-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C4iGRoSY3nNVJWW4z4ojcBGY0hQswmeuCtVCJW8I5aZFRZFfVd2vxe9rzJkiEC3K gAv+a1k5bL/TrKVKvSBUfA== 0000863334-01-500003.txt : 20010622 0000863334-01-500003.hdr.sgml : 20010622 ACCESSION NUMBER: 0000863334-01-500003 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010430 FILED AS OF DATE: 20010621 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIONEER EQUITY INCOME FUND CENTRAL INDEX KEY: 0000869356 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08657 FILM NUMBER: 1664565 BUSINESS ADDRESS: STREET 1: 60 STATE STREET CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6174224960 MAIL ADDRESS: STREET 1: 60 STATE STREET 19TH FLOOR CITY: BOSTON STATE: MA ZIP: 02109-1820 N-30D 1 eqinc.txt EQINC SEMI [LOGO] PIONEER INVESTMENTS-Registered Trademark- PIONEER EQUITY-INCOME FUND SEMIANNUAL REPORT 4/30/01 TABLE OF CONTENTS - -------------------------------------------------------------------------------- Letter from the President 1 Portfolio Summary 2 Performance Update 3 Portfolio Management Discussion 7 Schedule of Investments 11 Financial Statements 17 Notes to Financial Statements 24 Trustees, Officers and Service Providers 28 The Pioneer Family of Mutual Funds 29 PIONEER EQUITY-INCOME FUND LETTER FROM THE PRESIDENT 4/30/01 DEAR SHAREOWNER, - -------------------------------------------------------------------------------- I don't think you could find a better argument for a diversified portfolio than the volatile markets we have experienced in the last several months. The turbulence began when the dot-com bubble burst in the spring of 2000. Then, as higher interest rates began to drain strength from the economy, companies in a wide range of industries issued warnings of declining profits. The result has been a very weak stock market, with high-flying growth and internet-related stocks suffering the most damage. In contrast to these sharp declines, however, less aggressive investments, including many bonds and value stocks, did much better over this painful period. You can never eliminate risk entirely, but you and your financial advisor can work to mitigate it. The first step is to review your portfolio diversification, and modify it as necessary. You will probably want to continue holding a mix of stocks and bonds. A portfolio containing a variety of investments with varying risk and opportunity characteristics may be the most comfortable course for most investors. It could also be the most successful. As professional investors, we view market downturns as opportunities to reposition our funds' portfolios and take advantage of lower prices to purchase attractive securities. For more than 70 years, that strategy has helped Pioneer fund managers and shareowners reach their financial goals. You may want to put your own investment portfolio through the same process: Look past the bad news and try to bring your portfolio in line with current conditions and your own needs. Respectfully, /s/ David Tripple David Tripple Pioneer Investment Management, Inc. 1 PIONEER EQUITY-INCOME FUND PORTFOLIO SUMMARY 4/30/01 PORTFOLIO DIVERSIFICATION - -------------------------------------------------------------------------------- (As a percentage of total investment portfolio) [CHART] U.S. Common Stocks 96.7% U.S. Convertible Securities 2.1% Short-Term Cash Equivalents 1.2%
SECTOR DISTRIBUTION - -------------------------------------------------------------------------------- (As a percentage of equity holdings) [CHART] Utilities 21.9% Financials 16.1% Communication Services 11.7% Health Care 10.3% Energy 11.5% Technology 5.8% Consumer Staples 6.1% Consumer Cyclicals 6.5% Capital Goods 5.7% Transportation 2.2% Basic Materials 2.2%
10 LARGEST HOLDINGS - -------------------------------------------------------------------------------- (As a percentage of equity holdings) 1. Constellation Energy Group 3.73% 2. Texaco, Inc. 3.55 3. Chevron Corp. 3.53 4. SBC Communications, Inc. 3.52 5. Exxon Mobil Corp. 3.45 6. Verizon Communications, Inc. 3.05% 7. Schering-Plough Corp. 2.99 8. Ford Motor Corp. 2.93 9. Duke Energy Corp. 2.63 10. KeySpan Energy Corp. 2.22
Fund holdings will vary for other periods. 2 PIONEER EQUITY-INCOME FUND PERFORMANCE UPDATE 4/30/01 CLASS A SHARES SHARE PRICES AND DISTRIBUTIONS - -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE 4/30/01 10/31/00 $27.31 $29.55 DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM (10/31/00-4/30/01) DIVIDENDS CAPITAL GAINS CAPITAL GAINS $0.258 - $2.299 INVESTMENT RETURNS - -------------------------------------------------------------------------------- The mountain chart on the right shows the growth of a $10,000 investment made in Pioneer Equity-Income Fund at public offering price, compared to the growth of the Standard & Poor's 500 Index. AVERAGE ANNUAL TOTAL RETURNS (As of April 30, 2001)
NET ASSET PUBLIC OFFERING PERIOD VALUE PRICE* 10 Years 14.96% 14.28% 5 Years 14.26 12.92 1 Year 13.43 6.89
* Reflects deduction of the maximum 5.75% sales charge at the beginning of the period and assumes reinvestment of distributions at net asset value. [CHART]
GROWTH OF $10,000 Pioneer Equity-Income Standard & Poor's Fund* 500 Index 4/30/1991 $9,425 $10,000 4/30/1992 $11,363 $11,406 $13,807 $12,457 $14,372 $13,121 4/30/1995 $15,440 $15,410 $19,514 $20,049 $22,497 $25,085 4/30/1998 $31,489 $35,371 $35,349 $43,083 $33,500 $47,428 4/30/2001 $38,000 $41,287
The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely held common stocks listed on the New York Stock Exchange, American Stock Exchange and the over-the-counter market. Index returns assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. Past performance does not guarantee future results. Returns and share prices fluctuate, and your shares, when redeemed, may be worth more or less than their original cost. 3 PIONEER EQUITY-INCOME FUND PERFORMANCE UPDATE 4/30/01 CLASS B SHARES SHARE PRICES AND DISTRIBUTIONS - -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE 4/30/01 10/31/00 $27.13 $29.37 DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM (10/31/00-4/30/01) DIVIDENDS CAPITAL GAINS CAPITAL GAINS $0.148 - $2.299 INVESTMENT RETURNS - -------------------------------------------------------------------------------- The mountain chart on the right shows the growth of a $10,000 investment made in Pioneer Equity-Income Fund, compared to the growth of the Standard & Poor's 500 Index. AVERAGE ANNUAL TOTAL RETURNS (As of April 30, 2001)
IF IF PERIOD HELD REDEEMED* Life-of-Class 14.44% 14.44% (4/4/94) 5 Years 13.37 13.25 1 Year 12.51 8.51
* Reflects deduction of the maximum applicable contingent deferred sales charge (CDSC) at the end of the period and assumes reinvestment of distributions. The maximum CDSC of 4% declines over six years. [CHART]
GROWTH OF $10,000+ Pioneer Standard & Equity-Income Poor's Fund* 500 Index 4/4/1994 $10,000 $10,000 $10,343 $10,273 $10,593 $10,922 $11,036 $12,065 $12,568 $13,802 4/30/1996 $13,854 $15,698 $14,416 $17,116 $15,853 $19,641 $18,646 $22,613 $22,009 $27,694 10/31/1998 $21,971 $27,585 $24,529 $33,732 $24,263 $34,653 $23,061 $37,134 $25,728 $36,752 4/30/2001 $25,947 $32,326
+ Index comparison begins on 4/30/94. The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely held common stocks listed on the New York Stock Exchange, American Stock Exchange and the over-the-counter market. Index returns assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. Past performance does not guarantee future results. Returns and share prices fluctuate, and your shares, when redeemed, may be worth more or less than their original cost. 4 PIONEER EQUITY-INCOME FUND PERFORMANCE UPDATE 4/30/01 CLASS C SHARES SHARE PRICES AND DISTRIBUTIONS - -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE 4/30/01 10/31/00 $27.07 $29.32 DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM (10/31/00-4/30/01) DIVIDENDS CAPITAL GAINS CAPITAL GAINS $0.141 - $2.299 INVESTMENT RETURNS - -------------------------------------------------------------------------------- The mountain chart on the right shows the growth of a $10,000 investment made in Pioneer Equity-Income Fund, compared to the growth of the Standard & Poor's 500 Index. AVERAGE ANNUAL TOTAL RETURNS (As of April 30, 2001)
IF IF PERIOD HELD REDEEMED* Life-of-Class 12.90% 12.90% (1/31/96) 5 Years 13.29 13.29 1 Year 12.48 12.48
* Assumes reinvestment of distributions. The 1% contingent deferred sales charge (CDSC) applies to investments sold within one year of purchase. [CHART]
GROWTH OF $10,000 Pioneer Standard & Equity-Income Poor's Fund* 500 Index 1/31/1996 $10,000 $10,000 $10,133 $10,340 10/31/1996 $10,534 $11,274 $11,580 $12,937 $13,622 $14,894 4/30/1998 $16,075 $18,241 $16,047 $18,169 $17,908 $22,218 10/31/1999 $17,708 $22,825 $16,813 $24,459 $18,761 $24,207 4/30/2001 $18,910 $21,292
The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely held common stocks listed on the New York Stock Exchange, American Stock Exchange and the over-the-counter market. Index returns assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. Past performance does not guarantee future results. Returns and share prices fluctuate, and your shares, when redeemed, may be worth more or less than their original cost. 5 PIONEER EQUITY-INCOME FUND PERFORMANCE UPDATE 4/30/01 CLASS Y SHARES SHARE PRICES AND DISTRIBUTIONS - -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE 4/30/01 10/31/00 $27.34 $29.59 DISTRIBUTIONS PER SHARE INCOME SHORT-TERM LONG-TERM (10/31/00-4/30/01) DIVIDENDS CAPITAL GAINS CAPITAL GAINS $0.293 - $2.299 INVESTMENT RETURNS - -------------------------------------------------------------------------------- The mountain chart on the right shows the growth of a $10,000 investment made in Pioneer Equity-Income Fund, compared to the growth of the Standard & Poor's 500 Index. AVERAGE ANNUAL TOTAL RETURNS* (As of April 30, 2001)
IF IF PERIOD HELD REDEEMED Life-of-Class 6.52% 6.52% (7/2/98) 1 Year 13.82 13.82
* Assumes reinvestment of distributions. [CHART]
GROWTH OF $10,000+ Pioneer Standard & Equity-Income Poor's Fund* 500 Index 7/2/1998 $10,000 $10,000 $9,680 $9,788 $9,841 $9,635 $10,366 $11,259 4/30/1999 $11,045 $11,783 $11,060 $11,761 $10,990 $12,104 $10,307 $12,420 4/30/2000 $10,506 $12,971 $10,667 $12,815 $11,796 $12,838 $11,927 $12,305 4/30/2001 $11,958 $11,292
+ Index comparison begins 7/31/98. The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely held common stocks listed on the New York Stock Exchange, American Stock Exchange and the over-the-counter market. Index returns assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. Past performance does not guarantee future results. Returns and share prices fluctuate, and your shares, when redeemed, may be worth more or less than their original cost. 6 PIONEER EQUITY-INCOME FUND PORTFOLIO MANAGEMENT DISCUSSION 4/30/01 In the following discussion, John Carey gives an overview of the market environment and Pioneer Equity-Income Fund's performance over the past six months. Q: WHAT WERE THE RESULTS FOR PIONEER EQUITY-INCOME FUND FOR THE LAST SIX MONTHS, AND WHAT CONTRIBUTED TO THE RESULTS? A: The six months ended April 30, 2001 were quite difficult ones in the stock market. Class A shares of Pioneer Equity-Income Fund ended the period with a small overall gain, 1.27% at net asset value. By comparison the unmanaged Standard & Poor's 500 Index showed a 12.04% decline, and the average equity income fund as measured by Lipper had a loss of 0.23%. (Lipper, Inc. is an independent firm that tracks mutual fund performance.) While the Fund achieved a very modest gain, it was a better-than-average result versus comparable mutual funds and a much better return than the S&P. Q: WHAT CONTRIBUTED TO THE FUND'S OUTPERFORMANCE OF ITS LIPPER PEERS AND THE S&P 500 Index? A: The major reasons for the Fund's relatively good performance were our significant portfolio underweighting throughout the period in the troubled technology sector, our significant overweighting in the strong utility sector and good returns from a number of individual stocks in other sectors. At April 30, the Fund had only 5.7% of its portfolio invested in technology, versus a 19.2% exposure for the S&P; and the Fund had 21.7% in utilities, versus only a 3.9% S&P weighting in that sector. Otherwise, a number of stocks stood out on the plus side in a variety of industries. GORMAN-RUPP, a manufacturer of pumps, JOHNSON CONTROLS, a maker of automobile seats, and Old Kent Financial, the recipient of a generous tender offer from FIFTH THIRD BANCORP, all did splendidly during the period. For us, the period demonstrated the importance of diversification, emphasis on high quality at reasonable valuations and patience. 7 PIONEER EQUITY-INCOME FUND - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 4/30/01 (CONTINUED) Q: WHY FOCUS ON DIVIDEND-PAYING STOCKS? A: The emphasis we place on dividend-paying stocks generally does keep us out of a lot of trouble. Many of the market woes over the past six to twelve months have arisen from intense speculative activity in what are sometimes referred to as "concept" stocks. These are stocks of companies involved in businesses that capture the public imagination in their early stages, but that do not always go on to become "real" companies with sales and earnings to support their occasionally quite lofty share prices. Speculators who fail to make a timely exit from these feeding frenzies often find that they themselves are made a meal of. Of course the internet-stock mania made for quite a spectacular bubble, and when it burst it left an awful lot of people drenched and shivering with bone-chilling losses. But prices even for some of the more established companies in the fashionable market areas became quite inflated during the irrational exuberance of the fabulous bull market. While it was going on, we felt, as we always have, that a modicum of attention to such things as whether the company is actually profitable at a decent level - and profitable according to conservative and consistently applied accounting principles - can go a long ways toward preserving the longer-term value of one's assets. Dividends, especially when they have been paid for many years and at rising rates, are often as good a sign as any that there really is a business there and not just a gorgeously printed stock certificate with little in the way of value behind it. Q: WERE THERE SOME STOCKS THAT LAGGED THE REST OF THE PORTFOLIO DURING THE SIX MONTHS, AND WHAT IS YOUR VIEW ON THOSE STOCKS GOING FORWARD? A: The communication services and health care sectors were both rather weak. For the Fund, the major investments in communications services are the "Baby Bells," the successors to the original seven telephone companies spun out from the old AT&T at the beginning of 1984. Today only BELLSOUTH remains within its shell, that is, the business territory it had at the start. VERIZON, by contrast, represents the combination of investments our Fund made in Bell Atlantic, NYNEX, and the non-AT&T company GTE, all of which have merged in recent years. Similarly, SBC 8 PIONEER EQUITY-INCOME FUND includes the original Bell operating companies Southwestern Bell, Ameritech, and Pacific Telesis. Former holding US West was acquired by Qwest, and because of a dramatic reduction in the dividend payment by the new controlling entity we decided to part company with it after the merger was completed last summer. We also own shares of SPRINT and ALLTEL. We have avoided the debacles of the start-up telecommunications companies. However, the whole sector was under a cloud due to concerns about overbuilding of telecommunications systems, the costliness of adding internet-access capability and growing price competition. We do not know how long it will be before investors feel that the major issues in the industry are being resolved. In the meantime we are confident that most of us will continue making phone calls and paying phone bills. We believe that the large, dominant regional companies in which we have most of our investments will make it through this trying time and prosper. With regard to health care, our positioning is similarly conservative, at least by our lights. We emphasized large pharmaceutical companies and generally kept away from volatile biotechnology, hospital-management, managed-care, and medical-products companies. Over the life of the Fund, some of our very best stock-price performance has come from pharmaceutical investments. The recent underperformance resulted, we think, from some specific concerns with regard to some of the companies, sector rotation in the market as shorter-term investors moved into other sectors and profit taking after the very good relative performance of pharmaceuticals in calendar year 2000. We continue to see great potential for the pharmaceutical stocks we own over the next several years. Indeed we took advantage of the weakness in the group to add one stock, ELI LILLY. Q: WOULD YOU LIKE TO HIGHLIGHT ANY OTHER CHANGES YOU HAVE MADE IN THE PORTFOLIO? A: Another stock we added to the portfolio in recent months was TIMKEN, a maker of tapered roller bearings, other types of bearings, and specialty steels. Without the products made by the company, our automobiles, 9 PIONEER EQUITY-INCOME FUND PORTFOLIO MANAGEMENT DISCUSSION 4/30/01 (CONTINUED) trucks, and locomotives, among other machines, would quite literally grind to a halt. Yet, as was typical with respect to so many similar kinds of basic manufacturers during these past few years, hardly any investors showed much interest in the shares of Timken. After the shares of Timken had recorded what we felt to be a quite inappropriate decline we purchased some shares for the Fund. Going back over the whole six months ended April 30, 2001 we made investments in the comparably overlooked, unfashionable MEAD, INGERSOLL-RAND, ILLINOIS TOOL WORKS, GENERAL MOTORS and SARA LEE. Q: WHAT LIES AHEAD FOR THE MARKET? A: Like everyone we watch the economic numbers. Clearly they show that things have slowed down and that investors are not altogether unjustified in thinking significant risks exist. Inventories are still out of line in some areas, and excess capacity in some industries surely exists. But is there anything really out of the ordinary about any of this? Are people correct in maintaining that "this time is different" (that is, much worse than normal), even when they were not at all correct before the slowdown in maintaining that "this time is different" (that is, much better than ever, a new paradigm)? No, we think they are just as wrong now. The business cycle can be rough. Companies do rise and fall. Products and services do become outmoded and obsolete. Managements do lose their way. Investments do go astray. Not every new plant is required, and not every addition to inventory is a good idea. We are going through one of the periods of adjustment that we need to go through from time to time if excesses are not to become even more excessive and wrong turns by companies are not to end in total corporate destruction. Already, though, there are glimmers of light, we think, between the more distant trees in these woods in which we still find ourselves. Some companies are actually beginning to show results a bit better than expected. In any case, we intend to do what we always aim to do, which is to watch our investments closely, to make changes we believe are indicated by their relative, long-term prospects, and otherwise sit patiently and wait. Thank you very much for your continued interest in the Fund. 10 PIONEER EQUITY-INCOME FUND SCHEDULE OF INVESTMENTS 4/30/01 (UNAUDITED)
SHARES VALUE CONVERTIBLE PREFERRED STOCKS - 2.1% CONSUMER STAPLES - 0.9% BROADCASTING (CABLE/TELEVISION/RADIO) - 0.9% 123,000 Cox Communication, Inc., 7.00%, 8/16/02 $ 7,527,600 ------------ TOTAL CONSUMER STAPLES $ 7,527,600 ------------ TRANSPORTATION - 1.2% RAILROADS - 1.2% 84,700 Union Pacific Capital Trust, 6.25%, 4/1/28 $ 4,042,562 123,000 Union Pacific Capital Trust, 6.25%, 4/1/28 (144A) 5,870,544 ------------ TOTAL TRANSPORTATION $ 9,913,106 ------------ TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $15,543,900) $ 17,440,706 ------------ COMMON STOCKS - 96.7% BASIC MATERIALS - 2.2% CHEMICALS - 0.6% 105,232 E.I. du Pont de Nemours and Co. $ 4,755,434 ------------ IRON & STEEL - 0.9% 523,405 Roanoke Electric Steel Corp. $ 7,343,372 ------------ METALS MINING - 0.4% 75,000 Phelps Dodge Corp. $ 3,355,500 ------------ PAPER & FOREST PRODUCTS - 0.3% 100,000 Mead Corp. $ 2,820,000 ------------ TOTAL BASIC MATERIALS $ 18,274,306 ------------ CAPITAL GOODS - 5.7% AEROSPACE/DEFENSE - 0.4% 38,700 General Dynamics Corp. $ 2,982,996 ------------ MACHINERY (DIVERSIFIED) - 1.7% 505,957 The Gorman-Rupp Co.+ $ 10,017,949 50,000 Ingersoll-Rand Co. 2,350,000 86,100 The Timken Co. 1,472,310 ------------ $ 13,840,259 ------------ MANUFACTURING (DIVERSIFIED) - 1.3% 40,000 Illinois Tool Works, Inc. $ 2,535,200 117,800 Johnson Controls, Inc. 8,528,720 ------------ $ 11,063,920 ------------
The accompanying notes are an integral part of these financial statements. 11 PIONEER EQUITY-INCOME FUND SCHEDULE OF INVESTMENTS 4/30/01 (UNAUDITED) (CONTINUED)
SHARES VALUE MANUFACTURING (SPECIALIZED) - 0.5% 112,550 Diebold, Inc. $ 3,668,005 ------------ TRUCKS & PARTS - 1.8% 310,500 Paccar, Inc. $ 15,065,460 ------------ TOTAL CAPITAL GOODS $ 46,620,640 ------------ COMMUNICATION SERVICES - 11.6% TELECOMMUNICATIONS (LONG DISTANCE) - 1.9% 722,000 Sprint Corp. $ 15,436,360 ------------ TELEPHONE - 9.7% 184,585 ALLTEL Corp. $ 10,080,187 396,400 BellSouth Corp. 16,632,944 694,669 SBC Communications, Inc. 28,655,096 451,354 Verizon Communications, Inc. 24,856,065 ------------ $ 80,224,292 ------------ TOTAL COMMUNICATION SERVICES $ 95,660,652 ------------ CONSUMER CYCLICALS - 6.4% AUTOMOBILES - 3.6% 810,803 Ford Motor Corp. $ 23,902,472 100,000 General Motors Corp. 5,481,000 ------------ $ 29,383,472 ------------ PUBLISHING - 1.2% 160,000 McGraw-Hill Co., Inc. $ 10,364,800 ------------ PUBLISHING (NEWSPAPERS) - 0.4% 70,000 Tribune Co. $ 2,949,800 ------------ RETAIL (DEPARTMENT STORES) - 0.5% 50,000 Harcourt General, Inc. $ 2,741,000 41,000 May Department Stores Co. 1,527,250 ------------ $ 4,268,250 ------------ SERVICES (ADVERTISING/MARKETING) - 0.7% 167,800 The Interpublic Group of Companies, Inc. $ 5,696,810 ------------ TOTAL CONSUMER CYCLICALS $ 52,663,132 ------------ CONSUMER STAPLES - 5.2% BEVERAGES (NON-ALCOHOLIC) - 0.6% 121,300 PepsiCo, Inc. $ 5,314,153 ------------ ENTERTAINMENT - 1.4% 531,200 Cedar Fair, L.P. $ 11,309,248 ------------
The accompanying notes are an integral part of these financial statements. 12 PIONEER EQUITY-INCOME FUND
SHARES VALUE FOODS - 2.7% 130,000 Campbell Soup Co. $ 3,957,200 106,000 General Mills, Inc. 4,177,460 216,250 H.J. Heinz Co. 8,466,188 50,000 The Quaker Oats Co. 4,850,000 34,000 Sara Lee Corp. 676,940 ------------ $ 22,127,788 ------------ HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.5% 66,000 Colgate-Palmolive Co. $ 3,686,100 ------------ TOTAL CONSUMER STAPLES $ 42,437,289 ------------ ENERGY - 11.3% OIL (DOMESTIC INTEGRATED) - 0.9% 253,305 Conoco Inc. (Class B) $ 7,705,538 ------------ OIL (INTERNATIONAL INTEGRATED) - 10.4% 297,700 Chevron Corp. $ 28,745,912 316,939 Exxon Mobil Corp. 28,080,795 400,000 Texaco, Inc. 28,912,000 ------------ $ 85,738,707 ------------ TOTAL ENERGY $ 93,444,245 ------------ FINANCIALS - 15.8% BANKS (MAJOR REGIONAL) - 6.5% 330,836 Fifth Third Bancorp $ 17,785,743 266,600 Mellon Bank Corp. 10,911,938 264,000 National City Corp. 7,183,440 164,700 SouthTrust Corp. 7,831,485 215,662 Wells Fargo Co. 10,129,644 ------------ $ 53,842,250 ------------ BANKS (REGIONAL) - 1.0% 250,000 First Tennessee National Corp. $ 8,167,500 ------------ INSURANCE (MULTI-LINE) - 0.5% 53,135 American International Group, Inc. $ 4,346,443 ------------ INSURANCE (PROPERTY-CASUALTY) - 3.1% 170,100 Chubb Corp. $ 11,354,175 150,000 Safeco Corp. 4,005,000 227,800 St. Paul Companies, Inc. 10,273,780 ------------ $ 25,632,955 ------------
The accompanying notes are an integral part of these financial statements. 13 PIONEER EQUITY-INCOME FUND SCHEDULE OF INVESTMENTS 4/30/01 (UNAUDITED) (CONTINUED)
SHARES VALUE INVESTMENT BANK/BROKERAGE - 0.9% 175,000 Edwards (A.G.), Inc. $ 7,117,250 ------------ INVESTMENT MANAGEMENT - 3.8% 232,600 Alliance Capital Management L.P. $ 10,722,860 208,000 Eaton Vance Corp. 6,718,400 402,000 T. Rowe Price Associates, Inc. 13,973,520 ------------ $ 31,414,780 ------------ TOTAL FINANCIALS $130,521,178 ------------ HEALTH CARE - 10.2% HEALTH CARE (DIVERSIFIED) - 4.6% 356,600 Abbott Laboratories $ 16,539,108 200,000 Bristol-Myers Squibb Co. 11,200,000 105,000 Johnson & Johnson 10,130,400 ------------ $ 37,869,508 ------------ HEALTH CARE (DRUGS/MAJOR PHARMACEUTICALS) - 5.2% 50,000 Eli Lilly & Co. $ 4,250,000 190,400 Merck & Co., Inc. 14,464,688 631,600 Schering-Plough Corp. 24,341,864 ------------ $ 43,056,552 ------------ HEALTH CARE (MEDICAL PRODUCTS/SUPPLIES) - 0.4% 88,000 Becton, Dickinson & Co. $ 2,846,800 ------------ TOTAL HEALTH CARE $ 83,772,860 ------------ TECHNOLOGY - 5.7% COMMUNICATIONS EQUIPMENT - 0.6% 300,000 Motorola Inc. $ 4,665,000 ------------ COMPUTER (HARDWARE) - 3.3% 381,200 Hewlett-Packard Co. $ 10,837,516 145,000 International Business Machines Corp. 16,695,300 ------------ $ 27,532,816 ------------ ELECTRONICS (SEMICONDUCTORS) - 0.8% 100,000 Intel Corp. $ 3,091,000 100,000 Texas Instruments, Inc. 3,870,000 ------------ $ 6,961,000 ------------ PHOTOGRAPHY/IMAGING - 1.0% 180,000 Eastman Kodak Co. $ 7,830,000 ------------ TOTAL TECHNOLOGY $ 46,988,816 ------------
The accompanying notes are an integral part of these financial statements. 14 PIONEER EQUITY-INCOME FUND
SHARES VALUE TRANSPORTATION - 0.9% AIRLINES - 0.2% 50,000 Delta Air Lines, Inc. $ 2,201,500 ------------ RAILROADS - 0.7% 105,000 Burlington Northern Santa Fe, Inc. $ 3,087,000 143,600 Norfolk Southern Corp. 2,834,664 ------------ $ 5,921,664 ------------ TOTAL TRANSPORTATION $ 8,123,164 ------------ UTILITIES - 21.7% ELECTRIC COMPANIES - 13.6% 296,200 Allegheny Energy, Inc. $ 15,153,592 235,400 American Electric Power Co., Inc. 11,614,636 636,500 Constellation Energy Group 30,386,510 372,350 DPL, Inc. 11,539,127 300,000 DQE, Inc. 9,129,000 458,000 Duke Energy Corp. 21,416,080 284,400 Kansas City Power & Light Co. 7,422,840 140,000 NSTAR 5,644,800 ------------ $112,306,585 ------------ NATURAL GAS - 7.0% 100,600 Buckeye Partners, L.P. $ 3,360,040 454,700 KeySpan Energy Corp. 18,051,590 110,882 Kinder Morgan Energy Partners L.P. 7,783,916 72,200 Lakehead Pipe Line Partners, L.P. (Preferred Units) 3,299,540 191,200 NICOR, Inc. 7,493,128 446,600 Questar Corp. 14,367,122 147,933 Vectren Corp. 3,349,203 ------------ $ 57,704,539 ------------ POWER PRODUCERS (INDEPENDENT) - 0.5% 100,000 Consol Energy Inc. $ 3,825,000 ------------ WATER UTILITIES - 0.6% 150,400 American Water Works Co., Inc. $ 4,662,400 ------------ TOTAL UTILITIES $178,498,524 ------------ TOTAL COMMON STOCKS (Cost $550,760,567) $797,004,806 ------------ TOTAL INVESTMENT IN SECURITIES - 98.8% (Cost $566,304,467) $814,445,512 ============
The accompanying notes are an integral part of these financial statements. 15 PIONEER EQUITY-INCOME FUND SCHEDULE OF INVESTMENTS 4/30/01 (UNAUDITED) (CONTINUED)
PRINCIPAL AMOUNT VALUE TEMPORARY CASH INVESTMENT - 1.2% COMMERCIAL PAPER - 1.2% $9,547,000 American Express Credit Corp., 4.69%, 5/1/01 $ 9,547,000 ------------ TOTAL TEMPORARY CASH INVESTMENT (Cost $9,547,000) $ 9,547,000 ------------ TOTAL INVESTMENT IN SECURITIES AND TEMPORARY CASH INVESTMENT - 100.0% (Cost $575,851,467) $823,992,512 ============
144ASecurity is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At April 30, 2001, the value of these securities amounted to $5,870,544 or 0.7% of total net assets. + Investments held by the Fund representing 5% or more of the outstanding voting stock of such company. (a) At April 30, 2001, the net unrealized gain on investments based on cost for federal income tax purposes of $575,851,467 was as follows: Aggregate gross unrealized gain for all investments in which there is an excess of value over tax cost $266,501,920 Aggregate gross unrealized loss for all investments in which there is an excess of tax cost over value (18,360,875) ------------ Net unrealized gain $248,141,045 ============
Purchases and sales of securities (excluding temporary cash investments) for the period ended April 30, 2001, aggregated $48,833,956 and $63,317,435, respectively. The accompanying notes are an integral part of these financial statements. 16 PIONEER EQUITY-INCOME FUND BALANCE SHEET 4/30/01 (unaudited) ASSETS: Investment in securities, at value (including temporary cash investment of $9,547,000) (cost $575,851,467) $823,992,512 Cash 10,952 Receivables - Fund shares sold 1,612,281 Dividends and interest 2,038,374 Other 10,154 ------------ Total assets $827,664,273 ------------ LIABILITIES: Payables - Investment securities purchased $ 251,092 Fund shares repurchased 2,043,165 Due to affiliates 892,086 Accrued expenses 207,232 ------------ Total liabilities $ 3,393,575 ------------ NET ASSETS: Paid-in capital $568,657,329 Accumulated undistributed net investment income 5,403,974 Accumulated undistributed net realized gain on investments 2,068,350 Net unrealized gain on investments 248,141,045 ------------ Total net assets $824,270,698 ============ NET ASSET VALUE PER SHARE: (Unlimited number of shares authorized) Class A (based on $525,692,808/19,251,486 shares) $ 27.31 ============ Class B (based on $260,118,751/9,587,233 shares) $ 27.13 ============ Class C (based on $35,415,475/1,308,439 shares) $ 27.07 ============ Class Y (based on $3,043,664/111,310 shares) $ 27.34 ============ MAXIMUM OFFERING PRICE: Class A $ 28.98 ============
The accompanying notes are an integral part of these financial statements. 17 PIONEER EQUITY-INCOME FUND STATEMENT OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED 4/30/01 INVESTMENT INCOME: Dividends $11,911,270 Interest 173,802 ----------- Total investment income $12,085,072 ----------- EXPENSES: Management fees $ 2,416,595 Transfer agent fees Class A 435,636 Class B 258,119 Class C 54,533 Class Y 42 Distribution fees Class A 646,838 Class B 1,266,735 Class C 159,852 Administrative fees 105,625 Custodian fees 44,640 Registration fees 1,197 Professional fees 27,309 Printing 21,167 Fees and expenses of nonaffiliated trustees 13,030 Miscellaneous 5,418 ----------- Total expenses $ 5,456,736 Less fees paid indirectly (99,621) ----------- Net expenses $ 5,357,115 ----------- Net investment income $ 6,727,957 ----------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investments $ 2,301,415 Change in net unrealized gain on investments (709,608) ----------- Net gain on investments $ 1,591,807 ----------- Net increase in net assets resulting from operations $ 8,319,764 ===========
The accompanying notes are an integral part of these financial statements. 18 PIONEER EQUITY-INCOME FUND STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED 4/30/01 AND THE YEAR ENDED 10/31/00
SIX MONTHS ENDED 4/30/01 YEAR ENDED FROM OPERATIONS: (UNAUDITED) 10/31/00 Net investment income $ 6,727,957 $ 14,656,923 Net realized gain on investments 2,301,415 66,519,762 Change in net unrealized gain on investments (709,608) (43,657,079) --------------- --------------- Net increase in net assets resulting from operations $ 8,319,764 $ 37,519,606 --------------- --------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income: Class A ($.26 and $0.52 per share, respectively) $ (4,983,357) $ (10,555,233) Class B ($.15 and $0.28 per share, respectively) (1,411,989) (2,749,857) Class C ($.14 and $0.27 per share, respectively) (169,979) (340,012) Class Y ($.29 and $0.62 per share, respectively) (29,994) (60,202) Net realized gain: Class A ($2.30 and $1.76 per share, respectively) (41,657,545) (38,674,197) Class B ($2.30 and $1.76 per share, respectively) (20,081,191) (19,330,510) Class C ($2.30 and $1.76 per share, respectively) (2,486,531) (2,471,114) Class Y ($2.30 and $1.76 per share, respectively) (207,083) (206,266) --------------- --------------- Total distributions to shareowners $ (71,027,669) $ (74,387,391) --------------- --------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 79,016,774 $ 152,285,109 Reinvestment of distributions 66,060,099 68,083,498 Cost of shares repurchased (90,417,964) (385,976,595) --------------- --------------- Net increase (decrease) in net assets resulting from fund share transactions $ 54,658,909 $ (165,607,988) --------------- --------------- Net decrease in net assets $ (8,048,996) $ (202,475,773) NET ASSETS: Beginning of period 832,319,694 1,034,795,467 --------------- --------------- End of period (including accumulated undistributed net investment income of $5,403,974 and $5,271,336, respectively) $ 824,270,698 $ 832,319,694 =============== ===============
'01 SHARES '01 AMOUNT '00 SHARES '00 AMOUNT CLASS A (UNAUDITED) (UNAUDITED) Shares sold 1,520,745 $ 41,198,074 3,626,103 $ 98,582,842 Reinvestment of distributions 1,634,841 44,049,148 1,669,366 45,882,406 Less shares repurchased (2,161,856) (58,595,869) (9,114,542) (243,890,094) ---------- ------------- ---------- ------------- Net increase (decrease) 993,730 $ 26,651,353 (3,819,073) $ (99,424,846) ========== ============= ========== ============= CLASS B Shares sold 1,065,946 $ 28,660,729 1,553,273 $ 41,887,882 Reinvestment of distributions 725,866 19,450,624 713,993 19,543,375 Less shares repurchased (988,495) (26,411,256) (4,511,215) (119,487,097) ---------- ------------- ---------- ------------- Net increase (decrease) 803,317 $ 21,700,097 (2,243,949) $ (58,055,840) ========== ============= ========== ============= CLASS C Shares sold 320,090 $ 8,534,579 414,172 $ 11,279,145 Reinvestment of distributions 87,264 2,333,066 87,593 2,395,692 Less shares repurchased (192,049) (5,127,232) (797,781) (21,091,723) ---------- ------------- ---------- ------------- Net increase (decrease) 215,305 $ 5,740,413 (296,016) $ (7,416,886) ========== ============= ========== ============= CLASS Y Shares sold 22,919 $ 623,392 19,432 $ 535,240 Reinvestment of distributions 8,433 227,261 9,528 262,025 Less shares repurchased (10,244) (283,607) (56,014) (1,507,681) ---------- ------------- ---------- ------------- Net increase (decrease) 21,108 $ 567,046 (27,054) $ (710,416) ========== ============= ========== =============
The accompanying notes are an integral part of these financial statements. 19 PIONEER EQUITY-INCOME FUND FINANCIAL HIGHLIGHTS 4/30/01
SIX MONTHS ENDED 4/30/01 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED (UNAUDITED) 10/31/00 10/31/99 10/31/98 10/31/97 10/31/96 CLASS A Net asset value, beginning of period $ 29.55 $ 29.97 $ 28.10 $ 24.78 $ 20.37 $ 18.22 ---------- --------- --------- --------- --------- ---------- Increase from investment operations: Net investment income $ 0.25 $ 0.58 $ 0.48 $ 0.49 $ 0.50 $ 0.55 Net realized and unrealized gain on investments 0.07 1.28 2.62 4.04 5.36 2.24 ---------- --------- --------- --------- --------- ---------- Net increase from investment operations $ 0.32 $ 1.86 $ 3.10 $ 4.53 $ 5.86 $ 2.79 Distributions to shareowners: Net investment income (0.26) (0.52) (0.47) (0.48) (0.50) (0.50) Net realized gain (2.30) (1.76) (0.76) (0.73) (0.95) (0.14) ---------- --------- --------- --------- --------- ---------- Net increase (decrease) in net asset value $ (2.24) $ (0.42) $ 1.87 $ 3.32 $ 4.41 $ 2.15 ---------- --------- --------- --------- --------- ---------- Net asset value, end of period $ 27.31 $ 29.55 $ 29.97 $ 28.10 $ 24.78 $ 20.37 ========== ========= ========= ========= ========= ========== Total return* 1.27% 6.90% 11.26% 18.69% 30.40% 15.53% Ratio of net expenses to average net assets+ 1.07%** 1.11% 1.09% 1.05% 1.11% 1.19% Ratio of net investment income to average net assets+ 1.93%** 1.95% 1.62% 1.82% 2.22% 2.85% Portfolio turnover rate 12%** 14% 23% 12% 18% 47% Net assets, end of year (in thousands) $ 525,693 $ 539,602 $ 661,598 $ 584,389 $ 452,300 $ 336,384 Ratios assuming reduction for fees paid indirectly: Net expenses 1.05%** 1.08% 1.07% 1.04% 1.10% 1.18% Net investment income 1.95%** 1.98% 1.64% 1.83% 2.23% 2.86%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charges. Total return would be reduced if sales charges were taken into account. ** Annualized. + Ratios assuming no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 20 PIONEER EQUITY-INCOME FUND FINANCIAL HIGHLIGHTS 4/30/01
SIX MONTHS ENDED 4/30/01 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED (UNAUDITED) 10/31/00 10/31/99 10/31/98 10/31/97 10/31/96 CLASS B Net asset value, beginning of year $ 29.37 $ 29.78 $ 27.91 $ 24.63 $ 20.26 $ 18.15 --------- --------- --------- --------- --------- --------- Increase from investment operations: Net investment income $ 0.14 $ 0.35 $ 0.25 $ 0.29 $ 0.33 $ 0.41 Net realized and unrealized gain on investments 0.07 1.28 2.61 4.01 5.32 2.22 --------- --------- --------- --------- --------- --------- Net increase from investment operations $ 0.21 $ 1.63 $ 2.86 $ 4.30 $ 5.65 $ 2.63 Distributions to shareowners: Net investment income (0.15) (0.28) (0.23) (0.29) (0.33) (0.38) Net realized gain (2.30) (1.76) (0.76) (0.73) (0.95) (0.14) --------- --------- --------- --------- --------- --------- Net increase (decrease) in net asset value $ (2.24) $ (0.41) $ 1.87 $ 3.28 $ 4.37 $ 2.11 --------- --------- --------- --------- --------- --------- Net asset value, end of year $ 27.13 $ 29.37 $ 29.78 $ 27.91 $ 24.63 $ 20.26 ========= ========= ========= ========= ========= ========= Total return* 0.85% 6.04% 10.43% 17.83% 29.35% 14.70% Ratio of net expenses to average net assets+ 1.86%** 1.91% 1.87% 1.82% 1.88% 1.95% Ratio of net investment income to average net assets+ 1.14%** 1.15% 0.84% 1.05% 1.45% 2.06% Portfolio turnover rate 12%** 14% 23% 12% 18% 47% Net assets, end of year (in thousands) $ 260,119 $ 257,999 $ 328,360 $ 281,469 $ 201,360 $ 134,657 Ratios assuming reduction for fees paid indirectly: Net expenses 1.84%** 1.89% 1.85% 1.81% 1.87% 1.94% Net investment income 1.16%** 1.17% 0.86% 1.06% 1.46% 2.07%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period, and no sales charges. Total return would be reduced if sales charges were taken into account. ** Annualized. + Ratios assuming no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 21 PIONEER EQUITY-INCOME FUND FINANCIAL HIGHLIGHTS 4/30/01
SIX MONTHS ENDED 4/30/01 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1/31/96 TO (UNAUDITED) 10/31/00 10/31/99 10/31/98 10/31/97 10/31/96 CLASS C Net asset value, beginning of period $ 29.32 $ 29.75 $ 27.88 $ 24.61 $ 20.25 $ 19.49 --------- ---------- ---------- ----------- ----------- --------- Increase from investment operations: Net investment income $ 0.13 $ 0.30 $ 0.22 $ 0.27 $ 0.32 $ 0.27 Net realized and unrealized gain on investments 0.06 1.30 2.62 4.02 5.32 0.76 --------- ---------- ---------- ----------- ----------- --------- Net increase from investment operations $ 0.19 $ 1.60 $ 2.84 $ 4.29 $ 5.64 $ 1.03 Distributions to shareowners: Net investment income (0.14) (0.27) (0.21) (0.29) (0.33) (0.27) Net realized gain (2.30) (1.76) (0.76) (0.73) (0.95) -- --------- ---------- ---------- ----------- ----------- --------- Net increase (decrease) in net asset value $ (2.25) $ (0.43) $ 1.87 $ 3.27 $ 4.36 0.76 --------- ---------- ---------- ----------- ----------- --------- Net asset value, end of period $ 27.07 $ 29.32 $ 29.75 $ 27.88 $ 24.61 $ 20.25 ========= ========== ========== =========== =========== ========= Total return* 0.80% 5.94% 10.35% 17.80% 29.32% 5.34% Ratio of net expenses to average net assets+ 1.99%** 2.02% 1.97% 1.89% 1.93% 1.98%** Ratio of net investment income to average net assets+ 1.00%** 1.05% 0.74% 0.97% 1.35% 1.91%** Portfolio turnover rate 12%** 14% 23% 12% 18% 47% Net assets, end of period (in thousands) $ 35,415 $ 32,050 $ 41,320 $ 25,941 $ 12,324 $ 4,144 Ratios assuming reduction for fees paid indirectly: Net expenses 1.96%** 1.98% 1.94% 1.87% 1.91% 1.94%** Net investment income 1.03%** 1.09% 0.77% 0.99% 1.37% 1.95%**
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charges. Total return would be reduced if sales charges were taken into account. ** Annualized. + Ratios assuming no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 22 PIONEER EQUITY-INCOME FUND FINANCIAL HIGHLIGHTS 4/30/01
SIX MONTHS ENDED 4/30/01 YEAR ENDED YEAR ENDED 7/2/98 TO (UNAUDITED) 10/31/00 10/31/99 10/31/98 CLASS Y Net asset value, beginning of period $29.59 $30.00 $28.13 $28.72 ------ ------ ------ ------ Increase (decrease) from investment operations: Net investment income $ 0.28 $ 0.70 $ 0.59 $ 0.18 Net realized and unrealized gain (loss) on investments 0.06 1.27 2.62 (0.64) ------ ------ ------ ------ Net increase (decrease) from investment operations $ 0.34 $ 1.97 $ 3.21 $(0.46) Distributions to shareowners: Net investment income (0.29) (0.62) (0.58) (0.13) Net realized gain (2.30) (1.76) (0.76) - ------ ------ ------ ------ Net increase (decrease) in net asset value $(2.25) $(0.41) $ 1.87 $(0.59) ------ ------ ------ ------ Net asset value, end of period $27.34 $29.59 $30.00 $28.13 ====== ====== ====== ====== Total return* 1.37% 7.33% 11.67% (1.59)% Ratio of net expenses to average net assets+ 0.66%** 0.70% 0.70% 0.74%** Ratio of net investment income to average net assets+ 2.33%** 2.37% 2.01% 2.07%** Portfolio turnover rate 12%** 14% 23% 12% Net assets, end of period (in thousands) $3,044 $2,669 $3,517 $2,888 Ratios assuming reduction for fees paid indirectly: Net expenses 0.64%** 0.68% 0.69% 0.74%** Net investment income 2.35%** 2.39% 2.02% 2.07%**
* 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. The accompanying notes are an integral part of these financial statements. 23 PIONEER EQUITY-INCOME FUND NOTES TO FINANCIAL STATEMENTS 4/30/01 (unaudited) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Pioneer Equity-Income Fund (the Fund), is a Delaware business trust registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The investment objectives of the Fund are current income and long-term growth of capital from a portfolio consisting primarily of income producing equity securities of U.S. corporations. The Fund offers four classes of shares - Class A, Class B, Class C and Class Y shares. Shares of Class A, Class B, Class C and Class Y each represent an interest in the same portfolio of investments of the Fund and have equal rights to voting, redemptions, dividends and liquidation, except that each class of shares can bear different transfer agent and distribution fees and have exclusive voting rights with respect to the distribution plans that have been adopted by Class A, Class B and Class C, respectively. There is no distribution plan for Class Y shareowners. The Fund's financial statements have been prepared in conformity with accounting principles generally accepted in the United States that require the management of the Fund to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund, which are in conformity with those generally accepted in the investment company industry: A. SECURITY VALUATION Security transactions are recorded as of trade date. The net asset value is computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset value, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Dividend income is recorded on the ex-dividend date and interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. 24 PIONEER EQUITY-INCOME FUND Gains and losses on sales of investments are calculated on the identified cost method for both financial reporting and federal income tax purposes. Settlements from litigation and class action suits are recognized when the Fund acquires an enforceable right to such awards. Included in net realized gain from investments is $11,515 of class action settlements received by the Fund during the six months ended April 30, 2001. B. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of the Fund's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. C. FUND SHARES The Fund records sales and repurchases of its shares as of trade date. Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Fund and a majority owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), earned $59,885 in underwriting commissions on the sale of fund shares during the six months ended April 30, 2001. D. CLASS ALLOCATIONS Distribution fees are calculated based on the average daily net asset value attributable to Class A, Class B and Class C shares of the Fund, respectively. Class Y shares are not subject to a distribution plan. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expense (see Note 3). Income, common expenses and realized and 25 PIONEER EQUITY-INCOME FUND NOTES TO FINANCIAL STATEMENTS 4/30/01 (UNAUDITED) (CONTINUED) unrealized gains and losses are calculated at the Fund level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions to shareowners are recorded as of the ex-dividend date. Distributions paid by the Fund with respect to each class of shares are calculated in the same manner, at the same time and in the same amount, except that Class A, Class B, Class C and Class Y shares can bear different transfer agent and distribution fees. 2. MANAGEMENT AGREEMENT Pioneer Investment Management, Inc. (PIM), the Fund's investment adviser, manages the Fund's portfolio and is a majority owned indirect subsidiary of UniCredito Italiano. Management fees are calculated at the annual rate of 0.60% of the Fund's average daily net assets up to $10 billion and 0.575% of the excess over $10 billion. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Fund. At April 30, 2001, $414,352 was payable to PIM related to management fees, administrative fees and certain others services. 3. TRANSFER AGENT PIMSS, a majority owned indirect subsidiary of UniCredito Italiano, provides substantially all transfer agent and shareowner services to the Fund at negotiated rates. Included in due to affiliates is $127,943 in transfer agent fees payable to PIMSS at April 30, 2001. 4. DISTRIBUTION PLANS The Fund adopted Plans of Distribution with respect to Class A, Class B and Class C shares (Class A Plan, Class B Plan and Class C Plan) in accordance with Rule 12b-1 of the Investment Company Act of 1940. Pursuant to the Class A Plan, the Fund pays PFD a service fee of up to 0.25% of the Fund's average daily net assets in reimbursement of its actual expenditures to finance activities primarily intended to result in the sale of Class A shares. Pursuant to the Class B Plan and the Class C Plan, the Fund pays PFD 1.00% of the average daily net assets attributable to each class of shares. The fee consists of a 0.25% service fee and a 0.75% distribution fee paid as compensation for personal services and/or account maintenance services or distribution services with regard to Class B and Class C shares. Included in due to affiliates is $349,791 in distribution fees payable to PFD at April 30, 2001. 26 PIONEER EQUITY-INCOME FUND In addition, redemptions of each class of shares (except Class Y shares) may be subject to a contingent deferred sales charge (CDSC). A CDSC of 1.00% may be imposed on redemptions of certain net asset value purchases of Class A shares within one year of purchase. Class B shares that are redeemed within six years of purchase are subject to a CDSC at declining rates beginning at 4.00%, based on the lower of cost or market value of shares being redeemed. Redemptions of Class C shares within one year of purchase are subject to a CDSC of 1.00%. Proceeds from the CDSCs are paid to PFD. For the six months ended April 30, 2001, CDSCs in the amount of $160,181 were paid to PFD. 5. EXPENSE OFFSETS The Fund has entered into certain directed brokerage and expense offset arrangements resulting in a reduction in the Fund's total expenses. For the six months ended April 30, 2001, the Fund's expenses were reduced by $99,621 under such arrangements. 6. LINE OF CREDIT FACILITY The Fund, along with certain other funds in the Pioneer Family of Funds (the Funds), collectively participate in a $50 million committed, unsecured revolving line of credit facility. Borrowings are used solely for temporary or emergency purposes. The Fund may borrow up to the lesser of $50 million or the limits set by its prospectus for borrowings. Interest on collective borrowings of up to $25 million is payable at the Federal Funds Rate plus 3/8% on an annualized basis, or at the Federal Funds Rate plus 1/2% if the borrowing exceeds $25 million at any one time. The Funds pay an annual commitment fee for this facility. The commitment fee is allocated among such Funds based on their respective borrowing limits. For the six months ended April 30, 2001, the Fund had no borrowings under this agreement. 7. AFFILIATED COMPANIES The Fund's investments in certain companies exceed 5% of the outstanding voting stock. Such companies are deemed affiliates of the Fund for financial reporting purposes. The following summarizes transactions with affiliates of the Fund as of April 30, 2001:
- -------------------------------------------------------------------------- DIVIDEND AFFILIATE PURCHASES SALES INCOME VALUE - -------------------------------------------------------------------------- The Gorman-Rupp Co. $ - $ - $161,906 $10,017,949 - --------------------------------------------------------------------------
27 PIONEER EQUITY-INCOME FUND TRUSTEES, OFFICERS AND SERVICE PROVIDERS TRUSTEES John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Marguerite A. Piret David D. Tripple Stephen K. West John Winthrop OFFICERS John F. Cogan, Jr., President David D. Tripple, Executive Vice President Vincent Nave, Treasurer Joseph P. Barri, Secretary INVESTMENT ADVISER Pioneer Investment Management, Inc. CUSTODIAN Brown Brothers Harriman & Co. PRINCIPAL UNDERWRITER Pioneer Funds Distributor, Inc. LEGAL COUNSEL Hale and Dorr LLP SHAREOWNER SERVICES AND TRANSFER AGENT Pioneer Investment Management Shareholder Services, Inc. 28 THE PIONEER FAMILY OF MUTUAL FUNDS For information about any Pioneer mutual fund, please contact your investment professional, or call Pioneer at 1-800-225-6292. Ask for a free fund information kit, which includes a fund prospectus. Please read the prospectus carefully before you invest or send money. GROWTH FUNDS UNITED STATES Pioneer Growth Shares Pioneer Micro-Cap Fund Pioneer Mid-Cap Fund Pioneer Mid-Cap Value Fund Pioneer Small Company Fund Pioneer Tax-Managed Fund INTERNATIONAL/GLOBAL Pioneer Emerging Markets Fund Pioneer Europe Fund Pioneer Europe Select Fund Pioneer Indo-Asia Fund Pioneer International Growth Fund Pioneer World Equity Fund SECTOR FUNDS Pioneer Global Financials Fund Pioneer Global Health Care Fund Pioneer Global Telecoms Fund Pioneer Real Estate Shares Pioneer Science & Technology Fund GROWTH AND INCOME FUNDS Pioneer Fund Pioneer Balanced Fund Pioneer Equity-Income Fund Pioneer Value Fund (formerly Pioneer II) INCOME FUNDS TAXABLE Pioneer America Income Trust Pioneer Bond Fund Pioneer High Yield Fund Pioneer Limited Maturity Bond Fund Pioneer Strategic Income Fund TAX-FREE Pioneer Tax-Free Income Fund MONEY MARKET FUND Pioneer Cash Reserves Fund* *An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the Fund. 29 HOW TO CONTACT PIONEER We are pleased to offer a variety of convenient ways for you to contact us for assistance or information. CALL US FOR: ACCOUNT INFORMATION, including existing accounts, new accounts, prospectuses, applications and service forms 1-800-225-6292 FACTFONE-SM- for automated fund yields, prices, account information and transactions 1-800-225-4321 RETIREMENT PLANS INFORMATION 1-800-622-0176 TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD) 1-800-225-1997 WRITE TO US: PIMSS, Inc. P.O. Box 9014 Boston, Massachusetts 02205-9014 OUR TOLL-FREE FAX 1-800-225-4240 OUR INTERNET E-MAIL ADDRESS ask.pioneer@pioneerinvest.com (for general questions about Pioneer only) VISIT OUR WEB SITE: www.pioneerfunds.com THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT FUND PROSPECTUS. [LOGO] PIONEER INVESTMENTS-Registered Trademark- PIONEER INVESTMENT MANAGEMENT, INC. 60 STATE STREET 1269-00-0601 BOSTON, MASSACHUSETTS 02109 PIONEER FUNDS DISTRIBUTOR, INC. www.pioneerfunds.com -C-UNDERWRITER OF PIONEER MUTUAL FUNDS [RECYCLED SYMBOL] PRINTED ON RECYCLED PAPER -----END PRIVACY-ENHANCED MESSAGE-----