[Pioneer logo]
Pioneer II
S E M I A N N U A L R E P O R T 3 / 3 1 / 9 7
<PAGE>
T a b l e o f C o n t e n t s
- -----------------------------------------------------------------------------
Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule of Investments 9
Financial Statements 16
Notes to Financial Statements 23
Report of Independent Public Accountants 29
Trustees, Officers and Service Providers 30
Programs and Services for Pioneer Shareowners 34
The Pioneer Family of Mutual Funds 37
<PAGE>
Pioneer II
LETTER FROM THE CHAIRMAN 3/31/97
D e a r S h a r e o w n e r ,
- --------------------------------------------------------------------------------
Welcome to Pioneer II's semiannual report, covering the six months ended
March 31, 1997. On behalf of the Fund's investment management team, I am
pleased to thank you for your interest in the Fund and to comment briefly on
today's investing environment.
The past six months took stock investors on a rollercoaster ride. The
emotions that fueled the Dow Jones Industrial Average to a record year in
1996 carried over into 1997. Individuals and institutions continued to pour
money into the stock market; over the past six months, $223 billion entered
the stock market through mutual funds alone. The bulk of those assets,
however, have been directed toward one type of stock - that of large,
familiar companies, even though they have become rather pricey. As a rule,
this is not the kind of stock you will find in Pioneer II's value-oriented,
long-sighted portfolio.
As time has passed, investors have grown increasingly uncertain about what
circumstances could trigger a "correction," whether to continue buying stocks
that have already done well or to start looking at stocks that have depressed
prices. From our vantage point, it seems realistic to expect the stock
market's unprecedented upward surge to slow or backtrack at times - at least
for the relatively narrow group of stocks that have led the charge. On the
surface, this may not appear to be an encouraging outlook, but it could
actually be the best possible news for investors in funds like Pioneer II who
have not fully participated in the new enthusiasm for stock investing.
I encourage you to read this report, especially the Portfolio Management
Discussion, to learn more about our endeavors on your behalf. Please contact
your investment representative, or us at 1-800-225-6292, if you have
questions about Pioneer II. Thank you for your support.
Respectfully,
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.,
Chairman and President
1
<PAGE>
Pioneer II
PORTFOLIO SUMMARY 3/31/97
P o r t f o l i o D i v e r s i f i c a t i o n
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
U.S. Common Stocks 92%
Depositary Receipts for International Stocks 5%
International Common Stocks 2%
Short-Term Cash Equivalents 1%
S e c t o r D i s t r i b u t i o n
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
Technology 24%
Financial 21%
Consumer Non-Durables 12%
Basic Industries 11%
Capital Goods 9%
Services 7%
Utilities 7%
Consumer Durables 4%
Energy 3%
Transportation 2%
1 0 L a r g e s t H o l d i n g s
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
1. Arrow Electronics, Inc. 4.25% 6. Intel Corp. 2.36%
2. IBP, Inc. 3.70 7. The Chase Manhattan Corp. 2.35
3. AMBAC Inc. 3.59 8. Brunswick Corp. 2.16
4. Dominion Resources, Inc. 3.06 9. Trinity Industries, Inc. 2.07
5. Washington Mutual, Inc. 2.48 10. AGCO Corp. 2.01
Fund holdings will vary for other periods.
2
<PAGE>
Pioneer II
PERFORMANCE UPDATE 3/31/97 CLASS A SHARES
S h a r e P r i c e s a n d D i s t r i b u t i o n s
- --------------------------------------------------------------------------------
Net Asset Value
per Share 3/31/97 9/30/96
$21.61 $20.94
Distributions per Share Income Short-Term Long-Term
(9/30/96-3/31/97) Dividends Capital Gains Capital Gains
$0.062 $0.236 $1.698
I n v e s t m e n t R e t u r n s
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer II at public offering price, compared to the growth of the
Standard & Poor's 500 Index.
Average Annual Total Returns
(As of March 31, 1997)
Net Asset Public Offering
Period Value Price*
10 Years 10.82% 10.17%
5 Years 14.58 13.23
1 Year 17.09 10.36
* Reflects deduction of the maximum 5.75%
sales charge at the beginning of the
period and assumes rein vestment of
distributions at net asset value.
******************************* [Mountain Chart] ******************************
Growth of $10,000
Standard &
Poors 500
Index Pioneer II*
---------- ----------
3/87 10000 9425
3/88 9163 8834
3/89 10814 10485
3/90 12888 11840
3/91 14739 11755
3/92 16360 13333
3/93 18845 15331
3/94 19124 16196
3/95 22095 17903
3/96 29166 22489
3/97 34939 26332
********************************************************************************
The Standard & Poor's (S&P) 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
sales charges. You cannot invest directly in the Index.
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.
3
<PAGE>
Pioneer II
PERFORMANCE UPDATE 3/31/97 CLASS B SHARES
S h a r e P r i c e s a n d D i s t r i b u t i o n s
- --------------------------------------------------------------------------------
Net Asset Value
per Share 3/31/97 9/30/96
$21.39 $20.89
Distributions per Share Income Short-Term Long-Term
(9/30/96-3/31/97) Dividends Capital Gains Capital Gains
$0.122 $0.236 $1.698
I n v e s t m e n t R e t u r n s
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer II, compared to the growth of the Standard & Poor's 500 Index.
Cumulative Total Returns
(As of March 31, 1997)
If If
Period Held Redeemed*
Life-of-Fund 14.20% 10.20%
(7/1/96)
* Reflects deduction of the maximum
applicable contingent deferred sales
charge (CDSC) at the end of the period and
assumes reinvestment of distributions. The
maximum CDSC of 4% declines over six
years.
******************************* [Mountain Chart] ******************************
Growth of $10,000
Standard &
Poors 500
Index Pioneer II*
---------- ----------
7/1/96 10000 10000
7/96 9468 9304
8/96 9647 9815
9/96 10227 10165
10/96 10494 10433
11/96 11264 11392
12/96 11078 11403
1/97 11757 12081
2/97 11827 12033
3/97 11377 11020
********************************************************************************
The Standard & Poor's (S&P) 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
sales charges. You cannot invest directly in the Index.
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.
4
<PAGE>
Pioneer II
PERFORMANCE UPDATE 3/31/97 CLASS C SHARES
S h a r e P r i c e s a n d D i s t r i b u t i o n s
- --------------------------------------------------------------------------------
Net Asset Value
per Share 3/31/97 9/30/96
$21.41 $20.88
Distributions per Share Income Short-Term Long-Term
(9/30/96-3/31/97) Dividends Capital Gains Capital Gains
$0.086 $0.236 $1.698
I n v e s t m e n t R e t u r n s
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer II, compared to the growth of the Standard & Poor's 500 Index.
Cumulative Total Returns
(As of March 31, 1997)
If If
Period Held Redeemed*
Life-of-Fund 14.10% 13.10%
(7/1/96)
* Reflects deduction of the 1% contingent
deferred sales charge (CDSC) at the end of
the period and assumes reinvestment of
distributions.
******************************* [Mountain Chart] ******************************
Growth of $10,000
Standard &
Poors 500
Index Pioneer II*
---------- ----------
7/1/96 10000 10000
7/96 9468 9304
8/96 9647 9815
9/96 10227 10161
10/96 10494 10433
11/96 11264 11397
12/96 11078 11400
1/97 11757 12077
2/97 11827 12023
3/97 11377 11310
********************************************************************************
The Standard & Poor's (S&P) 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
sales charges. You cannot invest directly in the Index.
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.
5
<PAGE>
Pioneer II
PORTFOLIO MANAGEMENT DISCUSSION 3/31/97
D e a r S h a r e o w n e r ,
- --------------------------------------------------------------------------------
The past six months were an interesting time to be managing a fund like
Pioneer II. Enthusiasm for stocks may never have been more feverish, yet many
segments of the stock market gained only slightly - or even fell in price.
Economic growth accelerated, but apparently without triggering a rise in
inflation. Interest rates rose, but the same concerns that drove up rates
also seemed to promote enthusiasm for stocks. Certainly, this was an
unprecedented period in many ways.
We are pleased to report that Pioneer II turned in good performance during
this time. The Fund's Class A Shares posted a total return of 12.85%, based
on net asset value. The market indices reflected the investing public's
renewed love affair with large, familiar companies - and their continued
disdain for other investment opportunities, even though they might offer
better value, or even better growth. The Dow Jones Industrial Average of 30
large-company stocks returned 13.09%, the Standard & Poor's 500 Index gained
11.24%, and the Nasdaq Composite (which does not include dividend payments)
fell 0.42%.
Diverse Portfolio, Emphasis on Value
Pioneer II's portfolio can include companies of virtually any size, doing
business in almost any industry. We also have the flexibility to invest
outside the United States. No matter which company, industry or country we
select for the Fund, certain basic principles and discipline apply.
We look for real value in a company. That means it's a leading manufacturer,
distributor or inventor - preferably in a fragmented industry that has room
for consolidation. To appeal to us, a business must be in control of its own
destiny and be able to prosper regardless of external economic or political
forces. There must be a strong management team dedicated to providing real
value to stockholders; we rarely invest in companies whose leadership doesn't
own company stock. And, most importantly, we set target purchase and sell
prices we think reflect a company's growth prospects.
6
<PAGE>
Pioneer II
Several of our strategies for Pioneer II proved their worth over the past
six months. Financial companies prospered for much of the period, until
worries about rising interest rates moved to the fore in late February.
Familiar holdings in this group held up well, including Washington Mutual and
Charter One Financial. When the Federal Reserve raised short-term interest
rates 0.25% on March 25, the overall stock market declined and financial
stocks were among the heaviest hit. We had begun trimming the Fund's
financial exposure earlier in the period; many of these stocks had been in
the portfolio for several years, and we locked-in gains on those we believed
were approaching "full" value. Stocks sold include Cal Fed Bancorp (acquired
by First Nationwide Holdings) and MBNA Corp. This discipline helped limit the
effect of the change in interest rates.
We had been increasing the Fund's investment in technology companies, taking
advantage of price declines to add market leaders such as Cisco Systems and
Cascade Communications. In this way, we were able to add companies with
excellent growth prospects and still leave plenty of room for their stock
price to appreciate beyond our purchase price. The technology sector can be
tremendously volatile, although we believe its potential rewards make it
worth the short-term price declines the Fund will occasionally experience.
On the "sell side," Tencor Instruments left the portfolio when it was bought
by KLA; we continue to hold KLA. We did move several other stocks out of the
portfolio because the company's business prospects changed. Ashanti
Goldfields and Cypress Semiconductor fell into this group.
7
<PAGE>
Pioneer II
PORTFOLIO MANAGEMENT DISCUSSION 3/31/97 (continued)
A Long-Tested Approach to Investing
As we move into the second half of the Fund's fiscal year, the portfolio is
filled with companies we believe offer real value - in terms of their market
position, financial situation and management ability. Because we take a
long-term outlook, we are willing to be patient. We don't purchase a stock
because we think it's going to be "hot" over the next six or 12 months. To
our way of thinking, that's a recipe for disaster. We are going to continue
with the disciplined, diligent approach that has brought Pioneer II
shareowners solid long-term results for nearly 30 years.
Respectfully,
/s/ Francis J. Boggan,
Francis J. Boggan,
Portfolio Manager
8
<PAGE>
Pioneer II
SCHEDULE OF INVESTMENTS 3/31/97
Shares Value
COMMON STOCKS - 99.1%
Basic Industries - 10.7%
Aerospace - 0.6%
440,000 Lockheed Martin Corp. $ 36,960,000
---------------
Chemicals - 2.5%
555,000 Akzo NV (Sponsored A.D.R.) $ 38,988,750
760,000 Cytec Industries Inc.* 28,785,000
999,700 Lyondell Petrochemicals Co. 22,868,138
2,095,000 Methanex Corp.* 17,742,136
1,713,000 Mississippi Chemical Corp.+ 40,897,875
---------------
$ 149,281,899
---------------
Containers - 0.3%
780,000 Owens-Illinois, Inc* $ 19,207,500
---------------
Forest Products - 1.1%
118,000 Abitibi-Price Inc. $ 1,711,000
4,186,100 Longview Fibre Co.+ 62,791,500
---------------
$ 64,502,500
---------------
Iron & Steel - 3.1%
1,331,825 A.M. Castle & Co.+ $ 23,140,459
1,271,000 Allegheny Teledyne, Inc. 35,746,875
851,900 Amcast Industrial Corp.+ 19,913,163
2,100,000 British Steel Plc (Sponsored A.D.R.) 55,912,500
2,345,500 National Steel Corp. (Class B)*+ 18,177,625
1,990,500 Rouge Steel Co.+ 31,350,375
---------------
$ 184,240,997
---------------
Metals & Mining - 2.2%
200,000 Newmont Mining Corp. $ 7,750,000
4,010,900 Trinity Industries, Inc.+ 121,831,088
---------------
$ 129,581,088
---------------
Non-Ferrous Metals - 0.7%
570,000 Phelps Dodge Corp. $ 41,681,250
---------------
Precious Metals - 0.2%
250,000 Newmont Gold Co. $ 10,031,250
---------------
Total Basic Industries $ 635,486,484
---------------
The accompanying notes are an integral part of these financial statements 9
<PAGE>
Pioneer II
SCHEDULE OF INVESTMENTS 3/31/97 (continued)
Shares Value
Capital Goods - 8.7%
Construction & Engineering - 4.5%
4,290,000 AGCO Corp.+ $ 118,511,250
2,935,100 Champion Enterprises, Inc.*+ 43,659,613
3,520,700 Clayton Homes, Inc. 44,888,925
458,287 Hanson Plc (Sponsored A.D.R.) 10,426,029
2,979,400 Oakwood Homes Corp.+ 52,511,925
---------------
$ 269,997,742
---------------
Producer Goods - 4.0%
1,943,400 Briggs & Stratton Corp.+ $ 87,210,075
2,494,400 Donaldson Co., Inc.+ 86,680,400
1,907,900 Global Industrial Technologies, Inc.*+ 32,911,275
555,000 Tecumseh Products Co. (non-voting) 31,635,000
---------------
$ 238,436,750
---------------
Telecommunications - 0.2%
220,000 Ascend Communications, Inc.* $ 8,965,000
---------------
Total Capital Goods $ 517,399,492
---------------
Consumer Durables - 3.7%
Motor Vehicles - 3.7%
2,665,000 Breed Technologies, Inc.+ $ 51,967,500
830,200 Chrysler Corp. 24,906,000
1,008,300 Magna International Inc. 50,036,887
1,350,000 Simpson Industries, Inc.+ 13,331,250
1,458,800 A.O. Smith Corp.+ 50,875,650
1,275,000 Stewart & Stevenson Services, Inc. 25,500,000
352,500 Strattec Security Corp.*+ 6,168,750
---------------
Total Consumer Durables $ 222,786,037
---------------
Consumer Non - Durables - 11.8%
Agriculture & Food - 4.3%
8,850,300 IBP, Inc.+ $ 217,938,637
2,651,900 Terra Industries Inc. 37,126,600
---------------
$ 255,065,237
---------------
Consumer Luxuries - 2.1%
4,722,200 Brunswick Corp. $ 126,909,125
---------------
10 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer II
Shares Value
Home Products - 1.9%
700,000 Bassett Furniture Industries, Inc.+ $ 16,800,000
1,715,000 Lancaster Colony Corp.+ 78,890,000
520,000 Tupperware Corp. 17,420,000
---------------
$ 113,110,000
---------------
Retail Food - 0.6%
20,000 Nestle SA (Registered Shares) $ 23,459,798
372,700 SUPERVALU, Inc. 11,087,825
---------------
$ 34,547,623
---------------
Retail Non - Food - 2.5%
500,000 Fuji Photo Film (A.D.R.) $ 16,375,000
1,601,500 J.C. Penney Co., Inc. 76,271,437
2,026,400 Toys "R" Us, Inc.* 56,739,200
---------------
$ 149,385,637
---------------
Textiles/Clothes - 0.4%
1,710,000 Shaw Industries, Inc. $ 21,802,500
---------------
Total Consumer Non - Durables $ 700,820,122
---------------
Energy - 3.1%
Oil & Gas Extraction - 0.5%
360,000 Amoco Corp. $ 31,185,000
---------------
Oil Refining & Drilling - 1.7%
520,000 Atlantic Richfield Co. $ 68,965,000
1,230,000 YPF SA (Sponsored A.D.R.) (Class D) 32,595,000
---------------
$ 101,560,000
---------------
Oil Services - 0.9%
1,272,500 Santa Fe Pacific Pipeline
Partners, L.P.+ $ 49,150,313
---------------
Total Energy $ 181,895,313
---------------
Financial - 20.4%
Commercial Banks - 2.5%
1,075,000 Banco De Santander SA $ 74,190,409
49,451 Banco Popular Espanol SA 8,897,854
730,000 Mellon Bank Corp. 53,107,500
514,050 New York Bancorp Inc. 14,907,450
---------------
$ 151,103,213
---------------
The accompanying notes are an integral part of these financial statements 11
<PAGE>
Pioneer II
SCHEDULE OF INVESTMENTS 3/31/97 (continued)
Shares Value
Financial Services - 6.5%
1,475,000 The Chase Manhattan Corp. $ 138,096,875
1,035,000 Dean Witter Discover & Co. 36,095,625
1,800,000 First USA, Inc. 76,275,000
851,500 GreenPoint Financial Corp. 43,852,250
1,000,000 Merrill Lynch & Co., Inc. 85,875,000
94,200 North American Mortgage Co. 1,919,325
---------------
$ 382,114,075
---------------
Finance/Miscellaneous - 2.8%
1,140,000 Advanta Corp. (Class A)+ $ 30,637,500
1,750,000 Advanta Corp. (Class B) (non-voting) 45,281,250
99,700 Bay View Capital Corp. 5,084,700
6,980 Cal Fed Bancorp Inc. (Secondary Contingent
Litigation Recovery Participation Interests)* 120,405
1,304,000 Countrywide Credit Industries, Inc. 32,274,000
652,500 Franklin Resources, Inc. 33,277,500
1,369,600 Resource Bancshares Mortgage Group, Inc.+ 21,571,200
---------------
$ 168,246,555
---------------
Insurance - 4.5%
3,277,900 AMBAC Inc.+ $ 211,424,550
584,300 MBIA Inc. 56,019,763
---------------
$ 267,444,313
---------------
Savings & Loan - 4.1%
1,964,700 Charter One Financial, Inc $ 86,201,212
580,600 Washington Federal, Inc. 13,208,650
3,020,000 Washington Mutual, Inc. 145,903,750
---------------
$ 245,313,612
---------------
Total Financial $1,214,221,768
---------------
Services - 7.0%
Health & Personal Care - 2.9%
1,702,000 Apria Healthcare Group, Inc.* $ 30,848,750
310,000 Beckman Instruments, Inc. 13,020,000
3,300,000 Columbia/HCA Healthcare Corp. 110,962,500
750,995 Tenet Healthcare Corp.* 18,493,252
---------------
$ 173,324,502
---------------
12 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer II
Shares Value
Broadcasting & Media - 0.2%
1,130,000 Comcast UK Cable Partners Ltd.* $ 12,571,250
---------------
Pharmaceuticals - 1.0%
350,000 Amgen Inc.* $ 19,556,250
21,600 Astra AB (Sponsored A.D.R.) 1,004,400
845,000 Astra AB (Series A Free) 40,912,623
---------------
$ 61,473,273
---------------
Services - 2.9%
3,158,900 Kelly Services Inc. (non-voting) $ 84,500,575
2,380,000 Manpower, Inc. 85,680,000
---------------
$ 170,180,575
---------------
Total Services $ 417,549,600
---------------
Technology - 24.1%
Computer Services - 3.1%
900,000 Compaq Computer Corp.* $ 68,962,500
585,000 International Business Machines Corp. 80,364,375
270,000 Komag, Inc.* 8,201,250
600,000 Seagate Technology, Inc.* 26,925,000
---------------
$ 184,453,125
---------------
Electronics - 19.3%
1,080,000 Applied Materials, Inc.* $ 50,085,000
4,441,300 Arrow Electronics, Inc.*+ 250,378,288
16,000 Avnet, Inc. 902,000
1,900,000 Cisco System, Inc.* 91,437,500
2,149,000 EMC Corp.* 76,289,500
1,835,000 Etec Systems, Inc.*+ 58,031,875
1,000,000 Intel Corp. 139,125,000
1,350,000 Lam Research Corp.* 45,562,500
1,425,000 L.M. Ericsson Telephone Co. (Sponsored
A.D.R.) (Class B) 48,182,812
1,941,200 MEMC Electronic Materials, Inc.* 46,346,150
497,000 MTS Systems Corp.+ 10,934,000
1,575,000 Nokia Corp. (Class A) (Sponsored A.D.R.) 91,743,750
2,050,000 Philips Electronics NV (NY Shares) 91,225,000
1,103,900 Stratus Computers, Inc.* 34,220,900
1,550,000 Tencor Instruments* 55,993,750
The accompanying notes are an integral part of these financial statements 13
<PAGE>
Pioneer II
SCHEDULE OF INVESTMENTS 3/31/97 (continued)
Shares Value
Electronics - (Continued)
1,920,000 Teradyne, Inc.* $ 55,440,000
---------------
$1,145,898,025
---------------
Photo/Instrumention - 1.7%
1,188,000 Dionex Corp.*+ $ 54,054,000
910,400 Varian Associates, Inc. 48,706,400
---------------
$ 102,760,400
---------------
Total Technology $1,433,111,550
---------------
Transportation - 2.2%
Air Transport - 0.6%
401,000 AMR Corp.* $ 33,082,500
---------------
Railroad & Bus - 1.3%
1,600,000 CSX Corp. $ 74,400,000
---------------
Ships & Shipping - 0.3%
988,100 APL Ltd. $ 20,750,100
---------------
Total Transportation $ 128,232,600
---------------
Utilities - 7.4%
Electric Utility - 5.8%
4,948,200 Dominion Resources, Inc. $ 179,990,775
2,000,000 DTE Energy Co. 53,750,000
3,054,663 Hawaiian Electric Industries, Inc.+ 103,476,709
191,100 Union Electric Co. 7,046,813
---------------
$ 344,264,297
---------------
Telecommunications - 1.6%
3,100,400 Cascade Communications Corp.* $ 81,773,050
230,000 GTE Corp. 10,723,750
---------------
$ 92,496,800
---------------
Total Utilities $ 436,761,097
---------------
TOTAL COMMON STOCKS
(Cost $4,784,122,472) $5,888,264,063
---------------
14 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer II
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 0.9%
Commercial Paper - 0.9%
$23,000,000 Household Finance Corp., 6.60%, 4/1/97 $ 23,000,000
29,111,000 Prudential Funding Corp., 6.00%, 4/2/97 29,111,000
---------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $52,111,000) $ 52,111,000
---------------
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $4,836,233,472) (a) $5,940,375,063
===============
* Non-income producing security.
+ Investment held by the Fund representing 5% or more of the outstanding voting
stock of such company.
(a) At March 31, 1997, the net unrealized gain on investments based on cost for
federal income tax purposes of $4,849,728,956 was as follows:
Aggregate gross unrealized gain for all investments in
which there is an excess of value over tax cost $1,329,056,382
Aggregate gross unrealized loss for all investments in
which there is an excess of tax cost over value (238,410,275)
---------------
Net unrealized gain $1,090,646,107
===============
Purchases and sales of securities (excluding temporary cash investments) for the
six months ended March 31, 1997 aggregated approximately $1,544,732,000 and
$1,746,339,000, respectively.
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
Pioneer II
BALANCE SHEET 3/31/97
(Dollars in Thousands Except Per Share Amounts)
ASSETS:
Investment in securities, at value (including temporary cash
investments of $52,111) (cost $4,836,233) $5,940,375
Foreign currencies, at value 497
Receivables -
Investment securities sold 37,982
Fund shares sold 3,800
Dividends, interest and foreign taxes withheld 6,493
Other 104
----------
Total assets $5,989,251
----------
LIABILITIES:
Payables -
Investment securities purchased $ 24,693
Fund shares repurchased 4,338
Due to bank 682
Forward foreign currency settlement contracts - net 51
Due to affiliates 6,929
Accrued expenses 449
----------
Total liabilities $ 37,142
----------
NET ASSETS:
Paid-in capital $4,382,970
Accumulated undistributed net investment income 21,586
Accumulated undistributed net realized gain on investments
and foreign currency transactions 443,427
Net unrealized gain on investments 1,104,142
Net unrealized loss on forward foreign currency contracts
and other assets and liabilities denominated in
foreign currencies (16)
----------
Total net assets $5,952,109
==========
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $5,944,070/275,103,602 shares) $ 21.61
==========
Class B (based on $7,220/337,585 shares) $ 21.39
==========
Class C (based on $819/38,263 shares) $ 21.41
==========
MAXIMUM OFFERING PRICE:
Class A $ 22.93
==========
16 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer II
STATEMENT OF OPERATIONS
For the Six Months Ended 3/31/97
(Dollars in Thousands)
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $730) $ 48,289
Interest (net of foreign taxes withheld of $1) 1,851
Other 58
--------
Total investment income $ 50,198
--------
EXPENSES:
Management fees
Basic fee $ 17,960
Performance adjustment (904)
Transfer agent fees
Class A 5,047
Class B 7
Class C 1
Distribution fees
Class A 5,737
Class B 21
Class C 2
Accounting 203
Custodian fees 191
Registration fees 103
Professional fees 71
Printing 110
Fees and expenses of nonaffiliated trustees 37
Miscellaneous 96
--------
Total expenses $ 28,682
Less fees paid indirectly (499)
--------
Net expenses $ 28,183
--------
Net investment income $ 22,015
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $452,687
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (61) $452,626
-------- --------
Change in net unrealized gain or loss from:
Investments $221,977
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 23 $222,000
-------- --------
Net gain on investments and foreign currency
transactions $674,626
--------
Net increase in net assets resulting from operations $696,641
========
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
Pioneer II
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended 3/31/97 and the Year Ended 9/30/96
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
FROM OPERATIONS: 3/31/97 9/30/96
<S> <C> <C>
Net investment income $ 22,015 $ 60,827
Net realized gain on investments and foreign currency
transactions 452,626 570,164
Change in net unrealized gain on investments and foreign
currency transactions 222,000 (25,695)
---------- -----------
Net increase in net assets resulting from operations $ 696,641 $ 605,296
---------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.06 and $0.32 per share, respectively) $ (15,800) $ (81,721)
Class B ($0.12 and $0.00 per share, respectively) (22) -
Class C ($0.09 and $0.00 per share, respectively) (2) -
Net realized gain:
Class A ($1.93 and $1.73 per share, respectively) (495,319) (424,185)
Class B ($1.93 and $0.00 per share, respectively) (350) -
Class C ($1.93 and $0.00 per share, respectively) (38) -
---------- -----------
Total distributions to shareholders $ (511,531) $ (505,906)
---------- -----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 213,675 $ 327,727
Reinvestment of distributions 485,115 480,912
Cost of shares repurchased (364,666) (590,117)
---------- -----------
Net increase in net assets resulting from fund
share transactions $ 334,124 $ 218,522
---------- -----------
Net increase in net assets $ 519,234 $ 317,912
NET ASSETS:
Beginning of period 5,432,875 5,114,963
---------- -----------
End of period (including accumulated undistributed net
investment income of $21,586 and $15,395,
respectively) $5,952,109 $5,432,875
========== ===========
</TABLE>
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer II
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
CLASS A '97 Shares '97 Amount '96 Shares '96 Amount
<S> <C> <C> <C> <C>
Shares sold 9,195,577 $ 206,400 16,110,239 $ 326,689
Reinvestment of distributions 22,703,377 484,717 24,810,556 480,912
Less shares repurchased (16,236,972) (364,307) (29,020,381) (590,116)
----------- --------- ----------- ---------
Net increase 15,661,982 $ 326,810 11,900,414 $ 217,485
=========== ========= =========== =========
CLASS B*
Shares sold 295,030 $ 6,674 41,389 $ 834
Reinvestment of distributions 17,148 363 - -
Less shares repurchased (15,940) (354) (42) (1)
----------- --------- ----------- ---------
Net increase 296,238 $ 6,683 41,347 $ 833
=========== ========= =========== =========
CLASS C*
Shares sold 26,604 $ 601 10,250 $ 204
Reinvestment of distributions 1,654 35 - -
Less shares repurchased (245) (5) - -
----------- --------- ----------- ---------
Net increase 28,013 $ 631 10,250 $ 204
=========== ========= =========== =========
</TABLE>
*Class B and C shares were first publicly offered on July 1, 1996.
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
Pioneer II
FINANCIAL HIGHLIGHTS 3/31/97
<TABLE>
<CAPTION>
Six Months Year Ended
Ended 3/31/97 9/30/96
<S> <C> <C>
CLASS A
Net asset value, beginning of period $ 20.94 $ 20.66
----------- ------------
Increase from investment operations:
Net investment income $ 0.08 $ 0.23
Net realized and unrealized gain on investments and foreign
currency transactions 2.58 2.10
----------- ------------
Net increase from investment operations $ 2.66 $ 2.33
Distributions to shareholders:
Net investment income (0.06) (0.32)
Net realized gain (1.93) (1.73)
----------- ------------
Net increase (decrease) in net asset value $ 0.67 $ 0.28
----------- ------------
Net asset value, end of period $ 21.61 $ 20.94
=========== ============
Total return* 12.85% 12.18%
Ratio of net expenses to average net assets 0.96%**+ 0.92%+
Ratio of net investment income to average net assets 0.72%**+ 1.13%+
Portfolio turnover rate 53%** 66%
Average commission rate paid (1) $ 0.0585 $ 0.0424
Net assets, end of period (in thousands) $5,944,070 $5,431,797
Ratios assuming reduction for fees paid indirectly:
Net expenses 0.94%** 0.90%
Net investment income 0.74%** 1.15%
<CAPTION>
Year Ended Year Ended Year Ended Year Ended
9/30/95 9/30/94 9/30/93 9/30/92
<S> <C> <C> <C> <C>
CLASS A
Net asset value, beginning of period $ 19.38 $ 20.55 $ 18.86 $ 18.22
------------ ----------- ----------- -----------
Increase from investment operations:
Net investment income $ 0.35 $ 0.36 $ 0.38 $ 0.44
Net realized and unrealized gain on investments and foreign
currency transactions 3.04 1.05 2.85 1.27
------------ ----------- ----------- -----------
Net increase from investment operations $ 3.39 $ 1.41 $ 3.23 $ 1.71
Distributions to shareholders:
Net investment income (0.30) (0.33) (0.39) (0.47)
Net realized gain (1.81) (2.25) (1.15) (0.60)
------------ ----------- ----------- -----------
Net increase (decrease) in net asset value $ 1.28 $ (1.17) $ 1.69 $ 0.64
------------ ----------- ----------- -----------
Net asset value, end of period $ 20.66 $ 19.38 $ 20.55 $ 18.86
============ =========== =========== ===========
Total return* 19.92% 7.37% 18.15% 9.92%
Ratio of net expenses to average net assets 0.93%+ 0.90%++ 0.96%++ 0.94%++
Ratio of net investment income to average net assets 1.85%+ 1.59%++ 1.89%++ 2.31%++
Portfolio turnover rate 63% 68% 66% 64%
Average commission rate paid (1) - - - -
Net assets, end of period (in thousands) $5,114,963 $4,509,225 $4,347,672 $3,974,712
Ratios assuming reduction for fees paid indirectly:
Net expenses 0.91% 0.90% 0.95% 0.93%
Net investment income 1.87% 1.59% 1.90% 2.32%
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at 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.
** Annualized.
+ Ratio includes expenses paid through third party brokerage/service and
certain expense offset arrangements.
++ Ratios for 1994, 1993, and 1992 have been restated to conform with certain
provisions of SEC Release No. 33-7197: Payment for Investment Company
Services with Brokerage Commissions.
(1) Amount may fluctuate from period to period as a result of portfolio
transactions executed in different markets where trading practices and
commission rate structures may vary.
20 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer II
FINANCIAL HIGHLIGHTS 3/31/97
<TABLE>
<CAPTION>
Six Months 7/1/96 to
Ended 3/31/97(a) 9/30/96
<S> <C> <C>
CLASS B
Net asset value, beginning of period $ 20.89 $ 20.55
----------- -----------
Increase (decrease) from investment operations:
Net investment loss $ (0.02) $ (0.01)
Net realized and unrealized gain on investments
and foreign currency transactions 2.57 0.35
----------- -----------
Net increase from investment operations $ 2.55 $ 0.34
Distributions to shareholders:
Net investment income (0.12) -
Net realized gain (1.93) -
----------- -----------
Net increase in net asset value $ 0.50 $ 0.34
----------- -----------
Net asset value, end of period $ 21.39 $ 20.89
=========== ===========
Total return* 12.33% 1.65%
Ratio of net expenses to average net assets 1.90%**+ 2.03%**+
Ratio of net investment loss to average net assets (0.17)%**+ (0.25)%**+
Portfolio turnover rate 53%** 66%
Average commission rate paid(1) $ 0.0585 $ 0.0424
Net assets, end of period (in thousands) $ 7,220 $ 864
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.87%** 2.02%**
Net investment loss (0.14)%** (0.24)%**
</TABLE>
(a) The per share data presented above is based upon the average shares
outstanding for the period outstanding.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at 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.
** Annualized.
+ Ratio includes expenses paid through third party brokerage/service and
certain expense offset arrangements.
(1) Amount may fluctuate from period to period as a result of portfolio
transactions executed in different markets where trading practices and
commission rate structures may vary.
The accompanying notes are an integral part of these financial statements. 21
<PAGE>
Pioneer II
FINANCIAL HIGHLIGHTS 3/31/97
Six Months
Ended 7/1/96 to
3/31/97(a) 9/30/96
CLASS C
Net asset value, beginning of period $ 20.88 $ 20.55
----------- -----------
Increase (decrease) from investment
operations:
Net investment loss $ (0.03) $ (0.01)
Net realized and unrealized gain on
investments and foreign currency
transactions 2.58 0.34
----------- -----------
Net increase from investment operations $ 2.55 $ 0.33
Distributions to shareholders:
Net investment income (0.09) -
Net realized gain (1.93) -
----------- -----------
Net increase in net asset value $ 0.53 $ 0.33
----------- -----------
Net asset value, end of period $ 21.41 $ 20.88
=========== ===========
Total return* 12.30% 1.61%
Ratio of net expenses to average net assets 2.04%**+ 2.02%**+
Ratio of net investment loss to average
net assets (0.33)%**+ (0.15)%**+
Portfolio turnover rate 53%** 66%
Average commission rate paid(1) $0.0585 $0.0424
Net assets, end of period (in thousands) $ 819 $ 214
Ratios assuming reduction for fees paid
indirectly:
Net expenses 2.01%** 2.01%**
Net investment loss (0.30)%** (0.14)%**
(a) The per share data presented above is based upon the average shares
outstanding for the period outstanding.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at 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.
** Annualized.
+ Ratio includes expenses paid through third party brokerage/service and
certain expense offset arrangements.
(1) Amount may fluctuate from period to period as a result of portfolio
transactions executed in different markets where trading practices and
commission rate structures may vary.
22 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer II
NOTES TO FINANCIAL STATEMENTS 3/31/97
1. Organization and Significant Accounting Policies
Pioneer II (the Fund) is a Delaware business trust registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The investment objectives of the Fund are reasonable income and growth
of capital.
The Fund offers three classes of shares - Class A, Class B and Class C shares.
Shares of Class A, Class B and Class C each represent an interest in the same
portfolio of investments of the Fund and have equal rights to voting,
redemptions, dividends and liquidation, except that each class of shares can
bear different transfer agent and distribution fees and have exclusive voting
rights with respect to the distribution plans that have been adopted by Class A,
Class B and Class C shareholders, respectively.
The Fund's financial statements have been prepared in conformity with generally
accepted accounting principles that require the management of the Fund to, among
other things, make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. 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 sale 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. 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
data in the exercise of reasonable diligence. Interest income is recorded on
the accrual basis, net of unrecoverable foreign taxes withheld at the
applicable country rates. Temporary cash investments are valued at amortized
cost.
23
<PAGE>
Pioneer II
NOTES TO FINANCIAL STATEMENTS 3/31/97 (continued)
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.
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 the 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 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 March 31, 1997, the
Fund had no outstanding portfolio hedges. The Fund's gross forward foreign
currency settlement contracts receivable and payable were approximately
$3,514,000 and $3,565,000, respectively, resulting in a net payable of
approximately $51,000 as of March 31, 1997.
24
<PAGE>
Pioneer II
D. 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. In
addition to the requirements of the Internal Revenue Code, the Fund may also
be required to pay local taxes on net realized capital gains in certain
countries. The required capital gains taxes, if any, are determined in
accordance with local tax laws. In determining daily net asset value, the
Fund estimates the reserve for capital gains taxes, if any, associated with
net unrealized gains on certain portfolio securities. The estimated reserve
for capital gains taxes, if any, is based on the holding periods of such
securities and the related tax rates, tax loss carryforward (if applicable)
and other such factors. During the period ended March 31, 1997, the Fund paid
no capital gains taxes on the sale of certain foreign securities.
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.
E. Fund Shares
The Fund records sales and repurchases of its 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 Group, Inc. (PGI). PFD earned
approximately $898,000 in underwriting commissions on the sale of fund shares
during the period ended March 31, 1997.
F. Class Allocations
Distribution fees are calculated based on the average daily net asset value
attributable to Class A, Class B and Class C shares of the Fund,
respectively. Shareholders of each class share all expenses and fees paid to
the transfer agent, Pioneering Services Corporation (PSC), for their
services, which are allocated based on the number of accounts in each class
and the ratable allocation of related out-of-pocket expense (see Note 3).
Income, common expenses and realized and unrealized
25
<PAGE>
Pioneer II
NOTES TO FINANCIAL STATEMENTS 3/31/97 (continued)
gains and losses are calculated at the Fund level and allocated daily to each
class of shares based on the respective percentage of adjusted net assets at
the beginning of the day. . Distributions to shareholders are recorded as of
the ex-dividend date. Distributions paid by the Fund with respect to each
class of shares are calculated in the same manner, at the same time, and in
the same amount, except that Class A, Class B and Class C shares can bear
different transfer agent and distribution fees.
2. Management Agreement
Pioneering Management Corporation (PMC), the Fund's investment adviser, manages
the Fund's portfolio and is a wholly owned subsidiary of PGI. PMC receives a
basic fee that is calculated at the annual rate of 0.60% of the Fund's average
daily net assets. The basic fee is subject to a performance adjustment up to a
maximum of -0.10% based on the Fund's investment performance as compared with
the Lipper Growth & Income Funds Index. For the period ended March 31, 1997, the
aggregate performance adjustment resulted in a reduction to the basic fee of
approximately $904,000.
Prior to May 1, 1996, management fees were 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. For the six months
ended March 31, 1997, the net management fee was equivalent to 0.57% of average
net assets.
In addition, under the management agreement, certain other services and costs,
including accounting, regulatory reporting and insurance premiums, are paid by
the Fund. At March 31, 1997, approximately $3,085,000 was payable to PMC related
to management fees and certain other services.
3. Transfer Agent
PSC, a wholly owned subsidiary of PGI, provides substantially all transfer agent
and shareholder services to the Fund at negotiated rates. Included in due to
affiliates is approximately $889,000 in transfer agent fees payable to PSC at
March 31, 1997.
4. Distribution Plans
The Fund adopted a Plan of Distribution for each class of shares (Class A Plan,
Class B Plan and Class C Plan) in accordance with Rule 12b-1 of the Investment
Company Act of 1940. Pursuant to the Class A Plan, the Fund pays PFD a service
fee of up to 0.25% of the Fund's average daily net
26
<PAGE>
Pioneer II
assets in reimbursement of its actual expenditures to finance activities
primarily intended to result in the sale of Class A shares. On qualifying
investments made prior to August 19, 1991, the Class A Plan provides for
reimbursement of such expenditures in an amount not to exceed 0.15%. Pursuant to
the Class B Plan and Class C Plan, the Fund pays PFD 1.00% of the average daily
net assets attributable to each class of shares. The fee consists of a 0.25%
service fee and a 0.75% distribution fee paid as compensation for personal
services and/or account maintenance services or distribution services with
regard to Class B and Class C shares. Included in due to affiliates is
approximately $2,955,000 in distribution fees payable to PFD at March 31, 1997.
In addition, redemptions of each class of shares may be subject to a contingent
deferred sales charge (CDSC). A CDSC of 1.00% may be imposed on redemptions of
certain net asset value purchases of Class A shares within one year of purchase.
Class B shares that are redeemed within six years of purchase are subject to a
CDSC at declining rates beginning at 4.0%, based on the lower of cost or market
value of shares being redeemed. Redemptions of Class C shares within one year of
purchase are subject to a CDSC of 1.00%. Proceeds from the CDSC are paid to PFD.
For the six months ended March 31, 1997, CDSCs in the amount of approximately
$7,000 were paid to PFD.
5. Expense Offsets
The Fund has entered into certain directed brokerage and expense offset
arrangements resulting in a reduction in the Fund's total expenses. For the
period ended March 31, 1997, the Fund's expenses were reduced by approximately
$499,000 under such arrangements.
27
<PAGE>
Pioneer II
NOTES TO FINANCIAL STATEMENTS 3/31/97 (continued)
6. Affiliated Companies
The Fund's investments in certain companies 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, 1997 (amounts in thousands):
Dividend
Affiliates Purchases Sales Income Value
- --------------------------------------------------------------------------------
A.M. Castle & Co. $ - $ - $ 400 $ 23,140
A.O. Smith Corp. 14,257 - 392 50,876
Advanta Corp. (Class A) 73,120 17,415 287 30,638
AGCO Corp. 5,659 9,416 89 118,511
AMBAC Inc. 13,578 11,430 1,061 211,425
Amcast Industrial Corp. - - 239 19,913
Arrow Electronics, Inc. 3,514 25,180 - 250,378
Bassett Furniture Industries, Inc. - 1,001 445 16,800
Breed Technologies, Inc. 1,875 3,443 371 51,968
Briggs & Stratton Corp. 5,653 - 1,015 87,210
Champion Enterprises Inc. 55,818 - - 43,660
Dionex Corp. - - - 54,054
Donaldson Co., Inc. - 2,075 452 86,680
Etec Systems Inc. 54,035 - - 58,032
Global Industrial Technologies, Inc. 10,265 - - 32,911
Hawaiian Electric Industries, Inc. 3,617 - 3,665 103,477
IBP, Inc. 2,399 4,402 444 217,939
Lancaster Colony Corp. 5,131 - 598 78,890
Longview Fibre Co. - 2,850 1,340 62,792
Mississippi Chemical Corp. 41,698 - 70 40,898
MTS Systems Corp. - - 99 10,934
National Steel Corp. (Class B) - 3,146 - 18,178
Oakwood Homes Corp. 61,765 - 8 52,512
Resource Bancshares Mortgage
Group, Inc. - - 82 21,571
Rouge Steel Co. - - 119 31,350
Santa Fe Pacific Pipeline Partners,
L.P. 3,785 - 1,815 49,150
Simpson Industries, Inc. 1,013 - 268 13,331
Strattec Security Corp. 221 - - 6,169
Trinity Industries, Inc. 5,144 - 1,333 121,831
--------- -------- -------- -----------
$362,547 $80,358 $14,592 $1,965,218
========= ======== ======== ===========
28
<PAGE>
Pioneer II
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
T o t h e S h a r e h o l d e r s a n d t h e B o a r d o f
T r u s t e e s o f P i o n e e r I I :
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer II as of March 31, 1997, 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 the
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, 1997 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, 1997, 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
May 2, 1997
29
<PAGE>
Pioneer II
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
Trustees Officers
John F. Cogan, Jr. John F. Cogan, Jr., Chairman and
Richard H. Egdahl, M.D. President
Margaret B.W. Graham David D. Tripple, Executive Vice President
John W. Kendrick Francis J. Boggan, Vice President
Marguerite A. Piret William H. Keough, Treasurer
David D. Tripple Joseph P. Barri, Secretary
Stephen K. West
John Winthrop
Investment Adviser
Pioneering Management Corporation
Custodian
Brown Brothers Harriman & Co.
Independent Public Accountants
Arthur Andersen LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Hale and Dorr LLP
Shareowner Services and
Transfer Agent
Pioneering Services Corporation
30
<PAGE>
This page for your notes.
31
<PAGE>
This page for your notes.
32
<PAGE>
This page for your notes.
33
<PAGE>
PROGRAMS AND SERVICES FOR PIONEER SHAREOWNERS
Your investment representative can give you additional information on Pioneer's
programs and services. If you want to order literature on any of the following
items directly, simply call Pioneer at 1-800-225-6292.
FactFone(SM)
Our automated account information service, available to you 24 hours a day,
seven days a week. FactFone gives you a quick and easy way to check fund share
prices, yields, dividends and distributions, as well as information about your
own account. Simply call 1-800-225-4321. For specific account information, have
your 13-digit account number and four-digit personal identification number at
hand.
90-Day Reinstatement Privilege (for Class A Shares)
Enables you to reinvest all or a portion of the money you redeem from your
Pioneer account - without paying a sales charge - within 90 days of your
redemption. You have the choice of investing in any Pioneer fund, as long as you
meet its minimum investment requirement.
Investomatic Plan
An easy and convenient way for you to invest on a regular basis. All you need to
do is authorize a set amount of money to be moved out of your bank account into
the Pioneer fund of your choice. Investomatic also allows you to change the
dollar amount, frequency and investment date right over the phone. By putting
aside affordable amounts of money regularly, you can build a long-term
investment - without sacrificing your current standard of living.
Payroll Investment Program (PIP)
Lets you invest in a Pioneer fund directly through your paycheck. All that's
involved is for your employer to fill out an authorization form allowing Pioneer
to deduct from participating employees' paychecks. You specify the dollar amount
you want to invest into the Pioneer fund(s) of your choice.
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Automatic Exchange Program
A simple way to move money from a money market or bond fund into a stock fund
over a period of time. Just invest a lump sum in a Pioneer money market fund or
bond fund. Then, select the Pioneer equity fund or funds you wish to invest in,
and choose the amounts and dates for Pioneer to sell shares of your money market
or bond fund and use the proceeds to buy shares of the Pioneer equity fund you
have chosen. Over time, your original investment will be shifted to your Pioneer
equity fund.
Directed Dividends
Lets you invest cash dividends from one Pioneer fund to an account in another
Pioneer fund with no sales charge or fee. Simply fill out the applicable
information on a Pioneer Account Options Form. (This program is available for
dividend payments only; capital gains distributions are not eligible at this
time.)
Direct Deposit
Lets you move money into your bank account using electronic funds transfer
(EFT). EFT moves your money faster than you would receive a check, eliminates
unnecessary paper and mail, and avoids lost checks. Simply fill out a Pioneer
Direct Deposit Form, giving your instructions.
Systematic Withdrawal Plan (SWP)
Lets you establish automatic withdrawals from your account at set intervals. You
decide the frequency and the day of the month you want. Pioneer will send the
proceeds by check to the address you designate, or electronically to your bank
account. You also can authorize Pioneer to make the redemptions payable to
someone else. (SWPs are available only for accounts with a value of $10,000 or
more.)
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This page for your notes.
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THE PIONEER FAMILY OF MUTUAL FUNDS
Growth Funds Income Funds
Global/International Taxable
Pioneer Emerging Markets Fund Pioneer America Income Trust
Pioneer Europe Fund Pioneer Bond Fund
Pioneer Gold Shares Pioneer Short-Term Income Trust*
Pioneer India Fund
Pioneer International Growth Fund Tax-Exempt
Pioneer World Equity Fund
Pioneer Intermediate Tax-Free Fund
United States Pioneer Tax-Free Income Fund
Pioneer Capital Growth Fund
Pioneer Growth Shares Money Market Fund
Pioneer Micro-Cap Fund*
Pioneer Mid-Cap Fund Pioneer Cash Reserves Fund
Pioneer Small Company Fund
Growth and Income Funds
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
*Offers Class A and B Shares only
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HOW TO CONTACT PIONEER
We are pleased to offer a variety of convenient ways for you to contact us
for assistance or information.
You can call us for:
Account information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Or write to us at:
Pioneering Services Corporation
60 State Street
Boston, Massachusetts 02109
Our toll-free fax 1-800-225-4240
Our Internet e-mail address [email protected]
(for general questions about Pioneer only)
This report must be preceded or accompanied by a current
Fund prospectus.
[Pioneer logo] Pioneer Funds Distributor, Inc.
60 State Street
Boston, Massachusetts 02109
0597-4099
(C) Pioneer Funds Distributor, Inc.
[Recycle symbol] Printed on Recycled Paper
