<PAGE>
DEAR FELLOW SHAREOWNERS,
Pioneer II completed its 26th fiscal year on September 30, 1995. After a slow
start in the final three months of 1994, domestic financial markets improved
significantly, reaching historic levels on numerous occasions in 1995. Your Fund
took part in the market's impressive momentum and turned in a solid performance.
HOW YOUR FUND PERFORMED
For the 12 months ended September 30, 1995, we report the following results for
Pioneer II:
* The Fund's total return was 19.92%, based on net asset value. Total
return represents the change in net asset value per share and assumes the
reinvestment of all distributions at net asset value.
* Dividends totaling $0.30, and a capital gains distribution of $1.805,
were paid for the year.
* The Fund's net asset value per share stood at $20.66 on September 30,
1995, versus $19.38 one year earlier, even after the payment of
distributions.
For additional performance information, please turn to page 4.
DOMESTIC MARKETS MOVED AHEAD STRONGLY
AS FISCAL YEAR PROGRESSED
Rising interest rates, brought on by fears of inflation, worked against
financial markets in the United States for the first quarter of your Fund's
fiscal year. The Federal Reserve (the Fed) raised short-term interest rates in
November 1994 to 5.5% in an attempt to quell inflationary concerns. Investors,
however, showed as much apprehension about higher rates as they did toward
inflation. As a result, financial markets lagged, as they had for much of 1994.
Moving into 1995, however, investors began to view the Fed's actions more
favorably, seeing them as a commitment to keep inflation low. When the Fed acted
again in February, raising short-term interest rates to 6%, investors reacted
positively. As inflation remained low and signs of a slowing economy became more
apparent, long-term interest rates moved lower and created a more optimistic
climate for investing. The Fed intervened once again on July 6 -- this time
lowering short-term rates to 5.75% -- to keep the economy from slowing too much.
This latest Fed action also boosted investor spirits, further benefiting
financial markets. Reflecting this, the Dow Jones Industrial Average of 30
large-capitalization stocks gained 27.93% for the year ended September 30, while
the broader-based Standard & Poor's 500 Index returned 29.64%. Stocks of large
technology companies led the market rally, hitting record-high prices. Of
course, with these record levels came heightened volatility, as huge investor
demand for issues created some significant price swings.
Changing interest rates also created volatility, both in the U.S. and overseas.
Emerging markets in particular were affected, especially early in the period
when investors exited these areas and moved back to the U.S. to take advantage
of higher returns. Performance improved as U.S. interest rates moved lower; this
gave other countries the chance to lower their rates to amplify economic growth
and become more attractive to investors. The decline of the U.S. dollar versus
the Japanese yen and German deutschemark also affected markets worldwide. Japan
was particularly sensitive to the weaker dollar, since its exports to the U.S.
comprise such an important part of many business es. As a result, many Japanese
stocks declined in value. The situation improved later in the period, however,
thanks in large part to Germany's decision to lower interest rates. This helped
the dollar rebound and regain ground lost earlier in the period.
<PAGE>
FUND BENEFITED FROM A DIVERSIFIED PORTFOLIO
To pursue Pioneer II's objective of long-term capital growth, your management
looks around the globe to uncover value in individual companies. While the
Fund's holdings primarily are U.S.-based, we also have a number of
investments in overseas markets, which totaled 17% of Pioneer II's portfolio
on September 30, 1995. Our basic selection process for a stock remains the
same regardless of location. We focus on reasonably priced companies with
strong balance sheets, healthy cash flows and earnings, management ownership
in the company, and global operations. We do not consider other investors'
views about a sector to be a reason for investing in -- or avoiding -- an
individual company.
The technology sector offers a good example. Over the past year, Wall Street
became obsessed with technology issues. While many companies did experience high
corporate earnings, stock prices of weak operations also were swept along by the
market's euphoria toward the sector as a whole. Your management selected a
number of companies -- both U.S.- and foreign-based -- including Noki a, Intel,
SAP, Motorola, Allen Group, and Arrow Electronics, we believed exhibited growth
potential based on their individual company merits, not market momentum. When
these holdings appreciated sharply during the year, and began to reach the
target prices we had set, we trimmed the Fund's positions and took gains.
Reflecting this, the Fund's weighting in technology at September 30 stood at
10%, versus 13% 12 months earlier.
The technology holdings, while creating impressive profits for the Fund, did not
match some of the mammoth gains that technology-heavy market indexes saw for the
year. Nonetheless, we think the Fund's broad diversification and our strict buy
and sell discipline remain the best approaches to long-term investing. While
there are times your Fund may not fully participate in a sector's run-up, it
also should not be as susceptible to declines when a single industry falls out
of favor.
RESEARCH TURNED UP OPPORTUNITIES
With so much investor attention on technology stocks, your management found
value in other industries. The Fund's financial stocks turned in strong
results for the year, helped by lower interest rates as 1995 progressed. In
addition, the FDIC's reduction in reserve requirements created substantial
savings that should flow right through to the bottom line of financial
companies. The industry continues to consolidate, with the pace of mergers
and acquisitions picking up for banks of all sizes.
Many of the Fund's financial holdings are trading at seven-to-eight times their
estimated 1996 earnings, with expectations of 10% annual growth; we think their
impressive growth will continue, even if interest rates do not move much lower.
Many of the companies not only are paying attractive dividends, but also are
buying back some of their own stock. Where we already have seen significant
stock price increases, we locked in gains by selling a portion of the Fund's
position. Some of the Fund's best performers in this group over the year were
Washington Mutual, a savings and loan institution, St udent Loan Marketing
Association (Sallie Mae), a leading provider of students loans, and banks such
as Banco De Santander, Norwest Company, BankAmerica, and Mellon Bank.
Durable-products companies turned in mixed results for the year; consumer
spending on major purchases generally remained low, and demand for automobiles
and other durable goods was stagnant. Regardless, we believe the Fund's holdings
in this group are solid in terms of their individual potential. A good example
is Cummins Engine Company, a producer of power systems and engines. Despite
lackluster results this year due to slow vehicle sales, the company has a solid
cash flow, strong balance sheet, significant insider ownership, and global
exposure. These sound fundamentals, as well as a low price-to-earnings ratio,
make Cummins Engine a good investment for your Fund, and we believe the stock's
price eventually will reflect its true worth.
2
<PAGE>
As we moved toward the end of the fiscal year, we increased Pioneer II's
weighting in utility stocks, to 13% of the portfolio at September 30 versus 9%
one year earlier. We added to holdings that our research shows are efficiently
run, low-cost producers, have solid demand, excess cash flow, and are relatively
immune to regulatory difficulties. Investments we especially like fall in the
category of electric companies, including Dominion Resources, Union Electric Co.
and Baltimore Gas & Electric Co.
The accompanying chart shows the diverse sectors represented in Pioneer II's
portfolio at the end of the year.
SECTOR DISTRIBUTION
(Percentage of equity investments as of September 30, 1995)
[PIE CHART]
Capital Goods 7%
Consumer Durables 8%
Consumer Non-Durables 15%
Financials 22%
Services 9%
Technology 10%
Utilities 13%
Basic Industries 12%
Other 4%
LOOKING AHEAD
In 1995, events that hindered financial markets in 1994 were replaced with
significantly improved market conditions, renewing investor optimism in the
United States and, to some extent, overseas regions. While financial markets
cannot sustain such scorching upward drives forever, the year already has well
rewarded investors.
In our last annual report to you we emphasized that successful investors
maintain a long-term outlook. While the Fund and stock market have been strong,
they both will continue to be influenced by near-term conditions and, therefore,
will experience day-to-day price swings. Investors should not try to "time the
market." Instead, consider an investment's long-term potential, just as your
Fund's management does. The current bullish market climate -- just as last
year's bearish environment -- stresses the need for careful stock selection.
While recent results remind us that stock market investing can create impressive
results, they also remind us to keep in mind long-term objectives. We remain
optimistic about the many investment choices that exist globally and are
committed to identifying opportunities we believe will offer shareowners value
and rewarding long-term returns.
Please refer to the following pages for the audited list of the Fund's portfolio
holdings and financial statements as of September 30, 1995. If you have any
questions about your investment in Pioneer II, please contact your investment
representative, or call Pioneer at 1-800-225-6292.
Respectfully,
/S/ John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman and President,
Pioneer II
November 3, 1995
3
<PAGE>
GROWTH OF A $10,000 INVESTMENT
This chart shows the growth of a $10,000 investment made in Pioneer II at public
offering price, compared with the growth of the Standard & Poor's 500 Index.
[LINE GRAPH]
The Standard & Poor's 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange and
the Over-the-Counter market. Index returns assume reinvestment of dividends and,
unlike Fund returns, do not reflect any fees, expenses or sale charges.
Investors cannot directly invest in the Index.
*Reflects deduction of the maximum 5.75% sales charge at the beginning of the
period and assumes reinvestment of all distributions at net asset value.
Past performance does not guarantee future results. Return and principal
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
4
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS -- PIONEER II -- SEPTEMBER 30, 1995
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------- -----
INVESTMENTS IN SECURITIES -- 95.7%
CONVERTIBLE CORPORATE BONDS -- 0.1%
<C> <S> <C>
$ 5,000,000 Essar Gujarat Ltd., 5.5%, 1998 $ 5,000,000
--------------
TOTAL CONVERTIBLE
CORPORATE BONDS
(Cost $5,263,750) . . . . . . . . . . . . . . . . . . . . $ 5,000,000
--------------
SHARES
------
PREFERRED STOCKS -- 0.8%
5,000 Hornbach Holding AG (non-voting) $ 5,435,550
166,500 S.A.P. AG 27,350,381
38,406 Samsung Electronics Co., Ltd. 5,128,973
7,601 Samsung Electronics Co., Ltd.
(New Preferred 1) 982,738
--------------
TOTAL PREFERRED STOCKS
(Cost $10,912,674) . . . . . . . . . . . . . . . . . . . $ 38,897,642
--------------
COMMON STOCKS -- 94.8%
BASIC INDUSTRIES -- 11.4%
CHEMICALS -- 3.0%
515,000 AKZO N.V. (A.D.R.) $ 30,964,375
75,200 AKZO N.V. 9,105,528
28,000 Bayer AG 7,194,692
102,800 Chemicals and Plastics India Ltd.* 382,210
793,000 Cytec Industries Inc.*+ 45,894,875
3,350,000 Methanex Corp.* 22,612,500
14,000,000 Montedison SpA* 9,686,308
3,539,957 Nan Ya Plastics Corp. 6,030,569
40,000 Solvay S.A. 21,455,912
200 Taiwan Styrene Monomer* 310
--------------
$ 153,327,279
--------------
FOREST PRODUCTS -- 1.0%
550,000 Abitibi Price Inc. $ 9,556,250
2,619 Hansol Paper (G.D.S.)* 55,889
2,800,000 Longview Fibre Co.+ 42,700,000
--------------
$ 52,312,139
--------------
IRON & STEEL -- 4.8%
56,375 Acerinox S.A. $ 6,472,851
4,368,300 Allegheny Ludlum Corp.+ 89,004,113
831,900 Amcast Industrial Corp.+ 16,014,075
1,050,000 A.M. Castle & Co.+ 23,362,500
548,100 British Steel Plc (A.D.R.) 15,689,363
9,530,000 China Steel Corp. 7,536,436
117,800 Koninklijke Hoogovens
& Staalfabrieken CVA 4,737,246
1,829,000 National Steel Corp. (Class B)*+ 28,120,875
1,860,000 Nippon Steel Co. * 6,560,124
IRON & STEEL -- CONTINUED
1,993,600 Rouge Steel Co. (Class A)+ $ 46,351,200
--------------
$ 243,848,783
--------------
METALS & MINING -- 2.3%
1,490,000 Ashanti Goldfields Co., Ltd.
(G.D.R.) 144A $ 30,172,500
125,000 Ashanti Goldfields Co., Ltd. (G.D.R.) 2,531,250
480,000 Indian Aluminum Co. (G.D.R.) 3,600,000
3,650,000 Industrias Penoles S.A. 13,435,929
2,100,000 Trinity Industries Leasing Co.+ 65,100,000
--------------
$ 114,839,679
--------------
PAPER PRODUCTS -- 0.0%
6,550 Herlitz AG $ 1,197,550
--------------
TIRE & RUBBER -- 0.3%
305,500 Carlisle Companies, Inc. $ 12,716,438
--------------
TOTAL BASIC INDUSTRIES . . . . . . . . . . . . . . . . . $ 578,241,868
--------------
CAPITAL GOODS -- 6.2%
CONSTRUCTION & ENGINEERING -- 0.5%
884,100 Clayton Homes, Inc. $ 20,997,375
235,500 India Cements Ltd. (G.D.R.) 2,032,365
210,000 Toll Brothers, Inc.* 3,963,750
--------------
$ 26,993,490
--------------
PRODUCER GOODS -- 5.7%
2,144,300 Briggs & Stratton Corp.+ $ 86,308,075
1,760,000 BW/IP, Inc.+ 31,460,000
1,609,300 Donaldson Co.+ 39,629,013
1,100,000 General Signal Corp. 32,175,000
473,900 Indresco, Inc.* 8,470,963
810,000 Komatsu, Ltd. 6,572,356
140,411 Lafarge Coppee S.A. 9,287,117
135,000 Lindberg Corp. 877,500
170,000 Lindsay Manufacturing Co.* 5,652,500
127,000 Pechiney International S.A. 8,171,790
1,085,000 Tecumseh Products Co. (Class A) 52,080,000
162,500 Tecumseh Products Co. (Class B) 7,515,625
--------------
$ 288,199,939
--------------
TOTAL CAPITAL GOODS . . . . . . . . . . . . . . . . . . . $ 315,193,429
--------------
CONSUMER DURABLES -- 7.4%
CONSUMER DURABLES -- 0.3%
679,000 Bassett Furniture Industries, Inc. $ 17,059,875
--------------
$ 17,059,875
--------------
MOTOR VEHICLES -- 7.1%
1,900,000 AGCO Corp.+ $ 86,450,000
117,600 A.O. Smith Corp. 3,042,900
275,000 Ashok Leyland Ltd.* 3,472,563
1,000,000 Breed Technologies Inc. 19,875,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS -- PIONEER II -- SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
MOTOR VEHICLES -- CONTINUED
2,541,200 Cummins Engine Company, Inc.+ $ 97,836,200
400,000 Douglas & Lomason Co.+ 4,900,000
3,930,000 Fiat SpA di Risp 9,144,904
950,000 General Motors Corp. 44,531,250
1,500,000 Hitachi Zosen Corp. 7,400,476
420,000 Honda Motor Co. 7,620,655
335,000 Magna International Inc. (Class A) 15,116,875
175,000 Mahindra & Mahindra Ltd. (G.D.R.)* 2,320,500
45,000 Mannesmann AG 14,898,348
530,000 Stewart & Stevenson Services, Inc. 17,092,500
520,000 Strattec Security Corp.*+ 7,410,000
762,500 AB Volvo (Series B Free) 18,693,846
--------------
$ 359,806,017
--------------
TOTAL CONSUMER DURABLES . . . . . . . . . . . . . . . . . $ 376,865,892
--------------
CONSUMER NON-DURABLES -- 14.4%
AGRICULTURE & FOOD -- 6.9%
2,165,100 Hormel Foods Corp. $ 57,104,513
4,044,200 IBP, Inc.+ 215,859,175
20,000 Nestle S.A. (Registered Shares) 20,763,493
1,092,500 Pioneer Hi-Bred International, Inc. 50,255,000
377,900 Terra Industries Inc. 5,385,075
--------------
$ 349,367,256
--------------
CONSUMER LUXURIES -- 0.8%
1,500,000 Brunswick Corp. $ 30,375,000
180,000 Sega Enterprises, Ltd. 10,403,479
--------------
$ 40,778,479
--------------
HOME PRODUCTS -- 1.7%
410,000 Colgate-Palmolive Co. $ 27,316,250
358,600 First Brands Corp. 16,137,000
1,030,000 Lancaster Colony Corp. 35,020,000
460,000 Sharp Corp. 6,517,719
--------------
$ 84,990,969
--------------
RETAIL FOOD -- 1.4%
4,000 Daiei, Inc. $ 46,075
45,000 Docks de France, S.A. 6,894,086
27,000 Promodes S.A. 6,579,716
1,970,000 SuperValu Stores, Inc. 57,868,750
--------------
$ 71,388,627
--------------
RETAIL NON-FOOD -- 3.0%
175,000 Jostens, Inc. $ 4,112,500
800,000 Mattel, Inc. 23,500,000
2,000,000 Reebok International Ltd. 68,750,000
874,900 Rite Aid Corp. 24,497,200
96,500 Sony Music Entertainment, Inc. 4,465,871
1,065,000 Toys "R" Us, Inc.* 28,755,000
--------------
$ 154,080,571
--------------
TEXTILES -- 0.6%
200 Far East Textile, Ltd. $ 223
290,000 Indian Rayon and Industries
Ltd. (G.D.R.)* 4,060,000
80,000 Precot Mills Ltd.* 330,489
26,667 Precot Mills Ltd. (New)* 110,163
190,000 Raymond Ltd. (G.D.R.)* 3,123,125
1,668,900 Shaw Industries, Inc. 24,616,275
119,150 Taiwan Polypropylene Co., Ltd. 175,682
--------------
$ 32,415,957
--------------
TOTAL CONSUMER NON-DURABLES. . . . . . . . . . . . . . . $ 733,021,859
--------------
ENERGY -- 1.6%
OIL SERVICES -- 1.6%
338,680 Koninklijke Pakhoed N.V., C.V.A. $ 10,012,021
250,000 Reliance Industries (G.D.R.)* 4,532,500
1,021,700 Santa Fe Pacific Pipeline Partners, L.P.+ 37,292,050
1,700,000 YPF S.A. (Class D) (A.D.R.) 30,600,000
--------------
TOTAL ENERGY . . . . . . . . . . . . . . . . . . . . . . $ 82,436,571
--------------
FINANCIAL -- 21.5%
COMMERCIAL BANK -- 9.6%
205,900 Banco Comercial Portugues
S.A. (A.D.R.) $ 2,702,437
1,044,600 Banco De Santander S.A. 44,062,562
125,000 Banco Popular Espanol S.A. 19,563,807
1,600,000 BankAmerica Corp. 95,800,000
50,000 Chemical Banking Corp. 3,043,750
20,000 Commerzbank A.G. 4,588,451
635,000 Espirito Santo Financial Holdings
S.A. (A.D.R.) 7,461,250
1,815,000 First Interstate Bancorp 182,861,250
950,000 First Tennessee National Corp. 52,725,000
975,000 Mellon Bank Corp. 43,509,375
100,000 National City Corp. 3,087,500
641,000 New York Bancorp Inc. 12,499,500
430,000 Norwest Company, Inc. 14,082,500
--------------
$ 485,987,382
--------------
FINANCE/MISCELLANEOUS -- 5.0%
302,500 Bay View Capital Corp. $ 8,167,500
3,065,000 California Federal Bank*+ 48,273,750
273,230 California Federal Bank
Goodwill Certificates* 1,571,073
333,700 The Chase Manhattan Corp. 20,397,413
330,000 Federal National Mortgage Association 34,155,000
1,640,000 GreenPoint Financial Corp. 45,305,000
500,000 Integra Financial Corp. 29,062,500
1,692,000 Jardine Strategic Holdings, Ltd. 4,940,640
140,000 Reliance Bancorp, Inc. 2,047,500
1,105,000 Student Loan Marketing Association 59,670,000
--------------
$ 253,590,376
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS -- PIONEER II -- SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
LIFE INSURANCE -- 0.0%
364,000 Cathay Life Insurance Co. $ 1,607,417
--------------
$ 1,607,417
--------------
INSURANCE-GENERAL -- 5.0%
3,100,000 AMBAC Inc.+ $ 136,400,000
2,250,000 Istituto Nazionale delle Assicurazioni 3,043,648
1,513,000 MBIA Inc. 106,666,500
4,446 Nuernberger Beteiligungs AG (Series B) 3,985,896
889 Nuernberger Beteiligungs
AG Partright (Series B)* 797,000
3,128 Nuernberger Beteiligungs AG 3,113,427
--------------
$ 254,006,471
--------------
SAVINGS & LOAN -- 1.9%
325,000 Great Western Financial Corp. $ 7,718,750
3,265,000 Washington Mutual, Inc.+ 86,522,500
--------------
$ 94,241,250
--------------
TOTAL FINANCIAL . . . . . . . . . . . . . . . . . . . . . $1,089,432,896
--------------
SERVICES -- 8.4%
HEALTH SERVICES & PERSONAL CARE -- 5.6%
2,935,000 Columbia/HCA Healthcare Corp. $ 142,714,375
730,000 Humana Inc.* 14,691,250
500,000 Lincare Holdings, Inc.* 12,875,000
1,204,600 Service Corp. International 47,129,975
850,000 Tenet Healthcare Corp.* 14,768,750
1,450,000 U.S. Healthcare, Inc. 51,293,750
--------------
$ 283,473,100
--------------
HOTEL & RESTAURANT -- 0.1%
250,000 Indian Hotel Co., Ltd. (G.D.R.)* $ 4,625,000
--------------
PHARMACEUTICALS -- 0.6%
845,000 AB Astra (Series A Free) $ 30,282,589
175,000 Dr. Reddy's Laboratories Ltd. (G.D.R.)* 1,509,813
--------------
$ 31,792,402
--------------
MISCELLANEOUS SERVICES -- 2.1%
2,125,000 American Greetings Corp. (Class A) $ 64,812,500
1,300,000 Kelly Services Inc. (Class A) 34,775,000
39,737 Pinault-Printemps S.A. 8,474,196
--------------
$ 108,061,696
--------------
TOTAL SERVICES. . . . . . . . . . . . . . . . . . . . . . $ 427,952,198
--------------
TECHNOLOGY -- 9.0%
BUSINESS MACHINES -- 2.1%
5,187,030 Acer, Co. $ 12,267,557
338,000 First International Computer, Inc. 450,903
250,000 Hewlett Packard Co. 20,843,750
1,800,000 Stratus Computers, Inc.*+ 47,250,000
475,000 Silicon Graphics, Inc.* 16,328,125
BUSINESS MACHINES -- CONTINUED
800,000 Tandem Computers Inc.* $ 9,800,000
--------------
$ 106,940,335
--------------
ELECTRONICS -- 4.6%
720,000 Adaptec, Inc.* $ 29,700,000
93,500 Allen Organ Co. (Class B) (Non-voting) 4,301,000
112,500 American Superconductor Corp.* 1,490,625
39,200 Analog Devices, Inc.* 1,357,300
1,043,100 Arrow Electronics, Inc.* 56,718,563
280 Delta Electronic Industrial Co., Ltd.* 430
450,000 EMC Corp.* 8,156,250
33,500 Felten & Guillaume Energietechnik AG 6,266,765
620,000 Hitachi, Ltd. 6,825,563
715,000 Intergraph Corp.* 8,669,375
496,667 Leader Universal Holdings Bhd. 1,524,671
450,000 Lockheed Martin Corp. 30,206,250
248,500 MTS Systems Corp.+ 7,020,125
100,000 Newbridge Networks Corp.* 2,937,500
240 Samsung Electronics Co., Ltd.
(G.D.R.) 144A* 26,640
488 Samsung Electronics Co., Ltd.
(G.D.R.) (1 Voting Share)* 51,240
1,216 Samsung Electronics Co., Ltd.
(Sponsored G.D.R.)* 145,920
38,000 Samsung Electronics Co., Ltd. (G.D.S.) 2,622,000
570 Samsung Electronics Co., Ltd.
(New Common Two) 61,562
1,848,000 Storage Technology Corp.* 45,276,000
1,675,800 Taiwan Semiconductor
Manufacturing Co. 6,099,831
4,544,600 Tatung Co., Ltd. 7,607,697
2,387,664 United Microelectronics Corp. 6,485,148
--------------
$ 233,550,455
--------------
PHOTO/INSTRUMENTATION -- 2.3%
600,000 Dionex Corp.*+ $ 31,350,000
820,000 The Perkin-Elmer Corp. 29,212,500
1,025,000 Varian Associates, Inc. 54,325,000
--------------
$ 114,887,500
--------------
TOTAL TECHNOLOGY . . . . . . . . . . . . . . . . . . . . $ 455,378,290
--------------
TRANSPORTATION -- 2.1%
AIR TRANSPORT -- 0.0%
435,587 Modi Luft (Class B) $ 250,639
--------------
RAILROAD & BUS -- 1.6%
1,000,000 CSX Corp. $ 84,125,000
--------------
TRUCKING -- 0.5%
1,767,000 Yellow Corp.+ $ 24,296,250
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS -- PIONEER II -- SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
TRANSPORTATION -- CONTINUED
TOTAL TRANSPORTATION . . . . . . . . . . . . . . . . . . . $ 108,671,889
--------------
UTILITIES -- 12.5%
ELECTRIC UTILITY -- 7.9%
482,100 Allegheny Power Systems, Inc. $ 12,293,550
1,500,000 Baltimore Gas and Electric Co. 38,812,500
400,000 Detroit Edison Co. 12,900,000
4,037,500 Dominion Resources, Inc. 151,910,938
300,000 Empresa Nacional de Electridad S.A. 15,488,183
946,000 Hawaiian Electric Industries, Inc. 35,948,000
1,190,000 Huaneng Power International, Inc.* 20,527,500
415,000 Korea Electric Power Corp. 17,303,671
1,176,000 National Power Plc 4,207,980
1,550,000 SCEcorp 27,512,500
200,000 Unicom Corp. 6,050,000
1,563,500 Union Electric Co. 58,435,812
--------------
$ 401,390,634
--------------
GAS UTILITY -- 1.6%
796,300 MCN Corp. $ 15,726,925
1,317,500 Peoples Energy Corp. 36,231,250
1,513,800 Washington Gas Light Co. 30,086,775
--------------
$ 82,044,950
--------------
TELECOMMUNICATIONS -- 2.8%
1,210,458 Cable & Wireless Plc $ 7,991,783
600,000 L.M. Ericsson Telephone Co. 14,700,000
380,800 Nokia Corp. (Class A) 26,924,981
890,000 Nokia Corp. (Class A) (A.D.R.) 62,077,500
259,144 Royal PTT Nederland N.V. 9,228,891
5,255,000 Telecom Italia Mobile SpA * 8,771,631
5,255,000 Telecom Italia SpA 8,690,110
200,000 Telefonos de Mexico S.A.
(L Shares) (A.D.R.) 6,350,000
--------------
$ 144,734,896
--------------
UTILITY/OTHER -- 0.2%
637,600 United Water Resources, Inc. $ 8,129,400
--------------
TOTAL UTILITIES . . . . . . . . . . . . . . . . . . . . . $ 636,299,880
--------------
MISCELLANEOUS -- 0.3%
CONGLOMERATES & HOLDINGS -- 0.3%
278,315 Jardine Matheson Holdings, Ltd. $ 1,878,626
293,000 Veba AG 11,729,514
--------------
TOTAL MISCELLANEOUS $ 13,608,140
--------------
TOTAL COMMON STOCKS
(Cost $3,936,835,517) $4,817,102,912
--------------
</TABLE>
<TABLE>
<CAPTION>
WARRANTS VALUE
-------- -----
<C> <S> <C>
WARRANTS -- 0.0%
188,000 Jardine Strategic Holdings,
Ltd., 5/2/98* $ 67,680
--------------
TOTAL WARRANTS
(Cost $96,243) $ 67,680
--------------
TOTAL INVESTMENT IN SECURITIES
(Cost $3,953,108,184)(a) $4,861,068,234
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <S> <C>
TEMPORARY CASH INVESTMENTS -- 4.3%
U.S. TREASURY OBLIGATIONS -- 3.1%
$18,000,000 U.S. Treasury Bill, 5.29%, 10/5/95 $ 17,992,440
15,800,000 U.S. Treasury Bill, 5.45%, 10/12/95 15,777,374
15,000,000 U.S. Treasury Bill, 5.42%, 10/19/95 14,963,655
15,000,000 U.S. Treasury Bill, 5.36%, 10/26/95 14,949,180
15,000,000 U.S. Treasury Bill, 5.32%, 11/9/95 14,916,390
15,000,000 U.S. Treasury Bill, 5.41%, 11/16/95 14,901,165
15,000,000 U.S. Treasury Bill, 5.32%, 11/30/95 14,873,865
15,000,000 U.S. Treasury Bill, 5.325%, 12/7/95 14,855,340
15,000,000 U.S. Treasury Bill, 5.295%, 12/14/95 14,837,865
20,000,000 U.S. Treasury Bill, 5.21%, 12/21/95 19,765,760
--------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $157,796,875) $ 157,833,034
--------------
COMMERCIAL PAPER -- 1.2%
$12,477,000 Associates Corp. of North America,
5.70%, 10/2/95 $ 12,496,790
18,078,000 Household Finance Corp.,
6.25%, 10/2/95 18,084,280
14,226,000 Norwest Financial Inc.,
5.72%, 10/3/95 14,237,314
16,040,000 Prudential Funding Corp.,
5.78%, 10/4/95 16,047,733
--------------
TOTAL COMMERCIAL PAPER
(Cost $60,821,000) $ 60,866,117
--------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $218,617,875) $ 218,699,151
--------------
TOTAL INVESTMENT IN SECURITIES AND
TEMPORARY CASH INVESTMENTS-100%
(Cost $4,171,726,059) $5,079,767,385
==============
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS -- PIONEER II -- SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
* Non-income producing security.
+ Investment held by the Fund representing 5% or more of the outstanding
voting stock of such company (see Note 5).
144A Security exempt from registration under Rule 144A of the Securities
Act of 1933.These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,1995,
the value of these amounted to $30,199,140, or 0.6% of total net assets.
(a) At September 30, 1995, the net unrealized gain on investments based on
cost for federal income tax purposes of $3,958,169,155 was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost . . . . . . . . $1,047,657,993
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost overvalue . . . . . . . . $ (144,758,914)
--------------
Net unrealized gain . . . . . . . . . . . . $ 902,899,079
==============
</TABLE>
- --------------------------------------------------------------------------------
Purchases and sales of securities (excluding temporary cash investments) for the
year ended September 30, 1995 aggregated approximately $2,769,812,000 and
$3,053,138,000, respectively.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
BALANCE SHEET -- SEPTEMBER 30, 1995
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash investments
of $218,699) (cost $4,171,726; see Schedule of Investments and Note 1) . . . . . . . $5,079,767
Foreign currencies, at value (Note 1). . . . . . . . . . . . . . . . . . . . . . . . . 23,368
Receivables-
Investment securities sold . . . . . . . . . . . . . . . . . . . . . . . . 50,496
Dividends, interest and foreign taxes withheld (Note 1). . . . . . . . . . . . . . . 8,193
Trust shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,303
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,163,259
----------
LIABILITIES:
Payables-
Investment securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,278
Due to bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,207
Trust shares repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,651
Forward foreign currency settlement contracts-net (Note 1) . . . . . . . . . . . . . 106
Accrued expenses-
Management fees (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316
Other (Notes 2, 3 and 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,738
----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48,296
----------
NET ASSETS:
Paid-in capital (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,830,324
Accumulated undistributed net investment income (Note 1) . . . . . . . . . . . . . . . 36,402
Accumulated undistributed net realized gain on investments and
foreign currency transactions (Note 1) . . . . . . . . . . . . . . . . . . . . . . . 340,416
Net unrealized gain on investments (Note 1) . . . . . . . . . . . . . . . . . . . . . 907,996
Net unrealized loss on forward foreign currency contracts and other
assets and liabilities denominated in foreign currencies (Note 1) . . . . . . . . . (175)
----------
Total net assets (equivalent to $20.66 per share based on
247,541,206 shares outstanding). . . . . . . . . . . . . . . . . . . . . . . . . $5,114,963
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS -- FOR THE YEAR ENDED SEPTEMBER 30, 1995 (DOLLARS IN THOUSANDS)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME (NOTE 1):
Dividends (net of foreign taxes withheld of $1,978)...................................................$114,455
Interest (net of foreign taxes withheld of $112)...................................................... 14,628
--------
Total investment income..........................................................................$129,083
--------
EXPENSES:
Management fees (Note 2)..............................................................................$ 21,051
Transfer fees (Note 3)................................................................................ 10,877
Distribution fees (Note 4)............................................................................ 8,744
Custodian fees........................................................................................ 1,238
Printing.............................................................................................. 563
Accounting (Note 2)................................................................................... 242
Professional fees..................................................................................... 174
Registration fees..................................................................................... 115
Fees and expenses of nonaffiliated trustees........................................................... 58
Miscellaneous......................................................................................... 178
--------
Total expenses...................................................................................$ 43,240
Less fees paid indirectly (Note 6)............................................................... 1,184
--------
Net expenses.....................................................................................$ 42,056
--------
Net investment income........................................................................$ 87,027
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments -- (net of capital gain taxes of $106) (Note 1).......................... $ 409,060
Forward foreign currency contracts and other assets and
liabilities denominated in foreign currencies (Note 1)......................... (6,363) $402,697
--------- --------
Net unrealized gain (loss) from:
Change in net unrealized gain on investments (Note 1).......................... $ 377,751
Change in net unrealized gain on forward foregin currency contracts and other
assets and liabilities denominated in foreign currencies (Notes 1) (609) $377,142
--------- --------
Net gain on investments and foreign currency transactions....................................... $779,839
--------
Net increase in net assets resulting from operations....................................... $866,866
========
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS -- FOR THE YEARS ENDED SEPTEMBER 30, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 1994
---- ----
FROM OPERATIONS:
Net investment income............................................................................... $ 87,027 $ 70,887
Net realized gain on investments and other foreign currency transactions.......................... 402,697 389,305
Change in net unrealized gain on investments and other foreign currency transactions............. 377,142 (144,681)
---------- ----------
Net increase in net assets resulting from operations............................................ 866,866 $ 315,511
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ($0.30 and $0.33 per share, respectively)..................................... $ (71,692) (71,991)
Net realized gain on investments ($1.81 and $2.25 per share, respectively).......................... (415,685) (472,746)
---------- ----------
Decrease in net assets resulting from distributions to shareholders............................... (487,377 $ (544,737)
---------- ----------
FROM TRUST SHARE TRANSACTIONS: Shares
----------------------------
Net proceeds from sale of shares............................. 14,703,193 18,712,024 $ 272,715 $ 361,056
Net asset value of shares issued to shareholders in
reinvestment of dividend distributions..................... 27,336,288 27,805,542 463,968 520,944
Cost of shares repurchased................................... (27,190,398) (25,389,203) (510,434) (491,221)
----------- ----------- ---------- ----------
Net increase in net assets resulting
from trust share transactions............................ 14,849,083 21,128,363 $ 226,249 $ 390,779
=========== =========== ---------- ----------
Net increase in net assets....................................................................... $ 605,738 $ 161,553
NET ASSETS:
Beginning of year.................................................................................. 4,509,225 4,347,672
---------- ----------
End of year (including accumulated undistributed net investment income of
$36,402 and $28,831, respectively)............................................................... $5,114,963 $4,509,225
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- SELECTED DATA FOR A SHARE OUTSTANDING
FOR THE YEARS PRESENTED
- ------------------------------------------------------------------------------------------------------------------------------------
For the Year Ended September 30,
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net asset value,
beginning of
year...... $ 19.38 $ 20.55 $ 18.86 $ 18.22 $ 15.35 $ 21.12 $ 18.29 $ 24.09 $ 18.48 $ 16.65
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Increase (decrease)
from investment
operations:
Net investment
income........... $ 0.35 $ 0.36 $ 0.38 $ 0.44 $ 0.52 $ 0.59 $ 0.65 $ 0.54 $ 0.46 $ 0.43
Net realized and
unrealized gain
(loss) on
investments, and
other foreign
currency
transactions 3.04 1.05 2.85 1.27 3.16 (3.81) 3.84 (3.86) 6.67 3.07
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total increase
(decrease) from
investment
operations..... $ 3.39 $ 1.41 $ 3.23 $ 1.71 $ 3.68 $ (3.22) $ 4.49 $ (3.32) $ 7.13 $ 3.50
Distribution to
shareholders from:
Net investment
income........... (0.30) (0.33) (0.39) (0.47) (0.55) (0.64) (0.62) (0.48) (0.49) (0.52)
Net realized gain.. (1.81) (2.25) (1.15) (0.60) (0.26) (1.91) (1.04) (2.00) (1.03) (1.15)
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net increase (decrease)
in net asset value. $ 1.28 $ (1.17) $ 1.69 $ 0.64 $ 2.87 $ (5.77) $ 2.83 $ (5.80) $ 5.61 $ 1.83
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value,
end of year......... $ 20.66 $ 19.38 $ 20.55 $ 18.86 $ 18.22 $ 15.35 $ 21.12 $ 18.29 $ 24.09 $ 18.48
========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Total return*......... 19.92% 7.37% 18.15% 9.92% 24.61% (17.16%) 26.55% (12.04%) 41.37% 22.77%
Ratio of net
operating expenses
to average net
assets.............. 0.93%** 0.90%+ 0.96%+ 0.94%+ 0.83% 0.75% 0.77% 0.81% 0.75% 0.72%
Ratio of net
investment income to
average net assets.. 1.85%** 1.59%+ 1.89%+ 2.31%+ 3.02% 3.18% 3.31% 3.06% 2.18% 2.43%
Portfolio turnover
rate 63% 68% 66% 64% 46% 42% 34% 30% 26% 29%
Net assets,
end of period
(in thousands)... $5,114,963 $4,509,225 $4,347,672 $3,974,712 $4,039,234 $3,588,735 $4,411,923 $3,724,615 $4,456,459 $2,841,545
Ratios net of
expenses paid
through third
party brokerage/
service and
certain expense
offset arrangements:
Net operating expenses 0.91% 0.90% 0.95% 0.93% -- -- -- -- -- --
Net investment income 1.87% 1.59% 1.90% 2.32% -- -- -- -- -- --
<FN>
*Assumes initial investment at net asset value at the beginning of each year, reinvestment of all distributions, and the complete
redemption of the investment at the net asset value at the end of each year and no sales charges. Total return would be reduced if
sales charges were taken into account.
**Ratios include expenses paid through third party brokerage/service and certain expense offset arrangements.
+Ratios for 1994, 1993 and 1992 have been modified to comply with certain provisions of SEC Release No. 33-7197: Payment for
Investment Company Services with Brokerage Commissions. Ratios of net operating expenses and net investment income to average net
assets prior to 1992 have not been modified as such.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
1. Pioneer II (the Fund) is a Massachusetts business trust registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company.
The following is a summary of significant accounting
policies consistently followed by the Fund, which are in conformity with
those generally accepted in the investment company industry:
A. Security Valuation -- Security transactions are recorded on trade date.
Each day, securities are valued at the last sale price on the principal
exchange where they are traded. Securities that have not traded on the date
of valuation, or securities for which sales prices are not generally
reported, are valued at the mean between the last bid and asked prices.
Securities for which market quotations are not readily available are valued
at their fair values as determined by, or under the direction of, the Board
of Trustees. Trading in foreign securities is substantially completed each
day at various times prior to the close of the New York Stock Exchange. The
values of such securities used in computing the net asset value of the
Fund's shares are determined as of such times. Temporary cash investments
with a maturity of 60 days or less are valued at amortized cost plus
accrued interest, which approximates value. Dividend income is recorded on
the ex-dividend date, except that certain dividends from foreign securities
where the ex-dividend date may have passed are recorded as soon as the Fund
is informed of the ex-dividend date. Interest income is recorded on the
accrual basis, net of unrecoverable foreign taxes withheld at the
applicable country rates.
In addition, net realized gains on securities in certain countries give
rise to capital gains taxes. It is the Fund's policy to provide a reserve
against net unrealized gains for anticipated capital gains taxes on such
securities held by the Fund. For the year ended September 30, 1995, the
Fund paid approximately $106,000 in capital gains taxes on gains realized
on the sale of certain foreign securities.
Gains and losses on sales of investments are calculated on the
"identified cost" method for both financial reporting and federal income
tax purposes. It is the Fund's practice to first select for sale those
securities that have the highest cost and also qualify for long-term
capital gain or loss treatment for tax purposes.
Settlements from litigation and class action suits are recognized when
the Fund acquires an enforceable right to such awards.These settlements are
included in other income to the extent that they are not identifiable with
realized or unrealized losses. Included in net realized gain from
investments is approximately $1,154,000 of class action settlements
received by the Fund during the year ended September 30, 1995.
B. Foreign Currency Translation -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
among other things, the net realized gains and losses on foreign currency
contracts, disposition of foreign currencies and the difference between the
amount of income accrued and the U.S. dollar actually received. Further,
the effects of changes in foreign currency exchange rates on investments
are not segregated in the statement of operations from the effects of
changes in market price of those securities but are included with t he net
realized and unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts -- The Fund enters into forward foreign
currency contracts (contracts) for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or
cross-hedge against either specific investment transactions (settlement
hedges) or portfolio positions (portfolio hedges). All contracts are marked
to market daily at the applicable exchange rates, and any resulting
unrealized gains or losses are recorded in the Fund's financial statements.
The Fund records realized gains and losses at the time a portfolio hedge is
offset by entry into a closing transaction or extinguished by delivery of
the currency. Risks may arise upon entering into these contracts from the
potential
12
<PAGE>
inability of counterparties to meet the terms of the contract and from
unanticipated movements in the value of foreign currencies relative to the
U.S. Dollar. As of September 30, 1995, the Fund had no outstanding
portfolio hedges. At September 30, 1995, the Fund's gross forward foreign
currency settlement contracts receivable and payable were approximately
$8,884,000 and $8,990,000, respectively, resulting in a net payable of
approximately $106,000.
D. Federal Taxes -- It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income and net realized capital gains, if
any, to its shareholders. Therefore, no federal income tax provision is
required.
The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with federal income tax
rules. Therefore, the source of the Fund's distributions may be shown in
the accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
At September 30, 1995, the Fund reclassified from accumulated
undistributed net investment income approximately $1,275,000 and $6,717,000
to paid-in capital and accumulated undistributed net realized gain on
investments and foreign currency transactions, respectively. The
reclassification has no impact on the net asset value of the Fund and is
designed to present the Fund's capital accounts on a tax basis.
E. Trust Shares -- The Fund records sales and repurchases of its trust shares
on trade date. Net losses, if any, as a result of cancellations are
absorbed by Pioneer Funds Distributor, Inc. (PFD), the principal
underwriter for the Fund and an indirect subsidiary of The Pioneer G roup,
Inc. (PGI). PFD earned approximately $1,498,000 in underwriting commissi
ons on the sale of the Fund's trust shares during the year ended September
30, 1995. Distributions to shareholders are recorded as of the ex-dividend
date.
F. Reclassification - During the year ended September 30, 1995, the Fund
reclassified approximately $228,000 from Accumulated undistributed net
investment income to Net unrealized gain on investments. This
reclassification represents the provision for foreign taxes payable on
unrealized capital gains earned on certain foreign securities previously
treated as an operating expense.
2. Pioneering Management Corporation (PMC), the Fund's investment adviser,
manages the Fund's portfolio and is a wholly owned subsidiary of PGI.
Management fees are calculated daily at the annual rate of 0.50% of the
Fund's average daily net assets up to $250 million; 0.48% of the next $50
million; and 0.45% of the excess over $300 million. In addition, under the
management agreement, certain other services and costs, including
accounting, regulatory reporting and insurance premiums, are paid by the
Fund. Included in Accrued expenses-- Other is approximately $25,000 in
accounting fees payable to PMC at September 30, 1995.
3. Pioneering Services Corporation (PSC), a wholly owned subsidiary of PGI,
provides substantially all transfer agent and shareholder services to the
Fund at negotiated rates. Included in Accrued expenses -- Other is
approximately $882,000 in transfer agent fees payable to PSC at September
30, 1995.
4. The Fund adopted a Plan of Distribution (the Plan) that allows for the Fund
to reimburse PFD for expenditures to finance any activities primarily
intended to result in the sale of trust shares. The Plan provides for
reimbursement of such expenditures in an amount not to exceed 0.15% on
qualifying investments in the Fund made prior to August 19, 1991 and 0.25%
on qualifying investments made on or subsequent to that date. Included in
Accrued expenses -- Other is approximately $2,383,000 in distribution fees
payable to PFD at September 30, 1995.
5. The Fund's investments in certain companies may exceed 5% of the
outstanding voting stock. Such companies are deemed affiliates of the Fund
for financial reporting purposes. The following summarizes transactions
with affiliates of the Fund as of September 30, 1995:
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVIDEND
AFFILIATES PURCHASES SALES INCOME VALUE
- ---------- --------- ----- -------- -----
<S> <C> <C> <C> <C>
A.M. Castle & Co. $ 4,776 $ -- $ 461 $1,023,363
AGCO Corp. 65,021 4,900 48 86,450
Allegheny Ludlum Corp. 39,344 -- 1,575 89,004
AMBAC Inc. 8,597 5,021 1,615 136,400
Amcast Industrial Corp. 649 -- 441 16,014
Briggs & Stratton Corp. 8,179 22,593 2,479 86,308
BW/IP, Inc. 594 2,122 746 31,460
California Federal Bank* 23,155 -- -- 48,274
Cummins Engine Co., Inc. 109,941 -- 1,791 97,836
Cytec Industries Inc.* 15,970 5,900 -- 45,895
Dionex Corp.* -- -- -- 31,350
Donaldson Co. 15,701 163 354 39,629
Douglas & Lomason Co. 1,737 -- 160 4,900
IBP, Inc. 45,834 19,504 792 215,859
Longview Fibre Co. 37,048 1,230 857 42,700
MTS Systems Corp. -- 2,637 180 7,020
National Steel Corp. (Class B)* 29,500 -- -- 28,121
New York Bancorp Inc. 11,355 -- 212 12,500
Rouge Steel Co. (Class A) 54,730 -- 100 46,351
Santa Fe Pacific Pipeline Partners, L.P. 19,085 -- 2,065 37,292
Strattec Security Corp.* 5,497 -- -- 7,410
Stratus Computers Inc.* 40,961 -- -- 47,250
Trinity Industries Leasing Co. 68,371 -- 70 65,100
Washington Mutual, Inc. 6,910 29,869 3,092 86,523
Yellow Corp. 17,884 3,136 1,056 24,296
-------- ------- ------- ----------
$630,839 $97,075 $18,094 $1,357,305
======== ======= ======= ==========
<FN>
*Non-income producing security.
</FN>
</TABLE>
6. PMC has entered into certain directed brokerage and expense offset
arrangements resulting in a reduction of the Fund's total expenses. For the
year ended September 30, 1995, custody fees paid with third party brokerage
commissions and transfer agent fees paid in connection with interest earned
on account balances maintained by the transfer agent were approximately
$758,000 and $426,000, respectively.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND THE BOARD OF TRUSTEES OF PIONEER II:
We have audited the accompanying balance sheet of Pioneer II, including the
schedule of investments, as of September 30, 1995, and the related statement of
operations, statements of changes in net assets and financial highlights for the
years presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the finan-cial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Pioneer II as of September 30, 1995, the results of its operations, the changes
in its net assets and financial highlights for the years presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 27, 1995
TAX TREATMENT OF DISTRIBUTIONS MADE DURING THE YEAR ENDED SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
During the fiscal year ended September 30, 1995, the Fund paid the following
distributions:
<TABLE>
<CAPTION>
<C> <S>
Distributions Per Share
--------------------------------------------------------
From Net
To Shareholders Investment From Net
of Record Payment Date Income Realized Gain
- -------------------- -------------------- ------------- ---------------------------------------
Short-term Long-term
-------------------- ----------------
December 20, 1994 December 29, 1994 $0.17 $0.361 $1.444
June 22, 1995 June 30, 1995 $0.13 -- --
---- ------ ------
TOTAL $0.30 $0.361 $1.444
===== ====== ======
On a per share basis, the distributions from net realized gain include
$1.444, which should be reported as long-term capital gain. The remaining $0.361
should be combined with the $0.30 distribution from net investment income for a
total of $0.661, which represents ordinary income.
Corporate shareholders may deduct up to 70% of qualifying dividends
received during the year. For purposes of computing the exclusion, 100% of
distributions from net investment income represents qualifying dividends.
Shareholders who elected to take the Capital Gain Distribution in
additional shares of the Fund should report the distribution as explained above.
The tax cost of the shares received is $16.82 per share.
</TABLE>
TRUSTEES' FEES, PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP
OF TRUSTEES AND OFFICERS (UNAUDITED)
- --------------------------------------------------------------------------------
The aggregate direct remuneration paid by the Fund to nonaffiliated
trustees and officers during the year ended September 30, 1995 was approximately
$54,000, plus expenses incurred in attending trustees meetings of approximately
$4,000. Fees of trustees who are affiliated with or "interested persons" of
Pioneering Management Corporation and Pioneer Funds Distributor, Inc., the
investment adviser and principal underwriter, respectively, of the Fund ($1,000
in 1995), are reimbursed to the Fund by Pioneer Management Corporation in
accordance with the management contract with the Fund. At September 30, 1995,
the trustees and officers of the Fund owned beneficially 76,752 shares of the
Fund (approximately 0.03% of the outstanding shares). The Pioneer Group, Inc. is
a publicly held corporation of which Mr. Cogan, Chairman and President of the
Fund, owned approximately 15% of the outstanding shares of capital stock at
September 30, 1995.
15
<PAGE>
Pioneer II
Annual Report
September 30, 1995
PIONEER II
60 STATE STREET
BOSTON, MASSACHUSETTS
02109
OFFICERS
JOHN F. COGAN, JR., Chairman and President
DAVID D. TRIPPLE, Executive Vice President
FRANCIS J. BOGGAN, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
TRUSTEES
JOHN F. COGAN, JR.
RICHARD H. EGDAHL, M.D.
MARGARET B.W. GRAHAM
JOHN W. KENDRICK
MARGUERITE A. PIRET
DAVID D. TRIPPLE
STEPHEN K. WEST
JOHN WINTHROP
INVESTMENT ADVISER
PIONEERING MANAGEMENT CORPORATION
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
INDEPENDENT PUBLIC ACCOUNTANTS
ARTHUR ANDERSEN LLP
LEGAL COUNSEL
HALE AND DORR
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street
Boston, Massachusetts 02109
- -----------------------------------------------------------------------
Please call Pioneer for information on:
Existing accounts, new accounts,
prospectuses, applications,
and service forms....................... 1-800-225-6292
Fund yields and prices.................. 1-800-225-4321
Telecommunications Device
for the Deaf (TDD)...................... 1-800-225-1997
Toll-free fax........................... 1-800-225-4240
Retirement plans........................ 1-800-622-0176
- -----------------------------------------------------------------------
When distributed to persons who are not shareowners of the Fund, this report
must be accompanied by an official prospectus, which discusses the objectives,
policies and other information concerning the Fund.
1195-2820
Copy Rights Pioneer Funds Distributor, Inc.
