<PAGE>   1
                                                                 EXHIBIT 10.3

[BANK OF BOSTON LETTERHEAD]
                                        October 20, 1995

Mr. William H. Keough
SVP, CFO and Treasurer
The Pioneer Group, Inc.
60 State St.
Boston, MA  02110

Dear Bill:

        We are pleased to confirm that The First National Bank of Boston, (the 
"Bank") holds available an unsecured $15,000,000.00 line of credit for The 
Pioneer Group, Inc. (the "Company") through February 27, 1996. This facility 
supersedes and replaces the $10,000,000 line of credit established on May 22, 
1995. 

1.      Term. This line of credit shall commence October 20, 1995 and expire on
        February 27, 1996.

2.      Notice and Manner of Borrowings. Each loan made under this line of 
        credit must be in a minimum amount of $1,000,000.00 or any larger
        amount which is an integral multiple of $100,000.00, and aggregate
        loans outstanding may not exceed $15,000,000.00. Requests by the
        Company for loans must be received by the Bank no later than 12:00
        noon (Boston time) on the day of the requested loan (in the case of
        Alternate Base Loans or Money Market Loans) or two business days prior
        to such date (in the case of Eurodollar Rate Loans). Promptly upon
        receipt of such notice, and provided that the condition set forth in
        paragraph 10 has been satisfied, the Bank will make the requested loans
        by crediting the proceeds thereof to the demand deposit account of the
        Company maintained with the Bank.

3.      Evidence of Indebtedness. All Alternate Base Rate Loans and Eurodollar
        Rate Loans will be evidenced by a promissory note (a "Note") in the
        form attached hereto as Exhibit I. All Money Market Loans will be
        evidenced by a promissory note in the form attached hereto as Exhibit II
        (also a "Note"). The Company hereby authorizes the Bank to record each
        loan and the corresponding information on the schedule forming part of
        the applicable Note, and, absent manifest error, this record shall be
        conclusive and binding.

4.      Interest Rates. Subject to the terms and conditions hereof, the Company
        may elect in its request for a loan to have interest thereon accrue at
        any of the following interest rate options:

        (a)  a rate per annum equal to the higher of the rate of interest
        announced from time to time by the Bank at its head office as its Base
        Rate, or the overnight Federal Funds Rate plus 1/2% (the "Alternate
        Base Rate"), or

        (b)  a rate quoted by the Bank in its sole discretion (it being
        understood that the Bank is under no obligation to quote such rate) to
        the Company as the fixed rate of interest at which it is willing to make
        a "money market" advance to the Company in the amount and for the period
        of the requested loan (the "Money Market Rate"); or

        (c)  a rate quoted by the Bank to the Company as the prevailing rate per
        annum at which U.S. dollar deposits are offered to the Bank by first
        class banks in the interbank Eurodollar market in which it
<PAGE>   2
                                       2

        regularly participates at approximately 10:00 a.m. (Boston time) two 
        business days before the date of the requested loan in the amount and
        for an interest period approximately equal to that of the requested
        loan, adjusted for reserve requirements, plus 1.10% per annum.

        Loans bearing interest as provided in paragraphs (a), (b) and (c) of
        this section 5 shall be referred to herein as "Alternate Base Rate
        Loans", "Money Market Loans", and "Eurodollar Rate Loans", respectively.
        Money Market Loans may be requested for interest periods of up to 180
        days; Eurodollar Rate Loans may be requested for interest periods of 
        one, two or three months; and no loan shall have an interest period that
        extends beyond the expiration of this line of credit. In the event that
        the Company fails to specify an interest period in its request for a 
        loan, the interest period for the Money Market Loans shall be deemed to
        be one month. Interest on each loan shall be calculated on the basis of
        a 360-day year for the actual number of days elapsed and shall be 
        payable as set forth in the Notes.

5.      Additional Interest. The Company shall pay to the Bank additional
        interest at the rate of .25 of 1% per annum on the unused amount of the
        line of credit. Additionally, such interest shall be payable quarterly
        in arrears at the end of each March, June, September, and December of
        any year.

6.      Payments and Prepayments. Base Rate Loans shall be payable on demand.
        Money Market Loans and Eurodollar Rate Loans shall be payable on the
        last day of the interest period applicable thereto. The Company may
        prepay Alternate Base Rate Loans, in whole or in part, at any time and
        without prepayment penalties, but prepayments of Money Market Loans will
        not be permitted. Your ability to prepay Eurodollar Rate Loans is 
        subject to the requirement that you compensate us for any funding 
        losses and other costs (including lost profits) incurred as a result of
        such prepayment. If the Company for any reason makes any payment with
        respect to a Money Market Loan or Eurodollar Rate Loan before its
        maturity, or fails to borrow a Money Market Loan or Eurodollar Rate
        Loan requested by the Company pursuant to Section 2, the Company will be
        required to pay any costs, losses or liabilities incurred by the Bank as
        a result thereof, including any losses incurred in obtaining, 
        liquidating or employing deposits with reference to which the rate of
        interest for such loan was determined, upon presentation by the Bank of
        a statement in the amount and setting forth the Bank's calculation
        thereof, which statement shall be deemed true and correct absent
        manifest error.

7.      Changed Circumstances; Increased Costs
        (a) In the event that any law, regulation, treaty or official directive
        or the interpretation or application thereof by any court or
        governmental authority or the compliance with any guideline or request
        of any central bank or other governmental authority (whether or not
        having the force of law):

                (i) subjects the Bank to any tax with respect to any amounts
                payable hereunder by the Company or otherwise with respect to
                the transactions contemplated hereunder (except for taxes on
                the overall net income of the Bank imposed by the United States
                of America or any political subdivision thereof), or

                (ii) imposes, modifies or deems applicable any deposit 
                insurance, reserve, special deposit, capital maintenance or
                similar requirement against assets held by, or deposits in or
                for the account of, or loans or commitments to make loans by,
                the Bank (other than such requirements the effect of which is
                included in the determination of the interest rates for loans
                made hereunder), or

                (iii) imposes upon the Bank any other condition with respect to
                the loans made hereunder,


        

        
<PAGE>   3
                                       3

     and the result of any of the foregoing is to increase the cost to the Bank,
     reduce the income receivable by or return on equity of the Bank or impose
     any expense upon the Bank with respect to any loans or commitments to make
     loans hereunder, the Bank shall so notify the Company. The Company agrees
     to pay to the Bank the amount of such increase in costs, reduction in
     income, reduced return on equity or additional expense as and when such
     cost, reduction or expense is incurred or determined, upon presentation by
     the Bank of a statement in the amount and setting forth the Bank's
     calculation thereof, which statement shall be deemed true and correct 
     absent manifest error.

 8.  Loan Participations. The Bank may sell, transfer or grant participations in
     the Note without the prior consent of the Company, and the Company agrees
     that any transferee or participant shall be entitled to the benefits of
     paragraph 7 and 8 hereof to the same extent as if such transferee or
     participant were the Bank hereunder.

 9.  Availability of Loans. The availability of loans under this facility is
     subject to (a) the Bank's usual condition that the Bank continue to be
     satisfied that there shall have been no material adverse change in the
     assets, liabilities, financial condition, business operations or prospects
     of the Company or the Guarantor since the date, hereof; and (b) any 
     substantive changes in government regulations or monetary policies.


                                           Sincerely,

                                           The First National Bank of Boston

                                           By: /s/ STEWART P. NEFF
                                               --------------------------- 
                                           
                                           Title: Managing Director


Acknowledged and Accepted:

The Pioneer Group, Inc.

By: /s/ William H. Keough
    -------------------------

Title: Senior Vice President,       
       and Treasurer
       
  Date: Oct. 28, 1995

<PAGE>   4
                                       4

                                   EXHIBIT I

                            THE PIONEER GROUP, INC.

PROMISSORY NOTE                                         Boston, Massachusetts
                                                        October 20, 1995

        FOR VALUE RECEIVED, the undersigned hereby promises to pay to THE FIRST 
NATIONAL BANK OF BOSTON (the "Bank"), or order, at the head office of the Bank 
in Boston, Massachusetts, the aggregate principal amount of all loans made by 
the Bank to the undersigned pursuant to the letter agreement between the Bank 
and the undersigned dated October 20, 1995, as shown in the schedule attached 
hereto (the "Note Schedule"), together with interest on each loan from the date 
such loan is made until the maturity thereof at the applicable rate set forth 
in the Note Schedule. The principal amount of each loan shall be payable on 
demand or on the maturity date of such loan as indicated in the Note Schedule, 
and in any event, the aggregate outstanding principal amount of all loans 
hereunder shall be due and payable on February 27, 1996. Interest on the 
principal amount of each loan shall be payable in arrears on the same day as 
the principal amount is due, provided that (i) interest on each loan bearing 
interest at the Alternate Base Rate shall be payable on the last day of each 
quarter, beginning on the first of such dates occurring after the date of such 
loan and when such loan is due, and (ii) if the maturity of any loan is more 
than 90 days from the date of such loan, then interest shall be payable at 
intervals of 90 days and when such loan is due. Loans which are shown as 
bearing interest at the Alternate Base Rate shall bear interest at a rate per 
annum equal to the greater of (i) the rate of interest announced from time to 
time by the Bank at its head office as its "Base Rate", and (ii) the rate equal 
to the weighted average of the published rates on overnight Federal Funds 
transactions with members of the Federal Reserve System plus 1.2%, in each case 
plus the applicable margin, if any, which interest rate shall change as and 
when the Alternate Base Rate changes. Interest shall be computed on the basis 
of a 360 day year and paid for the actual number of days elapsed. All payments 
shall be made in lawful currency of the United States of America in immediately 
available funds.

        Overdue payments of principal of any loan (whether at stated maturity, 
by acceleration or otherwise), and, to the extent permitted by law, overdue 
interest, shall bear interest, payable on demand and compounded daily, at a 
rate per annum equal to two percent (2%) above the greater of (i) the Alternate 
Base Rate and (ii) the rate applicable to such loan prior to the date such loan 
was due.

        If any of the following events of default shall occur ("Defaults:): (a) 
default in the payment of any amounts due hereunder or performance of any of 
the Obligations or of any obligations of any Obligor to others for borrowed 
money or in respect of any extension of credit or accommodations; (b) failure 
of any representation or warranty, statement or information in any documents or 
financial statements delivered to the Bank for the purpose of inducing it to 
make or maintain any loan under this Note to be true and correct; (c) failure 
of the undersigned to file any tax return, or to pay or remit any tax, when 
due; (d) failure to furnish the holder promptly on request with financial 
information about, or to permit inspection by the holder of books, records and 
properties of, any Obligor; (e) loss, theft, substantial damage, sale or 
encumbrance to or of any property constituting any collateral for the 
Obligations, or the making of any levy, seizure or attachment thereof or 
thereon or the failure to pay when due any tax thereon or, with respect to any 
insurance policy, any premium therefore; (f) default under any instrument 
constituting, or under any agreement relating to, any collateral; (g) Any 
Obligor generally not paying its debts as they become due; (h) death, 
dissolution, termination of existence, insolvency, business failure, 
appointment of a
<PAGE>   5
                                        5

receiver or other custodian of any part of the property of, assignment for the 
benefit of creditors by, or the commencement of any proceedings under any 
bankruptcy or insolvency laws by or against, any Obligor; (i) change in the 
condition or affairs (financial or otherwise) of which in the opinion of the 
holder will impair its security or increase its risk; then immediately and 
automatically with respect to any Defaults set forth in clauses (g) and (h) 
above, and thereupon or at any time thereafter with respect to each other 
Default (such Default not having been previously cured), at the option of the 
holder, all Obligations of the undersigned shall become immediately due and 
payable without notice or demand and, if there is any collateral for the 
Obligations, the holder shall then have in any jurisdiction where enforcement 
hereof is sought, in addition to all other rights and remedies, the rights and 
remedies of a secured party under the Uniform Commercial Code of Massachusetts.

        Any sums from time to time credited by or due from the holder to any 
Obligor, and any property of the undersigned or any guarantor in which the 
holder has from time to time any security interest or which from time to time 
may be in the possession of the holder for any purpose shall constitute 
collateral security for the payment or performance of the Obligations of the 
undersigned or such guarantor hereunder, and the undersigned hereby grants the 
holder a security interest in such sums and property. Regardless of the 
adequacy of any collateral, the holder may apply such sums or property or 
realizations upon any such security interest against such Obligations at any 
time in the case of the primary Obligor but only against matured Obligations in 
the case of a secondary Obligor.

        The undersigned hereby waives presentment, demand, notice of dishonor, 
protest and all other demands and notices in connection with the delivery, 
acceptance, performance and enforcement of this Note.

        Each Obligor waives presentment, demand, notice of dishonor protest and 
all other demands and notices in connection with the delivery, acceptance, 
performance, default and enforcement of this Note or of any collateral, and 
assents to any extension or postponement of the time of payment or any other 
indulgence under this Note or with respect to any collateral, to any 
substitution, exchange or release of any collateral and/or to the addition or 
release or any other party or person primarily or secondarily liable hereunder. 
As used herein "Obligor" means any person primarily or secondarily liable 
hereunder or in respect hereto; "Obligation" means any obligation hereunder or 
otherwise of any Obligor to the holder whether direct or indirect, absolute or 
contingent, due or to become due, now existing or hereafter arising; and 
"holder" means the payee or any endorsee of this Note who is in possession of 
it, or the bearer hereof if this Note is at the time payable to the bearer.

        The undersigned will pay on demand all costs of collection and 
attorney's fees paid or incurred by the holder in enforcing the Obligations of 
any Obligor.

        This instrument shall have the effect of an instrument executed under 
seal and shall be governed by and construed in accordance with the laws of The 
Commonwealth of Massachusetts.

                                        The Pioneer Group, Inc.

                                        By:    /s/ William H. Keough
                                               ----------------------------

                                        Title: Senior Vice President
                                               and Treasurer
<PAGE>   6
                                       6

                NOTE SCHEDULE TO $15,000,000 PROMISSORY NOTE OF
                            THE PIONEER GROUP, INC.
                             DATED October 20, 1995


<TABLE>
                                                                       Date and
                                                                       Amount of
                 Principal                                             Payment       Notation Made
Date of Loan     Amount of Loan     Maturity Date     Interest Rate    Received      By
------------     --------------     -------------     -------------    ---------     -------------
<S>              <C>                <C>               <C>              <C>           <C>













</TABLE>

<PAGE>   7
                                        7


                                   EXHIBIT II

                            THE PIONEER GROUP, INC.
                     PROMISSORY NOTE (MONEY MARKET NOTE)


                                                October 20, 1995
                                                Boston, Massachusetts

FOR VALUE RECEIVED, the undersigned hereby promises to pay to THE FIRST 
NATIONAL BANK OF BOSTON (the "Bank"), or order, at the head office of the Bank 
in Boston, Massachusetts, the aggregate principal amount of all loans made by 
the Bank to the undersigned pursuant to the letter agreement between the Bank 
and the undersigned dated October 20, 1995, as shown in the schedule attached 
hereto (the "Note Schedule"), together with interest at the rate or rates set 
forth in the Note Schedule. The principal amount of each loan as shown on the 
Note Schedule shall be payable on the maturity date set forth therein, and 
interest with respect to such principal amount is due. Interest shall be 
computed on the basis of a 360-day year and paid for the actual number of days 
elapsed in any interest period. All payments shall be made in lawful currency 
of the United States of America in immediately available funds.

        No prepayment of the principal amount of any loan shall be permitted.

        Upon the occurrence of any of the following events of default: (a) 
default in the payment or performance of any of the Obligations or of any 
obligations of any Obligor to others for borrowed money or in respect of any 
extension of credit or accommodation; (b) failure of any representation and 
warranty hereunder or of any representation or warranty, statement or 
information in any documents or financial statements delivered to the Bank for 
the purpose of inducing it to make or maintain the loans under this Note to be 
true and correct; (c) failure to furnish the holder promptly on request with 
financial information about, or to permit inspection by the holder of books, 
records and properties of, any Obligor; (d) any Obligor generally not paying 
its debts as they become due; (e) death, dissolution, termination of existence, 
insolvency, business failure, appointment of a receiver or other custodian of 
any part of the property of, assignment for the benefit of creditors by, or the 
commencement of any proceedings under any bankruptcy or insolvency laws by or 
against, any Obligor; then the unpaid principal balance of this Note, plus 
accrued interest may, at the option of the Bank, be declared immediately due 
and payable. As used herein "Obligor" means any person primarily or secondarily 
liable hereunder or in respect hereto; "Obligation" means any obligation 
hereunder or otherwise of any Obligor to the holder whether direct or indirect, 
absolute or contingent, due or to become due, now existing or hereafter 
arising; and "holder" means the payee or any endorsee or assignee of this Note.

        Overdue payments of principal (whether at stated maturity, by 
acceleration or otherwise), and to the extent by law, overdue interest, shall 
bear interest, payable on demand and compounded monthly, at a rate per annum 
equal to two percent (2%) above the rate of interest announced from time to 
time by the First National Bank of Boston at its head office as its Base Rate 
(the "Base Rate"), which rate shall change as the Base Rate changes.

        The parties hereunder, including the undersigned, hereby waive 
presentment, demand, notice of dishonor, protest and all other demands and 
notices in connection with the delivery, acceptance, performance and 
enforcement of this Note.
<PAGE>   8
                                       8

        The undersigned agrees to pay all charges of the Bank in connection
with the collection or enforcement of this Note, including reasonable
attorneys' fees.

        This instrument shall be governed by and construed in accordance with 
the laws of the Commonwealth of Massachusetts.

                                        THE PIONEER GROUP, INC.

                                        By: /s/ William H. Keough
                                            ------------------------------
                                            Title: Senior Vice President
                                                   and Treasurer
<PAGE>   9
                                       9

                NOTE SCHEDULE TO $15,000,000 PROMISSORY NOTE OF
                            THE PIONEER GROUP, INC.
                             DATED October 20, 1995

<TABLE>
<CAPTION>
                                                        Date and
                                                        Amount of
                Principal       Maturity   Interest     Payment     Notation
Date of Loan    Amount of Loan  Date       Rate         Received    Made By
------------    --------------  --------   --------     ---------   --------
<S>             <C>             <C>        <C>          <C>         <C>












</TABLE>