PIONEER VARIABLE CONTRACTS TRUST /MA/, 485BPOS, 1998-04-30

PIONEER VARIABLE CONTRACTS TRUST /MA/
485BPOS, 1998-04-30

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File No. 33-84546
File No. 811-8786

As Filed with the Securities and Exchange Commission on April 30, 1998

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /_X__/
Pre-Effective Amendment No. ___ /_ __/
Post-Effective Amendment No. _7_ /_X__/

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT _____
OF 1940 /_X__/

Amendment No. 8 /_X__/

(Check appropriate box or boxes)

PIONEER VARIABLE CONTRACTS TRUST
(Exact name of registrant as specified in charter)

60 State Street, Boston, Massachusetts 02109
(Address of principal executive office) Zip Code

(617) 742-7825
(Registrant's Telephone Number, including Area Code)

Joseph P. Barri, Hale and Dorr LLP, 60 State
Street, Boston, MA 02109
(Name and address of agent for service)

It is proposed that this filing will become effective (check
appropriate box):

___ immediately upon filing pursuant to paragraph (b)
_X_ on May 1, 1998 pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ on [date] pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on [date] pursuant to paragraph (a)(2) of Rule 485

Title of Securities: Shares of Beneficial Interest, no par value
<PAGE>
PIONEER VARIABLE CONRACTS TRUST

Cross-Reference Sheet Showing Location in Prospectus and Statementof
Additional Information of Information Required by Items of the Registration
Form

Location in
Prospectus or
Statement of
Additional
Form N-1A Item Number and Caption Information
- --------------------------------- -----------

1. Cover Page Prospectus - Cover Page

2. Synopsis Prospectus
-Highlights--Pioneer
Variable
Contracts Trust

3 Condensed Financial Information Financial Highlights

4. General Description of Registrant Prospectus -
Highlights--Pioneer
Variable
Contracts Trust;
Investment
Objectives and
Policies;
The Fund
and the Pioneer
Organization;
Shareholder Information.

5. Management of the Fund Prospectus -
The Fund and
the Pioneer
Organization;
Fund
Management Fees and
Other
Expenses.

6. Capital Stock and Other Securities Prospectus
- Investment
Objectives and Policies;
Shareholder Information.

7. Purchase of Securities Being
Offered Prospectus -
Shareholder
Information.
<PAGE>

Location in
Prospectus or
Statement of
Additional
Form N-1A Item Number and Caption Information
- ---------------------------------
- -----------

8. Redemption or Repurchase Prospectus - Shareholder
Information.

9. Pending Legal Proceedings Not Applicable

10. Cover Page Statement of Additional
Information - Cover Page

11. Table of Contents Statement of Additional
Information - Cover Page

12. General Information and History Statement of Additional
Information - Cover Page;
Description of Shares

13. Investment Objectives and Policy Statement of Additional
Information - Investment
Policies and Restrictions

14. Management of the Fund Statement of Additional
Information - Management
of the Trust;
Investment Adviser

15. Control Persons and Principal Holders
of Securities Statement of Additional
Information - Management
of the Trust

16. Investment Advisory and Other
Services Statement of Additional
Information - Management
of the
Trust; Investment
Adviser;
Principal Underwriter;
Custodian; Independent
Public
Accountant

<PAGE>

Location in
Prospectus or
Statement of
Additional
Form N-1A Item Number and Caption Information
- --------------------------------- -----------

17. Brokerage Allocation and Other
Practices Statement of Additional
Information - Portfolio
Transactions

18. Capital Stock and Other Securities Statement of Additional
Information -
Description
of Shares

19. Purchase, Redemption and Pricing of
Securities Being Offered Statement of Additional
Information -
Determination of
Net Asset Value

20. Tax Status Statement of Additional
Information - Tax Status

21. Underwriters Statement of Additional
Information - Principal
Underwriter

22. Calculation of Performance Data Statement of Additional
Information - Investment
Results

23. Financial Statements Statement of Additional
Information - Financial
Statements

<PAGE>
PIONEER VARIABLE CONTRACTS TRUST

PART A

10 PORTFOLIO PROSPECTUS
<PAGE>

PIONEER VARIABLE CONTRACTS TRUST
Prospectus

May 1, 1998

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
- --------------------------------------------------
<S> <C> <C>
I. HIGHLIGHTS ....................... 2
II. HOW THE FUND WORKS ............... 8
III. RISK CONSIDERATIONS .............. 12
IV. THE FUND AND THE PIONEER
ORGANIZATION ..................... 15

<CAPTION>
PAGE
- --------------------------------------------------
<S> <C> <C>
V. FUND MANAGEMENT FEES
AND OTHER EXPENSES ............... 17
VI. PERFORMANCE ...................... 17
VII. DISTRIBUTIONS AND TAXES .......... 18
VIII. SHAREHOLDER INFORMATION .......... 19
IX. APPENDIX ......................... 20
</TABLE>

The Fund currently offers these Portfolios:

INTERNATIONAL GROWTH PORTFOLIO seeks long-term growth of capital primarily
through investments in non-United States (U.S.) equity securities and related
depositary receipts.

CAPITAL GROWTH PORTFOLIO seeks capital appreciation through a diversified
portfolio of securities consisting primarily of common stocks.

GROWTH SHARES PORTFOLIO seeks appreciation of capital through investments in
common stocks, together with preferred stocks, bonds, and debentures which are
convertible into common stocks.

REAL ESTATE GROWTH PORTFOLIO seeks long-term growth of capital primarily through
investments in the securities of real estate investment trusts (REITs) and other
real estate industry companies. Current income is the Portfolio's secondary
investment objective.

GROWTH AND INCOME PORTFOLIO seeks reasonable income and growth of capital by
investing in a broad list of carefully selected, reasonably priced securities.

EQUITY-INCOME PORTFOLIO seeks current income and long-term capital growth by
investing in a portfolio of income-producing equity securities of U.S.
corporations.

BALANCED PORTFOLIO seeks capital growth and current income by actively managing
investments in a diversified portfolio of equity securities and bonds.

SWISS FRANC BOND PORTFOLIO seeks to approximate the performance of the Swiss
franc relative to the U.S. dollar while earning a reasonable level of income.

AMERICA INCOME PORTFOLIO seeks as high a level of current income as is
consistent with the preservation of capital. The Portfolio invests in U.S.
Government Securities and in "when issued" commitments and repurchase agreements
with respect to such securities.

MONEY MARKET PORTFOLIO seeks current income consistent with preserving capital
and providing liquidity. The Portfolio seeks to maintain a stable $1.00 share
price; however, there can be no assurance that a $1.00 share price will be
maintained.

PORTFOLIO RETURNS AND SHARE PRICES FLUCTUATE AND THE VALUE OF YOUR ACCOUNT UPON
REDEMPTION MAY BE MORE OR LESS THAN YOUR PURCHASE PRICE. SHARES IN THE
PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY
BANK OR OTHER DEPOSITORY INSTITUTION, ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY AND ARE NOT GUARANTEED BY THE U.S. GOVERNMENT. THERE IS NO ASSURANCE THAT
A PORTFOLIO WILL ACHIEVE ITS OBJECTIVE.

Investors considering the purchase of shares of any Portfolio should read
this Prospectus before investing. It is designed to provide you with information
and help you decide if the goal of one or more of the Portfolios matches your
own. Retain this document for future reference.

Shares of each Portfolio may be purchased primarily by the separate
accounts of insurance companies, for the purpose of funding Variable Contracts.
Particular Portfolios may not be available in your state due to various
insurance or other regulations. Please check with your insurance company for
available Portfolios. Inclusion of a Portfolio in this Prospectus which is not
available in your state is not to be considered a solicitation. This Prospectus
should be read in conjunction with the separate account prospectus of the
specific insurance product which accompanies this Prospectus. Shares of each
Portfolio also may be purchased by certain qualified pension and retirement
plans (Qualified Plans). See "Shareholder Information -- Investments in Shares
of the Portfolios" for more complete information.

A Statement of Additional Information dated May 1, 1998 as supplemented or
revised from time to time for the Fund has been filed with the Securities and
Exchange Commission (the "SEC") and is incorporated herein by reference. This
free Statement is available upon request from your insurance company. Other
information about the Fund has been filed with the SEC and is available though
the SEC's internet web site (http://www.sec.gov).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>

I. HIGHLIGHTS
PIONEER VARIABLE CONTRACTS TRUST

[Top Arrow] More Aggressive More Conservative [Bottom arrow]

Pioneer Variable Contracts Trust (the Fund) is an open-end
management investment company that currently consists of
ten distinct Portfolios. Shares of the Portfolios are offered
primarily to holders of insurance company variable annuity
and variable life insurance contracts (Variable Contracts). You
may obtain certain tax benefits by purchasing a Variable Con
tract (refer to the prospectus of your insurance company's
separate account for a discussion of the tax benefits).

Each Portfolio has its own distinct INVESTMENT OBJECTIVE AND
POLICIES. In striving to meet its objective, each Portfolio will
face the challenges of changing business, economic and mar
ket conditions. Each Portfolio offers different levels of poten
tial return and will experience different levels of risk.

No single Portfolio constitutes a complete investment plan.
Each Portfolio's share price (except as described below for
Money Market Portfolio), yield and total return will fluctuate
and an investment in a Portfolio may be worth more or less
than your original cost when shares are redeemed. Money
Market Portfolio seeks to maintain a constant $1.00 share
price although there can be no assurance it will do so.

Pioneering Management Corporation (Pioneer) is the invest
ment adviser to each Portfolio. Each Portfolio pays a fee to
its investment adviser for managing the Portfolio's invest
ments and business affairs. For a discussion of these fees,
please see "Fund Management Fees and Other Expenses."

Each Portfolio complies with various insurance regulations.
Please read your insurance company's separate account pro
spectus for more specific information relating to insurance
regulations and instructions on how to invest in and redeem
from each Portfolio. For a general discussion of how to buy
and sell Portfolio shares, see "Shareholder Information" in
this Prospectus.

CHOOSING A PORTFOLIO

The illustration below shows the expected relationship
between the return potential and the level of risk normally
associated with each Portfolio's investment objective. Refer
to "How the Fund Works" for additional information on each
Portfolio's investment objective and policies.

<TABLE>
<CAPTION>
PORTFOLIO STRATEGIC FOCUS
<S> <C>
INTERNATIONAL Invests for long-term growth of
GROWTH capital primarily through
investments in non-U.S. equity
securities and related depositary
receipts.

CAPITAL Invests for capital appreciation
GROWTH through a diversified portfolio of
securities consisting primarily
of common stocks.

GROWTH Invests for appreciation of
SHARES capital through investments in
common stocks, together with
preferred stocks, bonds, and
debentures which are convertible
into common stocks.

REAL ESTATE Invests for long-term growth
GROWTH of capital primarily through
investments in REITs and other
real estate industry companies.
Current income is the Portfolio's
secondary investment objective.

GROWTH AND Invests for reasonable income
INCOME and growth of capital by
investing in a broad list of
carefully selected, reasonably
priced securities.

EQUITY-INCOME Invests for current income and
long-term capital growth by
investing in a portfolio of
income-producing equity
securities of U.S. corporations.

BALANCED Invests for capital growth and
current income by actively
managing investments in a
diversified portfolio of common
stocks and bonds.

SWISS FRANC Invests to approximate the
BOND performance of the Swiss franc
relative to the U.S. dollar while
earning a reasonable level of
income.

AMERICA Invests for as high a level of
INCOME current income as is consistent
with the preservation of capital.
The Portfolio invests in U.S.
Government Securities and in
"when-issued" commitments and
repurchase agreements with
respect to such securities.

MONEY MARKET Invests for current income
consistent with preserving
capital and providing liquidity.
</TABLE>

2
<PAGE>

The following information has been audited by Arthur Andersen LLP, independent
public accountants, in connection with their audit of the Portfolios' financial
statements. Arthur Andersen LLP's report on the Fund's financial statements as
of December 31, 1997 appears in the Portfolios' Annual Report which is
incorporated by reference into the Statement of Additional Information. The
information below should be read in conjunction with financial statements
contained in the Portfolios' Annual Report. The Annual Report includes more
information about the Portfolios' performance and is available free of charge
upon request from your insurance company.

FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR EACH PERIOD PRESENTED:

<TABLE>
<CAPTION>
INTERNATIONAL GROWTH PORTFOLIO
------------------------------------------------------
FOR THE YEAR FOR THE YEAR MARCH 1, 1995
ENDED ENDED (COMMENCEMENT
DECEMBER 31, DECEMBER 31, OF OPERATIONS)
1997 1996 TO DECEMBER 31, 1995
-------------- ---------------- ----------------------
<S> <C> <C> <C>
Net asset value, beginning of period ........ $ 11.83 $ 10.93 $10.00
------- ------- ------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS:
Net investment income ...................... $ 0.06 $ 0.05 $ --
Net realized and unrealized gain (loss)
on investments ............................ 0.53* 0.88* 1.04*
------- ------- ------
Net increase (decrease) from
investment operations ................... $ 0.59 $ 0.93 $ 1.04
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ...................... (0.03) -- --
In excess of net investment income ......... -- -- (0.02)
Net realized gain .......................... (0.16) (0.03) (0.09)
------- ------- ------
Net increase (decrease) in net
asset value ............................. $ 0.40 $ 0.90 $ 0.93
------- ------- ------
Net asset value, end of period .............. $ 12.23 $ 11.83 $10.93
======= ======= ======
Total return** .............................. 4.87% 8.54% 10.42%
Ratio of net expenses to average net
assets + ................................... 1.49% 1.52% 2.10%***
Ratio of net investment income (loss) to
average net assets + ....................... 0.78% 0.78% (0.25)%***
Portfolio turnover rate ..................... 133% 115% 139%***
Average brokerage commission per share $0.0034 $0.0033 --
Net assets, end of period (in thousands) $49,412 $24,770 $2,967
RATIO ASSUMING NO WAIVER OF MANAGEMENT
FEES AND ASSUMPTION OF EXPENSES BY
PIONEER AND NO REDUCTION FOR FEES PAID
INDIRECTLY:
Net expenses ............................... 1.71% 3.04% 17.22%***
Net investment income (loss) ............... 0.56% (0.74)% (15.37)%***
RATIO ASSUMING WAIVER OF MANAGEMENT
FEES AND ASSUMPTION OF EXPENSES BY
PIONEER AND REDUCTION FOR FEES PAID
INDIRECTLY:
Net expenses ............................... 1.48% 1.50% 1.75%***
Net investment income (loss) ............... 0.79% 0.80% 0.10%***

<CAPTION>
CAPITAL GROWTH PORTFOLIO
------------------------------------------------
MARCH 1, 1995
FOR THE YEAR FOR THE YEAR (COMMENCEMENT
ENDED ENDED OF OPERATIONS)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1997 1996 1995
-------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period ........ $ 13.05 $ 11.57 $10.00
-------- ------- ------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS:
Net investment income ...................... $ 0.12 $ 0.03 $ 0.02
Net realized and unrealized gain (loss)
on investments ............................ 3.09 1.71 1.69
-------- ------- ------
Net increase (decrease) from
investment operations ................... $ 3.21 $ 1.74 $ 1.71
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ...................... -- (0.03) (0.02)
In excess of net investment income ......... -- -- --
Net realized gain .......................... (0.11) (0.23) (0.12)
-------- ------- ------
Net increase (decrease) in net
asset value ............................. $ 3.10 $ 1.48 1.57
-------- ------- ------
Net asset value, end of period .............. $ 16.15 $ 13.05 $11.57
======== ======= ======
Total return** .............................. 24.69% 15.03% 17.13%
Ratio of net expenses to average net
assets + ................................... 0.80% 0.93% 1.56%***
Ratio of net investment income (loss) to
average net assets + ....................... 1.02% 0.37% 0.48%***
Portfolio turnover rate ..................... 50% 41% 46%***
Average brokerage commission per share $ 0.0556 $0.0661 --
Net assets, end of period (in thousands) $105,476 $48,572 $9,357
RATIO ASSUMING NO WAIVER OF MANAGEMENT
FEES AND ASSUMPTION OF EXPENSES BY
PIONEER AND NO REDUCTION FOR FEES PAID
INDIRECTLY:
Net expenses ............................... 0.80% 0.95% 3.95%***
Net investment income (loss) ............... 1.02% 0.35% (1.91)%***
RATIO ASSUMING WAIVER OF MANAGEMENT
FEES AND ASSUMPTION OF EXPENSES BY
PIONEER AND REDUCTION FOR FEES PAID
INDIRECTLY:
Net expenses ............................... 0.79% 0.92% 1.49%***
Net investment income (loss) ............... 1.03% 0.38% 0.55%***
</TABLE>

- ---------
* Includes foreign currency transactions.

** Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.

*** Annualized.

+ Ratio assuming no reduction for fees paid indirectly.

3
<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OUTSTANDING FOR EACH PERIOD PRESENTED:

<TABLE>
<CAPTION>
GROWTH SHARES PORTFOLIO
-------------------------
OCTOBER 31, 1997
(COMMENCEMENT
OF OPERATIONS)
TO DECEMBER 31, 1997
-------------------------
<S> <C>
Net asset value, beginning of period ............................... $ 15.00
-------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS:
Net investment income ............................................. $ 0.01
Net realized and unrealized gain (loss) on investments ............ 0.33*
-------
Net increase (decrease) from investment operations .............. $ 0.34
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................................. --
Tax return of capital ............................................. --
Net realized gain ............................................... --
-------
Net increase (decrease) in net asset value ........................ $ 0.34
-------
Net asset value, end of period ..................................... $ 15.34
=======
Total return** ..................................................... 2.27%
Ratio of net expenses to average net assets ........................ 1.25%***
Ratio of net investment income to average net assets ............... 0.60%***
Portfolio turnover rate ............................................ 16%***
Average brokerage commission per share ............................. $0.0595
Net assets, end of period (in thousands) ........................... $ 4,646
RATIO ASSUMING NO WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF EXPENSES BY
PIONEER AND NO REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ...................................................... 6.57%***
Net investment income (loss) ...................................... (4.72)%***
RATIO ASSUMING WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF EXPENSES BY PIONEER
AND REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ...................................................... --
Net investment income (loss) ...................................... --

<CAPTION>
REAL ESTATE GROWTH PORTFOLIO
-----------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------- --------------------
<S> <C> <C>
Net asset value, beginning of period ............................... $ 14.46 $ 11.23
-------- -------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS:
Net investment income ............................................. $ 0.47 $ 0.54
Net realized and unrealized gain (loss) on investments ............ 2.54 3.34
-------- -------
Net increase (decrease) from investment operations .............. $ 3.01 $ 3.88
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................................. (0.45) (0.53)
Tax return of capital ............................................. -- --
Net realized gain ............................................... (0.12) (0.12)
------- -------
Net increase (decrease) in net asset value ........................ $ 2.44 $ 3.23
------- -------
Net asset value, end of period ..................................... $ 16.90 $ 14.46
======= =======
Total return** ..................................................... 21.16% 35.73%
Ratio of net expenses to average net assets ........................ 1.25%+ 1.34%+
Ratio of net investment income to average net assets ............... 3.16%+ 4.63%+
Portfolio turnover rate ............................................ 28% 41%
Average brokerage commission per share ............................. $0.0597 $0.0595
Net assets, end of period (in thousands) ........................... $42,187 $11,115
RATIO ASSUMING NO WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF EXPENSES BY
PIONEER AND NO REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ...................................................... 1.37% 3.35%
Net investment income (loss) ...................................... 3.04% 2.62%
RATIO ASSUMING WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF EXPENSES BY PIONEER
AND REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ...................................................... 1.24% 1.24%
Net investment income (loss) ...................................... 3.17% 4.73%

<CAPTION>
REAL ESTATE GROWTH
PORTFOLIO
---------------------
MARCH 31, 1995
(COMMENCEMENT
OF OPERATIONS)
TO DECEMBER 31, 1995
---------------------
<S> <C>
Net asset value, beginning of period ............................... $10.00
------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS:
Net investment income ............................................. $ 0.12
Net realized and unrealized gain (loss) on investments ............ 1.55
------
Net increase (decrease) from investment operations .............. $ 1.67
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................................. (0.23)
Tax return of capital ............................................. (0.18)
Net realized gain ............................................... (0.03)
------
Net increase (decrease) in net asset value ........................ $ 1.23
------
Net asset value, end of period ..................................... $11.23
======
Total return** ..................................................... 16.96%
Ratio of net expenses to average net assets ........................ 2.10%***+
Ratio of net investment income to average net assets ............... 2.68%***+
Portfolio turnover rate ............................................ 1%***
Average brokerage commission per share ............................. --
Net assets, end of period (in thousands) ........................... $ 512
RATIO ASSUMING NO WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF EXPENSES BY
PIONEER AND NO REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ...................................................... 45.96%***
Net investment income (loss) ...................................... (41.18)%***
RATIO ASSUMING WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF EXPENSES BY PIONEER
AND REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ...................................................... 1.57%***
Net investment income (loss) ...................................... 3.21%***
</TABLE>

- ---------
* Includes foreign currency transactions.
** Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
*** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.

4
<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OUTSTANDING FOR EACH PERIOD PRESENTED:

<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
---------------------------
OCTOBER 31, 1997
(COMMENCEMENT
OF OPERATIONS)
TO DECEMBER 31, 1997
--------------------
<S> <C>
Net asset value, beginning of period ............................. $ 15.00
-------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS:
Net investment income ........................................... $ 0.01
Net realized and unrealized gain (loss) on investments .......... 0.80
-------
Net increase (decrease) from investment operations ............ $ 0.81
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ........................................... (0.01)
Net realized gain ............................................... --
---------
Net increase (decrease) in net asset value .................... $ 0.80
---------
Net asset value, end of period ................................... $ 15.80
=========
Total return* .................................................... 5.43%
Ratio of net expenses to average net assets ...................... 1.25%**
Ratio of net investment income to average net assets ............. 1.07**
Portfolio turnover rate .......................................... 0%
Average brokerage commission per share ........................... $0.0421
Net assets, end of period (in thousands) ......................... $ 4,493
RATIO ASSUMING NO WAIVER OF MANAGEMENT FEES AND ASSUMPTION
OF EXPENSES BY PIONEER AND NO REDUCTION FOR FEES PAID
INDIRECTLY:
Net expenses .................................................... 5.30%**
Net investment income (loss) .................................... (2.98)%**
RATIO ASSUMING WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF
EXPENSES BY PIONEER AND REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses .................................................... --
Net investment income (loss) .................................... --

<CAPTION>
EQUITY-INCOME PORTFOLIO
---------------------------------------------------
FOR THE YEAR FOR THE YEAR MARCH 1, 1995
ENDED ENDED (COMMENCEMENT
DECEMBER 31, DECEMBER 31, OF OPERATIONS)
1997 1996 TO DECEMBER 31, 1995
-------------- -------------- ---------------------
<S> <C> <C> <C>
Net asset value, beginning of period ............................. $ 13.73 $ 12.17 $10.00
-------- ------- ------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS:
Net investment income ........................................... $ 0.35 $ 0.29 $ 0.19
Net realized and unrealized gain (loss) on investments .......... 4.44 1.54 2.16
-------- -------- ------
Net increase (decrease) from investment operations ............ $ 4.79 $ 1.83 $ 2.35
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ........................................... (0.37) (0.27) (0.18)
Net realized gain ............................................... (0.01) -- --
--------- ---------- ------
Net increase (decrease) in net asset value .................... $ 4.41 $ 1.56 $ 2.17
-------- ------- ------
Net asset value, end of period ................................... $ 18.14 $ 3.73 $12.17
======== ======= ======
Total return* .................................................... 35.23% 15.19% 23.62%
Ratio of net expenses to average net assets ...................... 0.77%+ 0.96%+ 1.63%**+
Ratio of net investment income to average net assets ............. 2.31%+ 2.67%+ 2.89%**+
Portfolio turnover rate .......................................... 15% 18% --
Average brokerage commission per share ........................... $ 0.0574 $0.0583 --
Net assets, end of period (in thousands) ......................... $124,213 $46,871 $6,914
RATIO ASSUMING NO WAIVER OF MANAGEMENT FEES AND ASSUMPTION
OF EXPENSES BY PIONEER AND NO REDUCTION FOR FEES PAID
INDIRECTLY:
Net expenses .................................................... 0.77% 0.98% 5.32%**
Net investment income (loss) .................................... 2.31% 2.65% (0.80)%**
RATIO ASSUMING WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF
EXPENSES BY PIONEER AND REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses .................................................... 0.77% 0.95% 1.47%**
Net investment income (loss) .................................... 2.31% 2.68% 3.05%**
</TABLE>

- ---------

* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.

5
<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OUTSTANDING FOR EACH PERIOD PRESENTED:

<TABLE>
<CAPTION>
BALANCED PORTFOLIO
-------------------------------------------------
MARCH 1,
1995
FOR THE YEAR FOR THE YEAR (COMMENCEMENT
ENDED ENDED OF OPERATIONS)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1997 1996 1995
-------------- -------------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of period ............................ $ 13.19 $ 11.87 $10.00
------- ------- ------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS:
Net investment income .......................................... $ 0.36 $ 0.29 $ 0.20
Net realized and unrealized gain (loss) on investments ......... 1.94 1.39 1.87
------- ------- ------
Net increase (decrease) from investment operations ........... $ 2.30 $ 1.68 $ 2.07
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income .......................................... 0.36) (0.29) (0.20)
Net realized gain .............................................. (0.14) (0.07) --
------- ------- ------
Net increase (decrease) in net asset value ...................... $ 1.80 $ 1.32 $ 1.87
------- ------- ------
Net asset value, end of period .................................. $ 14.99 $ 13.19 $11.87
======= ======= ======
Total return** .................................................. 17.62% 14.26% 20.84%
Ratio of net expenses to average net assets + ................... 0.96% 1.20% 1.76%***
Ratio of net investment income to average net assets + .......... 2.63% 2.83% 2.99%***
Portfolio turnover rate ......................................... 63% 74% --
Average brokerage commission per share .......................... $0.0567 $0.0582 --
Net assets, end of period (in thousands) ........................ $44,008 $16,783 $2,661
RATIO ASSUMING NO WAIVER OF MANAGEMENT FEES BY PIONEER AND NO
REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ................................................... 0.96% 1.58% 14.77%***
Net investment income (loss) ................................... 2.63% 2.45% (10.02)%***
RATIO ASSUMING WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF
EXPENSES BY PIONEER AND REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ................................................... 0.95% 1.15% 1.45%***
Net investment income (loss) ................................... 2.64% 2.88% 3.30%***

<CAPTION>
SWISS FRANC BOND PORTFOLIO
-------------------------------------------------
NOVEMBER 1,
1995
FOR THE YEAR FOR THE YEAR (COMMENCEMENT
ENDED ENDED OF OPERATIONS)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1997 1996 1995
-------------- -------------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of period ............................ $ 13.42 $ 15.06 $15.00
------- ------- ------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS:
Net investment income .......................................... $ 0.30 $ 0.14 $ 0.04
Net realized and unrealized gain (loss) on investments ......... (1.22)* (1.78)* 0.02*
------- ------- ------
Net increase (decrease) from investment operations ........... $ (0.92) $ (1.64) $ 0.06
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income .......................................... -- -- --
Net realized gain .............................................. -- -- --
------- ------- -----
Net increase (decrease) in net asset value ...................... $ (0.92) $ 1.64 $ 0.06
------- ------- -----
Net asset value, end of period .................................. $ 12.50 $ 13.42 $15.06
======= ======= ======
Total return** .................................................. (6.92)% (10.88)% 0.40%
Ratio of net expenses to average net assets + ................... 1.23% 1.20% 2.25%***
Ratio of net investment income to average net assets + .......... 3.22% 3.37% 1.70%***
Portfolio turnover rate ......................................... 17% 39% --
Average brokerage commission per share .......................... -- -- --
Net assets, end of period (in thousands) ........................ $22,088 $13,079 $ 189
RATIO ASSUMING NO WAIVER OF MANAGEMENT FEES BY PIONEER AND NO
REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ................................................... 1.25% 2.58% 69.22%***
Net investment income (loss) ................................... 3.20% 1.99% (65.27)%***
RATIO ASSUMING WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF
EXPENSES BY PIONEER AND REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ................................................... 1.22% 1.15% 1.25%***
Net investment income (loss) ................................... 3.23% 3.42% 2.70%***
</TABLE>

<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OUTSTANDING FOR EACH PERIOD PRESENTED:

<TABLE>
<CAPTION>
AMERICA INCOME PORTFOLIO
-----------------------------------------------
MARCH 1,
1995
FOR THE YEAR FOR THE YEAR (COMMENCEMENT
ENDED ENDED OF OPERATIONS)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1997 1996 1995
-------------- -------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period ............................ $ 9.78 $10.18 $10.00
------- ------ -------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS:
Net investment income .......................................... $ 0.54 $ 0.52 $ 0.38
Net realized and unrealized gain (loss) on investments ......... 0.26 (0.40) 0.18
------- ------ ------
Net increase (decrease) from investment operations ........... $ 0.80 $ 0.12 $ 0.56
distribution to shareholders from:
Net investment income .......................................... (0.54) (0.52) (0.38)
-------
Net realized gain .............................................. -- --
------ ------
Net increase (decrease) in net asset value ...................... $ 0.26 $(0.40) $(0.18)
------- ------ ------
Net asset value, end of period .................................. $ 10.04 $ 9.78 $10.18
======= ====== ======
Total return* ................................................... 8.44% 1.30% 5.68%
Ratio of net expenses to average net assets + ................... 1.26% 1.31% 1.12%**
Ratio of net investment income to average net assets + .......... 5.46% 5.25% 5.22%**
Portfolio turnover rate ......................................... 11% 60% 96%**
Net assets, end of period (in thousands) ........................ $14,519 $6,872 $3,514
RATIO ASSUMING NO WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF
EXPENSES BY PIONEER AND NO REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ................................................... 1.43% 2.24% 11.86%**
Net investment income (loss) ................................... 5.29% 4.32% (5.52)%**
RATIO ASSUMING WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF
EXPENSES BY PIONEER AND REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ................................................... 1.23% 1.25% 0.99%**
Net investment income (loss) ................................... 5.49% 5.31% 5.35%**

<CAPTION>
MONEY MARKET PORTFOLIO
----------------------------------------------
NOVEMBER 1,
1995
FOR THE YEAR FOR THE YEAR (COMMENCEMENT
ENDED ENDED OF OPERATIONS)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1997 1996 1995
-------------- -------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period ............................ $ 1.00 $ 1.00 $ 1.00
------- ------- ------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS:
Net investment income .......................................... $ 0.05 $ 0.04 $ 0.04
Net realized and unrealized gain (loss) on investments ......... -- -- --
------- ------- ------
Net increase (decrease) from investment operations ........... $ 0.05 $ 0.04 $ 0.04
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income .......................................... (0.05) (0.04) (0.04)
Net realized gain .............................................. -- -- --
------- ------- ------
Net increase (decrease) in net asset value ...................... $ 0.00 $ 0.00 $ 0.00
------- ------- ------
Net asset value, end of period .................................. $ 1.00 $ 1.00 $ 1.00
======= ======= ======
Total return* ................................................... 4.64% 4.51% 4.35%
Ratio of net expenses to average net assets + ................... 1.00% 0.97% 0.81%**
Ratio of net investment income to average net assets + .......... 4.55% 4.43% 5.00%**
Portfolio turnover rate ......................................... -- -- --
Net assets, end of period (in thousands) ........................ $13,739 $11,744 $3,416
RATIO ASSUMING NO WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF
EXPENSES BY PIONEER AND NO REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ................................................... 1.17% 1.29% 8.34%**
Net investment income (loss) ................................... 4.38% 4.11% (2.53)%**
RATIO ASSUMING WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF
EXPENSES BY PIONEER AND REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ................................................... 0.99% 0.96% 0.74%**
Net investment income (loss) ................................... 4.56% 4.44% 5.07%**
</TABLE>

- ---------

** Annualized.

+ Ratio assuming no reduction for fees paid indirectly.

7
<PAGE>

II. HOW THE FUND WORKS

INVESTMENT OBJECTIVES AND POLICIES

The Fund's Portfolios are designed to serve as investment vehicles primarily for
Variable Contracts of insurance companies. The Fund currently offers ten
Portfolios with different investment objectives and policies which are described
below. Each Portfolio's investment objective is fundamental and can be changed
only by vote of a majority of the outstanding shares of the Portfolio. All other
investment policies of each Portfolio are nonfundamental and may be changed by
the Fund's Trustees without shareholder approval. There is no assurance that a
Portfolio will achieve its investment objective.

Each Portfolio may invest up to 100% of its total assets in short-term
investments for temporary defensive purposes. A Portfolio will assume a
temporary defensive posture only when economic and other factors are such that
Pioneer believes there to be extraordinary risks in being substantially invested
in the securities in which the Portfolio normally concentrates its investments.
Refer to the Appendix for a description of short-term investments.

INTERNATIONAL GROWTH PORTFOLIO seeks long-term growth of capital primarily
through investments in non-U.S. equity securities and related depositary
receipts. Non-U.S. equity securities are equity securities of issuers that are
organized and have principal offices in foreign countries. For information on
depositary receipts, please refer to the Appendix.

Normally, at least 80% of the Portfolio's total assets will be invested in
equity securities and related depositary receipts. The Portfolio may not invest
more than 25% of its total assets in securities of issuers from any one country
except Japan or the United Kingdom. Also, with the exception of the Japanese
yen, the British pound and the U.S. dollar, no more than 25% of the Portfolio's
total assets may be denominated in the currency of any one country. Substantial
investments in Japan and the United Kingdom or their currencies will subject the
Portfolio to the risks associated with changing economic, market and social
conditions in Japan and the United Kingdom. Refer to "Risks of International
Investments" for more information.

The Portfolio is managed in accordance with the value investment philosophy of
Pioneer. This approach consists of developing a diversified portfolio of
securities consistent with the Portfolio's investment objective and selected
primarily on the basis of Pioneer's judgment that the securities have an
underlying value, or potential value, which exceeds their current prices. The
analysis and quantification of the economic worth, or "value," of an individual
company reflects Pioneer's assessment of the company's assets and the company's
prospects for earnings growth over the next three to five years. Pioneer relies
primarily on the knowledge, experience and judgment of its own research staff,
but also receives and uses information from a variety of outside sources,
including brokerage firms, electronic databases, specialized research firms and
technical journals.

When allocating the Portfolio's investments among geographic regions and
individual countries, Pioneer considers various criteria, such as prospects for
relative economic growth among countries, expected levels of inflation,
government policies influencing business conditions, and the outlook for
currency relationships. Pioneer currently expects to invest most of the
Portfolio's assets in securities of issuers located in countries such as:
Australia, Canada, Finland, Hong Kong, Japan, New Zealand, Singapore, Sweden,
the United Kingdom and the other developed countries of Western Europe. The
Portfolio may also invest in the securities of issuers located in countries with
emerging markets such as: Algeria, Argentina, Bangladesh, Brazil, Bulgaria,
Chile, China, Colombia, Costa Rica, Czech Republic, Ecuador, Egypt, Ghana,
Greece, Hungary, India, Indonesia, Israel, Jamaica, Jordan, Kenya, Kuwait,
Malaysia, Mexico, Morocco, Nigeria, Pakistan, Peru, the Philippines, Poland,
Portugal, Russia, South Africa, South Korea, Sri Lanka, Taiwan, Thailand,
Turkey, Uruguay, Venezuela, Vietnam and Zimbabwe. Normally, at least 65% of the
Portfolio's total assets will be invested in at least three different non-U.S.
countries. In addition, most of the securities purchased by the Portfolio will
be denominated in foreign currencies.

Pioneer may normally invest up to 20% of the Portfolio's total assets in
short-term debt securities, including certain securities issued by U.S. and
non-U.S. governments and banks, and debt securities of non-U.S. and U.S.
companies.

The Portfolio will not purchase lower rated debt securities or unrated debt
securities of comparable quality. See "Risk Considerations -- Risks of Medium
and Lower Rated Debt Securities." Pioneer expects that opportunities for
long-term growth of capital will come primarily from the Portfolio's investments
in equity securities, including common stock, securities such as warrants or
rights that are convertible into common stock, preferred stock and depositary
receipts for such securities.

OTHER INVESTMENT PRACTICES. Refer to the Appendix for information on the
Portfolio's possible use of illiquid investments, restricted securities,
warrants, options and futures contracts, forward foreign currency exchange
contracts and repurchase agreements, and its ability to lend securities.

CAPITAL GROWTH PORTFOLIO seeks capital appreciation through a diversified
portfolio of securities consisting primarily of common stocks. Normally, at
least 80% of the Portfolio's assets will be invested in common stocks and in
securities with common stock characteristics, such as convertible bonds and
preferred stocks. In selecting individual equity securities to be purchased by
the Portfolio, Pioneer uses the "investing for value" approach as described
above for International Growth Portfolio.

The Portfolio may invest up to 25% of its total assets in non-U.S. securities.
For a discussion of international investing, please see "Risks of International
Investments." The Portfolio may invest up to 5% of its net assets in REITs. See
"Risks Associated with Real Estate Investment Trusts."

Other Investment Practices. Refer to the Appendix for information on the
Portfolio's possible use of repurchase agree-

8
<PAGE>

ments, illiquid investments, restricted securities, options, futures contracts
and forward foreign currency exchange contracts, and its ability to lend
securities.

GROWTH SHARES PORTFOLIO seeks appreciation of capital through investments in
common stocks, together with preferred stocks, bonds, and debentures which are
convertible into common stocks. Current income will be incidental to the
Portfolio's primary objective. In selecting securities for investment, Pioneer
attempts to identify companies that have better-than-average earnings growth
potential and those industries that stand to enjoy the greatest benefit from the
expected economic environment. The Portfolio seeks to purchase the securities of
companies that are thought to be best situated in those industry groupings. The
Portfolio invests in companies in a variety of industries in an attempt to
reduce overall exposure to investment and market risks.

The Portfolio may invest up to 25% of its net assets in non-U.S. securities. For
a discussion of international investing, please see "Risks of International
Investments." The Portfolio may invest up to 5% of its net assets in REITs. See
"Risks Associated with Real Estate Investment Trusts." The Portfolio may invest
up to 5% of the Portfolio's net assets in lower rated debt securities or unrated
debt securities of comparable quality. See "Risks of Medium and Lower Rated Debt
Securities."

OTHER INVESTMENT PRACTICES. Refer to the Appendix for information on the
Portfolio's possible use of repurchase agreements, illiquid investments,
restricted securities, when-issued securities, forward foreign currency exchange
contracts, and its ability to lend securities.

REAL ESTATE GROWTH PORTFOLIO seeks long-term growth of capital primarily through
investments in REITs and other real estate industry companies. Current income is
the Portfolio's secondary investment objective. The Portfolio will invest in a
non-diversified portfolio consisting of equity securities of REITs and other
real estate industry companies and, to a lesser extent, in debt securities of
such companies and in mortgage-backed securities. Normally, at least 75% of the
Portfolio's assets will be invested in equity securities of REITs and other real
estate industry companies. See "Risks Associated with the Real Estate Industry"
and "Risks Associated with Real Estate Investment Trusts."

A real estate industry company is defined as a company that derives at least 50%
of its gross revenues or net profits from either (a) the ownership, development,
construction, financing, management or sale of commercial, industrial or
residential real estate or (b) products or services related to the real estate
industry like building supplies or mortgage servicing. The equity securities of
real estate industry companies in which the Portfolio will invest consist of
common stock, shares of beneficial interest of REITs and securities with common
stock characteristics, such as preferred stock and debt securities convertible
into common stock.

The Portfolio may also invest up to 25% of its total assets in: (a) debt
securities of real estate industry companies, (b) mortgage-backed securities,
such as mortgage pass-through certificates, real estate mortgage investment
conduit (REMIC) certificates and collateralized mortgage obligations (CMOs) and
(c) short-term investments. See "Risks Associated with Mortgage-Backed
Securities." The Portfolio may invest up to 10% of its net assets in equity and
debt securities of non-U.S. real estate companies provided that purchases of
Canadian securities are not subject to this limitation. See "Risks of
International Investments."

Pioneer will invest no more than 5% of the Portfolio's net assets in lower
rated debt securities or unrated debt securities of comparable quality. See
"Risks of Medium and Lower Rated Debt Securities."

The Portfolio will purchase the securities of REITs and other real estate
industry companies when, in Pioneer's judgment, their market price appears to be
less than their fundamental value and/or which offer a high level of current
income consistent with reasonable investment risk. In selecting specific
investments, Pioneer will attempt to identify securities with significant
potential for appreciation relative to their downside exposure and/or which have
a timely record and high level of interest or dividend payments. In making these
determinations, Pioneer will take into account price/earnings ratios, cash flow,
the relationship of asset value to market price of the securities, interest or
dividend payment history and other factors which it may determine from time to
time to be relevant. Pioneer will attempt to allocate the Portfolio's
investments across regional economies and property types.

Unlike the other Portfolios, Real Estate Growth Portfolio is a non-diversified
mutual fund under the Investment Company Act of 1940 (the 1940 Act). As a
non-diversified mutual fund, the Portfolio may be more susceptible to risks
associated with a single economic, political or regulatory occurrence than a
diversified fund.

OTHER INVESTMENT PRACTICES. Refer to the Appendix for information about the
Portfolio's possible use of repurchase agreements, illiquid investments,
restricted securities, options and futures, and its ability to lend securities.

GROWTH AND INCOME PORTFOLIO seeks reasonable income and growth of capital by
investing in a broad list of carefully selected, reasonably priced securities.
Most of the Portfolio's assets are invested in common stocks and other equity
securities such as preferred stocks and securities convertible into common
stock, but the Portfolio may also invest in debt securities and cash equivalent
investments.

The largest portion of the Portfolio's assets is invested in securities that
have paid dividends within the preceding twelve months, but some non-income
producing securities are held for anticipated increases in value. The Portfolio
is managed in accordance with Pioneer's value investment philosophy as described
above for International Growth Portfolio.

The Portfolio may invest in non-U.S. securities. While there is no requirement
to do so, the Portfolio intends to limit its

9
<PAGE>

investments in foreign securities to no more than 10% of its net assets. For a
discussion of international investing, please see "Risks of International
Investments." The Portfolio may invest up to 5% of its net assets in REITs. See
"Risks Associated with Real Estate Investment Trusts." The Portfolio may invest
up to 5% of the Portfolio's net assets in debt securities, including convertible
securities, which are rated less than investment grade or the equivalent. See "
Risks of Medium and Lower Rated Debt Securities."

OTHER INVESTMENT PRACTICES. Refer to the Appendix for information on the
Portfolio's possible use of repurchase agreements, illiquid investments,
restricted securities, writing (selling) covered call options, forward foreign
currency exchange contracts, and its ability to lend securities.

EQUITY-INCOME PORTFOLIO seeks current income and long-term capital growth
primarily by investing in the income-producing equity securities of U.S.
corporations.

Normally, at least 80% of the Portfolio's total assets will be invested in
income-producing common or preferred stock. The remainder of the Portfolio's
assets may be invested in debt securities, most of which are expected to be
convertible into common stock. Pioneer will invest no more than 10% of the
Portfolio's net assets in lower rated debt securities, including convertible
securities, or unrated debt securities of comparable quality. See " Risks of
Medium and Lower Rated Debt Securities." The Portfolio may invest up to 5% of
its net assets in REITs. See "Risks Associated with Real Estate Investment
Trusts."

The Portfolio is managed in accordance with Pioneer's "investing for value"
investment philosophy as described above for International Growth Portfolio.

OTHER INVESTMENT PRACTICES. Refer to the Appendix for information on the
Portfolio's possible use of repurchase agreements and its ability to lend
securities.

BALANCED PORTFOLIO seeks capital growth and current income by actively managing
investments in a diversified portfolio of equity securities and bonds. Normally,
equity securities and bonds will each represent 35% to 65% of the Portfolio's
assets.

The assets of the Portfolio allocated to equity securities will be invested in
common stocks and in securities with common stock characteristics, such as
convertible bonds and preferred stocks. Normally, Portfolio assets allocated to
bonds will be invested in (1) debt securities rated "A" or higher by Standard &
Poor's Ratings Group (S&P) or Moody's Investors Service, Inc. (Moody's) or, if
unrated, judged by Pioneer to be of comparable quality, (2) commercial paper of
comparable quality and (3) U.S. Government Securities, GNMA Certificates
(described below) and CMOs. The Portfolio may, however, invest up to 20% of its
total assets in debt securities that are rated "BBB" by S&P or "Baa" by Moody's,
or, if unrated, judged by Pioneer to be of comparable quality, and in commercial
paper that is of comparable quality. See "Risks of Medium and Lower Rated Debt
Securities." Although the Portfolio intends to be fully invested, normally a
portion of the Portfolio's total assets may be invested in cash and short-term
investments. Refer to the Appendix for a description of short-term investments.

Consistent with its investment objectives, the Portfolio may invest up to 25%
of its total assets in non-U.S. securities and related forward foreign currency
exchange contracts, however investments in non-U.S. securities may not exceed
10% of its total assets. For a further discussion of international investing,
please see "Risks of International Investments." The Portfolio may invest up to
5% of its net assets in REITs. See "Risks Associated with Real Estate
Investment Trusts."

The allocation of the Portfolio's assets between stocks
and bonds will vary in response to conclusions drawn from Pioneer's continual
assessment of business, economic and market conditions. The mix of equity
securities, bonds, short-term investments and cash may be held in whatever
proportions Pioneer determines are necessary for defensive purposes.

OTHER INVESTMENT PRACTICES. Refer to the Appendix for information on the
Portfolio's possible use of repurchase agreements and its ability to lend
securities. The Portfolio will not invest in futures or options, except that the
Portfolio may use forward foreign currency exchange contracts and purchase and
sell options and futures contracts relating to foreign currencies.

SWISS FRANC BOND PORTFOLIO seeks to approximate the performance of the Swiss
franc relative to the U.S. dollar while earning a reasonable level of income.
The Portfolio was developed by Pioneer with the assistance of JML Swiss
Investment Counsellors, A.G., a Swiss financial consultant.

Normally, the Portfolio invests at least 65% of its total assets in (1)
government and corporate debt securities that are denominated in Swiss francs
and (2) combinations of forward foreign currency exchange contracts and debt
securities that are not denominated in Swiss francs ("non-Swiss franc
securities") designed to link the value of the investment in the non-Swiss franc
security to the performance of the Swiss franc. Pioneer expects that these
combination investments generally will represent no more than 25% of the
Portfolio's total assets. The Portfolio's investments in debt securities are
investment grade (i.e., rated "BBB" or higher by S&P or "Baa" or higher by
Moody's or, if unrated, determined by Pioneer to be of comparable quality). The
Portfolio's weighted average maturity normally will not exceed three years, but
may be as long as five years if Pioneer determines that a longer weighted
average maturity is appropriate in response to existing or expected market
conditions.

The Portfolio may invest up to 35% of its total assets in investment grade
commercial paper, bank obligations and money market instruments which may be
denominated in the Swiss franc or other currencies. Normally, at least 50% of
the Portfolio's investments will be denominated in Swiss francs. An investment
in the Portfolio may effectively hedge a diversified investment program by
offering protection against declines in the value of the U.S. dollar relative to
the Swiss franc.

10
<PAGE>

OTHER INVESTMENT PRACTICES. Refer to the Appendix for information on the
Portfolio's possible use of illiquid investments, restricted securities, futures
and options contracts, forward currency exchange contracts and repurchase
agreements, and its ability to lend securities.

AMERICA INCOME PORTFOLIO seeks as high a level of current income as is
consistent with the preservation of capital. Normally, the Portfolio invests in
U.S. Government Securities and in "when-issued" commitments and repurchase
agreements with respect to such securities.

The Portfolio's investments in U.S. Government Securities may include certain
mortgage-backed securities, such as mortgage pass-through certificates and
collateralized mortgage obligations (CMOs). See the Appendix and "Risks
Associated with Mortgage-Backed Securities."

U.S. Government Securities are debt securities issued or guaranteed as to
principal and interest by the U.S. Treasury or by an agency or instrumentality
of the U.S. Government. Not all U.S. Government Securities are backed by the
full faith and credit of the United States. For example, securities issued by
the Federal Farm Credit Bank, the Student Loan Marketing Association or the
Federal National Mortgage Association are supported by the agency's right to
borrow money from the U.S. Treasury under certain circumstances. Securities
issued by the Federal Home Loan Bank are supported only by the credit of the
agency. There is no guarantee that the U.S. Government will support these types
of securities, and therefore they involve more risk than U.S. Government
Securities that are backed by the full faith and credit of the United States.

U.S. Government Securities that are backed by the full
faith and credit of the United States include (1) U.S. Treasury obligations,
which differ only in their interest rates, maturities and times of issuance, and
(2) obligations of varying maturities issued or guaranteed by certain agencies
and instrumentalities of the U.S. Government, such as mortgage participation
certificates (GNMA Certificates) guaranteed by the Government National Mortgage
Association (GNMA) and Federal Housing Administration (FHA) debentures, for
which the U.S. Treasury unconditionally guarantees payment of principal and
interest. Although the payment when due of interest and principal on these
securities is backed by the full faith and credit of the United States, this
guarantee does not extend to the market value of these securities. The net asset
value of the Portfolio's shares will fluctuate accordingly.

The Portfolio is free to take advantage of the entire range of maturities
offered by U.S. Government Securities and the average maturity of the Portfolio
may vary significantly. Under normal circumstances, however, the Portfolio's
dollar-weighted average portfolio maturity is not expected to exceed 20 years.

GNMA Certificates. The Portfolio may invest all or any portion of its assets in
GNMA Certificates but it is not obligated to do so; the portion of its assets so
invested will vary with Pioneer's view of the relative yields and values of GNMA
Certificates compared to U.S. Treasury obligations and other U.S. Government
Securities. GNMA Certificates are mortgage-backed securities which evidence part
ownership of a pool of mortgage loans. The GNMA Certificates which the Portfolio
may purchase are the "modified pass-through" type. Modified pass-through
certificates entitle the holder to receive all principal and interest owed on
the mortgages in the pool, net of fees paid to the issuer and GNMA, regardless
of whether or not the mortgagor actually makes the payment.

GNMA Certificates may offer yields higher than those available from other types
of U.S. Government Securities. However, because of principal prepayments and
foreclosures with respect to mortgages in the underlying pool, they may be less
effective than other types of securities as a means of "locking in" attractive
long-term interest rates. Prepayments generally can be invested only at lower
interest rates.

"When-Issued" GNMA Certificates. When-issued or delayed delivery transactions
arise when securities are purchased or sold by the Portfolio with payment and
delivery taking place in the future in order to secure what is considered to be
an advantageous price and yield which is fixed at the time of entering into the
transaction. However, the yield on a comparable GNMA Certificate when the
transaction is consummated may vary from the yield on the GNMA Certificate at
the time that the when-issued or delayed delivery transaction was made. Also,
the market value of the when-issued or delayed delivery GNMA Certificate may
increase or decrease as a result of changes in general interest rates.
When-issued and delayed delivery transactions involve risk of loss if the value
of a GNMA Certificate declines before the settlement date.

The value of when-issued GNMA Certificate purchase commitments at any time will
not exceed the value of the Portfolio's assets invested in U.S. Treasury bills
(i.e., U.S. Treasury obligations with maturities of one year or less) and other
debt securities having remaining maturities of less than six months. In
addition, the Portfolio's aggregate investments in when-issued or delayed
delivery commitments and repurchase agreements may not exceed 25% of its assets.

OTHER INVESTMENT PRACTICES. Refer to the Appendix for information on the
Portfolio's possible use of repurchase agreements and its ability to lend
securities.

MONEY MARKET PORTFOLIO seeks current income consistent with preserving capital
and providing liquidity. The Portfolio should be considered as a temporary
investment rather than as an income or cash management vehicle. Pioneer will
invest the Portfolio's assets in the following types of high-quality money
market instruments.

[bullet] U.S. Government Securities.

[bullet] Obligations of U.S. banks and their non-U.S. branches, savings and
loan associations with total assets in excess of $1 billion and
certain smaller banks and savings and loan associations satisfying
criteria described in the State-

11
<PAGE>

ment of Additional Information. These obligations include certificates
of deposit and bankers' acceptances.

[bullet] Commercial Paper: that is, short-term unsecured promissory notes of
corporations, including variable amount master demand notes rated, on
the date of investment, A-1 by S&P or P-1 by Moody's, or, if unrated,
issued by companies having outstanding debt rated AAA or AA by S&P or
Aaa or Aa by Moody's.

[bullet] Short-Term Corporate Debt Securities: that is, bonds and debentures
with no more than 397 days remaining to maturity at date of
settlement and rated AAA or AA by S&P or Aaa or Aa by Moody's.

The Portfolio may enter into repurchase agreements with approved banks and
broker-dealers for periods not to exceed seven days and only with respect to
U.S. Government Securities that, throughout the period, have a value at least
equal to the amount of the repurchase agreement (including accrued interest). No
more than 25% of the Portfolio's assets will be invested in any one industry,
except that there is no percentage limitation on investments in bank obligations
or U.S. Government Securities.

Many of the instruments in which Money Market Portfolio may invest are described
in the Appendix.

QUALITY. Money Market Portfolio may purchase only high quality securities that
Pioneer believes present minimal credit risks. To be considered high quality, a
security must be rated, in accordance with applicable rules, in one of the two
highest categories for short-term securities by the major rating services, such
as S&P or Moody's (or by one, if only one rating service has rated the
security), or, if unrated, judged to be of equivalent quality by Pioneer.

High quality securities are divided into "first tier" and "second tier"
securities. First tier securities have received the highest rating (e.g., S&P's
A-1 rating) from at least two rating services (or one, if only one has rated the
security). Second tier securities have received ratings within the two highest
categories (e.g., S&P's A-1 or A-2) from at least two rating services (or one,
if only one has rated the security), but do not qualify as first tier
securities. If a security has been assigned different ratings by different
rating services, at least two rating services must have assigned the higher
rating in order for Pioneer to determine eligibility on the basis of that higher
rating. Based on procedures adopted by the Fund's Board of Trustees, Pioneer may
determine that an unrated security is of equivalent quality to a rated first or
second tier security.

Diversification. As a money market fund, the Portfolio is subject to the
following special diversification requirements. The Portfolio may not invest
more than 5% of its total assets in securities issued by or subject to demand
features from any one issuer (except U.S. Government Securities and repurchase
agreements collateralized by such securities). In addition, the Portfolio may
not invest (1) more than 5% of its total assets in second tier securities or (2)
more than 1% of its total assets or $1 million (whichever is greater) in the
second tier securities of a single issuer (other than U.S. Government
Securities).

Maturity Policies. The Portfolio must limit its investments to securities with
remaining maturities of 397 days or less and must maintain a dollar-weighted
average maturity of 90 days or less.

III. RISK CONSIDERATIONS
RISKS OF INTERNATIONAL INVESTMENTS

The information contained in these paragraphs is of particular importance to
International Growth Portfolio and Swiss Franc Bond Portfolio; however, Capital
Growth, Growth Shares, Balanced, Real Estate Growth and Growth and Income
Portfolios may also make non-U.S. investments. Pioneer limits the amount of
Capital Growth, Growth Shares and Balanced Portfolio's net assets that may be
invested in non-U.S. securities to 25%. Pioneer limits the amount of Growth and
Income Portfolio's net assets that may be invested in non-U.S. securities to
10%. Pioneer limits the amount of Real Estate Growth Portfolio's net assets that
may be invested in non-U.S. securities to 10%, provided that purchases of
Canadian securities are not subject to this limitation. Investing outside the
U.S. involves different opportunities and different risks from U.S. investments.
Pioneer believes that it may be possible to obtain significant returns from a
portfolio of non-U.S. investments, or a combination of non-U.S. investments and
U.S. investments, and to achieve increased diversification in comparison to a
portfolio invested solely in U.S. securities. By including international
investments in your investment portfolio, you may gain increased diversification
by combining securities from various countries and geographic areas that
offer different investment opportunities and are affected by different economic
trends. At the same time, these opportunities and trends involve risks that may
not be encountered in U.S. investments.

International investing in general may involve greater risks than U.S.
investments. There is generally less publicly available information about
non-U.S. issuers, and there may be less government regulation and supervision
of non-U.S. stock exchanges, brokers and listed companies. There may be
difficulty in enforcing legal rights outside the United States. Non-U.S.
companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
that apply to U.S. companies. Security trading practices abroad may offer less
protection to investors such as the Portfolios. Settlement of transactions in
some non-U.S. markets may be delayed or may be less frequent than in the U.S.,
which could affect the liquidity of a Portfolio's investments. Additionally, in
some foreign countries, there is the possibility of expropriation or
confiscatory taxation, limitations on the removal of securities, property, or
other assets of a Portfolio, political or social instability, or diplomatic
developments which could affect U.S. investments in foreign countries. Pioneer
will take these factors into consideration in managing each Portfolio's
non-U.S. investments.

12
<PAGE>

International Growth Portfolio may invest a portion of its assets in developing
countries, or in countries with new or developing capital markets; for example,
countries in Eastern Europe. The considerations noted above are generally
intensified for these investments. These countries may have relatively unstable
governments, economies based on only a few industries, and securities markets
that trade a small number of securities. Securities of issuers located in these
countries tend to have volatile prices and may offer significant potential for
loss as well as gain.

FOREIGN CURRENCIES. The value of Swiss Franc Bond Portfolio's and International
Growth Portfolio's non-U.S. investments, and the value of dividends and interest
earned by these Portfolios, may be significantly affected by changes in currency
exchange rates. Currency exchange rates may also affect Capital Growth, Growth
Shares, Balanced, Real Estate Growth and Growth and Income Portfolios to the
extent that these Portfolios invest in non-U.S. securities. Some foreign
currency values may be volatile, and there is the possibility of governmental
controls on currency exchange or governmental intervention in currency markets,
which could adversely affect the Portfolios. Pioneer may attempt to manage
currency exchange rate risks for the Portfolios (other than Swiss Franc Bond
Portfolio). However, there is no assurance that Pioneer will do so at an
appropriate time or that Pioneer will be able to predict exchange rates
accurately. For example, to the extent that Pioneer increases a Portfolio's
exposure to a foreign currency, and that currency's value subsequently falls,
Pioneer's currency management may result in increased losses to the Portfolio.
Similarly, if Pioneer hedges a Portfolio's exposure to a foreign currency, and
the currency's value rises, the Portfolio will lose the opportunity to
participate in the currency's appreciation.

Because Swiss Franc Bond Portfolio seeks to approximate the performance of the
Swiss franc relative to the U.S. dollar, the Portfolio will be particularly
susceptible to the effects of social, political and economic events that affect
Switzerland and the value of the Swiss franc relative to the U.S. dollar.
Pioneer will not actively manage the currency exchange rate risk associated with
the Portfolio's investments. For information about the Swiss economy and the
Swiss franc, see the Appendix.

CURRENCY MANAGEMENT. The relative performance of foreign currencies can be an
important factor in the performance of Swiss Franc Bond Portfolio, and in the
performance of International Growth Portfolio, each of which invests the
predominant portion of its assets outside the United States. The performance of
Capital Growth, Growth Shares, Balanced, Real Estate Growth and Growth and
Income Portfolios may also be affected by the relative performance of foreign
currencies, but to a lesser extent. Pioneer may manage International Growth,
Capital Growth, Growth Shares, Real Estate Growth, Growth and Income and
Balanced Portfolios' exposure to various currencies to take advantage of
different yield, risk, and return characteristics that different currencies can
provide for U.S. investors.

To manage exposure to currency fluctuations, International Growth, Capital
Growth, Growth Shares, Growth and Income and Balanced Portfolios may enter into
forward foreign currency exchange contracts (agreements to exchange one currency
for another at a future date) and buy and sell options and futures contracts
relating to foreign currencies. The Portfolios will use forward foreign currency
exchange contracts in the normal course of business to lock in an exchange rate
in connection with purchases and sales of securities denominated in foreign
currencies. Other currency management strategies allow the Portfolios to hedge
portfolio securities, to shift investment exposure from one currency to another,
or to attempt to profit from anticipated declines in the value of a foreign
currency relative to the U.S. dollar. Subject to compliance with tax
requirements, there is no overall limitation on the amount of International
Growth Portfolio's assets that may be committed to currency management
strategies. Capital Growth, Growth Shares, Growth and Income and Balanced
Portfolio may engage in currency management strategies only to the extent that
they invest in non-U.S. securities. Because Real Estate Growth Portfolio may
only invest up to 10% of its net assets in non-U.S. securities, it does not
actively seek to manage exposure to currency fluctuations.

Swiss Franc Bond Portfolio may enter into forward foreign currency exchange
contracts to purchase Swiss francs in connection with its investments in
non-Swiss franc securities. The Portfolio may engage in this practice in order
to link an investment in a non-Swiss franc security to the value of the Swiss
franc. The Portfolio's use of this strategy will be subject to compliance with
tax requirements.

RISKS OF MEDIUM AND LOWER RATED DEBT SECURITIES

All the Portfolios except America Income and Money Market Portfolios may invest
in medium rated debt securities which are usually defined as securities rated
"BBB" by S&P or "Baa" by Moody's. Medium rated debt securities have speculative
characteristics and involve greater risk of loss than higher rated debt
securities, and are more sensitive to changes in the issuer's capacity to make
interest payments and repay principal. Medium rated debt securities represent a
somewhat more aggressive approach to income investing than higher rated debt
securities. If the rating of a debt security is reduced below investment grade
(i.e., below "BBB" by S&P or "Baa" by Moody's), Pioneer will consider whatever
action is appropriate, consistent with the Portfolio's investment objective and
policies.

Growth Shares, Real Estate Growth, Growth and Income, and Equity-Income
Portfolios may invest up to 5% of their net assets in lower rated debt
securities. International Growth and Swiss Franc Bond Portfolios may not
purchase lower rated debt securities, but up to 5% of their net assets may be
invested in such securities as a result of credit quality downgrades. Lower
rated debt securities are usually defined as securities rated below "BBB" by S&P
or "Baa" by Moody's. Investments in lower rated debt securities are speculative
and changes in economic conditions or other circumstances are more likely to
lead to a weakened capacity of the issuer to make principal and interest
payments on such securities.

13
<PAGE>

The considerations discussed above for medium and lower rated debt securities
also apply to medium and lower quality, unrated debt instruments of all types.
Unrated debt instruments are not necessarily of lower quality than similar rated
instruments, but they may not be attractive to as many buyers. Each Portfolio
relies more on Pioneer's credit analysis when investing in debt securities that
are unrated.

Please refer to the Statement of Additional Information for a discussion of
Moody's and S&P's ratings.

RISKS ASSOCIATED WITH THE REAL ESTATE INDUSTRY

Although Real Estate Growth Portfolio does not invest directly in real estate,
it does invest in real estate equity securities and will concentrate its
investments in the real estate industry, and therefore, an investment in the
Portfolio may be subject to certain risks associated with the direct ownership
of real estate and with the real estate industry in general. These risks
include, among others: possible declines in the value of real estate; risks
related to general and local economic conditions; possible lack of availability
of mortgage funds; overbuilding; extended vacancies of properties; increases in
competition, property taxes and operating expenses; changes in zoning laws;
costs resulting from the clean-up of, and liability to third parties for damages
resulting from, environmental problems; casualty or condemnation losses;
uninsured damages from floods, earthquakes or other natural disasters;
limitations on and variations in rents; and changes in interest rates.

In addition, if Real Estate Growth Portfolio has rental income or income from
the disposition of real property acquired as a result of a default on securities
the Portfolio owns, the receipt of such income may adversely affect its ability
to retain its tax status as a regulated investment company. See "Distributions
and Taxes" in the Statement of Additional Information. Investments by the
Portfolio in securities of companies providing mortgage servicing will be
subject to the risks associated with refinancings and their impact on servicing
rights.

RISKS ASSOCIATED WITH REAL ESTATE INVESTMENT TRUSTS

Real Estate Growth Portfolio may invest without limitation in shares of REITs.
Capital Growth Portfolio, Growth Shares Portfolio, Growth and Income Portfolio,
Equity-Income Portfolio and Balanced Portfolio may invest up to 5% of its net
assets in shares of REITs. REITs are pooled investment vehicles which invest
primarily in income producing real estate or real estate related loans or
interests. REITs are generally classified as equity REITs, mortgage REITs or a
combination of equity and mortgage REITs. Equity REITs invest the majority of
their assets directly in real property and derive income primarily from the
collection of rents. Equity REITs can also realize capital gains by selling
properties that have appreciated in value. Mortgage REITs invest the majority of
their assets in real estate mortgages and derive income from the collection of
interest payments. REITs are not taxed on income distributed to shareholders
provided they comply with several requirements of the Internal Revenue Code of
1986, as amended (the Code). Each Portfolio will indirectly bear its
proportionate share of any expenses paid by REITs in which it invests in
addition to the expenses paid by the Portfolio.

Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified and
are subject to the risks of financing projects. REITs are subject to heavy cash
flow dependency, default by borrowers, self-liquidation, and the possibilities
of failing to qualify for the exemption from tax for distributed income under
the Code and failing to maintain their exemptions under the 1940 Act. REITs
whose underlying assets include long-term health care properties, such as
nursing, retirement and assisted living homes, may be impacted by federal
regulations concerning the health care industry.

REITs (especially mortgage REITs) are also subject to interest rate risks. When
interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.

Investing in REITs involves risks similar to those associated with investing in
small capitalization companies. REITs may have limited financial resources, may
trade less frequently and in a limited volume and may be subject to more abrupt
or erratic price movements than larger company securities. Historically, small
capitalization stocks, such as REITs, have been more volatile in price than the
larger capitalization stocks included in the S&P 500 Index.

RISKS ASSOCIATED WITH MORTGAGE-BACKED SECURITIES

Real Estate Growth, Balanced and America Income Portfolios may invest in
mortgage-backed securities. Mortgage-backed securities are securities that
directly or indirectly represent participation in, or are collateralized by and
payable from, mortgage loans secured by real property. America Income Portfolio
may invest in mortgage-backed securities issued or guaranteed by the U.S.
government and its agencies and instrumentalities, including CMOs collateralized
by GNMA, Fannie Mae or Freddie Mac certificates. Real Estate Growth Portfolio
may invest in a variety of mortgage-backed securities and Balanced Portfolio may
invest in GNMA Certificates and CMOs. Refer to the APPENDIX for a description of
these securities.

Investing in mortgage-backed securities involves certain unique risks in
addition to those risks associated with investing in the real estate industry in
general. These risks include

14
<PAGE>

the failure of a counter-party to meet its commitments, adverse interest rate
changes and the effects of prepayments on mortgage cash flows. When interest
rates decline, the value of an investment in fixed rate obligations can be
expected to rise. Conversely, when interest rates rise, the value of an
investment in fixed rate obligations can be expected to decline. In contrast, as
interest rates on adjustable rate mortgage loans are reset periodically, yields
on investments in such loans will gradually align themselves to reflect changes
in market interest rates, causing the value of such investments to fluctuate
less dramatically in response to interest rate fluctuations than would
investments in fixed rate obligations.

The yield characteristics of mortgage-backed securities, such as those in which
the Portfolio may invest, differ from those of traditional fixed income
securities. The major differences typically include more frequent interest and
principal payments (usually monthly), the adjustability of interest rates, and
the possibility that prepayments of principal may be made substantially earlier
than their final distribution dates.

Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Under certain interest
rate and prepayment rate scenarios, Real Estate Growth Portfolio, Balanced
Portfolio and America Income Portfolio may fail to recoup fully their
investments in mortgage-backed securities notwithstanding any direct or indirect
governmental or agency guarantee. When a Portfolio reinvests amounts
representing payments and unscheduled prepayments of principal, it may receive a
rate of interest that is lower than the rate on existing adjustable rate
mortgage pass-through securities. Thus, mortgage-backed securities, and
adjustable rate mortgage pass-through securities in particular, may be less
effective than other types of U.S. Government Securities as a means of "locking
in" interest rates.

IV. THE FUND AND THE PIONEER ORGANIZATION

The Fund is an open-end, management investment company organized as a Delaware
business trust on September 16, 1994. The Fund has its own Board of Trustees,
which supervises its activities and reviews contractual arrangements with
companies that provide each Portfolio with services. The Fund is not required to
hold annual shareholder meetings, although special meetings may be called for a
specific Portfolio, or the Fund as a whole, for purposes such as electing or
removing Trustees, changing fundamental policies or approving a management
contract. An insurance company issuing a Variable Contract that participates in
the Fund will vote shares of the Portfolios held by the insurance company's
separate accounts as required by law. In accordance with current law and
interpretations thereof, participating insurance companies are required to
request voting instructions from policyowners and must vote shares of the
Portfolios in proportion to the voting instructions received. For a further
discussion of voting rights, please refer to your insurance company's separate
account prospectus.

The Pioneer Group, Inc. (PGI), established in 1928, is one of America's oldest
investment managers and has its principal business address at 60 State Street,
Boston, Massachusetts 02109. PGI is the parent company of Pioneer and a number
of different companies located in the U.S. and several other countries. These
companies provide a variety of financial services and products. Each Portfolio
employs various PGI companies to perform certain activities required for its
operation. In an effort to avoid conflicts of interest with the Fund, the Fund
and Pioneer have adopted a Code of Ethics that is designed to maintain a high
standard of personal conduct by directing that all personnel defer to the
interests of the Fund and its shareholders in making personal securities
transactions.

John F. Cogan, Jr., Chairman and President of the Fund, President and a Director
of PGI and Chairman and a Director of Pioneer, owned approximately 14% of the
outstanding capital stock of PGI as of the date of this Prospectus.

THE MANAGER

Pioneer, the investment adviser to each Portfolio, provides investment research
and portfolio management services to a number of other mutual funds and certain
institutional clients. It maintains a staff of experienced investment personnel
and a full complement of related support facilities. As of December 31, 1997,
Pioneer advised mutual funds with a total value of over $19 billion, which
includes more than 1,000,000 U.S. shareholder accounts, and other institutional
accounts. Pioneer Funds Distributor, Inc. (PFD), with its principal business
address at 60 State Street, Boston, Massachusetts 02109, distributes shares of
the Portfolios and shares of Pioneer's retail mutual funds.

Mr. David Tripple, President and Chief Investment Officer of Pioneer and
Executive Vice President of the Fund, has general responsibility for Pioneer's
investment operations. Mr. Tripple chairs special committees which review the
research and portfolio operations for the Portfolios. Each committee is
responsible for focusing on select investment categories including domestic
equities, international equities, domestic fixed-income and international
fixed-income. Mr. Tripple joined Pioneer in 1974. Ms. Theresa Hamacher, Senior
Vice President of PMC, oversees U.S. equity research and portfolio management.

The Portfolio Managers responsible for day-to-day management of the Portfolios
are:

INTERNATIONAL GROWTH PORTFOLIO: Norman Kurland, Senior Vice President of
Pioneer. Mr. Kurland joined Pioneer in 1990 after working with a variety of
investment and industrial concerns.

CAPITAL GROWTH PORTFOLIO: J. Rodman Wright, Vice President of Pioneer. Mr.
Wright joined Pioneer in 1994 and has ten years investment experience.

15
<PAGE>

GROWTH SHARES PORTFOLIO: Jeffrey B. Poppenhagen, Vice President of Pioneer. Mr.
Poppenhagen joined Pioneer in 1996 and has ten years of investment experience.

REAL ESTATE GROWTH PORTFOLIO: Robert Benson, Senior Vice President of Pioneer,
who joined Pioneer in 1974.

GROWTH AND INCOME PORTFOLIO: John A. Carey, Vice President of Pioneer. Mr.
Carey joined Pioneer in 1979.

EQUITY-INCOME PORTFOLIO: John A. Carey, Vice President of Pioneer. Mr. Carey
joined Pioneer in 1979.

AMERICA INCOME PORTFOLIO: Sherman B. Russ, Senior Vice President of Pioneer.
Mr. Russ joined Pioneer in 1983.

bALANCED PORTFOLIO: William C. Field, Vice President of Pioneer. Mr. Field
joined Pioneer in 1991.

SWISS FRANC BOND PORTFOLIO: Salvatore P. Pramas, Vice President of Pioneer. Mr.
Pramas joined Pioneer in 1994 after working for a number of investment
management firms.

THE REAL ESTATE GROWTH PORTFOLIO SUBADVISER. Boston Financial Securities, Inc.
(BFS), the investment subadviser to Real Estate Growth Portfolio since May 1,
1996, is an affiliate of The Boston Financial Group Limited Partnership, a
Massachusetts limited partnership ("Boston Financial"), which together with a
predecessor business has extensive experience and expertise in placing,
evaluating and providing advice on a variety of real estate related investments
since 1969 for individuals, institutions and real estate professionals. Several
other affiliates of BFS also provide a variety of financial, consulting and
management services to real estate investors and developers. Boston Financial
oversees investment in over $4.5 billion of properties in 49 states. The company
serves over 30,000 investors with equity contributions in excess of $2 billion
in real estate investments.

In its capacity as subadviser to the Portfolio, BFS (i) identifies and analyzes
real estate industry companies, including real estate properties and other
permissible investments for the Real Estate Growth Portfolio, (ii) analyzes
market conditions affecting the real estate industry generally and specific
geographical and securities markets in which the Portfolio may invest or is
invested, (iii) continuously reviews and analyzes the investments in the Real
Estate Growth Portfolio's portfolio and (iv) furnishes advisory reports based on
such analysis to Pioneer.

Mr. Fred N. Pratt, Jr. has the ultimate responsibility for overseeing the
provision of subadvisory services to the Real Estate Growth Portfolio. Mr.
Pratt is President and Chief Executive officer of Boston Financial, a Director
of BFS and a Trustee of the Real Estate Growth Portfolio. Mr. Pratt has worked
in the real estate industry since 1969. Mr. Mark Howard-Johnson, a Vice
President of BFS, is primarily responsible for the day-to-day provision of
subadvisory services to the Real Estate Growth Portfolio since September 30,
1996. Mr. Howard-Johnson has worked as a real estate analyst since 1994. The
executive office of BFS is located at 101 Arch Street, Boston, Massachusetts
02110.

Each Portfolio, other than Swiss Franc Bond Portfolio, has an investment
objective and policies similar to those of an existing Pioneer retail mutual
fund. International Growth Portfolio is most similar to Pioneer International
Growth Fund, Capital Growth Portfolio to Pioneer Capital Growth Fund, Growth
Shares Portfolio to Pioneer Growth Shares, Real Estate Growth Portfolio to
Pioneer Real Estate Shares, Growth and Income Portfolio to Pioneer Fund,
Equity-Income Portfolio to Pioneer Equity-Income Fund, Balanced Portfolio to
Pioneer Balanced Fund, America Income Portfolio to Pioneer America Income Trust
and Money Market Portfolio to Pioneer Cash Reserves Fund. Performance of these
Portfolios is not expected to be the same as the performance of the
corresponding retail mutual fund due in part to dissimilarities in their
investments. Various insurance costs will also affect the performance of
investments in the Portfolios, as measured for the Accumulation Units of your
Variable Contract.

Certain information technology experts currently predict the possibility of a
widespread failure of computer systems and certain other equipment which will be
triggered on or after certain dates -- primarily January 1, 2000 -- due to a
systemic inability to process date-related information. This scenario, commonly
known as the "Year 2000 Problem," could have an adverse impact on individuals
and businesses including the Fund and other mutual funds and financial
organizations. PMC and its affiliates are taking steps believed to be adequate
to address the Year 2000 Problem with respect to the systems and equipment
controlled by the Fund's investment adviser, broker-dealer and transfer agent.
In addition, other entities providing services to the Fund and its shareholders
are being asked to provide assurances that they have undertaken similar measures
with respect to their systems and equipment. Although PMC is not expecting any
adverse impact to it or its clients from the Year 2000 Problem, it cannot
provide complete assurances that its efforts or the efforts of its key vendors
will be successful.

PORTFOLIO TRANSACTIONS

Orders for each Portfolio's securities transactions are placed by Pioneer, which
strives to obtain the best price and execution for each transaction. In
circumstances where two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides investment research or brokerage services or sells shares
of a Portfolio, any Pioneer mutual fund or other funds for which Pioneer or any
other affiliate or subsidiary serves as investment adviser or manager. See the
Statement of Additional Information for a further description of Pioneer's
brokerage allocation practices.

16
<PAGE>

investment decision, and usually without reference to the length of time a
security has been held. Accordingly, portfolio turnover rate is not considered a
limiting factor in the execution of investment decisions.

The frequency of portfolio transactions -- a Portfolio's turnover rate -- will
vary from year to year depending on market conditions. Portfolio turnover rates
are not generally expected to exceed 100% with the exception of International
Growth Portfolio's turnover rate, which may be as high as 300%. See "Financial
Highlights" for actual turnover rates. Because a higher turnover rate increases
transaction costs and may have certain tax consequences, Pioneer carefully
weighs the anticipated benefits of short-term investment against these factors.

V. FUND MANAGEMENT FEES AND OTHER EXPENSES

Each Portfolio pays a management fee to Pioneer for managing its investments and
business affairs. Each Portfolio's management fee is computed daily and paid
monthly at the following annual rate:

<TABLE>
<CAPTION>
MANAGEMENT FEE AS A PERCENTAGE
OF PORTFOLIO'S AVERAGE DAILY
PORTFOLIO NET ASSETS
<S> <C>
International Growth Portfolio 1.00%
Capital Growth Portfolio 0.65%
Growth Shares Portfolio 0.70%
Real Estate Growth Portfolio 1.00%
Growth and Income Portfolio 0.65%
Equity-Income Portfolio 0.65%
Balanced Portfolio 0.65%
Swiss Franc Bond Portfolio 0.65%
America Income Portfolio 0.55%
Money Market Portfolio 0.50%
</TABLE>

See "Expense Information" in the Prospectus and "Investment Adviser" in the
Statement of Additional Information.

Pioneer has agreed not to impose all or a portion of its management fee or to
make other arrangements to reduce Portfolio expenses to a specified percentage
of average daily net assets, as indicated below. Such agreements or arrangements
may be terminated by Pioneer at any time without notice.

<TABLE>
<CAPTION>
MAXIMUM PORTFOLIO
EXPENSES AS A
PERCENTAGE OF PORTFOLIO'S
PORTFOLIO AVERAGE DAILY NET ASSETS
<S> <C>
International Growth Portfolio 1.50%
Growth Shares Portfolio 1.25%
Real Estate Growth Portfolio 1.25%
Growth and Income Portfolio 1.25%
Swiss Franc Bond Portfolio 1.25%
America Income Portfolio 1.25%
Money Market Portfolio 1.00%
</TABLE>

Under the terms of its management contract with the Fund, Pioneer assists in the
management of each Portfolio and is authorized in its discretion to buy and sell
securities for the account of each Portfolio. Pioneer pays all the expenses,
including executive salaries and the rental of certain office space, related to
its services for each Portfolio, with the exception of the following which are
paid by each Portfolio: (a) charges and expenses for fund accounting, pricing
and appraisal services and related overhead, including, to the extent such
services are performed by personnel of Pioneer or its affiliates, office space
and facilities and personnel compensation, training and benefits; (b) the
charges and expenses of auditors; (c) the charges and expenses of any custodian,
transfer agent, plan agent, dividend disbursing agent and registrar appointed by
the Fund with respect to the Portfolio; (d) issue and transfer taxes chargeable
to the Portfolio in connection with securities transactions to which the
Portfolio is a party; (e) insurance premiums, interest charges, dues and fees
for membership in trade associations, and all taxes and corporate fees payable
by the Portfolio to federal, state or other governmental agencies; (f) fees and
expenses involved in registering and maintaining registrations of the Fund
and/or its shares with the SEC, individual states or blue sky securities
agencies, territories and foreign jurisdictions, including the preparation of
Prospectuses and Statements of Additional Information for filing with regulatory
agencies; (g) all expenses of shareholders' and Trustees' meetings and of
preparing, printing and distributing prospectuses, notices, proxy statements and
all reports to shareholders and to governmental agencies; (h) charges and
expenses of legal counsel to the Fund and the Trustees; (i) compensation of
those Trustees of the Trust who are not affiliated with or interested persons of
Pioneer, the Fund (other than as Trustees), PGI or PFD; (j) the cost of
preparing and printing share certificates; and (k) interest on borrowed money,
if any. In addition to the expenses described above, each Portfolio shall pay
all brokers' and underwriting commissions chargeable to the Portfolio in
connection with securities transactions to which the Portfolio is a party.

SUBADVISORY FEE FOR REAL ESTATE GROWTH PORTFOLIO. As compensation for its
subadvisory services, Pioneer pays BFS a subadvisory fee equal to 0.30% per
annum of the Real Estate Growth Portfolio's average daily net assets. The
subadvisory fee payable by Pioneer to BFS could be reduced proportionally to the
extent that the management fee paid by the Real Estate Growth Portfolio to
Pioneer is reduced under Pioneer's voluntary expense limitation agreement or,
after written notice to BFS, to the extent that Pioneer elects to utilize a
portion of the management fees paid to Pioneer by the Real Estate Growth
Portfolio to make payments to third parties.

VI. PERFORMANCE

Each Portfolio's performance may be quoted in advertising in terms of yield and
total return if accompanied by performance for your insurance company's separate
account. Performance is based on historical results and is not intended to
indicate future performance. For additional performance information, contact
your insurance company for a free annual report.

For America Income Portfolio, Swiss Franc Bond Portfolio, Growth and Income
Portfolio, Equity-Income Portfolio and Bal-

17
<PAGE>

anced Portfolio, yield is a way of showing the rate of income the Portfolio
earns on its investments as a percentage of the Portfolio's share price. To
calculate yield, a Portfolio takes the dividend and interest income, if any, it
earned from its portfolio of investments for a specified 30-day period (net of
expenses), divides it by the number of its shares entitled to receive dividends
and expresses the result as an annualized percentage rate based on the
Portfolio's share price at the end of the 30-day period.

Money Market Portfolio's yield refers to the income generated by an investment
in the Portfolio over a specified seven-day period, expressed as an annual
percentage rate. The Portfolio's effective yield is calculated similarly, but
assumes that the income earned from investments is reinvested in shares of the
Portfolio. Money Market Portfolio's effective yield will tend to be slightly
higher than its yield because of the compounding effect of this reinvestment.

Yields are calculated according to accounting methods that are standardized for
all stock and bond funds. Because yield accounting methods differ from the
methods used for other accounting purposes, a Portfolio's yield may not equal
its distribution rate, the income paid to an account or the income reported on
the Portfolio's financial statements.

A Portfolio's total return is based on the overall dollar or percentage change
in value of a hypothetical investment in the Portfolio, including changes in
share price (except for Money Market Portfolio) and assuming each Portfolio's
dividends and capital gain distributions are reinvested at net asset value. A
cumulative total return reflects a Portfolio's performance over a stated period
of time. An average annual total return reflects the hypothetical annually
compounded return that would have produced the same cumulative total return if a
Portfolio's performance had been constant over the entire period. Because
average annual returns tend to smooth out variations in a Portfolio's actual
return, you should recognize that they are not the same as actual year-by-year
results. To illustrate the components of overall performance, a Portfolio may
separate its cumulative and average annual returns into income results and
capital gain or loss.

YIELDS AND TOTAL RETURNS QUOTED FOR THE PORTFOLIOS INCLUDE THE EFFECT OF
DEDUCTING EACH PORTFOLIO'S EXPENSES, BUT MAY NOT INCLUDE CHARGES AND EXPENSES
ATTRIBUTABLE TO ANY PARTICULAR INSURANCE PRODUCT. SINCE SHARES OF THE PORTFOLIOS
MAY BE PURCHASED PRIMARILY THROUGH A VARIABLE CONTRACT, PURCHASERS OF SUCH
CONTRACTS SHOULD CAREFULLY REVIEW THE PROSPECTUS OF THE SELECTED INSURANCE
PRODUCT FOR INFORMATION ON RELEVANT CHARGES AND EXPENSES. Excluding these
charges from quotations of each Portfolio's performance has the effect of
increasing the performance quoted. You should bear in mind the effect of these
charges when comparing a Portfolio's performance to that of other mutual funds.

VII. DISTRIBUTIONS AND TAXES

For a discussion of the tax status of a Variable Contract, including the tax
consequences of withdrawals or other payments, refer to the prospectus of the
Variable Contract insurance company's separate account. It is suggested you keep
all statements you receive to assist in your personal record keeping. It is
expected that shares of the Portfolios will be held primarily by life insurance
company separate accounts that fund Variable Contracts. A Portfolio's dividends
and capital gain distributions are generally treated as ordinary income and
long-term capital gain, respectively, under the Code. Insurance companies should
consult their own tax advisers regarding the tax treatment of dividends or
capital gain distributions they receive from any Portfolio.

Each Portfolio is treated as a separate entity for federal income tax purposes
and has elected to be treated, has qualified and intends to qualify each year as
a regulated investment company under Subchapter M of the Code. To qualify as
such, each Portfolio must satisfy certain requirements relating to the sources
of its income, diversification of its assets and distribution of its income to
shareholders. As a regulated investment company, each Portfolio will not be
subject to federal income tax on any net investment income and net realized
capital gains that are distributed to its shareholders as required under the
Code.

Each Portfolio intends to pay out all of its net investment income and net
realized capital gains for each year. International Growth, Capital Growth,
Growth Shares and Swiss Franc Bond Portfolios distribute their dividends, if
any, each year. Real Estate Growth, Growth and Income, Equity-Income and
Balanced Portfolios distribute their dividends, if any, quarterly. Dividends
from America Income and Money Market Portfolios are declared daily and paid
monthly. Normally, net realized capital gains, if any, are distributed each year
for the Portfolios. Dividends from income may also be paid at such other times
as may be necessary for the Portfolios to avoid federal income or excise tax.
Such income and capital gains are automatically reinvested in additional shares
of the Portfolios.

All Portfolios make dividend and capital gain distributions on a per-share
basis. After every distribution from each Portfolio, except Money Market
Portfolio and America Income Portfolio's dividend distributions from income, the
Portfolio's share price declines by the amount of the distribution as a result
of the distribution. Since dividends and capital gain distributions are
reinvested, the total value of an account will not be affected by such
distributions because, although the shares will have a lower price, there will
be correspondingly more of them.

In addition to the above, each Portfolio also follows certain portfolio
diversification requirements imposed by the IRS on separate accounts of
insurance companies relating to the tax-deferred status of Variable Contracts.
These requirements, which are in addition to the diversification requirements
imposed on the Portfolios by the 1940 Act (only Real Estate Growth Portfolio is
exempt from the 1940 Act's diversification requirements) and Subchapter M of the
Code generally, subject to a safe harbor or other available exception, place
certain percentage limitations on the assets of a Portfolio that may be
represented by any one, two, three or four investments. More specific
information on these diversifica-

18
<PAGE>

tion requirements is contained in the insurance company's separate account
prospectus and in the Fund's Statement of Additional Information.

VIII. SHAREHOLDER INFORMATION
OPENING AN ACCOUNT

SINCE INDIVIDUAL INVESTORS MAY NOT PURCHASE PORTFOLIO SHARES DIRECTLY, THEY
SHOULD READ THE PROSPECTUS OF THE INSURANCE COMPANY'S SEPARATE ACCOUNT TO OBTAIN
INSTRUCTIONS FOR PURCHASING A VARIABLE ANNUITY OR VARIABLE LIFE INSURANCE
CONTRACT AND INFORMATION ON THE ALLOCATION OF RETIREMENT PLAN PURCHASE PAYMENTS
AMONG THE PORTFOLIOS.

SHARE PRICE

The term "net asset value" or NAV per share refers to the worth of one share. A
Portfolio's NAV per share is computed by adding the value of the Portfolio's
investments, cash and other assets, deducting liabilities and dividing the
result by the number of shares outstanding. Each Portfolio is open for business
each day the New York Stock Exchange (the NYSE) is open. The price of one share
of a Portfolio is its NAV which is normally calculated daily as of the close of
regular trading on the NYSE (normally 4:00 p.m., Eastern time).

The investments of each Portfolio (other than Money Market Portfolio) are valued
at the last sale price on the principal exchange or market where they are
traded. Securities which have not traded on the date of valuation or securities
for which sales prices are not generally reported are valued at the mean between
the current bid and asked prices. Securities quoted in foreign currencies are
converted to U.S. dollars utilizing foreign exchange rates employed by the
Portfolios' independent pricing services. Generally, trading in foreign
securities is substantially completed each day at various times prior to the
close of the NYSE. The values of such securities used in computing the NAV of
the Portfolios' shares are determined as of such times. Foreign currency
exchange rates are also generally determined prior to the close of the NYSE.
Occasionally, events which affect the values of such securities and such
exchange rates may occur between the times at which they are determined and the
close of the NYSE and will therefore not be reflected in the computation of a
Portfolio's NAV. If events materially affecting the value of such securities
occur during such period, then these securities are valued at their fair value
as determined in good faith by the Trustees.

Money Market Portfolio's investments are valued on the basis of amortized cost.
This means of valuation assumes a steady rate of amortization of any premium and
discount from the date of purchase until maturity. All assets of the Portfolios
for which there is no other readily available valuation method are valued at
their fair value as determined in good faith by the trustees.

INVESTMENTS IN SHARES OF THE PORTFOLIOS

Each Portfolio may sell its shares directly to separate accounts established and
maintained by insurance companies for the purpose of funding Variable Contracts
and to certain qualified pension and retirement plans (Qualified Plans). Shares
offered to Qualified Plans will be offered by a separate prospectus. Shares of
the Portfolios are sold at NAV. Variable Contracts may or may not make
investments in all the Portfolios described in this Prospectus. Investments in
each Portfolio are expressed in terms of the full and fractional shares of the
Portfolio purchased. Investments in a Portfolio are credited to an insurance
company's separate account immediately upon acceptance of the investment by the
Portfolio. Investments will be processed at the next NAV calculated after an
order is received and accepted by a Portfolio. The offering of shares of any
Portfolio may be suspended for a period of time and each Portfolio reserves the
right to reject any specific purchase order. Purchase orders may be refused if,
in Pioneer's opinion, they are of a size that would disrupt the management of a
Portfolio.

The interests of Variable Contracts and Qualified Plans investing in the Fund
could conflict due to differences of tax treatment and other considerations. The
Fund currently does not foresee any disadvantages to investors arising out of
the fact that each Portfolio may offer its shares to insurance company separate
accounts that serve as the investment medium for their Variable Contracts or
that each Portfolio may offer its shares to Qualified Plans. Nevertheless, the
Fund's Board of Trustees intends to monitor events in order to identify any
material irreconcilable conflicts which may possibly arise, and to determine
what action, if any, should be taken in response to such conflicts. If such a
conflict were to occur, one or more insurance companies' separate accounts or
Qualified Plans might be required to withdraw their investments in one or more
Portfolios and shares of another Portfolio may be substituted. This might force
a Portfolio to sell securities at disadvantageous prices. In addition, the Board
of Trustees may refuse to sell shares of any Portfolio to any separate account
or Qualified Plan or may suspend or terminate the offering of shares of any
Portfolio if such action is required by law or regulatory authority or is in the
best interests of the shareholders of the Portfolio.

REDEMPTIONS

Shares of a Portfolio may be redeemed on any business day. Redemptions are
effected at the per share NAV next determined after receipt and in good order as
described in the prospectus of the insurance company's separate account of the
redemption request by a Portfolio. Redemption proceeds will normally be
forwarded by bank wire to the redeeming insurance company on the next business
day after receipt of the redemption instructions by a Portfolio but in no event
later than 7 days following receipt of instructions. Each Portfolio may suspend
redemptions or postpone payment dates during any period in which any of the
following conditions exists: the NYSE is closed or trading on the NYSE is
restricted; an emergency exists as a result of which disposal by the Portfolio
of securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Portfolio to fairly determine the value of its net assets;
or the SEC, by order, so permits.

19
<PAGE>

Please refer to the prospectus of your insurance company's separate account for
information on how to redeem from each Portfolio.

IX. APPENDIX

The following paragraphs provide a brief description of certain securities in
which the Portfolios may invest and certain investment practices in which they
may engage. Unless stated otherwise, each security and investment practice
listed below may be used by each Portfolio. No Portfolio is limited by this
discussion, however, and each Portfolio may purchase other types of securities
and enter into other types of transactions if they are consistent with its
investment objective and policies.

SHORT-TERM INVESTMENTS. As described in "Investment Objectives and Policies,"
each Portfolio (other than Money Market Portfolio) may invest in short-term
investments consisting of: corporate commercial paper and other short-term
commercial obligations, in each case rated or issued by companies with similar
securities outstanding that are rated Prime-1, Aa or better by Moody's or A-1,
AA or better by S&P; obligations (including certificates of deposit, time
deposits, demand deposits and bankers' acceptances) of banks with securities
outstanding that are rated Prime-1, Aa or better by Moody's, or A-1, AA or
better by S&P; obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities with remaining maturities not exceeding 18 months;
and repurchase agreements. Normally, Swiss Franc Bond Portfolio may invest in
similar short-term investments that are denominated in Swiss francs or other
non-U.S. currencies, but may invest in U.S. dollar-denominated short-term
securities for certain purposes, including temporary defensive purposes. Money
Market Portfolio's short-term investments are subject to certain additional
restrictions. See "Investment Objectives and Policies."

Bankers' Acceptances are obligations of a bank to pay a draft which has been
drawn on it by a customer. These obligations are backed by large banks and
usually backed by goods in international trade.

Certificates of Deposit represent a commercial bank's obligations to repay
funds deposited with it, earning specified rates of interest over given
periods.

Commercial Paper is a short-term unsecured promissory note, including variable
amount master demand notes, issued by banks, broker-dealers, corporations or
other entities for purposes such as financing their current operations.

REPURCHASE AGREEMENTS AND LENDING OF SECURITIES. As described in "Investment
Objectives and Policies," each Portfolio may enter into repurchase agreements.
In a repurchase agreement, a Portfolio buys a security at one price and
simultaneously agrees to sell it back to the seller at a higher price, generally
for a period not exceeding seven days and fully collateralized with investment
grade debt securities with a market value of not less than 100% of the
obligation, valued daily. Each Portfolio other than America Income and Money
Market Portfolios may lend securities to broker-dealers and institutional
investors, provided that the value of securities loaned by a Portfolio may not
exceed 331/3% of its total assets. In the event of the bankruptcy of the other
party to a repurchase agreement or a securities loan, a Portfolio could
experience delays in recovering its cash or the securities it lent. To the
extent that, in the meantime, the value of the securities purchased had
decreased, or the value of the securities lent had increased, the Portfolio
could experience a loss. In all cases, Pioneer must find the creditworthiness of
the other party to the transaction satisfactory.

RESTRICTED SECURITIES. Each Portfolio (other than America Income and Money
Market Portfolios) may invest up to 5% of its net assets in "restricted
securities," (i.e., securities that would be required to be registered prior to
distribution to the public), excluding restricted securities eligible for resale
to certain institutional investors pursuant to Rule 144A under the Securities
Act of 1933 and, for Portfolios that allow non-U.S. investments, foreign
securities which are offered or sold outside the United States. In no instance,
however, may more than 15% of a Portfolio's net assets be invested in restricted
securities, including securities eligible for resale under Rule 144A. It is not
possible to predict with assurance exactly how the market for such restricted
securities will develop and investments in restricted securities will be
carefully monitored by Pioneer and by the Fund's Trustees.

ILLIQUID INVESTMENTS. Each Portfolio may invest up to 15% (except Money Market
Portfolio which is limited to 10%) of its net assets in illiquid investments
which includes securities that are not readily marketable and repurchase
agreements maturing in more than 7 days. The Fund's Trustees have adopted
guidelines and delegated to Pioneer the daily function of determining and
monitoring the liquidity of restricted securities. The Trustees, however, retain
sufficient oversight and are ultimately responsible for the determination. Under
the supervision of the Board of Trustees, Pioneer determines the liquidity of
each Portfolio's investments. The absence of a trading market can make it
difficult to ascertain a market value for illiquid investments. Disposing of
illiquid investments may involve time-consuming negotiation and legal expenses,
and it may be difficult or impossible for a Portfolio to sell them promptly at
an acceptable price.

FORWARD CURRENCY EXCHANGE CONTRACTS. International Growth, Swiss Franc Bond,
Capital Growth, Growth Shares, Real Estate Growth, Growth and Income and
Balanced Portfolios each has the ability to hold a portion of its assets in
non-U.S. currencies and purchase or sell forward currency exchange contracts to
facilitate settlement of non-U.S. securities transactions or to protect against
changes in currency exchange rates. A Portfolio might sell a non-U.S. currency
on either a spot (i.e., cash) or forward basis to hedge against an anticipated
decline in the U.S. dollar value of securities that it owns or securities that
it intends to sell or has contracted to sell or to preserve the U.S. dollar
value of dividends, interest or other amounts it expects to receive. Although
this strategy

20
<PAGE>

could minimize the risk of loss due to a decline in the value of the hedged
foreign currency, it could also limit any potential gain which might result from
an increase in the value of the currency. Alternatively, a Portfolio might
purchase a non-U.S. currency or enter into a forward purchase contract for the
non-U.S. currency to preserve the U.S. dollar price of securities it intends to
purchase or has contracted to purchase. A Portfolio may also engage in
cross-hedging by using forward contracts in one currency to hedge against
fluctuations in the value of securities denominated in a different currency.

Swiss Franc Bond Portfolio may also purchase and sell forward currency exchange
contracts for Swiss francs in order to link the value of an investment in a
non-Swiss franc security to the value of the Swiss franc. If the Portfolio
enters into a forward contract to buy foreign currency, the Portfolio will be
required to place cash or high grade liquid securities in a segregated account
of the Portfolio maintained by the Portfolio's custodian in an amount equal to
the value of the Fund's total assets committed to the consummation of the
forward contract. See "Risk Considerations--Currency Management."

MORTGAGE-BACKED SECURITIES. Real Estate Growth Portfolio may invest up to 25% of
its total assets in mortgage pass-through certificates and multiple-class
pass-through securities, such as guaranteed mortgage pass-through securities,
real estate mortgage investment conduit (REMIC) pass-through certificates, CMOs
and stripped mortgage-backed securities (SMBS) and other types of
mortgage-backed securities that may be available in the future. America Income
Portfolio may invest in mortgage-backed securities that are issued or guaranteed
by the U.S. Government, its agencies or instrumentalities, and in CMOs. Balanced
Portfolio may invest in GNMA Certificates, which are a type of mortgage
pass-through security, and in CMOs.

Mortgage-backed securities are issued by government and non-government entities
such as banks, mortgage lenders or other financial institutions. A
mortgage-backed security may be an obligation of the issuer backed by a mortgage
or pool of mortgages or a direct interest in an underlying pool of mortgages.
Some mortgage-backed securities, such as CMOs, make payments of both principal
and interest at a variety of intervals; others make semiannual interest payments
at a predetermined rate and repay principal at maturity (like a typical bond).
Mortgage-backed securities are based on different types of mortgages including
those on commercial real estate or residential properties. Other types of
mortgage-backed securities will likely be developed in the future, and a
Portfolio may invest in them if Pioneer determines they are consistent with its
investment objective and policies. Real Estate Growth, Balanced and America
Income Portfolios will not invest in the lowest tranche (described below) of
CMOs or REMIC certificates.

The value of mortgage-backed securities may change due to shifts in the market's
perception of issuers. In addition, regulatory or tax changes may adversely
affect the mortgage securities market as a whole. Non-government mortgage-backed
securities may offer higher yields than those issued by government entities, but
also may be subject to greater price changes than government issues.
Mortgage-backed securities are subject to prepayment risk. Prepayment, which
occurs when unscheduled or early payments are made on the underlying mortgages,
may shorten the effective maturities of these securities and may lower their
total returns.

GUARANTEED MORTGAGE PASS-THROUGH SECURITIES may be purchased by Real Estate
Growth, Balanced and America Income Portfolios. These securities represent
participation interests in pools of residential mortgage loans and are
issued by U.S. Governmental or private lenders and guaranteed by the U.S.
Government or one of its agencies or instrumentalities, including but not
limited to the Government National Mortgage Association (GNMA), the Federal
National Mortgage Association (Fannie Mae) and the Federal Home Loan
Mortgage Corporation (Freddie Mac). Ginnie Mae certificates are guaranteed
by the full faith and credit of the U.S. government for timely payment of
principal and interest on the certificates. Fannie Mae certificates are
guaranteed by Fannie Mae, a federally chartered and privately-owned
corporation for full and timely payment of principal and interest on the
certificates. Freddie Mac certificates are guaranteed by Freddie Mac, a
corporate instrumentality of the U.S. government, for timely payment of
interest and the ultimate collection of all principal of the related
mortgage loans.

MULTIPLE-CLASS PASS-THROUGH SECURITIES AND COLLATERALIZED MORTGAGE OBLIGATIONS.
Real Estate Growth Portfolio may also invest in CMOs and REMIC pass-through
or participation certificates, which may be issued by, among others, U.S.
government agencies and instrumentalities as well as private lenders.
Balanced Portfolio's investments in mortgage-backed securities may include
CMOs. America Income Portfolio may invest in CMOs collateralized by GNMA,
Fannie Mae or Freddie Mac certificates. CMOs and REMIC certificates are
issued in multiple classes and the principal of and interest on the
underlying mortgage assets may be allocated among the several classes of
CMOs or REMIC certificates in various ways. Each class of CMOs or REMIC
certificates, often referred to as a "tranche," is issued at a specific
adjustable or fixed interest rate and must be fully retired no later than
its final distribution date. Generally, interest is paid or accrues on all
classes of CMOs or REMIC certificates on a monthly basis.

Typically, CMOs are collateralized by GNMA, Fannie Mae or Freddie Mac
certificates but also may be collateralized by other mortgage assets such as
whole loans or private mortgage pass-through securities. Debt service on
CMOs is provided from payments of principal and interest on collateral of
mortgaged assets and any reinvestment income thereon.

REAL ESTATE MORTGAGE INTEREST CONDUIT interests may be purchased by Real Estate
Growth Portfolio. A REMIC is a CMO that qualifies for special tax treatment
under the Code and invests in certain mortgages primarily secured by
interests in real property and other permitted investments.

21
<PAGE>

Investors may purchase "regular" and "residual" interest shares of beneficial
interest in REMIC trusts although the Portfolio does not intend to invest in
residual interests.

STRIPPED MORTGAGE-BACKED SECURITIES are currently intended for use only by Real
Estate Growth Portfolio. Such securities are created when a U.S. government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments
from the same underlying security.

The prices of SMBS may be particularly affected by changes in interest rates.
As interest rates fall, prepayment rates tend to increase, which tends to
reduce prices of IOs and increase prices of POs. Rising interest rates can
have the opposite effect.

Options and Futures Contracts provide a way for International Growth, Capital
Growth, Growth Shares, Real Estate Growth, Growth and Income and Swiss Franc
Bond Portfolios to manage their exposure to changing interest rates, security
prices, and currency exchange rates. Some options and futures strategies,
including selling futures, buying puts and writing calls, tend to hedge a
Portfolio's investments against price fluctuations. Other strategies, including
buying futures, writing puts and buying calls, tend to increase market exposure.
Options and futures may be combined with each other or with forward contracts in
order to adjust the risk and return characteristics of a Portfolio's overall
strategy. A Portfolio may invest in options and futures based on any type of
security, index or currency, including options and futures traded on non-U.S.
exchanges and options not traded on exchanges.

Subject to compliance with tax and other requirements, Swiss Franc Bond
Portfolio may enter into options and futures contracts in order to gain
investment exposure to the Swiss franc.

OPTIONS AND FUTURES can be volatile investments and involve certain risks. If
Pioneer applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures strategies may lower a Portfolio's return. A
Portfolio could also experience losses if the prices of its options and futures
positions were poorly correlated with its other investments, or if it could not
close out its positions because of an illiquid secondary market.

Depositary Receipts. International Growth Portfolio and, to a lesser extent
Capital Growth, Real Estate Growth and Balanced Portfolios may invest in
securities of non-U.S. issuers in the form of American Depositary Receipts
(ADRs), Global Depositary Receipts (GDRs) and other similar instruments.
Generally, ADRs in registered form are designed for use in U.S. securities
markets, and GDRs and other similar global instruments in bearer form are
designed for use in non-U.S. securities markets. ADRs are denominated in U.S.
dollars and represent an interest in the right to receive securities of non-U.S.
issuers deposited in a U.S. bank or a correspondent bank. ADRs do not eliminate
all the risk inherent in investing in the securities of non-U.S. issuers.
However, by investing in ADRs rather than directly in the stock of non-U.S.
issuers, a Portfolio will avoid currency risks during the settlement period for
either purchases or sales. GDRs are not necessarily denominated in the same
currency as the securities for which they may be exchanged. For purposes of the
Portfolios' investment policies, investments in ADRs, GDRs and similar
instruments will be deemed to be investments in the equity securities into which
they may be converted.

WARRANTS. International Growth, Capital Growth, Real Estate Growth,
Equity-Income and Balanced Portfolios may invest in, and growth shares and
Income and Growth Portfolios may invest no more than 5% of each Portfolio's
total assets in, warrants, which entitle the holder to buy equity securities at
a specific price over a specific period of time. Warrants may be considered more
speculative than certain other types of investments, in that they do not entitle
the holder to dividends or voting rights with respect to the securities which
may be purchased nor do they represent any rights in the assets of the issuing
company. The value of a warrant may be more volatile than the value of the
warrant's underlying securities. Also, the value of the warrant does not
necessarily change with the value of the underlying securities and a warrant
ceases to have value if it is not exercised prior to the expiration date.

WHEN ISSUED SECURITIES. Growth Shares Portfolio may purchase and sell securities
on a "when issued" and "delayed delivery" basis. These transactions are subject
to market fluctuation; the value at the time of delivery may be more or less
than the purchase price. Since the Portfolio will rely on the buyer or seller,
as the case may be, to consummate the transactions, failure by the other party
to complete the transaction may result in the Portfolio missing the opportunity
of obtaining a price or yield considered to be advantageous. No interest accrues
to the Portfolio prior to delivery. When the Portfolio is the buyer in such a
transaction it will maintain, in a segregated account with its custodian, cash,
U.S. government securities, or high-grade, liquid debt obligations having an
aggregate value equal to the amount of such purchase commitments until payment
is made. The Portfolio will make commitments to purchase securities on such
basis only with the intention of actually acquiring these securities, but the
Portfolio may sell such securities prior to the settlement date if such sales
are considered advisable. To the extent the Portfolio engages in "when issued"
and "delayed delivery" transactions, it will do so for the purpose of acquiring
securities for the Portfolio consistent with the Portfolio's investment
objective and policies not for the purpose of investment leverage.

22
<PAGE>

PIONEER VARIABLE CONTRACTS TRUST

PART A

CAPITAL GROWTH AND REAL ESTATE GROWTH PORTFOLIO PROSPECTUS
<PAGE>

PIONEER VARIABLE CONTRACTS TRUST

CAPITAL GROWTH PORTFOLIO
REAL ESTATE GROWTH PORTFOLIO
PROSPECTUS

MAY 1, 1998

TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
PAGE
- ---------------------------------------------------
I. HIGHLIGHTS ....................... 2
II. HOW THE FUND WORKS ............... 5
III. RISK CONSIDERATIONS .............. 6
IV. THE FUND AND THE PIONEER
ORGANIZATION ..................... 8
</TABLE>

<TABLE>
<S> <C> <C>
PAGE
- ---------------------------------------------------
V. FUND MANAGEMENT FEES
AND OTHER EXPENSES ............... 10
VI. PERFORMANCE ...................... 10
VII. DISTRIBUTIONS AND TAXES .......... 10
VIII. SHAREHOLDER INFORMATION .......... 11
IX. APPENDIX ......................... 13
</TABLE>

PIONEER VARIABLE CONTRACTS TRUST (the Fund) is an open-end, management
investment company primarily designed to provide investment vehicles for
variable annuity and variable life insurance contracts (Variable Contracts) of
various insurance companies. The Fund consists of ten Portfolios with different
investment objectives and policies (Portfolio or Portfolios).

The following Portfolios are currently available to you:

CAPITAL GROWTH PORTFOLIO seeks capital appreciation through a diversified
portfolio of securities consisting primarily of common stocks.

PORTFOLIO RETURNS AND SHARE PRICES FLUCTUATE AND THE VALUE OF YOUR ACCOUNT UPON
REDEMPTION MAY BE MORE OR LESS THAN YOUR PURCHASE PRICE. SHARES IN THE
PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY
BANK OR OTHER DEPOSITORY INSTITUTION, ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY AND ARE NOT GUARANTEED BY THE UNITED STATES ("U.S.") GOVERNMENT. THERE IS
NO ASSURANCE THAT A PORTFOLIO WILL ACHIEVE ITS OBJECTIVE.

Investors considering the purchase of shares of a Portfolio should read
this Prospectus before investing. It is designed to provide you with information
and help you decide if the goal of one or more of the Portfolios matches your
own. Retain this document for future reference.

A Statement of Additional Information dated May 1, 1998, as supplemented or
revised from time to time, for the Fund has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. This free Statement
is available upon request from your insurance company. Other information about
the Fund has been filed with SEC and is available through the SEC's Internet
website (http://www.sec.gov).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

<PAGE>

I. HIGHLIGHTS PIONEER VARIABLE CONTRACTS TRUST

Pioneer Variable Contracts Trust (the Fund) is an open-end management investment
company that currently consists of ten distinct Portfolios, two of which are
available to you. Shares of the Portfolios are offered primarily to holders of
insurance company variable annuity and variable life insurance contracts
(Variable Contracts). You may obtain certain tax benefits by purchasing a
Variable Contract (refer to the prospectus of your insurance company's separate
account for a discussion of the tax benefits).

Each Portfolio has its own distinct INVESTMENT OBJECTIVE AND POLICIES. In
striving to meet its objective, each Portfolio will face the challenges of
changing business, economic and market conditions. Each Portfolio offers
different levels of potential return and will experience different levels of
risk.

No single Portfolio constitutes a complete investment plan. Each Portfolio's
share price, yield and total return will fluctuate and an investment in a
Portfolio may be worth more or less than your original cost when shares are
redeemed.

Pioneering Management Corporation (Pioneer) is the investment adviser to each
Portfolio. Each Portfolio pays a fee to its investment adviser for managing the
Portfolio's investments and business affairs. For a discussion of these fees,
please see "Fund Management Fees and Other Expenses."

Each Portfolio complies with various insurance regulations. Please read your
insurance company's separate account prospectus for more specific information
relating to insurance regulations and instructions on how to invest in and
redeem from each Portfolio. For a general discussion of how to buy and sell
Portfolio shares, see "Shareholder Information" in this Prospectus.

CHOOSING A PORTFOLIO

Refer to "How the Fund Works" for additional information on each Portfolio's
investment objective and policies.

<TABLE>
<CAPTION>
PORTFOLIO STRATEGIC FOCUS
<S> <C>
CAPITAL Invests for capital appreciation
GROWTH through a diversified portfolio of
securities consisting primarily
of common stocks.

REAL ESTATE Invests for long-term growth
GROWTH of capital primarily through
investments in the securities
of real estate investment trusts
(REITs) and other real estate
industry companies. Current
income is the Portfolio's
secondary investment objective.
</TABLE>

<PAGE>

The following information has been audited by Arthur Andersen LLP, independent
public accountants, in connection with their audit of the Portfolios' financial
statements. Arthur Andersen LLP's report on the Fund's financial statements as
of December 31, 1997 appears in the Portfolios' Annual Report which is
incorporated by reference into the Statement of Additional Information. The
information listed below should be read in conjunction with those financial
statements. The Annual Report includes more information about the Portfolios'
performance and is available free of charge upon request from your insurance
company.

FINANCIAL HIGHLIGHTS
CAPITAL GROWTH PORTFOLIO
SELECTED DATA FOR A SHARE OUTSTANDING FOR EACH PERIOD PRESENTED:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 1, 1995
DECEMBER 31, TO DECEMBER 31,
--------------------------- ----------------
1997 1996 1995
------------- ------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period ............................. $ 13.05 $ 11.57 $10.00
-------- ------- ------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................................... $ 0.12 $ 0.03 $ 0.02
Net realized and unrealized gain (loss) on investments .......... 3.09 1.71 1.69
-------- ------- ------
Net increase (decrease) from investment operations ............ $ 3.21 $ 1.74 $ 1.71
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ........................................... -- (0.03) (0.02)
Net realized gain ............................................... (0.11) (0.23) (0.12)
--------
Net increase (decrease) in net asset value .................... $ 3.10 $ 1.48 $ 1.57
-------- ------
Net asset value, end of period ................................... $ 16.15 $ 3.05 $11.57
======== ======= ======
Total return* .................................................... 24.69% 15.03% 17.13%**+
Ratios/Supplemental Data:
Ratio of net expenses to average net assets ...................... 0.80%+ 0.93%+ 1.56%**+
Ratio of net investment income to average net assets ............. 1.02%+ 0.37%+ 0.48%
Portfolio turnover rate .......................................... 50% 41% 46%**
Average brokerage commission per share ........................... $ 0.0556 $0.0661 --
Net assets, end of period (in thousands) ......................... $105,476 $48,572 $9,357
RATIO ASSUMING NO WAIVER OF MANAGEMENT FEES BY PIONEER
AND NO REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses .................................................... 0.80% 0.95% 3.95%**
Net investment income (loss) .................................... 1.02% 0.35% (1.91)%**
RATIO ASSUMING WAIVER OF MANAGEMENT FEES BY PIONEER AND
REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses .................................................... 0.79% 0.92% 1.49%**
Net investment income (loss) .................................... 1.03% 0.38% 0.55%**

</TABLE>

- ---------

* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of period.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.

<PAGE>

FINANCIAL HIGHLIGHTS
REAL ESTATE GROWTH PORTFOLIO
SELECTED DATA FOR A SHARE OUTSTANDING FOR EACH PERIOD PRESENTED:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, 1995
DECEMBER 31, TO DECEMBER 31,
--------------------------- ----------------
1997 1996 1995
------------- ------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period ................................ $ 14.46 $ 11.23 $ 10.00
--------- --------- -------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS:
Net investment income (loss) ....................................... $ 0.47 $ 0.54 $ 0.12
Net realized and unrealized gain (loss) on investments ............. 2.54 3.34 1.55
--------- --------- -------
Net increase (decrease) from investment operations ............... $ 3.01 $ 3.88 $ 1.67
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income .............................................. (0.45) (0.53) (0.23)
Tax return of capital .............................................. -- -- (0.18)
Net realized gain .................................................. (0.12) (0.12) (0.03)
Net increase (decrease) in net asset value ....................... $ 2.44 $ 3.23 $ 1.23
---------- ---------- ----------
Net asset value, end of period ...................................... $ 16.90 $ 14.46 $ 11.23
========== ========== ==========
Total return* ....................................................... 21.16% 35.73% 16.96%
Ratios/Supplemental Data:
Ratio of net expenses to average net assets ......................... 1.25%+ 1.34%+ 2.10%**+
Ratio of net investment income to average net assets ................ 3.16%+ 4.63%+ 2.68%**+
Portfolio turnover rate ............................................. 28% 41% 1%**
Average brokerage commission per share .............................. $0.0597 $0.0595 --
Net assets, end of period (in thousands) ............................ $42,187 $11,115 $ 512
RATIO ASSUMING NO WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF
EXPENSES BY PIONEER AND NO REDUCTION FOR FEES PAID INDIRECTLY:
Net expenses ....................................................... 1.37% 3.35% 45.96%**
Net investment income (loss) ....................................... 3.04% 2.62% (41.18)%**
RATIO ASSUMING WAIVER OF MANAGEMENT FEES AND ASSUMPTION OF
EXPENSES BY PIONEER AND REDUCTION
for fees paid indirectly:
Net expenses ....................................................... 1.24% 1.24% 1.57%**
Net investment income (loss) ....................................... 3.17% 4.73% 3.21%**

</TABLE>

- ---------
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of period.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.

<PAGE>

II. HOW THE FUND WORKS

INVESTMENT OBJECTIVES AND POLICIES

The Fund's Portfolios are designed to serve as investment vehicles primarily for
Variable Contracts of insurance companies. The Fund currently offers ten
Portfolios with different investment objectives and policies; the two Portfolios
currently available to you are described below. Each Portfolio's investment
objective is fundamental and can be changed only by vote of a majority of the
outstanding shares of the Portfolio. All other investment policies of each
Portfolio are nonfundamental and may be changed by the Fund's Trustees without
shareholder approval. There is no assurance that a Portfolio will achieve its
investment objective.

The Portfolio is managed in accordance with Pioneer's "investing for value"
investment philosophy. This approach consists of developing a diversified
portfolio of securities consistent with the Portfolio's investment objective
and selected primarily on the basis of Pioneer's judgment that the securities
have an underlying value, or potential value, which exceeds their current
prices. The analysis and quantification of the economic worth, or "value," of
an individual company reflects Pioneer's assessment of the company's assets and
the company's prospects for earnings growth over the next three to five years.
Pioneer relies primarily on the knowledge, experience and judgment of its own
research staff, but also receives and uses information from a variety of
outside sources, including brokerage firms, electronic databases, specialized
research firms and technical journals.

The Portfolio may invest up to 25% of its total assets in non-United States
(U.S.) securities. For a discussion of international investing, please see
"Risks of International Investments." The Portfolio may invest up to 5% of its
net assets in real estate investment trusts (REITs). See "Risks Associated with
Real Estate Investment Trusts."

OTHER INVESTMENT PRACTICES. Refer to the Appendix for information on the
Portfolio's possible use of repurchase agreements, illiquid investments,
restricted securities, options, futures contracts and forward foreign currency
exchange contracts, and its ability to lend securities.

REAL ESTATE GROWTH PORTFOLIO seeks long-term growth of capital primarily through
investments in the equity securities of REITs and other real estate industry
companies. Current income is the Portfolio's secondary investment objective. The
Portfolio will invest in a non-diversified portfolio consisting of equity
securities of REITs and other real estate industry companies and, to a lesser
extent, in debt securities of such companies and in mortgage-backed securities.
Normally, at least 75% of the Portfolio's assets will be invested in equity
securities of REITs and other real estate industry companies. See "Risks
Associated with the Real Estate Industry" and "Risks Associated with Real Estate
Investment Trusts."

Pioneer will invest no more than 5% of the Portfolio's net assets in lower rated
debt securities or unrated debt securities of comparable quality. See "Risk
Considerations -- Risks of Medium and Lower Rated Debt Securities."

Real Estate Growth Portfolio is a non-diversified mutual fund under the
Investment Company Act of 1940 (the 1940 Act).

<PAGE>

As a non-diversified mutual fund, the Portfolio may be more susceptible to risks
associated with a single economic, political or regulatory occurrence than a
diversified fund.

Other Investment Practices. Refer to the Appendix for information about the
Portfolio's possible use of repurchase agreements, illiquid investments,
restricted securities, options and futures and its ability to lend securities.

III. RISK CONSIDERATIONS

RISKS OF INTERNATIONAL INVESTMENTS

Capital Growth and Real Estate Growth Portfolios may make non-U.S. investments.
Pioneer limits the amount of Capital Growth Portfolio's net assets that may be
invested in non-U.S. securities to 25%. Pioneer limits the amount of Real Estate
Growth Portfolio's net assets that may be invested in non-U.S. securities to
10%, provided that purchases of Canadian securities are not subject to this
limitation. Investing outside the U.S. involves different opportunities and
different risks from U.S. investments. Pioneer believes that it may be possible
to obtain significant returns from a portfolio of non-U.S. investments, or a
combination of non-U.S. investments and U.S. investments, and to achieve
increased diversification in comparison to a portfolio invested solely in U.S.
securities. By including international investments in your investment portfolio,
you may gain increased diversification by combining securities from various
countries and geographic areas that offer different investment opportunities and
are affected by different economic trends. At the same time, these opportunities
and trends involve risks that may not be encountered in U.S. investments.

International investing in general may involve greater risks than U.S.
investments. There is generally less publicly available information about
non-U.S. issuers, and there may be less government regulation and supervision of
non-U.S. stock exchanges, brokers and listed companies. There may be difficulty
in enforcing legal rights outside the U.S. Non-U.S. companies generally are not
subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those that apply to U.S. companies.
Security trading practices abroad may offer less protection to investors such as
the Portfolios. Settlement of transactions in some non-U.S. markets may be
delayed or may be less frequent than in the U.S., which could affect the
liquidity of a Portfolio's investments. Additionally, in some foreign countries,
there is the possibility of expropriation or confiscatory taxation, limitations
on the removal of securities, property, or other assets of a Portfolio,
political or social instability, or diplomatic developments which could affect
U.S. investments in foreign countries. Pioneer will take these factors into
consideration in managing each Portfolio's non-U.S. investments.

FOREIGN CURRENCIES. Currency exchange rates may affect Capital Growth and Real
Estate Growth Portfolios to the extent that these Portfolios invest in non-U.S.
securities. Some foreign currency values may be volatile, and there is the
possibility of governmental controls on currency exchange or governmental
intervention in currency markets, which could adversely affect the Portfolios.
Pioneer may attempt to manage currency exchange rate risks for the Portfolios.
However, there is no assurance that Pioneer will do so at an appropriate time or
that Pioneer will be able to predict exchange rates accurately. For example, to
the extent that Pioneer increases a Portfolio's exposure to a foreign currency,
and that currency's value subsequently falls, Pioneer's currency management may
result in increased losses to the Portfolio. Similarly, if Pioneer hedges a
Portfolio's exposure to a foreign currency, and the currency's value rises, the
Portfolio will lose the opportunity to participate in the currency's
appreciation.

CURRENCY MANAGEMENT. The performance of each Portfolio may be affected by the
relative performance of foreign currencies. Pioneer may manage Capital Growth
and Real Estate Growth Portfolios' exposure to various currencies to take
advantage of different yield, risk, and return characteristics that different
currencies can provide for U.S. investors.

To manage exposure to currency fluctuations, Capital Growth Portfolio may enter
into forward foreign currency exchange contracts (agreements to exchange one
currency for another at a future date) and buy and sell options and futures
contracts relating to foreign currencies. Capital Growth and Real Estate Growth
Portfolios will use forward foreign currency exchange contracts in the normal
course of business to lock in an exchange rate in connection with purchases and
sales of securities denominated in foreign currencies. Other currency management
strategies allow the Portfolios to hedge portfolio securities, to shift
investment exposure from one currency to another, or to attempt to profit from
anticipated declines in the value of a foreign currency relative to the U.S.
dollar. Capital Growth Portfolio may engage in currency management strategies
only to the extent that it invests in non-U.S. securities. Because Real Estate
Growth Portfolio may only invest up to 10% of its net assets in non-U.S.
securities, it does not actively seek to manage exposure to currency
fluctuations.

RISKS OF MEDIUM AND LOWER RATED DEBT SECURITIES

Capital Growth and Real Estate Growth Portfolios may invest in medium rated debt
securities which are usually defined as securities rated "BBB" by Standard and
Poor's Ratings Group (S&P) or "Baa" by Moody's Investors Service, Inc. (Moody's)
. Medium rated debt securities have speculative characteristics and involve
greater risk of loss than higher rated debt securities, and are more sensitive
to changes in the issuer's capacity to make interest payments and repay
principal. Medium rated debt securities represent a somewhat more aggressive
approach to income investing than higher rated debt securities. If the rating of
a debt security is reduced below investment grade (i.e., below "BBB" by S&P or
"Baa" by Moody's), Pioneer will consider whatever action is appropriate,
consistent with the Portfolio's investment objective and policies.

<PAGE>

Real Estate Growth Portfolio may invest up to 5% of its net assets in lower
rated debt securities. Lower rated debt securities are usually defined as
securities rated below "BBB" by S&P or "Baa" by Moody's. Investments in lower
rated debt securities are speculative and changes in economic conditions or
other circumstances are more likely to lead to a weakened capacity of the issuer
to make principal and interest payments on such securities.

Please refer to the Statement of Additional Information for a discussion of
Moody's and S&P's ratings.

RISKS ASSOCIATED WITH THE REAL ESTATE INDUSTRY

Although Real Estate Growth Portfolio does not invest directly in real estate,
it does invest in real estate equity securities, and will concentrate its
investments in the real estate industry. Therefore, an investment in the
Portfolio may be subject to certain risks associated with the direct ownership
of real estate and with the real estate industry in general. These risks
include, among others: possible declines in the value of real estate; risks
related to general and local economic conditions; possible lack of availability
of mortgage funds; overbuilding; extended vacancies of properties; increases in
competition, property taxes and operating expenses; changes in zoning laws;
costs resulting from the clean-up of, and liability to third parties for damages
resulting from, environmental problems; casualty or condemnation losses;
uninsured damages from floods, earthquakes or other natural disasters;
limitations on and variations in rents; and changes in interest rates.

RISK ASSOCIATED WITH REAL ESTATE INVESTMENT TRUSTS

Real Estate Growth Portfolio may invest without limitation in shares of REITs.
Capital Growth Portfolio may invest up to 5% of its net assets in shares of
REITs. REITs are pooled investment vehicles which invest primarily in income
producing real estate or real estate related loans or interests. REITs are
generally classified as equity REITs, mortgage REITs or a combination of equity
and mortgage REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents. Equity
REITs can also realize capital gains by selling properties that have appreciated
in value. Mortgage REITs invest the majority of their assets in real estate
mortgages and derive income from the collection of interest payments. Like
investment companies such as Real Estate Growth Portfolio, REITs are not taxed
on income distributed to shareholders provided they comply with several
requirements of the Internal Revenue Code of 1986, as amended (the Code). The
Portfolio will indirectly bear its proportionate share of any expenses paid by
REITs in which it invests in addition to the expenses paid by the Portfolio.

RISKS ASSOCIATED WITH MORTGAGE-BACKED SECURITIES

Real Estate Growth Portfolio may invest in mortgage-backed securities.
Mortgage-backed securities are securities that directly or indirectly represent
participation in, or are collateralized by and payable from, mortgage loans
secured by real property. Refer to the APPENDIX for a description of these
securities.

Investing in mortgage-backed securities involves certain unique risks in
addition to those risks associated with invest-

<PAGE>

ing in the real estate industry in general. These risks include the failure of a
counter-party to meet its commitments, adverse interest rate changes and the
effects of prepayments on mortgage cash flows. When interest rates decline, the
value of an investment in fixed rate obligations can be expected to rise.
Conversely, when interest rates rise, the value of an investment in fixed rate
obligations can be expected to decline. In contrast, as interest rates on
adjustable rate mortgage loans are reset periodically, yields on investments in
such loans will gradually align themselves to reflect changes in market interest
rates, causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed rate
obligations.

Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Under certain interest
rate and prepayment rate scenarios, Real Estate Growth Portfolio may fail to
recoup fully its investments in mortgage-backed securities notwithstanding any
direct or indirect governmental or agency guarantee. When Real Estate Growth
Portfolio reinvests amounts representing payments and unscheduled prepayments of
principal, it may receive a rate of interest that is lower than the rate on
existing adjustable rate mortgage pass-through securities. Thus, mortgage-backed
securities, and adjustable rate mortgage pass-through securities in particular,
may be less effective than other types of U.S. government securities as a means
of "locking in" interest rates.

IV. THE FUND AND THE PIONEER ORGANIZATION

THE MANAGER

Pioneer, the investment adviser to each Portfolio, provides investment research
and portfolio management services to a number of other retail mutual funds and
certain institutional clients. It maintains a staff of experienced investment
personnel and a full complement of related support facilities. As of December
31, 1997, Pioneer advised mutual funds with a total value of over $19 billion,
which includes more than 1,000,000 U.S. shareholder accounts, and other
institutional accounts. Pioneer Funds Distributor, Inc. (PFD), with its
principal business address at 60 State Street, Boston, Massachusetts 02109,
distributes shares of the Portfolios and shares of Pioneer's retail mutual
funds.

Mr. David Tripple, President and Chief Investment Officer of Pioneer and
Executive Vice President of the Fund, has general responsibility for Pioneer's
investment operations and chairs a committee of Pioneer's equity managers which
reviews Pioneer's research and portfolio operations, including those of the
Portfolios. Mr. Tripple joined Pioneer in 1974. Ms. Theresa Hamacher, Senior
Vice President of Pioneer, oversees U.S. equity research and portfolio
management.

CAPITAL GROWTH PORTFOLIO. Research and management for the Portfolio is the
responsibility of a team of portfolio managers and analysts focusing on domestic
equity securities, including special equities and smaller companies. Members of
the team meet regularly to discuss holdings, prospective investments and
portfolio composition.

Day-to-day management of the Portfolio has been the responsibility of J. Rodman
Wright since January 15, 1997. Mr. Wright, a Vice President of the Fund and
Pioneer, joined Pioneer in 1994 and has 10 years of investment experience.

<PAGE>

REAL ESTATE GROWTH PORTFOLIO. Research and management for the Portfolio is the
responsibility of a team consisting of a Pioneer portfolio manager and analysts
from Boston Financial Securities, Inc. ("BFS"), the Portfolio's subadviser.
Members of the team meet regularly to discuss holdings, prospective investments
and portfolio composition.

Day-to-day management of the Portfolio has been the responsiblity of Robert W.
Benson since the Portfolio's inception. Mr. Benson, a Vice President of the Fund
and Pioneer, joined Pioneer in 1974 and has 24 years of investment experience.

THE REAL ESTATE GROWTH PORTFOLIO SUBADVISER. BFS, the investment subadviser to
Real Estate Growth Portfolio since May 1, 1996, is an affiliate of the Boston
Financial Group Limited Partnership, a Massachusetts limited partnership
("Boston Financial"), which together with a predecessor business has extensive
experience and expertise in placing, evaluating and providing advice on a
variety of real estate related investments since 1969 for individuals,
institutions and real estate professionals. Several other affiliates of BFS also
provide a variety of financial, consulting and management services to real
estate investors and developers. Boston Financial oversees investment in over
$4.5 billion of properties in 49 states. The company serves over 30,000
investors with equity contributions in excess of $2 billion in real estate
investments.

In its capacity as subadviser to the Portfolio, BFS (i) identifies and analyzes
real estate industry companies, including real estate properties and other
permissible investments for the Portfolio, (ii) analyzes market conditions
affecting the real estate industry generally and specific geographical and
securities markets in which the Portfolio may invest or is invested, (iii)
continuously reviews and analyzes the investments in the Real Estate Growth
Portfolio's portfolio and (iv) furnishes advisory reports based on such analysis
to Pioneer.

Mr. Fred N. Pratt, Jr. has the ultimate responsibility for overseeing the
provision of subadvisory services to the Real Estate Growth Portfolio. Mr. Pratt
is President and Chief Executive officer of Boston Financial, a Director of BFS
and a Trustee of the Real Estate Growth Portfolio. Mr. Pratt has worked in the
real estate industry since 1969. Mr. Mark Howard-Johnson, a Vice President of
BFS, is primarily responsible for the day-to-day provision of subadvisory
services to the Real Estate Growth Portfolio. Mr. Howard-Johnson has worked as a
real estate analyst since September 1996.

The executive office of BFS is located at 101 Arch Street, Boston, Massachusetts
02110. BFS also serves as the investment subadviser to Pioneer Real Estate
Growth Shares.

Each Portfolio has an investment objective and policies similar to those of an
existing Pioneer retail mutual fund. Capital Growth Portfolio is most similar to
Pioneer Capital Growth Fund and Real Estate Growth Portfolio to Pioneer Real
Estate Shares. Performance of these Portfolios is not expected to be the same as
the performance of the corresponding retail mutual fund due in part to
dissimilarities in their investments. Various insurance costs will also affect
the performance of investments in the Portfolios, as measured for the
Accumulation Units of your Variable Contract.

PORTFOLIO TRANSACTIONS

Each of the Portfolios is substantially fully invested at all times. It is the
policy of the Portfolios not to engage in trading for short-term profits,
although a Portfolio may do so when it believes a particular transaction will
contribute to the achievement of its investment objective. Nevertheless, changes
in any Portfolio will be made promptly when determined to be advisable by reason
of developments not foreseen at the time of the initial investment decision, and
usually without reference to the length of time a security has been held.
Accordingly, portfolio turnover rate is not considered a limiting factor in the
execution of investment decisions.

The frequency of portfolio transactions -- a Portfolio's turnover rate -- will
vary from year to year depending on market conditions. Portfolio turnover rates
are not generally expected to exceed 100%. See "Financial Highlights" for actual
turnover rates. Because a higher turnover rate increases transaction costs and
may have certain tax consequences, Pioneer carefully weighs the anticipated
benefits of short-term investment against these factors.

<PAGE>

V. FUND MANAGEMENT FEES AND OTHER EXPENSES

Each Portfolio pays a management fee to Pioneer for managing its investments and
business affairs. Each Portfolio's management fee is computed daily and paid
monthly at the following annual rate:

<TABLE>
<CAPTION>
MANAGEMENT FEE AS A PERCENTAGE
OF PORTFOLIO'S AVERAGE DAILY
PORTFOLIO NET ASSETS
<S> <C>
Capital Growth Portfolio 0.65%
Real Estate Growth Portfolio 1.00%
</TABLE>

<TABLE>
<CAPTION>
PERCENTAGE OF PORTFOLIO'S
PORTFOLIO AVERAGE DAILY NET ASSETS
<S> <C>
Real Estate Growth Portfolio 1.25%
</TABLE>

Under the terms of their respective management contracts with the Fund, Pioneer
assists in the management of each Portfolio and is authorized in its discretion
to buy and sell securities for the account of each Portfolio. Pioneer pays all
the expenses, including executive salaries and the rental of certain office
space, related to its services for each Portfolio, with the exception of the
following which are paid by each Portfolio: (a) charges and expenses for fund
accounting, pricing and appraisal services and related overhead, including, to
the extent such services are performed by personnel of Pioneer or its
affiliates, office space and facilities and personnel compensation, training and
benefits; (b) the charges and expenses of auditors; (c) the charges and expenses
of any custodian, transfer agent, plan agent, dividend disbursing agent and
registrar appointed by the Fund with respect to the Portfolio; (d) issue and
transfer taxes chargeable to the Portfolio in connection with securities
transactions to which the Portfolio is a party; (e) insurance premiums, interest
charges, dues and fees for membership in trade associations, and all taxes and
corporate fees payable by the Portfolio to federal, state or other governmental
agencies; (f) fees and expenses involved in registering and maintaining
registrations of the Fund and/or its shares with the SEC, individual states or
blue sky securities agencies, territories and foreign jurisdictions, including
the preparation of Prospectuses and Statements of Additional Information for
filing with regulatory agencies; (g) all expenses of shareholders' and Trustees'
meetings and of preparing, printing and distributing prospectuses, notices,
proxy statements and all reports to shareholders and to governmental agencies;
(h) charges and expenses of legal counsel to the Fund and the Trustees; (i)
compensation of those Trustees of the Trust who are not affiliated with or
interested persons of Pioneer, the Fund (other than as Trustees), PGI or PFD;
(j) the cost of preparing and printing share certificates; and (k) interest on
borrowed money, if any. In addition to the expenses described above, each
Portfolio shall pay all brokers' and underwriting commissions chargeable to the
Portfolio in connection with securities transactions to which the Portfolio is a
party.

VI. PERFORMANCE

Each Portfolio's performance may be quoted in advertising in terms of total
return if accompanied by performance for your insurance company's separate
account. Performance is based on historical results and is not intended to
indicate future performance. For additional performance information, contact
your insurance company for a free annual report.

A Portfolio's total return is based on the overall dollar or percentage change
in value of a hypothetical investment in the Portfolio, including changes in
share price and assuming each Portfolio's dividends and capital gain
distributions are reinvested at net asset value. A cumulative total return
reflects a Portfolio's performance over a stated period of time. An average
annual total return reflects the hypothetical annually compounded return that
would have produced the same cumulative total return if a Portfolio's
performance had been constant over the entire period. Because average annual
returns tend to smooth out variations in a Portfolio's actual return, you should
recognize that they are not the same as actual year-by-year results. To
illustrate the components of overall performance, a Portfolio may separate its
cumulative and average annual returns into income results and capital gain or
loss.

TOTAL RETURNS QUOTED FOR THE PORTFOLIOS INCLUDE THE EFFECT OF DEDUCTING EACH
PORTFOLIO'S EXPENSES, BUT MAY NOT INCLUDE CHARGES AND EXPENSES ATTRIBUTABLE TO
ANY PARTICULAR INSURANCE PRODUCT. SINCE SHARES OF THE PORTFOLIOS MAY BE
PURCHASED PRIMARILY THROUGH A VARIABLE CONTRACT, PURCHASERS OF SUCH CONTRACTS
SHOULD CAREFULLY REVIEW THE PROSPECTUS OF THE SELECTED INSURANCE PRODUCT FOR
INFORMATION ON RELEVANT CHARGES AND EXPENSES. EXCLUDING THESE CHARGES FROM
QUOTATIONS OF EACH PORTFOLIO'S PERFORMANCE HAS THE EFFECT OF INCREASING THE
PERFORMANCE QUOTED. YOU SHOULD BEAR IN MIND THE EFFECT OF THESE CHARGES WHEN
COMPARING A PORTFOLIO'S PERFORMANCE TO THAT OF OTHER MUTUAL FUNDS.

VII. DISTRIBUTIONS AND TAXES

For a discussion of the tax status of a Variable Contract, including the tax
consequences of withdrawals or other pay-

<PAGE>

ments, refer to the prospectus of the Variable Contract insurance company's
separate account. It is suggested you keep all statements you receive to assist
in your personal record keeping. It is expected that shares of the Portfolios
will be held primarily by life insurance company separate accounts that fund
Variable Contracts. A Portfolio's dividends and capital gain distributions are
generally treated as ordinary income and long-term capital gain, respectively,
under the Code. Insurance companies should consult their own tax advisers
regarding the tax treatment of dividends or capital gain distributions they
receive from any Portfolio.

Each Portfolio is treated as a separate entity for federal income tax purposes
and has elected to be treated, has qualified and intends to qualify each year as
a regulated investment company under Subchapter M of the Code and to qualify for
such treatment for each taxable year. To qualify as such, each Portfolio must
satisfy certain requirements relating to the sources of its income,
diversification of its assets and distribution of its income to shareholders. As
a regulated investment company, each Portfolio will not be subject to federal
income tax on any net investment income and net realized capital gains that are
distributed to its shareholders as required under the Code.

Each Portfolio intends to pay out all of its net investment income and net
realized capital gains for each year. Capital Growth Portfolio distributes its
dividends, if any, each year. Real Estate Growth Portfolio distributes its
dividends, if any, quarterly. Normally, net realized capital gains, if any, are
distributed each year for the Portfolios. Dividends from income and/or capital
gains may also be paid at such other times as may be necessary for the
Portfolios to avoid federal income or excise tax. Such income and capital gains
are automatically reinvested in additional shares of the Portfolios.

The Portfolios make dividend and capital gain distributions on a per-share
basis. After every distribution from each Portfolio, the Portfolio's share price
declines by the amount of the distribution as a result of the distribution.
Since dividends and capital gain distributions are reinvested, the total value
of an account will not be affected by such distributions because, although the
shares will have a lower price, there will be correspondingly more of them.

In addition to the above, each Portfolio also follows certain portfolio
diversification requirements imposed by the IRS on separate accounts of
insurance companies relating to the tax-deferred status of Variable Contracts.
These requirements, which are in addition to the diversification requirements
imposed on Capital Growth Portfolio by the 1940 Act (Real Estate Growth
Portfolio is exempt from the 1940 Act's diversification requirements) and
Subchapter M of the Code generally, subject to a safe harbor or other available
exception, place certain percentage limitations on the assets of a Portfolio
that may be represented by any one, two, three or four investments. More
specific information on these diversification requirements is contained in the
insurance company's separate account prospectus and in the Fund's Statement of
Additional Information.

VIII. SHAREHOLDER INFORMATION

OPENING AN ACCOUNT

SHARE PRICE

The term "net asset value" or NAV per share refers to the worth of one share. A
Portfolio's NAV per share is computed by adding the value of the Portfolio's
investments, cash and other assets, deducting liabilities and dividing the
result by the number of shares outstanding. Each Portfolio is open for business
each day the New York Stock Exchange (the NYSE) is open. The price of one share
of a Portfolio is its NAV which is currently calculated daily as of the regular
close of the NYSE (normally 4:00 p.m., Eastern time).

The investments of each Portfolio are valued at the last sale price on the
principal exchange or market where they are traded. Securities which have not
traded on the date of valuation or securities for which sales prices are not
generally reported are valued at the mean between the current bid and asked
prices. The securities of each Portfolio are valued primarily on the basis of
market quotations.

Securities quoted in foreign currencies are converted to U.S. dollars utilizing
foreign exchange rates employed by the Portfolios' independent pricing services.
Generally, trading in foreign securities is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the NAV of the Portfolios' shares are determined as of such times.
Foreign currency exchange rates are also generally determined prior to the close
of the NYSE. Occasionally, events which affect the values of such securities and
such exchange rates may occur between the times at which they are determined and
the close of the NYSE and will therefore not be reflected in the computation of
a Portfolio's NAV. If events materially affecting the value of such securities
occur during such period, then these securities are valued at their fair value
as determined in good faith by the Trustees. All assets of the Portfolios for
which there is no other readily available valuation method are valued at their
fair value as determined in good faith by the Trustees.

INVESTMENTS IN SHARES OF THE PORTFOLIOS

<PAGE>

tional shares of the Portfolio purchased. Investments in a Portfolio are
credited to an insurance company's separate account immediately upon acceptance
of the investment by the Portfolio. Investments will be processed at the next
NAV calculated after an order is received and accepted by a Portfolio. The
offering of shares of any Portfolio may be suspended for a period of time and
each Portfolio reserves the right to reject any specific purchase order.
Purchase orders may be refused if, in Pioneer's opinion, they are of a size that
would disrupt the management of a Portfolio.

Redemptions

Shares of a Portfolio may be redeemed on any business day. Redemptions are
effected at the per share NAV next determined after receipt and acceptance of
the redemption request by a Portfolio. Redemption proceeds will normally be
forwarded by bank wire to the redeeming insurance company on the next business
day after receipt of the redemption instructions by a Portfolio but in no event
later than 7 days following receipt of instructions. Each Portfolio may suspend
redemptions or postpone payment dates during any period in which any of the
following conditions exists: the NYSE is closed or trading on the NYSE is
restricted; an emergency exists as a result of which disposal by the Portfolio
of securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Portfolio to fairly determine the value of its net assets;
or the Securities and Exchange Commission, by order, so permits.

Please refer to the prospectus of your insurance company's separate account for
information on how to redeem from each Portfolio.

<PAGE>

IX. APPENDIX

Short-Term Investments. As described in "Investment Objectives and Policies,"
each Portfolio may invest in short-term investments consisting of: corporate
commercial paper and other short-term commercial obligations, in each case rated
or issued by companies with similar securities outstanding that are rated
Prime-1, Aa or better by Moody's or A-1, AA or better by S&P; obligations
(including certificates of deposit, time deposits, demand deposits and bankers'
acceptances) of banks with securities outstanding that are rated Prime-1, Aa or
better by Moody's, or A-1, AA or better by S&P; obligations issued or guaranteed
by the U.S. government or its agencies or instrumentalities with remaining
maturities not exceeding 18 months; and repurchase agreements. See "Investment
Objectives and Policies."

Bankers' Acceptances are obligations of a bank to pay a draft which has been
drawn on it by a customer. These obligations are backed by large banks and
usually backed by goods in international trade.

Certificates of Deposit represent a commercial bank's obligations to repay
funds deposited with it, earning specified rates of interest over given
periods.

Commercial Paper is a short-term unsecured promissory note, including
variable amount master demand notes, issued by banks, broker-dealers,
corporations or other entities for purposes such as financing their current
operations.

Repurchase Agreements and Lending of Securities. As described in "Investment
Objectives and Policies," each Portfolio may enter into repurchase agreements.
In a repurchase agreement, a Portfolio buys a security at one price and
simultaneously agrees to sell it back to the seller at a higher price, generally
for a period not exceeding seven days and fully collateralized with investment
grade debt securities with a market value of not less than 100% of the
obligation, valued daily. Each Portfolio may lend securities to broker-dealers
and institutional investors, provided that the value of securities loaned by a
Portfolio may not exceed 331/3% of its total assets. In the event of the
bankruptcy of the other party to a repurchase agreement or a securities loan, a
Portfolio could experience delays in recovering its cash or the securities it
lent. To the extent that, in the meantime, the value of the securities purchased
had decreased, or the value of the securities lent had increased, the Portfolio
could experience a loss. In all cases, Pioneer must find the creditworthiness of
the other party to the transaction satisfactory.

Restricted Securities. Each Portfolio may invest up to 5% of its net assets in
"restricted securities," (i.e., securities that would be required to be
registered prior to distribution to the public), excluding restricted securities
eligible for resale to certain institutional investors pursuant to Rule 144A
under the Securities Act of 1933 and, for Portfolios that allow non- U.S.
investments, foreign securities which are offered or sold outside the U.S. In no
instance, however, may more than 15% of a Portfolio's net assets be invested in
restricted securities, including securities eligible for resale under Rule 144A.
It is not possible to predict with assurance exactly how the market for such
restricted securities will develop and investments in restricted securities will
be carefully monitored by Pioneer and by the Fund's Trustees.

Illiquid Investments. Each Portfolio may invest up to 15% of its net assets in
illiquid investments which includes securities that are not readily marketable
and repurchase agreements maturing in more than seven days. The Fund's Trustees
have adopted guidelines and delegated to Pioneer the daily function of
determining and monitoring the liquidity of restricted securities. The Trustees,
however, retain sufficient oversight and are ultimately responsible for the
determinations. Under the supervision of the Board of Trustees, Pioneer
determines the liquidity of each Portfolio's investments. The absence of a
trading market can make it difficult to ascertain a market value for illiquid
investments. Disposing of illiquid investments may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for a
Portfolio to sell them promptly at an acceptable price.

Forward Currency Exchange Contracts. Each Portfolio has the ability to hold a
portion of its assets in non-U.S. currencies and purchase or sell forward
currency exchange contracts to facilitate settlement of non-U.S. securities
transactions or to protect against changes in currency exchange rates. A
Portfolio might sell a non-U.S. currency on either a spot (i.e., cash) or
forward basis to hedge against an anticipated decline in the U.S. dollar value
of securities that it owns or securities that it intends to sell or has
contracted to sell or to preserve the U.S. dollar value of dividends, interest
or other amounts it expects to receive. Although this strategy could minimize
the risk of loss due to a decline in the value of the hedged foreign currency,
it could also limit any potential gain which might result from an increase in
the value of the currency. Alternatively, a Portfolio might purchase a non-U.S.
currency or enter into a forward purchase contract for the non-U.S. currency to
preserve the U.S. dollar price of securities it intends to purchase or has
contracted to purchase. A Portfolio may also engage in cross-hedging by using
forward contracts in one currency to hedge against fluctuations in the value of
securities denominated in a different currency.

If the Portfolio enters into a forward contract to buy foreign currency, the
Portfolio will be required to place cash or high grade liquid securities in a
segregated account of the Portfolio maintained by the Portfolio's custodian in
an amount equal to the value of the Portfolio's total assets committed to

<PAGE>

the consummation of the forward contract. See "Risk Considerations--Currency
Management."

Mortgage-Backed Securities. Real Estate Growth Portfolio may invest up to 25% of
its total assets in mortgage pass-through certificates and multiple-class
pass-through securities, such as guaranteed mortgage pass-through securities,
REMIC pass-through certificates, CMOs, stripped mortgage-backed securities
(SMBS) and other types of mortgage-backed securities that may be available in
the future.

Mortgage-backed securities are issued by government and non-government entities
such as banks, mortgage lenders or other financial institutions. A
mortgage-backed security may be an obligation of the issuer backed by a mortgage
or pool of mortgages or a direct interest in an underlying pool of mortgages.
Some mortgage-backed securities, such as CMOs, make payments of both principal
and interest at a variety of intervals; others make semiannual interest payments
at a predetermined rate and repay principal at maturity (like a typical bond).
Mortgage-backed securities are based on different types of mortgages including
those on commercial real estate or residential properties. Other types of
mortgage-backed securities will likely be developed in the future, and a
Portfolio may invest in them if Pioneer determines they are consistent with its
investment objective and policies. Real Estate Growth Portfolio will not invest
in the lowest tranche (described below) of CMOs or REMIC certificates.

Guaranteed Mortgage Pass-Through Securities represent participation interests
in pools of residential mortgage loans and are issued by U.S. governmental or
private lenders and guaranteed by the U.S. government or one of its agencies
or instrumentalities, including but not limited to the Government National
Mortgage Association (GNMA), the Federal National Mortgage Association
(Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).
Ginnie Mae certificates are guaranteed by the full faith and credit of the
U.S. government for timely payment of principal and interest on the
certificates. Fannie Mae certificates are guaranteed by Fannie Mae, a
federally chartered and privately-owned corporation for full and timely
payment of principal and interest on the certificates. Freddie Mac
certificates are guaranteed by Freddie Mac, a corporate instrumentality of
the U.S. government, for timely payment of interest and the ultimate
collection of all principal of the related mortgage loans.

Multiple-Class Pass-Through Securities and Collateralized Mortgage
Obligations. Real Estate Growth Portfolio may also invest in CMOs and REMIC
pass-through or participation certificates, which may be issued by, among
others, U.S. government agencies and instrumentalities as well as private
lenders. CMOs and REMIC certificates are issued in multiple classes and the
principal of and interest on the underlying mortgage assets may be allocated
among the several classes of CMOs or REMIC certificates in various ways. Each
class of CMOs or REMIC certificates, often referred to as a "tranche," is
issued at a specific adjustable or fixed interest rate and must be fully
retired no later than its final distribution date. Generally, interest is
paid or accrues on all classes of CMOs or REMIC certificates on a monthly
basis.

Typically, CMOs are collateralized by GNMA, Fannie Mae or Freddie Mac
certificates but also may be collateralized by other mortgage assets such as
whole loans or private mortgage pass-through securities. Debt service on CMOs
is provided from payments of principal and interest on collateral of
mortgaged assets and any reinvestment income thereon.

Real Estate Mortgage Interest Conduit interests may be purchased by Real
Estate Growth Portfolio. A REMIC is a CMO that qualifies for special tax
treatment under the Code and invests in certain mortgages primarily secured
by interests in real property and other permitted investments. Investors may
purchase "regular" and "residual" interest shares of beneficial interest in
REMIC trusts although the Portfolio does not intend to invest in residual
interests.

Stripped Mortgage-Backed Securities are created when a U.S. government agency
or a financial institution separates the interest and principal components of
a mortgage-backed security and sells them as individual securities. The
holder of the "principal-only" security (PO) receives the principal payments
made by the underlying mortgage-backed security, while the holder of the
"interest-only" security (IO) receives interest payments from the same
underlying security.

Options and Futures Contracts provide a way for each Portfolio to manage their
exposure to changing interest rates, security prices, and currency exchange
rates. Some options and futures strategies, including selling futures, buying
puts and writing calls, tend to hedge a Portfolio's investments against price
fluctuations. Other strategies, including buying futures, writing puts and
buying calls, tend to increase market exposure. Options and futures may be
combined with each other or with forward contracts in order to adjust the risk
and return characteristics of a Portfolio's overall strategy. A Portfolio may
invest in options and futures based on any type of secu-

<PAGE>

rity, index or currency, including options and futures traded on non-U.S.
exchanges and options not traded on exchanges.

Options and futures can be volatile investments and involve certain risks. If
Pioneer applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures strategies may lower a Portfolio's return. A
Portfolio could also experience losses if the prices of its options and futures
positions were poorly correlated with its other investments, or if it could not
close out its positions because of an illiquid secondary market.

Depositary Receipts. Each Portfolio may invest in securities of non-U.S. issuers
in the form of American Depositary Receipts (ADRs), Global Depositary Receipts
(GDRs) and other similar instruments. Generally, ADRs in registered form are
designed for use in U.S. securities markets, and GDRs and other similar global
instruments in bearer form are designed for use in non-U.S. securities markets.
ADRs are denominated in U.S. dollars and represent an interest in the right to
receive securities of non-U.S. issuers deposited in a U.S. bank or a
correspondent bank. ADRs do not eliminate all the risk inherent in investing in
the securities of non-U.S. issuers. However, by investing in ADRs rather than
directly in the stock of non-U.S. issuers, a Portfolio will avoid currency risks
during the settlement period for either purchases or sales. GDRs are not
necessarily denominated in the same currency as the securities for which they
may be exchanged. For purposes of the Portfolios' investment policies,
investments in ADRs, GDRs and similar instruments will be deemed to be
investments in the equity securities into which they may be converted.

Warrants. Each Portfolio may invest in warrants, which entitle the holder to buy
equity securities at a specific price over a specific period of time. Warrants
may be considered more speculative than certain other types of investments, in
that they do not entitle the holder to dividends or voting rights with respect
to the securities which may be purchased nor do they represent any rights in the
assets of the issuing company. The value of a warrant may be more volatile than
the value of the warrant's underlying securities. Also, the value of the warrant
does not necessarily change with the value of the underlying securities and a
warrant ceases to have value if it is not exercised prior to the expiration
date.

<PAGE>
PIONEER VARIABLE CONTRACTS TRUST

PART B

STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION

MAY 1, 1998

PIONEER VARIABLE CONTRACTS TRUST
(CONSISTING OF TEN PORTFOLIOS)

INTERNATIONAL GROWTH PORTFOLIO
CAPITAL GROWTH PORTFOLIO
GROWTH SHARES PORTFOLIO
REAL ESTATE GROWTH PORTFOLIO
GROWTH AND INCOME PORTFOLIO
EQUITY-INCOME PORTFOLIO
BALANCED PORTFOLIO
SWISS FRANC BOND PORTFOLIO
AMERICA INCOME PORTFOLIO
MONEY MARKET PORTFOLIO

60 STATE STREET
BOSTON, MASSACHUSETTS 02109

This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Prospectus (the "Prospectus") dated May
1, 1998, as amended and/or supplemented from time to time, of Pioneer Variable
Contracts Trust (the "Fund"). A copy of the Prospectus can be obtained free of
charge from your insurance company. The most recent Annual Report to
shareholders is attached to this Statement of Additional Information and is
hereby incorporated in this Statement of Additional Information by reference.

TABLE OF CONTENTS
PAGE

1. Investment Policies and Restrictions................ 2
2. Management of the Fund.............................. 18
3. Investment Adviser.................................. 22
4. Principal Underwriter............................... 24
5. Custodian........................................... 24
6. Independent Public Accountant....................... 25
7. Portfolio Transactions.............................. 25
8. Tax Status.......................................... 27
9. Description of Shares............................... 30
10. Certain Liabilities................................. 31
11. Determination of Net Asset Value.................... 31
12. Investment Results.................................. 33
13. Financial Statements................................ 36
APPENDIX A - Description of Short-Term Debt
and Corporate Bond Ratings................... 46
APPENDIX B - Performance Statistics.............. 50
APPENDIX C - Other Pioneer Information........... 61

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.

<PAGE>

1. INVESTMENT POLICIES AND RESTRICTIONS

The Fund consists of separate portfolios, each of which is an
investment vehicle for variable annuity and variable life insurance contracts
(the "Variable Contracts") offered by the separate accounts (the "Accounts") of
various insurance companies ("Participating Insurance Companies"). As described
in the Prospectus, the portfolios also may be offered to certain qualified
pension and retirement plans (the "Qualified Plans"). The Fund currently
consists of the following ten distinct portfolios: International Growth
Portfolio, Capital Growth Portfolio, Growth Shares Portfolio, Real Estate Growth
Portfolio, Growth and Income Portfolio, Equity-Income Portfolio, Balanced
Portfolio, Swiss Franc Bond Portfolio, America Income Portfolio and Money Market
Portfolio (each a "Portfolio"). Your Variable Contract or qualified plan may not
offer all Portfolios of the Fund. The terms and conditions of the Variable
Contracts and any limitations upon the Portfolios in which the Accounts may be
invested are set forth in a separate prospectus and statement of additional
information relating to the Variable Contracts. The terms and conditions of a
Qualified Plan and any limitations upon the Portfolios in which such Plan may be
invested are set forth in such Plan's governing documents. The Fund reserves the
right to limit the types of Accounts and the types of Qualified Plans that may
invest in any Portfolio.

Qualified Plans and Participating Insurance Companies are the record
holders and beneficial owners of shares of beneficial interest in each Portfolio
of the Fund. In accordance with the limitations set forth in their Variable
Contracts, contract holders may direct through their Participating Insurance
Companies the allocation of amounts available for investment among the Fund's
Portfolios. Similarly, in accordance with any limitations set forth in their
Qualified Plans, Qualified Plan participants may direct through their Qualified
Plan administrators the allocation of amounts available for investment among the
Fund's Portfolios. Instructions for any such allocation, or for the purchase or
redemption of shares of a Portfolio, must be made by the investor's
Participating Insurance Company or Qualified Plan administrator, as the case may
be, as the record holder of the Portfolio's shares. The rights of Participating
Insurance Companies and Qualified Plans as record holders of shares of a
Portfolio are different from the rights of contract holders and Qualified Plan
participants. The term "shareholder" in this Statement of Additional Information
refers only to Participating Insurance Companies and Qualified Plans, and not to
contract holders or Qualified Plan participants.

The Fund's Prospectus identifies the investment objective and the
principal investment policies of each Portfolio and the risk factors associated
with the Portfolio's investments. Whenever an investment policy or restriction
states a maximum percentage of a Portfolio's assets may be invested in any
security or presents a policy regarding quality standards, this standard or
other restriction shall be determined immediately after and as a result of the
Portfolio's investment. Accordingly, any later increase or decrease resulting
from a change in values, net assets or other circumstances will not be
considered in determining whether the investment complies with the Portfolio's
investment objectives and policies Other investment policies of the Portfolios
and associated risk factors are set forth below. Capitalized terms not otherwise
defined herein have the meaning given to them in the Prospectus. This Statement
of Additional Information should be read in conjunction with the Prospectus.

LOWER RATED DEBT SECURITIES

Growth Shares Portfolio, Real Estate Growth Portfolio, Growth and
Income Portfolio and Equity-Income Portfolio may each invest up to 5% of their
respective net assets in debt securities which are rated in the lowest rating
categories by Standard & Poor's Ratings Group ("Standard & Poor's") or by
Moody's Investors Service, Inc. ("Moody's") (I.E., ratings of BB or lower by
Standard & Poor's or Ba or lower by Moody's) or, if unrated by such rating
organizations, determined to be of comparable quality by Pioneering Management
Corporation ("Pioneer" or "PMC"), each Portfolio's investment adviser.
International Growth and Swiss Franc Bond Portfolios may not purchase such lower
rated debt securities, but up to 5% of their net assets may be invested in such
securities as a result of credit quality downgrades. In addition, each Portfolio
other than America Income and Money Market Portfolios may invest in medium rated
debt securities (I.E., securities rated BBB by Standard & Poor's or Baa by
Moody's, or unrated securities determined by Pioneer to be of comparable
quality).

Bonds rated BB or Ba or below or comparable unrated securities are
commonly referred to as "junk bonds" and are considered speculative and may be
questionable as to principal and interest payments. In some cases, such bonds
may be highly speculative, have poor prospects for reaching investment standing
and be in default. As a result, investment in such bonds will entail greater
speculative risks than those associated with investment in investment grade
bonds (I.E., bonds rated BBB or better by Standard & Poor's or Baa or better by
Moody's or, if unrated by such rating organizations, determined to be of
comparable quality by Pioneer). See Appendix A to this Statement of Additional
Information for a description of the ratings issued by Standard & Poor's and
Moody's.

The amount of junk bond securities outstanding has proliferated in
conjunction with the increase in merger and acquisition and leveraged buyout
activity. An economic downturn could severely affect the ability of highly
leveraged issuers to service their debt obligations or to repay their
obligations upon maturity. Factors having an adverse impact on the market value
of lower rated securities will have an adverse effect on a Portfolio's net asset
value to the extent that it invests in such securities. In addition, a Portfolio
may incur additional expenses to the extent it is required to seek recovery upon
a default in payment of principal or interest on its portfolio holdings.

The secondary market for junk bond securities, which is concentrated in
relatively few market makers, may not be as liquid as the secondary market for
more highly rated securities, a factor which may have an adverse effect on a
Portfolio's ability to dispose of a particular security when necessary to meet
its liquidity needs. Under adverse market or economic conditions, the secondary
market for junk bond securities could contract further, independent of any
specific adverse changes in the condition of a particular issuer. As a result, a
Portfolio could find it more difficult to sell these securities or may be able
to sell the securities only at prices lower than if such securities were widely
traded. Prices realized upon the sale of such lower rated or unrated securities,
under these circumstances, may be less than the prices used in calculating the
Portfolio's net asset value.

Certain proposed and recently enacted federal laws including the
required divestiture by federally insured savings and loan associations of their
investments in junk bonds and proposals designed to limit the use, or tax and
other advantages, of junk bond securities could adversely affect a Portfolio's
net asset value and investment practices. Such proposals could also adversely
affect the secondary market for junk bond securities, the financial condition of
issuers of these securities and the value of outstanding junk bond securities.
The form of such proposed legislation and the possibility of such legislation
being passed are uncertain.

Since investors generally perceive that there are greater risks
associated with the medium to lower rated debt securities of the type in which
each Portfolio other than America Income and Money Market Portfolios may invest
a portion of its assets, the yields and prices of such securities may tend to
fluctuate more than those for higher rated securities. In the lower quality
segments of the debt securities market, changes in perceptions of issuers'
creditworthiness tend to occur more frequently and in a more pronounced manner
than do changes in higher quality segments of the debt securities market,
resulting in greater yield and price volatility.

The prices of all debt securities generally fluctuate in response to
the general level of interest rates. Another factor which causes fluctuations in
the prices of debt securities is the supply and demand for similarly rated
securities. Fluctuations in the prices of portfolio securities subsequent to
their acquisition will not affect any cash income from such securities but will
be reflected in a Portfolio's net asset value.

Medium to lower rated and comparable unrated debt securities tend to
offer higher yields than higher rated securities with the same maturities
because the historical financial condition of the issuers of such securities may
not have been as strong as that of other issuers. Since medium to lower rated
securities generally involve greater risks of loss of income and principal than
higher rated securities, investors should consider carefully the relative risks
associated with investment in securities which carry medium to lower ratings and
in comparable unrated securities. In addition to the risk of default, there are
the related costs of recovery on defaulted issues. Pioneer will attempt to
reduce these risks through portfolio diversification and by analysis of each
issuer and its ability to make timely payments of income and principal, as well
as broad economic trends and corporate developments.

CERTIFICATES OF DEPOSIT

Swiss Franc Bond Portfolio may invest in investment grade certificates
of deposit of domestic banks and savings and loan associations and foreign
banks, without regard to the size of the issuing institution. Money Market
Portfolio may invest in certificates of deposit of large domestic banks and
savings and loan associations (i.e., banks which at the time of their most
recent annual financial statements show total assets in excess of $1 billion),
including foreign branches of such domestic banks, and of smaller banks as
described below. Money Market Portfolio will not invest in certificates of
deposit of foreign banks.

Investment in certificates of deposit issued by foreign banks and
foreign branches of domestic banks involves investment risks that are different
in some respects from those associated with investment in certificates of
deposit issued by domestic banks, including the possible imposition of
withholding taxes on interest income, the possible adoption of foreign
governmental restrictions which might adversely affect the payment of principal
and interest on such certificates of deposit, or other adverse political or
economic developments. In addition, it might be more difficult to obtain and
enforce a judgment against a foreign bank or a foreign branch of a domestic
bank.

Although Money Market Portfolio recognizes that the size of a bank is
important, this fact alone is not necessarily indicative of its
creditworthiness. Accordingly, Money Market Portfolio may invest in certificates
of deposit issued by banks and savings and loan associations which had at the
time of their most recent annual financial statements total assets of less than
$1 billion, provided that (i) the principal amounts of such certificates of
deposit are insured by an agency of the U.S. Government, (ii) at no time will
the Portfolio hold more than $100,000 principal amount of certificates of
deposit of any one such bank and (iii) at the time of acquisition, no more than
10% of the Portfolio's assets (taken at current value) are invested in
certificates of deposit of such banks having total assets not in excess of $1
billion.

ADDITIONAL INFORMATION REGARDING GNMA CERTIFICATES

As discussed in the Prospectus, America Income Portfolio's investments
in U.S. Government Securities may include mortgage participation certificates
("GNMA Certificates") guaranteed by the Government National Mortgage Association
("GNMA"). Real Estate Growth Portfolio and Balanced Portfolio also may invest in
GNMA Certificates. GNMA Certificates evidence part ownership of a pool of
mortgage loans. Because prepayment rates of individual mortgage pools will vary
widely, it is not possible to predict with certainty the average life of a
particular issue of GNMA Certificates. However, statistics published by the
Farmers' Home Administration ("FHA") are normally used as an indicator of the
expected average life of GNMA Certificates. The actual life of a particular
issue of GNMA Certificates, however, will depend on the coupon rate of the
underlying mortgages, with higher interest rate mortgages being more prone to
prepayment or refinancing.

The coupon rate of interest of GNMA Certificates is lower than the
interest rate paid on the Veterans Administration-guaranteed or FHA-insured
mortgages underlying the GNMA Certificates, but only by the amount of the fees
paid to GNMA and the issuer. For the most common type of mortgage pool,
containing single-family dwelling mortgages, GNMA receives an annual fee of
6/100 of 1% of the outstanding principal for providing its guarantee, and the
issuer is paid an annual fee of 44/100 of 1% for assembling the mortgage pool
and for passing through monthly payments of interest and principal to GNMA
Certificate holders.

The coupon rate by itself, however, does not indicate the yield that
will be earned on GNMA Certificates for the reasons given in the section
"Investment Objective and Policies" in the Prospectus. In quoting yields for
GNMA Certificates, the customary practice is to assume that the GNMA
Certificates will have a 12-year life. Compared on this basis, GNMA Certificates
have historically yielded roughly 25/100 of 1% more than U.S. Government and
U.S. Government agency bonds. As the life of individual pools may vary widely,
however, the actual yield earned on any issue of GNMA Certificates may differ
significantly from the yield estimated on the assumption of a 12-year life.

Since the inception of the GNMA mortgage-backed securities program in
1970, the amount of GNMA Certificates outstanding has grown rapidly. The size of
the market and the active participation in the secondary market by securities
dealers and many types of investors make the GNMA Certificates a highly liquid
instrument. Prices of GNMA Certificates are readily available from securities
dealers and depend on, among other things, the level of market interest rates,
the GNMA Certificate's coupon rate and the prepayment experience of the pools of
mortgages backing each GNMA Certificate.

COVERED CALL OPTIONS

Growth and Income Portfolio may write (sell) covered call options on
certain portfolio securities, but options may not be written on more than 25% of
the aggregate market value of any single portfolio security (determined each
time a call is sold as of the date of such sale). As a writer of a call option,
the Portfolio receives a premium less commission, and, in exchange, foregoes the
opportunity to profit from increases in the market value of the security
covering the call above the sum of the premium and the exercise price of the
option during the life of the option. The purchaser of such a call has the
option of purchasing the security from the Portfolio's portfolio at the option
price during the life of the option. Portfolio securities on which options may
be written are purchased solely on the basis of investment considerations
consistent with the Portfolio's investment objectives. The security covering the
call is maintained in a segregated account of the Portfolio's custodian. The
Portfolio does not consider a security covered by a call option to be "pledged"
as that term is used in the Portfolio's policy which limits the pledging or
mortgaging of its assets.

The Portfolio will purchase a call option only when entering into a
"closing purchase transaction," i.e., a purchase of a call option on the same
security with the same exercise price and expiration date as a "covered" call
already written by the Portfolio. There is no assurance that the Portfolio will
be able to effect such closing purchase transactions at a favorable price; if
the Portfolio cannot enter into such a transaction it may be required to hold a
security that it might otherwise have sold. The Portfolio's portfolio turnover
may increase through the exercise of options if the market price of the
underlying securities appreciates and the Portfolio has not entered into a
closing purchase transaction. The commission on the purchase or sale of a call
option is higher in relation to the premium than the commission in relation to
the price on purchase or sale of the underlying security.

<PAGE>

SECURITIES INDEX OPTIONS

Each of International Growth Portfolio, Capital Growth Portfolio, Real
Estate Growth Portfolio, Equity-Income Portfolio and Swiss Franc Bond Portfolio
may invest in call and put options on securities indices for the purpose of
hedging against the risk of unfavorable price movements adversely affecting the
value of the applicable Portfolio's securities or securities the Portfolio
intends to buy. The Portfolios will not invest in securities index options for
speculative purposes.

Options on stock indices are traded only on national securities
exchanges and over-the-counter, both in the United States and in foreign
countries. However, a Portfolio will not purchase over-the-counter options. A
securities index fluctuates with changes in the market values of the securities
included in the index. For example, some stock index options are based on a
broad market index such as the S&P 500 or the Value Line Composite Index in the
U.S., the Nikkei in Japan or the FTSE 100 in the United Kingdom. Index options
may also be based on a narrower market index, such as the S&P 100 or on an
industry or market segment such as the AMEX Oil and Gas Index or the Computer
and Business Equipment Index.

A Portfolio may purchase put options in order to hedge against an
anticipated decline in securities prices that might adversely affect the value
of securities held by the Portfolio. If a Portfolio purchases a put option on a
securities index, the amount of the payment it would receive upon exercising the
option would depend on the extent of any decline in the level of the securities
index below the exercise price. Such payments would tend to offset a decline in
the value of securities held by the Portfolio. However, if the level of the
securities index increases and remains above the exercise price while the put
option is outstanding, the Portfolio will not be able to profitably exercise the
option and will lose the amount of the premium and any transaction costs. Such
loss may be partially offset by an increase in the value of the securities held
by the Portfolio.

A Portfolio may purchase call options on securities indices in order to
lock in a favorable price on securities that it intends to buy in the future. If
a Portfolio purchases a call option on a securities index, the amount of the
payment it receives upon exercising the option depends on the extent of any
increase in the level of the securities index above the exercise price. Such
payments would in effect allow a Portfolio to benefit from securities market
appreciation even though it may not have had sufficient cash to purchase the
underlying securities. Such payments may offset increases in the price of
securities that the Portfolio intends to purchase. If, however, the level of the
securities index declines and remains below the exercise price while the call
option is outstanding, the Portfolio will not be able to exercise the option
profitably and will lose the amount of the premium and transaction costs. Such
loss may be partially offset by a reduction in the price the Portfolio pays to
buy additional securities for its portfolio.

A Portfolio may sell any securities index option it has purchased or
write a similar offsetting securities index option in order to close out a
position in a securities index option which it has purchased. These closing sale
transactions enable a Portfolio to immediately realize gains or minimize losses
on its options positions. However, there is no assurance that a liquid secondary
market on an options exchange will exist for any particular option, or at any
particular time, and for some options no secondary market may exist. In
addition, securities index prices may be distorted by interruptions in the
trading of securities of certain companies or of issuers in certain industries,
or by restrictions that may be imposed by an exchange on opening or closing
transactions, or both, which would disrupt trading in options on such indices
and preclude a Portfolio from closing out its options positions. If a Portfolio
is unable to effect a closing sale transaction with respect to options that it
has purchased, it would have to exercise the options in order to realize any
profit.

The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying markets that can not
be reflected in the options markets. The purchase of options is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions.

In addition to the risks of imperfect correlation between securities
held by a Portfolio and the index underlying the option, the purchase of
securities index options involves the risk that the premium and transaction
costs paid by a Portfolio in purchasing an option will be lost. This could occur
as a result of unanticipated movements in prices of the securities comprising
the securities index on which the option is based.

FORWARD FOREIGN CURRENCY TRANSACTIONS

International Growth Portfolio, Swiss Franc Bond Portfolio, Capital
Growth Portfolio, Growth Shares Portfolio, Real Estate Growth Portfolio, Growth
and Income Portfolio, and Balanced Portfolio each may enter into foreign
currency transactions on a spot (I.E., cash) basis at the spot rate for
purchasing or selling currency prevailing in the foreign exchange market. Each
of these Portfolios also has authority to purchase and sell forward foreign
currency exchange contracts involving currencies of the different countries in
which it will invest as a hedge against possible variations in the foreign
exchange rate between these currencies and the U.S. dollar. This is accomplished
through contractual agreements to purchase or sell a specified currency at a
specified future date and price set at the time of the contract. A Portfolio may
close out a forward position in a currency by selling the forward contract or
entering into an offsetting forward contract.

Each Portfolio's transactions in forward foreign currency contracts
will be limited to hedging either specific transactions or portfolio positions,
except that, as described below, Swiss Franc Bond Portfolio may also enter into
such contracts in order to link the value of an investment in a "non-Swiss franc
security" (as defined in the Prospectus) to the performance of the Swiss franc.
Transaction hedging is the purchase or sale of forward foreign currency
contracts with respect to specific receivables or payables of a Portfolio
accruing in connection with the purchase and sale of its portfolio securities
denominated in foreign currencies. Portfolio hedging is the use of forward
foreign currency contracts to offset portfolio security positions denominated or
quoted in such foreign currencies. There is no guarantee that a Portfolio will
be engaged in hedging activities when adverse exchange rate movements occur. A
Portfolio may not necessarily, and Swiss Franc Bond Portfolio will not, attempt
to hedge all of its foreign portfolio positions and will enter into such
transactions only to the extent, if any, deemed appropriate by Pioneer.

A Portfolio may engage in cross-hedging by using forward contracts in
one currency to hedge against fluctuations in the value of securities
denominated in a different currency, if Pioneer determines that there is a
pattern of correlation between the two currencies. Cross-hedging may also
include entering into a forward transaction involving two foreign currencies,
using one foreign currency as a proxy for the U.S. dollar to hedge against
variations in the other foreign currency, if Pioneer determines that there is a
pattern of correlation between the proxy currency and the U.S.

dollar.

Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for a Portfolio to hedge against a devaluation that is so generally
anticipated that the Portfolio is not able to contract to sell the currency at a
price above the devaluation level it anticipates.

Swiss Franc Bond Portfolio may combine forward contracts to purchase
Swiss francs with investments in securities denominated in another currency in
an attempt to construct a combined investment position whose overall performance
will be similar to that of a security denominated in Swiss francs. For example,
the Portfolio could purchase a dollar-denominated security and at the same time
enter into a forward contract to exchange dollars for Swiss francs at a future
date. If the amount of dollars to be exchanged is properly matched with the
anticipated value of the dollar-denominated security, the Portfolio should be
able to "lock in" the Swiss franc value of the security, and the Portfolio's
overall investment return from the combined position should be similar to the
return from purchasing a Swiss franc-denominated instrument. This is commonly
referred to as a "synthetic" investment position.

Synthetic investment positions may offer greater liquidity than actual
purchases of Swiss franc-denominated securities because of the broad variety of
highly liquid short-term instruments available in the United States and other
countries (other than Switzerland). However, the execution of a synthetic
investment strategy may not be successful. It is impossible to forecast with
absolute precision what the market value of a particular security will be at any
given time. If the value of a non-Swiss franc security is not exactly matched
with Swiss Franc Bond Portfolio's obligation under the forward currency exchange
contract on the contract's maturity date, the Portfolio may be exposed to some
risk of loss from fluctuation in the exchange rate between the Swiss franc and
the non-Swiss franc currency. Although Pioneer will attempt to match such
investments, there can be no assurance that Pioneer will be successful in doing
so.

If a Portfolio enters into a forward contract to purchase foreign
currency, its custodian bank will segregate cash or liquid, high grade debt
securities in a separate account of the Portfolio in an amount equal to the
value of the Portfolio's total assets committed to the consummation of such
forward contract. Those assets will be valued at market daily and if the value
of the assets in the separate account declines, additional cash or securities
will be placed in the accounts so that the value of the account will equal the
amount of the Portfolio's commitment with respect to such contracts.

The cost to a Portfolio of engaging in foreign currency transactions
varies with such factors as the currency involved, the size of the contract, the
length of the contract period and the market conditions then prevailing. Since
transactions in foreign currency and forward contracts are usually conducted on
a principal basis, no fees or commissions are involved.

OPTIONS ON FOREIGN CURRENCIES

International Growth Portfolio, Capital Growth Portfolio, Growth Shares
Portfolio, Real Estate Growth Portfolio, Growth and Income Portfolio, Balanced
Portfolio and Swiss Franc Bond Portfolio each may purchase options on foreign
currencies for hedging purposes in a manner similar to that of transactions in
forward contracts. For example, a decline in the U.S. dollar value of a foreign
currency in which portfolio securities are quoted or denominated will reduce the
U.S. dollar value of such securities, even if their value in the foreign
currency remains constant. In an attempt to protect against such decreases in
the value of portfolio securities, a Portfolio may purchase put options on the
foreign currency. If the value of the currency declines, the Portfolio will have
the right to sell such currency for a fixed amount of U.S. dollars which exceeds
the market value of such currency. This would result in a gain that may offset,
in whole or in part, the negative effect of currency depreciation on the value
of the Portfolio's securities quoted or denominated in that currency.

Conversely, if a rise in the U.S. dollar value of a currency is
projected for those securities to be acquired, thereby increasing the cost of
such securities, a Portfolio may purchase call options on such currency. If the
value of such currency increased, the purchase of such call options would enable
the Portfolio to purchase currency for a fixed amount of U.S. dollars which is
less than the market value of such currency. Such a purchase would result in a
gain that may offset, at least partially, the effect of any currency related
increase in the price of securities the Portfolio intends to acquire. As in the
case of other types of options transactions, however, the benefit a Portfolio
derives from purchasing foreign currency options will be reduced by the amount
of the premium and related transaction costs. In addition, if currency exchange
rates do not move in the direction or to the extent anticipated, a Portfolio
could sustain losses on transactions in foreign currency options which would
deprive it of a portion or all of the benefits of advantageous changes in such
rates.

A Portfolio may close out its position in a currency option by either
selling the option it has purchased or entering into an offsetting option.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

To hedge against changes in securities prices or currency exchange
rates, International Growth Portfolio, Capital Growth Portfolio, Real Estate
Growth Portfolio and Swiss Franc Bond Portfolio may purchase and sell various
kinds of futures contracts, and purchase and write (sell) call and put options
on such futures contracts. Growth Shares Portfolio, Growth and Income Portfolio,
and Balanced Portfolio may only purchase and sell futures contracts that relate
to foreign currencies and related options. Each Portfolio may also enter into
closing purchase and sale transactions with respect to such futures contracts
and options. Futures contracts may be based on various securities (such as U.S.
Government securities), securities indices, foreign currencies and other
financial instruments and indices. All futures contracts entered into by the
Portfolios are traded on U.S. exchanges or boards of trade that are licensed and
regulated by the Commodity Futures Trading Commission (the "CFTC") or on foreign
exchanges.

FUTURES CONTRACTS. A futures contract may generally be described as an
agreement between two parties to buy and sell particular financial instruments
for an agreed price during a designated month (or to deliver the final cash
settlement price, in the case of a contract relating to an index or otherwise
not calling for physical delivery at the end of trading in the contract).

When interest rates are rising or securities prices are falling, a
Portfolio can seek to offset a decline in the value of its current portfolio
securities through the sale of futures contracts. When interest rates are
falling or securities prices are rising, a Portfolio, through the purchase of
futures contracts, can attempt to secure better rates or prices than might later
be available in the market when it effects anticipated purchases. Similarly, a
Portfolio can sell futures contracts on a specified currency to protect against
a decline in the value of such currency and a decline in the value of its
portfolio securities which are quoted or denominated in such currency. A
Portfolio can purchase futures contracts on foreign currency to establish the
price in U.S. dollars of a security quoted or denominated in such currency that
the Portfolio has acquired or expects to acquire.

Positions taken in the futures markets are not normally held to
maturity but are instead liquidated through offsetting transactions which may
result in a profit or a loss. While futures contracts on securities or currency
will usually be liquidated in this manner, a Portfolio may instead make, or
take, delivery of the underlying securities or currency whenever it appears
economically advantageous to do so. A clearing corporation associated with the
exchange on which futures on securities or currency are traded guarantees that,
if still open, the sale or purchase will be performed on the settlement date.

Each Portfolio will be required, in connection with transactions in
futures contracts and the writing of options on futures, to make margin
deposits, which will be held by the Portfolio's custodian for the benefit of the
futures commission merchant through whom the Portfolio engages in such futures
contracts and options transactions. In the case of futures contracts or options
requiring a Portfolio to purchase securities, the Portfolio must place cash or
liquid, high grade debt securities in a segregated account maintained by the
custodian and marked to market daily to cover such futures contracts and
options.

HEDGING STRATEGIES. Hedging, by use of futures contracts, seeks to
establish with more certainty the effective price, rate of return and currency
exchange rate on portfolio securities and securities that a Portfolio owns or
proposes to acquire. A Portfolio may, for example, take a "short" position in
the futures market by selling futures contracts in order to hedge against an
anticipated rise in interest rates or a decline in market prices or foreign
currency rates that would adversely affect the value of securities held by the
Portfolio. Such futures contracts may include contracts for the future delivery
of securities held by the Portfolio or securities with characteristics similar
to those securities held by the Portfolio. Similarly, a Portfolio may sell
futures contracts in currency in which its portfolio securities are quoted or
denominated, or in one currency to hedge against fluctuations in the value of
securities quoted or denominated in a different currency if there is an
established historical pattern of correlation between the two currencies. If, in
the opinion of Pioneer, there is a sufficient degree of correlation between
price trends for the securities held by the Portfolio and futures contracts
based on other financial instruments, securities indices or other indices, the
Portfolio may also enter into such futures contracts as part of its hedging
strategy. Although under some circumstances prices of securities held by a
Portfolio may be more or less volatile than prices of such futures contracts,
Pioneer will attempt to estimate the extent of this volatility difference based
on historical patterns and compensate for any such differential by having the
Portfolio enter into a greater or lesser number of futures contracts or by
attempting to achieve only a partial hedge against price changes affecting the
Portfolio's securities portfolio. When hedging of this character is successful,
any depreciation in the value of securities held by a Portfolio will be
substantially offset by appreciation in the value of the futures position. On
the other hand, any unanticipated appreciation in the value of securities held
by a Portfolio would be substantially offset by a decline in the value of the
futures position.

On other occasions, a Portfolio may take a "long" position by
purchasing futures contracts. This would be done, for example, when the
Portfolio anticipates the subsequent purchase of particular securities when it
has the necessary cash, but expects the prices or currency exchange rates then
available in the applicable market to be less favorable than prices or rates
that are currently available.

OPTIONS ON FUTURES CONTRACTS. International Growth Portfolio, Capital
Growth Portfolio, Growth Shares Portfolio, Real Estate Growth Portfolio, Growth
and Income Portfolio, Balanced Portfolio and Swiss Franc Bond Portfolio may each
purchase and write options on futures contracts for hedging purposes. The
acquisition of put and call options on futures contracts will give a Portfolio
the right (but not the obligation) for a specified price to sell or to purchase,
respectively, the underlying futures contract at any time during the option
period. As the purchaser of an option on a futures contract, a Portfolio obtains
the benefit of the futures position if prices move in a favorable direction but
limits its risk of loss in the event of an unfavorable price movement to the
loss of the premium and transaction costs.

The writing of a call option on a futures contract generates a premium
which may partially offset a decline in the value of a Portfolio's assets. By
writing a call option, a Portfolio becomes obligated (if the option is
exercised), in exchange for the premium, to sell a futures contract, which may
have a value higher than the exercise price. Conversely, the writing of a put
option on a futures contract generates a premium which may partially offset an
increase in the price of securities that the Portfolio intends to purchase.
However, by writing a put option, the Portfolio becomes obligated (if the option
is exercised) to purchase a futures contract which may have a value lower than
the exercise price. Thus, the loss that a Portfolio may incur by writing options
on futures is potentially unlimited and may exceed the amount of the premium
received. A Portfolio will incur transaction costs in connection with the
writing of options on futures.

The holder or writer of an option on a futures contract may terminate
its position by selling or purchasing an offsetting option of the same series.
There is no guarantee that such closing transactions can be effected. A
Portfolio's ability to establish and close out positions on such options will be
subject to the development and maintenance of a liquid market.

OTHER CONSIDERATIONS. As noted above, International Growth Portfolio,
Capital Growth Portfolio, Growth Shares Portfolio, Real Estate Growth Portfolio,
Growth and Income Portfolio, Balanced Portfolio and Swiss Franc Bond Portfolio
may each engage in futures and related options transactions for hedging
purposes. CFTC regulations permit principals of an investment company registered
under the 1940 Act to engage in such transactions for bona fide hedging (as
defined in such regulations) and certain other limited purposes without
registering as commodity pool operators. Each Portfolio will determine that the
price fluctuations in the futures contracts and options on futures contracts
used for hedging purposes are substantially related to price fluctuations in
securities held by the Portfolio or which it expects to purchase. Except as
stated below, each Portfolio's futures transactions will be entered into for
traditional hedging purposes--i.e., futures contracts will be sold to protect
against a decline in the price of securities (or the currency in which they are
quoted or denominated) that the Portfolio owns, or futures contracts will be
purchased to protect the Portfolio against an increase in the price of
securities (or the currency in which they are quoted or denominated) it intends
to purchase. As evidence of this hedging intent, each Portfolio expects that on
75% or more of the occasions on which it takes a long futures or option position
(involving the purchase of futures contracts), the Portfolio will have
purchased, or will be in the process of purchasing, equivalent amounts of
related securities or assets quoted or denominated in the related currency in
the cash market at the time when the futures or option position is closed out.
However, in particular cases, when it is economically advantageous for a
Portfolio to do so, a long futures position may be terminated or an option may
expire without the corresponding purchase of securities or other assets.

As an alternative to literal compliance with the bona fide hedging
definition, a CFTC regulation permits a Portfolio to elect to comply with a
different test under which the sum of the amounts of initial margin deposits on
the Portfolio's existing futures contracts and premiums paid for options on
futures entered into for the purpose of seeking to increase total return (net of
the amount the positions were "in the money" at the time of purchase) may not
exceed 5% of the market value of the Portfolio's net assets. A Portfolio will
engage in transactions in futures contracts and related options only to the
extent such transactions are consistent with the requirements of the Internal
Revenue Code of 1986, as amended (the "Code"), for maintaining its qualification
as a regulated investment company for federal income tax purposes.

Transaction costs associated with futures contracts and related options
include brokerage costs, required margin deposits and, in the case of contracts
and options obligating a Portfolio to purchase securities or currencies, the
requirement that the Portfolio segregate assets to cover such contracts and
options.

While transactions in futures contracts and options on futures may
reduce certain risks, such transactions themselves entail certain other risks.
Thus, while a Portfolio may benefit from the use of futures and options on
futures, unanticipated changes in interest rates, securities prices or currency
exchange rates may result in a poorer overall performance for the Portfolio than
if it had not entered into any futures contracts or options transactions. In the
event of an imperfect correlation between a futures position and a portfolio
position which is intended to be protected, the desired protection may not be
obtained and a Portfolio may be exposed to risk of loss.

Perfect correlation between a Portfolio's futures positions and
portfolio positions will be difficult to achieve because the only futures
contracts available to hedge a Portfolio's portfolio are various futures on U.S.
Government securities and foreign currencies, futures on a municipal securities
index and stock index futures. In addition, it is not possible to hedge fully or
perfectly against the effect of currency fluctuations on the value of foreign
securities because currency movements affect the value of different securities
in differing degrees.

RESTRICTED AND ILLIQUID SECURITIES

Each Portfolio, other than America Income Portfolio and Money Market
Portfolio, may invest up to 5% of its net assets in "restricted securities"
(I.E., securities that would be required to be registered prior to distribution
to the public), excluding restricted securities eligible for resale under Rule
144A under the Securities Act of 1933, as amended (the "1933 Act"), and, for the
Portfolios that allow non-U.S. investments, foreign securities which are offered
or sold outside the United States. In addition, each Portfolio other than Money
Market Portfolio may invest up to 15% of its net assets in illiquid investments,
which includes securities that are not readily marketable and repurchase
agreements maturing in more than seven days. Money Market Portfolio may invest
up to 10% of its net assets in such investments. Generally, a security may be
considered illiquid if a Portfolio is unable to dispose of such security within
seven days at approximately the price at which it values such security.
Securities may also be considered illiquid as a result of certain legal or
contractual restrictions on resale. The sale of illiquid securities, if they can
be sold at all, generally will require more time and result in higher brokerage
charges and other selling expenses than will the sale of liquid securities, such
as securities eligible for trading on U.S. exchanges or in the over-the-counter
markets. Moreover, restricted securities (I.E., securities that would be
required to be registered prior to distribution to the general public), such as
securities eligible for resale pursuant to Rule 144A ("144A securities"), which
may be illiquid for purposes of this limitation, often sell, if at all, at a
price lower than similar securities that are not subject to restrictions on
resale.

With respect to liquidity determinations generally, the Board of
Trustees has the ultimate responsibility for determining whether specific
securities, including Rule 144A securities, are liquid or illiquid. The Board
has delegated the function of making day-to-day determinations of liquidity for
each Portfolio to Pioneer, pursuant to guidelines reviewed by the Trustees.
Pioneer takes into account a number of factors in reaching liquidity decisions.
These factors may include, but are not limited to: (i) the frequency of trading
in the security; (ii) the number of dealers who make quotes for the security;
(iii) the number of dealers who have undertaken to make a market in the
security; (iv) the number of other potential purchasers; and (v) the nature of
the security and how trading is effected (E.G., the time needed to sell the
security, how offers are solicited and the mechanics of transfer). Pioneer will
monitor the liquidity of securities held by the Portfolio and report
periodically on such decisions to the Trustees.

REPURCHASE AGREEMENTS

Each Portfolio may enter into repurchase agreements with "primary
dealers" in U.S. Government securities and banks which furnish collateral at
least equal in value or market price to the amount of their repurchase
obligation. Each Portfolio that may invest in foreign securities may also enter
into repurchase agreements involving certain foreign government securities. The
primary risk is that, if the seller defaults, a Portfolio might suffer a loss to
the extent that the proceeds from the sale of the underlying securities and
other collateral held by the Portfolio in connection with the related repurchase
agreement are less than the repurchase price. Another risk is that, in the event
of bankruptcy of the seller, a Portfolio could be delayed in or prohibited from
disposing of the underlying securities and other collateral held by the
Portfolio in connection with the related repurchase agreement pending court
proceedings. In evaluating whether to enter into a repurchase agreement for a
Portfolio, Pioneer will carefully consider the creditworthiness of the seller
pursuant to procedures reviewed and approved by the Trustees.

LENDING OF PORTFOLIO SECURITIES

Each Portfolio other than America Income Portfolio and Money Market
Portfolio may lend portfolio securities to member firms of the New York Stock
Exchange, under agreements which would require that the loans be secured
continuously by collateral in cash, cash equivalents or U.S. Treasury Bills
maintained on a current basis at an amount at least equal to the market value of
the securities loaned. A Portfolio would continue to receive the equivalent of
the interest or dividends paid by the issuer on the securities loaned as well as
the benefit of an increase or detriment of a decrease in the market value of the
securities loaned and would also receive compensation based on investment of the
collateral. A Portfolio would not, however, have the right to vote any
securities having voting rights during the existence of the loan, but would call
the loan in anticipation of an important vote to be taken among holders of the
securities or of the giving or withholding of consent on a material matter
affecting the investment.

As with other extensions of credit there are risks of delay in recovery
or even loss of rights in the collateral should the borrower of the securities
fail financially. A Portfolio will lend portfolio securities only to firms which
have been approved in advance by the Board of Trustees, which will monitor the
creditworthiness of any such firms. At no time would the value of the securities
loaned by a Portfolio exceed 33 1/3% of the value of its total assets.

OTHER INVESTMENT COMPANIES

With the exception of the Money Market Portfolio, which may not
purchase securities of other investment companies or investment trusts, unless
they are acquired as part of a merger, consolidation or acquisition of assets,
the Portfolios may not, under the 1940 Act, acquire the securities of other
domestic or foreign investment companies r investment funds if, as a result, (i)
more than 10% of a Portfolio's total assets would be invested in securities of
other investment companies, (ii) such purchase would result in more than 3% of
the total outstanding voting securities of any one investment company being held
by the Portfolio, or (iii) more than 5% of the Portfolio's total assets would be
invested in any one investment company. These limitations do not apply to the
purchase of shares of any investment company in connection with a merger,
consolidation, reorganization or acquisition of substantially all the assets of
another investment company. A Portfolio, as a shareholder of the securities of
another investment company, will bear its pro rata portion of the other
investment company's expenses, including advisory fees. These expenses are in
addition to the direct expenses of the Portfolio's own operations.

WARRANTS

Each Portfolio may invest in warrants, which are securities permitting,
but not obligating, their holder to subscribe for other securities. Warrants do
not carry with them the right to dividends or voting rights with respect to the
securities that they entitle their holders to purchase, and they do not
represent any rights in the assets of the issuer. As a result, an investment in
warrants may be considered more speculative than certain other types of
investments. In addition, the value of a warrant does not necessarily change
with the value of the underlying securities and a warrant ceases to have value
if it is not exercised prior to its expiration date. Although each Portfolio
does not have a formal percentage limitation on such investments, it is not
expected that Pioneer will invest more than 5% of a Portfolio's net assets in
such securities.

<PAGE>

REAL ESTATE INVESTMENT TRUSTS

Real Estate Growth Portfolio may invest without limitation in shares of
real estate investment trusts ("REITs"). Capital Growth Portfolio, Growth Shares
Portfolio, Growth and Income Portfolio, Equity-Income Portfolio and Balanced
Portfolio may each invest up to 5% of its total assets in shares of REITs. REITs
are pooled investment vehicles which invest primarily in income-producing real
estate or real estate related loans or interests. REITs are generally classified
as equity REITs, mortgage REITs or a combination of equity and mortgage REITs.
Equity REITs invest the majority of their assets directly in real property and
derive income primarily from the collection of rents. Equity REITs can also
realize capital gains by selling properties that have appreciated in value.
Mortgage REITs invest the majority of their assets in real estate mortgages and
derive income from the collection of interest payments. Like regulated
investment companies such as Real Estate Growth Portfolio, REITs are not taxed
on income distributed to shareholders provided they comply with several
requirements of the Code. Each Portfolio will indirectly bear its proportionate
share of any expenses paid by REITs in which it invests in addition to the
expenses paid by the Portfolio.

Investing in REITs involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. Equity
REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified and
are subject to the risks of financing projects. REITs are subject to heavy cash
flow dependency, default by borrowers, self-liquidation, and the possibilities
of failing to qualify for the exemption from tax for distributed income under
the Code and failing to maintain their exemptions under the 1940 Act. REITs
whose underlying assets include long-term health care properties, such as
nursing, retirement and assisted living homes, may be affected by federal
regulations concerning the health care industry.

REITs (especially mortgage REITs) are also subject to interest rate
risks. When interest rates decline, the value of a REIT's investment in fixed
rate obligations can be expected to rise. Conversely, when interest rates rise,
the value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.

Investing in REITs involves risks similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume and may be subject
to more abrupt or erratic price movements than larger company securities.
Historically, small capitalization stocks, such as REITs, have been more
volatile in price than the larger capitalization stocks included in the S&P 500
Index.

MORTGAGE-BACKED SECURITIES

Real Estate Growth, Balanced and America Income Portfolios may invest
in mortgage-backed securities. Investing in mortgage-backed securities involves
certain unique risks in addition to those risks associated with investing in the
real estate industry in general. In addition to the risks described in the
Prospectus, both adjustable rate mortgage loans and fixed rate mortgage loans
may be subject to a greater rate of principal prepayments in a declining
interest rate environment and to a lesser rate of principal prepayments in an
increasing interest rate environment. In an environment of rapidly rising
interest rates, the Fund may encounter difficulty disposing of instruments that
are sensitive to changes in interest rates.

INVESTMENT RESTRICTIONS

The Fund, on behalf of each Portfolio, has adopted certain fundamental
investment restrictions which may not be changed without the affirmative vote of
the record holders of a "majority" (as defined in the 1940 Act) of the
Portfolio's outstanding voting securities. As used in the Prospectus and this
Statement of Additional Information, such approval means the approval of the
lesser of (i) the recordholders of 67% or more of the shares of a Portfolio
represented at a meeting if the recordholders of more than 50% of the
outstanding shares of the Portfolios are present in person or by proxy, or (ii)
the holders of more than 50% of the Portfolio's outstanding shares.

RESTRICTIONS THAT APPLY TO INTERNATIONAL GROWTH PORTFOLIO, CAPITAL GROWTH
PORTFOLIO, GROWTH SHARES PORTFOLIO, REAL ESTATE GROWTH PORTFOLIO, GROWTH AND
INCOME PORTFOLIO, EQUITY-INCOME PORTFOLIO, BALANCED PORTFOLIO AND SWISS FRANC
BOND PORTFOLIO:

Each Portfolio may not:

(1) Issue senior securities, except as permitted by paragraphs (2), (6)
and (7) below. For purposes of this restriction, the issuance of shares of
beneficial interest in multiple classes or series, the purchase or sale of
options, futures contracts and options on futures contracts, forward
commitments, forward foreign exchange contracts, repurchase agreements and
reverse repurchase agreements entered into in accordance with the Portfolio's
investment policy, and the pledge, mortgage or hypothecation of the Portfolio's
assets within the meaning of paragraph (3) below are not deemed to be senior
securities.

(2) Borrow money, except from banks as a temporary measure for
extraordinary emergency purposes and except pursuant to reverse repurchase
agreements and (for Swiss Franc Bond Portfolio only) forward roll transactions,
and then only in amounts not to exceed 33 1/3% of the Portfolio's total assets
(including the amount borrowed) taken at market value. The Portfolio will not
use leverage to attempt to increase income. The Portfolio will not purchase
securities while outstanding borrowings (including reverse repurchase
agreements) exceed 5% of the Portfolio's total assets.

(3) Pledge, mortgage, or hypothecate its assets, except to secure
indebtedness permitted by paragraph (2) above and then only if such pledging,
mortgaging or hypothecating does not exceed 33 1/3% of the Portfolio's total
assets taken at market value.

(4) Act as an underwriter, except to the extent that, in connection
with the disposition of portfolio securities, the Portfolio may be deemed to be
an underwriter for purposes of the 1933 Act .

(5) Purchase or sell real estate, except that the Portfolio may (i)
lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (iii) invest in securities that are
secured by real estate or interests therein, (iv) purchase and sell
mortgage-related securities and (v) hold and sell real estate acquired by the
Portfolio as a result of the ownership of securities.

(6) Make loans, except that the Portfolio may lend portfolio securities
in accordance with the Portfolio's investment policies and may purchase or
invest in repurchase agreements, bank certificates of deposit, a portion of an
issue of publicly distributed bonds, bank loan participation agreements,
bankers' acceptances, debentures or other securities, whether or not the
purchase is made upon the original issuance of the securities.

(7) Invest in commodities or commodity contracts or in puts, calls, or
combinations of both, except interest rate futures contracts, options on
securities, securities indices, currency and other financial instruments,
futures contracts on securities, securities indices, currency and other
financial instruments and options on such futures contracts, forward foreign
currency exchange contracts, forward commitments, securities index put or call
warrants, interest rate swaps, caps and floors and repurchase agreements entered
into in accordance with the Fund's investment policies.

(8) (THIS RESTRICTION NO. 8 DOES NOT APPLY TO REAL ESTATE GROWTH
PORTFOLIO) With respect to 75% of its total assets, purchase securities of an
issuer (other than the U.S. Government, its agencies or instrumentalities), if

(a) such purchase would cause more than 5% of the Portfolio's
total assets, taken at market value, to be invested in the securities
of such issuer, or

(b) such purchase would at the time result in more than 10% of
the outstanding voting securities of such issuer being held by the
Portfolio.

It is the fundamental policy of each Portfolio other than Real Estate
Growth Portfolio not to concentrate its investments in securities of companies
in any particular industry. Following the current opinion of the staff of the
SEC, investments are concentrated in a particular industry if such investments
aggregate 25% or more of the Portfolio's total assets. The foregoing industry
concentration policy does not apply to investments in U.S. Government
securities.

Real Estate Growth Portfolio will invest 25% or more of its total
assets in securities issued by companies in the real estate industry.

As a matter of nonfundamental investment policy and in connection with
the offering of its shares in various states and foreign countries, the Fund, on
behalf of each Portfolio, has agreed not to:

(a) Purchase securities on margin or make short sales unless by virtue
of its ownership of other securities, the Portfolio has the right to obtain,
without payment of additional consideration, securities equivalent in kind and
amount to the securities sold and, if the right is conditional, the sale is made
upon the same conditions, except that the Portfolio may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities and in connection with transactions involving forward foreign
currency exchange transactions, options, futures contracts and options on
futures contracts.

(b) Purchase any security which is illiquid, if more than 15% of the
net assets of the Portfolio, taken at market value, would be invested in such
securities. Each Portfolio may not invest in repurchase agreements maturing in
more than seven days. Each Portfolio currently intends to limit its investments
in illiquid securities to illiquid Rule 144A securities.

(c) Invest more than 5% of its total assets in restricted securities,
excluding Rule 144A securities; provided, however, the Portfolio may not invest
more than 15% of its total assets in restricted securities, including such Rule
144A securities.

(d) Write covered calls or put options with respect to more than 25% of
the value of its total assets.

(e) Real Estate Growth Portfolio may not invest more than 10% of its
total assets in shares of REITs that are not readily marketable.

RESTRICTIONS THAT APPLY TO AMERICA INCOME PORTFOLIO

America Income Portfolio may not:

(1) borrow money, except from banks to meet redemptions in amounts not
exceeding 33 1/3% (taken at the lower of cost or current value) of its total
assets (including the amount borrowed). The Portfolio does not intend to borrow
money during the coming year, and will do so only as a temporary measure for
extraordinary purposes or to facilitate redemptions. The Portfolio will not
purchase securities while any borrowings are outstanding;

(2) purchase securities on margin;

(3) make loans to any person, except by (a) the purchase of a debt
obligation in which the Portfolio is permitted to invest and (b) engaging in
repurchase agreements;

(4) act as an underwriter, except as it may be deemed to be an
underwriter in a sale of restricted securities; or

(5) issue senior securities, except as permitted by restrictions nos. 2
and 4 above, and, for purposes of this restriction, the issuance of shares of
beneficial interest in multiple classes or series, the purchase or sale of
options, futures contracts and options on futures contracts, forward
commitments, forward foreign exchange contracts and repurchase agreements
entered into in accordance with the Portfolio's investment policies.

The Fund, on behalf of America Income Portfolio, has agreed to adopt
certain additional investment restrictions which are not fundamental and may be
changed by a vote of the Fund's Board of Trustees without shareholder approval.

Pursuant to these additional restrictions, the Portfolio may not:

(a) make short sales of securities, unless by virtue of its ownership
of other securities, the Portfolio has the right to obtain securities equivalent
in kind and amount to the securities sold and, if the right is conditional, the
sale is made upon the same terms and conditions, except that the Portfolio may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities;

(b) invest in any security, including any repurchase agreement maturing
in more than seven days, which is illiquid, if more than 15% of the net assets
of the Portfolio, taken at market value, would be invested in such securities;

(c) pledge, mortgage or hypothecate its portfolio securities if at the
time of such action the value of the securities so pledged, mortgaged or
hypothecated would exceed 10% of the value of the Portfolio;

(d) purchase or sell real estate except that the Portfolio may (i)
acquire or lease office space for its own use, (ii) invest in securities of
issuers that invest in real estate or interests therein, (iii) invest in
securities that are secured by real estate or interests therein, (iv) purchase
and sell mortgage-related securities and real estate limited partnerships and
(v) hold and sell real estate acquired by the Portfolio as a result of the
ownership or securities; and

(e) invest in assets, except in U.S. Government Securities and in
when-issued commitments and repurchase agreements with respect to these
securities;

<PAGE>

RESTRICTIONS THAT APPLY TO MONEY MARKET PORTFOLIO

Money Market Portfolio may not:

(1) except with respect to investments in obligations of (a) the U.S.
Government, its agencies, authorities or instrumentalities and (b) domestic
banks, purchase any security if, as a result (i) more than 5% of the assets of
the Portfolio would be invested in the securities of any one issuer, or (ii)
more than 25% of its assets would be invested in a particular industry;

(2) borrow money, except from banks to meet redemptions in amounts not
exceeding 33 1/3% (taken at the lower of cost or current value) of its total
assets (including the amount borrowed). The Portfolio does not intend to borrow
money during the coming year, and will do so only as a temporary measure for
extraordinary purposes or to facilitate redemptions. The Portfolio will not
purchase securities while any borrowings are outstanding;

(3) make short sales of securities;

(4) purchase securities on margin;

(5) write, purchase or otherwise invest in any put, call, straddle or
spread option or buy or sell real estate, commodities or commodity futures
contracts or invest in oil, gas or mineral exploration or development programs;

(6) make loans to any person, except by (a) the purchase of a debt
obligation in which the Portfolio is permitted to invest and (b) engaging in
repurchase agreements;

(7) knowingly purchase any security that is subject to legal or
contractual restrictions on resale or for which there is no readily available
market;

(8) purchase the securities of other investment companies or investment
trusts, unless they are acquired as part of a merger, consolidation or
acquisition of assets;

(9) purchase or retain the securities of any issuer if any officer or
Trustee of the Fund or the Portfolio or its investment adviser is an officer or
director of such issuer and beneficially owns more than 1/2 of 1% of the
securities of such issuer and all of the officers and the Trustees of the Fund
and the Portfolio's investment adviser together own more than 5% of the
securities of such issuer;

(10) act as an underwriter, except as it may be deemed to be an
underwriter in a sale of restricted securities;

(11) invest in companies for the purpose of exercising control or
management; or

(12) issue senior securities.

In addition, in order to comply with certain nonfundamental policies of
the Portfolio, the Portfolio will not (i) pledge, mortgage or hypothecate its
portfolio securities if at the time of such action the value of the securities
so pledged, mortgaged or hypothecated would exceed 10% of the value of the
Portfolio, or (ii) will not commit more than 10% of its assets to illiquid
investments, such as repurchase agreements that mature in more than seven days.
The term "person" as used in Investment Restriction No. 6 includes institutions
as well as individuals. Policies in this paragraph may be changed by the
Trustees without shareholder approval or notification.

CERTAIN ADDITIONAL NON-FUNDAMENTAL RESTRICTIONS THAT APPLY TO THE PORTFOLIOS

Except with respect to the 300% asset coverage required with respect to
borrowings by each Portfolio, if a percentage restriction on investment or
utilization of assets as set forth above is adhered to at the time an investment
is made, a later change in percentage resulting from changes in the values of
the Portfolio's assets will not be considered a violation of the restriction.

2. MANAGEMENT OF THE FUND

The Fund's Board of Trustees provides broad supervision over the
affairs of the Fund. The officers of the Fund are responsible for the Fund's
operations. The Trustees and executive officers of the Fund are listed below,
together with their principal occupations during the past five years. An
asterisk indicates those Trustees who are interested persons of the Fund within
the meaning of the 1940 Act.

JOHN F. COGAN, JR.*, CHAIRMAN OF THE BOARD, PRESIDENT AND TRUSTEE,
DOB: JUNE 1926
President, Chief Executive Officer and a Director of The Pioneer Group,
Inc. ("PGI"); Chairman and a Director of Pioneering Management Corporation
("PMC") and Pioneer Funds Distributor, Inc. ("PFD"); Director of Pioneering
Services Corporation ("PSC"), Pioneer Capital Corporation ("PCC"); Pioneer Real
Estate Advisors, Inc., Pioneer Forest, Inc., Pioneer Explorer, Inc., Pioneer
Management (Ireland) Ltd. ("PMIL") and Closed Joint Stock Company
"Forest-Starma"; President and Director of Pioneer Metals and Technology, Inc.
("PMT"), Pioneer International Corp. ("PIntl"), Pioneer First Russia, Inc.
("First Russia") and Pioneer Omega, Inc. ("Omega"); Chairman of the Board and
Director of Pioneer Goldfields Limited ("PGL") and Teberebie Goldfields Limited;
Chairman of the Supervisory Board of Pioneer Fonds Marketing, GmbH, Pioneer
First Polish Investment Fund Joint Stock Company, S.A. and Pioneer Czech
Investment Company, A.S.; Chairman, President and Trustee of all of the Pioneer
mutual funds; Director of Pioneer Global Equity Fund Plc, Pioneer Global Bond
Fund Plc, Pioneer DM Cashfonds Plc, Pioneer European Equity Fund Plc, Pioneer
Central & Eastern Europe Fund Plc and Pioneer US Real Estate Fund Plc; and
Partner, Hale and Dorr LLP (counsel to PGI and the Fund).

RICHARD H. EGDAHL, M.D. TRUSTEE, DOB: DECEMBER 1926
BOSTON UNIVERSITY HEALTH POLICY INSTITUTE, 53 BAY STATE ROAD, BOSTON, MA 02215
Alexander Graham Bell Professor of Health Care Entrepreneurship, Boston
University; Professor of Management, Boston University School of Management;
Professor of Public Health, Boston University School of Public Health; Professor
of Surgery, Boston University School of Medicine; University Professor, Boston
University; Director, Boston University Health Policy Institute and Boston
University Program for Health Care Entrepreneurship; Director, CORE (management
of workers' compensation and disability costs - NASDAQ); Director, WellSpace
(provider of complementary health care); Trustee, Boston Medical Center;
Honorary Trustee, Franciscan Children's Hospital; and Trustee of all of the
Pioneer mutual funds.

MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
ONE BOSTON PLACE, SUITE 2635, BOSTON, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm);
Trustee of Boston Medical Center; Member of the Board of Governors of the
Investment Company Institute; and Trustee of all of the Pioneer mutual funds.

DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Executive Vice President and a Director of PGI; President, Chief
Investment Officer and a Director of PMC; Director of PFD, PCC, PIntl, First
Russia, Omega, Pioneer SBIC Corporation ("Pioneer SBIC"), PMIL, Pioneer Global
Equity Fund Plc, Pioneer Global Bond Fund Plc, Pioneer DM Cashfonds Plc, Pioneer
European Equity Fund Plc, Pioneer Central and Eastern Europe Fund Plc and
Pioneer US Real Estate Fund Plc; and Executive Vice President and Trustee of all
of the Pioneer mutual funds.

STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 BROAD STREET, NEW YORK, NY 10004
Of Counsel to Sullivan & Cromwell (law firm); Trustee, The Winthrop
Focus Funds (mutual funds); and Trustee of all of the Pioneer mutual funds.

STEPHEN G. KASNET, VICE PRESIDENT, DOB: MAY 1945

Trustee and Vice President of Pioneer Real Estate Shares; Vice
President of PGI and President of Pioneer Real Estate Advisor, Inc. since 1995;
and Managing Director, Winthrop Financial Associates and First Winthrop Corp.
from 1991 to 1995.

WILLIAM H. KEOUGH, TREASURER, DOB: APRIL 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PIC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC Corporation; Treasurer and Director of PPC; and Treasurer of all of
the Pioneer mutual funds.

JOSEPH P. BARRI, SECRETARY, DOB: AUGUST 1946
Secretary of PGI, PMC, PPC, PIC, PIntl, PMT, First Russia, Omega and PCC;
Clerk of PFD and PSC; Partner, Hale and Dorr LLP (counsel to the Fund); and
Secretary of all of the Pioneer mutual funds.

ERIC W. RECKARD, ASSISTANT TREASURER, DOB: JUNE 1956

Manager of Business Planning and Internal Audit of PMC since September 1996;
Manager of Fund Accounting of PMC since May 1994; Manager of Auditing,
Compliance and Business Analysis for PGI prior to May 1994; and Assistant
Treasurer of all of the Pioneer mutual funds.

ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC; and formerly of Hale and Dorr LLP
(counsel to the Fund) where he most recently served as junior partner.

NORMAN KURLAND, VICE PRESIDENT, DOB: NOVEMBER 1949
Senior Vice President of PMC since 1993; Vice President of PMC from 1990
to 1993; Vice President of Pioneer Europe Fund, Pioneer Emerging Markets Fund,
Pioneer India Fund and Pioneer International Growth Fund.

J. RODMAN WRIGHT, VICE PRESIDENT, DOB: JANUARY 1961
Vice President of PMC and Pioneer Capital Growth Fund, since January 1997
and former analyst and assistant portfolio manager of the Fund; formerly an
analyst and a co-portfolio manager, focusing on small capitalization securities,
with another investment firm from November 1989 to July 1994.

ROBERT W. BENSON, VICE PRESIDENT, DOB: APRIL 1947

Senior Vice President of PMC; Vice President of Pioneer Real Estate
Shares.

JOHN A. CAREY, VICE PRESIDENT, DOB: MAY 1949
Vice President of PMC, Pioneer Equity-Income Fund and Pioneer Fund.

WILLIAM C. FIELD, VICE PRESIDENT, DOB: SEPTEMBER 1964
Vice President of PMC and Pioneer Balanced Fund. Research Analyst since
1991 and served as an assistant portfolio manager for certain institutional
accounts since January 1996.

SHERMAN B. RUSS, VICE PRESIDENT, DOB: JULY 1937
Senior Vice President of PMC; Vice President of Pioneer Bond Fund,
Pioneer Money Market Trust, Pioneer America Income Trust and Pioneer Interest
Shares.

SALVATORE P. PRAMAS, VICE PRESIDENT, DOB: APRIL 1963
Vice President of PMC.

JEFFREY B. POPPENHAGEN, VICE PRESIDENT, DOB: MARCH 1962
Vice President of PMC and Pioneer Growth Shares, since February 1996;
formerly a portfolio manager for a number of equity portfolios.

The Fund's Agreement and Declaration of Trust (the "Declaration")
provides that the recordholders of two-thirds of its outstanding shares may vote
to remove a Trustee of the Fund at any special meeting of shareholders. The
business address of all officers is 60 State Street, Boston, Massachusetts
02109.

All of the outstanding capital stock of PMC, PFD and PSC is directly or
indirectly owned by PGI, a Delaware corporation. All of the outstanding capital
stock of PFD is owned by PMC. The table below lists all the Pioneer funds
currently offered to the public (other than the Portfolios) and the investment
adviser and principal underwriter for each fund.
INVESTMENT PRINCIPAL
FUND NAME ADVISER UNDERWRITER

Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Micro-Cap Fund PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Independence Fund PMC Note 1
Pioneer Capital Growth Fund PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Balanced Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer World Equity Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares PMC Note 2

- --------------------------

Note 1 This fund is available to the general public only through Pioneer
Independence Plans, a systematic investment plan, sponsored by PFD.

Note 2 This fund is a closed-end investment company.

PMC, the investment adviser to each Portfolio, also manages the
investments of certain institutional private accounts. To the knowledge of the
Fund, no officer or Trustee of the Fund owned 5% or more of the issued and
outstanding shares of PGI as of March 31, 1998, except Mr. Cogan who then owned
approximately 14% of such shares. As of March 31, 1998, the officers and
Trustees of the Fund held in the aggregate less than 1% of the outstanding
shares of each Portfolio.

As of March 31, 1998, the following record holder owned substantially
all the shares of each Portfolio: Allmerica Financial Life Insurance and Annuity
Company, 440 Lincoln Street, Worcester, MA 01653.

COMPENSATION OF OFFICERS AND TRUSTEES

The Fund pays no salaries or compensation to any of its officers. The
Fund pays an annual trustee's fee to each Trustee who is not affiliated with
PGI, PMC, PFD or PSC consisting of two components: (a) a base fee of $500 and
(b) a variable fee, calculated on the basis of the average net assets of the
Fund. In addition, the Fund pays a per meeting fee of $100 to each Trustee who
is not affiliated with PGI, PMC,, PFD or PSC and pays an annual Trustee's fee of
$500 plus expenses to each Trustee affiliated with PGI, PMC, PFD and PSC. The
Fund also pays an annual committee participation fee to each Trustee who serves
as a member of any committees established to act on behalf of one or more of the
Pioneer mutual funds. Committee fees are allocated to the Fund on the basis of
the Fund's average net assets. Each Trustee who is a member of the Audit
Committee for the Pioneer mutual funds receives an annual fee equal to 10% of
the aggregate annual trustee's fee, except the Committee Chairperson who
receives an annual trustee's fee equal to 20% of the aggregate annual trustee's
fee. Members of the Pricing Committee for the Pioneer mutual funds, as well as
any other committee which renders material functional services to the Board of
Trustees for the Pioneer mutual funds, receive an annual fee equal to 5% of the
annual trustee's fee, except the Committee Chairperson who receives an annual
trustee's fee equal to 10% of the annual trustee's fee. Each Trustee who is not
affiliated with PGI, PMC, PFD or PSC also receives $375 per meeting for
attendance at meetings of the Non-Interested Trustees Committee, except for the
Committee Chairperson who receives an additional $375 per meeting. Any such fees
paid to affiliates or interested persons of PGI, PMC, PFD or PSC are reimbursed
to the Fund under its Management Contract.

<PAGE>

The following table sets forth the compensation of the Trustees from
the Fund and the other Pioneer mutual funds for the fiscal year of the Fund
ending December 31, 1997:

PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS FROM PIONEER
AGGREGATE ACCRUED AS FAMILY OF FUNDS
COMPENSATION PART OF (INCLUDING

NAME OF TRUSTEE FROM THE FUND* FUND'S EXPENSES FUND)**

John F. Cogan, Jr. $ 500 $0 $12,000
Richard H. Egdahl, M.D. $2,000 0 $62,000
Marguerite A. Piret $2,000 0 $80,000
David D. Tripple* $ 500 0 $12,000
Stephen K. West $2,000 0 $63,800
------ -------
TOTAL $7,000 $229,800
====== ========

* For the fiscal year ended December 31, 1997.
** For the calendar year ended December 31, 1997.

3. INVESTMENT ADVISER

As stated in the Prospectus, Pioneer, 60 State Street, Boston,
Massachusetts 02109, serves as the investment adviser to each Portfolio. Each of
the Fund's management contracts is renewable annually by the vote of a majority
of the Board of Trustees of the Fund (including a majority of the Board of
Trustees who are not parties to the contract or interested persons of any such
parties) cast in person at a meeting called for the purpose of voting on such
renewal. Each contract terminates if assigned and may be terminated with respect
to one or more Portfolios without penalty by either party or a majority of the
affected Portfolio's outstanding voting securities and the giving of 60 days'
written notice.

As compensation for the management services and expenses incurred,
Pioneer is entitled to management fees at the annual rate of the applicable
Portfolio's average daily net assets set forth below.

MAXIMUM PORTFOLIO EXPENSES
AS A
PERCENTAGE OF AVERAGE
PORTFOLIO DAILY NET ASSETS
International Growth Portfolio 1.00%
Real Estate Growth Portfolio 1.00%

Growth Shares Portfolio 0.70%
Capital Growth Portfolio 0.65%
Growth and Income Portfolio 0.65%
Equity-Income Portfolio 0.65%
Balanced Portfolio 0.65%
Swiss Franc Bond Portfolio 0.65%
America Income Portfolio 0.55%
Money Market Portfolio 0.50%

The above management fees are normally computed daily and paid monthly
in arrears. Pioneer has voluntarily agreed not to impose a portion of its
management fee and to make other arrangements, if necessary, to limit certain
other expenses of the Portfolios to the extent necessary to reduce expenses to a
specified percentage of average daily net assets, as indicated below. As of the
date of this Statement of Additional Information, expense limitations are in
effect for International Growth Portfolio, Growth Shares Portfolio, Real Estate
Growth Portfolio, Growth and Income Portfolio, Swiss Franc Bond Portfolio,
America Income Portfolio and Money Market Portfolio. PMC is waiving all or a
portion of its management fees for International Growth Portfolio, Real Estate
Growth Portfolio and Swiss Franc Bond Portfolio. Other Expenses may be reduced,
as necessary for International Growth Portfolio and Swiss Franc Bond Portfolio.
Any such arrangements may be revised or terminated by Pioneer at any time
without notice.

PERCENTAGE OF PORTFOLIO'S
PORTFOLIO AVERAGE DAILY NET ASSETS

International Growth Portfolio 1.50%
Growth Shares Portfolio 1.25%
Growth and Income Portfolio 1.25%
Real Estate Growth Portfolio 1.25%
Swiss Franc Bond Portfolio 1.25%
America Income Portfolio 1.25%
Money Market Portfolio 1.00%

For the fiscal years ended December 31, 1995, 1996 and 1997 the
Portfolios incurred or would have incurred the following management fees had the
expense limitation agreements described above (if applicable) not been in place:

1995 1996 1997
---- ------ ----
International Growth Portfolio $ 8,341 $128,708 $399,296
Capital Growth Portfolio $17,739 $178,068 $498,117
Growth and Income Portfolio N/A N/A $ 1,791
Real Estate Growth Portfolio $ 1,879 $ 29,633 $253,190
Growth Shares Portfolio N/A N/A $ 1,995
Equity-Income Portfolio $10,878 $161,879 $536,689
Balanced Portfolio $ 3,924 $ 52,926 $187,536
America Income Portfolio $ 127 $ 23,307 $ 49,978
Swiss Franc Bond Portfolio $ 3,861 $ 33,183 $114,187
Money Market Portfolio $ 4,972 $ 42,001 $ 62,428

REAL ESTATE GROWTH PORTFOLIO SUBADVISER. Boston Financial Securities,
Inc. ("BFS"), 101 Arch Street, Boston, Massachusetts 02110, serves as the Real
Estate Growth Portfolio's subadviser. The subadvisory agreement among the
Portfolio, PMC and BFS is renewable annually by the vote of a majority of the
Board of Trustees of the Portfolio (including a majority of the Board of
Trustees who are not parties to the contract or interested persons of any such
parties) cast in person at a meeting called for the purpose of voting on such
renewal. This contract terminates if assigned and may be terminated without
penalty by any party by vote of its Board of Directors or Trustees, as the case
may be, or a majority of its outstanding voting securities and the giving of 60
days' written notice.

As compensation for its subadvisory services, PMC pays BFS a
subadvisory fee equal to 0.30% per annum of the Real Estate Growth Portfolio's
average daily net assets. The fee is normally computed daily and paid monthly.
The subadvisory fee payable by PMC to BFS will be reduced proportionally to the
extent that the management fee paid by the Portfolio to PMC is reduced under
PMC's voluntary expense limitation agreement or to the extent that PMC, after
written notice to BFS, elects to utilize a portion of the management fees paid
to PMC by the Portfolio to make payments to third parties.

As of December 31, 1997, the following individuals owned beneficially
more than 10% of the outstanding common stock of BFS: Randolph G. Hawthorne
(11.45%), Fred N. Pratt, Jr. (13.42%), William B. Haynsworth (11.53%). The
address for each of these individuals is BFS, 101 Arch Street, Boston,
Massachusetts 02110.

4. PRINCIPAL UNDERWRITER

Pioneer Funds Distributor, Inc., 60 State Street, Boston, Massachusetts
02109, serves as the principal underwriter for the Fund in connection with the
continuous offering of shares of the Portfolios. The Fund will not generally
issue shares for consideration other than cash. At the Fund's sole discretion,
however, it may issue shares for consideration other than cash in connection
with an acquisition of portfolio securities pursuant to a purchase of assets,
merger or other reorganization.

The redemption price of shares of beneficial interest of a Portfolio
may, at PMC's discretion, be paid in cash or portfolio securities. The Fund has,
however, elected to be governed by Rule 18f-1 under the 1940 Act pursuant to
which each Portfolio is obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the Portfolio's net asset value during any 90-day
period for any one shareholder. Should the amount of redemptions by any
shareholder exceed such limitation, the Fund will have the option of redeeming
the excess in cash or portfolio securities. In the latter case, the securities
are taken at their value employed in determining the Portfolio's net asset
value. A shareholder whose shares are redeemed in-kind may incur brokerage
charges in selling the securities received in-kind. The selection of such
securities will be made in such manner as the Board deems fair and reasonable.

5. CUSTODIAN

Brown Brothers Harriman & Co. 40 Water Street, Boston, Massachusetts
02109 is the custodian (the "Custodian") of each Portfolio's assets. The
Custodian's responsibilities include safekeeping and controlling each
Portfolio's cash and securities in the United States as well as in foreign
countries, handling the receipt and delivery of securities, and collecting
interest and dividends on the Portfolio's investments. The Custodian fulfills
its function in foreign countries through a network of subcustodian banks
located around the world (the "Subcustodians"). The Custodian also provides fund
accounting, bookkeeping and pricing assistance to the Portfolios and assistance
in arranging for forward currency exchange contracts as described above under
"Investment Policies and Restrictions."

The Custodian does not determine the investment policies of any
Portfolio or decide which securities it will buy or sell. Each Portfolio may
invest in securities issued by the Custodian or any of the Subcustodians,
deposit cash in the Custodian or any Subcustodian and deal with the Custodian or
any of the Subcustodians as a principal in securities transactions. Portfolio
securities may be deposited into the Federal Reserve-Treasury Department Book
Entry System or the Depository Trust Company in the United States or in
recognized central depositories in foreign countries. The Trustees periodically
review and approve the continuations of its international subcustodian
arrangements.

6. INDEPENDENT PUBLIC ACCOUNTANT

Arthur Andersen LLP, 225 Franklin Street, Boston, MA 02110, is the
Fund's independent public accountant, providing audit services, tax return
review, and assistance and consultation with respect to the preparation of
filings with the SEC.

7. PORTFOLIO TRANSACTIONS

MONEY MARKET PORTFOLIO

PMC intends to fully manage Money Market Portfolio by buying and
selling securities, as well as holding securities to maturity. In managing
Pioneer Money Market Portfolio, PMC seeks to take advantage of market
developments and yield disparities, which may include use of the following
strategies:

(1) shortening the average maturity of the Portfolio in anticipation of
a rise in interest rates so as to minimize depreciation of principal;

(2) lengthening the average maturity of the Portfolio in anticipation
of a decline in interest rates so as to maximize yield;

(3) selling one type of debt security and buying another when
disparities arise in the relative values of each; and

(4) changing from one debt security to an essentially similar debt
security when their respective yields appear distorted due to market factors.

ALL PORTFOLIOS

All orders for the purchase or sale of portfolio securities are placed
on behalf of a Portfolio by Pioneer pursuant to authority contained in the
Management Contracts. The primary consideration in placing portfolio security
transactions is execution at the most favorable prices. In selecting
broker-dealers, Pioneer will consider various relevant factors relating to best
execution, including, but not limited to, the size and type of the transaction;
the nature and character of the markets for the security to be purchased or
sold; the execution efficiency, settlement capability, and financial condition
of the broker-dealer; the broker-dealer's execution services rendered on a
continuing basis; and the reasonableness of any broker-dealer spreads. Most
transactions in foreign equity securities are executed by broker-dealers in
foreign countries in which commission rates are fixed and, therefore, are not
negotiable (as such rates are in the United States) and are generally higher
than in the United States. In addition, debt securities are traded principally
in the over-the-counter market on a net basis through dealers acting for their
own account and not as brokers.

The cost of securities purchased from underwriters includes an
underwriter's commission or concession, and the prices at which securities are
purchased and sold from and to dealers include a dealer's mark-up or mark-down.
Pioneer attempts to negotiate with underwriters to decrease the commission or
concession for the benefit of the Portfolios. Pioneer normally seeks to deal
directly with the primary market makers unless, in its opinion, better prices
are available elsewhere.

Pioneer may select broker-dealers which provide brokerage and/or
research services to the Portfolios and/or other investment companies or other
accounts managed by Pioneer. In addition, if PMC determines in good faith that
the amount of commissions charged by a broker-dealer is reasonable in relation
to the value of the brokerage and research services provided by such
broker-dealer, a Portfolio may pay commissions to such broker-dealer in an
amount greater than the amount another firm may charge. Such services may
include advice concerning the value of securities; the advisability of investing
in, purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; providing stock price quotation services;
furnishing analyses, manuals and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, performance of
accounts; comparative fund statistics and credit rating service information and
effecting securities transactions and performing functions incidental thereto
(such as clearance and settlement). Pioneer maintains a listing of
broker-dealers who provide such services on a regular basis. However, because it
is anticipated that many transactions on behalf of the Portfolios and other
investment companies or accounts managed by Pioneer are placed with
broker-dealers (including broker-dealers on the listing) without regard to the
furnishing of such services, it is not possible to estimate the proportion of
such transactions directed to such dealers solely because such services were
provided. Management believes that no exact dollar value can be calculated for
such services.

The research received from broker-dealers may be useful to Pioneer in
rendering investment management services to a Portfolio as well as to other
investment companies or accounts managed by Pioneer, although not all of such
research may be useful to the Portfolio. Conversely, such information provided
by brokers or dealers who have executed transaction orders on behalf of such
other accounts may be useful to Pioneer in carrying out its obligations to a
Portfolio. The receipt of such research has not reduced Pioneer's normal
independent research activities; however, it enables Pioneer to avoid the
additional expenses which might otherwise be incurred if it were to attempt to
develop comparable information through its own staff.

In circumstances where two or more broker-dealers offer comparable
prices and executions, preference may be given to a broker-dealer which has sold
shares of other investment companies or accounts managed by Pioneer. This policy
does not imply a commitment to execute all portfolio transactions through all
broker-dealers that sell shares of such investment companies and accounts

In addition to serving as investment adviser to the Portfolios, Pioneer
acts as investment adviser to other Pioneer mutual funds and certain private
accounts with investment objectives similar to those of the Portfolios. As such,
securities may meet investment objectives of a Portfolio, such other funds and
such private accounts. In such cases, the decision to recommend purchases for
one Portfolio, fund or account rather than another is based on a number of
factors. The determining factors in most cases are the amount of securities of
the issuer then outstanding, the value of those securities and the market for
them. Other factors considered in the investment recommendations include other
investments which each Portfolio, fund or account presently has in a particular
industry or country and the availability of investment funds in each Portfolio,
fund or account.

It is possible that, at times, identical securities will be held by
more than one Portfolio, fund and/or account. However, positions in the same
issue may vary and the length of time that any Portfolio, fund or account may
choose to hold its investment in the same issue may likewise vary. To the extent
that a Portfolio, another fund in the Pioneer group or a private account managed
by Pioneer may not be able to acquire as large a position in such security as it
desires, it may have to pay a higher price for the security. Similarly, a
Portfolio may not be able to obtain as large an execution of an order to sell or
as high a price for any particular portfolio security if Pioneer decides to sell
on behalf of another account the same portfolio security at the same time. On
the other hand, if the same securities are bought or sold at the same time by
more than one Portfolio or account, the resulting participation in volume
transactions could produce better executions for a Portfolio or the account. In
the event that more than one account purchases or sells the same security on a
given date, the purchases and sales will normally be made as nearly as
practicable on a pro rata basis in proportion to the amounts desired to be
purchased or sold by each.

The Trustees periodically review Pioneer's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Portfolios.

For the fiscal periods ended December 31, 1996 and December 31, 1997,
the Portfolios paid or owed aggregate brokerage commissions as follows:
AGGREGATE BROKERAGE COMMISSIONS
1996 1997
International Growth Portfolio $104,003 $420,962
Capital Growth Portfolio $112,179 $213,767
Growth Shares Portfolio N/A $ 3,795
Real Estate Growth Portfolio $ 22,788 $ 76,336
Growth & Income Portfolio N/A $ 2,460
Equity-Income Portfolio $ 45,921 $ 84,245
Balanced Portfolio $ 16,275 $ 35,766
America Income Portfolio $ 0 $ 0
Swiss Franc Bond Portfolio $ 0 $ 0
Money Market Portfolio $ 0 $ 0

Differences in brokerage commissions reflected above were due to
increased Portfolio activity and changes in net assets as a result of
shareholder transactions throughout the respective periods.

8. TAX STATUS

Each Portfolio is treated as a separate entity for federal income tax
purposes. It is each Portfolio's policy to meet the requirements of Subchapter M
of the Code for qualification as a regulated investment company. These
requirements relate to the sources of a Portfolio's income, the diversification
of its assets and the distribution of its income to shareholders. If a Portfolio
meets all such requirements and distributes to its shareholders, in accordance
with the Code's timing requirements, all investment company taxable income and
net capital gain, if any, which it earns, the Portfolio will be relieved of the
necessity of paying federal income tax.

In order to qualify as a regulated investment company under Subchapter
M, a Portfolio must, among other things, derive at least 90% of its annual gross
income from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock, securities or foreign
currencies, or other income (including gains from options, futures and forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies (the "90% income test"), and satisfy certain annual
distribution and quarterly diversification requirements. For purposes of the 90%
income test, income a Portfolio earns from equity interests in certain entities
that are not treated as corporations (E.G., are treated as partnerships or
trusts) for U.S. tax purposes will generally have the same character for the
Portfolio as in the hands of such entities; consequently, a Portfolio may be
required to limit its equity investments in such entities that earn fee income,
rental income, or other nonqualifying income.

As noted in the Prospectus, each Portfolio must, and intends to, comply
with the diversification requirements imposed by Section 817(h) of the Code and
the regulations thereunder. These requirements, which are in addition to the
diversification requirements imposed on a Portfolio by the 1940 Act and
Subchapter M of the Code, place certain limitations on the assets of each
separate account. Section 817(h) and these regulations treat the assets of the
Portfolios as assets of the related separate accounts and, among other things,
limit the extent to which the assets of a Portfolio may be represented by any
one, two, three or four investments. Specifically, the regulations provide that,
except as permitted by the "safe harbor" described below, as of the end of each
calendar quarter or within 30 days thereafter no more than 55% of the total
assets of a Portfolio may be represented by any one investment, no more than 70%
by any two investments, no more than 80% by any three investments and no more
than 90% by any four investments. For this purpose, all securities of the same
issuer are considered a single investment, and each U.S. Government agency and
instrumentality is considered a separate issuer. Section 817(h) provides, as a
safe harbor, that a separate account will be treated as being adequately
diversified if the diversification requirements under Subchapter M are satisfied
and no more than 55% of the value of the account's total assets are cash and
cash items (including receivables), U.S. Government securities and securities of
other regulated investment companies. Failure by a Portfolio to both qualify as
a regulated investment company and satisfy the Section 817(h) requirements would
generally result in adverse treatment of the variable contract holders,
differing from the treatment described in the applicable variable contract
prospectus, by causing the contracts to lose their favorable tax status and
requiring a contract holder to include in ordinary income any income accrued
under the contracts for the current and all prior taxable years. Any such
failure may also result in adverse tax consequences for the insurance company
issuing the contracts.

Dividends from investment company taxable income, which includes net
investment income, net short-term capital gain in excess of net long-term
capital loss, and certain net foreign exchange gains, are treated as ordinary
income, whether received in cash or reinvested in additional shares. Dividends
from net long-term capital gain in excess of net short-term capital loss ("net
capital gain"), if any, whether received in cash or reinvested in additional
shares, are treated as capital gains for federal income tax purposes without
regard to the length of time shares of the Portfolio have been held

Any dividend declared by a Portfolio in October, November or December
as of a record date in such a month and paid during the following January will
be treated for federal income tax purposes as received by shareholders on
December 31 of the calendar year in which it is declared.

Foreign exchange gains and losses realized by a Portfolio in connection
with certain transactions involving foreign currency-denominated debt
securities, certain options and futures contracts relating to foreign currency,
foreign currency forward contracts, foreign currencies, or payables or
receivables denominated in a foreign currency are subject to Section 988 of the
Code, which generally causes such gains and losses to be treated as ordinary
income and losses and may affect the amount, timing and character of
distributions to shareholders. Under future regulations, any such transactions
that are not directly related to a Portfolio's investments in stock or
securities (or its options or futures contracts with respect to stock or
securities) may need to be limited in order to enable the Portfolio to satisfy
the 90% income test If the net foreign exchange loss for a year were to exceed a
Portfolio's investment company taxable income (computed without regard to such
loss), the resulting ordinary loss for such year would not be deductible by the
Portfolio or its shareholders in future years.

If a Portfolio acquires any equity interest (under proposed
regulations, generally including not only stock but also an option to acquire
stock such as is inherent in a convertible bond) in certain foreign corporations
that receive at least 75% of their annual gross income from passive sources
(such as interest, dividends, certain rents, royalties, or capital gains) or
hold at least 50% of their assets in investments producing such passive income
("passive foreign investment companies"), the Portfolio could be subject to
federal income tax and additional interest charges on "excess distributions"
received from such companies or gain from the sale of stock in such companies,
even if all income or gain actually received by the Portfolio is timely
distributed to its shareholders. The Portfolio would not be able to pass through
to its shareholders any credit or deduction for such a tax. An election may
generally be available that would ameliorate these adverse tax consequences, but
any such election could require the applicable Portfolio to recognize taxable
income or gain (subject to tax distribution requirements) without the concurrent
receipt of cash. These investments could also result in the treatment of
associated capital gains as ordinary income. A Portfolio may limit and/or manage
its holdings in passive foreign investment companies to minimize its tax
liability or maximize its return from these investments.

Growth Shares Portfolio, Real Estate Growth Portfolio, Growth and
Income Portfolio and Equity-Income Portfolio may invest in debt obligations that
are in the lowest rating categories or are unrated, including debt obligations
of issuers not currently paying interest or who are in default. International
Growth Portfolio may hold such securities only as a result of credit quality
downgrades. Investments in debt obligations that are at risk of or in default
present special tax issues for the Portfolios. Tax rules are not entirely clear
about issues such as when a Portfolio may cease to accrue interest, original
issue discount, or market discount, when and to what extent deductions may be
taken for bad debts or worthless securities, how payments received on
obligations in default should be allocated between principal and income, and
whether exchanges of debt obligations in a workout context are taxable. These
and other issues will be addressed by a Portfolio, in the event it invests in
such securities, in order to seek to ensure that it distributes sufficient
income to preserve its status as a regulated investment company and does not
become subject to federal income tax.

If a Portfolio invests in certain pay-in-kind securities ("PIKs"), zero
coupon securities, deferred interest securities or, in general, any other
securities with original issue discount (or with market discount if a Portfolio
elects to include market discount in income currently), the Portfolio must
accrue income on such investments for each taxable year, which generally will be
prior to the receipt of the corresponding cash payments. However, the Portfolio
must distribute, at least annually, all or substantially all of its net income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid Federal income tax. Therefore, the
Portfolio may have to dispose of its portfolio securities under disadvantageous
circumstances to generate cash, or may have to leverage itself by borrowing the
cash, to satisfy distribution requirements.

For federal income tax purposes, each Portfolio is permitted to carry
forward a net capital loss for any year to offset its own capital gains, if any,
during the eight years following the year of the loss. To the extent subsequent
capital gains are offset by such losses, they would not result in federal income
tax liability to the Portfolio and therefore are not expected to be distributed
as such to shareholders. At December 31, 1997, America Income Portfolio had
aggregate capital loss carryforwards of $67,031 which will expire in 2004 if not
utilized and Swiss Franc Bond Portfolio had aggregate capital loss carryforwards
of $5,280 which will expire in 2005 if not utilized. As of December 31, 1997,
International Growth Portfolio, Capital Growth Portfolio, Growth Shares
Portfolio, Real Estate Growth Portfolio, Growth and Income Portfolio,
Equity-Income Portfolio, Balanced Portfolio, and Money Market Portfolio had no
capital loss carryforwards.

Redemptions and exchanges are taxable events for shareholders that are
subject to tax. Shareholders should consult their own tax advisers with
reference to their individual circumstances to determine whether any particular
transaction in Portfolio shares is properly treated as a sale for tax purposes,
as the following discussion assumes. Any loss realized by a shareholder upon the
redemption, exchange or other disposition of shares with a tax holding period of
six months or less will be treated as a long-term capital loss to the extent of
any amounts treated as distributions of long-term capital gain with respect to
such shares. . Losses on redemptions or other dispositions of shares may be
disallowed under "wash sale" rules in the event of other investments in the same
Portfolio (including those made pursuant to reinvestment of dividends and/or
capital gain distributions) within a period of 61 days beginning 30 days before
and ending 30 days after a redemption or other disposition of shares. In such a
case, the disallowed portion of any loss would be included in the federal tax
basis of the shares acquired in the other investments.

Options written or purchased and futures contracts entered into by a
Portfolio on certain securities, indices and foreign currencies, as well as
certain foreign currency forward contracts, may cause the Portfolio to recognize
gains or losses from marking-to-market at the end of its taxable year even
though such options may not have lapsed, been closed out, or exercised or such
futures or forward contracts may not have been performed or closed out. The tax
rules applicable to these contracts may affect the characterization as long-term
or short-term of some capital gains and losses realized by the Portfolios.
Certain options, futures and forward contracts relating to foreign currency may
be subject to Section 988, as described above, and may accordingly produce
ordinary income or loss. Additionally, the Fund may be required to recognize
gain if an option, futures contract or other transaction that is not subject to
the mark to market rules is treated as a "constructive sale" of an "appreciated
financial position" held by the Fund under Section 1259 of the Code. Any net
mark to market gains and/or gains from constructive sales may also have to be
distributed to satisfy the distribution requirements referred to above even
though no corresponding cash amounts may concurrently be received, possibly
requiring the disposition of portfolio securities or borrowing to obtain the
necessary cash. Losses on certain options, futures or forward contracts and/or
offsetting positions (portfolio securities or other positions with respect to
which a Portfolio's risk of loss is substantially diminished by one or more
options, futures or forward contracts) may also be deferred under the tax
straddle rules of the Code, which may also affect the characterization of
capital gains or losses from straddle positions and certain successor positions
as long-term or short-term. Certain tax elections may be available that would
enable a Portfolio to ameliorate some adverse effects of the tax rules described
in this paragraph. The tax rules applicable to options, futures or forward
contracts and straddles may affect the amount, timing and character of a
Portfolio's income and losses and hence of its distributions to shareholders.

Each Portfolio that may invest in foreign countries may be subject to
withholding and other taxes imposed by foreign countries, including taxes on
interest, dividends and capital gains, with respect to its investments in those
countries. Tax conventions between certain countries and the U.S. may reduce or
eliminate such taxes in some cases. The Portfolios do not expect to pass through
to their shareholders their pro rata shares of qualified foreign taxes paid by
the Portfolios.

Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions, is accorded to accounts held
by trustees of qualified pension or retirement plans. These shareholders should
consult their tax advisers for more information.

If, as anticipated, each Portfolio continues to qualify as a regulated
investment company under the Code, it will not be required to pay any
Massachusetts income, corporate excise or franchise taxes or any Delaware
corporation income tax.

The description of certain federal tax provisions above relates solely
to U.S. federal income tax law as it applies to the Portfolios and to certain
aspects of their distributions. It does not address special tax rules applicable
to certain classes of investors, such as tax-exempt entities and insurance
companies. Shareholders should consult their own tax advisers on these matters
and on state, local and other applicable tax laws.

9. DESCRIPTION OF SHARES

The Fund's Declaration of Trust permits the Board of Trustees to
authorize the issuance of an unlimited number of full and fractional shares of
beneficial interest (without par value) which may be divided into such separate
series as the Trustees may establish. Currently, the Fund consists of ten
Portfolios. The Trustees may establish additional portfolios of shares in the
future, and may divide or combine the shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests. Each
share of a Portfolio represents an equal proportionate interest in the
Portfolio. The shares of each Portfolio participate equally in the earnings,
dividends and assets of the Portfolio, and are entitled to vote separately to
approve investment advisory agreements or changes in investment restrictions,
but shareholders of all Portfolios vote together in the election and selection
of Trustees and accountants. Upon liquidation of a Portfolio, the Portfolio's
shareholders are entitled to share pro rata in the Portfolio's net assets
available for distribution to shareholders.

Shareholders are entitled to one vote for each share held and may vote
in the election of Trustees and on other matters submitted to meetings of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees. No amendment adversely affecting the rights of shareholders may be
made to the Fund's Declaration of Trust without the affirmative vote of a
majority of its shares. Shares have no preemptive or conversion rights. Shares
are fully paid and non-assessable by the Fund, except as stated below.

The rights, if any, of Variable Contract holders to vote the shares of
a Portfolio are governed by the relevant Variable Contract. For information on
such voting rights, see the prospectus describing such Variable Contract.

10. CERTAIN LIABILITIES

As a Delaware business trust, the Fund's operations are governed by its
Declaration of Trust dated September 16, 1994, as amended January 25, 1995. A
copy of the Fund's Certificate of Trust, also dated September 16, 1994, as
amended February 3, 1995, is on file with the Office of the Secretary of State
of the State of Delaware. Generally, Delaware business trust shareholders are
not personally liable for obligations of a Delaware business trust under
Delaware law. The Delaware Business Trust Act (the "Delaware Act") provides that
a shareholder of a Delaware business trust shall be entitled to the same
limitation of liability extended to shareholders of private for-profit
corporations. The Fund's Declaration of Trust expressly provides that the Fund
has been organized under the Delaware Act and that the Declaration of Trust is
to be governed by Delaware law. It is nevertheless possible that a Delaware
business trust, such as the Fund, might become a party to an action in another
state whose courts refused to apply Delaware law, in which case the Fund's
shareholders could be subject to personal liability.

To guard against this risk, the Declaration of Trust (i) contains an
express disclaimer of shareholder liability for acts or obligations of the Fund
and provides that notice of such disclaimer may be given in each agreement,
obligation and instrument entered into or executed by the Fund or its Trustees,
(ii) provides for the indemnification out of Fund or Portfolio property of any
shareholders held personally liable for any obligations of the Fund or of such
Portfolio and (iii) provides that the Fund shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the Fund and satisfy any judgment thereon. Thus, the risk of a Fund shareholder
incurring financial loss beyond his or her investment because of shareholder
liability with respect to a Portfolio is limited to circumstances in which all
of the following factors are present: (1) a court refused to apply Delaware law;
(2) the liability arose under tort law or, if not, no contractual limitation of
liability was in effect; and (3) the Portfolio itself would be unable to meet
its obligations. In the light of Delaware law, the nature of the Fund's business
and the nature of its assets, the risk of personal liability to a Fund
shareholder is remote.

The Declaration of Trust further provides that the Fund shall indemnify
each of its Trustees and officers against liabilities and expenses reasonably
incurred by them, in connection with, or arising out of, any action, suit or
proceeding, threatened against or otherwise involving such Trustee or officer,
directly or indirectly, by reason of being or having been a Trustee or officer
of the Fund. The Declaration of Trust does not authorize the Fund or any
Portfolio to indemnify any Trustee or officer against any liability to which he
or she would otherwise be subject by reason of or for willful misfeasance, bad
faith, gross negligence or reckless disregard of such person's duties.

11. DETERMINATION OF NET ASSET VALUE

The net asset value per share of each Portfolio is determined as of the
close of regular trading (currently 4:00 p.m., Eastern time) on each day on
which the New York Stock Exchange (the "Exchange") is open for trading. As of
the date of this Statement of Additional Information, the Exchange is open for
trading every weekday except for the following holidays: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset value per
share of each Portfolio is also determined on any other day in which the level
of trading in its portfolio securities is sufficiently high so that the current
net asset value per share might be materially affected by changes in the value
of its portfolio securities. No Portfolio is required to determine its net asset
value per share on any day in which no purchase orders for the shares of the
Portfolio become effective and no shares of the Portfolio are tendered for
redemption.

The net asset value per share of each Portfolio is computed by taking
the value of all of the Portfolio's assets less the Portfolio's liabilities, and
dividing it by the number of outstanding shares of the Portfolio. For purposes
of determining net asset value, expenses of each Portfolio are accrued daily.

MONEY MARKET PORTFOLIO

Except as set forth in the following paragraph, Money Market
Portfolio's investments are valued on each business day on the basis of
amortized cost, if the Board of Trustees determines in good faith that the
method approximates fair value. This technique involves valuing an instrument at
its cost and, thereafter, assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price such Portfolio would receive
if it sold the investment. During periods of declining interest rates, the yield
on shares of Money Market Portfolio computed as described below may tend to be
higher than a like computation made by a fund with identical investments
utilizing a method of valuation based upon market prices and estimates of market
prices for all of its portfolio investments. Thus, if the use of amortized cost
by Money Market Portfolio resulted in a lower aggregate portfolio value on a
particular day, a prospective investor in the Portfolio would be able to obtain
a somewhat higher yield than would result from investment in a fund utilizing
solely market values. The converse would apply in a period of rising interest
rates.

In determining Money Market Portfolio's net asset value, "when-issued"
securities will be valued at the value of the security at the time the
commitment to purchase is entered into.

The valuation of Money Market Portfolio's investments based upon their
amortized cost and the concomitant maintenance of the Portfolio's per share net
asset value of $1.00 is permitted in accordance with Rule 2a-7 under the 1940
Act, pursuant to which the Portfolio must adhere to certain conditions which are
described in detail in the Prospectus. Money Market Portfolio must maintain a
dollar-weighted average portfolio maturity of 90 days or less. The maturities of
variable rate demand instruments held by the Portfolio will be deemed to be the
longer of the demand period or the period remaining until the next interest rate
adjustment, although stated maturities may be in excess of one year. The
Trustees have established procedures designed to stabilize, to the extent
reasonably possible, the price per share of Money Market Portfolio for the
purpose of maintaining sales and redemptions at a single value. Such procedures
will include review of the Portfolio's holdings by the Trustees, at such
intervals as they may deem appropriate, to determine whether the Portfolio's net
asset value calculated by using available market quotations deviates from $1.00
per share and, if so, whether such deviation may result in material dilution or
is otherwise unfair to existing shareholders. In the event the Trustees
determine that such a deviation exists, they have agreed to take such corrective
action as they regard as necessary and appropriate, including: (i) the sale of
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; (ii) withholding dividends; (iii) redeeming
shares in kind; or (iv) establishing a net asset value per share by using
available market quotations. It is the intention of the Fund to maintain Money
Market Portfolio's per-share net asset value at $1.00 but there can be no
assurance of this.

ALL OTHER PORTFOLIOS

Securities which have not traded on the date of valuation or securities
for which sales prices are not generally reported are valued at the mean between
the last bid and asked prices. Securities for which no market quotations are
readily available (including those the trading of which has been suspended) will
be valued at fair value as determined in good faith by the Trust's Board of
Trustees, although the actual computations may be made by persons acting
pursuant to the direction of the Board.

12. INVESTMENT RESULTS

Each Portfolio's average annual total return quotations and yield
quotations as they may appear in the Prospectus, this Statement of Additional
Information or in advertising are calculated by standard methods prescribed by
the SEC.

QUOTATIONS, COMPARISONS, AND GENERAL INFORMATION

From time to time, in advertisements, in sales literature, or in
reports to shareholders, the past performance of a Portfolio may be illustrated
and/or compared with that of other mutual funds with similar investment
objectives, and to other relevant indices. In addition, the performance of a
Portfolio may be compared to alternative investment or savings vehicles and/or
to indices or indicators of economic activity, e.g., inflation or interest
rates. Performance rankings and listings reported in newspapers or national
business and financial publications, such as BARRON'S, BUSINESS WEEK, CONSUMERS
DIGEST, CONSUMER REPORTS, FINANCIAL WORLD, FORBES, FORTUNE, INVESTORS BUSINESS
DAILY, KIPLINGER'S PERSONAL FINANCE MAGAZINE, MONEY MAGAZINE, NEW YORK TIMES,
PERSONAL INVESTOR, SMART MONEY, USA TODAY, U.S. NEWS AND WORLD REPORT, THE WALL
STREET JOURNAL, and WORTH may also be cited (if the Portfolio is listed in such
publications) or used for comparisons, as well as performance listings and
rankings from various other sources including CDA/WEISENBERGER INVESTMENT
COMPANIES SERVICE, DONOGHUE'S MUTUAL FUND ALMANAC, INVESTMENT COMPANY DATA,
INC., IBBOTSON ASSOCIATES, JOHNSON'S CHARTS, KANON BLOCK CARRE AND CO., LIPPER
ANALYTICAL SERVICES, MICROPAL, INC., MORNINGSTAR, INC., SCHABACKER INVESTMENT
MANAGEMENT and TOWERS DATA SYSTEMS, INC.

In addition, from time to time quotations from articles from financial
publications such as those listed above may be used in advertisements, in sales
literature or in reports to Fund shareholders.

In presenting investment results, the Fund may also include references
to certain financial planning concepts, including (a) an investor's need to
evaluate his financial assets and obligations to determine how much to invest;
(b) his need to analyze the objectives of various investments to determine where
to invest; and (c) his need to analyze his time frame for future capital needs
to determine how long to invest. The investor controls these three factors, all
of which affect the use of investments in building assets.

One of the primary methods used to measure the performance of each
Portfolio is "total return." Total return will normally represent the percentage
change in value of an account, or of a hypothetical investment in a Portfolio,
over any period up to the lifetime of that Portfolio. Total return calculations
will usually assume the reinvestment of all dividends and capital gains
distributions and will be expressed as a percentage increase or decrease from an
initial value, for the entire period or for one or more specified periods within
the entire period. Total return percentages for periods of less than one year
will usually be annualized; total return percentages for periods longer than one
year will usually be accompanied by total return percentages for each year
within the period and/or by the average annual compounded total return for the
period. The income and capital components of a given return may be separated and
portrayed in a variety of ways in order to illustrate their relative
significance. Performance may also be portrayed in terms of cash or investment
values, without percentages. Past performance cannot guarantee any particular
future result.

The Fund may also present, from time to time, historical information
depicting the value of a hypothetical account in a Portfolio since the
Portfolio's inception.

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS

Average annual total return quotations for shares of the Portfolios are
computed by finding the average annual compounded rates of return that would
cause a hypothetical investment made on the first day of a designated period
(assuming all dividends and distributions are reinvested) to equal the ending
redeemable value of such hypothetical investment on the last day of the
designated period in accordance with the following formula:
n
P(1+T) = ERV

Where: P = a hypothetical initial payment of $1,000

T = average annual total return

n = number of years

ERV = ending redeemable value of the hypothetical
$1000 initial payment made at the
beginning of the designated period (or
fractional portion thereof)

For purposes of the above computation, it is assumed that all dividends and
distributions made by a Portfolio are reinvested at net asset value during the
designated period. The average annual total return quotation is determined to
the nearest 1/100 of 1%.

In determining the average annual total return (calculated as provided
above), recurring fees, if any, that are charged to all shareholder accounts are
taken into consideration. For any account fees that vary with the size of the
account, the account fee used for purposes of the above computation is assumed
to be the fee that would be charged to the mean account size.

STANDARDIZED YIELD QUOTATIONS

The yield of a Portfolio is computed by dividing the Portfolio's net
investment income per share during a base period of 30 days, or one month, by
the maximum offering price per share of the Portfolio on the last day of such
base period in accordance with the following formula:

a-b
YIELD = 2[ ( ------ +1)6-1]
cd

Where: a = interest earned during the period

b = net expenses accrued for the period

c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends

d = the maximum offering price per share on the
last day of the period

For purposes of calculating interest earned on debt obligations as provided in
item "a" above:

(i) The yield to maturity of each obligation held by the
Portfolio is computed based on the market value of the obligation (including
actual accrued interest, if any) at the close of business each day during the
30-day base period, or, with respect to obligations purchased during the month,
the purchase price (plus actual accrued interest, if any) on settlement date,
and with respect to obligations sold during the month the sale price (plus
actual accrued interest, if any) between the trade and settlement dates.

(ii) The yield to maturity of each obligation is then divided
by 360 and the resulting quotient is multiplied by the market value of the
obligation (including actual accrued interest, if any) to determine the interest
income on the obligation for each day. The yield to maturity calculation has
been made on each obligation during the 30-day base period.

(iii) Interest earned on all debt obligations during the 30-day
or one month period is then totaled.

(iv) The maturity of an obligation with a call provision(s) is
the next call date on which the obligation reasonably may be expected to be
called or, if none, the maturity date.

With respect to the treatment of discount and premium on mortgage or
other receivables-backed obligations which are expected to be subject to monthly
payments of principal and interest ("pay downs"), each Portfolio accounts for
gain or loss attributable to actual monthly pay downs as an increase or decrease
to interest income during the period. In addition, a Portfolio may elect (i) to
amortize the discount or premium on a remaining on a security, based on the cost
of the security, to the weighted average maturity date, if such information is
available, or to the remaining term of the security, if the weighted average
maturity date is not available, or (ii) not to amortize the remaining discount
or premium on a security.

For purposes of computing a Portfolio's yield, interest income is
recognized by accruing 1/360 of the stated interest rate of each obligation held
by the Portfolio each day that the obligation is held by the Portfolio.

YIELD QUOTATIONS FOR MONEY MARKET PORTFOLIO

Money Market Portfolio's yield quotations are computed as follows: the
net change, exclusive of capital changes (i.e., realized gains and losses from
the sale of securities and unrealized appreciation and depreciation), in the
value of a hypothetical pre-existing account having a balance of one share of
the Portfolio at the beginning of the seven-day base period is determined by
subtracting a hypothetical charge reflecting expense deductions from the
hypothetical account, and dividing the net change in value by the value of the
share at the beginning of the base period. This base period return is then
multiplied by 365/7 with the resulting yield figure carried to the nearest 100th
of 1%. The determination of net change in account value reflects the value of
additional shares purchased with dividends from the original share, dividends
declared on both the original share and any such additional shares, and all fees
that are charged to the Portfolio, in proportion to the length of the base
period and the Portfolio's average account size (with respect to any fees that
vary with the size of an account).

Money Market Portfolio may also advertise quotations of effective
yield. Effective yield is computed by compounding the unannualized base period
return determined as in the preceding paragraph by adding 1 to the base period
return, raising the sum to a power equal to 365 divided by 7, and subtracting
one from the result, according to the following formula:

Effective Yield = (base period return +1) 365/7 - 1

The Portfolios' average annual total returns for the year ended
December 31, 1997 and for the periods from commencement of operations to
December 31, 1997 are as follows:

Average Annual Total Return (%)

One Year Five Years Ten Years Commencement

International Growth 4.87 N/A N/A 8.38*
Capital Growth 24.69 N/A N/A 20.04*
Growth Shares N/A N/A N/A 2.27****
Real Estate Growth 21.16 N/A N/A 25.90**
Growth and Income N/A N/A N/A 5.43****
Equity-Income 35.23 N/A N/A 25.95*
Balanced 17.62 N/A N/A 18.61*
America Income 8.44 N/A N/A 5.39*
Swiss Franc Bond -6.86 N/A N/A -8.05***

* Commencement of operations, March 1, 1995.
** Commencement of operations, March 31, 1995.
*** Commencement of operations, November 1, 1995.
**** Commencement of operations, October 31, 1997.

<PAGE>
13. FINANCIAL STATEMENTS

The Portfolios' Annual Report, filed with the SEC on March 6, 1998
(Accession No. 0000930709-98-000006), is incorporated by reference into this
Statement of Additional Information. The financial statements in the Portfolios'
Annual Report, including the financial highlights, for the period ended December
31, 1997, included or incorporated by reference into the Prospectus and this
Statement of Additional Information, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect to the
financial statements, and are included in reliance upon the authority of Arthur
Andersen, LLP as experts in accounting and auditing in giving their report.

<PAGE>

APPENDIX A

DESCRIPTION OF SHORT-TERM DEBT AND CORPORATE BOND RATINGS1

MOODY'S INVESTORS SERVICE, INC. SHORT-TERM PRIME RATING SYSTEM -
TAXABLE DEBT AND DEPOSITS GLOBALLY

Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations. These obligations have an original maturity
not exceeding one year, unless explicitly noted.

Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:

PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:

Leading market positions in well-established industries. High rates of
return on funds employed.
Conservative capitalization structure with moderate reliance on debt
and ample asset protection. Broad margins in earnings coverage of fixed
financial charges and high internal cash generation. Well-established
access to a range of financial markets and assured sources of alternate
liquidity.

PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

PRIME-3: Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating
categories.

Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's Sovereign Rating for Bank Deposits. Such branch
obligations are rated at the lower of the bank's rating or Moody's Sovereign
Rating for Bank Deposits for the country in which the branch is located.

When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by actions of the government controlling the currency of denomination.
In addition, risks associated with bilateral conflicts between an investor's
home country and either the issuer's home country or the country where an
issuer's branch is located are not incorporated into Moody's short-term debt
ratings.

If an issuer represents to Moody's that its short-term debt obligations are
supported by the credit of another entity or entities, then the name or names of
such supporting entity or entities are listed within the parenthesis beneath the
name of the issuer, or there is a footnote referring the reader to another page
for the name or names of the supporting entity or entities. In assigning ratings
to such issuers, Moody's evaluates the financial strength of the affiliated
corporations, commercial banks, insurance companies, foreign governments or
other entities, but only as one factor in the total rating assessment.

MOODY'S CORPORATE BOND RATINGS

AAA: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

AA: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

BAA: Bonds which are rated Baa are considered as medium-grade obligations (I.E.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

BA: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

CAA: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

CA: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

NOTE: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicated that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicated
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.

STANDARD & POOR'S SHORT-TERM ISSUE CREDIT RATINGS

A-1: A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.

A-2: A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.

A-3: A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.

B: A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.

C: A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.

D: A short-term obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.

STANDARD & POOR'S CORPORATE BOND RATINGS

AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.

AA: An obligation rated AA differs from the highest-rated obligations only in a
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.

A: An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.

BBB: An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.

Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.

BB: An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's capacity to meet its financial commitment on the obligation.

B: An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.

CCC: An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation.

CC: An obligation rated CC is currently highly vulnerable to nonpayment.

C: The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.

D: An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments are jeopardized.

PLUS (+) OR MINUS (-): The rating from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major categories.

R: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk, such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.

- --------
1 The ratings indicated herein are believed to be the most recent ratings
available at the date of this Statement of Additional Information for the
securities listed. Ratings are generally given to securities at the time of
issuance. While the rating agencies may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings indicated do not
necessarily represent ratings which will be given to these securities on the
date of the Fund's fiscal year-end.

<PAGE>

INVESTMENT ILLUSTRATIONS
TO 12/31/97

Note: Illustrations show the value of units held based on $10,000 total value
at investment date, but do not account for additional costs of investing.

PIONEER VISION INTERNATIONAL GROWTH AUV
<TABLE>
<S> <C> <C> <C> <C> <C>

DATE INITIAL INVESTMENT UNIT VALUE UNITS PURCHASED INITIAL TOTAL VALUE
3/1/95 $10,000.00 $ 1.002063 9,979.412 $10,000

DATE CUMULATIVE UNIT VALUE UNITS HELD TOTAL VALUE GUARANTEED MINIMUM
INVESTMENT DEATH BENEFIT
12/31/95 $10,000.00 $ 1.093958 9,979.412 $10,917.06 $10,000.00
12/31/96 10,000.00 1.170756 9,979.412 11,683.46 10,000.00

12/31/97 10,000.00 1.210842 9,979.412 12,083.49 10,000.00

</TABLE>

<PAGE>

INVESTMENT ILLUSTRATIONS
TO 12/31/97

Note: Illustrations show the value of units held based on $10,000 total value
at investment date, but do not account for additional costs of investing.

PIONEER VISION CAPITAL GROWTH AUV

DATE INITIAL INVESTMENT UNIT VALUE UNITS PURCHASED INITIAL TOTAL VALUE
3/1/95 $10,000.00 $ 1.000038 9,999.620 $10,000

DATE CUMULATIVE UNIT VALUE UNITS HELD TOTAL VALUE GUARANTEED MINIMUM
INVESTMENT DEATH BENEFIT

12/31/95 $10,000.00 $ 1.158080 9,999.620 $11,580.36 $10,000.00
12/31/96 10,000.00 1.313525 9,999.620 13,134.75 10,000.00
12/31/97 10,000.00 1 .615324 9,999.620 16,152.63 10,000.00

</TABLE>

<PAGE>

INVESTMENT ILLUSTRATIONS
TO 12/31/97

Note: Illustrations show the value of units held based on $10,000 total value
at investment date, but do not account for additional costs of investing.

PIONEER VISION GROWTH SHARES AUV

DATE INITIAL INVESTMENT UNIT VALUE UNITS PURCHASED INITIAL TOTAL VALUE
10/31/97 $10,000.00 $1.00000 10,000.00 $10,000

DATE CUMULATIVE UNIT VALUE UNITS HELD TOTAL VALUE GUARANTEED MINIMUM DEATH
INVESTMENT BENEFIT
12/31/97 $10,000.00 $1.020297 10,000.00 $10,202.97 $10,000.00

</TABLE>

<PAGE>

INVESTMENT ILLUSTRATIONS
TO 12/31/97

Note: Illustrations show the value of units held based on $10,000 total value
at investment date, but do not account for additional costs of investing.

PIONEER VISION REAL ESTATE GROWTH AUV

<TABLE>
<S> <C> <C> <C> <C> <C>
DATE INITIAL INVESTMENT UNIT VALUE UNITS PURCHASED INITIAL TOTAL VALUE
3/1/95 $10,000.00 $ 1.000227 9,997.731 $10,000

DATE CUMULATIVE UNIT VALUE UNITS HELD TOTAL VALUE GUARANTEED MINIMUM
INVESTMENT DEATH BENEFIT

12/31/95 $10,000.00 $ 1.156319 9,997.731 $11,560.57 $10,000.00
12/31/96 10,000.00 1.547672 9,997.731 15,473.21 10,000.00
12/31/97 10,000.00 1.849418 9,997.731 18,489.98 10,000.00

</TABLE>

<PAGE>

INVESTMENT ILLUSTRATIONS
TO 12/31/97

Note: Illustrations show the value of units held based on $10,000 total value
at investment date, but do not account for additional costs of investing.

PIONEER VISION GROWTH AND INCOME AUV

DATE INITIAL INVESTMENT UNIT VALUE UNITS PURCHASED INITIAL TOTAL VALUE
10/31/97 $10,000.00 $ 1.00000 10,000.00 $10,000.00

DATE CUMULATIVE UNIT VALUE UNITS HELD TOTAL VALUE GUARANTEED MINIMUM
INVESTMENT DEATH BENEFIT
12/31/97 $10,000.00 $ 1.052518 10,000.00 $10,525.18 $10,000.00

</TABLE>
<PAGE>

INVESTMENT ILLUSTRATIONS
TO 12/31/97

Note: Illustrations show the value of units held based on $10,000 total value
at investment date, but do not account for additional costs of investing.

PIONEER VISION EQUITY INCOME AUV

DATE INITIAL INVESTMENT UNIT VALUE UNITS PURCHASED INITIAL TOTAL VALUE
3/1/95 $10,000.00 $ 1.000037 9,999.630 $10,000

DATE CUMULATIVE UNIT VALUE UNITS HELD TOTAL VALUE GUARANTEED MINIMUM DEATH
INVESTMENT BENEFIT

12/31/95 $10,000.00 $ 1.222215 9,999.630 $12,221.70 $10,000.00
12/31/96 10,000.00 1.388129 9,999.630 13,880.78 10,000.00
12/31/97 10,000.00 1.851384 9,999.630 18,513.15 10,000.00

</TABLE>

<PAGE>

INVESTMENT ILLUSTRATIONS
TO 12/31/97

Note: Illustrations show the value of units held based on $10,000 total value
at investment date, but do not account for additional costs of investing.

PIONEER VISION BALANCED AUV

DATE INITIAL INVESTMENT UNIT VALUE UNITS PURCHASED INITIAL TOTAL VALUE
3/1/95 $10,000.00 $ 0.975073 10,255.642 $10,000

DATE CUMULATIVE UNIT VALUE UNITS HELD TOTAL VALUE GUARANTEED MINIMUM DEATH
INVESTMENT BENEFIT

12/31/95 $10,000.00 $ 1.164800 10,255.642 $11,945.77 $10,000.00
12/31/96 10,000.00 1.312218 10,255.642 13,457.64 10,000.00
12/31/97 10,000.00 1.516084 10,255.642 15,548.41 10,000.00

</TABLE>

<PAGE>

INVESTMENT ILLUSTRATIONS
TO 12/31/97

Note: Illustrations show the value of units held based on $10,000 total value
at investment date, but do not account for additional costs of investing.

PIONEER VISION SWISS FRANC AUV
<TABLE>
<S> <C> <C> <C> <C> <C>

DATE INITIAL INVESTMENT UNIT VALUE UNITS PURCHASED INITIAL TOTAL VALUE
11/1/95 $10,000.00 $ 1.000000 10,000.000 $10,000

DATE CUMULATIVE UNIT VALUE UNITS HELD TOTAL VALUE GUARANTEED MINIMUM
INVESTMENT DEATH BENEFIT

12/31/95 $10,000.00 $ 1.001476 10,000.000 $10,014.76 $10,000.00
12/31/96 10,000.00 0.880598 10,000.000 8,805.98 10,000.00
12/31/97 10,000.00 0.808274 10,000.000 8,082.74 10,000.00

</TABLE>

<PAGE>

INVESTMENT ILLUSTRATIONS
TO 12/31/97

Note: Illustrations show the value of units held based on $10,000 total value
at investment date, but do not account for additional costs of investing.

PIONEER VISION AMERICA INCOME AUV
<TABLE>
<S> <C> <C> <C> <C> <C>

DATE INITIAL INVESTMENT UNIT VALUE UNITS PURCHASED INITIAL TOTAL VALUE
3/1/95 $10,000.00 $ 0.996465 10,035.475 $10,000

DATE CUMULATIVE UNIT VALUE UNITS HELD TOTAL VALUE GUARANTEED MINIMUM
INVESTMENT DEATH BENEFIT

12/31/95 $10,000.00 $ 1.043081 10,035.475 $10,467.81 $10,000.00
12/31/96 10,000.00 1.041725 10,035.475 10,454.21 10,000.00
12/31/97 10,000.00 1.114134 10,035.475 11,180.86 10,000.00

</TABLE>

<PAGE>

INVESTMENT ILLUSTRATIONS
TO 12/31/97

Note: Illustrations show the value of units held based on $10,000 total value
at investment date, but do not account for additional costs of investing.

PIONEER VISION MONEY MARKET AUV
<TABLE>
<S> <C> <C> <C> <C> <C>

DATE INITIAL INVESTMENT UNIT VALUE UNITS PURCHASED INITIAL TOTAL VALUE
3/1/95 $10,000.00 $ 1.000076 9,999.240 $10,000

DATE CUMULATIVE UNIT VALUE UNITS HELD TOTAL VALUE GUARANTEED MINIMUM DEATH
INVESTMENT BENEFIT

12/31/95 $10,000.00 $ 1.031243 9,999.240 $10,311.65 $10,000.00
12/31/96 10,000.00 1.062621 9,999.240 10,625.40 10,000.00
12/31/97 10,000.00 1.096575 9,999.240 10,964.92 10,000.00
</TABLE>

COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS

The following securities indices are well known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may also be used, if appropriate. The
indices are not available for direct investment. The data presented are not
meant to be indicative of the performance of the Fund, do not reflect past
performance and do not guarantee future results.

S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P 500 includes 500 of
the largest stocks (in terms of stock market value) in the U.S.

DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of stocks of 30 blue chip
companies widely held by individuals and institutional investors. The 30 stocks
represent about a fifth of the $8 trillion-plus market value of all U.S. stocks
and about a fourth of the value of stocks listed on the New York Stock Exchange
(NYSE).

U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the NYSE, plus stocks listed on the American Stock Exchange and over the counter
with the same or less capitalization as the upper bound of the NYSE ninth
decile.

U.S. INFLATION
THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S.
Department of Labor, Bureau of Labor Statistics, Washington, DC.

S&P/BARRA INDEXES
The S&P/BARRA GROWTH AND VALUE INDEXES are constructed by dividing the stocks in
the S&P 500 according to price-to-book ratios. The GROWTH INDEX contains stocks
with higher price-to-book ratios, and the VALUE INDEX contains stocks with lower
price-to-book ratios. Both indexes are market capitalization weighted.

MERRILL LYNCH MICRO-CAP INDEX
The MERRILL LYNCH MICRO-CAP INDEX represents the performance of 2,036 stocks
ranging in market capitalization from $50 million to $220 million. Index returns
are calculated monthly.

LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds after 1977 are constructed with
data from The Wall Street Journal and are calculated as the change in the flat
price or and-interest price. From 1926 to 1976, data are obtained from the
government bond file at the Center for Research in Security Prices (CRSP),
Graduate School of Business, University of Chicago. Each year, a one-bond
portfolio with a term of approximately 20 years and a reasonably current coupon
was used and whose returns did not reflect potential tax benefits, impaired
negotiability or special redemption or call privileges. Where callable bonds had
to be used, the term of the bond was assumed to be a simple average of the
maturity and first call dates minus the current date. The bond was "held" for
the calendar year and returns were computed.

INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of intermediate-term government bonds after 1987 are calculated
from The Wall Street Journal prices, using the change in flat price. Returns
from 1934 to 1986 are obtained from the CRSP government bond file.

Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than five years, and this bond is
"held" for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934 to 1942, almost all bonds
with maturities near five years were partially or fully tax-exempt and were
selected using the rules described above. Personal tax rates were generally low
in that period, so that yields on tax-exempt bonds were similar to yields on
taxable bonds. From 1926 to 1933, there are few bonds suitable for construction
of a series with a five-year maturity. For this period, five-year bond yield
estimates are used.

MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI")
MSCI's international indices are based on the share prices of approximately
1,700 companies listed on stock exchanges in the 22 countries that make up the
MSCI World Index. MSCI's emerging market indices are comprised of approximately
1000 stocks from 26 countries.

Countries in the MSCI EAFE INDEX are: Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and
United Kingdom.

Countries in the MSCI EMERGING MARKETS FREE INDEX are: Argentina, Brazil, Chile,
China Free, Czech Republic, Colombia, Greece, Hungary, India, Indonesia Free,
Israel, Jordan, Korea (at 50%), Malaysia Free, Mexico Free, Pakistan, Peru,
Philippines Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan (at 50%),
Thailand Free, Turkey and Venezuela.

6-MONTH CDS
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.

LONG-TERM U.S. CORPORATE BONDS
Since 1969, corporate bond total returns are represented by the Salomon Brothers
Long-Term High-Grade Corporate Bond Index. As most large corporate bond
transactions take place over the counter, a major dealer is the natural source
of these data. The index includes nearly all Aaa- and Aa-rated bonds with at
least 10 years to maturity. If a bond is downgraded during a particular month,
its return for the month is included in the index before removing the bond from
future portfolios.

From 1926 to 1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946 to 1968,
Ibbotson and Sinquefield backdated the Salomon Brothers' index, using Salomon
Brothers' monthly yield data with a methodology similar to that used by Salomon
Brothers for 1969 to 1995. Capital appreciation returns were calculated from
yields assuming (at the beginning of each monthly holding period) a 20-year
maturity, a bond price equal to par, and a coupon equal to the
beginning-of-period yield. For the period 1926 to 1945, Standard & Poor's
monthly high-grade corporate composite yield data were used, assuming a 4%
coupon and a 20-year maturity. The conventional present-value formula for bond
price for the beginning and end-of-month prices was used. (This formula is
presented in Ross, Stephen A., and Westerfield, Randolph W. Corporate Finance,
Times Mirror/Mosby, St. Louis, 1990, p. 97 ["Level-Coupon Bonds"].) The monthly
income return was assumed to be one-twelfth the coupon.

U.S. (30-DAY) TREASURY BILLS
For the U.S. TREASURY BILL INDEX, data from The Wall Street Journal are used
after 1977; the CRSP government bond file is the source until 1976. Each month a
one-bill portfolio containing the shortest-term bill having not less than one
month to maturity is constructed. (The bill's original term to maturity is not
relevant.) To measure holding period returns for the one-bill portfolio, the
bill is priced as of the last trading day of the previous month-end and as of
the last trading day of the current month.

NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUSTS
("NAREIT")EQUITY REIT INDEX
All of the data are based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMEX and NASDAQ. The data are
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighting at the beginning of the period.
Only those REITs listed for the entire period are used in the total return
calculation. Dividends are included in the month based upon their payment date.
There is no smoothing of income.
Liquidating dividends, whether full or partial, are treated as income.

RUSSELL U.S. EQUITY INDEXES
The RUSSELL 3000(R) INDEX (the "Russell 3000") is comprised of the 3,000 largest
U.S. companies as determined by market capitalization representing approximately
98% of the U.S. equity market. The average market capitalization is
approximately $2.8 billion. The RUSSELL 2500TM INDEX measures performance of the
2,500 smallest companies in the Russell 3000. The average market capitalization
is approximately $733.4 million, and the largest company in the index has an
approximate market capitalization of $2.9 billion. The RUSSELL 2000(R) INDEX
measures performance of the 2,000 smallest stocks in the Russell 3000; the
largest company in the index has a market capitalization of approximately $1.1
billion. The RUSSELL 1000(R) INDEX (the "Russell 1000") measures the performance
of the 1,000 largest companies in the Russell 3000. The average market
capitalization is approximately $7.6 billion. The smallest company in the index
has an approximate market capitalization of $1.1 billion. The RUSSELL MIDCAPTM
INDEX measures performance of the 800 smallest companies in the Russell 1000.
The largest company in the index has an approximate market capitalization of
$8.0 billion.

The Russell indexes are reconstituted annually as of July 1, based on May 31
market capitalization rankings.

WILSHIRE REAL ESTATE SECURITIES INDEX
The WILSHIRE REAL ESTATE SECURITIES INDEX is a market capitalization weighted
index of 120 publicly traded real estate securities, such as REITs, real estate
operating companies ("REOCs") and partnerships.

The index contains performance data on five major categories of property:
office, retail, industrial, apartment and miscellaneous. The companies in the
index are 91.66% equity and hybrid REITs and 8.33% REOCs.

STANDARD & POOR'S MIDCAP 400 INDEX
The S&P 400 is a market-capitalization-weighted index. The performance data for
the index were calculated by taking the stocks presently in the index and
tracking them backward in time as long as there were prices reported. No attempt
was made to determine what stocks "might have been" in the S&P 400 five or ten
years ago had it existed. Dividends are reinvested on a monthly basis prior to
June 30, 1991, and are reinvested daily thereafter.

LIPPER BALANCED FUNDS INDEX
This index represents equally weighted performance, adjusted for capital gains
distributions and income dividends, of approximately 30 of the largest funds
with a primary objective of conserving principal by maintaining at all times a
balanced portfolio of stocks and bonds. Typically, the stock/bond ratio ranges
around 60%/40%.

BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963 to 1987; and The Wall Street Journal thereafter.

Sources: Ibbotson Associates, Towers Data Systems, Lipper Analytical Services,
Inc. Merrill Lynch and PGI

<PAGE>

PERFORMANCE STATISTICS - TOTAL RETURN PERCENT

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Dow S&P/ S&P/
S&P Jones U.S. Small BARRA BARRA Merrill Lynch
500 Industrial Stock U.S. 500 500 Micro-Cap
Average Index Inflation Growth Value Index
- ----------------------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 11.62 N/A 0.28 -1.49 N/A N/A N/A
Dec 1927 37.49 N/A 22.10 -2.08 N/A N/A N/A
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A N/A
Dec 1931 -43.34 -49.02 -49.75 -9.52 N/A N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A N/A
Dec 1933 53.99 73.72 142.87 0.51 N/A N/A N/A
Dec 1934 -1.44 8.08 24.22 2.03 N/A N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A N/A
Dec 1942 20.34 14.13 44.51 9.29 N/A N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A N/A
</TABLE>

<PAGE>

PERFORMANCE STATISTICS - TOTAL RETURN PERCENT

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Dow S&P/ S&P/
S&P Jones U.S. Small BARRA 500 BARRA Merrill Lynch
500 Industrial Stock U.S. Growth 500 Micro-Cap
Average Index Inflation Value Index
- ----------------------------------------------------------------------------------------------------------------------
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A N/A
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A N/A
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38 N/A
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93 N/A
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57 N/A
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16 27.76
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16 43.18
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59 32.32
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02 9.18
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04 33.62
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89 42.44
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52 -14.97
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68 22.89
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67 3.45
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68 -13.84
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67 22.76
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13 8.06
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85 -29.55
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56 57.44
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53 36.62
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60 31.32
Dec 1994 1.31 5.06 3.11 2.67 3.13 -0.64 1.81
Dec 1995 37.43 36.84 34.46 2.54 38.13 36.99 30.70
Dec 1996 23.07 28.84 17.62 3.32 23.96 21.99 13.88
Dec 1997 33.36 24.88 22.78 1.92 36.52 29.98 24.61

</TABLE>

<PAGE>

PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Long- Intermediate- MSCI Long-
Term Term U.S. EAFE 6- Term U.S. U.S.
U.S. Gov't Government (Net of Month Corporate T-Bill
Bonds Bonds Taxes) CDs Bonds (30-Day)
- ------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.10 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
</TABLE>

<PAGE>

PERFORMANCE STATISTICS - TOTAL RETURN PERCENT

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Long- Intermediate- MSCI Long-
Term Term U.S. EAFE 6- Term U.S. U.S.
U.S. Gov't Government (Net of Month Corporate T-Bill
Bonds Bonds Taxes) CDs Bonds (30-Day)
- ------------------------------------------------------------------------------------------------------
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.17 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
Dec 1966 3.65 4.69 N/A 5.76 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.47 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.45 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.70 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.39 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.11 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.50 -1.24 14.71
Dec 1982 40.36 29.10 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.59 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.30 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.80 11.21 5.21 27.20 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
Dec 1997 15.85 8.38 1.78 5.71 12.95 5.26
</TABLE>

<PAGE>

PERFORMANCE STATISTICS - TOTAL RETURN PERCENT

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
NAREIT Lipper MSCI
Equity Russell Wilshire Balanced Emerging Bank
REIT 2000 Real Estate S&P Fund Markets Savings
Index Index Securities 400 Index Free Index Account
- -----------------------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 5.77 N/A 3.86
Dec 1961 N/A N/A N/A N/A 20.59 N/A 3.90
</TABLE>

<PAGE>

PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>

NAREIT Lipper MSCI
Equity Russell Wilshire Balanced Emerging Bank
REIT 2000 Real Estate S&P Fund Markets Savings
Index Index Securities 400 Index Free Index Account
- -----------------------------------------------------------------------------------------------------------------------
Dec 1962 N/A N/A N/A N/A -6.80 N/A 4.08
Dec 1963 N/A N/A N/A N/A 13.10 N/A 4.17
Dec 1964 N/A N/A N/A N/A 12.36 N/A 4.19
Dec 1965 N/A N/A N/A N/A 9.80 N/A 4.23
Dec 1966 N/A N/A N/A N/A -5.86 N/A 4.45
Dec 1967 N/A N/A N/A N/A 15.09 N/A 4.67
Dec 1968 N/A N/A N/A N/A 13.97 N/A 4.68
Dec 1969 N/A N/A N/A N/A -9.01 N/A 4.80
Dec 1970 N/A N/A N/A N/A 5.62 N/A 5.14
Dec 1971 N/A N/A N/A N/A 13.90 N/A 5.30
Dec 1972 8.01 N/A N/A N/A 11.13 N/A 5.37
Dec 1973 -15.52 N/A N/A N/A -12.24 N/A 5.51
Dec 1974 -21.40 N/A N/A N/A -18.71 N/A 5.96
Dec 1975 19.30 N/A N/A N/A 27.10 N/A 6.21
Dec 1976 47.59 N/A N/A N/A 26.03 N/A 6.23
Dec 1977 22.42 N/A N/A N/A -0.72 N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 4.80 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 19.70 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 1.86 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.10 17.44 N/A 9.71
Dec 1984 20.93 -7.30 20.64 1.18 7.46 N/A 9.92
Dec 1985 19.10 31.05 22.20 35.58 29.83 N/A 9.02
Dec 1986 19.16 5.68 20.30 16.21 18.43 N/A 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 4.13 N/A 6.92
Dec 1988 13.49 24.89 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.24 2.37 35.54 19.70 64.96 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 0.66 -10.55 7.80
Dec 1991 35.70 46.05 20.03 50.10 25.83 59.91 4.61
Dec 1992 14.59 18.41 7.36 11.91 7.46 11.40 2.89
Dec 1993 19.65 18.91 15.24 13.96 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 -2.05 -7.32 4.96
Dec 1995 15.27 28.44 13.65 30.94 24.89 -5.21 5.24
Dec 1996 35.26 16.53 36.87 19.20 13.01 6.03 4.95
Dec 1997 20.29 22.36 19.80 32.26 20.05 -11.59 5.17

</TABLE>

<PAGE>

APPENDIX C

OTHER PIONEER INFORMATION

The Pioneer group of mutual funds was established in 1928 with the creation of
Pioneer Fund. Pioneer is one of the oldest and most experienced money managers
in the United States.

As of December 31, 1997, PMC employed a professional investment staff of 58,
with a combined average of 12 years' experience in the financial services
industry.

Total assets of all Pioneer mutual funds at December 31, 1997, were
approximately $19.8 billion representing 1,177,148 shareholder accounts
consisting of 791,468 non-retirement accounts and 385,680 retirement accounts.

<PAGE>

<PAGE>
PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(a) Financial Statements:

The financial highlights of the Registrant for the fiscal year
ended December 31, 1997 are included in Part A of the
Registration Statement and the financial statements of the
Registrant for the fiscal year ended December 31, 1997 are
incorporated by reference into Part B of the Registration
Statement from the 1997 Annual Report to Shareholders for
dated December 31, 1997 (filed electronically on March 6,
1998; File No. 811-08786; Accession Number
0000930709-98-000006).

(b) Exhibits:

1.1 Amended Agreement and Declaration of Trust of the
Registrant.*

1.2 Amended Certificate of Trust of the
Registrant.*

1.3 Amendment to the Amended Agreement and
Declaration of Trust of the
Registrant.1

2. Amended By-Laws of the Registrant.*

3. None.

4. None.

5.1 Management Contract between the Registrant, on behalf of each of its
series other than Real Estate Growth Portfolio and Swiss Franc Bond
Portfolio, and Pioneering Management Corporation.*

5.2 Interim Management Contract between the Registrant, on behalf of Real
Estate Growth Portfolio, and Pioneering Management Corporation.*

5.3 Management Contract between the Registrant, on behalf of Real Estate
Growth Portfolio, and Pioneering Management Corporation.*

5.4 Form of Management Contract between the Registrant, on behalf of Swiss
Franc Bond Portfolio, and Pioneering Management Corporation.*

5.5 Subadvisory Agreement among Pioneering Management Corporation, Boston
Financial Securities, Inc. and the Registrant on behalf of Real Estate
Growth Portfolio.*

5.6 Form of Management Contract between the Registrant, on behalf of Growth
Shares Portfolio, and Pioneering Management Corporation.*

5.7 Form of Management Contract between the Registrant, on behalf of Growth
and Income Portfolio, and Pioneering Management Corporation.*

6. Underwriting Agreement between the Registrant and Pioneer Funds
Distributor, Inc.*

7. None.

8. Custody Agreement between the Registrant and Brown Brothers Harriman &
Co.*

9. Form of Investment Company Service Agreement between the Registrant and
Pioneering Services Corporation.*

10. None

11. Consent of Independent Public Accountants.+

12. None.

13. Share Purchase Agreement.*

14. None.

15 None.

16. None.

17. Financial Data Schedule.+

18. None.

19. Powers of Attorney.*

- --------------

* Previously filed. Incorporated by reference from exhibits filed with
previous amendments to the Registrant's Registration Statement.

+ Filed herewith.

Item 25. Persons Controlled By or Under
Common Control With Registrant.

No person is controlled by the Registrant. A common control
relationship could exist from a management perspective because the Chairman and
President of the Registrant owns approximately 14% of the outstanding shares of
The Pioneer Group, Inc. (PGI), the parent company of the Registrant's investment
adviser, and certain Trustees or officers of the Registrant (i) hold similar
positions with other investment companies advised by PGI and (ii) are directors
or officers of PGI and/or its direct or indirect subsidiaries. The following
lists all U.S. and the principal non-U.S. subsidiaries of PGI and those
registered investment companies with a common or similar Board of Trustees
advised by PGI.

<TABLE>
<S> <C> <C> <C>
Owned By Percent of Shares State/Country of
Company Incorporation
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneer Funds Distributor, Inc. (PFD) PMC 100% MA
Pioneer Explorer, Inc. (PEI) PMC 100% DE
Pioneer Fonds Marketing GmbH (GmbH) PFD 100% Germany
Pioneer Forest, Inc. (PFI) PGI 100% DE
CJSC "Forest-Starma" (Forest-Starma) PFI 95% Russia
Pioneer Metals and Technology, Inc. (PMT) PGI 100% DE
Pioneer Capital Corp. (PCC) PGI 100% DE
Pioneer SBIC Corp. PCC 100% MA
Pioneer Real Estate Advisors, Inc. (PREA) PGI 100% DE
Pioneer Management (Ireland) Ltd. (PMIL) PGI 100% Ireland
Pioneer Plans Corporation (PPC) PGI 100% DE
PIOGlobal Corp. (PIOGlobal) PGI 100% DE
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Goldfields Holdings, Inc. (PGH) PGI 100% DE
Pioneer Goldfields Ltd. (PGL) PGH 100% Guernsey
Teberebie Goldfields Ltd. (TGL) PGL 90% Ghana
Pioneer Omega, Inc. (Omega) PGI 100% DE
Pioneer First Russia, Inc. (First Russia) Omega 81.65% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer International Corp. (PIntl) PGI 100% DE
Pioneer First Polish Investment
Fund JSC, S.A. (First Polish) PIntl 100% Poland
Pioneer Czech Investment Company, A.S.
(Pioneer Czech) PIntl 100% Czech Republic
</TABLE>
Registered investment companies that are parties to management contracts with
PMC:

Funds Business Trust
Pioneer International Growth Fund MA
Pioneer World Equity Fund DE
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Fund DE
Pioneer II DE
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Trust MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Balanced Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares DE
Pioneer Micro-Cap Fund DE

The following table lists John F. Cogan, Jr.'s positions with the
investment companies, PGI and principal direct or indirect PGI subsidiaries
referenced above and the Registrant's counsel.

Trustee/
Entity Chairman President Director Other
Pioneer mutual funds
X X X
PGL
X X X
PGI
X X X
PPC
X X
PIC
X X
PIntl
X X
PMT
X X
Omega
X X
PIOGlobal
X X
First Russia
X X
PCC
X
PSC
X
PMIL
X
PEI
X
PFI
X
PREA
X
Forest-Starma
X
PMC
X X
PFD
X X
TGL
X X
First Polish
Chairman of
Supervisory Board

GmbH Chairman of
Supervisory Board

Pioneer Czech Chairman of
Supervisory Board

Hale and Dorr LLP Partner

Item 26. Number of Holders of Securities.

As of March 31, 1998, the number of record holders of securities of each
series of the Registrant were as follows:

Number of
Title of Class Record Holders

International Growth Portfolio 2

Capital Growth Portfolio 2

Growth Shares Portfolio 2

Real Estate Growth Portfolio 2

Growth and Income Portfolio 2

Equity-Income Portfolio 2

Balanced Portfolio 2

Swiss Franc Bond Portfolio 2

America Income Portfolio 2

Money Market Portfolio 2

Item 27. Indemnification.

Except for the Agreement and Declaration of Trust dated September 16,
1994, as amended January 25, 1995 (the "Declaration"), establishing the
Registrant as a business trust under Delaware law, there is no contract,
arrangement or statute under which any director, officer, underwriter or
affiliated person of the Registrant is insured or indemnified. The Declaration
provides that no Trustee or officer will be indemnified against any liability to
which the Registrant would otherwise be subject by reason of or for willful
misfeasance, bad faith, gross negligence or reckless disregard of such person's
duties.

Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "Act"), may be available to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

Item 28. Business and Other Connections of Investment Adviser.

The business and other connections of the officers and directors of the
Registrant's investment manager, Pioneering Management Corporation, are listed
on the Form ADV of Pioneering Management Corporation as currently on file with
the Commission (File No. 801-8255). The business and other connections of the
officers and directors of Real Estate Growth Portfolio's subadviser, Boston
Financial Securities Inc., are listed on the Form ADV of Boston Financial
Securities, Inc. as currently on file with the Commission (File No. 801-3170).
The following sections of both such Form ADVs are incorporated herein by
reference:

(a) Items 1 and 2 of Part 2;

(b) Section 6, Business Background, of Schedule
D.

Item 29. Principal Underwriter

(a) See Item 25 above.

(b) Directors and Officers of PFD:

Positions and Offices Positions and Offices
Name with Underwriter with Registrant

John F. Cogan, Jr. Director and Chairman Chairman of the
Board, President
and Trustee

Robert L. Butler Director and President None

David D. Tripple Director Executive Vice
President and
Trustee

Steven M. Graziano Senior Vice President None

Stephen W. Long Senior Vice President None

Barry G. Knight Vice President None

William A. Misata Vice President None

Anne W. Patenaude Vice President None

Elizabeth B. Bennett Vice President None

Gail A. Smyth Vice President None

Constance D. Spiros Vice President None

Marcy L. Supovitz Vice President None

Mary Kleeman Vice President None

Steven R. Berke Assistant Vice President None

Steven H. Forss Assistant Vice President None

Mary Sue Hoban Assistant Vice President None

Debra A. Levine Assistant Vice President None

Junior Roy McFarland Assistant Vice President None

Marie E. Moynihan Assistant Vice President None

William H. Keough Treasurer Treasurer

Roy P. Rossi Assistant Treasurer None

Joseph P. Barri Clerk Secretary

Robert P. Nault Assistant Clerk Assistant Secretary

The principal business address of each of these individuals is 60 State Street,
Boston, Massachusetts 02109-1820.

Item 30. Location of Accounts and Records

The accounts and records are maintained at the Registrant's
office at 60 State Street, Boston, Massachusetts; contact the Treasurer.

Item 31. Management Services

The Registrant is not a party to any management-related
service contract, except as described in the Prospectus and the Statement of
Additional Information.

Item 32. Undertakings

(a) Not applicable.

(b) The Registrant undertakes to file an additional
post-effective amendment, using financial statements for Growth Shares Portfolio
and Growth and Income Portfolio which need not be certified, within four to six
months from the later of the effective date of this Registration Statement or
the commencement of operations.

(c) The Registrant undertakes to deliver, or cause to be
delivered, with the Registrant's prospectus to each person to whom such
prospectus is sent or given a copy of the Registrant's report to shareholders
furnished pursuant to and meeting the requirements of Rule 30d-1 under the
Investment Company Act of 1940, as amended, from which the specified information
is incorporated by reference, unless such person currently holds securities of
the Registrant and otherwise has received a copy of such report, in which case
the Registrant shall state in its prospectus that it will furnish, without
charge, a copy of such report on request, and the name, address and telephone
number of the person to whom such a request should be directed.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 7 (the
"Amendment") to the Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston and
The Commonwealth of Massachusetts, on the 30th day of April, 1998.

PIONEER VARIABLE CONTRACTS TRUST

By: /s/John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman of the Board
and President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 7 to the Registrant's Registration Statement on
Form N-1A has been signed below by the following persons in the capacities and
on the date indicated:

<PAGE>

Signature Title Date

/s/John F. Cogan, Jr. ) April 30, 1998
- ------------------------- )
John F. Cogan, Jr. Chairman of the Board )
and President )
(Principal Executive )
Officer) )
)
)
/s/William H. Keough )
- -------------------------- )
William H. Keough Treasurer (Principal )
Financial and Accounting)
Officer) )
)
Trustees: )
)
)
)
/s/John F. Cogan, Jr. )
John F. Cogan, Jr. )

Richard H. Egdahl, M.D.* )
Richard H. Egdahl, M.D. )
)
)
Marguerite A. Piret* )
Marguerite A. Piret )
)
)
David D. Tripple* )
David D. Tripple )
)
)
Stephen K. West* )
Stephen K. West )

*By: /s/John F. Cogan, Jr. Dated: April 30, 1998
--------------------------------
John F. Cogan, Jr.
Attorney-in-fact

<PAGE>

Exhibit Index

Exhibit
Number Document Title

11. Consent of Independent Public Accountants.

27. Financial Data Schdules

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated February 2, 1998 (and to all references to our firm) included in or made a
part of Post-Effective Amendment No.7 and Amendment No. 8 to Registration
Statement File Nos. 33-84546 and 811-8786, respectively.

/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP

Boston, Massachusetts
April 27, 1998

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