<PAGE>
[PIONEER LOGO]
----------------------
HAPPY 70TH BIRTHDAY
----------------------
PIONEER FUND
SINCE 1928
----------------------
ANNUAL REPORT 12/31/98
<PAGE>
-------------------------------------
HAPPY 70TH BIRTHDAY
-------------------------------------
PIONEER FUND
SINCE 1928
-------------------------------------
TARGETING CLASSICS TODAY AND TOMORROW
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule of Investments 9
Financial Statements 18
Notes to Financial Statements 25
Report of Independent Public Accountants 31
Trustees, Officers and Service Providers 32
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
LETTER FROM THE CHAIRMAN 12/31/98
DEAR SHAREOWNER,
-----------------------------------------------------------------------------
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 the investment
environment over the last year.
Overall, 1998 proved to be another eventful year for stock investors.
The U.S. stock market, as measured by the Dow Jones Industrial
Average, flourished through mid-July, as the U.S. economy continued
to grow at a solid pace and inflation remained low. Stocks around the
globe tumbled in the summer amid concerns about the global economy.
In the fall, the bad news seemed to dissipate and the stock market
resumed a record-setting pace. Through it all, the management team of
Pioneer Fund was, once again, able to turn in impressive results.
While you have good reason to applaud such extraordinary returns, we
believe you should also be aware of the risks that are part of
investing. Returns in the last several years have been abnormally
high - over 20% annually - and we would not be surprised to see them
return to their more normal - around 10% - historical average levels.
We also encourage you to have a financial plan with a mix of stock
funds, bond funds and money market investments that suits your risk
tolerance, as returns on different asset classes often vary
considerably. If you don't have a plan, or you haven't rebalanced
your portfolio in some time, we suggest that you meet with your
investment professional to discuss your financial options.
I encourage you to read the remainder of this report, including the
discussion on page 6 with John Carey, your Fund's portfolio manager.
If you have questions, 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
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY 12/31/98
PORTFOLIO DIVERSIFICATION
-----------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[LOGO]
U.S. Common Stocks 91%
Depositary Receipts for
International Stocks 5%
International Common Stocks 3%
Short-Term Equivalents 1%
SECTOR DISTRIBUTION
-----------------------------------------------------------------------------
(As a percentage of equity holdings)
[LOGO]
Financial 21%
Technology 16%
Healthcare 15%
Communications Services 12%
Consumer Cyclicals 11%
Consumer Staples 9%
Basic Materials 4%
Capital Goods 4%
Energy 4%
Other 4%
10 LARGEST HOLDINGS
-----------------------------------------------------------------------------
(As a percentage of equity holdings)
<TABLE>
<C> <S> <C> <C> <C> <C>
1. Schering-Plough Corp. 4.97% 6. SBC Communications, Inc. 1.93%
2. IBM Corp. 2.65 7. Ford Motor Co. 1.85
3. The Bank of New York Co., Inc. 2.59 8. Ameritech Corp. 1.76
4. Charles Schwab Corp. 2.04 9. Bristol-Myers Squibb Co. 1.69
5. BellSouth Corp. 1.99 10. Sun Microsystems, Inc. 1.64
</TABLE>
Fund holdings will vary for other periods.
2
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 12/31/98 CLASS A SHARES
SHARE PRICES AND DISTRIBUTIONS
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
PER SHARE 12/31/98 12/31/97
<S> <C> <C> <C>
$43.30 $34.95
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(12/31/97 - 12/31/98) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
<S> <C> <C> <C>
$0.205 $0.016 $1.470
</TABLE>
INVESTMENT RETURNS
-----------------------------------------------------------------------------
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.
[LOGO]
AVERAGE ANNUAL TOTAL RETURNS
(As of December 31, 1998)
NET ASSET PUBLIC OFFERING
PERIOD VALUE PRICE*
10 Years 16.82% 16.14%
5 Years 21.91 20.47
1 Year 29.00 21.59
* Reflects deduction of the maximum
5.75% sales charge at the beginning
of the period and assumes reinvest-
ment of distributions at net asset
value.
GROWTH OF $10,000
9,425 10,000
11,630 13,163
10,407 12,755
12,776 16,632
14,513 17,899
16,578 19,701
16,483 19,958
20,874 27,447
24,987 33,738
34,599 44,987
44,662 57,911
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
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 12/31/98 CLASS B SHARES
SHARE PRICES AND DISTRIBUTIONS
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
PER SHARE 12/31/98 12/31/97
<S> <C> <C> <C>
$43.20 $35.01
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(12/31/97 - 12/31/98) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
<S> <C> <C> <C>
- $0.016 $1.470
</TABLE>
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.
[LOGO]
AVERAGE ANNUAL TOTAL RETURNS
(As of December 31, 1998)
IF IF
PERIOD HELD REDEEMED*
Life-of-Fund 30.02% 29.21%
(7/1/96)
1 Year 27.82 23.82
* 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.
Growth of $10,000
10,000 10,000
10,212 10,232
10,991 11,085
11,235 11,383
13,253 13,367
14,473 14,367
15,079 14,780
17,056 16,840
17,319 17,398
15,803 15,671
18,975 19,026
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
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 12/31/98 CLASS C SHARES
SHARE PRICES AND DISTRIBUTIONS
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
PER SHARE 12/31/98 12/31/97
<S> <C> <C> <C>
$42.76 $34.66
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM
(12/31/97 - 12/31/98) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
<S> <C> <C> <C>
- $0.016 $1.470
</TABLE>
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.
[LOGO]
AVERAGE ANNUAL TOTAL RETURNS
(As of December 31, 1998)
IF IF
PERIOD HELD REDEEMED*
Life-of-Fund 29.49% 29.49%
(7/1/96)
1 Year 27.85 27.85
* Assumes reinvestment distributions
The 1% contingent deferred sales
charge (CDSC) applies to redemptions
made within one year or purchase.
Growth of $10,000
10,000 10,000
10,117 10,232
10,874 11,085
11,117 11,383
13,114 13,367
14,326 14,367
14,925 14,780
16,880 16,840
17,139 17,398
15,644 15,671
19,081 19,026
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
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 12/31/98
- --------------------------------------------------------------------------------
Q: HOW DID THE FUND PERFORM?
A: Pioneer Fund had a terrific year. For the year ended December 31,
1998, Class A shares generated a total return of 29.00% based on
net asset value. By comparison, the Standard & Poor's 500 Index,
an unmanaged measure of the general stock market, rose an
exceptional 28.73% on the same, total return basis.
While the year was marked by a great deal of turbulence and
volatility in share prices, it ended pretty well. Strong cash
flows into the stock market from investors continued during most
of the year. And, many of the deepest concerns investors had
during the summer had abated by year-end. Earnings growth remained
a key issue, but few forecasters seemed to think growth would stop
or that a recession would set in. Interest rates remained quite
manageable, and inflation was very modest. All in all, the
investment climate was favorable, and the Fund benefited
handsomely from staying substantially invested in equities
throughout the year.
Q: THE U.S. STOCK MARKET SEEMED MORE VOLATILE IN 1998. WAS IT?
A: It certainly has felt that way! But it pays to take a closer look.
Since July of 1990, the S&P 500 Index has experienced only one
decline of 15% or more. But by reviewing the returns of the S&P
500 over the last 30 years, one can find six instances when the
market has endured similar fluctuations.
While volatility can be unsettling, you often must experience
price fluctuations - and sometimes they can be severe - in order
to pursue long-term results. But there are a number of ways we
attempt to moderate risk for the Fund. For example, the portfolio
is diversified among many different sectors and companies.
Currently, there are 63 and 138, respectively. This helps us to
mute the volatility in any one sector, since returns of stocks in
different areas often vary considerably.
Q: WHAT WERE SOME OF YOUR MAJOR INVESTMENT THEMES?
A: If there has been any one theme to our investing, it has been our
forward-looking, value-based strategy. It is actually the same
strategy we have always had, though the stocks encompassed by it
will vary from one market cycle to the next, and from one stage of
our national business development to the next.
6
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
One thing we have observed is that investors appear willing to pay
a premium for predictable earnings growth. There has also been a
strong interest in newer, "growth" industries. While we could not
accept the astronomical prices of many internet stocks, for
instance, we successfully invested in many other technology
stocks. We also found opportunities in other growth areas such as
healthcare, telecommunications and financial services. The
difference between our approach and that of a "momentum" investor
is that, in many cases, we attempt to identify promising stocks
when they are much less well known. Many of the portfolio's
biggest gains in 1998 were on stocks purchased two, three or four
years ago, and even earlier in some cases. We are hopeful that
some of the stocks we are buying now will contribute to results in
the future.
Q: WHICH SECTORS HELPED AND HURT FUND PERFORMANCE?
A: Several groups had a significant effect. Earnings growth for many
technology companies, such as IBM and Sun Microsystems, was ahead
of analysts' expectations and helped to fuel performance. Drug and
pharmaceutical holdings also turned in gains, including
Bristol-Myers Squibb, a diversified company that produces
cholesterol control, diabetes and cancer medications, and
Schering-Plough, a leader in respiratory drugs. Telephone
companies - including the "Baby Bells" - made a positive
contribution. Major retailers, Wal-Mart Stores and Walgreen, for
example, posted impressive results, especially at the end of the
year when holiday sales reports were higher than most predictions.
Many of the Fund's financial services stocks struggled during the
year. Especially disappointing were the property and casualty
insurance companies. The insurance industry has been hurt by a
general slowdown and pricing pressures in many markets, but we are
confident in the long-term outlook for this sector. Companies that
produce capital goods, most notably machinery manufacturers, such
as Caterpillar and Timken, were also weak throughout the year.
Q: WHAT COMPANIES DID YOU ADD TO, OR TAKE OUT OF, THE PORTFOLIO?
A: Compared with this time last year, there are a number of new
holdings and also some deletions. Our largest purchases in the
most recent months included oil companies Mobil and Atlantic
Richfield. The Fund received shares in cellular telephone company
Sprint PCS as a spin-off from Sprint.
7
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 12/31/98 (CONTINUED)
Mergers affected four positions in the fourth quarter. The Fund
booked gains on Amoco after it was taken over by British Petroleum
and received shares of DaimlerChrysler in exchange for holdings in
Chrysler. Shares of Bank One came in exchange for First Chicago
NBD, and shares of Washington Mutual replaced the position in H.F.
Ahmanson.
Q: INTERNATIONAL STOCKS HAVE ALWAYS PLAYED A ROLE IN PIONEER FUND.
CAN YOU TALK ABOUT SOME OF THEM?
A: At year-end, approximately 8% of the portfolio was invested in
international stocks. Many of these companies are familiar names
like Nestle, Bayer and Sony. Others such as Swiss pharmaceutical
companies Novartis and Roche Holdings, and Exel, a Bermuda-based
insurance company, may not be as familiar but were positive
contributors nonetheless.
Some international holdings are based in Europe and, as you know,
the beginning of the year saw the implementation of a new
currency - the euro. While it is much too early to predict the
long-term outlook for the euro, we think the new currency should
help many European companies by reducing the costs of doing
business and spurring competition.
Q: WHAT IS YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A: As the stock market has continued to advance over the past four
years, we have often suggested caution. There has never been
another period when the S&P 500 has produced such large gains over
such an extended period of time. As we look ahead, we could
foresee the possibility of lower returns than in recent years.
But, as we saw over the course of 1998, markets can be very
unpredictable. We will continue to manage the Fund by taking a
long-term view - focusing on companies we think can grow their
sales and earnings - because these are the factors that will
ultimately determine if their stock prices rise or fall.
8
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/98
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
INVESTMENT IN SECURITIES - 98.6%
PREFERRED STOCK - 0.0%
60,000 The Rouse Co., $3.00 (Series B) (Convertible) $ 2,602,500
--------------
TOTAL PREFERRED STOCK
(Cost $3,000,000) $ 2,602,500
--------------
COMMON STOCKS - 98.6%
BASIC MATERIALS - 4.0%
ALUMINUM - 0.5%
369,000 Aluminum Company of America $ 27,513,563
--------------
CHEMICALS - 1.3%
290,000 Dow Chemical Co. $ 26,371,875
958,000 E.I. du Pont de Nemours & Co. 50,833,875
--------------
$ 77,205,750
--------------
CHEMICALS (DIVERSIFIED) - 0.3%
360,700 Bayer AG (A.D.R.) $ 15,149,400
--------------
CHEMICALS (SPECIALTY) - 0.4%
236,158 A. Schulman, Inc. $ 5,357,835
105,898 Ciba Specialty Chemicals (A.D.R.) 4,434,479
659,451 Lilly Industries, Inc. 13,147,804
--------------
$ 22,940,118
--------------
CONTAINERS & PACKAGING (PAPER) - 0.5%
896,600 Greif Brothers Corp. $ 26,169,513
--------------
IRON & STEEL - 0.4%
396,900 Nucor Corp. $ 17,165,925
382,000 Steel Dynamics, Inc.* 4,488,500
--------------
$ 21,654,425
--------------
METALS MINING - 0.6%
647,900 Phelps Dodge Corp. $ 32,961,913
--------------
TOTAL BASIC MATERIALS $ 223,594,682
--------------
CAPITAL GOODS - 4.2%
AEROSPACE/DEFENSE - 0.5%
362,500 Lockheed Martin Corp. $ 30,721,875
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 9
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/98 (CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
ELECTRICAL EQUIPMENT - 0.9%
445,800 Emerson Electric Co. $ 26,970,900
112,000 General Electric Co. 11,431,000
286,256 Hubbell, Inc. (Class B) 10,877,728
--------------
$ 49,279,628
--------------
MACHINERY (DIVERSIFIED) - 1.4%
960,600 Caterpillar, Inc. $ 44,187,600
371,600 Deere & Co. 12,309,250
504,450 Ingersoll-Rand Co. 23,677,622
174,200 Timken Co. 3,288,025
--------------
$ 83,462,497
--------------
MANUFACTURING (DIVERSIFIED) - 0.8%
355,800 Illinois Tool Works, Inc. $ 20,636,400
393,300 Johnson Controls, Inc. 23,204,700
--------------
$ 43,841,100
--------------
MANUFACTURING (SPECIALIZED) - 0.3%
416,100 Diebold Inc. $ 14,849,569
--------------
OFFICE EQUIPMENT & SUPPLIES - 0.3%
691,400 Canon Inc. (A.D.R.) $ 14,865,100
--------------
TOTAL CAPITAL GOODS $ 237,019,769
--------------
COMMUNICATIONS SERVICES - 12.0%
CELLULAR/WIRELESS TELECOMMUNICATIONS - 0.2%
517,000 Sprint Corp. (PCS Group)* $ 11,955,625
--------------
TELECOMMUNICATIONS - 1.5%
1,034,000 Sprint Corp. $ 86,985,250
--------------
TELEPHONE - 10.3%
754,400 Aliant Communications Co. $ 30,836,100
1,567,200 Ameritech Corp. 99,321,300
1,666,708 Bell Atlantic Corp. 88,335,524
2,259,600 BellSouth Corp. 112,697,550
1,360,900 GTE Corp. 88,458,500
2,033,202 SBC Communications, Inc. 109,030,457
974,351 US West Communications Group, Inc. 62,967,433
--------------
$ 591,646,864
--------------
TOTAL COMMUNICATIONS SERVICES $ 690,587,739
--------------
</TABLE>
10 The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
CONSUMER CYCLICALS - 11.3%
AUTOMOBILES - 3.1%
750,444 DaimlerChrysler AG* $ 72,089,527
1,785,000 Ford Motor Co. 104,757,187
--------------
$ 176,846,714
--------------
HOUSEHOLD FURNISHINGS & APPLIANCES - 0.5%
364,800 Sony Corp. (A.D.R.) $ 26,174,400
--------------
PUBLISHING - 2.5%
1,747,200 John Wiley & Sons, Inc.+ $ 56,336,875
553,000 McGraw-Hill Co., Inc. 84,411,600
--------------
$ 140,748,475
--------------
PUBLISHING (NEWSPAPERS) - 0.4%
320,300 Central Newspapers, Inc. $ 22,881,431
--------------
RETAIL (DEPARTMENT STORES) - 2.0%
568,500 Harcourt General, Inc. $ 30,237,094
596,400 Kohl's Corp.* 36,641,325
823,200 May Department Stores Co. 49,700,700
--------------
$ 116,579,119
--------------
RETAIL (DISCOUNTERS) - 0.4%
875,100 Dollar General Corp. $ 20,674,238
--------------
RETAIL (GENERAL MERCHANDISE) - 2.0%
1,380,000 Dayton Hudson Corp. $ 74,865,000
526,000 Wal-Mart Stores, Inc. 42,836,125
--------------
$ 117,701,125
--------------
RETAIL (SPECIALTY) - 0.3%
393,200 Barnes & Noble, Inc.* $ 16,711,000
--------------
SERVICES (ADVERTISING/MARKETING) - 0.1%
128,600 Omnicom Group $ 7,458,800
--------------
TOTAL CONSUMER CYCLICALS $ 645,775,302
--------------
CONSUMER STAPLES - 8.8%
BEVERAGES (NON-ALCOHOLIC) - 0.5%
765,000 Pepsico, Inc. $ 31,317,188
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/98 (CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
BROADCASTING (CABLE/TELEVISION/RADIO) - 1.1%
481,900 Belo (A.H.) Corp. $ 9,607,881
1,511,900 CBS Corp. 49,514,725
74,500 Hearst-Argyle Television, Inc.* 2,458,500
--------------
$ 61,581,106
--------------
DISTRIBUTORS (FOOD & HEALTH) - 0.4%
866,200 Sysco Corp. $ 23,766,363
--------------
FOODS - 3.7%
604,600 Bestfoods $ 32,194,950
1,204,000 ConAgra, Inc. 37,926,000
480,300 General Mills, Inc. 37,343,325
955,150 H.J. Heinz Co. 54,085,369
139,000 Nestle SA (A.D.R.) 14,994,625
1,330,000 Sara Lee Corp. 37,489,375
--------------
$ 214,033,644
--------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.9%
529,300 Colgate-Palmolive Co. $ 49,158,738
--------------
RESTAURANTS - 0.4%
320,000 McDonald's Corp. $ 24,520,000
--------------
RETAIL (DRUG STORES) - 1.5%
1,425,600 Walgreen Co. $ 83,486,700
--------------
SERVICES (EMPLOYMENT) - 0.3%
420,600 Robert Half International, Inc.* $ 18,795,563
--------------
TOTAL CONSUMER STAPLES $ 506,659,302
--------------
ENERGY - 4.3%
OIL (DOMESTIC INTEGRATED) - 0.5%
449,300 Atlantic Richfield Co. $ 29,316,825
--------------
OIL (INTERNATIONAL INTEGRATED) - 3.1%
961,000 Chevron Corp. $ 79,702,937
545,000 Exxon Corp. 39,853,125
650,300 Mobil Corp. 56,657,388
--------------
$ 176,213,450
--------------
</TABLE>
12 The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
OIL & GAS (DRILLING & EQUIPMENT) - 0.7%
523,000 Schlumberger Ltd. $ 24,123,375
670,100 Smith International, Inc.* 16,878,144
--------------
$ 41,001,519
--------------
TOTAL ENERGY $ 246,531,794
--------------
FINANCIAL - 20.7%
BANKS (MAJOR REGIONAL) - 6.5%
3,646,800 The Bank of New York Co., Inc. $ 146,783,700
542,913 Bank One Corp. 27,722,495
473,700 Comerica, Inc. 32,300,419
671,000 Huntington Bancshares, Inc. 20,171,937
143,300 Mellon Bank Corp. 9,851,875
1,182,324 National City Corp. 85,718,490
756,800 State Street Boston Corp. 52,644,900
--------------
$ 375,193,816
--------------
BANKS (REGIONAL) - 0.9%
625,700 First Tennessee National Corp. $ 23,815,706
415,000 Zions Bancorporation 25,885,625
--------------
$ 49,701,331
--------------
FINANCIAL (DIVERSIFIED) - 2.8%
835,642 Associates First Capital Corp. $ 35,410,330
1,005,700 The Equitable Companies, Inc. 58,204,887
420,000 Federal National Mortgage Association 31,080,000
346,750 Morgan Stanley, Dean Witter, Discover & Co. 24,619,250
333,641 The Rouse Co. 9,175,127
--------------
$ 158,489,594
--------------
INSURANCE (LIFE/HEALTH) - 0.3%
436,200 ReliaStar Financial Corp. $ 20,119,725
--------------
INSURANCE (MULTI-LINE) - 0.7%
419,850 American International Group, Inc. $ 40,568,006
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/98 (CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
INSURANCE (PROPERTY/CASUALTY) - 3.4%
774,200 Chubb Corp. $ 50,226,225
707,300 Exel Ltd. 53,047,500
535,400 Partnerre Ltd. 24,494,550
773,200 The St. Paul Companies, Inc. 26,868,700
930,400 Safeco Corp. 39,949,050
--------------
$ 194,586,025
--------------
INSURANCE BROKERS - 0.7%
729,000 Marsh & McLennan, Co., Inc. $ 42,600,937
--------------
INVESTMENT BANKING/BROKERAGE - 3.4%
2,050,725 Charles Schwab Corp. $ 115,225,111
621,000 Merrill Lynch & Co., Inc. 41,451,750
1,020,500 Paine Webber Group, Inc. 39,416,812
--------------
$ 196,093,673
--------------
INVESTMENT MANAGEMENT - 1.5%
777,000 Federated Investors, Inc. $ 14,083,125
2,100,000 T. Rowe Price Associates, Inc. 71,925,000
--------------
$ 86,008,125
--------------
SAVINGS & LOAN COMPANIES - 0.5%
693,840 Washington Mutual, Inc. $ 26,496,015
--------------
TOTAL FINANCIAL $1,189,857,247
--------------
HEALTHCARE - 15.2%
HEALTHCARE (DIVERSIFIED) - 4.2%
687,200 Abbott Laboratories $ 33,672,800
714,000 Bristol-Myers Squibb Co. 95,542,125
850,000 Johnson & Johnson 71,293,750
520,100 Warner-Lambert Co., Inc. 39,105,019
--------------
$ 239,613,694
--------------
HEALTHCARE (DRUGS/MAJOR PHARMACEUTICALS) - 10.0%
410,000 Eli Lilly & Co. $ 36,438,750
200,300 Merck & Co., Inc. 29,581,806
927,994 Novartis AG (A.D.R.) 91,291,410
3,898 Roche Holdings AG 47,606,558
5,092,800 Schering-Plough Corp. 281,377,200
1,243,000 Smithkline Beecham Plc (A.D.R.) 86,388,500
--------------
$ 572,684,224
--------------
</TABLE>
14 The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
HEALTHCARE (MANAGED CARE) - 0.3%
375,600 United Healthcare Corp. $ 16,174,275
--------------
HEALTHCARE (MEDICAL PRODUCTS/SUPPLIES) - 0.7%
1,032,800 Becton, Dickinson & Co. $ 44,087,650
--------------
TOTAL HEALTHCARE $ 872,559,843
--------------
TECHNOLOGY - 15.5%
COMMUNICATIONS EQUIPMENT - 2.5%
556,400 Harris Corp. $ 20,378,150
608,484 Lucent Technologies, Inc. 66,933,240
937,900 Motorola, Inc. 57,270,519
--------------
$ 144,581,909
--------------
COMPUTERS (HARDWARE) - 6.7%
1,790,000 Compaq Computer Corp. $ 75,068,125
940,000 Hewlett-Packard Co. 64,213,750
812,000 IBM Corp. 150,017,000
1,085,000 Sun Microsystems, Inc.* 92,903,125
--------------
$ 382,202,000
--------------
COMPUTERS (SOFTWARE & SERVICES) - 1.6%
837,000 Aspen Technology, Inc.* $ 12,136,500
160,000 BMC Software, Inc.* 7,130,000
623,100 Computer Sciences Corp. 40,151,006
190,000 Network Associates, Inc.* 12,587,500
200,000 Oracle Corp.* 8,625,000
498,500 Peoplesoft, Inc.* 9,440,344
--------------
$ 90,070,350
--------------
ELECTRONICS (DEFENSE) - 0.3%
444,000 General Motors Corp. (Class H) $ 17,621,250
--------------
ELECTRONICS (SEMICONDUCTORS) - 2.7%
400,000 Altera Corp.* $ 24,350,000
545,000 Intel Corp. 64,616,562
503,875 Taiwan Semiconductor Manufacturing Co., Ltd. (A.D.R.)* 7,148,727
692,000 Texas Instruments, Inc. 59,209,250
--------------
$ 155,324,539
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/98 (CONTINUED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
EQUIPMENT (SEMICONDUCTORS) - 0.2%
295,000 Applied Materials, Inc.* $ 12,592,812
--------------
PHOTOGRAPHY/IMAGING - 0.3%
229,100 Eastman Kodak Co. $ 16,495,200
--------------
SERVICES (DATA PROCESSING) - 1.2%
408,600 Automatic Data Processing, Inc. $ 32,764,612
276,400 DST Systems, Inc.* 15,772,075
205,000 Electronic Data Systems Corp. 10,301,250
245,000 Fiserv, Inc.* 12,602,187
--------------
$ 71,440,124
--------------
TOTAL TECHNOLOGY $ 890,328,184
--------------
TRANSPORTATION - 1.1%
AIRLINES - 0.3%
322,908 Delta Air Lines, Inc. $ 16,791,216
--------------
RAILROADS - 0.8%
440,500 Burlington Northern, Inc. $ 14,866,875
1,060,700 Norfolk Southern Corp. 33,610,931
--------------
$ 48,477,806
--------------
TOTAL TRANSPORTATION $ 65,269,022
--------------
UTILITIES - 1.5%
ELECTRIC COMPANIES - 0.9%
1,125,100 Allegheny Power Systems, Inc. $ 38,815,950
468,900 DPL, Inc. 10,139,963
--------------
$ 48,955,913
--------------
NATURAL GAS - 0.3%
767,533 Indiana Energy, Inc. $ 18,900,500
--------------
WATER UTILITY - 0.3%
552,600 American Water Works Co., Inc. $ 18,650,250
--------------
TOTAL UTILITIES $ 86,506,663
--------------
TOTAL COMMON STOCKS
(Cost $2,678,670,962) $5,654,689,547
--------------
TOTAL INVESTMENT IN SECURITIES
(Cost $2,681,670,962) $5,657,292,047
--------------
</TABLE>
16 The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
TEMPORARY CASH INVESTMENTS - 1.4%
COMMERCIAL PAPER - 1.4%
$33,186,000 American Express Credit Co., 5.85%, 1/5/99 $ 33,186,000
30,563,000 Ford Motor Credit Corp., 4.92%, 1/4/99 30,563,000
19,521,000 General Electric Financial Assurance Co., 6.11%, 1/4/99 19,521,000
--------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $83,270,000) $ 83,270,000
--------------
TOTAL INVESTMENT IN SECURITIES AND TEMPORARY CASH
INVESTMENTS - 100%
(Cost $2,764,940,962)(a) $5,740,562,047
==============
</TABLE>
* Non-income producing security.
+ Investment held by Fund representing 5% or more of the outstanding
voting stock of such company.
(a) At December 31, 1998, the net unrealized gain on investments based
on cost for federal income tax purposes of $2,764,940,962 was as
follows:
<TABLE>
<S> <C>
Aggregate gross unrealized gain for all
investments in which there is an excess of value
over tax cost $3,028,336,747
Aggregate gross unrealized loss for all
investments in which there is an excess of tax
cost over value (52,715,662)
--------------
Net unrealized gain $2,975,621,085
==============
</TABLE>
Purchases and sales of securities (excluding temporary cash
investments) for the year ended December 31, 1998, aggregated
$868,877,870 and $424,748,427, respectively.
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
BALANCE SHEET 12/31/98
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary
cash investments of $83,270,000) (cost $2,764,940,962) $5,740,562,047
Cash 890
Receivables -
Fund shares sold 20,999,502
Dividends and interest 5,534,077
Other 65,194
--------------
Total assets $5,767,161,710
--------------
LIABILITIES:
Payables -
Investment securities purchased $ 47,920,060
Fund shares repurchased 5,683,426
Due to affiliates 5,289,181
Accrued expenses 323,941
--------------
Total liabilities $ 59,216,608
--------------
NET ASSETS:
Paid-in capital $2,732,324,017
Net unrealized gain on investments 2,975,621,085
--------------
Total net assets $5,707,945,102
==============
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $5,388,760,751/124,447,140 shares) $ 43.30
==============
Class B (based on $271,795,569/6,290,930 shares) $ 43.20
==============
Class C (based on $47,388,782/1,108,135 shares) $ 42.76
==============
MAXIMUM OFFERING PRICE:
Class A $ 45.94
==============
</TABLE>
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED 12/31/98
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld
of $313,804) $ 74,900,715
Interest 1,476,815
------------
Total investment income $ 76,377,530
--------------
EXPENSES:
Management fees
Basic fee $ 28,402,964
Performance adjustment 3,229,200
Transfer agent fees
Class A 8,286,127
Class B 394,904
Class C 60,906
Distribution fees
Class A 9,385,483
Class B 1,432,187
Class C 235,591
Accounting 834,399
Custodian fees 214,380
Registration fees 322,369
Professional fees 134,254
Printing 177,355
Fees and expenses of nonaffiliated trustees 64,120
Miscellaneous 193,828
------------
Total expenses $ 53,368,067
Less fees paid indirectly (574,442)
--------------
Net expenses $ 52,793,625
--------------
Net investment income $ 23,583,905
--------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from:
Investments $188,376,253
Other assets and liabilities denominated
in foreign currencies 2,435 $ 188,378,688
------------
Change in net unrealized gain on investments $1,016,960,019
--------------
Net gain on investments $1,205,338,707
--------------
Net increase in net assets resulting
from operations $1,228,922,612
==============
</TABLE>
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED 12/31/98 AND 12/31/97
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
FROM OPERATIONS: 12/31/98 12/31/97
<S> <C> <C>
Net investment income $ 23,583,905 $ 32,704,339
Net realized gain on investments 188,378,688 208,300,236
Change in net unrealized gain on investments 1,016,960,019 877,438,631
-------------- --------------
Net increase in net assets resulting
from operations $1,228,922,612 $1,118,443,206
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ($0.21 and $0.31 per share, respectively) $ (23,991,812) $ (33,233,565)
Class B ($0.00 and $0.11 per share, respectively) - (71,137)
Class C ($0.00 and $0.09 per share, respectively) - (8,434)
Net realized gain:
Class A ($1.49 and $1.90 per share, respectively) (178,206,860) (205,353,843)
Class B ($1.49 and $1.90 per share, respectively) (8,623,800) (2,591,421)
Class C ($1.49 and $1.90 per share, respectively) (1,502,241) (374,276)
-------------- --------------
Total distributions to shareholders $ (212,324,713) $ (241,632,676)
-------------- --------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $1,075,355,825 $ 416,679,617
Reinvestment of distributions 192,687,584 219,460,826
Cost of shares repurchased (629,692,713) (367,396,230)
-------------- --------------
Net increase in net assets resulting from
fund share transactions $ 638,350,696 $ 268,744,213
-------------- --------------
Net increase in net assets $1,654,948,595 $1,145,554,743
NET ASSETS:
Beginning of year 4,052,996,507 2,907,441,764
-------------- --------------
End of year (including accumulated undistributed net
investment income of $0 and $264,430, respectively) $5,707,945,102 $4,052,996,507
============== ==============
</TABLE>
20 The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A '98 SHARES '98 AMOUNT '97 SHARES '97 AMOUNT
<S> <C> <C> <C> <C>
Shares sold 20,599,912 $ 809,225,041 11,315,545 $ 364,028,984
Reinvestment of distributions 4,465,786 183,937,799 6,379,337 216,673,889
Less shares repurchased (14,825,021) (578,631,413) (11,203,914) (356,282,237)
----------- ------------- ----------- -------------
Net increase 10,240,677 $ 414,531,427 6,490,968 $ 224,420,636
=========== ============= =========== =============
CLASS B
Shares sold 5,636,157 $ 221,555,435 1,335,573 $ 43,838,902
Reinvestment of distributions 186,678 7,724,353 73,049 2,502,926
Less shares repurchased (1,046,121) (40,159,056) (225,262) (7,543,016)
----------- ------------- ----------- -------------
Net increase 4,776,714 $ 189,120,732 1,183,360 $ 38,798,812
=========== ============= =========== =============
CLASS C
Shares sold 1,134,435 $ 44,575,349 271,638 $ 8,811,731
Reinvestment of distributions 25,035 1,025,432 8,373 284,011
Less shares repurchased (289,689) (10,902,244) (110,127) (3,570,977)
----------- ------------- ----------- -------------
Net increase 869,781 $ 34,698,537 169,884 $ 5,524,765
=========== ============= =========== =============
</TABLE>
The accompanying notes are an integral part of these financial statements. 21
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 12/31/98
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
CLASS A 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 34.95 $ 26.89 $ 24.36 $ 21.32 $ 23.25
---------- ---------- ---------- ---------- ----------
Increase (decrease) from investment operations:
Net investment income $ 0.21 $ 0.30 $ 0.37 $ 0.49 $ 0.49
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 9.84 9.97 4.35 5.13 (0.63)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from investment operations $ 10.05 $ 10.27 $ 4.72 $ 5.62 $ (0.14)
Distributions to shareholders:
Net investment income (0.21) (0.31) (0.37) (0.49) (0.49)
Net realized gain (1.49) (1.90) (1.82) (2.09) (1.30)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value $ 8.35 $ 8.06 $ 2.53 $ 3.04 $ (1.93)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 43.30 $ 34.95 $ 26.89 $ 24.36 $ 21.32
========== ========== ========== ========== ==========
Total return* 29.00% 38.47% 19.70% 26.64% (0.57)%
Ratio of net expenses to average net assets 1.09%+ 1.03%+ 1.01%+ 0.95%+ 0.94%
Ratio of net investment income to average net assets 0.52%+ 0.93%+ 1.40%+ 2.01%+ 2.13%
Portfolio turnover rate 9% 17% 25% 31% 20%
Net assets, end of year (in thousands) $5,388,761 $3,991,726 $2,896,670 $2,466,098 $2,011,051
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.08% 1.02% 0.99% 0.94% -
Net investment income 0.53% 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.
+ Ratio assuming no reduction for fees paid indirectly.
22 The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 12/31/98
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED 7/1/96 TO
CLASS B 12/31/98 12/31/97(A) 12/31/96(A)
<S> <C> <C> <C>
Net asset value, beginning of
period $ 35.01 $ 27.02 $26.40
-------- ------- ------
Increase (decrease) from
investment operations:
Net investment income (loss) $ (0.04) $ 0.01 $ 0.07
Net realized and unrealized
gain on investments and
foreign currency
transactions 9.72 9.99 2.50
-------- ------- ------
Net increase from
investment operations $ 9.68 $ 10.00 $ 2.57
Distributions to shareholders:
Net investment income - (0.11) (0.07)
In excess of net investment
income - - (0.06)
Net realized gain (1.49) (1.90) (1.82)
-------- ------- ------
Net increase in net asset value $ 8.19 $ 7.99 $ 0.62
-------- ------- ------
Net asset value, end of period $ 43.20 $ 35.01 $27.02
======== ======= ======
Total return* 27.82% 37.19% 9.92%
Ratio of net expenses to average
net assets 1.99%+ 1.92%+ 1.82%**+
Ratio of net investment income
(loss) to average net assets (0.41)%+ (0.02)%+ 0.46%**+
Portfolio turnover rate 9% 17% 25%
Net assets, end of period
(in thousands) $271,796 $53,010 $8,940
Ratios assuming reduction for
fees paid indirectly:
Net expenses 1.96% 1.88% 1.80%**
Net investment income (loss) (0.38)% 0.02% 0.48%**
</TABLE>
<TABLE>
<S> <C>
(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.
+ Ratio assuming no reduction for fees paid indirectly.
</TABLE>
The accompanying notes are an integral part of these financial statements. 23
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 12/31/98
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED 7/1/96 TO
CLASS C 12/31/98 12/31/97(A) 12/31/96(A)
<S> <C> <C> <C>
Net asset value, beginning of
period $ 34.66 $26.74 $26.40
------- ------ ------
Increase (decrease) from
investment operations:
Net investment income (loss) $ (0.04) $ 0.02 $ 0.03
Net realized and unrealized
gain on investments and
foreign currency
transactions 9.63 9.89 2.23
------- ------ ------
Net increase from
investment operations $ 9.59 $ 9.91 $ 2.26
Distributions to shareholders:
Net investment income - (0.09) (0.03)
In excess of net investment
income - - (0.07)
Net realized gain (1.49) (1.90) (1.82)
------- ------ ------
Net increase in net asset value $ 8.10 $ 7.92 $ 0.34
------- ------ ------
Net asset value, end of period $ 42.76 $34.66 $26.74
======= ====== ======
Total return* 27.85% 37.25% 8.74%
Ratio of net expenses to
average net assets 1.97%+ 1.87%+ 2.11%**+
Ratio of net investment income
(loss) to average net assets (0.39)%+ 0.02%+ 0.20%**+
Portfolio turnover rate 9% 17% 25%
Net assets, end of period
(in thousands) $47,389 $8,261 $1,831
Ratios assuming reduction for
fees paid indirectly:
Net expenses 1.93% 1.83% 2.08%**
Net investment income (loss) (0.35)% 0.06% 0.23%**
</TABLE>
<TABLE>
<S> <C>
(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.
+ Ratio assuming no reduction for fees paid indirectly.
</TABLE>
24 The accompanying notes are an integral part of these financial statements.
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/98
- --------------------------------------------------------------------------------
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. The net asset value is
computed once daily, on each day the New York Stock Exchange is open, as
of the close of regular trading on the Exchange. In computing the net
asset value, 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.
25
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/98 (CONTINUED)
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.
Settlements from litigation and class action suits are recognized when
the Fund acquires an enforceable right to such awards. Included in net
realized gain from investments is $1,151,963 of class action settlements
received by the Fund during the year ended December 31, 1998.
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.
26
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
At December 31, 1998, the Fund reclassified $45,787 and $97,690 from
accumulated undistributed net realized gain on investments and paid-in
capital, respectively, to accumulated distributions in excess of net
investment income. 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 $183,138,102 as a capital gain dividend for the purposes of
the dividend paid deduction.
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 $2,772,025 in underwriting commissions on the sale of fund
shares during the year ended December 31, 1998.
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.
27
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/98 (CONTINUED)
2. MANAGEMENT AGREEMENT
Pioneer Investment Management, Inc. (PIM) (formerly Pioneering
Management Corp.), the Fund's investment adviser, manages the Fund's
portfolio and is a wholly owned subsidiary of PGI. PIM 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]0.10% based on the Fund's
investment performance as compared with the Lipper Growth & Income Funds
index. For the year ended December 31, 1998, the aggregate performance
adjustment resulted in an increase to management fees of $3,229,200. For
the year ended December 31, 1998, the management fee was equivalent to
0.67% of average daily net assets.
In addition, under the management and administration agreements,
certain other services and costs, including accounting, regulatory
reporting and insurance premiums, are paid by the Fund. At December
31, 1998, $3,133,808 was payable to PIM related to management fees,
administrative 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 $1,012,521 in transfer agent
fees payable to PSC at December 31, 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. 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 distri-
28
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
bution services with regard to Class B and Class C shares. Included in
due to affiliates is $1,142,852 in distribution fees payable to PFD at
December 31, 1998.
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 year ended December 31, 1998, CDSCs in the
amount of $266,556 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, 1998, the Fund's expenses
were reduced by $574,442 under such arrangements.
6. LINE OF CREDIT
Effective April 14, 1998, the Fund, along with certain other funds 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
borrowing exceeds $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
period ended December 31, 1998, the Fund had no borrowings under this
agreement.
29
<PAGE>
PIONEER FUND
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NOTES TO FINANCIAL STATEMENTS 12/31/98 (CONTINUED)
7. 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, 1998:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Dividend
Affiliates Purchases Sales Income Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John Wiley & Sons, Inc. - - $321,048 $56,336,875
- --------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
PIONEER FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREOWNERS 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, 1998, 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 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, 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 Fund as of December 31, 1998, 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 12, 1999
31
<PAGE>
PIONEER 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 John A. Carey, Vice President
Marguerite A. Piret John A. Boynton, Treasurer
David D. Tripple Joseph P. Barri, Secretary
Stephen K. West
John Winthrop
</TABLE>
INVESTMENT ADVISER
Pioneer Investment Management, Inc.
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
32
<PAGE>
- ---------------------------------------
HAPPY 70TH BIRTHDAY
- ---------------------------------------
PIONEER FUND
SINCE 1928
- ---------------------------------------
(TARGETING CLASSICS TODAY AND TOMORROW)
- --------------------------------------------------------------------------------
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
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 LOGO] PIONEER INVESTMENT MANAGEMENT, INC.
60 STATE STREET 0299-6031
BOSTON, MASSACHUSETTS 02109 (C)Pioneer Funds Distributor, Inc.
WWW.PIONEERFUNDS.COM Printed on Recycled Paper
