[Logo]
PIONEER
Pioneer II
SEMIANNUAL REPORT
MARCH 31, 1995
<PAGE>
Dear Fellow Shareowners,
Pioneer II ended the first six months of its 26th fiscal year on March 31, 1995.
During this time, the stock market reached historic levels, thanks in part to
better economic and interest rate conditions. Your Fund's performance reflects
this improvement; after a modest decline in the final three months of 1994, the
Fund bounced back nicely in 1995, lifting its six-month total return into
positive territory.
How Your Fund Performed
For the six months ended March 31, 1995, we report the following for Pioneer II:
o Shareowners received a dividend of $0.17 per share and a capital gains
distribution of $1.81, both paid in December 1994.
o Net asset value per share stood at $17.90 on March 31, versus $19.38 on
September 30, in part reflecting the payment of distributions.
o The Fund's six-month total return was 3.21% based on net asset value, and
-2.71% based on maximum public offering price. Total return represents the
change in share price and assumes the reinvestment of all distributions at
net asset value. By comparison, the Dow Jones Industrial Average (the
Dow), which measures the performance of very large, actively traded
stocks, and the Standard & Poor's 500 Index, a broader indicator of stock
market performance, both returned 9.69%. These unmanaged indexes, after a
lackluster final quarter of 1994, enjoyed an especially robust first three
months of 1995.
Average Annual Total Returns
(as of March 31, 1995)
- --------------------------------------------------------------------------------
Period Net Asset Value Public Offering Price*
- --------------------------------------------------------------------------------
Life-of-Fund
(9/30/69) 14.29% 14.02%
- --------------------------------------------------------------------------------
20 Years 17.12 16.78
- --------------------------------------------------------------------------------
10 Years 11.54 10.88
- --------------------------------------------------------------------------------
5 Years 8.62 7.34
- --------------------------------------------------------------------------------
1 Year 10.54 4.19
- --------------------------------------------------------------------------------
Domestic Stock Market Reached a Milestone
(Several Times)
The Dow crossed the 4000 threshold for the first time in its history on February
23, 1995. Since then, it has continued to move up, closing the period at
4157.68. The 4000 level was an important psychological milestone for many
investors, and its attainment brought added optimism to the stock market. This
enthusiasm carried over into the broader-based Standard & Poor's 500 Index and,
to a lesser extent, smaller-company markets (although investors apparently
preferred more liquid, large-company stocks during most of the six-month
period).
Much of the positive momentum was the result of slowing economic growth. The
Federal Reserve (the Fed), which began raising short-term interest rates early
in 1994 and continued until its most recent hike on February 1, 1995, hoped to
slow the pace of the economy and stem inflation. Recently, investors have begun
seeing the results the Fed had hoped to achieve. Many economic indicators are
trending lower, indicating that the economy and inflation could experience a
"soft landing."
Results in foreign markets were mixed during the period. Most Asian markets,
including Japan, declined in value. The weakening U.S. dollar became a
particularly sensitive issue in Japan, where exports to the U.S. comprise an
important part of many businesses. In Europe, stock market results varied from
country to country; while Germany and Belgium generally performed well, Italy
and Spain declined significantly. High unemployment, slow economic growth and
political problems were just some issues affecting these markets during the
period. Finally, in Latin America, the prominent issue remained the state of
Mexico's economy after its decision to devalue the Mexican peso.
--------------------------------------------------------------------
*Reflects deduction of the maximum 5.75% sales charge and assumes reinvestment
of all distributions at net asset value.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
<PAGE>
Portfolio Changes
We added a total of 28 companies to the Fund's domestic portfolio during the
six-month period. One new holding was Cummins Engine Company, Inc., a producer
of power systems. We like this company's cash flow, strong balance sheet,
significant insider ownership, and global exposure -- the exact qualities your
management looks for in a company. We think the stock also is attractively
priced, trading at only six and one half times its estimated 1995 earnings.
Another recent addition was Toys "R" Us. A dominant player in the toy industry,
the company also sports a strong balance sheet and cash flow, and is building an
impressive presence overseas. We mentioned a few other additions in our last
report to you, including AGCO Corp., a manufacturer and distributor of
agricultural equipment, and Rouge Steel Company, a manufacturer and seller of
sheet steel. We remain especially impressed by these companies and added to the
Fund's initial positions over the period.
The Fund's financial holdings continued to perform well, paying attractive
dividends and remaining reasonably priced. While financial stocks experienced a
slight setback in March, they were some of the Fund's strongest performers for
most of the period, thanks in part to steadier interest rates. Examples include
First Tennessee National Corp., Bay View Capital Corp., AMBAC Inc., and MBIA
Inc. These holdings also are experiencing impressive growth rates, and we expect
solid performance from them going forward. We sold PNC Financial after it met
our target price, generating a solid profit for the Fund. Another stock, Coral
Gables Financial, demonstrated the industry's trend toward consolidation and was
taken over by First Union Corp. This acquisition also produced a profit for the
Fund.
The accompanying chart shows the diverse sectors represented in Pioneer II's
portfolio at the end of the six-month period.
Sector Distribution
(as of March 31, 1995)
Capital Goods 8%
Consumer Durables 6%
Consumer Non-Durables 13%
Financial 23%
Services 8%
Technology 13%
Utilities 8%
Basic Industries 9%
Other 6%
Cash 6%
International investments amounted to 12% of Pioneer II's portfolio on March 31,
1995. The poor market performance we saw in many countries continued into 1995
and worked against your Fund. On a more optimistic note, lower prices created
some good values. We think many of these locales have hit -- or will soon hit --
their lowest price valuations. In addition, the growth potential in many
countries is still much greater than in the U.S., suggesting long-term benefits
to investing overseas. Of course, certain risks, such as currency fluctuations,
as well as economic and political instabilities, remain an unavoidable part of
international investing, no matter what the foreign market. But as the Fund's
long-term performance has shown, diversifying internationally has played on
important role in your Fund's past success. We continue to believe that the
trade-off of international risks is worthwhile, especially given the superior
gains we think are possible.
3
<PAGE>
Looking Ahead
The Fed's two increases in short-term interest rates over the past six months
show its continued determination to fight inflation. With the economy finally
showing signs of a slowdown, further interest rate increases should be minimal.
Any additional increases that may occur over the near term should not create the
widespread volatility last year's financial markets experienced. Of course, we
will look for signs of interest rate movements, just as we will watch for other
events that could have an impact on the stock market, such as the weakening
dollar and events overseas.
We will continue to monitor and adjust your Fund's portfolio, adding and holding
companies that display long-term growth characteristics, and eliminating those
that reach our target price or that no longer offer the characteristics we
originally found attractive. We are confident that your Fund's widely
diversified portfolio and exposure to U.S. and international markets will lead
to continued solid long-term performance.
Please refer to the following pages for the audited list of portfolio holdings
as of March 31, 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
May 3, 1995
4
<PAGE>
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SCHEDULE OF INVESTMENTS -- PIONEER II -- March 31, 1995
- --------------------------------------------------------------------------------
Principal
Amount (a) Value
------------------ ------------------
INVESTMENTS IN SECURITIES -- 94.4%
CONVERTIBLE CORPORATE BONDS -- 0.0%
BSES Limited 15.0%, 2002 ............INR 5,075,000 $ 380,556
-----------------
TOTAL CONVERTIBLE
CORPORATE BONDS
(Cost $161,550) .......................... $ 380,556
-----------------
Shares
------------------
PREFERRED STOCKS -- 1.8%
Hornbach Holding AG
(non-voting) .................... 5,000 $ 5,045,372
Nokia Oy. (A.D.R.) .................. 505,000 37,117,500
Nokia Oy. ........................... 120,200 17,463,275
S.A.P. AG ........................... 18,650 14,513,829
Samsung Electronics Co., Ltd. ....... 38,406 2,858,976
Samsung Electronics Co., Ltd.
(New Preferred 1) ............... 7,601 565,795
Storage Technology Corp.
(Convertible) ................... 77,850 3,775,725
-----------------
TOTAL PREFERRED STOCKS
(Cost $60,339,011) ........... $ 81,340,472
-----------------
COMMON STOCKS -- 92.6%
BASIC INDUSTRIES -- 8.8%
Chemicals -- 3.3%
AKZO N.V. (A.D.R.) .................. 605,000 $ 32,972,500
AKZO N.V. ........................... 75,200 8,201,424
Bayer AG ............................ 18,000 4,429,764
Chemicals and Plastics
India Ltd. ...................... 175,000 1,113,433
Cytec Industries Inc.*+ ............. 1,007,500 36,647,812
Methanex Corp.* ..................... 3,025,000 30,060,937
Montedison S.p.A.* .................. 14,000,000 8,891,983
Nan Ya Plastics Corp. ............... 2,974,850 6,547,397
Solvay S.A. ......................... 32,000 15,643,277
Taiwan Styrene Monomer* ............. 1,751,000 7,910,442
-----------------
$ 152,418,969
-----------------
Forest Products -- 0.3%
Longview Fibre Co. .................. 900,000 $ 15,300,000
-----------------
Iron & Steel -- 3.7%
Acerinox S.A. ....................... 56,375 $ 5,414,311
Allegheny Ludlum Corp. .............. 3,280,300 68,476,262
Amcast Industrial Corp.+ ............ 831,900 16,638,000
A.M. Castle & Co.+ .................. 1,050,000 12,993,750
China Steel Corp. . ................. 7,530,000 7,908,473
Koninklijke Nederlandsche
Hoogovens en
Staalfabrieken N.V. ............. 114,000 4,523,107
Outokumpu Oy (Series A) ............. 177,000 $ 2,624,611
Rouge Steel Co.(Class A) ............ 1,993,600 48,843,200
-----------------
$ 167,421,714
-----------------
Metals & Mining -- 1.0%
Ashanti Goldfields Co., Ltd.
(G.D.R.), 144A .................. 1,060,000 $ 26,341,000
Ashanti Goldfields, Co., Ltd.
(G.D.R.) ........................ 25,000 621,250
Eramet S.A. ......................... 55,000 3,637,717
Industrias Penoles S.A.* ............ 3,650,000 7,776,023
Odin Mining & Investment
Co., Ltd.* ...................... 262,500 115,806
Terra Industries Inc. ............... 545,700 5,934,487
-----------------
$ 44,426,283
-----------------
Paper Products -- 0.1%
Herlitz AG .......................... 20,000 $ 3,847,550
-----------------
Tire & Rubber -- 0.4%
Carlisle Companies, Inc. ............ 453,300 $ 16,658,775
-----------------
TOTAL BASIC INDUSTRIES ......... $ 400,073,291
-----------------
CAPITAL GOODS -- 8.0%
Construction & Engineering -- 1.1%
Armstrong World
Industries, Inc. ................ 37,300 $ 1,701,812
Centex Corp. ........................ 160,200 3,864,825
Clayton Homes, Inc .................. 1,370,000 23,461,250
Hunter Douglas N.V. ................. 77,200 3,352,828
Mannesmann AG ....................... 45,000 11,646,098
Toll Brothers, Inc.* ................ 700,000 8,137,500
-----------------
$ 52,164,313
-----------------
Producer Goods -- 6.9%
Briggs & Stratton Corp.+ ............ 2,600,000 $ 95,875,000
BW/IP, Inc.+ ........................ 1,825,000 30,112,500
Daniel Industries, Inc. ............. 359,900 5,173,562
Donaldson Co. ....................... 1,215,000 30,375,000
General Signal Corp. ................ 1,069,500 38,100,938
Indresco Inc.* ...................... 473,900 6,042,225
Ishikawajima-Harima Heavy
Industries Co., Ltd. ............ 1,865,000 8,525,101
Kurita Water Industries Ltd. ........ 342,000 8,348,187
Lafarge Coppee S.A. ................. 124,000 9,334,215
Lindberg Corp. ...................... 160,000 1,080,000
Lindsay Manufacturing Co.* .......... 170,000 5,015,000
Mabuchi Motor Co., Ltd. ............. 118,000 7,948,187
Pechiney International S.A. ......... 127,000 8,452,317
Tecumseh Products Co.
(Class A, non-voting) ........... 1,100,000 54,450,000
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
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SCHEDULE OF INVESTMENTS -- PIONEER II -- March 31, 1995
- --------------------------------------------------------------------------------
Shares Value
------------------ ------------------
Producer Goods -- continued
Tecumseh Products Co.
(Class B) ....................... 100,500 $ 4,974,750
-----------------
$ 313,806,982
-----------------
TOTAL CAPITAL GOODS ............ $ 365,971,295
-----------------
CONSUMER DURABLES -- 5.7%
Consumer Durables -- 0.4%
Bassett Furniture
Industries, Inc. ................ 695,000 $ 18,243,750
Internacional de Ceramica
S.A. (Class B) .................. 1,400 1,877
-----------------
$ 18,245,627
-----------------
Motor Vehicles -- 5.3%
AGCO Corp.+ ......................... 1,650,000 $ 54,656,250
Cummins Engine
Company, Inc. ................... 1,972,800 88,282,800
Douglas & Lomason Co.+ .............. 400,000 6,600,000
Fiat S.p.A. ......................... 3,930,000 9,536,466
General Motors Corp. ................ 950,000 42,037,500
Kansei Corp. ........................ 22,000 177,824
Magna International Inc.
(Class A) ....................... 481,100 18,341,938
Premier Instruments and
Controls Ltd. ................... 50,000 294,265
Premier Instruments and
Controls Ltd. (New) ............. 33,333 196,176
Renault S.A. ........................ 87,500 3,036,512
Strattec Security Corp.*+ ........... 520,000 5,850,000
AB Volvo (Series B Free) ............ 762,500 13,191,505
-----------------
$ 242,201,236
-----------------
TOTAL CONSUMER DURABLES ..................... $ 260,446,863
-----------------
CONSUMER NON-DURABLES -- 13.5%
Agriculture & Food -- 5.5%
Geo. A. Hormel & Co. ................ 947,000 $ 25,687,375
IBP, Inc.+ .......................... 4,147,100 135,299,138
Nestle S.A. (Registered Shares) ..... 20,000 19,397,876
Pioneer Hi-Bred International,
Inc. ............................ 1,985,000 71,460,000
-----------------
$ 251,844,389
-----------------
Consumer Luxuries -- 0.5%
Mattel, Inc. ........................ 1,000,000 $ 24,625,000
-----------------
HOME PRODUCTS -- 1.6%
Colgate Palmolive Co. ............... 500,000 $ 33,000,000
First Brands Corp. .................. 1,000,000 37,625,000
-----------------
$ 70,625,000
-----------------
Retail Food -- 2.0%
Docks de France, S.A. ............... 45,000 $ 6,892,026
Promodes S.A. ....................... 27,000 6,160,969
Seven-Eleven Japan Co., Ltd. ........ 137,500 9,641,623
SuperValu Stores, Inc. .............. 2,517,600 67,345,800
-----------------
$ 90,040,418
-----------------
Retail Non-Food -- 3.1%
Jostens, Inc. ....................... 1,000,000 $ 19,875,000
Kmart Corp. ......................... 1,500,000 20,625,000
Reebok International Ltd. ........... 1,755,000 62,521,875
Rite Aid Corp. ...................... 870,000 21,315,000
Showa Shell Sekiyu K.K. ............. 3,000 24,352
Toys "R" Us, Inc.* .................. 640,000 16,400,000
-----------------
$ 140,761,227
-----------------
Textiles -- 0.8%
Far East Textile Ltd. ............... 648,000 $ 1,005,842
Precot Mills Ltd. ................... 80,000 508,998
Precot Mills Ltd (New) .............. 26,667 169,666
Shaw Industries, Inc. ............... 2,086,800 27,650,100
Shinkong Synthetic
Fibers Co., Ltd. ................ 27,000 47,123
Taiwan Polypropylene Co., Ltd.* ..... 2,383,000 7,453,115
Tainan Spinning Co. ................. 500 755
-----------------
$ 36,835,599
-----------------
TOTAL CONSUMER NON-DURABLES ............... $ 614,731,633
-----------------
ENERGY -- 2.2%
Oil Refining & Drilling -- 0.1%
Production Operators Corp. .......... 129,700 $ 3,469,475
-----------------
Oil Services -- 2.1%
Dresser Industries, Inc. ............ 2,000,000 $ 42,500,000
IHC Caland N.V. ..................... 160,000 3,966,343
Koninklijke Pakhoed
N.V., C.V.A. .................... 327,000 9,037,476
Santa Fe Pacific Pipeline
Partners, L.P. .................. 735,600 27,033,300
YPF Sociedad Anonima S.A.
(A.D.R.) ........................ 825,000 15,675,000
-----------------
$ 98,212,119
-----------------
TOTAL ENERGY ................................ $ 101,681,594
-----------------
FINANCIAL -- 22.7%
Commercial Bank -- 10.3%
Banco Comercial Portugues
S.A. (A.D.R.) ................... 205,900 $ 2,831,125
Banco De Santander S.A. ............. 550,000 19,245,590
Banco De Santander S.A.
(Series E) ...................... 44,600 1,553,620
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
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SCHEDULE OF INVESTMENTS -- PIONEER II -- March 31, 1995
- --------------------------------------------------------------------------------
Shares Value
------------------ ------------------
Commercial Bank -- continued
Banco Espanol de Credito,
S.A. (Banesto)* ................. 151,466 $ 1,031,402
BankAmerica Corp. ................... 1,800,000 86,850,000
Centerbank .......................... 465,000 5,928,750
Development & Commercial
Bank Bhd.* ...................... 1,415,000 3,459,658
First American Corp.--
Tennessee ....................... 260,000 8,710,000
First Interstate Bancorp ............ 1,160,000 91,640,000
First Tennessee National Corp.+ ..... 1,817,000 75,859,750
KeyCorp ............................. 750,000 21,187,500
Mellon Bank Corp. ................... 1,470,000 59,902,500
NationsBank Corp. ................... 700,000 35,525,000
Norwalk Savings Society* ............ 60,000 900,000
Norwest Company, Inc. ............... 1,695,000 43,010,625
Redfed Bancorp, Inc.* ............... 133,000 1,163,750
Reliance Bancorp, Inc. .............. 300,000 3,637,500
St. Paul Bancorp Inc. ............... 335,000 7,202,500
-----------------
$ 469,639,270
-----------------
Finance/Miscellaneous -- 1.0%
Espirito Santo Financial
Holdings S.A. (A.D.R.) .......... 635,000 $ 6,588,125
Federal National Mortgage
Association ..................... 420,000 34,177,500
Jardine Strategic Holdings Ltd. ..... 1,504,000 5,662,304
SCICI Ltd.* ......................... 46,500 123,889
-----------------
$ 46,551,818
-----------------
Life Insurance -- 0.9%
Cathay Life Insurance Co. ........... 1,820,000 $ 11,665,631
Home Beneficial Corp.
(Class B, non-voting) ........... 437,400 8,638,650
U.S. Healthcare, Inc. ............... 475,000 21,018,750
-----------------
$ 41,323,031
-----------------
Insurance-General -- 5.0%
AMBAC Inc.+ ......................... 2,895,300 $ 117,621,562
MBIA Inc. ........................... 1,678,900 105,560,838
Nuernberger Beteiligungs
AG (Series B) ................... 4,446 4,712,276
Nuernberger Beteiligungs AG ......... 2,607 3,065,946
-----------------
$ 230,960,622
-----------------
Savings & Loan -- 5.5%
Bay View Capital Corp.+ ............. 536,000 $ 12,462,000
Brooklyn Bancorp, Inc.* ............. 10,000 322,500
California Federal Bank* ............ 2,073,700 22,033,062
GP Financial Corp. .................. 1,705,000 39,428,125
Great Western Financial Corp. ....... 538,500 10,096,875
Harbor Federal Bancorp, Inc.*+ ...... 125,000 1,500,000
Liberty Bancorp, Inc. ............... 12,500 306,250
Long Island Bancorp Inc. ............ 250,000 4,375,000
MassBank Corp. ...................... 25,500 599,250
New York Bancorp. Inc. .............. 372,800 6,384,200
Queens County Bancorp, Inc. ......... 35,000 988,750
SFFed Corp. ......................... 375,000 6,609,375
Student Loan Marketing
Association ..................... 1,850,000 64,518,750
TR Financial Corp. .................. 30,000 457,500
Washington Mutual, Inc.+ ............ 4,000,000 80,250,000
-----------------
$ 250,331,637
-----------------
TOTAL FINANCIAL ................ $ 1,038,806,378
-----------------
SERVICES -- 8.0%
Broadcasting & Media -- 0.5%
VIACOM, INC.
(Class B, non-voting)* .............. 545,000 $ 24,388,750
-----------------
Health Services & Personal Care -- 4.8%
Columbia/HCA Healthcare
Corp. ........................... 100,000 $ 4,300,000
Healthtrust Inc.* ................... 4,027,500 151,534,687
Tenet Healthcare Corp.* ............. 700,000 11,112,500
Service Corp. International ......... 1,870,000 52,360,000
-----------------
$ 219,307,187
-----------------
Hotel & Restaurant -- 0.0%
Queens Moat Houses Plc*++ ........... 6,725,000 $ 0
-----------------
Pharmaceuticals -- 0.5%
AB Astra (Series A Free) ............ 845,000 $ 22,472,794
-----------------
Miscellaneous Services -- 2.2%
American Greetings
Corp. (Class A) ................. 2,535,000 $ 75,733,125
Cosmo Films Ltd. .................... 75,000 381,749
Getronics N.V. ...................... 180,489 7,184,514
Pinault-Printemps, S.A. ............. 39,737 9,256,252
Sophus Berendsen S.A.
(Series B) ...................... 56,950 5,007,278
-----------------
$ 97,562,918
-----------------
TOTAL SERVICES .............................. $ 363,731,649
-----------------
TECHNOLOGY --13.1%
Business Machines -- 1.8%
Acer Co. ............................ 652,838 $ 2,344,321
Daewoo Precision
Industries Co., Ltd.* ........... 1,801 30,938
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
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SCHEDULE OF INVESTMENTS -- PIONEER II -- March 31, 1995
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Shares Value
------------------ ------------------
Business Machines -- continued
First International Computer
Inc.* ........................... 1,200,000 $ 2,965,446
Hewlett Packard Co. ................. 140,000 16,852,500
Stratus Computers Inc.*+ ............ 1,261,000 39,406,250
Sun Microsystems, Inc.* ............. 605,000 21,023,750
-----------------
$ 82,623,205
-----------------
Electronics -- 7.9%
Adaptec, Inc.* ...................... 770,000 $ 25,410,000
Adobe Systems, Inc. ................. 100,000 4,950,000
Advanced Micro Devices, Inc.* ....... 500,000 16,937,500
The Allen Group Inc. ................ 201,700 4,992,075
Allen Organ Co.
(Class B, non-voting) ........... 95,000 3,918,750
American Superconductor
Corp.* .......................... 112,500 2,221,875
Analog Devices Inc.* ................ 600,000 15,300,000
Arrow Electronics, Inc. ............. 1,132,800 47,719,200
Diebold, Inc. ....................... 30,000 1,068,750
Felten & Guillaume
Energietechnik AG ............... 33,500 7,587,659
Hitachi, Ltd. ....................... 1,300,000 13,471,503
Intel Corp. ......................... 670,000 56,866,250
Intergraph Corp.* ................... 800,000 9,500,000
Leader Universal
Holdings Bhd. ................... 1,046,667 3,632,253
Lockheed Martin Corp.* .............. 150,000 7,931,250
Motorola, Inc. ...................... 300,000 16,387,500
MTS Systems Corp.+ .................. 337,750 8,106,000
National Semiconductor Corp. ........ 625,000 10,937,500
Newbridge Networks Corp. ............ 925,000 30,293,750
Omron Corp.. ........................ 835,000 16,440,415
Samsung Electronics
Co., Ltd. ....................... 2,370 355,317
Samsung Electronics Co., Ltd.
(New Common One) ................ 469 70,318
Storage Technology Corp. ............ 2,200,000 42,075,000
Taiwan Semiconductor
Manufacturing Co. ............... 331,000 2,402,783
Tatung Co. Ltd.* .................... 3,665,000 9,339,995
United Microelectronics Corp. ....... 1,391,776 6,932,467
-----------------
$ 364,848,110
-----------------
Photo/Instrumentation -- 3.4%
Dionex Corp.*+ ...................... 600,000 $ 24,150,000
The Perkin-Elmer Corp. .............. 1,981,500 57,711,187
TDK Corp. ........................... 300,000 13,989,637
Varian Associates, Inc .............. 1,382,000 58,216,750
-----------------
$ 154,067,574
-----------------
TOTAL TECHNOLOGY ............................ $ 601,538,889
-----------------
TRANSPORTATION -- 2.3%
Air Transport -- 0.0%
Modiluft (Class B)* ................. 435,587 $ 484,997
-----------------
Railroad & Bus -- 1.6%
CSX Corp. ........................... 944,500 $ 74,379,375
-----------------
Ships & Shipping -- 0.1%
Great Eastern Shipping Co.* ......... 186,825 $ 291,224
Stena Line AB (Series B Free) ....... 361,000 1,827,092
-----------------
$ 2,118,316
-----------------
Trucking -- 0.6%
Yellow Corp.+ ....................... 1,760,000 $ 28,160,000
-----------------
TOTAL TRANSPORTATION ........................ $ 105,142,688
-----------------
UTILITIES -- 8.0%
Electric Utility -- 5.2%
Baltimore Gas and Electric Co. ...... 1,550,000 $ 36,618,750
Delta Electric Industrial Co.,
Ltd.+ ........................... 794,400 2,392,559
Dominion Resources, Inc. ............ 1,975,000 71,100,000
Hawaiian Electric
Industries, Inc. ................ 844,687 28,297,015
Hidroelectrica del Cantabrico
S.A. ............................ 69,700 1,794,227
Huaneng Power International,
Inc. ............................ 1,190,000 18,891,250
Korea Electric Power Corp.* ......... 415,000 14,528,331
National Power Plc .................. 1,176,000 3,113,220
SCEcorp ............................. 1,550,000 24,218,750
Union Electric Co. .................. 1,025,000 36,259,375
-----------------
$ 237,213,477
-----------------
Gas Utility -- 1.7%
MCN Corp. ........................... 1,000,000 $ 18,375,000
Peoples Energy Corp. ................ 1,241,400 31,035,000
Washington Gas Light Co. ............ 732,900 29,590,837
-----------------
$ 79,000,837
-----------------
Telecommunications -- 1.0%
Cable & Wireless Plc ................ 600,000 $ 3,757,869
MCI Communications Corp ............. 400,000 8,250,000
Royal PTT Nederland N.V. ............ 252,500 8,923,301
Tele-Communications Inc.
(Class A)* ...................... 400,000 8,400,000
Telebras S.A. (A.D.R.), 144A ........ 7,693 203,864
Telecom Italia S.p.A.* .............. 5,255,000 12,257,675
-----------------
$ 41,792,709
-----------------
Utility/Other -- 0.1%
United Water Resources, Inc. ........ 388,500 $ 5,293,312
-----------------
TOTAL UTILITIES ............................. $ 363,300,335
-----------------
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS -- PIONEER II -- March 31, 1995
- --------------------------------------------------------------------------------
Shares Value
------------------ ------------------
MISCELLANEOUS -- 0.3%
Conglomerates & Holdings -- 0.3%
Hualon Corp.* ....................... 447 $ 642
Jardine Matheson
Holdings Ltd. ................... 278,315 2,504,835
Veba AG ............................. 24,300 8,802,686
-----------------
TOTAL MISCELLANEOUS ......................... $ 11,308,163
-----------------
TOTAL COMMON STOCKS
(Cost $3,714,526,163) ..................... $ 4,226,732,778
-----------------
RIGHTS/WARRANTS -- 0.0%
Rights/Warrants
-------------------
Development and Commercial
Bank Warrants, 12/27/99 ......... 353,750 $ 251,104
Jardine Strategic Holdings
Rights, 4/20/95 ................. 188,000 52,896
-----------------
TOTAL RIGHTS/WARRANTS
(Cost $108,945) ........................... $ 304,000
-----------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $3,775,135,669) (b) ................. $ 4,308,757,806
-----------------
TEMPORARY CASH INVESTMENTS -- 5.6%
Principal
Amount (a)
------------------
Commercial Credit Corp.,
5.93%, 4/3/95 ................... $ 4,338,000 $ 4,340,861
Exxon Credit Corp.,
5.94%, 4/3/95 ................... 14,232,000 14,250,817
Commercial Credit Corp.,
5.95%, 4/3/95 ................... 8,000,000 8,003,970
Prudential Funding Corp.,
5.91%, 4/4/95 ................... 11,467,000 11,476,409
Ford Motor Credit Corp.,
5.94%, 4/5/95 ................... 17,782,000 17,814,300
Chevron Credit Corp.,
5.96%, 4/7/95 ................... 15,882,000 15,889,887
Associates Corp. of North
America, 5.95%, 4/10/95 ......... 16,174,000 16,179,356
Norwest Financial Inc.,
6.00%, 4/11/95 .................. 22,197,000 22,200,706
U.S. Treasury Bill,
5.60%, 4/6/95 ................... 15,000,000 14,988,344
U.S. Treasury Bill,
5.54%, 4/13/95 .................. 19,800,000 19,763,436
U.S. Treasury Bill,
5.73%, 5/11/95 .................. 15,000,000 14,904,500
U.S. Treasury Bill,
5.73%, 5/25/95 .................. 19,000,000 18,836,695
U.S. Treasury Bill,
5.71%, 6/1/95 ................... 15,000,000 14,854,871
U.S. Treasury Bill,
5.71%, 6/8/95 ................... 20,000,000 19,784,289
U.S. Treasury Bill,
5.72%, 6/15/95 .................. 15,000,000 14,821,406
U.S. Treasury Bill,
5.70%, 6/22/95 .................. 10,000,000 9,870,167
U.S. Treasury Bill,
5.69%, 6/22/95 .................. 10,000,000 9,870,508
U.S. Treasury Bill,
5.61%, 6/29/95 .................. 10,000,000 9,861,308
-----------------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $257,627,524) ....................... $ 257,711,830
TOTAL INVESTMENTS
IN SECURITIES AND
TEMPORARY CASH
INVESTMENTS--100%
(Cost $4,032,763,193) ..................... $ 4,566,469,636
=================
INR=Indian Rupee
* Represents non-income producing security.
+ Investment held by the Fund representing 5% or more of the outstanding
voting stock of such company (Note 7).
++ Security trading has been suspended as company is in process of
restructuring its debt.
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 March 31,
1995, the value of these securities amounted to $26,544,864 or 0.6% of
total net assets.
(a) Principal amount is stated in U.S. Dollars unless otherwise noted.
(b) At March 31, 1995, the net unrealized appreciation on investments based on
cost for federal income tax purposes of $3,782,921,166 was as follows:
Aggregate gross unrealized appreciation
for all investments in which there
is an excess of value over tax cost ............. $ 684,524,125
Aggregate gross unrealized depreciation
for all investments in which there
is an excess of tax cost over value ............. $ (158,687,485)
--------------
Net unrealized appreciation ..................... $ 525,836,640
==============
- --------------------------------------------------------------------------------
Purchases and sales of investments securities (excluding
temporary cash investments) for the six months ended March 31, 1995, aggregated
approximately $1,376,865,000 and $1,538,903,000, respectively.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
BALANCE SHEET -- March 31, 1995
(Dollars in Thousands Except Per Share Amounts)
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments in securities, at value (including temporary cash investments
of $257,712) (cost $4,032,763; see Schedule of Investments and Notes 1 and 7) ............................. $ 4,566,470
Foreign currencies, at value (Note 1) ....................................................................... 13,311
Receivables--
Dividends, interest and foreign taxes withheld (Note 1) ................................................... 8,609
Trust shares sold ......................................................................................... 1,941
Investment securities sold ................................................................................ 26,196
Forward foreign currency hedge contracts, closed -- net (Notes 1, 5 and 6) ................................ 349
Other ....................................................................................................... 101
-----------
Total assets ........................................................................................... $ 4,616,977
-----------
LIABILITIES:
Payables --
Investment securities purchased ........................................................................... $ 52,445
Trust shares repurchased .................................................................................. 2,111
Due to bank ............................................................................................... 10,694
Forward foreign currency hedge contracts, open -- net (Notes 1, 5 and 6) .................................. 7,241
Accrued expenses --
Management fees (Note 2) .................................................................................. 222
Other (Notes 2, 3 and 4) .................................................................................. 3,730
-----------
Total liabilities ...................................................................................... $ 76,443
-----------
NET ASSETS:
Trust shares (unlimited number of shares authorized), amount
paid in on 253,617,467 shares outstanding (Note 1) ........................................................ $ 3,947,511
Accumulated undistributed net investment income (Note 1) .................................................... 24,306
Accumulated undistributed net realized gain on investments and
foreign currency transactions (Notes 1, 5 and 6) .......................................................... 42,149
Net unrealized gain on investments (Note 1) ................................................................. 533,622
Net unrealized loss on forward foreign currency hedge contracts and other
assets and liabilities denominated in foreign currencies (Notes 1, 5 and 6) ............................... (7,054)
-----------
Total net assets (equivalent to $17.90 per share based on 253,617,467 shares outstanding) ............. $ 4,540,534
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS -- For The Six Months Ended March 31, 1995 (Dollars in Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME (Note 1):
<S> <C>
Dividends (net of foreign taxes withheld of $385) .......................................................... $ 49,543
Interest ................................................................................................... 6,423
--------
Total investment income .............................................................................. $ 55,966
--------
EXPENSES:
Management fees (Note 2) ................................................................................... $ 9,982
Transfer fees (Note 3) ..................................................................................... 5,223
Distribution fees (Note 4) ................................................................................. 4,085
Custodian fees ............................................................................................. 874
Printing ................................................................................................... 146
Accounting (Note 2) ........................................................................................ 103
Professional fees .......................................................................................... 98
Registration fees .......................................................................................... 89
Fees and expenses of nonaffiliated trustees ................................................................ 36
Miscellaneous .............................................................................................. 89
--------
Total expenses ....................................................................................... $ 20,725
--------
Investment income .................................................................................. $ 35,241
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain from:
Investments -- (net of capital gain taxes of $106) (Note 1) ................................ $ 109,800
Forward foreign currency hedge contracts and other assets and
liabilities denominated in foreign currencies (Notes 1, 5 and 6) ....................... 500 $ 110,300
--------- ---------
Net unrealized gain (loss) from:
Increase in net unrealized gain on investments (Note 1) .................................... $ 3,377
Decrease in net unrealized gain on forward foreign currency hedge
contracts and other assets and liabilities denominated in
foreign currencies (Notes 1, 5 and 6) .................................................. (7,488) $ (4,111)
--------- ---------
Net gain on investments and foreign currency transactions .................................................... $ 106,189
---------
Net increase in net assets resulting from operations ..................................................... $ 141,430
=========
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS -- For The Six Months Ended March 31, 1995
and for the Year Ended September 30, 1994 (Dollars in Thousands Except Per Share Amounts)
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended
Ended March 31, September 30,
1995 1994
------------- -----------
<S> <C> <C>
FROM OPERATIONS:
Net investment income .......................................................................... $ 35,241 $ 70,887
Net realized gain on investments and other foreign currency transactions ....................... 110,300 389,305
Decrease in net unrealized gain on investments and other foreign currency transactions ......... (4,111) (144,681)
--------- ---------
Net increase in net assets resulting from operations ......................................... $ 141,430 $ 315,511
--------- ---------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income ($0.17 and $0.33 per share, respectively) .................................... $ (39,150) $ (71,991)
Net realized gain on investments ($1.81 and $2.25 per share, respectively) ..................... (415,682) (472,746)
--------- ---------
Decrease in net assets resulting from distributions to shareholders .......................... (454,832) $(544,737)
--------- ---------
FROM TRUST SHARE TRANSACTIONS: Shares
----------------------------
Net proceeds from sale of shares ....................... 8,307,313 18,712,024 $ 149,026 $ 361,056
Net asset value of shares issued to shareholders in
reinvestment of dividend distributions ............... 25,779,424 27,805,542 433,610 520,944
Cost of shares repurchased ............................. (13,161,393) (25,389,203) (237,925) (491,221)
----------- ----------- ----------- -----------
Net increase in net assets resulting
from trust share transactions ........................ 20,925,344 21,128,363 $ 344,711 $ 390,779
=========== =========== ----------- -----------
Net increase in net assets ......................................................... $ 31,309 $ 161,553
NET ASSETS:
Beginning of period .................................................................. 4,509,225 4,347,672
----------- -----------
End of period (including undistributed investment net income of
$24,306 and $28,831, respectively) ................................................. $ 4,540,534 $ 4,509,225
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- Selected Data For a Share Outstanding
For the Periods Presented
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
Ended For the Year Ended September 30,
March 31, -------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period .......... $19.38 $20.55 $18.86 $18.22 $15.35 $21.12 $18.29
------ ------ ------ ------ ------ ------ ------
Income from investment
operations --
Net investment
income .................... $ 0.15 $ 0.36 $ 0.38 $ 0.44 $ 0.52 $ 0.59 $ 0.65
Net realized and unrealized
gain (loss) on investments,
forward foreign currency
hedge contracts and
other foreign currency
related transactions ...... 0.35 1.05 2.85 1.27 3.16 (3.81) 3.84
------ ------ ------ ------ ------ ------ ------
Total increase (decrease)
from investment
operations ............. $ 0.50 $ 1.41 $ 3.23 $ 1.71 $ 3.68 $(3.22) $ 4.49
Distribution to shareholders
from --
Net investment
income ................. (0.17) (0.33) (0.39) (0.47) (0.55) (0.64) (0.62)
Net realized capital
gains .................. (1.81) (2.25) (1.15) (0.60) (0.26) (1.91) (1.04)
------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
in net asset value .......... $(1.48) $(1.17) $ 1.69 $ 0.64 $ 2.87 $(5.77) $ 2.83
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period ...................... $17.90 $19.38 $20.55 $18.86 $18.22 $15.35 $21.12
====== ====== ====== ====== ====== ====== ======
Total return* ................... 3.21% 7.37% 18.15% 9.92% 24.61% (17.16%) 26.55%
Ratio of net operating
expenses to average
net assets .................. 0.94%+ 0.90%** 0.95%** 0.93%** 0.83% 0.75% 0.77%
Ratio of net investment
income to average
net assets .................. 1.60%+ 1.59%** 1.90%** 2.32%** 3.02% 3.18% 3.31%
Portfolio turnover rate ......... 65%+ 68%** 66% 64% 46% 42% 34%
Net assets, end of period
(in thousands) ..............$4,540,534 $4,509,225 $4,347,672 $3,974,712 $4,039,234 $3,588,735 $4,411,923
</TABLE>
For the Year Ended September 30,
-------------------------------------
1988 1987 1986
-------- -------- --------
Net asset value,
beginning of period .......... $24.09 $18.48 $16.65
------ ------ ------
Income from investment
operations --
Net investment
income .................... $ 0.54 $ 0.46 $ 0.43
Net realized and unrealized
gain (loss) on investments,
forward foreign currency
hedge contracts and
other foreign currency
related transactions ...... (3.86) 6.67 3.07
------ ------ ------
Total increase (decrease)
from investment
operations ............. $(3.32) $ 7.13 $ 3.50
Distribution to shareholders
from --
Net investment
income ................. (0.48) (0.49) (0.52)
Net realized capital
gains .................. (2.00) (1.03) (1.15)
------ ------ ------
Net increase (decrease)
in net asset value .......... $(5.80) $ 5.61 $ 1.83
------ ------ ------
Net asset value, end of
period ...................... $18.29 $24.09 $18.48
====== ====== ======
Total return* ................... (12.04%) 41.37% 22.77%
Ratio of net operating
expenses to average
net assets .................. 0.81% 0.75% 0.72%
Ratio of net investment
income to average
net assets .................. 3.06% 2.18% 2.43%
Portfolio turnover rate ......... 30% 26% 29%
Net assets, end of period
(in thousands) .............. $3,724,615 $4,456,459 $2,841,545
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all dividends and distributions, and the complete
redemption of the investment at the net asset value at the end of each period
and no sales charges. Total return would be reduced if sales charges were
taken into account.
** The ratios of operating expenses and net investment income to average net
assets are net of custodian fees paid by certain third party broker/dealers.
Assuming no payment of custodian fees by third party broker/dealers, ratios
of operating expenses and net investment income to average net assets for the
years ended September 30, 1994,1993 and 1992 would have been:
1994 1993 1992
-------- -------- --------
Ratio of net operating
expenses to average
net assets ........................ 0.90% 0.96% 0.94%
Ratio of net investment
income to average
net assets ........................ 1.59% 1.89% 2.31%
* Annualized
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- March 31, 1995
- --------------------------------------------------------------------------------
1. Pioneer II (the Fund), a Massachusetts business trust, is registered under
the Investment Company Act of 1940 as a diversified, open-end management
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. Investment Securities -- Security transactions are recorded on the date the
securities are purchased or sold. Each day, investments in 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 will be valued at their fair value as determined by, or under the
direction of, the Board of Trustees (the Trustees). Trading in foreign
securities is substantially completed each day at various times prior to the
close of the New York Stock Exchange. The value of such securities used in
computing the net asset value of the Fund's shares is determined as of such
times. Temporary cash investments are stated at cost plus accrued interest,
which approximates market value. Dividend income is recorded on the ex-dividend
date, except that certain dividends from foreign securities that are not known
on the ex-dividend date are recorded as soon as the Fund is informed of the
dividends. Interest income is recorded on the accrual basis net of unrecoverable
foreign taxes withheld at the applicable country rates.
Gains and losses from 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 first to select for sale those securities
that have the highest cost and also qualify for long-term capital gain or loss
treatment for tax purposes. In addition, net realized capital 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 capital gains on
certain foreign securities held by the Fund. The Fund paid approximately
$106,000 in capital gains taxes on gains realized on the sale of foreign
securities during the six months ended March 31, 1995.
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 six months ended March 31, 1995.
B. 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 provisions are required.
The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with income tax rules. Therefore,
the source of a portfolio'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 capital, depending on the type
of book/tax differences that may exist.
The Fund has reclassified foreign currency losses of approximately $844,000
from Accumulated undistributed net realized gain on investments and foreign
currency transactions to Accumulated undistributed net investment income. This
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.
C. Trust Shares -- The Fund records sales and repurchases of its shares on the
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 a wholly owned subsidiary of The Pioneer Group, Inc. (PGI). PFD retained
approximately $824,000 in underwriting commissions on the sale of Fund shares
during the six months ended March 31, 1995. Dividends and distributions to
shareholders are recorded as of the ex-dividend date.
D. 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 (See Note 6).
E. Forward Foreign Currency Hedge Contracts -- The Fund is authorized to enter
into forward foreign
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- March 31, 1995
- --------------------------------------------------------------------------------
currency hedge 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 translation rates, and any resulting unrealized gains or losses are
recorded in the Fund's financial statements. The Fund records realized gains or
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 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 (See Note 5).
F. Reclassification -- At March 31, 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) is 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 average
daily net assets up to $250,000,000, 0.48% of such assets between $250,000,000
and $300,000,000, and 0.45% of such assets in excess of $300,000,000.
In addition, under the management agreement, certain services and costs
including accounting, regulatory reporting and insurance premiums, are paid by
the Fund. Included in Accrued expenses - Other is approximately $36,000 in
accounting fees payable to PMC at March 31, 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
$971,000 in transfer fees payable to PSC at March 31, 1995.
4. The Fund has adopted a Plan of Distribution (the Plan) in accordance with
Rule 12b-1 pursuant to the Investment Company Act of 1940. The Plan generally
provides that the Fund will reimburse PFD for PFD's actual expenditures to
finance activities intended to result in the sale of the Fund's shares or to
provide services to the Fund's shareholders. Expenditures of the Fund pursuant
to the Plan may not exceed 0.25 % of the Fund's average annual net assets. The
Plan provides for service fees to be paid at a rate of 0.15% per annum 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 $1,969,000 in distribution fees payable to PFD
at March 31, 1995.
5. At March 31, 1995, the Fund had entered into various contracts that
contractually obligate the Fund to deliver currencies at specified future dates.
At the maturity of a contract, the Fund may either sell portfolio securities or
make delivery of the currency held. Alternatively, prior to the settlement date
of a contract, the Fund may close out a contract by entering into an offsetting
contract.
Open portfolio hedges at March 31, 1995 were as follows:
<TABLE>
<CAPTION>
Contracts In Exchange Settlement Net Realized
Currency to Deliver For Date Value Loss
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DEM 29,327,665 $ 19,180,645 4/27/95 $ 21,310,467 $(2,129,822)
DEM 35,567,500 25,000,000 6/7/95 25,887,983 (887,983)
DEM 42,015,000 30,000,000 6/8/95 30,583,054 (583,054)
JPY 2,322,750,000 25,000,000 6/7/95 26,954,592 (1,954,592)
JPY 2,299,250,000 25,000,000 6/8/95 26,685,353 (1,685,353)
------------ ------------ -----------
$124,180,645 $131,421,449 $(7,240,804)
============ ============ ===========
</TABLE>
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- March 31, 1995
- --------------------------------------------------------------------------------
Included in Accumulated undistributed net realized gain on investments and
foreign currency transactions is approximately $349,000, which represents the
net realized gain on contracts totaling approximately $60,371,000, which have
been closed prior to the settlement dates with offsetting contracts. The gross
realized gain and loss on such contracts are approximately $483,000 and
$134,000, respectively.
6. Effective October 1, 1994, the Fund adopted Statement of Position 93-4 (SOP
93-4): Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies. In accordance with SOP 93-4, net realized gains and losses
on forward foreign currency hedge transactions and other assets and liabilities
denominated in foreign currencies represent, among other things, the net
realized gains and losses on foreign currency hedge contracts, disposition of
foreign currencies and the difference between the amount of income accrued and
the U.S. Dollar amount actually received. Further, as permitted under SOP 93-4,
the effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the effects of
changes in market price of those securities but are included with the net
realized and unrealized gain or loss on investments in securities.
7. The Fund's investment 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 March 31, 1995 (Dollar amounts in thousands):
<TABLE>
<CAPTION>
Purchases Sales Dividend
Affiliates Cost Cost Income Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AGCO Corp. $ 47,555 $ -- $ 14 $ 54,656
AMBAC Inc. 373 5,021 806 117,622
Amcast Industrial Corp. 649 -- 216 16,638
Bay View Capital Corp. 584 405 162 12,462
Briggs & Stratton Corp. (a) 4,140 5,497 1,300 95,875
BW/IP Inc. 408 -- 360 30,113
A.M. Castle & Co. 4,776 -- 178 12,994
Cytec Industries Inc.* 13,778 1,634 -- 36,648
Delta Electric Industrial Co., Ltd. -- -- -- 2,393
Dionex Corp.* -- -- -- 24,150
Douglas & Lomanson Co. 1,737 -- 80 6,600
First Tennessee National Corp. 7,870 15,091 1,629 75,860
Harbor Federal Bancorp, Inc.* -- -- -- 1,500
IBP, Inc. 22,962 3,161 375 135,299
MTS Systems Corp. -- -- 95 8,106
Strattec Security Corp.* (a) 5,497 -- -- 5,850
Stratus Computers Inc.* 24,332 -- -- 39,406
Washington Mutual, Inc. 6,910 14,031 1,691 80,250
Yellow Corp. 15,048 -- 642 28,160
-------- ------- -------- --------
$156,619 $44,840 $ 7,548 $784,582
======== ======= ======== ========
</TABLE>
*Represents non-income producing security
(a) Sales cost includes approximately $5,497,000 allocated to Strattec Security
Corp. as a result of a spin-off on February 28, 1995
15
<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 (a
Massachusetts business trust) including the schedule of investments, as of March
31, 1995, and the related statement of operations, the statements of changes in
net assets and the financial highlights for the periods 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 financial
statements. Our procedures included confirmation of securities owned as of March
31, 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 March 31, 1995, the results of its operations, the changes in
its net assets and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
April 21, 1995
16
<PAGE>
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.....................................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, sales charges, and other information about the Fund.
0595-2434
(C) Pioneer Funds Distributor, Inc.
