[PIONEER LOGO]
[HAPPY 70th Birthday LOGO]
PIONEER FUND
SINCE 1928
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ANNUAL REPORT 12/31/97
<PAGE>
[HAPPY 70th BIRTHDAY LOGO]
PIONEER FUND
SINCE 1928
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TARGETING CLASSICS TODAY AND TOMORROW
TABLE OF CONTENTS
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Letter from the Fund's Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule of Investments 9
Financial Statements 17
Notes to Financial Statements 24
Report of Independent Public Accountants 29
Trustees, Officers and Service Providers 30
The Pioneer Family of Mutual Funds 31
Retirement Plans From Pioneer 32
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PIONEER FUND
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LETTER FROM THE CHAIRMAN 12/31/97
DEAR SHAREOWNER,
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I am delighted to introduce this report for Pioneer Fund, covering a
most rewarding year. On behalf of everyone at Pioneer, I thank you
for your interest and this opportunity to reflect on Pioneer Fund's
unique place in investing history.
In the late 1920s, a few curious minds on the Boston investment scene
pondered an intriguing question - how could they bring professional
money management to people who couldn't afford their own investment
banker? The answer was a revolution in American investing - the
mutual fund. One affordable investment offered anyone a diversified
portfolio of stocks or bonds along with professional research and
strategy.
One of the minds at work was Philip Carret, a reporter for the
fledgling Barron's investment newspaper. Convinced this new approach
to investing offered real value and a unique opportunity, he formed
Pioneer Fund in 1928, one of the first four funds created. Today, 70
years later, the principles Mr. Carret wove into the Fund in 1928 are
at work for more than 260,000 shareowners; John Carey, only the third
portfolio manager in the Fund's rich history, carries on the
tradition of value-oriented, research-driven, disciplined investing.
And, I'm pleased to note, Mr. Carret is still an active investor and
forward-thinking optimist at age 101.
The past year's success is vivid testimony to the "evergreen"
strength of Pioneer Fund's classic investment approach. As we
approach the next millennium, value investing - research, discipline
and an unending search for reasonably priced opportunity - makes as
much sense as it did when mutual funds were invented.
Thank you for being part of Pioneer Fund's unique history and
promising future. If you have questions about your Fund, please
contact your investment professional, or Pioneer at 1-800-225-6292.
Respectfully,
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.,
Chairman and President
1
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PIONEER FUND
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PORTFOLIO SUMMARY 12/31/97
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PORTFOLIO DIVERSIFICATION
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(As a percentage of total investment portfolio)
[PIE CHART]
U.S. Common Stocks 93%
U.S. Preferred Stocks 1%
Short-Term Cash Equivalents 1%
Depositary Receipts for
International Stocks 2%
International Common Stocks 3%
SECTOR DISTRIBUTION
- -----------------------------------------------------------------------------
(As a percentage of equity holdings)
[PIE CHART]
Transportation 1%
Utilities 2%
Energy 3%
Capital Goods 6%
Basis Materials 6%
Consumer Staples 7%
Consumer Cyclicals 11%
Communication Services 12%
Technology 13%
Healthcare 15%
Financial 24%
10 LARGEST HOLDINGS
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(As a percentage of equity holdings)
<TABLE>
<S> <C> <C> <C> <C> <C>
1. Schering-Plough Corp. 4.03% 6. Bell Atlantic Corp. 1.89%
2. The Bank of New York Co., Inc. 2.63 7. Novartis AG (Sponsored A.D.R.) 1.88
3. Ford Motor Co. 2.17 8. SBC Communications, Inc. 1.86
4. IBM Corp. 2.12 9. GTE Corp. 1.77
5. National City Corp. 1.94 10. Bristol-Myers Squibb Co. 1.69
</TABLE>
Fund holdings will vary for other periods.
2
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PIONEER FUND
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PERFORMANCE UPDATE 12/31/97 CLASS A SHARES
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SHARE PRICES AND DISTRIBUTIONS
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NET ASSET VALUE
PER SHARE 12/31/97 12/31/96
$34.95 $26.89
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(12/31/96 - 12/31/97) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
$0.309 $0.213 $1.682
INVESTMENT RETURNS
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The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Fund at public offering price, compared to the growth of the Standard &
Poor's 500 Index.
[BOXED TEXT]
AVERAGE ANNUAL TOTAL RETURNS
(As of December 31, 1997)
Period Net Asset Value Public Offering Price*
10 Years 15.82% 15.13%
5 Years 18.98 17.58
1 Year 38.47 30.51
[MOUNTAIN CHART]
Growth of $10,000
Pioneer Standard & Poors
Fund* 500 Index
12/87 9,425 10,000
12/88 11,151 11,650
12/89 13,759 15,330
12/90 12,312 14,852
12/91 15,113 19,358
12/92 17,168 20,831
12/93 19,610 22,921
12/94 19,498 23,232
12/95 24,692 31,931
12/96 29,557 39,423
12/97 40,927 52,317
* Reflects deduction of the maximum 5.75% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
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 the 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 FUND
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PERFORMANCE UPDATE 12/31/97 CLASS B SHARES
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SHARE PRICES AND DISTRIBUTIONS
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NET ASSET VALUE
PER SHARE 12/31/97 12/31/96
$35.01 $27.02
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(12/31/96 - 12/31/97) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
$0.105 $0.213 $1.682
INVESTMENT RETURNS
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Fund, compared to the growth of the Standard & Poor's 500 Index.
[BOXED TEXT]
AVERAGE ANNUAL TOTAL RETURNS
(As of December 31, 1997)
PERIOD IF HELD IF REDEEMED*
Life-of-Fund (7/1/96) 31.50% 29.17%
1 Year 37.19 33.19
[MOUNTAIN CHART]
Growth of $10,000
Pioneer Standard & Poors
Fund* 500 Index
7/1/96 10,000 10,000
9,504 9,468
9,761 9,647
9/96 10,212 10,227
10,391 10,494
11,199 11,264
12/96 10,991 11,078
11,602 11,757
11,744 11,827
3/97 11,235 11,377
11,826 12,041
12,625 12,747
6/97 13,253 13,359
14,302 14,403
13,595 13,575
9/97 14,473 14,358
14,057 13,863
14,853 14,481
12/97 14,679 14,769
* 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 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 the 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 FUND
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PERFORMANCE UPDATE 12/31/97 CLASS C SHARES
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SHARE PRICES AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
NET ASSET VALUE
PER SHARE 12/31/97 12/31/96
$34.66 $26.74
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(12/31/96 - 12/31/97) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
$0.090 $0.213 $1.682
INVESTMENT RETURNS
- -----------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made in
Pioneer Fund, compared to the growth of the Standard & Poor's 500 Index.
[BOXED TEXT]
AVERAGE ANNUAL TOTAL RETURNS
(As of December 31, 1997)
PERIOD IF HELD IF REDEEMED*
Life-of-Fund (7/1/96) 30.60% 30.60%
1 Year 37.25 37.25
* Assumes reinvestment of distributions. The 1% contingent deferred sales
charge (CDSC) applies to redemptions made within one year of purchase.
[MOUNTAIN CHART]
Growth of $10,000
Pioneer Standard & Poors
Fund* 500 Index
7/1/96 10,000 10,000
9/96 10,117 10,227
12/96 10,874 11,078
3/97 11,117 11,377
6/97 13,114 13,359
9/97 14,326 14,358
12/97 14,925 14,769
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 the 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 FUND
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PORTFOLIO MANAGEMENT DISCUSSION 12/31/97
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DEAR SHAREOWNER,
- -----------------------------------------------------------------------------
The American stock market recorded yet another year of extraordinary gains in
1997. While many commentators had looked for a "correction" in the market after
the exceptional gains of 1995 and 1996, stocks continued to climb. There were
harrowing moments, notably in April and October, but the only lasting correction
was to the notion that "timing" the market is a worthwhile endeavor.
Early in the year, we reported that 1997 was shaping up as especially congenial
to our conservative, patient, value-oriented style of investing. We are pleased
to report that proved to be the case. Pioneer Fund turned in a tremendous year,
generating a 38.47% total return for Class A Shares, at net asset value. The
Fund outpaced the Standard & Poor's 500 Index, which returned 33.29%, and the
27.14% average return of the growth and income funds tracked by Lipper
Analytical Services for the year. In fact, your Fund's performance ranked sixth
among its 611 peers for the year.*
MANAGING THE PORTFOLIO THROUGH CHANGING TIMES
Our investment success in 1997 sprang from decisions made over a number of
years. Since its founding in 1928, your Fund's portfolio has reflected our
general optimism about the future - for opportunities overseas and the
possibilities of growth right here at home. The world economy has evolved
favorably for many leading U.S. industries. The opening of the Soviet Bloc, the
spread of democracy in Latin America and China's emergence from isolation are
just a few events linked to worldwide economic progress. American companies have
responded by providing computers and computer software, telecommunications
equipment, financial services, healthcare products and construction equipment.
This year, companies in all of
- ---------------
*Lipper, an independent research firm, ranks funds according to total return
performance. Rankings vary over time and do not reflect the effects of sales
charges. For periods ended 12/31/97, Class A Shares ranked 6 of 611, 66 of 240,
and 66 of 136 growth and income funds for one-, five- and 10- year performance,
respectively; Class B and Class C Shares ranked 13 and 11, respectively, of 611
growth and income funds for one-year performance and were not ranked over longer
periods. Past performance does not guarantee future results.
6
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PIONEER FUND
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these industries made positive contributions to the Fund's performance.
Naturally the road to growth has occasional bumps. Now, the focus is on the
significant problems in Asia's financial and economic systems and how the
region's difficulties will affect other parts of the world. We monitor overseas
developments closely, particularly as they relate to companies in the
portfolio. No portfolio is so well positioned that it cannot be improved upon;
we are always looking at holdings in relation to other opportunities and
assessing their individual values and risks. Even so, we have experienced a
multitude of world events and many business cycles over the past 70 years. To
us, patience often seems the most sensible approach to investing.
In keeping with that philosophy, we made few adjustments to the portfolio in
the final months of 1997, despite the tumultuous markets. We did expand on the
financial services theme that proved so successful over the year, and continued
to combine growth-oriented stocks with holdings that provide steady income. Two
dividend-paying additions were Comerica, a leading Detroit-based regional bank,
and Partner Re, a Bermuda-based, multi-line reinsurance company serving U.S.
and European clients. Other new holdings include Taiwan Semiconductor
Manufacturing, a semiconductor producer in one of the strongest Asian
countries, and Teligent, a new entrant in the local telephone business with
experienced management from established telephone companies.
We closed a number of positions to lock in gains, including Computer Associates
International, Cisco Systems and TRW. Other portfolio changes reflect the
increasing level of merger activity. Westinghouse Electric changed its name to
CBS, indicating its emphasis on broadcasting. Raytheon acquired part of the
Hughes Electronics division of General Motors in exchange for stock; the Fund
now has shares in both General Motors (Class H) and Raytheon.
A LOOK AHEAD
By many measures the stock market has provided generous returns over the past
70 years. Of course, after the crash of 1929 or during much of the 1970s - to
cite two rather grueling periods - stock
7
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PIONEER FUND
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PORTFOLIO MANAGEMENT DISCUSSION 12/31/97 (CONTINUED)
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investing did not look like a road to riches. As with almost any aspect of life,
however, perspective is everything. We have been suggesting caution for some
time, even as the stock market has roared ahead. Our longstanding policy of
keeping the portfolio fully invested was a great help to the Fund in 1997. We do
not know how 1998 will turn out, but statistics and experience indicate that
stocks are due to pause, at least, from their breathless advance. Over the
years, we have tried to serve shareowners by managing the Fund as though a
market setback were just around the corner. We like companies with a bit more
than they need for "business as usual," enterprises with management and
financial resources to make it through a period of adversity. A company "saving
for a rainy day" doesn't make us feel at all uncomfortable!
One final comment. On February 13, 1998, we happily salute Pioneer Fund's 70th
birthday. When Philip Carret incorporated the Fund in 1928, it was one of only
four mutual funds. Today there are thousands of funds available. Mutual funds
are one of the great success stories of our economy - making it convenient and
affordable for a broad cross-section of people to participate in the American
story of economic growth. We are very proud to have contributed to America's
investment history.
During this special year, we want to express our enormous gratitude to you for
entrusting your hard-earned savings to our mutual fund. We take our
responsibilities to you very seriously and hope we will continue to enjoy your
support for many more years.
Respectfully,
/s/ John A. Carey,
- -----------------------
John A. Carey,
Portfolio Manager
8
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PIONEER FUND
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SCHEDULE OF INVESTMENTS 12/31/97
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<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
INVESTMENT IN SECURITIES - 98.6%
PREFERRED STOCKS - 0.9%
991,100 Greif Brothers Corp. (Non-voting) $ 33,201,850
60,000 Rouse Co., $3.00 (Series B) (Convertible) 3,030,000
------------
TOTAL PREFERRED STOCKS
(Cost $3,299,608) $ 36,231,850
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COMMON STOCKS - 97.7%
BASIC MATERIALS - 5.3%
CHEMICALS - 3.3%
92,798 Ciba Specialty Chemicals AG (A.D.R.)* $ 5,523,504
255,000 Dow Chemical Co. 25,882,500
958,000 E.I. du Pont de Nemours and Co. 57,539,875
195,000 Eastman Chemical Co. 11,614,687
659,451 Lilly Industries, Inc. 13,601,177
765,158 A. Schulman, Inc. 19,224,595
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$133,386,338
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PAPER & FOREST PRODUCTS - 0.3%
408,000 Mead Corp. $ 11,424,000
------------
IRON & STEEL - 0.4%
235,300 Nucor Corp. $ 11,367,931
417,400 Steel Dynamics, Inc.* 6,678,400
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$ 18,046,331
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METALS & MINING - 1.3%
248,000 Aluminum Company of America $ 17,453,000
597,900 Phelps Dodge Corp. 37,219,275
------------
$ 54,672,275
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TOTAL BASIC MATERIALS $217,528,944
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CAPITAL GOODS - 5.6%
AEROSPACE/DEFENSE - 0.9%
362,500 Lockheed Martin Corp. $ 35,706,250
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ELECTRICAL EQUIPMENT - 1.3%
445,800 Emerson Electric Co. $ 25,159,837
180,000 General Electric Co. 13,207,500
286,256 Hubbell, Inc. (Class B) 14,115,999
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$ 52,483,336
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</TABLE>
The accompanying notes are an integral part of these financial statements. 9
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PIONEER FUND
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SCHEDULE OF INVESTMENTS 12/31/97 (CONTINUED)
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<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
MACHINERY (DIVERSIFIED) - 2.1%
553,200 Caterpillar, Inc. $ 26,864,775
421,600 Deere & Co. 24,584,550
120,000 Dover Corp. 4,335,000
564,750 Ingersoll-Rand Co. 22,872,375
264,200 The Timken Co. 9,081,875
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$ 87,738,575
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MANUFACTURING (DIVERSIFIED) - 1.2%
113,000 AlliedSignal, Inc. $ 4,399,938
198,100 Diebold, Inc. 10,028,812
280,800 Illinois Tool Works, Inc. 16,883,100
344,200 Johnson Controls, Inc. 16,435,550
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$ 47,747,400
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TRUCKS & PARTS - 0.1%
63,900 Cummins Engine Co., Inc. $ 3,774,094
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TOTAL CAPITAL GOODS $227,449,655
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COMMUNICATIONS SERVICES - 11.5%
TELECOMMUNICATIONS - 1.5%
1,034,000 Sprint Corp. $ 60,618,250
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TELEPHONE - 10.0%
754,400 Aliant Communications, Inc. $ 23,669,300
733,000 Ameritech Corp. 59,006,500
833,354 Bell Atlantic Corp. 75,835,214
1,129,800 BellSouth Corp. 63,621,862
1,360,900 GTE Corp. 71,107,025
1,016,601 SBC Communications, Inc. 74,466,023
889,351 U.S. West Communication Group 40,131,964
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$407,837,888
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TOTAL COMMUNICATIONS SERVICES $468,456,138
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CONSUMER CYCLICALS - 11.1%
AUTOMOBILES - 2.8%
753,600 Chrysler Corp. $ 26,517,300
1,785,000 Ford Motor Co. 86,907,188
------------
$113,424,488
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</TABLE>
The accompanying notes are an integral part of these financial statements.
10
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PIONEER FUND
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<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
PUBLISHING - 2.8%
320,300 Central Newspapers, Inc. $ 23,682,181
873,600 John Wiley & Sons, Inc.+ 47,392,800
553,000 McGraw-Hill Co., Inc. 40,922,000
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$111,996,981
------------
RETAIL - 5.5%
690,000 Dayton Hudson Corp. $ 46,575,000
568,500 Harcourt General, Inc. 31,125,375
298,200 Kohl's Corp.* 20,314,875
723,100 May Department Stores Co. 38,098,331
183,500 Mercantile Stores Co., Inc. 11,170,563
1,425,600 Walgreen Co. 44,728,200
826,000 Wal-Mart Stores, Inc. 32,575,375
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$224,587,719
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TOTAL CONSUMER CYCLICALS $450,009,188
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CONSUMER STAPLES - 7.4%
BROADCASTING - 1.0%
1,403,000 CBS Corp. $ 41,300,812
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FOOD - 5.4%
263,300 Bush Boake Allen, Inc.* $ 6,895,169
647,800 ConAgra, Inc. 21,255,938
213,800 CPC International, Inc. 23,036,950
470,300 General Mills, Inc. 33,685,237
955,150 H.J. Heinz Co. 48,533,559
765,000 PepsiCo, Inc. 27,874,688
665,000 Sara Lee Corp. 37,447,812
433,100 Sysco Corp. 19,733,119
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$218,462,472
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HOUSEHOLD PRODUCTS - 0.9%
509,300 Colgate-Palmolive Co. $ 37,433,550
------------
RESTAURANTS - 0.1%
100,000 McDonald's Corp. $ 4,775,000
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TOTAL CONSUMER STAPLES $301,971,834
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
PIONEER FUND
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SCHEDULE OF INVESTMENTS 12/31/97 (CONTINUED)
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<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
ENERGY - 3.0%
OIL & GAS - 2.7%
436,500 Amoco Corp. $ 37,157,062
480,500 Chevron Corp. 36,998,500
420,000 Exxon Corp. 25,698,750
380,700 Union Pacific Resources Group Inc. 9,231,975
------------
$109,086,287
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OIL & GAS (DRILLING & EQUIPMENT) - 0.3%
178,000 Schlumberger Ltd. $ 14,329,000
------------
TOTAL ENERGY $123,415,287
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FINANCIAL - 23.2%
BANKS - 8.6%
1,823,400 The Bank of New York Co., Inc. $105,415,312
65,000 Comerica, Inc. 5,866,250
660,000 CoreStates Financial Corp. 52,841,250
335,132 First Chicago NBD Corp. 27,983,522
190,000 First Tennessee National Corp. 12,682,500
610,000 Huntington Bancshares, Inc. 21,960,000
1,182,324 National City Corp. 77,737,803
756,800 State Street Boston Corp. 44,036,300
------------
$348,522,937
------------
CONSUMER FINANCE - 0.3%
279,700 Countrywide Credit Industries, Inc. $ 11,992,138
------------
FINANCIAL (DIVERSIFIED) - 2.6%
1,005,700 Equitable Companies, Inc. $ 50,033,575
420,000 Federal National Mortgage Association 23,966,250
321,750 Morgan Stanley, Dean Witter, Discover & Co. 19,023,469
333,641 Rouse Co. 10,926,743
------------
$103,950,037
------------
INSURANCE (LIFE/HEALTH) - 0.4%
376,400 ReliaStar Financial Corp. $ 15,502,975
------------
INSURANCE (MULTI-LINE) - 0.7%
279,900 American International Group, Inc. $ 30,439,125
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
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PIONEER FUND
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<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
INSURANCE (PROPERTY-CASUALTY) - 4.7%
746,000 Chubb Corp. $ 56,416,250
707,300 Exel Ltd. 44,825,137
294,500 Partner Re Ltd. 13,657,438
930,400 Safeco Corp. 45,357,000
386,600 St. Paul Companies, Inc. 31,725,363
------------
$191,981,188
------------
INSURANCE BROKERS - 0.9%
486,000 Marsh & McLennan Co., Inc. $ 36,237,375
------------
INVESTMENT BANK/BROKERAGE - 2.7%
1,425,150 Charles Schwab Corp. $ 59,767,228
676,000 Merrill Lynch & Co., Inc. 49,305,750
------------
$109,072,978
------------
INVESTMENT MANAGEMENT - 1.6%
1,050,000 T. Rowe Price Associates, Inc. $ 66,018,750
------------
SAVINGS & LOAN COMPANIES - 0.7%
413,000 H.F. Ahmanson & Co. $ 27,645,187
------------
TOTAL FINANCIAL $941,362,690
------------
HEALTH CARE - 14.5%
343,600 Abbott Laboratories $ 22,527,275
516,400 Becton, Dickinson & Co. 25,820,000
714,000 Bristol-Myers Squibb Co. 67,562,250
410,000 Eli Lilly & Co. 28,546,250
750,000 Johnson & Johnson 49,406,250
175,000 Merck & Co., Inc. 18,593,750
927,994 Novartis AG (Sponsored A.D.R.) 75,341,513
670,000 Pfizer, Inc. 49,956,875
3,898 Roche Holdings AG 38,682,646
2,596,400 Schering-Plough Corp. 161,463,625
425,000 United Healthcare Corp. 21,117,188
237,500 Warner-Lambert Co. 29,450,000
------------
TOTAL HEALTH CARE $588,467,622
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
PIONEER FUND
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SCHEDULE OF INVESTMENTS 12/31/97 (CONTINUED)
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<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
TECHNOLOGY - 12.7%
COMMUNICATIONS EQUIPMENT - 2.3%
556,400 Harris Corp. $ 25,524,850
304,242 Lucent Technologies, Inc. 24,301,330
757,900 Motorola, Inc. 43,247,669
------------
$ 93,073,849
------------
COMPUTER (HARDWARE) - 5.8%
895,000 Compaq Computer Corp. $ 50,511,562
940,000 Hewlett-Packard Co. 58,750,000
812,000 IBM Corp. 84,904,750
1,085,000 Sun Microsystems, Inc.* 43,264,375
------------
$237,430,687
------------
COMPUTERS (NETWORKING) - 0.0%
38,700 Teligent, Inc.* $ 952,988
------------
COMPUTERS (PERIPHERALS) - 0.3%
603,000 Seagate Technology, Inc.* $ 11,607,750
------------
COMPUTERS (SOFTWARE & SERVICES) - 0.7%
687,000 Aspen Technology, Inc.* $ 23,529,750
573,200 Indus Group, Inc.* 4,155,700
------------
$ 27,685,450
------------
ELECTRONICS (DEFENSE) - 0.7%
444,000 General Motors Corp. (Class H) $ 16,400,250
249,705 Raytheon Co. 12,347,983
------------
$ 28,748,233
------------
ELECTRONICS (SEMICONDUCTORS) - 1.7%
425,000 Intel Corp. $ 29,856,250
347,500 Taiwan Semiconductor Manufacturing Co. (Sponsored
A.D.R.)* 6,320,156
692,000 Texas Instruments, Inc. 31,140,000
------------
$ 67,316,406
------------
SERVICES (DATA PROCESSING) - 0.9%
249,200 Automatic Data Processing, Inc. $ 15,294,650
220,000 DST Systems, Inc.* 9,391,250
305,000 Electronic Data Systems Corp. 13,400,938
------------
$ 38,086,838
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
PHOTOGRAPHY/IMAGING - 0.3%
209,100 Eastman Kodak Co. $ 12,715,894
--------------
TOTAL TECHNOLOGY $ 517,618,095
--------------
TRANSPORTATION - 1.1%
AIRLINES - 0.5%
161,454 Delta Air Lines, Inc. $ 19,213,026
--------------
RAILROAD - 0.6%
799,500 Norfolk Southern Corp. $ 24,634,594
--------------
TOTAL TRANSPORTATION $ 43,847,620
--------------
UTILITIES - 2.3%
ELECTRIC COMPANIES - 0.9%
1,125,100 Allegheny Power Systems, Inc. $ 36,565,750
--------------
NATURAL GAS - 1.0%
574,650 Indiana Energy, Inc. $ 18,927,534
481,600 Sonat, Inc. 22,033,200
--------------
$ 40,960,734
--------------
WATER UTILITY - 0.4%
552,600 American Water Works Co., Inc. $ 15,092,888
--------------
TOTAL UTILITIES $ 92,619,372
--------------
TOTAL COMMON STOCKS
(Cost $2,047,017,621) $3,972,746,445
--------------
TOTAL INVESTMENT IN SECURITIES
(Cost $2,050,317,229) $4,008,978,295
PRINCIPAL --------------
AMOUNT
TEMPORARY CASH INVESTMENTS - 1.4%
COMMERCIAL PAPERS - 1.4%
$31,559,000 American Express Co., 6.25%, 1/02/98 $ 31,559,000
26,408,000 Ford Motor Credit Co., 6.00%, 1/05/98 26,408,000
--------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $57,967,000) $ 57,967,000
--------------
TOTAL INVESTMENT IN SECURITIES AND
TEMPORARY CASH INVESTMENTS - 100%
(Cost $2,108,284,229)(a) $4,066,945,295
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/97 (CONTINUED)
- --------------------------------------------------------------------------------
* Non-income producing security.
+ Investment held by Fund representing 5% or more of the outstanding voting
stock of such company.
(a) At December 31, 1997, the net unrealized gain on investments based on cost
for federal income tax purposes of $2,108,284,229 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $1,988,785,490
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (30,124,424)
--------------
Net unrealized gain $1,958,661,066
==============
</TABLE>
Purchases and sales of securities (excluding temporary cash investments) for the
year ended December 31, 1997, aggregated $649,680,222 and $579,573,829,
respectively.
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
BALANCE SHEET 12/31/97
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary
cash investments of $57,967,000) (cost $2,108,284,229) $4,066,945,295
Cash 624
Receivables -
Fund shares sold 3,751,182
Dividends and interest 5,604,466
Other 70,043
--------------
Total assets $4,076,371,610
--------------
LIABILITIES:
Payables -
Investment securities purchased $ 16,196,043
Fund shares repurchased 1,814,576
Dividends 14,429
Due to affiliates 5,104,568
Accrued expenses 245,487
--------------
Total liabilities $ 23,375,103
--------------
NET ASSETS:
Paid-in capital $2,094,071,011
Accumulated undistributed net investment income 264,430
Net unrealized gain on investments 1,958,661,066
--------------
Total net assets $4,052,996,507
==============
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $3,991,725,803/114,206,463 shares) $ 34.95
==============
Class B (based on $53,009,872/1,514,216 shares) $ 35.01
==============
Class C (based on $8,260,832/238,354 shares) $ 34.66
==============
MAXIMUM OFFERING PRICE:
Class A $ 37.08
==============
</TABLE>
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED 12/31/97
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 67,647,333
Interest 964,536
------------
Total investment income $ 68,611,869
--------------
EXPENSES:
Management fees
Basic fee $ 20,959,647
Performance adjustment 276,855
Transfer agent fees
Class A 6,905,919
Class B 72,939
Class C 10,331
Distribution fees
Class A 6,845,927
Class B 268,672
Class C 44,536
Accounting 179,259
Custodian fees 191,357
Registration fees 132,587
Professional fees 145,946
Printing 172,182
Fees and expenses of nonaffiliated trustees 44,979
Miscellaneous 121,048
------------
Total expenses $ 36,372,184
Less fees paid indirectly (464,654)
--------------
Net expenses $ 35,907,530
--------------
Net investment income $ 32,704,339
--------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $ 208,300,236
Change in net unrealized gain or loss on:
Investments $877,434,850
Other assets and liabilities denominated in
foreign currencies 3,781 $ 877,438,631
------------ --------------
Net gain on investments $1,085,738,867
--------------
Net increase in net assets resulting
from operations $1,118,443,206
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE YEARS ENDED 12/31/97 AND 12/31/96
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
FROM OPERATIONS: 12/31/97 12/31/96
<S> <C> <C>
Net investment income $ 32,704,339 $ 37,721,103
Net realized gain on investments 208,300,236 184,074,085
Change in net unrealized gain on investments 877,438,631 260,584,448
-------------- --------------
Net increase in net assets resulting
from operations $1,118,443,206 $ 482,379,636
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ($0.31 and $0.37 per share, respectively) $ (33,233,565) $ (37,742,441)
Class B ($0.11 and $0.07 per share, respectively) (71,137) (8,561)
Class C ($0.09 and $0.03 per share, respectively) (8,434) (665)
In excess of net investment income
Class B ($0.00 and $0.06 per share, respectively) - (17,071)
Class C ($0.00 and $0.07 per share, respectively) - (3,118)
Net realized gain:
Class A ($1.90 and $1.82 per share, respectively) (205,353,843) (183,428,836)
Class B ($1.90 and $1.82 per share, respectively) (2,591,421) (538,300)
Class C ($1.90 and $1.82 per share, respectively) (374,276) (114,206)
-------------- --------------
Total distributions to shareholders $ (241,632,676) $ (221,853,198)
-------------- --------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 416,679,617 $ 238,714,584
Reinvestment of distributions 219,460,826 201,514,070
Cost of shares repurchased (367,396,230) (259,411,638)
-------------- --------------
Net increase in net assets resulting from
fund share transactions $ 268,744,213 $ 180,817,016
-------------- --------------
Net increase in net assets $1,145,554,743 $ 441,343,454
NET ASSETS:
Beginning of year 2,907,441,764 2,466,098,310
-------------- --------------
End of year (including accumulated undistributed net
investment income of $264,430 and $892,736, respectively) $4,052,996,507 $2,907,441,764
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A '97 SHARES '97 AMOUNT '96 SHARES '96 AMOUNT
<S> <C> <C> <C> <C>
Shares sold 11,315,545 $ 364,028,984 8,683,155 $ 227,806,568
Reinvestment of distributions 6,379,337 216,673,889 7,663,593 200,891,264
Less shares repurchased (11,203,914) (356,282,237) (9,884,745) (258,909,705)
----------- ------------- ---------- -------------
Net increase 6,490,968 $ 224,420,636 6,462,003 $ 169,788,127
=========== ============= ========== =============
CLASS B*
Shares sold 1,335,573 $ 43,838,902 325,224 $ 8,988,120
Reinvestment of distributions 73,049 2,502,926 19,805 521,752
Less shares repurchased (225,262) (7,543,016) (14,173) (385,803)
----------- ------------- ---------- -------------
Net increase 1,183,360 $ 38,798,812 330,856 $ 9,124,069
=========== ============= ========== =============
CLASS C*
Shares sold 271,638 $ 8,811,731 68,824 $ 1,919,896
Reinvestment of distributions 8,373 284,011 3,873 101,054
Less shares repurchased (110,127) (3,570,977) (4,227) (116,130)
----------- ------------- ---------- -------------
Net increase 169,884 $ 5,524,765 68,470 $ 1,904,820
=========== ============= ========== =============
</TABLE>
* Class B and Class C shares were first publicly offered on July 1, 1996.
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
PIONEER FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 12/31/97
- ----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
CLASS A 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 26.89 $ 24.36 $ 21.32 $ 23.25 $ 21.51
---------- ---------- ---------- ---------- ----------
Increase (decrease) from investment
operations:
Net investment income $ 0.30 $ 0.37 $ 0.49 $ 0.49 $ 0.47
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions 9.97 4.35 5.13 (0.63) 2.57
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from investment
operations $ 10.27 $ 4.72 $ 5.62 $ (0.14) $ 3.04
Distribution to shareholders:
Net investment income (0.31) (0.37) (0.49) (0.49) (0.47)
Net realized gain (1.90) (1.82) (2.09) (1.30) (0.83)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value $ 8.06 $ 2.53 $ 3.04 $ (1.93) $ 1.74
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 34.95 $ 26.89 $ 24.36 $ 21.32 $ 23.25
========== ========== ========== ========== ==========
Total return* 38.47% 19.70% 26.64% (0.57%) 14.23%
Ratio of net expenses to average net assets 1.03%+ 1.01%+ 0.95%+ 0.94% 0.95%
Ratio of net investment income to average net
assets 0.93%+ 1.40%+ 2.01%+ 2.13% 2.04%
Portfolio turnover rate 17% 25% 31% 20% 12%
Average brokerage commission per share $ 0.0572 $ 0.0599 -- -- --
Net assets, end of year (in thousands) $3,991,726 $2,896,670 $2,466,098 $2,011,051 $2,042,945
Ratios assuming reduction for fees paid
indirectly:
Net expenses 1.02% 0.99% 0.94% -- --
Net investment income 0.94% 1.42% 2.02% -- --
</TABLE>
* Assumes initial investment at net asset value at the beginning of each period,
reinvestment of all distributions, the complete redemption of the investment
at net asset value at the end of each period, and no sales charges. Total
return would be reduced if sales charges were taken into account.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 12/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED 7/1/96 TO
CLASS B 12/31/97(a) 12/31/96(a)
<S> <C> <C>
Net asset value, beginning of period $ 27.02 $ 26.40
-------- -------
Increase from investment operations:
Net investment income $ 0.01 $ 0.07
Net realized and unrealized gain on
investments and foreign currency
transactions 9.99 2.50
-------- -------
Net increase from investment
operations $ 10.00 $ 2.57
Distribution to shareholders:
Net investment income (0.11) (0.07)
In excess of net investment income - (0.06)
Net realized gain (1.90) (1.82)
-------- -------
Net increase in net asset value $ 7.99 $ 0.62
-------- -------
Net asset value, end of period $ 35.01 $ 27.02
======== =======
Total return* 37.19% 9.92%
Ratio of net expenses to average net assets 1.92%+ 1.82%**+
Ratio of net investment income (loss) to
average net assets (0.02)%+ 0.46%**+
Portfolio turnover rate 17% 25%
Average brokerage commission per share $ 0.0572 $0.0599
Net assets, end of period (in thousands) $ 53,010 $ 8,940
Ratios assuming reduction for fees paid
indirectly:
Net expenses 1.88% 1.80%**
Net investment income 0.02% 0.48%**
</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 each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 12/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED 7/1/96 TO
CLASS C 12/31/97(a) 12/31/96(a)
<S> <C> <C>
Net asset value, beginning of period $ 26.74 $ 26.40
-------- -------
Increase from investment operations:
Net investment income $ 0.02 $ 0.03
Net realized and unrealized gain on
investments and foreign currency
transactions 9.89 2.23
-------- -------
Net increase from investment
operations $ 9.91 $ 2.26
Distribution to shareholders:
Net investment income (0.09) (0.03)
In excess of net investment income - (0.07)
Net realized gain (1.90) (1.82)
-------- -------
Net increase in net asset value $ 7.92 $ 0.34
-------- -------
Net asset value, end of period $ 34.66 $ 26.74
======== =======
Total return* 37.25% 8.74%
Ratio of net expenses to average net assets 1.87%+ 2.11%**+
Ratio of net investment income to average
net assets 0.02%+ 0.20%**+
Portfolio turnover rate 17% 25%
Average brokerage commission per share $ 0.0572 $0.0599
Net assets, end of period (in thousands) $ 8,261 $ 1,831
Ratios assuming reduction for fees paid
indirectly:
Net expenses 1.83% 2.08%**
Net investment income 0.06% 0.23%**
</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 each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 23
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/97
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Pioneer 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 objectives of the Fund are reasonable income and 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 have 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. Each day, 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.
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
24
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
those securities that have the highest cost and also qualify for long-term
capital gain or loss treatment for tax purposes.
B. FOREIGN CURRENCY TRANSLATION
The books and records of the Fund are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars using
current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
among other things, the net realized gains and losses on foreign currency
contracts, disposition of foreign currencies and the difference between the
amount of income accrued and the U.S. dollar actually received. Further, the
effects of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
C. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
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.
At December 31, 1997, the Fund reclassified $19,509 and $144 from accumulated
undistributed net investment income and paid-in-capital, respectively, to
accumulated net realized loss on investments and foreign currency
transactions. 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.
In order to comply with federal income tax regulations, the Fund has
designated $184,921,595 as a capital gain dividend for the purposes of the
dividend paid deduction. Of this amount,
25
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/97 (CONTINUED)
- --------------------------------------------------------------------------------
$63,268,620 and $121,652,975 are subject to the maximum 28% and 20% federal
income tax rates, respectively.
D. 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
approximately $1,566,827 in underwriting commissions on the sale of fund
shares during the year ended December 31, 1997.
E. CLASS ALLOCATIONS
Distribution fees are calculated based on the average daily net asset value
attributable to Class A, Class B and Class C shares of the Fund,
respectively. 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.
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. PMC receives a
basic fee that is calculated at the annual rate of 0.60% of the Fund's average
daily net assets. The basic fee is subject to a performance adjustment up to a
maximum of (plus or minus sign)0.10% based on the Fund's investment performance
as compared with the Lipper Growth & Income Funds Index. For the year ended
December 31, 1997, the aggregate performance adjustment resulted in an increase
to management fees of $276,855. For the year ended
26
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31, 1997, the management fee was equivalent to 0.61% of average daily
net assets.
In addition, under the management agreement, certain other services and costs,
including accounting, regulatory reporting and insurance premiums, are paid by
the Fund. At December 31, 1997, $2,414,755 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 $702,251 in transfer agent fees payable to PSC at December 31,
1997.
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. On qualifying investments made prior to August 19,
1991, the Class A Plan provides for reimbursement of such expenditures in an
amount not to exceed 0.15%. Pursuant to the Class B Plan and the Class C Plan,
the Fund pays PFD 1.00% of the average daily net assets attributable to each
class of shares. The fee consists of a 0.25% service fee and a 0.75%
distribution fee paid as compensation for personal services and/or account
maintenance services or distribution services with regard to Class B and Class C
shares. Included in due to affiliates is $1,987,562 in distribution fees payable
to PFD at December 31, 1997.
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%.
27
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/97 (CONTINUED)
- --------------------------------------------------------------------------------
Proceeds from the CDSC are paid to PFD. For the year ended December 31, 1997,
CDSCs in the amount of $21,916 were paid to PFD.
5. EXPENSE OFFSETS
The Fund has entered into certain directed brokerage and expense offset
arrangements resulting in a reduction in the Fund's total expenses. For the year
ended December 31, 1997, the Fund's expenses were reduced by $464,654 under such
arrangements.
6. AFFILIATED COMPANIES
The Fund's investments in certain companies exceed 5% of the outstanding voting
stock. Such companies are deemed affiliates of the Fund for financial reporting
purposes. The following summarizes transactions with affiliates of the Fund as
of December 31, 1997:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
DIVIDEND
AFFILATES PURCHASES SALES INCOME VALUE
<S> <C> <C> <C> <C>
John Wiley & Sons, Inc. -- -- $382,200 $47,392,800
------------------------------------------------------------------------
</TABLE>
28
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND THE BOARD OF TRUSTEES OF PIONEER FUND:
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer Fund as of December 31, 1997, and the related statement
of operations, the statements of changes in net assets, and the financial
highlights for the periods presented. These financial statements and the
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.
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
December 31, 1997, 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 Fund as of December 31, 1997, the results of its operations, the changes
in its net assets, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 2, 1998
29
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
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 John A. Carey, Vice President
Marguerite A. Piret William H. Keough, Treasurer
David D. Tripple Joseph P. Barri, Secretary
Stephen K. West
John Winthrop
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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THE PIONEER FAMILY OF MUTUAL FUNDS
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For information about any Pioneer mutual fund, please contact your investment
representative, or call Pioneer at 1-800-225-6292. Ask for a free fund
information kit, which includes a fund prospectus. Please read the prospectus
carefully before you invest or send money.
GROWTH FUNDS INCOME FUNDS
GLOBAL/INTERNATIONAL TAXABLE
Pioneer Emerging Markets Fund Pioneer America Income Trust
Pioneer Europe Fund Pioneer Bond Fund
Pioneer Gold Shares Pioneer Short-Term Income Trust*
Pioneer India Fund
Pioneer International Growth Fund
Pioneer World Equity Fund TAX-EXEMPT
Pioneer Intermediate Tax-Free Fund
UNITED STATES Pioneer Tax-Free Income Fund
Pioneer Capital Growth Fund
Pioneer Growth Shares MONEY MARKET FUND
Pioneer Micro-Cap Fund* Pioneer Cash Reserves Fund
Pioneer Mid-Cap Fund
Pioneer Small Company Fund
GROWTH AND INCOME FUNDS
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
* Offers Class A and B Shares only
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RETIREMENT PLANS FROM PIONEER
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Pioneer offers retirement plans suited to the individual investor and businesses
of all sizes. For information, contact your investment professional, or call
Pioneer at 1-800-622-0176.
INDIVIDUAL PLANS
INDIVIDUAL RETIREMENT ACCOUNT (IRA) The $2,000 maximum annual contribution may
be tax-deductible; earnings are tax-deferred.
ROTH IRA
ROTH IRA New in 1998, $2,000 maximum annual contribution are not tax-deductible.
Earnings are tax-free for qualified withdrawals.
PLANS FOR SMALL BUSINESSES OR THE SELF-EMPLOYED
SIMPLE (SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES)
IRA OR 401(k) PLAN For firms with 100 or fewer employees. Employees can make
pre-tax contributions of up to $6,000 annually, and an employer contribution is
required.
SIMPLIFIED EMPLOYEE PENSION PLAN (SEP) Self-employed people and small-business
owners can make tax-deductible contributions of up to 15% of their income.
EMPLOYER-SPONSORED PLANS
401(k) PLAN Allows employees to make pre-tax contributions. Also allows for
employer contributions.
403(b) PLAN Lets employees of tax-exempt organizations set aside part of their
salary, before taxes, through payroll deduction.
PROFIT SHARING PLAN Employers contribute on a discretionary basis, usually based
on profits.
AGE-WEIGHTED PROFIT SHARING PLAN Employer makes discretionary contributions
based on employees' age and salary.
MONEY PURCHASE PENSION PLAN (MPP) Employers contribute based on a fixed formula.
Most retirement plan withdrawals must meet specific conditions to avoid
penalties.
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[HAPPY 70th BIRTHDAY LOGO]
PIONEER FUND
SINCE 1928
-----------------
TARGETING CLASSICS TODAY AND TOMORROW
HOW TO CONTACT PIONEER
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We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
CALL US FOR:
ACCOUNT INFORMATION, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FACTFONE(SM) for Automated fund yields, prices,
account information and transactions 1-800-225-4321
RETIREMENT PLANS INFORMATION 1-800-622-0176
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD) 1-800-225-1997
WRITE TO US:
Pioneering Services Corporation
60 State Street
Boston, Massachusetts 02109
TOLL-FREE FAX 1-800-225-4240
OUR INTERNET E-MAIL ADDRESS [email protected]
(for general questions about Pioneer only)
VISIT OUR WEB SITE WWW.PIONEERFUNDS.COM:
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT
FUND PROSPECTUS.
Pioneer Funds Distributor, Inc.
60 State Street
Boston, Massachusetts 02109
www.pioneerfunds.com
0298-4813
[PIONEER LOGO] (c)PIONEER FUNDS DISTRIBUTOR, INC.
[*]PRINTED ON RECYCLED PAPER
