[Pioneer Logo]
PIONEER INDEPENDENCE FUND
[Graphic of the Head and Torch of the Statue of Liberty in Profile]
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Annual Report
December 31, 1998
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<PAGE>
PIONEER INDEPENDENCE FUND
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Table of Contents
<TABLE>
<S> <C>
Letter from the Chairman 1
Portfolio Management Discussion 2
Portfolio and Performance Update 4
Schedule of Investments 5
Financial Statements 9
Notes to Financial Statements 13
Report of Independent Public Accountants 15
</TABLE>
<PAGE>
PIONEER INDEPENDENCE FUND
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LETTER FROM THE CHAIRMAN 12/31/98
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Dear Shareowner,
I am pleased to introduce this report to shareowners of Pioneer Independence
Fund. This report covers the period from the Fund's inception on March 16,
through the end of its fiscal year on December 31, 1998. On behalf of all of us
at Pioneer, I thank you for your interest.
Before moving on to review the stock markets, I'd like to announce a recent
addition to the Fund's management team. We are pleased that Pioneer's Chief
Investment Officer, Theresa Hamacher, has joined David Tripple as a leader of
the Fund's investment management team. Theresa brings 14 years of investment
experience to the team. In September, Mr. Tripple was promoted to President of
Pioneer Investment Management, Inc.
Overall, 1998 proved to be another eventful year for stock investors. The U.S.
stock market, as measured by the Standard & Poor's 500 Index, flourished
through mid-July, as the U.S. economy continued to grow at a solid pace and
inflation remained low. Stocks around the globe tumbled in the summer amid
concerns about the global economy. In the fall, the bad news seemed to
dissipate and the S&P 500 resumed a record-setting pace. Unfortunately, small-
and mid-sized companies, which make up a sizeable portion of your Fund's
portfolio, did not keep up with the larger company stocks, and often showed
losses for the year.
I would caution against putting too much emphasis on short-term results.
Pioneer Independence Fund was created for investors with a long-term investment
horizon. Your investment management team uses Pioneer's full range of
fundamental research when selecting stocks for the Fund. They evaluate each
stock by analyzing the company's balance sheet and income statement, growth
potential, management quality and stock price in relation to its assets and
earning power. Here, they too, are looking for long-term potential.
We encourage you to have a financial plan with a mix of stock funds, bond funds
and money market investments that suits your risk tolerance, since returns on
different asset classes often vary considerably. If you don't have a plan, or
haven't rebalanced your portfolio in some time, we suggest that you meet with
your investment professional to discuss your financial options.
I encourage you to read on to learn more about Pioneer Independence Fund. If
you have questions about your investment, please contact your investment
professional.
Respectfully,
/s/ John F. Cogan, Jr.
- -------------------------------
John F. Cogan, Jr.
Chairman and President
1
<PAGE>
PIONEER INDEPENDENCE FUND
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PORTFOLIO MANAGEMENT DISCUSSION 12/31/98
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[Begin Sidebar]
The Fund's investment adviser, Pioneer Investment
Management, Inc., reduced its management fee
and certain other expenses; otherwise, returns
would have been lower. Past performance does not
guarantee future results. Return and principal fluctu-
ate so that your investment, when redeemed, may
be worthmore or less than the original cost.
[End Sidebar]
We thank you for the opportunity to present a review of Pioneer Independence
Fund's progress over its first nine months. It was an exciting and volatile
time to launch a new investment vehicle, both "the best of times and the worst
of times," to paraphrase Charles Dickens.
Reflecting on 1998
Looking around the world, we saw boom economic times in the United States,
near-depressions in Japan and Asia's emerging markets, while Europe joined
together to form a single currency - the euro. Here in the United States, the
stock market's worst decline in almost 10 years was immediately followed by one
of the most explosive rallies since World War II. And, though the major U.S.
market averages showed gains for the year (the Dow Jones Industrial Average
rose over 1,000 points, for example), many stocks - particularly smaller ones -
suffered significant losses.
Pioneer Independence Fund opened on March 16, 1998, and by the end of the year
assets had grown to $3.3 million. From March 31 to December 31, the Fund posted
a total return of -3.07% at net asset value. That decline is a disappointment
to us, since it trails the 12.04% return of the Russell 1000 Index for the same
period. (The Russell 1000 measures the performance of the largest 1000 stocks
in the U.S. market; it is a broader measure than the Standard & Poor's 500
Index.)
We believe the Fund's performance resulted from unusual factors related to its
startup and market conditions. The Fund's rapid growth took place mostly
between April and June, when stock prices were rising steadily. While we were
careful to invest new money quickly, inflows still kept cash higher than we
would have liked and diluted performance. Now, because the Fund has a larger
asset base, cash inflows have less of an impact.
Our Investment Approach
As you know, the Fund's objective is to grow your capital by investing in
stocks that represent the very best ideas of Pioneer's investment team. These
may be established holdings in our other mutual funds, or new ideas that look
particularly compelling right now. Portfolio managers and analysts recommend
stocks to buy and sell; we monitor the Fund's overall positioning, including
exposure to various segments of the market and the total level of risk.
You should expect the Fund's portfolio to include stocks from the two major
styles of investing - value and growth. Value investors look for stocks whose
share prices are low in relation to their potential earnings. Growth-oriented
investors concentrate on companies with rapidly growing businesses, and pay
less attention to the purchase price. You should also see small- and mid-sized
stocks, as well as those of larger, blue chip companies. We will also include
international stocks, but only to a limited extent.
Our willingness to hold smaller company stocks was the second major factor
influencing performance last year. The 1998 market was dominated by a
relatively limited number of stocks - mostly very large companies. The
statistic that best illustrates this phenomenon is that, according to Morgan
Stanley, the largest 20% of the stocks in the S&P 500 generated 85% of its
return last year.
This theme played out in the Fund too, as the larger stocks in the portfolio
performed best. These include McDonald's, a stock well-liked by both our growth
and value analysts, and McGraw-Hill, a beneficiary of the booming information
age. Unfortunately, the Fund's smaller, value-oriented holdings also mirrored
the market. In addition, falling oil prices hurt holdings in the energy area.
2
<PAGE>
PIONEER INDEPENDENCE FUND
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PORTFOLIO MANAGEMENT DISCUSSION 12/31/98
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Looking Ahead
In 1998, markets showed "the best of times and the worst of times," bringing
ever-wider differentials between the best and the worst performing stocks. We
believe the next few years will bring a return to "average times," with those
differences gradually closing.
Recently, we've begun placing more emphasis on the types of stocks that were so
out of favor last year, especially mid-sized value companies. For example, we
added aluminum and paper producers to the portfolio. After years of falling
commodity prices, companies in these industries have begun to close factories,
which bodes well for future price increases. Aluminum Company of America and
Temple-Inland are new purchases in these groups.
We're also being cautious in the sectors that have seen the greatest gains in
the last few months. In technology and healthcare, we are maintaining a
lower-than-average exposure and are emphasizing companies that represent good
value. For example, the Fund's largest technology holding is Compaq, the
computer manufacturer. Compaq's business was recovering from an inventory
overhang, and we believed the stock was a good value. While we think the
internet will continue to change the way the world communicates, we have not
been a buyer of the high-flying stocks in this group - we prefer companies with
earnings. But we are interested in those that supply the computers and phone
lines that make the internet work.
For international stocks, now about 11% of equity holdings, our focus is on
large multinational corporations and Canadian stocks. You may recognize some of
these, such as telecommunications giant Nokia (Finland) and software company,
SAP (Germany).
We believe the portfolio is well-positioned for the year to come. On behalf of
the entire team of portfolio managers and analysts who contribute to the Fund,
we'd like to thank you for your interest.
Respectfully,
/s/ David D. Tripple /s/ Theresa A. Hamacher
- ------------------------------- ------------------------------------
David D. Tripple Theresa A. Hamacher
Portfolio Manger Portfolio Manager
3
<PAGE>
PIONEER INDEPENDENCE FUND
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PORTFOLIO AND PERFORMANCE UPDATE 12/31/98
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Portfolio Diversification
(As a percentage of total investment portfolio)
[Begin Pie Chart]
U.S. Common Stocks 89%
Depositary Receipts for International Stocks 8%
International Common Stocks 3%
[End Pie Chart]
Sector Diversification
(As a percentage of equity holdings}
[Begin Pie Chart]
Technology 15%
Financial 14%
Consumer Staples 13%
Consumer Cyclicals 13%
Basic Materials 13%
Capital Goods 8%
Healthcare 6%
Energy 6%
Utilities 5%
Other 7%
[End Pie Chart]
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Five Largest Holdings
(As a percentage of equity holdings)
<TABLE>
<S> <C>
McDonald's Corp. 2.36%
Berkshire Hathaway Inc. (Class B) 2.28
McGraw-Hill Co., Inc. 2.20
Compaq Computer Corp. 2.20
Infinity Broadcasting Corp. 2.11
</TABLE>
Fund holdings will vary for other periods.
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Prices and Distributions
<TABLE>
<CAPTION>
12/31/98 3/16/98
<S> <C> <C>
Net Asset Value per Share $9.63 $10.00
</TABLE>
<TABLE>
<CAPTION>
Distributions per Share Income Short-Term Long-Term
(3/16/98 - 12/31/98) Dividends Capital Gains Capital Gains
<S> <C> <C> <C>
$0.089 -- --
</TABLE>
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Performance of a $10,000 Investment
The following chart shows the value of an investment made in Pioneer
Independence Fund, compared to the growth of the Russell 1000 Index.
[Begin Line Chart]
Pioneer Independence Fund* Russell 1000 Index
------------------------- ------------------
3/98 $10,000 $10,000
10,249 10,103
10,000 9,884
6/98 9,900 10,250
9,202 10,127
7,836 8,613
9/98 8,126 9,193
8,853 9,919
9,182 10,533
12/98 9,693 11,204
[End Line Chart]
Index comparison begins 3/31/98. The Russell 1000 Index is an unmanaged measure
of the 1,000 largest companies in the Russell 3000 Index, representing
approximately 89% of the total market capitalization of the Russell 3000. Index
returns are calculated monthly, assume reinvestment of dividends and, unlike
Fund returns, do not reflect any fees or expenses. You cannot invest directly in
the Index.
[Begin Sidebar]
Total Return
(As of December 31, 1998)
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Net Asset Value*
- ----------------------------
<TABLE>
<S> <C>
Period
Life-of-Fund -2.78%
(3/16/98)
</TABLE>
Returns assume reinvestment of distributions at
net asset value.
* Reflects Fund performance only, at net
asset value. Does not reflect Creation
and Sales Charges applicable to
purchases of Fund shares through Pioneer
Independence Plans, which vary as
discussed in the Plans' prospectus. For
the first 12 investments, these charges
can amount to 50% of the total amount
invested. Total return would be reduced
if these charges were taken into
account.
[End Sidebar]
4 Past performance does not guarantee future results. Return and principal
fluctuate so that your investment, when redeemed, may be worth more or less
than the original cost.
<PAGE>
Pioneer Independence Fund
Schedule of Investments - December 31, 1998
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<TABLE>
<CAPTION>
Shares Value
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<S> <C> <C>
COMMON STOCKS - 100%
BASIC MATERIALS - 13.4%
Agricultural Products - 1.6%
1,900 Pioneer Hi-Bred International, Inc. $ 51,300
--------
Aluminum - 1.6%
700 Aluminum Company of America $ 52,194
--------
Chemicals (Diversified) - 3.7%
600 Henkel KGaA (A.D.R.) $ 53,100
1,400 Monsanto Co. 66,500
--------
$119,600
--------
Chemicals (Specialty) - 1.6%
1,300 Minerals Technologies, Inc. $ 53,219
--------
Containers & Packaging (Paper) - 2.0%
1,100 Temple-Inland Inc. $ 65,244
--------
Gold & Precious Metals Mining - 1.3%
3,300 De Beers Consolidated Mines Ltd. (A.D.R.) $ 42,075
--------
Metals Mining - 1.6%
3,600 Usec Inc. $ 49,950
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TOTAL BASIC MATERIALS $433,582
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CAPITAL GOODS - 7.6%
Aerospace - 1.8%
1,100 Gulfstream Aerospace Corp.* $ 58,575
--------
Machinery (Diversified) - 1.2%
4,900 Siebe Plc (A.D.R.)* $ 39,200
--------
Manufacturing (Specialized) - 2.0%
1,300 Sealed Air Corp.* $ 66,381
--------
Office Equipment & Supplies - 2.6%
2,800 Anacomp, Inc.* $ 52,150
2,400 Nashua Corp.* 31,950
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$ 84,100
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TOTAL CAPITAL GOODS $248,256
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COMMUNICATION SERVICES - 4.0%
Telephone - 4.0%
1,100 Alltel Corp. $ 65,794
1,200 Bell Atlantic Corp. 63,600
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TOTAL COMMUNICATION SERVICES $129,394
--------
CONSUMER CYCLICALS - 12.6%
Auto Parts & Equipment - 1.4%
800 TRW Inc. $ 44,950
--------
Foods - 1.6%
2,400 Tyson Foods Inc. $ 51,000
--------
Household Furnishings & Appliances - 1.9%
1,000 Maytag Corp. $ 62,250
--------
Leisure Time (Products) - 1.9%
3,800 Huffy Corp. $ 62,700
--------
Publishing - 2.2%
700 McGraw-Hill Co., Inc. $ 71,312
--------
Retail (General Merchandise) - 2.0%
1,200 Dayton Hudson Corp. $ 65,100
--------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
Pioneer Independence Fund
Schedule of Investments - December 31, 1998
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<TABLE>
<CAPTION>
Shares Value
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<S> <C> <C>
Textiles (Apparel) - 1.6%
1,600 Liz Claiborne, Inc. $ 50,500
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TOTAL CONSUMER CYCLICALS $407,812
--------
CONSUMER STAPLES - 13.3%
Broadcasting (Cable/Television/Radio) - 2.1%
2,500 Infinity Broadcasting Corp.* $ 68,438
--------
Household Products (Non-Durables) - 1.7%
600 Procter & Gamble Co. $ 54,787
--------
Personal Care - 1.5%
1,000 The Gillette Co. $ 48,312
--------
Restaurants - 4.3%
4,000 Luby's Cafeterias Inc. $ 61,750
1,000 McDonald's Corp. 76,625
--------
$138,375
--------
Retail Stores (Food Chains) - 2.1%
1,500 Winn-Dixie Stores, Inc. $ 67,312
--------
Specialty Printing - 1.6%
3,300 John H. Harland Co. $ 52,181
--------
TOTAL CONSUMER STAPLES $429,405
--------
ENERGY - 6.1%
Oil (International Integrated) - 2.9%
2,000 Conoco, Inc.* $ 41,750
600 Mobil Corp. 52,275
--------
$ 94,025
--------
Oil & Gas (Production/Exploration) - 3.2%
1,700 Anadarko Petroleum Corp. $ 52,487
3,600 Plains Resources Inc.* 50,625
--------
$103,112
--------
TOTAL ENERGY $197,137
--------
FINANCIAL - 14.2%
Banks (Money Centers) - 1.9%
1,000 BankAmerica Corp. $ 60,125
--------
Banks (Regional) - 1.8%
2,500 North Fork Bancorporation, Inc. $ 59,844
--------
Consumer Financial - 1.8%
1,200 SLM Holdings Corp. $ 57,600
--------
Financial (Diversified) - 1.5%
2,000 Equity Office Properties Trust $ 48,000
--------
Insurance (Life/Health) - 1.0%
1,100 Conseco, Inc. $ 33,619
--------
Insurance (Property/Casualty) - 6.2%
800 Excel Ltd. $ 60,000
32 Berkshire Hathaway, Inc. (Class B)* 74,025
400 Progressive Corp. 67,750
--------
$201,775
--------
TOTAL FINANCIAL $460,963
--------
HEALTHCARE - 6.1%
Healthcare (Diversified) - 1.6%
900 American Home Products Corp. $ 50,681
--------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Pioneer Independence Fund
Schedule of Investments - December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE (continued)
Healthcare (Drugs/Major Pharmaceuticals) - 1.0%
600 Schering-Plough Corp. $ 33,150
----------
Healthcare (Managed Care) - 1.5%
2,800 Humana Inc.* $ 49,875
----------
Healthcare (Medical Products/Supplies) - 2.0%
1,200 Beckman Coulter Inc. $ 65,100
----------
TOTAL HEALTHCARE $ 198,806
----------
TECHNOLOGY - 14.7%
Communications Equipment - 2.3%
1,100 Alcatel Alsthom SA (A.D.R.) $ 26,881
400 Nokia Corp. (A.D.R.) 48,175
----------
$ 75,056
----------
Computers (Hardware) - 3.3%
1,700 Compaq Computer Corp. $ 71,294
500 Hewlett-Packard Co. 34,156
----------
$ 105,450
----------
Computers (Software & Services) - 4.4%
500 Cadence Design Systems Inc.* $ 14,875
1,000 The Learning Co., Inc.* 25,938
1,200 Oracle Corp.* 51,750
1,400 SAP AG (A.D.R.) 50,488
----------
$ 143,051
----------
Electronics (Semiconductors) - 3.4%
1,500 Etec Systems Inc.* $ 60,000
600 Texas Instruments Inc. 51,338
----------
$ 111,338
----------
Photography/Imaging - 1.3%
600 Eastman Kodak Co. $ 43,200
----------
TOTAL TECHNOLOGY $ 478,095
----------
TRANSPORTATION - 3.4%
Railroads - 3.4%
1,000 Canadian National Railway Co. $ 51,875
1,300 Union Pacific Corp. 58,581
----------
TOTAL TRANSPORTATION $ 110,456
----------
UTILITIES - 4.6%
Electric Companies - 1.7%
2,000 Edison International Inc. $ 55,750
----------
Natural Gas - 1.3%
1,400 Williams Companies, Inc. $ 43,663
----------
Water Utilities - 1.6%
1,500 American Water Works Co., Inc. $ 50,625
----------
TOTAL UTILITIES $ 150,038
----------
TOTAL INVESTMENT IN SECURITIES
94,232 (Cost $3,011,424) (a) (b) $3,243,944
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
Pioneer Independence Fund
Schedule of Investments - December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
* Non-income producing security.
(a) At December 31, 1998, the net unrealized gain on investments based on cost for
federal income tax purposes of $3,011,424 was as follows:
Aggregate gross unrealized gain for all investments in which there is an excess of
value over cost $325,161
Aggregate gross unrealized gain for all investments in which there is an excess of tax
cost over value (92,641)
--------
Net unrealized gain $232,520
========
(b) At December 31, 1998, the Fund had a net capital loss carryforward of $49,000 which
will expire in 2006 if not utilized.
Purchases and sales of securities (excluding temporary cash investments) for the
period ended December 31, 1998 aggregated $4,327,347 and $1,319,009 respectively.
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
Pioneer Independence Fund
Balance Sheet
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investment in securities, at value (cost $3,011,424) $3,243,944
Cash 54,739
Receivables -
Investment securities sold 91,623
Fund shares sold 42,681
Dividends and interest 2,545
Due from Pioneer Investment Management, Inc. 41,534
Organizational costs - net 48,223
Other 3,222
----------
Total assets $3,528,511
----------
Liabilities:
Payables -
Investment securities purchased $ 122,024
Fund shares repurchased 243
Dividends 2,216
Due to affiliates 13,113
Accrued expenses 55,709
----------
Total liabilities $ 193,305
----------
Net Assets:
Paid-in capital $3,151,686
Accumulated net realized loss on investments (49,000)
Net unrealized gain on investments 232,520
----------
Total net assets $3,335,206
==========
Net Asset Value Per Share:
(Unlimited number of shares authorized)
Based on $3,335,206/346,427 shares $ 9.63
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
Pioneer Independence Fund
Statement of Operations
For the Period from March 16, 1998 (Commencement of Operations) to December 31,
1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income:
Dividends (net of foreign taxes withheld of $128) $14,263
Interest 1,409
-------
Total investment income $ 15,672
---------
Expenses:
Management fees $ 8,494
Transfer agent fees 27,027
Distribution fees 2,832
Accounting 26,554
Custodian fees 12,265
Registration fees 12,760
Professional fees 41,020
Printing 17,110
Fees and expenses of nonaffiliated trustees 16,300
Organization costs 29,361
Other 3,317
-------
Total expenses $ 197,040
Less management fees waived and expenses reimbursed
by Pioneer Investment Management, Inc. (177,898)
Less fees paid indirectly (2,153)
---------
Net expenses $ 16,989
---------
Net investment loss $ (1,317)
---------
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments $ (49,000)
Net unrealized gain on investments 232,520
---------
Net increase in net assets resulting from operations $ 182,203
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
Pioneer Independence Fund
Statement of Changes in Net Assets
For the Period from March 16, 1998 (Commencement of Operations) to December 31,
1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 16, 1998 to
December 31, 1998
------------------
<S> <C> <C>
From Operations:
Net investment loss $ (1,317)
Net realized loss on investments (49,000)
Net unrealized gain on investments 232,520
----------
Net increase in net assets resulting from operations $ 182,203
----------
DISTRIBUTIONS TO SHAREHOLDERS:
In excess of net investment income ($0.09 per share) $ (29,968)
----------
Total distributions to shareholders $ (29,968)
----------
From Fund Share Transactions: '98 Shares
----------
Net proceeds from sale of shares 366,217 $3,350,061
Reinvestment of distributions 2,994 27,752
Cost of shares repurchased (32,784) (294,842)
------- ----------
Net increase in net assets resulting from fund share transactions 336,427 $3,082,971
======= ----------
Net increase in net assets $3,235,206
Net Assets:
Beginning of period (initial capitalization - 10,000 shares) 100,000
----------
End of period (including accumulated undistributed net investment
income of $0) $3,335,206
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
Pioneer Independence Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 16, 1998 to
December 31, 1998(a)
--------------------
<S> <C>
Net asset value, beginning of period $ 10.00
-------
Net decrease from investment operations:
Net investment loss $ (0.01)
Net realized and unrealized loss on investments (0.27)
-------
Net decrease from investment operations $ (0.28)
Distributions to shareholders:
In excess of net investment income (0.09)
-------
Net decrease in net asset value $ (0.37)
-------
Net asset value, end of period $ 9.63
=======
Total return* (2.78)%
Ratio of net expenses to average net assets 1.68%**+
Ratio of net investment loss to average net assets (0.30)%**+
Portfolio turnover rate 118%**
Net assets, end of period (in thousands) $ 3,335
Ratios assuming no waiver of management fees and
assumption of expenses by PIM and no reduction
for fees paid indirectly:
Net expenses 17.26%**
Net investment loss (15.88)%**
Ratios assuming waiver of management fees and
assumption of expenses by PIM and reduction for
fees paid indirectly:
Net expenses 1.50%**
Net investment loss (0.12)%**
</TABLE>
(a) The per share data presented above is based upon the average shares
outstanding for the period presented.
* Assumes initial investment at net asset value at the beginning of the
period, reinvestment of distributions and the complete redemption of the
investment at net asset value at the end of the period.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
Notes to Financial Statements - December 31, 1998
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies - Pioneer Independence
Fund (the Fund) is a Delaware business trust registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
The Fund is available to the general public only through Pioneer Independence
Plans, a systematic investment plan sponsored by Pioneer Funds Distributor,
Inc. (PFD). The Fund was organized on December 8, 1997 and commenced operations
on March 16, 1998. Prior to March 16, 1998, the Fund had no operations other
than those relating to organizational matters and the initial capitalization of
the Fund by PFD. The investment objective of the Fund is to seek capital
appreciation.
The Fund's financial statements have been prepared in conformity with
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 revenues and expenses during the reporting periods. 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 on trade date. The
net asset value is computed once daily, on each day that the New York Stock
Exchange is open, as of the close of the regular trading on the Exchange. In
computing the net asset value, securities are valued at the last sale price on
the principal exchange where they are traded. Securities that have not traded
on the date of valuation, or securities for which sale prices are not generally
reported, are valued at the mean between the last bid and asked prices.
Securities for which market quotations are not readily available are valued at
their fair values as determined by, or under the direction of, the Board of
Trustees. Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Temporary cash investments are valued
at amortized cost.
B. 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 shareholders. Therefore, no federal income tax provision
is required.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes. It is
the Fund's practice to first select for sale those securities that have the
highest cost and also qualify for long-term capital gain or loss treatment for
tax purposes.
The characterization of distributions to shareholders 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.
At December 31, 1998, the Fund has reclassified $31,285 from paid-in
capital to accumulated net investment loss. The reclassification has no impact
on the net asset value of the Fund and is designed to present the Fund's
capital accounts on a tax basis.
C. Fund Shares - The Fund records sales and repurchases of its shares on
trade date. Net losses, if any, as a result of cancellations are absorbed by
PFD, the principal underwriter for the Fund and an indirect subsidiary of The
Pioneer Group, Inc. (PGI).
D. Repurchase Agreement - 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) (formerly
Pioneering Management Corp.), is responsible for determining that the value of
the collateral remains at least equal to the repurchase price.
E. Deferred Organization Costs - The costs incurred by the Fund in connection
with its organization have been deferred and are amortized on a straight-line
basis over a period of up to five years. If PFD redeems any of its initial
investment prior to the end of the amortization period, the redemption proceeds
will be decreased by the pro rata share of the unamortized expenses as of the
date of redemption. The pro rata shares is derived by dividing the number of
original shares redeemed by the total number of original shares outstanding at
the time of redemption.
13
<PAGE>
Notes to Financial Statements - December 31, 1998
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2. Management Agreement - PIM manages the Fund's portfolio and is a wholly
owned subsidiary of PGI. Management fees are calculated daily at the annual
rate of 0.75% of the Fund's average daily net assets.
PIM has agreed not to impose all or a portion of its management fee and to
assume other operating expenses of the Fund to the extent necessary to limit
the Fund's expenses to 1.50% of average daily net assets. PIM's agreement is
temporary and voluntary and may be revised or terminated at any time.
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.
3. Transfer Agent - Pioneering Services Corp. (PSC), a wholly owned
subsidiary of PGI, provides substantially all transfer agent and shareholder
services to the Fund at negotiated rates. Included in due to affiliates is
$11,997 in transfer agent fees payable to PSC at December 31, 1998.
4. Distribution Plan - The Fund adopted a Plan of Distribution in accordance
with Rule 12b-1 of the Investment Company Act of 1940. Pursuant to the
Distribution Plan, the Fund pays PFD a service fee of up to 0.25% of the Fund's
average daily net assets in reimbursement of its actual expenditures to finance
activities primarily intended to result in the sale of fund shares. Included in
due to affiliates is $1,116 in distribution fees payable to PFD at December 31,
1998.
5. Expense Offsets - The Fund has entered into certain expense offset
arrangements resulting in a reduction in the Fund's total expenses. For the
period ended December 31, 1998, the Fund's expenses were reduced by $2,153
under such arrangements.
14
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Pioneer Independence Fund
Report of Independent Public Accountants
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To the Shareowners and the Board of Trustees of Pioneer Independence Fund:
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer Independence Fund as of December 31, 1998, and the
related statement of operations, the statement of changes in net assets, and
financial highlights for the period presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Independence Fund as of December 31, 1998, the results of its
operations, the change in its net assets, and the financial highlights for the
period presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 12, 1999
15
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This page for your notes.
16
<PAGE>
This page for your notes.
17
<PAGE>
[Pioneer Logo] PIONEER INDEPENDENCE FUND
Officers
John F. Cogan, Jr., Chairman and President
David D. Tripple, Executive Vice President
John A. Boynton, Treasurer
Joseph P. Barri, Secretary
Trustees
John F. Cogan, Jr.
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
John W. Kendrick
Marguerite A. Piret
David D. Tripple
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Distributor
Pioneer Funds Distributor, Inc.
Independent Public Accountants
Arthur Andersen LLP
Legal Counsel
Hale and Dorr LLP
Pioneer Independence Fund is available to the general public only through
Pioneer Independence Plans, a systematic investment plan sponsored by Pioneer
Funds Distributor, Inc.
This report must be preceded or accompanied by a prospectus for Pioneer
Independence Fund, which includes more information about charges and expenses.
Please read the prospectus carefully before you invest or send money.
0299-6094
[Copyright Symbol] Pioneer Funds Distributor, Inc.
