<PAGE>   1
 
     ========================================================================
 
                        SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C. 20549
 
                         --------------------------------
 
                                    FORM 10-K
     (MARK ONE)
     [X]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
 
                                        OR
 
     [ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
 
           FOR THE TRANSITION PERIOD FROM ___________ TO ___________

 
                          COMMISSION FILE NUMBER 0-8841
 
                             THE PIONEER GROUP, INC.
              (Exact name of Registrant as specified in its charter)
 
<TABLE>
<S>                                              <C>
                   DELAWARE                                        13-5657669
        (State or other jurisdiction of                         (I.R.S. Employer
        incorporation or organization)                         Identification No.)
</TABLE>
 
                                60 STATE STREET,
                          BOSTON, MASSACHUSETTS 02109
                                 (617) 742-7825
  (Address, including zip code, and telephone number, including area code, of
                          principal executive offices)
 
Securities registered pursuant to Section 12(b) of the Act: NONE
 
Securities registered pursuant to Section 12(g) of the Act:
 
                    COMMON STOCK, PAR VALUE $0.10 PER SHARE
                                (Title of Class)
 
     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
                          Yes  [X]            No  [ ]
 
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X].
 
     Based on the last sale price of the Registrant's Common Stock on the Nasdaq
National Market of $16.375 on March 24, 1999, the aggregate market value of the
shares of voting stock held by non-affiliates of the Registrant on that date was
$348,950,169.
 
     As of March 24, 1999, 26,315,377 shares of the Registrant's Common Stock,
$0.10 par value, were outstanding.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
(1) Portions of the 1998 Annual Report to Stockholders are incorporated by
    reference into Parts I, II and IV (as indicated in such parts).
 
(2) Certain information called for by Part III (as indicated therein) is
    incorporated from the Registrant's definitive proxy materials for use in
    connection with the 1999 Annual Meeting of Stockholders.

================================================================================

<PAGE>   2
 
                                     PART I
 
ITEM 1.  BUSINESS.
 
                                    OVERVIEW
 
     The operations of The Pioneer Group, Inc., a corporation organized under
the laws of the State of Delaware in 1956 (the "Company"), and its wholly owned
subsidiaries, are divided among three strategic business units: (i) Pioneer
Investment Management, (ii) Pioneer International Financial Services, and (iii)
Pioneer Global Investments.
 
     PIONEER INVESTMENT MANAGEMENT. This strategic business unit includes the
(i) investment management of the Company's 24 open-end registered investment
companies (comprised of 36 investment portfolios) and one closed-end registered
investment company (collectively, the "mutual funds") based in the U.S., which
are available to domestic investors, as well as the seven offshore open-end
investment funds based in Ireland, which are available to non-U.S. investors,
(ii) distribution of shares of the open-end mutual funds and offshore funds, and
(iii) shareholder servicing for the open-end mutual funds. Pioneer Investment
Management also provides separate account management services for institutional
investors.
 
     PIONEER INTERNATIONAL FINANCIAL SERVICES.  The Company's international
financial services businesses include investment management and financial
services operations in: (i) Warsaw, Poland, where the Company manages and
distributes units of four mutual funds available to Polish citizens, owns 80% of
a brokerage company and 100% of a unitholder servicing agent and recently
established a private pension fund management company, (ii) Prague, the Czech
Republic, where the Company manages a Czech open-end mutual fund and distributes
its participation certificates, (iii) Moscow, Russia, where the Company provides
financial services, including transfer agency services, distributes shares of,
manages and services two open-end mutual funds available to Russian citizens and
manages and owns 51% of the Pioneer First Investment Fund, a closed-end fund,
which was one of the largest Russian voucher investment funds, and (iv) Madras,
India, where the Company owns 47.61% of an Indian company that serves as the
investment adviser, distributor and shareholder servicing agent to 18 private
sector mutual funds available to Indian citizens. In addition, the Company has a
10% interest in an investment management operation in Taiwan.
 
     PIONEER GLOBAL INVESTMENTS.  This strategic business unit includes the
Company's diversified businesses of gold mining, timber, international venture
capital, real estate and mineral exploration. The Company's indirect wholly
owned subsidiary, Pioneer Goldfields Limited ("Pioneer Goldfields"), conducts
mining and exploration activities in the Republic of Ghana and exploration
activities elsewhere in Africa. Pioneer Goldfields' principal asset is its
ownership of 90% of the outstanding shares of Teberebie Goldfields Limited,
which operates a gold mine in the western region of the Republic of Ghana. The
Company also participates in several natural resource development ventures in
Russia. The Company's subsidiary, Pioneer Forest, Inc. ("Pioneer Forest"),
conducts (through three Russian subsidiaries) timber harvesting and timber
development activities in the Russian Far East. Pioneer Forest's principal asset
is its ownership of 97% of the outstanding shares of Closed Joint-Stock Company
"Forest-Starma." The Company also is conducting a gold exploration project in
the same region. In addition, the Company provides global real estate management
and advisory services to institutions and corporations in the U.S., Russia and
Poland and serves as a venture capital investor and manager in Poland.
 
                         PIONEER INVESTMENT MANAGEMENT
 
DOMESTIC INVESTMENT MANAGEMENT
 
     The Company's domestic investment management business includes the U.S.
registered mutual funds, the offshore funds registered in Ireland and private
institutional accounts, all of which are advised by the Company's wholly owned
subsidiary, Pioneer Investment Management, Inc. ("Pioneer Management"). This
business also includes distribution, shareholder servicing and transfer agency
activities related to these investment products.


 
                                        1
<PAGE>   3
 
     U.S. Mutual Funds.  Pioneer Management serves as investment manager to 24
domestic open-end mutual funds (consisting of 36 investment portfolios,
comprised of seven U.S. growth portfolios, nine international growth portfolios,
10 growth and income portfolios, six income portfolios, two tax-free income
portfolios and two money market portfolios) and one U.S. closed-end mutual fund.
These portfolios include Pioneer Independence Fund, which commenced operations
in March 1998, and the Europe and Emerging Markets Portfolios of the Pioneer
Variable Contracts Trust, which commenced operations in October 1998. All of
these funds (hereinafter referred to collectively as the "U.S. Funds") are
registered under the Investment Company Act of 1940, as amended (the "1940
Act").
 
     At March 1, 1999, the U.S. Funds had aggregate net assets of approximately
$21.5 billion. In managing such assets, Pioneer Management employed, at March 1,
1999, 153 persons on a full-time basis, including 22 fund managers and 54
investment analysts and support staff.
 
     Pioneer Management manages each U.S. Fund pursuant to a management
contract, which is renewable annually by vote of either the U.S. Fund's Board of
Trustees (including a majority of members who are not "interested persons" as
defined under the 1940 Act) or the U.S. Fund's shareholders. All management
contracts terminate if assigned and may be terminated by either party without
penalty on 60 days' written notice. The management contracts for the U.S. Funds
(other than three U.S. Funds that were established in 1998) were all renewed for
an additional year in 1998. Under these contracts, Pioneer Management is
authorized in its discretion to buy and sell securities for the accounts of the
U.S. Funds, subject to certain limitations. In addition, the management
contracts between the U.S. Funds and Pioneer Management define the ordinary
operating expenses to be assumed by each.
 
     As compensation for its management services, Pioneer Management receives
management fees from the U.S. Funds that range from 0.40% to 1.25% per year of
average daily net assets depending on the U.S. Fund. Four of the U.S. Funds
(including the two largest U.S. Funds) have a management fee that is adjusted
based upon the U.S. Fund's performance relative to the performance of an
established index. For 1998, 1997 and 1996, Pioneer Management received revenues
from management fees from all the U.S. Funds and from Pioneer II and Pioneer
Fund, the Company's largest U.S. Funds, approximately as shown in the chart
below:
 
<TABLE>
<CAPTION>
                                                   1998            1997            1996
                                               (IN MILLIONS)   (IN MILLIONS)   (IN MILLIONS)
                                               -------------   -------------   -------------
<S>                                            <C>             <C>             <C>
Management Fee Revenues from All U.S. Funds..      $125            $107             $76
Management Fee Revenues from Pioneer II......      $ 36            $ 40             $29
Management Fee Revenues from Pioneer Fund....      $ 32            $ 21             $14
</TABLE>
 
     On an interim basis, Pioneer Management has agreed not to impose a portion
of its management fees and to make other arrangements, if necessary, to limit
operating expenses of selected U.S. Funds. Pursuant to this policy, Pioneer
Management limited management fees or otherwise incurred expenses pursuant to
expense limitation agreements with selected U.S. Funds during 1998, 1997 and
1996 as shown in the chart below:
 
<TABLE>
<CAPTION>
                                                   1998            1997            1996
                                               (IN MILLIONS)   (IN MILLIONS)   (IN MILLIONS)
                                               -------------   -------------   -------------
<S>                                            <C>             <C>             <C>
Management Fees Limited or Expenses Incurred..     $1.5            $1.8            $2.4
</TABLE>
 
     Irish Funds.  Pioneer Management (Ireland) Limited ("Pioneer Ireland"), a
wholly owned subsidiary of the Company, serves as investment manager,
distributor and shareholder servicing agent of seven offshore funds incorporated
under the laws of the Republic of Ireland, consisting of five growth portfolios,
one income portfolio and one money market portfolio (collectively, the "Irish
Funds"). Pioneer Management serves as investment adviser for the Irish Funds. As
compensation for its advisory services, Pioneer Ireland receives annual
management fees from the Irish Funds of 0.60% to 1.50% of average daily net
assets. The Irish Funds are currently sold primarily in Germany and Austria, but
the Company anticipates that they eventually will be sold in other foreign
markets. At March 1, 1999, the Irish Funds had aggregate net assets of
approximately $413 million.
 
     Pioneer Ireland's main office is located in Dublin, Ireland. It also
maintains an office in Hamburg, Germany. At March 1, 1999, Pioneer Ireland had
163 employees, including management and support staff.
 


                                        2
<PAGE>   4
 
     Institutional Accounts.  Pioneer Management acts as an investment manager
to one private institutional account and two collective investment vehicles for
institutional investors and acts as a subadvisor to one of a series of
portfolios utilized as funding vehicles for a variable life insurance fund
(hereinafter referred to collectively as the "Institutional Accounts"). The
Institutional Accounts had aggregate assets of approximately $118 million at
March 1, 1999.
 
  DISTRIBUTION ACTIVITIES
 
     Pioneer Management's wholly owned subsidiary, Pioneer Funds Distributor,
Inc. ("Pioneer Distributor"), acts as principal underwriter and distributor of
the shares of the U.S. Funds (except Pioneer Interest Shares, a closed-end fund
which does not continuously offer its shares). In 1998, Pioneer Distributor sold
shares of the U.S. Funds with an aggregate offering price of approximately $4
billion, including Class A Shares (as defined below) with an aggregate offering
price of $2.5 billion, Class B Shares (as defined below) with an aggregate
offering price of $869 million, Class C Shares (as defined below) with an
aggregate offering price of $297 million, Class Y Shares (as defined below) with
an aggregate offering price of $9 million and shares of Pioneer Variable
Contracts Trust with an aggregate offering price of $304 million. In connection
therewith, Pioneer Distributor received aggregate commissions in each of 1998,
1997 and 1996 as shown in the chart below. In each such year, Pioneer
Distributor reallowed the amount shown in the chart below to approximately 1,600
independent broker-dealers throughout the United States and in several foreign
countries. One broker-dealer was responsible for approximately 11% of sales in
1998, 10% of sales in 1997 and 9% of sales in 1996.
 
<TABLE>
<CAPTION>
                                               1998             1997             1996
                                           (IN MILLIONS)    (IN MILLIONS)    (IN MILLIONS)
                                           -------------    -------------    -------------
<S>                                        <C>              <C>              <C>
Commissions Received.....................      $75.9            $60.9            $66.2
Commissions Reallowed....................      $66.1            $53.8            $59.1
</TABLE>
 
     Underwriting Contracts.  Pioneer Distributor provides its underwriting and
distribution services pursuant to underwriting contracts, which are
substantially identical, with each of the U.S. Funds. These one-year contracts
are renewable annually by vote of the U.S. Fund's Board of Trustees (including a
majority of those Trustees who are not "interested persons" as defined under the
1940 Act) or shareholders. Each contract terminates if assigned and may be
terminated by either party on 60 days' written notice without penalty. The
underwriting contracts for each of the U.S. Funds (other than U.S. Funds that
were established in 1998) were all renewed for an additional year in 1998.
 
     Sales Charges.  Generally, purchasers of shares of the U.S. Funds pay a
sales charge at the time of purchase. The amount of the sales charge is
calculated as the difference between the offering price of the shares and the
net asset value of the shares and varies generally as a percentage of the
offering price. Shares bearing this sales charge are referred to as front-end
load shares ("Class A Shares"). Sales charges on Class A Shares range from zero
to 5.75% depending on the U.S. Fund and the amount invested. Most of the sales
charge on Class A Shares is reallowed by Pioneer Distributor to broker-dealers
through whom the shares are sold. This reallowance varies generally as a
percentage of the offering price on sales under $1 million. Reallowances range
from 1.0% to 5.0% depending on the U.S. Fund and the amount of the sale.
Broker-dealer reallowances on new funds and during certain short-term promotions
may be increased to 100% or more of the sales charge.
 
     The Company also offers a multiclass share structure for the U.S. Funds,
which, with the exception of Pioneer Interest Shares, Pioneer Variable Contracts
Trust and Pioneer Independence Fund, are sometimes collectively referred to
herein as the "multiclass funds". Pursuant to this structure, the multiclass
funds offer Class A Shares, two classes of back-end load shares ("Class B
Shares" and "Class C Shares") and a no-load class of shares ("Class Y Shares").
On Class B Shares, the investor does not pay any sales charge unless he or she
redeems before the expiration of the minimum holding period, which ranges from
three to six years. These early redemptions are subject to a contingent deferred
sales charge (a "CDSC"), which ranges from 2.0% to 4.0%. On Class C Shares, the
investor does not pay any sales charge unless he or she redeems within one year
of purchase in which event a CDSC of 1.0% is imposed. Class Y Shares are not
subject to a front-end load,


 
                                        3
<PAGE>   5
 
back-end load or Rule 12b-1 distribution fees (see "Distribution Plans" below).
The Company began offering Class B Shares in April 1994, Class C Shares in
January 1996 and Class Y Shares in April 1998. Class C Shares and Class Y Shares
are not available on all multiclass funds.
 
     With respect to sales of Class A Shares, Pioneer Distributor may, in its
discretion, pay a commission to broker-dealers that initiate and are responsible
for sales of at least $1 million but less than $50 million, ranging from 0.10%
to 1.0%, depending on the U.S. Fund and the amount of the sale. Certain
purchases not subject to an initial sales charge may be subject to a CDSC of
1.0% in the event of certain redemption transactions within one year. With
respect to sales of Class B Shares, Pioneer Distributor will generally pay
commissions to broker-dealers related to sales and service of such shares
ranging from 2% to 4% of the sales transaction amount (including a service fee
of 0.25% for the first year). With respect to sales of Class C Shares, Pioneer
Distributor will pay commissions to broker-dealers related to sales and service
of such shares of 1% of the sales transaction amount (including a service fee of
0.25% for the first year). Pioneer Distributor incurs the expense of
distributing Class Y Shares. During 1998, 1997 and 1996, in connection with
sales of Class B Shares, Pioneer Distributor paid aggregate commissions to
broker-dealers as shown in the chart below:
 
<TABLE>
<CAPTION>
                                               1998             1997             1996
                                           (IN MILLIONS)    (IN MILLIONS)    (IN MILLIONS)
                                           -------------    -------------    -------------
<S>                                        <C>              <C>              <C>
Broker-Dealer Commissions Paid...........      $27.5            $16.3            $23.2
</TABLE>
 
     Previously, Pioneer Distributor's cash flow was subject to the adverse
effects of vigorous sales of back-end load shares because its recovery of the
cost of commissions paid up front to dealers was spread over a period of years.
During this period, the Company would bear the costs of financing and the risk
of market decline. Pioneer Distributor would be reimbursed for such commissions
from payments by the U.S. Funds under distribution plans (see "Distribution
Plans" below) and from CDSCs paid by redeeming investors before the expiration
of the holding periods. Rather than continuing to bear the ongoing financing
costs and market risks, in September 1998, Pioneer Distributor sold its rights
to certain distribution fees and CDSCs (see "Distribution Plans" below) from the
distribution of Class B Shares of the U.S. Funds in exchange for cash payments
from a third party. This arrangement also provides for the sale at a premium of
additional rights arising out of future sales of Class B Shares on a monthly
basis for three years. The purpose of this transaction was to provide liquidity
to the Company and reduce the continuous strain on its cash flow.
 
     Distribution Plans.  Each of the U.S. Funds (except Pioneer Interest Shares
and Pioneer Variable Contracts Trust) has one or more distribution plans
pursuant to Rule 12b-1 under the 1940 Act which provides for certain payments to
be made to Pioneer Distributor. With respect to Class A Shares and shares of
Pioneer Independence Fund, the distribution plans (the "Class A Plans") provide
for payments by such U.S. Funds of certain expenses up to 0.25% per annum of
average daily net assets (0.15% for Pioneer Cash Reserves Fund, a money market
fund). With respect to Class B and Class C Shares, the distribution plans (the
"Class B Plans" and "Class C Plans," respectively) provide for payments by such
U.S. Funds of fees relating to (a) distribution services in an amount not to
exceed 0.75% per annum of the average daily net assets of the Class B or Class C
Shares and (b) personal and account maintenance services in an amount not to
exceed 0.25% of the average daily net assets of the Class B or Class C Shares.
Each U.S. Fund's distribution plan is subject to annual renewal, which requires
the approval of the U.S. Fund's Board of Trustees, including a majority of
Trustees who are not "interested persons" of the U.S. Fund. In 1998, the
Trustees of the U.S. Funds (other than U.S. Funds that were established in 1998)
renewed the Class A, Class B and Class C Plans. In 1998, 1997 and 1996, Pioneer
Distributor received aggregate distribution fees as shown in the chart below:
 
<TABLE>
<CAPTION>
                                                 1998             1997            1996
                                             (IN MILLIONS)    (IN MILLIONS)   (IN MILLIONS)
                                             -------------    -------------   -------------
<S>                                          <C>              <C>             <C>
Distribution Fees Received.................      $14.0            $13.1           $7.7
</TABLE>
 
     Domestic Sales of Shares of the U.S. Funds.  Pioneer Distributor is a
registered broker-dealer (see "Regulation" below), employing approximately 139
full-time personnel, including 26 regional sales representatives who are
responsible for territories comprising most of the United States and Puerto Rico
and who work with broker-dealers to promote sales of U.S. Fund shares in their
respective territories. Substantially all of the U.S. Funds' shares are sold to
the public by securities sales persons registered with the National Association
of


 
                                        4
<PAGE>   6
 
Securities Dealers, Inc. (the "NASD") who act as representatives of
broker-dealer firms, which are members of the NASD and which have signed sales
agreements with Pioneer Distributor. Shares of the Funds may be sold in all
states, by broker-dealers and registered representatives licensed in those
states.
 
     International Sales of Shares of the Funds.  Pioneer Distributor's wholly
owned subsidiary, Pioneer Fonds Marketing GmbH ("Pioneer Fonds Marketing"), a
company registered under the laws of the Republic of Germany, performs marketing
and sales activities with respect to sales of shares of certain of the U.S.
Funds in Europe, primarily Germany, Austria and Switzerland. Pioneer Fonds
Marketing currently has 26 full-time employees. In 1998, approximately 13% of
the total sales of the U.S. Funds' shares were sold outside of the United
States. Pioneer Fonds Marketing also performs marketing and sales activities
with respect to sales of the Irish Funds in Western Europe.
 
     In 1998, Pioneer Distributor established Pioneer Global Funds Distributor,
Ltd. ("Global Funds Distributor") to serve as the exclusive worldwide
distributor of the Irish Funds. Global Funds Distributor, a wholly owned
subsidiary of Pioneer Distributor, is registered under the laws of Bermuda and
maintains its registered office in that country. Global Funds Distributor has
entered into an agreement with Pioneer Fonds Marketing with respect to sales of
the Irish Funds in specified countries in Western Europe.
 
  SHAREHOLDER AND RELATED SERVICES
 
     Pioneering Services Corporation.  At December 31, 1998, the U.S. Funds had
approximately 1,363,000 active shareholder accounts, including approximately
473,000 Individual Retirement Accounts ("IRAs") and other tax-qualified
retirement accounts. Shareholder accounts, in general, and qualified accounts,
in particular, require an exceptional amount of shareholder communications and
transfer agency services. The Company's wholly owned subsidiary, Pioneering
Services Corporation ("Pioneering Services"), has been providing transfer agent
and shareholder services to the U.S. Funds since 1985. At March 1, 1999,
Pioneering Services employed 332 full-time personnel, including 64 employees who
are located at its processing facility in Omaha, Nebraska.
 
     As shareholder servicing agent for the U.S. Funds, Pioneering Services has
entered into agreements with each U.S. Fund (except Pioneer Interest Shares)
pursuant to which it received in 1998 an annual active account fee of $22.75 for
equity fund accounts, $30.00 for fixed-income fund accounts and $28.00 for money
market fund accounts. Such agreements are subject to annual renewals which
require the approval of the U.S. Funds' Boards, including a majority of members
who are not "interested persons," and may be canceled by either party on 60
days' notice. Effective January 1, 1999, these annual fees were changed to
$25.25 for equity fund accounts and $33.00 for fixed-income and money market
fund accounts. For 1998, 1997 and 1996, Pioneering Services received revenues
from service fees from the Funds and Pioneer Interest Shares (in 1996) as shown
in the chart below:
 
<TABLE>
<CAPTION>
                                               1998             1997             1996
                                           (IN MILLIONS)    (IN MILLIONS)    (IN MILLIONS)
                                           -------------    -------------    -------------
<S>                                        <C>              <C>              <C>
Service Fee Revenues.....................      $30.9            $27.0            $25.3
</TABLE>
 
     In February 1997, Pioneer Ireland assumed responsibilities as
sub-shareholder servicing agent for certain of the U.S. Funds, representing
approximately 133,000 active shareholder accounts. In that capacity, Pioneer
Ireland provides, under the direction of Pioneering Services, shareholder and
transfer agency services to U.S. Fund shareholders who are citizens of Germany,
Austria and Switzerland. Pioneer Ireland also provides similar services to the
shareholders of the Irish Funds, representing approximately 31,000 active
shareholder accounts.


 
                                        5
<PAGE>   7
 
     Trustee/Custodian.  The Company acts as the trustee/custodian for accounts
that are IRAs or other tax-qualified retirement accounts and receives an annual
fee of $10 for each such account, payable by shareholders with such accounts, up
to maximum annual fees of $20 for shareholders with multiple accounts of one
plan type. Shareholders also have the option of paying a one-time fee of $100 in
lieu of the annual account fee. During 1998, 1997 and 1996, the Company received
fees in connection with its services as trustee/custodian as shown in the chart
below:
 
<TABLE>
<CAPTION>
                                               1998             1997             1996
                                           (IN MILLIONS)    (IN MILLIONS)    (IN MILLIONS)
                                           -------------    -------------    -------------
<S>                                        <C>              <C>              <C>
Trustee/Custodian Fees Received..........      $5.5             $4.4             $3.9
</TABLE>
 
                         ------------------------------
 
     For more information on assets under management and sales of mutual fund
shares for the five years ended December 31, 1998, and other industry segment
information for the three years ended December 31, 1998, see "Assets Under
Management at December 31," "Sales of Mutual Fund Shares" and Note 17 -
Financial Information by Business Segment included under Notes to Consolidated
Financial Statements, all of which are included in the 1998 Annual Report to
Stockholders and are incorporated herein by reference.
 
COMPETITION
 
     Management and Distribution Services.  The mutual fund industry is
intensely competitive. Many organizations in this industry are attempting to
sell and service the same clients and customers, not only with mutual fund
investments but also with other financial products. Some of the Company's
competitors have more products and product lines and substantially greater
assets under management and financial resources. The Company believes it is
competitive in terms of price and performance with other firms providing similar
advisory services to investment companies and to pension plans and endowment
funds and with firms engaged in distributing investment company shares.
 
     The distribution of mutual fund shares has been significantly affected by
(i) the growth in the number of funds available for sale, in particular, no-load
funds, the shares of which are sold primarily through direct sales approaches
without any sales charge, (ii) the evolution of service fees payable to
broker-dealers that provide continuous services to their clients in connection
with their investments in a mutual fund, (iii) the aggressive entry of banks and
investment banking firms into the industry, and (iv) the development and
implementation of complex distribution systems employing multiple classes of
shares and master-feeder fund structures. Typically, the underwriter or
distributor that pays a service fee is reimbursed by the mutual fund under a
plan of distribution pursuant to Rule 12b-1 under the 1940 Act. All of the U.S.
Funds distributed by Pioneer Distributor now pay such service fees to
broker-dealers. See "Domestic Investment Management -- Distribution
Activities -- Distribution Plans" above.
 
     Success in the investment advisory and mutual fund share distribution
businesses is substantially dependent on the U.S. Funds' investment performance.
Good performance stimulates sales of the U.S. Funds' shares and tends to keep
redemptions low. Sales of U.S. Funds' shares generate higher management fees and
distribution revenues (which are based on assets of the U.S. Funds). Good
performance also attracts private institutional accounts to Pioneer Management.
Conversely, relatively poor performance results in decreased sales and increased
redemptions of the U.S. Funds' shares and the loss of private accounts, with
corresponding decreases in revenues to the Company. In 1998, the performance of
the U.S. Funds managed by Pioneer Management was generally competitive with
comparable mutual funds offered by others and with relevant indices and
benchmarks approved by the U.S. Funds' Boards.
 
     Shareholder Services.  The shareholder services industry is extremely
competitive. Pioneering Services believes that it is providing high quality
shareholder services for the U.S. Funds and their shareholders at competitive
rates. The Company believes that superior shareholder services are vital to
success in this industry. While these services have historically been provided
by banks and other institutions with greater resources than those of Pioneering
Services or Pioneer Ireland, the Company believes that Pioneering Services and
Pioneer Ireland generally outperform such competitors because they are dedicated
exclusively to the


 
                                        6
<PAGE>   8
 
provision of such services to the U.S. Funds and the Irish Funds and their
respective shareholders, rather than to a number of different customers.
 
REGULATION
 
     Each of the U.S. Funds is registered under the 1940 Act and the Securities
Act of 1933, as amended. As registered investment companies, the U.S. Funds are
subject to extensive regulation governing all aspects of their operations. In
addition to being subject to the regulatory authority of the U.S. Securities and
Exchange Commission (the "SEC"), the U.S. Funds are also subject to certain
limited regulation by the securities regulators in all 50 states and in the
foreign jurisdictions in which several of the U.S. Funds are registered.
 
     Pioneer Distributor, as a registered broker-dealer under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), is required, among other
things, to maintain certain records, file reports with the SEC, supervise
employees and deal fairly with customers, all in accordance with the 1934 Act
and the rules and regulations promulgated thereunder. Pioneer Distributor is
also registered as a broker-dealer in all 50 states and, as such, is subject to
regulation by the state securities regulators in all such states. Pioneer
Distributor is a member of the NASD, a securities industry self-regulatory body
which is itself regulated by the SEC under the 1934 Act. As a member of the
NASD, Pioneer Distributor is required to abide by the standards, including
pricing practices, set forth in the Articles of Incorporation, the By-Laws and
the Rules of Fair Practice of the NASD.
 
     Pioneer Management, as investment manager of the U.S. Funds, adviser to the
Institutional Accounts and investment adviser to the Irish Funds, is registered
pursuant to the Investment Advisers Act of 1940, as amended, and as such is
subject to certain recordkeeping, SEC reporting, compensation and supervisory
rules and regulations.
 
     Each of Pioneering Services and Pioneer Ireland, as transfer agent and
sub-transfer agent, respectively, for the U.S. Funds, is registered as a
transfer agent pursuant to the 1934 Act and as such is subject to SEC
recordkeeping and reporting requirements and certain other rules and
regulations.
 
     The SEC has jurisdiction over registered investment companies, registered
investment advisers, broker-dealers and transfer agents and, in the event of a
violation of applicable rules or regulations, may take action which could have a
serious effect on Pioneer Management's, Pioneer Distributor's, Pioneering
Services' or Pioneer Ireland's businesses.
 
     The Irish Funds are authorized by The Central Bank of Ireland under the
European Communities (Undertakings for Collective Investment in Transferable
Securities) Regulations, 1989 (S.I. No. 78 of 1989) of Ireland.
 
                    PIONEER INTERNATIONAL FINANCIAL SERVICES
 
FINANCIAL SERVICES -- POLAND
 
     Polish Mutual Funds.  In 1992, subsidiaries of the Company organized and
began distributing units of Pioneer First Polish Trust Fund, the first mutual
fund in Poland. Since 1992, the Company has organized three additional funds,
Pioneer Aggressive Investment Trust Fund, Pioneer Interest Bearing Securities
Trust and Pioneer Privatization Trust Fund (collectively, the "Polish Funds").
Pioneer First Polish Investment Fund Joint Stock Company ("Pioneer First
Polish") serves as an investment manager and distributor of units of the Polish
Funds. As compensation for its management services, Pioneer First Polish
receives management fees of 2.00% per annum of average daily net assets. The
Polish Funds are open-end trust funds established under, and regulated by, the
Public Trading in Securities and Trust Funds Act of March 22, 1991, as amended.
At March 1, 1999, Pioneer First Polish employed 103 full-time persons, including
management and support staff. Pioneer First Polish is a wholly owned subsidiary
of Pioneer International Corporation ("Pioneer


 
                                        7
<PAGE>   9
 
International"). At March 1, 1999, the Polish Funds had aggregate net assets of
approximately $322 million. Sales of units of the Polish Funds in 1998, 1997 and
1996 were in the amounts shown in the chart below:
 
<TABLE>
<CAPTION>
                                                 1998             1997            1996
                                             (IN MILLIONS)    (IN MILLIONS)   (IN MILLIONS)
                                             -------------    -------------   -------------
<S>                                          <C>              <C>             <C>
Aggregate Sales of Polish Funds............       $39             $203            $169
</TABLE>
 
     Pioneer Financial Services Limited.  In January 1992, the Company's
subsidiary, Pioneer International, established Pioneer Financial Services
Limited ("PFSL"), which was 50% owned by Pioneer International and 50% owned by
Bank Polska Kasa Opieki, S.A. During the fourth quarter of 1998, Pioneer
International acquired the remaining 50% of PFSL from Bank Polska Kasa Opieki,
S.A. PFSL acts as the unitholder servicing agent for the Polish Funds.
Pioneering Services provides ongoing support to PFSL. Under the terms of the
agreements with the funds, PFSL receives annual fees equal to the Polish zloty
("PLN") equivalent of $21.00 per account. In 1998, such fees aggregated
approximately PLN 16.4 million (approximately $4.7 million). At December 31,
1998, PFSL serviced approximately 275,000 unitholder accounts. At March 1, 1999,
PFSL employed 117 full-time persons.
 
     Polish Brokerage Operations.  In March 1996, Pioneer International acquired
approximately 86% of Pioneer Polski Dom Maklerski, S.A., a Polish full-service
brokerage operation ("PPDM"). Pioneer International now holds 80% of PPDM. PPDM
provides brokerage services to Polish and U.S. institutions and Polish citizens.
PPDM also provides investment advice, research and analysis and portfolio
management and trading services.
 
     Polish Pension Fund Company.  In October 1998, the Polish government
granted to Pioneer Universal Pension Fund Company ("Pioneer Universal Pension"),
a wholly owned subsidiary of the Company, a license to establish one of Poland's
first universal pension fund societies. Initially capitalized with $10 million,
Pioneer Universal Pension will manage pension assets accumulated in Pioneer Open
Pension Funds, which operates in the second pillar of Poland's newly reformed
pension system. Pioneer Universal Pension is licensed by the Pension Fund
Supervisory Office in Poland under the Act on Organization and Operation of
Pension Funds.
 
FINANCIAL SERVICES -- RUSSIA
 
     The Company's Russian investment operations, which include Pioneer First
(Company for the Management of Investment Funds) and Pioneer Services, are
consolidated under Pioneer Omega's subsidiary, Pioneer First Russia, Inc.
("PFR"). In 1996, PFR executed agreements with the International Finance
Corporation ("IFC"), a member of the World Bank Group, pursuant to which IFC
agreed to invest $4 million in PFR to acquire an 18.35% equity interest. This
transaction was completed in early 1997. At March 1, 1999, PFR and its
subsidiaries employed 69 persons.
 
     During the second quarter of 1998, the Company reported a significant loss
from its Russian bank, Pioneer Bank. In response, the Company elected to
discontinue operations of Pioneer Bank in the third quarter of 1998 and
subsequently sold its share ownership of Pioneer Bank.
 
     In August 1998, the Russian government effectively defaulted on its
internal debt and suspended trading in its government securities. These actions
led to a severe lack of liquidity in the Russian equity market which severely
impacted the Company's Russian investment management, venture capital and
brokerage businesses.
 
     The Company adjusted the cost basis of certain of the securities of Pioneer
First Investment Fund (the "First Investment Fund") in the third and fourth
quarters of 1998, to reflect the lack of liquidity in the Russian equity market.
These adjustments resulted in a net loss of $4.5 million. The First Investment
Fund had over 2 million shareholders and approximately 125 portfolio investment
as of March 1, 1999. A significant portion of the revenues of the First
Investment Fund is lease revenue from the Meridian Commercial Towers in Moscow,
for which Pioneer Real Estate Advisors, Inc., the Company's real estate
management subsidiary, provides management services.


 
                                        8
<PAGE>   10
 
     Pioneer First serves as investment manager to the First Investment Fund and
Pioneer First Unit Investment Fund, one of Russia's first open-end unit
investment funds. Pioneer First Unit Investment Fund, which invests mainly in
Russian government bonds, was launched in November 1996. Its operations were
suspended in the third quarter of 1998. In November 1997, the Company launched
its second open-end unit investment fund, Pioneer First Liquid Shares, which
invests mainly in Russian equities. Pioneer Services, a domestic registrar and
shareholder services company, serves as the registrar for the First Investment
Fund and the unit investment funds.
 
     In the fourth quarter of 1998, as a result of the continuing Russian
economic crisis, the Company determined that it would cease operating its
Russian venture capital subsidiary, Pioneer Investments. In the first quarter of
1999, the Company decided to shut down its Russian brokerage subsidiary, Pioneer
Securities.
 
     In 1998, 1997 and 1996, Russian financial services had revenues and net
income (loss) from continuing operations as shown in the chart below:
 
<TABLE>
<CAPTION>
                                               1998             1997             1996
                                           (IN MILLIONS)    (IN MILLIONS)    (IN MILLIONS)
                                           -------------    -------------    -------------
<S>                                        <C>              <C>              <C>
Revenues.................................     $ 10.3            $42.2            $ 6.1
Net Income (Loss)........................     $(13.0)           $ 5.8            $(2.3)
</TABLE>
 
FINANCIAL SERVICES -- CZECH REPUBLIC
 
     In 1995, subsidiaries of the Company organized and began distributing
Pioneer Czech Investment Company Trust Fund (the "Pioneer Czech Fund") in the
Czech Republic. Pioneer Czech Investment Company, a.s. ("Pioneer Czech"), a
wholly owned subsidiary of Pioneer International, serves as investment adviser
and distributor of participation certificates in the Pioneer Czech Fund. As
compensation for its management services, Pioneer Czech receives management fees
of 2% of average daily net assets. Pioneer Czech is regulated by the newly
established Czech Securities and Exchange Commission in accordance with the new
Securities Commission Act, Securities Act and Investment Company and Investment
Funds Act. Pioneer Czech employs 26 full-time persons. As of March 1, 1999, the
Pioneer Czech Fund had net assets with a market value of approximately $61
million. The Company has a second Czech subsidiary, Pioneer Czech Financial
Company s.r.o., which provides distribution services generally and which also
distributes the Irish Funds in the Czech Republic.
 
OTHER INVESTMENT MANAGEMENT INITIATIVES
 
     India.  Pioneer Management owns 47.61% of Kothari Pioneer AMC Ltd.
("Kothari Pioneer"), an Indian company, which serves as investment adviser,
distributor and shareholder servicing agent to 18 private sector mutual funds
for Indian citizens. These funds had aggregate net assets of approximately $109
million at March 1, 1999.
 
     Taiwan.  The Company is a 10% investor in a joint venture in Taiwan, which
was organized to manage and distribute investments in investment companies to
Taiwanese investors.
                         ------------------------------


 
                                        9
<PAGE>   11
 
                           PIONEER GLOBAL INVESTMENTS
 
GOLD MINING BUSINESS
 
  SUMMARY
 
     The results of the gold mining business are substantially attributable to
the operations of Teberebie Goldfields Limited ("TGL"), the principal operating
subsidiary of the Company's indirect wholly owned subsidiary, Pioneer Goldfields
Limited, a corporation organized under the laws of Guernsey, Channel Islands,
which conducts mining and exploration activities in the Republic of Ghana and
exploration activities elsewhere in Africa. Pioneer Goldfields' principal asset
is its ownership of 90% of the outstanding shares of TGL. TGL, a corporation
organized under the laws of the Republic of Ghana, is engaged in the
exploration, mining, and processing of gold ore on a mining concession located
in the Western Region of the Republic of Ghana. The Republic of Ghana holds the
remaining 10% ownership interest in TGL. Gold mining results are also affected
by the exploration activities in the Russian Far East of Closed Joint Stock
Company "Tas-Yurjah Mining Company," a Russian company in which the Company has
a 95% beneficial interest. Exploration costs are charged to operations as
incurred.
 
     TGL shipped approximately 253,000 ounces of gold in 1998, contributing
$77.3 million to the Company's revenues. In 1997 and 1996, TGL shipped
approximately 263,000 and 203,000 ounces of gold, respectively. A three-year
financial summary for the gold mining business segment is shown below:
 
<TABLE>
<CAPTION>
                                               1998             1997             1996
                                           (IN MILLIONS)    (IN MILLIONS)    (IN MILLIONS)
                                           -------------    -------------    -------------
<S>                                        <C>              <C>              <C>
Revenues.................................     $ 77.3           $ 89.5           $ 78.3
Net Income (Loss)........................     $(19.8)          $ (2.8)          $  2.6
Total Assets.............................     $131.4           $152.9           $149.6
</TABLE>
 
  TEBEREBIE GOLDFIELDS LIMITED
 
     Organization and Mining Lease.  In 1986, the Company and a joint venture
partner organized TGL for the purpose of evaluating the feasibility of mining
gold on several tracts of land in the Teberebie concession area ("Teberebie") in
the Republic of Ghana. In February 1988, TGL entered into a mining lease with
the Republic of Ghana (the "Government") pursuant to which TGL received
exclusive gold mining rights for a term of 30 years. Under this lease, the
Government is entitled to annual royalties of between 3.0% and 12.0% of TGL
revenue, which rate will vary based on TGL's operating profit margin and its
level of capital expenditures, and is assured a continuing 10% equity interest
in TGL. In April 1989, the Company purchased the joint venture partner's
interest for $3.7 million, primarily in cash. In 1992, TGL was granted a second
26-year mining lease over two contiguous areas to the north and west of the
original lease area, the terms of which are substantially similar to the
original lease. Since the commencement of commercial production in 1991, TGL has
paid royalties to the Government in the amount of 3.0% of TGL's annual revenue.
 
     Teberebie Mine Site.  The Teberebie mine site consists of mining
concessions covering an area of approximately 42 square kilometers. It is
located in the Western Region of the Republic of Ghana and is approximately six
kilometers south of the town of Tarkwa. The Teberebie mine is geographically
approximately 200 kilometers west of, and 330 kilometers by road from, Accra,
the capital of the Republic of Ghana. It is approximately 95 kilometers by road
from Takoradi, which is one of Ghana's two major ports and the point of entry
for most of the imported equipment used at the Teberebie mine.
 
     Gold Reserves.  Reserves (proven and probable categories) represent that
portion of TGL's resource which can be reasonably assumed to be economically and
legally extracted based on demonstrated practice or detailed tests and studies.
In the fourth quarter of 1998, TGL identified the source of lower than expected
heap leach recoveries. Compared with the predominant material processed since
project inception, the more recently processed ore is inherently less weathered
and harder, adversely affecting crusher throughput and availability. The Company
now believes that the hardness of the ore also contributed to lower than
expected crusher production in the second and fourth quarters of 1998. Based on
TGL's existing heap leach technology, this ore exhibits a significantly longer
leach cycle and yields extraction values below historical rates. Testing


 
                                       10
<PAGE>   12
 
work conducted by TGL personnel to date has confirmed that acceptable extraction
values are achievable at liberation sizes below those feasible by present
crushing methods. TGL has determined that the high incidence of the less
weathered and harder ore will necessitate a transition from heap leaching to
conventional milling. A comprehensive testing program is nearing completion,
which delineates the recovery characteristics of this ore and identifies both
its location and frequency in the current pit design.
 
     As a result of this new finding, TGL is currently developing a new mine
plan which will: (i) synthesize the results of the comprehensive testing
program, (ii) incorporate a new, modified pit design, and (iii) specify the
equipment necessary to efficiently process the less weathered ore. Until the new
mine plan is complete, TGL cannot quantify its effect on previously reported
proven and probable in situ mineable reserves of 5.9 million ounces or on annual
production levels. TGL anticipates, however, that proven and probable in situ
mineable reserves will be reduced.
 
     Mining and Processing.  The Teberebie mine is a conventional open pit, heap
leach operation. Mining at Teberebie is a technically simple drill and blast,
load and haul operation, carried out on three contiguous ridges along a strike
length of some 6.5 kilometers. The ridges, running from south to north, are
named Teberebie, Awunaben and Mantraim. The mine is currently an open pit mine
operating from two pits, the Teberebie/Awunaben pit and the Mantraim pit.
 
     TGL processes its ore using a conventional heap leach operation at three
locations on the Teberebie concession: the East, West, and South Plants. Each
plant was developed during successive phases of project development (see
"Development and Expansion" below). Ore is crushed in the near-pit gyratory
crusher, which serves as the primary crusher for the West Plant and the South
Plant. A jaw crusher, with a capacity of 3.0 million tonnes per year, continues
to be the primary crusher for the East Plant. Cement is added to the crushed ore
to bind the ore and to raise its alkalinity to a level conducive to cyanide
leaching. The agglomerate of ore and cement is then placed on a heap leach and
is then treated with a diluted cyanide solution that percolates through the
material dissolving the gold. The diluted cyanide solution containing the
dissolved gold drains into collection ponds. From there, the solution is pumped
to an adjacent adsorption desorption refinery plant (the "ADR Plant") where it
passes through a series of activated carbon adsorption columns. The gold
contained in the solution is adsorbed onto the carbon and the solution is then
recirculated to the barren solution pond where it is refortified with sodium
cyanide. Gold is then chemically stripped from the carbon adsorption columns and
recovered from the stripper solution by electrowinning onto stainless steel
cathodes. The cathodes are removed approximately every two weeks at each ADR
Plant, at which time the gold sludge is washed off and dried. The sludge is then
mixed with flux and smelted to produce dore.
 
     Gold Production and Sales.  TGL began shipping gold in October 1990. In the
second quarter of 1991, the mine reached then commercially feasible production
levels (about 1,000 ounces per week), and reached full production levels (about
2,000 ounces per week) during the fourth quarter of 1991. Set forth below is a
chart showing TGL's gold shipments for the years ended December 31, 1998, 1997
and 1996:
 
<TABLE>
<CAPTION>
                                                     1998        1997        1996
                                                   (OUNCES)    (OUNCES)    (OUNCES)
                                                   --------    --------    --------
<S>                                                <C>         <C>         <C>
TGL Gold Shipments...............................  253,000     263,000     203,000
</TABLE>
 
     The average realized price of gold sold by TGL during 1998, 1997 and 1996
was $305, $340 and $385 per ounce, respectively. With the exception of 1998 and
1997, the average realized price was based on the market spot price of gold at
the time of sale. In 1998 and 1997, the average realized price of gold includes
proceeds from the sale of floor program options of $12 per ounce and $15 per
ounce, respectively. Spot prices of gold fluctuate widely and are affected by a
number of factors including supply and demand, inflation expectations, the
strength of the U.S. dollar and interest rates.
 
     At present, TGL does not enter into forward gold sales or otherwise engage
in gold price hedging. In the fourth quarter of 1996, TGL entered into a series
of put options which secured a minimum selling price of $340 per ounce to cover
1997 estimated production. In May 1997 and April 1998, TGL purchased additional
put options at exercise prices of $320 and $305 per ounce, respectively, to
cover estimated production for the respective four months ended April 28, 1998
and the five months ended September 28, 1998. During 1997 and


 
                                       11
<PAGE>   13
 
1998, when the market spot price of gold declined below the exercise price of
the options, the Company continued to ship gold to refineries and sold the put
options, receiving payment for the difference between the market spot price of
gold and the exercise price. As a result of low prevailing market prices, the
Company was unable to secure an acceptable floor program exercise price beyond
September 1998. The Company may consider additional hedging strategies if and
when it deems circumstances appropriate.
 
     TGL's cash costs per ounce and total costs per ounce for 1998, 1997 and
1996 are summarized on the following table:
 
<TABLE>
<CAPTION>
                                                          1998    1997    1996
                                                          ----    ----    ----
<S>                                                       <C>     <C>     <C>
Cash Costs Per Ounce....................................  $284    $230    $266
Total Costs Per Ounce...................................  $409    $337    $361
</TABLE>
 
     More information on TGL's 1998 production and operations is set forth in
the 1998 Annual Report to Stockholders under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations -- Pioneer Global Investments -- Gold Mining
Business -- Gold Production and Costs," which information is incorporated herein
by reference.
 
     Development and Expansion.  TGL has completed three major capital
expenditure programs at the Teberebie mine to date, designated Phase I, Phase II
and Phase III. Phase I included the development of the mine site and the
construction of the crushing and processing facility known as the East plant.
Phase II, which was completed in 1994, included the construction of a crushing
and processing facility that replicated the East plant and is known as the West
plant. Phase III, which was completed in 1997, included a further heap leach
operation and a near-pit gyratory crushing facility which acts as a primary
crushing facility for both the existing West Plant and the new South Plant. The
Phase III expansion plan did not require the construction of a third ADR Plant
to support the South Plant. Instead, the existing ADR Plant at the West Plant
was upgraded with a second carbon adsorption train and a modified stripping
circuit. The first gold pour associated with the South Plant occurred in April
1997, but the plant was not fully operational until the fourth quarter of 1997.
 
     Customers.  During the year ended December 31, 1998, gold sales aggregated
$77.3 million. During 1998, gold shipments from TGL in Ghana to two unaffiliated
European refiners (Johnson Matthey Plc and Metaux Precieux SA Metalor) accounted
for $38.5 million and $35.7 million, respectively, of total sales, or 96% of
such sales. Because of the worldwide demand for gold, the Company does not
believe that the loss of such customers would have a material adverse effect on
the Company or its subsidiaries. The remaining 4% of sales related to the sales
of put options associated with TGL's gold price floor program and the sale of
carbon residue with gold value to a Ghanaian firm.
 
     Employees.  At March 1, 1999, TGL had 1,389 employees, 1,354 of whom are
Ghanaians. The terms of employment and compensation for junior TGL staff, known
as monthly rated employees, are determined pursuant to a collective bargaining
agreement between TGL and the Ghana Mineworkers' Union. The terms of the
collective agreement (other than pay levels) are negotiated every three years.
Pay levels are negotiated annually. Because of general depression in the gold
industry, negotiations of the three-year collective bargaining agreement were
deferred six months to January 1, 1999. Although a new agreement had not been
executed by March 1999, the existing agreement remains in effect until TGL and
the Ghana Mineworkers' Union conclude negotiations. TGL experienced a two-day
work stoppage in 1996. The work stoppage was related to two employee dismissals
resulting from a determination by TGL and local union officials that the
employees had violated the disciplinary code. The union did not organize the
work stoppage, and the work stoppage did not have a material effect on TGL's
operations. TGL continues to believe that its relations with its employees are
good.
 
     Regulation and Taxation.  Mining activities in the Republic of Ghana are
governed by PNDCL 153, the Minerals and Mining Law of 1986 (the "MML").
 
     The Republic of Ghana is currently developing a system of environmental
regulation that applies to TGL's operations. However, it has always been a
strategic objective of the Company to minimize the effects of its subsidiaries'
mining operations on the environment. TGL has developed an overall environmental
action


 
                                       12
<PAGE>   14
 
plan, a reagent spill management plan, a decommissioning plan and has initiated
site rehabilitation and revegetation studies. The Company cannot determine at
this time the effect, if any, the new regulations may have on TGL's operations.
 
     In the first quarter of 1994, the Republic of Ghana enacted the Minerals
and Mining (Amendment) Act of 1994, which reduced the income tax rate for mining
companies from 45% to 35%. Pursuant to the terms of the MML, income taxes may be
deferred until recovery of capital investment. Accordingly, deferred taxes at
December 31, 1998, 1997 and 1996, were $-0-, $7.6 million and $9.6 million,
respectively. Income taxes were deferred during all of 1996, 1997 and 1998.
Deferred taxes decreased during the last two years principally as a result of
operating losses. Income tax payments to the Republic of Ghana since the
inception of the project aggregate approximately $20.2 million.
 
     Insurance.  The Company maintains $76.5 million of "political risk"
insurance principally from the Overseas Private Investment Corporation ("OPIC"),
covering 90% of its equity and loan guarantees. This insurance also covers 90%
of the Company's proportionate share of TGL's cumulative retained earnings and
parent debt. The OPIC debt and equity coverage is presently limited to a ceiling
of $74.1 million. In 1998, the Company increased the ceiling by about $11
million to cover parent debt. The Company also secured $9 million foreign
exchange exposure insurance from another source to hedge 90% of its exposure to
a limited recourse provision contained in the OPIC Phase III expansion
financing. In addition to other commercial insurance coverage, TGL has secured
business interruption coverage of up to $40.6 million for losses associated with
machinery breakdown and property damage and to defray continuing infrastructure
and interest costs.
 
     Recent Developments.  In October 1998, the Company engaged the services of
an investment banking firm to sell Pioneer Goldfields, including its African
exploration rights and its 90% equity interest in TGL, Pioneer Goldfields'
operating subsidiary. Upon completion of the new mine plan, an offering document
will be finalized for circulation to a select group of potential buyers.
 
     For more information on recent developments affecting production and
reserves, see "Gold Reserves" above.
 
  EXPLORATION ACTIVITIES OF PIONEER GOLDFIELDS
 
     Since the end of 1993, in addition to continuing to develop the Teberebie
mine, Pioneer Goldfields has increased its exploration activities in the
Republic of Ghana and in other African countries. These activities are currently
conducted by TGL in Ghana and by Pioneer Goldfields in Niger. In 1997, Pioneer
Goldfields discontinued exploration activities in Zimbabwe and is in the process
of dissolving its Zimbabwe-registered company, Lobengula Exploration and Mining
Company, Ltd. In 1998, Pioneer Goldfields incurred exploration costs of
approximately $1.8 million, approximately $1.4 million of which related to
exploration activities outside of Ghana. In 1997, Pioneer Goldfields incurred
exploration costs of approximately $1.9 million, approximately $1.7 million of
which related to exploration activities outside of Ghana.
 
  EXPLORATION ACTIVITIES OF TAS-YURJAH MINING COMPANY
 
     In 1994, the Company entered into a joint venture, Closed Joint Stock
Company "Tas-Yurjah Mining Company" ("Tas-Yurjah"), with a Russian company to
explore potential gold mining properties in the Khabarovsk Territory of the
Russian Far East. The Company currently owns a 94.5% direct interest and a 0.59%
indirect interest in Tas-Yurjah. In 1995, Tas-Yurjah secured a license to
conduct exploration activities over a 240 square kilometer area (the "licensed
area"). Tas-Yurjah plans to conduct drilling and geochemical and geological
surveys to further examine anomalies located in the licensed area during 1999.
At December 31, 1998, the Company had expended approximately $5.4 million for
exploration work related to Tas-Yurjah, of which $1.5 million had been expended
in 1998.


 
                                       13
<PAGE>   15
 
TIMBER BUSINESS
 
     The Company holds a majority controlling interest in three companies
located in the Khabarovsk Territory of the Russian Far East, Closed Joint-Stock
Company "Forest-Starma" ("Forest-Starma"), Closed Joint-Stock Company
"Amgun-Forest" ("Amgun-Forest") and Closed Joint-Stock Company "Udinskoye"
(Udinskoye"). The Company has consolidated its ownership of these three
companies under its wholly owned subsidiary, Pioneer Forest, Inc. ("Pioneer
Forest"). Of the three companies, Forest-Starma is the only company currently
engaged in timber operations. Forest-Starma, which is located on Siziman Bay in
the Vanino district of the Khabarovsk Territory, has developed a modern logging
camp, including a harbor facility, from which it exports timber to markets in
the Pacific Rim, primarily Japan and South Korea.
 
     Leasehold and Cutting Rights.  Forest-Starma, Amgun-Forest and Udinskoye
have each entered into long-term lease arrangements that provide significant
leasehold acreage and annual cutting rights. In the aggregate, the three
subsidiaries have leasehold rights comprising 1,076,500 hectares (approximately
2.7 million acres), with annual cutting rights of approximately 1.2 million
cubic meters. Forest-Starma is actively engaged in negotiations to expand its
existing leasehold. The current leasehold rights of each of the projects are set
forth below:
 
<TABLE>
<CAPTION>
                                 FOREST-STARMA    AMGUN-FOREST    UDINSKOYE
                                 -------------    ------------    ---------
<S>                              <C>              <C>             <C>
Hectares (acres)...............     390,100           485,400      201,000
                                   (964,000)       (1,200,000)    (497,000)
Annual Cutting Rights (m(3))...     555,000           350,000      300,000
</TABLE>
 
     Ownership Structure.  Pioneer Forest currently has a 97% direct interest in
Forest-Starma. The Company has signed agreements to acquire an additional 3%
direct interest in Forest-Starma. The transfer is currently awaiting regulatory
approvals. Pioneer Forest has an 80.6% direct interest and the Company has a
7.9% indirect interest in Amgun-Forest. Pioneer Forest has a 72% direct interest
and the Company has a 11.76% indirect interest in Udinskoye.
 
     Timber Operations.  Timber is harvested at Forest-Starma according to
international sustainable development standards using advanced planning and
implementation of the best available management practices as defined in the U.S.
Forest Service stewardship guidelines and the United Nations Conference on
Environment and Development principles. Five production crews consisting, in
aggregate, of four harvesters, eight skidders, and five processors form the
nucleus of the logging operation. The harvesters cut the trees which are then
skidded to five processors which delimb and buck the timber into logs. The logs
are hauled on company constructed roads by log trucks approximately 50
kilometers to a lower landing log yard for sorting and scaling prior to
shipment. The lower landing is equipped with log loaders and other equipment
necessary for maintaining the log yard and delivering sorted logs to the harbor
for shipment. Sorted logs are delivered to the harbor based upon a manifest
received from Forest-Starma's marketing agent, Rayonier, Inc. The logs are then
delivered to the dock and placed on ships by crane. Forest-Starma has
constructed and maintains a self-contained camp with living quarters for between
250 and 300 workers, a modern maintenance and parts facility, on site offices
and sophisticated communications equipment.


 
                                       14
<PAGE>   16
 
     Timber Production.  Timber harvesting commenced in the first quarter of
1995 and the first shipments of timber totaling approximately 30,000 cubic
meters occurred in the third and fourth quarters of 1995. In 1996, Forest-Starma
shipped approximately 133,000 cubic meters of timber. Since the project was
still in the development phase, the related revenues of $10.1 million were used
partially to offset capitalized interest and development costs. In January 1997,
Forest-Starma commenced commercial production of timber and amortization of
deferred development costs. During 1997, Forest-Starma produced and shipped
257,000 cubic meters and 194,000 cubic meters of timber, respectively. During
1998, Forest-Starma produced and shipped 248,000 cubic meters and 280,000 cubic
meters of timber, respectively. A three-year financial summary for the timber
business segment is shown below:
 
<TABLE>
<CAPTION>
                                               1998             1997             1996
                                           (IN MILLIONS)    (IN MILLIONS)    (IN MILLIONS)
                                           -------------    -------------    -------------
<S>                                        <C>              <C>              <C>
Revenues.................................     $ 10.5            $11.9            $  --
Net Income (Loss)........................     $(18.7)           $(6.7)           $(0.5)
Total Assets.............................     $ 52.9            $51.0            $43.4
</TABLE>
 
     Customers.  In 1998, Forest-Starma shipped 45% of its timber to seven
unaffiliated customers in Japan and 55% of its timber to seven unaffiliated
customers in South Korea.
 
     Employees.  At March 1, 1999, Forest-Starma had 604 Russian employees. In
addition, expatriate employees and consultants of the Company's employment
company subsidiary are seconded to Forest-Starma. Such employees are not
unionized nor are they a party to a collective bargaining agreement. Salaries
are determined annually based on the prevailing market prices for timber
industry employees within the region.
 
     Insurance.  In connection with its investment in Forest-Starma, the Company
has secured OPIC political risk insurance in an amount of up to $47 million
which would protect 90% of the Company's equity investment and loans and a
proportionate share of cumulative retained earnings. In addition, the Company
has secured OPIC business income loss insurance of up to $5 million for
Forest-Starma.
 
     Amgun-Forest and Udinskoye.  The Amgun-Forest timber project is located in
the Polina Osipenko District of the Khabarovsk Territory, approximately 150
kilometers northwest of the city of Komsomolsk-on-Amur and further inland than
Forest-Starma. Duharian Larch, Yeddo Spruce and Amur Fir are the principal
commercial tree species in the project area, with larch constituting
approximately 67% of the exportable product and whitewood (Yeddo Spruce and Amur
Fir together) constituting the balance. The Udinskoye timber project is also
located in the Polina Osipenko District of the Khabarovsk Territory, west of the
Amgun-Forest timber project.
 
U.S. AND CENTRAL EUROPE VENTURE CAPITAL
 
  U.S. VENTURE CAPITAL OPERATIONS
 
     The Company was engaged in venture capital investment and management in the
U.S. for a number of years through its wholly owned subsidiary, Pioneer Capital
Corporation ("Pioneer Capital"), a majority-owned limited partnership, Pioneer
Ventures Limited Partnership ("PVLP"), and Pioneer Ventures Limited Partnership
II ("PVLP II"), an institutional investor fund in which the Company had a 14%
interest. In March 1999, the Company sold the investment assets held by Pioneer
Capital and PVLP and its interest in PVLP II. More information on the Company's
sale of its direct investments and indirect interests of its U.S. venture
capital business is set forth in the 1998 Annual Report to Stockholders under
the caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Results of Operations -- Pioneer Global
Investments -- 1998 Compared to 1997 and 1996," which information is
incorporated herein by reference.
 
  POLISH VENTURE CAPITAL OPERATIONS
 
     In 1995, the Company's wholly owned subsidiary, Pioneer International
Corporation ("Pioneer International"), organized two limited partnerships,
Pioneer Poland U.S. L.P. ("PPUSLP") and Pioneer Poland U.K. L.P. ("PPUKLP"), for
the purpose of raising funds for venture capital investment in Poland. Pioneer
International's wholly owned subsidiaries, Pioneer Poland U.S. (Jersey) Ltd. and
Pioneer Poland U.K. Ltd., are the general partners of PPUSLP and PPUKLP,
respectively. During 1995, PPUSLP and PPUKLP (collectively, the "Pioneer Poland
Fund") raised $60 million in commitments from U.S. and


 
                                       15
<PAGE>   17
 
European investors. The Company has invested approximately $2.5 million in each
limited partnership. This investment provides the Company with a 7% indirect
interest in PPUSLP and a 9% indirect interest in PPUKLP. At December 31, 1998,
Pioneer Poland Fund held investments valued at approximately $27.5 million in 9
privately held Polish companies, had committed contractually to invest an
additional $3 million in these companies and had reserved an additional $3.1
million for future financing rounds of the existing portfolio. The
responsibilities for managing the Pioneer Polish Fund are shared by Pioneer
Management (Jersey) Ltd. and Pioneer Investment Poland Ltd., each of which is a
wholly owned subsidiary of Pioneer International. The limited partners of PPUSLP
and PPUKLP have approved a reorganization of the partnerships, which would
substitute a single general partner for the two current ones. This
reorganization would have no effect on the Company's legal rights or economic
interests in the partnerships.
 
REAL ESTATE MANAGEMENT AND ADVISORY SERVICES
 
     In 1996, the Company established Pioneer Real Estate Advisors, Inc.
("Pioneer Real Estate") to provide real estate advisory and management services
to institutional investors and corporations in the U.S. and in Central and
Eastern Europe, primarily Russia and Poland. Pioneer Real Estate is based in
Boston and conducts its operations in Russia through a representative office in
Moscow and in Poland through a wholly owned subsidiary. Pioneer Real Estate is
currently pursuing two primary objectives. First, it seeks to invest and manage
capital in the commercial real estate markets of Central and Eastern Europe on
behalf of pooled investment vehicles, individual institutional investors and the
Company. Second, it seeks to provide advisory services, including property
management, facilities management, development management and feasibility and
valuation analysis, to the pooled investment vehicles it manages and to third
parties.
 
     In Poland, Pioneer Real Estate is developing a $60 million Polish real
property fund (the "Polish Real Estate Fund") to invest in a diversified
portfolio of commercial real estate in Poland, including office space,
warehouse/distribution centers and retail centers. Pioneer Real Estate Advisors
Poland Sp. z o.o., a limited liability company that Pioneer Real Estate
established in 1996, will provide professional real estate investment advice to
the Polish Real Estate Fund. Pioneer Real Estate has committed to invest $2
million in the Polish Real Estate Fund and has been conducting extensive
negotiations for the balance of the equity commitments.
 
     In May 1998, Pioneer Real Estate, together with its partner, Banc One
Capital Corporation, established an OPIC-sponsored pooled investment vehicle
(the "PBO Property Fund") that will invest in commercial property projects in
Central and Eastern Europe and the newly independent states of the former Soviet
Union. The PBO Property Fund will be funded with up to $80 million of equity
investments from institutional investors and up to $160 million of debt
financing guaranteed by OPIC. Pioneer Real Estate has committed to invest $4
million in the PBO Property Fund. During the second half of 1998, the PBO
Property Fund began seeking capital commitments from investors, and Pioneer Real
Estate expects to close this fund by the end of 1999.
 
     Pioneer Real Estate, through its representative office in Moscow, manages
the Meridian Commercial Towers, an 18 story office tower located in Northern
Moscow, which is owned by the First Investment Fund. As of March 1, 1999,
Pioneer Real Estate had 25 employees.
 
METALS VENTURES
 
     Since 1991, a subsidiary of the Company, Pioneer Metals and Technology,
Inc., has been involved in a development-stage business in Russia, through its
subsidiary, for the manufacture, production and sale of powdered metals,
permanent magnets and various trading endeavors. To date, the metals ventures
have not had a material impact on the Company's financial results.
 
COMPETITION
 
     Venture Capital.  The venture capital industry both in the United States
and abroad is extremely competitive. In the process of investing and attempting
to raise funds from entities other than the Company, the Company's venture
capital subsidiaries must compete with a large number of venture capital firms,
many of which have substantially larger staffs, more experience in raising
funds, and more capital to invest.


 
                                       16
<PAGE>   18
 
     Real Estate Management and Advisory Business.  The real estate management
and advisory business both in the United States and abroad is extremely
competitive. Pioneer Real Estate must compete with a large number of real estate
firms, many of which have been in existence for many years and have
substantially more resources than those available to Pioneer Real Estate.
 
                                   EMPLOYEES
 
     Throughout its three strategic business units the Company has a total of
3,300 employees worldwide, including 665 at its headquarters in Boston and 1,389
at the TGL mine in Ghana. The Company believes that it has good relations with
its employees in all worldwide locations.
 
                            FUTURE OPERATING RESULTS
 
     Certain of the information contained in this Annual Report on Form 10-K,
including information with respect to the Company's plans and strategies for its
three strategic business units, consists of forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," "projects,"
"estimates" and similar expressions are intended to identify forward-looking
statements. Important factors that could cause actual results to differ
materially from those indicated by such forward-looking statements are set forth
in the 1998 Annual Report to Stockholders under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Future Operating Results" which is hereby incorporated by
reference.
 
                                   YEAR 2000
 
     A description of the Company's plans with respect to the Year 2000
transition is set forth in the 1998 Annual Report to Stockholders under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Year 2000," which is hereby incorporated by reference.
 
ITEM 2.  DESCRIPTION OF PROPERTY.
 
     The Company's principal properties are its headquarters in Boston, its gold
mine concession in Ghana, and its timber production facilities in the Russian
Far East, each as more fully described below. Additionally, the Company leases
properties in several locations for its financial services operations, including
Poland, Ireland, the Czech Republic, Russia, Germany and Switzerland.
 
     The Company and its subsidiaries conduct their principal operations from
leased premises with approximately 163,241 square feet at 60 State Street,
Boston, Massachusetts, under two leases. The first to expire of these leases
(which covers substantially all of the space) expires in 2002, with two
five-year renewal options. The rent expense for these premises was approximately
$4.6 million in 1998. After a recently completed expansion, the Company believes
that its facilities are adequate for its current needs and that additional space
will be available as needed.
 
     TGL conducts mining operations in Tarkwa, Ghana. The Republic of Ghana has
granted TGL land concessions of approximately 42 square kilometers. The
operating facilities included on the mine site include approximately 48 housing
and office buildings, one gyratory crusher, two three-stage crushing plants, one
four-stage crushing plant, heap leaching facilities and ponds, two processing
plants and refineries, a clinic, a laboratory, a warehouse and an eight-bay
maintenance shop for heavy equipment. TGL believes that its facilities are
generally in a state of good repair and adequate for its current needs and that
additional facilities will be constructed as needed.


 
                                       17
<PAGE>   19
 
     The Company's 97%-owned subsidiary, Forest-Starma, is pursuing the
development of timber production in the Khabarovsk Territory of Russia under
three long-term (49 years) leases comprising 390,100 hectares (approximately
964,000 acres) in the aggregate with annual cutting rights of 555,000 cubic
meters. Amgun-Forest and Udinskoye, the Company's other majority-owned Russian
timber ventures, each have a long-term lease (49 years) relating to timber
harvesting. The Amgun-Forest lease covers 485,400 hectares (approximately
1,200,000 acres) with annual cutting rights of 350,000 cubic meters. The
Udinskoye lease covers 201,000 hectares (approximately 497,000 acres) with
annual cutting rights of 300,000 cubic meters.
 
ITEM 3.  LEGAL PROCEEDINGS.
 
     There are no material legal proceedings to which the Company or its
subsidiaries is a party or of which any of their property is subject, other than
ordinary routine litigation incidental to the Company's businesses.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
     None.


 
                                       18
<PAGE>   20
 
                      EXECUTIVE OFFICERS OF THE REGISTRANT
 
     Set forth below are the names and ages of the executive officers of the
Company, and a description of the positions and offices each holds with the
Company and its significant subsidiaries.
 
<TABLE>
<CAPTION>
                 NAME                    AGE   POSITIONS WITH THE COMPANY AND ITS SIGNIFICANT SUBSIDIARIES
                 ----                    ---   -----------------------------------------------------------
<S>                                      <C>   <C>
John F. Cogan, Jr......................  72    President, Chief Executive Officer and Chairman of the
                                               Board of the Company since 1962. Chairman of Pioneer
                                               Management since 1993 and President of Pioneer Management
                                               from 1962 to 1993. Director of Pioneer Management since
                                               1962. Chairman and Director of Pioneer Distributor.
                                               Chairman, President and Trustee of each of the registered
                                               investment companies in the Pioneer Family of Mutual Funds.
                                               President and Director of Pioneer International, Pioneer
                                               Omega and Pioneer First Russia. Director of Pioneering
                                               Services, Pioneer Real Estate, First Investment Fund and
                                               Pioneer Forest. Chairman and Director of Pioneer
                                               Goldfields, TGL, and Forest-Starma. Chairman of Supervisory
                                               Board of Pioneer First Polish, Pioneer Czech and Pioneer
                                               Fonds Marketing. Director of Pioneer Ireland and each of
                                               the Irish Funds. Chairman of Global Funds Distributor.
                                               Member of Supervisory Board of Pioneer Universal Pension.
                                               Senior Partner of the Boston law firm, Hale and Dorr LLP,
                                               counsel to the Company.

John A. Boynton........................  45    Executive Vice President and Chief Financial Officer of the
                                               Company since 1998. Treasurer of the Company, Pioneer
                                               Distributor, Pioneer Management, Pioneering Services,
                                               Pioneer International, Pioneer Real Estate, Pioneer Omega
                                               and Pioneer First Russia. Treasurer of each of the
                                               registered investment companies in the Pioneer Family of
                                               Mutual Funds. Previously, Senior Vice President of The
                                               Quaker Oats Company.

Stephen G. Kasnet......................  53    Executive Vice President of the Company since 1998.
                                               President of the Company's business unit, Pioneer Global
                                               Investments, since 1998. Vice President of the Company
                                               since 1995. President of Pioneer Real Estate since January
                                               1996. Director of Pioneer Real Estate, Pioneer Goldfields,
                                               TGL and Pioneer Forest. Trustee and Vice President of
                                               Pioneer Real Estate Shares and Vice President of Pioneer
                                               Variable Contracts Trust. Previously, Managing Director,
                                               First Winthrop Corporation and Winthrop Financial
                                               Associates. Chairman of the Board of Warren Bancorp and
                                               Warren Five Cents Savings Bank and Director of Bradley Real
                                               Estate, Inc.

Alicja K. Malecka......................  52    Executive Vice President of the Company since 1998.
                                               President of the Company's business unit, Pioneer
                                               International Financial Services, since 1998. Vice
                                               President of the Company since 1992. Senior Vice President
                                               of Pioneer International and Vice President of Pioneer Real
                                               Estate. Director and Vice President of Pioneer First Russia
                                               and Director of First Investment Fund. President of Pioneer
                                               First Polish and the Polish Funds. Member of the
                                               Supervisory Board of PFSL, Pioneer Czech and Pioneer
                                               Universal Pension.
</TABLE>


 
                                       19
<PAGE>   21
 
<TABLE>
<CAPTION>
                 NAME                    AGE   POSITIONS WITH THE COMPANY AND ITS SIGNIFICANT SUBSIDIARIES
                 ----                    ---   -----------------------------------------------------------
<S>                                      <C>   <C>
William H. Smith, Jr...................  63    Executive Vice President -- Global Operations and
                                               Technology of the Company since 1998. Vice President of the
                                               Company and Director of Pioneering Services since 1985.
                                               Vice President and Director of Pioneer International.
                                               Director of Pioneer Ireland and each of the Irish Funds.
                                               Member of the Supervisory Board of PFSL.

David D. Tripple.......................  55    Executive Vice President of the Company since 1986.
                                               President of the Company's business unit, Pioneer
                                               Investment Management, since 1998. Director of the Company
                                               since 1986. President of Pioneer Management since 1993 and
                                               Director of Pioneer Management since 1986. Executive Vice
                                               President and Chief Investment Officer of Pioneer
                                               Management from 1986 to 1993. Executive Vice President and
                                               Trustee of each of the registered investment companies in
                                               the Pioneer Family of Mutual Funds. Director of Pioneer
                                               Distributor, Pioneer International, Pioneer Real Estate,
                                               Pioneer First Russia, Pioneer Omega, Pioneer Ireland and
                                               each of the Irish Funds. Member of Supervisory Board of
                                               Pioneer First Polish and Pioneer Czech.

Timothy T. Frost.......................  43    Senior Vice President -- Corporate Planning and
                                               Communications of the Company since 1998. Vice President of
                                               the Company since 1995. Director and Vice President of
                                               Pioneer Omega and Director of Pioneer First Russia and
                                               First Investment Fund. Senior Vice President of Pioneer
                                               International. Vice President of Pioneer Real Estate.
                                               Previously, Managing Director of Financial Services
                                               Volunteer Corps.

Robert P. Nault........................  35    Senior Vice President of the Company since 1998. General
                                               Counsel and Assistant Secretary of the Company since 1995.
                                               Assistant Secretary of each of the registered investment
                                               companies in the Pioneer Family of Mutual Funds, Pioneer
                                               Management, Pioneer Distributor, Pioneering Services,
                                               Pioneer International, Pioneer Omega, Pioneer First Russia
                                               and Pioneer Goldfields. Secretary of Pioneer Real Estate
                                               and Pioneer Forest. Previously, Junior Partner of the
                                               Boston law firm, Hale and Dorr LLP, counsel to the Company.

Joseph P. Barri........................  52    Secretary of the Company since 1978. Secretary of each of
                                               the registered investment companies in the Pioneer Family
                                               of Mutual Funds, Pioneer Management, Pioneer Distributor,
                                               Pioneering Services, Pioneer Omega, Pioneer First Russia
                                               and Pioneer International. Senior Partner of the Boston law
                                               firm, Hale and Dorr LLP, counsel to the Company.
</TABLE>


 
                                       20
<PAGE>   22
 
                                    PART II
 
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
 
     Incorporated by reference from the 1998 Annual Report to Stockholders under
the caption "Quarterly Financial Data."
 
ITEM 6.  SELECTED FINANCIAL DATA.
 
     Incorporated by reference from the 1998 Annual Report to Stockholders under
the caption "Five Year Summary of Selected Financial Data."
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.
 
     Incorporated by reference from the 1998 Annual Report to Stockholders under
the caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
 
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
     Incorporated by reference from the 1998 Annual Report to Stockholders under
the caption "Market Risk Disclosure."
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
     Incorporated by reference from the 1998 Annual Report to Stockholders under
the caption "Consolidated Financial Statements and Notes to Consolidated
Financial Statements" and "Report of Independent Public Accountants."
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.
 
     Not applicable.
 
                                    PART III
 
ITEMS 10-13.
 
     The information required for Part III in this Annual Report on Form 10-K is
incorporated by reference from the Company's definitive proxy statement for the
Company's 1999 Annual Meeting of Stockholders. Such information will be
contained in the sections of such proxy statement captioned "Security Ownership
of Certain Beneficial Owners, Directors and Executive Officers," "Election of
Directors," "Directors' Meetings and Fees," "Committee Meetings," "Executive
Compensation," "Stock Option Grants and Exercises," "Certain Transactions" and
"Compliance with Section 16 of the Securities Exchange Act of 1934." Information
regarding executive officers of the Company is also furnished in Part I of this
Annual Report on Form 10-K under the heading "Executive Officers of the
Registrant."


 
                                       21
<PAGE>   23
 
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
 
     (a) The following documents are included as part of this Annual Report on
Form 10-K.
 
1.  FINANCIAL STATEMENTS:
     
<TABLE>                                                               
   <S>                                                            <C> 
   Report of Independent Public Accountants....................    31*
   Consolidated Statements of Operations for the Three years
     Ended December 31, 1998...................................    32*
   Consolidated Balance Sheets as of December 31, 1998 and
     1997......................................................    33*
   Consolidated Statements of Changes in Stockholders' Equity
     for the Three Years Ended December 31, 1998...............    34*
   Consolidated Statements of Cash Flows for the Three Years
     Ended December 31, 1998...................................    35*
   Notes to Consolidated Financial Statements..................    36*
</TABLE>
 
---------------
 
* Refers to page number in 1998 Annual Report to Stockholders. Each such
  financial statement or report is hereby incorporated herein by reference to
  the 1998 Annual Report to Stockholders which is filed as an exhibit to this
  Annual Report on Form 10-K.
 
2.  FINANCIAL STATEMENT SCHEDULES:
 
     All financial statement schedules are omitted because they are not
applicable or the required information is shown in the Consolidated Financial
Statements or the Notes thereto.
 
3.  EXHIBITS:
 
     The exhibits filed with or incorporated into this Annual Report on Form
10-K are listed on the "Index to Exhibits" below.
 
     (b) Reports on Form 8-K:
 
     None.


 
                                       22
<PAGE>   24
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, on March 30, 1999.
 
                                          THE PIONEER GROUP, INC.
 
                                          BY: /s/  JOHN F. COGAN, JR.
                                              ---------------------------------
                                                   JOHN F. COGAN, JR.,
                                                       President
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
 
<TABLE>
<CAPTION>
         SIGNATURE                          TITLE                     DATE
         ---------                          -----                     ----
                              <S>                                <C>

  /s/ JOHN F. COGAN, JR.      Principal Executive Officer and    March 30, 1999
----------------------------  Director
    JOHN F. COGAN, JR.

    /s/ JOHN A. BOYNTON       Principal Financial Officer and    March 30, 1999
----------------------------  Principal Accounting
      JOHN A. BOYNTON

   /s/ ROBERT L. BUTLER       Director                           March 30, 1999
----------------------------
     ROBERT L. BUTLER

   /s/ MAURICE ENGLEMAN       Director                           March 30, 1999
----------------------------
     MAURICE ENGLEMAN

   /s/ ALAN J. STRASSMAN      Director                           March 30, 1999
----------------------------
     ALAN J. STRASSMAN

   /s/ JASKARAN S. TEJA       Director                           March 30, 1999
----------------------------
     JASKARAN S. TEJA

   /s/ DAVID D. TRIPPLE       Director                           March 30, 1999
----------------------------
     DAVID D. TRIPPLE

   /s/ JOHN H. VALENTINE      Director                           March 30, 1999
----------------------------
     JOHN H. VALENTINE
</TABLE>

 
                                       23
<PAGE>   25
 
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
EXHIBIT NO.                                   EXHIBIT
-----------                                   -------
<S>            <C>  <C>
 3.1(17)       --   Certificate of Incorporation, as amended
 3.2(1)        --   By-Laws, as amended
10.1(15)       --   Form of Management Contract with Pioneer Mutual Funds
10.2(15)       --   Form of Investment Company Service Agreement with Pioneer
                    Mutual Funds
10.3(1)(7)     --   Retirement Benefit Plan and Trust
10.4(5)(7)     --   1988 Stock Option Plan, as amended
10.5(5)        --   Lease, dated as of July 3, 1991, between the Trustees of 60
                    State Street and the Company
10.6(2)(7)     --   Form of Employment Agreements with Regional Vice Presidents
10.7(22)       --   Revised Form of Underwriting Contract with Pioneer Funds
10.8(3)(7)     --   1990 Restricted Stock Plan
10.9(4)        --   Deed of Warranty, dated December 3, 1987, between the
                    Government of Republic of Ghana, Teberebie Goldfields
                    Limited and The Pioneer Group, Inc.
10.10(4)       --   Lease, dated February 2, 1988, between the Government of the
                    Republic of Ghana and Teberebie Goldfields Limited
10.11(4)       --   Map of Mining Operations in Tarkwa, Ghana
10.12(6)       --   Refining Agreement, dated as of August 23, 1993, between
                    Teberebie Goldfields Limited and Metalor
10.13(6)       --   OPIC Contract of Insurance Against Inconvertibility,
                    Expropriation and Political Violence between OPIC and
                    Pioneer Goldfields Limited, dated August 12, 1993
10.14(6)       --   Credit Agreement, dated as of June 1, 1993, between
                    Teberebie Goldfields Limited and Skandinaviska Enskilda
                    Banken
10.15(8)       --   Agreement, dated May 10, 1994, between Teberebie Goldfields
                    Limited and Johnson Matthey PLC
10.16(8)       --   Contract, dated May 30, 1994, among Timber Harvesting
                    Equipment Sales, Inc., Joint-Stock Company "Forest-Starma"
                    and the Company
10.17(8)       --   Contract, dated August 4, 1994, among Morbark Northwest,
                    Inc., Joint-Stock Company "Forest-Starma" and the Company
10.18(8)       --   Contract, dated May 25, 1994, among Caterpillar Overseas
                    S.A., Joint-Stock Company "Forest Starma" and the Company
10.19(8)       --   OPIC Contract of Insurance Against Business Income Loss
                    between OPIC and the Company, effective September 30, 1992,
                    as amended (No. D581)
10.20(8)       --   OPIC Contract of Insurance Against Business Income Loss
                    between OPIC and the Company, effective September 30, 1992,
                    as amended (No. D582)
10.21(8)       --   OPIC Contract of Insurance Against Inconvertibility,
                    Expropriation and Political Violence between OPIC and the
                    Company, effective September 30, 1992 as amended (No. D547)
10.22(8)       --   OPIC Contract of Insurance Against Inconvertibility,
                    Expropriation and Political Violence between OPIC and the
                    Company, effective September 30, 1992 (No. D545)
10.23(8)       --   Consulting Agreement, dated as of January 2, 1995, between
                    the Company and Pioneer First Polish Trust Fund Joint Stock
                    Company ("Pioneer Poland")
10.24(8)       --   Services Contract, dated January 1, 1994, between Pioneering
                    Services Corporation and Financial Services Limited
10.25(8)       --   Agreement, dated June 25, 1992, between Pioneer Poland and
                    Bank Polska Kasa Opieka S.A. ("Bank Pekao")
10.26(8)       --   Agreement, dated as of June 25, 1992, between Bank Pekao and
                    Pioneer International Corporation
</TABLE>
 

                                       24
<PAGE>   26
 
<TABLE>
<CAPTION>
EXHIBIT NO.                                   EXHIBIT
-----------                                   -------
<S>            <C>  <C>
10.27(8)       --   Agreement, dated June 25, 1992, between Bank Pekao and
                    Pioneer Poland
10.28(8)       --   Agreement, dated September 24, 1992, between Pioneer Poland
                    and Financial Services Limited
10.29(9)       --   Master Share Purchase Agreement dated as of April 7, 1995 by
                    and among Pioneer Omega, Inc. and First Voucher Fund
10.30(9)       --   Agreement dated as of April 7, 1995 by and among Pioneer
                    Omega, Inc. and DOM Investment Company
10.31(9)       --   Agreement dated as of April 7, 1995 by and among Pioneer
                    Omega, Inc. and Moscow International Business Centre Limited
10.32(9)       --   Stockholders Agreement dated as of April 11, 1995 by and
                    among the Company and Moscow International Business Centre
                    Limited
10.33(10)      --   Collective Agreement dated as of July 3, 1995 between
                    Teberebie Goldfields Limited and the Ghana Mineworkers Union
                    of T.U.C.
10.34(11)      --   Contract of Insurance Against Incontrovertibility,
                    Expropriation and Political Violence dated September 29,
                    1995 between the Overseas Private Investment Corporation and
                    the Company
10.35(7)(12)   --   1995 Restricted Stock Plan
10.36(12)      --   Credit Agreement between Teberebie Goldfields Limited and
                    Skandinaviska Enskilda Banken AB dated as of March 11, 1996
10.37(7)(13)   --   1995 Employee Stock Purchase Plan
10.38(13)      --   Loan Agreement dated as of April 23, 1996, by and between
                    Teberebie Goldfields Limited and Caterpillar Financial
                    Services Corporation
10.39(13)      --   Chattel Mortgage dated as of April 23, 1996, by and between
                    Teberebie Goldfields Limited and Caterpillar Financial
                    Services Corporation
10.40(13)      --   Credit Agreement dated as of June 6, 1996, by and among the
                    Company, Certain of its subsidiaries, the Lenders and The
                    First National Bank of Boston, as agent for itself and the
                    other Lenders
10.41(13)      --   Loan Agreement dated as of May 16, 1996, by and between
                    Teberebie Goldfields Limited and Caterpillar Financial
                    Corporation
10.42(14)      --   Sublease dated as of August 15, 1996, between the Company
                    and Citizens Financial Group, Inc.
10.43(16)      --   Subscription Agreement dated as of October 16, 1996, between
                    Pioneer First Russia, Inc. and International Finance
                    Corporation
10.44(16)      --   Shareholders Agreement dated as of October 16, 1996, among
                    Pioneer Omega, Inc. and Pioneer First Russia, Inc. and
                    International Finance Corporation
10.45(16)      --   Put and Call Agreement dated as of October 16, 1996, among
                    Pioneer First Russia, Inc. and Pioneer Omega, Inc. and
                    International Finance Corporation
10.46(16)      --   Credit Facility Agreement dated 19th December, 1996, for
                    Pioneer Real Estate Advisors, Inc. provided by Banque
                    Societe Generale Vostok
10.47(16)      --   First Amendment to Lease dated as of the 31st day of January
                    1994, by and between the Trustees of 60 State Street Trust
                    and the Company
10.48(16)      --   Second Amendment to Lease dated as of September 30, 1996, by
                    and between The Trustees of 60 State Street Trust and the
                    Company
10.49(16)      --   Third Amendment to Lease dated as of November 15, 1996, by
                    and between The Trustees of 60 State Street Trust and the
                    Company
10.50(16)      --   Finance Agreement dated as of October 25, 1996, between
                    Teberebie Goldfields Limited and the Overseas Private
                    Investment Corporation
10.51(16)      --   Project Completion Agreement dated as of October 28, 1996,
                    among Teberebie Goldfields Limited, the Company and Overseas
                    Private Investment Corporation
</TABLE>
 
                                       25
<PAGE>   27
 
<TABLE>
<CAPTION>
EXHIBIT NO.                                   EXHIBIT
-----------                                   -------
<S>            <C>  <C>
10.52(16)      --   Overseas Private Investment Corporation Contract of
                    Insurance Against Inconvertibility, Expropriation and
                    Political Violence between the Overseas Private Investment
                    Corporation and Pioneer Omega, Inc.
10.53(17)      --   Finance Agreement between Closed Joint-Stock Company
                    "Forest-Starma" and Overseas Private Investment Corporation
                    dated as of December 21, 1995
10.54(17)      --   Project Completion Agreement among Closed Joint-Stock
                    Company "Forest-Starma", the Company, International
                    Joint-Stock Company "Starma Holding" and Overseas Private
                    Investment Corporation dated as of December 21, 1995
10.55(17)      --   Closed Joint-Stock Company "Forest-Starma" Promissory Note
                    in the principal amount of $9.3 million dated as of July 1,
                    1996
10.56(17)      --   Amendment to Finance Agreement dated as of June 24, 1996
                    between Closed Joint-Stock Company "Forest-Starma" and
                    Overseas Private Investment Corporation
10.57(17)      --   Amendment No. 1 to Credit Agreement dated as of April 23,
                    1997, among the Company, certain of its subsidiaries, the
                    Lenders and The First National Bank of Boston
10.58(18)      --   Amendment No. 2 to Credit Agreement dated as of June 30,
                    1997, by and among the Company, certain of its subsidiaries,
                    the Lenders and BankBoston, N.A. f/k/a/ The First National
                    Bank of Boston
10.59(18)(7)   --   1997 Stock Incentive Plan
10.60(19)      --   Note Agreement dated as August 14, 1997 by and between the
                    Company and The Travelers Insurance Company
10.61(20)      --   Amendment No. 3 to Credit Agreement dated as of June 30,
                    1997, by and among the Company, certain of its subsidiaries,
                    the Lenders and BankBoston, N.A. f/k/a/ The First National
                    Bank of Boston
10.62(20)      --   Investment Agreement dated as of February 11, 1998 by and
                    between AS Eesti Forekspank and ZAO Pioneer Bank
10.63(20)      --   Fourth Amendment to Lease dated as of September 11, 1997, by
                    and between The Trustees of 60 State Street Trust and the
                    Company
10.64(21)      --   Amendment No. 4 to Credit Agreement dated as of April 21,
                    1998, by and among the Company, certain of its subsidiaries,
                    the Lenders and BankBoston, N.A. f/k/a The First National
                    Bank of Boston
10.65(21)      --   Amendment No. 5 to Credit Agreement dated as of July 21,
                    1998, by and among the Company, certain of its subsidiaries,
                    the Lenders and BankBoston, N.A. f/k/a The First National
                    Bank of Boston
10.66(21)      --   Amendment No. 6 to Credit Agreement dated as of September
                    30, 1998, by and among the Company, certain of its
                    subsidiaries, the Lenders and BankBoston, N.A. f/k/a The
                    First National Bank of Boston
10.67(21)      --   Supplemental Agreement No. 1 to Note Agreement dated as of
                    September 30, 1998, by and between the Company and Travelers
                    Insurance Company
10.68(21)      --   Supplemental Agreement No. 2 to Note Agreement dated as of
                    September 30, 1998, by and between the Company and Travelers
                    Insurance Company
10.69(21)      --   Pioneer Program Master Agreement dated as of September 30,
                    1998, among the Company, certain of its subsidiaries, PLT
                    Finance, L.P., Putnam, Lovell, DeGuardiola & Thornton, Inc.,
                    and Bankers Trust Company (Confidential Treatment Granted)
10.70*         --   Amendment No. 7 to Credit Agreement dated as of December 30,
                    1998, by and among the Company, certain of its subsidiaries,
                    the Lenders and BankBoston, N.A. f/k/a The First National
                    Bank of Boston
10.71*         --   Supplemental Agreement No. 3 to Note Agreement dated as of
                    December 30, 1998, by and between the Company and Travelers
                    Insurance Company
10.72*(7)      --   1998 Deferred Compensation Plan
</TABLE>

 
                                       26
<PAGE>   28
 
<TABLE>
<CAPTION>
EXHIBIT NO.                                   EXHIBIT
-----------                                   -------
<S>            <C>  <C>
10.73*         --   Agreement dated as of December 7, 1998 between Closed Joint
                    Stock Company "Forest Starma" and Rayonier Inc., and
                    Amendment No. 1 thereto.
10.74*         --   Fifth Amendment to Lease dated as of December 31, 1997, by
                    and between The Trustees of 60 State Street Trust and the
                    Company
10.75*         --   Sixth Amendment to Lease dated as of October 5, 1998, by and
                    between the Trustees of 60 State Street Trust and the
                    Company
10.76*         --   Sublease Agreement dated as of March 5, 1999, by and between
                    Leerink, Swann & Company and the Company
10.77*         --   Asset Purchase Agreement dated as of March 18, 1999, by and
                    between PCC Transfer Limited Partnership, Pioneer Capital
                    Corporation, Pioneer Ventures Limited Partnership and The
                    Pioneer Group, Inc.
13*            --   1998 Annual Report to Stockholders (which is not deemed
                    "filed" except with respect to the portions specifically
                    incorporated herein by reference)
21*            --   Subsidiaries
23*            --   Consent of Arthur Andersen LLP
27.98*         --   Financial Data Schedule (1998)
27.97*         --   Financial Data Schedule (1997)
27.96*         --   Financial Data Schedule (1996)
</TABLE>
 
---------------
 
   * Filed herewith
 
 (1) Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1986.
 
 (2) Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1988.
 
 (3) Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1989.
 
 (4) Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1990.
 
 (5) Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1991.
 
 (6) Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1993.
 
 (7) Management contract or compensatory plan or arrangement filed as an exhibit
     to this Form pursuant to Items 14(a) and 14(c) of Form 10-K.
 
 (8) Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1994.
 
 (9) Incorporated herein by reference to the exhibits to the Company's Quarterly
     Report on Form 10-Q for the quarter ended March 31, 1995.
 
(10) Incorporated herein by reference to the exhibits to the Company's Quarterly
     Report on Form 10-Q for the quarter ended June 30, 1995.
 
(11) Incorporated herein by reference to the exhibits to the Company's Quarterly
     Report on Form 10-Q for the quarter ended September 30, 1995.
 
(12) Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1995.
 
(13) Incorporated herein by reference to the exhibits to the Company's Quarterly
     Report on Form 10-Q for the quarter ended June 30, 1996.

 
                                       27
<PAGE>   29
 
(14) Incorporated herein by reference to the exhibits to the Company's Quarterly
     Report on Form 10-Q for the quarter ended September 30, 1996.
 
(15) Incorporated herein by reference to the exhibits to the Registration
     Statement on Form N-1A for the Pioneer Micro Cap Fund (File Nos. 333-18639,
     811-07985) filed December 23, 1996.
 
(16) Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1996.
 
(17) Incorporated herein by reference to the exhibits to the Company's Quarterly
     Report on Form 10-Q for the quarter ended March 31, 1997.
 
(18) Incorporated herein by reference to the exhibits to the Company's Quarterly
     Report on Form 10-Q for the quarter ended June 30, 1997.
 
(19) Incorporated herein by reference to the exhibits to the Company's Quarterly
     Report on Form 10-Q for the quarter ended September 30, 1997.
 
(20) Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1997.
 
(21) Incorporated herein by reference to the exhibits to the Company's Quarterly
     Report on Form 10-Q for the quarter ended September 30, 1998.
 
(22) Incorporated herein by reference to the exhibits to the Registration
     Statement on Form N-1A for the Pioneer Fund (File Nos. 2-25980, 811-07613)
     filed October 30, 1998.
 






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