[Pioneer Logo]
PIONEER
BALANCED
FUND
SEMI ANNUAL REPORT 6/30/98
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<S> <C>
Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule of Investments 9
Financial Statements 16
Notes to Financial Statements 22
Report of Independent Public Accountants 26
Trustees, Officers and Service Providers 27
Retirement Plans from Pioneer 28
</TABLE>
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PIONEER BALANCED FUND
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LETTER FROM THE CHAIRMAN 6/30/98
DEAR SHAREOWNER,
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Thank you for this opportunity to introduce the semiannual report for
Pioneer Balanced Fund, covering the six months ended June 30, 1998. I
will take a moment to comment on today's investing environment and
point out a few matters of note concerning your Fund. On behalf of
your investment team, I thank you for your interest in Pioneer and
look forward to serving your financial needs in the future.
The bull market in the United States rolled on through the first half
of 1998. Although the effects of Asia's financial crisis showed more
frequently in the earnings reports of many U.S. companies, strong
employment and low inflation kept consumer confidence at record
highs. Some investors showed concern over Asia's problems and a
narrowing of the U.S. bull market by moving toward the relative
safety of U.S. blue chip companies and high-quality bonds,
particularly Treasurys.
This "flight to quality" reflects a general wariness over the
historic bull market's continued viability. Your Fund's attempts to
strike a balance between the growth potential of the U.S. stock
market and the safety and income features of high-quality domestic
bonds are in keeping with the economic times. With patience and
research your Fund will continue to seek growth and income for the
long term.
I encourage you to read on to learn more about Pioneer Balanced Fund.
If you have questions, please contact your investment professional,
or Pioneer at 1-800-225-6292.
Respectfully,
/s/ John F. Gogan, Jr.
John F. Cogan, Jr.,
Chairman and President
1
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PIONEER BALANCED FUND
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PORTFOLIO SUMMARY 6/30/98
PORTFOLIO DIVERSIFICATION
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(As a percentage of total investment portfolio)
[PIE CHART]
Convertible Securities 1%
International Preferred Stocks 1%
Short-Term Cash Equivalents 5%
U.S. Common Stocks 55%
U.S. Corporate Bonds 23%
U.S. Corporate Securities 15%
SECTOR DISTRIBUTION
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(As a percentage of long-term holdings)
[PIE CHART]
Other 11%
Consumer Staples 4%
Energy 6%
Technology 6%
Consumer Cyclicals 5%
Financial 20%
Healthcare 17%
Government Obligations 15%
Basic Materials 10%
Capital Goods 6%
10 LARGEST HOLDINGS
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(As a percentage of long-term holdings)
<TABLE>
<C> <S> <C> <C> <C> <C>
1. Monsanto Co. 3.81% 6. Allstate Corp. 3.12%
2. U.S. Treasury Bond, 6.5%, 3.62 7. Integrated Health Services, 2.90
10/15/06 Inc.
3. U.S. Treasury Notes, 6.25%, 3.48 8. Merck & Co., Inc. 2.73
1/31/02
4. U.S. Treasury Notes, 5.875%, 3.41 9. Conseco, Inc. 2.71
1/31/99
5. Green Tree Financial Corp. 3.35 10. American Home Products Corp. 2.64
</TABLE>
Fund holdings will vary for other periods.
2
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PIONEER BALANCED FUND
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PERFORMANCE UPDATE 6/30/98 CLASS A SHARES
SHARE PRICES AND DISTRIBUTIONS
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<TABLE>
<CAPTION>
NET ASSET VALUE
PER SHARE 6/30/98 12/31/97
<S> <C> <C> <C>
$10.52 $10.15
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(12/31/97 - 6/30/98) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
<S> <C> <C> <C>
$0.150 - -
</TABLE>
INVESTMENT RETURNS
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The mountain chart on the right shows the growth of a $10,000
investment made in Pioneer Balanced Fund at public offering price,
compared to the growth of the Standard & Poor's 500 Index and the
Lehman Brothers Government/Corporate Bond Index.
[CHART]
Growth of $10,000
<TABLE>
<CAPTION>
Lehman Brothers Government/
Pioneer Balanced Fund* Standard & Poor's 500 Index Corporate Bond Index
- ---------------------- --------------------------- ---------------------------
<S> <C> <C>
9550 10,000 10,000
10,843 12,044 11,234
11,787 14,018 12,032
12,740 15,054 13,262
14,320 17,065 15,141
16,219 19,381 17,132
16,025 19,658 16,881
17,834 24,768 19,036
19,784 31,191 19,927
22,887 41,993 21,471
25,775 54,628 23,894
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
(As of June 30, 1998)
<TABLE>
<CAPTION>
PERIOD NET ASSET VALUE PUBLIC OFFERING PRICE*
------ --------------- ---------------------
<S> <C> <C>
10 Years 10.43% 9.93%
5 Years 9.71 8.71
1 year 12.62 7.60
</TABLE>
* Reflects deduction of the maximum 4.5% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
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 Lehman Brothers Government/Corporate Bond Index is an unmanaged,
composite index of the U.S. bond market. It contains 5,353 issues,
including Treasury and government agency securities, investment-grade
corporate bonds and Yankee bonds. 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. Index returns assume reinvestment of dividends
and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in an Index.
Past performance does not guarantee future results. Return and share
price fluctuate, and your shares, when redeemed, may be worth more or
less than their original cost.
3
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PIONEER BALANCED FUND
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PERFORMANCE UPDATE 6/30/98 CLASS B SHARES
SHARE PRICES AND DISTRIBUTIONS
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<TABLE>
<CAPTION>
NET ASSET VALUE
PER SHARE 6/30/98 12/31/97
<S> <C> <C> <C>
$10.44 $10.08
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(12/31/97 - 6/30/98) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
<S> <C> <C> <C>
$0.110 - -
</TABLE>
INVESTMENT RETURNS
-----------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000
investment made in Pioneer Balanced Fund, compared to the growth of the
Standard & Poor's 500 Index and the Lehman Brothers Government/
Corporate Bond Index.
[CHART]
GROWTH OF $10,000
<TABLE>
<CAPTION>
PIONEER STANDARD & POOR'S LEHMAN BROTHERS GOVERNMENT/
BALANCED FUND* 500 INDEX CORPORATE BOND INDEX
<S> <C> <C>
10,000 10,000 10,000
10,397 10,654 10,502
10,813 11,498 10,703
11,374 12,188 11,202
11,330 12,841 10,942
11,455 13,416 10,994
11,672 13,827 11,188
12,400 14,979 11,530
12,235 15,383 11,431
13,142 18,062 11,846
14,232 19,413 12,261
14,010 19,969 12,655
14,871 22,748 12,847
14,362 23,497 13,183
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
(As of June 30, 1998)
<TABLE>
<CAPTION>
IF IF
PERIOD HELD REDEEMED*
<S> <C> <C>
Life-of-Fund 12.79% 12.06%
(4/28/95)
1 Year 11.57 7.80
</TABLE>
* Reflects deduction of the maximum applicable contingent deferred sales
charge (CDSC) at the end of the period and assumes reinvestment of
distributions. The maximum CDSC of 4% declines over six years.
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 Lehman Brothers Government/Corporate Bond Index is an unmanaged,
composite index of the U.S. bond market. It contains 5,353 issues,
including Treasury and government agency securities, investment-grade
corporate bonds and Yankee bonds. 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. Index returns assume reinvestment of dividends
and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in an Index.
Past performance does not guarantee future results. Return and share
price fluctuate, and your shares, when redeemed, may be worth more or
less than their original cost.
4
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PIONEER BALANCED FUND
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PERFORMANCE UPDATE 6/30/98 CLASS C SHARES
SHARE PRICES AND DISTRIBUTIONS
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
PER SHARE 6/30/98 12/31/97
<S> <C> <C> <C>
$10.55 $10.17
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(12/31/97 - 6/30/98) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
<S> <C> <C> <C>
$0.110 - -
</TABLE>
INVESTMENT RETURNS
-----------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000
investment made in Pioneer Balanced Fund compared to the growth of the
Standard & Poor's 500 Index and the Lehman Brothers
Government/Corporate Bond Index.
[CHART]
GROWTH OF $10,000
<TABLE>
<CAPTION>
Pioneer Standard & Poor's Lehman Brothers Government/
Balanced Fund* 500 Index Corporate Bond Index
<S> <C> <C>
10,000 10,000 10,000
9,856 10,203 9,708
9,974 10,660 9,753
10,163 10,987 9,926
10,812 11,902 10,229
10,678 12,223 10,141
11,487 14,352 10,509
12,456 15,426 10,878
12,269 15,867 11,227
13,029 18,076 11,398
12,859 18,671 11,696
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
(As of June 30, 1998)
<TABLE>
<CAPTION>
IF IF
PERIOD HELD REDEEMED*
<S> <C> <C>
Life-of-Fund 11.00% 11.00%
(1/31/96)
1 Year 11.95 11.95
</TABLE>
* Assumes reinvestment of distributions. The 1% contingent deferred sales
charge (CDSC) applies to redemptions made within one year of purchase.
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 Lehman Brothers Government/Corporate Bond Index is an unmanaged,
composite index of the U.S. bond market. It contains 5,353 issues,
including Treasury and government agency securities, investment-grade
corporate bonds and Yankee bonds. 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. Index returns assume reinvestment of dividends
and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in an Index.
Past performance does not guarantee future results. Return and share
price fluctuate, and your shares, when redeemed, may be worth more or
less than their original cost.
5
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PIONEER BALANCED FUND
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/98
Over the past six months, neither the aging bull market in the United
States nor the bear market in Asia gave any real signs of going away.
Their dual influence on the worlds of business and finance clouded
the crystal ball of many would be prognosticators.
U.S. stocks, reflected in the broad-based Standard & Poor's 500
Index's return of 17.67%, surged ahead, despite a slower second
quarter that included rumblings from Asia's economic troubles. As the
period progressed, bonds, especially the high quality Treasurys,
benefited from nervous investors' "flight to quality" as the signals
became more mixed on the ability of the bull market to survive.
The following discussion with your Fund's portfolio manager, William
C. Field, provides a review of the semiannual period, including a
look at some of the factors that affected investment decisions and
performance.
Q: HOW DID THE FUND PERFORM IN THE FIRST SIX MONTHS OF THIS YEAR?
A: On an absolute basis, the Fund has posted solid performance
numbers. For the six months ended June 30, 1998, Class A Shares
returned 5.12%, Class B Shares 4.65% and Class C Shares 4.81% at net
asset value. Unfortunately, we underperformed the 8.95% average
return for the 409 funds in the Lipper Balanced Funds category.
(Lipper Analytical Services, Inc. is an independent firm that reports
mutual fund performance.)
Q: WHAT ARE SOME OF THE FACTORS THAT AFFECTED PERFORMANCE?
A: Our largest holdings in the Fund did well. Drug manufacturer Merck
rose 27.14%. Green Tree Financial was up 83.60%, benefiting from its
acquisition by another of our investments, Conseco. American Home
Products returned 37.25%.
The Fund's gains from these stocks, however, were dampened by
holdings in technology, specifically the semiconductor and
semiconductor-related industries, as well as by investments in real
estate investment trusts (REITs).
In the semiconductor industry, where lack of demand and too much
inventory wreaked havoc on business, investments in Applied
Materials,
6
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
Teradyne, Helix Technologies and Photronics hurt results. This
normally cyclical business has been down for two years now. That's
usually its inflection point - when business rebounds - but that
hasn't happened this time around. The lack of Asian demand has put
off any improvement, since companies in Asia can't raise capital to
build new plants and order equipment. These mostly small technology
companies cost the Fund in relative performance. We had a weighting
in technology of 14% at the beginning of the period. We've brought
our weighting down to 6% by the end of the period.
REITs, which traditionally move independently of the general stock
market, were another problem. With the current demand for these
stocks so low and our belief that this would not change any time
soon, we decided to bring down our weighting in REITs significantly.
As a matter of fact, the only REIT still in the portfolio is
Mack-Cali Realty.
Q: WERE THERE ANY OTHER SHIFTS IN THE FUND'S INVESTMENT STRATEGY?
A: We sold small-cap technology stocks and reallocated that money to
healthcare including pharmaceuticals. We completely sold positions in
Adaptec, Avnet and Lam Research.
We believe pharmaceuticals will have more consistent growth going
forward, even though they look a little expensive right now. In terms
of demographics, they have the wind at their backs. As mentioned
before, Merck and American Home Products have both done well.
CVS, a new buy this period, is at the forefront of the consolidating
pharmacy business. By acquiring Revco, it has extended its reach
south along the East Coast and it has pushed West with Arbour Drug, a
Michigan based company. CVS now profitably dominates the East Coast
drug store pharmacy business and is looking for more territories to
enter.
Q: ANY OTHER SECTORS WORTH MENTIONING?
A: Financial has been a good area. Insurance companies Allstate and
Conseco did well for us. Conseco had a huge first quarter, then took
some charges when it bought Green Tree Financial. Green Tree's
earnings had been accelerating and Conseco decided to take the
plunge.
7
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/98 (CONTINUED)
There are concerns on the street that Conseco (an insurance company
vs. consumer finance) wouldn't know how to run Green Tree. We own
both and believe we understand both of them and the advantages to
their merger. We're looking for them to take advantage of some cost
efficiencies and surprise on the upside with earnings. The stock
sells at 12x earnings - the peer group sells at 18x earnings. So
there is huge room for improvement.
Q: WHAT ABOUT THE MIX OF STOCKS AND BONDS?
A: In the middle of the period we were at the high end of the range
of equity investments - 60% in equities, 38% in bonds and 2% in cash.
The equity side came down when we sold technology, and at the end of
the period we were at about 57% equities. That's at the lower end of
the range now but I think it's prudent with the S&P 500 at all time
highs.
On the bond side, the only news during the first half of the year was
that we sold the position in General Motors. We took the proceeds and
bought five-year Treasurys to bring down the duration. The Fund went
from an average duration of 5.3 years in the middle of the period
around March 31 to 4.7 years on June 30 at the end. That's in line
with the Lehman Brothers Government/Corporate Index. (Duration is a
measure of price sensitivity to interest rates. The longer the
duration the greater the change in response to a move in interest
rates.)
Q: HOW DO YOU SEE THE REST OF THE YEAR UNFOLDING?
A: I hope to see more consistent performance from the Fund. Selling
small-cap technology stocks should take out a lot of potential
volatility. We've increased the portfolio's average market
capitalization - now at $6 billion - by using the money from
small-caps to add large healthcare/pharmaceutical firms. I am also
confident that the 10 largest stock holdings are well positioned.
Between the bond portfolio's shorter duration and the larger average
market-cap for stocks, I hope to see the Fund's relative performance
improve as well. Ultimately our goal is to provide our shareowners
with regular income and performance that lands between the returns of
the Lehman Government/Corporate Index and the Standard & Poor's 500
Index.
8
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/98
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
INVESTMENT IN SECURITIES - 94.9%
PREFERRED STOCKS - 1.7%
117,000 Elf Overseas, Ltd. (Series A) $ 3,042,000
38,150 Sprint Corp., 8.25%, 3/31/00 (Convertible) 2,205,547
------------
TOTAL PREFERRED STOCKS
(Cost $4,273,401) $ 5,247,547
------------
COMMON STOCKS - 54.8%
BASIC MATERIALS - 5.3%
CHEMICALS - 1.0%
40,000 E.I. du Pont Nemours and Co. $ 2,985,000
------------
CHEMICALS (DIVERSIFIED) - 3.6%
200,000 Monsanto Co. $ 11,175,000
------------
GOLD & PRECIOUS METALS MINING - 0.7%
95,000 Newmont Mining Corp. $ 2,244,375
------------
TOTAL BASIC MATERIALS $ 16,404,375
------------
CAPITAL GOODS - 1.8%
AEROSPACE/DEFENSE - 0.4%
30,000 Boeing Co. $ 1,336,875
------------
MACHINERY (DIVERSIFIED) - 0.8%
116,200 AGCO Corp. $ 2,389,363
------------
MACHINERY (SPECIALIZED) - 0.6%
50,000 Sealed Air Corp.* $ 1,837,500
------------
TOTAL CAPITAL GOODS $ 5,563,738
------------
COMMUNICATION SERVICES - 2.1%
TELEPHONE - 2.1%
20,000 Ameritech Corp. $ 897,500
20,000 Bell Atlantic Corp. 912,500
30,000 Bellsouth Corp. 2,013,750
50,000 GTE Corp. 2,781,250
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TOTAL COMMUNICATION SERVICES $ 6,605,000
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 9
<PAGE>
PIONEER BALANCED FUND
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SCHEDULE OF INVESTMENTS 6/30/98 (CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
CONSUMER CYCLICALS - 1.7%
AUTO PARTS & EQUIPMENT - 0.5%
20,100 Magna International Inc. $ 1,379,362
------------
HOMEBUILDING - 0.7%
110,000 Clayton Homes, Inc. $ 2,090,000
------------
RETAIL (DEPT. STORES) - 0.2%
10,000 Penney (J.C.) Co., Inc. $ 723,125
------------
TEXTILES (APPAREL) - 0.3%
20,000 Nike, Inc. (Class B) $ 973,750
------------
TOTAL CONSUMER CYCLICALS $ 5,166,237
------------
CONSUMER STAPLES - 3.8%
FOODS - 0.7%
10,000 BestFoods $ 580,625
30,000 Heinz (H.J.) Co. 1,683,750
------------
$ 2,264,375
------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 2.8%
110,900 First Brands Corp. $ 2,841,813
125,000 Kimberly Clark Co. 5,734,375
------------
$ 8,576,188
------------
RETAIL (DRUG STORES) - 0.3%
20,000 CVS Corp. $ 778,750
------------
TOTAL CONSUMER STAPLES $ 11,619,313
------------
ENERGY - 3.0%
OIL (DOMESTIC INTEGRATED) - 1.3%
50,000 Atlantic Richfield Co. $ 3,906,250
------------
OIL (INTERNATIONAL INTEGRATED) - 1.3%
40,000 Amoco Corp. $ 1,665,000
30,000 Mobil Corp. 2,298,750
------------
$ 3,963,750
------------
OIL & GAS (DRILLING & EQUIPMENT) - 0.1%
10,000 EVI, Inc.* $ 371,250
------------
OIL & GAS (REFINING & MARKETING) - 0.3%
25,000 Sun Company, Inc. $ 970,313
------------
TOTAL ENERGY $ 9,211,563
------------
</TABLE>
10
The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
FINANCIAL - 15.3%
BANKS (MONEY CENTER) - 1.0%
40,000 The Chase Manhattan Corp. $ 3,020,000
------------
CONSUMER FINANCE - 4.8%
230,000 Green Tree Financial Corp. $ 9,846,875
100,000 SLM Holdings Corp. 4,900,000
------------
$ 14,746,875
------------
FINANCIAL (DIVERSIFIED) - 1.3%
10,000 Federal National Mortgage Association $ 607,500
100,000 Mack-Cali Reality Corp. 3,437,500
7,500 Ocwen Asset Investment Corp. 124,219
------------
$ 4,169,219
------------
INSURANCE (PROPERTY-CASUALTY) - 2.9%
100,000 Allstate Corp. $ 9,156,250
------------
INSURANCE (LIFE/HEALTH) - 2.6%
170,000 Conseco, Inc. $ 7,947,500
------------
SAVINGS & LOAN - 2.7%
74,000 Charter One Financial, Inc. $ 2,492,875
133,500 Washington Mutual, Inc. 5,798,906
------------
$ 8,291,781
------------
TOTAL FINANCIAL $ 47,331,625
------------
HEALTHCARE - 14.8%
HEALTHCARE (DIVERSIFIED) - 4.9%
150,000 American Home Products Corp. $ 7,762,500
40,000 Bristol-Myers Squibb Co. 4,597,500
40,000 Johnson & Johnson 2,950,000
------------
$ 15,310,000
------------
HEALTHCARE (DRUGS/MAJOR PHARMACEUTICALS) - 2.5%
60,000 Merck & Co., Inc. $ 8,025,000
------------
HEALTHCARE (HOSPITAL MGT.) - 2.0%
105,000 Quorum Health Group, Inc.* $ 2,782,500
113,300 Tenet Healthcare Corp.* 3,540,625
------------
$ 6,323,125
------------
HEALTHCARE (LONG TERM CARE) - 2.8%
226,660 Integrated Health Services, Inc. $ 8,499,750
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/98 (CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
HEALTHCARE (MEDICAL PRODUCTS/SUPPLIES) - 2.5%
132,100 Beckman Instruments, Inc. $ 7,694,825
------------
TOTAL HEALTHCARE $ 45,852,700
------------
TECHNOLOGY - 6.2%
ELECTRONICS (SEMICONDUCTORS) - 1.8%
35,000 Etec Systems, Inc.* $ 1,231,562
60,000 Intel Corp. 4,447,500
------------
$ 5,679,062
------------
EQUIPMENT (SEMICONDUCTOR) - 3.3%
125,000 Applied Materials, Inc.* $ 3,687,500
198,900 Helix Technology Corp. 2,983,500
95,800 Photronics, Inc.* 2,113,587
53,000 Teradyne, Inc.* 1,417,750
------------
$ 10,202,337
------------
SERVICES (DATA PROCESSING) - 1.1%
100,000 First Data Corp. $ 3,331,250
------------
TOTAL TECHNOLOGY $ 19,212,649
------------
UTILITIES - 0.8%
ELECTRIC COMPANIES - 0.8%
20,000 Allegheny Power Systems, Inc. $ 602,500
50,000 Dominion Resources, Inc. 2,037,500
------------
TOTAL UTILITIES $ 2,640,000
------------
TOTAL COMMON STOCKS
(Cost $151,803,447) $169,607,200
------------
</TABLE>
<TABLE>
<CAPTION>
S&P/MOODY'S
PRINCIPAL RATINGS
AMOUNT (UNAUDITED)
<C> <S> <C> <C>
DEBT OBLIGATIONS - 38.4%
U.S. CORPORATE BONDS - 23.4%
BASIC MATERIALS - 4.5%
$ 2,000,000 BB-/Ba3 Bethlehem Steel Corp., 10.375%, 9/1/03 $ 2,150,000
2,000,000 BBB/Baa2 Bowater, Inc., 9.0%, 8/1/09 2,348,280
4,000,000 BBB-/Baa2 Georgia Pacific Co., 9.875%, 11/1/21 4,498,760
4,000,000 BBB-/Baa2 USX Corp., 9.375%, 2/15/12 4,924,200
-------------
TOTAL BASIC MATERIALS $ 13,921,240
-------------
</TABLE>
12
The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/MOODY'S
PRINCIPAL RATINGS
AMOUNT (UNAUDITED) VALUE
<C> <S> <C> <C>
CAPITAL GOODS - 3.7%
$ 5,000,000 AAA/Aaa General Electric Capital Corp., 8.85%,
4/1/05 $ 5,777,300
5,000,000 BBB-/Baa3 Southdown, Inc., 10.0%, 3/1/06 5,575,000
-------------
TOTAL CAPITAL GOODS $ 11,352,300
-------------
CONSUMER CYCLICALS - 3.1%
2,000,000 A/A2 General Motors Acceptance Corp., 8.5%,
1/1/03 $ 2,179,440
1,500,000 A/A2 May Department Stores Co., 9.875%,
6/15/00 1,603,275
5,000,000 BBB-/Baa3 News America Holdings, Inc., 8.25%,
8/10/18 5,667,350
-------------
TOTAL CONSUMER CYCLICALS $ 9,450,065
-------------
CONSUMER STAPLES - 0.7%
2,000,000 BB-/B1 Viacom International, Inc., 10.25%,
9/15/01 $ 2,215,000
-------------
TOTAL CONSUMER STAPLES $ 2,215,000
-------------
ENERGY - 2.4%
2,500,000 BBB/Baa2 Ashland Oil Co., 8.8%, 11/15/12 $ 2,994,175
4,100,000 A-/A3 Phillips Petroleum Co., 8.86%, 5/15/22 4,520,373
-------------
TOTAL ENERGY $ 7,514,548
-------------
FINANCIAL - 4.3%
4,000,000 A/A1 Ford Motor Credit Co., 9.14%, 12/30/14 $ 4,641,000
5,000,000 BB-/Ba1 Riggs National Corp., 8.5%, 2/1/06 5,301,700
3,000,000 BBB+/A3 Washington Mutual, Inc., 8.375%, 6/1/27 3,330,390
-------------
TOTAL FINANCIAL $ 13,273,090
-------------
HEALTHCARE - 1.7%
5,000,000 BB-/Ba3 Quorum Health Group, 8.75%, 11/1/05 $ 5,175,000
-------------
TOTAL HEALTHCARE $ 5,175,000
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/98 (CONTINUED)
<TABLE>
<CAPTION>
S&P/MOODY'S
PRINCIPAL RATINGS
AMOUNT (UNAUDITED) VALUE
<C> <S> <C> <C>
TRANSPORTATION - 3.0%
$ 5,000,000 BBB/Baa1 Delta Air Lines, Inc., 9.2%, 9/23/14 $ 6,113,800
3,000,000 BBB-/Baa2 Kansas City Southern Industries, Inc.,
8.8%, 7/1/22 3,300,720
-------------
TOTAL TRANSPORTATION $ 9,414,520
-------------
TOTAL CORPORATE BONDS $ 72,315,763
-------------
U.S. GOVERNMENT OBLIGATIONS - 15.0%
4,000,000 U.S. Treasury Bond, 5.625%, 12/31/02 $ 4,016,680
5,000,000 U.S. Treasury Bond, 5.375%, 6/30/03 4,975,391
10,000,000 U.S. Treasury Bond, 6.5%, 10/15/06 10,619,700
10,000,000 U.S. Treasury Notes, 5.875%, 1/31/99 10,023,100
10,000,000 U.S. Treasury Notes, 6.25%, 1/31/02 10,223,200
6,500,000 U.S. Treasury Notes, 5.75%, 4/30/03 6,562,270
-------------
TOTAL U.S. GOVERNMENT OBLIGATIONS $ 46,420,341
-------------
TOTAL DEBT OBLIGATIONS
(Cost $114,630,484) $ 118,736,104
-------------
TOTAL INVESTMENT IN SECURITIES
(Cost $270,707,332) $ 293,590,851
-------------
</TABLE>
14
The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
TEMPORARY CASH INVESTMENT - 5.1%
REPURCHASE AGREEMENT - 5.1%
$15,700,000 The Chase Manhattan Corp., 5.50%, 7/1/98,
repurchase price of $15,700,000 plus accrued
interest on 7/1/98, collateralized by
$15,818,000 U.S. Treasury Notes, 5.507%,
3/31/00. $15,700,000
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $15,700,000) $15,700,000
-----------
TOTAL INVESTMENT IN SECURITIES AND TEMPORARY
CASH INVESTMENT - 100%
(Cost $286,407,332) (a) $309,290,851
-----------
</TABLE>
* Non-income producing security.
(a) At June 30, 1998, the net unrealized gain on investments based on cost for
federal income tax purposes of $286,407,332 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized gain for all investments in
which there is an excess of value over tax cost $ 31,682,899
Aggregate gross unrealized loss for all investments in
which there is an excess of tax cost over value (8,799,380)
------------
Net unrealized gain $ 22,883,519
------------
</TABLE>
Purchases and sales of securities (excluding temporary cash investments) for the
six months ended June 30, 1998 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Long-term U.S. Government $19,519,219 $ 3,953,061
Other Long-term Securities 73,528,841 83,628,130
</TABLE>
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
BALANCE SHEET 6/30/98
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary
cash investment of $15,700,000) (cost $286,407,332) $309,290,851
Cash 65,334
Receivables -
Investment securities sold 4,359,554
Fund shares sold 545,860
Dividends and interest 2,464,077
------------
Total assets $316,725,676
------------
LIABILITIES:
Payables -
Investment securities purchased $ 6,633,359
Fund shares repurchased 212,977
Due to affiliates 454,326
Accrued expenses 67,346
------------
Total liabilities $ 7,368,008
------------
NET ASSETS:
Paid-in capital $277,511,789
Accumulated undistributed net investment income 104,686
Accumulated undistributed net realized gain on investments 8,857,674
Net unrealized gain on investments 22,883,519
------------
Total net assets $309,357,668
------------
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $285,473,490/27,132,493 shares) $ 10.52
------------
Class B (based on $20,121,194/1,927,351 shares) $ 10.44
------------
Class C (based on $3,762,984/356,641 shares) $ 10.55
------------
MAXIMUM OFFERING PRICE:
Class A $ 11.02
------------
</TABLE>
16
The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED 6/30/98
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $3,437) $1,609,382
Interest 4,475,084
----------
Total investment income $ 6,084,466
------------
EXPENSES:
Management fees $ 985,757
Transfer agent fees
Class A 238,668
Class B 17,903
Class C 2,797
Distribution fees
Class A 354,553
Class B 84,871
Class C 13,469
Accounting 34,679
Custodian fees 33,527
Registration fees 36,200
Professional fees 22,064
Printing 14,289
Fees and expenses of nonaffiliated trustees 7,762
Miscellaneous 15,429
----------
Total expenses $ 1,861,968
Less fees paid indirectly (3,045)
------------
Net expenses $ 1,858,923
------------
Net investment income $ 4,225,543
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $ 2,371,538
Change in net unrealized gain on investments 8,335,642
------------
Net gain on investments $ 10,707,180
------------
Net increase in net assets resulting from operations $ 14,932,723
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED 6/30/98 AND THE YEAR ENDED 12/31/97
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
FROM OPERATIONS: 6/30/98 12/31/97
<S> <C> <C>
Net investment income $ 4,225,543 $ 10,205,513
Net realized gain on investments 2,371,538 42,840,367
Change in net unrealized gain on investments 8,335,642 (15,644,829)
------------ ------------
Net increase in net assets resulting from operations $ 14,932,723 $ 37,401,051
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.15 and $0.40 per share, respectively) $ (4,179,851) $ (9,787,194)
Class B ($0.11 and $0.31 per share, respectively) (193,309) (296,419)
Class C ($0.11 and $0.31 per share, respectively) (32,252) (41,660)
Net realized gain:
Class A ($0.00 and $1.54 per share, respectively) - (36,413,655)
Class B ($0.00 and $1.54 per share, respectively) - (1,818,106)
Class C ($0.00 and $1.54 per share, respectively) - (245,120)
------------ ------------
Total distributions to shareholders $ (4,405,412) $(48,602,154)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 33,224,177 $ 35,307,081
Reinvestment of distributions 3,826,900 43,110,353
Cost of shares repurchased (28,604,574) (60,895,690)
------------ ------------
Net increase in net assets resulting from fund share
transactions $ 8,446,503 $ 17,521,744
------------ ------------
Net increase in net assets $ 18,973,814 $ 6,320,641
NET ASSETS:
Beginning of period 290,383,854 284,063,213
------------ ------------
End of period (including accumulated undistributed net
investment income of $104,686 and $284,555, respectively) $309,357,668 $290,383,854
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
CLASS A '98 SHARES '98 AMOUNT '97 SHARES '97 AMOUNT
<S> <C> <C> <C> <C>
Shares sold 2,267,495 $ 23,891,374 2,323,054 $ 25,981,813
Reinvestment of distributions 341,583 3,625,144 4,015,098 40,935,530
Less shares repurchased (2,527,722) (26,735,369) (5,215,265) (58,241,422)
---------- ------------ ---------- ------------
Net increase 81,356 $ 781,149 1,122,887 $ 8,675,921
---------- ------------ ---------- ------------
CLASS B
Shares sold 678,669 $ 7,107,358 690,179 $ 7,841,955
Reinvestment of distributions 16,589 174,554 192,597 1,938,506
Less shares repurchased (135,671) (1,410,011) (170,315) (1,906,474)
---------- ------------ ---------- ------------
Net increase 559,587 $ 5,871,901 712,461 $ 7,873,987
---------- ------------ ---------- ------------
CLASS C
Shares sold 210,059 $ 2,225,445 129,250 $ 1,483,313
Reinvestment of distributions 2,560 27,202 23,280 236,317
Less shares repurchased (42,833) (459,194) (65,385) (747,794)
---------- ------------ ---------- ------------
Net increase 169,786 $ 1,793,453 87,145 $ 971,836
---------- ------------ ---------- ------------
</TABLE>
18
The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 6/30/98
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
CLASS A 6/30/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93(a)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.15 $ 10.65 $ 10.30 $ 9.11 $ 10.21 $ 10.13
---------- ---------- ---------- ---------- ---------- -----------
Increase (decrease) from investment
operations:
Net investment income $ 0.14 $ 0.41 $ 0.64 $ 0.66 $ 0.66 $ 0.65
Net realized and unrealized gain (loss) on
investments 0.38 1.03 0.33 1.29 (1.09) 0.37
---------- ---------- ---------- ---------- ---------- -----------
Net increase (decrease) from investment
operations $ 0.52 $ 1.44 $ 0.97 $ 1.95 $ (0.43) $ 1.02
Distributions to shareholders:
Net investment income (0.15) (0.40) (0.62) (0.65) (0.67) (0.64)
Net realized gain - (1.54) - (0.11) - (0.30)
---------- ---------- ---------- ---------- ---------- -----------
Net increase (decrease) in net asset value $ 0.37 $ (0.50) $ 0.35 $ 1.19 $ (1.10) $ 0.08
---------- ---------- ---------- ---------- ---------- -----------
Net asset value, end of period $ 10.52 $ 10.15 $ 10.65 $ 10.30 $ 9.11 $ 10.21
---------- ---------- ---------- ---------- ---------- -----------
Total return* 5.12% 13.92% 9.89% 22.00% (4.31)% 10.24%
Ratio of net expenses to average net assets 1.18%**+ 1.19%+ 1.10%+ 1.13%+ 1.11% 1.06%
Ratio of net investment income to average net
assets 2.83%**+ 3.55%+ 6.17%+ 6.58%+ 7.07% 6.52%
Portfolio turnover rate 61%** 122% 31% 25% 50% 69%
Net assets, end of period (in thousands) $285,473 $274,695 $276,064 $281,639 $259,970 $296,699
Ratios assuming reduction for fees paid
indirectly:
Net expenses 1.17%** 1.17% 1.08% 1.11% - -
Net investment income 2.84%** 3.57% 6.19% 6.60% - -
</TABLE>
<TABLE>
<C> <S>
(a) Prior to the assumption of the management agreement on
December 1, 1993 by Pioneering Management Corporation, the
Fund was advised by Mutual of Omaha Fund Management Company.
* Assumes initial investment at net asset value at the
beginning of each period, reinvestment of 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.
+ Ratios assuming no reduction for fees paid indirectly.
</TABLE>
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 6/30/98
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED 4/28/95 TO
CLASS B 6/30/98 12/31/97 12/31/96 12/31/95
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $ 10.08 $ 10.59 $10.27 $ 9.55
--------- --------- -------- --------
Increase from investment
operations:
Net investment income $ 0.12 $ 0.32 $ 0.52 $ 0.39
Net realized and unrealized gain
on investments 0.35 1.02 0.37 0.90
--------- --------- -------- --------
Net increase from investment
operations $ 0.47 $ 1.34 $ 0.89 $ 1.29
Distributions to shareholders:
Net investment income (0.11) (0.31) (0.52) (0.46)
In excess of net investment
income - - (0.05) -
Net realized gain - (1.54) - (0.11)
--------- --------- -------- --------
Net increase (decrease) in net
asset value $ 0.36 $ (0.51) $ 0.32 $ 0.72
--------- --------- -------- --------
Net asset value, end of period $ 10.44 $ 10.08 $10.59 $10.27
--------- --------- -------- --------
Total return* 4.65% 12.98% 9.02% 13.74%
Ratio of net expenses to average
net assets 1.97%**+ 2.01%+ 1.88%+ 1.88%**+
Ratio of net investment income to
average net assets 2.05%**+ 2.65%+ 5.45%+ 5.83%**+
Portfolio turnover rate 61%** 122% 31% 25%
Net assets, end of period (in
thousands) $20,121 $13,789 $6,940 $1,800
Ratios assuming reduction for fees
paid indirectly:
Net expenses 1.97%** 1.99% 1.86% 1.78%**
Net investment income 2.05%** 2.67% 5.47% 5.93%**
</TABLE>
<TABLE>
<S> <C>
* Assumes initial investment at net asset value at the
beginning of each period, reinvestment of 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 assuming no reduction for fees paid indirectly.
</TABLE>
20
The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 6/30/98
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED 1/31/96 TO
CLASS C 6/30/98 12/31/97 12/31/96
<S> <C> <C> <C>
Net asset value, beginning of period $10.17 $10.62 $10.39
-------- -------- --------
Increase from investment operations:
Net investment income $ 0.13 $ 0.33 $ 0.49
Net realized and unrealized
gain on investments 0.36 1.07 0.31
-------- -------- --------
Net increase from investment operations $ 0.49 $ 1.40 $ 0.80
Distributions to shareholders:
Net investment income (0.11) (0.31) (0.49)
In excess of net investment income - - (0.08)
Net realized gain - (1.54) -
-------- -------- --------
Net increase (decrease) in net asset value $ 0.38 $(0.45) $ 0.23
-------- -------- --------
Net asset value, end of period $10.55 $10.17 $10.62
-------- -------- --------
Total return* 4.81% 13.48% 8.12%
Ratio of net expenses to average net assets 1.96%**+ 2.03%+ 1.76%**+
Ratio of net investment income to average
net assets 2.06%**+ 2.68%+ 5.63%**+
Portfolio turnover rate 61%** 122% 31%
Net assets, end of period (in thousands) $3,763 $1,900 $1,059
Ratios assuming reduction for fees paid
indirectly:
Net expenses 1.96%** 1.98% 1.73%**
Net investment income 2.06%** 2.73% 5.66%**
</TABLE>
<TABLE>
<S> <C>
* Assumes initial investment at net asset value at the
beginning of each period, reinvestment of 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 assuming no reduction for fees paid indirectly.
</TABLE>
The accompanying notes are an integral part of these financial statements. 21
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/98
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Pioneer Balanced 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 investment objective of the
Fund is to seek current income and long-term growth of capital.
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 shareholders, respectively.
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. Debt securities are
valued at prices supplied by independent pricing services, which
consider such factors as Treasury spreads, yields, maturities and
ratings, and valuations may be supplemented by dealers and other
sources, as required. Equity securities are valued at the last sale
price on the principal exchange where they are traded. Securities
that have not traded on the date of valuation, or securities for
which sale prices are not generally reported, are valued at the mean
between the last bid and asked prices. Securities for which market
quotations are not readily available are valued at their fair values
as determined by, or under the direction of, the Board of Trustees.
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.
22
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
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.
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.
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.
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
Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for
the Fund and an indirect subsidiary of The Pioneer Group, Inc.
(PGI). PFD earned $49,356 in underwriting commissions on the sale of
fund shares during the six months ended June 30, 1998.
D. 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. Shareholders of each class share all expenses
and fees paid to the transfer agent, Pioneering Services Corporation
(PSC), for their services, which are allocated based on the number
of accounts in each class and the ratable allocation of related
out-of-pocket expense (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.
23
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/98 (CONTINUED)
Distributions to shareholders 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.
2. MANAGEMENT AGREEMENT
Pioneering Management Corporation (PMC), the Fund's investment adviser,
manages the Fund's portfolio and is a wholly owned subsidiary of PGI.
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 agreement, certain other services and
costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At June 30, 1998, $183,394 was payable
to PMC related to management fees and certain other services.
3. TRANSFER AGENT
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 $70,969 in transfer agent fees
payable to PSC at June 30, 1998.
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 Fund's average daily
net assets 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 $199,963
in distribution fees payable to PFD at June 30, 1998.
24
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
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 4.0%, based on the lower of cost or 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, 1998, CDSCs in the
amount of $10,834 were paid to PFD.
5. EXPENSE OFFSETS
The Fund has entered into certain expense offset arrangements resulting
in a reduction in the Fund's total expenses. For the six months ended
June 30, 1998, the Fund's expenses were reduced by $3,045 under such
arrangements.
6. LINE OF CREDIT FACILITY
Effective April 14, 1998, 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 of up
to $25 million is payable at the Federal Funds Rate plus 3/8% on an
annualized basis, or at the Federal Funds Rate plus 1/2% if the
borrowings exceed $25 million at any one time. 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, 1998, the Fund had no borrowings under this
agreement.
25
<PAGE>
PIONEER BALANCED FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND THE BOARD OF TRUSTEES OF
PIONEER BALANCED FUND:
We have audited the accompanying balance sheet of Pioneer Balanced
Fund, including the schedule of investments, as of June 30, 1998, and
the related statement of operations and the statements of changes in
net assets for the periods presented and the financial highlights for
the six months ended June 30, 1998 and for each of the four years
ended December 31, 1997. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements
and financial highlights based on our audits. The financial highlights
for the year ended December 31, 1993 were audited by other auditors
whose report dated February 22, 1994 expressed an unqualified opinion.
We conducted our audits 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 June 30, 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Pioneer Balanced Fund as of June 30, 1998, the
results of its operations and the changes in its net assets for the
periods presented, and the financial highlights for the six months
ended June 30, 1998 and for each of the four years ended December 31,
1997, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
August 7, 1998
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PIONEER BALANCED FUND
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TRUSTEES, OFFICERS AND SERVICE PROVIDERS
<TABLE>
<S> <C>
TRUSTEES OFFICERS
John F. Cogan, Jr. John F. Cogan, Jr., Chairman and
Mary K. Bush President
Richard H. Egdahl, M.D. David D. Tripple, Executive Vice
Margaret B.W. Graham President
John W. Kendrick William C. Field, Vice President
Marguerite A. Piret William H. Keough, Treasurer
David D. Tripple Joseph P. Barri, Secretary
Stephen K. West
John Winthrop
</TABLE>
INVESTMENT ADVISER
Pioneering Management Corporation
CUSTODIAN
Brown Brothers Harriman & Co.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
PRINCIPAL UNDERWRITER
Pioneer Funds Distributor, Inc.
LEGAL COUNSEL
Hale and Dorr LLP
SHAREOWNER SERVICES AND TRANSFER AGENT
Pioneering Services Corporation
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RETIREMENT PLANS FROM PIONEER
Pioneer has a long history of helping people work toward their
retirement goals, offering plans suited to the individual investor
and businesses of all sizes. For more information on Pioneer
retirement plans, contact your investment professional, or call
Pioneer at 1-800-622-0176.
INDIVIDUAL RETIREMENT ACCOUNT (IRA)
An IRA is a tax-favored account that allows anyone under age 70 1/2
with earned income to contribute up to $2,000 annually. Spouses may
contribute up to $2,000 annually into a separate IRA, for a total of
$4,000 per year for a married couple. Earnings are tax-deferred, and
contributions may be tax-deductible.
ROTH IRA
The Roth IRA came about as part of the Taxpayer Relief Act of 1997
and is available to investors in 1998. Contributions, up to $2,000 a
year, are not tax-deductible, but earnings are tax-free for qualified
withdrawals.
401(k) PLAN
The traditional 401(k) plan allows employees to make pre-tax
contributions through payroll deduction, up to $9,500 per year or 25%
of pay, whichever is less. Employers may contribute.
SIMPLE (SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES)
401(k) OR IRA PLAN
Businesses with 100 or fewer eligible employees can establish either
plan; both resemble the traditional 401(k), but with less testing and
lower administration costs. Employees can make pre-tax contributions
of up to $6,000 per year, and an employer contribution is required.
403(b) PLAN
Also known as a Tax-Sheltered Account (TSA), a 403(b) plan is
available only to employees of public schools, not-for-profit
hospitals and other tax-exempt organizations. A 403(b) plan lets
employees set aside a portion of their salary, before taxes, through
payroll deduction.
Most retirement plan withdrawals must meet specific conditions to
avoid penalties.
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SIMPLIFIED EMPLOYEE PENSION PLAN (SEP)
SEPs let self-employed people and small-business owners make tax-
deductible contributions of up to 15% of their income. Generally,
employers must contribute the same percentage of pay for themselves
and any eligible employees; contributions are made directly to
employees' IRAs. SEPs are easy to administer and can be an especially
good choice for firms with few or no employees.
PROFIT SHARING PLAN
Profit sharing plans offer companies considerable flexibility,
allowing them to decide each year whether a contribution will be made
and how much, up to 15% of each participant's pay. These plans can
include provisions for loans and vesting schedules.
AGE-WEIGHTED PROFIT SHARING PLAN
Like traditional profit sharing plans, employer contributions are
flexible, but age-weighted plans allocate contributions based on both
age and salary. Age-weighted plans are designed for employers who
want to maximize their own contributions while keeping contributions
to employees affordable.
MONEY PURCHASE PENSION PLAN (MPP)
Money purchase plans are similar to profit-sharing plans, but allow
for higher annual contributions -- up to 25% of pay. MPPs aren't as
flexible as profit sharing plans; a fixed percentage of pay must be
contributed each year, determined when the plan is established.
Businesses often set up both MPPs and profit sharing plans.
Most retirement plan withdrawals must meet specific conditions to
avoid penalties.
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HOW TO CONTACT PIONEER
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
CALL US FOR:
ACCOUNT INFORMATION, including existing accounts, new accounts, prospectuses,
applications and service forms 1-800-225-6292
FACTFONE(SM) for automated fund yields, prices, account information and
transactions 1-800-225-4321
RETIREMENT PLANS INFORMATION 1-800-622-0176
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD) 1-800-225-1997
WRITE TO US:
Pioneering Services Corporation
60 State Street
Boston, Massachusetts 02109
OUR TOLL-FREE FAX 1-800-225-4240
OUR INTERNET E-MAIL ADDRESS [email protected]
(for general questions about Pioneer only)
VISIT OUR WEBSITE: WWW.PIONEERFUNDS.COM
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT FUND PROSPECTUS.
[PIONEER LOGO] PIONEER FUNDS DISTRIBUTOR, INC.
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
WWW.PIONEERFUNDS.COM
0898-5427
(c)Pioneer Funds Distributor, Inc.
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