Why Consider Bank Loan Investing?

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1 Why Consider Bank Loan Investing? September 2012 Bank loans continue to increase in popularity among a variety of investors in search of higher yield potential than other types of bonds, with lower relative risk. Historically, investors have used bank loans as diversifiers, because their returns can move independently of the broader market as well as the stock market. Low Relative Correlations May Offer Diversification Benefits Historically, investors have used bank loans as diversifiers, because their returns can move independently of the broader market as well as the stock market.* In the table below, the correlation of bank loans to the broad bond market (represented by the Barclays Aggregate Index) over the last 10 years is negative, indicating they have gained or lost value in opposing cycles. Correlation** versus the stock market, as represented by the S&P 500 Index, is U.S. Treasuries*** also offer a compelling comparison. Bank loans have shown notable negative correlation to government debt, primarily due to their low sensitivity to changes in interest rates. As rates rise or fall Treasuries lose or gain in price, while loans are minimally affected. Currently, Pioneer believes U.S. Treasuries are expensively priced, as evidenced by their low absolute and real yields (negative real yields in many parts of the yield curve); therefore, we favor bank loans over Treasuries for total return potential.**** **** As of September 30, 2012 Correlation of Floating Rate Loans to other Asset Classes 10/1/02 to 9/30/12 * Diversification does not assure a profit or protect against loss in a declining market. ** Correlation - A complementary or parallel relationship between two securities. A perfect correlation is represented by 1.0. A low or negative correlation indicates historically dissimilar performance behavior. *** The principal value and interest on Treasury securities are guaranteed by the U.S. government if held to maturity. The views expressed in this report are those of the investment professional and are subject to change at any time. These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any Pioneer investment product. There is no guarantee that these trends will continue. There is no guarantee that market forecasts discussed will be realized Floating Rate Loans S&P/LSTA Leveraged Loan Index 2. Aggregate Bonds Barclays Capital U.S. Aggregate Bond Index U.S. Treasuries Bank of America Merrill Lynch U.S. Treasury Master Index U.S. Corporate Bonds Bank of America Merrill Lynch U.S. Corporate Index High Yield Bonds Bank of America Merrill Lynch U.S. High Yield Master II Index Municipal Bonds Barclays Municipal Bond Index U.S. Stock Market S&P 500 Index Small Cap Stocks Russell 2000 Index Source: Morningstar Direct. The performance data shown represents past performance, which is no guarantee of future results. Indices are unmanaged and their returns assume reinvestment of dividends and, unlike mutual fund returns, do not reflect any fees or expenses associated with a mutual fund. It is not possible to invest directly in an index.

2 A Hedge against Rising Interest Rates LIBOR An interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market. The LIBOR is fixed on a daily basis by the British Bankers' Association. Bank loans are floating rate instruments. They tend to have their coupons reset every 30, 60 or 90 days and have short-term maturities, making them short-duration vehicles with reduced exposure to interest rate risk. Floating rate loans have historically paid increasing income in periods of rising rates, and decreasing income in periods of falling rates. Consider that rates are currently near 60-year lows and during the last full interest rate cycle of , London Interbank Offered Rate (LIBOR) a rate that loans are often referenced to, averaged approximately 3.37%. A Hedge against Inflation Bank loans can provide an opportunity for investors concerned about inflation. During periods of inflation, rates have typically risen as investors demanded a greater rate of return to help compensate for an increase in inflation. Seniority in the Capital Structure Bank loans are typically senior and secured. They have provided lenders with the first right to any cash flows from the sale of collateral in the event that the borrower defaults on its obligations under the loan. As a result, lenders historically have recovered a higher proportion of their outstanding loan amount (approximately 70%)* if the company has defaulted, as compared to unsecured obligations such as bonds of the same issue (approximately 40%).* Furthermore, loans have historically continued to receive interest even in the event of a default in a firm s other fixed income securities. Investors should keep in mind, however, that bank loans are generally rated below investment grade; therefore, they carry credit risk. * Source: Pioneer Research Going back to 1997, bank loans have only experienced one calendar year of negative performance, which was 2008, a difficult year for most investments. Attractive Performance History Going back to 1997, bank loans have only experienced one calendar year of negative performance, which was 2008, a difficult year for most investments. For the 63 quarters from 1997 through Q3 2012, the sector was subject to only 12 quarters of negative returns. This equates to positive returns over 83% of the time on a quarterly basis. While the average return through all negative quarters was -3.76%, this was skewed due to Q4 2008, when loans lost 22.94%. The median may be a more telling measure here, at -1.19%. Past performance is no guarantee of future results. Floating Rate Bank Loans Have Experienced a Dramatic Recovery Following 2008 s Credit Crisis 60% 40% 51.62% 20% 0% 9.97% 7.59% 5.25% 3.65% 4.92% 4.24% 5.17% 5.06% 6.74% 1.91% 2.08% 10.13% 1.52% 6.47% -20% -40% % YTD '12 It is not possible to invest directly in an index. Data represents past performance, which is no guarantee of future results. Last data point: 9/30/12. Source: Morningstar, S&P LSTA Leveraged Loan Index

3 Quarterly Performance was Positive about 83% of the Time S&P LSTA Leveraged Loan Index: 1997 September 30, 2012 # Up Quarters 51 # Down Quarters 12 Best Quarter Q at 20.38% Worst Quarter Q at % Total # Quarters 63 Source: Morningstar. Performance data shown represents past performance, which is no guarantee of future results. The S&P LSTA Leveraged Loan Index is a generally accepted measure of the performance of U.S. bank loans. Indices are unmanaged and their returns assume reinvestment of dividends and, unlike mutual fund returns, do not reflect any fees or expenses associated with a mutual fund. It is not possible to invest directly in an index. One of the catalysts driving bank loan prices is the interest rate environment. Yet, investors do not need rates to rise to obtain benefits from bank loans. Current Market and Opportunities One of the catalysts driving bank loan prices is the interest rate environment. Bank loan coupon payments are determined by adding a spread over a reference rate. Three-month LIBOR is an often used rate. Over the past 25 years, LIBOR has averaged around 4.50%, but is currently trading around 0.36%. Rates are significantly below their long-term average. Thus, if rates trend toward the mean, it would portend an ample opportunity to buy bank loans to hedge against a rise in rates and experience an increase in income generation. The Federal Reserve indicated it might hold the Fed Funds rate at its current level until Generally, a low Fed Funds rate means a low LIBOR rate, as they are highly correlated. Yet, investors do not need rates to rise to obtain benefits from bank loans. On the income side, loans offer a LIBOR basis points coupon (per S&P LSTA index, 9/30/12). This is well above the yield that the equity market (2.06% as of 9/30/12) and many fixed income sectors are currently offering. Loans also offer capital appreciation potential, with the average bid price of the S&P index at $97.02 (as of 9/30/12). On average, loans typically trade at the high 90 s to par (100) level, so there are approximately five dollars of appreciation opportunity in the index. Additionally, consider that loans are eventually retired at par when a company refinances, which is typically about every three years. The following are month-end statistics. Floating Rate Bonds Currently Offer Attractive Yields (Data as of 9/30/12) Yield to Maturity Average Price of Bonds in Index Bank Loans S&P/LSTA Leveraged Loan Index 5.25% $97.02 Aggregate Bonds Barclays Capital U.S. Aggregate Bond Index 3.14% $ Treasuries Bank of America Merrill Lynch U.S. Treasury Master Index 0.90% $ Investment Grade Corporates Bank of America Merrill Lynch U.S. Corporate Index 2.87% $ High Yield Corporates Bank of America Merrill Lynch U.S. High Yield Master II Index 7.15% $ Stocks S&P 500 Index 2.06% N/A Source: Bloomberg, S&P LSTA Leveraged Loan Index. The performance data shown represents past performance, which is no guarantee of future results. Indices are unmanaged and their returns assume reinvestment of dividends and, unlike mutual fund returns, do not reflect any fees or expenses associated with a mutual fund. It is not possible to invest directly in an index.

4 In addition to having an attractive yield and price environment, loans have the lowest interest rate risk of the sectors in comparison; although, as mentioned, they do carry credit risk, which is the risk that a bond issuer could become financially unable to fulfill a bond obligation. The other catalyst that drives loan prices is sentiment toward the credit market. Pioneer estimates that default rates will remain low over the near term, and should be a continued positive for the asset class. Spread - Also called credit spread, the spread between Treasury securities and non-treasury securities that are identical in all respects except for quality rating. For instance, the difference between yields on Treasuries and those on single A-rated industrial bonds. The other catalyst that drives loan prices is sentiment toward the credit market. This market has experienced turmoil recently with the overhang of the European debt crisis and fears of a slowdown in global growth. Investors, still stinging from their 2008 and 2009 induced pains, are cautious about putting money to work in a volatile environment. Bank loans are experiencing a different environment now than in 2008, however. Forced unwinding of portfolios in 08 to the tune of $6 billion worth of loans was a significant impediment to loans, driving average prices to $64. Liquidations in the late summer of 2011 amounted to $6.7 billion, yet the price only went to $91. The big differences this time have been that hedge funds and other institutions have not been forced to liquidate positions and bank loan issuers and buyers are less levered. This is why prices have held up better during the latter environment, although similar to 08 we believe capital appreciation is still available as loans continue to recover. The rolling 12-month default rate by number of loans was 1.06% in September. It is considerably down from the all-time high of 8.25% for November 2009 and the long-term average of approximately 3.24%. Pioneer estimates that default rates will remain low over the near term, and should be a continued positive for the asset class. Lower default rates could lead to lower NAV volatility because of fewer impairments or write-offs. Driven by the credit crisis of 2008, high yield companies generally have a greater percentage of cash on their balance sheets than at any point in the past, leading to lower leverage. A greater percentage of available cash allows companies to better service their debt obligations. During the sharp market sell-off in September, bank loan spreads were implying a default rate of over 20%! Spreads in 08 implied a 30% default rate! While spreads have narrowed recently from those levels, to imply a default over 10%, consider that defaults peaked at 8+% in November 2009 (12-month rolling defaults ramped higher after the 08 debacle). Defaults were brought on by severe stress in the financial world to say the least. We believe the scenario built into current pricing is too pessimistic, and believe loans are an attractive asset class. Finally, the bank loan supply has decreased, which should be a technical positive. We believe the new issues coming to market will be met with solid demand, which should be good news for the asset class. Supply has Narrowed as Defaults have Declined Number of Issuers Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Source: Standard & Poor s LCD, last data point: 9/30/12 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Lagging 12-Month Default Rate Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11

5 New Issue Loan Volume by Year $600B A Word about Risk: Debt securities rated below investment grade are commonly referred to as junk bonds and are considered speculative. Below investment grade debt securities involve greater risk of loss, are subject to greater price volatility and are less liquid, especially during periods of economic uncertainty or change, than higher rated debt securities. The Fund may invest in high yield securities of any rating, including securities that are in default at the time of purchase. Securities with floating interest rates generally are less sensitive to interest rate changes but may decline in value if their interest rates do not rise as much, or as quickly, as prevailing interest rates. Unlike fixed-rate securities, floating rate securities generally will not increase in value if interest rates decline. Changes in interest rates also will affect the amount of interest income the Fund earns on its floating rate investments. These risks may increase share price volatility. $400B $200B $0B Institutional Source: Standard & Poors, LCD Pro Rata Pioneer Floating Rate Fund /1-10/25/ /1-10/25/12 Pioneer Floating Rate Fund aims to protect investors in down markets by investing in loans with attractive prices, yields, cash flows, and covenants. The Fund attempts to hold higher credit quality loans than the S&P LSTA Leveraged Loan Index, which may be of further help to performance in down markets. It has had the same rigorous bottom-up, value-oriented, total return approach since its inception in February of Jon Sharkey has been the lead portfolio manager since the Fund s inception and has over 17 years of bank loan investment experience in structured vehicles and mutual funds. Overall, Pioneer Floating Rate Fund tries to maintain higher credit quality loans compared to it's benchmark (Barclays High Yield Loans Performing Index) and it's Morningstar peer group average. At September s month end, the average quality of the S&P LSTA Leveraged Loan index was B+. We believe investing in higher quality credits can help reduce the volatility of returns over time and offer investors the potential for increased downside risk protection during periods of negative market performance. Pioneer Floating Rate Fund Seeks Higher Quality Credits than the S&P LSTA Leveraged Loan Index Profiles as of 9/30/12 AAA % AA % A % BBB % BB % B % CCC % Not Rated % Cash Equivalent % Pioneer Floating Rate A S&P/LSTA Leveraged Loan TR Source: Morningstar and S&P/LSTA Source: Moody s and S&P. If the ratings provided by Moody s and S&P for a security differ, the higher of the two ratings is used. Bond ratings are ordered highest to lowest in portfolio. Based on S&P s measures, AAA (highest possible rating) through BBB are considered investment grade; BB or lower ratings are considered non-investment grade. Cash equivalents and some bonds may not be rated. Due to rounding, totals may not be equal 100%.

6 Many equity and fixed income asset classes suffered steep losses in However, Pioneer Floating Rate Fund outperformed its benchmark, the Barclays High Yield Loans Performing Index, % to %, and beat the % return of its Morningstar peers for that period. So, even during the credit crisis of 2008, the Fund outperformed the index as well as its peers by over 500 basis points each. Three-year returns were behind the lower quality index, which received boosts from lower rated loans in the risk-on environment of 2009 and The funds 5-year returns bested its peer group by 114 basis points. Past performance is no guarantee of future results. Pioneer Floating Rate Fund Performance vs. Indices and Morningstar Peers As of 9/30/12 Since YTD Year 3-Year 5-Year Inception (2/14/07) Pioneer Floating Rate Fund A at NAV Pioneer Floating Rate Fund A at POP Barclays High Yield Loans Performing Index (Benchmark) S&P LSTA Leveraged Loan Index Morningstar Bank Loans Gross expense ratio: 1.12%. Periods exceeding one year are annualized. Call or visit 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. NAV results represent the percent change in net asset value per share. POP returns reflect deduction of a maximum 4.50% sales charge. 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. It is not possible to invest directly in an index.

7 Pioneer believes bank loans can be a consistent part of diversified fixed income allocation for appropriate investors. The Fund Offers Favorable Risk and Return Statistics vs. its Peers and the Index Data as of 9/30/12 Pioneer Floating Rate A Morningstar Bank Loans S&P/LSTA Leveraged Loan Index 3-Yr R Yr R Yr Standard Deviation R-squared represents the percentage of the portfolio s movements that can be explained by the general movements of the market. Index portfolios will tend to have R-squared values very close to 100. Standard Deviation is a statistical measure of the historic volatility of a portfolio. Sharpe Ratio is a risk-adjusted measure calculated to determine reward per unit of risk. It uses a standard deviation and excess return. The higher the Sharpe Ratio, the better the portfolio s historical riskadjusted performance. Alpha is a measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a mutual fund and compares its risk-adjusted performance to a benchmark index. Information Ratio is a ratio of portfolio returns above the returns of a benchmark to the volatility of those returns. 5-Yr Standard Deviation Yr Sharpe Ratio Yr Sharpe Ratio Yr Alpha Yr Alpha Yr Information Ratio N/A 5-Yr Information Ratio N/A Source: Morningstar The average price of the bank loan holdings within Pioneer s Floating Rate Fund was approximately $99.5 as of the end of September Typically, loans trade near par (100). Loans could weaken, but Pioneer believes the potential for capital appreciation along with income generation outweighs the risks. Average Bid of Leveraged Loans Dec-96 Source: Standard & Poors, LCD * Excludes facilities in default. Conclusion Jun-97 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 All Loans Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Pioneer believes bank loans can be a consistent part of diversified fixed income allocation for appropriate investors. Currently, wider spreads offer the potential to generate capital appreciation and earn substantial income. In the future, protection from increasing interest rates and inflation, and the ability to generate more income vis-à-vis a higher LIBOR rate may become positive catalysts. Jun-12 Sep-12

8 Bank of America Merrill Lynch U.S. Corporate Index: Tracks the performance of U.S. dollar denominated investment grade corporate debt publicly issued in the U.S. domestic market. Bank of America Merrill Lynch U.S. High Yield Master II Index: A commonly accepted measure of the performance of high yield securities. Bank of America Merrill Lynch U.S. Treasury Master Index: Tracks the performance of U.S. dollar denominated inflation-linked sovereign debt publicly issued by the U.S. government in its domestic market. Barclays Capital High Yield Loans Performing Index: A commonly used benchmark for higher yielding, higher risk loans. Barclays Capital U.S. Aggregate Bond Index: An unmanaged index considered representative of the US investment-grade, fixed-rate bond market. Barclays Municipal Bond Index: A broad measure of the municipal bond market. Russell 2000 Index: Measures the performance of U.S. small-cap stocks. S&P 500 Index: An unmanaged index considered representative of the U.S. stock market. S&P/LSTA Leveraged Loan Index: A daily total return index that calculates the market value change of primary and secondary loans. You cannot invest directly in an index. Contact your financial advisor or visit us.pioneerinvestments.com for more information about the Pioneer investment products and programs that may be best for your needs. Before investing, consider the products investment objectives, risks, charges and expenses. Contact Pioneer Investments for a prospectus or summary prospectus containing this information. Read it carefully. The following copyright pertains only to the Morningstar information. The Morningstar information contained herein: (1) is proprietary to Morningstar; (2) may not be copied; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information Morningstar, Inc. All Rights Reserved. The views expressed in this Outlook are those of Pioneer Investments, and are subject to change at any time. These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of Pioneer. The performance data quoted represents past performance, which is no guarantee of future results. Neither Pioneer, nor its representatives are legal or tax advisors. In addition, Pioneer does not provide advice or recommendations. The investments you choose should correspond to your financial needs, goals, and risk tolerance. For assistance in determining your financial situation, please consult an investment professional. Securities offered through Pioneer Funds Distributor, Inc. 60 State Street, Boston, Massachusetts Underwriter of Pioneer mutual funds, Member SIPC 2012 Pioneer Investments us.pioneerinvestments.com

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