<PAGE>
PIONEER LOGO
Pioneer
Equity-Income
Fund
ANNUAL REPORT 10/31/98
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 7
Schedule of Investments 10
Financial Statements 17
Notes to Financial Statements 25
Report of Independent Public Accountants 30
Results of Shareowner Meeting 31
Trustees, Officers and Service Providers 32
A Salute to Pioneer Fund 33
Programs and Services for Pioneer Shareowners 34
The Pioneer Family of Mutual Funds 36
</TABLE>
<PAGE>
Pioneer Equity-Income Fund
LETTER FROM THE CHAIRMAN 10/31/98
Dear Shareowner,
- --------------------------------------------------------------------------------
The end of October marked the close of Pioneer Equity-Income Fund's eighth
fiscal year. I appreciate this opportunity to comment on the challenges and
progress of a fast-paced period that investors will not soon forget.
For financial markets in the U.S. and around the globe, the past 12 months were
volatile. We think it is important to point out that the current fluctuations
in stock prices are relatively normal, compared to historical market movements.
Short-term memory to the contrary, it is the steadily rising stock prices of
recent years that are aberrations, no matter how enjoyable. Volatility is, and
always will be, part of investing.
Size was an important factor over the last year, with large, well-established
U.S. companies - like those owned by Pioneer Equity-Income Fund - pushing the
major market indexes to record heights. Investors seemed to prefer these types
of stocks, initially because of their growth prospects and because of the
belief that large stocks can be safer in volatile times. We agree that these
stocks can serve conservative investors well by providing the potential for
solid returns over the long term while adding a measure of protection in down
markets through their ability to generate income.
As we move ahead, the Fund's investment team will be working hard to bring you
solid performance, but you should be prepared for the inevitable ups and downs
that are part of stock investing. I encourage you to read on to learn more
about your Fund, including the Portfolio Management Discussion with John A.
Carey, your Fund's portfolio manager. If you have any questions about the 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
<PAGE>
Pioneer Equity-Income Fund
PORTFOLIO SUMMARY 10/31/98
P o r t f o l i o D i v e r s i f i c a t i o n
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
<TABLE>
<S> <C>
U.S. Common Stocks 97%
U.S. Convertible Securities 2%
Short-Term Cash Equivalents 1%
</TABLE>
S e c t o r D i s t r i b u t i o n
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
<TABLE>
<S> <C>
Financial 21%
Communication Services 15%
Healthcare 13%
Utilities 11%
Consumer Cyclicals 8%
Consumer Staples 7%
Energy 7%
Technology 7%
Basic Materials 6%
Other 5%
</TABLE>
1 0 L a r g e s t H o l d i n g s
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
<TABLE>
<S> <C> <C> <C>
1. Schering-Plough Corp. 5.90% 6. DaimlerChrysler AG 2.33%
(NY shares)
2. Ameritech Corp. 3.35 7. Old Kent Financial 2.10
Corp.
3. SBC Communications, Inc. 2.94 8. The May Department 2.01
Stores Co.
4. Ford Motor Co. 2.83 9. Eastman Kodak Co. 2.00
5. Amoco Corp. 2.82 10. The Bank of New York 1.90
Co., Inc.
</TABLE>
Fund holdings will vary for other periods.
2
<PAGE>
Pioneer Equity-Income Fund
PERFORMANCE UPDATE 10/31/98 CLASS A SHARES
S h a r e P r i c e s a n d D i s t r i b u t i o n s
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 10/31/98 10/31/97
$ 28.10 $ 24.78
Distributions per Share Income Short-Term Long-Term
(10/31/97- 10/31/98) Dividends Capital Gains Capital Gains
$ 0.478 $ 0.089 $ 0.636
</TABLE>
I n v e s t m e n t R e t u r n s
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Equity-Income Fund at public offering price, compared to the growth
of the Standard & Poor's 500 Index.
<TABLE>
<S> <C> <C>
Average Annual Total Returns
(As of October 31, 1998)
Public
Net Asset Offering
Period Value Price*
Life-of-Fund 16.44% 15.60%
(7/25/90)
5 Years 16.42 15.05
1 Year 18.69 11.87
</TABLE>
* Reflects deduction of the maximum
5.75% sales charge at the beginning of
the period and assumes reinvestment
of distributions at net asset value.
<TABLE>
<CAPTION>
Mountain Chart Class A Shares
<S> <C> <C>
"7/90" 9425 10000
"10/90" 8160 8597
9913 10794
"10/91" 11025 11477
11947 12311
"10/92" 12848 12616
14517 13446
"10/93" 15509 14494
15111 14162
"10/94" 15523 15055
16234 16628
"10/95" 18552 19023
20518 21639
"10/96" 21433 23593
23654 27073
"10/97" 27948 31168
33109 38170
"10/98" 33171 38018
</TABLE>
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. Returns and share prices
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
3
<PAGE>
Pioneer Equity-Income Fund
PERFORMANCE UPDATE 10/31/98 CLASS B SHARES
S h a r e P r i c e s a n d D i s t r i b u t i o n s
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 10/31/98 10/31/97
$ 27.91 $ 24.63
Distributions per Share Income Short-Term Long-Term
(10/31/97- 10/31/98) Dividends Capital Gains Capital Gains
$ 0.291 $ 0.089 $ 0.636
</TABLE>
I n v e s t m e n t R e t u r n s
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Equity-Income Fund, compared to the growth of the Standard & Poor's
500 Index.
<TABLE>
<S> <C> <C>
Average Annual Total Returns
(As of October 31, 1998)
If If
Period Held Redeemed*
Life-of-Fund 18.75% 18.51%
(4/4/94)
1 Year 17.83 13.83
</TABLE>
* Reflects deduction of the maximum
applicable contingent deferred sales
charge (CDSC) at the end of the
period and assumes reinvestment
of distributions. The maximum CDSC
of 4% declines over six years.
<TABLE>
<CAPTION>
Mountain Chart Class B Shares
<S> <C> <C>
"4/94" 10000 10000
10343 10273
10666 10521
"10/94" 10593 10921
10436 10956
11036 12062
12072 13259
"10/95" 12575 13800
13678 15181
13854 15697
13330 15443
"10/96" 14416 17115
15606 19176
15846 19639
18565 23490
"10/97" 18646 22610
20258 24332
22009 27689
21679 28014
"10/98" 21771 27579
</TABLE>
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. Returns and share prices
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
4
<PAGE>
Pioneer Equity-Income Fund
PERFORMANCE UPDATE 10/31/98 CLASS C SHARES
S h a r e P r i c e s a n d D i s t r i b u t i o n s
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 10/31/98 10/31/97
$ 27.88 $ 24.61
Distributions per Share Income Short-Term Long-Term
(10/31/97- 10/31/98) Dividends Capital Gains Capital Gains
$ 0.290 $ 0.089 $ 0.636
</TABLE>
I n v e s t m e n t R e t u r n s
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Equity-Income Fund, compared to the growth of the Standard & Poor's
500 Index.
<TABLE>
<S> <C> <C>
Average Annual Total Returns
(As of October 31, 1998)
If If
Period Held Redeemed*
Life-of-Fund 18.77% 18.77%
(1/31/96)
1 Year 17.80 17.80
</TABLE>
* Assumes reinvestment of distributions.
The 1% contingent deferred sales charge
(CDSC) applies to investments sold
within one year of purchase.
<TABLE>
<CAPTION>
Mountain Chart Class C Shares
<S> <C> <C>
"1/96" 10000 10000
"4/96" 10133 10340
9745 10172
"10/96" 10534 11274
11405 12632
"4/97" 11575 12937
13563 15473
"10/97" 13622 14894
14795 16028
"4/98" 16075 18240
15828 18454
"10/98" 16047 18167
</TABLE>
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. Returns and share prices
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
5
<PAGE>
Pioneer Equity-Income Fund
PERFORMANCE UPDATE 10/31/98 CLASS Y SHARES
S h a r e P r i c e s a n d D i s t r i b u t i o n s
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 10/31/98 7/2/98
$ 28.13 $ 28.72
Distributions per Share Income Short-Term Long-Term
(7/2/98- 10/31/98) Dividends Capital Gains Capital Gains
$ 0.130 - -
</TABLE>
I n v e s t m e n t R e t u r n s
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Equity-Income Fund, compared to the growth of the Standard & Poor's
500 Index.
<TABLE>
<S> <C> <C>
Cumulative Total Returns
(As of October 31, 1998)
If If
Period Held Redeemed*
Life-of-Fund -1.59% -1.59%
(7/2/98)
</TABLE>
* Assumes reinvestment of distributions.
<TABLE>
<CAPTION>
Mountain Chart Class Y Shares
<S> <C> <C>
"7/98" 10000 10000
"7/98" 9680 9775
"8/98" 8663 8350
"9/98" 9229 8908
"10/98" 9841 9624
</TABLE>
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. Returns and share prices
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
6
<PAGE>
Pioneer Equity-Income Fund
PORTFOLIO MANAGEMENT DISCUSSION 10/31/98
Pioneer Equity-Income Fund's fiscal year ended on October 31, 1998. The
following discussion with John A. Carey provides a detailed account of the
investment environment and the strategies affecting your Fund's performance
during the year. An investment professional for more than 19 years, Mr. Carey
oversees the team responsible for the daily management of the Fund.
Q: How did the stock markets and the Fund perform?
A: Overall, the 12-month period ended October 31, 1998 produced excellent
returns, although the period included some very interesting stock markets.
A tremendous rally in the first two quarters of 1998, culminating in the
middle of July, was totally reversed over the next two months. Then, in
early October, a new rally occurred, prompted by a reduction in interest
rates by the Federal Reserve.
Pioneer Equity-Income Fund returned 18% at net asset value, nearly double
the average 9.49% return of equity-income funds tracked by Lipper
Analytical Services. The Fund's strong returns earned it an overall
Morningstar rating of 4 stars (out of 2719 domestic equity funds). The Fund
also received 4 stars for the three and five-year periods (out of 2719 and
1622 domestic equity funds, respectively).
The market's bias toward growth-oriented stocks showed in the 21.98% return
of the Standard & Poor's 500 Index. While your Fund did not keep pace with
the S&P 500's breakneck advances, it did very well during the turbulent,
downward legs. From August through October, for example, the S&P 500 was
down 1.55% but your Fund rose 1.56%. We were gratified by the results,
since we've worked to structure the portfolio to be resilient during
difficult markets.
Q: What were some of your investment themes this year?
A: For this Fund, we emphasize companies with relatively stable and predictable
streams of earnings and cash flow that should allow them to
- -------
Morningstar proprietary ratings reflect risk-adjusted performance as of
9/30/98. The ratings are subject to change every month and are calculated from
the Fund's three- and five-year average annual returns in excess of 90-day
Treasury bill returns, with the appropriate fee adjustments and a risk factor
that reflects fund performance below 90-day Treasury bill returns. The top 10%
of the funds in an investment class receive 5 stars and the next 22.5% receive
4 stars.
7
<PAGE>
Pioneer Equity-Income Fund
PORTFOLIO MANAGEMENT DISCUSSION 10/31/98 (continued)
support regular dividend payments and to increase dividends over time.
These companies are often described by investors as "defensive" stocks, but
we are also attracted to them for their longer-term growth prospects.
We also concentrated on larger enterprises. Although we can and do select
companies of various sizes, the Fund's major positions and the bulk of
assets are concentrated in larger companies we think are fundamentally
strong. The dividend income we seek is also generally more attainable in
the larger capitalization, more mature sectors of the market.
So the only real "theme" to our investing this year was to continue with
our focus on value by seeking stocks of companies with high-quality
management, sound finances, leading product positions and, of course,
reasonable share-price valuation. This approach has been followed since the
inception of the Fund in 1990 - indeed since the inception of Pioneer in
1928 - and it proved particularly timely this past year.
Q: What specific sectors or holdings helped or hurt Fund performance?
A: Holdings in utilities, communication services and oil and gas performed well
over the difficult summer months of the market correction. During the more
upbeat months, pharmaceutical, consumer goods and financial stocks were
especially lustrous.
Q: What role do convertible securities play in the Fund?
A: Your Fund has owned numerous convertibles since 1990, although in general
they have made up a low percentage of total fund assets. A convertible is
a type of debt security that offers the holder the privilege of exchanging
their security into shares of common stock at a specified price. We
generally feel that if we have a strong investment conviction about a
company, we want to get all the appreciation available, and so we will buy
the common shares if they offer an adequate dividend. However, there have
been instances where the common shares of a company we favor pay little or
no dividend. It's primarily in these cases that we go to the convertible
market. Some convertible issues we added over the past year include Aspen
Technology (5.25%, 2005 convertible debenture), Amerus Life Holdings
8
<PAGE>
Pioneer Equity-Income Fund
(7.00% convertible preferred) and Union Pacific (6.25%, 2028 convertible
preferred).
Q: The Fund buys only U.S. companies. Does this limit you in any way?
A: No, in fact, we think it allows for a lower risk and volatility profile.
There are many fine companies overseas but, so far, we have been able to
find enough suitable candidates for investment here at home. With foreign
investments, there are added elements of uncertainty related to currency
fluctuations, accounting differences, political developments and
timeliness of information. Foreign companies also tend to pay dividends
only once or twice a year, rather than quarterly. That's a real
consideration for us, since our goal is for the Fund to distribute steady
income throughout the year. One interesting exception is DaimlerChrysler,
which is based in Germany; it came into the portfolio through its merger
with long-time Fund holding Chrysler.
Q: What is your outlook for the Fund over the next six months?
A: Our principal concern as we look out over the next couple of quarters has to
do with the historically high price-to-earnings multiples on many leading
stocks. This is particularly important in what may be a period of more
slowly growing earnings. Naturally, we also pay attention to economies
abroad and their potential to limit exports or other foreign sales
opportunities. However, there is never a situation where everything is
perfect. It's often said that a bull market "climbs a wall of worry." The
main difference between bears and bulls is that bears worry even more, and
act on their worries by avoiding investment or otherwise betting against
stocks. This is both natural, and necessary, since all markets need both
buyers and sellers.
We think the key to making money in the stock market is to buy shares at
reasonable valuations. This is where our strength and experience in
securities analysis comes in. We work constantly to find the best companies
selling at the best prices. But because stock prices rarely move up
steadily - and in case they actually drop over some period of time - we
also add an attractive stream of dividends to the portfolio.
9
<PAGE>
Pioneer Equity-Income Fund
SCHEDULE OF INVESTMENTS 10/31/98
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
INVESTMENT IN SECURITIES - 99.1%
CONVERTIBLE CORPORATE BONDS - 0.6%
$6,700,000 Aspen Technology, Inc., 5.25%, 6/15/05 (144A) $ 4,375,971
1,250,000 Phototronics Inc., 6.0%, 6/1/04 1,284,975
------------
Total Convertible Corporate Bonds
(Cost $7,950,000) $ 5,660,946
------------
Shares
CONVERTIBLE PREFERRED STOCKS - 1.9%
15,300 AirTouch Communications, Inc., 4.25%, 8/16/16 $ 1,224,956
229,500 Amerus Life Holdings, 7.00%, 7/27/01 5,594,062
20,000 The Rouse Co., $3.00 (Series B) 905,000
500 Sprint Corp., 8.25%, 3/31/00 35,375
207,700 Union Pacific Capital Trust, 6.25%, 4/01/28 9,619,210
------------
Total Convertible Preferred Stocks
(Cost $18,343,419) $ 17,378,603
------------
COMMON STOCKS - 96.6%
Basic Materials - 6.0%
Aluminum - 0.4%
44,000 Aluminum Company of America $ 3,487,000
------------
Chemicals - 2.9%
116,000 Dow Chemical Co. $ 10,860,500
135,000 Eastman Chemical Co. 7,931,250
133,000 E.I. du Pont de Nemours and Co. 7,647,500
------------
$ 26,439,250
------------
Chemicals (Specialty) - 0.5%
139,700 Nalco Chemical Co. $ 4,321,969
------------
Iron & Steel - 0.9%
7,800 Great Northern Iron Ore Properties $ 425,100
523,405 Roanoke Electric Steel Corp. 7,589,372
------------
$ 8,014,472
------------
Metals & Mining - 1.3%
201,600 Phelps Dodge Corp. $ 11,617,200
------------
Total Basic Materials $ 53,879,891
------------
</TABLE>
10 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Equity-Income Fund
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Capital Goods - 3.6%
Electrical Equipment - 0.8%
40,000 General Electric Co. $ 3,500,000
20,000 Honeywell, Inc. 1,597,500
46,900 Hubbell, Inc. (Class B) 1,870,137
------------
$ 6,967,637
------------
Machinery (Diversified) - 1.5%
506,457 The Gorman-Rupp Co.+ $ 8,609,769
292,600 The Timken Co. 5,211,937
------------
$ 13,821,706
------------
Manufacturing (Diversified) - 0.7%
117,800 Johnson Controls, Inc. $ 6,626,250
------------
Manufacturing (Specialized) - 0.6%
166,150 Diebold, Inc. $ 5,181,803
------------
Total Capital Goods $ 32,597,396
------------
Communications Services - 15.0%
Telecommunications - 1.2%
145,000 Sprint Corp. $ 11,128,750
------------
Telephone - 13.8%
275,500 Aliant Communications, Inc. $ 7,774,266
553,700 Ameritech Corp. 29,865,194
313,424 Bell Atlantic Corp. 16,650,650
163,200 BellSouth Corp. 13,025,400
275,700 GTE Corp. 16,180,144
566,000 SBC Communications, Inc. 26,212,875
239,877 U.S. West, Inc. 13,762,943
------------
$123,471,472
------------
Total Communications Services $134,600,222
------------
Consumer Cyclicals - 8.1%
Automobiles - 5.1%
430,300 DaimlerChrysler AG (NY shares) $ 20,708,187
463,800 Ford Motor Co. 25,161,150
------------
$ 45,869,337
------------
Publishing - 0.8%
80,000 The McGraw-Hill Co., Inc. $ 7,195,000
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
Pioneer Equity-Income Fund
SCHEDULE OF INVESTMENTS 10/31/98 (continued)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Services (Advertising/Marketing) - 0.2%
25,000 The Interpublic Group of Companies, Inc. $ 1,462,500
------------
Retail (Department Stores) - 2.0%
294,000 May Department Stores Co. $ 17,934,000
------------
Total Consumer Cyclicals $ 72,460,837
------------
Consumer Staples - 6.3%
Beverages - 0.1%
39,000 Pepsico, Inc. $ 1,316,250
------------
Entertainment - 1.5%
531,200 Cedar Fair, L.P. $ 13,180,400
------------
Food - 4.2%
271,800 BestFoods $ 14,813,100
138,000 General Mills, Inc. 10,143,000
157,750 H.J. Heinz Co. 9,169,219
60,000 Sara Lee Corp. 3,581,250
------------
$ 37,706,569
------------
Retail Stores (Food Chains) - 0.2%
50,000 Winn-Dixie Stores $ 1,696,875
------------
Household Products - 0.3%
28,000 Colgate-Palmolive Co. $ 2,474,500
------------
Total Consumer Staples $ 56,374,594
------------
Energy - 7.1%
Oil (Domestic Integrated) - 0.9%
122,000 Atlantic Richfield Co. $ 8,402,750
------------
Oil (International Integrated) - 6.2%
447,000 Amoco Corp. $ 25,087,875
187,500 Chevron Corp. 15,281,250
74,000 Exxon Corp. 5,272,500
131,000 Mobil Corp. 9,915,062
------------
$ 55,556,687
------------
Total Energy $ 63,959,437
------------
</TABLE>
12 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Equity-Income Fund
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Financial - 20.4%
Banks (Major Regional) - 4.6%
536,600 The Bank of New York Co., Inc. $ 16,936,437
50,000 Comerica, Inc. 3,225,000
118,300 Mellon Bank Corp. 7,112,787
152,000 National City Corp. 9,775,500
130,000 U.S. Bancorp 4,745,000
------------
$ 41,794,724
------------
Banks (Regional) - 4.6%
607,500 First Security Corp. $ 12,415,781
269,300 First Tennessee National Corp. 8,533,444
443,608 Old Kent Financial Corp. 18,659,261
33,100 Zions Bancorporation 1,756,369
------------
$ 41,364,855
------------
Financial (Diversified) - 1.1%
20,000 Equitable Companies, Inc. $ 980,000
312,023 The Rouse Co. 8,756,145
------------
$ 9,736,145
------------
Insurance (Property/Casualty) - 4.0%
170,100 Chubb Corp. $ 10,461,150
175,050 HSB Group, Inc. 7,067,644
240,500 Safeco Corp. 10,416,656
226,200 St. Paul Companies, Inc. 7,492,875
------------
$ 35,438,325
------------
Investment Management - 2.8%
232,600 Alliance Capital Management, L.P. $ 5,771,387
227,600 Eaton Vance Corp. (Non-voting) 5,092,550
402,000 T. Rowe Price Associates, Inc. 14,296,125
------------
$ 25,160,062
------------
Investment Bank/Brokerage - 0.7%
184,100 Paine Webber Group, Inc. $ 6,155,844
------------
Insurance (Life/Health) - 2.0%
188,700 American National Insurance Co. $ 15,850,800
5,000 Amerus Life Holdings 120,625
41,000 Reliastar Financial Corp. 1,796,313
------------
$ 17,767,738
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
Pioneer Equity-Income Fund
SCHEDULE OF INVESTMENTS 10/31/98 (continued)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Savings & Loan Companies - 0.6%
99,000 Astoria Financial Co. $ 4,257,000
42,000 Washington Mutual, Inc. 1,572,375
------------
$ 5,829,375
------------
Total Financial $183,247,068
------------
Healthcare - 12.4%
Healthcare (Diversified) - 4.9%
356,600 Abbott Laboratories $ 16,737,913
165,000 American Home Products Corp. 8,043,750
100,000 Bristol-Myers Squibb Co. 11,056,250
95,000 Johnson & Johnson 7,742,500
------------
$ 43,580,413
------------
Healthcare (Drugs/Major Pharmaceuticals) - 7.1%
80,200 Merck & Co., Inc. $ 10,847,050
510,800 Schering-Plough Corp. 52,548,550
------------
$ 63,395,600
------------
Healthcare (Medical Products/Supplies) - 0.4%
93,000 Becton, Dickinson & Co. $ 3,917,625
------------
Total Healthcare $110,893,638
------------
Technology - 5.7%
Communications Equipment - 0.6%
160,000 Harris Corp. $ 5,610,000
------------
Computer (Hardware) - 2.5%
235,600 Hewlett-Packard Co. $ 14,180,175
57,000 IBM Corp. 8,460,938
------------
$ 22,641,113
------------
Equipment (Semiconductors) - 0.6%
497,000 Helix Technology Corp. $ 5,684,438
------------
Photography/Imaging - 2.0%
230,000 Eastman Kodak Co. $ 17,825,000
------------
Total Technology $ 51,760,551
------------
Transportation - 1.1%
Railroads - 1.1%
293,600 Norfolk Southern Corp. $ 9,670,450
------------
Total Transportation $ 9,670,450
------------
</TABLE>
14 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Equity-Income Fund
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Utilities - 10.9%
Electric Companies - 5.0%
296,200 Allegheny Energy, Inc. $ 9,108,150
436,500 Baltimore Gas & Electric Co. 13,695,188
30,000 BEC Energy 1,190,625
372,350 DPL, Inc. 7,051,378
200,000 DQE, Inc. 7,887,500
215,000 Kansas City Power & Light Co. 6,194,688
------------
$ 45,127,529
------------
Natural Gas - 5.4%
100,600 Buckeye Partners, L.P. $ 2,841,950
190,750 Consolidated Natural Gas Co. 10,073,984
147,933 Indiana Energy, Inc. 3,310,001
304,700 KeySpan Energy Corp. 9,102,913
60,882 Kinder Morgan Energy Partners, L.P. 2,191,752
22,200 Lakehead Pipe Line Partners, L.P. (Preferred Units) 1,171,050
191,200 NICOR, Inc. 8,102,100
119,500 Public Service Co. of North Carolina, Inc. 2,629,000
446,600 Questar Corp. 8,792,438
------------
$ 48,215,188
------------
Water Utility - 0.5%
150,400 American Water Works Co., Inc. $ 4,803,400
------------
Total Utilities $ 98,146,117
------------
Total Common Stocks
(Cost $597,353,041) $867,590,201
------------
TOTAL INVESTMENT IN SECURITIES
(Cost $623,646,460) $890,629,750
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
<S> <C> <C>
TEMPORARY CASH INVESTMENT - 0.9%
Commercial Paper - 0.9%
$7,691,000 Citigroup Inc., 5.65%, 11/2/98 $ 7,691,000
------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $7,691,000) $ 7,691,000
------------
TOTAL INVESTMENT IN SECURITIES AND
TEMPORARY CASH INVESTMENT - 100%
(Cost $631,337,460)(a) $898,320,750
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
Pioneer Equity-Income Fund
SCHEDULE OF INVESTMENTS 10/31/98 (continued)
+ Investment held by Fund representing 5% or more of the outstanding voting
stock of such company.
144A Security is exempt from registration under Rule 144A of the Securities Act
of 1933. Such securities may be resold normally to qualified institutional
buyers in a transaction exempt from registration. At October 31, 1998, the
value of these securities amounted to $4,375,971 or 0.5% of total net
assets.
(a) At October 31, 1998, the net unrealized gain on investments based on cost
for federal income tax purposes of $633,785,380 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized gain for all investments in
which there is an excess of value over tax cost $280,421,820
Aggregate gross unrealized loss for all investments in
which there is an excess of tax cost over value (15,886,450)
------------
Net unrealized gain $264,535,370
------------
</TABLE>
Purchases and sales of securities (excluding temporary cash investments) for the
year ended October 31, 1998, aggregated $207,662,901 and $92,830,067,
respectively.
16 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Equity-Income Fund
BALANCE SHEET 10/31/98
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash investment
of $7,691,000) (cost $631,337,460) $898,320,750
Cash 1,447
Receivables -
Investment securities sold 152,427
Fund shares sold 1,646,784
Dividends and interest 1,964,031
Other 20,527
------------
Total assets $902,105,966
------------
LIABILITIES:
Payables -
Investment securities purchased $ 4,735,451
Fund shares repurchased 1,669,823
Due to affiliates 916,883
Accrued expenses 96,176
------------
Total liabilities $ 7,418,333
------------
NET ASSETS:
Paid-in capital $602,443,294
Accumulated undistributed net investment income 2,858,114
Accumulated undistributed net realized gain on investments 22,402,935
Net unrealized gain on investments 266,983,290
------------
Total net assets $894,687,633
------------
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $584,389,311/20,795,537 shares) $ 28.10
------------
Class B (based on $281,469,214/10,083,480 shares) $ 27.91
------------
Class C (based on $25,941,001/930,465 shares) $ 27.88
------------
Class Y (based on $2,888,107/102,677 shares) $ 28.13
------------
MAXIMUM OFFERING PRICE:
Class A $ 29.81
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
Pioneer Equity-Income Fund
STATEMENT OF OPERATIONS
For the Year Ended 10/31/98
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Dividends $22,848,070
Interest 493,434
-----------
Total investment income $ 23,341,504
------------
EXPENSES:
Management fees $ 4,812,790
Transfer agent fees
Class A 785,585
Class B 412,597
Class C 44,330
Class Y 228
Distribution fees
Class A 1,354,233
Class B 2,510,830
Class C 194,016
Accounting 223,878
Custodian fees 86,831
Registration fees 73,724
Professional fees 44,634
Printing 61,680
Fees and expenses of nonaffiliated trustees 22,837
Miscellaneous 17,259
-----------
Total expenses $ 10,645,452
Less fees paid indirectly (120,416)
------------
Net expenses $ 10,525,036
------------
Net investment income $ 12,816,468
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $ 23,455,256
Change in net unrealized gain on investments 90,559,589
------------
Net gain on investments $114,014,845
------------
Net increase in net assets resulting from operations $126,831,313
------------
</TABLE>
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Equity-Income Fund
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended 10/31/98 and 10/31/97
<TABLE>
<CAPTION>
Year Ended Year Ended
10/31/98 10/31/97
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 12,816,468 $ 11,397,594
Net realized gain on investments 23,455,256 19,772,281
Change in net unrealized gain on investments 90,559,589 116,333,355
------------ ------------
Net increase in net assets resulting from operations $126,831,313 $147,503,230
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.48 and $0.50 per share, respectively) $ (9,465,678) $ (8,790,651)
Class B ($0.29 and $0.33 per share, respectively) (2,681,431) (2,466,847)
Class C ($0.29 and $0.33 per share, respectively) (204,927) (116,752)
Class Y ($0.13 and $0.00 per share, respectively) (13,022) -
Net realized gain:
Class A ($0.73 and $0.95 per share, respectively) (13,377,646) (15,676,400)
Class B ($0.73 and $0.95 per share, respectively) (6,017,141) (6,437,316)
Class C ($0.73 and $0.95 per share, respectively) (384,858) (212,007)
------------ ------------
Total distributions to shareholders $(32,144,703) $(33,699,973)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $282,310,127 $149,366,290
Reinvestment of distributions 29,629,866 31,076,966
Cost of shares repurchased (177,923,138) (103,447,399)
------------ ------------
Net increase in net assets resulting from fund
share transactions $134,016,855 $ 76,995,857
------------ ------------
Net increase in net assets $228,703,465 $190,799,114
NET ASSETS:
Beginning of year 665,984,168 475,185,054
------------ ------------
End of year (including accumulated undistributed net
investment income of $2,858,114 and $2,166,552,
respectively) $894,687,633 $665,984,168
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
Pioneer Equity-Income Fund
STATEMENT OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
'98 Shares '98 Amount '97 Shares '97 Amount
<S> <C> <C> <C> <C>
CLASS A
Shares sold 6,498,655 $ 176,430,152 3,879,341 $ 87,709,414
Reinvestment of distributions 820,812 21,402,740 1,117,055 22,915,378
Less shares repurchased (4,779,787) (129,571,542) (3,257,004) (73,268,206)
---------- -------------- ---------- -------------
Net increase 2,539,680 $ 68,261,350 1,739,392 $ 37,356,586
---------- -------------- ---------- -------------
CLASS B
Shares sold 3,260,906 $ 88,078,226 2,439,283 $ 54,427,605
Reinvestment of distributions 300,913 7,743,240 391,406 7,922,751
Less shares repurchased (1,652,132) (44,685,857) (1,304,045) (29,250,894)
---------- -------------- ---------- -------------
Net increase 1,909,687 $ 51,135,609 1,526,644 $ 33,099,462
---------- -------------- ---------- -------------
CLASS C
Shares sold 545,171 $ 14,756,877 325,018 $ 7,229,271
Reinvestment of distributions 18,231 470,941 11,617 238,837
Less shares repurchased (133,683) (3,552,030) (40,498) (928,299)
---------- -------------- ---------- -------------
Net increase 429,719 $ 11,675,788 296,137 $ 6,539,809
---------- -------------- ---------- -------------
CLASS Y*
Shares sold 106,376 $ 3,044,872
Reinvestment of distributions 473 12,945
Less shares repurchased (4,172) (113,709)
---------- --------------
Net increase 102,677 $ 2,944,108
---------- --------------
</TABLE>
*Class Y shares were first publicly offered on July 2, 1998.
20 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Equity-Income Fund
FINANCIAL HIGHLIGHTS 10/31/98
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
<S> <C> <C> <C> <C> <C>
CLASS A
Net asset value, beginning of year $ 24.78 $ 20.37 $ 18.22 $ 16.16 $ 16.92
-------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.49 $ 0.50 $ 0.55 $ 0.54 $ 0.55
Net realized and unrealized gain (loss) on investments 4.04 5.36 2.24 2.45 (0.54)
-------- -------- -------- -------- --------
Net increase from investment operations $ 4.53 $ 5.86 $ 2.79 $ 2.99 $ 0.01
Distributions to shareholders:
Net investment income (0.48) (0.50) (0.50) (0.53) (0.54)
Net realized gain (0.73) (0.95) (0.14) (0.40) (0.23)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 3.32 $ 4.41 $ 2.15 $ 2.06 $ (0.76)
-------- -------- -------- -------- --------
Net asset value, end of year $ 28.10 $ 24.78 $ 20.37 $ 18.22 $ 16.16
-------- -------- -------- -------- --------
Total return* 18.69% 30.40% 15.53% 19.51% 0.09%
Ratio of net expenses to average net assets 1.05%+ 1.11%+ 1.19%+ 1.29%+ 1.24%
Ratio of net investment income to average net assets 1.82%+ 2.22%+ 2.85%+ 3.26%+ 3.43%
Portfolio turnover rate 12% 18% 47% 13% 27%
Net assets, end of year (in thousands) $584,389 $452,300 $336,384 $249,981 $175,943
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.04% 1.10% 1.18% 1.27% -
Net investment income 1.83% 2.23% 2.86% 3.28% -
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 21
<PAGE>
Pioneer Equity-Income Fund
FINANCIAL HIGHLIGHTS 10/31/98
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended 4/4/94 to
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
<S> <C> <C> <C> <C> <C>
CLASS B
Net asset value, beginning of period $ 24.63 $ 20.26 $ 18.15 $ 16.14 $ 15.46
-------- -------- -------- ------- -------
Increase from investment operations:
Net investment income $ 0.29 $ 0.33 $ 0.41 $ 0.45 $ 0.21
Net realized and unrealized gain on investments 4.01 5.32 2.22 2.41 0.71
-------- -------- -------- ------- -------
Net increase from investment operations $ 4.30 $ 5.65 $ 2.63 $ 2.86 $ 0.92
Distributions to shareholders:
Net investment income (0.29) (0.33) (0.38) (0.45) (0.21)
In excess of net investment income - - - - (0.03)
Net realized gain (0.73) (0.95) (0.14) (0.40) -
-------- -------- -------- ------- -------
Net increase in net asset value $ 3.28 $ 4.37 $ 2.11 $ 2.01 $ 0.68
-------- -------- -------- ------- -------
Net asset value, end of period $ 27.91 $ 24.63 $ 20.26 $ 18.15 $ 16.14
-------- -------- -------- ------- -------
Total return* 17.83% 29.35% 14.70% 18.64% 5.93%
Ratio of net expenses to average net assets 1.82%+ 1.88%+ 1.95%+ 2.02%+ 1.92%**
Ratio of net investment income to average net assets 1.05%+ 1.45%+ 2.06%+ 2.35%+ 2.35%**
Portfolio turnover rate 12% 18% 47% 13% 27%
Net assets, end of period (in thousands) $281,469 $201,360 $134,657 $60,433 $12,663
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.81% 1.87% 1.94% 1.98% -
Net investment income 1.06% 1.46% 2.07% 2.39% -
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
22 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Equity-Income Fund
FINANCIAL HIGHLIGHTS 10/31/98
<TABLE>
<CAPTION>
Year Ended Year Ended 1/31/96 to
10/31/98 10/31/97 10/31/96
<S> <C> <C> <C>
CLASS C
Net asset value, beginning of period $ 24.61 $ 20.25 $ 19.49
------- ------- -------
Increase from investment operations:
Net investment income $ 0.27 $ 0.32 $ 0.27
Net realized and unrealized gain on
investments 4.02 5.32 0.76
------- ------- -------
Net increase from investment operations $ 4.29 $ 5.64 $ 1.03
Distributions to shareholders:
Net investment income (0.29) (0.33) (0.27)
Net realized gain (0.73) (0.95) -
------- ------- --------
Net increase in net asset value $ 3.27 $ 4.36 $ 0.76
------- ------- --------
Net asset value, end of period $ 27.88 $ 24.61 $ 20.25
------- ------- --------
Total return* 17.80% 29.32% 5.34%
Ratio of net expenses to average net assets 1.89%+ 1.93%+ 1.98%**+
Ratio of net investment income to average net
assets 0.97%+ 1.35%+ 1.91%**+
Portfolio turnover rate 12% 18% 47%
Net assets, end of period (in thousands) $25,941 $12,324 $ 4,144
Ratios assuming reduction for fees paid
indirectly:
Net expenses 1.87% 1.91% 1.94%**
Net investment income 0.99% 1.37% 1.95%**
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 23
<PAGE>
Pioneer Equity-Income Fund
FINANCIAL HIGHLIGHTS 10/31/98
<TABLE>
<CAPTION>
7/2/98 to
10/31/98
<S> <C>
CLASS Y(a)
Net asset value, beginning of period $ 28.72
-------
Increase (decrease) from investment operations:
Net investment income $ 0.18
Net realized and unrealized loss on investments (0.64)
-------
Net decrease from investment operations $ (0.46)
Distributions to shareholders:
Net investment income (0.13)
-------
Net decrease in net asset value $ (0.59)
-------
Net asset value, end of period $ 28.13
-------
Total return* (1.59)%
Ratio of net expenses to average net assets 0.74%**+
Ratio of net investment income to average net assets 2.07%**+
Portfolio turnover rate 12%
Net assets, end of period (in thousands) $ 2,888
Ratios assuming reduction for fees paid indirectly:
Net expenses 0.74%**
Net investment income 2.07%**
</TABLE>
(a) Class Y shares were first publicly offered July 2, 1998.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
24 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Equity-Income Fund
NOTES TO FINANCIAL STATEMENTS 10/31/98
1. Organization and Significant Accounting Policies
Pioneer Equity-Income 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 current income
and long-term growth of capital.
The Fund offers four classes of shares - Class A, Class B, Class C, and Class Y
shares. Class Y shares were first publicly offered on July 2, 1998. Shares of
Class A, Class B, Class C and Class Y 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 respectively. There is no distribution plan for Class Y
shareholders.
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 Equity-Income Fund
NOTES TO FINANCIAL STATEMENTS 10/31/98 (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 $77,585 of class action settlements received by the
Fund during the year ended October 31, 1998.
B. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareholders. Therefore, no federal income tax provision is required.
The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with federal income tax
rules. Therefore, the source of the Fund's distributions may be shown in the
accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
At October 31, 1998, the Fund has reclassified $240,152 from accumulated
undistributed net realized gain on investments to accumulated undistributed
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 $24,554,787 as a capital gain dividend for the purposes of the
dividend paid deduction.
C. Fund Shares
The Fund records sales and repurchases of its shares on trade date. Net
losses, if any, as a result of cancellations are absorbed by Pioneer Funds
Distributor, Inc. (PFD), the principal underwriter for the Fund and an
indirect subsidiary of The Pioneer Group, Inc. (PGI). PFD earned $397,675 in
underwriting commissions on the sale of fund shares during the year ended
October 31, 1998.
26
<PAGE>
Pioneer Equity-Income Fund
D. Class Allocations
Distribution fees are calculated based on the average daily net asset value
attributable to Class A, Class B, Class C of the Fund, respectively. Class Y
shares are not subject to a distribution plan. 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, Class C and Class Y shares can bear different
transfer agent and distribution fees.
2. Management Agreement
Pioneer Investment Management, Inc. (PIM), the Fund's investment adviser,
manages the Fund's portfolio and is a wholly owned subsidiary of PGI.
Management fees are calculated at the annual rate of 0.60% of the Fund's
average daily net assets up to $10 billion and 0.575% of the excess over $10
billion.
Prior to May 1, 1998, management fees were calculated daily at the annual rate
of 0.65% of the Fund's average daily net assets up to $300 million; 0.60% of
the next $200 million; 0.50% of the next $500 million; and 0.45% of the excess
over $1 billion.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At October 31, 1998, $447,700 was payable to
PIM related to management fees and administrative 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 $104,316 in transfer agent fees payable to PSC at October 31,
1998.
27
<PAGE>
Pioneer Equity-Income Fund
NOTES TO FINANCIAL STATEMENTS 10/31/98 (continued)
4. Distribution Plans
The Fund adopted a Plan of Distribution for each class of shares (Class A Plan,
Class B Plan, and Class C Plan) in accordance with Rule 12b-1 of the Investment
Company Act of 1940. Pursuant to the Class A Plan, the Fund pays PFD a service
fee of up to 0.25% of the Fund's average daily net assets in reimbursement of
its actual expenditures to finance activities primarily intended to result in
the sale of Class A shares. Pursuant to the Class B Plan and the Class C Plan,
the Fund pays PFD 1.00% of the average daily net assets attributable to each
class of shares. The fee consists of a 0.25% service fee and a 0.75%
distribution fee paid as compensation for personal services and/or account
maintenance services or distribution services with regard to Class B and Class
C shares. Included in due to affiliates is $364,867 in distribution fees
payable to PFD at October 31, 1998.
In addition, redemptions of each class of shares (except Class Y 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 CDSC are paid to PFD. For the year ended October 31, 1998,
CDSCs in the amount of $402,416 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 October 31, 1998, the Fund's expenses were reduced by $120,416 under
such arrangements.
6. Line of Credit Facility
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 com-
28
<PAGE>
Pioneer Equity-Income Fund
mitment fee is allocated among such Funds based on their respective borrowing
limits. For the period ended October 31, 1998, the Fund had no borrowings under
this agreement.
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 October 31, 1998:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Dividend
Affiliates Purchases Sales Income Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Gorman-Rupp Co. $ - $ - $288,680 $8,609,769
- -------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
Pioneer Equity-Income Fund
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareowners and the Board of Trustees of
Pioneer Equity-Income Fund:
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer Equity-Income Fund as of October 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
October 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 Equity-Income Fund as of October 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
December 4, 1998
30
<PAGE>
Pioneer Equity-Income Fund
RESULTS OF SHAREOWNER MEETING
On June 18, 1998, Pioneer Equity-Income Fund held a special meeting of
shareowners. The following proposal was passed by shareowner vote. Here are the
detailed results of the vote.
Proposal 3 - Allow the Fund to be reorganized as a separate Delaware business
trust.
<TABLE>
<CAPTION>
Affirmative Against Abstain
<S> <C> <C>
14,719,236.420 692,346.287 1,508,174.726
</TABLE>
31
<PAGE>
Pioneer Equity-Income 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 President
Margaret B.W. Graham John A. Carey, Vice President
John W. Kendrick John A. Boynton, Treasurer
Marguerite A. Piret Joseph P. Barri, Secretary
David D. Tripple
Stephen K. West
John Winthrop
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>
A SALUTE TO PIONEER FUND
[PIONEER BIRTHDAY LOGO]
This year, 1998, marks a special anniversary for the Pioneer family of mutual
funds and an important milestone for the entire mutual fund industry. In the
1920s, a group of forward thinking financial professionals started the first
"open-end" investment companies, known today as mutual funds. They provided a
way for small investors to benefit from professional financial management.
In 1928, Pioneer Fund became the fourth mutual fund created.
Since then, Pioneer Fund has gone to work for its shareowners every day for 70
years. Through 15 bear markets, 16 bull markets and even the Great Depression,
Pioneer Fund has stayed true to an investment ethic that relies on the rewards
of hard work.
Rather than follow trends, the financial professionals at Pioneer roll-up their
sleeves and research. We look for value in an investment: companies that might
not be the current rage on Wall Street, but that we believe have the business
smarts on Main Street to keep their earnings strong. The Fund's investment
objective continues to be growth and income.
For 70 years, Pioneer Fund has made investments based on experience, our own
investment ethic and the needs of our shareowners.
Every day, the financial professionals at Pioneer Fund come to work, aware of
the job at hand. We know shareowners are investing their hard-earned money to
provide for the future.
In 1928 there were four mutual funds. Today there are 11,000. Only one can tell
the Pioneer Fund story.
For the complete Pioneer Fund story call your investment professional, or
Pioneer at 1-800-225-6292, for a prospectus. Please read it carefully before
you invest or send money.
Class B and C Shares have been available since 7/1/96. Past performance does
not guarantee future results.
33
<PAGE>
PROGRAMS AND SERVICES FOR PIONEER SHAREOWNERS
Your investment representative can give you additional information on Pioneer's
programs and services. If you want to order literature on any of the following
items directly, simply call Pioneer at 1-800-225-6292.
FactFone(SM)
Our automated account information service, available to you 24 hours a day,
seven days a week. FactFone gives you a quick and easy way to check fund share
prices, yields, dividends and distributions, as well as information about your
own account. Simply call 1-800-225-4321. For specific account information, have
your 13-digit account number and four-digit personal identification number at
hand.
90-Day Reinstatement Privilege (for Class A Shares)
Enables you to reinvest all or a portion of the money you redeem from your
Pioneer account - without paying a sales charge - within 90 days of your
redemption. You have the choice of investing in any Pioneer fund, as long as
you meet its minimum investment requirement.
Investomatic Plan
An easy and convenient way for you to invest on a regular basis. All you need
to do is authorize a set amount of money to be moved out of your bank account
into the Pioneer fund of your choice. Investomatic also allows you to change
the dollar amount, frequency and investment date right over the phone. By
putting aside affordable amounts of money regularly, you can build a long-term
investment - without sacrificing your current standard of living.
Payroll Investment Program (PIP)
Lets you invest in a Pioneer fund directly through your paycheck. All that's
involved is for your employer to fill out an authorization form allowing
Pioneer to deduct from participating employees' paychecks. You specify the
dollar amount you want to invest into the Pioneer fund(s) of your choice.
34
<PAGE>
Automatic Exchange Program
A simple way to move money from one Pioneer fund to another over a period of
time. Just invest a lump sum in one fund, and select the other Pioneer funds
you wish to invest in. You choose the amounts and dates for Pioneer to sell
shares of your original fund and use the proceeds to buy shares of the other
funds you have chosen. Over time, your investment will be shifted out of the
original fund. (Automatic Exchange is available for originating accounts with a
balance of $5,000 or more.)
Directed Dividends
Lets you invest cash dividends from one Pioneer fund to an account in another
Pioneer fund with no sales charge or fee. Simply fill out the applicable
information on a Pioneer Account Options Form. (This program is available for
dividend payments only; capital gains distributions are not eligible at this
time.)
Direct Deposit
Lets you move money into your bank account using electronic funds transfer
(EFT). EFT moves your money faster than you would receive a check, eliminates
unnecessary paper and mail, and avoids lost checks. Simply fill out a Pioneer
Direct Deposit Form, giving your instructions.
Systematic Withdrawal Plan (SWP)
Lets you establish automatic withdrawals from your account at set
intervals. You decide the frequency and the day of the month you want. Pioneer
will send the proceeds by check to the address you designate, or electronically
to your bank account. You also can authorize Pioneer to make the redemptions
payable to someone else. (SWPs are available for accounts with a value of
$10,000 or more.)
35
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
For information about any Pioneer mutual fund, please contact your investment
professional, 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
United States
Pioneer Capital Growth Fund
Pioneer Growth Shares
Pioneer Micro-Cap Fund
Pioneer Mid-Cap Fund
Pioneer Small Company Fund
International/Global
Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Gold Shares
Pioneer Indo-Asia Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
Growth and Income Funds
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
Income Funds
Taxable
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Short-Term Income Trust
Tax-Free
Pioneer Intermediate Tax-Free Fund
Pioneer Tax-Free Income Fund
Money Market Fund
Pioneer Cash Reserves Fund
36
<PAGE>
This page for your notes.
37
<PAGE>
HOW TO CONTACT PIONEER
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
Call us for:
Account information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
Pioneering Services Corporation
60 State Street
Boston, Massachusetts 02109
Our toll-free fax 1-800-225-4240
Our Internet e-mail address [email protected]
(for general questions about Pioneer only)
Visit our 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
Boston, Massachusetts 02109
www.pioneerfunds.com 1298-5777
(Copyright) Pioneer Funds Distributor, Inc.
(Recycle Symbol) Printed on Recycled Paper
