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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-01605
Pioneer Balanced Fund
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: December 31
Date of reporting period: January 1, 2005 through June 30, 2005
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
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PIONEER
-------
BALANCED
FUND
Semiannual
Report
6/30/05
[LOGO]PIONEER
Investments(R)
Table of Contents
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Letter to Shareowners 1
Portfolio Summary 2
Prices and Distributions 3
Performance Update 4
Comparing Ongoing Fund Expenses 8
Portfolio Management Discussion 10
Schedule of Investments 14
Financial Statements 29
Notes to Financial Statements 37
Factors Considered by the Independent Trustees in Approving
the Management Contract 44
Trustees, Officers and Service Providers 50
The Pioneer Family of Mutual Funds 51
Pioneer Balanced Fund
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LETTER TO SHAREOWNERS 6/30/05
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Dear Shareowner,
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The U.S. economy has expanded at an annualized rate of at least three percent
for eight straight quarters, a feat it last achieved in the 1980s. Job
conditions are strengthening as well: by mid-year, the unemployment rate had
fallen to 5.0% for the first time since September 11, 2001. Retail sales trends
- - apart from automobiles - were upbeat as sunnier employment prospects sent
consumers to the malls. And with the economy expanding, corporate profits have
been moving ahead smartly.
But equity investors were unconvinced by this evidence and instead brooded
about the possibility of slowing growth later in the year. For one thing,
expectations were for a moderating pace of profit growth. For another, the
Federal Reserve Board has raised short-term interest rates nine times. And some
areas of the economy are feeling the impact of record high energy prices. So
investors were lukewarm toward stocks, with modest losses in the S&P 500 Stock
Index and the Dow Jones Industrials the result. The technology- heavy NASDAQ
Composite also slid, as did small-company stocks, as measured by the Russell
2000 Index. Value stocks, viewed as less vulnerable to declines in a less
robust economy, held up better than growth.
Corporate bonds felt the sting of ratings downgrades in the automobile sector.
Treasury issues fared better, as yields fell and prices rose among intermediate
and longer-term issues, which were little affected by rising short-term rates.
Low long-term yields may signal investor confidence that the Fed will succeed
in dousing inflationary fires; they also brought more affordable mortgages,
further boosting home construction. Municipal revenue bonds edged upward as
healthier economic conditions bolstered tax collections.
The dollar's rebound positively affected foreign markets. Europe's stock
markets performed better than business and political conditions might suggest,
and Japan's market inched higher.
Pioneer's analysts believe that, although the rate of growth may slow,
carefully selected, good quality stocks and bonds have the potential to deliver
solid results. Our global investment experts are well positioned to discover
what we believe are attractive opportunities in the world's markets.
Large or small? Bonds or stocks? Domestic or international?
Just what your mix of investments should be isn't a question to be taken
lightly. Much of your long-term return will depend on the kinds of investments
you own, not just the individual items in your portfolio. For an analysis of
your holdings and some ideas to help bring your investments in line with your
aspirations, talk to your financial professional.
Please consider a fund's investment objective, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about each fund and should be read carefully before you invest or send money.
To obtain a prospectus and for other information on any Pioneer fund, contact
your financial advisor, call 1-800-225-6292 or visit our web site at
www.pioneerfunds.com.
Respectfully,
/s/ Osbert M. Hood
Osbert M. Hood
President
Pioneer Investment Management, Inc.
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 statements 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.
1
Pioneer Balanced Fund
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PORTFOLIO SUMMARY 6/30/05
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Portfolio Diversification
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(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 62.6%
U.S. Government Securities 22.8%
U.S. Corporate Bonds 10.7%
Depositary Receipts for International Stocks 1.8%
Temporary Cash Investment 0.9%
Asset Backed Securities 0.8%
Collateralized Mortgage Obligations 0.4%
Sector Diversification
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(As a percentage of total long-term securities)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Government 23.0%
Consumer Staples 12.4%
Financials 12.2%
Information Technology 11.1%
Health Care 10.9%
Consumer Discretionary 9.6%
Energy 6.5%
Materials 5.9%
Industrials 5.7%
Telecommunication Services 2.1%
Utilities 0.6%
10 Largest Holdings
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(As a percentage of long-term securities)*
1. Microsoft Corp. 3.13%
2. Berkshire Hathaway, Inc. (Class B) 3.07
3. Northrop Grumman Corp. 3.00
4. PepsiCo, Inc. 2.99
5. CVS Corp. 2.80
6. First Data Corp. 2.79
7. Praxair, Inc. 2.31
8. Viacom, Inc. (Class B) 2.10
9. Newmont Mining Corp. 2.01
10. William Wrigley Jr. Co. 1.95
*This list excludes temporary cash and derivative instruments. Portfolio
holdings will vary for other periods.
2
Pioneer Balanced Fund
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PRICES AND DISTRIBUTIONS
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Net Asset Value Per Share
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Class 6/30/05 12/31/04
----- ------- --------
A $9.61 $9.72
B $9.50 $9.61
C $9.57 $9.68
Investor $9.62 $9.72
Distributions Per Share
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1/1/05 - 6/30/05
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Net
Investment Short-Term Long-Term
Class Income Capital Gains Capital Gains
----- ------ ------------- -------------
A $0.0700 $ - $ -
B $0.0300 $ - $ -
C $0.0400 $ - $ -
Investor $0.0800 $ - $ -
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INDEX DEFINITIONS
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The Standard & Poor's 500 Stock Index (the S&P 500) is a commonly used measure
of the broad U.S. stock market. The Lehman Brothers Aggregate Bond Index is a
measure of the U.S. Bond Market. Index returns assume reinvestment of dividends
and, unlike Fund returns, do not reflect any fees, expenses or sales charges.
You cannot invest directly in the Indexes.
The indexes defined here pertain to the Value of $10,000 Investment charts on
pages 4-7.
3
Pioneer Balanced Fund
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PERFORMANCE UPDATE 6/30/05 CLASS A SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Balanced Fund at public offering price, compared to
that of the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond
Index.
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Average Annual Total Returns
(As of June 30, 2005)
Net Asset Public Offering
Period Value (NAV) Price (POP)
10 Years 4.63% 4.15%
5 Years 1.43 0.50
1 Year 2.38 -2.22
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[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Pioneer Standard & Poor's Lehman Brothers
Balanced Fund 500 Index Aggregate Bond Index
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6/95 9551 10000 10000
10596 12596 10501
6/97 12257 16962 11358
13804 22075 12554
6/99 13729 27103 12947
13991 29070 13536
6/01 14480 24764 15057
12952 20317 16357
6/03 13522 20367 18058
14672 24255 18118
6/05 15021 25787 19353
Call 1-800-225-6292 or visit www.pioneerfunds.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.
POP returns reflect deduction of maximum 5.75% sales charge. NAV results
represent the percent change in net asset value per share. Returns would have
been lower had sales charges been reflected. 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 Fund adopted its current name and investment objective on February 3,
1997. Prior to that date, the Fund's name was Pioneer Income Fund and its
objective was income from a portfolio of income-producing bonds and stocks.
4
Pioneer Balanced Fund
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PERFORMANCE UPDATE 6/30/05 CLASS B SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Balanced Fund, compared to that of the Standard &
Poor's 500 Index and the Lehman Brothers Aggregate Bond Index.
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Average Annual Total Returns
(As of June 30, 2005)
If If
Period Held Redeemed
10 Years 3.70% 3.70%
5 Years 0.49 0.49
1 Year 1.42 -2.58
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[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Pioneer Standard & Poor's Lehman Brothers
Balanced Fund 500 Index Aggregate Bond Index
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6/95 10000 10000 10000
11017 12596 10501
6/97 12640 16962 11358
14102 22075 12554
6/99 13892 27103 12947
14037 29070 13536
6/01 14388 24764 15057
12759 20317 16357
6/03 13205 20367 18058
14184 24255 18118
6/05 14386 25787 19353
Call 1-800-225-6292 or visit www.pioneerfunds.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.
"If Held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. "If Redeemed"
returns reflect the deduction of applicable contingent deferred sales charge
(CDSC). Effective December 1, 2004, the period during which a CDSC is applied
to withdrawals was shortened to 5 years. The maximum CDSC for Class B shares
continues to be 4%. For more complete information, please see the prospectus
for details. Note: Shares purchased prior to December 1, 2004 remain subject
to the CDSC in effect at the time you purchased those shares. For performance
information for shares purchased prior to December 1, 2004, please visit
www.pioneerfunds.com/bshares.
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 Fund adopted its current name and investment objective on February 3,
1997. Prior to that date, the Fund's name was Pioneer Income Fund and its
objective was income from a portfolio of income-producing bonds and stocks.
5
Pioneer Balanced Fund
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PERFORMANCE UPDATE 6/30/05 CLASS C SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Balanced Fund, compared to that of the Standard &
Poor's 500 Index and the Lehman Brothers Aggregate Bond Index.
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Average Annual Total Returns
(As of June 30, 2005)
If If
Period Held Redeemed
Life-of-Class
(1/31/96) 2.80% 2.80%
5 Years 0.36 0.36
1 Year 1.59 1.59
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[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Pioneer Standard & Poor's Lehman Brothers
Balanced Fund 500 Index Aggregate Bond Index
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1/96 10000 10000 10000
9974 10646 9813
6/97 11487 14336 10613
12860 18658 11731
6/99 12643 22907 12099
12745 24570 12649
6/01 12986 20930 14071
11500 17171 15286
6/03 11897 17214 16875
12769 20500 16931
6/05 12972 21794 18084
Call 1-800-225-6292 or visit www.pioneerfunds.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.
Class C shares held for less than one year are also subject to a 1% contingent
deferred sales charge (CDSC). The performance of Class C shares does not
reflect the 1% front-end sales charge in effect prior to February 1, 2004. If
you paid a 1% sales charge, your returns would be lower than those shown
above. "If Held" results represent the percent change in net asset value per
share. Returns would have been lower had sales charges been reflected. 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 Fund adopted its current name and investment objective on February 3,
1997. Prior to that date, the Fund's name was Pioneer Income Fund and its
objective was income from a portfolio of income-producing bonds and stocks.
6
Pioneer Balanced Fund
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PERFORMANCE UPDATE 6/30/05 INVESTOR CLASS SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Balanced Fund, compared to that of the Standard &
Poor's 500 Index and the Lehman Brothers Aggregate Bond Index.
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Average Annual Total Returns
(As of June 30, 2005)
If If
Period Held Redeemed
Life-of-Class
(12/10/04) 0.42% 0.42%
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[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Pioneer Standard & Poor's Lehman Brothers
Balanced Fund 500 Index Aggregate Bond Index
------------- --------- --------------------
12/04 10000 10000 10000
6/05 9980 9919 10251
Call 1-800-225-6292 or visit www.pioneerfunds.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.
Certain Pioneer funds (the "Funds") issued Investor Class shares in connection
with the reorganization of Safeco mutual funds. The Funds are not offering
additional Investor Class shares except in connection with the reinvestment of
dividends on the Funds' outstanding Investor Class shares. All Investor Class
shares of the Funds, whenever issued, convert to Class A shares of their
respective Funds on December 10, 2006. Investor Class shares are not subject
to sales charges.
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 Fund adopted its current name and investment objective on February 3,
1997. Prior to that date, the Fund's name was Pioneer Income Fund and its
objective was income from a portfolio of income-producing bonds and stocks.
7
Pioneer Balanced Fund
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COMPARING ONGOING FUND EXPENSES
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As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value [divided by] $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Balanced Fund
Based on actual returns from January 1, 2005 through June 30, 2005
Share Class A B C Investor
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Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 1/1/05
Ending Account Value $ 995.90 $ 991.70 $ 992.80 $ 998.00
On 6/30/05
Expenses Paid During Period* $ 6.58 $ 11.26 $ 10.28 $ 5.45
* Expenses are equal to the Fund's annualized expense ratio of 1.33%, 2.28%,
2.08% and 1.10%, for Class A, Class B, Class C and Investor Class shares,
respectively, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
8
Pioneer Balanced Fund
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Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the
5% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Balanced Fund
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2005 through June 30, 2005
Share Class A B C Investor
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Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 1/1/05
Ending Account Value $1,018.20 $1,013.49 $1,014.48 $1,019.34
On 6/30/05
Expenses Paid During Period* $ 6.66 $ 11.38 $ 10.39 $ 5.51
* Expenses are equal to the Fund's annualized expense ratio of 1.33%, 2.28%,
2.08% and 1.10%, for Class A, Class B, Class C and Investor Class shares,
respectively, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
9
Pioneer Balanced Fund
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/05
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The U.S. economy expanded steadily throughout the first six months of 2005,
despite some concerns about the sustainability of the economic recovery. The
concerns led to periodic volatility in both the equity and bond markets. The
U.S. Federal Reserve Board continued to raise short-term interest rates
throughout the six months, but market rates of longer-maturity bonds declined,
and longer-maturity securities outperformed shorter-maturity investments. In
the equity market, small- and mid-cap stocks outperformed large-cap stocks, and
lower-priced value stocks outpaced returns of consistent growth companies.
In the following interview, Timothy Mulrenan, who is responsible for the equity
portfolio of Pioneer Balanced Fund, and Richard Schlanger, who is responsible
for the Fund's fixed-income portfolio, discuss the markets and the factors that
affected performance.
Throughout the six months, the Fund retained stable allocations to equities and
bonds, with about 64% of assets in stocks and 36% in fixed-income securities.
Q: How did the Fund perform?
A: Pioneer Balanced Fund (Class A shares) had a total return of -0.41% at net
asset value during the six months ended June 30, 2005. During the same six
months, the average return of the 648 funds in Lipper's Balanced Fund
category was 0.35%.
The primary reason for the Fund's trailing performance was our emphasis on
large-cap, blue chip growth companies during a period in which
dividend-paying, value stocks and small- and mid-cap stocks tended to post
better results.
Q: What general factors affected fixed income performance during the six
months?
A: Over the period, as the economy expanded and new jobs were created, the
Federal Reserve Board raised the short-term Federal Funds rate from 2.25%
to 3.25%. However, in a phenomenon that Fed Chairman Alan Greenspan
referred to as a "conundrum," the yields of longer-maturity bonds resisted
the upward pressure and actually declined, and the yield curve - which
reflects the difference in yields of short- and long-term investments -
flattened. During the six months, for example, the difference between the
yields of two-year and 10-year Treasuries narrowed from 116 basis points
(a basis point is one-hundredth of one percentage point) to 28 basis
points. This led to additional stimulus in some parts of
10
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the economy, notably housing, where mortgage rates are highly influenced
by 10-year Treasuries. There was considerable volatility in the corporate
bond market, however, especially in the early spring when major credit
agencies announced they were downgrading the debt of automotive giants
General Motors and Ford from investment grade to below-investment grade.
While we held some General Motors and Ford debt, the Fund was not
significantly affected by the downgrade.
It was an environment in which longer-maturity investments had a
performance advantage over shorter-term securities, especially among
high-quality securities. Treasuries outperformed mortgages, and
investment-grade corporates outperformed high-yield corporates.
The performance of the fixed-income portfolio, while consistent with that
of the Lehman Brothers Aggregate Bond Index, was held back somewhat by our
de-emphasis of long-term Treasuries. We also had cut back our exposure to
mortgage-backed securities, although we subsequently increased it again by
investing in bonds with less pre-payment risk. At the end of the six-month
period, mortgages accounted for 48.8% of fixed-income assets. Industrial
and utility bonds accounted for another 23.8% of assets, while bonds
issued by banks and financial institutions composed another 8% of
fixed-income assets. Treasuries and government agency bonds accounted for
16.9% of fixed income assets, while cash represented 2.5% of those assets.
As the period progressed, we took profits and sold some corporate
investments that we believed had become expensive, including bonds of
Verizon, Hilton Hotels, Magellan Midstream, a pipeline company, and Shaw
Group, an engineering and construction company.
Average credit quality was AA- on June 30, while duration - a measure of
sensitivity to changes in interest rates - was 3.98 years.
Q: What factors affected equity performance during the period?
A: Equity investors struggled to detect an underlying trend for the six months,
and most equity indexes ended the period close to where they started. The
lackluster results came despite a healthy corporate profit picture.
Investors were concerned about a variety of issues, including the effects
of rising oil prices, higher short-term interest rates and even the
possibility of a steep correction in real estate prices. Because of these
factors influencing sentiment,
11
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/05 (continued)
- --------------------------------------------------------------------------------
stock prices did not keep pace with corporate earnings growth. In the
overall stock market, small- and mid-cap stocks outdistanced large-company
stocks, and value stocks performed better than growth stocks. Within the
large-cap S&P 500 universe of stocks, only three of 10 sectors had
positive performance - energy, utilities and health care.
The portfolio's investments in the consumer staples sector helped
performance. Two stocks from that sector did particularly well: Gillette,
which announced it is being acquired by Proctor & Gamble at a 15% premium
to its stock price; and CVS, the pharmacy chain which has successfully
integrated the acquisition of the former Eckerd's stores. Within the
energy sector, investments in EnCana, a Canadian oil and natural gas
producer, and National Oilwell Varco, a leading provider of oil-field
equipment and services, both benefited from rising commodity prices. In
the health-care area, one of the top performers was the pharmaceutical
company IVAX, which appreciated both because of the excellent prospects
for generic drug products and because of opportunities for some of its
branded pharmaceuticals.
Holding back results, however, was the portfolio's investment in Avaya,
which provides telecommunications systems for large organization. Its
sales of traditional telephone equipment slumped, while newer equipment
designed for the Internet did not meet growth expectations. UPS declined
because of disappointing earnings linked to heightened competition in the
domestic ground business, while Newmont Mining, a gold mining company,
underperformed as the price of gold stopped rising. Not owning any
utilities stocks also held back results. We avoided the sector because of
the poor growth prospects of utilities companies, but their stock
valuations rose as longer-term interest rates declined.
Q: What is your outlook for equities?
A: We think that equity prices in 2005 have the potential to rise consistent
with corporate earnings growth. Even though profit growth may continue to
decelerate, that should imply moderate positive performance from equity
investments, especially as the Federal Reserve Board nears the end of its
round of short-term interest-rate hikes. Although value stocks have
outperformed growth stocks recently, we think the performance of growth
stocks should be close to that of value issues in the coming months. We
also think the performance of large-company stocks should improve relative
to smaller company equities. This should, we think, be an
12
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
environment that favors our strategy of emphasizing higher quality,
large-company growth stocks.
Q: What is your outlook for bonds?
A: At least in the near term, we anticipate that the Federal Reserve will keep
raising short-term interest rates, while the economy should continue to
grow at an annual rate of 3% to 3.5%. Overall, we anticipate moderate,
positive returns from fixed-income investments.
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
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 statements 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.
13
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/05 (unaudited)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCK - 64.2%
Energy - 5.7%
Integrated Oil & Gas - 0.9%
2,400 BP Amoco Plc (A.D.R.) $ 149,712
18,776 Exxon Mobil Corp. 1,079,056
------------
$ 1,228,768
------------
Oil & Gas Drilling - 1.9%
72,100 ENSCO International, Inc. $ 2,577,575
------------
Oil & Gas Equipment & Services - 1.8%
50,788 National-Oilwell Varco, Inc.* $ 2,414,462
------------
Oil & Gas Exploration & Production - 1.1%
35,400 Encana Corp. $ 1,401,486
3,100 Pioneer Natural Resources Co. 130,448
------------
$ 1,531,934
------------
Total Energy $ 7,752,739
------------
Materials - 4.3%
Gold - 2.0%
68,700 Newmont Mining Corp. $ 2,681,361
------------
Industrial Gases - 2.3%
66,100 Praxair, Inc. $ 3,080,260
------------
Total Materials $ 5,761,621
------------
Capital Goods - 3.0%
Aerospace & Defense - 3.0%
72,600 Northrop Grumman Corp. $ 4,011,150
------------
Total Capital Goods $ 4,011,150
------------
Commercial Services & Supplies - 0.4%
Diversified Commercial Services - 0.4%
13,000 Cintas Corp. $ 501,800
------------
Total Commercial Services & Supplies $ 501,800
------------
Transportation - 1.8%
Air Freight & Couriers - 1.8%
34,700 United Parcel Service $ 2,399,852
------------
Total Transportation $ 2,399,852
------------
14 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Consumer Durables & Apparel - 1.6%
Apparel, Accessories & Luxury Goods - 1.6%
55,600 Liz Claiborne, Inc. $ 2,210,656
------------
Total Consumer Durables & Apparel $ 2,210,656
------------
Media - 2.9%
Broadcasting & Cable Tv - 0.8%
37,200 Comcast Corp. (Special)* $ 1,114,140
------------
Movies & Entertainment - 2.1%
87,594 Viacom, Inc. (Class B) $ 2,804,760
------------
Total Media $ 3,918,900
------------
Retailing - 2.6%
Apparel Retail - 1.1%
51,100 Ross Stores, Inc. $ 1,477,301
------------
General Merchandise Stores - 1.5%
77,700 Family Dollar Stores, Inc. $ 2,027,970
------------
Total Retailing $ 3,505,271
------------
Food & Drug Retailing - 3.2%
Drug Retail - 2.8%
128,400 CVS Corp. $ 3,732,588
------------
Food Distributors - 0.1%
3,400 Sysco Corp. $ 123,046
------------
Hypermarkets & Supercenters - 0.3%
9,400 Wal-Mart Stores, Inc. $ 453,080
------------
Total Food & Drug Retailing $ 4,308,714
------------
Food, Beverage & Tobacco - 6.6%
Brewers - 1.0%
28,900 Anheuser-Busch Companies, Inc. $ 1,322,175
------------
Packaged Foods & Meats - 1.9%
37,900 William Wrigley Jr. Co. $ 2,609,036
------------
Soft Drinks - 3.7%
24,800 The Coca-Cola Co. $ 1,035,400
74,100 PepsiCo, Inc. 3,996,213
------------
$ 5,031,613
------------
Total Food, Beverage & Tobacco $ 8,962,824
------------
The accompanying notes are an integral part of these financial statements. 15
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
Shares Value
Household & Personal Products - 2.0%
Personal Products - 2.0%
42,900 Avon Products, Inc. $ 1,623,765
27,200 Estee Lauder Co. 1,064,336
------------
$ 2,688,101
------------
Total Household & Personal Products $ 2,688,101
------------
Health Care Equipment & Services - 3.1%
Health Care Distributors - 0.9%
21,100 Cardinal Health, Inc. $ 1,214,938
------------
Health Care Equipment - 1.7%
21,300 Biomet, Inc. $ 737,832
23,100 Guidant Corp. 1,554,630
------------
$ 2,292,462
------------
Health Care Services - 0.5%
24,900 IMS Health, Inc. (b) $ 616,773
------------
Total Health Care Equipment & Services $ 4,124,173
------------
Pharmaceuticals & Biotechnology - 7.2%
Biotechnology - 1.6%
34,868 Amgen, Inc.* $ 2,108,119
------------
Pharmaceuticals - 5.6%
11,100 Eli Lilly & Co. $ 618,381
92,400 IVAX Corp.* 1,986,600
89,321 Pfizer, Inc. 2,463,473
56,600 Wyeth 2,518,700
------------
$ 7,587,154
------------
Total Pharmaceuticals & Biotechnology $ 9,695,273
------------
Banks - 0.8%
Diversified Banks - 0.8%
11,000 Bank of America Corp. $ 501,710
4,620 U.S. Bancorp 134,904
7,900 Wachovia Corp. 391,840
------------
$ 1,028,454
------------
Total Banks $ 1,028,454
------------
16 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Diversified Financials - 2.9%
Asset Management & Custody Banks - 1.0%
48,000 The Bank of New York Co., Inc. $ 1,381,440
------------
Consumer Finance - 1.5%
38,000 American Express Co. $ 2,022,740
------------
Investment Banking & Brokerage - 0.4%
9,400 Merrill Lynch & Co., Inc. $ 517,094
------------
Total Diversified Financials $ 3,921,274
------------
Insurance - 4.2%
Multi-Line Insurance - 0.1%
3,500 American International Group, Inc. $ 203,350
------------
Property & Casualty Insurance - 4.1%
1,475 Berkshire Hathaway, Inc. (Class B)* $ 4,105,663
14,000 Progressive Corp.* 1,383,340
------------
$ 5,489,003
------------
Total Insurance $ 5,692,353
------------
Software & Services - 7.7%
Data Processing & Outsourced Services - 2.7%
92,700 First Data Corp. $ 3,720,978
------------
Systems Software - 5.0%
168,200 Microsoft Corp. $ 4,178,088
116,400 Symantec Corp.* 2,530,536
------------
$ 6,708,624
------------
Total Software & Services $ 10,429,602
------------
Technology Hardware & Equipment - 1.9%
Communications Equipment - 0.6%
88,900 Avaya, Inc.* $ 739,648
------------
Computer Hardware - 1.3%
76,900 Hewlett-Packard Co. $ 1,807,919
------------
Electronic Manufacturing Services - 0.0%
1,800 Molex, Inc. $ 42,264
------------
Total Technology Hardware & Equipment $ 2,589,831
------------
The accompanying notes are an integral part of these financial statements. 17
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
Shares Value
Semiconductors - 0.7%
15,000 Intel Corp. $ 390,900
22,100 Texas Instruments, Inc. 620,347
------------
$ 1,011,247
------------
Total Semiconductors $ 1,011,247
------------
Telecommunication Services - 1.7%
Wireless Telecommunication Services - 1.7%
93,700 Vodafone Group Plc (A.D.R.) $ 2,278,784
------------
Total Telecommunication Services $ 2,278,784
------------
TOTAL COMMON STOCK
(Cost $76,643,368) $ 86,792,619
------------
RIGHTS/WARRANTS - 0.0%
Technology Hardware & Equipment - 0.0%
1,883 Lucent Technologies - Expires 12/10/07* $ 1,450
------------
TOTAL RIGHTS/WARRANTS
(Cost $2,194) $ 1,450
------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
ASSET BACKED SECURITIES - 0.8%
Transportation - 0.0%
Airlines - 0.0%
$12,432 AA-/Baa1 Continential Airlines, 6.648%, 9/15/17 $ 12,268
------------
Total Transportation $ 12,268
------------
Diversified Financials - 0.4%
Diversified Financial Services - 0.4%
242,079 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%,
6/1/15 (144A) $ 248,234
285,813 BBB/Baa2 Power Receivables Finance, 6.29%,
1/1/12 (144A) 296,937
------------
$ 545,171
------------
Specialized Finance - 0.0%
70,000 AAA/Aaa MBNA Credit Card Master Note, Floating Rate,
12/15/08 $ 70,068
------------
Total Diversified Financials $ 615,239
------------
18 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Utilities - 0.4%
Electric Utilities - 0.4%
$294,063 BBB-/Baa3 FPL Energy America Wind LLC, 6.639%,
6/20/23 (144A) $ 317,488
174,200 BB-/Ba2 FPL Energy Wind Funding, 6.876%,
6/27/17 (144A) 176,160
------------
Total Utilities $ 493,648
------------
TOTAL ASSET BACKED SECURITIES
(Cost $1,087,322) $ 1,121,155
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.4%
Diversified Financials - 0.2%
Diversified Financial Services - 0.2%
300,000 BBB-/Baa3 Tower 2004-1A E, 5.395%, 1/15/34 $ 294,882
------------
Total Diversified Financials $ 294,882
------------
Government - 0.2%
192,603 Federal Home Loan Mortgage Corp.,
5.0%, 1/15/16 $ 194,786
------------
Total Government $ 194,786
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $498,670) $ 489,668
------------
CORPORATE BONDS - 10.6%
Energy - 0.7%
Integrated Oil & Gas - 0.1%
120,000 A-/A3 Occidental Petroleum, 6.75%, 1/15/12 $ 135,817
25,000 BBB/Baa2 Petro-Canada, 4.00%, 7/15/13 23,658
15,000 BBB+/Baa1 USX Corp., 6.85%, 3/1/08 15,939
------------
$ 175,414
------------
Oil & Gas Exploration & Production - 0.5%
300,000 BBB-/Baa3 Gazprom International SA, 7.201%,
2/1/20 (144A) $ 323,250
65,000 BBB/Baa1 Pemex Project Funding Master,
9.125%, 10/13/10 76,115
200,000 BBB-/Baa3 Tengizchevroil LLP, 6.124%, 11/15/14 (144A) 204,500
------------
$ 603,865
------------
Oil & Gas Refining & Marketing - 0.1%
65,000 BBB-/Baa2 TGT Pipeline LLC, 5.50%, 2/1/17 (144A) $ 67,536
------------
The accompanying notes are an integral part of these financial statements. 19
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Oil & Gas Storage & Transporation - 0.0%
$40,000 BBB+/Baa1 Kinder Morgan Energy Partners, 6.75%, 3/15/11 $ 43,991
------------
Total Energy $ 890,806
------------
Materials - 1.6%
Aluminum - 0.1%
150,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 (144A) $ 150,563
------------
Commodity Chemicals - 0.2%
300,000 BB+/Ba2 Nova Chemicals, Ltd., 6.5%, 1/15/12 $ 291,000
------------
Diversified Metals & Mining - 0.4%
425,000 BBB-/Baa3 Inco, Ltd., 7.2%, 9/15/32 $ 505,862
------------
Fertilizers & Agricultural Chemicals - 0.1%
30,000 BBB+/Baa1 Potash Corp Saskatchewan, 4.875%, 3/1/13 $ 30,305
------------
Metal & Glass Containers - 0.1%
125,000 BBB/Baa2 Tenneco Packaging, 8.125%, 6/15/17 $ 155,987
------------
Paper Packaging - 0.3%
425,000 A/Baa1 Bemis Company, Inc. 6.7%, 7/1/05 $ 425,000
------------
Paper Products - 0.4%
250,000 BB-/Ba3 Abitibi-Consolidated, Inc., 6.95%, 4/1/08 $ 251,250
300,000 B/B2 MDP Acquisitions, 9.625%, 10/1/12 300,000
------------
$ 551,250
------------
Total Materials $ 2,109,967
------------
Capital Goods - 0.4%
Aerospace & Defense - 0.0%
25,000 A/A3 Boeing Co., 5.125%, 2/15/13 $ 26,163
80,000 A/A2 Honeywell International, 7.5%, 3/1/10 91,155
------------
$ 117,318
------------
Electrical Component & Equipment - 0.2%
200,000 BBB-/Ba1 Thomas & Betts Corp., 7.25%, 6/1/13 $ 219,302
------------
Industrial Conglomerates - 0.2%
145,000 AAA/Aaa General Electric Capital Corp., 6.125%, 2/22/11 $ 157,538
90,000 AAA/Aaa General Electric Capital Corp., 6.75%, 3/15/32 111,059
------------
$ 268,597
------------
Total Capital Goods $ 605,217
------------
Commercial Services & Supplies - 0.1%
Diversified Commercial Services - 0.1%
100,000 BBB+/Baa1 Deluxe Corp., 3.5%, 10/1/07 $ 97,735
------------
Total Commercial Services & Supplies $ 97,735
------------
20 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Automobiles & Components - 0.8%
Auto Parts & Equipment - 0.4%
$200,000 B-/B3 Delphi Corp., 6.55%, 6/15/06 (b) $ 194,500
300,000 B+/Ba2 Sun Sage BV, 8.25%, 3/26/09 (144A) 318,750
------------
$ 513,250
------------
Automobile Manufacturers - 0.4%
80,000 BB+/Baa3 Ford Motor Co., 7.25%, 10/1/08 $ 79,239
500,000 BB/Baa3 General Motors, 7.2%, 1/15/11 (b) 462,500
------------
$ 541,739
------------
Total Automobiles & Components $ 1,054,989
------------
Consumer Durables & Apparel - 0.0%
Housewares & Specialties - 0.0%
35,000 BBB+/Baa2 Newell Rubbermaid, Inc., 4.625%, 12/15/09 $ 35,076
------------
Total Consumer Durables & Apparel $ 35,076
------------
Media - 1.2%
Broadcasting & Cable Television - 0.7%
80,000 BBB+/Baa2 Comcast Corp., 5.3%, 1/15/14 $ 82,241
500,000 BBB+/Baa2 Comcast Corp., 7.125%, 6/15/13 573,010
300,000 BBB-/Baa3 Cox Communications, 7.125%, 10/1/12 336,427
------------
$ 991,678
------------
Movies & Entertainment - 0.0%
30,000 BBB+/Baa1 Time Warner, Inc. 6.75%, 4/15/11 $ 33,246
------------
Publishing - 0.5%
512,000 BBB-/Baa3 News America, Inc., 7.3%, 4/30/28 $ 595,848
------------
Total Media $ 1,620,772
------------
Retailing - 0.3%
Department Stores - 0.0%
15,000 A-/Baa1 Nordstrom, Inc., 5.625%, 1/15/09 $ 15,598
------------
Specialty Stores - 0.3%
500,000 B-/Ba2 Toys "R" Us, 7.875%, 4/15/13 $ 447,500
------------
Total Retailing $ 463,098
------------
Food, Beverage & Tobacco - 0.4%
Brewers - 0.0%
35,000 BBB+/Baa1 Miller Brewing Co., 5.5%, 8/15/13 (144A) $ 36,271
------------
Packaged Foods & Meats - 0.0%
35,000 A+/A1 Unilever Capital Corp., 7.125%, 11/1/10 $ 39,567
------------
The accompanying notes are an integral part of these financial statements. 21
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Soft Drinks - 0.0%
$35,000 A/A3 Bottling Group LLC 5.0%, 11/15/13 $ 36,206
------------
Tobacco - 0.3%
400,000 BBB/Baa2 Altria Group, Inc., 7.0%, 11/4/13 $ 447,640
------------
Total Food, Beverage & Tobacco $ 559,684
------------
Health Care Equipment & Services - 0.6%
Health Care Facilities - 0.4%
500,000 BB+/Ba2 HCA, Inc., 6.3%, 10/1/12 $ 513,242
------------
Health Care Supplies - 0.2%
250,000 BBB/Baa3 Bausch & Lomb, 7.125%, 8/1/28 $ 280,819
------------
Total Health Care Equipment & Services $ 794,061
------------
Banks - 0.4%
Diversified Banks - 0.4%
80,000 AAA/Aaa International Bank for Reconstruction &
Development, 4.375%, 9/28/06 $ 80,612
150,000 N/R/Aaa KFW-Kredit Wiederaufbau, 2.75%, 5/8/07 147,204
225,000 AA-/Aa2 National Westminster, 7.375%, 10/1/09 252,573
30,000 A+/Aa2 US Bancorp, 3.125%, 3/15/08 29,205
------------
$ 509,594
------------
Regional Banks - 0.0%
40,000 A-/A2 Keycorp, 2.75%, 2/27/07 $ 39,074
------------
Total Banks $ 548,668
------------
Diversified Financials - 0.8%
Consumer Finance - 0.2%
265,000 A/A2 SLM Corp., Floating Rate, 7/25/14 $ 262,517
------------
Investment Banking & Brokerage - 0.2%
200,000 B+/B1 E*Trade Financial Corp., 8.0%, 6/15/11 $ 210,500
------------
Diversified Financial Services - 0.4%
300,000 A-/Baa3 Brascan Corp., 5.75%, 3/1/10 $ 312,447
300,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) 287,669
------------
$ 600,116
------------
Total Diversified Financials $ 1,073,133
------------
Insurance - 1.1%
Life & Health Insurance - 0.2%
300,000 BB+/Ba1 Provident Companies, Inc., 7.0%, 7/15/18 $ 302,696
------------
Multi-Line Insurance - 0.2%
150,000 A/Baa1 Loew Corp., 5.25%, 3/15/16 $ 151,087
------------
22 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Property & Casualty Insurance - 0.4%
$180,000 BBB-/N/R Kingsway America, Inc., 7.5%, 2/1/14 $ 191,066
350,000 BB/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 384,929
------------
$ 575,995
------------
Reinsurance - 0.3%
300,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 323,860
100,000 BBB/Baa2 Platinum Underwriters Financial, 7.5%
6/1/17 (144A) 101,401
------------
$ 425,261
------------
Total Insurance $ 1,455,039
------------
Real Estate - 1.1%
Real Estate Investment Trusts - 1.1%
300,000 BBB-/Baa3 Colonial Reality LP, 6.15%, 4/15/13 $ 316,904
400,000 BBB-/Baa3 Hospitality Properties Trust, 6.75%, 2/15/13 439,318
316,000 B+/Ba3 Host Marriot LP, 6.375%, 3/15/15 (144A) 312,840
250,000 B+/B1 Trustreet Properties, Inc., 7.5%, 4/1/15 (144A) 255,625
100,000 BB/Ba2 Ventas Realty LP Capital Corp., 7.125%,
6/1/15 (144A) 104,000
------------
$ 1,428,687
------------
Total Real Estate $ 1,428,687
------------
Software & Services - 0.2%
IT Consulting & Other Services - 0.2%
300,000 BB+/Ba1 UNISYS Corp., 6.875%, 3/15/10 $ 294,750
------------
Total Software & Services $ 294,750
------------
Technology Hardware & Equipment - 0.4%
Computer Hardware - 0.4%
500,000 BBB-/Baa3 NCR Corp., 7.125%, 6/15/09 $ 540,936
------------
Total Technology Hardware & Equipment $ 540,936
------------
Telecommunication Services - 0.4%
Integrated Telecommunication Services - 0.4%
300,000 B/Caa1 Intelsat, Ltd., 6.5%, 11/1/13 $ 243,000
300,000 BBB+/Baa2 Telecom Italia Capital, 5.25%, 11/15/13 304,562
------------
$ 547,562
------------
Total Telecommunication Services $ 547,562
------------
The accompanying notes are an integral part of these financial statements. 23
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Utilities - 0.2%
Electric Utilities - 0.1%
$115,000 BBB+/Baa3 Entergy Gulf States, 5.7%, 6/1/15 $ 117,652
40,000 BBB/Baa1 PSE&G Power, 6.95%, 6/1/12 44,965
------------
$ 162,617
------------
Multi-Utilities - 0.1%
75,000 BBB-/Baa3 Avista Corp., 7.75%, 1/1/07 $ 78,592
15,000 BBB+/Baa1 Dominion Resources, 6.25%, 6/30/12 16,283
------------
$ 94,875
------------
Total Utilities $ 257,492
------------
TOTAL CORPORATE BONDS
(Cost $13,820,725) $ 14,377,672
------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 22.8%
$ 65,000 Federal Home Loan Bank, 3.875%, 6/14/13 $ 63,759
967,318 Federal Home Loan Bank, 5.0%, 11/1/34 968,543
300,000 Federal Home Loan Mortgage Corp. 3.25%, 2/25/08 294,714
4,958 Federal Home Loan Mortgage Corp., 3.5%, 9/15/10 4,951
931,193 Federal Home Loan Mortgage Corp., 5.0%, 4/1/34 932,372
319,271 Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 327,876
341,372 Federal Home Loan Mortgage Corp., 5.5%, 12/1/18 351,964
433,077 Federal Home Loan Mortgage Corp., 5.5%, 5/1/33 444,365
422,376 Federal Home Loan Mortgage Corp., 5.5%, 11/1/34 428,552
923,043 Federal Home Loan Mortgage Corp., 5.5%, 12/1/34 936,542
566,511 Federal Home Loan Mortgage Corp., 5.5% 1/1/35 574,780
110,000 Federal Home Loan Mortgage Corp., 6.0%, 4/15/32 114,347
260,217 Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 267,085
334,865 Federal Home Loan Mortgage Corp., 6.0%, 4/1/33 343,704
200,045 Federal Home Loan Mortgage Corp., 6.0%, 6/01/34 205,257
81,287 Federal Home Loan Mortgage Corp., 6.5%, 5/1/09 84,127
43,700 Federal Home Loan Mortgage Corp., 6.5%, 7/1/33 45,435
223,447 Federal Home Loan Mortgage Corp., 6.5%, 10/1/33 232,303
135,422 Federal National Mortgage Association, 4.816%, 12/1/12 138,744
190,017 Federal National Mortgage Association, 5.0%, 12/1/17 192,370
430,662 Federal National Mortgage Association, 5.0%, 5/1/18 436,177
136,670 Federal National Mortgage Association, 5.0%, 3/1/33 136,862
24 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount Value
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - (continued)
$ 460,157 Federal National Mortgage Association, 5.0%, 6/1/34 $ 460,652
100,000 Federal National Mortgage Association, 5.24%, 8/7/18 104,805
274,696 Federal National Mortgage Association, 5.5%, 8/1/14 282,886
517,482 Federal National Mortgage Association, 5.5%, 2/1/17 531,609
64,603 Federal National Mortgage Association, 5.5%, 9/1/17 66,363
100,989 Federal National Mortgage Association, 5.5%, 2/1/18 103,896
59,633 Federal National Mortgage Association, 5.5%, 7/1/23 60,874
426,313 Federal National Mortgage Association, 5.5%, 11/1/33 432,536
191,929 Federal National Mortgage Association, 5.5%, 3/1/34 194,667
327,816 Federal National Mortgage Association, 5.5%, 4/1/34 332,492
193,969 Federal National Mortgage Association, 5.5%, 12/1/34 196,736
118,703 Federal National Mortgage Association, 6.0%, 11/1/16 122,770
47,800 Federal National Mortgage Association, 6.0%, 1/1/29 49,129
19,344 Federal National Mortgage Association, 6.0%, 9/1/29 19,878
57,030 Federal National Mortgage Association, 6.0%, 8/1/32 58,506
304,894 Federal National Mortgage Association, 6.0%, 1/1/33 312,784
363,697 Federal National Mortgage Association, 6.0%, 2/1/33 373,009
53,917 Federal National Mortgage Association, 6.0%, 3/1/33 55,298
313,197 Federal National Mortgage Association, 6.0%, 12/1/33 321,216
1,260,000 Federal National Mortgage Association, 6.125%, 3/15/12 1,409,092
15,380 Federal National Mortgage Association, 6.5%, 1/1/15 16,017
160,982 Federal National Mortgage Association, 6.5%, 12/1/21 167,408
172,546 Federal National Mortgage Association, 6.5%, 4/1/29 180,495
48,774 Federal National Mortgage Association, 6.5%, 7/1/29 50,650
407,525 Federal National Mortgage Association, 6.5%, 5/1/32 422,458
350,969 Federal National Mortgage Association, 6.5%, 7/1/32 363,830
150,200 Federal National Mortgage Association, 6.5%, 9/1/32 156,759
42,081 Federal National Mortgage Association, 6.5%, 10/1/32 43,623
19,934 Federal National Mortgage Association, 7.0%, 3/1/12 20,897
40,000 Federal National Mortgage Association, 7.125%, 6/15/10 45,555
9,691 Federal National Mortgage Association, 8.0%, 4/1/20 10,422
16,668 Federal National Mortgage Association, 8.0%, 2/1/29 17,967
1,877 Federal National Mortgage Association, 8.0%, 2/1/30 2,020
3,300 Federal National Mortgage Association, 8.0%, 4/1/30 3,549
3,157 Federal National Mortgage Association, 8.0%, 7/1/30 3,396
The accompanying notes are an integral part of these financial statements. 25
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
Principal
Amount Value
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - (continued)
$ 7,833 Federal National Mortgage Association, 8.0%, 10/1/30 $ 8,425
5,756 Federal National Mortgage Association, 8.0%, 1/1/31 6,190
38,963 Federal National Mortgage Association, 8.0%, 3/1/31 41,926
3,347 Federal National Mortgage Association, 8.0%, 5/1/31 3,599
71,831 Federal National Mortgage Association, 9.0%, 4/1/33 76,299
443,888 Government National Mortgage Association II,
5.5%, 2/20/34 452,781
521,450 Government National Mortgage Association II,
6.0%, 10/20/33 538,914
1,303,839 Government National Mortgage Association II,
6.0%, 11/20/33 1,343,061
124,043 Government National Mortgage Association,
4.5%, 1/15/35 122,688
199,506 Government National Mortgage Association,
4.5%, 4/15/35 197,328
350,572 Government National Mortgage Association,
5.0%, 4/15/34 353,715
487,605 Government National Mortgage Association,
5.0%, 10/15/34 491,929
610,296 Government National Mortgage Association,
5.5%, 8/15/17 630,325
415,087 Government National Mortgage Association,
5.5%, 8/15/19 428,683
585,063 Government National Mortgage Association,
5.5%, 8/15/33 598,143
413,651 Government National Mortgage Association,
5.5%, 8/15/33 422,899
158,888 Government National Mortgage Association,
5.5%, 8/15/33 162,440
113,967 Government National Mortgage Association,
5.5%, 9/15/33 116,594
258,112 Government National Mortgage Association,
5.5%, 10/15/33 263,883
317,877 Government National Mortgage Association,
5.5%, 12/15/34 324,942
26 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount Value
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - (continued)
$ 24,222 Government National Mortgage Association,
6.0%, 8/15/13 $ 25,155
5,865 Government National Mortgage Association,
6.0%, 4/15/14 6,092
1,338,594 Government National Mortgage Association,
6.0%, 9/15/33 1,381,790
286,134 Government National Mortgage Association,
6.0%, 10/15/33 295,368
859,149 Government National Mortgage Association,
6.0%, 8/15/34 886,789
330,952 Government National Mortgage Association,
6.0%, 9/15/34 341,599
253,479 Government National Mortgage Association,
6.5%, 10/15/28 265,357
164,631 Government National Mortgage Association,
6.5%, 5/15/33 172,075
13,626 Government National Mortgage Association,
7.0%, 4/15/28 14,447
4,073 Government National Mortgage Association,
7.0%, 8/15/28 4,318
7,344 Government National Mortgage Association,
7.5%, 1/15/30 7,872
6,404 Government National Mortgage Association,
7.75%, 11/15/29 6,882
49,226 Government National Mortgage Association,
8.0%, 2/15/30 53,207
220,000 U.S. Treasury Bonds, 5.25%, 11/15/28 251,273
100,000 U.S. Treasury Bonds, 7.125%, 2/15/23 135,141
1,985,000 U.S. Treasury Notes, 4.0%, 11/15/12 2,007,255
300,000 U.S. Treasury Notes, 4.25%, 11/15/14 307,043
700,000 U.S. Treasury Notes, 4.75%, 11/15/08 723,188
500,000 U.S. Treasury Notes, 4.75%, 5/15/14 530,547
360,000 U.S. Treasury Notes, 5.375%, 2/15/31 424,800
75,000 U.S. Treasury Notes, 5.5%, 8/15/28 88,321
1,500,000 U.S. Treasury Notes, 5.625%, 5/15/08 1,579,101
The accompanying notes are an integral part of these financial statements. 27
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
Principal
Amount Value
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - (continued)
$ 200,000 U.S. Treasury Strip, Zero Coupon, 11/15/15 $ 131,017
------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $30,439,601) $ 30,742,474
------------
Shares TEMPORARY CASH INVESTMENT - 0.9%
Security Lending Collateral - 0.9%
1,270,040 Security Lending Investment Fund, 3.29% $ 1,270,040
------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $1,270,040) $ 1,270,040
------------
TOTAL INVESTMENTS IN SECURITIES - 99.7%
(Cost $123,761,920) (a) $134,795,078
------------
OTHER ASSETS AND LIABILITIES - 0.3% $ 412,327
------------
TOTAL NET ASSETS - 100.0% $135,207,405
============
(A.D.R.) American Depositary Receipt
* Non-income producing security
N/R Not Rated
(144A) Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2005, the value of these securities amounted to $3,201,224 or 2.4%
of total net assets.
(a) At June 30, 2005, the net unrealized gain on investments based
on cost for federal income tax purposes of $123,747,125 was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $14,546,865
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (3,498,912)
-----------
Net unrealized gain $11,047,953
===========
(b) At June 30, 2005, the following securities were out on loan:
Principal Market
Amount Security Value
$190,000 Delphi Corp., 6.55%, 6/15/06 $ 184,775
474,500 General Motors, 7.2%, 1/15/11 438,913
Shares
23,655 IMS Health, Inc. 585,934
-----------
Total $1,209,622
===========
Purchases and sales of securities (excluding temporary cash investments) for
the year ended June 30, 2005 aggregated $18,168,020 and $30,939,878,
respectively.
28 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/05 (unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities (including securities loaned of
$1,209,622) (cost $123,761,920) $134,795,078
Cash 1,121,656
Receivables -
Fund shares sold 281,534
Dividends, interest and foreign taxes withheld 495,485
Other 728
------------
Total assets $136,694,481
------------
LIABILITIES:
Payables -
Fund shares repurchased 109,444
Upon return of securities loaned 1,270,040
Due to affiliates 75,749
Accrued expenses 31,843
------------
Total liabilities $ 1,487,076
------------
NET ASSETS:
Paid-in capital $129,457,541
Distributions in excess of net investment income (24,672)
Accumulated net realized loss on investments (5,258,622)
Net unrealized gain on investments 11,033,158
------------
Total net assets $135,207,405
============
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $95,354,138/9,917,688 shares) $ 9.61
============
Class B (based on $16,624,903/1,749,520 shares) $ 9.50
============
Class C (based on $13,218,662/1,380,919 shares) $ 9.57
============
Investor Class (based on $10,009,702/1,040,479 shares) $ 9.62
============
MAXIMUM OFFERING PRICE:
Class A ($9.61 [divided by] 95.5% ) $ 10.06
============
The accompanying notes are an integral part of these financial statements. 29
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (unaudited)
- --------------------------------------------------------------------------------
For the Six Months Ended 6/30/05
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $799) $ 568,643
Interest 1,226,693
Income from securities loaned, net 7,494
---------
Total investment income $ 1,802,830
-----------
EXPENSES:
Management fees $ 454,666
Transfer agent fees and expenses
Class A 149,644
Class B 41,638
Class C 19,222
Investor Class 21,728
Distribution fees
Class A 114,323
Class B 85,194
Class C 66,223
Administrative reimbursements 14,226
Custodian fees 4,725
Registration fees 31,791
Professional fees 22,846
Printing expense 8,938
Fees and expenses of nonaffiliated trustees 4,140
Miscellaneous 8,349
---------
Total expenses $ 1,047,653
Less management fees waived and expenses
reimbursed by Pioneer Investment Management, Inc. (183)
Less fees paid indirectly $ (4,369)
-----------
Net expenses $ 1,043,101
-----------
Net investment income $ 759,729
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments: $ 4,309,673
-----------
Change in net unrealized loss on investments: $(5,635,318)
-----------
Net loss on investments $(1,325,645)
-----------
Net decrease in net assets resulting from operations $ (565,916)
===========
30 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Six Months Ended 6/30/05 and the Year Ended 12/31/04
Six Months
Ended
6/30/05 Year Ended
(unaudited) 12/31/04
FROM OPERATIONS:
Net investment income $ 759,729 $ 1,753,109
Net realized gain on investments and futures contracts 4,309,673 4,392,771
Change in net unrealized gain (loss) on investments (5,635,318) (649,320)
------------- -------------
Net increase (decrease) in net assets resulting
from operations $ (565,916) $ 5,496,560
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.07 and $0.16 per share, respectively) $ (698,065) $ (1,753,950)
Class B ($0.03 and $0.08 per share, respectively) (53,098) (162,518)
Class C ($0.04 and $0.09 per share, respectively) (55,614) (109,871)
Investor Class ($0.08 and $0.00 per share,
respectively) (84,865) -
------------- -------------
Total distributions to shareowners $ (891,642) $ (2,026,339)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 7,414,192 $ 25,246,160
Shares issued in reorganization - 18,324,440
Reinvestment of distributions 814,531 1,833,185
Cost of shares repurchased (22,694,333) (29,592,439)
------------- -------------
Net increase (decrease) in net assets resulting from
fund share transactions $ (14,465,610) $ 15,811,346
------------- -------------
Net increase (decrease) in net assets $ (15,923,168) $ 19,281,567
NET ASSETS:
Beginning of period 151,130,573 131,849,006
------------- -------------
End of period (including undistributed net investment
income (loss) of $(24,672) and $107,241,
respectively) $ 135,207,405 $ 151,130,573
============= =============
The accompanying notes are an integral part of these financial statements. 31
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
'05 Shares '05 Amount
CLASS A (unaudited) (unaudited) '04 Shares '04 Amount
Shares sold 436,890 $ 4,205,576 922,267 $ 8,795,188
Reinvestment of distributions 66,170 636,318 166,585 1,594,873
Less shares repurchased (971,657) (9,370,853) (2,028,558) (19,366,320)
-------- ------------ ---------- -------------
Net decrease (468,597) $ (4,528,959) (939,706) $ (8,976,259)
======== ============ ========== =============
CLASS B
Shares sold 204,925 $ 1,946,762 849,263 $ 7,994,504
Reinvestment of distributions 4,839 46,043 14,764 140,299
Less shares repurchased (372,156) (3,534,365) (676,731) (6,377,749)
-------- ------------ ---------- -------------
Net increase (decrease) (162,392) $ (1,541,560) 187,296 $ 1,757,054
======== ============ ========== =============
CLASS C
Shares sold 131,292 $ 1,261,854 889,037 $ 8,456,468
Reinvestment of distributions 5,348 51,148 10,218 98,013
Less shares repurchased (173,256) (1,658,348) (372,585) (3,526,430)
-------- ------------ ---------- -------------
Net increase (decrease) (36,616) $ (345,346) 526,670 $ 5,028,051
======== ============ ========== =============
INVESTOR CLASS
Shares sold - - - -
Reinvestment of distributions 8,432 81,022 - -
Shares issued in
reorganization - - 1,896,932 18,324,440
Less shares repurchased (831,722) (8,130,767) (33,163) (321,940)
-------- ------------ ---------- -------------
Net increase (decrease) (823,290) $ (8,049,745) 1,863,769 $ 18,002,500
======== ============ ========== =============
32 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/05 Year Ended
(unaudited) 12/31/04
CLASS A
Net asset value, beginning of period $ 9.72 $ 9.47
------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.06 $ 0.15
Net realized and unrealized gain (loss) on investments (0.10) 0.27
------- --------
Net increase (decrease) from investment operations $ (0.04) $ 0.42
Distributions to shareowners:
Net investment income (0.07) (0.17)
------- --------
Net increase (decrease) in net asset value $ (0.11) $ 0.25
------- --------
Net asset value, end of period $ 9.61 $ 9.72
======= ========
Total return* (0.41)% 4.43%
Ratio of net expenses to average net assets(+) 1.33%** 1.29%
Ratio of net investment income to average net assets(+) 1.24%** 1.51%
Portfolio turnover rate 31%** 31%
Net assets, end of period (in thousands) $95,354 $100,920
Ratios with reductions for fees paid indirectly:
Net expenses 1.33%** 1.29%
Net investment income 1.24%** 1.51%
Year Ended Year Ended Year Ended Year Ended
12/31/03 12/31/02 12/31/01 (a) 12/31/00
CLASS A
Net asset value, beginning of period $ 8.29 $ 9.46 $ 9.94 $ 9.73
-------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.12 $ 0.11 $ 0.19 $ 0.30
Net realized and unrealized gain (loss) on investments 1.20 (1.17) (0.47) 0.22
-------- -------- -------- --------
Net increase (decrease) from investment operations $ 1.32 $ (1.06) $ (0.28) $ 0.52
Distributions to shareowners:
Net investment income (0.14) (0.11) (0.20) (0.31)
-------- -------- -------- --------
Net increase (decrease) in net asset value $ 1.18 $ (1.17) $ (0.48) $ 0.21
-------- -------- -------- --------
Net asset value, end of period $ 9.47 $ 8.29 $ 9.46 $ 9.94
======== ======== ======== ========
Total return* 15.99% (11.20)% (2.87)% 5.38%
Ratio of net expenses to average net assets(+) 1.38% 1.41% 1.31% 1.23%
Ratio of net investment income to average net assets(+) 1.25% 1.19% 1.97% 2.96%
Portfolio turnover rate 44% 180% 133% 17%
Net assets, end of period (in thousands) $107,265 $106,734 $141,746 $162,855
Ratios with reductions for fees paid indirectly:
Net expenses 1.38% 1.41% 1.30% 1.20%
Net investment income 1.25% 1.19% 1.98% 2.99%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratio with no reduction for fees paid indirectly.
(a) At January 1, 2001, the Fund began accreting discounts and amortizing
premiums on debt securities. The effect of this change for the year ended
December 31, 2001 was to decrease net investment income by less than one
cent per share, increase net realized and unrealized gain (loss) by less
than one cent per share and decrease the ratio of net investment income to
average net assets assuming reduction for fees paid indirectly from 2.02% to
1.98%. Per share ratios and supplemental data for periods prior to January
1, 2001, have not been restated to reflect this change in presentation.
The accompanying notes are an integral part of these financial statements. 33
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/05 Year Ended
(unaudited) 12/31/04
CLASS B
Net asset value, beginning of period $ 9.61 $ 9.37
------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.02 $ 0.05
Net realized and unrealized gain (loss) on investments (0.10) 0.27
------- -------
Net increase (decrease) from investment operations $ (0.08) $ 0.32
Distributions to shareowners:
Net investment income (0.03) (0.08)
------- -------
Net increase (decrease) in net asset value $ (0.11) $ 0.24
------- -------
Net asset value, end of period $ 9.50 $ 9.61
======= =======
Total return* (0.83)% 3.48%
Ratio of net expenses to average net assets(+) 2.28%** 2.24%
Ratio of net investment income to average net assets(+) 0.30%** 0.59%
Portfolio turnover rate 31%** 31%
Net assets, end of period (in thousands) $16,625 $18,369
Ratios with reduction for fees paid indirectly:
Net expenses 2.28%** 2.24%
Net investment income 0.30%** 0.59%
Year Ended Year Ended Year Ended Year Ended
12/31/03 12/31/02 12/31/01 (a) 12/31/00
CLASS B
Net asset value, beginning of period $ 8.21 $ 9.36 $ 9.85 $ 9.64
------- ------ ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.03 $ 0.02 $ 0.12 $ 0.19
Net realized and unrealized gain (loss) on investments 1.18 (1.13) (0.48) 0.23
------- ------ ------- -------
Net increase (decrease) from investment operations $ 1.21 $(1.11) $ (0.36) $ 0.42
Distributions to shareowners:
Net investment income (0.05) (0.04) (0.13) (0.21)
------- ------ ------- -------
Net increase (decrease) in net asset value $ 1.16 $(1.15) $ (0.49) $ 0.21
------- ------ ------- -------
Net asset value, end of period $ 9.37 $ 8.21 $ 9.36 $ 9.85
======= ====== ======= =======
Total return* 14.71% 11.90)% (3.72)% 4.39%
Ratio of net expenses to average net assets(+) 2.35% 2.32% 2.20% 2.15%
Ratio of net investment income to average net assets(+) 0.27% 0.28% 1.04% 2.03%
Portfolio turnover rate 44% 180% 133% 17%
Net assets, end of period (in thousands) $16,168 $6,256 $18,110 $16,413
Ratios with reduction for fees paid indirectly:
Net expenses 2.35% 2.32% 2.19% 2.13%
Net investment income 0.27% 0.28% 1.05% 2.05%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratio with no reduction for fees paid indirectly.
(a) At January 1, 2001, the Fund began accreting discounts and amortizing
premiums on debt securities. The effect of this change for the year ended
December 31, 2001 was to decrease net investment income by less than one
cent per share, increase net realized and unrealized gain (loss) by less
than one cent per share and decrease the ratio of net investment income to
average net assets assuming reduction for fees paid indirectly from 1.08% to
1.05%. Per share ratios and supplemental data for periods prior to January
1, 2001, have not been restated to reflect this change in presentation.
34 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/05 Year Ended
(unaudited) 12/31/04
CLASS C
Net asset value, beginning of period $ 9.68 $ 9.45
------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.02 $ 0.06
Net realized and unrealized gain (loss) on investments (0.09) 0.26
------- -------
Net increase (decrease) from investment operations $ (0.07) $ 0.32
Distributions to shareowners:
Net investment income (0.04) (0.09)
------- -------
Net increase (decrease) in net asset value $ (0.11) $ 0.23
------- -------
Net asset value, end of period $ 9.57 $ 9.68
======= =======
Total return* (0.72)% 3.42%
Ratio of net expenses to average net assets(+) 2.08%** 2.18%
Ratio of net investment income to average net assets(+) 0.49%** 0.73%
Portfolio turnover rate 31%** 31%
Net assets, end of period (in thousands) $13,219 $13,720
Ratios with reduction for fees paid indirectly:
Net expenses 2.08%** 2.18%
Net investment income 0.49%** 0.73%
Year Ended Year Ended Year Ended Year Ended
12/31/03 12/31/02 12/31/01 (a) 12/31/00
CLASS C
Net asset value, beginning of period $ 8.27 $ 9.44 $ 9.94 $ 9.73
------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.02 $ 0.01 $ 0.13 $ 0.15
Net realized and unrealized gain (loss) on investments 1.20 (1.14) (0.54) 0.23
------- ------- ------- -------
Net increase (decrease) from investment operations $ 1.22 $ (1.13) $ (0.41) $ 0.38
Distributions to shareowners:
Net investment income (0.04) (0.04) (0.09) (0.17)
------- ------- ------- -------
Net increase (decrease) in net asset value $ 1.18 $ (1.17) $ (0.50) $ 0.21
------- ------- ------- -------
Net asset value, end of period $ 9.45 $ 8.27 $ 9.44 $ 9.94
======= ======= ======= =======
Total return* 14.82% (12.02)% (4.11)% 3.95%
Ratio of net expenses to average net assets(+) 2.38% 2.53% 2.44% 2.61%
Ratio of net investment income to average net assets(+) 0.24% 0.06% 0.75% 1.56%
Portfolio turnover rate 44% 180% 133% 17%
Net assets, end of period (in thousands) $ 8,416 $ 7,806 $ 5,499 $ 3,426
Ratios with reduction for fees paid indirectly:
Net expenses 2.38% 2.53% 2.43% 2.59%
Net investment income 0.24% 0.06% 0.76% 1.58%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratio with no reduction for fees paid indirectly.
(a) At January 1, 2001, the Fund began accreting discounts and amortizing
premiums on debt securities. The effect of this change for the year ended
December 31, 2001 was to decrease net investment income by less than one
cent per share, increase net realized and unrealized gain (loss) by less
than one cent per share and decrease the ratio of net investment income to
average net assets assuming reduction for fees paid indirectly from 0.86% to
0.76%. Per share ratios and supplemental data for periods prior to January
1, 2001, have not been restated to reflect this change in presentation.
The accompanying notes are an integral part of these financial statements. 35
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/05 12/10/04 to
INVESTOR CLASS (unaudited) 12/31/04
Net asset value, beginning of period $ 9.72 $ 9.66
------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.10 $ 0.01
Net realized and unrealized gain (loss)
on investments (0.12) 0.05
------- -------
Net increase (decrease) from investment
operations $ (0.02) $ 0.06
Distributions to shareowners:
Net investment income (0.08) -
------- -------
Net increase in net asset value $ (0.10) $ 0.06
------- -------
Net asset value, end of period $ 9.62 $ 9.72
======= =======
Total return* (0.20)% 0.62%(a)
Ratio of net expenses to average net assets(+) 1.10%** 1.06%**
Ratio of net investment loss to average net assets(+) 1.52%** 1.06%**
Portfolio turnover rate 31%** 31%
Net assets, end of period (in thousands) $10,010 $18,121
Ratios with reduction for fees paid indirectly:
Net expenses 1.10%** 1.06%**
Net investment loss 1.52%** 1.06%**
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges.
** Annualized
+ Ratio with no reduction for fees paid indirectly.
(a) Not Annualized
36 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/05 (unaudited)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Balanced Fund (the Fund) is a Delaware statutory trust registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The Fund's investment objective is to seek capital growth
and current income by actively managing investments in a diversified portfolio
of equity securities and bonds.
The Trustees have authorized the issuance of four classes of shares of the
Fund. The Fund offers four Classes of shares designated as - Class A, Class B,
Class C and Investor Class shares. Investor Class shares were first issued
December 10, 2004. The Fund is not offering additional Investor Class shares
except in connection with the reinvestment of dividends on the Fund's
outstanding Investor Class shares. Each class of shares represents an interest
in the same portfolio of investments of the Fund and have equal rights to
voting, redemptions, dividends and liquidation, except that each class of
shares can bear different transfer agent and distribution fees and has
exclusive voting rights with respect to the distribution plans that have been
adopted by Class A, Class B and Class C shareowners, respectively. There is no
distribution plan for Investor Class shares.
The Fund's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Fund to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses and gain and losses on investments during the
reporting year. Actual results could differ from those estimates. The following
is a summary of significant accounting policies followed by the Fund in the
preparation of its financial statements, which are consistent with those
policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value
of the Fund is computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE.
In computing the net asset value, debt securities are valued at prices
supplied by independent pricing services, which consider such factors as
Treasury spreads, yields, maturities
37
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
and ratings. Valuations may be supplemented by dealers and other sources,
as required. Equity securities are valued at the last sale price on the
principal exchange where they are traded. Securities that have not traded
on the date of valuation, or securities for which sale prices are not
generally reported, are valued at the mean between the last bid and asked
prices. Securities for which market quotations are not readily available
are valued at their fair values as determined by, or under the direction
of, the Board of Trustees. Trading in foreign securities is substantially
completed each day at various times prior to the close of the NYSE. The
values of such securities used in computing the net asset value of the
Fund's shares are determined as of such times. The Fund also may use the
fair value of a security including a non-U.S. security when the closing
market price on the principal exchange where the security is traded no
longer reflects the value of the security. At June 30, 2005 there were no
securities fair valued. Temporary cash investments are valued at amortized
cost.
Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities where the ex dividend date may have passed
are recorded as soon as the Fund becomes aware of the ex-dividend data in
exercise of reasonable diligence. Interest income is recorded on the accrual
basis. All discounts/premiums on debt securities are accreted/amortized into
interest income for financial reporting purposes.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Futures Contracts
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, and currency rates or to seek to
increase total return. Upon entering into a futures contract, the Fund is
required to deposit with a broker an amount of cash or securities equal to
the minimum "initial margin" requirements of the associated futures
exchange. Subsequent payments on futures contracts ("variation margin")
are paid or received by the Fund, depending on the daily fluctuation in
the value of the contracts, and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund realizes a gain or
loss equal to the difference between the opening and closing value of the
38
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
contract. The use of futures contracts involves, to varying degrees,
elements of market risk which may exceed the amounts recognized by the
Fund. Changes in the value of the contracts may not directly correlate to
the changes in the value of the underlying securities. These risks may
decrease the effectiveness of the Fund's hedging and trading strategies
and potentially result in a loss. As of June 30, 2005, the Fund had no
open futures contracts.
C. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the sources of the Fund's distributions may
be shown in the accompanying financial statements as either from or in
excess of net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
At December 31, 2004, the Fund had a net capital loss carryforward of
$9,545,944, of which $4,387,204 will expire in 2011 and $5,158,740 will
expire in 2012 if not utilized.
The tax character of current year distributions will be determined at the
end of the fiscal year. The tax character of distributions paid during the
year ended December 31, 2004 was as follows:
- --------------------------------------------------------------------------------
2004
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $2,026,339
Long-term capital gain -
----------
Total $2,026,339
==========
- --------------------------------------------------------------------------------
39
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
The following shows the components of distributable earnings on a
federal income tax basis at December 31, 2004.
- --------------------------------------------------------------------------------
2004
- --------------------------------------------------------------------------------
Undistributed ordinary income $ 70,096
Capital loss carryforward (9,545,944)
Unrealized appreciation 16,683,271
----------
Total $7,207,423
==========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is
attributable to the tax deferral of losses on wash sales and the tax
treatment of premium and amortization.
D. Fund Shares
The Fund records sales and repurchases of its shares as of trade date.
Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the
Fund and a wholly owned subsidiary of UniCredito Italiano S.p.A.
(UniCredito Italiano), earned $8,409 in underwriting commissions on the
sale of Class A shares during the six months ended June 30, 2005.
E. Class Allocations
Distribution fees are calculated based on the average daily net asset
value attributable to Class A, Class B and Class C shares of the Fund,
respectively (see Note 4). Investor Class shares are not subject to a
distribution plan. Shareowners of each class share all expenses and fees
paid to the transfer agent, Pioneer Investment Management Shareholder
Services, Inc. (PIMSS), for its services, which are allocated based on the
number of accounts in each class and the ratable allocation of related
out-of-pocket expenses (see Note 3). Income, common expenses and realized
and unrealized gains and losses are calculated at the Fund level and
allocated daily to each class of shares based on the respective percentage
of adjusted net assets at the beginning of the day.
Distributions to shareowners are recorded as of the ex-dividend date.
Distributions paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time, and in
40
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the same amount, except that Class A, Class B, Class C and Investor Class
shares can bear different transfer agent and distribution fees.
F. Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, the value
of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Fund's custodian, or subcustodians. The
Fund's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
Fund's portfolio. Management fees are calculated daily at the annual rate of
0.65% of the Fund's average daily net assets up to $1 billion; 0.60% of the
next $4 billion; and 0.55% of the excess over $5 billion.
Through December 10, 2006, PIM has agreed not to impose all or a portion of its
management fee and to assume other operating expenses (excluding taxes,
commissions, interest and extraordinary expenses) of the Fund to the extent
necessary to limit Investor Class expenses to 1.10% of the average daily net
assets attributable to Investor Class shares.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At June 30, 2005, $3,341 was payable to PIM
related to management fees, administrative costs and certain other services,
and is included in due to affiliates.
3. Transfer Agent
PIMSS, a wholly owned subsidiary of UniCredito Italiano, provides substantially
all transfer agent and shareowner services to the Fund at negotiated rates.
Included in due to affiliates is $70,967 in transfer agent fees payable to
PIMSS at June 30, 2005.
41
Pioneer Balanced Fund
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NOTES TO FINANCIAL STATEMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
4. Distribution Plans
The Fund adopted a Plan of Distribution for each class of shares (Class A Plan,
Class B Plan and Class C Plan) in accordance with Rule 12b-1 of the Investment
Company Act of 1940. Pursuant to the Class A Plan, the Fund pays PFD a service
fee of up to 0.25% of the average daily net assets attributable to Class A
shares in reimbursement of its actual expenditures to finance activities
primarily intended to result in the sale of Class A shares. Pursuant to the
Class B Plan and the Class C Plan, the Fund pays PFD 1.00% of the average daily
net assets attributable to each class of shares. The fee consists of a 0.25%
service fee and a 0.75% distribution fee paid as compensation for personal
services and/or account maintenance services or distribution services with
regard to Class B and Class C shares. Included in due to affiliates is $1,441
in distribution fees payable to PFD at June 30, 2005.
In addition, redemptions of each class of shares (except Investor Class shares)
may be subject to a contingent deferred sales charge (CDSC). Effective February
1, 2004, a CDSC of 1.00% may be imposed on redemptions of certain net asset
value purchases of Class A shares within 18 months of purchase (12 months for
shares purchased prior to February 1, 2004). Class B shares subscribed on or
after December 1, 2004 that are redeemed within five years of purchase are
subject to a CDSC at declining rates beginning at 4.00%, based on the lower of
cost or market value of shares being redeemed. Shares purchased prior to
December 1, 2004 remain subject to the CDSC in effect at the time those shares
were purchased. Redemptions of Class C shares within one year of purchase are
subject to a CDSC of 1.00%. Proceeds from the CDSCs are paid to PFD. For the
six months ended June 30, 2005, CDSCs in the amount of $28,931 were paid to
PFD.
5. Expense Offset Arrangements
The Fund has entered into certain expense offset arrangements with PIMSS
resulting in a reduction in the Fund's total expenses due to interest earned on
cash held by PIMSS. For the six months ended June 30, 2005, the Fund's expenses
were reduced by $4,368 under such arrangements.
42
Pioneer Balanced Fund
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- --------------------------------------------------------------------------------
6. Line of Credit Facility
The Fund, along with certain others in the Pioneer Family of Funds (the Funds),
collectively participate in a $50 million committed, unsecured revolving line
of credit facility. Borrowings are used solely for temporary or emergency
purposes. The Fund may borrow up to the lesser of $50 million or the limits set
by its prospectus for borrowings. Interest on collective borrowings is payable
at the Federal Funds Rate plus 1/2% on an annualized basis. The Funds pay an
annual commitment fee for this facility. The commitment fee is allocated among
such Funds based on their respective borrowing limits. For the six months ended
June 30, 2005, the Fund had no borrowings under this agreement.
7. Merger Information
On December 8, 2004, beneficial owners of Safeco Balanced Fund (one of the
series that comprised Safeco Common Stock Trust) approved a proposed Agreement
and Plan of Reorganization that provided for the merger listed below. This
tax-free reorganization was accomplished on December 10, 2004, by exchanging
all of Safeco's net assets for Investor Class shares, based on the Fund's Class
A shares' ending net asset value. The following charts show the details of the
reorganizations as of that closing date ("Closing Date"):
- ----------------------------------------------------------------------------------------
Pioneer
Pioneer Safeco Balanced Fund
Balanced Fund Balanced Fund (Post-
(Pre-Reorganization) (Pre-Reorganization) Reorganization)
- ----------------------------------------------------------------------------------------
Net Assets $131,213,704 $18,324,440 $149,538,144
Shares Outstanding 13,574,726 1,479,627 15,471,658
Investor Shares Issued 1,896,932
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Accumulated
Unrealized Appreciation/ Loss on
on Closing Date Closing Date
- ----------------------------------------------------------------------------------------
Safeco Balanced Fund $2,484,884 $(483,521)
- ----------------------------------------------------------------------------------------
43
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT
- --------------------------------------------------------------------------------
The Investment Company Act of 1940 requires that both the Board of Trustees and
a majority of the Independent Trustees (collectively "the Trustees") vote
separately annually to approve the Fund's management contract (the "Management
Contract"). The Trustees have determined that the terms of the Management
Contract are fair and reasonable and that renewal of the contract will enable
the Fund to receive quality investment advisory services at a cost deemed
reasonable and in the best interests of the Fund and its shareholders. In
making such determinations, the Independent Trustees relied upon the assistance
of counsel to the Independent Trustees and counsel to the Fund.
Throughout the year, the Independent Trustees regularly met in executive
session separately from the Interested Trustees of the Fund and any officer of
Pioneer Investment Management, Inc., the Fund's adviser (the "Investment
Adviser"), or its affiliates. While the Trustees, including the Independent
Trustees, act on all major matters relating to the Fund, a significant portion
of the activities of the Board of Trustees (including certain of those
described herein) is conducted through committees, the members of which are
comprised exclusively of Independent Trustees. Such committee meetings are
attended by officers of the Fund or the Investment Adviser to the extent
requested by the members of the committee.
In evaluating the Management Contract, the Trustees conducted a review that was
specifically focused upon the renewal of the Management Contract, and relied
upon their knowledge, resulting from their meetings throughout the year, of the
Investment Adviser, its services and the Fund. Both in meetings specifically
dedicated to renewal of the Management Contract and at other meetings during
the course of the year, the Trustees, including the Independent Trustees,
received materials relating to the Investment Adviser's investment and
management services under the Management Contract. These materials included (i)
information on the investment performance of the Fund, a peer group of funds
and two indices, in each case selected by the Independent Trustees for this
purpose, (ii) sales and redemption data in respect to the Fund, (iii) the
general investment outlook in the markets in which the Fund invests, (iv)
arrangements in respect of the distribution of the Fund's shares, (v) the
procedures employed to determine the value of each of the Fund's assets, (vi)
the Investment Adviser's management of the relationships with the Fund's
unaffiliated service providers, (vii) the record of compliance with the
44
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fund's investment policies and restrictions and with the Fund's Code of Ethics
and the structure and responsibilities of the Investment Adviser's compliance
department, (viii) the nature, cost and character of non-investment management
services provided by the Investment Adviser and its affiliates and (ix) the
disclosures included in the Fund's prospectuses and reports to shareholders.
Specifically in connection with the Independent Trustees' review of the
Management Contract, the Independent Trustees requested and the Investment
Adviser provided additional information in order to evaluate the quality of the
Investment Adviser's services and the reasonableness of the fee under the
Management Contract. Among other items, this information included data or
analyses of (1) investment performance for one, three and five-year periods for
the Fund and a peer group selected by the Independent Trustees for this
purpose, (2) management fees incurred by a peer group of funds selected by the
Independent Trustees for this purpose, (3) the advisory fees of comparable
portfolios of other clients of the Investment Adviser, (4) expense ratios for
the Fund and a peer group of funds selected by the Independent Trustees for
this purpose, (5) the overall organization of the Investment Adviser, (6) the
Investment Adviser's financial results and condition, including its and certain
of its affiliates profitability from services performed for the Fund, (7)
transfer agency fees and administrative reimbursements paid to the Investment
Adviser or affiliates, (8) investment management staffing, and (9) operating
expenses paid to third parties. The Trustees also reviewed information
regarding the potential for the Fund and the Investment Adviser to benefit from
further economies of scale in the management of the Fund in light of reasonable
growth expectations for the Fund, breakpoints in the Fund's management fee and
certain of the Fund's expenses that are not incurred as fees based on a
percentage of net assets.
The following summarizes matters considered by the Trustees in connection with
their renewal of the Fund's Management Contract. The Trustees did not identify
any single factor as all-important or controlling, and the summary does not
detail all the matters that were considered.
A. Ancillary Benefits to Shareholders. The Trustees considered the benefits to
shareholders of investing in a Fund that is part of a large number of
investment companies offering a variety of
45
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
- --------------------------------------------------------------------------------
investment disciplines and providing for a large variety of Fund and
shareholder services.
B. Compliance and Investment Performance. The Trustees determined that the
Investment Adviser had policies and systems reasonably designed to achieve
compliance with the Fund's investment objectives and regulatory
requirements. The Trustees also reviewed the Fund's investment performance
based upon total return and yield, as well as the Fund's performance
compared to both the performance of a peer group and two relevant indices
(equity and fixed income), in each case selected by the Independent
Trustees for this purpose. The Fund's performance based upon total return
was in the fourth quintile of the peer group for the 12 months ended June
30, 2004, the fifth quintile of the peer group for the three years ended
June 30, 2004, and the third quintile for the five years ended June 30,
2004. (In all quintile rankings referred to throughout this discussion
first quintile is most favorable to the Fund's shareholders. Thus, highest
relative performance would be first quintile and lowest relative expenses
also would be first quintile.) The Trustees concluded that the performance
of the Fund supported the continuation of the Management Contract.
C. The Investment Adviser's Personnel and Methods. The Trustees reviewed the
background of members of the team responsible for the daily management of
the Fund and the Fund's investment objective and discipline. The
Independent Trustees also have had discussions with senior management of
the Investment Adviser responsible for investment operations and the
senior management of the Investment Adviser's equities group. Among other
things, the Trustees considered the number, education and experience of
the Investment Adviser's investment staff and their use of technology and
emphasis on analytics in view of the risk profile of securities in which
the Fund invests. The Trustees concluded that the Investment Adviser had
the quality and depth of personnel and the well-developed methods
essential to performing its duties under the Management Contract.
D. Nature and Quality of Other Services. The Trustees considered the nature,
quality, cost and extent of other services provided to shareholders of the
Fund, including administrative and shareholder services performed by the
Investment Adviser under the Management
46
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Contract. The Trustees also considered the reasonableness of the
arrangements for reimbursement of the Investment Adviser's out-of-pocket
costs and expenses, including overhead, for certain administrative
services that the Investment Adviser is not required to provide under the
Management Contract. The Trustees also considered the nature and extent of
the other services provided by the Investment Adviser's affiliates under
other contracts and its supervision of third party service providers.
Based on these considerations, the Trustees concluded that the nature,
quality, cost and extent of such services are satisfactory and reliable
and serve the shareholders of the Fund well.
E. Management Fee and Expenses. The Trustees considered the Investment
Adviser's fee under the Management Contract relative to the management
fees charged by a peer group of funds selected by the Independent Trustees
for this purpose using data provided by an independent third party. The
Fund's management fee for the 12 months ended June 30, 2004 was in the
third quintile relative to the management fees paid by the other funds in
that peer group for the comparable period. The Trustees determined that
the fee under the Management Contract was reasonable and fair in light of
both the overall nature and quality of services provided by the Investment
Adviser and the fees charged by the funds in the peer group. The Trustees
also considered the Fund's expense ratio and expense ratios of a peer
group of funds selected by the Independent Trustees for this purpose. The
Fund's expense ratio for the 12 months ended June 30, 2004 was in the
fourth quintile of the applicable peer group for the most recent fiscal
year of the peer group for the comparable period. The Trustees concluded
that the Fund's overall expense ratio was reasonable compared to that of
comparable funds.
47
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
- --------------------------------------------------------------------------------
F. Profitability. The Trustees considered the level of the Investment Adviser's
profits with respect to the management of the Pioneer Funds, including
details with respect to the Fund. This consideration included a review of
the Investment Adviser's methodology in allocating certain of its costs to
the management of each Fund. The Trustees also considered the financial
results realized by the Investment Adviser in connection with the
operation of the Fund. They further considered the profits realized by the
Investment Adviser and its affiliates from non-fund businesses that may
benefit from or be related to the Fund's business. The Trustees considered
the Investment Adviser's profit margins in comparison with the limited
available industry data. The Trustees concluded that the Investment
Adviser's profits from management of the Pioneer Funds, including the
financial results derived from the Fund, bear a reasonable relationship to
the services rendered and are fair for the management of the Fund.
G. Economies of Scale. The Trustees considered the economies of scale with
respect to the management of the Fund, whether the Fund had appropriately
benefited from any economies of scale, and whether there was potential for
realization of any further economies of scale. Because of break points in
the management fee, the Trustees concluded that any perceived or potential
economies of scale would be shared in a reasonable manner as the Fund
grows in size between Fund's shareholders and the Investment Adviser.
48
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
H. Other Benefits to the Investment Adviser. The Trustees also considered the
character and amount of fees paid by the Fund, other than under the
Management Contract, for services provided by the Investment Adviser and
affiliates, including fees for services such as shareholder services. The
Trustees also considered the receipt of sales loads and payments under
Rule 12b-1 plans in respect to the Pioneer Funds (including the Fund), and
benefits to the Investment Adviser from the use of "soft" commission
dollars to pay for research and brokerage services. The Trustees further
considered the revenues and profitability of the Investment Adviser's
businesses other than the fund business, including the Investment
Adviser's institutional investment advisory business. The Trustees
considered the intangible benefits that accrue to the Investment Adviser
and its affiliates by virtue of its relationship with the Fund and the
Pioneer Funds as a group. The Trustees concluded that all these types of
benefits accruing to the Investment Adviser were reasonable in the context
of the overall relationship between the Investment Adviser and the Fund.
Conclusion. The Trustees, in light of the Investment Adviser's overall
performance, considered it appropriate to continue to retain the management
services of the Investment Adviser. Based on their evaluation of all material
factors deemed relevant and the advice of independent counsel, the Trustees
concluded that the Management Contract with the Fund is fair and reasonable and
voted to approve the continuation of the Management Contract for another year.
49
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees
John F. Cogan, Jr., Chairman
David R. Bock
Mary K. Bush
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive
Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerfunds.com. This information is also available on our
web site at www.pioneerfunds.com and on the Securities and Exchange
Commission's web site at http://www.sec.gov.
50
- --------------------------------------------------------------------------------
THE PIONEER FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
Please consider a fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about a fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, contact your
advisor, call 1-800-225-6292 or visit our web site at www.pioneerfunds.com.
U.S. Equity
Pioneer Fund
Pioneer Balanced Fund
Pioneer Cullen Value Fund
Pioneer Equity Income Fund
Pioneer Equity Opportunity Fund
Pioneer Growth Opportunities Fund
Pioneer Growth Shares
Pioneer Mid Cap Growth Fund
Pioneer Mid Cap Value Fund
Pioneer Oak Ridge Large Cap Growth Fund
Pioneer Oak Ridge Small Cap Growth Fund**
Pioneer AmPac Growth Fund(1)
Pioneer Small and Mid Cap Growth Fund(2)
Pioneer Growth Leaders Fund(3)
Pioneer Strategic Growth Fund(4)
Pioneer Real Estate Shares
Pioneer Research Fund
Pioneer Small Cap Value Fund
Pioneer Small Company Fund
Pioneer Value Fund
Asset Allocation
Pioneer Ibbotson Aggressive Allocation Fund
Pioneer Ibbotson Conservative Allocation Fund
Pioneer Ibbotson Moderate Allocation Fund
Pioneer Ibbotson Growth Allocation Fund
International/Global Equity
Pioneer Emerging Markets Fund
Pioneer Europe Select Equity Fund
Pioneer International Equity Fund
Pioneer International Value Fund
Fixed Income
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer California Tax Free Income Fund
Pioneer Global High Yield Fund
Pioneer High Yield Fund
Pioneer Municipal Bond Fund
Pioneer Short Term Income Fund
Pioneer Strategic Income Fund
Pioneer Tax Free Income Fund
Money Market
Pioneer Cash Reserves Fund*
Pioneer Tax Free Money Market Fund
(1) Formerly Pioneer Papp America-Pacific Rim Fund
(2) Formerly Pioneer Papp Small and Mid Cap Growth Fund
(3) Formerly Pioneer Papp Stock Fund
(4) Formerly Pioneer Papp Strategic Growth Fund
* An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund.
** Effective May 26, 2005, Pioneer Oak Ridge Small Cap Growth Fund is generally
closed to new investors. Purchases in the Fund will be limited to existing
investors.
51
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This page for your notes.
52
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HOW TO CONTACT PIONEER
- --------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
Call us for:
Account Information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our internet e-mail address ask.pioneer@pioneerinvest.com
(for general questions about Pioneer only)
Visit our web site: www.pioneerfunds.com
Please consider the Fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the Fund and should be read carefully before you invest. To obtain a
prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or
visit our web site www.pioneerfunds.com.
The Fund files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
N/A
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
N/A
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
N/A
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
N/A
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognize that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
- ---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
- ---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
- ---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
- ---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
- ----------------------- --------------------------- -----------------------------------------------
- ------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- -------------------------
- ------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
- ------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
- ----------------------- --------------------------- -----------------------------------------------
- --------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
- ------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
- ----------------------- ------------------------- -----------------------------------------------
- ------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
- ------------------------------------------- ------------------------------
- --------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
- --------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
N/A
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The Fund's independent auditor, Ernst & Young
LLP ("E&Y"), has advised the Securities
and Exchange Commission, the Public Company
Accounting Oversight Board, and the Audit
Committee of the Fund's Board of Trustees that
certain non-audit work performed by E&Y's China
affiliate raised questions regarding E&Y's
independence with respect to its performance of
audit services for the Fund. In July 2004, E&Y
became aware that member firms in China ("E&Y
China") provided certain tax services to offices of
UniCredito Italiano, S.p.A. ("UCI"), a member of
the Fund's Investment Company Complex. The
services included receipt and disbursement of
monies transferred to E&Y China by UCI in
payment of individual expatriate income taxes due
on returns prepared by E&Y China for certain UCI
employees located in China from October 1998 to
May 2003. E&Y became auditors of the Fund in
May 2002. These expatriate tax services were
discontinued in May 2003. The fees received by
E&Y China for all such services totaled $3,685.
The Fund's Audit Committee and E&Y have
discussed the matter, including the nature of the
services provided, the personnel involved in
providing the services and the fees received by
E&Y for performing the services. E&Y has informed
the Audit Committee that based on its internal reviews
and the de minimis nature of the services provided and
fees received, it does not believe its independence
with respect to the Fund has been impaired.
N/A
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
N/A
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Not applicable to open-end management investment companies.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer and principal financial
officer have concluded, that the registrant's disclosure controls and
procedures are effective based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Balanced Fund
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date August 29, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date August 29, 2005
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date August 29, 2005
* Print the name and title of each signing officer under his or her signature.