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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, 2004 through December 31, 2004
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.
PIONEER
-------
BALANCED
FUND
Annual
Report
12/31/04
[LOGO]
PIONEER
Investments(R)
Table of Contents
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Letter to Shareowners 1
Portfolio Summary 2
Performance Update 3
Comparing Ongoing Fund Expenses 7
Portfolio Management Discussion 9
Schedule of Investments 14
Financial Statements 31
Notes to Financial Statements 39
Report of Independent Registered Public Accounting Firm 46
Trustees, Officers and Service Providers 47
Retirement Plans from Pioneer 54
Programs and Services for Pioneer Shareowners 56
The Pioneer Family of Mutual Funds 58
Pioneer Balanced Fund
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LETTER TO SHAREOWNERS 12/31/04
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Dear Shareowner,
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After three calendar quarters of listless performance, U.S. equity markets
improved strongly late in the year. Anxiety over energy prices, international
tensions and the falling American dollar had held the markets back, but
uneasiness about the presidential election was the principal source of investor
hesitation. The election went smoothly, the result was decisive, and the
ensuing rally pushed major indices into the black for the second year running.
However, returns trailed 2003's levels. Small capitalization companies
outperformed large cap issues for the sixth consecutive year. Markets overseas
were generally buoyant: commodity-rich nations saw surging demand for copper,
gold, lumber and other materials, with much of their output destined to feed
China's vast economic appetite.
Bond investors focused on longer-term issues. Reflecting the risk aversion that
favored small cap stocks, high-yield bonds were the strongest performers, while
higher quality issues, including U.S. Treasury issues, scored more modest
gains. Municipal bond returns were generally favorable as well; economic growth
spurred rising tax revenues, putting many issuers into surplus for the first
time in years.
A measured pace of growth seems in store for the U.S. economy, which generated
2.2 million jobs after years of employment declines. By the end of September,
the economy had tallied twelve straight up quarters and the nation's annualized
growth rate stood at a respectable four percent. We believe this rate of
expansion is enough to sustain growth without provoking the Federal Reserve
Board into aggressive interest rate hikes aimed at calming inflation.
Welcome to former Safeco fund shareholders
With this report, we also would like to acknowledge the investors in former
Safeco mutual funds who now are shareholders of Pioneer funds. We would like to
welcome you again to the Pioneer fund family and assure you of our commitment
to provide the highest quality portfolio management and personal service.
Pioneer has emerged as a growing presence in the ranks of major U.S. management
firms. As a shareholder in a Pioneer mutual fund, you have a significantly more
investment options available to you. A conversation with your investment
professional will help you understand how these new funds may enhance your
portfolio diversification and fit in with your long-range goals. Or, feel free
to call Pioneer directly at 1-800-225-6292 for assistance.
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 12/31/04
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Portfolio Diversification
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(As a percentage of total investment portfolio)
[THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 64.0%
Collateralized Mortgage Obligations 0.4%
Asset Backed Securities 0.6%
Depositary Receipts for International Stocks 1.8%
U.S. Corporate Bonds 10.4%
U.S. Government Securities 22.8%
Sector Distribution
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(As a percentage of total long-term securities)
[THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Utilities 0.7%
Telecommunications Services 2.7%
Materials 3.5%
Energy 6.5%
Industrials 7.4%
Health Care 8.8%
Government Obligations 23.0%
Consumer Staples 13.3%
Financials 13.0%
Information Technology 11.0%
Consumer Discretionary 10.1%
10 Largest Holdings
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(As a percentage of total long-term securities)*
1. Berkshire Hathaway, Inc. (Class B) 3.08% 6. Gillette Co. 2.58%
2. Microsoft Corp. 3.04 7. William Wrigley Jr. Co. 2.51
3. First Data Corp. 3.00 8. United Parcel Service 2.30
4. Northrop Grumman Corp. 2.67 9. Pfizer, Inc. 2.23
5. PepsiCo, Inc. 2.62 10. Viacom, Inc. (Class B) 2.16
* This list excludes temporary cash and derivative instruments. Portfolio
holdings will vary for other periods.
2
Pioneer Balanced Fund
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PERFORMANCE UPDATE 12/31/04 CLASS A SHARES
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Share Prices and Distributions
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Net Asset Value per Share 12/31/04 12/31/03
$9.72 $9.47
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/04 - 12/31/04) Income Capital Gains Capital Gains
$0.166 $ - $ -
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.
Average Annual Total Returns
(as of December 31, 2004)
Net Asset Public Offering
Period Value Price (POP)
10 Years 5.78% 5.29%
5 Years 1.94 1.00
1 Year 4.43 -0.31
[THE FOLLOWING WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Date Pioneer Lehman Brothers Standard &
Balanced Fund Aggregate Bond Index Poor's 500 Index
12/31/1994 $ 9,550 $10,000 $10,000
$11,650 $11,848 $13,752
12/31/1996 $12,803 $12,276 $16,904
$14,585 $13,463 $22,541
12/31/1998 $14,752 $14,631 $28,986
$15,216 $14,508 $35,083
12/31/2000 $16,035 $16,196 $31,895
$15,574 $17,563 $28,114
12/31/2002 $13,830 $19,365 $21,903
$16,041 $20,160 $28,181
12/31/2004 $16,752 $21,035 $31,245
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. 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.
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 any Index.
3
Pioneer Balanced Fund
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PERFORMANCE UPDATE 12/31/04 CLASS B SHARES
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Share Prices and Distributions
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Net Asset Value per Share 12/31/04 12/31/03
$9.61 $9.37
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/04 - 12/31/04) Income Capital Gains Capital Gains
$0.0846 $ - $ -
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.
Average Annual Total Returns
(as of December 31, 2004)
If If
Period Held Redeemed
Life-of-Class
(4/28/95) 4.34% 4.34%
5 Years 1.00 1.00
1 Year 3.48 -0.52
[THE FOLLOWING WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Date Pioneer Lehman Brothers Standard &
Balanced Fund Aggregate Bond Index Poor's 500 Index
4/30/1995 $10,000 $10,000 $10,000
$11,374 $11,123 $12,175
12/31/1996 $12,400 $11,525 $14,966
$14,010 $12,640 $19,956
12/31/1998 $14,036 $13,736 $25,663
$14,351 $13,621 $31,060
12/31/2000 $14,981 $15,205 $28,238
$14,423 $16,489 $24,891
12/31/2002 $12,707 $18,181 $19,391
$14,576 $18,927 $24,950
12/31/2004 $15,083 $19,749 $27,662
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 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.
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 any Index.
4
Pioneer Balanced Fund
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PERFORMANCE UPDATE 12/31/04 CLASS C SHARES
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Share Prices and Distributions
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Net Asset Value per Share 12/31/04 12/31/03
$9.68 $9.45
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/04 - 12/31/04) Income Capital Gains Capital Gains
$0.0916 $ - $ -
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.
Average Annual Total Returns
(as of December 31, 2004)
If If
Period Held Redeemed
Life-of-Class
(1/31/96) 3.04% 3.04%
5 Years 0.81 0.81
1 Year 3.42 3.42
[THE FOLLOWING WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Date Pioneer Lehman Brothers Standard &
Balanced Fund Aggregate Bond Index Poor's 500 Index
1/31/1996 $10,000 $10,000 $10,000
$10,812 $10,294 $11,888
$12,269 $11,289 $15,852
12/31/1998 $12,302 $12,268 $20,385
$12,551 $12,165 $24,672
12/31/2000 $13,046 $13,580 $22,430
$12,510 $14,727 $19,771
12/31/2002 $11,006 $16,238 $15,403
$12,637 $16,905 $19,819
12/31/2004 $13,068 $17,638 $21,971
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.
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.
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 any Index.
5
Pioneer Balanced Fund
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PERFORMANCE UPDATE 12/31/04 INVESTOR CLASS SHARES
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Share Prices and Distributions
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Net Asset Value per Share 12/31/04 12/11/04
$9.72 $9.66
Net
Distributions per Share Investment Short-Term Long-Term
(12/11/04 - 12/31/04) Income Capital Gains Capital Gains
$ - $ - $ -
Investment Returns
- --------------------------------------------------------------------------------
Average Annual Total Returns
(as of December 31, 2004)
If If
Period Held Redeemed
Life-of-Class
(12/11/04) 0.62% 0.62%
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 does 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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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 July 1, 2004 through December 31, 2004
Investor
Share Class A B C Class
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Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 7/1/04**
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Ending Account Value $1,027.96 $1,022.73 $1,023.35 $1,006.20
On 12/31/04
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Expenses Paid During Period* $ 6.43 $ 11.11 $ 10.06 $ 0.61
* Expenses are equal to the Fund's annualized expense ratio of 1.26%, 2.19%,
1.98% and 1.06%, for Class A, Class B, Class C and Investor Class shares,
respectively, multiplied by the average account value over the period,
multiplied by 184/366 (to reflect the one-half year period (21/366 for
Investor Class shares).
** 12/11/04 for Investor Class shares.
7
Pioneer Balanced Fund
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COMPARING ONGOING FUND EXPENSES (continued)
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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). 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% per year return before expenses, reflecting the
period from July 1, 2004 through December 31, 2004
Investor
Share Class A B C Class
- -----------------------------------------------------------------------------------------
Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 7/1/04**
- -----------------------------------------------------------------------------------------
Ending Account Value $1,018.65 1,013.88 $1,014.18 1,002.26
On 12/31/04
- -----------------------------------------------------------------------------------------
Expenses Paid During Period* $ 6.40 $ 11.06 $ 10.02 $ 0.61
* Expenses are equal to the Fund's annualized expense ratio of 1.26%, 2.19%,
1.98% and 1.06%, for Class A, Class B, Class C and Investor Class shares,
respectively, multiplied by the average account value over the period,
multiplied by 184/366 (to reflect the one-half year period (21/366 for
Investor Class shares)).
** 12/11/04 for Investor Class shares.
8
Pioneer Balanced Fund
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PORTFOLIO MANAGEMENT DISCUSSION 12/31/04
- --------------------------------------------------------------------------------
The domestic economy continued its rebound during 2004, encouraging the Federal
Reserve to begin raising short-term interest rates, which had reached the
lowest levels in 46 years. The yields of longer-term bonds showed little
movement over the year, however, despite some interim volatility in the spring.
Corporate bonds and mortgage-backed securities performed well. The equity
markets delivered positive performance over the year, with small- and mid-cap
stocks outperforming large-company equities and value stocks outpacing growth
stocks. 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 during 2004.
Throughout the year, the Fund kept its allocations to equities and bonds
relatively stable, with about 64% of assets in stocks and about 36% in fixed
income investments.
Q: How did the Fund perform during 2004?
A: Pioneer Balanced Fund (Class A shares) returned 4.43% at net asset value
during the 12 months ended December 31, 2004. During the same period, the
average return of the 576 funds in Lipper's Balanced Fund category was
7.93%.
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.
The primary reason for the underperformance versus the peer group was our
emphasis on higher quality, large-cap growth stocks, during a time when
dividend paying and value stocks outperformed growth stocks.
Q: What was the investment environment like during the period?
A: The economy was healthy, growing at a moderate rate throughout 2004.
Evidence of a sustained economic recovery was clear enough that, beginning
on June 30, the Federal Reserve Board began raising the overnight interbank
lending rate, the Fed Funds Rate, in an effort to avoid any increase in
inflationary pressures.
9
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 12/31/04 (continued)
- --------------------------------------------------------------------------------
By the end of the year, the Fed Funds Rate had risen from 1.00% to 2.25%,
with the Fed indicating it intended to continue to raise the rate at a
"measured" pace.
During a year in which the value of the U.S. dollar on international
currency exchanges fell dramatically and energy prices rose significantly,
longer-term interest rates remained surprisingly stable for much of the
year. In fact, the yield of the 10-year Treasury ended 2004 at 4.22%, very
close to its level at the start of the year. As the improving economy
helped lift corporate profits, corporate bonds significantly outperformed
government bonds. Mortgage-backed securities also did better than
Treasuries in a year in which securities that paid a higher coupon tended
to deliver higher returns.
In the equity markets, stock prices did not move greatly during the first
10 months of the year. However, after the November elections and the end of
political uncertainty about control of the federal government, stocks
staged a strong rally. Small- and mid-cap stocks and value stocks
outperformed large-cap stocks and growth stocks.
Q: What were your strategies in managing the fixed-income portfolio during the
year?
A: We emphasized the "spread" sectors - corporates and mortgages - and kept
the portfolio's duration, or sensitivity to interest rate changes, close to
that of the benchmark Lehman Brothers Aggregate Bond Index. For much of the
year, we kept our investments in high-yielding, lower-rated corporate bonds
at about 8.5% of fixed income assets, close to our limit of 10%. However,
we did lower that to about 6.8% of fixed income assets by the end of the
year, increasing our investments in mortgage-backed securities to almost
half the portfolio. This was because, after strong performance by corporate
bonds, we found that mortgage securities offered very attractive relative
value, as they provided almost as much income as corporate securities, but
with higher credit quality.
At the end of 2004, average credit quality was AA-, up from the A+ average
rating of a year earlier. Both because we were cautious in taking
interest-rate risk and because we increased our
10
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
investments in mortgages, the portfolio's duration was 3.83 years, down
from 4.52 years at the end of 2003.
Both our sector selection and our decision to keep the portfolio's
sensitivity to interest rate changes close to that of the benchmark aided
performance during the year.
Q: What were the principal factors affecting the equity portfolio's
performance during 2004?
A: During a year in which high quality, large-company growth stocks were not
in favor, the best performance tended to come from our investments in the
energy and consumer staples sectors. Several of our holdings in the
information technology sector also supported performance, while many of the
most notable detractors were in health care and consumer discretionary
investments.
The price of oil rose substantially in 2004, helping lift the performance
of the entire energy sector. Our best-performing energy investments
included Encana, a Canadian exploration and production company, and Varco
International, which provides oil field equipment and services to energy
companies. Varco eventually received an attractive acquisition offer from
National Oil Well.
In consumer staples, top performers included two of our five largest
holdings: Wrigley's and Gillette. In addition, CVS, the pharmacy chain,
rose substantially as its earnings outlook improved with the acquisition of
many stores formerly operated by the Eckerd chain. Chewing gum leader
Wrigley's appreciated on good earnings growth, its improving outlook with
the acquisition of the Altoids and Lifesavers brands, and inroads into the
markets in China and India. Gillette gained on successful new product
introductions and excellent cost management.
In information technology, Symantec's stock price appreciated with strong
sales of its anti-virus software. Newmont Mining, the world's largest gold
mining company, was another holding that did well.
In health care, our investments in large pharmaceutical companies detracted
from results during a difficult year for the industry. The largest
disappointment was Pfizer, a major position in the portfolio. Pfizer's
stock price plummeted late in the year amid
11
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 12/31/04 (continued)
- --------------------------------------------------------------------------------
controversies about possible side effects of its Cox-2 pain inhibitor,
Celebrex. The news came after Merck, a smaller holding in the portfolio,
withdrew its Cox-2 pain inhibitor from the market entirely. Among consumer
discretionary holdings, the most notable drag on performance was our
investment in Viacom, which declined 17% during the year, primarily because
of disappointing advertising sales in its radio station division.
As the year progressed, we sold some of our more successful investments,
notably Symantec and Newmont Mining because of concerns about the high
valuations that they had attained. As we did so, we invested in Vodaphone,
the wireless communications company based in the U.K.; Guidant, a leading
medical device company, which later received an acquisition offer from
Johnson & Johnson; and Avaya, a telecommunications equipment company that
is a leader in providing Voice Over Internet Protocol technology to
corporations.
Q: What is your investment outlook?
A: We believe the economy will continue to expand and the Federal Reserve will
maintain its policy of raising short-term interest rates. Longer term rates
may rise more slowly. As this happens, the "yield curve" will flatten as
the difference between short-term rates and longer-term rates narrows. If
this scenario unfolds, we may take a more "bar-belled" approach to the
fixed income portfolio, investing in both short-maturity (less than two
years) on one end of the spectrum and longer-maturity securities (more than
10 years) on the other end but de-emphasizing intermediate-term issues
which may be the most vulnerable to the risk of price loss from rising
rates. We may also take some profits in mortgage investments if their
prices begin to look less appealing and search for more attractive
opportunities in corporate securities.
In the equity market, we believe corporate profits will continue to
improve, but at a decelerating rate. We think stock prices will track
earnings growth, which in turn should track Gross Domestic Product growth.
We intend to continue to emphasize high quality, stable-growth companies.
Historically, these companies have done relatively well as corporate profit
growth begins decelerating as the economy enters a new, slower growth stage
in the business cycle.
12
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The consumer staples and health care sectors typically perform well in such
an environment.
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 12/31/04
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 64.3%
Energy - 5.6%
Integrated Oil & Gas - 1.2%
2,400 BP Amoco Plc (A.D.R.) $ 140,160
1,801 ConocoPhillips 156,381
9,400 ChevronTexaco Corp. 493,594
21,076 Exxon Mobil Corp. 1,080,356
------------
$ 1,870,491
------------
Oil & Gas Drilling - 4.1%
21,800 Encana Corp. $ 1,243,908
98,100 ENSCO International, Inc. 3,113,694
63,600 Varco International, Inc.* 1,853,940
------------
$ 6,211,542
------------
Oil & Gas Exploration & Production - 0.3%
13,800 Pioneer Natural Resources Co. $ 484,380
------------
Total Energy $ 8,566,413
------------
Materials - 2.2%
Commodity Chemicals - 0.2%
6,200 Praxair, Inc. $ 273,730
------------
Metal & Glass Containers - 0.0%
1,800 Ball Corp. $ 79,164
------------
Precious Metals & Minerals - 2.0%
68,700 Newmont Mining Corp. $ 3,050,967
------------
Total Materials $ 3,403,861
------------
Capital Goods - 3.1%
Aerospace & Defense - 2.6%
72,600 Northrop Grumman Corp. $ 3,946,536
------------
Electrical Component & Equipment - 0.2%
9,700 General Electric Co. $ 354,050
------------
Industrial Conglomerates - 0.2%
800 Illinois Tool Works, Inc. $ 74,144
2,400 Johnson Controls, Inc. 152,256
2,100 United Technologies Corp. 217,035
------------
$ 443,435
------------
The accompanying notes are an integral part of these financial statements.
14
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Industrial Machinery - 0.1%
2,400 Ingersoll-Rand Co. $ 192,720
------------
Total Capital Goods $ 4,936,741
------------
Commercial Services & Supplies - 0.6%
Diversified Commercial Services - 0.6%
19,900 Cintas Corp. $ 872,814
------------
Total Commercial Services & Supplies $ 872,814
------------
Transportation - 2.2%
Trucking - 2.2%
39,700 United Parcel Service $ 3,392,762
------------
Total Transportation $ 3,392,762
------------
Hotels, Restaurants & Leisure - 0.1%
Restaurants - 0.1%
3,300 Tricon Global Restaurants, Inc. $ 155,694
------------
Total Hotels, Restaurants & Leisure $ 155,694
------------
Media - 3.4%
Broadcasting & Cable Television - 1.2%
27,400 Clear Channel Communications, Inc. $ 917,626
28,900 Comcast Corp. (Special)* 949,076
------------
$ 1,866,702
------------
Movies & Entertainment - 2.1%
87,594 Viacom, Inc. (Class B) $ 3,187,546
------------
Publishing - 0.1%
2,200 Gannett Co. $ 179,740
------------
Total Media $ 5,233,988
------------
Retailing - 3.7%
Apparel Retail - 1.3%
47,500 Liz Claiborne, Inc. $ 2,004,975
------------
Department Stores - 0.2%
5,300 Nordstrom, Inc. $ 247,669
------------
General Merchandise Stores - 2.0%
93,300 Family Dollar Stores, Inc. $ 2,913,759
2,800 Target Corp. 145,404
------------
$ 3,059,163
------------
The accompanying notes are an integral part of these financial statements.
15
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/04 (continued)
- --------------------------------------------------------------------------------
Shares Value
Specialty Stores - 0.2%
20,099 Blockbuster, Inc. $ 191,744
20,099 Blockbuster, Inc. (Class B) 177,072
------------
$ 368,816
------------
Total Retailing $ 5,680,623
------------
Food & Drug Retailing - 4.2%
Drug Retail - 0.8%
28,200 CVS Corp. $ 1,270,974
------------
Food Distributors - 0.1%
3,400 Sysco Corp. $ 129,778
------------
Food Retail - 2.5%
53,700 Wm. Wrigley Jr. Co. $ 3,715,503
------------
Hypermarkets & Supercenters - 0.8%
22,100 Wal-Mart Stores, Inc. $ 1,167,322
------------
Total Food & Drug Retailing $ 6,283,577
------------
Food, Beverage & Tobacco - 5.1%
Distillers & Vintners - 1.9%
57,700 Anheuser-Busch Co., Inc. $ 2,927,121
------------
Soft Drinks - 3.2%
24,800 The Coca-Cola Co. $ 1,032,424
74,100 PepsiCo, Inc. 3,868,020
------------
$ 4,900,444
------------
Total Food, Beverage & Tobacco $ 7,827,565
------------
Household & Personal Products - 3.6%
Household Products - 0.9%
27,200 Estee Lauder Co. $ 1,244,944
1,200 Procter & Gamble Co. 66,096
------------
$ 1,311,040
------------
Personal Products - 2.7%
85,000 Gillette Co. $ 3,806,300
3,900 Kimberly-Clark Corp. 256,659
------------
$ 4,062,959
------------
Total Household & Personal Products $ 5,373,999
------------
The accompanying notes are an integral part of these financial statements.
16
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Health Care Equipment & Services - 5.1%
Health Care Distributors - 2.5%
3,900 Abbott Laboratories $ 181,935
21,100 Cardinal Health, Inc. 1,226,965
56,600 Wyeth 2,410,594
------------
$ 3,819,494
------------
Health Care Equipment - 2.6%
52,700 Biomet, Inc. $ 2,286,653
23,100 Guidant Corp. 1,665,510
------------
$ 3,952,163
------------
Total Health Care Equipment & Services $ 7,771,657
------------
Pharmaceuticals & Biotechnology - 3.5%
Biotechnology - 0.9%
20,168 Amgen, Inc.* $ 1,293,777
------------
Pharmaceuticals - 2.6%
11,100 Eli Lilly & Co. $ 629,925
122,521 Pfizer, Inc. 3,294,590
------------
$ 3,924,515
------------
Total Pharmaceuticals & Biotechnology $ 5,218,292
------------
Banks - 1.0%
Diversified Banks - 1.0%
17,400 Bank of America Corp. $ 817,626
12,820 U.S. Bancorp 401,522
5,000 Wachovia Corp. 263,000
------------
$ 1,482,148
------------
Total Banks $ 1,482,148
------------
Diversified Financials - 3.4%
Asset Management & Custody Banks - 1.3%
57,200 The Bank of New York Co., Inc. $ 1,911,624
1,700 State Street Corp. 83,504
------------
$ 1,995,128
------------
Consumer Finance - 1.4%
38,000 American Express Co. $ 2,142,060
------------
Investment Banking & Brokerage - 0.4%
10,900 Merrill Lynch & Co., Inc. $ 651,493
------------
The accompanying notes are an integral part of these financial statements.
17
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/04 (continued)
- --------------------------------------------------------------------------------
Shares Value
Diversified Financial Services - 0.3%
9,300 Citigroup, Inc. $ 448,074
------------
Total Diversified Financials $ 5,236,755
------------
Insurance - 4.5%
Multi-Line Insurance - 0.3%
3,500 American International Group, Inc. $ 229,845
4,800 Hartford Financial Services Group, Inc. 332,688
------------
$ 562,533
------------
Property & Casualty Insurance - 4.2%
1,550 Berkshire Hathaway, Inc. (Class B)* $ 4,550,800
20,500 Progressive Corp. 1,739,220
------------
$ 6,290,020
------------
Total Insurance $ 6,852,553
------------
Software & Services - 6.7%
Application Software - 3.8%
168,200 Microsoft Corp. $ 4,492,622
46,000 Symantec Corp.* 1,184,960
------------
$ 5,677,582
------------
Data Processing & Outsourced Services - 2.9%
104,300 First Data Corp. $ 4,436,922
------------
Total Software & Services $ 10,114,504
------------
Technology Hardware & Equipment - 2.5%
Communications Equipment - 0.4%
40,200 Avaya, Inc.* $ 691,440
------------
Computer Hardware - 1.7%
1,100 Diebold, Inc. $ 61,303
1,900 Dell, Inc.* 80,066
101,300 Hewlett-Packard Co. 2,124,261
2,500 IBM Corp. 246,450
------------
$ 2,512,080
------------
Electronic Manufacturing Services - 0.4%
23,800 Molex, Inc. $ 634,270
------------
Total Technology Hardware & Equipment $ 3,837,790
------------
The accompanying notes are an integral part of these financial statements.
18
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Semiconductors - 0.8%
Semiconductors - 0.8%
29,800 Intel Corp. $ 697,022
22,100 Texas Instruments, Inc. 544,102
------------
$ 1,241,124
------------
Total Semiconductors $ 1,241,124
------------
Telecommunication Services - 2.2%
Integrated Telecommunication Services - 0.5%
4,100 Alltel Corp. $ 240,916
5,000 BellSouth Corp. 138,950
7,900 SBC Communications, Inc. 203,583
6,114 Verizon Communications, Inc. 247,678
------------
$ 831,127
------------
Wireless Telecommunication Services - 1.7%
93,700 Vodafone Group Plc (A.D.R.) $ 2,565,506
------------
Total Telecommunication Services $ 3,396,633
------------
Utilities - 0.2%
Electric Utilities - 0.2%
4,800 Exelon Corp. $ 211,536
4,400 Southern Co. 147,488
------------
Total Utilities $ 359,024
------------
TOTAL COMMON STOCKS
(Cost $81,740,036) $ 97,238,517
------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
ASSET BACKED SECURITIES - 0.6%
Transportation - 0.0%
Airlines - 0.0%
$ 12,687 BBB+/Baa3 Continential Airlines, 6.648%, 9/15/17 $ 12,323
------------
Total Transportation $ 12,323
------------
Diversified Financials - 0.4%
Consumer Finance - 0.0%
24,438 AAA/Aaa Americredit Automobile Receivables Trust,
Floating Rate, 12/12/07 $ 24,453
------------
The accompanying notes are an integral part of these financial statements.
19
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/04 (continued)
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Diversified Financial Services - 0.4%
$ 254,182 BBB-/Baa2 PF Export Receivable Master Trust,
6.436%, 6/1/15 (144A) $ 252,634
296,535 BBB/Baa2 Power Receivables Finance, 6.29%,
1/1/12 (144A) 312,088
------------
$ 564,722
------------
Specialized Finance - 0.0%
70,000 AAA/Aaa MBNA Credit Card Master Note, Floating
Rate, 12/15/08 $ 70,096
------------
Total Diversified Financials $ 659,271
------------
Utilities - 0.1%
Electric Utilities - 0.1%
189,200 BB-/Ba2 FPL Energy Wind Funding, 6.876%,
6/27/17 (144A) $ 195,113
------------
Total Utilities $ 195,113
------------
TOTAL ASSET BACKED SECURITIES
(Cost $851,014) $ 866,707
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.4%
Banks - 0.0%
Thrifts & Mortgage Finance - 0.0%
2,264 AAA/Aaa Structured Asset Securities Corp., Floating
Rate, 9/25/32 $ 2,272
------------
Total Banks $ 2,272
------------
Diversified Financials - 0.2%
Consumer Finance - 0.0%
4,346 AAA/Aaa Asset Securitization Corp., Floating Rate,
1/13/30 $ 4,359
------------
Diversified Financial Services - 0.2%
300,000 BBB-/Baa3 Tower 2004-1A E, 5.395%, 1/15/34 $ 299,442
------------
Total Diversified Financials $ 303,801
------------
Government - 0.1%
220,363 AAA/Aaa Freddie Mac, 5.0%, 1/15/16 $ 224,458
------------
Total Government $ 224,458
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $534,390) $ 530,531
------------
The accompanying notes are an integral part of these financial statements.
20
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
CORPORATE BONDS - 10.2%
Energy - 0.7%
Integrated Oil & Gas - 0.1%
$ 120,000 BBB+/Baa1 Occidental Petroleum, 6.75%, 1/15/12 $ 136,221
25,000 BBB/Baa2 Petro-Canada, 4.0%, 7/15/13 23,418
15,000 BBB+/Baa1 USX Corp., 6.85%, 3/1/08 16,320
------------
$ 175,959
------------
Oil & Gas Exploration & Production - 0.3%
300,000 BBB-/N/R Gazprom International SA., 7.201%,
2/1/20 (144A) $ 317,250
65,000 BBB-/Baa1 Pemex Project Funding Master, 9.125%,
10/13/10 77,935
------------
$ 395,185
------------
Oil & Gas Refining Marketing & Transportation - 0.3%
40,000 BBB+/Baa1 Kinder Morgan Energy Partners, 6.75%,
3/15/11 $ 44,657
430,000 BBB/Ba1 Magellan Midstream Partners, L.P., 6.45%,
6/1/14 465,005
------------
$ 509,662
------------
Total Energy $ 1,080,806
------------
Materials - 1.1%
Commodity Chemicals - 0.2%
300,000 BB+/Ba2 Nova Chemicals Ltd., 6.5%, 1/15/12 $ 318,000
------------
Diversified Metals & Mining - 0.3%
425,000 BBB-/Baa3 Inco Ltd., 7.2%, 9/15/32 $ 495,336
------------
Fertilizers & Agricultural Chemicals - 0.0%
30,000 BBB+/Baa2 Potash Corp., Saskatchewan, 4.875%,
3/1/13 $ 30,155
------------
Forest Products - 0.0%
12,000 BBB/Baa2 Weyerhaeuser Co., 5.5%, 3/15/05 $ 12,055
------------
Metal & Glass Containers - 0.1%
125,000 BBB/Baa2 Tenneco Packaging, 8.125%, 6/15/17 $ 156,072
------------
Paper Packaging - 0.3%
425,000 A/A2 Bemis Co., Inc., 6.7%, 7/1/05 $ 432,262
------------
The accompanying notes are an integral part of these financial statements.
21
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/04 (continued)
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Paper Products - 0.2%
$ 250,000 BB-/Ba3 Abitibi-Consolidated, Inc., 6.95%, 4/1/08 $ 257,500
------------
Total Materials $ 1,701,380
------------
Capital Goods - 0.7%
Aerospace & Defense - 0.1%
25,000 A/A3 Boeing Co., 5.125%, 2/15/13 $ 25,862
80,000 A/A2 Honeywell International, 7.5%, 3/1/10 92,427
------------
$ 118,289
------------
Construction & Engineering - 0.1%
150,000 B+/Ba3 Shaw Group, Inc., 10.75%, 3/15/10 $ 165,375
------------
Electrical Component & Equipment - 0.1%
200,000 BBB-/Ba1 Thomas & Betts Corp., 7.25%, 6/1/13 $ 219,384
------------
Industrial Conglomerates - 0.1%
145,000 AAA/Aaa General Electric Capital Corp., 6.125%,
2/22/11 $ 158,832
90,000 AAA/Aaa General Electric Capital Corp., 6.75%,
3/15/32 105,341
------------
$ 264,173
------------
Industrial Machinery - 0.2%
300,000 B+/Ba2 Sun Sage BV, 8.25%, 3/26/09 (144A) $ 315,000
------------
Total Capital Goods $ 1,082,221
------------
Commercial Services & Supplies - 0.1%
Diversified Commercial Services - 0.1%
100,000 BBB+/Baa1 Deluxe Corp., 3.5%, 10/1/07 (144A) $ 98,712
------------
Total Commercial Services & Supplies $ 98,712
------------
Automobiles & Components - 0.4%
Automobile Manufacturers - 0.4%
80,000 BBB-/Baa1 Ford Motor Co., 7.25%, 10/1/08 $ 85,816
500,000 BBB-/Baa2 General Motors, 7.2%, 1/15/11 512,821
------------
$ 598,637
------------
Total Automobiles & Components $ 598,637
------------
Consumer Durables & Apparel - 0.0%
Housewares & Specialties - 0.0%
35,000 BBB+/Baa2 Newell Rubbermaid, Inc., 4.625%,
12/15/09 $ 35,330
------------
The accompanying notes are an integral part of these financial statements.
22
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Total Consumer Durables & Apparel $ 35,330
------------
Hotels, Restaurants & Leisure - 0.4%
Hotels, Resorts & Cruise Lines - 0.4%
$ 500,000 BBB-/Baa3 Hilton Hotels, 7.625%, 12/1/12 $ 584,712
------------
Total Hotels, Restaurants & Leisure $ 584,712
------------
Media - 1.1%
Broadcasting & Cable Television - 0.7%
500,000 BBB/Baa3 Comcast Cable Corp., 7.125%, 6/15/13 $ 579,273
80,000 BBB/Baa3 Comcast Corp., 5.3%, 1/15/14 82,505
300,000 BBB-/Baa3 Cox Communications, 7.125%, 10/1/12 336,259
------------
$ 998,037
------------
Movies & Entertainment - 0.0%
30,000 BBB+/Baa1 Time Warner, Inc., 6.75%, 4/15/11 $ 33,746
------------
Publishing - 0.4%
512,000 BBB-/Baa3 News America, Inc., 7.3%, 4/30/28 $ 586,675
------------
Total Media $ 1,618,458
------------
Retailing - 0.3%
Department Stores - 0.0%
15,000 A-/Baa1 Nordstrom, Inc., 5.625%, 1/15/09 $ 15,875
------------
Specialty Stores - 0.3%
500,000 BB/Ba2 Toys "R" Us, 7.875%, 4/15/13 $ 496,250
------------
Total Retailing $ 512,125
------------
Food, Beverage & Tobacco - 0.4%
Brewers - 0.0%
35,000 BBB+/Baa1 Miller Brewing Co., 5.5%, 8/15/13 (144A) $ 36,584
------------
Packaged Foods & Meats - 0.0%
35,000 A+/A1 Unilever Capital Corp., 7.125%, 11/1/10 $ 40,258
------------
Soft Drinks - 0.0%
35,000 A/A3 Bottling Group LLC, 5.0%, 11/15/13 $ 36,084
------------
Tobacco - 0.3%
400,000 BBB/Baa2 Altria Group, Inc., 7.0%, 11/4/13 $ 433,420
------------
Total Food, Beverage & Tobacco $ 546,346
------------
The accompanying notes are an integral part of these financial statements.
23
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/04 (continued)
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Health Care Equipment & Services - 0.5%
Health Care Facilities - 0.3%
$ 500,000 BB+/Ba2 HCA, Inc., 6.3%, 10/1/12 $ 507,103
------------
Health Care Supplies - 0.2%
250,000 BBB-/Ba1 Bausch & Lomb, 7.125%, 8/1/28 $ 266,375
------------
Total Health Care Equipment & Services $ 773,478
------------
Banks - 0.4%
Diversified Banks - 0.4%
80,000 AAA/Aaa International Bank for Reconstruction &
Development, 4.375%, 9/28/06 $ 81,708
150,000 NR/Aaa KFW-Kredit Wiederaufbau, 2.75%, 5/8/07 147,627
225,000 AA-/Aa2 National Westminster, 7.375%, 10/1/09 256,148
30,000 A+/Aa3 US Bancorp, 3.125%, 3/15/08 29,474
------------
$ 514,957
------------
Regional Banks - 0.0%
40,000 A-/A2 Keycorp 2.75%, 2/27/07 $ 39,264
------------
Total Banks $ 554,221
------------
Diversified Financials - 1.1%
Consumer Finance - 0.2%
65,000 A/A2 National Rural Utilities, 7.25%, 3/1/12 $ 75,023
265,000 A/A2 SLM Corp., Floating Rate, 7/25/14 264,051
------------
$ 339,074
------------
Investment Banking & Brokerage - 0.1%
200,000 B+/B1 E*Trade Financial Corp., 8.0%, 6/15/11
(144A) $ 215,000
------------
Diversified Financial Services - 0.4%
300,000 A-/Baa3 Brascan Corp., 5.75%, 3/1/10 $ 317,417
300,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14
(144A) 290,243
------------
$ 607,660
------------
The accompanying notes are an integral part of these financial statements.
24
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Specialized Finance - 0.4%
$ 200,000 N/R/Baa3 Tengizchevroil LLP, 6.124%, 11/15/14
(144A) $ 200,500
300,000 B/B2 MDP Acquisitions, 9.625%, 10/1/12 334,500
------------
$ 535,000
------------
Total Diversified Financials $ 1,696,734
------------
Insurance - 1.1%
Life & Health Insurance - 0.2%
300,000 BB+/Ba1 Provident Co., Inc., 7.0%, 7/15/18 $ 289,875
65,000 AA/A1 Jackson National Life Global Funding,
Floating Rate, 3/11/05 (144A) 65,014
------------
$ 354,889
------------
Multi-Line Insurance - 0.0%
150,000 A/Baa1 Loews Corp., 5.25%, 3/15/16 $ 145,060
------------
Property & Casualty Insurance - 0.5%
180,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 186,620
200,000 BBB-/Baa3 Arch Capital Group Ltd., 7.35%, 5/1/34 213,232
350,000 BB/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 376,669
------------
$ 776,521
------------
Reinsurance - 0.2%
300,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 330,888
------------
Total Insurance $ 1,607,358
------------
Real Estate - 0.5%
Real Estate Investment Trusts - 0.5%
400,000 BBB-/Baa3 Hospitality Properties Trust, 6.75%,
2/15/13 $ 441,677
300,000 BBB-/Baa3 Colonial Reality LP, 6.15%, 4/15/13 311,606
------------
$ 753,283
------------
Total Real Estate $ 753,283
------------
Technology Hardware & Equipment - 0.7%
Communications Equipment - 0.1%
200,000 BB/Ba3 Rogers Wireless, Inc., Floating Rate,
12/15/10 (144A) $ 209,500
------------
The accompanying notes are an integral part of these financial statements.
25
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/04 (continued)
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited)
Computer Hardware - 0.6%
$ 500,000 BBB-/Baa3 NCR Corp., 7.125%, 6/15/09 $ 552,078
300,000 BB+/Ba1 Unisys Corp., 6.875%, 3/15/10 321,000
------------
$ 873,078
------------
Total Technology Hardware & Equipment $ 1,082,578
------------
Telecommunication Services - 0.4%
Integrated Telecommunication Services - 0.4%
25,000 A+/A2 Verizon Global Funding Corp., 7.375%,
9/1/12 $ 29,420
300,000 BBB+/Ba3 Intelsat, Ltd., 6.5%, 11/1/13 273,000
300,000 BBB+/Baa2 Telecom Italia Capital, 5.25%, 11/15/13 303,221
------------
$ 605,641
------------
Total Telecommunication Services $ 605,641
------------
Utilities - 0.3%
Electric Utilities - 0.3%
313,500 BBB-/Baa3 FLP Energy American Wind LLC, 6.639%,
6/20/23 (144A) $ 334,310
40,000 BBB/Baa1 PSE&G Power, 6.95%, 6/1/12 45,073
------------
$ 379,383
------------
Multi-Utilities & Unregulated Power - 0.0%
75,000 BBB-/Baa3 Avista Corp., 7.75%, 1/1/07 $ 80,483
15,000 BBB+/Baa1 Dominion Resources, 6.25%, 6/30/12 16,377
------------
$ 96,860
------------
Total Utilities $ 476,243
------------
TOTAL CORPORATE BONDS
(Cost $14,529,623) $ 15,408,263
------------
The accompanying notes are an integral part of these financial statements.
26
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount Value
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 22.3%
$ 65,000 Federal Home Loan Bank, 3.875%, 6/14/13 $ 62,728
998,293 Federal Home Loan Bank, 5.0%, 11/1/34 992,024
300,000 Federal Home Loan Mortgage Corp., 3.25%, 2/25/08 297,882
973,082 Federal Home Loan Mortgage Corp., 5.0%, 4/1/34 966,971
517,686 Federal Home Loan Mortgage Corp., 5.5%, 5/1/33 535,011
355,308 Federal Home Loan Mortgage Corp., 5.5%, 12/1/18 369,203
450,000 Federal Home Loan Mortgage Corp., 5.5%, 11/1/34 457,440
1,000,000 Federal Home Loan Mortgage Corp., 5.5%, 12/1/34 1,016,532
226,945 Federal Home Loan Mortgage Corp., 6.0%, 6/1/34 234,551
400,217 Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 414,000
497,433 Federal Home Loan Mortgage Corp., 6.0%, 4/1/33 514,565
102,337 Federal Home Loan Mortgage Corp., 6.5%, 5/1/09 107,377
162,015 Federal Home Loan Mortgage Corp., 6.5%, 7/1/33 170,689
278,249 Federal Home Loan Mortgage Corp., 6.5%, 10/1/33 293,073
397,571 Federal National Loan Mortgage Corp., 5.5%, 10/1/16 411,286
31,748 Federal National Mortgage Association, 3.5%, 9/15/10 31,756
150,855 Federal National Mortgage Association, 4.816%, 12/1/12 154,167
151,618 Federal National Mortgage Association, 5.0%, 3/1/33 150,728
452,075 Federal National Mortgage Association, 5.0%, 5/1/18 460,450
484,491 Federal National Mortgage Association, 5.0%, 6/1/34 480,945
209,017 Federal National Mortgage Association, 5.0%, 12/1/17 212,624
100,000 Federal National Mortgage Association, 5.24%, 8/7/18 99,732
570,503 Federal National Mortgage Association, 5.5%, 2/1/17 590,555
112,162 Federal National Mortgage Association, 5.5%, 2/1/18 116,455
213,175 Federal National Mortgage Association, 5.5%, 3/1/34 216,544
437,936 Federal National Mortgage Association, 5.5%, 4/1/34 444,858
662,243 Federal National Mortgage Association, 5.5%, 5/1/33 672,893
66,076 Federal National Mortgage Association, 5.5%, 7/1/23 67,594
287,009 Federal National Mortgage Association, 5.5%, 8/1/14 297,999
73,112 Federal National Mortgage Association, 5.5%, 9/1/17 75,641
447,148 Federal National Mortgage Association, 5.5%, 11/1/33 454,339
54,841 Federal National Mortgage Association, 6.0%, 1/1/29 56,902
795,297 Federal National Mortgage Association, 6.0%, 1/1/33 823,456
382,191 Federal National Mortgage Association, 6.0%, 1/1/33 395,724
434,914 Federal National Mortgage Association, 6.0%, 2/1/33 449,913
72,596 Federal National Mortgage Association, 6.0%, 3/1/33 75,100
110,000 Federal National Mortgage Association, 6.0%, 4/15/32 114,996
The accompanying notes are an integral part of these financial statements.
27
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/04 (continued)
- --------------------------------------------------------------------------------
Principal
Amount Value
$ 67,243 Federal National Mortgage Association, 6.0%, 8/1/32 $ 69,624
22,460 Federal National Mortgage Association, 6.0%, 9/1/29 23,276
139,142 Federal National Mortgage Association, 6.0%, 11/1/16 145,895
364,083 Federal National Mortgage Association, 6.0%, 12/1/33 376,640
1,260,000 Federal National Mortgage Association, 6.125%, 3/15/12 1,399,934
20,159 Federal National Mortgage Association, 6.5%, 1/1/15 21,393
197,443 Federal National Mortgage Association, 6.5%, 4/1/29 208,373
492,724 Federal National Mortgage Association, 6.5%, 5/1/32 517,173
62,531 Federal National Mortgage Association, 6.5%, 7/1/29 65,709
429,055 Federal National Mortgage Association, 6.5%, 7/1/32 450,345
165,705 Federal National Mortgage Association, 6.5%, 9/1/32 174,512
47,158 Federal National Mortgage Association, 6.5%, 10/1/32 49,498
194,137 Federal National Mortgage Association, 6.5%, 12/1/21 204,894
24,259 Federal National Mortgage Association, 7.0%, 3/1/12 25,721
40,000 Federal National Mortgage Association, 7.125%, 6/15/10 45,977
6,715 Federal National Mortgage Association, 8.0%, 1/1/31 7,281
19,893 Federal National Mortgage Association, 8.0%, 2/1/29 21,648
1,907 Federal National Mortgage Association, 8.0%, 2/1/30 2,073
50,775 Federal National Mortgage Association, 8.0%, 3/1/31 55,195
11,529 Federal National Mortgage Association, 8.0%, 4/1/20 12,505
4,309 Federal National Mortgage Association, 8.0%, 4/1/30 4,672
4,155 Federal National Mortgage Association, 8.0%, 5/1/31 4,505
3,966 Federal National Mortgage Association, 8.0%, 7/1/30 4,300
9,902 Federal National Mortgage Association, 8.0%, 10/1/30 10,736
96,287 Federal National Mortgage Association, 9.0%, 4/1/33 104,239
384,815 Government National Mortgage Association, 5.0%, 4/15/34 385,287
662,159 Government National Mortgage Association, 5.5%, 8/15/17 690,645
478,506 Government National Mortgage Association, 5.5%, 8/15/19 499,035
1,332,912 Government National Mortgage Association, 5.5%, 8/15/33 1,362,642
136,792 Government National Mortgage Association, 5.5%, 9/15/33 139,972
299,971 Government National Mortgage Association, 5.5%, 10/15/33 306,663
320,000 Government National Mortgage Association, 5.5%, 12/15/34 326,994
6,171 Government National Mortgage Association, 6.0%, 4/15/14 6,510
28,257 Government National Mortgage Association, 6.0%, 8/15/13 29,810
964,122 Government National Mortgage Association, 6.0%, 8/15/34 999,926
373,844 Government National Mortgage Association, 6.0%, 9/15/34 387,729
1,559,215 Government National Mortgage Association, 6.0%, 9/15/33 1,617,027
The accompanying notes are an integral part of these financial statements.
28
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount Value
$ 337,609 Government National Mortgage Association, 6.0%,
10/15/33 $ 350,126
631,827 Government National Mortgage Association, 6.0%,
10/20/33 656,620
241,249 Government National Mortgage Association, 6.5%, 5/15/33 254,021
298,683 Government National Mortgage Association, 6.5%,
10/15/28 315,014
19,325 Government National Mortgage Association, 7.0%, 4/15/28 20,572
4,764 Government National Mortgage Association, 7.0%, 8/15/28 5,071
18,243 Government National Mortgage Association, 7.5%, 1/15/30 19,596
8,548 Government National Mortgage Association, 7.75%,
11/15/29 9,233
49,532 Government National Mortgage Association, 8.0%, 2/15/30 53,776
498,409 Government National Mortgage Association II, 5.5%,
2/20/34 508,834
1,549,572 Government National Mortgage Association II, 6.0%,
11/20/33 1,605,088
100,000 U.S. Treasury Bonds, 7.125%, 2/15/23 127,607
220,000 U.S. Treasury Notes, 3.5%, 1/15/11 269,856
1,985,000 U.S. Treasury Notes, 4.0%, 11/15/12 1,981,664
700,000 U.S. Treasury Notes, 4.75%, 11/15/08 733,168
500,000 U.S. Treasury Notes, 4.75%, 5/15/14 521,055
360,000 U.S. Treasury Notes, 5.375%, 2/15/31 389,278
75,000 U.S. Treasury Notes, 5.5%, 8/15/28 81,176
1,500,000 U.S. Treasury Notes, 5.625%, 5/15/08 1,608,867
100,000 U.S. Treasury Notes, 7.0%, 7/15/06 106,023
-----------
$33,661,706
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $33,382,912) $33,661,706
-----------
The accompanying notes are an integral part of these financial statements.
29
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/04 (continued)
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
MUNICIPAL BOND - 0.0%
$70,000 BBB+/A3 California State Department of Water
Resources & Power Supply, 4.33%,
5/1/06 $ 70,711
------------
TOTAL MUNICIPAL BOND
(Cost $69,984) $ 70,711
------------
TOTAL INVESTMENTS IN SECURITIES - 97.8%
(Cost $131,107,959) (a) $147,776,435
------------
OTHER ASSETS AND LIABILITIES - 2.2% $ 3,354,138
------------
TOTAL NET ASSETS - 100.0% $151,130,573
============
(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 transac- tion exempt from registration. At
December 31, 2004, the value of these securities amounted to $2,841,948
or 1.9% of net assets.
(a) At December 31, 2004, the net unrealized gain on investments based on
cost for federal income tax purposes of $131,093,164 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost $18,299,449
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (1,616,178)
-----------
Net unrealized gain $16,683,271
===========
Purchases and sales of securities (excluding temporary cash investments) for the year ended December 31,
2004 aggregated $40,928,661 and $44,798,874, respectively.
The accompanying notes are an integral part of these financial statements.
30
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 12/31/04
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (cost $131,107,959) $147,776,435
Cash 2,624,580
Receivables -
Investment securities sold 2,297,384
Fund shares sold 112,674
Dividends, interest and foreign taxes withheld 563,799
Due from Pioneer Investment Management, Inc. 2,856
Other 6,363
------------
Total assets $153,384,091
------------
LIABILITIES:
Payables -
Investment securities purchased $ 1,965,681
Fund shares repurchased 33,638
Due to affiliates 177,224
Accrued expenses 76,975
------------
Total liabilities $ 2,253,518
------------
NET ASSETS:
Paid-in capital $143,923,150
Undistributed net investment income 107,241
Accumulated net realized loss on investments ) (9,568,294)
Net unrealized gain on investments 16,668,476
------------
Total net assets $151,130,573
============
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $100,920,220/10,386,285 shares) $ 9.72
============
Class B (based on $18,369,075/1,911,912 shares) $ 9.61
============
Class C (based on $13,720,466/1,417,535 shares) $ 9.68
============
Investor Class (based on $18,120,812/1,863,769 shares) $ 9.72
============
MAXIMUM OFFERING PRICE:
Class A ($9.72 [divided by] 95.5%) $ 10.18
============
The accompanying notes are an integral part of these financial statements.
31
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended 12/31/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $3,795) $1,360,512
Interest (net of foreign taxes withheld of $283) 2,340,473
Income from securities loaned, net 171
----------
Total investment income $3,701,156
----------
EXPENSES:
Management fees $ 856,331
Transfer agent fees and expenses
Class A 314,883
Class B 88,236
Class C 43,911
Investor Class 3,559
Distribution fees
Class A 257,721
Class B 177,438
Class C 98,614
Administrative reimbursements 24,843
Custodian fees 3,032
Registration fees 48,663
Professional fees 29,659
Fees and expenses of nonaffiliated trustees 3,924
----------
Total expenses $1,950,814
Less fees paid indirectly (2,767)
----------
Net expenses $1,948,047
----------
Net investment income $1,753,109
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $4,392,771
----------
Change in net unrealized gain on investments $ (649,320)
----------
Net gain on investments $3,743,451
----------
Net increase in net assets resulting from operations $5,496,560
==========
The accompanying notes are an integral part of these financial statements.
32
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Years Ended 12/31/04 and 12/31/03
Year Ended Year Ended
12/31/04 12/31/03
FROM OPERATIONS:
Net investment income $ 1,753,109 $ 1,368,139
Net realized gain on investments 4,392,771 1,587,565
Change in net unrealized gain (loss) on investments (649,320) 15,653,026
------------ ------------
Net increase in net assets resulting from
operations $ 5,496,560 $ 18,608,730
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.16 and $0.14 per share, respectively) $ (1,753,950) $ (1,600,449)
Class B ($0.08 and $0.05 per share, respectively) (162,518) (75,922)
Class C ($0.09 and $0.04 per share, respectively) (109,871) (36,184)
------------ ------------
Total distributions to shareowners $ (2,026,339) $ (1,712,555)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 25,246,160 $ 27,583,670
Shares issued in reorganization 18,324,440 -
Reinvestment of distributions 1,833,185 1,559,351
Cost of shares repurchased (29,592,439) (44,985,862)
------------ ------------
Net increase (decrease) in net assets resulting from
Fund share transactions $ 15,811,346 $(15,842,841)
------------ ------------
Net increase in net assets $ 19,281,567 $ 1,053,334
NET ASSETS:
Beginning of year 131,849,006 130,795,672
------------ ------------
End of year (including undistributed net investment
income of $107,241 and $64,731, respectively) $151,130,573 $131,849,006
============ ============
The accompanying notes are an integral part of these financial statements.
33
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
For the Years Ended 12/31/04 and 12/31/03
'04 Shares '04 Amount '03 Shares '03 Amount
CLASS A
Shares sold 922,267 $ 8,795,188 1,716,085 $ 14,763,083
Reinvestment of distributions 166,585 1,594,873 163,222 1,459,391
Less shares repurchased (2,028,558) (19,366,320) (3,422,395) (29,595,678)
---------- ----------- ---------- ------------
Net decrease (939,706) $(8,976,259) (1,543,088) $(13,373,204)
---------- ----------- ---------- ------------
CLASS B
Shares sold 849,263 $ 7,994,504 919,101 $ 7,827,081
Reinvestment of distributions 14,764 140,299 7,559 67,534
Less shares repurchased (676,731) (6,377,749) (1,183,145) (9,987,739)
---------- ----------- ---------- ------------
Net increase (decrease) 187,296 $ 1,757,054 (256,485) $ (2,093,124)
---------- ----------- ---------- ------------
CLASS C
Shares sold 889,037 $ 8,456,468 580,857 $ 4,993,506
Reinvestment of distributions 10,218 98,013 3,605 32,426
Less shares repurchased (372,585) (3,526,430) (637,455) (5,402,445)
---------- ----------- ---------- ------------
Net increase (decrease) 526,670 $ 5,028,051 (52,993) $ (376,513)
========== =========== ========== ===========
INVESTOR CLASS
Shares sold - $ -
Shares issued
in reorganization 1,896,932 18,324,440
Less shares repurchased (33,163) (321,940)
---------- -----------
Net increase 1,863,769 $18,002,500
========== ===========
The accompanying notes are an integral part of these financial statements.
34
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/04 12/31/03 12/31/02 12/31/01 (a) 12/31/00
CLASS A
Net asset value, beginning of period $ 9.47 $ 8.29 $ 9.46 $ 9.94 $ 9.73
-------- -------- -------- ------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.15 $ 0.12 $ 0.11 $ 0.19 $ 0.30
Net realized and unrealized gain (loss) on
investments 0.27 1.20 (1.17) (0.47) 0.22
-------- -------- -------- ------- --------
Net increase (decrease) from investment
operations $ 0.41 $ 1.32 $ (1.06) $ (0.28) $ 0.52
Distributions to shareowners:
Net investment income (0.17) (0.14) (0.11) (0.20) (0.31)
-------- -------- -------- ------- --------
Net increase (decrease) in net asset value $ 0.25 $ 1.18 $ (1.17) $ (0.48) $ 0.21
-------- -------- -------- ------- --------
Net asset value, end of period $ 9.72 $ 9.47 $ 8.29 $ 9.46 $ 9.94
======== ======== ======== ======= ========
Total return* 4.43% 15.99% (11.20)% (2.87)% 5.38%
Ratio of net expenses to average net assets+ 1.29% 1.38% 1.41% 1.31% 1.23%
Ratio of net investment income to average net assets+ 1.51% 1.25% 1.19% 1.97% 2.96%
Portfolio turnover rate 31% 44% 180% 133% 17%
Net assets, end of period (in thousands) $100,920 $107,265 $106,734 $141,746 $162,855
Ratios with reductions for fees paid indirectly:
Net expenses 1.29% 1.38% 1.41% 1.30% 1.20%
Net investment income 1.51% 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.
+ 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.
35
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/04 12/31/03 12/31/02 12/31/01 (a) 12/31/00
CLASS B
Net asset value, beginning of period $ 9.37 $ 8.21 $ 9.36 $ 9.85 $ 9.64
------- ------- -------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.05 $ 0.03 $ 0.02 $ 0.12 $ 0.19
Net realized and unrealized gain (loss) on
investments 0.27 1.18 (1.13) (0.48) 0.23
------- ------- -------- ------- -------
Net increase (decrease) from investment
operations $ 0.32 $ 1.21 $ (1.11) $ (0.36) $ 0.42
Distributions to shareowners:
Net investment income (0.08) (0.05) (0.04) (0.13) (0.21)
------- ------- -------- ------- -------
Net increase (decrease) in net asset value $ 0.24 $ 1.16 $ (1.15) $ (0.49) $ 0.21
------- ------- -------- ------- -------
Net asset value, end of period $ 9.61 $ 9.37 $ 8.21 $ 9.36 $ 9.85
======= ======= ======== ======= =======
Total return* 3.48% 14.71% (11.90)% (3.72)% 4.39%
Ratio of net expenses to average net assets+ 2.24% 2.35% 2.32% 2.20% 2.15%
Ratio of net investment income to average net assets+ 0.59% 0.27% 0.28% 1.04% 2.03%
Portfolio turnover rate 31% 44% 180% 133% 17%
Net assets, end of period (in thousands) $18,369 $16,168 $ 16,256 $18,110 $16,413
Ratios with reduction for fees paid indirectly:
Net expenses 2.24% 2.35% 2.32% 2.19% 2.13%
Net investment income 0.59% 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.
+ 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.
The accompanying notes are an integral part of these financial statements.
36
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/04 12/31/03 12/31/02 12/31/01 (a) 12/31/00
CLASS C
Net asset value, beginning of period $ 9.45 $ 8.27 $ 9.44 $ 9.94 $ 9.73
------- ------- -------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.06 $ 0.02 $ 0.01 $ 0.13 $ 0.15
Net realized and unrealized gain (loss) on
investments 0.26 1.20 (1.14) (0.54) 0.23
------- ------- -------- ------- -------
Net increase (decrease) from investment
operations $ 0.32 $ 1.22 $ (1.13) $ (0.41) $ 0.38
Distributions to shareowners:
Net investment income (0.09) (0.04) (0.04) (0.09) (0.17)
------- ------- -------- ------- -------
Net increase (decrease) in net asset value $ 0.23 $ 1.18 $ (1.17) $ (0.50) $ 0.21
------- ------- -------- ------- -------
Net asset value, end of period $ 9.68 $ 9.45 $ 8.27 $ 9.44 $ 9.94
======= ======= ======== ======= =======
Total return* 3.42% 14.82% (12.02)% (4.11)% 3.95%
Ratio of net expenses to average net assets+ 2.18% 2.38% 2.53% 2.44% 2.61%
Ratio of net investment income to average net assets+ 0.73% 0.24% 0.06% 0.75% 1.56%
Portfolio turnover rate 31% 44% 180% 133% 17%
Net assets, end of period (in thousands) $13,720 $ 8,416 $ 7,806 $ 5,499 $ 3,426
Ratios with reduction for fees paid indirectly:
Net expenses 2.18% 2.38% 2.53% 2.43% 2.59%
Net investment income 0.73% 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.
+ 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.
37
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
12/11/04
to
12/31/04
INVESTOR CLASS
Net asset value, beginning of period $ 9.66
-------
Increase (decrease) from investment operations:
Net investment loss $ 0.01
Net realized and unrealized gain on investments 0.05
-------
Net increase from investment operations $ 0.06
Net increase in net asset value 0.06
-------
Net asset value, end of period $ 9.72
=======
Total return* 0.62%(b)
Ratio of net expenses to average net assets+ 1.06%**
Ratio of net investment loss to average net assets+ 1.06%**
Portfolio turnover rate 31%
Net assets, end of period (in thousands) $18,121
Ratios with reduction for fees paid indirectly:
Net expenses 1.06%**
Net investment loss 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.
(b) Not Annualized.
The accompanying notes are an integral part of these financial statements.
38
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/04
- --------------------------------------------------------------------------------
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.
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 publicly
offered 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 Class I 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 and ratings. Valuations may be
supplemented by dealers and other
39
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/04 (continued)
- --------------------------------------------------------------------------------
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 December 31, 2004
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
40
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 December 31, 2004, 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 distributions paid during the years ended December
31, 2004 and December 31, 2003 were as follows:
- --------------------------------------------------------------------------------
2004 2003
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $2,026,339 $1,712,555
Long-term capital gain -- --
---------- ----------
Total $2,026,339 $1,712,555
========== ==========
- --------------------------------------------------------------------------------
41
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/04 (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.
At December 31, 2004, the Fund has reclassified $315,740 to increase
undistributed net investment income and $315,740 to increase accumulated
net realized loss on investments to reflect permanent book/tax
differences. The reclassification has no impact on the net assets of the
Fund and is designed to present the Fund's capital accounts on a tax
basis.
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 $21,475 in underwriting commissions on the
sale of Class A shares during the year ended December 31, 2004.
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
42
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 the same amount,
except that Class A, Class B, Class C and Class I 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 December 31, 2004, $84,194 was payable to
PIM related to management fees, administrative costs and certain other
services, and is included in due to affiliates.
43
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/04 (continued)
- --------------------------------------------------------------------------------
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 $43,435 in transfer agent fees payable to
PIMSS at December 31, 2004.
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 $49,595
in distribution fees payable to PFD at December 31, 2004.
In addition, redemptions of each class of 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). Effective December 1, 2004, Class B shares 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 year ended December 31, 2004, CDSCs in
the amount of $70,778 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 year ended
44
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31, 2004, the Fund's expenses were reduced by $2,767 under such
arrangements.
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 year ended
December 31, 2004, 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
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Unrealized Appreciation/ Accumulated
on Closing Date Loss
- ----------------------------------------------------------------------------------------
Safeco Balanced Fund $2,484,884 $ (483,521)
- ----------------------------------------------------------------------------------------
45
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareowners of
Pioneer Balanced Fund:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Pioneer Balanced Fund (the "Fund") as of
December 31, 2004, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the three years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the two years in the period ended
December 31, 2001 were audited by other auditors who have ceased operations and
whose report, dated February 15, 2002, expressed an unqualified opinion on
those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of December 31, 2004, by correspondence
with the custodian and brokers or by other appropriate auditing procedures
where replies from brokers were not received. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Balanced Fund at December 31, 2004, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the three years
in the period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 18, 2005
46
Pioneer Balanced Fund
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
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.
Trustees and Officers
The Fund's Board of Trustees provides broad supervision over the Fund's
affairs. The officers of the Fund are responsible for the Fund's operations.
The Fund's Trustees and officers are listed below, together with their
principal occupations during the past five years. Trustees who are interested
persons of the Fund within the meaning of the Investment Company Act of 1940
are referred to as Interested Trustees. Trustees who are not interested persons
of the Fund are referred to as Independent Trustees. Each of the Trustees
serves as a trustee of each of the 74 U.S. registered investment portfolios for
which Pioneer Investment Management, Inc. ("Pioneer") serves as investment
adviser (the "Pioneer Funds"). The address for all Interested Trustees and all
officers of the Fund is 60 State Street, Boston, Massachusetts 02109.
The Fund's statement of additional information provides more detailed
information regarding the Fund's Trustees and is available upon request,
without charge, by calling 1-800-225-6292.
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 and on the SEC's website at
http://www.sec.gov.
47
Pioneer Balanced Fund
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Positions Held Principal Occupation Other Directorships
Name and Age With the Fund Term of Office During Past Five Years Held by this Trustee
John F. Cogan, Jr. Chairman of the Board, Serves until Trustee and President Services Director of Harbor
(78)* Trustee and President successor trustee is until retirement or removal; Deputy Global Company, Ltd.
elected or earlier Chairman and a Director of Pioneer
retirement or Global Asset Management S.p.A.
removal ("PGAM"); Non-Executive Chairman
and a Director of Pioneer
Investment Management USA Inc.
("PIM-USA"); Chairman and a
Director of Pioneer Alternative
Investment Management Limited
(Dublin); President and a Director
of Pioneer Alternative Investment
Management (Bermuda) Limited and
affilliated funds; President and
Director of Pioneer Funds
Distributor, Inc. ("PFD");
President of all of the Pioneer
Funds; and Of Councel (since 2000,
partner prior to 2000), Wilmer
Cutler Pickering Hale and Dorr LLP
(counsel to PIM-USA and the Pioneer
Funds).
*Mr. Cogan is an Interested Trustee because he is an officer or director of Pioneer and certain of its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
Osbert M. Hood (52)** Trustee and Serves until President and Chief Executive None
Executive Vice successor trustee is Officer, PIM-USA since May 2003
President elected or earlier (Director since January 2001);
retirement or President and Director of Pioneer
removal since May 2003; Chairman and
Director of Pioneer Investment
Management Shareholder Services,
Inc. ("PIMSS") since May 2003;
Executive Vice President of all of
the Pioneer Funds since June 2003;
Executive Vice President and Chief
Operating Officer of PIM-USA,
November 2000 to May 2003;
Executive Vice President, Chief
Financial Officer and Treasurer,
John Hancock Advisers, L.L.C.,
Boston, MA, November 1999 to
November 2000; Senior Vice
President and Chief Financial
Officer, John Hancock Advisers,
L.L.C., April 1997 to November
1999.
**Mr. Hood is an Interested Trustee because he is an officer or director of Pioneer and certain of its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
48
Pioneer Balanced Fund
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Positions Held Principal Occupation Other Directorships
Name and Age With the Fund Term of Office During Past Five Years Held by this Trustee
David R. Bock **(61) Trustee since 2005. Serves until a Senior Vice President and Chief Director of The
3050 K. Street NW, successor trustee is Financial Officer, I-trax, Inc. Enterprise Social
Washington, DC 20007 elected or earlier (publicly traded health care Investment Company
retirement or removal. services company) (2001 - present); (privately-held
Managing Partner, Federal City affordable housing
Capital Advisors (boutique merchant finance company);
bank)(1995 - 2000; 2002 to 2004); Director of New York
Executive Vice President and Chief Mortgage Trust
Financial Officer, Pedestal Inc. (publicly traded
(internet-based mortgage trading mortgage REIT)
company) (2000 - 2002)
**Mr. Bock became a Trustee of the Fund on January 1, 2005.
- ------------------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (56) Trustee since 1997. Serves until President, Bush International Director of Brady
3509 Woodbine Street, successor trustee (international financial Corporation
Chevy Chase, MD 20815 is elected or earlier advisory firm) (industrial
retirement or removal identification and
specialty coated
material products
manufacturer),
Millennium
Chemicals, Inc.
(commodity
chemicals), Mortgage
Guaranty Insurance
Corporation, and
R.J. Reynolds
Tobacco Holdings,
Inc. (tobacco)
- ------------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (57) Trustee since 1994. Serves until Founding Director, The Winthrop None
1001 Sherbrooke successor trustee Group, Inc. (consulting firm);
Street West, is elected or earlier Professor of Management, Faculty of
Montreal, Quebec, Canada retirement or removal Management, McGill University
H3A 1G5
- ------------------------------------------------------------------------------------------------------------------------------------
49
Pioneer Balanced Fund
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Positions Held Principal Occupation Other Directorships
Name and Age With the Fund Term of Office During Past Five Years Held by this Trustee
Marguerite A. Piret (56) Trustee since 1994. Serves until President and Chief Executive Director of New
One Boston Place, successor trustee Officer, Newbury, Piret & Company, America High Income
28th Floor, is elected or earlier Inc. (investment banking firm) Fund, Inc.
Boston, MA 02108 retirement or removal (closed-end
investment company)
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen K. West (76) Trustee since 1994. Serves until Senior Counsel, Sullivan & Cromwell Director, The Swiss
125 Broad Street, successor trustee (law firm) Helvetia Fund, Inc.
New York, NY 10004 is elected or earlier (closed-end
retirement or removal investment company)
and AMVESCAP PLC
(investment
managers)
- ------------------------------------------------------------------------------------------------------------------------------------
John Winthrop (68) Trustee since 1994. Serves until President, John Winthrop & Co., None
One North Adgers Wharf, successor trustee Inc. (private investment firm
Charleston, SC 29401 is elected or earlier
retirement or removal
- ------------------------------------------------------------------------------------------------------------------------------------
50
Pioneer Balanced Fund
- ------------------------------------------------------------------------------------------------------------------------------------
FUND OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
Positions Held Principal Occupation Other Directorships
Name and Age With the Fund Term of Office During Past Five Years Held by this Trustee
Dorothy E. Bourassa (57) Secretary Serves at the Secretary of PIM-USA; Senior Vice None
discretion President - Legal of Pioneer; and
of the Board Secretary/Clerk of most of
PIM-USA's subsidiaries since
October 2000; Secretary of all of
the Pioneer Funds since September
2003 (Assistant Secretary from
November 2000 to September 2003);
and Senior Counsel, Assistant Vice
President and Director of
Compliance of PIM-USA from April
1998 through October 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley Assistant Secretary Serves at the Assistant Vice President and Senior None
(40) discretion Counsel of Pioneer since July 2002;
of the Board Vice President and Senior Counsel
of BISYS Fund Services, Inc. (April
2001 to June 2002); Senior Vice
President and Deputy General
Counsel of Funds Distributor, Inc.
(July 2000 to April 2001; Vice
President and Associate General
Counsel from July 1996 to July
2000); Assistant Secretary of all
Pioneer Funds since September 2003
- ------------------------------------------------------------------------------------------------------------------------------------
David C. Phelan (47) Assistant Secretary Serves at the Partner, Wilmer Cutler Pickering None
discretion Hale and Dorr LLP; Assistant
of the Board Secretary of all Pioneer Funds
since September 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Vincent Nave (59) Treasurer Serves at the Vice President - Fund Accounting, None
discretion Administration and Custody Services
of the Board of Pioneer; and Treasurer of all of
the Pioneer Funds (Assistant
Treasurer from June 1999 to
November 2000)
- ------------------------------------------------------------------------------------------------------------------------------------
51
Pioneer Balanced Fund
- ------------------------------------------------------------------------------------------------------------------------------------
FUND OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
Positions Held Principal Occupation Other Directorships
Name and Age With the Fund Term of Office During Past Five Years Held by this Trustee
Mark E. Bradley (45) Assistant Treasurer Serves at the Deputy Treasurer of Pioneer since None
discretion 2004; Treasurer and Senior Vice
of the Board President, CDC IXIS Asset
Management Services from 2002 to
2003; Assistant Treasurer and Vice
President, MFS Investment
Management from 1997 to 2002; and
Assistant Treasurer of all of the
Pioneer Funds since November 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (39) Assistant Treasurer Serves at the Assistant Vice President - Fund None
discretion Accounting, Administration and
of the Board Custody Services of Pioneer; and
Assistant Treasurer of all of the
Pioneer Funds since November 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Gary Sullivan (46) Assistant Treasurer Serves at the Fund Accounting Manager - Fund None
discretion Accounting, Administration and
of the Board Custody Services of Pioneer; and
Assistant Treasurer of all of the
Pioneer Funds since May 2002
- ------------------------------------------------------------------------------------------------------------------------------------
Katharine Kim Sullivan Assistant Treasurer Serves at the Fund Administration Manager - Fund None
(31) discretion Accounting, Administration and
of the Board Custody Services since June 2003;
Assistant Vice President - Mutual
Fund Operations of State Street
Corporation from June 2002 to June
2003 (formerly Deutsche Bank Asset
Management); Pioneer Fund
Accounting, Administration and
Custody Services (Fund Accounting
Manager from August 1999 to May
2002, Fund Accounting Services
Supervisor from 1997 to July 1999);
Assistant Treasurer of all Pioneer
Funds since September 2003
- ------------------------------------------------------------------------------------------------------------------------------------
52
Pioneer Balanced Fund
- ------------------------------------------------------------------------------------------------------------------------------------
FUND OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
Positions Held Principal Occupation Other Directorships
Name and Age With the Fund Term of Office During Past Five Years Held by this Officer
Martin J. Wolin (37) Chief Compliance Serves at the Chief Compliance Officer of Pioneer None
Officer discretion of (Director of Compliance and Senior
the Board Counsel from November 2000 to
September 2004); Vice President and
Associate General Counsel of UAM
Fund Services, Inc. (mutual fund
administration company) from
February 1998 to November 2000; and
Chief Compliance Officer of all of
the Pioneer Funds.
- ------------------------------------------------------------------------------------------------------------------------------------
The outstanding capital stock of PFD, PIM and PIMSS is indirectly wholly owned
by UniCredito Italiano S.p.A. ("UniCredito Italiano"), one of the largest
banking groups in Italy. PIM, the Fund's investment adviser, provides investment
management and financial services to mutual funds, institutional and other
clients.
53
- --------------------------------------------------------------------------------
RETIREMENT PLANS FROM PIONEER
- --------------------------------------------------------------------------------
Pioneer has a long history of helping people work toward their retirement
goals, offering plans suited to the individual investor and businesses of all
sizes. For more information on Pioneer retirement plans, contact your
investment professional, or call Pioneer at 1-800-622-0176.
Individual Retirement Accounts (IRAs)
Traditional IRA*
For anyone under age 70 1/2 earning income. Individuals can contribute up to
$4,000, or $4,500 if age 50 or older, annually. Earnings are tax-deferred, and
contributions may be tax-deductible.
Roth IRA*
Available to single individuals earning less than $110,000 in income annually,
and married couples with joint income less than $160,000. Contributions of up
to $4,000, or $4,500 if age 50 or older, a year are not tax-deductible, but all
earnings are tax-free for qualified withdrawals. Distributions are tax and
penalty-free if certain conditions are met.
Employer-Sponsored Plans
Uni-K Plan*
A 401(k) plan designed specifically for any business that employs only owners
and their spouses. Participants can make salary deferral contributions up to
$14,000 per year, or $18,000 if age 50 or older. In addition, each year the
business may contribute up to 25% of pay.
Uni-DB Plan
A full service defined benefit plan for small business owners over age 45 with
up to five employees. Annual Employer contributions are required. The plan
allows for the maximum deductible contribution up to $170,000 or more.
401(k) Plan*
Allows employees to make pre-tax contributions through payroll deduction, up to
$14,000, or $18,000 if age 50 or older, per year. Employers' contributions are
discretionary. The 401(k) offers companies maximum flexibility.
SIMPLE IRA Plan*
The Savings Incentive Match PLan for Employees (SIMPLE) is designed for
employers with 100 or fewer eligible employees. Employees can defer up to
$9,000, or $10,500 if age 50 or older. Employer makes additional required
contributions.
Most retirement plan withdrawals must meet specific conditions to avoid
penalties.
54
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
403(b) Plan*
Also known as a Tax-Sheltered Account (TSA), this plan lets employees of public
schools, non-profit hospitals and other tax-exempt organizations make pre-tax
contributions through payroll deduction. Individuals can generally defer up to
$14,000 per year, or $18,000 if age 50 or older.
SEP-IRA
The Simplified Employee Pension (SEP) plan lets self-employed people and
small-business owners make tax-deductible contributions of up to 25% of income,
while maintaining complete contribution flexibility each year.
Profit Sharing Plan
Companies can decide each year whether - and how much - to contribute to
participants, up to 25% of each participant's pay. Can include vesting
schedules that are not available with a SEP-IRA.
Age-Based Profit Sharing Plan
Employer contributions are flexible, but are based on a formula using age and
salary. Each year, a business can contribute up to 25% of the total eligible
payroll.
* Special Catch-Up Provisions are available to individuals age 50 and older
to contribute additional amounts to their retirement accounts. For more
information, call our Retirement Plans Information line at 1-800-622-0176.
Withdrawals of earnings or other taxable amounts are subject to income tax and,
if made prior to age 591/2, may be subject to an additional 10% federal tax
penalty.
Investing in mutual funds involves significant risks, for complete information
on the specific risks associated with each fund, please see the appropriate
fund's prospectus.
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
adviser, call 800-225-6292 or visit www.pioneerfunds.com.
Most retirement plan withdrawals must meet specific conditions to avoid
penalties.
55
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PROGRAMS AND SERVICES FOR PIONEER SHAREOWNERS
- --------------------------------------------------------------------------------
Your investment professional can give you additional information on Pioneer's
programs and services. If you want to order literature on any of the following
items directly, simply call Pioneer at 1-800-225-6292.
FactFone(SM)
This is our automated account information service, available to you 24 hours a
day, seven days a week. FactFone(SM) gives you a quick and easy way to check
fund share prices, yields, dividends and distributions, as well as information
about your own account. Simply call 1-800-225-4321. For specific account
information, have your account number, fund number and our personal
identification number (PIN) in hand. If this is your first time using
FactFone(SM), you will need to establish a PIN.
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.
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 and can be rescinded at any time. See the
prospectus and financial statements for complete details.
90-Day Reinstatement Privilege (for Class A and Class B Shares)
Enables you to reinvest all or a portion of the money you redeemed from your
Pioneer account - without paying a sales charge - within 90 days from your
redemption. Upon your request, the shares will be reinvested into your choice
of any Class A fund with the same registration as the originating account.
Please note that you will need to meet fund minimum requirements.
Investomatic Plan
An easy and convenient way for you to invest on a regular basis. With this
feature, Pioneer will automatically draft a predetermined dollar amount,
specified by you, from your bank account and purchase shares into your
investments to grow using the dollar-cost averaging approach.
The use of a systematic investing program does not guarantee a profit or
protect against a loss in declining markets. You should consider your financial
ability to continue to invest through periods of low prices.
56
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Payroll Investment Program (PIP)
This service enables you to fund your Pioneer investment directly through a
payroll deduction. After completing Pioneer's authorization form, your employer
will deduct a predetermined dollar amount from your paycheck to be invested at
Pioneer. When you invest through payroll, you're putting yourself at the top of
the list of those you pay. Many people find that "paying yourself first" is the
most sensible way to build a nest egg.
Automatic Exchange Program
A simple way to move money from one Pioneer fund to another over a period of
time. Just choose the amounts and dates for Pioneer to sell shares from your
original fund and use the proceeds to buy shares of the other funds you have
chosen. To establish this service, simply complete a Pioneer Account Options
form. (Automatic Exchange is available for originating accounts with a balance
of $5,000 or more.)
Direct Deposit
Lets you move money into your bank account using electronic funds transfer
(EFT). EFT moves your money faster than you would receive a check, eliminates
unnecessary paper and mail, and avoids lost checks. Simply fill out a Pioneer
Direct Deposit Form, giving your instructions.
Systematic Withdrawal Plan (SWP)
This service allows you to establish automatic withdrawals from your account at
set intervals. You decide the frequency and the day of the month. Pioneer will
send the proceeds by check to a designated address or electronically to your
bank account. You can also authorize Pioneer to make the redemptions payable to
someone else. Simply complete a Pioneer Account Options form to begin this
service.
Investing in mutual funds involves significant risks, for complete information
on the specific risks associated with each fund, please see the appropriate
fund's prospectus.
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
adviser, call 800-225-62952 or visit www.pioneerfunds.com.
57
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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 Ibbotson Growth
Pioneer Fund Allocation Fund
Pioneer Balanced Fund Pioneer Ibbotson Aggressive
Pioneer Cullen Value Fund Allocation Fund
Pioneer Equity Income Fund
Pioneer Equity Opportunity Fund International/Global Equity
Pioneer Growth Opportunities Fund Pioneer Emerging Markets Fund
Pioneer Growth Shares Pioneer Europe Select Fund
Pioneer Mid Cap Growth Fund Pioneer Europe Fund
Pioneer Mid Cap Value Fund Pioneer International Equity Fund
Pioneer Oak Ridge Large Cap Pioneer International Value Fund
Growth Fund
Pioneer Oak Ridge Small Cap Fixed Income
Growth Fund Pioneer America Income Trust
Pioneer Papp America-Pacific Pioneer Bond Fund
Rim Fund Pioneer California Tax Free
Pioneer Papp Small and Mid Cap Income Fund
Growth Fund Pioneer Global High Yield Fund
Pioneer Papp Stock Fund Pioneer High Yield Fund
Pioneer Papp Strategic Pioneer Municipal Bond Fund
Growth Fund Pioneer Short Term Income Fund
Pioneer Real Estate Shares Pioneer Strategic Income Fund
Pioneer Research Fund Pioneer Tax Free Income Fund
Pioneer Small Cap Value Fund
Pioneer Small Company Fund Money Market
Pioneer Value Fund Pioneer Cash Reserves Fund*
Pioneer Tax Free Money
Asset Allocation Market Fund
Pioneer Ibbotson Moderate
Allocation 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.
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This page for your notes.
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This page for your notes.
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HOW TO CONTACT PIONEER
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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 or send money.
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. Shareowners may view the filed Form N-Q by visiting the Commission's
website 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.
Audit Fees
Fees for audit services provided to the Fund, including fees associated with
the routine filing of its Form N-1A, totaled approximately $23,000 in 2004
and approximately $27,200 in 2003. Included in the 2003 fees is an additional
billing related to that audit, which was billed after the Funds filing of
its N-CSR for the year ended December 31, 2003.
(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.
Audit-Related and Other Fees
There were no audit-related and other services provided to the Fund during
the fiscal years ended December 31, 2004 and 2003.
(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.
Tax Fees
Fees for tax compliance services, primarily for tax returns, totaled $7,000
in 2004 and $3,600 in 2003.
(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.
Audit-Related and Other Fees
There were no audit-related and other services provided to the Fund during
the fiscal years ended December 31, 2004 and 2003.
(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 recognizes 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 recognizes that a Funds 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"), recently 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 has 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. The Committee
continues to review the facts and circumstances
surrounding the matter, including the issue of
whether the monies transferred for employees' taxes
were de facto monies due the employees for tax
payments rather than monies belonging to UCI.
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.
Aggregate Non-Audit Fees
The aggregate non-audit fees for the Fund and affiliates, as
previously defined, totaled $6,000 in 2004 and $26,900 in 2003. These fees
include services provided prior to May 6, 2003, the effective date of the
pre-approval process.
The Fund's audit committee of the Board of Trustees has considered
whether the provision of non-audit services that were rendered to the
Affiliates (as defined) 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.
(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.
Non-Audit Services
Beginning with non-audit service contracts entered into on or after May 6,
2003, the effective date of the new SEC pre-approval rules, the Funds
audit committee is required to pre-approve services to affiliates defined
by SEC rules to the extent that the services are determined to have a direct
impact on the operations or financial reporting of the Fund. For the years
ended December 31, 2004 and 2003, there were no services provided to an
affiliate that required the Funds audit committee pre-approval.
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 March 9, 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 March 9, 2005
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date March 9, 2005
* Print the name and title of each signing officer under his or her signature.