Pioneer Fund

Annual Report | December 31, 2020

 

Paper copies of the Fund’s shareholder reports may no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer, bank or insurance company. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you invest directly with the Fund, you can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by calling 1-800-225-6292. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held within the Pioneer Fund complex if you invest directly.

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visit us: www.amundi.com/us

 

 

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President’s Letter


Dear Shareholders,

With a very turbulent 2020 calendar year finally behind us, the U.S. and global economies still face numerous challenges as the new calendar year dawns. The COVID-19 pandemic has continued to spread, with high numbers of new cases reported in many U.S. states and in other countries. In response, some governments have retightened restrictions on both business and personal activities. However, as 2021 arrived, deployment of the first approved COVID-19 vaccines had already begun, and expectations are for widespread vaccine distribution by the middle of the year.

While there may finally be a light visible at the end of the pandemic tunnel, the long-term impact on the global economy from COVID-19, while currently unknown, is likely to be considerable. It is clear that several industries have already felt greater effects than others, and the markets, which do not thrive on uncertainty, have been volatile, delivering significantly negative performance in the first quarter of 2020, and then recovering most of those losses throughout the following quarters. In fact, the U.S. stock market, as measured by the Standard & Poor’s 500 Index, returned more than 18% for the full 2020 calendar year, an impressive performance given all of the obstacles market participants faced during those 12 months.

However, despite the market rebound since its March 2020 low point, volatility has remained elevated, with momentum rising and falling on seemingly every bit of positive or negative news about the virus, from vaccines to spikes in the number of cases as well as rising hospitalization rates in some areas. In addition, the recent U.S. Presidential and Congressional elections have resulted in a power shift in Washington, D.C., and that most likely portends some changes in fiscal policy. That, too, could lead to increased market volatility as investors analyze the various tax and spending plans, and wait to see what proposed policy alterations actually become law.

With the advent of COVID-19 last winter, we implemented our business continuity plan according to the new COVID-19 guidelines, and most of our employees have been working remotely since March. To date, our operating environment has faced no interruption. I am proud of the careful planning that has taken place and confident we can maintain this environment for as long as is prudent. History in the making for a company that first opened its doors way back in 1928.

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Since 1928, Amundi US’s investment process has been built on a foundation of fundamental research and active management, principles which have guided our investment decisions for more than 90 years. We believe active management – that is, making active investment decisions – can help mitigate the risks during periods of market volatility. As 2020 has reminded us, investment risk can arise from a number of factors in today’s global economy, including slower or stagnating growth, changing U.S. Federal Reserve policy, oil price shocks, political and geopolitical factors and, unfortunately, major public health concerns such as a viral pandemic.

At Amundi US, active management begins with our own fundamental, bottom-up research process. Our team of dedicated research analysts and portfolio managers analyzes each security under consideration, communicating directly with the management teams of the companies issuing the securities and working together to identify those securities that best meet our investment criteria for our family of funds. Our risk management approach begins with each and every security, as we strive to carefully understand the potential opportunity, while considering any and all risk factors.

Today, as investors, we have many options. It is our view that active management can serve shareholders well, not only when markets are thriving, but also during periods of market stress.

As you consider your long-term investment goals, we encourage you to work with your financial professional to develop an investment plan that paves the way for you to pursue both your short-term and long-term goals.

We remain confident that the current crisis, like others in human history, will pass, and we greatly appreciate the trust you have placed in us and look forward to continuing to serve you in the future.

Sincerely,

Lisa M. Jones

Head of the Americas, President and CEO of US.

Amundi Asset Management US, Inc.

February 2021

Any information in this shareowner report regarding market or economic trends or the factors influencing the Fund’s historical or future performance are statements of opinion as of the date of this report. Past performance is no guarantee of future results.

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Portfolio Management Discussion | 12/31/20

In the following discussion, Jeff Kripke discusses the market environment during the 12-month period ended December 31, 2020, and Pioneer Fund’s performance during the period. Mr. Kripke, a senior vice president and a portfolio manager at Amundi Asset Management US, Inc. (Amundi US), is responsible for the day-to-day management of the Fund, along with James Yu, a vice president and associate portfolio manager at Amundi US, Craig Sterling, Managing Director, Director of Core Equity and Director of Equity Research, US, and a portfolio manager at Amundi US, and John Carey, Managing Director, Director of Equity Income, US, and a portfolio manager at Amundi US.

Q How did the Fund perform over the 12-month period ended December 31, 2020?

A Pioneer Fund’s Class A shares returned 23.90% at net asset value during the 12-month period ended December 31, 2020, while the Fund’s benchmark, the Standard & Poor’s 500 Index (the S&P 500), returned 18.40%. During the same 12-month period, the average return of the 1,363 mutual funds in Morningstar’s Large Blend Funds category was 15.83%.

Q How would you describe the market environment for equities during the 12-month period ended December 31, 2020?

A The Fund’s benchmark, the S&P 500, returned more than 18% for the full calendar year, closing at a record high on the last trading day of December for only the eighth time since 1928. On the face of it, this seemed like a highly improbable outcome, in our view. COVID-19 infection rates, which declined during the summer after climbing to 35,000 new daily cases in early April, spiked during the holiday season, reaching over 280,000 new daily cases on December 11, 2020. New case numbers climbed even higher in early January 2021. The S&P 500, having declined by more than 30% in a little over a month in February and March of 2020 due to the economic effects of the initial COVID-19 containment measures, which included lockdowns and business closings, rose by 70% from those lows through the end of the 12-month period, despite the exponential increase in daily virus infection rates.

There were four primary catalysts for the S&P 500’s recovery after the March 2020 low point. First, there was unprecedented fiscal and monetary stimulus from the US government and the Federal Reserve (Fed), which lent support to the economy and kept interest rates low. As a result, unemployment, which peaked at 14.7% in April, had fallen back to 6.7% at the end of November. Spending on autos and homes rose as

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people took advantage of the low-interest-rate environment, and sought refuge in suburban or rural areas. Second, the five largest stocks in the S&P 500 (based on market capitalization), which are technology and tech-oriented companies, benefited from the stay-at-home environment created by the efforts to contain the spread of the virus, as online gaming, video usage, and online retailing surged. That resulted in a partial decoupling of the stock market from the larger economy, as the share prices of those five companies rose by anywhere from 30% to 82% for the full 12 months ended December 31, 2020. Third, Moderna and Pfizer (neither of which is a portfolio holding) announced in November that their vaccines were more than 90% effective in preventing COVID-19 infections. The two companies subsequently received emergency-use authorization from the FDA in December, allowing the vaccination process to begin and sparking a more optimistic tone among market participants. Finally, the economy largely remained open in the fourth quarter of the year (October through December), despite the rise in COVID-19 infections, as states tried to balance social-interaction restrictions with the need for economic activity.

Though stocks declined in late October due to concerns about the US elections, they rebounded in early November with the declaration of a winner and emerging clarity about possible future policy actions coming out of Washington.

From a style perspective, growth stocks trounced value over the full 12 months ended December 31, 2020, as a number of growth stocks were among the stay-at-home beneficiaries we mentioned earlier. The Russell 1000 Growth Index returned 38% for the full calendar year, compared with the modest 3% gain by the Russell 1000 Value Index. Technology and technology-related stocks led the market in 2020, as the information technology sector within the S&P 500 soared by 43%. Meanwhile, energy stocks were easily the worst performers of 2020, as the sector plummeted by 33% due to falling oil demand amid ample supply.

Q Which of your investment decisions either contributed positively to, or detracted from, the Fund’s benchmark-relative performance during the 12-month period ended December 31, 2020?

A The key to the Fund’s success relative to the benchmark for the full 12-month period was strict adherence to our investment philosophy and process, as we seek to invest in attractively valued equities of companies that we believe have sustainable businesses from competitive, financial, and environmental, social, and governance (ESG) perspectives.

Relative performance for the full 12-month period benefited from sector allocation decisions, despite a portfolio underweight to information technology, which was the top-performing sector in the S&P 500

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(returning 43% for the year, as noted earlier, compared with 18% for the overall benchmark). The underweight to information technology was by far the biggest drag on benchmark-relative returns during the 12-month period, but positive allocation results in other sectors offset the shortfall from information technology. For example, an overweight in the technology-related communication services sector helped the Fund’s relative returns for the full 12 months. However, most of the performance benefits at the sector allocation level came from the portfolio’s underweights, for valuation reasons, to “bond proxy” sectors such as consumer staples and utilities, as well as an underweight in energy, due to ESG and oil-price concerns we have had about the sector.

Positive security selection results versus the S&P 500 in the two consumer sectors, industrials, and information technology also boosted the Fund’s benchmark-relative performance during the 12-month period, more than making up for negative selection results in health care, materials, and real estate.

The Fund’s exposure to five secular themes during the year – 5G, artificial intelligence, autonomy (robotics), cloud computing, and “internet of things” – was another positive contributor to benchmark-relative results. A differentiator in how we integrate themes into the Fund’s investment process is that we seek to own shares of companies that provide services such as cloud computing, but also of companies that are aggressive adopters of the technologies related to those themes. Leading banks, for instance, have been using artificial intelligence to improve the customer experience and reduce costs. This approach to integrating themes into our investment process means that it can apply to value as well as growth stocks. Spending related to those investment themes has accelerated during the pandemic.

In our view, one of the benefits of investing in a large-cap core portfolio such as this one is that we have the ability to migrate across the growth and value spectrums in search of stocks that we believe have the best risk-return potential, regardless of whether a stock falls under the growth or value category. The challenge for active managers like us is successfully executing that migration. Over the course of 2020, we reduced the Fund’s active (benchmark-relative) exposure to communication services and information technology, and to the bond proxy sectors, and increased allocations to cyclical sectors, such as industrials, in anticipation of a full economic recovery. The positive effects of those shifts were evident in the 12-month sector allocation results discussed previously.

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Q Which individual holdings factored into the Fund’s benchmark-relative performance during the 12-month period ended December 31, 2020, either positively or negatively?

A The Fund’s position in NVIDIA, which manufactures graphic-processing units used in computer games, driverless cars, and data centers, was the top positive contributor to relative returns during the 12-month period. We believe the company is a good example of the integrated approach we take in assessing the sustainability of a business as part of our ESG investment process. One of NVIDIA’s most notable practices related to ESG is the use of artificial intelligence in an effort to eliminate unintended biases in the employee recruiting process, which has contributed not only to a favorable ESG profile, but also to better hiring outcomes.

Another top performer for the Fund over the 12-month period was United Parcel Service (UPS), which reported much better-than-expected results driven by an increase in package deliveries in the stay-at-home environment created by COVID-19. We believe that new CEO, Carol Tome, who recently joined UPS after 24 years with Home Depot, could deliver on her promise to make the company “better, not bigger,” by investing in technology, reducing inefficiencies by streamlining service offerings, and increasing profit margins. The company has been improving its ESG profile by increasing its fleet of renewable natural-gas vehicles.

On the negative side, a position in Wells Fargo was the top detractor from the Fund’s benchmark-relative performance in 2020. Under the leadership of Charles Scharf, who was appointed CEO in 2019, Wells Fargo is at the beginning stages of what we believe could be a transformation into a company that operates more efficiently, more profitably, and more responsibly from an ESG perspective. This transformation, in our opinion, could be positive for the stock price, but may require some patience, as corporate initiatives can take time to execute. The company is an example of our approach to ESG investing, which is to hold shares of companies that have solid ESG ratings, but also – as in the case of Wells Fargo – to hold shares of companies that have lower-than-average ESG ratings, but are actively working to improve them.

Finally, shares of oilfield services giant Schlumberger slumped and detracted from the Fund’s relative returns over the 12-month period, as oil prices declined due to continued supply/demand concerns. The stock is a portfolio holding in spite of overall ESG concerns in the energy sector, because we believe the company’s services could be critical in the energy industry’s quest to become more efficient in the production of oil and natural gas. Schlumberger’s training and environmental management systems have been strong, which has helped to mitigate the inherent ESG risks of operating in the energy sector.

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Q Did the Fund have any exposure to derivative investments during the 12-month period ended December 31, 2020?

A No, the Fund had no exposure to derivatives during the 12-month period.

Q Could you discuss the Fund’s commitment to ESG investing?

A ESG refers to the three central factors in measuring the sustainability and ethical impact of an investment in a company or business. We have historically followed an ESG-friendly approach when building the Fund’s portfolio. We use specific screening criteria to exclude investments from the portfolio in companies that fail to meet certain ESG standards across all industries. Per the prospectus, the Fund generally will not invest in companies significantly involved in certain business activities, including but not limited to, the production of alcohol, tobacco products, and certain controversial military weapons, and the operation of coal mines, gambling casinos and other gaming businesses. In addition, we view the “governance” aspect of ESG as critically important, as we believe companies that take steps to better manage risk exposure than their competitors can help reduce volatility and lead to solid performance during more difficult periods for both the economy and the markets.

Q What is your outlook for equities as the Fund enters a new fiscal year, and how would you characterize the Fund’s current positioning?

A While the near-term economic outlook remains challenging due to the current wave of COVID-19 cases, we believe the distribution of vaccines from Pfizer and Moderna is paving the way for a potentially robust economic recovery in 2021, particularly in the second half of the year, once we get closer to possible attainment of herd immunity. We expect that a majority of adults in the US could receive the vaccine during the first half of 2021, and that hospitalization rates could begin to decline in late February or March. Gradual lifting of limitations on economic and social activity could potentially occur, and businesses that suffered the most from those limitations may in turn begin to recover. Additional fiscal stimulus from the government could also help support the economy until there is a wide-ranging rollout of the vaccination process.

Though we still see significant valuation risk in financial markets, as evidenced by the performance of ultra-high-growth stocks and IPOs, we believe there are attractively valued opportunities in equities, especially in cyclical stocks that could benefit from a strong economy in the second half of 2021. Speculative activity is quite apparent, in our view, not only in the ultra-high-growth and largely unprofitable companies, but also in recent IPOs.

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Consistent with these views, we have overweighted the Fund to the industrials sector, while underweighting it to bond-proxy sectors, such as consumer staples and utilities, which we believe are likely to underperform if economic growth recovers and interest rates begin to rise.

Please refer to the Schedule of Investments on pages 19–22 for a full listing of Fund securities.

All investments are subject to risk, including the possible loss of principal. In the past several years, financial markets have experienced increased volatility and heightened uncertainty. The market prices of securities may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the bond markets, the spread of infectious illness or other public health issues or adverse investor sentiment. These conditions may continue, recur, worsen or spread.

The Fund generally excludes corporate issuers that do not meet or exceed minimum ESG standards. Excluding specific issuers limits the universe of investments available to the Fund, which may mean forgoing some investment opportunities available to funds without similar ESG standards.

At times, the Fund’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Fund more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors.

Before investing, consider the product’s investment objectives, risks, charges and expenses. Contact your financial professional or Amundi Asset Management US, Inc., for a prospectus or summary prospectus containing this information. Read it carefully.

Any information in this shareholder report regarding market or economic trends or the factors influencing the Fund’s historical or future performance are statements of opinion as of the date of this report. Past performance is no guarantee of future results.

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Index Definition

The Standard & Poor’s 500 Index is an unmanaged, commonly used measure of the broad U.S. stock market. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees, expenses or sales charges. It is not possible to invest directly in an index.

The index defined here pertains to the “Value of $10,000 Investment” and “Value of $5 Million Investment” charts on pages 12–16.

* Class K shares commenced operations on December 30, 2019.

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