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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 811-001605
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 June 30, 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
Semiannual
Report
6/30/04
[LOGO] PIONEER
Investments(R)
Table of Contents
- -----------------------------------------------
Letter to Shareowners 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule of Investments 10
Financial Statements 21
Notes to Financial Statements 28
Trustees, Officers and Service Providers 34
The Pioneer Family of Funds 35
Pioneer Balanced Fund
================================================================================
LETTER TO SHAREOWNERS 6/30/04
================================================================================
Dear Shareowner,
- --------------------------------------------------------------------------------
U.S. equity markets traced a jagged course through the first half of the year,
ending on June 30 only slightly ahead of where they started. Mid-sized and
small-cap indices scored modest gains, while indicators that track large-cap
stocks showed even smaller changes. For bond investors, Treasury issues wound up
the period with higher yields and lower prices than at year-end. The same was
true of corporate issues, whose prices gave ground in the face of rising
interest rates, while high-yield bonds, outstanding performers over recent
quarters, also cooled off.
Although the economic expansion continued to move ahead, investors were
preoccupied with factors that might have undesirable impacts on the economy and
the markets. For one thing, the threat of terrorism is never far from our minds.
For another, the jump in oil prices, attributed to turmoil in the Mideast and
vast demand from China and other developing nations, was a major factor. The
cost of gas or oil for heating our homes, and gasoline for our cars is a
critical component in household budgets. Industry, too, requires energy, and in
many cases petroleum is an essential raw material.
The "jobless" recovery became a job-generating machine for a few months,
followed by a brief slump and a partial rebound. But strong boosts in employment
quickly triggered fears of economic overheating; too much demand for goods and
services, the reasons for aggressive corporate hiring, might trigger inflation.
That would lead to higher interest rates that could choke off the recovery by
causing consumers and businesses to hold back on outlays. In fact, on June 30,
the Federal Reserve Board raised short-term interest rates by one-quarter
percentage point, the first hike in four years.
While there may be further increases, they probably will be gradual; the Federal
Reserve Board would like to keep the expansion intact while keeping inflation at
bay. And even after the Fed's June move, short-term rates remain near the lowest
levels many of us have seen. U.S. businesses, which have done massive amounts of
cost-cutting in recent years, can readily accommodate somewhat higher borrowing
costs. In addition, the federal income tax cuts that have helped bolster growth
over the past several quarters remain in place.
More growth choices from Pioneer
The possibility of higher interest rates and the economy's direction could have
important implications for the way your portfolio is balanced, so an appointment
with your professional financial advisor may well be in order.
When you talk to your advisor, ask to hear about the Pioneer Oak Ridge and
Pioneer Papp Funds. These six additions to our product lineup are designed to
broaden your opportunities to pursue growth. Please consider the Funds'
investment objectives, risks, charges and expenses carefully before investing.
The prospectuses contain that and other information about the Funds 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 investment advisor, call
1-800-225-6292 or visit our web site www.pioneerfunds.com.
Respectfully,
/s/ OSBERT M. HOOD
Osbert M. Hood
President
Pioneer Investment Management, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
1
Pioneer Balanced Fund
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PORTFOLIO SUMMARY 6/30/04
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Portfolio Diversification
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stocks 65.2%
U.S. Government Securities 20.9%
U.S. Corporate Bonds 12.3%
Collateralized Mortgage Obligations 0.9%
Asset Backed Securities 0.7%
Sector Distribution
- --------------------------------------------------------------------------------
(As a percentage of total long-term securities)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Government Obligations 20.9%
Consumer Staples 17.9%
Financials 12.6%
Information Technology 11.6%
Consumer Discretionary 9.7%
Health Care 9.4%
Industrials 7.3%
Energy 5.9%
Materials 3.8%
Utilities 0.5%
Telecommunication Services 0.4%
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of total long-term securities)
- -----------------------------------------------------------------------------------------
1. Berkshire Hathaway, Inc. (Class B) 3.53% 6. Gillette Co. 3.17%
- -----------------------------------------------------------------------------------------
2. First Data Corp. 3.35 7. William Wrigley Jr. Co. 3.06
- -----------------------------------------------------------------------------------------
3. Microsoft Corp. 3.29 8. Anheuser-Busch Companies, Inc. 2.90
- -----------------------------------------------------------------------------------------
4. Northrop Grumman Corp. 3.27 9. Family Dollar Stores, Inc. 2.64
- -----------------------------------------------------------------------------------------
5. Pfizer, Inc. 3.23 10. Newmont Mining Corp. 2.48
- -----------------------------------------------------------------------------------------
This list excludes money market and derivative instruments. Portfolio holdings
will vary for other periods.
2
Pioneer Balanced Fund
================================================================================
PERFORMANCE UPDATE 6/30/04 CLASS A SHARES
================================================================================
Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value
per Share 6/30/04 12/31/03
$9.57 $9.47
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/04 - 6/30/04) Income Capital Gains Capital Gains
$0.0500 $ - $ -
Investment Returns
- --------------------------------------------------------------------------------
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 June 30, 2004)
Net Asset Public Offering
Period Value Price*
10 Years 5.51% 5.03%
5 Years 1.34 0.40
1 Year 8.51 3.64
- --------------------------------------------------------------------------------
* Reflects deduction of the maximum 4.5% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
[DATA BELOW IS REPRESENTED BY A MOUNTAIN CHART IN THE ORIGINAL REPORT]
Value of $10,000 Investment
Pioneer Lehman Brothers
Balanced Aggregate Bond Standard &
Fund* Index Poor's 500 Index
6/94 9,550 10,000 10,000
9,573 10,099 10,486
11,679 11,965 14,420
6/96 12,834 12,398 17,725
14,621 13,597 23,635
6/98 14,788 14,776 30,394
15,253 14,652 36,787
6/00 16,074 16,356 33,444
15,612 17,737 29,480
6/02 13,863 19,557 22,966
16,080 20,360 29,550
6/04 16,335 20,391 30,567
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site www.pioneerfunds.com. The performance table and graph do not
reflect the deduction of 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 (S&P) 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange and
the over-the-counter market. The Lehman Brothers Aggregate Bond Index is a
widely recognized market value-weighted index composed of the Lehman Brothers
Government/Credit, Mortgage-Backed, Asset-Backed and Commercial Mortgage-Based
Securities indices. 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
================================================================================
PERFORMANCE UPDATE 6/30/04 CLASS B SHARES
================================================================================
Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value
per Share 6/30/04 12/31/03
$9.47 $9.37
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/04 - 6/30/04) Income Capital Gains Capital Gains
$0.0100 $ - $ -
Investment Returns
- --------------------------------------------------------------------------------
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 June 30, 2004)
If If
Period Held Redeemed*
Life-of-Class
(4/28/95) 4.32% 4.32%
5 Years 0.42 0.23
1 Year 7.41 3.41
* Reflects deduction of the maximum applicable contingent deferred sales charge
(CDSC) at the end of the period and assumes reinvestment of distributions at
net asset value. The maximum CDSC of 4% declines over six years.
- --------------------------------------------------------------------------------
[DATA BELOW IS REPRESENTED BY A MOUNTAIN CHART IN THE ORIGINAL REPORT]
Value of $10,000 Investment
Pioneer Lehman Brothers
Balanced Aggregate Bond Standard &
Fund* Index Poor's 500 Index
4/95 10,000 10,000 10,000
11,374 11,123 12,175
6/96 12,400 11,525 14,966
14,010 12,640 19,956
6/98 14,036 13,736 25,663
14,350 13,621 31,060
6/00 14,981 15,205 28,238
14,423 16,489 24,891
6/02 12,707 18,181 19,391
14,576 18,927 24,950
6/04 14,747 18,956 25,808
Performace data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site www.pioneerfunds.com. The performance table and graph do not
reflect the deduction of 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 (S&P) 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange and
the over-the-counter market. The Lehman Brothers Aggregate Bond Index is a
widely recognized market value-weighted index composed of the Lehman Brothers
Government/Credit, Mortgage-Backed, Asset-Backed and Commercial Mortgage-Based
Securities indices. 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
================================================================================
PERFORMANCE UPDATE 6/30/04 CLASS C SHARES
================================================================================
Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value
per Share 6/30/04 12/31/03
$9.54 $9.45
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/04 - 6/30/04) Income Capital Gains Capital Gains
$0.0100 $ - $ -
Investment Returns
- --------------------------------------------------------------------------------
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 June 30, 2004)
If If
Period Held Redeemed*
Life-of-Class
(1/31/96) 2.95% 2.95%
5 Years 0.20 0.20
1 Year 7.33 7.33
- --------------------------------------------------------------------------------
* 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. Class C shares held for
less than 1 year are subject to a 1% contingent deferred sales charge.
[DATA BELOW IS REPRESENTED BY A MOUNTAIN CHART IN THE ORIGINAL REPORT]
Value of $10,000 Investment
Pioneer Lehman Brothers
Balanced Aggregate Bond Standard &
Fund* Index Poor's 500 Index
1/96 10,000 10,000 10,000
10,812 10,294 11,888
12,269 11,289 15,852
6/98 12,302 12,268 20,385
12,550 12,165 24,672
6/00 13,046 13,580 22,430
12,509 14,727 19,771
6/02 11,005 16,238 15,403
12,637 16,905 19,819
6/04 12,770 16,931 20,500
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site www.pioneerfunds.com. The performance table and graph do not
reflect the deduction of 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 (S&P) 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange and
the over-the-counter market. The Lehman Brothers Aggregate Bond Index is a
widely recognized market value-weighted index composed of the Lehman Brothers
Government/Credit, Mortgage-Backed, Asset-Backed and Commercial Mortgage-Based
Securities indices. 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
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
================================================================================
While the economy grew and corporate profits rose during the first half of 2004,
stock market returns were muted by worries about rising interest rates as well
as geopolitical issues around the world. In the fixed income markets, the jump
in interest rates midway through the six months sent many bond prices lower,
resulting in weak returns in most sectors. 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 their investment strategies during the six months ended
June 30, 2004.
Q: How did the Fund perform during the first six months of 2004?
A: Pioneer Balanced Fund's Class A shares had a total return of 1.59% during the
six months ended June 30, 2004, while Class B and Class C shares returned,
respectively, 1.18% and 1.06%, all at net asset value. During the same six
months, the average return of the funds in Lipper's Balanced Fund category
was 1.79%.
Q: What were the factors that affected performance?
A: The domestic equity market produced generally positive returns for the six
months, but those returns masked the underlying volatility and tensions
between conflicting influences. Supporting equity valuations were an
expanding economy and robust corporate profits. Reported earnings tended to
be 25% higher than in the comparable period of 2003. The competing negative
factors included the spike in market interest rates midway through the six
months, as well as uncertainty brought on by concerns over issues such as
energy prices, stability in Iraq and presidential election-year politics.
In the fixed income markets, interest rates tended to rise, with
shorter-maturity rates rising farther than longer-term rates. The price
losses brought on by the higher rates as well as the flattening of the yield
curve - or difference between short-term and long-term yields - resulted in
volatility in the bond market. The key factor was the widely anticipated
announcement by the Federal Reserve Board on the final day of the period to
begin tightening monetary policy by starting to raise the influential
overnight lending rate - the Fed Funds rate. The initial hike was from 1.00%
to 1.25%, but the expectation was that the Fed would raise rates further in
the months to come in an effort to guard against inflationary pressures.
6
Pioneer Balanced Fund
================================================================================
================================================================================
Q: What were the principal strategies during the period?
A: We kept the allocation between equities and bonds consistent during the six
months. On June 30, about 64% of assets were invested in stocks - about the
same percentage as at the start of the period. The remaining assets were
invested in fixed income assets, including corporate bonds, government
securities, and mortgage-backed securities, with a small allocation in
foreign bonds and less than 2% in cash.
There also were no major changes in the equity portfolio, although we did
trim our energy position to take profits and to reduce our vulnerability to
the area during a time when we expected increased price volatility. We
remained overweighted in energy stocks, however, and remain positive about
the sector's longer-term fundamentals. We modestly increased the Fund's
health care holdings, adding medical device company Guidant and
pharmaceutical company Eli Lilly. We thought Guidant's stock price had become
compellingly attractive after it fell because of an announcement about a
delay in a new product introduction. We like Lilly because it has
well-developed research and development activities that should produce a flow
of new products. In addition, we initiated a position in Liz Claiborne, the
apparel company. We think it is attractive because of its strong distribution
during a time when the industry is beginning to gain greater control over
pricing.
We substantially reduced our holdings in two stocks that had performed very
well - software company Symantec and auto insurance company Progressive. We
also eliminated our position in Devon Energy, an exploration and production
company, because of our concerns about its internal cost structure.
In the fixed income portfolio, we raised overall quality of the portfolio,
with average credit quality moving from A+ to AA-. Interest-rate sensitivity
- as measured by duration - was about even with that of the benchmark Lehman
Brothers Aggregate Bond Index, although it declined slightly during the six
months from 4.52 years to 4.34 years.
We increased our exposure to mortgage-backed securities - the best-performing
part of the investment-grade sector - from 43.6% of fixed income assets to
47.7%. Mortgages tend to be less
7
Pioneer Balanced Fund
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 (continued)
================================================================================
vulnerable to declining prices than Treasuries and other government
securities in a rising interest-rate environment. We reduced our exposure to
corporates, taking profits when their yield advantage over Treasuries began
to narrow. At the end of the period, 25.9% of the fixed income portfolio was
invested in industrial and utility bonds, compared to 31.4% at the start of
the period. At the same time, we also reduced our banking and financial
services bond holdings from 10.7% to 9.0% of fixed income assets. When we
invest in corporates, we tend to favor new issues, which have a greater yield
advantage over Treasuries than existing issues available on the secondary
market. When invested in Treasury bonds, we tended to hold TIPS, or
inflation-protected Treasuries, although we sold them near the end of the
period when the Federal Reserve made it clear it intended to control
inflationary pressures.
Q: What types of investments had the greatest influence on performance?
A: In our equity portfolio, our emphasis on consumer staples companies helped
considerably as stock investors began to recognize the value of
higher-quality, stable growth companies that had been overlooked in the rally
of 2003. Holdings such as Gillette, PepsiCo and Wrigley performed very well.
Our technology positions also did well, led by Symantec, whose share price
went up 27% during the six months. Detracting from performance, however, was
security selection in the consumer discretionary sector. Family Dollar Stores
had disappointing earnings, which may have been caused by higher gasoline
prices, but we still favor the company and continue to hold it at the end of
the period. Newmont Mining, which had been a strong contributor to Fund
performance prior to the period, fell 20% during the period in response to
slumping gold prices. However, we still believe the company is attractive and
continue to hold a position in it on June 30.
In the fixed income portfolio, our overweight position in mortgages helped
substantially, as did our exposure to corporate bonds - both high yield and
investment-grade. Performance was held back, however, by our concentration in
intermediate-term securities, as short- and intermediate-term interest rates
rose more than the rates on long-term bonds during the six months.
8
Pioneer Balanced Fund
================================================================================
================================================================================
Q: What is your investment outlook?
A: We believe the June 30 announcement by the U.S. Federal Reserve that it was
starting to raise short-term rates is the start of a long process of
interest-rate hikes that is likely to continue at least through the end of
2005. We anticipate moving to a bar-belled strategy over time with respect to
maturity allocations, concentrating on both short-term securities and
long-term bonds while de-emphasizing intermediate-term bonds that we think
are most vulnerable in the present environment.
We believe the equity market will continue to be choppy, with no major trends
either up or down in stock price averages. The outlooks for gross domestic
product (GDP) and for corporate earnings both are favorable, although the
rate of corporate profit growth may slow somewhat. The big question hanging
over investors' minds will be what happens to interest rates. In addition,
uncertainty about geopolitical events and the outcome of the presidential
election will influence investor psychology.
We think the most likely scenario is that the major stock averages will show
moderate growth over the next several months.
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.
9
Pioneer Balanced Fund
================================================================================
SCHEDULE OF INVESTMENTS 6/30/04 (unaudited)
================================================================================
Shares Value
COMMON STOCKS - 64.0%
Energy - 5.6%
Integrated Oil & Gas - 0.4%
11,200 Exxon Mobil Corp. $ 497,392
------------
Oil & Gas Drilling - 4.2%
21,800 Encana Corp. $ 940,888
107,400 ENSCO International, Inc. 3,125,340
63,600 Varco International, Inc.* 1,392,204
------------
$ 5,458,432
------------
Oil & Gas Exploration & Production - 1.0%
38,000 Pioneer Natural Resources Co. $ 1,333,040
------------
Total Energy $ 7,288,864
------------
Materials - 2.4%
Precious Metals & Minerals - 2.4%
83,000 Newmont Mining Corp. $ 3,217,080
------------
Total Materials $ 3,217,080
------------
Capital Goods - 3.7%
Aerospace & Defense - 3.3%
79,000 Northrop Grumman Corp. $ 4,242,300
------------
Electrical Components & Equipment - 0.4%
23,800 Molex, Inc. $ 649,264
------------
Total Capital Goods $ 4,891,564
------------
Commercial Services & Supplies - 0.5%
Diversified Commercial Services - 0.5%
13,000 Cintas Corp. $ 619,710
------------
Total Commercial Services & Supplies $ 619,710
------------
Transportation - 2.2%
Trucking - 2.2%
38,800 United Parcel Service $ 2,916,596
------------
Total Transportation $ 2,916,596
------------
Media - 2.8%
Broadcasting & Cable TV - 1.1%
16,600 Clear Channel Communications, Inc. $ 613,370
28,900 Comcast Corp* 797,928
------------
$ 1,411,298
------------
10 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
================================================================================
================================================================================
Shares Value
Movies & Entertainment - 1.7%
64,700 Viacom, Inc. (Class B) $ 2,311,084
-------------
Total Media $ 3,722,382
-------------
Retailing - 3.1%
Apparel Retail - 0.5%
19,200 Liz Claiborne, Inc. $ 690,816
-------------
General Merchandise Stores - 2.6%
112,800 Family Dollar Stores, Inc. $ 3,431,376
-------------
Total Retailing $ 4,122,192
-------------
Food & Drug Retailing - 6.6%
Drug Retail - 0.8%
25,000 CVS Corp. $ 1,050,500
-------------
Food Distributors - 1.9%
36,700 Cardinal Health, Inc. $ 2,570,835
-------------
Food Retail - 3.0%
63,000 Wm. Wrigley Jr. Co. $ 3,972,150
-------------
Hypermarkets & Supercenters - 0.9%
22,100 Wal-Mart Stores, Inc. $ 1,165,996
-------------
Total Food & Drug Retailing $ 8,759,481
-------------
Food, Beverage & Tobacco - 6.6%
Distillers & Vintners - 2.9%
69,600 Anheuser-Busch Companies, Inc. $ 3,758,400
-------------
Soft Drinks - 3.7%
37,800 The Coca-Cola Co. $ 1,908,144
55,500 PepsiCo, Inc. 2,990,340
-------------
$ 4,898,484
-------------
Total Food, Beverage & Tobacco $ 8,656,884
-------------
Household & Personal Products - 4.1%
Household Products - 1.0%
27,200 Estee Lauder Co. $ 1,326,816
-------------
Personal Products - 3.1%
96,900 Gillette Co. $ 4,108,560
-------------
Total Household & Personal Products $ 5,435,376
-------------
The accompanying notes are an integral part of these financial statements. 11
Pioneer Balanced Fund
================================================================================
SCHEDULE OF INVESTMENTS 6/30/04 (unaudited) (continued)
================================================================================
Shares Value
Health Care Equipment & Services - 3.6%
Health Care Distributors - 1.5%
53,200 Wyeth $ 1,923,712
------------
Health Care Equipment - 2.1%
52,700 Biomet, Inc. $ 2,341,988
8,700 Guidant Corp. 486,156
------------
$ 2,828,144
------------
Total Health Care Equipment & Services $ 4,751,856
------------
Pharmaceuticals & Biotechnology - 5.0%
Biotechnology - 0.5%
13,468 Amgen, Inc.* $ 734,949
------------
Pharmaceuticals - 4.5%
11,100 Eli Lilly & Co. $ 776,001
18,900 Merck & Co., Inc. 897,750
122,341 Pfizer, Inc. 4,193,849
------------
$ 5,867,600
------------
Total Pharmaceuticals & Biotechnology $ 6,602,549
------------
Diversified Financials - 2.3%
Asset Management & Custody Banks - 0.9%
40,200 The Bank of New York Co., Inc. $ 1,185,096
------------
Consumer Finance - 1.4%
36,700 American Express Co. $ 1,885,646
------------
Total Diversified Financials $ 3,070,742
------------
Insurance - 5.2%
Property & Casualty Insurance - 5.2%
1,550 Berkshire Hathaway, Inc. (Class B)* $ 4,580,250
27,000 Progressive Corp.* 2,303,100
------------
Total Insurance $ 6,883,350
------------
Software & Services - 8.4%
Application Software - 5.1%
149,400 Microsoft Corp. $ 4,266,864
57,400 Symantec Corp.* 2,512,972
------------
$ 6,779,836
------------
12 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
================================================================================
================================================================================
Shares Value
Data Processing & Outsourced Services - 3.3%
97,700 First Data Corp. $ 4,349,604
------------
Total Software & Services $ 11,129,440
------------
Technology Hardware & Equipment - 1.5%
Computer Hardware - 1.5%
94,900 Hewlett-Packard Co. $ 2,002,390
------------
Total Technology Hardware & Equipment $ 2,002,390
------------
Semiconductors - 0.4%
18,000 Intel Corp. $ 496,800
------------
Total Semiconductors $ 496,800
------------
TOTAL COMMON STOCKS
(Cost $71,853,529) $ 84,567,256
------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
ASSET BACKED SECURITIES - 0.7%
Transportation - 0.0%
Airlines - 0.0%
$ 12,776 BBB+/Baa3 Continental Airlines, 6.648%, 9/15/17 $ 11,925
------------
Total Transportation $ 11,925
------------
Diversified Financials - 0.5%
Diversified Financial Services - 0.5%
269,455 BBB-/Baa2 PF Export Receivable Master Trust,
6.436%, 6/1/15 (144A) $ 265,712
304,725 BBB/Baa2 Power Receivables Finance, 6.29%,
1/1/12 (144A) 310,293
------------
Total Diversified Financials $ 576,005
------------
Real Estate - 0.2%
Real Estate Investment Trusts - 0.2%
300,000 BBB-/Baa3 Global Signal Trust, 5.395%, 1/15/34
(144A) $ 288,260
------------
Total Real Estate $ 288,260
------------
TOTAL ASSET BACKED SECURITIES
(Cost $884,377) $ 876,190
------------
The accompanying notes are an integral part of these financial statements. 13
Pioneer Balanced Fund
================================================================================
SCHEDULE OF INVESTMENTS 6/30/04 (unaudited) (continued)
================================================================================
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.1%
Banks - 0.7%
Thrifts & Mortgage Finance - 0.7%
$ 957,664 BBB/Aaa Structured Asset Securities Corp.,
6.0765%, 8/25/32 $ 934,212
------------
Total Banks $ 934,212
------------
Government - 0.4%
300,000 AAA/Aaa Freddie Mac, 3.25%, 2/25/08 $ 293,859
238,975 AAA/Aaa Freddie Mac, 5.00%, 1/15/16 243,789
------------
Total Government $ 537,648
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $1,531,095) $ 1,471,860
------------
CORPORATE BONDS - 12.1%
Energy - 0.3%
Integrated Oil & Gas - 0.1%
120,000 BBB+/Baa1 Occidental Petroleum, 6.75%, 1/15/12 $ 132,161
------------
Oil & Gas Refining Marketing & Transportation - 0.2%
200,000 BBB/Ba1 Magellan Midstream Partners, L.P., 6.45%,
6/1/14 $ 200,898
------------
Total Energy $ 333,059
------------
Materials - 1.3%
Commodity Chemicals - 0.2%
300,000 BB+/Ba2 Nova Chemicals Ltd., 6.5%, 1/15/12 $ 295,500
------------
Diversified Metals & Mining - 0.3%
425,000 BBB-/Baa3 Inco Ltd., 7.2%, 9/15/32 $ 447,803
------------
Metal & Glass Containers - 0.1%
125,000 BBB/Baa2 Tenneco Packaging, 8.125%, 6/15/17 $ 148,461
------------
Paper Products - 0.2%
250,000 BB/Ba2 Abitibi-Consolidated, Inc., 6.95%, 4/1/08 $ 253,249
------------
Specialty Chemicals - 0.3%
300,000 BBB-/Baa3 Ferro Corp., 9.125%, 1/1/09 $ 344,509
------------
Steel - 0.2%
225,000 BB/Ba3 International Steel Group, 6.5%, 4/15/14
(144A) $ 210,938
------------
Total Materials $ 1,700,460
------------
14 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
================================================================================
================================================================================
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Capital Goods - 0.8%
Aerospace & Defense - 0.1%
$ 100,000 B/B3 K&F Industries, 9.625%, 12/15/10 $ 109,625
------------
Electrical Components & Equipment - 0.2%
200,000 BBB-/Ba1 Thomas & Betts Corp., 7.25%, 6/1/13 $ 211,844
------------
Industrial Conglomerates - 0.2%
145,000 AAA/Aaa General Electric Capital Corp., 6.125%,
2/22/11 $ 155,286
90,000 AAA/Aaa General Electric Capital Corp., 6.75%,
3/15/32 96,751
------------
$ 252,037
------------
Industrial Machinery - 0.3%
400,000 BBB-/Ba1 Timken Co., 5.75%, 2/15/10 $ 400,838
------------
Total Capital Goods $ 974,344
------------
Automobiles & Components - 0.7%
Automobile Manufacturers - 0.7%
150,000 BBB-/A3 Ford Motor Credit Co., 9.14%, 12/30/14 $ 154,392
500,000 BBB-/Baa1 General Motors, 7.2%, 1/15/11 523,898
300,000 BB+/Ba1 Hyundai Motor Co., Ltd., 5.3%, 12/19/08 295,226
------------
Total Automobiles & Components $ 973,516
------------
Hotels, Restaurants & Leisure - 0.5%
Casinos & Gaming - 0.1%
100,000 B+/B1 Turning Stone, 9.125%, 12/15/10 (144A) $ 104,500
------------
Hotels, Resorts & Cruise Lines - 0.4%
500,000 BBB-/Baa3 Hilton Hotels, 7.625%, 12/1/12 $ 537,500
------------
Total Hotels, Restaurants & Leisure $ 642,000
------------
Media - 1.9%
Broadcasting & Cable TV - 1.2%
500,000 BBB/Baa3 Comcast Cable Corp., 7.125%, 6/15/13 $ 546,531
530,000 BBB/Baa2 Cox Communications, 7.125%, 10/1/12 580,854
415,000 BB-/Ba3 Echostar DBS Corp., 6.375%, 10/1/11
(144A) 408,775
------------
$ 1,536,160
------------
Movies & Entertainment - 0.3%
400,000 BBB+/Baa1 AOL Time Warner, Inc., 6.875%, 5/1/12 $ 432,237
------------
The accompanying notes are an integral part of these financial statements. 15
Pioneer Balanced Fund
================================================================================
SCHEDULE OF INVESTMENTS 6/30/04 (unaudited) (continued)
================================================================================
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Publishing - 0.4%
$ 512,000 BBB-/Baa3 News America, Inc., 7.3%, 4/30/28 $ 555,207
------------
Total Media $ 2,523,604
------------
Retailing - 0.5%
Department Stores - 0.1%
150,000 BB+/Ba3 J.C. Penney Co., Inc., 8.25%, 8/15/22 $ 156,000
------------
Specialty Stores - 0.4%
500,000 BB/Ba2 Toys "R" Us, 7.875%, 4/15/13 $ 501,875
------------
Total Retailing $ 657,875
------------
Food, Beverage & Tobacco - 0.3%
Tobacco - 0.3%
400,000 BBB/Baa2 Altria Group, Inc., 7.0%, 11/4/13 $ 407,329
------------
Total Food, Beverage & Tobacco $ 407,329
------------
Health Care Equipment & Services - 0.6%
Health Care Facilities - 0.4%
500,000 BBB-/Ba1 HCA, Inc., 6.3%, 10/1/12 $ 500,257
------------
Health Care Supplies - 0.2%
250,000 BBB-/Baa3 Bausch & Lomb, 7.125%, 8/1/28 $ 250,296
------------
Total Health Care Equipment & Services $ 750,553
------------
Pharmaceuticals & Biotechnology - 0.1%
Pharmaceuticals - 0.1%
100,000 AAA/Aaa Pharmacia Corp., 6.6%, 12/1/28 $ 108,304
------------
Total Pharmaceuticals & Biotechnology $ 108,304
------------
Banks - 0.5%
Diversified Banks - 0.3%
150,000 NR/Aaa KFW-Kredit Wiederaufbau, 2.75%, 5/8/07 $ 146,809
225,000 AA-/Aa2 National Westminster, 7.375%, 10/1/09 254,865
------------
$ 401,674
------------
Thrifts & Mortgage Finance - 0.2%
300,000 BBB-/Baa3 Sovereign Bank, 5.125%, 3/15/13 $ 285,181
------------
Total Banks $ 686,855
------------
16 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
================================================================================
================================================================================
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Diversified Financials - 1.1%
Investment Banking & Brokerage - 0.2%
$ 200,000 B+/B1 E*Trade Financial Corp., 8.0%, 6/15/11
(144A) $ 199,000
------------
Diversified Financial Services - 0.7%
300,000 A-/Baa3 Brascan Corp., 5.75%, 3/1/10 $ 308,545
275,000 A+/Aa2 Citigroup, Inc., 7.25%, 10/1/10 309,706
300,000 BBB/Baa3 Glencore Funding LLC, 6.0%, 4/15/14
(144A) 278,262
------------
$ 896,513
------------
Specialized Finance - 0.2%
300,000 B/B2 MDP Acquistions, 9.625%, 10/1/12 $ 328,500
------------
Total Diversified Financials $ 1,424,013
------------
Insurance - 1.1%
Life & Health Insurance - 0.2%
300,000 BB+/Ba1 Provident Companies, Inc., 7.0%, 7/15/18 $ 285,692
------------
Multi-Line Insurance - 0.1%
150,000 A/Baa1 Loew Corp., 5.25%, 3/15/16 $ 139,793
------------
Property & Casualty Insurance - 0.6%
200,000 BBB-/Baa1 Arch Capital Group Ltd., 7.35%, 5/1/34 $ 201,324
350,000 BBB+/Baa2 Berkley (WR), 5.875%, 2/15/13 357,206
180,000 BBB-/Baa1 Kingsway America, Inc., 7.5%, 2/1/14 176,904
------------
$ 735,434
------------
Reinsurance - 0.2%
300,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 322,490
------------
Total Insurance $ 1,483,409
------------
Real Estate - 0.6%
Real Estate Investment Trusts - 0.6%
400,000 BBB-/Baa3 Hospitality Properties Trust, 6.75%,
2/15/13 $ 415,271
300,000 BBB-/Baa3 Colonial Reality LP, 6.15%, 4/15/13 304,808
------------
Total Real Estate $ 720,079
------------
The accompanying notes are an integral part of these financial statements. 17
Pioneer Balanced Fund
================================================================================
SCHEDULE OF INVESTMENTS 6/30/04 (unaudited) (continued)
================================================================================
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Technology Hardware & Equipment - 1.1%
Computer Hardware - 0.7%
$ 500,000 BBB-/Baa3 NCR Corp., 7.125%, 6/15/09 $ 546,908
300,000 BB+/Ba1 UNISYS Corp., 6.875%, 3/15/10 309,000
------------
$ 855,908
------------
Electronic Manufacturing Services - 0.2%
250,000 BB+/Baa3 Jabil Circuit, Inc., 5.875%, 7/15/10 $ 258,249
------------
Technology Distributors - 0.2%
300,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 7/1/13 $ 313,368
------------
Total Technology Hardware & Equipment $ 1,427,525
------------
Telecommunication Services - 0.4%
Integrated Telecommunication Services - 0.4%
300,000 BBB+/Baa3 Intelsat Ltd., 6.5%, 11/1/13 $ 265,030
300,000 BBB+/Baa2 Telecom Italia S.p.A. 5.25%, 11/15/13
(144A) 290,354
------------
Total Telecommunication Services $ 555,384
------------
Utilities - 0.5%
Electric Utilities - 0.2%
313,500 BBB-/Baa3 FPL Energy American Wind LLC, 6.639%,
6/20/23 (144A) $ 320,096
------------
Multi-Utilities & Unregulated Power - 0.3%
300,000 B/B1 Reliant Energy, Inc., 9.5%, 7/15/13 $ 323,250
------------
Total Utilities $ 643,346
------------
TOTAL CORPORATE BONDS
(Cost $15,588,191) $ 16,011,655
------------
18 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
================================================================================
================================================================================
Principal
Amount Value
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 20.3%
$ 433,717 Federal Home Loan Bank, 5.5%, 10/1/16 $ 444,576
130,249 Federal Home Loan Bank, 6.5%, 5/1/09 137,853
990,901 Federal Home Loan Mortgage, 5.0%, 4/1/34 957,568
377,093 Federal Home Loan Mortgage, 5.5%, 12/1/18 387,616
1,999,960 Federal Home Loan Mortgage, 6.0%,
1/1/33 to 6/1/34 2,045,850
651,303 Federal Home Loan Mortgage, 6.5%,
10/1/33 to 11/1/33 681,850
970,122 Federal National Mortgage Association, 5.0%,
5/1/18 to 6/1/34 955,995
2,955,351 Federal National Mortgage Association, 5.5%,
8/1/14 to 4/1/34 2,981,072
2,503,413 Federal National Mortgage Association, 6.0%,
11/1/16 to 12/1/33 2,563,179
1,260,000 Federal National Mortgage Association, 6.125%,
3/15/12 1,358,682
1,890,658 Federal National Mortgage Association, 6.5%,
12/1/21 to 10/1/32 1,973,368
40,000 Federal National Mortgage Association, 7.125%,
6/15/10 45,410
106,886 Federal National Mortgage Association, 9.0%,
4/1/33 118,825
1,446,551 Government National Mortgage Association, 5.5%,
8/15/33 to 9/15/33 1,448,158
2,211,435 Government National Mortgage Association, 6.0%,
9/15/33 to 10/15/33 2,270,006
655,862 Government National Mortgage Association, 6.5%,
10/15/28 to 5/15/33 686,811
18,385 Government National Mortgage Association, 7.5%,
1/15/30 19,838
68,461 Government National Mortgage Association, 8.0%,
2/15/30 75,052
537,229 Government National Mortgage Association II, 5.5%,
2/20/34 536,781
2,520,293 Government National Mortgage Association II, 6.0%,
10/20/33 to 11/20/33 2,586,467
700,000 U.S. Treasury Bonds, 4.75%, 11/15/08 731,063
The accompanying notes are an integral part of these financial statements. 19
Pioneer Balanced Fund
================================================================================
SCHEDULE OF INVESTMENTS 6/30/04 (unaudited) (continued)
================================================================================
Principal
Amount Value
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - (continued)
$ 1,985,000 U.S. Treasury Notes, 4.0%, 11/15/12 $ 1,921,806
300,000 U.S. Treasury Notes, 4.75%, 5/15/14 303,129
1,500,000 U.S. Treasury Notes, 5.625%, 5/15/08 1,614,609
------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $26,999,074) $ 26,845,564
------------
TOTAL INVESTMENTS IN SECURITIES - 98.2%
(Cost $116,856,266)(a)(b) $129,772,525
------------
OTHER ASSETS AND LIABILITIES - 1.8% $ 2,331,235
------------
TOTAL NET ASSETS - 100.0% $132,103,760
============
* Non-income producing security.
NR Not rated by either S&P or Moody's
(144A) Security is exempt from registration under Rule 144A of the Securities Act of
1933. Such securities may be resold normally to qualified institutional buyers in
a transaction exempt from registration. At June 30, 2004, the value of these
securities amounted to $2,676,190 or 2.03% of total net assets.
TBA TBA (To Be Assigned) securities are purchased on a forward commitment basis with an
approximate (generally plus/minus 2.5%) principal and no definite maturity date period
The actual principal amount and maturity date will be determined upon settlement when
the specific mortgage pools are assigned.
(a) At June 30, 2004 the net unrealized gain on investments based on cost for federal
income tax purposes of $116,930,027 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost $14,237,292
Aggregate gross unrealized loss for all investments in which there is anexcess
of tax cost over value (1,394,794)
-----------
Net unrealized gain $12,842,498
===========
(b) At June 30, 2004 the Fund had a net capital loss carryforward of $13,510,963
which will expire between 2006 and 2010, if not utilized.
$1,527,766 in 2006
$6,824,457 in 2010
$5,158,740 in 2011
Purchases and sales of securities (excluding temporary cash investments) for the six months ended
June 30. 2004 aggregated $21,930,430 and $24,267,397, respectively.
20 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced Fund
================================================================================
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (unaudited)
================================================================================
ASSETS:
Investment in securities, at value (cost $116,856,266) $129,772,525
Cash 2,454,871
Receivables -
Investment securities sold 759,296
Fund shares sold 220,178
Dividends, interest and foreign taxes withheld 473,996
Other 333
------------
Total assets $133,681,199
------------
LIABILITIES:
Payables -
Investment securities purchased $ 1,255,330
Fund shares repurchased 64,977
Due to affiliates 182,793
Accrued expenses 74,339
------------
Total liabilities $ 1,577,439
------------
NET ASSETS:
Paid-in capital $129,408,977
Accumulated net investment income 221,468
Accumulated net realized loss on investments (10,442,944)
Net unrealized gain on investments 12,916,259
------------
Total net assets $132,103,760
============
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $103,880,652/10,851,975 shares) $ 9.57
============
Class B (based on $18,462,111/1,949,543 shares) $ 9.47
============
Class C (based on $9,760,997/1,023,264 shares) $ 9.54
============
MAXIMUM OFFERING PRICE:
Class A ($9.57 [divided by] 95.5%) $ 10.02
============
Class C ($9.54 [divided by] 99.0%) $ 9.64
============
The accompanying notes are an integral part of these financial statements. 21
Pioneer Balanced Fund
================================================================================
STATEMENT OF OPERATIONS (unaudited)
================================================================================
For the Six Months Ended 6/30/04
INVESTMENT INCOME:
Dividends (Net of foreign taxes withheld of $476) $ 406,424
Interest (Net of foreign taxes withheld of $283) 1,314,146
----------
Total investment income $ 1,720,570
------------
EXPENSES:
Management fees $ 426,777
Transfer agent fees
Class A 161,744
Class B 44,386
Class C 27,457
Distribution fees
Class A 131,181
Class B 86,044
Class C 45,810
Administrative fees 13,233
Custodian fees 2,666
Registration fees 34,239
Professional fees 9,502
Printing 2,870
Fees and expenses of nonaffiliated trustees 2,808
Miscellaneous 3,913
----------
Total expenses $ 992,630
------------
Less fees paid indirectly (1,629)
------------
Net expenses $ 991,001
------------
Net investment income $ 729,569
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments $ 3,202,381
------------
Change in net unrealized loss on investments $ (1,916,653)
------------
Net gain on investments $ 1,285,728
------------
Net increase in net assets resulting from operations $ 2,015,297
============
The accompanying notes are an integral part of these financial statements. 22
Pioneer Balanced Fund
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
For the Six Months Ended 6/30/04 and the Year Ended 12/31/03
Six Months
Ended
6/30/04 Year Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income $ 729,569 $ 1,368,139
Net realized gain on investments 3,202,381 1,587,565
Change in net unrealized gain (loss) on investments (1,916,653) 15,653,026
------------ ------------
Net increase in net assets resulting from
operations $ 2,015,297 $ 18,608,730
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.05 and $0.14 per share, respectively) $ (543,338) $ (1,600,449)
Class B ($0.01 and $0.05 per share, respectively) (19,399) (75,922)
Class C ($0.01 and $0.04 per share, respectively) (10,095) (36,184)
------------ ------------
Total distributions to shareowners $ (572,832) $ (1,712,555)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 14,142,239 $ 27,583,670
Reinvestment of distributions 519,411 1,559,351
Cost of shares repurchased (15,849,361) (44,985,862)
------------ ------------
Net decrease in net assets resulting from fund
share transactions $ (1,187,711) $(15,842,841)
------------ ------------
Net increase in net assets $ 254,754 $ 1,053,334
NET ASSETS:
Beginning of period 131,849,006 130,795,672
------------ ------------
End of period (accumulated net investment income of
$212,468 and $64,731 respectively) $132,103,760 $131,849,006
============ ============
The accompanying notes are an integral part of these financial statements. 23
Pioneer Balanced Fund
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS (continued)
================================================================================
For the Six Months Ended 6/30/04 and the Year Ended 12/31/03
'04 Shares '04 Amount
(unaudited) (unaudited) '03 Shares '03 Amount
CLASS A
Shares sold 558,526 $ 5,337,505 1,716,085 $ 14,763,083
Reinvestment of distributions 51,740 493,794 163,222 1,459,391
Less shares repurchased (1,084,282) (10,393,171) (3,422,395) (29,595,678)
---------- ----------- ---------- ------------
Net decrease (474,016) $(4,561,872) (1,543,088) $(13,373,204)
---------- ----------- ---------- ------------
CLASS B
Shares sold 598,900 $ 5,641,545 919,101 $ 7,827,081
Reinvestment of distributions 1,793 16,963 7,559 67,534
Less shares repurchased (375,766) (3,550,281) (1,183,145) (9,987,739)
---------- ----------- ---------- ------------
Net increase (decrease) 224,927 $ 2,108,227 (256,485) $ (2,093,124)
---------- ----------- ---------- ------------
CLASS C
Shares sold 332,363 $ 3,163,189 580,857 $ 4,993,506
Reinvestment of distributions 908 8,654 3,605 32,426
Less shares repurchased (200,872) (1,905,909) (637,455) (5,402,445)
---------- ----------- ---------- ------------
Net increase (decrease) 132,399 $ 1,265,934 (52,993) $ (376,513)
---------- ----------- ---------- ------------
The accompanying notes are an integral part of these financial statements. 24
Pioneer Balanced Fund
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended
6/30/04 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/03 12/31/02 12/31/01 (a) 12/31/00 12/31/99
CLASS A
Net asset value, beginning of period $ 9.47 $ 8.29 $ 9.46 $ 9.94 $ 9.73 $ 9.74
------- -------- -------- ------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.06 $ 0.12 $ 0.11 $ 0.19 $ 0.30 $ 0.31
Net realized and unrealized gain (loss) on investments 0.09 1.20 (1.17) (0.47) 0.22 (0.01)
------- -------- -------- ------- -------- --------
Net increase (decrease) from investment operations $ 0.15 $ 1.32 $ (1.06) $ (0.28) $ 0.52 $ 0.30
Distributions to shareowners:
Net investment income (0.05) (0.14) (0.11) (0.20) (0.31) (0.31)
------- -------- -------- ------- -------- --------
Net increase (decrease) in net asset value $ 0.10 $ 1.18 $ (1.17) $ (0.48) $ 0.21 $ (0.01)
------- -------- -------- ------- -------- --------
Net asset value, end of period $ 9.57 $ 9.47 $ 8.29 $ 9.46 $ 9.94 $ 9.73
======= ======== ======== ======= ======== ========
Total return* 1.59% 15.99% (11.20)% (2.87)% 5.38% 3.15%
Ratio of net expenses to average net assets+ 1.31%** 1.38% 1.41% 1.31% 1.23% 1.23%
Ratio of net investment income to average net assets+ 1.31%** 1.25% 1.19% 1.97% 2.96% 3.21%
Portfolio turnover rate 34%** 44% 180% 133% 17% 46%
Net assets, end of period (in thousands) $103,881 $107,265 $106,734 $141,746 $162,855 $214,866
Ratios with reductions for fees paid indirectly:
Net expenses 1.31%** 1.38% 1.41% 1.30% 1.20% 1.21%
Net investment income 1.31%** 1.25% 1.19% 1.98% 2.99% 3.23%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratio with no reduction for fees paid indirectly.
(a) At January 1, 2001, the Fund began accreting discounts and amortizing
premiums on debt securities. The effect of this change for the year ended
December 31, 2001 was to decrease net investment income by less than one
cent per share, increase net realized and unrealized gain (loss) by less
than one cent per share and decrease the ratio of net investment income to
average net assets assuming reduction for fees paid indirectly from 2.02% to
1.98%. Per share ratios and supplemental data for periods prior to January
1, 2001, have not been restated to reflect this change in presentation.
The accompanying notes are an integral part of these financial statements.
25
Pioneer Balanced Fund
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended
6/30/04 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/03 12/31/02 12/31/01 (a) 12/31/00 12/31/99
CLASS B
Net asset value, beginning of period $ 9.37 $ 8.21 $ 9.36 $ 9.85 $ 9.64 $ 9.65
------- ------- --------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.02 $ 0.03 $ 0.02 $ 0.12 $ 0.19 $ 0.22
Net realized and unrealized gain (loss) on investments 0.09 1.18 (1.13) (0.48) 0.23 (0.01)
------- ------- --------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.11 $ 1.21 $ (1.11) $ (0.36) $ 0.42 $ 0.21
Distributions to shareowners:
Net investment income (0.01) (0.05) (0.04) (0.13) (0.21) (0.22)
------- ------- --------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.10 $ 1.16 (1.15) $ (0.49) $ 0.21 $ (0.01)
------- ------- --------- ------- ------- -------
Net asset value, end of period $ 9.47 $ 9.37 $ 8.21 $ 9.36 $ 9.85 $ 9.64
======= ======= ========= ======= ======= =======
Total return* 1.18% 14.71% (11.90)% (3.72)% 4.39% 2.24%
Ratio of net expenses to average net assets+ 2.27%** 2.35% 2.32% 2.20% 2.15% 2.14%
Ratio of net investment income to average net assets+ 0.35%** 0.27% 0.28% 1.04% 2.03% 2.30%
Portfolio turnover rate 34%** 44% 180% 133% 17% 46%
Net assets, end of period (in thousands) $18,462 $16,168 $ 16,256 $18,110 $16,413 $19,865
Ratios with reduction for fees paid indirectly:
Net expenses 2.27%** 2.35% 2.32% 2.19% 2.13% 2.12%
Net investment income 0.35%** 0.27% 0.28% 1.05% 2.05% 2.32%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratio with no reduction for fees paid indirectly.
(a) At January 1, 2001, the Fund began accreting discounts and amortizing
premiums on debt securities. The effect of this change for the year ended
December 31, 2001 was to decrease net investment income by less than one
cent per share, increase net realized and unrealized gain (loss) by less
than one cent per share and decrease the ratio of net investment income to
average net assets assuming reduction for fees paid indirectly from 1.08% to
1.05%. Per share ratios and supplemental data for periods prior to January
1, 2001, have not been restated to reflect this change in presentation.
The accompanying notes are an integral part of these financial statements.
26
Pioneer Balanced Fund
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended
6/30/04 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/03 12/31/02 12/31/01 (a) 12/31/00 12/31/99
CLASS C
Net asset value, beginning of period $ 9.45 $ 8.27 $ 9.44 $ 9.94 $ 9.73 $ 9.75
-------- ------- --------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.01 $ 0.02 $ 0.01 $ 0.13 $ 0.15 $ 0.21
Net realized and unrealized gain (loss) on investments 0.09 1.20 (1.14) (0.54) 0.23 (0.02)
-------- ------- --------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.10 $ 1.22 $ (1.13) $ (0.41) $ 0.38 $ 0.19
Distributions to shareowners:
Net investment income (0.01) (0.04) (0.04) (0.09) (0.17) (0.21)
-------- ------- --------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.09 $ 1.18 $ (1.17) $ (0.50) $ 0.21 $ (0.02)
-------- ------- --------- ------- ------- -------
Net asset value, end of period $ 9.54 $ 9.45 $ 8.27 $ 9.44 $ 9.94 $ 9.73
======== ======= ========= ======= ======= =======
Total return* 1.06% 14.82% (12.02)% (4.11)% 3.95% 2.02%
Ratio of net expenses to average net assets+ 2.36%** 2.38% 2.53% 2.44% 2.61% 2.38%
Ratio of net investment income to average net assets+ 0.28%** 0.24% 0.06% 0.75% 1.56% 2.09%
Portfolio turnover rate 34%** 44% 180% 133% 17% 46%
Net assets, end of period (in thousands) $ 9,761 $ 8,416 $ 7,806 $ 5,499 $ 3,426 $ 3,734
Ratios with reduction for fees paid indirectly:
Net expenses 2.36%** 2.38% 2.53% 2.43% 2.59% 2.35%
Net investment income 0.28%** 0.24% 0.06% 0.76% 1.58% 2.12%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratio with no reduction for fees paid indirectly.
(a) At January 1, 2001, the Fund began accreting discounts and amortizing
premiums on debt securities. The effect of this change for the year ended
December 31, 2001 was to decrease net investment income by less than one
cent per share, increase net realized and unrealized gain (loss) by less
than one cent per share and decrease the ratio of net investment income to
average net assets assuming reduction for fees paid indirectly from 0.86% to
0.76%. Per share ratios and supplemental data for periods prior to January
1, 2001, have not been restated to reflect this change in presentation.
The accompanying notes are an integral part of these financial statements.
27
Pioneer Balanced Fund
================================================================================
NOTES TO FINANCIAL STATEMENTS 6/30/04 (unaudited)
================================================================================
1. Organization and Significant Accounting Policies
Pioneer Balanced Fund (the Fund) is a Delaware statutory trust registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The Fund's investment objective is to seek capital growth
and current income.
The Fund offers three classes of shares - Class A, Class B and Class C shares.
Shares of Class A, Class B and Class C each represent 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.
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 consistently followed by the Fund, which are in
conformity with those generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value is
computed once daily, on each day the New York Stock Exchange is open, as of
the close of regular trading on the Exchange. 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. All discounts/premiums on debt securities are accreted/
amortized into interest income for financial reporting purposes. Valuations
may be supplemented by dealers and other sources, as required. Equity
securities are valued at the last sale price on the principal exchange where
they are traded. Securities that have not traded on the date of valuation, or
securities for which sale prices
28
Pioneer Balanced Fund
================================================================================
================================================================================
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
New York Stock Exchange. The values of such securities used in computing the
net asset value of the Fund's shares are determined as of such times. At June
30, 2004 there were no securities fair valued. 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. Temporary cash investments
are valued at amortized cost.
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 contract. The use of futures contracts
involves, to varying degrees, elements of market risk which may exceed the
amounts recognized by the Fund. Changes in the value of the contracts may not
directly correlate to the changes in the value of the underlying securities.
These risks may decrease the effectiveness of the Fund's hedging and trading
strategies and potentially result in a loss. As of June 30, 2004, the Fund
had no open futures contracts.
29
Pioneer Balanced Fund
================================================================================
NOTES TO FINANCIAL STATEMENTS 6/30/04 (unaudited) (continued)
================================================================================
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 amount and characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with federal income tax rules.
Therefore, the source 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.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The tax character of distributions paid
during the year ended December 31, 2003 was as follows:
- -----------------------------------------------------------------------------
2003
- -----------------------------------------------------------------------------
Distributions paid from:
Ordinary income $1,712,555
Long-term capital gain -
----------
Total $1,712,555
==========
- -----------------------------------------------------------------------------
The following shows the components of distributable earnings on a federal
income tax basis at December 31, 2003.
- -----------------------------------------------------------------------------
2003
- -----------------------------------------------------------------------------
Undistributed ordinary income $ 4,131
Capital loss carryforward (13,510,963)
Unrealized appreciation 14,759,150
-----------
Total $ 1,252,318
===========
- -----------------------------------------------------------------------------
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 premuim and amortization.
30
Pioneer Balanced Fund
================================================================================
================================================================================
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 $12,298 in underwriting commissions on the sale of Fund
shares during the six months ended June 30, 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). Shareowners of each class share all expenses and fees paid to
the transfer agent, Pioneer Investment Management Shareholder Services, Inc.
(PIMSS), for its services, which are allocated based on the number of
accounts in each class and the ratable allocation of related out-of-pocket
expenses (see Note 3). Income, common expenses and realized and unrealized
gains and losses are calculated at the Fund level and allocated daily to each
class of shares based on the respective percentage of adjusted net assets at
the beginning of the day.
Distributions to shareowners are recorded as of the ex-dividend date.
Distributions paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time, and in the same amount,
except that Class A, Class B and Class C 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.
31
Pioneer Balanced Fund
================================================================================
NOTES TO FINANCIAL STATEMENTS 6/30/04 (unaudited) (continued)
================================================================================
2. Management Agreement
PIM manages the Fund's portfolio and is a wholly owned indirect subsidiary of
UniCredito Italiano. 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.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At June 30, 2004, $81,488 was payable to PIM
related to management fees, administrative fees and certain other services, and
is included in due to affiliates.
3. Transfer Agent
PIMSS, a wholly owned subsidiary of UniCredito Italiano, provides substantially
all transfer agent and shareowner services to the Fund at negotiated rates.
Included in due to affiliates is $51,300 in transfer agent fees payable to PIMSS
at June 30, 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 $50,005
in distribution fees payable to PFD at June 30, 2004.
In addition, redemptions of each class of shares may be subject to a contingent
deferred sales charge (CDSC). A CDSC of 1.00% may be imposed on redemptions of
certain net asset value purchases of Class A shares within one year of purchase.
Class B shares that are redeemed within six years of purchase are subject to a
CDSC at declining rates beginning at 4.00%, based on the lower of cost or
32
Pioneer Balanced Fund
================================================================================
================================================================================
market value of shares being redeemed. Redemptions of Class C shares within one
year of purchase are subject to a CDSC of 1.00%. Proceeds from the CDSCs are
paid to PFD. For the six months ended June 30, 2004, CDSCs in the amount of
$35,369 were paid to PFD.
5. Expense Offset Arrangements
The Fund has entered into certain expense offset arrangements with PIMSS
resulting in a reduction in the Fund's total expenses due to interest earned on
cash held by PIMSS. For the six months ended June 30, 2004, the Fund's expenses
were reduced by $1,629 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 six months ended June
30, 2004, the Fund had no borrowings under this agreement.
33
Pioneer Balanced Fund
================================================================================
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
================================================================================
Officers Trustees
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
Mary K. Bush Osbert M. Hood, Executive
Richard H. Egdahl, M.D. Vice President
Margaret B.W. Graham Vincent Nave, Treasurer
Osbert M. Hood Dorothy E. Bourassa, Secretary
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). This
information is also available at pioneerfunds.com and on the Securities and
Exchange Commission's web site at http://www.sec.gov.
34
================================================================================
THE PIONEER FAMILY OF MUTUAL FUNDS
================================================================================
Please consider a fund's investment objective, 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 International/Global Equity
Pioneer Fund Pioneer Emerging Markets Fund
Pioneer Balanced Fund Pioneer Europe Select Fund
Pioneer Equity Income Fund Pioneer Europe Fund
Pioneer Growth Shares Pioneer International Equity Fund
Pioneer Mid Cap Growth Fund Pioneer International Value Fund
Pioneer Mid Cap Value Fund
Pioneer Oak Ridge Large Cap Fixed Income
Growth Fund Pioneer America Income Trust
Pioneer Oak Ridge Small Cap Pioneer Bond Fund
Growth Fund Pioneer Global High Yield Fund
Pioneer Papp America-Pacific Pioneer High Yield Fund
Rim Fund Pioneer Short Term Income Fund
Pioneer Papp Small and Mid Cap Pioneer Strategic Income Fund
Growth Fund Pioneer Tax Free Income Fund
Pioneer Papp Stock Fund
Pioneer Papp Strategic Money Market
Growth Fund Pioneer Cash Reserves Fund**
Pioneer Real Estate Shares
Pioneer Research Fund* Fund of Funds
Pioneer Small Cap Value Fund Pioneer Ibbotson Asset
Pioneer Small Company Fund Allocation Series
Pioneer Value Fund
* Name change effective December 11, 2003. Formerly known as Pioneer Core
Equity 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.
35
================================================================================
================================================================================
This page for your notes.
36
================================================================================
HOW TO CONTACT PIONEER
================================================================================
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
Call us for:
Account Information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our Internet e-mail address ask.pioneer@pioneerinvest.com
(for general questions about Pioneer only)
Visit our web site: www.pioneerfunds.com
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest 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.
[LOGO] PIONEER
Investments(R)
Pioneer Investment Management, Inc.
60 State Street
Boston, MA 02109
www.pioneerfunds.com
16048-00-0804
(C) 2004 Pioneer Funds Distributor, Inc.
Underwriter of Pioneer mutual funds
Member SIPC
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
N/A
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
N/A
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
N/A
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
N/A
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds 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 Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
- ---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
- ---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
- ---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
- ---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
- ----------------------- --------------------------- -----------------------------------------------
- ------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- -------------------------
- ------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
- ------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
- ----------------------- --------------------------- -----------------------------------------------
- --------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
- ------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
- ----------------------- ------------------------- -----------------------------------------------
- ------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
- ------------------------------------------- ------------------------------
- --------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
- --------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
N/A
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
N/A
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
N/A
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Not applicable to open-end management investment companies.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer and principal financial
officer have concluded, that the registrant's disclosure controls and
procedures are effective based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Balanced Fund
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date August 25, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date August 25, 2004
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date August 25, 2004
* Print the name and title of each signing officer under his or her signature.