March 11, 1996
PIONEER II
Supplement to Prospectus dated January 26, 1996
The Trustees of Pioneer II (the "Fund") have approved certain changes
to the Fund's operations, including a new management contract with a performance
based management fee. These changes have been submitted for shareholder approval
at a meeting scheduled to be held in April, 1996. If approved by shareholders,
the changes will take effect on May 1, 1996.
EXPENSE INFORMATION
As more fully described below, the Fund has submitted for shareholder
approval a proposed management contract under which the basic rate of management
fee payable to Pioneering Management Corporation ("PMC") would be increased or
decreased based upon the Fund's investment performance relative to the record of
a benchmark securities index. Under the proposed contract, the "Annual Operating
Expenses" and the "Example" shown on pages 2 of the prospectus would change as
set forth below. The "Shareholder Transaction Expenses" shown on page 2 of the
prospectus would not change as a result of the new contract.
The information in the table below is based on the Fund's actual
expenses for the year ended September 30, 1995. Management fees have been
restated to reflect the basic, maximum and minimum fees payable under the
proposed contract. Actual management fees and total operating expenses for the
fiscal year ended September 30, 1995 were 0.45% and 0.93%, respectively, under
the management contract currently in effect. Had the proposed contract been in
effect throughout this period management fees and total operating expenses would
have been the same as shown under the basic fee column below.
Annual Fund Operating Expenses (As a Percentage of Average Net Assets):
Management Fee
Basic Maximum Minimum
Management Fee 0.60% 0.70% 0.50%
12b-1 Fees 0.19% 0.19% 0.19%
Other Expenses (including accounting and transfer
agent fees, custodian fees and printing expenses) 0.29% 0.29% 0.29%
---- ---- ----
Total Operating Expenses 1.08% 1.18% 0.98%
==== ==== ====
Example:
You would pay the following fees and expenses on a $1,000 investment,
assuming a 5% annual return and redemption at the end of each time period:
Management Fee 1 Year 3 Years 5 Years 10 Years
Basic $68 $89 $112 $178
Maximum $69 $92 $117 $189
Minimum $67 $86 $107 $167
The example above assumes the reinvestment of all dividends and
distributions and that the percentage amounts listed above under "Annual
Operating Expenses" remain the same each year.
THE EXAMPLE IS DESIGNED FOR INFORMATION PURPOSES ONLY, AND SHOULD NOT
BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSE OR RETURN. ACTUAL FUND EXPENSES
AND RETURN WILL VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
<PAGE>
MANAGEMENT FEE
Under the proposed management contract, as compensation for its
management related services and certain expenses which PMC incurs on behalf of
the Fund, the Fund would pay PMC a management fee that is comprised of two
components. The first component is a basic fee equal to 0.60% per annum of the
Fund's average daily net assets (the "Basic Fee"). The second component is a
performance fee adjustment.
Computing The Performance Fee Adjustment
The Basic Fee is subject to an upward or downward adjustment, depending
on whether, and to what extent, the investment performance of the Fund for the
performance period exceeds, or is exceeded by, the record of the index
determined by the Fund to be appropriate over the same period. The Trustees have
initially designated the Lipper Growth & Income Funds Index (the "Index") for
this purpose. The performance period consists of the current month and the prior
35 months ("performance period"). Each percentage point of difference (up to a
maximum of +/- 10) is multiplied by a performance adjustment rate of 0.01%.
Thus, the maximum annualized adjustment rate is +/- 0.10%. This performance
comparison is made at the end of each month. An appropriate percentage of this
rate is (based upon the number of days in the current month) then applied to the
Fund's average net assets for the entire performance period, giving a dollar
amount that will be added to (or subtracted from) the Basic Fee.
Because the adjustment to the Basic Fee is based on the comparative
performance of the Fund and the record of the Index, the controlling factor is
not whether Fund performance is up or down, but whether it is up or down more or
less than the record of the Index. Moreover, the comparative investment
performance of the Fund is based solely on the relevant performance period
without regard to the cumulative performance over a longer or shorter period of
time.
From time to time, the Trustees may determine that another securities
index is a more appropriate benchmark for purposes of evaluating the performance
of the Fund. In such event, a successor index may be substituted for the Index
in prospectively calculating the performance based adjustment to the Basic Fee.
However, the Fund's performance relative to the Index will still be used in
calculating the performance adjustment for the performance period prior to the
adoption of the successor index would still be based upon the Fund's performance
compared to the Index.
As indicated above, if approved by shareholders, the proposed contract
with PMC will become effective June 1, 1996. Accordingly, beginning in June,
1996, the Fund will begin paying management fees at a rate equal to the Basic
Fee plus or minus the amount of the performance adjustment for that month and
the preceding thirty-five months. In this regard, the performance adjustment for
the thirty-five month period prior to the effectiveness of the Proposed Contract
would likely -- on the basis of performance since May 1993 -- result in a
negative adjustment to the Basic Fee.
The Basic Fee is computed daily, the performance fee adjustment is calculated
once per month and the entire management fee is paid monthly.
INVESTMENT POLICIES
Changes in the Fund's policy relating to investments in repurchase
agreements and in a number of the fundamental investment restrictions set forth
in the Fund's statement of additional information have also been proposed.
However, none of these changes are expected to have a material effect on the
Fund's current investment operations.
0296-3193
(C) Pioneer Funds Distributor, Inc.
