Pioneer Investment Management is looking to merge a closed-end bond fund into a much larger open-end bond fund with a similar investment strategy.According to the terms of the reorganization, the assets and liabilities of the $90 million ( MUO) Pioneer Interest Shares (MUO) would be moved into the $970 million ( PIOBX) Pioneer Bond (PIOBX) in exchange for its Y class shares. The plan is up for shareholder approval at a special meeting in October. There is no information available about exchange ratio. Both funds invest in investment grade corporate bonds, U.S. government and agency obligations, municipal bonds and temporary cash investments. Both allocate approximately 80% of their assets to high-quality triple-A rated securities. Pioneer wouldn't comment on the transaction beyond its statement in a press release that the reorganization "is in the best interests of the shareholders of both funds." However, it's likely that the move has more to do with economics than shareholder activism. With its bigger asset base, the Pioneer Bond fund is able to charge lower management fees, particularly for share classes with higher investment minimums. The fund's Y shares, which are only available to those who can invest at least $5 million, have a total annual operating expense of 0.58%. By comparison, the Pioneer Interest Shares fund charges 1% of assets. Unlike open-end funds, which issue and redeem shares at net asset value, closed-end funds issue a limited amount of shares that trade on an exchange. These shares often change hands at prices that are below the net asset value of their holdings, meaning investors who want out have to leave some money on the table. Closed-end funds that trade at big discounts often attract bargain hunters who pressure management to convert them to an open-end format, allowing them to realize the full value of their investment. But the discount on the Interest Shares fund, which has been around since 1971, is actually relatively narrow at around 1.43%. By comparison, the average closed-end fund had a 4.02% discount in June, according to Lipper.