PIONEER OFFERS SMALL-CAP VALUE PRODUCT FOR INSURERS

Plus a Q&A with Pioneer's Ken Fuller, who finds value opportunities abound in the small-cap arena

"While the market is demanding variable products with a complete range ofinvestment styles, most products are loaded with large-cap growth funds andoffer limited investment options in small-cap and value boxes," says TimStegner, vice president, Pioneer Institutional Alliances. "By offeringsmall-cap value to the insurance industry, we hope to help product managersaddress investors' demand for this asset class and meet theirdiversification goals."

And investors' interest in the asset class has increased substantially overthe past year. Over $1.4 billion poured into small-cap value portfoliosduring 2000 (figures through October 2000; Source: Strategic InsightSimfund). This compares to $853 million in sales in all of 1999. Theyear-over-year monthly sales figures are similarly dramatic--$184 million insales during October 2000 as compared to $51 million the year earlierperiod.

Investor interest has been piqued for good reason. According to LipperAnalytics, the performance of small-cap value funds has nearly equaled thatof large-cap growth funds with much lower volatility for the 10-year periodended 12/31/00. During that time period, small-cap value funds in the Lipperuniverse returned an average of 15.61% as compared to 16.96% for theirlarge-cap growth brethren. The risk measure of these returns shows anannualized standard deviation (which measures how an asset's percentagechanges over time have varied from the mean) of 14.35 for the small-capvalue funds in the universe versus 17.38 for the large-cap growth funds.
(Source: Lipper)

"Today, many insurance product manufacturers are rounding out theirportfolio investment options to include a complete array of styles," saidJohn Benvenuto, a consultant at Financial Research Corporation. "The solidperformance of small-cap value funds and growing interest in the asset classmake a strong case for any variable product to include these options."

Q&A WITH KEN FULLER
LEAD MANAGER, SMALL-CAP EQUITY TEAM

Q: What areas of the small-cap universe are offering value now?

A: Equities in general faced an uncertain investment climate over thepast several months. Since August, the market has witnessed a broadening ofinvestor interest-away from technology stocks to other sectors, includinghealth care, financials, and energy. This market rotation means that manytechnology issues, especially small company stocks, are now much moreattractively valued than they were back in March 2000. Other areas of themarket continue to offer compelling investment opportunities as well.

We're continuing to find an abundance of opportunities in manysectors, including energy, consumer and financials (REITs). We have been andare particularly optimistic about natural gas stocks, including explorationand land drilling companies. Barring a recession, we believe there will be ashortage of natural gas in the U.S. over the next several years. Demand isincreasing and will take several years for the supply to catch up.

Q: What is your current outlook for the tech sector?

A: Despite a great upheaval in the technology sector over the past ninemonths, we expect superior growth over the longer term in this sector. Thisgrowth, coupled with attractive stock valuations, has lead us to anapproximate market weighting (versus the Russell 2000 Index) for technologyin our small-cap portfolios.

Two segments of technology we like currently are Internetinfrastructure and sub-wave length lithography. VEECO Instruments (1.89% ofPioneer Small Company Fund on 12/31/00) supplies optical telecom productsfor the Internet. Our favorite lithography stock (related to capitalspending by the semi-conductor industry) is Dupont Photomasks (2.21% on12/31/00).

Q: What does the team look for in a stock and how do sectors play intothat?

A: Our sector weightings are really a natural fall-out of our stockselection process-rather than a goal in itself. We're basically bottom-upstock pickers. Although we consider the broader economic picture, andgeneral sector characteristics, we focus more on company fundamentals whenselecting investments.

We take an issue-by-issue approach, carefully scrutinizing eachcompany-looking for those that are currently out of market favor yet arefinancially healthy, are priced at least 30% below their all time high, andare capable of doubling their stock price within two to three years. I wantto emphasize that the companies we follow are smaller-many do not have anyWall Street coverage worthy of the name "Wall Street," and we are able toget in there and virtually discover them. I like to say that finding acompany with value potential is something like watching a hit Broadway play.If you leave the meeting humming the score, it's likely a stock you want tobuy.

Q: Who makes up Pioneer's small-cap team and how do you work together?

A: Pioneer's small-cap team includes Tom Crowley, Dave Adams, Ann MarieHanley, and me. Between us, we have an average of 13 years of industryexperience and four years with the team. Each of us functions as stockanalyst and portfolio manager-we meet with management, analyze companies,and make buy and sell decisions based on the fundamentals. Together, with anaverage of one face-to-face company meeting per day each, we meet with about1,000 companies every year.

Q: Can you give some examples of stocks you like currently?

A: Indicative of our investment approach is a company called FlemmingCompanies, one of the largest food distribution (to supermarkets etc.) firmsin the U.S. (1.41% on 12/31/00). We became interested in the stock after anew management team took control after a very long period of sub parperformance. The new CEO cut costs, pruned facilities, and improved thebalance sheet. We expect the stock to be discovered in 2001 as earningsgrowth is less masked by special charges. At year end, the stock was sellingat only a modest premium to book value and at a very low price/earningsratio.

A second example is Sunrise Assisted Living, a chain of assistedliving facilities for seniors aged 85 and older (1.83% on 12/31/00). Webecame interested in the stock after its price fell substantially due toindustry concerns of overbuilding. Although the concerns are real, Sunrisehas created a defendable niche, building in urban areas and meeting thedemand for high-end facilities. In addition, the company has a healthy cashflow and a positive long-term outlook.

Q: What is your outlook for the small-cap market?

A: There has been no shortage of opportunities in the small cap arenain recent months, and we don't expect this scenario to change in the nearfuture. Because small company stocks are effective portfolio diversifiers,and offer outstanding growth potential, we believe they deserve a place innearly every investment portfolio. While small cap stocks may presentgreater opportunity for capital appreciation, they also present greaterrisks than large cap issues.

# # # #

Note: Past performance does not guarantee future results. This releaseshould not be deemed as an offer of any fund described within it. There canbe no assurance that markets and stocks will perform as expected.

Pioneer Visionsm variable annuities are issued by Allmerica Financial LifeInsurance and Annuity Company (Pioneer Visionsm 2 and Pioneer C-Visionsm areissued by First Allmerica Financial Life Insurance Company in NY and HI)under contract form numbers A3025-96 (Pioneer Visionsm 2), A3027-98 (PioneerC-Visionsm), and A3028-99 (Pioneer XtraVisionsm) located at 440 LincolnStreet, Worcester, MA 01545. Securities are offered by AllmericaInvestments, Inc., member NASD/SIPC. Allmerica Financial Life and FirstAllmerica Financial Life are solely responsible for their own obligations.Pioneer XtraVision and Pioneer C-Vision may not be available in all states.Pioneer Vision 2 and Pioneer XtraVision are subject to a surrender chargefor the first 7 and 9 years, respectively. Call for a Pioneer Visionvariable annuity information kit, which includes a prospectus detailingcharges and expenses. Read it carefully before you invest or send money.

For information on Pioneer Small Company Fund or any Pioneer mutual fund,please request a free kit from your investment representative or Pioneer at800-225-6292. The kit includes a prospectus describing charges andexpenses, and a quarterly fact sheet containing the latest holdings and fundperformance. Please read the prospectus carefully before you invest or sendmoney. For information on Pioneer Small Company VCT Portfolio, please callPioneer Institutional Alliances at 888-622-5190.

Pioneer Funds Distributor, Inc., is the underwriter for the Pioneer mutualfunds.