "Tax" shall mean all
taxes, charges, fees, levies or other similar assessments or
liabilities, including without limitation income, gross receipts, ad
valorem, premium, value-added, excise, real property, personal
property, sales, use, transfer, withholding, employment, unemployment,
insurance, social security, business license, business organization,
environmental, workers compensation, payroll, profits, license, lease,
service, service use, severance, stamp, occupation, windfall profits,
customs, duties, franchise and other taxes imposed by the United States
of America or any state, local or foreign government, or any agency
thereof, or other political subdivision of the United States or any
such government, and any interest, fines, penalties, assessments or
additions to tax resulting from, attributable to or incurred in
connection with any tax or any contest or dispute thereof; and "Tax
Returns" shall mean all reports, returns, declarations, statements or
other information required to be supplied to a governmental or
regulatory authority or agency, or to any other person, in connection
with Taxes and any associated schedules or work papers produced in
connection with such items.
(i) All issued and outstanding Acquired Fund Shares are, and at the
Closing Date will be, legally issued and outstanding, fully paid and
nonassessable by the Acquired Fund. All of the issued and outstanding
Acquired Fund Shares will, at the time of Closing, be held of record by the
persons and in the amounts set forth in the Shareholder List submitted to
the Acquiring Fund pursuant to Paragraph 3.5 hereof. The Acquired Fund does
not have outstanding any options, warrants or other rights to subscribe for
or purchase any Acquired Fund Shares, nor is there outstanding any security
convertible into any Acquired Fund Shares;
(j) At the Closing Date, the Acquired Fund will have good and
marketable title to the Acquired Assets, and full right, power and
authority to sell, assign, transfer and deliver the Acquired Assets to the
Acquiring Fund, and, upon delivery and payment for the Acquired Assets, the
Acquiring Fund will acquire good and marketable title thereto, subject to
no restrictions on the full transfer thereof, except such restrictions as
might arise under the Securities Act;
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(k) The Acquired Fund has the trust power and authority to enter into
and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement have been duly authorized by all
necessary action on the part of the Acquired Fund's Board of Trustees, and,
subject to the approval of the Acquired Fund's shareholders, assuming due
authorization, execution and delivery by the Acquiring Fund, this Agreement
will constitute a valid and binding obligation of the Acquired Fund,
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights and to general equity principles;
(l) The information to be furnished by the Acquired Fund to the
Acquiring Fund for use in applications for orders, registration statements,
proxy materials and other documents which may be necessary in connection
with the transactions contemplated hereby and any information necessary to
compute the total return of the Acquired Fund shall be accurate and
complete and shall comply in all material respects with federal securities
and other laws and regulations applicable thereto;
(m) The information included in the proxy statement (the "Proxy
Statement") forming part of the Acquiring Fund's Registration Statement on
Form N-14 filed in connection with this Agreement (the "Registration
Statement") that has been furnished in writing by the Acquired Fund to the
Acquiring Fund for inclusion in the Registration Statement, on the
effective date of that Registration Statement and on the Closing Date, will
conform in all material respects to the applicable requirements of the
Securities Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Investment Company Act and the rules and
regulations of the Commission thereunder and will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading;
(n) Upon the effectiveness of the Registration Statement, no consent,
approval, authorization or order of any court or governmental authority is
required for the consummation by the Acquired Fund or the Acquired Fund of
the transactions contemplated by this Agreement;
(o) All of the issued and outstanding Acquired Fund Shares have been
offered for sale and sold in compliance in all material respects with all
applicable federal and state securities laws, except as may have been
previously disclosed in writing to the Acquiring Fund;
(p) The prospectus and statement of additional information of the
Acquired Fund and any amendments or supplements thereto, furnished to the
Acquiring Fund, did not as of their dates or the dates of their
distribution to the public contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which such
statements were made, not materially misleading;
(q) The Acquired Fund currently complies in all material respects with,
and since its organization has complied in all material respects with, the
requirements of, and the rules and regulations under, the Investment
Company Act, the Securities Act, the Exchange Act, state "Blue Sky" laws
and all other applicable federal and state laws or regulations. The
Acquired Fund currently complies in all material respects with, and since
its organization has complied in all material respects with, all investment
objectives, policies, guidelines and restrictions and any compliance
procedures established by the Acquired Fund with respect to the Acquired
Fund. All advertising and sales material used by the Acquired Fund complies
in all material respects with and has complied in all material respects
with the applicable requirements of the Securities Act, the Investment
Company Act, the rules and regulations of the Commission, and, to the
extent applicable, the Conduct Rules of the National Association of
Securities Dealers, Inc. (the "NASD") and any applicable state regulatory
authority. All registration statements, prospectuses, reports, proxy
materials or other filings required to be made or filed with the
Commission, the NASD or any state securities authorities by the Acquired
Fund have been duly filed and have been approved or declared effective, if
such approval or declaration of effectiveness is required by law. Such
registration statements, prospectuses, reports, proxy materials and other
filings under the Securities Act, the Exchange Act and the Investment
Company Act (i) are or were in compliance in all material respects with the
requirements of all applicable statutes and the rules and regulations
thereunder and (ii) do not or did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not false or misleading;
(r) Neither the Acquired Fund nor, to the knowledge of the Acquired
Fund, any "affiliated person" of the Acquired Fund has been convicted of
any felony or misdemeanor, described in Section 9(a)(1) of the Investment
Company Act, nor, to the knowledge of the Acquired Fund, has any affiliated
person of the Acquired Fund been the subject, or presently is the subject,
of any proceeding or investigation with respect to any disqualification
that would be a basis for denial, suspension or revocation of registration
as an investment adviser under Section 203(e) of the Investment Advisers
Act of 1940, as amended (the "Investment Advisers Act"), or Rule
206(4)-4(b) thereunder or of a broker-dealer under Section 15 of the
Exchange Act, or for disqualification as an investment adviser, employee,
officer or director of an investment company under Section 9 of the
Investment Company Act; and
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(s) The tax representation certificate to be delivered by Acquired Fund
to the Acquiring Fund and Wilmer Cutler Pickering Hale and Dorr LLP at the
Closing pursuant to Paragraph 7.4 (the "Acquired Fund Tax Representation
Certificate") will not on the Closing Date contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein not misleading.
4.2 Except as set forth on a disclosure schedule previously provided by
the Acquiring Fund to the Acquired Fund, the Acquiring Fund represents,
warrants and covenants to the Acquired Fund, which representations, warranties
and covenants will be true and correct on the date hereof and on the Closing
Date as though made on and as of the Closing Date, as follows:
(a) The Acquiring Fund is a statutory trust duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Acquiring Fund has the power to own all of its properties and assets and to
perform the obligations under this Agreement. The Acquiring Fund is not
required to qualify to do business in any jurisdiction in which it is not
so qualified or where failure to qualify would subject it to any material
liability or disability. The Acquiring Fund has all necessary federal,
state and local authorizations to own all of its properties and assets and
to carry on its business as now being conducted;
(b) The Acquiring Fund is a registered investment company classified as
a management company of the open-end type, and its registration with the
Commission as an investment company under the Investment Company Act is in
full force and effect;
(c) The current prospectus and statement of additional information of
the Acquiring Fund and each prospectus and statement of additional
information for the Acquiring Fund used during the three years previous to
the date of this Agreement, and any amendment or supplement to any of the
foregoing, conform or conformed at the time their distribution to the
public in all material respects to the applicable requirements of the
Securities Act and the Investment Company Act and the rules and regulations
of the Commission thereunder and do not or did not at the time of their
distribution to the public include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not materially misleading;
(d) The Acquiring Fund's registration statement on Form N-1A that will
be in effect on the Closing Date, and the prospectus and statement of
additional information of the Acquiring Fund included therein, will conform
in all material respects with the applicable requirements of the Securities
Act and the Investment Company Act and the rules and regulations of the
Commission thereunder, and did not as of the effective date thereof and
will not as of the Closing Date contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading;
(e) The Registration Statement, the Proxy Statement and statement of
additional information with respect to the Acquiring Fund, and any
amendments or supplements thereto in effect on or prior to the Closing Date
included in the Registration Statement (other than written information
furnished by the Acquired Fund for inclusion therein, as covered by the
Acquired Fund's warranty in Paragraph 4.1(m) hereof) will conform in all
material respects to the applicable requirements of the Securities Act and
the Investment Company Act and the rules and regulations of the Commission
thereunder. Neither the Registration Statement nor the Proxy Statement
(other than written information furnished by the Acquired Fund for
inclusion therein, as covered by the Acquired Fund's warranty in Paragraph
4.1(m) hereof) includes or will include any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(f) The Acquiring Fund is not in violation of, and the execution and
delivery of this Agreement and performance of its obligations under this
Agreement will not result in a violation of, any provisions of the
Declaration of Trust or by-laws of the Acquiring Fund or any material
agreement, indenture, instrument, contract, lease or other undertaking with
respect to which the Acquiring Fund is a party or by which the Acquiring
Fund or any of its assets is bound;
(g) No litigation or administrative proceeding or investigation of or
before any court or governmental body is currently pending or threatened
against the Acquiring Fund or any of the Acquiring Fund's properties or
assets. The Acquiring Fund knows of no facts that might form the basis for
the institution of such proceedings. The Acquiring Fund is not a party to
or subject to the provisions of any order, decree or judgment of any court
or governmental body which materially adversely affects the Acquiring
Fund's business or its ability to consummate the transactions contemplated
herein;
(h) The statement of assets and liabilities of the Acquiring Fund, and
the related statements of operations and changes in net assets, as of and
for the fiscal year ended June 30, 2006 have been audited by Ernst & Young
LLP, independent registered public accounting firm, and are in accordance
with GAAP consistently applied and fairly reflect, in all material
respects, the financial condition of the Acquiring Fund as of such date and
the results of its operations for the period then ended, and all known
liabilities, whether actual or contingent, of the Acquiring Fund as of the
date thereof are disclosed therein;
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(i) Since the most recent fiscal year end, except as specifically
disclosed in the Acquiring Fund's prospectus, its statement of additional
information as in effect on the date of this Agreement, or its semi-annual
report for the period ended December 31, 2006, there has not been any
material adverse change in the Acquiring Fund's financial condition,
assets, liabilities, business or prospects, or any incurrence by the
Acquiring Fund of indebtedness, except for normal contractual obligations
incurred in the ordinary course of business or in connection with the
settlement of purchases and sales of portfolio securities. For the purposes
of this subparagraph (i) (but not for any other purpose of this Agreement),
a decline in NAV per Acquiring Fund Share arising out of its normal
investment operations or a decline in market values of securities in the
Acquiring Fund's portfolio or a decline in net assets of the Acquiring Fund
as a result of redemptions shall not constitute a material adverse change;
(j) (A) For each taxable year of its operation since its inception, the
Acquiring Fund has satisfied, and for the current taxable year it will
satisfy, the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and will qualify as such as of
the Closing Date and will satisfy the diversification requirements of
Section 851(b)(3) of the Code without regard to the last sentence of
Section 851(d) of the Code. The Acquiring Fund has not taken any action,
caused any action to be taken or caused any action to fail to be taken
which action or failure could cause the Acquiring Fund to fail to qualify
as a regulated investment company under the Code;
(B) Within the times and in the manner prescribed by law, the
Acquiring Fund has properly filed on a timely basis all Tax Returns
that it was required to file, and all such Tax Returns were complete
and accurate in all material respects. The Acquiring Fund has not been
informed by any jurisdiction that the jurisdiction believes that the
Acquiring Fund was required to file any Tax Return that was not filed;
and the Acquiring Fund does not know of any basis upon which a
jurisdiction could assert such a position;
(C) The Acquiring Fund has timely paid, in the manner prescribed by
law, all Taxes that were due and payable or that were claimed to be
due;
(D) All Tax Returns filed by the Acquiring Fund constitute complete
and accurate reports of the respective liabilities for Taxes and all
attributes of the Acquiring Fund or, in the case of information returns
and payee statements, the amounts required to be reported, and
accurately set forth all items required to be included or reflected in
such returns;
(E) The Acquiring Fund has not waived or extended any applicable
statute of limitations relating to the assessment or collection of
Taxes;
(F) The Acquiring Fund has not been notified that any examinations
of the Tax Returns of the Acquiring Fund are currently in progress or
threatened, and no deficiencies have been asserted or assessed against
the Acquiring Fund as a result of any audit by the Internal Revenue
Service or any state, local or foreign taxing authority, and, to its
knowledge, no such deficiency has been proposed or threatened;
(G) The Acquiring Fund has no actual or potential liability for any
Tax obligation of any taxpayer other than itself. The Acquiring Fund is
not and has never been a member of a group of corporations with which
it has filed (or been required to file) consolidated, combined or
unitary Tax Returns. The Acquiring Fund is not a party to any Tax
allocation, sharing, or indemnification agreement;
(H) The unpaid Taxes of the Acquiring Fund for tax periods through
the Closing Date do not exceed the accruals and reserves for Taxes
(excluding accruals and reserves for deferred Taxes established to
reflect timing differences between book and Tax income) set forth in
the financial statements referred to in paragraph 4.2(h). All Taxes
that the Acquiring Fund is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent
required, have been timely paid to the proper governmental agency;
(I) The Acquiring Fund has delivered to Acquired Fund or made
available to Acquired Fund complete and accurate copies of all Tax
Returns of the Acquiring Fund, together with all related examination
reports and statements of deficiency for all periods not closed under
the applicable statutes of limitations and complete and correct copies
of all private letter rulings, revenue agent reports, information
document requests, notices of proposed deficiencies, deficiency
notices, protests, petitions, closing agreements, settlement
agreements, pending ruling requests and any similar documents submitted
by, received by or agreed to by or on behalf of the Acquiring Fund. The
Acquiring Fund has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662
of the Code;
(J) The Acquiring Fund has not undergone, has not agreed to
undergo, and is not required to undergo (nor will it be required as a
result of the transactions contemplated in this Agreement to undergo) a
change in its method of accounting resulting in
A-8
an adjustment to its taxable income pursuant to Section 481 of the
Code. The Acquiring Fund will not be required to include any item of
income in, or exclude any item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Closing Date
as a result of any (i) change in method of accounting for a taxable
period ending on or prior to the Closing Date under Section 481(c) of
the Code (or any corresponding or similar provision of state, local or
foreign income Tax law); (ii) "closing agreement" as described in
Section 7121 of the Code (or any corresponding or similar provision of
state, local or foreign income Tax law) executed on or prior to the
Closing Date; (iii) installment sale or open transaction disposition
made on or prior to the Closing Date; or (iv) prepaid amount received
on or prior to the Closing Date;
(K) The Acquiring Fund will not have taken or agreed to take any
action, and will not be aware of any agreement, plan or other
circumstance, that is inconsistent with the representations set forth
in the Acquiring Fund Tax Representation Certificate to be delivered
pursuant to paragraph 6.3;
(L) There are (and as of immediately following the Closing there
will be) no liens on the assets of the Acquiring Fund relating to or
attributable to Taxes, except for Taxes not yet due and payable; and
(M) The Tax bases of the assets of the Acquiring Fund are
accurately reflected on the Acquiring Fund's Tax books and records.
(k) The authorized capital of the Acquiring Fund consists of an
unlimited number of shares of beneficial interest, no par value per share.
As of the Closing Date, the Acquiring Fund will be authorized to issue an
unlimited number of shares of beneficial interest, no par value per share.
The Acquiring Fund Shares to be issued and delivered to the Acquired Fund
for the account of the Acquired Fund Shareholders pursuant to the terms of
this Agreement will have been duly authorized on the Closing Date and, when
so issued and delivered, will be legally issued and outstanding, fully paid
and non-assessable. The Acquiring Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any
Acquiring Fund shares, nor is there outstanding any security convertible
into any Acquiring Fund shares;
(l) All issued and outstanding Acquiring Fund Shares are, and on the
Closing Date will be, legally issued, fully paid and non-assessable and
have been offered and sold in every state and the District of Columbia in
compliance in all material respects with all applicable federal and state
securities laws;
(m) The Acquiring Fund has the trust power and authority to enter into
and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement have been duly authorized by all
necessary action on the part of the Acquiring Fund's Board of Trustees,
and, assuming due authorization, execution and delivery by the Acquired
Fund, this Agreement will constitute a valid and binding obligation of the
Acquiring Fund, enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general equity
principles;
(n) The information to be furnished in writing by the Acquiring Fund or
the Acquiring Fund Adviser for use in applications for orders, registration
statements, proxy materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be accurate and
complete in all material respects and shall comply in all material respects
with federal securities and other laws and regulations applicable thereto
or the requirements of any form for which its use is intended, and shall
not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the information provided not misleading;
(o) No consent, approval, authorization or order of or filing with any
court or governmental authority is required for the execution of this
Agreement or the consummation of the transactions contemplated by the
Agreement by the Acquiring Fund, except for the registration of the
Acquiring Fund Shares under the Securities Act and the Investment Company
Act;
(p) The Acquiring Fund currently complies in all material respects
with, and since its organization has complied in all material respects
with, the requirements of, and the rules and regulations under, the
Investment Company Act, the Securities Act, the Exchange Act, state "Blue
Sky" laws and all other applicable federal and state laws or regulations.
The Acquiring Fund currently complies in all material respects with, and
since its organization has complied in all material respects with, all
investment objectives, policies, guidelines and restrictions and any
compliance procedures established by the Acquiring Fund. All advertising
and sales material used by the Acquiring Fund complies in all material
respects with and has complied in all material respects with the applicable
requirements of the Securities Act, the Investment Company Act, the rules
and regulations of the Commission, and, to the extent applicable, the
Conduct Rules of the NASD and any applicable state regulatory authority.
All registration statements, prospectuses, reports, proxy materials or
other filings required to be made or filed with the Commission, the NASD or
any state securities authorities by the Acquiring Fund have been duly filed
and have been approved or declared effective, if such approval or
declaration of effectiveness is required by law. Such registration
statements, prospectuses, reports, proxy materials and other filings under
the Securities Act, the Exchange Act and the Investment Company Act (i) are
or were in compliance in all material respects with the requirements of all
applicable
A-9
statutes and the rules and regulations thereunder and (ii) do not or did
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made,
not false or misleading;
(q) Neither the Acquiring Fund nor, to the knowledge of the Acquiring
Fund, any "affiliated person" of the Acquiring Fund has been convicted of
any felony or misdemeanor, described in Section 9(a)(1) of the Investment
Company Act, nor, to the knowledge of the Acquiring Fund, has any
affiliated person of the Acquiring Fund been the subject, or presently is
the subject, of any proceeding or investigation with respect to any
disqualification that would be a basis for denial, suspension or revocation
of registration as an investment adviser under Section 203(e) of the
Investment Advisers Act or Rule 206(4)-4(b) thereunder or of a
broker-dealer under Section 15 of the Exchange Act, or for disqualification
as an investment adviser, employee, officer or director of an investment
company under Section 9 of the Investment Company Act; and
(r) The tax representation certificate to be delivered by the Acquiring
Fund to the Acquired Fund and Wilmer Cutler Pickering Hale and Dorr LLP at
Closing pursuant to Section 6.3 (the "Acquiring Fund Tax Representation
Certificate") will not on the Closing Date contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein not misleading.
5. COVENANTS OF THE FUNDS
5.1 The Acquired Fund will operate the Acquired Fund's business in the
ordinary course of business between the date hereof and the Closing Date. It is
understood that such ordinary course of business will include the declaration
and payment of customary dividends and other distributions and any other
dividends and other distributions necessary or advisable (except to the extent
dividends or other distributions that are not customary may be limited by
representations made in connection with the issuance of the tax opinion
described in Paragraph 8.5 hereof), in each case payable either in cash or in
additional shares.
5.2 The Acquired Fund will call a special meeting of the Acquired Fund's
shareholders to consider approval of this Agreement and act upon the matters
set forth in the Proxy Statement.
5.3 The Acquiring Fund will prepare the notice of meeting, form of proxy
and Proxy Statement (collectively, "Proxy Materials") to be used in connection
with such meeting, and will promptly prepare and file with the Commission the
Registration Statement. The Acquired Fund will provide the Acquiring Fund with
information reasonably requested for the preparation of the Registration
Statement in compliance with the Securities Act, the Exchange Act, and the
Investment Company Act.
5.4 The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired by the Acquired Fund for the purpose of
making any distribution thereof other than in accordance with the terms of this
Agreement.
5.5 The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requires concerning the beneficial
ownership of the Acquired Fund Shares.
5.6 Subject to the provisions of this Agreement, each Fund will take, or
cause to be taken, all actions, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate the transactions
contemplated by this Agreement.
5.7 The Acquired Fund shall furnish to the Acquiring Fund on the Closing
Date a statement of assets and liabilities of the Acquired Fund ("Statement of
Assets and Liabilities") as of the Closing Date setting forth the NAV (as
computed pursuant to Paragraph 2.1) of the Acquired Fund as of the Valuation
Time, which statement shall be prepared in accordance with GAAP consistently
applied and certified by the Acquired Fund's Treasurer or Assistant Treasurer.
As promptly as practicable, but in any case within 30 days after the Closing
Date, the Acquired Fund shall furnish to the Acquiring Fund, in such form as is
reasonably satisfactory to the Acquiring Fund, a statement of the earnings and
profits of the Acquired Fund for federal income tax purposes, and of any
capital loss carryovers and other items that will be carried over to the
Acquiring Fund under the Code, and which statement will be certified by the
Treasurer of the Acquired Fund.
5.8 Neither Fund shall take any action that is inconsistent with the
representations set forth in, with respect to the Acquired Fund, the Acquired
Fund Tax Representation Certificate and, with respect to the Acquiring Fund,
the Acquiring Fund Tax Representation Certificate.
5.9 From and after the date of this Agreement and until the Closing Date,
each of the Funds shall use its commercially reasonable efforts to cause the
Reorganization to qualify, and will not knowingly take any action, cause any
action to be taken, fail to take any action or cause any action to fail to be
taken, which action or failure to act could prevent the Reorganization from
qualifying, as a reorganization under the provisions of Section 368(a) of the
Code. The parties hereby adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the income tax
regulations promulgated under the Code. Unless otherwise required pursuant to a
"determination" within the meaning of Section 1313(a) of the Code, the parties
hereto shall treat and report the transactions
A-10
contemplated hereby as a reorganization within the meaning of Section
368(a)(1)(C) of the Code and shall not take any position inconsistent with such
treatment.
5.10 From and after the date of this Agreement and through the time of the
Closing, each Fund shall use its commercially reasonable efforts to cause it to
qualify, and will not knowingly take any action, cause any action to be taken,
fail to take any action or cause any action to fail to be taken, which action
or failure to act could prevent it from qualifying as a regulated investment
company under the provisions of Subchapter M of the Code.
5.11 Each Fund shall prepare, or cause to be prepared, all of its Tax
Returns for taxable periods that end on or before the Closing Date and shall
timely file, or cause to be timely filed, all such Tax Returns. Each Fund shall
make any payments of Taxes required to be made by it with respect to any such
Tax Returns.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to complete the transactions provided
for herein shall be, at its election, subject to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions, unless waived by the Acquired Fund in writing:
6.1 All representations and warranties by the Acquiring Fund contained in
this Agreement shall be true and correct in all material respects as of the
date hereof (in each case, as such representations and warranties would read as
if all qualifications as to materiality were deleted therefrom) and, except as
they may be affected by the transactions contemplated by this Agreement, as of
the Closing Date with the same force and effect as if made on and as of the
Closing Date;
6.2 The Acquiring Fund shall have delivered to the Acquired Fund on the
Closing Date a certificate of the Acquiring Fund executed in its name by its
President or Vice President and its Treasurer or Assistant Treasurer, in form
and substance satisfactory to the Acquired Fund and dated as of the Closing
Date, to the effect that the representations and warranties of the Acquiring
Fund made in this Agreement are true and correct in all material respects at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, that each of the conditions to Closing in this
Article 6 have been met, and as to such other matters as the Acquired Fund
shall reasonably request;
6.3 The Acquiring Fund shall have delivered to the Acquired Fund and
Wilmer Cutler Pickering Hale and Dorr LLP, an Acquiring Fund Tax Representation
Certificate, satisfactory to the Acquiring Fund and Wilmer Cutler Pickering
Hale and Dorr LLP, in a form mutually acceptable to the Acquiring Fund and the
Acquired Fund, concerning certain tax-related matters with respect to the
Acquired Fund;
6.4 The Board of Trustees of the Acquiring Fund shall have determined that
the Reorganization is in the best interests of the Acquiring Fund and, based
upon such determination, shall have approved this Agreement and the
transactions contemplated hereby; and
6.5 The Acquired Fund shall have received at the Closing a favorable
opinion as to the due authorization of this Agreement by the Acquiring Fund and
related matters of Wilmer Cutler Pickering Hale and Dorr LLP, dated as of the
Closing Date, in a form reasonably satisfactory to the Acquired Fund.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
7.1 The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be, at its election, subject to the performance by
the Acquired Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions, unless waived by the Acquiring Fund in writing:
7.2 All representations and warranties of the Acquired Fund contained in
this Agreement shall be true and correct in all material respects as of the
date hereof (in each case, as such representations and warranties would read as
if all qualifications as to materiality were deleted therefrom) and, except as
they may be affected by the transactions contemplated by this Agreement, as of
the Closing Date with the same force and effect as if made on and as of the
Closing Date;
7.3 The Acquired Fund shall have delivered to the Acquiring Fund the
Statement of Assets and Liabilities of the Acquired Fund pursuant to Paragraph
5.7, together with a list of its portfolio securities showing the federal
income tax bases and holding periods of such securities, as of the Closing
Date, certified by the Acquired Fund's Treasurer or Assistant Treasurer;
7.4 The Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate of the Acquired Fund, executed in its name by its
President or Vice President and a Treasurer or Assistant Treasurer, in form and
substance reasonably satisfactory to the Acquiring Fund and dated as of the
Closing Date, to the effect that the representations and warranties of the
Acquired Fund contained
A-11
in this Agreement are true and correct in all material respects at and as of
the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, that each of the conditions to Closing in this
Article 7 have been met, and as to such other matters as the Acquiring Fund
shall reasonably request;
7.5 The Acquired Fund shall have delivered to the Acquiring Fund and
Wilmer Cutler Pickering Hale and Dorr LLP an Acquired Fund Tax Representation
Certificate, satisfactory to the Acquiring Fund and Wilmer Cutler Pickering
Hale and Dorr LLP, in a form mutually acceptable to the Acquiring Fund and the
Acquired Fund, concerning certain tax-related matters with respect to the
Acquired Fund; and
7.6 The Board of Trustees of the Acquired Fund shall have determined that
the Reorganization is in the best interests of the Acquired Fund and, based
upon such determination, shall have approved this Agreement and the
transactions contemplated hereby.
8. FURTHER CONDITIONS PRECEDENT
If any of the conditions set forth below does not exist on or before the
Closing Date with respect to either party hereto, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the Acquired Fund's shareholders in
accordance with the provisions of the Acquired Fund's Declaration and By-Laws,
and certified copies of the resolutions evidencing such approval by the
Acquired Fund's shareholders shall have been delivered by the Acquired Fund to
the Acquiring Fund. Notwithstanding anything herein to the contrary, neither
party hereto may waive the conditions set forth in this Paragraph 8.1;
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities) deemed
necessary by either party hereto to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of
either party hereto, provided that either party may waive any such conditions
for itself;
8.4 The Acquiring Fund's Registration Statement on Form N-14 shall have
become effective under the Securities Act and no stop orders suspending the
effectiveness of such Registration Statement shall have been issued and, to the
best knowledge of the parties hereto, no investigation or proceeding for that
purpose shall have been instituted or be pending, threatened or contemplated
under the Securities Act;
8.5 The parties shall have received an opinion of Wilmer Cutler Pickering
Hale and Dorr LLP, satisfactory to the Acquired Fund and the Acquiring Fund and
subject to customary assumptions and qualifications, substantially to the
effect that for federal income tax purposes the acquisition by the Acquiring
Fund of the Acquired Assets solely in exchange for the issuance of Acquiring
Fund Shares to the Acquired Fund and the assumption of the Assumed Liabilities
by the Acquiring Fund, followed by the distribution by the Acquired Fund, in
liquidation of the Acquired Fund, of Acquiring Fund Shares to the Acquired Fund
Shareholders in exchange for their Acquired Fund Shares and the termination of
the Acquired Fund, will constitute a "reorganization" within the meaning of
Section 368(a) of the Code.
8.6 The Acquired Fund shall have distributed to its shareholders, in a
distribution or distributions qualifying for the deduction for dividends paid
under Section 561 of the Code, all of its investment company taxable income (as
defined in Section 852(b)(2) of the Code determined without regard to Section
852(b)(2)(D) of the Code) for its taxable year ending on the Closing Date, all
of the excess of (i) its interest income excludable from gross income under
Section 103(a) of the Code over (ii) its deductions disallowed under Sections
265 and 171(a)(2) of the Code for its taxable year ending on the Closing Date,
and all of its net capital gain (as such term is used in Sections 852(b)(3)(A)
and (C) of the Code), after reduction by any available capital loss
carryforward, for its taxable year ending on the Closing Date.
9. BROKERAGE FEES AND EXPENSES
9.1 Each party hereto represents and warrants to the other party hereto
that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
9.2 The parties have been informed by Pioneer Investment Management, Inc.
that it will pay 50% of the expenses incurred in connection with the
Reorganization (including, but not limited to, the preparation of the proxy
statement and solicitation expenses). Each of the Acquired Fund and the
Acquiring Fund agrees to pay 25% of the expenses incurred in connection with
the Reorganization (including, but not limited to, the preparation of the proxy
statement and solicitation expenses).
A-12
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Acquired Fund each agrees that neither
party has made any representation, warranty or covenant not set forth herein or
referred to in Paragraphs 4.1 or 4.2 hereof and that this Agreement constitutes
the entire agreement between the parties.
10.2 The representations and warranties contained in this Agreement or in
any document delivered pursuant hereto or in connection herewith shall not
survive the consummation of the transactions contemplated hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Fund and the Acquired Fund. In addition, either party may at its
option terminate this Agreement at or prior to the Closing Date:
(a) because of a material breach by the other of any representation,
warranty, covenant or agreement contained herein to be performed at or
prior to the Closing Date;
(b) because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met and which
reasonably appears will not or cannot be met;
(c) by resolution of the Acquiring Fund's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board,
make proceeding with the Agreement not in the best interests of the
Acquiring Fund's shareholders;
(d) by resolution of the Acquired Fund's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board,
make proceeding with the Agreement not in the best interests of the
Acquired Fund's shareholders; or
(e) if the transactions contemplated by this Agreement shall not have
occurred on or prior to [December 31, 2007] or such other date as the
parties may mutually agree upon in writing.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Acquiring Fund or the Acquired Fund, or the trustees
or officers of the Acquired Fund or the Acquiring Fund, but, subject to
Paragraph 9.2, each party shall bear the expenses incurred by it incidental to
the preparation and carrying out of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the
Acquired Fund and the Acquiring Fund; provided, however, that following the
meeting of the Acquired Fund's shareholders called by the Acquired Fund
pursuant to Paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions regarding the method for determining the
number of Acquiring Fund Shares to be received by the Acquired Fund
Shareholders under this Agreement to their detriment without their further
approval; provided that nothing contained in this Section 12 shall be construed
to prohibit the parties from amending this Agreement to change the Closing
Date.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provision of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Acquired Fund and the
Acquiring Fund at 60 State Street, Boston, Massachusetts 02109.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware, without giving effect to conflict
of laws principles (other than Delaware Code Title 6 [sec] 2708); provided
that, in the case of any conflict between those laws and the federal securities
laws, the latter shall govern.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by
either party without the prior written consent of the other party hereto.
Nothing herein expressed or implied is intended or shall be construed to confer
upon or give any person, firm
A-13
or corporation, or other entity, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
14.5. It is expressly agreed that the obligations of the Acquiring Fund
and the Acquired Fund shall not be binding upon any of their respective
trustees, shareholders, nominees, officers, agents or employees personally, but
bind only to the property of the Acquiring Fund or the Acquired Fund, as the
case may be, as provided in the Acquiring Fund's Declaration and the Acquired
Fund's Declaration of Trust, respectively. The execution and delivery of this
Agreement have been authorized by the trustees of the Acquiring Fund and of the
Acquired Fund and this Agreement has been executed by authorized officers of
the Acquiring Fund and the Acquired Fund, acting as such, and neither such
authorization by such trustees nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to imposed any
liability on any of them personally, but shall bind only the property of the
Acquiring Fund and the Acquired Fund, as the case may be, as provided in the
Acquiring Fund's Declaration and the Acquired Fund's Declaration of Trust,
respectively.
* * * * *
A-14
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as of the date first set forth above by its President or Vice
President and attested by its Secretary or Assistant Secretary.
Attest: PIONEER BOND FUND
By: ____________________________________ By: _________________________________
Name: Christopher J. Kelley Name:
Title: Assistant Secretary Title:
Attest: PIONEER INTEREST SHARES
By: ____________________________________ By: _________________________________
Name: Christopher J. Kelley Name:
Title: Assistant Secretary Title:
A-15
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EXHIBIT B -- PORTFOLIO MANAGEMENT DISCUSSION OF EACH PIONEER FUND'S PERFORMANCE
- -------------------------------------------------------------------------------
PIONEER BOND FUND
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 12/31/06 CLASS Y SHARES
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of December 31, 2006)
If If
Period Held Redeemed
10 Years 6.07% 6.07%
5 Years 6.29 6.29
1 Year 3.98 3.98
Expense Ratio
(As of May 1, 2006)
Gross Net
0.58% 0.58%
Performance of a $10,000 Investment
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Bond Fund, compared to that of the Lehman Brothers
Aggregate Bond Index.
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Pioneer Lehman Brothers
Interest Shares Aggregate Bond Index
6/96 10000 10000
10709 10815
6/98 11784 11955
11943 12331
6/00 12098 12894
13392 14342
6/02 14452 15579
16166 17200
6/04 16728 17255
18078 18428
6/06 17938 18280
Call 1-800-225-6292 or visit pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Performance for periods prior to the inception of the Fund's Class Y shares
reflects the NAV performance of the Fund's Class A shares. The performance does
not reflect differences in expenses, including the Rule 12b-1 fees applicable
to Class A shares. Since fees for Class A shares are generally higher than
those of Class Y shares, the performance shown for Y shares prior to their
inception would have been higher. Class A shares are used as a proxy through
9/20/01. Class Y shares are not subject to sales charges and are available for
limited groups of eligible investors, including institutional investors. All
results are historical and assume the reinvestment of dividends and capital
gains. Other share classes are available for which performance and expenses
will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Lehman Brothers Aggregate Bond Index is a market value-weighted measure of
treasury and agency issues, corporate bond issues and mortgage-backed
securities. Index returns are calculated monthly, assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in an Index.
B-1
PORTFOLIO MANAGEMENT DISCUSSION
PIONEER BOND FUND 12/31/06
The domestic bond market recovered in the final half of 2006, after performing
weakly early in the year because of fears of potentially intensified
inflationary pressures and rising interest rates. Over the second half of the
year, the environment improved as concerns about inflation and high energy
prices receded and as the Federal Reserve Board left short-term rates
unchanged. In the following interview, Kenneth J. Taubes discusses the factors
that influenced the performance of Pioneer Bond Fund during the six months
ended December 31, 2006. Mr. Taubes, Director of Pioneer's Fixed Income Group,
is responsible for the daily management of the Fund.
Q: How did the Portfolio perform during the second half of 2006?
A: Pioneer Bond Fund Class A shares generated a total return of 4.73%, at net
asset value, for the six months ended December 31, 2006. During the same six
months, the Lehman Brothers Aggregate Bond Index rose 5.09%. The average
return of the 178 funds in Lipper's corporate debt, A- rated mutual fund
category was 4.93%. On December 31, 2006, the 30-day Standardized SEC yield
for the Fund's Class A shares was 4.07%.
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted?
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost?
Q: What was the investment environment like during the second half of 2006?
A: The period provided a different environment from that posed during the first
half, when most types of high-grade bonds posted negative results. During
the year's second half, the Federal Reserve Board paused in its tightening
policy and left the key Fed funds rate unchanged at 5.25%. Stabilized
short-term interest rates and easing oil prices encouraged investors to
believe that inflationary pressures were under control and that the economy
could sustain its expansion at a moderate rate. In this environment,
high-grade bonds improved in performance as yields across many maturities
receded over the final six months of the year. In many cases, the yield
curve became inverted -- a phenomenon which reverses normal fixed-income
relationships, resulting in higher yields among shorter-maturity securities
than among some longer-maturity securities. In general, government
securities and higher-rated corporate securities delivered positive results.
Mortgage-backed securities tended to produce the best results in the
investment-grade universe. High-yield, lower-rated corporate bonds, however,
still delivered the strongest performance in the domestic market.
Q: What were principal strategies during the six-month period, and how did they
affect performance?
A: The Fund's exposure to high-yield corporate bonds -- the best-performing
area of the market -- and an effective interest-rate strategy helped
performance. Although we became somewhat more defensive early in the period
and reduced our investments in corporate bonds, we still maintained a
healthy exposure to high-yield bonds, which at the end of the fiscal year
accounted for 4.3% of Fund assets. At the same time, we lowered our exposure
to investment-grade corporate debt, as we became concerned that heavy
activity in mergers-and-acquisitions and leveraged buyouts would hurt
bondholders while helping shareowners.
During a period of changing interest-rate trends, our management of duration
-- which is a measure of a bond's price sensitivity to changes in interest
rates -- was successful. After maintaining a relatively short-duration early
in 2006 when interest rates were rising, we moved to a longer duration,
starting in June. This positioned the Fund to benefit when longer-maturity
rates began to decline, as they did for the second half of the year.
However, we moved again to a shorter duration near the end of 2006 to
protect against the potential of a rise in rates. On December 31, 2006, the
Fund's effective duration was 4.19 years.
Within the investment-grade universe, we emphasized mortgage-backed
securities, which helped performance. At the end of the six months, on
December 31, 2006, 48.7% of Fund assets were invested in mortgages and other
pass-through securities. During the six months, we reduced our exposure to
Treasury Inflation Protected Securities (TIPS), which had helped results
earlier when interest rates were rising. This lower exposure was timely as
TIPS began to underperform straight Treasuries and other fixed-rate
high-grade securities as yields fell with reduced fears about inflation.
Nevertheless, our remaining TIPS holdings did not help during the six
months.
B-2
Q: What were some of the individual holdings that had the greatest influence on
the Fund's performance?
A: Several corporate securities helped performance. Bonds of Platinum
Underwriters, a property-and-casualty re-insurance company, appreciated when
the company encountered relatively few storm-related damage claims in 2006
after raising premiums following the severe 2005 hurricane season. Ohio
Casualty, a property-and-casualty company specializing in auto policies,
also performed well. Trustreet Properties, a real estate investment trust,
contributed as its bonds were bought back when the company was acquired.
The rating of the debt of HCA was lowered from investment-grade to
high-yield during the year as part of a leveraged buyout of the company,
which operates hospitals throughout the nation. As a result, the Fund's
holdings of HCA-issued bonds underperformed and detracted from results.
Q: What is your investment outlook?
A: Given expectations that the economy will continue to expand, we do not
expect the Federal Reserve to lower short-term rates in the near future. As
a consequence, we currently are maintaining a shorter-than-benchmark
duration policy to protect against the potential that interest rates might
rise. In this environment, we are placing the greatest emphasis on
mortgage-backed securities. In the corporate sector, we currently are
modestly overweighting high-yield bonds relative to the Fund's benchmark,
but have continued to de-emphasize investment-grade corporate debt due to
the small risk premium available on these securities and the aforementioned
leveraged buyout risk.
When interest rates rise, the prices of fixed-income securities in the Fund
will generally fall. Conversely, when interest rates fall, the prices of
fixed-income securities in the Fund will generally rise.
Investments in the Fund are subject to possible loss due to the financial
failure of issuers of underlying securities and their inability to meet
their debt obligations.
Prepayment risk is the chance that mortgage-backed bonds will be paid off
early if falling interest rates prompt homeowners to refinance their
mortgages. Forced to reinvest the unanticipated proceeds at lower interest
rates, the Fund would experience a decline in income and lose the
opportunity for additional price appreciation associated with falling
interest rates. Investments in high-yield or lower-rated securities are
subject to greater-than-average risk. The securities issued by U.S.
Government sponsored entities (i.e., FNMA, Freddie Mac) are neither
guaranteed nor issued by the U.S. Government. The portfolio may invest in
mortgage-backed securities, which during times of fluctuating interest rates
may increase or decrease more than other fixed-income securities.
Mortgage-backed securities are also subject to pre-payments. At times, the
Fund's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting
those industries and sectors.
Any information in this shareholder report regarding market or economic
trends or the factors influencing the Fund's historical or future
performance are statements of the opinion of Fund management as of the date
of this report. These opinions should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is
no guarantee that market forecasts discussed will be realized.
B-3
PIONEER INTEREST SHARES
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 12/31/06
- --------------------------------------------------------------------------------
Cumulative Total Returns
(As of December 31, 2006)
Net Asset Market
Period Value (NAV) Price
10 Years 5.67% 5.70%
5 Years 5.37 5.69
1 Year 3.78 8.28
Performance of a $10,000 Investment
The mountain chart on the right shows the change in market value, plus
reinvested dividends and distributions, of a $10,000 investment made in common
shares of Pioneer Interest Shares at market value, compared to that of the
Lehman Brothers Aggregate Bond Index.
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
Pioneer Lehman Brothers
Interest Shares Aggregate Bond Index
12/96 10000 10000
11783 10965
12/98 12327 11918
10114 11820
12/00 12092 13194
13196 14308
12/02 13933 15776
15174 16423
12/04 16054 17136
16075 17552
12/06 17407 18313
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
Performance data shown represents past performance. Past performance is no
guarantee of future results. Investment return and market price will fluctuate,
and your shares may trade below NAV, due to such factors as interest rate
changes, and the perceived credit quality of borrowers.
Total investment return does not reflect broker sales charges or commissions.
All performance is for common shares of the Fund.
Closed-end funds, unlike open-end funds, are not continuously offered. There is
a one-time public offering and once issued, shares of closed-end funds are sold
in the open market through a stock exchange and frequently trade at prices
lower than their NAV. NAV is total assets less total liabilities divided by the
number of common shares outstanding.
When NAV is lower than market price, dividends are assumed to be reinvested at
the greater of NAV or 95% of the market price. When NAV is higher, dividends
are assumed to be reinvested at market price.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Lehman Brothers Aggregate Bond Index is a measure of the U.S. bond market.
Index returns are calculated monthly, assume reinvestment of dividends and,
unlike the Fund's returns, do not reflect any fees, expenses or charges. You
cannot invest directly in an Index.
B-4
PORTFOLIO MANAGEMENT DISCUSSION
PIONEER INTEREST SHARES 12/31/06
The domestic bond market delivered generally moderate, positive returns during
2006. The final results came despite weak performance during the first six
months, when investors grew increasingly concerned about rising interest rates,
increasing oil prices and monetary tightening by the U.S. Federal Reserve. Over
the second half of the year, the environment improved as concerns about
inflation and high energy prices receded and as the Federal Reserve Board left
short-term rates unchanged. In the following interview, Kenneth J. Taubes
discusses the factors that influenced Pioneer Interest Shares' performance
during the 12 months ended December 31, 2006. Mr. Taubes, Director of Pioneer's
Fixed Income Group, oversees the team responsible for the daily management of
the Fund.
Q: How did the Fund perform during 2006?
A: Pioneer Interest Shares had a total return of 3.78% at net asset value for
the 12 months ended December 31, 2006. The Fund's 30-day SEC yield on
December 31, 2006, was 2.92% for the month of December. At market price, the
Fund had a total return of 8.28% for the year. During the same 12 months,
the Lehman Brothers Aggregate Bond Index produced a total return of 4.25%.
On December 31, 2006, the Fund's market price was at an 8.4% discount to net
asset value. During the 12 months, the Fund paid dividends totaling 59 cents
(a distribution yield of 5.44%, based upon market value per share at
beginning of year).
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Q: What was the investment environment like during 2006?
A: During the first half of the year, the Federal Reserve Board raised the key
Fed funds rate four times, putting pressure on Treasuries and other
high-grade fixed-income securities. As the Federal Reserve Board raised the
key Fed funds rate to 5.25% from the 4.25% starting point at the beginning
of the year, longer-maturity yields of high-grade securities also rose,
although not by as much, leading to negative returns for many high-grade
parts of the market during the first six months. The situation was different
in the lower-rated, high-yield market, which performed well as solid growth
in the economy largely offset the effects of the rate hikes. The climate
changed markedly from mid-May through mid-July, when the capital markets
were worried about inflationary pressures. The concerns were exacerbated by
rapidly rising oil prices. Riskier asset classes -- including stocks and
high-yield bonds -- slumped during that two-month period.
During the year's second half, as the Federal Reserve Board paused in its
tightening policy and left short-term interest rates unchanged, a different
environment unfolded. Stabilized short-term interest rates and easing oil
prices encouraged investors to believe that inflationary pressures were
under control and that the economy could sustain its expansion at a moderate
rate. In that environment, high-grade bonds improved in performance as
yields across many maturities receded over the final six months of the year.
In many cases, the yield curve became inverted -- a phenomenon which
reverses normal fixed-income relationships, resulting in higher yields among
shorter-maturity securities than among some longer-maturity securities. In
general, government securities and higher-rated corporate securities
delivered improved performance in the second half of the year. For the year,
Treasuries, government agencies, mortgage-backed securities and
investment-grade corporate bonds produced positive results, with income
overcoming some erosion of prices. Mortgage-backed securities tended to
produce the best results in the investment-grade universe. High-yield,
lower-rated corporate bonds, however, delivered the strongest performance in
the domestic market.
Q: What were principal strategies during the year, and how did they affect
performance?
A: Helping results were the Fund's exposure to high-yield corporate bonds --
the best-performing area of the market -- and an effective interest-rate
strategy. Although we became somewhat more defensive early in the year and
reduced our investments in corporate bonds, we still maintained an emphasis
on high-yield bonds, which helped support total return performance. At the
end of the fiscal year, 8.5% of Fund assets were invested in high-yield
corporate bonds. At the same time, we lowered our exposure to
investment-grade corporate debt, as we became concerned that heavy activity
in mergers-and-acquisitions and leveraged buyouts would hurt bondholders
while helping shareholders.
During a period of changing interest-rate trends, our management of duration
-- which is a measure of a bond's price sensitivity to changes in interest
rates -- was successful. We maintained a relatively short duration when
interest rates were rising in the first half of the year. Beginning in June,
we moved to a longer duration, which positioned the Fund to benefit when
longer-maturity rates
B-5
began to decline, as they did for the remainder of the year. However, we
moved again to a short-duration near the end of the year to protect against
the potential of a rise in rates. On December 31, 2006, the Fund's effective
duration was 4.29 years.
Early in the year, we increased our investments in mortgage-backed
securities and we maintained a higher exposure throughout the year, helping
performance. At the end of the fiscal year, on December 31, 2006, 53.0% of
Fund assets were invested in mortgages and other pass-through securities.
During the first half of the year, we also maintained a healthy allocation
to Treasury Inflation Protected Securities (TIPS), which contributed to
performance as interest rates were rising. We reduced that exposure
substantially, beginning in June, which was timely as TIPS began to
underperform straight Treasuries and other fixed-rate high-grade securities
as yields fell with reduced fears about inflation. Nevertheless, our
remaining TIPS holdings did not help in the second half of the year.
Q: What were some of the individual holdings that had the greatest influence on
Fund performance?
A: Several corporate bonds helped performance for the year. Bonds of Platinum
Underwriters, a property-and-casualty re-insurance company, appreciated when
the company encountered relatively few storm-related damage claims in 2006
after raising premiums following the severe 2005 hurricane season.
Securities of Odyssey Re, another re-insurance company, also helped, as did
our position in Ford Motor bonds. The automotive company's bonds gained in
price in 2006, after underperforming in 2005, as investors anticipated that
the company would be able to avoid bankruptcy.
The rating of the debt of HCA was lowered from investment-grade to
high-yield during the year as part of a leveraged buyout of the company,
which operates hospitals throughout the nation. As a result, the Fund's
holdings of HCA-issued bonds underperformed and detracted from results.
Q: What is your investment outlook?
A: Given expectations that the economy will continue to expand, we do not
expect the Federal Reserve Board to lower short-term rates in the near
future. As a consequence, we are maintaining a shorter-than-benchmark
duration policy to protect against the potential that interest rates might
rise. In this environment, we have placed the greatest emphasis on
mortgage-backed securities. In the corporate sector, we have modestly
overweighted (relative to the Fund's benchmark) high-yield bonds, but have
continued to de-emphasize investment-grade corporate debt due to the small
risk premium available and the aforementioned leveraged buyout risk.
Investments in high yield or lower-rated securities are subject to
greater-than-average risk. When interest rates rise, the prices of
fixed-income securities in the Fund will generally fall. Conversely, when
interest rates fall the prices of fixed-income securities in the Fund will
generally rise. The portfolio may invest in mortgage-backed securities,
which during times of fluctuating interest rates may increase or decrease
more than other fixed-income securities. Mortgage-backed securities are also
subject to pre-payments. Investments in the Fund are subject to possible
loss due to the financial failure of underlying securities and their
inability to meet their debt obligations.
Any information in this shareholder report regarding market or economic
trends or the factors influencing the Fund's historical or future
performance are statements of the opinion of Fund management as of the date
of this report. These opinions should not be relied upon for any other
purposes. Past performance is not a guarantee of future results, and there
is no guarantee that market forecasts discussed will be realized.
B-6
20958-00-0607
PIONEER BOND FUND
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
[__________], 2007
This Statement of Additional Information is not a Prospectus. It should be
read in conjunction with the related Proxy Statement and Prospectus (also dated
[], 2007) which covers Class Y shares of Pioneer Bond Fund to be issued in
exchange for shares of Pioneer Interest Shares. Please retain this Statement of
Additional Information for further reference.
The Prospectus is available to you free of charge (please call
1-800-622-3265).
INTRODUCTION ............................................................. 2
EXHIBITS ................................................................. 2
ADDITIONAL INFORMATION ABOUT PIONEER BOND FUND ........................... 2
FUND HISTORY ............................................................ 2
DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS ........................ 2
MANAGEMENT OF THE FUND .................................................. 2
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES ..................... 2
INVESTMENT ADVISORY AND OTHER SERVICES .................................. 2
PORTFOLIO MANAGERS ...................................................... 2
BROKERAGE ALLOCATION AND OTHER PRACTICES ................................ 3
CAPITAL STOCK AND OTHER SECURITIES ...................................... 3
PURCHASE, REDEMPTION AND PRICING OF SHARES .............................. 3
TAXATION OF THE FUND .................................................... 3
UNDERWRITERS ............................................................ 3
CALCULATION OF PERFORMANCE DATA ......................................... 3
FINANCIAL STATEMENTS .................................................... 3
ADDITIONAL INFORMATION ABOUT PIONEER INTEREST SHARES ..................... 3
FINANCIAL STATEMENTS .................................................... 3
INTRODUCTION
This Statement of Additional Information is intended to supplement the
information provided in a Proxy Statement and Prospectus dated [__________],
2007 (the "Proxy Statement and Prospectus") relating to the proposed
reorganization of Pioneer Interest Shares into Pioneer Bond Fund and in
connection with the solicitation by the management of Pioneer Interest Shares
of proxies to be voted at the Special Meeting of Shareholders of Pioneer
Interest Shares to be held on [__________], 2007.
EXHIBITS AND DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated herein by reference, as indicated
below. Shareholders will receive a copy of each document that is incorporated
by reference upon any request to receive a copy of this Statement of Additional
Information.
1. Pioneer Bond Fund's statement of additional information for Class A, B, C,
R, Y and Investor Class shares, dated November 1, 2006 ("Pioneer Bond
Fund's SAI") (File Nos. 002-62436 and 811-02864), as filed with the
Securities and Exchange Commission on October 27, 2006 (Accession No.
0000276776-06-000037) is incorporated herein by reference.
2. Pioneer Bond Fund's Annual Report for the fiscal year ended June 30, 2006
("Pioneer Bond Fund's 2006 Annual Report") (File No. 811-02864), as filed
with the Securities and Exchange Commission on August 29, 2006 (Accession
No. 0000831120-06-000086) is incorporated herein by reference.
3. Pioneer Bond Fund's Semi-Annual Report for the period ended December 31,
2006 ("Pioneer Bond Fund's 2006 Semi-Annual Report") (File No. 811-02864),
as filed with the Securities and Exchange Commission on March 1, 2007
(Accession No. 0000276776-07-00001) is incorporated herein by reference.
4. Pioneer Interest Shares' Annual Report for the fiscal year ended December
31, 2006 ("Pioneer Interest Shares' 2006 Annual Report") (File No.
811-02239), as filed with the Securities and Exchange Commission on March
1, 2007 (Accession No. 0000069407-07-000001) is incorporated herein by
reference.
ADDITIONAL INFORMATION ABOUT
PIONEER BOND FUND
FUND HISTORY
For additional information about Pioneer Bond Fund generally and its
history, see "Fund History" in Pioneer Bond Fund's SAI.
DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS
For additional information about Pioneer Bond Fund's investment objective,
policies, risks and restrictions, see "Investment Policies, Risks and
Restrictions" in Pioneer Bond Fund's SAI.
MANAGEMENT OF THE FUND
For additional information about Pioneer Bond Fund's Board of Trustees and
officers, see "Trustees and Officers" in Pioneer Bond Fund's SAI.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
For additional information, see "Annual Fee, Expense and Other
Information" in Pioneer Bond Fund's SAI.
INVESTMENT ADVISORY AND OTHER SERVICES
For additional information, see "Investment Adviser," "Shareholder
Servicing/Transfer Agent," "Custodian" and "Independent Registered Public
Accounting Firm" in Pioneer Bond Fund's SAI.
PORTFOLIO MANAGERS
For additional information, see "Portfolio Management" in Pioneer Bond
Fund's SAI.
2
BROKERAGE ALLOCATION AND OTHER PRACTICES
For additional information about the Pioneer Bond Fund's brokerage
allocation practices, see "Portfolio Transactions" in Pioneer Bond Fund's SAI.
CAPITAL STOCK AND OTHER SECURITIES
For additional information about the voting rights and other
characteristics of shares of beneficial interest of Pioneer Bond Fund, see
"Description of Shares" in Pioneer Bond Fund's SAI.
PURCHASE, REDEMPTION AND PRICING OF SHARES
For additional information about purchase, redemption and pricing of
shares of Pioneer Bond Fund, see "Sales Charges," "Redeeming Shares,"
"Telephone and Online Transactions" and "Pricing of Shares" in Pioneer Bond
Fund's SAI.
TAXATION OF THE FUND
For additional information about tax matters related to an investment in
Pioneer Bond Fund, see "Tax Status" in Pioneer Bond Fund's SAI.
UNDERWRITERS
For additional information about the Pioneer Bond Fund's principal
underwriter and distribution plans, see "Principal Underwriter and Distribution
Plans" and "Sales Charges" in Pioneer Bond Fund's SAI.
CALCULATION OF PERFORMANCE DATA
For additional information about the investment performance of Pioneer
Bond Fund, see "Investment Results" in Pioneer Bond Fund's SAI.
FINANCIAL STATEMENTS
For additional information, see "Financial Statements" in Pioneer Bond
Fund's 2006 Annual Report and "Financial Statements" in Pioneer Bond Fund's
2006 Semi-Annual Report.
ADDITIONAL INFORMATION ABOUT
PIONEER INTEREST SHARES
FINANCIAL STATEMENTS
For additional information, see "Financial Statements" in Pioneer Interest
Shares' 2006 Annual Report.
3
PART C
OTHER INFORMATION
PIONEER BOND FUND
ITEM 15. INDEMNIFICATION
No change from the information set forth in Item 25 of the most recently filed
Registration Statement of Pioneer Bond Fund (the "Registrant") on Form N-1A
under the Securities Act of 1933 and the Investment Company Act of 1940 (File
Nos. 2-62436 and 811-02864), as filed with the Securities and Exchange
Commission on October 27, 2006 (Accession No. 0000276776-06-000037), which
information is incorporated herein by reference.
ITEM 16. EXHIBITS
(1)(a) Agreement and Declaration of Trust (1)
(1)(b) Certificate of Trust (1)
(1)(c) Establishment and Designation of Classes (*)
(1)(d) Establishment and Designation of Class R Shares (6)
(1)(e) Amendment to Agreement and Declaration of Trust to establish Investor Class Shares (7)
(2) Amended and Restated By-Laws (9)
(3) Not applicable
(4) Form of Agreement and Plan of Reorganization (**)
(5) Reference is made to Exhibits (1) and (2) hereof
(6)(a) Management Contract (5)
(6)(b) Expense Limitation Agreement (9)
(7)(a) Underwriting Agreement (4)
(7)(b) Dealer Sales Agreement (8)
(8) Not applicable
(9) Custodian Agreement between the Registrant and Brown Brothers Harriman & Co. (9)
(10)(a) Amended and Restated Class A Distribution Plan (3)
(10)(b) Amended and Restated Class B Distribution Plan (5)
(10)(c) Class C Distribution Plan (1)
(10)(d) Class R Distribution Plan (6)
(10)(e) Class R Service Plan (6)
(10)(f) Multi-Class Plan Pursuant to Rule 18f-3 (7)
(11) Opinion of Counsel (legality of securities being offered) (*)
(12) Form of Opinion as to Tax Matters and Consent (*)
(13)(a) Investment Company Service Agreement (9)
(13)(b) Administration Agreement (9)
(13)(c) Form of Fee Waiver Agreement (*)
(14) Consents of Independent Registered Public Accounting Firm (*)
(15) Not applicable
(16) Power of Attorney (*)
(17)(a) Code of Ethics--Pioneer Investment Management, Inc. (8)
(17)(b) Code of Ethics--Pioneer Funds (8)
(17)(c) Code of Ethics--Pioneer Funds Distributor, Inc. (8)
(17)(d) Form of Proxy Cards (*)
(1) Previously filed. Incorporated by reference from the exhibits filed with
Post-Effective Amendment No. 28 to the Registration Statement (File Nos.
2-62436 and 811-02864) with the Securities and Exchange Commission (the "SEC")
on May 14, 1999 (accession number 0000276776-99-000013).
(2) Previously filed. Incorporated by reference from the exhibits filed with
Post-Effective Amendment No. 31 to the Registration Statement (File Nos.
2-62436 and 811-02864) with the SEC on July 19, 2001 (accession number
0000276776-01-500006).
(3) Previously filed. Incorporated by reference from the exhibits filed with
the Registration Statement on Form N-14 (File No. 333-64582) with the SEC on
July 3, 2001 (accession number 0000276776-01-500004).
(4) Previously filed. Incorporated by reference from the exhibits filed with
Post-Effective Amendment No. 34 to the Registration Statement (File Nos.
2-62436 and 811-02864) with the SEC on October 29, 2001 (accession number
0000276776-01-500036).
(5) Previously filed. Incorporated by reference from the exhibits filed with
Post-Effective Amendment No. 35 to the Registration Statement (File Nos.
2-62436 and 811-02864) with the SEC on October 29, 2002 (accession number
0000276776-02-000008).
(6) Previously filed. Incorporated by reference from the exhibits filed with
Post-Effective Amendment No. 36 to the Registration Statement (File Nos.
2-62436 and 811-02864) with the SEC on February 24,2003 (accession number
0000276776-03-000002).
(7) Previously filed. Incorporated by reference from the exhibits filed with
the Initial Registration Statement on Form N-14 (File No. 333-118443) as filed
with the SEC on August 20, 2004 (accession number 0001145443-04-001277).
(8) Previously filed. Incorporated by reference from the exhibits filed with
the Post-Effective Amendment No. 41 to the Registrant's Registration Statement
on Form N-1A (File Nos. 2-62436 and 811-02864) as filed with the SEC on October
28, 2005 (Accession No. 0000276776-05-000033)
(9) Previously filed. Incorporated by reference from the exhibits filed with
the Post-Effective Amendment No. 42 to the Registrant's Registration Statement
on Form N-1A (File Nos. 2-62436 and 811-02864) as filed with the SEC on October
27, 2006 (Accession No. 0000276776-06-000037)
(*) Filed herewith.
(**) Attached to the Proxy Statement and Prospectus as Exhibit A.
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is part of this
Registration Statement by any person or party which is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933,
the reoffering prospectus will contain the information called for by the
applicable registration form for the reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the Registration
Statement and will not be used until the amendment is effective, and that, in
determining any liability under the Securities Act of 1933, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees that it shall file a final executed
version of the legal and consent opinion as to tax matters as an exhibit to the
subsequent post-effective amendment to its registration statement on Form N-14
filed with the SEC after the consummation of the reorganizations contemplated
by this Registration Statement on Form N-14.
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement on
Form N-14 has been signed on behalf of the Registrant, in the City of Boston
and the Commonwealth of Massachusetts, on the 2nd day of July, 2007.
PIONEER BOND FUND
By: /s/ John F. Cogan, Jr.
---------------------
Name: John F. Cogan, Jr.
Title: Chairman of the Board, Trustee and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ John F. Cogan, Jr. Chairman of the Board, July 2, 2007
- -------------------------- Trustee, and President
John F. Cogan, Jr.
/s/ Vincent Nave Chief Financial Officer and Treasurer July 2, 2007
- -------------------------- (Principal Financial and Accounting
Vincent Nave Officer)
* Trustee
- --------------------------
David R. Bock
* Trustee
- --------------------------
Mary K. Bush
* Trustee
- --------------------------
Margaret B.W. Graham
* Trustee
- --------------------------
Marguerite A. Piret
* Trustee
- --------------------------
Thomas J. Perna
* Trustee
- --------------------------
John Winthrop
* By: /s/ John F. Cogan, Jr. July 2, 2007
---------------------
John F. Cogan, Jr., Attorney-in-Fact
EXHIBIT INDEX
The following exhibits are filed as part of this Registration Statement:
Exhibit No. Description
(1)(c) Establishment and Designation of Classes (*)
(11) Opinion of Counsel (legality of securities being offered) (*)
(12) Form of Opinion as to Tax Matters and Consent (*)
(13)(c) Form of Fee Waiver Agreement (*)
(14) Consents of Independent Registered Public Accounting Firm (*)
(16) Power of Attorney (*)
(17)(d) Form of Proxy Cards (*)