[Pioneer Logo]
Pioneer II
- -------------------------
SEMIANNUAL REPORT 3/31/00
- -------------------------
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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
Trustees, Officers and Service Providers 28
The Pioneer Family of Funds 29
</TABLE>
<PAGE>
Pioneer II
- --------------------------------
LETTER FROM THE CHAIRMAN 3/31/00
- --------------------------------
Dear Shareowner,
- --------------------------------------------------------------------------------
Only three months into the new millennium and already financial markets have
seen their share of activity. In March, for the fifth time in just nine months,
the Federal Reserve raised short-term interest rates in an effort to brake
unusually strong economic growth and deflect inflationary pressures.
In the United States stocks have continued to roar ahead, albeit in an uneven
manner. Increasingly, the financial media has distinguished between what's
become known as old economy and new economy stocks. In fact, so far in 2000,
we've seen a sharp divergence between the so-called old economy traditional
non-technology stocks and the new economy technology- and e-commerce-oriented
issues. Reflecting this divergence, the NASDAQ Composite Index, boosted by
strong technology stock performance, was up over 12%, while the Dow Jones
Industrial Index, composed of a select group of 30 blue-chip stocks, returned
- -5%. Meanwhile, long-term interest rates not only failed to rise in concert
with short-term rates but - in atypical fashion - have fallen below those
rates, enabling longer-term bond prices to remain fairly steady.
The recent market activity underscores the need for you to take a diversified
approach to your investment portfolio, making sure you have the optimal blend
of stocks, bonds and shorter-term investments like money market funds.
Experience tells us that over the long term, maintaining a diversified
portfolio can help to smooth out the periodic jolts that are characteristic of
financial markets. Sharp market swings are often a good reminder to take
another look at your risk threshold and your investment time horizon. As
always, an investment professional who is familiar with your individual
circumstances can assist you in that exercise.
I encourage you to read this report closely. It offers you an opportunity to
review your Fund in depth. I would draw your attention to the Portfolio Manager
Discussion with Richard Dahlberg, the manager of your Fund. It's a chance to
hear how the Fund performed and what the manager sees as he looks ahead. If you
have questions, please contact your investment professional or call Pioneer at
1-800-225-6292. You may also want to visit our web site at
www.pioneerfunds.com.
Respectfully,
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman and President
1
<PAGE>
Pioneer II
- -------------------------
PORTFOLIO SUMMARY 3/31/00
- -------------------------
Portfolio Diversification
- -------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[Pie Chart Information]
U.S. Common Stocks 87%
International Common Stocks 8%
Depositary Receipts for
International Stocks 4%
Short-Term Cash
Equivalents 1%
[End Pie Chart Information]
Sector Distribution
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
[Pie Chart Information]
Technology 28%
Financial 15%
Healthcare 12%
Energy 9%
Capital Goods 7%
Utilities 7%
Consumer Cyclicals 7%
Basic Materials 5%
Communication Services 5%
Other 5%
[End Pie Chart Information]
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
<TABLE>
<S> <C> <C> <C>
1. Koninklijke Philips 5.65% 6. IBM Corp. 3.22%
Electronics NV (NY Shares)
2. Intel Corp. 4.81 7. Bell Atlantic Corp. 2.75
3. Amgen, Inc. 4.66 8. Applied Materials Inc. 2.68
4. Ambac Financial Group, 3.99 9. The Chase Manhattan 2.65
Inc. Corp.
5. Dominion Resources, Inc. 3.27 10. Arrow Electronics, Inc. 2.32
</TABLE>
Fund holdings will vary for other periods.
2
<PAGE>
Pioneer II
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 3/31/00 CLASS A SHARES
- --------------------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 3/31/00 9/30/99
$22.15 $20.16
Distributions per Share Income Short-Term Long-Term
(9/30/99 -3/31/00) Dividends Capital Gains Capital Gains
$0.097 - $0.514
</TABLE>
Investment Returns
- --------------------------------------------------------------------------------
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 and Lipper Growth & Income Funds Index.
<TABLE>
<CAPTION>
- -----------------------------------------
Average Annual Total Returns
(As of March 31, 2000)
Net Asset Public Offering
Period Value Price*
<S> <C> <C>
10 Years 10.71% 10.06%
5 Years 12.85 11.52
1 Year 13.71 7.17
- -----------------------------------------
</TABLE>
* Reflects deduction of the maximum
5.75% sales charge at the beginning
of the period and assumes reinvest-
ment of distributions at net asset
value.
[Start of Tabular Representation of Mountain Chart]
<TABLE>
<CAPTION>
Lipper
Standard Growth &
& Poor's Income
Pioneer 500 Funds
II* Index Index
<S> <C> <C> <C>
3/90 9425 10000 10000
9357 11436 11026
3/92 10613 12695 12314
12203 14622 14315
3/94 12891 14839 14989
14250 17148 16636
3/96 17901 22633 21392
20960 27113 24823
3/98 28511 40098 34505
22937 47486 35925
3/00 26081 55981 40015
</TABLE>
[End of Tabular Representation of Mountain Chart]
The Standard & Poor's 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange
and the Over-the-Counter market. The Lipper Growth & Income Funds Index
reflects the performance of mutual funds with similar portfolio characteristics
and capitalization. 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 3/31/00 CLASS B SHARES
- --------------------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Net Asset Value
per Share 3/31/00 9/30/99
$21.63 $19.74
Distributions per Share Income Short-Term Long-Term
(9/30/99 -3/31/00) Dividends Capital Gains Capital Gains
- - $0.514
</TABLE>
Investment Returns
- --------------------------------------------------------------------------------
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 and
Lipper Growth & Income Funds Index.
<TABLE>
<CAPTION>
- -------------------------------------
Average Annual Total Returns
(As of March 31, 2000)
If If
Period Held Redeemed*
<S> <C> <C>
Life-of-Fund 8.84% 8.21%
(7/1/96)
1 Year 12.26 8.26
- -------------------------------------
</TABLE>
* 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.
[Start of Tabular Representation of Mountain Chart]
<TABLE>
<CAPTION>
Lipper
Standard Growth
& Poor's & Income
Pioneer 500 Funds
II* Index Index
<S> <C> <C> <C>
7/96 10000 10000 10000
10165 10247 10322
11403 11100 11126
3/97 11419 11399 11313
13165 13385 12900
14698 14387 13980
13962 14799 14116
3/98 15377 16859 15725
14269 17415 15756
11059 15686 13791
12717 19020 16033
3/99 12240 19965 16373
13294 21367 17891
12234 20035 16460
12775 23013 17935
3/00 13441 23536 18237
</TABLE>
[End of Tabular Representation of Mountain Chart]
The Standard & Poor's 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange and
the Over-the-Counter market. The Lipper Growth & Income Funds Index reflects
the performance of mutual funds with similar portfolio characteristics and
capitalization. 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 3/31/00 CLASS C SHARES
- -------------------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 3/31/00 9/30/99
$21.68 $19.78
Distributions per Share Income Short-Term Long-Term
(9/30/99 -3/31/00) Dividends Capital Gains Capital Gains
- - $0.514
</TABLE>
Investment Returns
- --------------------------------------------------------------------------------
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 and
Lipper Growth & Income Funds Index.
<TABLE>
<CAPTION>
- ------------------------------------
Average Annual Total Returns
(As of March 31, 2000)
If If
Period Held Redeemed*
<S> <C> <C>
Life-of-Fund 8.89% 8.89%
(7/1/96)
1 Year 12.40 12.40
- ------------------------------------
</TABLE>
* Assumes reinvestment of
distributions. The 1% contingent
deferred sales charge (CDSC)
applies to redemptions made
within one year of purchase.
[Start of Tabular Representation of Mountain Chart]
<TABLE>
<CAPTION>
Lipper
Standard Growth &
& Poor's Income
Pioneer 500 Funds
II* Index Index
<S> <C> <C> <C>
7/96 10000 10000 10000
10161 10247 10322
11400 11100 11126
3/97 11410 11399 11313
13142 13385 12900
14683 14387 13980
13952 14799 14116
3/98 15360 16859 15725
14253 17415 15756
11076 15686 13791
12727 19020 16033
3/99 12244 19965 16373
13303 21367 17891
12250 20035 16460
12797 23013 17935
3/00 13762 23536 18237
</TABLE>
[End of Tabular Representation of Mountain Chart]
The Standard & Poor's 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange
and the Over-the-Counter market. The Lipper Growth & Income Funds Index
reflects the performance of mutual funds with similar portfolio characteristics
and capitalization. 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 3/31/00
- -------------------------------------------------------------------------------
Richard Dahlberg became manager of Pioneer II in September of 1998. In the
following discussion, Mr. Dahlberg comments on his investment strategies and
their impact on the Fund's recent performance.
Q: Value stocks performed better over the last few months than in earlier
periods. How has the Fund kept up?
A: The Fund took strong advantage of the recovery in value stocks. Pioneer II
comfortably outperformed the average of its peer funds for the six months
ended March 31, 2000, with Class A shares returning 13.11% Class B 12.32%
and Class C 12.35%, all at net asset value. In comparison, the 497
multi-capitalization value funds (funds that invest in value stocks of
various sizes) tracked by Lipper, Inc. returned an average of 7.88% for the
same period. (Lipper is an independent firm that tracks mutual fund
performance.)
At the same time, the Fund lagged the 17.47% return of its benchmark, the
Standard & Poor's 500 Stock Index. However, if we set aside the growth
stocks in the S&P 500 and weigh the Fund only against the S&P 500's value
component, results were positive; the S&P Barra Value Index returned 9.25%
over the period.
The Fund's relative performance was even stronger in the most recent
quarter. From January through March of 2000, Pioneer II had a total return
(Class A shares at net asset value) of about 8%, well ahead of the 1.04%
average return of its Lipper multi-cap value peer group.
Q: The Fund's overall makeup has changed considerably since you assumed
management responsibility. Could you highlight some of the changes you have
made and their impact, both positive and negative?
A: Most importantly, we have improved portfolio quality in two ways. First, we
have been shifting assets into more substantial, more successful companies -
the average market capitalization of the Fund's holdings has tripled, from
approximately $20 billion to just over $61 billion. We have also reduced the
number of holdings by winnowing out some less attractive positions; there
are now 95 stocks in the portfolio, compared
6
<PAGE>
Pioneer II
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
to 107 a year ago. These changes create a portfolio context that we think
is more in tune with the current market environment.
At the sector level, we increased technology holdings from 16% six months
ago to nearly 28% at the end of the period, a move that boosted results.
However, the financial sector has fallen victim to the five interest rate
hikes engineered by the Federal Reserve. There are still strong earnings
trends to be found among financial stocks, but while higher rates cloud
the sector, we felt it prudent to reduce holdings to about 15% of the
portfolio from 20% in June of 1999.
Q: Are you still making significant changes to the portfolio?
A: The strategies we have adopted have benefited shareowners, so I expect the
basic look and feel of the portfolio - the number of companies we hold and
their sizes - to remain much as it is now. Of course, we will continue to
monitor the stocks we own and to research new opportunities as they come
along.
Q: Technology has been the most prominent market sector for some time. How does
a value fund take advantage of technology, especially in a volatile market?
A: We look for profitable companies that may benefit from the surge in
technology without becoming entangled in the fierce battle for Internet
survival. We especially favor companies whose products and services are
integral to the technology infrastructure. Examples are Oracle, a major
provider of database services, and chip maker Texas Instruments. Koninklijke
Philips Electronics, which reorganized to concentrate on two fast-growing
businesses - semiconductors and flat panel displays for computer monitors
and television sets - is another key technology holding. We continue to
avoid inflated "dot-com" companies because of their high potential for risk.
7
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 3/31/00 (continued)
- -------------------------------------------------------------------------------
Q: What other sectors and stocks have you been focusing on, and what are your
reasons for these choices?
A: Pharmaceutical companies look attractive despite the political
considerations that have held the group back. Notwithstanding possible price
pressure from a Medicare drug benefit or other legislation, we believe that
demographic forces favor drug makers for the next several years. Whether a
government program or a private insurer is responsible for payment, millions
of retiring baby boomers will soon see their consumption of prescription
medicines increase significantly. Also related to healthcare, Amgen has been
more successful than many biotech companies in translating technology into
sales. Amgen has developed two very profitable drugs for blood-related
illnesses and has others under consideration by the Food and Drug
Administration.
Our decision to increase exposure to the energy sector also contributed to
results. Energy companies, now about 9% of the portfolio, have benefited
from rising oil and gas prices, and we think that prices will remain
relatively high for at least the next few years.
Q: Why do you think value stocks will do well in the months ahead?
A: One compelling argument is that, for some time, investment capital has been
flowing almost exclusively into the technology sector. Meanwhile, many basic
industries are operating at high capacity because of increased demand for
their products. Without new capital, these companies may have to raise
prices to increase capacity, and higher earnings may follow. Also, at the
end of the period, investors had begun moving out of high-valuation Internet
stocks into "old-economy" market sectors. In our opinion, value stocks
should benefit from this scenario.
8
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/00 (unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
INVESTMENT IN SECURITIES - 99.5%
PREFERRED STOCK - 1.1%
355,000 Telecomunicacoes Brasileiras SA (A.D.R.) $ 53,139,063
------------
Total Preferred Stock
(Cost $32,180,242) $ 53,139,063
------------
COMMON STOCKS - 98.4%
Basic Materials - 4.8%
Aluminum - 0.6%
400,000 Alcoa Inc. $ 28,100,000
------------
Chemicals - 0.8%
1,774,000 Lyondell Petrochemicals Co. $ 26,166,500
2,180,000 Mississippi Chemical Corp.+ 14,851,250
------------
$ 41,017,750
------------
Chemicals (Specialty) - 1.3%
1,800,000 Cytec Industries Inc.* $ 55,125,000
400,000 Hercules Inc. 6,450,000
1,869,500 Terra Industries Inc. 4,323,219
------------
$ 65,898,219
------------
Containers & Packaging (Paper) - 0.4%
4,300,000 Vitro SA (A.D.R.) $ 20,425,000
------------
Iron & Steel - 0.1%
1,031,600 Rouge Industries, Inc. $ 6,511,975
------------
Metals Mining - 0.3%
1,200,000 Freeport-McMoRan Copper & Gold, Inc. (Class B)* $ 14,475,000
------------
Paper & Forest Products - 1.3%
2,000,000 Asia Pulp and Paper Ltd. (A.D.R.)* $ 14,750,000
400,000 Bowater Inc. 21,350,000
200,000 Georgia-Pacific Group 7,912,500
1,500,000 Longview Fibre Co. 22,125,000
------------
$ 66,137,500
------------
Total Basic Materials $242,565,444
------------
Capital Goods - 6.9%
Manufacturing (Diversified) - 1.9%
538,900 Amcast Industrial Corp.+ $ 4,951,144
3,647,600 Trinity Industries, Inc.+ 86,402,525
------------
$ 91,353,669
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 9
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/00 (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Manufacturing (Specialized) - 4.8%
1,638,700 Briggs & Stratton Corp.+ $ 67,391,537
2,076,000 Dionex Corp.*+ 68,378,250
4,590,000 Donaldson Co., Inc.+ 103,561,875
------------
$239,331,662
------------
Metal Fabricators - 0.2%
911,125 A.M. Castle & Co.+ $ 11,389,062
------------
Total Capital Goods $342,074,393
------------
Communication Services - 3.6%
Telephone - 3.6%
2,225,000 Bell Atlantic Corp. $136,003,125
994,800 SBC Communications, Inc. 41,781,600
------------
Total Communication Services $177,784,725
------------
Consumer Cyclicals - 6.6%
Auto Parts & Equipment - 0.6%
1,608,419 Delphi Automotive Systems Corp. $ 25,734,704
665,000 Simpson Industries, Inc. 6,525,313
------------
$ 32,260,017
------------
Automobiles - 1.5%
910,000 General Motors Corp. $ 75,359,375
------------
Consumer (Jewelry, Novelties, & Gifts) - 1.6%
2,647,450 Lancaster Colony Corp.+ $ 80,912,691
------------
Homebuilding - 2.3%
4,145,000 Champion Enterprises, Inc.*+ $ 23,833,750
8,184,000 Clayton Homes, Inc.+ 82,863,000
1,666,200 Oakwood Homes Corp. 6,352,387
------------
$113,049,137
------------
Retail (Department Stores) - 0.6%
700,000 Federated Department Stores, Inc.* $ 29,225,000
------------
Services (Commercial & Consumer) - 0.0%
1 Sabre Group Holdings Inc. $ 22
------------
Total Consumer Cyclicals $330,806,242
------------
Consumer Staples - 3.2%
Beverages (Non-Alcoholic) - 0.3%
400,000 Pepsico, Inc. $ 13,825,000
------------
</TABLE>
10 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/00 (unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Foods - 1.7%
2,500,000 IBP, Inc. $ 39,375,000
20,000 Nestle SA (Registered Shares) 35,839,923
400,000 Sara Lee Corp. 7,200,000
------------
$ 82,414,923
------------
Services (Employment) - 1.2%
2,555,500 Kelly Services Inc. (Non-voting) $ 61,172,281
------------
Total Consumer Staples $157,412,204
------------
Energy - 9.4%
Oil (Domestic Integrated) - 3.7%
700,000 Atlantic Richfield Co. $ 59,500,000
3,840,000 Conoco, Inc. (Class A) 94,560,000
227,256 Conoco, Inc. (Class B) 5,823,435
500,000 Shell Transport and Trading Co. (A.D.R.) 24,531,250
------------
$184,414,685
------------
Oil (International Integrated) - 0.7%
650,000 Texaco, Inc. $ 34,856,250
------------
Oil & Gas (Drilling & Equipment) - 3.6%
1,308,100 BJ Services Co.* $ 96,635,887
2,100,000 R&B Falcon Corp.* 41,343,750
310,000 Smith International, Inc.* 24,025,000
300,000 Weatherford International Inc.* 17,681,250
------------
$179,685,887
------------
Oil & Gas (Exploration/Production) - 1.4%
500,000 Anadarko Petroleum Corp. $ 19,343,750
700,000 Burlington Resources Inc. 25,900,000
500,000 Suncor Energy, Inc. 21,250,000
------------
$ 66,493,750
------------
Total Energy $465,450,572
------------
Financial - 15.4%
Banks (Major Regional) - 1.6%
800,000 Banc One Corp. $ 27,500,000
639,600 Banco Rio De La Plata SA (A.D.R.) 9,154,275
1,200,000 Fleet Boston Corp. 43,800,000
------------
$ 80,454,275
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/00 (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Banks (Money Center) - 2.6%
1,500,000 The Chase Manhattan Corp. $130,781,250
------------
Banks (Regional) - 0.5%
1,242,100 North Fork Bancorporation, Inc. $ 22,202,537
------------
Consumer Finance - 0.8%
1,385,000 Countrywide Credit Industries, Inc. $ 37,741,250
------------
Financial (Diversified) - 4.0%
3,910,300 Ambac Financial Group, Inc.+ $196,981,363
------------
Insurance (Life/Health) - 1.1%
4,400,389 Conseco, Inc. $ 50,329,449
227,000 Manulife Financial Corp.* 3,326,522
------------
$ 53,655,971
------------
Insurance (Multi-Line) - 0.2%
400,000 Nationwide Financial Services, Inc. $ 11,700,000
------------
Insurance (Property/Casualty) - 0.7%
1,550,000 Allstate Corp. $ 36,909,375
------------
Savings & Loans Companies - 3.9%
5,185,425 Charter One Financial, Inc. $108,893,925
3,150,000 Washington Mutual, Inc. 83,475,000
------------
$192,368,925
------------
Total Financial $762,794,946
------------
Healthcare - 12.0%
Biotechnology - 4.6%
3,750,000 Amgen, Inc.* $230,156,250
------------
Healthcare (Diversified) - 1.3%
1,250,000 American Home Products Corp. $ 67,031,250
------------
Healthcare (Drugs Generic) - 0.3%
1,135,000 Dura Pharmaceuticals Inc.* $ 13,974,688
------------
Healthcare (Drugs/Major Pharmaceuticals) - 4.6%
1,212,600 Astra Zeneca Group Plc $ 49,049,305
500,000 Lilly, Eli & Co. 31,500,000
1,650,000 Merck & Co., Inc. 102,506,250
300,000 Novartis AG (A.D.R.) 20,493,750
379,700 Pharmacia & Upjohn, Inc. 22,497,225
------------
$226,046,530
------------
</TABLE>
12 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/00 (unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Healthcare (Hospital Management) - 0.5%
1,050,000 Columbia/HCA Healthcare Corp. $ 26,578,125
------------
Healthcare (Managed Care) - 0.7%
504,900 Humana Inc.* $ 3,692,081
425,600 Wellpoint Health Networks Inc.* 29,738,800
------------
$ 33,430,881
------------
Total Healthcare $597,217,724
------------
Technology - 27.8%
Communications Equipment - 0.9%
1,000,000 Alcatel SA (A.D.R.) $ 43,812,500
------------
Computers (Hardware) - 4.1%
1,600,000 Compaq Computer Corp. $ 42,600,000
1,350,000 IBM Corp. 159,300,000
------------
$201,900,000
------------
Computers (Peripherals) - 0.5%
1,500,000 Storage Technology Corp.* $ 23,906,250
------------
Computers (Software and Services) - 1.9%
1,200,000 Oracle Corp.* $ 93,675,000
------------
Electrical Equipment--5.6%
1,629,188 Koninklijke Philips Electronics NV (NY Shares) $279,100,269
------------
Electronics (Component Distributors) - 2.3%
3,250,000 Arrow Electronics, Inc.* $114,562,500
------------
Electronics (Defense) - 1.3%
400,000 General Motors Corp. (Class H) $ 49,800,000
732,200 Raytheon Co. (Class B) 12,996,550
------------
$ 62,796,550
------------
Electronics (Instrumentation) - 0.1%
788,200 MTS Systems Corp. $ 6,010,025
------------
Electronics (Semiconductors) - 7.0%
1,800,000 Intel Corp. $237,487,500
700,000 Texas Instruments Inc. 112,000,000
------------
$349,487,500
------------
Equipment (Semiconductors) - 3.2%
1,406,383 Applied Materials Inc. $132,551,598
460,000 Helix Technology Corp. 27,628,750
------------
$160,180,348
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/00 (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Photography/Imaging - 0.9%
850,000 Eastman Kodak Co. $ 46,165,625
--------------
Total Technology $1,381,596,567
--------------
Transportation - 1.7%
Railroads - 1.7%
1,180,000 Canadian National Railway Co. $ 31,491,250
1,300,000 Union Pacific Corp. 50,862,500
--------------
Total Transportation $ 82,353,750
--------------
Utilities - 7.0%
Electric Companies - 4.8%
4,207,567 Dominion Resources, Inc. $ 161,728,357
2,000,000 Edison International 33,125,000
1,059,063 Hawaiian Electric Industries, Inc. 33,691,441
400,000 Public Service Enterprise Group, Inc. 11,850,000
--------------
$ 240,394,798
--------------
Natural Gas - 2.2%
2,073,000 Kinder Morgan Energy Partners, L.P. $ 82,272,188
600,000 Williams Companies, Inc. 26,362,500
--------------
$ 108,634,688
--------------
Total Utilities $ 349,029,486
--------------
Total Common Stocks
(Cost $3,488,083,539) $4,889,086,053
--------------
TOTAL INVESTMENT IN SECURITIES
(Cost $3,520,263,781) $4,942,225,116
--------------
</TABLE>
14 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/00 (unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
TEMPORARY CASH INVESTMENT - 0.5%
Commercial Paper - 0.5%
$24,021,000 Household Finance Corp., 6.27%, 4/3/00 $ 24,021,000
--------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $24,021,000) $ 24,021,000
--------------
TOTAL INVESTMENT IN SECURITIES AND
TEMPORARY CASH INVESTMENT - 100%
(Cost $3,544,284,781) (a) $4,966,246,116
==============
</TABLE>
* 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, 2000, the net unrealized gain on investments based on cost for
federal income tax purposes of $3,544,284,781 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $1,940,067,817
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (518,106,482)
--------------
Net unrealized gain $1,421,961,335
==============
</TABLE>
Purchases and sales of securities (excluding temporary cash investments) for
the six months ended March 31, 2000 aggregated $60,913,270 and $820,933,575,
respectively.
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
BALANCE SHEET 3/31/00 (unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash
investment of $24,021,000) (cost $3,544,284,781) $ 4,966,246,116
Receivables -
Investment securities sold 13,212,998
Fund shares sold 4,127,014
Dividends, interest and foreign taxes withheld 4,782,768
Other 88,529
---------------
Total assets $ 4,988,457,425
---------------
LIABILITIES:
Payables -
Fund shares repurchased $ 8,144,392
Due to affiliates 4,060,048
Accrued expenses 462,560
Due to bank 226
---------------
Total liabilities $ 12,667,226
---------------
NET ASSETS:
Paid-in capital $ 3,359,923,914
Accumulated undistributed net investment income 22,789,814
Accumulated undistributed net realized gain on investments and
foreign currency transactions 171,111,067
Net unrealized gain on investments 1,421,961,335
Net unrealized gain on other assets and liabilities denominated
in foreign currencies 4,069
---------------
Total net assets $ 4,975,790,199
===============
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $4,952,101,767/223,600,859 shares) $ 22.15
===============
Class B (based on $20,052,382/927,270 shares) $ 21.63
===============
Class C (based on $3,636,050/167,744 shares) $ 21.68
===============
MAXIMUM OFFERING PRICE:
Class A $ 23.50
===============
</TABLE>
16 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
For the Six Months Ended 3/31/00 (unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $495,711) $ 43,044,102
Interest 573,440
------------
Total investment income $ 43,617,542
------------
EXPENSES:
Management fees
Basic fee $ 15,207,112
Performance adjustment (2,599,334)
Transfer agent fees
Class A 5,460,684
Class B 91,859
Class C 14,345
Distribution fees
Class A 6,031,068
Class B 106,591
Class C 19,701
Administrative fees 437,112
Custodian fees 143,255
Professional fees 100,556
Printing 141,846
Fees and expenses of nonaffiliated trustees 44,320
------------
Total expenses $ 25,199,115
Less fees paid indirectly (555,186)
------------
Net expenses $ 24,643,929
------------
Net investment income $ 18,973,613
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain from:
Investments (including $12,148,803 from affiliated
companies) $176,264,904
Other assets and liabilities denominated in foreign
currencies 5,389 $176,270,293
------------ ------------
Change in net unrealized gain or loss from:
Investments $419,621,720
Other assets and liabilities denominated in
foreign currencies 4,440 $419,626,160
------------ ------------
Net gain on investments and foreign currency
transactions $595,896,453
------------
Net increase in net assets resulting from operations $614,870,066
============
</TABLE>
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 3/31/00 and the Year Ended 9/30/99
<TABLE>
<CAPTION>
Six Months
Ended
3/31/00 Year Ended
FROM OPERATIONS: (unaudited) 9/30/99
<S> <C> <C>
Net investment income $ 18,973,613 $ 54,498,188
Net realized gain on investments and foreign currency
transactions 176,270,293 128,989,779
Change in net unrealized gain on investments and
foreign currency transactions 419,626,160 500,572,638
-------------- --------------
Net increase in net assets resulting from
operations $ 614,870,066 $ 684,060,605
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.10 and $0.19 per share, respectively) $ (24,271,733) $ (51,921,429)
Net realized gain:
Class A ($0.51 and $0.15 per share, respectively) (127,730,590) (44,442,516)
Class B ($0.51 and $0.15 per share, respectively) (569,430) (229,790)
Class C ($0.51 and $0.15 per share, respectively) (103,341) (45,439)
-------------- --------------
Total distributions to shareholders $ (152,675,094) $ (96,639,174)
-------------- --------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 229,636,080 $ 549,021,003
Reinvestment of distributions 142,533,734 89,470,501
Cost of shares repurchased (1,010,444,392) (1,594,983,583)
-------------- --------------
Net decrease in net assets resulting
from fund share transactions $ (638,274,578) $ (956,492,079)
-------------- --------------
Net decrease in net assets $ (176,079,606) $ (369,070,648)
NET ASSETS:
Beginning of period 5,151,869,805 5,520,940,453
-------------- --------------
End of period (including accumulated undistributed net
investment income of $22,789,814 and
$28,087,934, respectively) $4,975,790,199 $5,151,869,805
============== ==============
</TABLE>
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A '00 Shares '00 Amount '99 Shares '99 Amount
<S> <C> <C> <C> <C>
Shares sold 10,953,315 $ 226,065,830 25,634,232 $ 527,769,739
Reinvestment of distributions 6,825,586 141,894,539 4,390,605 89,211,509
Less shares repurchased (48,431,021) (1,001,786,741) (75,774,124) (1,572,599,850)
----------- --------------- ----------- ----------------
Net decrease (30,652,120) $ (633,826,372) (45,749,287) $ (955,618,602)
=========== =============== =========== ===============
CLASS B
Shares sold 143,651 $ 2,940,051 796,132 $ 16,027,099
Reinvestment of distributions 26,731 547,988 11,167 219,995
Less shares repurchased (356,322) (7,199,345) (866,761) (17,501,553)
----------- --------------- ----------- ----------------
Net decrease (185,940) $ (3,711,306) (59,462) $ (1,254,459)
=========== =============== =========== ===============
CLASS C
Shares sold 31,072 $ 630,199 259,176 $ 5,224,165
Reinvestment of distributions 4,438 91,207 1,976 38,997
Less shares repurchased (72,003) (1,458,306) (244,298) (4,882,180)
----------- --------------- ----------- ----------------
Net increase (decrease) (36,493) $ (736,900) 16,854 $ 380,982
=========== =============== =========== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 3/31/00
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
3/31/00 Year Ended
(unaudited) 9/30/99
<S> <C> <C>
CLASS A
Net asset value, beginning of period $ 20.16 $ 18.32
---------- ---------
Increase (decrease) from investment operations:
Net investment income $ 0.09 $ 0.21
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 2.51 1.97
---------- ---------
Net increase (decrease) from investment operations $ 2.60 $ 2.18
Distributions to shareholders:
Net investment income (0.10) (0.19)
Net realized gain (0.51) (0.15)
---------- ---------
Net increase (decrease) in net asset value $ 1.99 $ 1.84
---------- ---------
Net asset value, end of period $ 22.15 $ 20.16
========== =========
Total return* 13.11% 11.86%
Ratio of net expenses to average net assets+ 0.99%** 0.96%
Ratio of net investment income to average net assets+ 0.74%** 0.93%
Portfolio turnover rate 2%** 12%
Net assets, end of period (in thousands) $4,952,102 $5,125,858
Ratios assuming reduction for fees paid indirectly:
Net expenses 0.97%** 0.95%
Net investment income 0.76%** 0.94%
<CAPTION>
Year Ended Year Ended Year Ended Year Ended
9/30/98 9/30/97 9/30/96 9/30/95
<S> <C> <C> <C> <C>
CLASS A
Net asset value, beginning of period $ 27.85 $ 20.94 $ 20.66 $ 19.38
---------- --------- ---------- ----------
Increase (decrease) from investment operations:
Net investment income $ 0.17 $ 0.16 $ 0.23 $ 0.35
Net realized and unrealized gain (loss) on investments
and foreign currency transactions (6.20) 8.83 2.10 3.04
---------- --------- ---------- ----------
Net increase (decrease) from investment operations $ (6.03) $ 8.99 $ 2.33 $ 3.39
Distributions to shareholders:
Net investment income (0.16) (0.15) (0.32) (0.30)
Net realized gain (3.34) (1.93) (1.73) (1.81)
---------- ---------- ----------- ----------
Net increase (decrease) in net asset value $ (9.53) $ 6.91 $ 0.28 $ 1.28
---------- ---------- ----------- ----------
Net asset value, end of period $ 18.32 $ 27.85 $ 20.94 $ 20.66
========== ========== =========== ==========
Total return* (23.97)% 45.95% 12.18% 19.92%
Ratio of net expenses to average net assets+ 0.90% 0.96% 0.92% 0.93%
Ratio of net investment income to average net assets+ 0.74% 0.68% 1.13% 1.85%
Portfolio turnover rate 50% 47% 66% 63%
Net assets, end of period (in thousands) $5,496,480 $7,534,010 $5,431,797 $5,114,963
Ratios assuming reduction for fees paid indirectly:
Net expenses 0.90% 0.95% 0.90% 0.91%
Net investment income 0.74% 0.69% 1.15% 1.87%
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all 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.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 3/31/00
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
3/31/00 Year Ended
(unaudited) 9/30/99
<S> <C> <C>
CLASS B
Net asset value, beginning of period $ 19.74 $ 17.98
------- -------
Increase (decrease) from investment operations:
Net investment loss $ (0.11) $ (0.04)
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 2.51 1.95
------- -------
Net increase (decrease) from investment operations $ 2.40 $ 1.91
Distributions to shareholders:
Net investment income - -
Net realized gain (0.51) (0.15)
------- -------
Net increase (decrease) in net asset value $ 1.89 $ 1.76
------- -------
Net asset value, end of period $ 21.63 $ 19.74
======= =======
Total return* 12.32% 10.62%
Ratio of net expenses to average net assets+ 2.40%** 2.06%
Ratio of net investment loss to average net assets+ (0.67)%** (0.18)%
Portfolio turnover rate 2%** 12%
Net assets, end of period (in thousands) $20,052 $21,972
Ratios assuming reduction for fees paid indirectly:
Net expenses 2.38%** 2.04%
Net investment loss (0.65)%** (0.16)%
<CAPTION>
Year Ended Year Ended 7/1/96 to
9/30/98(a) 9/30/97(a) 9/30/96
<S> <C> <C> <C>
CLASS B
Net asset value, beginning of period $ 27.52 $ 20.89 $20.55
------- ------- ------
Increase (decrease) from investment operations:
Net investment loss $ (0.07) $ (0.07) $(0.01)
Net realized and unrealized gain (loss) on investments
and foreign currency transactions (6.11) 8.76 0.35
------- ------- ------
Net increase (decrease) from investment operations $ (6.18) $ 8.69 $ 0.34
Distributions to shareholders:
Net investment income (0.02) (0.13) -
Net realized gain (3.34) (1.93) -
------- ------- ------
Net increase (decrease) in net asset value $ (9.54) $ 6.63 $ 0.34
------- ------- ------
Net asset value, end of period $ 17.98 $ 27.52 $20.89
======= ======= ======
Total return* (24.76)% 44.58% 1.65%
Ratio of net expenses to average net assets+ 1.96% 1.94% 2.03%**
Ratio of net investment loss to average net assets+ (0.31)% (0.32)% (0.25)%**
Portfolio turnover rate 50% 47% 66%
Net assets, end of period (in thousands) $21,084 $15,311 $ 864
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.96% 1.90% 2.02%**
Net investment loss (0.31)% (0.28)% (0.24)%**
</TABLE>
(a) The per share data presented above is based upon the average shares
outstanding for the period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all 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.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
FINANCIAL HIGHLIGHTS 3/31/00
Pioneer II
<TABLE>
<CAPTION>
Six Months Ended
3/31/00 Year Ended
(unaudited) 9/30/99
<S> <C> <C>
CLASS C
Net asset value, beginning of period $19.78 $18.02
------ ------
Increase (decrease) from investment operations:
Net investment loss $(0.09) $(0.04)
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 2.50 1.95
------ ------
Net increase (decrease) from investment operations $ 2.41 $ 1.91
Distributions to shareholders:
Net investment income - -
Net realized gain (0.51) (0.15)
------ ------
Net increase (decrease) in net asset value $ 1.90 $ 1.76
------ ------
Net asset value, end of period $21.68 $19.78
====== ======
Total return* 12.35% 10.60%
Ratio of net expenses to average net assets+ 2.26%** 2.08%
Ratio of net investment loss to average net assets+ (0.53)%** (0.22)%
Portfolio turnover rate 2% ** 12%
Net assets, end of period (in thousands) $3,636 $4,039
Ratios assuming reduction for fees paid indirectly:
Net expenses 2.24%** 2.06%
Net investment loss (0.51)%** (0.20)%
<CAPTION>
Year Ended Year Ended 7/1/96 to
9/30/98(a) 9/30/97(a) 9/30/96
<S> <C> <C> <C>
CLASS C
Net asset value, beginning of period $ 27.55 $20.88 $20.55
------- ------ ------
Increase (decrease) from investment operations:
Net investment loss $ (0.06) $(0.08) $(0.01)
Net realized and unrealized gain (loss) on investments
and foreign currency transactions (6.07) 8.77 0.34
------- ------ ------
Net increase (decrease) from investment operations $ (6.13) $ 8.69 $ 0.33
Distributions to shareholders:
Net investment income (0.06) (0.09) -
Net realized gain (3.34) (1.93) -
------- ------ ------
Net increase (decrease) in net asset value $ (9.53) $ 6.67 $ 0.33
------- ------ ------
Net asset value, end of period $ 18.02 $27.55 $20.88
======= ====== ======
Total return* (24.56)% 44.51% 1.61%
Ratio of net expenses to average net assets+ 1.93% 1.99% 2.02%**
Ratio of net investment loss to average net assets+ (0.28)% (0.39)% (0.15)%**
Portfolio turnover rate 50% 47% 66%
Net assets, end of period (in thousands) $ 3,377 $2,267 $ 214
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.93% 1.95% 2.01%**
Net investment loss (0.28)% (0.35)% (0.14)%**
</TABLE>
(a) The per share data presented above is based upon the average shares
outstanding for the period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all 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.
+ Ratios assuming no reduction for fees paid indirectly.
22
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/00 (unaudited)
- -------------------------------------------------------------------------------
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 period. 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 as of trade date. The net asset value is
computed once daily, on each day the New York Stock Exchange is open, as of
the close of regular trading on the Exchange. In computing the net asset
value, 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
23
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/00 (continued)
- -------------------------------------------------------------------------------
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.
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. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareholders. Therefore, no federal income tax provision is required.
The characterization of distributions to shareholders for financial reporting
purposes is determined in accordance with federal income tax rules.
Therefore, the source of the Fund's distributions may be shown in the
accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
24
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/00 (unaudited)
- -------------------------------------------------------------------------------
D. Fund Shares
The Fund records sales and repurchases of its shares as of trade date.
Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Fund
and an indirect subsidiary of The Pioneer Group, Inc., earned $469,784 in
underwriting commissions on the sale of fund shares during the six months
ended March 31, 2000.
E. 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 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
Pioneer Investment Management, Inc. (PIM), manages the Fund's portfolio and is a
wholly owned subsidiary of PGI. PIM 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 six months ended March 31, 2000, the aggregate performance
adjustment resulted in a reduction to the basic fee of $2,599,334. For the six
months ended March 31, 2000, the net management fee was equivalent to 0.50% of
average net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At March 31, 2000, $2,217,607 was payable to PIM
related to management fees, administrative fees and certain other services.
25
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/00 (continued)
- -------------------------------------------------------------------------------
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 $929,044 in transfer agent fees payable to PSC at March 31,
2000.
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 average daily net assets attributable to Class A
shares 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 the 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
$913,397 in distribution fees payable to PFD at March 31, 2000.
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
CDSCs are paid to PFD. For the six months ended March 31, 2000, CDSCs in the
amount of $119,118 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 six
months ended March 31, 2000, the Fund's expenses were reduced by $555,186 under
such arrangements.
26
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/00 (unaudited)
- -------------------------------------------------------------------------------
6. Line of Credit Facility
The Fund, along with certain other Funds in the Pioneer Family of Funds (the
Funds), collectively participate in a $50 million committed, unsecured
revolving line of credit facility. Borrowings are used solely for temporary or
emergency purposes. The Fund may borrow up to the lesser of $50 million or the
limits set by its prospectus for borrowings. Interest on collective borrowings
of up to $25 million is payable at the Federal Funds Rate plus 3/8% on an
annualized basis, or at the Federal Funds Rate plus 1/2% if the borrowing
exceeds $25 million at any one time. The Funds pay an annual commitment fee for
this facility. The commitment fee is allocated among such Funds based on their
respective borrowing limits.
The average daily amount of borrowings outstanding during the six months ended
March 31, 2000 was $383,618. The average daily shares outstanding during the
period were 244,939,376 resulting in an average borrowing of less than one cent
per share. The related weighted average annualized interest rate for the period
was 6.01%, and the total interest expense on such borrowings was $18,316.
7. 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, 2000:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Affiliates Purchases Sales Income Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A.M. Castle & Co. $ - $ - $ 355,339 $ 11,389,062
Ambac Financial Group, Inc. - 21,962,067 893,266 196,981,363
Amcast Industrial Corp. - - 150,892 4,951,144
Briggs & Stratton Corp. - - 983,220 67,391,537
Champion Enterprises, Inc. - - - 23,833,750
Clayton Homes, Inc. - - 392,832 82,863,000
Dionex Corp. - 4,282,670 - 68,378,250
Donaldson Co., Inc. - 6,894,813 684,600 103,561,875
Lancaster Colony Corp. - 16,540,450 895,184 80,912,691
Mississippi Chemical Corp. - - - 14,851,250
Trinity Industries, Inc. - 6,579,941 1,421,136 86,402,525
----- ----------- ---------- ------------
$ - $56,259,941 $5,776,469 $741,516,447
===== =========== ========== ============
- -----------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
Pioneer II
- -------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- -------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr. John F. Cogan, Jr., Chairman and
Mary K. Bush President
Richard H. Egdahl, M.D. Richard E. Dahlberg, Vice President
Margaret B.W. Graham David D. Tripple, Executive Vice President
John W. Kendrick Eric W. Reckard, Treasurer
Marguerite A. Piret Joseph P. Barri, Secretary
David D. Tripple
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneering Services Corporation
28
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
For information about any Pioneer mutual fund, please contact your investment
professional, or call Pioneer at 1-800-225-6292. Ask for a free fund
information kit, which includes a fund prospectus. Please read the prospectus
carefully before you invest or send money.
Growth Funds Income Funds
United States Taxable
Pioneer Growth Shares Pioneer America Income Trust
Pioneer Micro-Cap Fund Pioneer Bond Fund
Pioneer Mid-Cap Fund Pioneer High Yield Fund
Pioneer Mid-Cap Value Fund Pioneer Limited Maturity Bond Fund
Pioneer Science & Technology Fund Pioneer Strategic Income Fund
Pioneer Small Company Fund
Pioneer Tax-Managed Fund
Tax-Free
Pioneer Tax-Free Income Fund
International/Global
Pioneer Emerging Markets Fund
Pioneer Europe Fund Money Market Fund
Pioneer Indo-Asia Fund Pioneer Cash Reserves Fund*
Pioneer International Growth Fund
Pioneer World Equity Fund
Growth and Income Funds
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
*An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1 per share, it is possible to
lose money by investing in the Fund.
29
<PAGE>
HOW TO CONTACT PIONEER
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
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
Write to us:
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)
Visit our website: www.pioneerfunds.com
This report must be preceded or accompanied by a current
Fund prospectus.
[Pioneer Logo]
Pioneer Investment Management, Inc.
60 State Street
Boston, Massachusetts 02109 8127-00-0500
www.pioneerfunds.com (C) Pioneer Funds Distributor, Inc.
[Recycle Logo] Printed on Recycled Paper
