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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21460
Pioneer Series Trust II
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: December 31
Date of reporting period: January 1, 2008 through December 31, 2008
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
Pioneer AmPac
Growth Fund
Annual Report | December 31, 2008
Ticker Symbols:
Class A PAPRX
Class B PRABX
Class C PRRCX
[LOGO]PIONEER
Investments(R)
visit us: pioneerinvestments.com
Table of Contents
Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 8
Prices and Distributions 9
Performance Update 10
Comparing Ongoing Fund Expenses 13
Schedule of Investments 15
Financial Statements 20
Notes to Financial Statements 27
Report of Independent Registered Public Accounting Firm 33
Approval of Sub-Advisory Agreement 34
Trustees, Officers and Service Providers 37
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 1
President's Letter
Dear Shareowner,
Stock and bond markets around the globe this year have experienced one of their
most tumultuous periods in history. Investors have witnessed volatility of a
magnitude that many have never before seen. Distance often provides the best
vantage point for perspective. Still, we believe that the benefits of basic
investment principles that have stood the test of time -- even in the midst of
market turmoil -- cannot be underestimated.
First, invest for the long term. The founder of Pioneer Investments, Philip L.
Carret, began his investment career during the 1920s. One lesson he learned is
that while great prosperity affords an advantageous time for selling stocks,
extreme economic slumps can create opportunities for purchase. Indeed, many of
our portfolio managers, who follow the value-conscious investing approach of
our founder, are looking at recent market conditions as an opportunity to buy
companies whose shares we believe have been unjustifiably beaten down by
indiscriminate selling, but that we have identified as having strong prospects
over time. While investors may be facing a sustained market downturn, we
continue to believe that patience, along with staying invested in the market,
are important considerations for long-term investors.
A second principle is to stay diversified across different types of
investments. The global scope of the current market weakness poses challenges
for this basic investment axiom. But the turbulence makes now a good time to
reassess your portfolio and make sure that your investments continue to meet
your needs. We believe you should work closely with your financial advisor to
find the mix of stocks, bonds and money market assets that is best aligned to
your particular risk tolerance and investment objective.
As the investment markets sort through the continuing crisis in the financial
industry, we are staying focused on the fundamentals and risk management. With
more than 80 years of experience behind us, we have learned how to navigate
turbulent markets. At Pioneer Investments, risk management has always been a
critical part of our culture -- not just during periods of extraordinary
volatility. Our investment process is based on fundamental research,
quantitative analysis and active portfolio management. This three-pillared
process, which we apply to each of our portfolios, is supported by an
integrated team approach and is designed to carefully balance risk and reward.
While we
2 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
see potential chances for making money in many corners of the market, it takes
research and experience to separate solid investment opportunities from
speculation.
We invite you to learn more about Pioneer and our time-tested approach to
investing by consulting with your financial advisor or visiting us online at
www.pioneerinvestments.com. Thank you for investing with Pioneer.
Respectfully,
/s/ Daniel K. Kingsbury
Daniel K. Kingsbury
President and CEO
Pioneer Investment Management USA, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 3
Portfolio Management Discussion | 12/31/08
The equity markets retreated sharply in 2008, with many of the major stock
market indices posting losses in the neighborhood of 35% to 40% - their worst
annual showing since 1931. However, shareowners in Pioneer AmPac Growth Fund
can take a measure of solace from the fact that the Fund held up better than
most, as Rosellen Papp of L. Roy Papp & Associates, the Fund's sub-adviser,
discusses in the following interview.
Q What was the market environment like during the 12 months ended December 31,
2008?
A With many long-standing pillars of the financial community collapsing, the
credit markets contracting sharply, and the U.S. economy tipping into
recession, the capital markets experienced unprecedented turmoil in 2008.
The crisis in confidence among consumers and businesses and the ensuing
global market sell-off sent investors fleeing from all risk. The severity
of the market downturn and economic crisis was so sharp that the Federal
Reserve Board, the U.S. Treasury and the U.S. government introduced several
innovative programs to bolster the financial markets and attempt to
unfreeze the credit markets. By year end, financial markets had stabilized
from near-panic levels, and historically low interest rates were showing
signs of thawing the credit markets.
Q How did the Fund perform for the 12-month period ended December 31, 2008?
A The Fund's emphasis on high-quality American growth companies with strong
balance sheets and consistent earnings helped it to outperform its
benchmark and competitive funds universe, but it was still a disappointing
year. For the 12 months ended December 31, 2008, Class A shares posted a
total return of -33.36% at net asset value, with much of the decline coming
in the second half of the year. The Fund's benchmark, the Russell 1000
Growth Index, returned -38.44% over the same 12 months, and the average
return for the 506 multi-cap growth funds tracked by Lipper was -41.90%.
Q What factors most contributed to the Fund's outperformance versus its
benchmark and Lipper peer group during the 12-month period ended December
31, 2008?
A There was almost no place to hide from the steep decline in the market, but
some stocks weathered the crisis better than others. By focusing on high-
quality companies with solid earnings growth and by limiting the Fund's
exposure to several sectors of the economy that suffered in the wake of
higher oil prices in the first half of 2008 and the deepening financial
crisis
4 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
throughout the fiscal year, we were able to lessen the impact of the
decline on the Fund's portfolio. Our stock selection -- particularly in the
energy, information technology, industrial, and health care sectors -- also
helped the Fund's performance results during the 12-month period.
Q Could you mention some of the holdings that helped the Fund's performance
during the annual reporting period?
A The Fund's focus on large integrated oil companies, such as ExxonMobil and
Chevron, was a positive contributor, as they outperformed servicers and
drillers when commodity prices fell sharply. Fund holding Johnson & Johnson
was the third-best performing stock in the Dow Jones Industrial Average in
2008 -- demonstrating its defensive qualities as a health care company in a
down market. Similarly, two consumer-related holdings performed well
despite the economic slowdown: footwear giant Nike continued to do well
following the summer Olympics, and Colgate-Palmolive benefited from
consumers not turning to generic alternatives during the period.
Investments in the chewing gum manufacturer Wm. Wrigley Jr. appreciated
strongly in response to a buyout offer from Warren Buffet's Berkshire
Hathaway and the privately held Mars. Expeditors International of
Washington, an international airfreight forwarding company, continued to
profit from trade between Asia and the United States in spite of the global
slowdown.
Three holdings that were added to the Fund last spring held up well during
the period. United Technologies has a large order backlog that is expected
to help support revenue growth in the months ahead. Accenture, a global
management consulting and technology services company, has been seeing the
growth of its outsourcing business as customers seek to reduce costs during
the recession. Finally, Trimble Navigation, which specializes in global
positioning equipment for businesses, including agriculture and road
construction, may be in a position to benefit from infrastructure spending
that is expected to be part of the new administration's stimulus package.
Q Which holdings detracted from the Fund's performance during the 12 months
ended December 31, 2008?
A The Fund's financial stocks declined during the sell-off, but they did not
fall to the degree that large money center and regional banks with balance
sheet issues did. In our estimation, Fund holdings such as State Street
Bank and T. Rowe Price still offer strategic value and long-term potential.
We did, however, sell the Fund's holding in commercial bank UCBH Holdings
in the first half of the year - well in advance of the financial market
meltdown last fall. We were concerned that the difficulties in the credit
markets could result in a decline in commercial real estate transactions,
which would impact UCBH negatively. We scaled back the Fund's investment in
General Electric, but the stock still proved disappointing in the market
correction
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 5
when the company reported weaker-than-expected earnings due to the dismal
performance of its financial businesses.
With the current state of the U.S. economy coming into question, WPP Group,
which owns the highly respected Ogilvy Mather and J. Walter Thompson
agencies, fell in response to fears that a slowdown will hurt demand for
advertising. Stryker, a developer and manufacturer of orthopedic and
surgical devices, lagged in the fourth quarter on investor fears that
patients would postpone elective surgeries in a recession, thereby
affecting company profits. Stryker's stock price bounced back following the
close of the fiscal year. Medtronic's stock lagged in response to concerns
that a competitor with a similar stent product may hurt profits. However,
we saw this as a temporary issue and remain confident in the company's
growth potential, especially from its pacemaker and neurological
businesses.
Q We've already discussed some of the stocks that you added to the portfolio
early in the year. Did you make any further changes to the portfolio in the
second half of the year ended December 31, 2008?
A Yes. In an effort to increase the Fund's exposure to the defensive consumer
staples sector, we added Procter & Gamble, which we believe should prove
relatively resilient in these tougher economic times.
Q What is your outlook for the new fiscal year that began on January 1, 2009?
A The months ahead are difficult to gauge, but we think that deleveraging, or
the paying down of excess debt, should help restore more solid
underpinnings to the U.S. economy. And while the United States may face
some bumpy conditions over the next few months, we feel the coordinated
response by global governments and central banks should aid credit market
recovery, differentiating today's crisis from the Great Depression.
We have been seeing signs that the markets are beginning to function again,
which is contributing to our mildly optimistic outlook. Crude oil prices
declined steeply during the second half of 2008 -- falling from a peak of
$147 a barrel to below $40, and gasoline prices followed suit. This will
free up much needed cash for consumers to spend and help keep inflation
low. Secondly, given the steep decline in interest rates during the course
of 2008, we think that record low rates can help stabilize the housing
market, which, in turn, helps financial and credit markets recover.
Thirdly, the massive U.S. government economic stimulus program, in tandem
with those abroad, should help jump start the economy and restore some
consumer and investor confidence. Finally, new direction and leadership in
Washington can be a positive force for change.
6 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
U.S. equity valuations are the most compelling in years and appear to be
discounting a too-bearish outlook in our estimation. We feel that the Fund,
with its emphasis on high-quality companies with strong balance sheets,
strong cash flows, excellent management and reasonable growth prospects
trading at attractive valuations, should be in a good position to benefit
from an improving economic cycle.
Please refer to the Schedule of Investments on pages 15-19 for a full listing
of Fund securities.
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
The Fund may invest a substantial amount of its assets in issuers located in a
limited number of countries and therefore is susceptible to adverse economic,
political or regulatory developments affecting those countries. Investing in
the securities of U.S. issuers with substantial foreign activities involves
many of the same risks as investing in the securities of foreign issuers. The
Fund invests in a limited number of securities and, as a result, the Fund's
performance may be more volatile than the performance of other funds holding
more securities. At times, the Fund's investments may represent industries or
industry sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries or sectors.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes.
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 7
Portfolio Summary | 12/31/08
Portfolio Diversification
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
U.S. Common Stocks 86.8%
Temporary Cash Investments 11.1%
Depositary Receipts for International Stocks 2.1%
Sector Distribution
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
Information Technology 34.5%
Industrials 16.5%
Health Care 11.6%
Consumer Discretionary 11.3%
Consumer Staples 10.4%
Financials 9.0%
Energy 6.7%
10 Largest Holdings*
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
1. Accenture, Ltd. 4.95%
2. Colgate-Palmolive Co. 4.90
3. Emerson Electric Co. 4.80
4. T. Rowe Price Associates, Inc. 4.78
5. Microsoft Corp. 4.48
6. State Street Corp. 4.22
7. Cisco Systems, Inc. 4.14
8. 3M Co. 4.11
9. Nike, Inc. 4.05
10. Stryker Corp. 3.97
* This list excludes temporary cash and derivative instruments. The portfolio
is actively managed, and current holdings may be different. The holdings
listed should not be considered recommendations to buy or sell any security
listed.
8 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
Prices and Distributions | 12/31/08
Net Asset Value per Share
- --------------------------------------------------------------------------------
Class 12/31/08 12/31/07
A $ 12.13 $ 18.36
- -------------------------------------------------
B $ 11.80 $ 17.77
- -------------------------------------------------
C $ 11.78 $ 17.79
- -------------------------------------------------
Distributions per Share: 1/1/08-12/31/08
- --------------------------------------------------------------------------------
Net Investment Short-Term Long-Term
Class Income Capital Gains Capital Gains
A $ 0.1025 $ -- $ --
- --------------------------------------------------------------------------------
B $ -- $ -- $ --
- --------------------------------------------------------------------------------
C $ -- $ -- $ --
- --------------------------------------------------------------------------------
Index Definitions
- --------------------------------------------------------------------------------
The Russell 1000 Growth Index measures the performance of large-cap U.S. growth
stocks. Companies in this index tend to exhibit higher price-to-book and
price-to-earnings ratios, lower dividend yields, and higher forecasted growth
values than the value universe. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Fund returns, do not reflect any sales
charges, fees or expenses. You cannot invest directly in an index.
The index defined here pertains to the "Value of $10,000 Investment" charts
shown on pages 10-12.
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 9
Performance Update | 12/31/08 Class A Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer AmPac Growth Fund at public offering price, compared
to that of the Russell 1000 Growth Index.
Average Annual Total Returns
(As of December 31, 2008)
- ------------------------------------------------------------------
Net Asset Public Offering
Period Value (NAV) Price (POP)
- ------------------------------------------------------------------
10 Years -1.06% -1.64%
5 Years -3.82 -4.96
1 Year -33.36 -37.19
- ------------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ------------------------------------------------------------------
Gross Net
- ------------------------------------------------------------------
1.65% 1.25%
- ------------------------------------------------------------------
[THE FOLLOWING DATA IS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer Russell
AmPac 1000
Growth Growth
Fund Index
12/98 9,425 10,000
11,738 13,316
12/00 11,815 10,330
10,115 8,220
12/02 8,054 5,928
10,298 7,692
12/04 10,396 8,176
10,470 8,606
12/06 11,658 9,387
12,716 10,496
12/08 8,474 6,462
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost.
NAV results represent the percent change in net asset value per share. Returns
would have been lower had sales charges been reflected. POP returns reflect
deduction of maximum 5.75% sales charge. All results are historical and assume
the reinvestment of dividends and capital gains. Other share classes are
available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers, Fund performance would be lower.
The net expense ratio reflects contractual expense limitation currently in
effect through 5/1/10 for Class A Shares. There can be no assurance that
Pioneer will extend the expense limitation beyond such time. Please see the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
Pioneer AmPac Growth Fund was created through the reorganization of predecessor
fund Papp America-Pacific Rim Fund on February 20, 2004. The performance of
Class A shares of the Fund from March 14, 1997 to February 20, 2004 is the
performance of Papp America-Pacific Rim Fund's single class, which has been
restated to reflect any applicable sales charges, Rule 12b-1 fees and service
fees (but not other differences in expenses). This adjustment has the effect of
reducing the previously reported performance of Papp America-Pacific Rim Fund.
10 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
Performance Update | 12/31/08 Class B Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer AmPac Growth Fund, compared to that of the Russell
1000 Growth Index.
Average Annual Total Returns
(As of December 31, 2008)
- ----------------------------------------------------------------
If If
Period Held Redeemed
- ----------------------------------------------------------------
10 Years -1.83% -1.83%
5 Years -4.61 -4.61
1 Year -33.60 -36.25
- ----------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ----------------------------------------------------------------
Gross Net
- ----------------------------------------------------------------
2.60% 2.15%
- ----------------------------------------------------------------
[THE FOLLOWING DATA IS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer Russell
AmPac 1000
Growth Growth
Fund Index
12/98 10,000 10,000
12,362 13,316
12/00 12,350 10,330
10,494 8,220
12/02 8,292 5,928
10,524 7,692
12/04 10,549 8,176
10,509 8,606
12/06 11,584 9,387
12,520 10,496
12/08 8,314 6,462
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost.
"If Held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. "If redeemed"
returns reflect the deduction of applicable contingent deferred sales charge
(CDSC). Effective December 1, 2004, the period during which a CDSC is applied
to withdrawals was shortened to 5 years. The maximum CDSC for Class B shares
continues to be 4%. For more complete information, please see the prospectus
for details. Note: Shares purchased prior to December 1, 2004 remain subject to
the CDSC in effect at the time you purchased those shares. For performance
information for shares purchased prior to December 1, 2004, please visit
www.pioneerinvestments.com.
All results are historical and assume the reinvestment of dividends and capital
gains. Other share classes are available for which performance and expenses
will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers, Fund performance would be lower.
The net expense ratio reflects contractual expense limitation currently in
effect through 5/1/10 for Class B shares. There can be no assurance that
Pioneer will extend the expense limitation beyond such time. Please see the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
Pioneer AmPac Growth Fund was created through the reorganization of predecessor
fund Papp America-Pacific Rim Fund on February 20, 2004. The performance of
Class B shares of the Fund from March 14, 1997 to February 20, 2004 is the
performance of Papp America-Pacific Rim Fund's single class, which has been
restated to reflect any applicable sales charges, Rule 12b-1 fees and service
fees (but not other differences in expenses). This adjustment has the effect of
reducing the previously reported performance of Papp America-Pacific Rim Fund.
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 11
Performance Update | 12/31/08 Class C Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer AmPac Growth Fund, compared to that of the Russell
1000 Growth Index.
Average Annual Total Returns
(As of December 31, 2008)
- ----------------------------------------------------------------
If If
Period Held Redeemed
- ----------------------------------------------------------------
10 Years -1.85% -1.85%
5 Years -4.64 -4.64
1 Year -33.78 -33.78
- ----------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ----------------------------------------------------------------
Gross Net
- ----------------------------------------------------------------
2.55% 2.15%
- ----------------------------------------------------------------
[THE FOLLOWING DATA IS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer Russell
AmPac 1000
Growth Growth
Fund Index
12/98 10,000 10,000
12,362 13,316
12/00 12,350 10,330
10,494 8,220
12/09 8,292 5,928
10,524 7,692
12/09 10,542 8,176
10,509 8,606
12/09 11,590 9,387
12,534 10,496
12/09 8,300 6,462
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results.
Investment return and principal value will fluctuate, and shares, when
redeemed, may be worth more or less than their original cost.
Class C shares held for less than one year are also subject to a 1% contingent
deferred sales charge (CDSC). The performance of Class C shares does not
reflect the 1% front-end sales charge in effect prior to February 1, 2004. If
you paid a 1% sales charge, your returns would be lower than those shown above.
"If Held" results represent the percent change in net asset value per share.
"If Redeemed" results reflect the deduction of the 1% CDSC. Returns would have
been lower had sales charges been reflected. All results are historical and
assume the reinvestment of dividends and capital gains. Other share classes are
available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers, Fund performance would be lower.
The net expense ratio reflects contractual expense limitation currently in
effect through 5/1/10 for Class C shares. There can be no assurance that
Pioneer will extend the expense limitation beyond such time. Please see the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
Pioneer AmPac Growth Fund was created through the reorganization of predecessor
fund Papp America-Pacific Rim Fund on February 20, 2004. The performance of
Class C shares of the Fund from March 14, 1997 to February 20, 2004 is the
performance of Papp America-Pacific Rim Fund's single class, which has been
restated to reflect any applicable sales charges, Rule 12b-1 fees and service
fees (but not other differences in expenses). This adjustment has the effect of
reducing the previously reported performance of Papp America-Pacific Rim Fund.
12 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
Comparing Ongoing Fund Expenses
As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
- --------------------------------------------------------------------------------
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
(1) Divide your account value by $1,000
Example: an $8,600 account value [divided by] $1,000 = 8.6
(2) Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer AmPac Growth Fund
Based on actual returns from July 1, 2008 through December 31, 2008.
--------------------------------------------------------------------------------
Share Class A B C
- --------------------------------------------------------------------------------
Beginning Account $ 1,000.00 $ 1,000.00 $ 1,000.00
Value on 7/1/08
- --------------------------------------------------------------------------------
Ending Account $ 734.41 $ 736.06 $ 733.09
Value on 12/31/08
- --------------------------------------------------------------------------------
Expenses Paid $ 5.45 $ 7.81 $ 8.28
During Period*
- --------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.25%, 1.79% and
1.90% for Class A, Class B and Class C shares, respectively, multiplied by
the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period).
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 13
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the
5% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer AmPac Growth Fund
Based on a hypothetical 5% per year return before expenses, reflecting the
period from July 1, 2008 through December 31, 2008.
- --------------------------------------------------------------------------------
Share Class A B C
- --------------------------------------------------------------------------------
Beginning Account $ 1,000.00 $ 1,000.00 $ 1,000.00
Value on 7/1/08
- --------------------------------------------------------------------------------
Ending Account $ 1,018.85 $ 1,016.14 $ 1,015.58
Value on 12/31/08
- --------------------------------------------------------------------------------
Expenses Paid $ 6.34 $ 9.07 $ 9.63
During Period*
- --------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.25%, 1.79% and
1.90% for Class A, Class B and Class C shares, respectively, multiplied by
the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period).
14 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
Schedule of Investments | 12/31/08
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 98.4%
ENERGY -- 6.6%
Integrated Oil & Gas -- 6.6%
6,400 Chevron Corp. $ 473,408
4,600 Exxon Mobil Corp. 367,218
-----------
$ 840,626
-----------
Total Energy $ 840,626
- --------------------------------------------------------------------------------
CAPITAL GOODS -- 12.9%
Aerospace & Defense -- 2.0%
4,800 United Technologies Corp. $ 257,280
- --------------------------------------------------------------------------------
Electrical Component & Equipment -- 4.7%
16,500 Emerson Electric Co. $ 604,065
- --------------------------------------------------------------------------------
Industrial Conglomerates -- 6.2%
9,000 3M Co. $ 517,860
16,500 General Electric Co. 267,300
-----------
$ 785,160
-----------
Total Capital Goods $ 1,646,505
- --------------------------------------------------------------------------------
TRANSPORTATION -- 3.4%
Air Freight & Couriers -- 3.4%
13,000 Expeditors International of Washington, Inc. (b) $ 432,510
-----------
Total Transportation $ 432,510
- --------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 6.7%
Apparel, Accessories & Luxury Goods -- 2.7%
17,000 Coach, Inc.* $ 353,090
- --------------------------------------------------------------------------------
Footwear -- 4.0%
10,000 Nike, Inc. (b) $ 510,000
-----------
Total Consumer Durables & Apparel $ 863,090
- --------------------------------------------------------------------------------
MEDIA -- 2.3%
Advertising -- 2.3%
10,000 WPP Plc $ 295,900
-----------
Total Media $ 295,900
- --------------------------------------------------------------------------------
RETAILING -- 2.0%
General Merchandise Stores -- 2.0%
7,500 Target Corp. $ 258,975
-----------
Total Retailing $ 258,975
- --------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 3.2%
Soft Drinks -- 3.2%
7,500 PepsiCo, Inc. $ 410,775
-----------
Total Food, Beverage & Tobacco $ 410,775
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 15
Schedule of Investments | 12/31/08 (continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
HOUSEHOLD & PERSONAL PRODUCTS -- 7.0%
Household Products -- 7.0%
9,000 Colgate-Palmolive Co. $ 616,860
4,500 Procter & Gamble Co.* 278,190
-----------
$ 895,050
-----------
Total Household & Personal Products $ 895,050
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 7.7%
Health Care Equipment -- 7.7%
15,500 Medtronic, Inc. $ 487,010
12,500 Stryker Corp. 499,375
-----------
$ 986,385
-----------
Total Health Care Equipment & Services $ 986,385
- --------------------------------------------------------------------------------
PHARMACEUTICALS & BIOTECHNOLOGY -- 3.7%
Pharmaceuticals -- 3.7%
8,000 Johnson & Johnson Co. $ 478,640
-----------
Total Pharmaceuticals & Biotechnology $ 478,640
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 8.9%
Asset Management & Custody Banks -- 8.9%
13,500 State Street Corp. $ 530,955
17,000 T. Rowe Price Associates, Inc. 602,480
-----------
$ 1,133,435
-----------
Total Diversified Financials $ 1,133,435
- --------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 13.1%
Application Software -- 3.8%
23,000 Adobe Systems, Inc.* $ 489,670
- --------------------------------------------------------------------------------
IT Consulting & Other Services -- 4.9%
19,000 Accenture, Ltd. $ 623,010
- --------------------------------------------------------------------------------
Systems Software -- 4.4%
29,000 Microsoft Corp. $ 563,760
-----------
Total Software & Services $ 1,676,440
- --------------------------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 11.8%
Communications Equipment -- 4.1%
32,000 Cisco Systems, Inc.* $ 521,600
- --------------------------------------------------------------------------------
Computer Hardware -- 1.3%
2,000 IBM Corp.* $ 168,320
- --------------------------------------------------------------------------------
Computer Storage & Peripherals -- 1.1%
13,500 EMC Corp.* $ 141,345
- --------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 1.9%
10,000 National Instruments Corp. $ 243,600
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
16 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
- ---------------------------------------------------------------------------------
Shares Value
- ---------------------------------------------------------------------------------
Electronic Manufacturing Services -- 3.4%
20,000 Trimble Navigation, Ltd.* $ 432,200
-----------
Total Technology Hardware & Equipment $ 1,507,065
- ---------------------------------------------------------------------------------
SEMICONDUCTORS -- 9.1%
29,500 Intel Corp. $ 432,470
12,000 Linear Technology Corp. (b) 265,440
24,000 Microchip Technology, Inc. (b) 468,720
-----------
$ 1,166,630
-----------
Total Semiconductors $ 1,166,630
- ---------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $13,358,048) $12,592,026
- ---------------------------------------------------------------------------------
Principal
Amount
- ---------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 12.4%
Securities Lending Collateral -- 12.4% (c)
Certificates of Deposit:
$ 36,623 Abbey National Plc, 3.15%, 8/13/09 $ 36,623
36,618 Bank of Nova Scotia, 3.21%, 5/5/09 36,618
58,526 Bank of Scotland NY, 2.92%, 6/5/09 58,526
65,922 Barclays Bank, 1.5%, 5/27/09 65,922
11,644 Calyon NY, 4.62%, 1/16/09 11,644
73,246 CBA, 4.87%, 7/16/09 73,246
65,922 DNB NOR Bank ASA NY, 3.04%, 6/5/09 65,922
67,094 Intesa SanPaolo S.p.A., 1.44%, 5/22/09 67,094
4,243 NORDEA NY, 4.13%, 4/9/09 4,243
54,935 Royal Bank of Canada NY, 2.7%, 8/7/09 54,935
36,623 Royal Bank of Scotland, 3.06%, 3/5/09 36,623
7,321 Skandinavian Enskilda Bank NY, 3.06%, 2/13/09 7,321
73,246 Societe Generale, 3.29%, 9/4/09 73,246
65,922 Svenska Bank NY, 4.61%, 7/8/09 65,922
73,246 U.S. Bank NA, 2.25%, 8/24/09 73,245
-----------
$ 731,130
- ---------------------------------------------------------------------------------
Commercial Paper:
71,928 American Honda Finance Corp., 4.95%, 7/14/09 $ 71,928
6,980 BBVA U.S., 2.83%, 3/12/09 6,980
36,623 CME Group, Inc., 2.9%, 8/6/09 36,623
36,619 General Electric Capital Corp., 2.86%, 3/16/09 36,619
73,246 HSBC Bank, Inc., 2.5%, 8/14/09 73,246
36,623 IBM, 2.39%, 9/25/09 36,623
65,922 Met Life Global Funding, 3.19%, 6/12/09 65,922
73,246 Monumental Global Funding, Ltd., 2.5%, 8/17/09 73,246
65,922 New York Life Global, 2.13%, 09/04/09 65,922
62,259 Westpac Banking Corp., 2.34%, 6/1/09 62,259
-----------
$ 529,368
- ---------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 17
Schedule of Investments | 12/31/08 (continued)
- -------------------------------------------------------------------------------------
Principal
Amount Value
- -------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENT -- (continued)
Tri-party Repurchase Agreements:
$ 12,443 Barclays Capital Markets, 0.5%, 1/2/09 $ 12,443
161,142 Deutsche Bank, 0.25%, 1/2/09 161,142
-----------
$ 173,585
- -------------------------------------------------------------------------------------
Time Deposit:
73,246 BNP Paribas, 0.01%, 1/2/09 $ 73,246
- -------------------------------------------------------------------------------------
Shares
Money Market Mutual Funds:
18,312 Columbia Government Reserves Fund, 0.82%, 1/2/09 $ 18,311
54,935 JP Morgan, U.S. Government Money Market Fund, 0.98%,
1/2/09 54,935
-----------
$ 73,246
- -------------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $1,580,575) $ 1,580,575
- -------------------------------------------------------------------------------------
TOTAL INVESTMENT IN SECURITIES -- 110.8%
(Cost $14,938,623) (a) $14,172,601
- -------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (10.8)% $(1,376,566)
- -------------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $12,796,035
=====================================================================================
* Non-income producing security.
(a) At December 31, 2008, the net unrealized loss on investments based on
cost for federal income tax purposes of $14,938,623 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost $1,871,859
Aggregate gross unrealized loss for all investments in which there is an
excess of tax cost over value (2,637,881)
----------
Net unrealized loss $ (766,022)
===========
(b) At December 31, 2008, the following securities were out on loan:
- --------------------------------------------------------------------------
Shares Security Value
12,000 Expeditors International of Washington, Inc. $ 399,240
11,000 Linear Technology Corp. 243,320
23,700 Microchip Technology, Inc. 462,861
9,000 Nike, Inc. 459,000
- --------------------------------------------------------------------------
Total $1,564,421
===========================================================================
(c) Securities lending collateral is managed by Credit Suisse New York
Branch.
Purchases and sales of securities (excluding temporary cash investments) for
the year ended December 31, 2008 aggregated $2,770,579 and $4,741,642,
respectively.
The accompanying notes are an integral part of these financial statements.
18 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below.
Highest priority is given to Level 1 inputs and lowest priority is given to
Level 3.
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.)
Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining fair value of investments)
The following is a summary of the inputs used as of December 31, 2008, in
valuing the Fund's assets:
Investments
Valuation Inputs in Securities
Level 1 -- Quoted Prices $ 12,592,026
Level 2 -- Other Significant Observable Inputs 1,580,575
Level 3 -- Significant Unobservable Inputs --
- ----------------------------------------------------------------
Total $ 14,172,601
================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 19
Statement of Assets and Liabilities | 12/31/08
ASSETS:
Investment in securities (including securities loaned of $1,564,421)
(cost $14,938,623) $14,172,601
Cash 16,907
Receivables --
Investment securities sold 118,015
Fund shares sold 56,710
Dividends 21,949
Due from Pioneer Investment Management, Inc. 27,441
Other 27,164
- --------------------------------------------------------------------------------------
Total assets $14,440,787
======================================================================================
LIABILITIES:
Payables --
Fund shares repurchased $ 2,685
Upon return of securities loaned 1,580,575
Due to affiliates 6,878
Accrued expenses 54,614
- --------------------------------------------------------------------------------------
Total liabilities $ 1,644,752
======================================================================================
NET ASSETS:
Paid-in capital $13,585,455
Undistributed net investment income 12,751
Accumulated net realized loss on investments (36,149)
Net unrealized loss on investments (766,022)
- --------------------------------------------------------------------------------------
Total net assets $12,796,035
======================================================================================
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $10,501,480/865,921 shares) $ 12.13
Class B (based on $883,129/74,833 shares) $ 11.80
Class C (based on $1,411,426/119,772 shares) $ 11.78
MAXIMUM OFFERING PRICE:
Class A ($12.13[divided by]94.25%) $ 12.87
======================================================================================
The accompanying notes are an integral part of these financial statements.
20 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
Statement of Operations
For the Year Ended 12/31/08
INVESTMENT INCOME:
Dividends $320,068
Interest 3,735
Income from securities loaned, net 8,605
- ----------------------------------------------------------------------------------------
Total investment income $ 332,408
- ----------------------------------------------------------------------------------------
EXPENSES:
Management fees $130,987
Transfer agent fees
Class A 20,494
Class B 5,218
Class C 6,688
Distribution fees
Class A 34,197
Class B 13,630
Class C 20,727
Shareholder communications expense 13,795
Administrative fees 5,238
Custodian fees 28,003
Registration fees 38,586
Professional fees 45,467
Printing expense 21,705
Fees and expenses of nonaffiliated trustees 6,588
Miscellaneous 3,208
- ----------------------------------------------------------------------------------------
Total expenses $ 394,531
Less fees waived and expenses reimbursed by Pioneer
Investment Management, Inc. (155,246)
Less fees paid indirectly (795)
- ----------------------------------------------------------------------------------------
Net expenses $ 238,490
- ----------------------------------------------------------------------------------------
Net investment income $ 93,918
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments: $ 33,863
- ----------------------------------------------------------------------------------------
Change in net unrealized gain on investments: $ (6,834,281)
- ----------------------------------------------------------------------------------------
Net loss on investments $ (6,800,418)
- ----------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $ (6,706,500)
=========================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 21
Statement of Changes in Net Assets
For the Years Ended 12/31/08 and 12/31/07, respectively
Year Ended Year Ended
12/31/08 12/31/07
FROM OPERATIONS:
Net investment income $ 93,918 $ 13,491
Net realized gain on investments 33,863 498,908
Change in net unrealized gain (loss) on investments (6,834,281) 1,302,624
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $(6,706,500) $ 1,815,023
- ----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.10 and $0.01 per share, respectively) $ (88,818) $ (12,149)
Net realized gain:
Class A ($0.00 and $0.55 per share, respectively) -- (509,489)
Class B ($0.00 and $0.55 per share, respectively) -- (46,623)
Class C ($0.00 and $0.55 per share, respectively) -- (78,230)
- ----------------------------------------------------------------------------------------------
Total distributions to shareowners $ (88,818) $ (646,491)
- ----------------------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 2,942,168 $ 5,145,754
Reinvestment of distributions 78,028 512,874
Cost of shares repurchased (5,330,782) (4,471,459)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from Fund
share transactions $(2,310,586) $ 1,187,169
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $(9,105,904) $ 2,355,701
NET ASSETS:
Beginning of year 21,901,939 19,546,238
- ----------------------------------------------------------------------------------------------
End of year $12,796,035 $21,901,939
- ----------------------------------------------------------------------------------------------
Undistributed net investment income $ 12,751 $ 7,651
- ----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
22 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
'08 Shares '08 Amount '07 Shares '07 Amount
Class A
Shares sold 148,959 $ 2,197,791 200,764 $3,696,448
Reinvestment of distributions 6,634 77,960 24,202 429,839
Less shares repurchased (253,771) (4,039,208) (166,136) (3,144,954)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) (98,178) $ (1,763,457) 58,830 $ 981,333
==================================================================================================
Class B
Shares sold 21,193 $ 322,565 36,725 $ 659,609
Reinvestment of distributions -- -- 1,964 33,746
Less shares repurchased (33,857) (457,158) (38,346) (687,627)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) (12,664) $ (134,593) 343 $ 5,728
==================================================================================================
Class C
Shares sold 27,851 $ 421,880 43,990 $ 789,543
Reinvestment of distributions -- -- 2,867 49,289
Less shares repurchased (56,680) (834,416) (35,774) (630,966)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) (28,829) $ (412,536) 11,083 $ 207,866
==================================================================================================
Class R*
Shares sold -- $ -- 9 $ 154
Reinvestment of distributions -- -- -- --
Less shares repurchased -- -- (458) (7,912)
- --------------------------------------------------------------------------------------------------
Net decrease -- $ -- (449) $ (7,758)
==================================================================================================
* Class R shares ceased operations on February 1, 2007
The accompanying notes are an integral part of these financial statements.
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 23
Financial Highlights
The accompanying notes are an integral part of these financial statements.
Year Ended Year Ended
12/31/08 12/31/07
Class A
Net asset value, beginning of period $ 18.36 $ 17.37
- --------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income $ 0.11 $ 0.04
Net realized and unrealized gain (loss) on investments (6.24) 1.51
- -------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (6.13) $ 1.55
Distributions to shareowners:
Net investment income (0.10) (0.01)
Net realized gain -- (0.55)
- -------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (6.23) $ 0.99
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.13 $ 18.36
=================================================================================================
Total return* (33.36)% 9.07%
Ratio of net expenses to average net assets+ 1.25% 1.25%
Ratio of net investment income to average net assets+ 0.66% 0.23%
Portfolio turnover rate 16% 9%
Net assets, end of period (in thousands) $ 10,501 $17,703
Ratios with no waiver of fees and assumption of expenses by PIM and no
reduction for fees paid indirectly:
Net expenses 2.07% 1.65%
Net investment loss (0.16)% (0.17)%
Ratios with waiver of fees and assumption of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 1.25% 1.25%
Net investment income 0.66% 0.23%
=================================================================================================
Financial Highlights
The accompanying notes are an integral part of these financial statements.
Year Ended Year Ended Year Ended
12/31/06 12/31/05 12/31/04 (b)
Class A
Net asset value, beginning of period $ 16.08 $ 15.97 $ 15.87
- ----------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income $ 0.05 $ 0.02 $ 0.06
Net realized and unrealized gain (loss) on investments 1.77 0.09 0.10
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ 1.82 $ 0.11 $ 0.16
Distributions to shareowners:
Net investment income (0.01) --(a) (0.06)
Net realized gain (0.52) -- --
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ 1.29 $ 0.11 $ 0.10
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.37 $ 16.08 $ 15.97
=================================================================================================================
Total return* 11.35% 0.71% 0.99%**
Ratio of net expenses to average net assets+ 1.25% 1.25% 1.25%
Ratio of net investment income to average net assets+ 0.28% 0.08% 0.43%
Portfolio turnover rate 14% 16% 11%
Net assets, end of period (in thousands) $15,724 $15,780 $19,042
Ratios with no waiver of fees and assumption of expenses by PIM and no
reduction for fees paid indirectly:
Net expenses 1.82% 2.23% 2.22%
Net investment loss (0.29)% (0.90)% (0.54)%
Ratios with waiver of fees and assumption of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 1.25% 1.25% 1.25%
Net investment income 0.28% 0.08% 0.43%
=================================================================================================================
(a) Amount rounds to less than $.01 per share.
(b) Effective February 20, 2004 Pioneer Investment Management became the
Advisor of the Fund.
* 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.
+ Ratios with no reduction for fees paid indirectly.
24 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
The accompanying notes are an integral part of these financial statements.
Year Ended Year Ended
12/31/08 12/31/07
Class B
Net asset value, beginning of period $ 17.77 $ 16.97
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.02 $ (0.13)
Net realized and unrealized gain (loss) on investments (5.99) 1.48
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (5.97) $ 1.35
Distributions to shareowners:
Net realized gain -- (0.55)
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (5.97) $ 0.80
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.80 $ 17.77
==============================================================================================================
Total return* (33.60)% 8.09%
Ratio of net expenses to average net assets+ 1.80% 2.16%
Ratio of net investment income (loss) to average net assets+ 0.11% (0.67)%
Portfolio turnover rate 16% 9%
Net assets, end of period (in thousands) $ 883 $ 1,555
Ratios with no waiver of fees and assumption of expenses by PIM and no reduction
for fees paid indirectly:
Net expenses 3.10% 2.60%
Net investment loss (1.19)% (1.11)%
Ratios with waiver of fees and assumption of expenses by PIM and reduction for fees
paid indirectly:
Net expenses 1.79% 2.15%
Net investment income (loss) 0.12% (0.66)%
==============================================================================================================
The accompanying notes are an integral part of these financial statements.
Year Ended Year Ended
12/31/06 12/31/05
Class B
Net asset value, beginning of period $ 15.87 $ 15.93
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income (loss) $ (0.10) $ (0.15)
Net realized and unrealized gain (loss) on investments 1.72 0.09
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ 1.62 $ (0.06)
Distributions to shareowners:
Net realized gain (0.52) --
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ 1.10 $ (0.06)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.97 $ 15.87
===============================================================================================================
Total return* 10.23% (0.38)%
Ratio of net expenses to average net assets+ 2.23% 2.32%
Ratio of net investment income (loss) to average net assets+ (0.69)% (0.98)%
Portfolio turnover rate 14% 16%
Net assets, end of period (in thousands) $ 1,479 $ 1,224
Ratios with no waiver of fees and assumption of expenses by PIM and no reduction
for fees paid indirectly:
Net expenses 2.79% 3.30%
Net investment loss (1.25)% (1.96)%
Ratios with waiver of fees and assumption of expenses by PIM and reduction for fees
paid indirectly:
Net expenses 2.22% 2.32%
Net investment income (loss) (0.68)% (0.98)%
===============================================================================================================
The accompanying notes are an integral part of these financial statements.
2/21/04 (b)
to 12/31/04
Class B
Net asset value, beginning of period $ 16.32
- ---------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income (loss) $ (0.01)
Net realized and unrealized gain (loss) on investments (0.38)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (0.39)
Distributions to shareowners:
Net realized gain --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (0.39)
- ---------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.93
===================================================================================================
Total return* (2.39)%(a)
Ratio of net expenses to average net assets+ 2.08%**
Ratio of net investment income (loss) to average net assets+ (0.07)%**
Portfolio turnover rate 11%
Net assets, end of period (in thousands) $ 1,177
Ratios with no waiver of fees and assumption of expenses by PIM and no reduction
for fees paid indirectly:
Net expenses 3.14%**
Net investment loss (1.14)%**
Ratios with waiver of fees and assumption of expenses by PIM and reduction for fees
paid indirectly:
Net expenses 2.08%**
Net investment income (loss) (0.07)%**
===================================================================================================
(a) Not Annualized.
(b) Class B shares were first publicly offered on February 21, 2004.
* 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 with no reduction for fees paid indirectly.
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 25
Financial Highlights (continued)
The accompanying notes are an integral part of these financial statements.
Year Ended Year Ended
12/31/08 12/31/07
Class C
Net asset value, beginning of period $ 17.79 $ 16.98
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income (loss) $ --(c) $ (0.11)
Net realized and unrealized gain (loss) on investments (6.01) 1.47
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (6.01) $ 1.36
Distributions to shareowners:
Net realized gain -- (0.55)
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (6.01) $ 0.81
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.78 $ 17.79
==============================================================================================================
Total return* (33.78)% 8.14%
Ratio of net expenses to average net assets+ 1.91% 2.16%
Ratio of net investment income (loss) to average net assets+ (0.02)% (0.67)%
Portfolio turnover rate 16% 9%
Net assets, end of period (in thousands) $ 1,411 $ 2,644
Ratios with no waiver of fees and assumption of expenses by PIM and no reduction
for fees paid indirectly:
Net expenses 3.03% 2.55%
Net investment loss (1.14)% (1.06)%
Ratios with waiver of fees and assumption of expenses by PIM and reduction for fees
paid indirectly:
Net expenses 1.90% 2.15%
Net investment income (loss) (0.01)% (0.66)%
==============================================================================================================
Financial Highlights (continued)
The accompanying notes are an integral part of these financial statements.
Year Ended Year Ended
12/31/06 12/31/05
Class C
Net asset value, beginning of period $ 15.87 $ 15.92
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income (loss) $ (0.11) $ (0.15)
Net realized and unrealized gain (loss) on investments 1.74 0.10
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ 1.63 $ (0.05)
Distributions to shareowners:
Net realized gain (0.52) --
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ 1.11 $ (0.05)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.98 $ 15.87
==============================================================================================================
Total return* 10.29% (0.31)%
Ratio of net expenses to average net assets+ 2.20% 2.23%
Ratio of net investment income (loss) to average net assets+ (0.67)% (0.90)%
Portfolio turnover rate 14% 16%
Net assets, end of period (in thousands) $ 2,336 $ 2,664
Ratios with no waiver of fees and assumption of expenses by PIM and no reduction
for fees paid indirectly:
Net expenses 2.77% 3.20%
Net investment loss (1.24)% (1.87)%
Ratios with waiver of fees and assumption of expenses by PIM and reduction for fees
paid indirectly:
Net expenses 2.20% 2.22%
Net investment income (loss) (0.67)% (0.89)%
==============================================================================================================
Financial Highlights (continued)
The accompanying notes are an integral part of these financial statements.
2/21/04 (b)
to 12/31/04
Class C
Net asset value, beginning of period $ 16.32
- ------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.01
Net realized and unrealized gain (loss) on investments (0.41)
- ------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (0.40)
Distributions to shareowners:
Net realized gain --
- ------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (0.40)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.92
================================================================================================
Total return* (2.45)%(a)
Ratio of net expenses to average net assets+ 2.12%**
Ratio of net investment income (loss) to average net assets+ 0.14%**
Portfolio turnover rate 11%
Net assets, end of period (in thousands) $ 2,905
Ratios with no waiver of fees and assumption of expenses by PIM and no reduction
for fees paid indirectly:
Net expenses 3.16%**
Net investment loss (0.89)%**
Ratios with waiver of fees and assumption of expenses by PIM and reduction for fees
paid indirectly:
Net expenses 2.12%**
Net investment income (loss) 0.14%**
================================================================================================
(a) Not Annualized.
(b) Class C shares were first publicly offered on February 21, 2004.
(c) Amount rounds to less than one cent per share.
* 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 with no reduction for fees paid indirectly.
26 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
Notes to Financial Statements | 12/31/08
1. Organization and Significant Accounting Policies
Pioneer AmPac Growth Fund (the Fund) (formerly, Pioneer Papp America-Pacific
Rim Fund), is one of seven series of portfolios comprising Pioneer Series Trust
II, a Delaware statutory trust registered under the Investment Company Act of
1940 as a diversified, open-end management investment company. The Fund, which
commenced operations on February 20, 2004, is the successor to the Papp
America-Pacific Rim Fund, Inc. The investment objective of the Fund is to seek
long-term capital growth.
The Fund offers three classes of shares designated as Class A, Class B and
Class C shares. Class R shares were liquidated on February 1, 2007. Each class
of shares represents an interest in the same portfolio of investments of the
Fund and has identical rights (based on relative net asset values) to assets
and liquidation proceeds. Share classes can bear different class-specific fees
and expenses such as transfer agent and distribution fees. Differences in
class-specific fees and expenses will result in differences in net investment
income and, therefore, the payment of different dividends by each class. The
Amended and Restated Declaration of Trust of the Fund gives the Board the
flexibility to specify either per share voting or dollar-weighted voting when
submitting matters for shareholder approval. Under per share voting, each share
of a class of the Fund is entitled to one vote. Under dollar-weighted voting, a
shareholder's voting power is determined not by the number of shares owned, but
by the dollar value of the shares on the record date. Share classes have
exclusive voting rights with respect to matters affecting only that class,
including with respect to the distribution plan for that class. Class B shares
convert to Class A shares approximately eight years after the date of purchase.
The Fund's financial statements have been prepared in conformity with U.S.
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 income, expenses and gains and losses on investments during the
reporting year. Actual results could differ from those estimates.
The Fund invests in a limited number of securities and, as a result, the Fund's
performance may be more volatile than the performance of other funds holding
more securities. At times, the Fund's investments may represent industries or
industry sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries and sectors. The Fund's prospectuses contain
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 27
unaudited information regarding the Fund's principal risks. Please refer to
those documents when considering the Fund's principal risks.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements, which are consistent with
those policies generally accepted in the investment company industry.
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Fund is computed once daily, on each day the New York Stock Exchange
(NYSE) is open, as of the close of regular trading on the NYSE. 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
using fair value methods pursuant to procedures adopted by the Board of
Trustees. Trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. The Fund may also use fair value methods to
value a security, including a non-U.S. security, when the closing market
price on the principal exchange where the security is traded no longer
reflects the value of the security. At December 31, 2008 there were no
securities that were valued using fair value methods. Temporary cash
investments are valued at cost which approximates market value.
Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities where the ex-dividend date may have passed
are recorded as soon as the Fund becomes aware of the ex-dividend data in
the exercise of reasonable diligence. Dividend and interest income is
recorded on the accrual basis, net of unrecoverable foreign taxes withheld
at the applicable country rates.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. 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
shareowners. Therefore, no federal income tax provision is required. Tax
years for the prior three fiscal years remain subject to examination by tax
authorities.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
28 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
income tax rules. Therefore, the sources of the Fund's distributions may be
shown in the accompanying financial statements as from or in excess of net
investment income or as from net realized gain on investment transactions,
or as from paid-in capital, depending on the type of book/tax differences
that may exist.
At December 31, 2008, the Fund had a net capital loss carryforward of
$36,149 which will expire in 2016 if not utilized.
The tax character of distributions paid during the years ended December 31,
2008 and December 31, 2007 was as follows:
- -------------------------------------------------------
2008 2007
Distributions paid from:
Ordinary income $88,818 $ 12,149
Long-term capital gain -- 634,342
- -------------------------------------------------------
Total $88,818 $646,491
- -------------------------------------------------------
The following shows components of distributable earnings on a federal income
tax basis at December 31, 2008:
- -----------------------------------------------------
2008
- -----------------------------------------------------
Distributable earnings:
Undistributed ordinary income $ 12,751
Capital loss carryforward (36,149)
Unrealized Depreciation (766,022)
- ----------------------------------------------------
Total $ (789,420)
====================================================
C. 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 a wholly owned indirect subsidiary of UniCredit S.p.A. (UniCredit),
earned approximately $1,735 in underwriting commissions on the sale of Class
A shares during the year ended December 31, 2008.
D. Class Allocations
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.
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 (see Note 4). Shareowners of each class participate in all
expenses and fees paid to the transfer agent, Pioneer Investment Management
Shareholder Services, Inc. (PIMSS), for its services, which are allocated
based on the
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 29
number of accounts in each class and the ratable allocation of related
out-of-pocket expenses (see Note 3).
Distributions to shareowners 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 on the same day , except
that Class A, Class B and Class C shares bear different transfer agent and
distribution expense rates.
E. Securities Lending
The Fund lends securities in its portfolio to certain broker-dealers or
other institutional investors. When entering into a securities loan
transaction, the Fund typically receives cash collateral from the borrower
equal to at least the value of the securities loaned, which is invested in
temporary cash investments. Credit Suisse, New York Branch, as the Fund's
security lending agent, manages the Fund's securities lending collateral.
The income earned on the investment of collateral is shared with the
borrower and the lending agent in payment of any rebate due to the borrower
with respect to the securities loan, and in compensation for the lending
agent's services to the Fund. The Fund also continues to receive interest or
payments in lieu of dividends on the securities loaned. Gain or loss on the
value of the loaned securities that may occur during the term of the loan
will be for the account of the Fund. The amount of the collateral is
required to be adjusted daily to reflect any price fluctuation in the value
of the loaned securities. The Fund has the right, under the lending
agreement, to terminate the loan and recover the securities from the
borrower with prior notice. The Fund will be required to return the cash
collateral to the borrower and could suffer a loss if the value of the
collateral, as invested, has declined.
F. Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, the value of
the underlying securities (collateral), including accrued interest, is
required to be at least equal to or in excess of the value of the repurchase
agreement. The collateral for all repurchase agreements is held in
safekeeping in the customer-only account of the Fund's custodian or
subcustodians. The Fund's investment adviser, Pioneer Investment Management,
Inc. (PIM), is responsible for determining that the value of the collateral
remains at least equal to the repurchase price.
2. Management Agreement
Pioneer Investment Management, Inc. (PIM), a wholly owned indirect subsidiary
of UniCredit, manages the Fund's portfolio. PIM receives a basic fee that is
calculated at the annual rate of 0.75% of the Fund's average daily net assets
up to $1 billion; and 0.70% of the excess over $1 billion. For the year ended
30 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
December 31, 2008, the net management fee was equivalent to 0.75% of average
net assets.
PIM, and not the Fund, pays a portion of the fee it receives from the Fund to
L. Roy Papp & Associates, LLP (Papp) as compensation for its sub-advisory
services to the Fund.
PIM has agreed to limit ordinary operating expenses to the extent required to
reduce Fund expenses to 1.25%, 2.15% and 2.15% of the average daily net assets
attributable to Class A, Class B and Class C shares, respectively. These
expense limitations are in effect through May 1, 2010. PIM expects to continue
its limitation of expenses unless the expense limit agreement with the Fund is
terminated pursuant to the terms of the expense limit agreement. However, there
can be no assurance that PIM will extend the expense limitation beyond May 1,
2010. The Fund may terminate the expense limitation agreement at any time;
provided, however, that the Board of Trustees would not take such action unless
it determined termination of the agreement be in the best interests of the Fund
and its shareowners.
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. Included in "Due to Affiliates" reflected on
the Statement of Assets and Liabilities is $264 in management fees,
administrative costs and certain other fees payable to PIM at December 31,
2008.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Fund at negotiated rates.
In addition, the Fund reimbursed PIMSS for out-of-pocket expenses related to
shareholder communications activities such as proxy and statement mailings,
outgoing phone calls and omnibus relationship contracts. For the year ended
December 31, 2008, such out of pocket expenses by class of shares were as
follows:
- ---------------------------------------------
Shareholder Communications:
- ---------------------------------------------
Class A $10,021
Class B 1,429
Class C 2,345
- ---------------------------------------------
Total $13,795
=============================================
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $6,484 in transfer agent fees and shareholder communications
expense payable to PIMSS at December 31, 2008.
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 31
4. Distribution and Service Plans
The Fund adopted a Distribution Plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940 with respect to its Class A, Class B and Class C shares.
Pursuant to the Plan, the Fund pays PFD 0.25% of the average daily net assets
attributable to Class A shares as compensation for personal services and/or
account maintenance services or distribution services with regard to Class A
shares. Pursuant to the Plan, the Fund pays PFD 1.00% of the average daily net
assets attributable to Class B and Class C shares. The fee for Class B and
Class C shares 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. Prior to
February 1, 2008, PFD was reimbursed under the Distribution Plan for
distribution expenses in an amount of up to 0.25% of the average daily net
assets attributable to Class A shares. Included in "Due to affiliates"
reflected on the Statement of Assets and Liabilities is $130 in distribution
fees payable to PFD at December 31, 2008.
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 certain net
asset value purchases of Class A shares that are redeemed within 18 months of
purchase. Class B shares that are redeemed within five years of purchase are
subject to a CDSC at declining rates beginning at 4.00%, 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% based on the lower
of cost or market value of shares being redeemed. Proceeds from the CDSCs are
paid to PFD. For the year ended December 31, 2008, CDSCs in the amount of
$4,445 were paid to PFD.
5. Expense Offset Arrangements
The Fund has entered into certain expense offset arrangements with PIMSS
resulting in a reduction in the Fund's total expenses due to interest earned on
cash held by PIMSS. For the year ended December 31, 2008, the Fund's expenses
were reduced by $795 under such arrangements.
6. New Pronouncement
In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures
about Derivative Instruments and Hedging Activities ("SFAS 161"), was issued
and is effective for fiscal years beginning after November 15, 2008. SFAS 161
requires enhanced disclosures about an entity's derivative and hedging
activities. Management is currently evaluating the impact the adoption of SFAS
161 will have on the Fund's financial statement disclosures.
32 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Pioneer Series Trust II and the
Shareowners of Pioneer AmPac Growth Fund:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of Pioneer
AmPac Growth Fund, one of the series constituting Pioneer Series Trust II (the
"Trust"), including the schedule of investments, as of December 31, 2008, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
financial highlights for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Trust'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 the standards of the Public Company
Accounting Oversight Board (United States). 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. We were not engaged to perform an audit of the Trust's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Trust's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of December 31, 2008, by correspondence
with the custodian and brokers. 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 AmPac Growth Fund of the Pioneer Series Trust II at December 31, 2008,
the results of its operations for the year then ended, and the changes in its
net assets for each of the two years in the period then ended, and financial
highlights for each of the periods indicated therein, in conformity with U.S.
generally accepted accounting principles.
/s/Ernst & Young LLP
Boston, Massachusetts
February 18, 2009
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 33
Approval of Sub-Advisory Agreement (unaudited)
Pioneer Investment Management, Inc. (PIM) serves as the Fund's investment
adviser pursuant to an investment advisory agreement between PIM and the Fund.
PIM has retained L. Roy Papp & Associates, Inc. to serve as the sub-adviser to
the Fund pursuant to a sub-advisory agreement between PIM and the sub-adviser.
At a meeting held on January 8, 2008, the Trustees of the Fund approved an
amended and restated investment advisory agreement between the Fund and PIM.
Shareholders of the Fund approved the amended and restated investment advisory
agreement on May 13, 2008. The material factors and conclusions with respect
thereto that formed the basis for the Trustees' approval of the amended and
restated investment advisory agreement are included in the Fund's semi-annual
report for the period ended June 30, 2008.
At a meeting held on November 11, 2008, based on their evaluation of the
information provided by PIM and the sub-adviser, the Trustees of the Fund,
including the independent Trustees voting separately, unanimously approved the
continuation of the sub-advisory agreement for the Fund for another year. In
considering the continuation of the sub-advisory agreement, the Trustees
considered various factors that they determined were relevant, including the
factors described below. The Trustees did not identify any single factor as the
controlling factor in determining to approve the continuation of the sub-
advisory agreement.
Nature, Extent and Quality of Services
The Trustees considered the nature, extent and quality of the services provided
to the Fund by the sub-adviser, taking into account the investment objective
and strategy of the Fund and the information related to the Fund provided to
the Trustees at each quarterly meeting. The Trustees reviewed the terms of the
sub-advisory agreement. The Trustees also reviewed the sub-adviser's investment
approach for the Fund and its research process. The Trustees considered the
resources of the sub-adviser and the personnel of the sub-adviser who provide
investment management services to the Fund.
Based on these considerations, the Trustees concluded that the nature, extent
and quality of services provided by the sub-adviser to the Fund were
satisfactory and consistent with the terms of the sub-advisory agreement.
Performance of the Fund
The Trustees considered the performance results of the Fund over various time
periods. They reviewed information comparing the Fund's performance with the
average performance of its peer group of funds as classified by
34 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
Morningstar, Inc. (Morningstar), an independent provider of investment company
data, and with the performance of the Fund's benchmark index. The Trustees
considered that the Fund's annualized total return was in the third quintile of
its Morningstar category for the one and three year periods ended June 30,
2008. (In all quintile rankings referred to throughout this disclosure, first
quintile is most favorable to the Fund's shareowners. Thus, highest relative
performance would be first quintile and lowest relative expenses would also be
first quintile.) The Trustees concluded that the investment performance of the
Fund was satisfactory.
Sub-advisory Fee and Expenses
The Trustees considered the fees payable to the sub-adviser under the sub-
advisory agreement. They also considered that PIM, not the Fund, paid the
sub-adviser out of the management fees paid to PIM under the investment
advisory agreement. The Trustees considered information regarding the
management fees and expenses of the Fund in comparison to the management fees
of its peer group of funds as classified by Morningstar and the expense ratios
of a peer group of funds selected on the basis of criteria determined by the
independent Trustees for this purpose using data provided by Strategic Insight
Mutual Fund Research and Consulting, LLC (Strategic Insight), an independent
third party.
The Trustees considered that the Fund's management fee for the twelve months
ended June 30, 2008 was in the third quintile relative to the management fees
paid by other funds in its peer group Morningstar category for the comparable
period. The Trustees also considered that the Fund's expense ratio for the
twelve months ended June 30, 2008 was in the second quintile relative to its
Strategic Insight peer group.
The Trustees also reviewed the advisory fees charged by the sub-adviser to its
separate account clients. The Trustees noted that the fee rates for those
separate accounts generally were higher than the sub-advisory fees paid to the
sub-adviser with respect to the Fund. It was noted that the sub-adviser
reported that it did not currently manage any accounts with investment
strategies that were similar to the Fund.
The Trustees concluded that the sub-advisory fee payable by PIM to the sub-
adviser of the Fund was reasonable in relation to the nature and quality of
services provided by the sub-adviser. The Trustees also concluded that the
Fund's expense ratio was reasonable, taking into account the contractual
expense limitation agreed to by PIM with respect to the Fund.
Profitability
The Trustees considered information provided by PIM regarding the profitability
of PIM with respect to the advisory services provided by PIM to the Fund,
including the methodology used by PIM in allocating certain of its costs to the
management of the Fund. They also considered PIM's profit margin in
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 35
connection with the overall operation of the Fund. The Trustees further
considered the sub-advisory fees received by the sub-adviser with respect to
the Fund and the percentage that such fees represented of the sub-adviser's
overall revenues (for the 12-month period ended December 31, 2007). They also
reviewed the financial results realized by PIM and its affiliates from non-fund
businesses. The Trustees considered the profit margins with respect to the Fund
in comparison to the limited industry data available and noted that the
profitability of any adviser was affected by numerous factors, including its
organizational structure and method for allocating expenses. The Trustees
recognized that each of PIM and the sub-adviser should be entitled to earn a
reasonable level of profit for the services provided to the Fund. The Trustees
concluded that the profit margins with respect to the management of the Fund
were not unreasonable.
Economies of Scale
The Trustees considered the economies of scale with respect to the management
of the Fund, whether the Fund had appropriately benefited from any economies of
scale, and whether there was potential for realization of any further economies
of scale. The Trustees concluded that, because of the breakpoints in the
management and sub-advisory fee schedules and the reduced fee rates above
certain asset levels, any perceived or potential economies of scale would be
shared with the Fund.
Other Benefits
The Trustees considered that the sub-adviser reported that it does not receive
any other benefits from its relationship with the Portfolio.
Conclusion
After consideration of the factors described above as well as other factors,
the Trustees, including all of the independent Trustees, concluded that the
sub-advisory agreement for the Fund between PIM and the sub-adviser, including
the fees payable thereunder, was fair and reasonable and voted to approve the
continuation of the sub-advisory agreement for the Fund.
36 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
Trustees, Officers and Service Providers
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerinvestments.com. This information is also available
on the Securities and Exchange Commission's web site at http://www.sec.gov.
Trustees and Officers
The Board of Trustees provides broad supervision over the fund's affairs. The
officers of the fund are responsible for the fund's operations. The Trustees
and officers are listed below, together with their principal occupations during
the past five years. Trustees who are interested persons of the fund within the
meaning of the 1940 Act are referred to as Interested Trustees. Trustees who
are not interested persons of the fund are referred to as Independent Trustees.
Each of the Trustees serves as a trustee of each of the 76 U.S. registered
investment portfolios for which Pioneer serves as investment adviser (the
"Pioneer Funds"). The address for all Trustees and all officers of the fund is
60 State Street, Boston, Massachusetts 02109.
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 37
Interested Trustees
- --------------------------------------------------------------------------------
Position Held Length of Service
Name and Age with the Fund and Term of Office
- --------------------------------------------------------------------------------
John F. Cogan, Jr. (82)* Chairman of the Board, Trustee since 2003.
Trustee and President Serves until a successor
trustee is elected or
earlier retirement or
removal.
- --------------------------------------------------------------------------------
Daniel K. Kingsbury (50)* Trustee and Executive Trustee since 2008.
Vice President Serves until a successor
trustee is elected or
earlier retirement or
removal.
- --------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are officers
or directors of the fund's investment adviser and certain of its affiliates.
Interested Trustees
- ---------------------------------------------------------------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Trustee
- ---------------------------------------------------------------------------------------------------------------------
John F. Cogan, Jr. (82)* Deputy Chairman and a Director of Pioneer Global Asset Man- None
agement S.p.A. ("PGAM"); Non-Executive Chairman and a Direc-
tor of Pioneer Investment Management USA Inc. ("PIM-USA");
Chairman and a Director of Pioneer; Chairman and Director of
Pioneer Institutional Asset Management, Inc. (since 2006);
Director of Pioneer Alternative Investment Management Limited
(Dublin); President and a Director of Pioneer Alternative Invest-
ment Management (Bermuda) Limited and affiliated funds;
Director of PIOGLOBAL Real Estate Investment Fund (Russia)
(until June 2006); Director of Nano-C, Inc. (since 2003); Director
of Cole Management Inc. (since 2004); Director of Fiduciary
Counseling, Inc.; President and Director of Pioneer Funds Dis-
tributor, Inc. ("PFD") (until May 2006); President of all of the
Pioneer Funds; and Of Counsel, Wilmer Cutler Pickering Hale
and Dorr LLP
- ---------------------------------------------------------------------------------------------------------------------
Daniel K. Kingsbury (50)* Director, CEO and President of Pioneer Investment Management None
USA Inc. (since February 2007); Director and President of
Pioneer Investment Management, Inc. and Pioneer Institutional
Asset Management, Inc. (since February 2007); Executive
Vice President of all of the Pioneer Funds (since March 2007);
Director of Pioneer Global Asset Management S.p.A. (since
April 2007); Head of New Markets Division, Pioneer Global Asset
Management S.p.A. (2000 - 2007)
- ---------------------------------------------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are officers or directors of the fund's investment
adviser and certain of its affiliates.
38 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
Independent Trustees
- ----------------------------------------------------------------
Position Held Length of Service
Name and Age with the Fund and Term of Office
David R. Bock (65) Trustee Trustee since 2005.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------
Mary K. Bush (60) Trustee Trustee since 2003.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------
Independent Trustees
- -------------------------------------------------------------------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Trustee
- -------------------------------------------------------------------------------------------------------------------------
David R. Bock (65) Executive Vice President and Chief Financial Officer, I-trax, Inc. Director of Enterprise Com-
(publicly traded health care services company) (2004 - 2007); munity Investment, Inc.
Partner, Federal City Capital Advisors (boutique merchant bank) (privately-held affordable
(1997 to 2004 and 2008 - present); and Executive Vice Presi- housing finance company);
dent and Chief Financial Officer, Pedestal Inc. (internet-based and Director of New York
mortgage trading company) (2000 - 2002) Mortgage Trust (publicly
traded mortgage REIT)
- -------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (60) President, Bush International, LLC (international financial Director of Marriott Interna-
advisory firm) tional, Inc., Director of Dis-
cover Financial Services
(credit card issuer and elec-
tronic payment services);
Director of Briggs & Stratton
Co. (engine manufacturer);
Director of UAL Corporation
(airline holding company)
Director of Mantech Interna-
tional Corporation (national
security, defense, and intel-
ligence technology firm);
and Member, Board of
Governors, Investment
Company Institute
- -------------------------------------------------------------------------------------------------------------------------
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 39
Independent Trustees (continued)
- -----------------------------------------------------------------------
Position Held Length of Service
Name and Age with the Fund and Term of Office
Benjamin M. Friedman (64) Trustee Trustee since 2008.
Serves until a successor
trustee is elected or
earlier retirement or
removal
- -----------------------------------------------------------------------
Margaret B.W. Graham (61) Trustee Trustee since 2003.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- -----------------------------------------------------------------------
Thomas J. Perna (58) Trustee Trustee since 2006.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- -----------------------------------------------------------------------
Marguerite A. Piret (60) Trustee Trustee since 2003.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
Stephen K. West (80) Trustee Trustee since 2008.
- -----------------------------------------------------------------------
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Trustee
Benjamin M. Friedman (64) Professor, Harvard University Trustee, Mellon Institutional
Funds Investment Trust and
Mellon Institutional Funds
Master Portfolio (oversees 17
portfolios in fund complex)
- -----------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (61) Founding Director, Vice-President and Corporate Secretary, The None
Winthrop Group, Inc. (consulting firm); and Desautels Faculty of
Management, McGill University
- -----------------------------------------------------------------------------------------------------------------------------
Thomas J. Perna (58) Chief Executive Officer, Quadriserv, Inc. (2008 - present) (tech- None
nology products for securities lending industry); Private investor
(2004 - 2008); and Senior Executive Vice President, The Bank of
New York (financial and securities services) (1986 - 2004)
- -----------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (60) President and Chief Executive Officer, Newbury, Piret & Company, Director of New America
Inc. (investment banking firm) High Income Fund, Inc.
(closed-end investment
company)
- -----------------------------------------------------------------------------------------------------------------------------
Stephen K. West (80) Senior Counsel, Sullivan & Cromwell LLP (law firm) Director, The Swiss Helvetia
Fund, Inc. (closed-end
investment company)
- -----------------------------------------------------------------------------------------------------------------------------
40 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
Fund Officers
- --------------------------------------------------------------------------
Position Held Length of Service
Name and Age with the Fund and Term of Office
- --------------------------------------------------------------------------
Dorothy E. Bourassa (60) Secretary Since 2003. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------
Christopher J. Kelley (44) Assistant Secretary Since 2003. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------
Mark E. Bradley (49) Treasurer Since 2008. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------
Luis I. Presutti (43) Assistant Treasurer Since 2003. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------
Gary Sullivan (50) Assistant Treasurer Since 2003. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------
Fund Officers
- ----------------------------------------------------------------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Officer
- ----------------------------------------------------------------------------------------------------------------------
Dorothy E. Bourassa (60) Secretary of PIM-USA; Senior Vice President - Legal of Pioneer; None
Secretary/Clerk of most of PIM-USA's subsidiaries; and Secretary
of all of the Pioneer Funds since September 2003 (Assistant
Secretary from November 2000 to September 2003)
- ----------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (44) Associate General Counsel of Pioneer since January 2008 None
and Assistant Secretary of all of the Pioneer Funds since
September 2003; Vice President and Senior Counsel of Pioneer
from July 2002 to December 2007
- ----------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (49) Vice President - Fund Accounting, Administration and Controller- None
ship Services of Pioneer; and Treasurer of all of the Pioneer
Funds since March 2008; Deputy Treasurer of Pioneer from
March 2004 to February 2008; Assistant Treasurer of all of the
Pioneer Funds from March 2004 to February 2008; and Treasurer
and Senior Vice President, CDC IXIS Asset Management Services
from 2002 to 2003
- ----------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (43) Assistant Vice President - Fund Accounting, Administration and None
Controllership Services of Pioneer; and Assistant Treasurer of all
of the Pioneer Funds
- ----------------------------------------------------------------------------------------------------------------------
Gary Sullivan (50) Fund Accounting Manager - Fund Accounting, Administration and None
Controllership Services of Pioneer; and Assistant Treasurer of all
of the Pioneer Funds
- ----------------------------------------------------------------------------------------------------------------------
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 41
Fund Officers (continued)
- --------------------------------------------------------------------------------
Position Held Length of Service
Name and Age with the Fund and Term of Office
- --------------------------------------------------------------------------------
Katherine Kim Sullivan (35) Assistant Treasurer Since 2003. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------------
Teri W. Anderholm (49) Chief Compliance Officer Since 2007. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Officer
Katherine Kim Sullivan (35) Fund Administration Manager - Fund Accounting, Administration None
and Controllership Services since June 2003 and Assistant
Treasurer of all of the Pioneer Funds since September 2003;
Assistant Vice President - Mutual Fund Operations of State Street
Corporation from June 2002 to June 2003 (formerly Deutsche
Bank Asset Management)
- ------------------------------------------------------------------------------------------------------------------------
Teri W. Anderholm (49) Chief Compliance Officer of Pioneer since December 2006 and of None
all the Pioneer Funds since January 2007; Vice President and
Compliance Officer, MFS Investment Management (August 2005
to December 2006); Consultant, Fidelity Investments
(February 2005 to July 2005); Independent Consultant
(July 1997 to February 2005)
- ------------------------------------------------------------------------------------------------------------------------
42 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
This page for your notes.
Pioneer AmPac Growth Fund | Annual Report | 12/31/08 43
This page for your notes.
44 Pioneer AmPac Growth Fund | Annual Report | 12/31/08
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:
- --------------------------------------------------------------------------------
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our internet e-mail address ask.pioneer@pioneerinvestments.com
(for general questions about Pioneer only)
Visit our web site: pioneerinvestments.com
This report must be accompanied by a prospectus.
The Fund files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
- --------------------------------------------------------------------------------
Pioneer AMT-Free CA
Municipal Fund
- --------------------------------------------------------------------------------
Annual Report | December 31, 2008
- --------------------------------------------------------------------------------
Ticker Symbols:
Class A CATAX
Class B CATBX
Class C CATCX
[LOGO] PIONEER
Investments(R)
visit us: pioneerinvestments.com
Table of Contents
Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 8
Prices and Distributions 9
Performance Update 10
Comparing Ongoing Fund Expenses 13
Schedule of Investments 15
Financial Statements 18
Notes to Financial Statements 25
Report of Independent Registered Public Accounting Firm 31
Trustees, Officers and Service Providers 33
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 1
President's Letter
Dear Shareowner,
Stock and bond markets around the globe this year have experienced one of their
most tumultuous periods in history. Investors have witnessed volatility of a
magnitude that many have never before seen. Distance often provides the best
vantage point for perspective. Still, we believe that the benefits of basic
investment principles that have stood the test of time -- even in the midst of
market turmoil -- cannot be underestimated.
First, invest for the long term. The founder of Pioneer Investments, Philip L.
Carret, began his investment career during the 1920s. One lesson he learned is
that while great prosperity affords an advantageous time for selling stocks,
extreme economic slumps can create opportunities for purchase. Indeed, many of
our portfolio managers, who follow the value-conscious investing approach of
our founder, are looking at recent market conditions as an opportunity to buy
companies whose shares we believe have been unjustifiably beaten down by
indiscriminate selling, but that we have identified as having strong prospects
over time. While investors may be facing a sustained market downturn, we
continue to believe that patience, along with staying invested in the market,
are important considerations for long-term investors.
A second principle is to stay diversified across different types of
investments. The global scope of the current market weakness poses challenges
for this basic investment axiom. But the turbulence makes now a good time to
reassess your portfolio and make sure that your investments continue to meet
your needs. We believe you should work closely with your financial advisor to
find the mix of stocks, bonds and money market assets that is best aligned to
your particular risk tolerance and investment objective.
As the investment markets sort through the continuing crisis in the financial
industry, we are staying focused on the fundamentals and risk management. With
more than 80 years of experience behind us, we have learned how to navigate
turbulent markets. At Pioneer Investments, risk management has always been a
critical part of our culture -- not just during periods of extraordinary
volatility. Our investment process is based on fundamental research,
quantitative analysis and active portfolio management. This three-pillared
process, which we apply to each of our portfolios, is supported by an
integrated team approach and is designed to carefully balance risk and reward.
While we
2 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
see potential chances for making money in many corners of the market, it takes
research and experience to separate solid investment opportunities from
speculation.
We invite you to learn more about Pioneer and our time-tested approach to
investing by consulting with your financial advisor or visiting us online at
www.pioneerinvestments.com. Thank you for investing with Pioneer.
Respectfully,
/s/ Daniel K. Kingsbury
Daniel K. Kingsbury
President and CEO
Pioneer Investment Management USA, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 3
Portfolio Management Discussion | 12/31/08
In the following interview, Portfolio Manager Stephen C. Bauer outlines the
investment environment for California tax-free bonds during the Fund's most
recent fiscal year ended December 31, 2008, the Fund's performance during the
period, his investment strategy and his outlook.
Q How did the Fund perform during its most recent fiscal year ended December
31, 2008?
A For the 12 months ended December 31, 2008, Pioneer AMT-Free California
Municipal Fund's Class A shares produced a -16.72% return at net asset
value. The Fund's benchmark, the Barclays Capital Municipal Bond Index,
returned -2.47% over the same 12-month period, and the average return of the
119 funds in Lipper's California Municipal Debt Funds Category was -11.53%.
Lipper Analytical Services is an independent monitor of mutual fund
performance.
Q How would you describe the investing environment for tax-exempt bonds during
the 12 months ended December 31, 2008?
A The year 2008 represented one of the most unusual and volatile periods ever
witnessed in the municipal bond market. Early in the year, severe financial
difficulties related to the housing crisis caused the three largest
"monoline" insurers -- FGIC, MBIA and AMBAC -- to lose their AAA ratings.
The loss of AAA status for the three monolines meant that the underlying
credits for a host of insured municipal bonds had to be painstakingly
re-evaluated by market watchers (which sparked significant price
volatility).
Another market disruption in the first months of 2008 came from the
activities of hedge fund managers, who in the past had profited by borrowing
large amounts at low short-term rates and investing the proceeds in
higher-yielding long-term municipal bonds. However, in mid to late February,
many hedge fund managers were forced to sell billions of dollars of
long-term municipal bonds to meet margin calls. The huge selloff temporarily
seized up the municipal market until some private sale arrangements of hedge
fund holdings ignited a municipal rally that lasted into the middle of May.
In the fall of 2008, with the collapse of Lehman Brothers and the Federal
government's rescues of AIG, Fannie Mae, Freddie Mac and other prominent
financial institutions, the credit crisis mushroomed, and the municipal
market's reasonably sound fundamental characteristics were ignored by
investors, replaced by intense anxiety over the health of the U.S. financial
system. Lehman Brothers' disappearance made banks and brokers barely
4 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
willing to lend or trade to an extent that we have rarely witnessed. The
freeze-up in the municipal bond market began in October 2008 and peaked in
early December. Even high-quality tax-free bonds were trading at steep
discounts during this time, as the credit markets engaged in a frenzied
"flight to quality" to U.S. Treasury and agency securities.
Finally, in early December 2008, with municipal issuance at a standstill,
selling pressure from hedge funds abating and municipal/Treasury yield
ratios at unprecedented levels (long-term Treasuries yielding 2.50% and
AAA-rated municipals of the same maturity yielding 5.50% to 6.00%),
investors began to snap up tax-exempt bonds at attractive yields, and the
municipal market improved over the final three weeks of 2008. Again, in my
view, fundamental factors such as issuing municipalities' ability to raise
taxes or cut spending in order to balance budgets, did not support such a
high municipal yield premium over Treasuries. This circumstance spurred
bargain hunting among investors seeking to lock in high yields.
In California, the state's fiscal problems have worsened. In line with the
rest of the country's recessionary circumstances, California's sales and
income tax receipts have slowed significantly, and the state's leaders are
taking a long time to come to an agreement on a budget. California's budget
gap is much bigger than most other states, but the state's considerable
resources also dwarf most others.
Q What was your investment strategy for the Fund during the 12-month period
ended December 31, 2008?
A As always, our principal strategy for the Fund was to purchase and hold
discounted long-term bonds, as these investments offer the highest yields in
the municipal marketplace. We also believe that they offer the most
attractive value over time.
Because of the lack of AAA insurance on many new issues in recent months, in
the first half of 2008 high-quality issuers had to come to market with
higher yields in order to attract investors. In the first six months of the
annual reporting period, we focused on several of these opportunities,
purchasing bonds with yield "spreads" over AAA bonds that were double or
triple what they had been in recent years. The purchases included hospital
bonds in California's Statewide Community Development Authority for Sutter
Hospital, and St. Joseph Hospital.
As of the close of the period on December 31, 2008, 43% of the Fund's
portfolio was rated AAA (or the equivalent) or AA. In addition, the Fund is
broadly diversified among 30 issuers from all areas of the state.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 5
Q What were the largest contributors to and detractors from Fund performance
in 2008?
A In a difficult market, municipal bond interest rate spreads (or differences
in yield) between long- and short-term issues widened dramatically,
negatively affecting the bond prices of longer-term issues, which make up
most of the Fund's portfolio. The Fund's average maturity is significantly
longer than that of the Barclays Capital Municipal Bond Index, which means
that it will generally underperform the benchmark when long-term interest
rates are rising (such as through much of 2008) and outperform when those
rates are declining. Of course, over the long term, we believe the Fund's
shareholders should benefit from the higher yields of the long-term bonds
held in the Fund's portfolio.
One of the largest individual detractors from performance came from
California Municipal Finance Authority for Community Hospital bonds (rated
BBB+), which declined in price as yield "spreads" between AAA and lower
quality bonds widened substantially during the fourth quarter. Similarly
affected were the Fund's holdings in California Redevelopment Agency bonds
based in Redding. We believe both bond issues are fundamentally sound and
the Fund will continue to hold them. Short-term issues in the form of
pre-refunded municipal bonds were the strongest contributors to performance
over the period. An example comes from Golden State tobacco bonds
pre-refunded to 2013.
Q What is your outlook going forward?
A Statistical reports regarding the state of the U.S. economy in late 2008 and
early 2009 continued to be dismal, and the economic situation could
deteriorate further. President Obama and Congress will need to act quickly
on spending programs to revive the economy.
State and local government officials are facing their most difficult
budgetary conditions in more than 50 years, but municipal bond defaults have
remained at a very low level. We are confident that in most cases officials'
experience in dealing with trying economic circumstances will see California
and its agencies and municipalities through the crisis. In terms of market
volatility, the hope would be that in 2009 market behavior will be based
more on fundamental factors and less on fears about the health of financial
firms and supply/demand imbalances. The Fund will continue to hold long-term
issues that we think have the best chance to perform well, and we will seek
to avoid those that might encounter significant budgetary problems. We will
also seek to lock in attractive yields for the Fund from high-quality
tax-free bonds, as we feel there are many promising opportunities in the
market.
6 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
We believe that Pioneer AMT-Free California Municipal Fund continues to be
an option for suitable investors seeking high income free from federal
income tax and California state personal income tax.
Please refer to the Schedule of Investments on pages 15-17 for a full listing
of Fund securities.
When interest rates rise, the prices of fixed-income securities in the Fund
will generally fall. Conversely, when interest rates fall, the prices of
fixed-income securities in the Fund will generally rise. Investments in the
Fund are subject to possible loss due to the financial failure of issuers of
underlying securities and their inability to meet their debt obligations.
Investing primarily in the securities issued by California and its
municipalities makes the Fund more vulnerable to unfavorable developments in
California than are funds that invest in municipal securities of many states.
At times, the Fund's investments may represent industries or industry sectors
that are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These opinions should not be relied upon for any other purposes.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 7
Portfolio Summary | 12/31/08
Portfolio Quality
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE DATA BELOW WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
AAA 8.6%
AA 39 0%
A 38.7%
BBB 9.5%
BB & Lower 3.9%
Commercial Paper 0.3%
Sector Distribution
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE DATA BELOW WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Insured 50.8%
Health 16.7%
Water & Sewer 9.2%
Various Revenues 9.1%
Housing 4.6%
Transportation 3.9%
Special Revenues 3.7%
General Obligation 1.7%
Reserves 0.3%
10 Largest Holdings*
- --------------------------------------------------------------------------------
(As a percentage of total debt holdings)
1. Madera California District Water, 5.5%, 1/1/33 4.83%
2. Alameda Corridor Transportation Authority, 4.75%, 10/1/25 4.68
3. California State Department of Veteran Affairs, 4.75%, 12/1/25 4.64
4. California Statewide, 5.75%, 7/1/47 4.48
5. Long Beach California Finance Authority, 5.5%, 11/15/37 4.37
6. California Statewide Communities Development Authority, 5.75%, 8/15/38 4.29
7. Anaheim California Public Financing Authority Lease, 4.25%, 9/1/35 4.27
8. California Municipal Finance Agency, 5.25%, 2/1/37 4.07
9. San Joaquin Hills Transportation Corridor Agency, 5.0%, 1/1/33 3.93
10. Golden State Tobacco Securitization, 6.75%, 6/1/39 3.76
* The list excludes temporary cash investments and derivative investments. The
portfolio is actively managed, and current holdings may be different. The
holdings listed should not be considered recommendations to buy or sell any
security listed.
8 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
Prices and Distributions | 12/31/08
Net Asset Value per Share
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class 12/31/08 12/31/07
- --------------------------------------------------------------------------------
A $ 9.65 $ 12.19
- --------------------------------------------------------------------------------
B $ 9.60 $ 12.12
- --------------------------------------------------------------------------------
C $ 9.56 $ 12.08
- --------------------------------------------------------------------------------
Distributions per Share: 1/1/08-12/31/08
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net Investment Short-Term Long-Term
Class Income Capital Gains Capital Gains
- --------------------------------------------------------------------------------
A $ 0.5365 $-- $ 0.0267
- --------------------------------------------------------------------------------
B $ 0.4294 $-- $ 0.0267
- --------------------------------------------------------------------------------
C $ 0.4371 $-- $ 0.0267
- --------------------------------------------------------------------------------
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 9
Performance Update | 12/31/08 Class A Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer AMT-Free CA Municipal Fund at public offering price,
compared to that of the Barclays Capital Municipal Bond Index.
Average Annual Total Returns
(As of December 31, 2008)
- ------------------------------------------------------------------
Net Asset Public Offering
Period Value (NAV) Price (POP)
- ------------------------------------------------------------------
10 Years 2.21% 1.62%
5 Years -0.31 -1.23
1 Year -16.72 -20.44
- ------------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ------------------------------------------------------------------
Gross Net
- ------------------------------------------------------------------
0.95% 0.86%
- ------------------------------------------------------------------
[THE DATA BELOW WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer AMT-Free Barclay's Capital
Date CA Municipal Fund Municipal Bond Index
12/98 9,550 10,000
8,554 9,794
12/00 10,128 10,939
10,516 11,499
12/02 11,389 12,604
11,934 13,274
12/04 12,563 13,868
13,435 14,356
12/06 14,138 15,051
14,107 15,557
12/08 11,748 15,172
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
NAV results represent the percent change in net asset value per share. Returns
would have been lower had sales charges been reflected. POP returns reflect
deduction of maximum 4.5% sales charge. All results are historical and assume
the reinvestment of dividends and capital gains. Other share classes are
available for which performance and expenses will differ.
Pioneer AMT-Free CA Municipal Fund was created through the reorganization of
predecessor Safeco California Tax-Free Income Fund on December 10, 2004. The
performance of Class A shares of the Fund includes the performance of the
predecessor fund's Class A shares, which has been restated to reflect
differences in any applicable sales charges (but not differences in expenses).
If all the expenses of the Fund were reflected, the performance would be lower.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers fund performance would be lower. Waivers
may not be in effect for all funds and can be rescinded at any time. See the
prospectus and financial statements for complete details.
The net expense ratio reflects the contractual expense limitations currently in
effect through 5/1/12 for Class A shares. There can be no assurance that
Pioneer will extend the expense limitation beyond such time. Please see the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Barclays Capital Municipal Bond Index is a broad measure of the municipal
bond market. Index returns are calculated monthly, assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in an index.
10 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
Performance Update | 12/31/08 Class B Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer AMT-Free CA Municipal Fund, compared to that of the
Barclays Capital Municipal Bond Index.
Average Annual Total Returns
(As of December 31, 2008)
- ----------------------------------------------------------------
If If
Period Held Redeemed
- ----------------------------------------------------------------
10 Years 1.35% 1.35%
5 Years -1.24 -1.24
1 Year -17.44 -20.61
- ----------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ----------------------------------------------------------------
Gross Net
- ----------------------------------------------------------------
1.78% 1.76%
- ----------------------------------------------------------------
[THE DATA BELOW WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer AMT-Free Barclay's Capital
Date CA Municipal Fund Municipal Bond Index
12/98 10,000 10,000
8,992 9,794
12/00 10,576 10,939
10,897 11,499
12/02 11,711 12,604
12,175 13,274
12/04 12,744 13,868
13,431 14,356
12/06 14,016 15,051
13,858 15,557
12/08 11,440 15,172
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
"If Held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. "If Redeemed"
returns reflect the deduction of applicable contingent deferred sales charge
(CDSC).
Class B shares reflect the deduction of the maximum applicable contingent
deferred sales charge (CDSC). The maximum CDSC is 4.0% and declines over five
years.
All results are historical and assume the reinvestment of dividends and capital
gains. Other share classes are available for which performance and expenses
will differ.
Pioneer AMT-Free CA Municipal Fund was created through the reorganization of
predecessor Safeco California Tax-Free Income Fund on December 10, 2004. The
performance of Class B shares of the Fund includes the performance of the
predecessor fund's Class B shares, which has been restated to reflect
differences in any applicable sales charges (but not differences in expenses).
If all the expenses of the Fund were reflected, the performance would be lower.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers fund performance would be lower. Waivers
may not be in effect for all funds and can be rescinded at any time. See the
prospectus and financial statements for complete details.
The net expense ratio reflects the contractual expense limitation currently in
effect through 5/1/10 for Class B shares. There can be no assurance that
Pioneer will extend the expense limitation beyond such time. Please see the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Barclays Capital Municipal Bond Index is a broad measure of the municipal
bond market. Index returns are calculated monthly, assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in an Index.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 11
Performance Update | 12/31/08 Class C Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer AMT-Free CA Municipal Fund, compared to that of the
Barclays Capital Municipal Bond Index.
Average Annual Total Returns
(As of December 31, 2008)
- ----------------------------------------------------------------
If If
Period Held Redeemed
- ----------------------------------------------------------------
Life-of-Class
(10/1/03) -0.81% -0.81%
5 Years -1.22 -1.22
1 Year -17.45 -17.45
- ----------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ----------------------------------------------------------------
Gross Net
- ----------------------------------------------------------------
1.68 1.68
- ----------------------------------------------------------------
[THE DATA BELOW WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer AMT-Free Barclay's Capital
Date CA Municipal Fund Municipal Bond Index
10/03 10,000 10,000
12/03 10,225 10,188
12/04 10,695 10,644
12/05 11,281 11,018
12/06 11,776 11,552
12/07 11,650 11,940
12/08 9,617 11,645
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Class C shares held for less than one year are also subject to a 1% contingent
deferred sales charge (CDSC). The performance of Class C shares does not
reflect the 1% front-end sales charge in effect prior to February 1, 2004. If
you paid a 1% sales charge, your returns would be lower than those shown above.
"If Held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. All results are
historical and assume the reinvestment of dividends and capital gains. Other
share classes are available for which performance and expenses will differ.
Pioneer AMT-Free CA Municipal Fund was created through the reorganization of
predecessor Safeco California Tax-Free Income Fund on December 10, 2004. The
performance of Class C shares of the Fund includes the performance of the
predecessor fund's Class C shares, which has been restated to reflect
differences in any applicable sales charges (but not differences in expenses).
If all the expenses of the Fund were reflected, the performance would be lower.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers fund performance would be lower. Waivers
may not be in effect for all funds and can be rescinded at any time. See the
prospectus and financial statements for complete details.
The net expense ratio reflects the contractual expense limitation currently in
effect through 5/1/10 for Class C shares. There can be no assurance that
Pioneer will extend the expense limitation beyond such time. Please see the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Barclays Capital Municipal Bond Index is a broad measure of the municipal
bond market. Index returns are calculated monthly, assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in an Index.
12 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
Comparing Ongoing Fund Expenses
As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
- --------------------------------------------------------------------------------
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
(1) Divide your account value by $1,000
Example: an $8,600 account value [divided by] $1,000 = 8.6
(2) Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer AMT-Free CA
Municipal Fund
Based on actual returns from July 1, 2008 through December 31, 2008.
- --------------------------------------------------------------------------------
Share Class A B C
- --------------------------------------------------------------------------------
Beginning Account $ 1,000.00 $ 1,000.00 $ 1,000.00
Value on 7/1/08
- --------------------------------------------------------------------------------
Ending Account $ 843.26 $ 840.73 $ 838.92
Value on 12/31/08
- --------------------------------------------------------------------------------
Expenses Paid $ 3.98 $ 8.00 $ 7.95
During Period*
- --------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.86%, 1.73%,
and 1.72% for Class A, Class B, and Class C shares, respectively, multiplied
by the average account value over the period, multiplied by 184/366 (to
reflect the one-half year period).
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 13
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the
5% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer AMT-Free CA
Municipal Fund
Based on a hypothetical 5% return per year before expenses, reflecting the
period from July 1, 2008 through December 31, 2008.
- --------------------------------------------------------------------------------
Share Class A B C
- --------------------------------------------------------------------------------
Beginning Account $ 1,000.00 $ 1,000.00 $ 1,000.00
Value on 7/1/08
- --------------------------------------------------------------------------------
Ending Account $ 1,020.81 $ 1,016.44 $ 1,016.49
Value on 12/31/08
- --------------------------------------------------------------------------------
Expenses Paid $ 4.37 $ 8.77 $ 8.72
During Period*
- --------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.86%, 1.73%,
and 1.72% for Class A, Class B, and Class C shares, respectively, multiplied
by the average account value over the period, multiplied by 184/366 (to
reflect the one-half year period).
14 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
Schedule of Investments | 12/31/08
- --------------------------------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
- --------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS -- 97.9%
Government -- 4.4%
$ 3,000,000 A+/A1 California State, 4.25%, 8/1/33 $ 2,182,710
1,500,000 A+/A1 California State, 4.75%, 4/1/29 1,289,625
-----------
$ 3,472,335
- --------------------------------------------------------------------------------------------------------
Municipal Airport -- 2.4%
2,500,000 AA/A1 San Francisco California City & County Airports Community
International, 4.5%, 5/1/32 $ 1,935,050
- --------------------------------------------------------------------------------------------------------
Municipal Development -- 22.5%
3,500,000 AA/A3 Alameda County California Redevelopment Agency, 4.375%,
8/1/30 $ 2,362,990
4,000,000 AA-/Aa3 California Statewide, 5.75%, 7/1/47 3,453,400
4,000,000 A+/NR California Statewide Communities Development Authority,
5.75%, 8/15/38 3,305,720
2,500,000 AA-/Aa3 California Statewide Municipality, 5.25%, 11/15/48 1,983,600
2,500,000 A/Baa1 Inglewood California Redevelopment Agency Tax Allocation,
4.75%, 5/1/38 1,577,650
3,815,000 A/NR Pittsburg California Redevelopment Agency, 4.25%, 9/1/34 2,370,755
3,000,000 A-/Aaa Rialto California Redevelopment Agency Tax Allocation, 6.25%,
9/1/37 2,659,980
-----------
$17,714,095
- --------------------------------------------------------------------------------------------------------
Municipal Facilities -- 5.4%
2,100,000 AA-/Baa1 Fresno Joint Powers Financing Authority Lease Revenue,
4.75%, 9/1/28 $ 1,834,245
3,000,000 A/Baa1 Los Angeles County California Certificates of Participation,
4.75%, 3/1/23 2,429,520
-----------
$ 4,263,765
- --------------------------------------------------------------------------------------------------------
Municipal General -- 6.9%
5,000,000 AA/A3 Anaheim California Public Financing Authority Lease, 4.25%,
9/1/35 $ 3,291,800
2,095,000 BBB+/NR Redding California Redevelopment, 4.5%, 9/1/26 1,250,526
1,500,000 BBB+/NR Redding California Redevelopment, 5.0%, 9/1/36 868,050
-----------
$ 5,410,376
- --------------------------------------------------------------------------------------------------------
Municipal Housing -- 4.5%
4,000,000 AA-/Aa2 California State Department of Veteran Affairs, 4.75%,
12/1/25 $ 3,575,560
- --------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 15
Schedule of Investments | 12/31/08 (continued)
- ---------------------------------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
- ---------------------------------------------------------------------------------------------------------
Municipal Medical -- 16.7%
$ 4,000,000 A/NR California Health Facilities Financing Authority, 5.0%, 3/1/33 $ 2,880,840
3,500,000 A/A2 California Health Facilities, 5.625%, 7/1/32 2,866,045
5,000,000 BBB-/Baa2 California Municipal Finance Agency, 5.25%, 2/1/37 3,140,900
4,000,000 BBB+/Baa1 California Statewide Communities Development Authority,
5.0%, 8/15/47 2,090,800
2,500,000 A+/A3 San Bernardino County California Certificates of Participation,
5.5%, 8/1/24 2,197,025
-----------
$13,175,610
- ---------------------------------------------------------------------------------------------------------
Municipal School District -- 9.0%
2,500,000 AA-/Aa3 Los Angeles California University School District, 4.25%,
1/1/28 $ 2,066,400
1,885,000 AAA/Aa3 Oakland California University School District, 4.375%, 8/1/31 1,489,866
1,600,000 A+/WR Oxnard California School District, 4.375%, 8/1/33 1,240,128
2,180,000 AA/Baa1 Pomona Unified School District, 6.55%, 8/1/29 2,273,086
-----------
$ 7,069,480
- ---------------------------------------------------------------------------------------------------------
Municipal Tobacco -- 3.7%
2,500,000 AAA/WR Golden State Tobacco Securitization, 6.75%, 6/1/39 $ 2,899,600
- ---------------------------------------------------------------------------------------------------------
Municipal Transportation -- 8.4%
4,000,000 AA/A2 Alameda Corridor Transportation Authority, 4.75%, 10/1/25 $ 3,609,080
5,000,000 BB-/Ba2 San Joaquin Hills Transportation Corridor Agency, 5.0%,
1/1/33 3,029,850
-----------
$ 6,638,930
- ---------------------------------------------------------------------------------------------------------
Municipal Utilities -- 7.2%
5,000,000 A/A2 Long Beach California Finance Authority, 5.5%, 11/15/37 $ 3,371,000
3,000,000 AAA/Aa3 Modesto California Wastewater Revenue, 4.25%, 11/1/36 2,291,610
-----------
$ 5,662,610
- ---------------------------------------------------------------------------------------------------------
Municipal Water -- 6.8%
4,000,000 A-/NR Madera California District Water, 5.5%, 1/1/33 $ 3,728,122
2,000,000 AA/Baa1 Madera California Public, 4.375%, 3/1/31 1,594,500
-----------
$ 5,322,622
- ---------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $97,002,379) $77,140,033
- ---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT IN SECURITIES -- 97.9%
(Cost $97,002,379) (a) $77,140,033
- ---------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 2.1% $ 1,639,664
- ---------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $78,779,697
=========================================================================================================
The accompanying notes are an integral part of these financial statements.
16 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
WR Withdrawn rating.
NR Not rated by either S&P or Moody's.
(a) At December 31, 2008, the net unrealized loss on investments based on
cost for federal income tax purposes of $96,204,398 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost $ 1,381,041
Aggregate gross unrealized loss for all investments in which there is an
excess of tax cost over value (20,445,406)
------------
Net unrealized loss $(19,064,365)
============
Purchases and sales of securities (excluding temporary cash investments) for
the year ended December 31, 2008 aggregated $32,798,445 and $38,277,570,
respectively.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below.
Highest priority is given to Level 1 inputs and lowest priority is given to
Level 3.
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.)
Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining fair value of investments)
The following is a summary of the inputs used as of December 31, 2008, in
valuing the Fund's assets:
- --------------------------------------------------------------------------------
Investments
Valuation Inputs in Securities
- --------------------------------------------------------------------------------
Level 1 -- Quoted Prices $ --
Level 2 -- Other Significant Observable Inputs 77,140,033
Level 3 -- Significant Unobservable Inputs --
- --------------------------------------------------------------------------------
Total $77,140,033
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 17
Statement of Assets and Liabilities | 12/31/08
ASSETS:
Investment in securities (cost $97,002,379) $ 77,140,033
Cash 174,234
Receivables --
Fund shares sold 123,627
Interest 1,660,437
Due from Pioneer Investment Management, Inc. 24,818
Other 3,966
- --------------------------------------------------------------------------------
Total assets $ 79,127,115
- --------------------------------------------------------------------------------
LIABILITIES:
Payables --
Fund shares repurchased $ 134,853
Dividends 138,039
Due to affiliates 8,374
Accrued expenses 66,152
- --------------------------------------------------------------------------------
Total liabilities $ 347,418
- --------------------------------------------------------------------------------
NET ASSETS:
Paid-in capital $ 98,344,036
Undistributed net investment income 854,738
Accumulated net realized loss on investments (556,731)
Net unrealized loss on investments (19,862,346)
- --------------------------------------------------------------------------------
Total net assets $ 78,779,697
================================================================================
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $69,413,071/7,193,849 shares) $ 9.65
Class B (based on $803,950/83,770 shares) $ 9.60
Class C (based on $8,562,676/895,545 shares) $ 9.56
MAXIMUM OFFERING PRICE:
Class A ($9.65 [divided by] 95.5%) $ 10.10
================================================================================
The accompanying notes are an integral part of these financial statements.
18 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
Statement of Operations
For the Year Ended 12/31/08
INVESTMENT INCOME:
Interest $5,491,461
- ----------------------------------------------------------------------------------------
Total investment income $ 5,491,461
- ----------------------------------------------------------------------------------------
EXPENSES:
Management fees $ 501,996
Transfer agent fees
Class A 30,854
Class B 890
Class C 2,523
Distribution fees
Class A 223,420
Class B 8,680
Class C 101,601
Shareholder communications expense 27,910
Administrative fees 30,110
Custodian fees 8,318
Registration fees 8,137
Professional fees 66,394
Printing expense 21,373
Fees and expenses of nonaffiliated trustees 6,892
Miscellaneous 38,210
- ----------------------------------------------------------------------------------------
Total expenses $ 1,077,308
Less fees waived and expenses reimbursed by Pioneer
Investment Management, Inc. (119,235)
Less fees paid indirectly (774)
- ----------------------------------------------------------------------------------------
Net expenses $ 957,299
- ----------------------------------------------------------------------------------------
Net investment income $ 4,534,162
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investments $ (565,203)
- ----------------------------------------------------------------------------------------
Change in net unrealized gain on investments $(21,277,815)
- ----------------------------------------------------------------------------------------
Net loss on investments $(21,843,018)
- ----------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(17,308,856)
========================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 19
Statement of Changes in Net Assets
For the Years Ended 12/31/08 and 12/31/07, respectively
- ---------------------------------------------------------------------------------------------
Year Ended Year Ended
12/31/08 12/31/07
- ---------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 4,534,162 $ 4,266,111
Net realized gain (loss) on investments (565,203) 1,198,825
Change in net unrealized gain (loss) on investments (21,277,815) (5,840,502)
- ---------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(17,308,856) $ (375,566)
- ---------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.54 and $0.52 per share, respectively) $ (4,203,467) $ (3,922,521)
Class B ($0.43 and $0.40 per share, respectively) (32,985) (27,966)
Class C ($0.44 and $0.41per share, respectively) (393,990) (290,012)
Net realized gain:
Class A ($0.03 and $0.11 per share, respectively) (196,900) (881,443)
Class B ($0.03 and $0.11 per share, respectively) (2,080) (8,059)
Class C ($0.03 and $0.11 per share, respectively) (24,098) (86,909)
- ---------------------------------------------------------------------------------------------
Total distributions to shareowners $ (4,853,520) $ (5,216,910)
- ---------------------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 16,736,270 $ 39,865,570
Reinvestment of distributions 2,948,966 3,249,377
Cost of shares repurchased (27,288,012) (23,026,766)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
Fund share transactions $ (7,602,776) $ 20,088,181
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $(29,765,152) $ 14,495,705
NET ASSETS:
Beginning of year 108,544,849 94,049,144
- ---------------------------------------------------------------------------------------------
End of year $ 78,779,697 $108,544,849
- ---------------------------------------------------------------------------------------------
Undistributed net investment income $ 854,738 $ 960,154
- ---------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
20 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
- ----------------------------------------------------------------------------------------------------
'08 Shares '08 Amount '07 Shares '07 Amount
- ----------------------------------------------------------------------------------------------------
Class A
Shares sold 960,778 $10,955,699 2,678,403 $33,838,873
Reinvestment of distributions 251,433 2,794,059 251,413 3,142,454
Less shares repurchased (2,032,935) (22,462,563) (1,642,086) (20,545,659)
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) (820,724) $(8,712,805) 1,287,730 $16,435,668
====================================================================================================
Class B
Shares sold 33,506 $ 369,396 25,170 $ 315,513
Reinvestment of distributions 857 9,351 900 11,172
Less shares repurchased (25,395) (287,525) (11,478) (142,137)
- ----------------------------------------------------------------------------------------------------
Net increase 8,968 $ 91,222 14,592 $ 184,548
====================================================================================================
Class C
Shares sold 483,042 $ 5,411,175 459,403 $ 5,711,184
Reinvestment of distributions 13,301 145,556 7,744 95,751
Less shares repurchased (423,376) (4,537,924) (189,415) (2,338,970)
- ----------------------------------------------------------------------------------------------------
Net increase 72,967 $ 1,018,807 277,732 $ 3,467,965
====================================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 21
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04(a)
- -----------------------------------------------------------------------------------------------------------------------------------
Class A
Net asset value, beginning of period $ 12.19 $ 12.84 $ 12.86 $ 12.65 $ 12.69
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income $ 0.54 $ 0.50 $ 0.42 $ 0.45 $ 0.53(b)
Net realized and unrealized gain (loss) on investments (2.51) (0.52) 0.23 0.42 0.12
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (1.97) $ (0.02) $ 0.65 $ 0.87 $ 0.65
Distributions to shareowners:
Net investment income (0.54) (0.52) (0.52) (0.53) (0.53)
Net realized gain (0.03) (0.11) (0.15) (0.13) (0.16)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (2.54) $ (0.65) $ (0.02) $ 0.21 $ (0.04)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.65 $ 12.19 $ 12.84 $ 12.86 $ 12.65
===================================================================================================================================
Total return* (16.72)% (0.22)% 5.23% 6.94% 5.22%
Ratio of net expenses to average net assets+ 0.86% 0.86% 0.86% 0.86% 0.86%
Ratio of net investment income to average net assets+ 4.61% 4.12% 4.19% 4.23% 4.21%
Portfolio turnover rate 34% 21% 13% 7% 22%
Net assets, end of period (in thousands) $ 69,413 $97,704 $86,345 $10,186 $ 87
Ratios with no waivers of fees and assumption of expenses
by PIM and no reduction for fees paid indirectly:
Net expenses 0.99% 0.95% 1.03% 1.06% 1.04%
Net investment income 4.48% 4.04% 4.02% 4.03% 4.03%
Ratios with waiver of fees and assumption of expenses
by PIM and reduction for fees paid indirectly:
Net expenses 0.86% 0.86% 0.86% 0.86% 1.04%
Net investment income 4.61% 4.12% 4.19% 4.23% 4.03%
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Effective August 2, 2004, PIM became the sub-advisor of the Fund and
subsequently became the advisor on December 10, 2004.
(b) Net investment income per share has been calculated using the average shares
method.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
22 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
- ------------------------------------------------------------------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
Net asset value, beginning of period $ 12.12 $ 12.77 $ 12.79 $ 12.64 $ 12.66
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income $ 0.41 $ 0.38 $ 0.37 $ 0.32 $ 0.43(b)
Net realized and unrealized gain (loss) on investments (2.47) (0.52) 0.17 0.36 0.14
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (2.06) $ (0.14) $ 0.54 $ 0.68 $ 0.57
Distributions to shareowners:
Net investment income (0.43) (0.40) (0.41) (0.40) (0.43)
Net realized gain (0.03) (0.11) (0.15) (0.13) (0.16)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (2.52) $ (0.65) $ (0.02) $ 0.15 $ (0.02)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.60 $ 12.12 $ 12.77 $ 12.79 $ 12.64
===================================================================================================================================
Total return* (17.44)% (1.13)% 4.36% 5.39% 4.62%
Ratio of net expenses to average net assets+ 1.73% 1.76% 1.76% 1.78% 1.68%
Ratio of net investment income to average net assets+ 3.77% 3.21% 3.35% 3.40% 3.61%
Portfolio turnover rate 34% 21% 13% 7% 22%
Net assets, end of period (in thousands) $ 804 $ 906 $ 769 $ 411 $ 10
Ratios with no waivers of fees and assumption of expenses by PIM and
no reduction for fees paid indirectly:
Net expenses 1.90% 1.78% 1.94% 1.95% 1.88%
Net investment income 3.59% 3.21% 3.17% 3.23% 3.41%
Ratios with waiver of fees and assumption of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 1.73% 1.76% 1.76% 1.78% 1.88%
Net investment income 3.77% 3.21% 3.35% 3.40% 3.41%
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Effective August 2, 2004, PIM became the sub-advisor of the Fund and
subsequently became the advisor on December 10, 2004.
(b) Net investment income per share has been calculated using the average shares
method.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 23
Financial Highlights (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 (a)
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
Net asset value, beginning of period $ 12.08 $ 12.73 $ 12.76 $ 12.63 $ 12.66
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income $ 0.42 $ 0.37 $ 0.34 $ 0.35 $ 0.43(b)
Net realized and unrealized gain (loss) on investments (2.47) (0.50) 0.21 0.34 0.13
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (2.05) $ (0.13) $ 0.55 $ 0.69 $ 0.56
Distributions to shareowners:
Net investment income (0.44) (0.41) (0.43) (0.43) (0.43)
Net realized gain (0.03) (0.11) (0.15) (0.13) (0.16)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (2.52) $ (0.65) $ (0.03) $ 0.13 $ (0.03)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.56 $ 12.08 $ 12.73 $ 12.76 $ 12.63
===================================================================================================================================
Total return* (17.45)% (1.07)% 4.39% 5.49% 4.54%
Ratio of net expenses to average net assets+ 1.72% 1.68% 1.76% 1.56% 1.61%
Ratio of net investment income to average net assets+ 3.78% 3.29% 3.31% 3.50% 3.47%
Portfolio turnover rate 34% 21% 13% 7% 22%
Net assets, end of period (in thousands) $ 8,563 $ 9,935 $ 6,935 $ 1,561 $ 10
Ratios with no waivers of fees and assumption of expenses by PIM and
no reduction for fees paid indirectly:
Net expenses 1.73% 1.68% 1.76% 1.72% 2.06%
Net investment income 3.76% 3.29% 3.31% 3.34% 3.02%
Ratios with waiver of fees and assumption of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 1.72% 1.68% 1.76% 1.56% 1.61%
Net investment income 3.78% 3.29%0 3.31% 3.50% 3.47%
- -----------------------------------------------------------------------------------------------------------------------------------
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
+ Ratios assuming no reduction for fees paid indirectly.
(a) Effective August 2, 2004, PIM because the sub-advisor of the Fund and
subsequently became the advisor on December 10, 2004.
(b) Net investment income per share has been calculated using the average shares
method.
The accompanying notes are an integral part of these financial statements.
24 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
Notes to Financial Statements | 12/31/08
1. Organization and Significant Accounting Policies
Pioneer AMT-Free CA Municipal Fund (the Fund) is one of seven series of
portfolios comprising Pioneer Series Trust II, a Delaware statutory trust
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The investment objective of the Fund is to seek
as high a level of current interest income exempt from federal income tax and
California state personal income tax as is consistent with the relative
stability of capital.
The Fund offers three classes of shares designated as Class A, Class B, and
Class C shares. Each class of shares represents an interest in the same
portfolio of investments of the Fund and has identical rights (based on
relative net asset values) to assets and liquidation proceeds. Share classes
can bear different class-specific fees and expenses such as transfer agent and
distribution fees. Differences in class-specific fees and expenses will result
in differences in net investment income and, therefore, the payment of
different dividends by each class. The Amended and Restated Declaration of
Trust of the Fund gives the Board the flexibility to specify either per share
voting or dollar-weighted voting when submitting matters for shareholder
approval. Under per share voting, each share of a class of the Fund is entitled
to one vote. Under dollar-weighted voting, a shareholder's voting power is
determined not by the number of shares owned, but by the dollar value of the
shares on the record date. Share classes have exclusive voting rights with
respect to matters affecting only that class, including with respect to the
distribution plan for that class. Class B shares convert to Class A shares
approximately eight years after the date of purchase.
The Fund's financial statements have been prepared in conformity with U.S.
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 income, expenses, and gain or loss on investments during the
reporting period. Actual results could differ from those estimates.
At times, the Fund's investments may represent industries or industry sectors
that are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors. The Fund's prospectuses contain unaudited information
regarding the Fund's principal risks. Please refer to those documents when
considering the Fund's principal risks.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 25
Investing primarily in the securities issued by California and its
municipalities makes the Fund more vulnerable to unfavorable developments in
California than are funds that invest in municipal securities of many states.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements which are consistent with
those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Fund is computed daily, on each day the New York Stock Exchange (NYSE)
is open, as of the close of regular trading on the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Securities are valued at prices supplied by
independent pricing services, which consider such factors as Treasury
spreads, yields, maturities and ratings. Valuations may be supplemented by
dealers and other sources, as required. Securities for which there are no
other readily available valuation methods are valued using fair value
methods pursuant to procedures adopted by the Board of Trustees. At December
31, 2008 there were no securities that were valued using fair value methods.
Discount and premium on debt securities are accreted or amortized,
respectively daily into interest income on a yield-to-maturity basis with a
corresponding increase or decrease in the cost basis of the security.
Interest income is recorded on the accrual basis. Temporary cash investments
are valued at cost which approximates market value.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. 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
shareowners. Therefore, no federal tax provision is required. Tax years for
the prior three fiscal years remain subject to examination by tax
authorities.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the sources 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.
26 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
The Fund has elected to defer $224,151 of capital losses recognized between
November 1, 2008 and December 31, 2008 to its fiscal year ending December
31, 2009.
At December 31, 2008, the Fund had a net capital loss carryforward of
$332,580, which will expire in 2016 if not utilized.
At December 31, 2008, the Fund has reclassified $9,136 to increase
undistributed net investment income and $9,136 to decrease accumulated net
realized loss on investments, to reflect permanent book/tax differences. The
reclassification has no impact on the net assets of the Fund and presents
the Fund's capital accounts on a tax basis.
The tax character of distributions paid during the years ended December 31,
2008 and December 31, 2007 was as follows:
- --------------------------------------------------------------------------------
2008 2007
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 122,096 $ 246,231
Tax-exempt income 4,509,010 4,146,481
Long-term capital gain 222,414 824,198
- --------------------------------------------------------------------------------
Total $4,853,520 $5,126,910
================================================================================
The following shows the components of distributable earnings on a federal
income tax basis at December 31, 2008:
- --------------------------------------------------------------------------------
2008
- --------------------------------------------------------------------------------
Distributable earnings:
Undistributed tax-exempt income $ 56,757
Capital loss carryforward (332,580)
Current year Post-October loss deferral (224,151)
Unrealized depreciation (19,064,365)
- --------------------------------------------------------------------------------
Total $(19,564,339)
================================================================================
The difference between book basis and tax-basis unrealized appreciation is
attributable to the tax treatment of premium and amortization.
C. 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 a wholly owned indirect subsidiary of UniCredit S.p.A.,
(UniCredit), earned $10,146 in underwriting commissions on the sale of Class
A shares during the year ended December 31, 2008.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 27
D. Class Allocations
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.
Distribution fees are calculated based on the average daily net asset value
attributable to Class A, Class B, Class C shares of the Fund, respectively
(see Note 4). Shareowners of each class participate in all expenses and fees
paid to the transfer agent, Pioneer Investment Management Shareholder
Services, Inc. (PIMSS), for its services, which are allocated based on the
number of accounts in each class and the ratable allocation of related
out-of-pocket expenses (see Note 3).
The Fund declares, as daily dividends, substantially all of its net
investment income. All dividends are paid on a monthly basis. Short-term
capital gain distributions, if any, may be declared with the daily
dividends. Distributions to shareowners 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 and at the same time, except that Class A,
Class B, Class C shares can bear different transfer agent and distribution
expense rates.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit, manages the Fund's
portfolio. Management fees are calculated daily at the annual rate of 0.50% of
the Fund's average daily net assets up to $250 million; 0.45% of the next $500
million and 0.40% on assets over $750 million. Prior to January 1, 2008,
management fees were calculated daily at the annual rate of 0.50% of the fund's
average daily net assets up to $250 million. For the year ended December 31,
2008 the net management fee was equivalent to 0.50% of the average daily net
assets.
PIM has agreed to limit ordinary operating expenses to the extent required to
reduce Fund expenses to 0.86%, 1.76% and 1.76% of the average daily net assets
attributable to Class A, Class B and Class C shares, respectively. These
expense limitations are in effect through May 1, 2012 for Class A shares and
through May 1, 2010 for Class B and Class C Shares.
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. Included in "Due to Affiliates" reflected on
the Statement of Assets and Liabilities is $1,133 in management fees,
administrative costs and certain other services payable to PIM at December 31,
2008.
28 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Fund at negotiated rates.
In addition, the Fund reimbursed PIMSS for out-of-pocket expenses related to
shareholder communications activities such as proxy and statement mailings,
outgoing phone calls and omnibus relationship contracts. For the year ended
December 31, 2008, such out of pocket expenses by class of shares were as
follows:
- --------------------------------------------------------------------------------
Shareholder Communications:
- --------------------------------------------------------------------------------
Class A $24,243
Class B 1,032
Class C 2,635
- --------------------------------------------------------------------------------
Total $27,910
================================================================================
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $6,516 in transfer agent fees and shareholder communications
expense payable to PIMSS at December 31, 2008.
4. Distribution Plans
The Fund adopted a Distribution Plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940 with respect to its Class A, Class B and Class C. Pursuant
to the Plan, the Fund pays PFD 0.25% of the average daily net assets
attributable to Class A shares as compensation for personal services and/or
account maintenance services or distribution services with regard to Class A
shares. Pursuant to the Plan, the Fund pays PFD 1.00% of the average daily net
assets attributable to Class B and Class C shares. The fee for Class B and
Class C shares 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" reflected on the Statement of Assets and Liabilities is
$725 in distribution fees payable to PFD at December 31, 2008.
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 4.00%, 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% based on the lower
of cost or market value of shares being redeemed. Proceeds from the CDSCs are
paid to PFD. For the year ended December 31, 2008, CDSCs in the amount of
$25,757 were paid to PFD.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 29
5. Expense Offset Arrangements
The Fund has entered into certain expense offset arrangements with PIMSS
resulting in a reduction in the Fund's total expenses due to interest earned on
cash held by PIMSS. For the year ended December 31, 2008, the Fund's expenses
were reduced by $774 under such arrangements.
6. New Pronouncement
In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures
about Derivative Instruments and Hedging Activities ("SFAS 161"), was issued
and is effective for fiscal years beginning after November 15, 2008. SFAS 161
requires enhanced disclosures about an entity's derivative and hedging
activities. Management is currently evaluating the impact the adoption of SFAS
161 will have on the Fund's financial statement disclosures.
30 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Pioneer Series Trust II and
Shareowners of Pioneer AMT-Free CA Municipal Fund:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of Pioneer
AMT-Free CA Municipal Fund, one of the series comprising the Pioneer Series
Trust II (the "Trust"), including the schedule of investments, as of December
31, 2008, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Trust'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 the standards of the Public Company
Accounting Oversight Board (United States). 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. We were not engaged to perform an audit of the Trust's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Trust's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of December 31, 2008, by correspondence
with the custodian and brokers. 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 AMT-Free CA Municipal Fund of the Pioneer Series Trust II at December
31, 2008, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and
financial highlights for each of the five years in the period then ended, in
conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 18, 2009
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 31
ADDITIONAL INFORMATION (unaudited)
For the year ended December 31, 2008, certain dividends paid by the Fund may be
subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth
Tax Relief Reconciliation Act (the Act) of 2003. The Fund intends to designate
up to the maximum amount of such dividends allowable under the Act, as taxed at
a maximum rate of 15%. Complete information will be computed and reported in
conjunction with your 2008 form 1099-DIV.
The percentages of the Fund's ordinary income distributions that are exempt
from nonresident alien (NRA) tax withholding resulting from qualified interest
income and qualified short term gains were 100.0% and 0.0%, respectively.
32 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
Trustees, Officers and Service Providers
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerinvestments.com. This information is also available
on the Securities and Exchange Commission's web site at http://www.sec.gov.
Trustees and Officers
The Board of Trustees provides broad supervision over the Fund's affairs. The
officers of the Fund are responsible for the Fund's operations. The Trustees
and officers are listed below, together with their principal occupations during
the past five years. Trustees who are interested persons of the Fund within the
meaning of the 1940 Act are referred to as Interested Trustees. Trustees who
are not interested persons of the Fund are referred to as Independent Trustees.
Each of the Trustees serves as a trustee of each of the 76 U.S. registered
investment portfolios for which Pioneer serves as investment adviser (the
"Pioneer Funds"). The address for all Trustees and all officers of the Fund is
60 State Street, Boston, Massachusetts 02109.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 33
Interested Trustees
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age with the Fund and Term of Office During Past Five Years Held by this Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
John F. Cogan, Jr. Chairman of the Trustee since 2003. Deputy Chairman and a Director of None
(82)* Board, Trustee Serves until a successor Pioneer Global Asset Management S.p.A.
and President trustee is elected or ("PGAM"); Non-Executive Chairman and a
earlier retirement or Director of Pioneer Investment
removal. Management USA Inc. ("PIM-USA");
Chairman and a Director of Pioneer;
Chairman and Director of Pioneer
Institutional Asset Management, Inc.
(since 2006); Director of Pioneer
Alternative Investment Management
Limited (Dublin); President and a
Director of Pioneer Alternative Invest-
ment Management (Bermuda) Limited and
affiliated funds; Director of PIOGLOBAL
Real Estate Investment Fund (Russia)
(until June 2006); Director of Nano-C,
Inc. (since 2003); Director of Cole
Management Inc. (since 2004); Director
of Fiduciary Counseling, Inc.; President
and Director of Pioneer Funds Dis-
tributor, Inc. ("PFD") (until May 2006);
President of all of the Pioneer Funds;
and Of Counsel, Wilmer Cutler Pickering
Hale and Dorr LLP
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel K. Kingsbury Trustee and Trustee since 2008. Director, CEO and President of Pioneer None
(50)* Executive Serves until a successor Investment Management USA Inc. (since
Vice President trustee is elected or February 2007); Director and President
earlier retirement or of Pioneer Investment Management, Inc.
removal. and Pioneer Institutional Asset
Management, Inc. (since February 2007);
Executive Vice President of all of the
Pioneer Funds (since March 2007); Direc-
tor of Pioneer Global Asset Management
S.p.A. (since April 2007); Head of New
Markets Division, Pioneer Global Asset
Management S.p.A. (2000 - 2007)
- ------------------------------------------------------------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are
officers or directors of the fund's investment adviser and certain of its
affiliates.
34 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
Independent Trustees
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age with the Fund and Term of Office During Past Five Years Held by this Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
David R. Bock (65) Trustee Trustee since 2005. Executive Vice President and Chief Director of
Serves until a successor Financial Officer, I-trax, Inc. Enterprise Com-
trustee is elected or (publicly traded health care services munity Investment,
earlier retirement or company) (2004 - 2007); Partner, Federal Inc. (privately-held
removal. City Capital Advisors (boutique merchant affordable housing
bank) (1997 to 2004 and 2008 - present); finance company);
and Executive Vice President and Chief and Director of New
Financial Officer, Pedestal Inc. York Mortgage Trust
(internet-based mortgage trading (publicly traded
company) (2000 - 2002) mortgage REIT)
- ------------------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (60) Trustee Trustee since 2003. President, Bush International, LLC Director of Marriott
Serves until a successor (international financial advisory International,
trustee is elected or firm) Inc., Director of
earlier retirement or Discover Financial
removal. Services (credit
card issuer and
electronic payment
services); Director
of Briggs & Stratton
Co. (engine
manufacturer);
Director of UAL
Corporation (airline
holding company)
Director of Mantech
International
Corporation
(national security,
defense, and intel-
ligence technology
firm); and Member,
Board of Gov-
ernors, Investment
Company Institute
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
35
Independent Trustees (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age with the Fund and Term of Office During Past Five Years Held by this Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Benjamin M. Friedman Trustee Trustee since 2008. Professor, Harvard University Trustee, Mellon
(64) Serves until a successor Institutional Funds
trustee is elected or Investment Trust and
earlier retirement or Mellon Institutional
removal Funds Master
Portfolio (oversees
17 portfolios in
fund complex)
- ------------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham Trustee Trustee since 2003. Founding Director, Vice-President and None
(61) Serves until a successor Corporate Secretary, The Winthrop Group,
trustee is elected or Inc. (consulting firm); and Desautels
earlier retirement or Faculty of Management, McGill University
removal.
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas J. Perna (58) Trustee Trustee since 2006. Chief Executive Officer, Quadriserv, None
Serves until a successor Inc. (2008 - present) (technology
trustee is elected or products for securities lending
earlier retirement or industry); Private investor (2004 -
removal. 2008); and Senior Executive Vice
President, The Bank of New York
(financial and securities services)
(1986 - 2004)
- ------------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret Trustee Trustee since 2003. President and Chief Executive Officer, Director of New
(60) Serves until a successor Newbury, Piret & Company, Inc. America High Income
trustee is elected or (investment banking firm) Fund, Inc.
earlier retirement or (closed-end
removal. investment company)
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen K. West (80) Trustee Trustee since 2008. Senior Counsel, Sullivan & Cromwell LLP Director, The Swiss
Serves until a successor (law firm) Helvetia Fund, Inc.
trustee is elected or (closed-end
earlier retirement or investment company)
removal.
- ------------------------------------------------------------------------------------------------------------------------------------
36 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
Fund Officers
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age with the Fund and Term of Office During Past Five Years Held by this Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Dorothy E. Bourassa Secretary Since 2003. Serves at Secretary of PIM-USA; Senior Vice None
(60) the discretion of the President - Legal of Pioneer;
Board Secretary/Clerk of most of PIM-USA's
subsidiaries; and Secretary of all of
the Pioneer Funds since September 2003
(Assistant Secretary from November 2000
to September 2003)
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Assistant Since 2003. Serves at Associate General Counsel of Pioneer None
Kelley (44) Secretary the discretion of the since January 2008 and Assistant
Board Secretary of all of the Pioneer Funds
since September 2003; Vice President and
Senior Counsel of Pioneer from July 2002
to December 2007
- ------------------------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (49) Treasurer Since 2008. Serves at Vice President - Fund Accounting, None
the discretion of the Administration and Controller- ship
Board Services of Pioneer; and Treasurer of
all of the Pioneer Funds since March
2008; Deputy Treasurer of Pioneer from
March 2004 to February 2008; Assistant
Treasurer of all of the Pioneer Funds
from March 2004 to February 2008; and
Treasurer and Senior Vice President, CDC
IXIS Asset Management Services from 2002
to 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Luis I. Presutti Assistant Since 2003. Serves at Assistant Vice President - Fund None
(43) Treasurer the discretion of the Accounting, Administration and
Board Controllership Services of Pioneer; and
Assistant Treasurer of all of the
Pioneer Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Gary Sullivan (50) Assistant Since 2003. Serves at Fund Accounting Manager - Fund None
Treasurer the discretion of the Accounting, Administration and
Board Controllership Services of Pioneer; and
Assistant Treasurer of all of the
Pioneer Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
37
Fund Officers (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age with the Fund and Term of Office During Past Five Years Held by this Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Katherine Kim Assistant Since 2003. Serves at Fund Administration Manager - Fund None
Sullivan (35) Treasurer the discretion of the Accounting, Administration and
Board Controllership Services since June 2003
and Assistant Treasurer of all of the
Pioneer Funds since September 2003;
Assistant Vice President - Mutual Fund
Operations of State Street Corporation
from June 2002 to June 2003 (formerly
Deutsche Bank Asset Management)
- ------------------------------------------------------------------------------------------------------------------------------------
Teri W. Anderholm Chief Compliance Since 2007. Serves at Chief Compliance Officer of Pioneer None
(49) Officer the discretion of the since December 2006 and of all the
Board Pioneer Funds since January 2007; Vice
President and Compliance Officer, MFS
Investment Management (August 2005 to
December 2006); Consultant, Fidelity
Investments (February 2005 to July
2005); Independent Consultant (July 1997
to February 2005)
- ------------------------------------------------------------------------------------------------------------------------------------
38 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
This page for your notes.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 39
This page for your notes.
40 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
This page for your notes.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 41
This page for your notes.
42 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
This page for your notes.
Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08 43
This page for your notes.
44 Pioneer AMT-Free CA Municipal Fund | Annual Report | 12/31/08
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:
- --------------------------------------------------------------------------------
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our internet e-mail address ask.pioneer@pioneerinvestments.com
(for general questions about Pioneer only)
Visit our web site: www.pioneerinvestments.com
This report must be accompanied by a prospectus.
The Fund files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
[GRAPHIC]
Pioneer AMT-Free Municipal Fund
- --------------------------------------------------------------------------------
Annual Report | December 31, 2008
- --------------------------------------------------------------------------------
Ticker Symbols:
Class A PBMFX
Class B PBMUX
Class C MNBCX
Class Y PBYMX
[LOGO] PIONEER
Investments(R)
visit us: pioneerinvestments.com
Table of Contents
Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 8
Prices and Distributions 9
Performance Update 10
Comparing Ongoing Fund Expenses 14
Schedule of Investments 16
Financial Statements 22
Notes to Financial Statements 30
Report of Independent Registered Public Accounting Firm 35
Trustees, Officers and Service Providers 37
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 1
President's Letter
Dear Shareowner,
Stock and bond markets around the globe this year have experienced one of their
most tumultuous periods in history. Investors have witnessed volatility of a
magnitude that many have never before seen. Distance often provides the best
vantage point for perspective. Still, we believe that the benefits of basic
investment principles that have stood the test of time -- even in the midst of
market turmoil -- cannot be underestimated.
First, invest for the long term. The founder of Pioneer Investments, Philip L.
Carret, began his investment career during the 1920s. One lesson he learned is
that while great prosperity affords an advantageous time for selling stocks,
extreme economic slumps can create opportunities for purchase. Indeed, many of
our portfolio managers, who follow the value-conscious investing approach of
our founder, are looking at recent market conditions as an opportunity to buy
companies whose shares we believe have been unjustifiably beaten down by
indiscriminate selling, but that we have identified as having strong prospects
over time. While investors may be facing a sustained market downturn, we
continue to believe that patience, along with staying invested in the market,
are important considerations for long-term investors.
A second principle is to stay diversified across different types of
investments. The global scope of the current market weakness poses challenges
for this basic investment axiom. But the turbulence makes now a good time to
reassess your portfolio and make sure that your investments continue to meet
your needs. We believe you should work closely with your financial advisor to
find the mix of stocks, bonds and money market assets that is best aligned to
your particular risk tolerance and investment objective.
As the investment markets sort through the continuing crisis in the financial
industry, we are staying focused on the fundamentals and risk management. With
more than 80 years of experience behind us, we have learned how to navigate
turbulent markets. At Pioneer Investments, risk management has always been a
critical part of our culture--not just during periods of extraordinary
volatility. Our investment process is based on fundamental research,
quantitative analysis and active portfolio management. This three-pillared
process, which we apply to each of our portfolios, is supported by an
integrated team approach and is designed to carefully balance risk and reward.
While we
2 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
see potential chances for making money in many corners of the market, it takes
research and experience to separate solid investment opportunities from
speculation.
We invite you to learn more about Pioneer and our time-tested approach to
investing by consulting with your financial advisor or visiting us online at
www.pioneerinvestments.com. Thank you for investing with Pioneer.
Respectfully,
/s/ Daniel K. Kingsbury
Daniel K. Kingsbury
President and CEO
Pioneer Investment Management USA, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 3
Portfolio Management Discussion | 12/31/08
In the following interview, Portfolio Manager Stephen C. Bauer outlines the
investment environment for tax-free bonds during the Fund's most recent fiscal
year ended December 31, 2008, the Fund's performance, his investment strategy
and his outlook.
Q How did the Fund perform during its most recent fiscal year ended December
31, 2008?
A For the 12 months ended December 31, 2008, Pioneer AMT-Free Municipal
Fund's Class A shares produced a -14.85% return at net asset value. The
Fund's benchmark, the Barclays Capital Municipal Bond Index, returned
-2.47% over the same 12-month period, and the average return of the 228
funds in Lipper's General Municipal Debt Funds category was -9.09%. Lipper
Analytical Services is an independent monitor of mutual fund performance.
Q How would you describe the investing environment for tax-exempt bonds
during the 12 months ended December 31, 2008?
A The year 2008 represented one of the most unusual and volatile periods ever
witnessed in the municipal bond market. Early in the year, severe financial
difficulties related to the housing crisis caused the three largest
"monoline" insurers -- FGIC, MBIA and AMBAC -- to lose their AAA ratings.
The loss of AAA status for the three monolines meant that the underlying
credits for a host of insured municipal bonds had to be painstakingly
re-evaluated by market watchers (which sparked significant price
volatility).
Another market disruption in the first months of 2008 came from the
activities of hedge fund managers, who in the past had profited by
borrowing large amounts at low short-term rates and investing the proceeds
in higher-yielding long-term municipal bonds. However, in mid to late
February, many hedge fund managers were forced to sell billions of dollars
of long-term municipal bonds to meet margin calls. The huge selloff
temporarily seized up the municipal market until some private sale
arrangements of hedge fund holdings ignited a municipal rally that lasted
into the middle of May.
In the fall of 2008, with the collapse of Lehman Brothers and the Federal
government's rescues of AIG, Fannie Mae, Freddie Mac and other prominent
financial institutions, the credit crisis mushroomed, and the municipal
market's reasonably sound fundamental characteristics were ignored by
investors, replaced by intense anxiety over the health of the U.S.
financial system. Lehman Brothers' disappearance made banks and brokers
barely
4 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
willing to lend or trade to an extent that we have rarely witnessed. The
freeze-up in the municipal bond market began in October 2008 and peaked in
early December. Even high-quality tax-free bonds were trading at steep
discounts during this time, as the credit markets engaged in a frenzied
"flight to quality" to U.S. Treasury and agency securities.
Finally, in early December 2008, with municipal issuance at a standstill,
selling pressure from hedge funds abating and municipal/Treasury yield
ratios at unprecedented levels (long-term Treasuries yielding 2.50% and
AAA-rated municipals of the same maturity yielding 5.50% to 6.00%),
investors began to snap up tax-exempt bonds at attractive yields, and the
municipal market improved over the final three weeks of 2008. Again, in my
view, fundamental factors such as issuing municipalities' ability to raise
taxes or cut spending in order to balance budgets, did not support such a
high municipal yield premium over Treasuries. This circumstance spurred
bargain hunting among investors seeking to lock in high yields.
Q What was your investment strategy for the Fund during the 12-month period
ended December 31, 2008?
A As always, our principal investment strategy for the Fund was to purchase
and hold discounted long-term bonds, as those investments offer the highest
yields in the municipal marketplace. We also believe that they offer the
most attractive value over time.
In the first half of the 12-month period ended December 31, 2008, we
purchased bonds with yield "spreads" over AAA bonds that were double or
triple what they had been in recent years. The new purchases included
hospital bonds in California (Statewide Communities Development Authority
for Sutter Hospital, and St. Joseph Hospital), as well as Providence
Hospital bonds from Washington State. Also, the Fund was invested in 'gas
prepay' bonds, most recently from the Public Authority for Colorado Energy.
The bonds are engineered by Wall Street firms through arrangements with
municipalities that sell natural gas directly to their residents, rather
than through a utility. In order to lock in a stable and typically
lower-than-market price (rather than municipalities being forced to change
natural gas rates for consumers based on fluctuating commodity prices),
through this arrangement, natural gas is purchased via a long-term contract
in the futures market. Proceeds from the initial bond offering pay for the
futures transaction, and principal and interest are later paid to
bondholders through the municipalities' natural gas sales to consumers. The
underwriter of the issue is its financial guarantor.
In the second half of 2008, with the municipal market nearly locked down
for an extended period, we pursued a cautious strategy for the Fund,
maintaining a significant cash position for liquidity purposes. The Fund
was able
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 5
to purchase California Statewide Community Development Authority Children's
Hospital Los Angeles bonds during the second half of the annual reporting
period at an attractive yield.
As of December 31, 2008, 20% of the Fund's portfolio was rated AAA or the
equivalent. In addition, the Fund is broadly diversified among 24 states
and the District of Columbia.
Q What were the largest contributors to and detractors from Fund performance
in 2008?
A In a difficult market, municipal bond interest rate spreads (or differences
in yield) between long- and short-term issues widened dramatically,
negatively affecting the bond prices of longer-term issues, which make up
most of the Fund's portfolio. The Fund's average maturity is significantly
longer than that of the Barclays Capital Municipal Bond Index, which means
that it will generally underperform the benchmark when long-term interest
rates are rising (such as through much of 2008) and outperform when those
rates are declining. Of course, over the long term, we believe the Fund's
shareholders should benefit from the higher yields of the long-term bonds
held in the Fund's portfolio.
The largest individual detractor from performance came from Main Street
Natural Gas bonds, which defaulted due to the bankruptcy of Lehman
Brothers, which was responsible for the forward gas contract. It is
currently undetermined what bondholders may recover upon the ultimate
distribution of assets resulting from the liquidation, but the bonds have
recently traded between $19 and $22. Short-term issues in the form of
pre-refunded municipal bonds were the strongest contributors to
performance. Two examples were Grand Forks (North Dakota) and New York
Metropolitan Transit Authority municipals, both pre-refunded to shorter
call dates.
Q What is your outlook going forward?
A Statistical reports regarding the state of the U.S. economy in late 2008
and early 2009 continued to be dismal, and the economic situation could
deteriorate further. President Obama and Congress will need to act quickly
on spending programs to revive the economy.
State and local governments are facing their most difficult budgetary
conditions in more than 50 years, but municipal bond defaults have remained
at a very low level. We are confident that in most cases municipal
government officials' experience in dealing with trying economic
circumstances will see states and cities through the crisis. In terms of
market volatility, the hope would be that in 2009 market behavior will be
based more on fundamental factors, and less on fears about the health of
financial firms and supply/ demand imbalances. The Fund will continue to
hold long-term issues that we think have the best chance to perform well,
and we will seek to avoid
6 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
those that might encounter significant budgetary problems. We also will
seek to lock in attractive yields for the Fund from high-quality tax-free
bonds, as we believe there are many promising opportunities in the market.
We believe that Pioneer AMT-Free Municipal Fund continues to be an option
for suitable investors seeking high income free from federal taxes.
Please refer to the Schedule of Investments on pages 16-21 for a full listing
of Fund securities.
When interest rates rise, the prices of fixed-income securities in the fund
will generally fall. Conversely, when interest rates fall, the prices of
fixed-income securities in the Fund will generally rise. Investments in the
Fund are subject to possible loss due to the financial failure of issuers of
underlying securities and their inability to meet their debt obligations.
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
At times, the Fund's investments may represent industries or industry sectors
that are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors.
Past performance is not guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of fund management as of the date of this report.
These opinions should not be relied upon for any other purposes.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 7
Portfolio Summary | 12/31/08
Portfolio Quality
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
AAA 24.8%
AA 36.2%
A 18.5%
BBB 13.4%
BB & Lower 5.3%
Commercial Paper 1.8%
Sector Distribution
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Insured 39.4%
Health 16.0%
Escrowed 8.6%
Power 7.7%
Various Revenues 7.4%
Housing 5.7%
Water & Sewer 5.2%
Transportation 3.9%
Education 3.0%
Reserves 1.8%
General Obligation 1.3%
10 Largest Holdings*
- --------------------------------------------------------------------------------
(As a percentage of total long-term holdings)
1. Massachusetts State Housing Finance Agency, 5.4%, 12/1/28 4.33%
- --------------------------------------------------------------------------------
2. San Joaquin Hills Transportation Corridor Agency, 5.0%, 1/1/33 4.00
- --------------------------------------------------------------------------------
3. Piedmont Municipal Power Agency, 5.25%, 1/1/21 3.65
- --------------------------------------------------------------------------------
4. Indianapolis State Development Finance Authority, 5.6%, 12/1/32 3.34
- --------------------------------------------------------------------------------
5. Dallas County Texas Utilities & Reclamamation, 5.375%, 2/15/29 3.16
- --------------------------------------------------------------------------------
6. California State, 4.25%, 8/1/33 3.08
- --------------------------------------------------------------------------------
7. Illinois Educational Facilities Authority, 6.25%, 5/1/30 3.02
- --------------------------------------------------------------------------------
8. North Carolina Eastern Municipal Power, 6.0%, 1/1/22 2.96
- --------------------------------------------------------------------------------
9. Public Authority For Colorado Energy, 6.5%, 11/15/38 2.56
- --------------------------------------------------------------------------------
10. King County Washington Housing Authority, 5.5%, 5/1/38 2.54
- --------------------------------------------------------------------------------
* This list excludes temporary cash and derivative instruments. The portfolio
is actively managed, and current holdings may be different. The holdings
listed should not be considered recommendations to buy or sell any security
listed.
8 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
Prices and Distributions | 12/31/08
Net Asset Value per Share
- --------------------------------------------------------------------------------
Class 12/31/08 12/31/07
A $ 10.90 $ 13.50
- --------------------------------------------------------------------------------
B $ 10.83 $ 13.41
- --------------------------------------------------------------------------------
C $ 10.83 $ 13.42
- --------------------------------------------------------------------------------
Y $ 10.89 $ 13.48
- --------------------------------------------------------------------------------
Distributions per Share: 1/1/08-12/31/08
- --------------------------------------------------------------------------------
Net Investment Short-Term Long-Term
Class Income Capital Gains Capital Gains
A $ 0.5910 $ -- $ 0.0654
- --------------------------------------------------------------------------------
B $ 0.4739 $ -- $ 0.0654
- --------------------------------------------------------------------------------
C $ 0.4880 $ -- $ 0.0654
- --------------------------------------------------------------------------------
Y $ 0.6254 $ -- $ 0.0654
- --------------------------------------------------------------------------------
Index Definitions
- --------------------------------------------------------------------------------
The Barclays Capital Municipal Bond Index is a broad measure of the municipal
bond market. Index returns are calculated monthly, assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in an index.
The index defined here pertains to the "Value of $10,000 Investment" charts
shown on pages 10-13.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 9
Performance Update | 12/31/08 Class A Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer AMT-Free Municipal Fund at public offering price,
compared to that of the Barclays Capital Municipal Bond Index.
Average Annual Total Returns
(As of December 31, 2008)
- -----------------------------------------------------------------
Net Asset Public Offering
Period Value (NAV) Price (POP)
- -----------------------------------------------------------------
Life-of-Class
(9/30/1996) 3.67% 3.19%
10 Years 2.67 2.09
5 Years 0.08 -0.84
1 Year -14.85 -18.71
Expense Ratio
(Per prospectus dated May 1, 2008)
- -----------------------------------------------------------------
Gross Net
- -----------------------------------------------------------------
0.85% 0.82%
- -----------------------------------------------------------------
[THE DATA IS A REPRESENTATION OF A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer AMT-Free Barclay's Capital
Municipal Fund Municipal Bond Index
12/98 9,550 10,000
8,838 9,794
12/00 10,053 10,939
10,546 11,499
12/02 11,598 12,604
12,255 13,274
12/04 12,923 13,868
13,543 14,356
12/06 14,248 15,051
14,447 15,557
12/08 12,302 15,172
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
NAV results represent the percent change in net asset value per share. Returns
would have been lower had sales charges been reflected. POP returns reflect
deduction of maximum 4.5% sales charge. All results are historical and assume
the reinvestment of dividends and capital gains. Other share classes are
available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
Pioneer AMT-Free Municipal Fund was created through the reorganization of
predecessor Safeco Municipal Bond Fund on December 10, 2004. If all the
expenses of the Fund were reflected, the performance would be lower. The
performance of Class A shares of the Fund includes the performance of the
predecessor fund's Class A shares, which has been restated to reflect
differences in any applicable sales charges (but not differences in expenses).
The net expense ratio reflects contractual expense limitation currently in
effect through 5/1/12 for Class A Shares. There can be no assurance that
Pioneer will extend the expense limitation beyond such time. Please see the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
10 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
Performance Update | 12/31/08 Class B Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer AMT-Free Municipal Fund, compared to that of the
Barclays Capital Municipal Bond Index.
Average Annual Total Returns
(As of December 31, 2008)
- ----------------------------------------------------------------
If If
Period Held Redeemed
- -----------------------------------------------------------------
Life-of-Class
(9/30/1996) 2.87% 2.87%
10 Years 1.86 1.86
5 Years -0.76 -0.76
1 Year -15.60 -18.83
Expense Ratio
(Per prospectus dated May 1, 2008)
- -----------------------------------------------------------------
Gross Net
- -----------------------------------------------------------------
1.78% 1.72%
- -----------------------------------------------------------------
[THE DATA IS A REPRESENTATION OF A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer AMT-Free Barclay's Capital
Municipal Fund Municipal Bond Index
12/98 10,000 10,000
9,284 9,794
12/00 10,478 10,939
10,912 11,499
12/02 11,900 12,604
12,488 13,274
12/04 13,060 13,868
13,583 14,356
12/06 14,175 15,051
14,240 15,557
12/08 12,019 15,172
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
"If Held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. "If redeemed"
returns reflect the deduction of applicable contingent deferred sales charge
(CDSC). Class B shares reflect the deduction of the maximum applicable
contingent deferred sales charge (CDSC). The maximum CDSC is 4.0% and declines
over five years.
All results are historical and assume the reinvestment of dividends and capital
gains. Other share classes are available for which performance and expenses
will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
Pioneer AMT-Free Municipal Fund was created through the reorganization of
predecessor Safeco Municipal Bond Fund on December 10, 2004. If all the
expenses of the Fund were reflected, the performance would be lower. The
performance of Class B shares of the Fund includes the performance of the
predecessor fund's Class B shares, which has been restated to reflect
differences in any applicable sales charges (but not differences in expenses).
The net expense ratio reflects contractual expense limitation currently in
effect through 5/1/10 for Class B Shares. There can be no assurance that
Pioneer will extend the expense limitation beyond such time. Please see the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 11
Performance Update | 12/31/08 Class C Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer AMT-Free Municipal Fund, compared to that of the
Barclays Capital Municipal Bond Index.
Average Annual Total Returns
(As of December 31, 2008)
- -------------------------------------------------------------------
If If
Period Held Redeemed
- -------------------------------------------------------------------
Life-of-Class
(10/1/2003) -0.44% -0.44%
5 Years -0.75 -0.75
1 Year -15.56 -15.56
Expense Ratio
(Per prospectus dated May 1, 2008)
- -------------------------------------------------------------------
Gross Net
- -------------------------------------------------------------------
1.58% 1.58%
- -------------------------------------------------------------------
[THE DATA IS A REPRESENTATION OF A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer AMT-Free Barclay's Capital
Municipal Fund Municipal Bond Index
10/03 10,000 10,000
12/03 10,210 10,188
12/04 10,663 10,644
12/05 11,065 11,018
12/06 11,566 11,552
12/07 11,643 11,940
12/08 9,831 11,645
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Class C shares held for less than one year are also subject to a 1% contingent
deferred sales charge (CDSC). The performance of Class C shares does not
reflect the 1% front-end sales charge in effect prior to February 1, 2004. If
you paid a 1% sales charge, your returns would be lower than those shown above.
"If Held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. All results are
historical and assume the reinvestment of dividends and capital gains. Other
share classes are available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
Pioneer AMT-Free Municipal Fund was created through the reorganization of
predecessor Safeco Municipal Bond Fund on December 10, 2004. If all the
expenses of the Pioneer fund were reflected, the performance would be lower.
The performance of Class C shares of the Fund includes the performance of the
predecessor fund's Class C shares, which has been restated to reflect
differences in any applicable sales charges (but not differences in expenses).
The net expense ratio reflects contractual expense limitation currently in
effect through 5/1/10 for Class C Shares. There can be no assurance that
Pioneer will extend the expense limitation beyond such time. Please see the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
12 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
Performance Update | 12/31/08 Class Y Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer AMT-Free Municipal Fund, compared to that of the
Barclays Capital Municipal Bond Index.
Average Annual Total Returns
(As of December 31, 2008)
- ----------------------------------------------------------------
If If
Period Held Redeemed
- ----------------------------------------------------------------
Life-of-Class
(9/30/1996) 3.72% 3.72%
10 Years 2.74 2.74
5 Years 0.21 0.21
1 Year -14.56 -14.56
Expense Ratio
(Per prospectus dated May 1, 2008)
- ----------------------------------------------------------------
Gross Net
- ----------------------------------------------------------------
0.54% 0.54%
- ----------------------------------------------------------------
[THE DATA IS A REPRESENTATION OF A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer AMT-Free Barclay's Capital
Municipal Fund Municipal Bond Index
12/98 10,000 10,000
9,351 9,794
12/00 10,637 10,939
11,160 11,499
12/09 12,273 12,604
12,967 13,274
12/09 13,674 13,868
14,331 14,356
12/09 15,082 15,051
15,334 15,557
12/09 13,101 15,172
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Performance for periods prior to the inception of Class Y shares on November
10, 2006, reflects the NAV performance of the Fund's Class A shares. The
performance does not reflect differences in expenses, including the Rule 12b-1
fees applicable to Class A shares. Since fees for Class A shares are generally
higher than those of Class Y shares, the performance shown for Class Y shares
prior to its inception would have been higher. Class Y shares are not subject
to sales charges and are available for limited groups of eligible investors,
including institutional investors. All results are historical and assume the
reinvestment of dividends and capital gains. Other share classes are available
for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
Pioneer AMT-Free Municipal Fund was created through the reorganization of
predecessor Safeco Municipal Bond Fund on December 10, 2004. The performance of
Class Y shares of the Fund includes the net asset value performance of the
predecessor fund's Class A shares prior to the reorganization, which has not
been restated to reflect differences in expenses, including 12b-1 fees
applicable to Class A shares. If all the expenses of the Pioneer Fund were
reflected, the performance would be lower.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 13
Comparing Ongoing Fund Expenses
As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
- --------------------------------------------------------------------------------
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
(1) Divide your account value by $1,000
Example: an $8,600 account value [divided by] $1,000 = 8.6
(2) Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer AMT-Free Municipal Fund
Based on actual returns from July 1, 2008 through December 31, 2008.
- ---------------------------------------------------------------------------------------
Share Class A B C Y
- ---------------------------------------------------------------------------------------
Beginning Account $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00
Value on 7/1/08
- ---------------------------------------------------------------------------------------
Ending Account $ 858.37 $ 854.37 $ 855.26 $ 859.99
Value on 12/31/08
- ---------------------------------------------------------------------------------------
Expenses Paid $ 3.83 $ 8.02 $ 7.69 $ 2.71
During Period*
- ---------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.82%, 1.72%,
1.65% and 0.58%, for Class A, Class B, Class C, and Class Y shares,
respectively, multiplied by the average account value over the period,
multiplied by 184/366 (to reflect the one-half year period).
14 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the
5% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer AMT-Free Municipal Fund
Based on a hypothetical 5% per year return before expenses, reflecting the
period from July 1, 2008 through December 31, 2008.
- ---------------------------------------------------------------------------------------
Share Class A B C Y
- ---------------------------------------------------------------------------------------
Beginning Account $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00
Value on 7/1/08
- ---------------------------------------------------------------------------------------
Ending Account $ 1,021.01 $ 1,016.49 $ 1,016.84 $ 1,022.22
Value on 12/31/08
- ---------------------------------------------------------------------------------------
Expenses Paid $ 4.17 $ 8.72 $ 8.36 $ 2.95
During Period*
- ---------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.82%, 1.72%,
1.65%, and 0.58%, for Class A, Class B, Class C, and Class Y shares,
respectively, multiplied by the average account value over the period,
multiplied by 184/366 (to reflect the one-half year period).
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 15
Schedule of Investments | 12/31/08
- ---------------------------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
- ---------------------------------------------------------------------------------------------------
MUNICIPAL BONDS -- 96.4%
Alabama -- 1.6%
$ 5,000,000 A/Baa1 Alabama Drinking Water Finance Authority, 4.0%,
8/15/28 $ 3,735,900
3,000,000 A+/A3 Birmingham Alabama Waterworks & Sewer, 4.375%,
1/1/32 2,367,120
------------
$ 6,103,020
- ---------------------------------------------------------------------------------------------------
Arizona -- 4.9%
6,300,000 AA-/A1 Arizona Board Regents Certificates Partnerships, 4.0%,
6/1/31 $ 4,883,319
10,000,000 AA-/NR Arizona Health Facilities Authority Revenue, 5.5%,
1/1/38 8,352,200
7,155,000 AA/Aa3 Maricopa County Arizona High School District, 3.5%,
7/1/25 5,912,749
------------
$ 19,148,268
- ---------------------------------------------------------------------------------------------------
California -- 18.4%
2,000,000 BBB-/Baa2 California Municipal Finance Agency, 5.25%, 2/1/37 $ 1,256,360
9,325,000 AA-/Aa2 California State Department of Veteran Affairs, 4.75%,
12/1/25 8,335,524
16,000,000 A+/A1 California State, 4.25%, 8/1/33 11,641,120
6,000,000 AA-/Aa3 California Statewide, 5.75%, 7/1/47 5,180,100
11,955,000 BBB+/Baa1 California Statewide Communities Development
Authority, 5.0%, 8/15/47 6,248,879
7,500,000 AA-/Aa3 California Statewide Community, 5.25%, 11/15/48 5,950,800
3,000,000 AA/NR Los Angeles County Sanitation Districts Financing
Authority Revenue, 4.5%, 10/1/35 2,242,200
1,680,000 AA/Baa1 Madera California Public, 4.375%, 3/1/31 1,339,380
7,000,000 AAA/Aaa Pittsburg California Redevelopment Agency, 6.5%,
9/1/28 6,599,880
25,000,000 BB-/Ba2 San Joaquin Hills Transportation Corridor Agency, 5.0%,
1/1/33 15,149,250
10,865,000 AA/A3 San Jose California Redevelopment Agency Tax, 4.9%,
8/1/33 7,856,807
------------
$ 71,800,300
- ---------------------------------------------------------------------------------------------------
Colorado -- 5.6%
6,555,000 A-/A3 Colorado Springs Colorado Hospital Revenue, 6.375%,
12/15/30 $ 5,647,591
8,220,000 AAA/Aa3 Colorado Water & Power Development Authority,
4.375%, 8/1/35 6,651,295
12,500,000 A/A2 Public Authority For Colorado Energy, 6.5%, 11/15/38 9,703,625
------------
$ 22,002,511
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
16 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
- ----------------------------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
- ----------------------------------------------------------------------------------------------------
District of Columbia -- 1.8%
$ 2,000,000 A-/A3 District of Columbia, 5.5%, 4/1/36 $ 1,861,360
8,000,000 NR/A2 District of Columbia, 4.25%, 6/1/37 5,099,600
------------
$ 6,960,960
- ----------------------------------------------------------------------------------------------------
Florida -- 4.2%
2,000,000 A-/A2 Brevard County Florida Health, 5.0%, 4/1/34 $ 1,207,100
8,000,000 AA/Aa1 Escambia County Florida Health Facilities, 5.25%,
11/15/32 7,049,920
1,000,000 AA+/NR Florida State Department Children and Families
Certificates, 5.0%, 10/1/25 937,630
1,000,000 NR/A3 Hillsborough County Florida, 5.25%, 10/1/24 756,050
7,500,000 NR/Baa2 Tallahassee Florida Health, 6.375%, 12/1/30 5,835,075
1,000,000 AA/Baa1 Village Center Community Development Florida, 5.0%,
11/1/32 768,010
------------
$ 16,553,785
- ----------------------------------------------------------------------------------------------------
Georgia -- 1.2%
5,000,000 A/A2 Main Street Natural Gas, Inc., Georgia, 5.5%, 9/15/28 $ 3,547,250
10,000,000 D/Caa3 Main Street Natural Gas, Inc., Georgia, 6.375%,
7/15/38 1,275,200
------------
$ 4,822,450
- ----------------------------------------------------------------------------------------------------
Illinois -- 6.9%
10,000,000 NR/#Aaa Illinois Educational Facilities Authority, 6.25%, 5/1/30 $ 11,439,700
10,000,000 AAA/A1 Metropolitan Pier & Expo, 5.25%, 6/15/42 9,553,100
5,000,000 AAA/#Aaa Metropolitan Pier & Expo, 7.0%, 7/1/26 6,242,800
------------
$ 27,235,600
- ----------------------------------------------------------------------------------------------------
Indiana -- 4.6%
5,000,000 A+/A2 Indiana Health & Educational Facilities Authority, 4.75%,
2/15/34 $ 3,094,650
19,000,000 BBB+/Baa1 Indianapolis State Development Finance Authority, 5.6%,
12/1/32 12,627,400
2,500,000 AA/Baa1 St. Joseph County Indiana Authority, 4.5%, 8/15/18 2,376,500
------------
$ 18,098,550
- ----------------------------------------------------------------------------------------------------
Kentucky -- 0.1%
435,000 NR/Baa1 Kentucky Economic Development Finance, 6.625%,
10/1/28 $ 367,719
------------
$ 367,719
- ----------------------------------------------------------------------------------------------------
Louisiana -- 1.0%
5,000,000 AA/Aa3 Louisiana State Gas & Fuels Tax, 4.5%, 5/1/41 $ 3,985,750
------------
$ 3,985,750
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 17
Schedule of Investments | 12/31/08 (continued)
- ----------------------------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
- ----------------------------------------------------------------------------------------------------
Massachusetts -- 6.5%
$ 20,000,000 AA/Baa1 Massachusetts State Housing Finance Agency, 5.4%,
12/1/28 $ 16,366,600
5,000,000 AA/Aa2 Massachusetts State Water Authority, 4.0%, 8/1/46 3,585,100
7,330,000 AAA/Aaa Massachusetts Water Pollution Abatement Revenue,
3.5%, 8/1/26 5,738,657
------------
$ 25,690,357
- ----------------------------------------------------------------------------------------------------
Maryland -- 1.9%
3,400,000 AA/A1 Baltimore Maryland Project Revenue, 5.0%, 7/1/24 $ 3,591,692
1,865,000 AA/A1 Baltimore Maryland Project Revenue, 5.0%, 7/1/24 1,859,032
1,000,000 NR/Baa2 Maryland State Economic Development, 5.8%, 6/1/38 677,730
2,000,000 NR/Baa2 Maryland State Economic Development, 5.875%,
6/1/43 1,344,920
------------
$ 7,473,374
- ----------------------------------------------------------------------------------------------------
Michigan -- 1.2%
5,000,000 AA/Aa1 Michigan State Hospital Finance Authority, 5.5%, 11/15 $ 4,628,050
------------
$ 4,628,050
- ----------------------------------------------------------------------------------------------------
Montana -- 0.5%
2,785,000 A/Baa1 Forsyth Montana Pollution Control Revenue, 5.0%,
3/1/31 $ 1,986,513
------------
$ 1,986,513
- ----------------------------------------------------------------------------------------------------
North Carolina -- 2.9%
12,000,000 BBB+/Baa1 North Carolina Eastern Municipal Power, 6.0%, 1/1/22 $ 11,199,720
------------
$ 11,199,720
- ----------------------------------------------------------------------------------------------------
North Dakota -- 0.8%
3,000,000 NR/Baa2 Grand Forks North Dakota Health Care Systems,
7.125%, 8/15/24 $ 3,298,950
------------
$ 3,298,950
- ----------------------------------------------------------------------------------------------------
New York -- 5.8%
3,820,000 AAA/A1 Metropolitan Transportation Authority New York, 4.75%,
4/1/28 $ 4,405,797
10,000,000 AAA/Aa2 New York City Municipal Finance Water & Sewer Systems
Revenue, 4.25%, 6/15/39 7,750,000
1,425,000 AA-/A1 New York State Dormitory Authority Revenue, 7.5%,
5/15/11 1,506,439
1,295,000 AA-/A1 New York State Dormitory Authority Revenue, 7.5%,
5/15/11 1,419,294
5,250,000 AA-/A1 New York State Dormitory Authority Revenue, 7.5%,
5/15/13 6,212,010
1,500,000 AA-/Aa3 Port Authority of NY & NJ, Ninety Third Series, 6.125%,
6/1/94 1,604,595
------------
$ 22,898,135
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
18 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
- -------------------------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
- -------------------------------------------------------------------------------------------------
Oklahoma -- 1.5%
$ 5,590,000 AA/Baa1 McGee Creek Authority Water Revenue, 6.0%, 1/1/23 $ 5,948,040
-----------
$ 5,948,040
- -------------------------------------------------------------------------------------------------
Pennsylvania -- 4.5%
10,000,000 A-/Baa1 Lehigh County Pennsylvania Industrial Development
Authority Pollution Control, 4.75%, 2/15/27 $ 7,565,700
5,000,000 BBB+/Baa1 Northampton County Pennsylvania General Purpose
Authority Revenue, 5.5%, 8/15/40 3,251,250
6,000,000 AA/Aa2 Philadelphia Pennsylvania Hospital, 4.5%, 7/1/37 4,186,680
3,000,000 AA/A3 Southeastern Pennsylvania Transportation Authority
Pennsylvania, 4.75%, 3/1/29 2,608,800
-----------
$17,612,430
- -------------------------------------------------------------------------------------------------
Puerto Rico -- 1.0%
5,000,000 A+/A1 Puerto Rico Sales Tax Financing 5.25%, 8/1/57 $ 3,979,150
-----------
$ 3,979,150
- -------------------------------------------------------------------------------------------------
South Carolina -- 4.8%
1,000,000 AA-/A2 Dorchester South Carolina County School District,
5.25%, 12/1/29 $ 947,710
15,000,000 A-/Baa1 Piedmont Municipal Power Agency, 5.25%, 1/1/21 13,830,150
5,000,000 AAA/Aa2 Scago Educational Facilities Corp. For School Project,
4.375%, 12/1/31 3,911,650
-----------
$18,689,510
- -------------------------------------------------------------------------------------------------
Tennessee -- 1.5%
10,000,000 NR/NR Sumner County Tennessee Health Educational, 5.5%,
11/1/46 $ 6,012,100
-----------
$ 6,012,100
- -------------------------------------------------------------------------------------------------
Texas -- 5.0%
4,475,000 AAA/Aaa Crowley Texas Independent School District, 3.5%,
8/1/36 $ 3,187,050
15,000,000 A/Baa1 Dallas County Texas Utilities & Reclamation, 5.375%,
2/15/29 11,951,100
4,600,000 AA/Aa1 San Antonio Texas Electricity & Gas, Series A, 4.5%,
2/1/21 4,587,534
-----------
$19,725,684
- -------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 19
Schedule of Investments | 12/31/08 (continued)
- ---------------------------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
- ---------------------------------------------------------------------------------------------------
Washington -- 8.2%
$ 5,755,000 A/Baa1 Centralia Washington Electric Revenue, 4.25%, 12/1/26 $ 4,757,716
10,850,000 AAA/NR King County Washington Housing Authority, 5.5%,
5/1/38 9,628,724
4,000,000 AA-/A1 King County Washington Public Hospital, 5.25%,
12/1/37 3,550,360
2,971,000 AAA/NR Seattle, Washington Housing Authority, 6.6%, 8/20/38 2,767,189
6,290,000 NR/NR Vancouver Washington Housing Authority, 5.65%,
3/1/31 4,008,617
3,450,000 NR/Aaa Washington State Housing Finance, 5.45%, 12/1/33 3,091,510
5,000,000 AAA/Aa2 Washington State Health Care Facilities, 5.25%,
10/1/33 4,379,600
------------
$ 32,183,716
- ---------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $451,087,167) $378,404,642
- ---------------------------------------------------------------------------------------------------
Shares
- ---------------------------------------------------------------------------------------------------
TAX EXEMPT MONEY MARKET MUTUAL FUND -- 1.8%
7,000,000 Blackrock Liquidity Funds MuniFund Portfolio $ 7,000,000
- ---------------------------------------------------------------------------------------------------
TOTAL TAX EXEMPT MONEY MARKET MUTUAL FUND
(Cost $7,000,000) $ 7,000,000
- ---------------------------------------------------------------------------------------------------
TOTAL INVESTMENT IN SECURITIES -- 98.2%
(Cost $458,087,167) (a) $385,404,642
- ---------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 2.8% $ 6,866,444
- ---------------------------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $392,271,086
===================================================================================================
NR Not rated by either S&P or Moody's.
(a) At December 31, 2008, the net unrealized loss on investments based on
cost for federal income tax purposes of $454,593,149 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost $ 12,760,647
Aggregate gross unrealized loss for all investments in which there is an
excess of tax cost over value (81,949,154)
--------------
Net unrealized loss $ (69,188,507)
==============
Purchases and sales of securities (excluding temporary cash investments) for
the year ended December 31, 2008 aggregated $122,306,494 and $126,130,629,
respectively.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below.
Highest priority is given to Level 1 inputs and lowest priority is given to
Level 3.
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.)
The accompanying notes are an integral part of these financial statements.
20 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining fair value of investments)
The following is a summary of the inputs used as of December 31, 2008, in
valuing the Fund's assets:
- --------------------------------------------------------------------------------
Investments
Valuation Inputs in Securities
- --------------------------------------------------------------------------------
Level 1 -- Quoted Prices $ 7,000,000
Level 2 -- Other Significant Observable Inputs 378,404,642
Level 3 -- Significant Unobservable Inputs
- --------------------------------------------------------------------------------
Total $385,404,642
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 21
Statement of Assets and Liabilities | 12/31/08
ASSETS:
Investment in securities (cost $458,087,167) $385,404,642
Cash 2,638,708
Receivables --
Fund shares sold 553,059
Interest 6,594,195
Due from Pioneer Investment Management, Inc. 47,412
Other 27,392
- --------------------------------------------------------------------------------
Total assets $395,265,408
- --------------------------------------------------------------------------------
LIABILITIES:
Payables --
Fund shares repurchased $ 2,191,874
Dividends 692,235
Due to affiliates 25,293
Accrued expenses 84,920
- --------------------------------------------------------------------------------
Total liabilities $ 2,994,322
- --------------------------------------------------------------------------------
NET ASSETS:
Paid-in capital $460,788,798
Undistributed net investment income 3,964,920
Accumulated net realized gain on investments 199,893
Net unrealized loss on investments (72,682,525)
- --------------------------------------------------------------------------------
Total net assets $392,271,086
================================================================================
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $353,257,476/32,406,828 shares) $ 10.90
Class B (based on $5,286,076/488,154 shares) $ 10.83
Class C (based on $15,156,651/1,399,645 shares) $ 10.83
Class Y (based on $18,570,883/1,706,023 shares) $ 10.89
MAXIMUM OFFERING PRICE:
Class A ($10.90 [divided by] 95.50% ) $ 11.41
================================================================================
The accompanying notes are an integral part of these financial statements.
22 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
Statement of Operations
For the Year Ended 12/31/08
INVESTMENT INCOME:
Interest $25,366,883
Other income 116,937
- -----------------------------------------------------------------------------------------
Total investment income $ 25,483,820
- -----------------------------------------------------------------------------------------
EXPENSES:
Management fees $ 2,218,144
Transfer agent fees and expenses
Class A 153,994
Class B 4,847
Class C 5,371
Class Y 299
Distribution fees
Class A 1,049,582
Class B 63,196
Class C 147,253
Shareholder communications expense 80,988
Administrative fees 139,525
Custodian fees 14,156
Registration fees 71,031
Professional fees 75,472
Printing expense 46,191
Fees and expenses of nonaffiliated trustees 14,391
Miscellaneous 94,190
- -----------------------------------------------------------------------------------------
Total expenses $ 4,178,630
Less fees waived and expenses reimbursed by Pioneer
Investment Management, Inc. (238,304)
Less fees paid indirectly (3,953)
- -----------------------------------------------------------------------------------------
Net expenses $ 3,936,373
- -----------------------------------------------------------------------------------------
Net investment income $ 21,547,447
- -----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments $ 4,005,583
- -----------------------------------------------------------------------------------------
Change in net unrealized gain on investments $(97,753,876)
- -----------------------------------------------------------------------------------------
Net loss on investments $(93,748,293)
- -----------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(72,200,846)
=========================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 23
Statement of Changes in Net Assets
For the Years Ended 12/31/08 and 12/31/07, respectively
- ---------------------------------------------------------------------------------------------
Year Ended Year Ended
12/31/08 12/31/07
- ---------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 21,547,447 $ 22,308,031
Net realized gain on investments 4,005,583 5,628,317
Change in net unrealized gain (loss) on investments (97,753,876) (21,106,304)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $ (72,200,846) $ 6,830,044
- ---------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.59 and $0.61 per share, respectively) $ (19,564,148) $(20,186,172)
Class B ($0.47 and $0.49 per share, respectively) (237,225) (235,944)
Class C ($0.49 and $0.50 per share, respectively) (571,813) (357,021)
Class Y ($0.63 and $0.64 per share, respectively) (1,141,052) (1,187,622)
Net realized gain:
Class A ($0.07 and $0.20 per share, respectively) (2,148,067) (6,435,709)
Class B ($0.07 and $0.20 per share, respectively) (33,564) (93,464)
Class C ($0.07 and $0.20 per share, respectively) (86,185) (181,030)
Class Y ($0.07 and $0.20 per share, respectively) (122,479) (321,998)
- ---------------------------------------------------------------------------------------------
Total distributions to shareowners $ (23,904,533) $(28,998,960)
- ---------------------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 62,854,641 $ 54,924,560
Reinvestment of distributions 15,053,348 18,570,687
Cost of shares repurchased (83,439,041) (69,314,733)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
Fund share transactions $ (5,531,052) $ 4,180,514
- ---------------------------------------------------------------------------------------------
Net decrease in net assets $(101,636,431) $(17,988,402)
NET ASSETS:
Beginning of year 493,907,517 511,895,919
- ---------------------------------------------------------------------------------------------
End of year $ 392,271,086 $493,907,517
- ---------------------------------------------------------------------------------------------
Undistributed net investment income $ 3,964,920 $ 3,939,514
- ---------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
24 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
- ------------------------------------------------------------------------------------------------
'08 Shares '08 Amount '07 Shares '07 Amount
- ------------------------------------------------------------------------------------------------
Class A
Shares sold 3,666,507 $ 46,529,212 2,864,230 $39,598,214
Reinvestment of distributions 1,183,415 14,552,600 1,318,760 18,141,243
Less shares repurchased (5,860,093) (72,313,927) (4,147,935) (57,309,060)
- ------------------------------------------------------------------------------------------------
Net increase (decrease) (1,010,171) $(11,232,115) 35,055 $ 430,397
================================================================================================
Class B
Shares sold 149,173 $ 1,857,683 185,507 $ 2,547,320
Reinvestment of distributions 10,028 122,813 10,578 144,393
Less shares repurchased (173,390) (2,147,850) (137,806) (1,877,625)
- ------------------------------------------------------------------------------------------------
Net increase (decrease) (14,189) $ (167,354) 58,279 $ 814,088
================================================================================================
Class C
Shares sold 745,034 $ 9,301,426 703,468 $ 9,677,444
Reinvestment of distributions 27,650 334,341 19,974 271,653
Less shares repurchased (313,737) (3,805,241) (203,062) (2,768,340)
- ------------------------------------------------------------------------------------------------
Net increase 458,947 $ 5,830,526 520,380 $ 7,180,757
================================================================================================
Class Y
Shares sold 406,862 $ 5,166,320 226,691 $ 3,101,582
Reinvestment of distributions 3,714 43,594 985 13,398
Less shares repurchased (434,802) (5,172,023) (533,236) (7,359,708)
- ------------------------------------------------------------------------------------------------
Net increase (decrease) (24,226) $ 37,891 (305,560) $(4,244,728)
================================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 25
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Class A
Net asset value, beginning of period $ 13.50 $ 14.11 $ 14.13 $ 14.38 $ 14.45
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income $ 0.60 $ 0.62 $ 0.53 $ 0.54 $ 0.61(b)
Net realized and unrealized gain (loss) on investments (2.54) (0.42) 0.18 0.14 0.14
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (1.94) $ 0.20 $ 0.71 $ 0.68 $ 0.75
Distributions to shareowners:
Net investment income (0.59) (0.61) (0.61) (0.64) (0.60)
Net realized gain (0.07) (0.20) (0.12) (0.29) (0.22)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net asset value $ (2.60) $ (0.61) $ (0.02) $ (0.25) $ (0.07)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.90 $ 13.50 $ 14.11 $ 14.13 $ 14.38
====================================================================================================================================
Total return* (14.85)% 1.40% 5.20% 4.81% 5.40%
Ratio of net expenses to average net assets+ 0.82% 0.82% 0.86% 0.87% 0.91%
Ratio of net investment income to average net assets+ 4.66% 4.45% 4.48% 4.42% 4.25%
Portfolio turnover rate 27% 18% 8% 12% 7%
Net assets, end of period (in thousands) $353,257 $451,219 $471,084 $ 16,033 $ 227
Ratios with no waiver of fees by PIM and no reduction for
fees paid indirectly:
Net expenses 0.88% 0.85% 0.96% 1.16% 0.91%
Net investment income 4.60% 4.42% 4.38% 4.13% 4.25%
Ratios with waiver of fees by PIM and reduction for
fees paid indirectly:
Net expenses 0.82% 0.82% 0.86% 0.87% 0.91%
Net investment income 4.66% 4.45% 4.48% 4.42% 4.25%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Effective August 2, 2004, PIM became the sub-advisor of the Fund and
subsequently became the advisor on December 10, 2004.
(b) Net investment income per share has been calculated using the average
shares method.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
26 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
Net asset value, beginning of period $ 13.41 $ 14.03 $ 14.07 $ 14.34 $ 14.42
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income $ 0.48 $ 0.48 $ 0.46 $ 0.45 $ 0.49(b)
Net realized and unrealized gain (loss) on investments (2.52) (0.41) 0.14 0.12 0.14
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (2.04) $ 0.07 $ 0.60 $ 0.57 $ 0.63
Distributions to shareowners:
Net investment income (0.47) (0.49) (0.52) (0.55) (0.49)
Net realized gain (0.07) (0.20) (0.12) (0.29) (0.22)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net asset value $ (2.58) $ (0.62) $ (0.04) $ (0.27) $ (0.08)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.83 $ 13.41 $ 14.03 $ 14.07 $ 14.34
====================================================================================================================================
Total return* (15.60)% 0.46% 4.36% 4.02% 4.52%
Ratio of net expenses to average net assets+ 1.72% 1.72% 1.69% 1.41% 1.70%
Ratio of net investment income to average net assets+ 3.76% 3.55% 3.62% 3.90% 3.49%
Portfolio turnover rate 27% 18% 8% 12% 7%
Net assets, end of period (in thousands) $ 5,286 $ 6,737 $ 6,228 $ 2,369 $ 10
Ratios with no waiver of fees by PIM and no reduction
for fees paid indirectly:
Net expenses 1.72% 1.78% 1.69% 1.68% 1.70%
Net investment income 3.76% 3.49% 3.62% 3.63% 3.49%
Ratios with waiver of fees by PIM and reduction
for fees paid indirectly:
Net expenses 1.72% 1.72% 1.69% 1.41% 1.70%
Net investment income 3.76% 3.55% 3.62% 3.90% 3.49%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Effective August 2, 2004, PIM became the sub-advisor of the Fund and
subsequently became the advisor on December 10, 2004.
(b) Net investment income per share has been calculated using the average
shares method.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 27
Financial Highlights (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
Net asset value, beginning of period $ 13.42 $ 14.02 $ 14.04 $ 14.34 $ 14.42
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income $ 0.45 $ 0.45 $ 0.44 $ 0.44 $ 0.47(b)
Net realized and unrealized gain (loss) on investments (2.48) (0.35) 0.18 0.09 0.14
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (2.03) $ 0.10 $ 0.62 $ 0.53 $ 0.61
Distributions to shareowners:
Net investment income (0.49) (0.50) (0.52) (0.54) (0.47)
Net realized gain (0.07) (0.20) (0.12) (0.29) (0.22)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net asset value $ (2.59) $ (0.60) $ (0.02) $ (0.30) $ (0.08)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.83 $ 13.42 $ 14.02 $ 14.04 $ 14.34
====================================================================================================================================
Total return* (15.56)% 0.67% 4.52% 3.78% 4.38%
Ratio of net expenses to average net assets+ 1.65% 1.58% 1.65% 1.38% 1.84%
Ratio of net investment income to average net assets+ 3.85% 3.66% 3.58% 3.87% 3.35%
Portfolio turnover rate 27% 18% 8% 12% 7%
Net assets, end of period (in thousands) $ 15,157 $ 12,620 $ 5,891 $ 1,183 $ 10
Ratios assuming no waiver of fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.65% 1.58% 1.65% 1.63% 1.84%
Net investment income 3.85% 3.66% 3.58% 3.62% 3.35%
Ratios with waiver of fees by PIM and reduction for
fees paid indirectly:
Net expenses 1.65% 1.58% 1.65% 1.38% 1.84%
Net investment income 3.85% 3.66% 3.58% 3.87% 3.35%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Effective August 2, 2004, PIM became the sub-advisor of the Fund and
subsequently became the advisor on December 10, 2004.
(b) Net investment income per share has been calculated using the average
shares method.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
28 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended 11/10/06 to
12/31/08 12/31/07 12/31/06 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Class Y
Net asset value, beginning of period $ 13.48 $ 14.09 $ 14.17
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income $ 0.62 $ 0.67 $ 0.09
Net realized and unrealized loss on investments (2.51) (0.44) (0.06)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (1.89) $ 0.23 $ 0.03
Distributions to shareowners:
Net investment income (0.63) (0.64) (0.11)
Net realized gain (0.07) (0.20) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net asset value $ (2.59) $ (0.61) $ (0.08)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.89 $ 13.48 $ 14.09
====================================================================================================================================
Total return* (14.56)% 1.67% 0.21%(b)
Ratio of net expenses to average net assets+ 0.58% 0.54% 0.60%**
Ratio of net investment income to average net assets+ 4.90% 4.73% 4.49%**
Portfolio turnover rate 27% 18% 8%
Net assets, end of period (in thousands) $ 18,571 $ 23,331 $ 28,693
Ratios assuming no waiver of fees and assumption of expenses
by PIM and no reduction for fees paid
indirectly:
Net expenses 0.58% 0.54% 0.60%**
Net investment income 4.90% 4.73% 4.49%**
Ratios with waiver of fees by PIM and reduction for fees
paid indirectly:
Net expenses 0.58% 0.54% 0.60%**
Net investment income 4.90% 4.73% 4.49%**
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Class Y Shares were first publicly offered November 10, 2006.
(b) Not Annualized.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 29
Notes to Financial Statements | 12/31/08
1. Organization and Significant Accounting Policies
Pioneer AMT-Free Municipal Fund (the Fund) is one of seven series of portfolios
comprising Pioneer Series Trust II, a Delaware statutory trust registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The investment objective of the Fund is to seek a high
level of current income exempt from federal income tax as is consistent with
the relative stability of capital.
The Fund offers four classes of shares designated as Class A, Class B, Class C
and Class Y shares. Each class of shares represents an interest in the same
portfolio of investments of the Fund and has identical rights (based on
relative net asset values) to assets and liquidation proceeds. Share classes
can bear different class-specific fees and expenses such as transfer agent and
distribution fees. Differences in class-specific fees and expenses will result
in differences in net investment income and, therefore, the payment of
different dividends by each class. The Amended and Restated Declaration of
Trust of the Fund gives the Board the flexibility to specify either per share
voting or dollar-weighted voting when submitting matters for shareholder
approval. Under per share voting, each share of a class of the Fund is entitled
to one vote. Under dollar-weighted voting, a shareholder's voting power is
determined not by the number of shares owned, but by the dollar value of the
shares on the record date. Share classes have exclusive voting rights with
respect to matters affecting only that class, including with respect to the
distribution plan for that class. There is no distribution plan for Class Y
shares. Class B shares convert to Class A shares approximately eight years
after the date of purchase.
The Fund's financial statements have been prepared in conformity with U.S.
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 income, expenses, and gain or loss on investments during the
reporting period. Actual results could differ from those estimates.
At times, the Fund's investments may represent industries or industry sectors
that are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors. The Fund's prospectuses contain unaudited information
regarding the Fund's principal risks. Please refer to those documents when
considering the Fund's principal risks.
30 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements, which are consistent with
those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Fund is computed once daily, on each day the New York Stock Exchange
(NYSE) is open, as of the close of regular trading on the exchange.
Securities are valued at prices supplied by independent pricing services,
which consider such factors as Treasury spreads, yields, maturities and
ratings. Valuations may be supplemented by dealers and other sources, as
required. Securities for which there are no other readily available market
quotations are valued using fair value methods pursuant to procedures adopted
by the Board of Trustees. At December 31, 2008, there were no securities that
were valued using fair value methods. Temporary cash investments are valued
at cost which approximates market value.
Discount and premium on debt securities are accreted or amortized,
respectively daily into interest income on a yield-to-maturity basis with a
corresponding increase or decrease in the cost basis of the security.
Interest income is recorded on the accrual basis.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. 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
shareowners. Therefore, no federal tax provision is required. Tax years for
the prior three fiscal years remain subject to examination by tax
authorities.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal income
tax rules. Therefore, the sources of the Fund's distributions may be shown in
the accompanying financial statements as from or in excess of net investment
income or as from net realized gain on investment transactions, or as from
paid-in capital, depending on the type of book/tax differences that may
exist.
At December 31, 2008, the Fund has reclassified $7,803 to decrease
undistributed net investment income and $7,803 to increase accumulated net
realized gain on investments, to reflect permanent book/tax differences. The
reclassification has no impact on the net assets of the Fund and presents the
Fund's capital accounts on a tax basis.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 31
The tax character of distributions paid during the years ended December 31,
2008 and December 31, 2007 was as follows:
- --------------------------------------------------------------------------------
2008 2007
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 232,204 $ --
Tax-exempt income 21,281,534 21,968,940
Long-term capital gain 2,390,295 7,030,020
- --------------------------------------------------------------------------------
Total $23,904,533 $28,998,960
================================================================================
The following shows the components of distributable earnings on a federal
income tax basis at December 31, 2008:
- --------------------------------------------------------------------------------
2008
- --------------------------------------------------------------------------------
Undistributable earnings:
Undistributed tax-exempt income $ 470,902
Undistributed long-term gain 199,893
Unrealized depreciation (69,188,507)
- --------------------------------------------------------------------------------
Total $(68,517,712)
================================================================================
The difference between book basis and tax-basis unrealized appreciation is
attributable to the tax treatment of premium and amortization and interest on
defaulted bonds.
C. 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 a wholly owned indirect subsidiary of UniCredit S.p.A., (UniCredit),
earned $26,772 in underwriting commissions on the sale of Class A shares
during the year ended December 31, 2008.
D. Class Allocations
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.
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
(see Note 4). Class Y shares are not subject to a distribution plan.
Shareowners of each class participate in all expenses and fees paid to the
transfer agent, Pioneer Investment Management Shareholder Services, Inc.
(PIMSS), for its services, which are allocated based on the number of
accounts in each class and the ratable allocation of related out-of-pocket
expenses (see Note 3).
32 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
The Fund declares, as daily dividends, substantially all of its net
investment income. All dividends are paid on a monthly basis. Short-term
capital gain distributions, if any, may be declared with the daily dividends.
Distributions to shareowners 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, except that Class A, Class
B, Class C and Class Y shares can bear different transfer agent and
distribution expense rates.
2. Management Agreement
Pioneer Investment Management, Inc., (PIM), a wholly owned indirect subsidiary
of UniCredit, manages the Fund's portfolio. Management fees are calculated
daily at the annual rate of 0.50% of the Fund's average daily net assets up to
$250 million; 0.45% of the next $500 million; and 0.40% of the excess over $750
million. For the year ended December 31, 2008, the net management fee was
equivalent to 0.48% of average daily net assets.
PIM has agreed to limit ordinary operating expenses to the extent required to
reduce Fund expenses to 0.82%, 1.72% and 1.72% of the average daily net assets
attributable to Class A, Class B and Class C shares, respectively. These
limitations are in effect through May, 1, 2012 for Class A shares and through
May 1, 2010 for Class B and Class C shares. There can be no assurance that PIM
will extend the expense limit agreement beyond such periods.
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. Included in "Due to affiliates" reflected on
the Statement of Assets and Liabilities is $5,387 in management fees,
administrative costs and certain other fees payable to PIM at December 31,
2008.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Fund at negotiated rates.
In addition, the Fund reimbursed PIMSS for out-of-pocket expenses related to
shareholder communications activities such as proxy and statement mailings,
outgoing phone calls and omnibus relationship contracts. For the year ended
December 31, 2008, such out of pocket expenses by class of shares were as
follows:
- --------------------------------------------------------------------------------
Shareholder Communications:
- --------------------------------------------------------------------------------
Class A $70,659
Class B 4,565
Class C 5,000
Class Y 764
- --------------------------------------------------------------------------------
Total $80,988
================================================================================
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
33
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $16,951 in transfer agent fees and shareholder communications
expense payable to PIMSS at December 31, 2008.
4. Distribution Plans
The Fund adopted a Distribution Plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940 with respect to its Class A, Class B and Class C. Pursuant
to the Plan, the Fund pays PFD 0.25% of the average daily net assets
attributable to Class A shares as compensation for personal services and/or
account maintenance services or distribution services with regard to Class A
shares. Pursuant to the Plan, the Fund pays PFD 1.00% of the average daily net
assets attributable to Class B and Class C shares. The fee for Class B and
Class C shares 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. Prior to
February 1, 2008, PFD was reimbursed under the Distribution Plan for
distribution expenses in an amount of up to 0.25% of the average daily net
assets attributable to Class A shares. Included in "Due to affiliates"
reflected on the Statement of Assets and Liabilities is $2,955 in distribution
fees payable to PFD at December 31, 2008.
In addition, redemptions of each class of shares (except Class Y 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 18 months of purchase. Class B shares that are redeemed within five
years of purchase are subject to a CDSC at declining rates beginning at 4.00%,
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%, based on the lower of cost or market value of shares being redeemed.
Proceeds from the CDSCs are paid to PFD. For the year ended December 31, 2008,
CDSCs in the amount of $49,610 were paid to PFD.
5. Expense Offset Arrangements
The Fund has entered into certain expense offset arrangements with PIMSS which
may result in a reduction in the Fund's total expenses due to interest earned
on cash held by PIMSS. For the year ended December 31, 2008, the Fund's
expenses were reduced $3,953 under such arrangements.
6. New Pronouncement
In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures
about Derivative Instruments and Hedging Activities ("SFAS 161"), was issued
and is effective for fiscal years beginning after November 15, 2008. SFAS 161
requires enhanced disclosures about an entity's derivative and hedging
activities. Management is currently evaluating the impact the adoption of SFAS
161 will have on the Fund's financial statement disclosures.
34 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Pioneer Series Trust II and
Shareowners of Pioneer AMT-Free Municipal Fund:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of Pioneer
AMT-Free Municipal Fund, one of the series comprising the Pioneer Series Trust
II (the "Trust"), including the schedule of investments, as of December 31,
2008, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods indicated
therein. These financial statements and financial highlights are the
responsibility of the Trust'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 the standards of the Public Company
Accounting Oversight Board (United States). 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. We were not engaged to perform an audit of the Trust's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Trust's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of December 31, 2008, by correspondence
with the custodian and brokers. 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 AMT-Free Municipal Fund of the Pioneer Series Trust II at December 31,
2008, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and financial
highlights for each of the periods indicated therein, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 18, 2009
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 35
ADDITIONAL INFORMATION (unaudited)
For the year ended December 31, 2008, certain dividends paid by the Fund may be
subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth
Tax Relief Reconciliation Act (the Act) of 2003. The Fund intends to designate
up to the maximum amount of such dividends allowable under the Act, as taxed at
a maximum rate of 15%. Complete information will be computed and reported in
conjunction with your 2008 form 1099-DIV.
The percentages of the Fund's ordinary income distributions that are exempt
from nonresident alien (NRA) tax withholding resulting from qualified interest
income and qualified short term gains were 100.0% and 0.0%, respectively.
36 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
Trustees, Officers and Service Providers
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerinvestments.com. This information is also available
on the Securities and Exchange Commission's web site at http://www.sec.gov.
Trustees and Officers
The Board of Trustees provides broad supervision over the Fund's affairs. The
officers of the Fund are responsible for the Fund's operations. The Trustees
and officers are listed below, together with their principal occupations during
the past five years. Trustees who are interested persons of the Fund within the
meaning of the 1940 Act are referred to as Interested Trustees. Trustees who
are not interested persons of the Fund are referred to as Independent Trustees.
Each of the Trustees serves as a trustee of each of the 76 U.S. registered
investment portfolios for which Pioneer serves as investment adviser (the
"Pioneer Funds"). The address for all Trustees and all officers of the Fund is
60 State Street, Boston, Massachusetts 02109.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 37
Interested Trustees
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age with the Fund and Term of Office During Past Five Years Held by this Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
John F. Cogan, Jr. Chairman of the, Trustee since 2003. Deputy Chairman and a Director of None
(82)* Board Trustee Serves until a successor Pioneer Global Asset Management S.p.A.
and President trustee is elected or ("PGAM"); Non-Executive Chairman and a
earlier retirement or Director of Pioneer Investment
removal. Management USA Inc. ("PIM-USA");
Chairman and a Director of Pioneer;
Chairman and Director of Pioneer
Institutional Asset Management, Inc.
(since 2006); Director of Pioneer
Alternative Investment Management
Limited (Dublin); President and a
Director of Pioneer Alternative Invest-
ment Management (Bermuda) Limited and
affiliated funds; Director of PIOGLOBAL
Real Estate Investment Fund (Russia)
(until June 2006); Director of Nano-C,
Inc. (since 2003); Director of Cole
Management Inc. (since 2004); Director
of Fiduciary Counseling, Inc.; President
and Director of Pioneer Funds Dis-
tributor, Inc. ("PFD") (until May 2006);
President of all of the Pioneer Funds;
and Of Counsel, Wilmer Cutler Pickering
Hale and Dorr LLP
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel K. Kingsbury Trustee and Trustee since 2008. Director, CEO and President of Pioneer None
(50)* Executive Vice Serves until a successor Investment Management USA Inc. (since
President trustee is elected or February 2007); Director and President
earlier retirement or of Pioneer Investment Management, Inc.
removal. and Pioneer Institutional Asset
Management, Inc. (since February 2007);
Executive Vice President of all of the
Pioneer Funds (since March 2007); Direc-
tor of Pioneer Global Asset Management
S.p.A. (since April 2007); Head of New
Markets Division, Pioneer Global Asset
Management S.p.A. (2000 - 2007)
- ------------------------------------------------------------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are officers
or directors of the Fund's investment adviser and certain of its affiliates.
38 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
Independent Trustees
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age with the Fund and Term of Office During Past Five Year Held by this Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
David R. Bock (65) Trustee Trustee since 2005. Executive Vice President and Chief Director of
Serves until a successor Financial Officer, I-trax, Inc. Enterprise Com-
trustee is elected or (publicly traded health care services munity Investment,
earlier retirement or company) (2004 - 2007); Partner, Federal Inc. (privately-held
removal. City Capital Advisors (boutique merchant affordable housing
bank) (1997 to 2004 and 2008 - present); finance company);
and Executive Vice President and Chief and Director of New
Financial Officer, Pedestal Inc. York Mortgage Trust
(internet-based mortgage trading (publicly traded
company) (2000 - 2002) mortgage REIT)
- ------------------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (60) Trustee Trustee since 2003. President, Bush International, LLC Director of Marriott
Serves until a successor (international financial advisory International,
trustee is elected or firm) Inc.; Director of
earlier retirement or Discover Financial
removal. Services (credit
card issuer and
electronic payment
services); Director
of Briggs & Stratton
Co. (engine
manufacturer);
Director of UAL
Corporation (airline
holding company);
Director of Mantech
International
Corporation
(national security,
defense, and intel-
ligence technology
firm); and Member,
Board of Gov-
ernors, Investment
Company Institute
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
39
Independent Trustees (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age with the Fund and Term of Office During Past Five Years Held by this Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Benjamin M. Trustee Trustee since 2008. Professor, Harvard University Trustee, Mellon
Friedman (64) Serves until a successor Institutional Funds
trustee is elected or Investment Trust and
earlier retirement or Mellon Institutional
removal Funds Master
Portfolio (oversees
17 portfolios in
fund complex)
- ------------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Trustee Trustee since 2003. Founding Director, Vice President and None
Graham (61) Serves until a successor Corporate Secretary, The Winthrop Group,
trustee is elected or Inc. (consulting firm); and Desautels
earlier retirement or Faculty of Management, McGill University
removal.
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas J. Perna Trustee Trustee since 2006. Chief Executive Officer, Quadriserv, None
(58) Serves until a successor Inc. (technology products for securities
trustee is elected or lending industry) (2008 - present);
earlier retirement or Private investor (2004 - 2008); and
removal. Senior Executive Vice President, The
Bank of New York (financial and
securities services) (1986 - 2004)
- ------------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret Trustee Trustee since 2003. President and Chief Executive Officer, Director of New
(60) Serves until a successor Newbury, Piret & Company, Inc. America High Income
trustee is elected or (investment banking firm) Fund, Inc.
earlier retirement or (closed-end
removal. investment company)
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen K. West Trustee Trustee since 2008. Senior Counsel, Sullivan & Cromwell LLP Director, The Swiss
(80) Serves until a successor (law firm) Helvetia Fund, Inc.
trustee is elected or (closed-end
earlier retirement or investment company)
removal.
- ------------------------------------------------------------------------------------------------------------------------------------
40 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
Fund Officers
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age with the Fund and Term of Office During Past Five Years Held by this Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Dorothy E. Secretary Since 2003. Serves at Secretary of PIM-USA; Senior Vice None
Bourassa (60) the discretion of the President -- Legal of Pioneer;
Board Secretary/Clerk of most of PIM-USA's
subsidiaries; and Secretary of all of
the Pioneer Funds since September 2003
(Assistant Secretary from November 2000
to September 2003)
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Assistant Secretary Since 2003. Serves at Associate General Counsel of Pioneer None
Kelley (44) the discretion of the since January 2008 and Assistant
Board Secretary of all of the Pioneer Funds
since September 2003; Vice President and
Senior Counsel of Pioneer from July 2002
to December 2007
- ------------------------------------------------------------------------------------------------------------------------------------
Mark E. Bradley Treasurer Since 2008. Serves at Vice President -- Fund Accounting, None
(49) the discretion of the Administration and Controller- ship
Board Services of Pioneer; and Treasurer of
all of the Pioneer Funds since March
2008; Deputy Treasurer of Pioneer from
March 2004 to February 2008; Assistant
Treasurer of all of the Pioneer Funds
from March 2004 to February 2008; and
Treasurer and Senior Vice President, CDC
IXIS Asset Management Services from 2002
to 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Luis I. Presutti Assistant Treasurer Since 2003. Serves at Assistant Vice President -- Fund None
(43) the discretion of the Accounting, Administration and
Board Controllership Services of Pioneer; and
Assistant Treasurer of all of the
Pioneer Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Gary Sullivan Assistant Treasurer Since 2003. Serves at Fund Accounting Manager -- Fund None
(50) the discretion of the Accounting, Administration and
Board Controllership Services of Pioneer; and
Assistant Treasurer of all of the
Pioneer Funds
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
41
Fund Officers (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age with the Fund and Term of Office During Past Five Years Held by this Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Katherine Kim Assistant Treasurer Since 2003. Serves at Fund Administration Manager -- Fund None
Sullivan (35) the discretion of the Accounting, Administration and
Board Controllership Services since June 2003
and Assistant Treasurer of all of the
Pioneer Funds since September 2003;
Assistant Vice President -- Mutual
Fund Operations of State Street
Corporation from June 2002 to June 2003
(formerly Deutsche Bank Asset
Management)
- ------------------------------------------------------------------------------------------------------------------------------------
Teri W. Anderholm Chief Compliance Since 2007. Serves at Chief Compliance Officer of Pioneer None
(49) Officer the discretion of the since December 2006 and of all the
Board Pioneer Funds since January 2007; Vice
President and Compliance Officer, MFS
Investment Management (August 2005 to
December 2006); Consultant, Fidelity
Investments (February 2005 to July
2005); Independent Consultant (July 1997
to February 2005)
- ------------------------------------------------------------------------------------------------------------------------------------
42 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
This page for your notes.
Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08 43
This page for your notes.
44 Pioneer AMT-Free Municipal Fund | Annual Report | 12/31/08
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:
- --------------------------------------------------------------------------------
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our internet e-mail address ask.pioneer@pioneerinvestments.com
(for general questions about Pioneer only)
Visit our web site: pioneerinvestments.com
This report must be accompanied by a prospectus.
The Fund files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
- --------------------------------------------------------------------------------
Pioneer Growth Leaders Fund
- --------------------------------------------------------------------------------
Annual Report | December 31, 2008
- --------------------------------------------------------------------------------
Ticker Symbols:
Class A LRPSX
Class B LRPBX
Class C LRPCX
[LOGO]PIONEER
Investments(R)
visit us: pioneerinvestments.com
Table of Contents
Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 8
Prices and Distributions 9
Performance Update 10
Comparing Ongoing Fund Expenses 13
Schedule of Investments 15
Financial Statements 20
Notes to Financial Statements 27
Report of Independent Registered Public Accounting Firm 33
Approval of Investment Sub-Advisory Agreement 34
Trustees, Officers and Service Providers 37
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 1
President's Letter
Dear Shareowner,
Stock and bond markets around the globe this year have experienced one of their
most tumultuous periods in history. Investors have witnessed volatility of a
magnitude that many have never before seen. Distance often provides the best
vantage point for perspective. Still, we believe that the benefits of basic
investment principles that have stood the test of time -- even in the midst of
market turmoil -- cannot be underestimated.
First, invest for the long term. The founder of Pioneer Investments, Philip L.
Carret, began his investment career during the 1920s. One lesson he learned is
that while great prosperity affords an advantageous time for selling stocks,
extreme economic slumps can create opportunities for purchase. Indeed, many of
our portfolio managers, who follow the value-conscious investing approach of
our founder, are looking at recent market conditions as an opportunity to buy
companies whose shares we believe have been unjustifiably beaten down by
indiscriminate selling, but that we have identified as having strong prospects
over time. While investors may be facing a sustained market downturn, we
continue to believe that patience, along with staying invested in the market,
are important considerations for long-term investors.
A second principle is to stay diversified across different types of
investments. The global scope of the current market weakness poses challenges
for this basic investment axiom. But the turbulence makes now a good time to
reassess your portfolio and make sure that your investments continue to meet
your needs. We believe you should work closely with your financial advisor to
find the mix of stocks, bonds and money market assets that is best aligned to
your particular risk tolerance and investment objective.
As the investment markets sort through the continuing crisis in the financial
industry, we are staying focused on the fundamentals and risk management. With
more than 80 years of experience behind us, we have learned how to navigate
turbulent markets. At Pioneer Investments, risk management has always been a
critical part of our culture -- not just during periods of extraordinary
volatility. Our investment process is based on fundamental research,
quantitative analysis and active portfolio management. This three-pillared
process, which we apply to each of our portfolios, is supported by an
integrated team approach and is designed to carefully balance risk and reward.
While we
2 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
see potential chances for making money in many corners of the market, it takes
research and experience to separate solid investment opportunities from
speculation.
We invite you to learn more about Pioneer and our time-tested approach to
investing by consulting with your financial advisor or visiting us online at
www.pioneerinvestments.com. Thank you for investing with Pioneer.
Respectfully,
/s/ Daniel K. Kingsbury
Daniel K. Kingsbury
President and CEO
Pioneer Investment Management USA, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 3
Portfolio Management Discussion | 12/31/08
The year 2008 will be remembered as one of the worst in the recent history of
the stock market, as problems that began in the credit markets escalated and
spread to create impacts virtually no one predicted. In the following
interview, members of the portfolio management team from L. Roy Papp &
Associates, the Fund's sub-adviser, who are responsible for management of
Pioneer Growth Leaders Fund, discuss the factors that influenced the
performance of the Fund during the year.
Q How did the Fund perform during the 12 months ended December 31, 2008?
A Pioneer Growth Leaders Fund Class A shares returned -33.84% at net asset
value for the 12 months ended December 31, 2008. During the same period,
the Fund's benchmark, the Russell 1000 Growth Index, returned -38.44%,
while the average return of the 851 mutual funds in Lipper's Large Cap Core
category was -37.23%.
Q What were the principal factors affecting the Fund's performance during the
12 months ended December 31, 2008?
A It was a horrible year in the stock market, with deep declines in most
companies' share prices. The precipitous market drops were triggered in
part by loose money policies that resulted in imprudent loans, especially
in real estate, to unqualified borrowers. Those low-quality loans then were
packaged by investment banks into securities that were sold to investors
throughout the world. The poor quality of many mortgage loans became
evident when housing values began declining, unleashing a cascading series
of events that resulted in a deepening credit crisis that threatened the
existence of major financial institutions. Government rescues and bailouts,
and bankruptcies of well known financial corporations occurred over
virtually the entire year, starting with JP Morgan Chase's buyout -- with
the help of the federal government -- of Bear Stearns in March, and
extending until the end of the year when Bank of America acquired Merrill
Lynch and Wells Fargo bought Wachovia. While the credit crisis exacerbated
the existing problems of more troubled companies, such as General Motors,
it also created new problems for many profitable corporations that began to
see their credit dry up. Market volatility hit its highest point in the
weeks after investment bank Lehman Brothers filed for bankruptcy in
September, when investor confidence disappeared, consumers curtailed
spending and corporations throughout the economy saw revenues shrink at the
very time they lost access to credit. The financials sector was the area
that was most severely hit in this tumultuous market, as the share prices
of even higher-quality companies with little credit exposure were pulled
down with the rest of the sector.
4 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
The Fund's holdings could not escape the effects of the difficult market
environment, although the Fund did outperform both its Russell benchmark
and its Lipper competitive funds' average over the 12-month period. The
Fund's performance over the period was helped by our traditional emphasis
on corporations with strong balance sheets, little debt, steady earnings
growth, good cash flow and experienced management teams. The Fund's
non-financial holdings performed well, but its financials holdings, even
when they had little direct exposure to the credit crisis, nevertheless
were pulled down by the avalanche affecting the entire sector.
Q What were some of the investments that most influenced the Fund's results
over the 12 months ended December 31, 2008?
A Several of the Fund's holdings performed very well in a difficult market,
helping the Fund outperform its benchmark and Lipper category average. We
believe this was the result of our emphasis on established, financially
healthy corporations with strong balance sheets. These characteristics
helped the corporations withstand the worst effects of the credit crisis.
Our selections in the energy, financials, industrials and information
technology sectors contributed to the Fund's relative outperformance.
One of the better performing investments for the Fund was Johnson &
Johnson, the diversified health care product company that has established
itself in markets throughout the world. United Technologies, a diversified
industrials and technology corporation, also performed well as it
maintained its earnings outlook at a time when many other corporations were
cutting back their earnings guidance. In the financials sector, three
investments that helped the Fund were: T. Rowe Price, a mutual fund
management company and asset manager; State Street, a custodian of
financial assets as well as an asset management company; and Northern
Trust, a custodian of financial assets as well as a major mortgage lender
that successfully maintained high loan standards. These higher-quality
corporations stood up relatively well, outperforming banks and investment
banks more directly exposed to the deterioration in credit markets.
Elsewhere, Expeditors International, a long-term Fund holding that is a
specialist in planning logistics for international trade operations, fared
well as its improvements in productivity helped its performance even as
trade volumes weakened. Consulting firm Accenture, a relatively new Fund
holding, did well during the 12-month period, as it benefited from growing
demand for its services, which focus on helping corporations plan for
greater reliance on outsourcing. In the energy sector, our investment in
Chevron, a major integrated oil corporation, performed relatively well when
it outpaced other oil field services companies, which were particularly
hard-hit when energy prices retreated during the second half of 2008. Other
investments that helped the Fund's performance were Techne, which produces
proteins for the biotechnology and medical industries, and Canadian
National, the major railroad
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 5
that benefited from its efficient operations and exposure to intermodal
transport services.
The Fund did, however, have a number of disappointments during the 12-month
period. Omnicom, a diversified advertising and marketing firm, saw its
revenues slip as clients cut back their marketing budgets as the economy
weakened. In health care, equipment companies Medtronic and Stryker both
failed to meet expectations. Medtronic's new stent product for the
treatment of cardiac patients faced keen competition and failed to meet its
revenue expectations. Nevertheless, we have continued to favor the company
because of the bright prospects for its pacemaker and neurological
businesses. Stryker, a specialist in medical equipment and orthopedic
implants, was affected by concerns about hospital spending as well as by
worries that some hip and knee replacement surgeries could be postponed at
a time when many household budgets are pressured. Pharmacy retailer
Walgreen also underperformed. While Walgreen prescription sales held up
well, revenues from non-drug products at its retail stores failed to meet
expectations. The Fund had a small position in conglomerate General
Electric, but it nevertheless detracted from results because of worries
about its financial services operations. Among technology investments,
software company Adobe Systems proved to be a disappointment, after
revenues from a new graphics product failed to meet expectations.
Q What were some of the changes you made to the Fund during 2008?
A We sold some of the more volatile stocks, investing the Fund instead in
companies that we believed had superior long-term growth outlooks. We sold
the Fund's investment in American Express, the financial services
corporation, because of our concerns about consumer credit problems. We
also liquidated positions in retailer Coach, diversified technology company
International Business Machines, and delivery specialist United Parcel
Service because such firms are typically vulnerable to a downturn in the
economy. In addition, we sold the Fund's investment in O'Reilly Auto Parts,
which failed to meet expectations at its retail outlets.
New investments for the Fund during the year included: diversified
electronics corporation Emerson Electric; Federated Investors, an asset
manager specializing in money market funds and other lower-risk
investments; and the aforementioned firms Accenture and Stryker.
Q What is your investment outlook?
A The abrupt curtailment of consumer spending was a major contributor to the
economic downturn during 2008, but we believe several factors could help
give a boost to consumer confidence and trigger more discretionary spending
in 2009. They include: lower oil and gasoline prices, which have been
putting more money in consumers' pockets; lower interest rates, which
6 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
should help consumer spending and even housing sales; the massive Federal
government stimulus packages, which should put more money into the economy;
and the widely held view that the economy should improve under a new
national administration.
We also see some potential improvement in the capital markets. We already
have witnessed some evidence of progress in the bond market and we think
huge amounts of money are on the sidelines, ready to be deployed into
higher-quality investments once some signs of progress appear.
We firmly believe that our bias toward higher-quality corporations gives
the Fund a portfolio of companies that are more likely to be the survivors
of the recent economic downturn. We think they should have the potential to
flourish in any potential recovery.
Please refer to the Schedule of Investments on pages 15-19 for a full
listing of Fund securities.
Investments in mid-sized companies may offer the potential for higher
returns, but are also subject to greater short-term price fluctuations than
larger, more established companies. The Fund invests in a limited number of
securities and, as a result, the Fund's performance may be more volatile
than the performance of other funds holding more securities. At times, the
Fund's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting
those industries and sectors.
Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
Any information in this shareholder report regarding market or economic
trends or the factors influencing the Fund's historical or future
performance are statements of the opinion of Fund management as of the date
of this report. These opinions should not be relied upon for any other
purposes.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 7
Portfolio Summary | 12/31/08
Portfolio Diversification
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
U.S. Common Stocks 86.1%
Temporary Cash Investments 13.9%
Sector Distribution
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Information Technology 30.5%
Health Care 20.3%
Consumer Staples 13.9%
Industrials 12.8%
Financials 11.3%
Consumer Discretionary 6.0%
Energy 5.2%
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)*
1. Accenture, Ltd. 5.55%
2. Medco Health Solutions, Inc. 5.35
3. Chevron Corp. 5.16
4. Cisco Systems, Inc. 4.71
5. Clorox Co. 4.43
6. Expeditors International of Washington, Inc. 4.39
7. PepsiCo, Inc. 4.36
8. Techne Corp. 4.18
9. Medtronic, Inc. 3.88
10. Linear Technology Corp. 3.86
* This list excludes temporary cash and derivative instruments. The portfolio
is actively managed, and current holdings may be different. The holdings
listed should not be considered recommendations to buy or sell any security
listed.
8 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Prices and Distributions | 12/31/08
Net Asset Value per Share
- --------------------------------------------------------------------------------
Class 12/31/08 12/31/07
A $ 6.96 $ 12.82
- ---------------------------------------------
B $ 6.20 $ 11.80
- ---------------------------------------------
C $ 6.08 $ 11.58
- ---------------------------------------------
Distributions per Share: 1/1/08-12/31/08
- --------------------------------------------------------------------------------
Short-Term Long-Term
Class Dividends Capital Gains Capital Gains
A $ -- $ -- $ 1.4500
- -------------------------------------------------------------
B $ -- $ -- $ 1.4500
- -------------------------------------------------------------
C $ -- $ -- $ 1.4500
- -------------------------------------------------------------
Index Definitions
- --------------------------------------------------------------------------------
The Russell 1000 Growth Index measures the performance of large-cap U.S. growth
stocks. Index returns assume reinvestment of dividends and, unlike Fund
returns, do not reflect any fees, expenses or sales charges. You cannot invest
directly in an Index.
The index defined here pertains to the "Value of $10,000 Investment" charts on
pages 10-12.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 9
Performance Update | 12/31/08 Class A Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Growth Leaders Fund at public offering price,
compared to that of the Russell 1000 Growth Index.
Average Annual Total Returns
(As of December 31, 2008)
- ------------------------------------------------------------------
Net Asset Public Offering
Period Value (NAV) Price (POP)
- ------------------------------------------------------------------
10 Years -3.46% -4.03%
5 Years -4.35 -5.47
1 Year -33.84 -37.63
- ------------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ------------------------------------------------------------------
Gross Net
- ------------------------------------------------------------------
1.43% 1.43%
- ------------------------------------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer Small and Russell 1000
Mid Cap Growth Fund Growth Index
12/98 9,425 10,000
12/99 10,811 13,316
12/00 10,135 10,330
12/09 8,827 8,220
12/09 6,693 5,928
12/09 8,277 7,692
12/09 8,295 8,176
12/09 8,768 8,606
12/09 9,288 9,387
12/09 10,016 10,496
12/09 6,627 6,462
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
NAV results represent the percent change in net asset value per share. Returns
would have been lower had sales charges been reflected. POP returns reflect
deduction of maximum 5.75% sales charge. All results are historical and assume
the reinvestment of dividends and capital gains. Other share classes are
available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers, Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
Pioneer Growth Leaders Fund was created through the reorganization of the
predecessor Fund, Papp Stock Fund, on February 20, 2004. The performance of
Class A shares of the Fund from November 29, 1989 to February 20, 2004 is the
performance of Papp Stock Fund's single class, which has been restated to
reflect any applicable sales charges and Rule 12b-1 fees (but not other
differences in expenses). This adjustment has the effect of reducing the
previously reported performance of Papp Stock Fund.
10 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Performance Update | 12/31/08 Class B Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Growth Leaders Fund, compared to that of the Russell
1000 Growth Index.
Average Annual Total Returns
(As of December 31, 2008)
- ----------------------------------------------------------------
If If
Period Held Redeemed
- ----------------------------------------------------------------
10 Years -4.43% -4.43%
5 Years -5.56 -5.56
1 Year -34.57 -36.67
- ----------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ----------------------------------------------------------------
Gross Net
- ----------------------------------------------------------------
2.56% 2.56%
- ----------------------------------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer Small and Russell 1000
Mid Cap Growth Fund Growth Index
12/98 10,000 10,000
11,386 13,316
12/00 10,593 10,330
9,157 8,220
12/02 6,891 5,928
8,457 7,692
12/04 8,340 8,176
8,701 8,606
12/06 9,110 9,387
9,712 10,496
12/08 6,355 6,462
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
"If Held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. "If Redeemed"
returns reflect the deduction of applicable contingent deferred sales charge
(CDSC). Effective December 1, 2004, the period during which a CDSC is applied
to withdrawals was shortened to 5 years. The maximum CDSC for Class B shares
continues to be 4%. For more complete information, please see the prospectus
for details. Note: Shares purchased prior to December 1, 2004 remain subject to
the CDSC in effect at the time you purchased those shares. For performance
information for shares purchased prior to December 1, 2004, please visit
www.pioneerinvestments.com/bshares.
All results are historical and assume the reinvestment of dividends and capital
gains. Other share classes are available for which performance and expenses
will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers, Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
Pioneer Growth Leaders Fund was created through the reorganization of the
predecessor Fund, Papp Stock Fund, on February 20, 2004. The performance of
Class B shares of the Fund from November 29, 1989 to February 20, 2004 is the
performance of Papp Stock Fund's single class, which has been restated to
reflect any applicable sales charges and Rule 12b-1 fees (but not other
differences in expenses). This adjustment has the effect of reducing the
previously reported performance of Papp Stock Fund.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 11
Performance Update | 12/31/08 Class C Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Growth Leaders Fund, compared to that of the Russell
1000 Growth Index.
Average Annual Total Returns
(As of December 31, 2008)
- ----------------------------------------------------------------
If If
Period Held Redeemed
- ----------------------------------------------------------------
10 Years -4.50% -4.50%
5 Years -5.69 -5.69
1 Year -34.35 -34.35
- ----------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ----------------------------------------------------------------
Gross Net
- ----------------------------------------------------------------
2.85% 2.85%
- ----------------------------------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer Small and Russell 1000
Mid Cap Growth Fund Growth Index
12/98 10,000 10,000
11,386 13,316
12/00 10,593 10,330
9,157 8,220
12/02 6,891 5,928
8,457 7,692
12/04 8,304 8,176
8,673 8,606
12/06 9,076 9,387
9,610 10,496
12/08 6,309 6,462
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Class C shares held for less than one year are also subject to a 1% contingent
deferred sales charge (CDSC). If you paid a 1% sales charge, your returns would
be lower than those shown above. "If Held" results represent the percent change
in net asset value per share. Returns would have been lower had sales charges
been reflected. All results are historical and assume the reinvestment of
dividends and capital gains. Other share classes are available for which
performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers, Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
Pioneer Growth Leaders Fund was created through the reorganization of the
predecessor Fund, Papp Stock Fund, on February 20, 2004.The performance of
Class C shares of the fund from November 29, 1989 to February 20, 2004 is the
performance of Papp Stock Fund's single class, which has been restated to
reflect any applicable sales charges and Rule 12b-1 fees (but not other
differences in expenses). This adjustment has the effect of reducing the
previously reported performance of Papp Stock Fund.
12 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Comparing Ongoing Fund Expenses
As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
- --------------------------------------------------------------------------------
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
(1) Divide your account value by $1,000
Example: an $8,600 account value [divided by] $1,000 = 8.6
(2) Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Growth Leaders Fund
Based on actual returns from July 1, 2008 through December 31, 2008.
Share Class A B C
Beginning Account $ 1,000.00 $ 1,000.00 $ 1,000.00
Value on 7/1/08
- ---------------------------------------------------------------------
Ending Account $ 727.43 $ 722.90 $ 725.41
Value on 12/31/08
- ---------------------------------------------------------------------
Expenses Paid $ 7.60 $ 12.73 $ 11.75
During Period*
- ---------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.75%, 2.94% and
2.71% for Class A, Class B and Class C shares, respectively, multiplied by
the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period).
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 13
Comparing Ongoing Fund Expenses (continued)
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the
5% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Growth Leaders Fund
Based on a hypothetical 5% per year return before expenses, reflecting the
period from July 1, 2008 through December 31, 2008.
Share Class A B C
Beginning Account $ 1,000.00 $ 1,000.00 $ 1,000.00
Value on 7/1/08
- ---------------------------------------------------------------------
Ending Account $ 1,016.34 $ 1,010.36 $ 1,011.51
Value on 12/31/08
- ---------------------------------------------------------------------
Expenses Paid $ 8.87 $ 14.86 $ 13.70
During Period*
- ---------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.75%, 2.94% and
2.71% for Class A, Class B and Class C shares, respectively, multiplied by
the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period).
14 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Schedule of Investments | 12/31/08
Shares Value
COMMON STOCKS -- 99.2%
ENERGY -- 5.1%
Integrated Oil & Gas -- 5.1%
14,000 Chevron Corp. $ 1,035,580
-----------
Total Energy $ 1,035,580
- -----------------------------------------------------------------------------
CAPITAL GOODS -- 4.9%
Aerospace & Defense -- 2.8%
10,500 United Technologies Corp. $ 562,800
- -----------------------------------------------------------------------------
Electrical Component & Equipment -- 1.4%
8,000 Emerson Electric Co. $ 292,880
- -----------------------------------------------------------------------------
Industrial Conglomerates -- 0.7%
9,000 General Electric Co. $ 145,800
-----------
Total Capital Goods $ 1,001,480
- -----------------------------------------------------------------------------
TRANSPORTATION -- 7.8%
Air Freight & Couriers -- 4.4%
26,500 Expeditors International of Washington, Inc. (b) $ 881,655
- -----------------------------------------------------------------------------
Railroads -- 3.4%
18,800 Canadian National Railway Co. $ 691,088
-----------
Total Transportation $ 1,572,743
- -----------------------------------------------------------------------------
MEDIA -- 2.7%
Advertising -- 2.7%
20,500 Omnicom Group, Inc. $ 551,860
-----------
Total Media $ 551,860
- -----------------------------------------------------------------------------
RETAILING -- 3.2%
General Merchandise Stores -- 3.2%
19,000 Target Corp. (b) $ 656,070
-----------
Total Retailing $ 656,070
- -----------------------------------------------------------------------------
FOOD & DRUG RETAILING -- 5.1%
Drug Retail -- 3.7%
30,000 Walgreen Co. $ 740,100
- -----------------------------------------------------------------------------
Food Distributors -- 1.4%
12,500 Sysco Corp. $ 286,750
-----------
Total Food & Drug Retailing $ 1,026,850
- -----------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 4.3%
Soft Drinks -- 4.3%
16,000 PepsiCo, Inc. $ 876,320
-----------
Total Food, Beverage & Tobacco $ 876,320
- -----------------------------------------------------------------------------
HOUSEHOLD & PERSONAL PRODUCTS -- 4.4%
Household Products -- 4.4%
16,000 Clorox Co. $ 888,960
-----------
Total Household & Personal Products $ 888,960
- -----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 15
Schedule of Investments | 12/31/08 (continued)
Shares Value
HEALTH CARE EQUIPMENT & SERVICES -- 12.3%
Health Care Equipment -- 7.0%
24,800 Medtronic, Inc. $ 779,216
16,000 Stryker Corp. 639,200
-----------
$ 1,418,416
- -----------------------------------------------------------------------------
Health Care Services -- 5.3%
25,656 Medco Health Solutions, Inc.* $ 1,075,243
-----------
Total Health Care Equipment & Services $ 2,493,659
- -----------------------------------------------------------------------------
PHARMACEUTICALS & BIOTECHNOLOGY -- 7.9%
Life Sciences Tools & Services -- 4.2%
13,000 Techne Corp. $ 838,760
- -----------------------------------------------------------------------------
Pharmaceuticals -- 3.7%
12,500 Johnson & Johnson $ 747,875
-----------
Total Pharmaceuticals & Biotechnology $ 1,586,635
- -----------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 11.2%
Asset Management & Custody Banks -- 11.2%
10,000 Federated Investors, Inc. $ 169,600
13,000 Northern Trust Corp. 677,820
19,000 State Street Corp. 747,270
19,000 T. Rowe Price Associates, Inc. 673,360
-----------
$ 2,268,050
-----------
Total Diversified Financials $ 2,268,050
- -----------------------------------------------------------------------------
SOFTWARE & SERVICES -- 16.3%
Application Software -- 3.7%
35,000 Adobe Systems, Inc.* $ 745,150
- -----------------------------------------------------------------------------
Data Processing & Outsourced Services -- 3.6%
51,000 Western Union Co. $ 731,340
- -----------------------------------------------------------------------------
IT Consulting & Other Services -- 5.5%
34,000 Accenture, Ltd. $ 1,114,860
- -----------------------------------------------------------------------------
Systems Software -- 3.5%
36,000 Microsoft Corp. (b) $ 699,840
-----------
Total Software & Services $ 3,291,190
- -----------------------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 4.7%
Communications Equipment -- 4.7%
58,000 Cisco Systems, Inc.* $ 945,400
-----------
Total Technology Hardware & Equipment $ 945,400
- -----------------------------------------------------------------------------
SEMICONDUCTORS -- 9.3%
44,000 Intel Corp. $ 645,040
35,000 Linear Technology Corp. (b) 774,200
24,000 Microchip Technology, Inc. (b) 468,720
-----------
$ 1,887,960
-----------
Total Semiconductors $ 1,887,960
- -----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $15,221,877) $20,082,757
- -----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
16 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Principal
Amount Value
TEMPORARY CASH INVESTMENTS -- 16.0%
Securities Lending Collateral -- 16.0% (c)
Certificates of Deposit:
$ 75,042 Abbey National Plc, 3.15%, 8/13/09 $ 75,042
75,032 Bank of Nova Scotia, 3.21%, 5/5/09 75,032
119,923 Bank of Scotland NY, 2.92%, 6/5/09 119,923
135,076 Barclays Bank, 1.5%, 5/27/09 135,076
23,859 Calyon NY, 4.62%, 1/16/09 23,859
150,084 CBA, 4.87%, 7/16/09 150,084
135,076 DNB NOR Bank ASA NY, 3.04%, 6/5/09 135,076
137,477 Intesa SanPaolo S.p.A., 1.44%, 5/22/09 137,477
8,693 NORDEA NY, 4.13%, 4/9/09 8,693
112,563 Royal Bank of Canada NY, 2.7%, 8/7/09 112,563
75,042 Royal Bank of Scotland, 3.06%, 3/5/09 75,042
15,001 Skandinavian Enskilda Bank NY, 3.06%, 2/13/09 15,001
150,083 Societe Generale, 3.29%, 9/4/09 150,083
135,076 Svenska Bank NY, 4.61%, 7/8/09 135,076
150,084 U.S. Bank NA, 2.25%, 8/24/09 150,084
-----------
$ 1,498,111
- -----------------------------------------------------------------------------
Commercial Paper:
14,301 BBVA U.S., 2.83%, 3/12/09 $ 14,301
150,083 Monumental Global Funding, Ltd., 2.5%, 8/17/09 150,083
75,042 CME Group, Inc., 2.9%, 8/6/09 75,042
75,034 General Electric Capital Corp., 2.86%, 3/16/09 75,034
147,381 American Honda Finance Corp., 4.95%, 7/14/09 147,381
150,084 HSBC Bank, Inc., 2.5%, 8/14/09 150,084
75,042 IBM, 2.39%, 9/25/09 75,042
135,076 MetLife Global Funding, 3.19%, 6/12/09 135,076
135,076 New York Life Global, 2.13%, 9/4/09 135,076
127,571 Westpac Banking Corp., 2.34%, 6/1/09 127,571
-----------
$ 1,084,690
- -----------------------------------------------------------------------------
Tri-party Repurchase Agreements:
330,185 Deutsche Bank, 0.25%, 1/2/09 $ 330,185
25,496 Barclays Capital Markets, 0.5%, 1/2/09 25,496
-----------
$ 355,681
- -----------------------------------------------------------------------------
Time Deposit:
150,084 BNP Paribas, 0.01%, 1/2/09 $ 150,084
- -----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 17
Schedule of Investments | 12/31/08 (continued)
Shares Value
Money Market Mutual Funds:
37,521 Columbia Government Reserves Fund $ 37,521
112,563 JPMorgan, U.S. Government Money Market Fund 112,563
-----------
$ 150,084
-----------
Total Securities Lending Collateral $ 3,238,650
- -----------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $3,238,650) $ 3,238,650
- -----------------------------------------------------------------------------
TOTAL INVESTMENT IN SECURITIES -- 115.2%
(Cost $18,460,527)(a) $23,321,407
- -----------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (15.2)% $(3,080,140)
- -----------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $20,241,267
=============================================================================
* Non-income producing security.
(a) At December 31, 2008, the net unrealized gain on investments based on
cost for federal income tax purposes of $18,460,527 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost $7,310,397
Aggregate gross unrealized loss for all investments in which there is an
excess of tax cost over value (2,449,517)
----------
Net unrealized gain $4,860,880
==========
(b) At December 31, 2008, the following securities were out on loan:
Shares Description Value
25,900 Expeditors International of Washington, Inc. $ 861,693
33,900 Linear Technology Corp. 749,868
20,000 Microchip Technology, Inc. 390,600
35,000 Microsoft Corp. 680,400
15,000 Target Corp. 517,950
- ---------------------------------------------------------------------------
Total $3,200,511
===========================================================================
(c) Security lending collateral is managed by Credit Suisse.
Purchases and sales of securities (excluding temporary cash investments) for
the year ended December 31, 2008 aggregated $5,339,544 and $8,578,591,
respectively.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below.
Highest priority is given to Level 1 inputs and lowest priority is given to
Level 3.
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.)
Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining fair value of investments)
The accompanying notes are an integral part of these financial statements.
18 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Schedule of Investments | 12/31/08 (continued)
The following is a summary of the inputs used as of December 31, 2008, in
valuing the Fund's assets:
Investments
Valuation Inputs in Securities
Level 1 -- Quoted Prices $20,082,757
Level 2 -- Other Significant Observable Inputs 3,238,650
Level 3 -- Significant Unobservable Inputs --
- ---------------------------------------------------------------
Total $23,321,407
===============================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 19
Statement of Assets and Liabilities | 12/31/08
ASSETS:
Investment in securities (including securities loaned of $3,200,511)
(cost $18,460,527) $23,321,407
Cash 187,958
Receivables --
Fund shares sold 27,589
Dividends 34,490
Other 29,222
- --------------------------------------------------------------------------------------
Total assets $23,600,666
- --------------------------------------------------------------------------------------
LIABILITIES:
Payables --
Fund shares repurchased $ 51,005
Upon return of securities loaned 3,238,650
Due to affiliates 10,778
Accrued expenses 58,966
- --------------------------------------------------------------------------------------
Total liabilities $ 3,359,399
- --------------------------------------------------------------------------------------
NET ASSETS:
Paid-in capital $15,405,892
Accumulated net realized loss on investments (25,505)
Net unrealized gain on investments 4,860,880
- --------------------------------------------------------------------------------------
Total net assets $20,241,267
======================================================================================
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $19,011,363/2,730,280 shares) $ 6.96
Class B (based on $516,386/83,308 shares) $ 6.20
Class C (based on $713,518/117,345 shares) $ 6.08
MAXIMUM OFFERING PRICE:
Class A ($6.96 [divided by] 94.25%) $ 7.38
======================================================================================
The accompanying notes are an integral part of these financial statements.
20 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Statement of Operations
For the Year Ended 12/31/08
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $2,409) $481,384
Interest 4,300
Income from securities loaned, net 13,654
- -------------------------------------------------------------------------------------
Total investment income $ 499,338
- -------------------------------------------------------------------------------------
EXPENSES:
Management fees $215,025
Transfer agent fees
Class A 38,827
Class B 3,693
Class C 4,939
Distribution fees
Class A 61,396
Class B 7,124
Class C 12,042
Shareholder communications expense 19,321
Administrative fees 8,599
Custodian fees 31,828
Registration fees 39,838
Professional fees 45,608
Printing expense 22,453
Fees and expenses of nonaffiliated trustees 5,604
Miscellaneous 5,202
- -------------------------------------------------------------------------------------
Total expenses $ 521,499
Less fees paid indirectly (1,201)
- -------------------------------------------------------------------------------------
Net expenses $ 520,298
- -------------------------------------------------------------------------------------
Net investment loss $ (20,960)
- -------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments $ 2,078,820
- -------------------------------------------------------------------------------------
Change in net unrealized loss on investments $(13,016,972)
- -------------------------------------------------------------------------------------
Net loss on investments $(10,938,152)
- -------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(10,959,112)
=====================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 21
Statement of Changes in Net Assets
For the Years Ended 12/31/08 and 12/31/07, respectively
Year Ended Year Ended
12/31/08 12/31/07
FROM OPERATIONS:
Net investment loss $ (20,960) $ (51,969)
Net realized gain on investments 2,078,820 7,807,215
Change in net unrealized loss on investments (13,016,972) (4,641,212)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations $(10,959,112) $ 3,114,034
- ----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.00 and $0.00 per share, respectively) $ -- $ (7,952)
Net realized gain:
Class A ($1.45 and $3.34 per share, respectively) (3,226,681) (7,442,922)
Class B ($1.45 and $3.34 per share, respectively) (95,874) (180,922)
Class C ($1.45 and $3.34 per share, respectively) (175,419) (312,111)
- ----------------------------------------------------------------------------------------------
Total distributions to shareowners $ (3,497,974) $(7,943,907)
- ----------------------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 7,874,791 $ 6,568,318
Reinvestment of distributions 3,248,369 6,984,889
Cost of shares repurchased (10,891,993) (18,267,425)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from Fund
share transactions $ 231,167 $(4,714,218)
- ----------------------------------------------------------------------------------------------
Net decrease in net assets $(14,225,919) $(9,544,091)
NET ASSETS:
Beginning of year 34,467,186 44,011,277
- ----------------------------------------------------------------------------------------------
End of year $ 20,241,267 $34,467,186
- ----------------------------------------------------------------------------------------------
Accumulated net investment income $ -- $ --
- ----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
22 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
'08 Shares '08 Amount '07 Shares '07 Amount
Class A
Shares sold 691,874 $6,541,976 319,027 $ 4,976,275
Reinvestment of distributions 451,219 2,991,599 508,346 6,502,242
Less shares repurchased (926,983) (9,318,098) (1,124,050) (16,971,099)
- -------------------------------------------------------------------------------------------------
Net increase (decrease) 216,110 $ 215,477 (296,677) $(5,492,582)
=================================================================================================
Class B
Shares sold 27,334 $ 263,380 21,304 $ 308,834
Reinvestment of distributions 14,670 86,712 14,778 174,108
Less shares repurchased (27,668) (274,475) (64,871) (944,971)
- -------------------------------------------------------------------------------------------------
Net increase (decrease) 14,336 $ 75,617 (28,789) $ (462,029)
=================================================================================================
Class C
Shares sold 121,165 $1,069,435 89,156 $ 1,283,209
Reinvestment of distributions 29,448 170,058 26,690 308,539
Less shares repurchased (157,007) (1,299,420) (24,239) (350,360)
- -------------------------------------------------------------------------------------------------
Net increase (decrease) (6,394) $ (59,927) 91,607 $ 1,241,388
=================================================================================================
Class R*
Shares sold -- $ -- -- $ --
Reinvestment of distributions -- -- -- --
Less shares repurchased -- -- (69) (995)
- -------------------------------------------------------------------------------------------------
Net decrease -- $ -- (69) $ (995)
=================================================================================================
* Class R shares were liquidated on February 1, 2007.
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 23
Financial Highlights
Year Ended Year Ended
12/31/08 12/31/07
Class A
Net asset value, beginning of period $ 12.82 $ 15.00
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations:
Net investment income (loss) $ (0.00)(a) $ (0.01)
Net realized and unrealized gain (loss) on investments (4.41) 1.17
- ---------------------------------------------------------------------------------------------------------------
Net increase from investment operations $ (4.41) $ 1.16
Distributions to shareowners:
Net investment income -- 0.00(a)
Net realized gain (1.45) (3.34)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (5.86) $ (2.18)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 6.96 $ 12.82
===============================================================================================================
Total return* (33.84)% 7.84%
Ratio of net expenses to average net assets+ 1.75% 1.43%
Ratio of net investment income (loss) to average net assets+ (0.01)% (0.08)%
Portfolio turnover rate 19% 10%
Net assets, end of period (in thousands) $ 19,011 $ 32,221
Ratios with no waiver of fees by PIM and no reduction for fees paid indirectly:
Net expenses 1.75% 1.43%
Net investment income (loss) (0.01)% (0.08)%
Ratios with waiver of fees by PIM and reduction for fees paid indirectly:
Net expenses 1.75% 1.42%
Net investment income (loss) (0.01)% (0.07)%
- ---------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended
12/31/06 12/31/05 12/31/04 (b)
Class A
Net asset value, beginning of period $ 19.22 $ 21.05 $ 28.21
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations:
Net investment income (loss) $ 0.01 $ 0.01 $ 0.19
Net realized and unrealized gain (loss) on investments 1.11 1.13 (0.13)
- ------------------------------------------------------------------------------------------------------------------------------
Net increase from investment operations $ 1.12 $ 1.14 $ 0.06
Distributions to shareowners:
Net investment income 0.00(a) 0.00(a) (0.18)
Net realized gain (5.34) (2.97) (7.04)
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (4.22) $ (1.83) $ (7.16)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.00 $ 19.22 $21.05
==============================================================================================================================
Total return* 5.93% 5.70% 0.25%
Ratio of net expenses to average net assets+ 1.25% 1.25% 1.25%
Ratio of net investment income (loss) to average net assets+ 0.06% 0.01% 0.58%
Portfolio turnover rate 21% 3% 6%
Net assets, end of period (in thousands) $42,169 $56,040 $40,568
Ratios with no waiver of fees by PIM and no reduction for fees paid indirectly:
Net expenses 1.65% 1.59% 1.49%
Net investment income (loss) 0.34% (0.35)% 0.34%
Ratios with waiver of fees by PIM and reduction for fees paid indirectly:
Net expenses 1.25% 1.25% 1.25%
Net investment income (loss) 0.06% 0.01% 0.58%
- ------------------------------------------------------------------------------------------------------------------------------
(a) Amount rounds to less than one cent per share.
(b) Effective February 20, 2004, Pioneer Investment Management became the
advisor.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and 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.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
24 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Year Ended Year Ended
12/31/08 12/31/07
Class B
Net asset value, beginning of period $ 11.80 $14.21
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations:
Net investment loss $ (0.10) $(0.19)
Net realized and unrealized gain (loss) on investments (4.05) 1.12
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (4.15) $ 0.93
Distributions to shareowners:
Net realized gain (1.45) (3.34)
- ---------------------------------------------------------------------------------------------------------
Net decrease in net asset value $ (5.60) $(2.41)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 6.20 $11.80
=========================================================================================================
Total return* (34.57)% 6.62%
Ratio of net expenses to average net assets+ 2.95% 2.56%
Ratio of net investment loss to average net assets+ (1.20)% (1.22)%
Portfolio turnover rate 19% 10%
Net assets, end of period (in thousands) $ 516 $ 814
Ratios with no waiver of fees by PIM and no reduction for fees paid indirectly:
Net expenses 2.95% 2.56%
Net investment loss (1.20)% (1.22)%
Ratios with waiver of fees by PIM and reduction for fees paid indirectly:
Net expenses 2.94% 2.54%
Net investment loss (1.19)% (1.20)%
- ---------------------------------------------------------------------------------------------------------
Year Ended Year Ended 2/21/04 to
12/31/06 12/31/05 12/31/04 (a)
Class B
Net asset value, beginning of period $18.69 $20.81 $28.39
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations:
Net investment loss $(0.11) $(0.08) $(0.11)
Net realized and unrealized gain (loss) on investments 0.97 0.93 (0.43)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ 0.86 $ 0.85 $(0.54)
Distributions to shareowners:
Net realized gain (5.34) (2.97) (7.04)
- -----------------------------------------------------------------------------------------------------------------------------
Net decrease in net asset value $(4.48) $(2.12) $(7.58)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.21 $18.69 $20.81
=============================================================================================================================
Total return* 4.69% 4.34% (1.88)%(b)
Ratio of net expenses to average net assets+ 2.39% 2.34% 3.18%**
Ratio of net investment loss to average net assets+ (1.02)% (1.02)% (0.78)%**
Portfolio turnover rate 21% 3% 6%
Net assets, end of period (in thousands) $1,389 $ 904 $ 52
Ratios with no waiver of fees by PIM and no reduction for fees paid indirectly:
Net expenses 2.82% 2.67% 3.48%**
Net investment loss (1.44)% (1.35)% (1.08)%**
Ratios with waiver of fees by PIM and reduction for fees paid indirectly:
Net expenses 2.37% 2.33% 3.18%**
Net investment loss (1.00)% (1.01)% (0.78)%**
- -----------------------------------------------------------------------------------------------------------------------------
(a) Class B shares were first publicly offered on February 21, 2004.
(b) Not annualized.
* 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 with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 25
Financial Highlights (continued)
Year Ended Year Ended
12/31/08 12/31/07
Class C
Net asset value, beginning of period $ 11.58 $14.10
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations:
Net investment loss $ (0.10) $(0.10)
Net realized and unrealized gain (loss) on investments (3.95) 0.92
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (4.05) $ 0.82
Distributions to shareowners:
Net realized gain (1.45) (3.34)
- ----------------------------------------------------------------------------------------------------------
Net decrease in net asset value $ (5.50) $(2.52)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 6.08 $11.58
==========================================================================================================
Total return* (34.35)% 5.89%
Ratio of net expenses to average net assets+ 2.72% 2.85%
Ratio of net investment loss to average net assets+ (0.98)% (1.40)%
Portfolio turnover rate 19% 10%
Net assets, end of period (in thousands) $ 714 $1,432
Ratios with no waiver of fees by PIM and no reduction for fees paid indirectly:
Net expenses 2.72% 2.85%
Net investment loss (0.98)% (1.40)%
Ratios with waiver of fees by PIM and reduction for fees paid indirectly:
Net expenses 2.71% 2.83%
Net investment loss (0.97)% (1.38)%
- ----------------------------------------------------------------------------------------------------------
Year Ended Year Ended 2/21/04 to
12/31/06 12/31/05 12/31/04 (a)
Class C
Net asset value, beginning of period $18.59 $20.69 $28.39
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations:
Net investment loss $(0.13) $(0.07) $(0.09)
Net realized and unrealized gain (loss) on investments 0.98 0.94 (0.57)
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ 0.85 $ 0.87 $(0.66)
Distributions to shareowners:
Net realized gain (5.34) (2.97) (7.04)
- ------------------------------------------------------------------------------------------------------------------------
Net decrease in net asset value $(4.49) $(2.10) $(7.70)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.10 $18.59 $20.69
========================================================================================================================
Total return* 4.64% 4.44% (2.30)%(b)
Ratio of net expenses to average net assets+ 2.53% 2.32% 3.80%**
Ratio of net investment loss to average net assets+ (1.20)% (0.95)% (1.36)%**
Portfolio turnover rate 21% 3% 6%
Net assets, end of period (in thousands) $ 453 $ 406 $ 24
Ratios with no waiver of fees by PIM and no reduction for fees paid indirectly:
Net expenses 2.93% 2.66% 4.11%**
Net investment loss (1.60)% (1.29)% (1.68)%**
Ratios with waiver of fees by PIM and reduction for fees paid indirectly:
Net expenses 2.51% 2.32% 3.80%**
Net investment loss (1.18)% (0.95)% (1.36)%**
- ------------------------------------------------------------------------------------------------------------------------
(a) Class C shares were first publicly offered on February 21, 2004.
(b) Not annualized.
* 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 with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
26 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Notes to Financial Statements | 12/31/08
1. Organization and Significant Accounting Policies
Pioneer Growth Leaders Fund (the Fund), formerly known as Pioneer Papp Stock
Fund, is one of seven series of portfolios comprising Pioneer Series Trust II
(the Trust), a Delaware statutory trust registered under the Investment Company
Act of 1940 as a diversified, open-end management investment company. The
investment objective of the Fund is long-term capital growth.
The Fund offers three classes of shares -- Class A, Class B, and Class C
shares. Class B and Class C shares were first publicly offered on February 21,
2004. Class R shares ceased operations on February 1, 2007. Each class of
shares represents an interest in the same portfolio of investments of the Fund
and has identical rights (based on relative net asset values) to assets and
liquidation proceeds. Share classes can bear different class-specific fees and
expenses such as transfer agent and distribution fees. Differences in
class-specific fees and expenses will result in differences in net investment
income and, therefore, the payment of different dividends by each class. The
Amended and Restated Declaration of Trust of the Fund gives the Board the
flexibility to specify either per share voting or dollar-weighted voting when
submitting matters for shareholder approval. Under per share voting, each share
of a class of the Fund is entitled to one vote. Under dollar-weighted voting, a
shareholder's voting power is determined not by the number of shares owned, but
by the dollar value of the shares on the record date. Share classes have
exclusive voting rights with respect to matters affecting only that class,
including with respect to the distribution plan for that class.
The Fund's financial statements have been prepared in conformity with U.S.
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 income, expenses and gains or losses on investments during the
reporting year. Actual results could differ from those estimates.
At times, the Fund's investments may represent industries or industry sectors
that are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors. The Fund's prospectus contains unaudited information
regarding the Fund's principal risks. Please refer to this document when
considering the Fund's principal risks.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 27
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements, which are consistent with
those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Fund is computed once daily, on each day the New York Stock Exchange
(NYSE) is open, as of the close of regular trading on the NYSE. 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 prices and/or quotations are not readily
available are valued using fair value methods pursuant to procedures adopted
by the Board of Trustees. Trading in foreign securities is substantially
completed each day at various times prior to the close of the NYSE. The
values of such securities used in computing the net asset value of the
Fund's shares are determined as of such times. The Fund may also use fair
value methods to value a security, including a non-U.S. security, when the
closing market price on the principal exchange where the security is traded
no longer reflects the value of the security. At December 31, 2008, there
were no securities that were valued using fair value methods. Temporary cash
investments are valued at amortized cost which approximates market value.
Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities where the ex-dividend date may have passed
are recorded as soon as the Fund becomes aware of the ex-dividend data in
the exercise of reasonable diligence. Interest income is recorded on the
accrual basis. Dividend and interest income are reported net of
unrecoverable foreign taxes withheld at the applicable country rates.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. 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
shareowners. Therefore, no federal income tax provision is required. Tax
years for the prior three fiscal years remain subject to examination by tax
authorities.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the sources of the Fund's distributions may be
28 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
shown in the accompanying financial statements as from or in excess of net
investment income or as from net realized gain on investment transactions,
or as from paid-in capital, depending on the type of book/tax differences
that may exist.
The Fund has elected to defer approximately $25,505 of capital losses
recognized between November 1, 2008 and December 31, 2008 to its fiscal year
ending December 31, 2009.
At December 31, 2008, the Fund has reclassified $21,052 to decrease paid in
capital, $20,960 to decrease accumulated net investment loss and $92 to
decrease accumulated net realized loss on investments to reflect permanent
book/tax differences. The reclassification has no impact on the net asset
value of the Fund and presents the Fund's capital accounts on a tax basis.
The tax character of distributions paid during the years ended December 31,
2008 and December 31, 2007 was as follows:
2008 2007
Distributions paid from:
Ordinary income $ -- $ 7,732
Long-term capital gain 3,497,974 7,936,175
- ------------------------------------------------------------------------------
Total $ 3,497,974 $7,943,907
==============================================================================
The following shows the components of distributable earnings on a federal
income tax basis at December 31, 2008:
2008
Distributable earnings:
Post-October loss deferred $ (25,505)
Unrealized appreciation 4,860,880
- ------------------------------------------------------------------------------
Total $4,835,375
==============================================================================
C. 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 a wholly owned indirect subsidiary of UniCredit S.p.A. (UniCredit),
earned approximately $2,520 in underwriting commissions on the sale of Class
A shares during the year ended December 31, 2008.
D. Class Allocations
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.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 29
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 (see Note 4). Shareowners of each class participate in all
expenses and fees paid to the transfer agent, Pioneer Investment Management
Shareholder Services, Inc. (PIMSS), for its services, which are allocated
based on the number of accounts in each class and the ratable allocation of
related out-of-pocket expenses (see Note 3).
Distributions to shareowners 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 and at the same time, except that Class A,
Class B, and Class C shares can bear different transfer agent and
distribution expense rates.
E. Securities Lending
The Fund lends securities in its portfolio to certain broker-dealers or
other institutional investors. When entering into a securities loan
transaction, the Fund typically receives cash collateral from the borrower
equal to at least the value of the securities loaned, which is invested in
temporary cash investments. Credit Suisse, New York Branch, as the Fund's
security lending agent, manages the Fund's securities lending collateral.
The income earned on the investment of collateral is shared with the
borrower and the lending agent in payment of any rebate due to the borrower
with respect to the securities loan, and in compensation for the lending
agent's services to the Fund. The Fund also continues to receive interest or
payments in lieu of dividends on the securities loaned. Gain or loss on the
value of the loaned securities that may occur during the term of the loan
will be for the account of the Fund. The amount of the collateral is
required to be adjusted daily to reflect any price fluctuation in the value
of the loaned securities. The Fund has the right, under the lending
agreement, to terminate the loan and recover the securities from the
borrower with prior notice. The Fund will be required to return the cash
collateral to the borrower and could suffer a loss if the value of the
collateral, as invested, has declined.
2. Management Agreement
Pioneer Investment Management, Inc. (PIM), a wholly owned indirect subsidiary
of UniCredit, manages the Fund's portfolio. Management fees are calculated
daily at the annual rate equal to 0.75% of the Fund's average daily net assets
up to $1 billion; and 0.70% on assets over $1 billion. For the year ended
December 31, 2008, the effective management fee (net of waivers and/or
assumption of expenses) was equivalent to a rate of 0.75% of the Fund's average
net assets.
30 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
PIM, and not the Fund, pays a portion of the fee it receives from the Fund to
L. Roy Papp & Associates LLP (Papp) as compensation for its sub-advisory
services to the Fund.
In addition, under the management and administrative agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. Included in "Due to affiliates" reflected on
the Statement of Assets and Liabilities is $424 in management fees,
administrative costs and certain other fees payable to PIM at December 31,
2008.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Fund at negotiated rates.
In addition, the Fund reimbursed PIMSS for out-of-pocket expenses related to
shareholder communications activities such as proxy and statement mailings,
outgoing phone calls and omnibus relationship contracts. For the year ended
December 31, 2008, such out-of-pocket expenses by class of shares were as
follows:
Shareholder Communications:
Class A $18,463
Class B 858
- -------------------------------------------------------------------------------
Total $19,321
===============================================================================
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $10,192 in transfer agent fees and shareholder communications
expenses payable to PIMSS at December 31, 2008.
4. Distribution and Service Plans
The Fund adopted a Distribution Plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940 with respect to its Class A, Class B and Class C shares.
Pursuant to the Plan, the Fund pays PFD 0.25% of the average daily net assets
attributable to Class A shares as compensation for personal services and/or
account maintenance services or distribution services with regard to Class A
shares. Pursuant to the Plan, the Fund pays PFD 1.00% of the average daily net
assets attributable to Class B and Class C shares. The fee for Class B and
Class C shares consists of a 0.25% service fee and 0.75% distribution fee paid
as compensation for personal services and/or account maintenance services or
distribution services with regard to Class B shares and Class C shares. Prior
to February 1, 2008, PFD was reimbursed under the Distribution Plan for
distribution expenses in an amount of up to 0.25% of the average daily net
assets attributable to Class A shares. Included in "Due to affiliates"
reflected on the Statement of Assets and Liabilities is $162 in distribution
fees payable to PFD at December 31, 2008.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 31
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 18 months of
purchase. Class B shares that are redeemed within five years of purchase are
subject to a CDSC at declining rates beginning at 4.00%, 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%, based on the lower
of cost or market value of shares being redeemed. Proceeds from the CDSCs are
paid to PFD. For the year ended December 31, 2008, CDSCs in the amount of
$1,711 were paid to PFD.
5. Expense Offset Arrangements
The Fund has entered into certain expense offset arrangements with PIMSS
resulting in a reduction in the Fund's total expenses due to interest earned on
cash held by PIMSS. For the year ended December 31, 2008, the Fund's expenses
were reduced by $1,201 under such arrangements.
6. New Pronouncement
In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures
about Derivative Instruments and Hedging Activities ("SFAS 161"), was issued
and is effective for fiscal years beginning after November 15, 2008. SFAS 161
requires enhanced disclosures about an entity's derivative and hedging
activities. Management is currently evaluating the impact the adoption of SFAS
161 will have on the Fund's financial statement disclosures.
32 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Pioneer Series Trust II
and the Shareowners of Pioneer Growth Leaders Fund:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of Pioneer
Growth Leaders Fund, one of the series constituting Pioneer Series Trust II
(the "Trust"), including the schedule of investments, as of December 31, 2008,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended and
financial highlights for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Trust'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 the standards of the Public Company
Accounting Oversight Board (United States). 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. We were not engaged to perform an audit of the Trust's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Trust's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of December 31, 2008, by correspondence
with the custodian and brokers. 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 Growth Leaders Fund of the Pioneer Series Trust II at December 31,
2008, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended and financial
highlights for each of the periods indicated therein, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 18, 2009
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 33
Approval of Investment Sub-Advisory Agreement (unaudited)
Pioneer Investment Management, Inc. (PIM) serves as the Fund's investment
adviser pursuant to an investment advisory agreement between PIM and the Fund.
PIM has retained L. Roy Papp & Associates, Inc. to serve as the sub-adviser to
the Fund pursuant to a sub-advisory agreement between PIM and the sub-adviser.
At a meeting held on January 8, 2008, the Trustees of the Fund approved an
amended and restated investment advisory agreement between the Fund and PIM.
Shareholders of the Fund approved the amended and restated investment advisory
agreement on May 13, 2008. The material factors and conclusions with respect
thereto that formed the basis for the Trustees' approval of the amended and
restated investment advisory agreement are included in the Fund's semi-annual
report for the period ended June 30, 2008.
At a meeting held on November 11, 2008, based on their evaluation of the
information provided by PIM and the sub-adviser, the Trustees of the Fund,
including the independent Trustees voting separately, unanimously approved the
continuation of the sub-advisory agreement for the Fund for another year. In
considering the continuation of the sub-advisory agreement, the Trustees
considered various factors that they determined were relevant, including the
factors described below. The Trustees did not identify any single factor as the
controlling factor in determining to approve the continuation of the sub-
advisory agreement.
Nature, Extent and Quality of Services
The Trustees considered the nature, extent and quality of the services provided
to the Fund by the sub-adviser, taking into account the investment objective
and strategy of the Fund and the information related to the Fund provided to
the Trustees at each quarterly meeting. The Trustees reviewed the terms of the
sub-advisory agreement. The Trustees also reviewed the sub-adviser's investment
approach for the Fund and its research process. The Trustees considered the
resources of the sub-adviser and the personnel of the sub-adviser who provide
investment management services to the Fund.
Based on these considerations, the Trustees concluded that the nature, extent
and quality of services provided by the sub-adviser to the Fund were
satisfactory and consistent with the terms of the sub-advisory agreement.
Performance of the Fund
The Trustees considered the performance results of the Fund over various time
periods. They reviewed information comparing the Fund's performance with the
average performance of its peer group of funds as classified by
34 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Morningstar, Inc. (Morningstar), an independent provider of investment company
data, and with the performance of the Fund's benchmark index. The Trustees
considered that the Fund's annualized total return was in the third quintile of
its Morningstar category for the one year period ended June 30, 2008 and that
the Fund's annualized total return was in the fifth quintile of its Morningstar
category for the three year period ended June 30, 2008. (In all quintile
rankings referred to throughout this disclosure, first quintile is most
favorable to the Fund's shareowners. Thus, highest relative performance would
be first quintile and lowest relative expenses would also be first quintile.)
The Trustees agreed that they would continue to monitor the performance of the
Fund closely.
Sub-advisory Fee and Expenses
The Trustees considered the fees payable to the sub-adviser under the sub-
advisory agreement. They also considered that PIM, not the Fund, paid the
sub-adviser out of the management fees paid to PIM under the investment
advisory agreement. The Trustees considered information regarding the
management fees and expenses of the Fund in comparison to the management fees
of its peer group of funds as classified by Morningstar and the expense ratios
of a peer group of funds selected on the basis of criteria determined by the
independent Trustees for this purpose using data provided by Strategic Insight
Mutual Fund Research and Consulting, LLC (Strategic Insight), an independent
third party.
The Trustees considered that the Fund's management fee for the twelve months
ended June 30, 2008 was in the third quintile relative to the management fees
paid by other funds in its peer group Morningstar category for the comparable
period. The Trustees also considered that the Fund's expense ratio for the
twelve months ended June 30, 2008 was in the fourth quintile relative to its
Strategic Insight peer group.
The Trustees also reviewed the advisory fees charged by the sub-adviser to its
separate account clients with investment strategies that were similar to the
Fund. The Trustees noted that the fee rates for those separate accounts
generally were higher than the sub-advisory fees paid to the sub-adviser with
respect to the Fund.
The Trustees concluded that the sub-advisory fee payable by PIM to the sub-
adviser of the Fund was reasonable in relation to the nature and quality of
services provided by the sub-adviser. The Trustees also concluded that the
Fund's expense ratio was reasonable, taking into account the quality of
services provided by PIM and the sub-adviser.
Profitability
The Trustees considered information provided by PIM regarding the profitability
of PIM with respect to the advisory services provided by PIM to the Fund,
including the methodology used by PIM in allocating certain of its costs
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 35
to the management of the Fund. They also considered PIM's profit margin in
connection with the overall operation of the Fund. The Trustees further
considered the sub-advisory fees received by the sub-adviser with respect to
the Fund and the percentage that such fees represented of the sub-adviser's
overall revenues (for the 12-month period ended December 31, 2007). They also
reviewed the financial results realized by PIM and its affiliates from non-fund
businesses. The Trustees considered the profit margins with respect to the Fund
in comparison to the limited industry data available and noted that the
profitability of any adviser was affected by numerous factors, including its
organizational structure and method for allocating expenses. The Trustees
recognized that each of PIM and the sub-adviser should be entitled to earn a
reasonable level of profit for the services provided to the Fund. The Trustees
concluded that the profit margins with respect to the management of the Fund
were not unreasonable.
Economies of Scale
The Trustees considered the economies of scale with respect to the management
of the Fund, whether the Fund had appropriately benefited from any economies of
scale, and whether there was potential for realization of any further economies
of scale. The Trustees concluded that, because of the breakpoints in the
management and sub-advisory fee schedules and the reduced fee rates above
certain asset levels, any perceived or potential economies of scale would be
shared with the Fund.
Other Benefits
The Trustees considered that the sub-adviser reported that it does not receive
any other benefits from its relationship with the Fund.
Conclusion
After consideration of the factors described above as well as other factors,
the Trustees, including all of the independent Trustees, concluded that the
sub-advisory agreement for the Fund between PIM and the sub-adviser, including
the fees payable thereunder, was fair and reasonable and voted to approve the
continuation of the sub-advisory agreement for the Fund.
36 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Trustees, Officers and Service Providers
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerinvestments.com. This information is also available
on the Securities and Exchange Commission's web site at http://www.sec.gov.
Trustees and Officers
The Board of Trustees provides broad supervision over the Fund's affairs. The
officers of the Fund are responsible for the Fund's operations. The Trustees
and officers are listed below, together with their principal occupations during
the past five years. Trustees who are interested persons of the Fund within the
meaning of the 1940 Act are referred to as Interested Trustees. Trustees who
are not interested persons of the Fund are referred to as Independent Trustees.
Each of the Trustees serves as a trustee of each of the 76 U.S. registered
investment portfolios for which Pioneer serves as investment adviser (the
"Pioneer Funds"). The address for all Trustees and all officers of the Fund is
60 State Street, Boston, Massachusetts 02109.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 37
Interested Trustees
Position Held Length of Service
Name and Age with the Fund and Term of Office
John F. Cogan, Jr. (82)* Chairman of the Board, Trustee since 2003.
Trustee and President Serves until a successor
trustee is elected or
earlier retirement or
removal.
- -------------------------------------------------------------------------------
Daniel K. Kingsbury (50)* Trustee and Executive Trustee since 2008.
Vice President Serves until a successor
trustee is elected or
earlier retirement or
removal.
- -------------------------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Trustee
John F. Cogan, Jr. (82)* Deputy Chairman and a Director of Pioneer Global Asset None
Management S.p.A. ("PGAM"); Non-Executive Chairman and a
Director of Pioneer Investment Management USA Inc. ("PIM-USA");
Chairman and a Director of Pioneer; Chairman and Director of
Pioneer Institutional Asset Management, Inc. (since 2006);
Director of Pioneer Alternative Investment Management Limited
(Dublin); President and a Director of Pioneer Alternative
Investment Management (Bermuda) Limited and affiliated funds;
Director of PIOGLOBAL Real Estate Investment Fund (Russia)
(until June 2006); Director of Nano-C, Inc. (since 2003); Director
of Cole Management Inc. (since 2004); Director of Fiduciary
Counseling, Inc.; President and Director of Pioneer Funds
Distributor, Inc. ("PFD") (until May 2006); President of all of
the Pioneer Funds; and Of Counsel, Wilmer Cutler Pickering Hale and
Dorr LLP
- ---------------------------------------------------------------------------------------------------------------------
Daniel K. Kingsbury (50)* Director, CEO and President of Pioneer Investment Management None
USA Inc. (since February 2007); Director and President of
Pioneer Investment Management, Inc. and Pioneer Institutional
Asset Management, Inc. (since February 2007); Executive Vice
President of all of the Pioneer Funds (since March 2007);
Director of Pioneer Global Asset Management S.p.A. (since April
2007); Head of New Markets Division, Pioneer Global Asset
Management S.p.A. (2000 - 2007)
- ---------------------------------------------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are
officers or directors of the Fund's investment adviser and certain of its
affiliates.
38 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Independent Trustees
Position Held Length of Service
Name and Age with the Fund and Term of Office
David R. Bock (65) Trustee Trustee since 2005.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------
Mary K. Bush (60) Trustee Trustee since 2003.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Trustee
David R. Bock (65) Executive Vice President and Chief Financial Officer, I-trax, Inc. Director of Enterprise
(publicly traded health care services company) (2004 - 2007); Community Investment, Inc.
Partner, Federal City Capital Advisors (boutique merchant bank) (privately-held affordable
(1997 to 2004 and 2008 - present); and Executive Vice housing finance company);
President and Chief Financial Officer, Pedestal Inc. (internet- and Director of New York
based mortgage trading company) (2000 - 2002) Mortgage Trust (publicly
traded mortgage REIT)
- -------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (60) President, Bush International, LLC (international financial Director of Marriott
advisory firm) International, Inc.; Director
of Discover Financial Services
(credit card issuer and
electronic payment services);
Director of Briggs & Stratton
Co. (engine manufacturer);
Director of UAL Corporation
(airline holding company);
Director of Mantech
International Corporation
(national security, defense, and
intelligence technology firm);
and Member, Board of
Governors, Investment
Company Institute
- -------------------------------------------------------------------------------------------------------------------------
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 39
Independent Trustees (continued)
Position Held Length of Service
Name and Age with the Fund and Term of Office
Benjamin M. Friedman (64) Trustee Trustee since 2008.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------------
Margaret B.W. Graham (61) Trustee Trustee since 2003.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------------
Thomas J. Perna (58) Trustee Trustee since 2006.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------------
Marguerite A. Piret (60) Trustee Trustee since 2003.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------------
Stephen K. West (80) Trustee Trustee since 2008.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Trustee
Benjamin M. Friedman (64) Professor, Harvard University Trustee, Mellon Institutional
Funds Investment Trust and
Mellon Institutional Funds
Master Portfolio (oversees 17
portfolios in fund complex)
- -------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (61) Founding Director, Vice President and Corporate Secretary, The None
Winthrop Group, Inc. (consulting firm); and Desautels Faculty of
Management, McGill University
- -------------------------------------------------------------------------------------------------------------------------------
Thomas J. Perna (58) Chief Executive Officer, Quadriserv, Inc. (technology products for None
securities lending industry) (2008 - present); Private investor
(2004 - 2008); and Senior Executive Vice President, The Bank of
New York (financial and securities services) (1986 - 2004)
- -------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (60) President and Chief Executive Officer, Newbury, Piret & Company, Director of New America
Inc. (investment banking firm) High Income Fund, Inc.
(closed-end investment
company)
- -------------------------------------------------------------------------------------------------------------------------------
Stephen K. West (80) Senior Counsel, Sullivan & Cromwell LLP (law firm) Director, The Swiss Helvetia
Fund, Inc. (closed-end
investment company)
- -------------------------------------------------------------------------------------------------------------------------------
40 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
Fund Officers
Position Held Length of Service
Name and Age with the Fund and Term of Office
Dorothy E. Bourassa (60) Secretary Since 2003. Serves at
the discretion of the
Board.
- --------------------------------------------------------------------------
Christopher J. Kelley (44) Assistant Secretary Since 2003. Serves at
the discretion of the
Board.
- --------------------------------------------------------------------------
Mark E. Bradley (49) Treasurer Since 2008. Serves at
the discretion of the
Board.
- --------------------------------------------------------------------------
Luis I. Presutti (43) Assistant Treasurer Since 2003. Serves at
the discretion of the
Board.
- --------------------------------------------------------------------------
Gary Sullivan (50) Assistant Treasurer Since 2003. Serves at
the discretion of the
Board.
- --------------------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Officer
Dorothy E. Bourassa (60) Secretary of PIM-USA; Senior Vice President - Legal of Pioneer; None
Secretary/Clerk of most of PIM-USA's subsidiaries; and Secretary
of all of the Pioneer Funds since September 2003 (Assistant
Secretary from November 2000 to September 2003)
- ----------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (44) Associate General Counsel of Pioneer since January 2008 and None
Assistant Secretary of all of the Pioneer Funds since September
2003; Vice President and Senior Counsel of Pioneer from July
2002 to December 2007
- ----------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (49) Vice President - Fund Accounting, Administration and None
Controllership Services of Pioneer; and Treasurer of all of
the Pioneer Funds since March 2008; Deputy Treasurer of Pioneer
from March 2004 to February 2008; Assistant Treasurer of all of
the Pioneer Funds from March 2004 to February 2008; and Treasurer
and Senior Vice President, CDC IXIS Asset Management Services
from 2002 to 2003
- ----------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (43) Assistant Vice President - Fund Accounting, Administration and None
Controllership Services of Pioneer; and Assistant Treasurer of all
of the Pioneer Funds
- ----------------------------------------------------------------------------------------------------------------------
Gary Sullivan (50) Fund Accounting Manager - Fund Accounting, Administration and None
Controllership Services of Pioneer; and Assistant Treasurer of all
of the Pioneer Funds
- ----------------------------------------------------------------------------------------------------------------------
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 41
Fund Officers (continued)
Position Held Length of Service
Name and Age with the Fund and Term of Office
Katherine Kim Sullivan (35) Assistant Treasurer Since 2003. Serves at
the discretion of the
Board.
- --------------------------------------------------------------------------------
Teri W. Anderholm (49) Chief Compliance Officer Since 2007. Serves at
the discretion of the
Board.
- --------------------------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Officer
Katherine Kim Sullivan (35) Fund Administration Manager - Fund Accounting, Administration None
and Controllership Services since June 2003 and Assistant
Treasurer of all of the Pioneer Funds since September 2003;
Assistant Vice President - Mutual Fund Operations of State
Street Corporation from June 2002 to June 2003 (formerly
Deutsche Bank Asset Management)
- ---------------------------------------------------------------------------------------------------------------------
Teri W. Anderholm (49) Chief Compliance Officer of Pioneer since December 2006 and None
of all the Pioneer Funds since January 2007; Vice President and
Compliance Officer, MFS Investment Management (August 2005
to December 2006); Consultant, Fidelity Investments (February
2005 to July 2005); Independent Consultant (July 1997 to
February 2005)
- ---------------------------------------------------------------------------------------------------------------------
42 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
This page for your notes.
Pioneer Growth Leaders Fund | Annual Report | 12/31/08 43
This page for your notes.
44 Pioneer Growth Leaders Fund | Annual Report | 12/31/08
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:
- --------------------------------------------------------------------------------
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our internet e-mail address ask.pioneer@pioneerinvestments.com
(for general questions about Pioneer only)
Visit our web site: pioneerinvestments.com
This report must be accompanied by a prospectus.
The Fund files a complete schedule of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Pioneer Growth
Opportunities Fund
- --------------------------------------------------------------------------------
Annual Report | December 31, 2008
- --------------------------------------------------------------------------------
Ticker Symbols:
Class A PGOFX
Class B GOFBX
Class C GOFCX
Class Y GROYX
[LOGO] PIONEER
Investments(R)
visit us: pioneerinvestments.com
Table of Contents
Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 8
Prices and Distributions 9
Performance Update 10
Comparing Ongoing Fund Expenses 14
Schedule of Investments 16
Financial Statements 25
Notes to Financial Statements 33
Report of Independent Registered Public Accounting Firm 40
Trustees, Officers and Service Providers 41
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 1
President's Letter
Dear Shareowner,
Stock and bond markets around the globe this year have experienced one of their
most tumultuous periods in history. Investors have witnessed volatility of a
magnitude that many have never before seen. Distance often provides the best
vantage point for perspective. Still, we believe that the benefits of basic
investment principles that have stood the test of time -- even in the midst of
market turmoil -- cannot be underestimated.
First, invest for the long term. The founder of Pioneer Investments, Philip L.
Carret, began his investment career during the 1920s. One lesson he learned is
that while great prosperity affords an advantageous time for selling stocks,
extreme economic slumps can create opportunities for purchase. Indeed, many of
our portfolio managers, who follow the value-conscious investing approach of
our founder, are looking at recent market conditions as an opportunity to buy
companies whose shares we believe have been unjustifiably beaten down by
indiscriminate selling, but that we have identified as having strong prospects
over time. While investors may be facing a sustained market downturn, we
continue to believe that patience, along with staying invested in the market,
are important considerations for long-term investors.
A second principle is to stay diversified across different types of
investments. The global scope of the current market weakness poses challenges
for this basic investment axiom. But the turbulence makes now a good time to
reassess your portfolio and make sure that your investments continue to meet
your needs. We believe you should work closely with your financial advisor to
find the mix of stocks, bonds and money market assets that is best aligned to
your particular risk tolerance and investment objective.
As the investment markets sort through the continuing crisis in the financial
industry, we are staying focused on the fundamentals and risk management. With
more than 80 years of experience behind us, we have learned how to navigate
turbulent markets. At Pioneer Investments, risk management has always been a
critical part of our culture -- not just during periods of extraordinary
volatility. Our investment process is based on fundamental research,
quantitative analysis and active portfolio management. This three-pillared
process, which we apply to each of our portfolios, is supported by an
integrated team approach and is designed to carefully balance risk and reward.
While we
2 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
see potential chances for making money in many corners of the market, it takes
research and experience to separate solid investment opportunities from
speculation.
We invite you to learn more about Pioneer and our time-tested approach to
investing by consulting with your financial advisor or visiting us online at
www.pioneerinvestments.com. Thank you for investing with Pioneer.
Respectfully,
/s/ Daniel K. Kingsbury
Daniel K. Kingsbury
President and CEO
Pioneer Investment Management USA, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 3
Portfolio Management Discussion | 12/31/08
In the following interview, Brian Stack, portfolio manager of Pioneer Growth
Opportunities Fund, discusses the factors that influenced performance during
the 12-month period ended December 31, 2008.
Q How would you characterize the performance of the U.S. equity market in 2008?
A The past year was extremely difficult for investors, as the U.S. market
endured one of the worst years in its history. The leading cause of the
downturn was the ongoing fallout from the housing crisis, which led to a
virtual shutdown of the credit markets and the collapse of numerous financial
institutions throughout the United States and Europe. These events, taken
together, weighed heavily on global economic growth and severely depressed
the corporate earnings outlook for 2008 and 2009. With this as the backdrop,
the Fund's benchmark, the Russell 2000 Growth Index, returned -38.54%. The
bulk of the decline occurred in the September - November interval, during
which the index declined by nearly 40% amid the intensification of the
financial meltdown. While performance improved somewhat in December in
reaction to the U.S. government's extraordinary efforts to alleviate the
effects of the crisis, the U.S. market nonetheless finished 2008 deeply in
the red.
Q How did the Fund perform in this environment over the 12-month period ended
December 31, 2008?
A As would be expected at such a challenging time for the markets, the Fund
produced a sharply negative absolute return. Its Class A shares returned
-35.39% at net asset value during the 12-month period ended December 31,
2008, outperforming the Russell 2000 Growth Index. Over the same 12-month
period, the average return for the 603 Small Cap Growth Funds tracked by
Lipper, Inc. was -42.10%.
The Fund's 12-month results reflect the performance of two management teams.
The current team took over on September 2, 2008. While we were disappointed
with the Fund's overall one-year performance, we are encouraged that our
management style did help to improve the Fund's performance relative to its
benchmark by year-end.
The Fund's full-year performance was helped by stock selection in the
consumer discretionary and health care sectors, but selection in industrials
and energy detracted. Among the major contributors were the medical device
maker Thoratec, the food supplier American Italian Pasta, and the drug
4 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
maker Cubist Pharmaceuticals. Key detractors included the industrial
filtration supplier Polypore International, the coal miner Alpha Natural
Resources, and the investment manager Affiliated Managers Group. With the
exception of Alpha Natural Resources and Affiliated Managers Group, all
stocks remained in the portfolio as of December 31.
Q How would you describe your investment approach?
A When we took over as managers of the Fund in early September, we did so with
a mandate to apply a purely fundamental, bottom-up stock-picking strategy. In
contrast, the previous team managed the Fund using a hybrid approach that
employed both quantitative screens and fundamental research.
Our research-based approach employs the style known as "GARP," which stands
for "growth at a reasonable price." We look for companies that are growing
earnings faster than the market, but we also are sensitive to valuations. We
strive to take an independent-minded, longer-term view when considering
candidates for inclusion in the portfolio. We are attracted to companies
whose stock prices do not fairly reflect their underlying growth potential
and risk profile. These inefficiently-priced stocks typically fall into one
of three categories: unseasoned companies that have not yet drawn the
widespread appreciation of investors, companies that are known but not well
understood by investors, and companies whose short-term difficulties may have
been overly discounted into their share price.
We eliminate stocks from the portfolio when a) we feel the share price fully
reflects the company's fundamental outlook, b) our fundamental analysis
changes or is disconfirmed by subsequent events, or c) a superior investment
idea is found.
We would expect to maintain 80 to 100 holdings in the portfolio on average, a
reduction from the previous number of Fund holdings, which averaged about 200
or more individual positions.
Q What are some good examples of the type of companies in which you invest?
A We look for companies that have exceptional secular or cyclical growth
prospects. "Secular" growers typically offer unique and innovative products
addressing a poorly served market need, while "cyclical" growers are usually
more mature companies that can still generate growth due to imbalances in the
supply/demand fundamentals that characterize their industry. Typically, we
would expect the portfolio to be more heavily exposed to companies in the
secular growth category.
One such company is Priceline. Although the travel industry is experiencing
severe weakness, Priceline is expanding its geographic footprint into
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 5
Europe, which represents a relatively fragmented marketplace for
travel-related services. In the United States, the company's "name your own
price" approach is allowing hoteliers, airlines and auto rental companies to
sell excess inventory. Priceline is gaining market share, and we believe the
stock, which gained ground in the fourth quarter of 2008, can continue to
perform well in 2009.
Another example of the type of company in which we invest is Grand Canyon
Education, which provides online degree programs in education, business and
healthcare. For-profit education companies are capturing a growing share of
the market for post-secondary education. They also tend to be countercyclical
(meaning they can do well when the economy weakens) since consumers
frequently return to school to develop new skills and credentials when the
job market is soft.
American Italian Pasta (AIPC), a supplier of dry pasta products to retailers
and institutional food service providers, also helps illustrate our
investment style. We see AIPC as a good business whose stock was unfairly
discounted due to transitional difficulties. With new management in place and
an accounting controversy resolved, the company is prospering as consumers
"trade down" to less expensive fare and as retailers devote greater shelf
space to more profitable private label products.
It should be evident from the stocks mentioned above that the Fund's
portfolio can be fairly eclectic. In our view, this helps illustrate the
benefit of a pure bottom-up approach. Without being constrained by the need
to maintain certain sector weightings, we are able to construct a portfolio
of what we believe are the very best growth opportunities in the small-cap
asset class.
Q What are your thoughts on the year ahead?
A Expecting that the economic backdrop will remain challenging in 2009, we are
not counting on macroeconomic tailwinds as a driver of the Fund's performance
during the year ahead. We believe, however, that recent events have created
opportunities for proficient stock-pickers. According to Merrill Lynch, 2008
brought the worst performance for small-cap stocks since 1973. The market
action resulted in a massive selloff process, where virtually all stocks
plunged without regard for company-specific fundamentals. This has created
what we feel is a rare opportunity to purchase compelling, bottom-up growth
stories at very attractive valuations. Finding such stocks will be the focal
point of our efforts during the year ahead.
Note to Shareholders: Brian Stack became portfolio manager of the Pioneer
Growth Opportunities Fund on September 2, 2008. The Fund's previous co-managers
were Peter Wiley and Diego Franzin. Mr. Wiley remains a member of the U.S.
Small Cap Growth Team and Portfolio Manager of Pioneer Small Cap Value Fund.
Mr. Franzin was recently promoted to Head of Global Quantitative Research.
6 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
Please refer to the Schedule of Investments on pages 16-24 for a full listing
of Fund securities.
Investments in small companies may offer the potential for higher returns, but
are also subject to greater short-term price fluctuations than larger, more
established companies. Investing in foreign and/or emerging markets securities
involves risks relating to interest rates, currency exchange rates, economic,
and political conditions. At times, the Fund's investments may represent
industries or industry sectors that are interrelated or have common risks,
making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These opinions should not be relied upon for any other purposes.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 7
Portfolio Summary | 12/31/08
Portfolio Diversification
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 78.6%
Temporary Cash Investments 18.7%
Depositary Receipts for International Stocks 1.5%
Exchange Traded Funds 1.2%
Sector Distribution
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Health Care 25.2%
Information Technology 23.1%
Industrials 17.2%
Consumer Discretionary 11.1%
Energy 8.2%
Consumer Staples 5.3%
Materials 4.0%
Financials 4.0%
Utilities 1.9%
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)*
1. Quanta Services, Inc. * 2.39%
2. Exterran Holdings, Inc. 2.33
3. Priceline.com, Inc. 2.23
4. KBR, Inc. 2.03
5. Advanced Magnetics, Inc. 2.00
6. Comscore, Inc. 1.97
7. Comstock Resources, Inc. 1.95
8. American Italian Pasta Co. 1.88
9. Polypore International, Inc 1.86
10. Grand Canyon Education, Inc. 1.81
* This list excludes temporary cash investments and derivative instruments. The
portfolio is actively managed, and current holdings may be different. The
holdings listed should not be considered recommendations to buy or sell any
security listed.
8 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
Prices and Distributions | 12/31/08
Net Asset Value per Share
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class 12/31/08 12/31/07
- --------------------------------------------------------------------------------
A $ 15.95 $ 25.24
- --------------------------------------------------------------------------------
B $ 13.90 $ 22.42
- --------------------------------------------------------------------------------
C $ 14.02 $ 22.57
- --------------------------------------------------------------------------------
Y $ 16.26 $ 25.59
- --------------------------------------------------------------------------------
Distributions per Share: 1/1/08-12/31/08
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net Investment Short-Term Long-Term
Class Income Capital Gains Capital Gains
- --------------------------------------------------------------------------------
A $ -- $ -- $ 0.3110
- --------------------------------------------------------------------------------
B $ -- $ -- $ 0.3110
- --------------------------------------------------------------------------------
C $ -- $ -- $ 0.3110
- --------------------------------------------------------------------------------
Y $ -- $ -- $ 0.3110
- --------------------------------------------------------------------------------
Index Definitions
- --------------------------------------------------------------------------------
The Russell 2000 Growth Index measures the performance of U.S. small-cap growth
stocks. Index returns are calculated monthly, assume reinvestment of dividends
and, unlike Fund returns, do not reflect any fees, charges or expenses. You
cannot invest directly in an index.
The index defined here pertains to the "Value of $10,000 Investment" charts on
pages 10-13.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 9
Performance Update | 12/31/08 Class A Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Growth Opportunities Fund at public offering price,
compared to that of the Russell 2000 Growth Index.
Average Annual Total Returns
(As of December 31, 2008)
- ------------------------------------------------------------------
Net Asset Public Offering
Period Value (NAV) Price (POP)
- ------------------------------------------------------------------
10 Years -1.11% -1.67%
5 Years -3.62 -4.76
1 Year -35.39 -39.11
- ------------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ------------------------------------------------------------------
Gross Net
- ------------------------------------------------------------------
1.20% 1.20%
- ------------------------------------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer
Growth
Opportunities Russell 2000
Fund Growth Index
12/98 9,425 10,000
9,679 14,309
12/00 9,241 11,100
11,243 10,075
12/02 7,077 7,026
10,167 10,437
12/04 12,427 11,931
12,994 12,426
12/06 13,615 14,084
13,084 15,077
12/08 8,454 9,266
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
NAV results represent the percent change in net asset value per share. Returns
would have been lower had sales charges been reflected. POP returns reflect
deduction of maximum 5.75% sales charge. All results are historical and assume
the reinvestment of dividends and capital gains. Other share classes are
available for which performance and expenses will differ.
Pioneer Growth Opportunities Fund was created through the reorganization of
predecessor Safeco Growth Opportunities Fund on December 10, 2004. The
performance of Class A shares of the Fund prior to December 10, 2004 is the
performance of the predecessor fund's Class A shares, which has been restated
to reflect differences in any applicable sales charges (but not differences in
expenses). If all the expenses of the Fund were reflected, the performance
would be lower.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds and can be rescinded at any time. See the
prospectus and financial statements for complete details.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
10 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
Performance Update | 12/31/08 Class B Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Growth Opportunities Fund, compared to that of the
Russell 2000 Growth Index.
Average Annual Total Returns
(As of December 31, 2008)
- ----------------------------------------------------------------
If If
Period Held Redeemed
- ----------------------------------------------------------------
10 Years -2.01% -2.01%
5 Years -4.69 -4.69
1 Year -36.41 -38.89
- ----------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ----------------------------------------------------------------
Gross Net
- ----------------------------------------------------------------
2.43% 2.43%
- ----------------------------------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer
Growth
Opportunities Russell 2000
Fund Growth Index
12/98 10,000 10,000
10,162 14,309
12/00 9,644 11,100
11,648 10,075
12/02 7,276 7,026
10,378 10,437
12/04 12,580 11,931
13,030 12,426
12/06 13,518 14,084
12,834 15,077
12/08 8,161 9,266
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
"If Held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. "If Redeemed"
returns reflect the deduction of applicable contingent deferred sales charge
(CDSC). Class B shares reflect the deduction of the maximum applicable CDSC.
The maximum CDSC is 4.0% and declines over five years.
All results are historical and assume the reinvestment of dividends and capital
gains. Other share classes are available for which performance and expenses
will differ.
Pioneer Growth Opportunities Fund was created through the reorganization of
predecessor Safeco Growth Opportunities Fund on December 10, 2004. The
performance of Class B shares of the Fund prior to December 10, 2004 is the
performance of the predecessor fund's Class B shares, which has been restated
to reflect differences in any applicable sales charges (but not differences in
expenses). If all the expenses of the Fund were reflected, the performance
would be lower.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds and can be rescinded at any time. See the
prospectus and financial statements for complete details.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 11
Performance Update | 12/31/08 Class C Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Growth Opportunities Fund, compared to that of the
Russell 2000 Growth Index.
Average Annual Total Returns
(As of December 31, 2008)
- ----------------------------------------------------------------
If If
Period Held Redeemed
- ----------------------------------------------------------------
Life-of-Class
(4/30/00) -2.80% -2.80%
5 Years -4.56 -4.56
1 Year -36.30 -36.30
- ----------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ----------------------------------------------------------------
Gross Net
- ----------------------------------------------------------------
2.25% 2.25%
- ----------------------------------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer
Growth
Opportunities Russell 2000
Fund Growth Index
4/00 10,000 10,000
12/00 9,173 7,895
11,075 7,167
12/02 6,924 4,998
9,876 7,424
12/04 11,971 8,486
12,429 8,839
12/06 12,918 10,018
12,278 10,724
12/08 7,821 6,591
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Class C shares held for less than one year are also subject to a 1% contingent
deferred sales charge (CDSC). "If Held" results represent the percent change in
net asset value per share. Returns would have been lower had sales charges been
reflected. All results are historical and assume the reinvestment of dividends
and capital gains. Other share classes are available for which performance and
expenses will differ.
Pioneer Growth Opportunities Fund was created through the reorganization of
predecessor Safeco Growth Opportunities Fund on December 10, 2004. The
performance of Class C shares of the Fund prior to December 10, 2004 is the
performance of the predecessor fund's Class C shares, which has been restated
to reflect differences in any applicable sales charges (but not differences in
expenses). This adjustment has the effect of reducing the previously reported
performance of predecessor fund. If all the expenses of the Fund were
reflected, the performance would be lower.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers, Fund performance would be lower. Waivers
may not be in effect for all funds and can be rescinded at any time. See the
prospectus and financial statements for complete details.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
12 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
Performance Update | 12/31/08 Class Y Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Growth Opportunities Fund, compared to that of the
Russell 2000 Growth Index.
Average Annual Total Returns
(As of December 31, 2008)
- ----------------------------------------------------------------
If If
Period Held Redeemed
- ----------------------------------------------------------------
10 Years -0.94% -0.94%
5 Years -3.30 -3.30
1 Year -35.06 -35.06
- ----------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ----------------------------------------------------------------
Gross Net
- ----------------------------------------------------------------
0.74% 0.74%
- ----------------------------------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer
Growth
Opportunities Russell 2000
Fund Growth Index
12/98 10,000 10,000
10,243 14,309
12/00 9,779 11,100
11,898 10,075
12/02 7,489 7,026
10,759 10,437
12/04 13,151 11,931
13,764 12,426
12/06 14,516 14,084
14,010 15,077
12/08 9,098 9,266
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Performance for periods prior to the inception of Class Y shares reflects the
NAV performance of the Fund's Class A shares. The performance does not reflect
differences in expenses, including the Rule 12b-1 fees applicable to Class A
shares. Since fees for Class A shares are generally higher than those of Class
Y shares, the performance shown for Class Y shares prior to their inception
would have been higher. Class Y shares are not subject to sales charges and are
available for limited groups of eligible investors, including institutional
investors.
Pioneer Growth Opportunities Fund was created through the reorganization of
predecessor Safeco Growth Opportunities Fund on December 10, 2004. The
performance of Class Y shares prior to December 10, 2004 is the performance of
the predecessor fund's Class A shares, which has not been restated to reflect
any differences in any applicable sales charges (but not differences in
expenses, including Rule 12b-1 fees). This adjustment has the effect of
reducing the previously reported performance of predecessor fund. If all the
expenses of the Fund were reflected, the performance would be lower.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds and can be rescinded at any time. See the
prospectus and financial statements for complete details.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 13
Comparing Ongoing Fund Expenses
As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
- --------------------------------------------------------------------------------
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
(1) Divide your account value by $1,000
Example: an $8,600 account value [divided by] $1,000 = 8.6
(2) Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Growth Opportunities Fund
Based on actual returns from July 1, 2008 through December 31, 2008.
- -----------------------------------------------------------------------------------------
Share Class A B C Y
- -----------------------------------------------------------------------------------------
Beginning Account $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00
Value on 7/1/08
- -----------------------------------------------------------------------------------------
Ending Account $ 716.46 $ 710.64 $ 711.02 $ 718.44
Value on 12/31/08
- -----------------------------------------------------------------------------------------
Expenses Paid $ 5.52 $ 12.13 $ 11.35 $ 3.41
During Period*
- -----------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio plus the expense
ratios of the underlying funds. The combined totals were 1.28%, 2.82%, 2.64%
and 0.79% for Class A, Class B, Class C and Class Y shares, respectively.
These combined ratios were multiplied by the average account value over the
period, and then multiplied by 184/366 (to reflect the partial year period)
to calculate the "Expenses Paid During Period" in the table above.
14 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the
5% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Growth Opportunities Fund
Based on a hypothetical 5% return per year before expenses, reflecting the
period from July 1, 2008 through December 31, 2008.
- -----------------------------------------------------------------------------------------
Share Class A B C Y
- -----------------------------------------------------------------------------------------
Beginning Account $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00
Value on 7/1/08
- -----------------------------------------------------------------------------------------
Ending Account $ 1,018.70 $ 1,010.96 $ 1,011.86 $ 1,021.17
Value on 12/31/08
- -----------------------------------------------------------------------------------------
Expenses Paid $ 6.50 $ 14.25 $ 13.35 $ 4.01
During Period*
- -----------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio plus the expense
ratios of the underlying funds. The combined totals were 1.28%, 2.82%, 2.64%
and 0.79% for Class A, Class B, Class C and Class Y shares, respectively.
These combined ratios were multiplied by the average account value over the
period, and then multiplied by 184/366 (to reflect the partial year period)
to calculate the "Expenses Paid During Period" in the table above.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 15
Schedule of Investments | 12/31/08
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 96.4%
ENERGY -- 8.2%
Coal & Consumable Fuels -- 1.4%
213,600 Foundation Coal Holdings, Inc. $ 2,994,672
- --------------------------------------------------------------------------------
Oil & Gas Equipment And Services -- 3.0%
46,396 Bristow Group, Inc.* $ 1,242,949
231,300 Exterran Holdings, Inc.*(b) 4,926,690
------------
$ 6,169,639
- --------------------------------------------------------------------------------
Oil & Gas Exploration & Production -- 3.8%
97,800 Carrizo Oil & Gas, Inc.*(b) $ 1,574,580
87,100 Comstock Resources, Inc.*(b) 4,115,475
111,100 Concho Resources, Inc.* 2,535,302
------------
$ 8,225,357
------------
Total Energy $ 17,389,668
- --------------------------------------------------------------------------------
MATERIALS -- 3.9%
Diversified Metals & Mining -- 1.7%
416,200 Titanium Metals Corp. (b) $ 3,666,722
- --------------------------------------------------------------------------------
Gold -- 1.4%
58,500 Agnico Eagle Mines, Ltd. $ 3,002,805
- --------------------------------------------------------------------------------
Steel -- 0.8%
71,500 Cliffs Natural Resources, Inc. $ 1,831,115
------------
Total Materials $ 8,500,642
- --------------------------------------------------------------------------------
CAPITAL GOODS -- 12.2%
Aerospace & Defense -- 3.3%
16,900 Alliant Techsystems, Inc.*(b) $ 1,449,344
386,400 Hexcel Corp.* 2,855,496
76,000 Orbital Sciences Corp.*(b) 1,484,280
38,700 Stanley, Inc.* 1,401,714
------------
$ 7,190,834
- --------------------------------------------------------------------------------
Construction & Engineering -- 4.3%
282,000 KBR, Inc. $ 4,286,400
255,000 Quanta Services, Inc.* 5,049,000
------------
$ 9,335,400
- --------------------------------------------------------------------------------
Electrical Component & Equipment -- 1.8%
519,600 Polypore International, Inc.* $ 3,928,176
- --------------------------------------------------------------------------------
Industrial Conglomerates -- 2.2%
361,000 McDermott International, Inc.* $ 3,566,680
45,400 Otter Tail Corp. (b) 1,059,182
------------
$ 4,625,862
- --------------------------------------------------------------------------------
Industrial Machinery -- 0.6%
537,800 Flow International Corp.* $ 1,301,476
------------
Total Capital Goods $ 26,381,748
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
16 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES -- 4.1%
Diversified Support Services -- 1.1%
97,400 Iron Mountain, Inc.* $ 2,408,702
- --------------------------------------------------------------------------------
Environmental & Facilities Services -- 3.0%
90,600 Rollins, Inc. $ 1,638,048
43,600 Stericycle, Inc.*(b) 2,270,688
81,100 Waste Connections, Inc.*(b) 2,560,327
------------
$ 6,469,063
------------
Total Commercial Services & Supplies $ 8,877,765
- --------------------------------------------------------------------------------
TRANSPORTATION -- 0.5%
Marine -- 0.5%
220,300 American Commercial Lines LLC*(b) $ 1,079,470
------------
Total Transportation $ 1,079,470
- --------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 1.1%
Apparel, Accessories & Luxury Goods -- 0.8%
84,500 The Warnaco Group, Inc.* $ 1,658,735
- --------------------------------------------------------------------------------
Leisure Products -- 0.3%
175,400 Leapfrog Enterprises, Inc.*(b) $ 613,900
------------
Total Consumer Durables & Apparel $ 2,272,635
- --------------------------------------------------------------------------------
CONSUMER SERVICES -- 5.5%
Casinos & Gaming -- 0.8%
71,000 Bally Technologies, Inc.*(b) $ 1,706,130
- --------------------------------------------------------------------------------
Education Services -- 4.7%
41,700 American Public Education, Inc.* $ 1,550,823
58,800 Career Education Corp.* 1,054,872
30,700 DeVry, Inc. 1,762,487
204,079 Grand Canyon Education, Inc.* 3,832,604
21,200 ITT Educational Services, Inc.*(b) 2,013,576
------------
$ 10,214,362
------------
Total Consumer Services $ 11,920,492
- --------------------------------------------------------------------------------
RETAILING -- 4.2%
Apparel Retail -- 1.5%
54,200 Gymboree Corp.*(b) $ 1,414,078
64,600 Ross Stores, Inc. 1,920,558
------------
$ 3,334,636
- --------------------------------------------------------------------------------
General Merchandise Stores -- 0.5%
102,700 99 Cents Only Stores*(b) $ 1,122,511
- --------------------------------------------------------------------------------
Internet Retail -- 2.2%
63,800 Priceline.com, Inc.*(b) $ 4,698,870
------------
Total Retailing $ 9,156,017
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 17
Schedule of Investments | 12/31/08 (continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 3.8%
Brewers -- 0.7%
50,400 Boston Beer Co.*(b) $ 1,431,360
- --------------------------------------------------------------------------------
Packaged Foods & Meats -- 1.8%
178,125 American Italian Pasta Co.*(b) $ 3,979,313
- --------------------------------------------------------------------------------
Soft Drinks -- 1.3%
84,500 Hansen Natural Corp.* $ 2,833,285
------------
Total Food, Beverage & Tobacco $ 8,243,958
- --------------------------------------------------------------------------------
HOUSEHOLD & PERSONAL PRODUCTS -- 1.3%
Household Products -- 1.3%
50,500 Church & Dwight Co, Inc. (b) $ 2,834,060
------------
Total Household & Personal Products $ 2,834,060
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 13.1%
Health Care Equipment -- 8.7%
130,500 Abiomed, Inc.*(b) $ 2,142,810
150,300 Cryolife, Inc.* 1,459,413
472,200 DexCom, Inc.*(b) 1,303,272
73,600 IDEXX Laboratories, Inc.*(b) 2,655,488
223,900 Insulet Corp.*(b) 1,728,508
33,400 Masimo Corp.*(b) 996,322
27,900 NuVasive, Inc.*(b) 966,735
84,700 Quidel Corp.* 1,107,029
105,300 Thoratec Corp.*(b) 3,421,197
79,200 Vnus Medical Technologies, Inc.* 1,284,624
80,900 Wright Medical Group, Inc.*(b) 1,652,787
------------
$ 18,718,185
- --------------------------------------------------------------------------------
Health Care Services -- 4.0%
35,300 Almost Family, Inc.*(b) $ 1,587,794
77,200 Catalyst Health Solutions, Inc.* 1,879,820
26,600 Genoptix, Inc.* 906,528
37,100 Lhc Group, Inc.* 1,335,600
110,500 Lincare Holdings, Inc.* 2,975,765
------------
$ 8,685,507
- --------------------------------------------------------------------------------
Health Care Supplies -- 0.4%
48,900 Inverness Medical Innovations, Inc.*(b) $ 924,699
------------
Total Health Care Equipment & Services $ 28,328,391
- --------------------------------------------------------------------------------
PHARMACEUTICALS & BIOTECHNOLOGY -- 11.5%
Biotechnology -- 4.4%
34,200 Alexion Pharmaceuticals, Inc.* $ 1,237,698
116,300 BioMarin Pharmaceutical, Inc.*(b) 2,070,140
130,600 Cubist Pharmaceuticals, Inc.*(b) 3,155,296
The accompanying notes are an integral part of these financial statements.
18 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
Biotechnology -- (continued)
13,900 Myriad Genetics, Inc.*(b) $ 921,014
85,000 Omrix Biopharmaceuticals, Inc.*(b) 2,125,000
------------
$ 9,509,148
- --------------------------------------------------------------------------------
Life Sciences Tools & Services -- 3.8%
117,910 Advanced Magnetics, Inc.*(b) $ 4,227,074
313,900 Parexel International Corp.* 3,047,969
15,100 Techne Corp. 974,252
------------
$ 8,249,295
- --------------------------------------------------------------------------------
Pharmaceuticals -- 3.3%
457,910 Cardiome Pharma Corp.*(b) $ 2,083,491
78,000 Endo Pharmaceuticals Holdings, Inc.*(b) 2,018,640
228,600 ViroPharma, Inc.*(b) 2,976,372
------------
$ 7,078,503
------------
Total Pharmaceuticals & Biotechnology $ 24,836,946
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 2.4%
Consumer Finance -- 1.4%
199,870 Ezcorp, Inc.* $ 3,040,023
- --------------------------------------------------------------------------------
Specialized Finance -- 1.0%
120,500 MSCI, Inc.* $ 2,140,080
------------
Total Diversified Financials $ 5,180,103
- --------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 15.1%
Application Software -- 6.2%
167,100 Informatica Corp.* $ 2,294,283
244,400 Lawson Software, Inc.* 1,158,456
26,000 MicroStrategy, Inc.* 965,380
97,900 Net 1 UEPS Technologies, Inc.* 1,341,230
134,700 Quest Software, Inc.* 1,695,873
85,500 Synopsys, Inc.* 1,583,460
95,733 The Ultimate Software Group, Inc.*(b) 1,397,702
558,400 TIBCO Software, Inc.* 2,898,096
------------
$ 13,334,480
- --------------------------------------------------------------------------------
Data Processing & Outsourced Services -- 0.9%
105,900 Neustar, Inc.*(b) $ 2,025,867
- --------------------------------------------------------------------------------
Internet Software & Services -- 3.3%
326,400 Comscore, Inc.* $ 4,161,600
211,800 Marchex, Inc.* 1,234,794
236,100 Skillsoft Plc* 1,685,754
------------
$ 7,082,148
- --------------------------------------------------------------------------------
IT Consulting & Other Services -- 2.9%
39,100 Forrester Research, Inc.* $ 1,103,011
76,200 Gartner Group, Inc.*(b) 1,358,646
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 19
Schedule of Investments | 12/31/08 (continued)
- -----------------------------------------------------------------------------------
Shares Value
- -----------------------------------------------------------------------------------
IT Consulting & Other Services -- (continued)
340,200 Sapient Corp.* $ 1,510,488
240,800 Satyam Computer Services, Ltd.*(b) 2,176,832
------------
$ 6,148,977
- -----------------------------------------------------------------------------------
Systems Software -- 1.8%
27,900 Quality Systems, Inc. (b) $ 1,216,998
204,100 Red Hat, Inc.* 2,698,202
------------
$ 3,915,200
------------
Total Software & Services $ 32,506,672
- -----------------------------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 3.3%
Communications Equipment -- 1.0%
93,800 F5 Networks, Inc.* $ 2,144,268
- -----------------------------------------------------------------------------------
Computer Hardware -- 0.9%
125,500 Teradata Corp.* $ 1,861,165
- -----------------------------------------------------------------------------------
Electronic Components -- 0.7%
85,200 Digital Theater Systems, Inc.*(b) $ 1,563,420
- -----------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 0.7%
234,100 L-1 Identity Solutions* $ 1,577,834
------------
Total Technology Hardware & Equipment $ 7,146,687
- -----------------------------------------------------------------------------------
SEMICONDUCTORS -- 4.3%
Semiconductor Equipment -- 2.5%
109,900 MEMC Electronic Materials, Inc.* $ 1,569,372
284,300 Teradyne, Inc.* 1,199,746
209,400 Tessera Technologies, Inc.* 2,487,672
------------
$ 5,256,790
- -----------------------------------------------------------------------------------
Semiconductors -- 1.8%
99,800 Actel Corp.* $ 1,169,656
244,300 Maxim Integrated Products, Inc. 2,789,906
------------
$ 3,959,562
------------
Total Semiconductors $ 9,216,352
- -----------------------------------------------------------------------------------
UTILITIES -- 1.9%
Electric Utilities -- 0.6%
31,100 ITC Holdings Corp. $ 1,358,448
- -----------------------------------------------------------------------------------
Independent Power Producer & Energy Traders -- 1.3%
167,100 Calpine Corp.*(b) $ 1,216,485
48,300 Ormat Technologies, Inc. (b) 1,539,321
------------
$ 2,755,806
------------
Total Utilities $ 4,114,254
- -----------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $217,395,156) $207,985,860
- -----------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
20 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
- -----------------------------------------------------------------------------------
Shares Value
- -----------------------------------------------------------------------------------
EXCHANGE TRADED FUNDS -- 1.5%
41,700 iShares Russell 2000 Growth $ 2,120,862
33,500 iShares Russell Micro Cap 1,066,975
- -----------------------------------------------------------------------------------
TOTAL EXCHANGE TRADED FUNDS
(Cost $3,129,640) $ 3,187,837
- -----------------------------------------------------------------------------------
Principal
Amount
TEMPORARY CASH INVESTMENTS -- 22.6%
Security Lending Collateral -- 22.6% (c)
Certificates of Deposit:
$ 1,126,204 Abbey National Plc, 3.15%, 8/13/09 $ 1,126,204
1,126,050 Bank of Nova Scotia, 3.21%, 5/5/09 1,126,050
1,799,758 Bank of Scotland NY, 2.92%, 6/5/09 1,799,758
2,027,166 Barclays Bank, 1.5%, 5/27/09 2,027,166
358,062 Calyon NY, 4.62%, 1/16/09 358,062
2,252,407 CBA, 4.87%, 7/16/09 2,252,407
2,027,166 DNB NOR Bank ASA NY, 3.04%, 6/5/09 2,027,166
2,063,205 Intesa SanPaolo S.p.A., 1.44%, 5/22/09 2,063,205
130,462 NORDEA NY, 4.13%, 4/9/09 130,462
1,689,305 Royal Bank of Canada NY, 2.7%, 8/7/09 1,689,305
1,126,204 Royal Bank of Scotland, 3.06%, 3/5/09 1,126,204
225,136 Skandinavian Enskilda Bank NY, 3.06%, 2/13/09 225,136
2,252,407 Societe Generale, 3.29%, 9/4/09 2,252,407
2,027,166 Svenska Bank NY, 4.61%, 7/8/09 2,027,166
2,252,407 U.S. Bank NA, 2.25%, 8/24/09 2,252,409
------------
$ 22,483,107
- -----------------------------------------------------------------------------------
Commercial Paper:
2,211,864 American Honda Finance Corp., 4.95%, 7/14/09 $ 2,211,864
214,629 BBVA U.S., 2.83%, 3/12/09 214,629
1,126,204 CME Group, Inc., 2.9%, 8/6/09 1,126,204
1,126,084 General Electric Capital Corp., 2.86%, 3/16/09 1,126,084
2,252,407 HSBC Bank, Inc., 2.5%, 8/14/09 2,252,407
1,126,204 IBM, 2.39%, 9/25/09 1,126,204
2,027,166 Met Life Global Funding, 3.19%, 6/12/09 2,027,166
2,252,407 Monumental Global Funding, Ltd., 2.5%, 8/17/09 2,252,407
2,027,166 New York Life Global, 2.13%, 09/04/09 2,027,166
1,914,546 Westpac Banking Corp., 2.34%, 6/1/09 1,914,546
------------
$ 16,278,677
- -----------------------------------------------------------------------------------
Tri-party Repurchase Agreements:
382,639 Barclays Capital Markets, 0.5%, 1/2/09 $ 382,639
4,955,296 Deutsche Bank, 0.25%, 1/2/09 4,955,296
------------
$ 5,337,935
- -----------------------------------------------------------------------------------
Time Deposit:
2,252,407 BNP Paribas, 0.01%, 1/2/09 $ 2,252,407
- -----------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 21
Schedule of Investments | 12/31/08 (continued)
- -----------------------------------------------------------------------------------
Shares Value
- -----------------------------------------------------------------------------------
Money Market Mutual Funds:
563,102 Columbia Government Reserves Fund, 0.82%, 1/2/09 $ 563,102
1,689,305 JP Morgan, U.S. Government Money Market Fund,
0.98%, 1/2/09 1,689,305
------------
$ 2,252,407
- -----------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $48,604,533) $ 48,604,533
- -----------------------------------------------------------------------------------
TOTAL INVESTMENT IN SECURITIES -- 120.5%
(Cost $269,129,329) (a) $259,778,230
- -----------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (20.5)% $(44,255,707)
- -----------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $215,522,523
===================================================================================
* Non-income producing security.
(a) At December 31, 2008, the net unrealized loss on investments based on
cost for federal income tax purposes of $272,534,346 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost $ 17,157,499
Aggregate gross unrealized loss for all investments in which there is an
excess of tax cost over value (29,913,615)
------------
Net unrealized loss $(12,756,116)
============
(b) At December 31, 2008, the following securities were out on loan:
- --------------------------------------------------------------------------------
Shares Security Market Value
- --------------------------------------------------------------------------------
50,000 99 Cents Only Stores* $ 546,500
74,000 Abiomed, Inc.* 1,215,080
12,500 Alliant Techsystems, Inc.* 1,072,000
34,500 Almost Family, Inc.* 1,551,810
51,600 Advanced Magnetics, Inc.* 1,849,860
96,500 American Commercial Lines LLC* 472,850
54,300 American Italian Pasta Co.* 1,213,062
63,000 Bally Technologies, Inc.* 1,513,890
97,500 BioMarin Pharmaceutical, Inc.* 1,735,500
13,100 Boston Beer Co.* 372,040
27,000 Calpine Corp.* 196,560
215,700 Cardiome Pharma Corp.* 981,435
72,100 Carrizo Oil & Gas, Inc.* 1,160,810
16,000 Church & Dwight Co, Inc. 897,920
55,900 Comstock Resources, Inc.* 2,641,275
128,400 Cubist Pharmaceuticals, Inc.* 3,102,144
47,800 DexCom, Inc.* 131,928
75,000 Digital Theater Systems, Inc.* 1,376,250
The accompanying notes are an integral part of these financial statements.
22 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
- --------------------------------------------------------------------------------
Shares Security Market Value
- --------------------------------------------------------------------------------
12,200 Endo Pharmaceuticals Holdings, Inc.* $ 315,736
228,900 Exterran Holdings, Inc.* 4,875,570
12,000 Gartner Group, Inc.* 213,960
53,500 Gymboree Corp.* 1,395,815
72,000 IDEXX Laboratories, Inc.* 2,597,760
221,600 Insulet Corp.* 1,710,752
40,000 Inverness Medical Innovations, Inc.* 756,400
17,000 ITT Educational Services, Inc.* 1,614,660
75,600 Leapfrog Enterprises, Inc.* 264,600
15,300 Masimo Corp.* 456,399
13,750 Myriad Genetics, Inc.* 911,075
4,000 Neustar, Inc.* 76,520
26,500 NuVasive, Inc.* 918,225
85,000 Omrix Biopharmaceuticals, Inc.* 2,125,000
21,000 Orbital Sciences Corp.* 410,130
15,300 Ormat Technologies, Inc. 487,611
44,000 Otter Tail Corp. 1,026,520
21,200 Priceline.com, Inc.* 1,561,380
24,901 Quality Systems, Inc. 1,086,182
24,200 Satyam Computer Services, Ltd.* 218,768
4,000 Stericycle, Inc.* 208,320
6,000 Thoratec Corp.* 194,940
14,000 Titanium Metals Corp. 123,340
44,000 The Ultimate Software Group, Inc.* 642,400
28,300 ViroPharma, Inc.* 368,466
35,900 Waste Connections, Inc.* 1,133,363
20,800 Wright Medical Group, Inc.* 424,944
- --------------------------------------------------------------------------------
Total $48,149,750
================================================================================
(c) Security lending collateral is managed by Credit Suisse New York Branch.
Purchases and sales of securities (excluding temporary cash investments) for
the year ended December 31, 2008 aggregated $650,424,611 and $718,023,042,
respectively.
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 23
Schedule of Investments | 12/31/08 (continued)
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below.
Highest priority is given to Level 1 inputs and lowest priority is given to
Level 3.
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.)
Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining fair value of investments)
The following is a summary of the inputs used as of December 31, 2008, in
valuing the Fund's assets:
- --------------------------------------------------------------------------------
Investments
Valuation Inputs in Securities
- --------------------------------------------------------------------------------
Level 1 -- Quoted Prices $211,173,697
Level 2 -- Other Significant Observable Inputs 48,604,533
Level 3 -- Significant Unobservable Inputs --
- --------------------------------------------------------------------------------
Total $259,778,230
================================================================================
The accompanying notes are an integral part of these financial statements.
24 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
Statement of Assets and Liabilities | 12/31/08
ASSETS:
Investment in securities (including securities loaned of $48,149,750)
(cost $269,129,329) $259,778,230
Cash 5,878,051
Receivables --
Investment securities sold 451,046
Fund shares sold 55,570
Dividends 34,153
Other 25,149
- ----------------------------------------------------------------------------------------
Total assets $266,222,199
- ----------------------------------------------------------------------------------------
LIABILITIES:
Payables --
Investment securities purchased $ 1,619,391
Fund shares repurchased 263,124
Upon return of securities loaned 48,604,533
Due to affiliates 75,306
Accrued expenses 137,322
- ----------------------------------------------------------------------------------------
Total liabilities $ 50,699,676
- ----------------------------------------------------------------------------------------
NET ASSETS:
Paid-in capital $320,606,058
Accumulated net realized loss on investments (95,732,436)
Net unrealized loss on investments (9,351,099)
- ----------------------------------------------------------------------------------------
Total net assets $215,522,523
========================================================================================
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $171,414,717/10,747,453 shares) $ 15.95
Class B (based on $1,152,694/82,900 shares) $ 13.90
Class C (based on $695,985/49,625 shares) $ 14.02
Class Y (based on $42,259,127/2,598,938 shares) $ 16.26
MAXIMUM OFFERING PRICE:
Class A ($15.95 [divided by] 94.25%) $ 16.92
========================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 25
Statement of Operations
For the Year Ended 12/31/08
INVESTMENT INCOME:
Dividends $1,357,340
Interest 1,007,683
Income from securities loaned, net 644,378
- ----------------------------------------------------------------------------------------
Total investment income $ 3,009,401
- ----------------------------------------------------------------------------------------
EXPENSES:
Management fees $1,965,930
Transfer agent fees
Class A 504,440
Class B 15,512
Class C 5,282
Class Y 1,278
Distribution fees
Class A 566,043
Class B 17,606
Class C 8,261
Shareholder communications expense 157,545
Administrative fees 90,694
Custodian fees 99,803
Registration fees 48,090
Professional fees 69,198
Printing expense 37,350
Fees and expenses of nonaffiliated trustees 10,679
Miscellaneous 49,506
- ----------------------------------------------------------------------------------------
Total expenses $ 3,647,217
Less fees paid indirectly (13,682)
- ----------------------------------------------------------------------------------------
Net expenses $ 3,633,535
- ----------------------------------------------------------------------------------------
Net investment loss $ (624,134)
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments $ (95,315,816)
- ----------------------------------------------------------------------------------------
Change in net unrealized gain on investments $ (32,948,156)
- ----------------------------------------------------------------------------------------
Net loss on investments $(128,263,972)
- ----------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(128,888,106)
- ----------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
26 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
Statement of Changes in Net Assets
For the Years Ended 12/31/08 and 12/31/07, respectively
Year Ended Year Ended
12/31/08 12/31/07
FROM OPERATIONS:
Net investment loss $ (624,134) $ (2,784,813)
Net realized gain (loss) on investments (95,315,816) 46,611,663
Change in net unrealized gain (loss) on investments (32,948,156) (57,928,124)
- ----------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(128,888,106) $ (14,101,274)
- ----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREOWNERS:
Net realized gain:
Class A ($0.31 and $2.36 per share, respectively) $ (3,318,383) $ (29,810,278)
Class B ($0.31 and $2.36 per share, respectively) (25,429) (237,550)
Class C ($0.31 and $2.36 per share, respectively) (14,809) (100,610)
Class Y ($0.31 and $2.36 per share, respectively) (812,707) (6,831,734)
- ----------------------------------------------------------------------------------------------
Total distributions to shareowners $ (4,171,328) $ (36,980,172)
- ----------------------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 26,358,287 $ 38,428,553
Reinvestment of distributions 3,941,449 33,580,145
Cost of shares repurchased (100,015,176) (174,699,293)
- ----------------------------------------------------------------------------------------------
Net decrease in net assets resulting from Fund
share transactions $ (69,715,440) $(102,690,595)
- ----------------------------------------------------------------------------------------------
Net decrease in net assets $(202,774,874) $(153,772,041)
NET ASSETS:
Beginning of year 418,297,397 572,069,438
- ----------------------------------------------------------------------------------------------
End of year $ 215,522,523 $ 418,297,397
- ----------------------------------------------------------------------------------------------
Undistributed net investment income $ 0 $ 0
- ----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 27
Statement of Changes in Net Assets (continued)
- ------------------------------------------------------------------------------------------------------
'08 Shares '08 Amount '07 Shares '07 Amount
- ------------------------------------------------------------------------------------------------------
Class A
Shares sold 411,113 $ 8,845,461 634,674 $ 18,607,842
Reinvestment of distributions 229,570 3,186,656 1,178,176 28,735,726
Less shares repurchased (3,358,446) (72,970,916) (3,205,907) (93,713,143)
- ------------------------------------------------------------------------------------------------------
Net decrease (2,717,763) $(60,938,799) (1,393,057) $(46,369,575)
======================================================================================================
Class B
Shares sold 9,122 $ 163,777 24,905 $ 641,162
Reinvestment of distributions 1,902 23,076 10,082 218,692
Less shares repurchased (34,502) (613,049) (48,708) (1,275,450)
- ------------------------------------------------------------------------------------------------------
Net decrease (23,478) $ (426,196) (13,721) $ (415,596)
======================================================================================================
Class C
Shares sold 16,121 $ 278,083 14,380 $ 383,487
Reinvestment of distributions 1,187 14,508 4,484 99,945
Less shares repurchased (13,831) (258,929) (25,188) (681,031)
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) 3,477 $ 33,662 (6,324) $ (197,599)
======================================================================================================
Class Y
Shares sold 796,124 $ 17,070,966 656,274 $ 18,796,062
Reinvestment of distributions 50,722 717,209 183,057 4,525,782
Less shares repurchased (1,178,467) (26,172,282) (2,707,107) (79,029,669)
- ------------------------------------------------------------------------------------------------------
Net decrease (331,621) $ (8,384,107) (1,867,776) $(55,707,825)
======================================================================================================
The accompanying notes are an integral part of these financial statements.
28 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Class A
Net asset value, beginning of period $ 25.24 $ 28.81 $ 31.16 $ 29.80 $ 24.38
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations:
Net investment loss $ (0.07) $ (0.20) $ (0.02) $ (0.12) $ (0.14)(b)
Net realized and unrealized gain (loss) on investments ( 8.91) ( 1.01) 1.45 1.48 5.56
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (8.98) $ (1.21) $ 1.43 $ 1.36 $ 5.42
Distributions to shareowners:
Net realized gain (0.31) (2.36) (3.78) -- --
Redemption fees $ -- $ -- $ -- $ -- $ --(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (9.29) $ (3.57) $ (2.35) $ 1.36 $ 5.42
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.95 $ 25.24 $ 28.81 $ 31.16 $ 29.80
====================================================================================================================================
Total return* (35.39)% (3.90)% 4.78% 4.56% 22.23%
Ratio of net expenses to average net assets+ 1.28% 1.17% 1.28% 1.26% 1.31%
Ratio of net investment loss to average net assets+ (0.29)% (0.65)% (0.39)% (0.56)% (0.55)%
Portfolio turnover rate 221% 104% 99% 83% 17%
Net assets, end of period (in thousands) $171,415 $339,870 $428,128 $53,000 $ 23,225
Ratios with no reduction for fees paid indirectly:
Net expenses 1.28% 1.17% 1.28% 1.26% 2.29%
Net investment loss (0.29)% (0.65)% (0.39)% (0.56)% (1.53)%
Ratios with reduction for fees paid indirectly:
Net expenses 1.28% 1.16% 1.28% 1.26% 1.31%
Net investment loss (0.28)% (0.64)% (0.39)% (0.56)% (0.55)%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Effective August 2, 2004, PIM became the sub-advisor of the Fund and
subsequently became the advisor on December 10, 2004.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and 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.
+ Ratios with no reduction for fees paid indirectly.
(b) Net investment loss per share has been calculated using the average shares
method.
(c) Amount rounds to less than $0.01 cent per share.
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 29
Financial Highlights (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
Net asset value, beginning of period $ 22.42 $ 26.19 $ 28.94 $ 27.94 $ 23.05
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations:
Net investment loss $ (0.39) $ (0.48) $ (0.48) $ (0.16) $ (0.47)(b)
Net realized and unrealized gain (loss) on investments (7.82) (0.93) 1.51 1.16 5.36
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (8.21) $ (1.41) $ 1.03 $ 1.00 $ 4.89
Distributions to shareowners:
Net realized gain (0.31) (2.36) (3.78) -- --
Redemption fees $ -- $ -- $ -- $ -- $ --(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (8.52) $ (3.77) $ (2.75) $ 1.00 $ 4.89
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.90 $ 22.42 $ 26.19 $ 28.94 $ 27.94
====================================================================================================================================
Total return* (36.41)% (5.06)% 3.74% 3.58% 21.21%
Ratio of net expenses to average net assets+ 2.84% 2.40% 2.40% 2.37% 2.08%
Ratio of net investment loss to average net assets+ (1.86)% (1.88)% (1.67)% (1.72)% (1.37)%
Portfolio turnover rate 221% 104% 99% 83% 17%
Net assets, end of period (in thousands) $ 1,153 $ 2,385 $ 3,145 $ 3,503 $ 10
Ratios with no reduction for fees paid indirectly:
Net expenses 2.84% 2.40% 2.40% 2.37% 2.33%
Net investment loss (1.86)% (1.88)% (1.67)% (1.72)% (1.63)%
Ratios with reduction for fees paid indirectly:
Net expenses 2.82% 2.37% 2.38% 2.37% 2.08%
Net investment loss (1.84)% (1.85)% (1.65)% (1.71)% (1.37)%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Effective August 2, 2004, PIM became the sub-advisor of the Fund and
subsequently became the advisor on December 10, 2004.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and 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.
+ Ratios with no reduction for fees paid indirectly.
(b) Net investment loss per share has been calculated using the average shares
method.
(c) Amount rounds to less than $0.01 cent per share.
The accompanying notes are an integral part of these financial statements.
30 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
Net asset value, beginning of period $ 22.57 $ 26.32 $ 29.01 $ 27.94 $ 23.05
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations:
Net investment loss $ (0.27) $ (0.46) $ (0.36) $ (0.16) $ (0.33)(b)
Net realized and unrealized gain (loss) on investments (7.97) (0.93) 1.45 1.23 5.22
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (8.24) $ (1.38) $ 1.09 $ 1.07 $ 4.89
Distributions to shareowners:
Net realized gain (0.31) (2.36) (3.78) -- --
Redemption fees $ -- $ -- $ -- $ -- $ --(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (8.55) $ (3.75) $ (2.69) $ 1.07 $ 4.89
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 14.02 $ 22.57 $ 26.32 $ 29.01 $ 27.94
====================================================================================================================================
Total return* (36.30)% (4.96)% 3.93% 3.83% 21.21%
Ratio of net expenses to average net assets+ 2.65% 2.22% 2.27% 2.02% 2.08%
Ratio of net investment loss to average net assets+ (1.64)% (1.70)% (1.52)% (1.36)% (1.35)%
Portfolio turnover rate 221% 104% 99% 83% 17%
Net assets, end of period (in thousands) $ 696 $ 1,042 $ 1,381 $ 887 $ 10
Ratios with no reduction for fees paid indirectly:
Net expenses 2.65% 2.22% 2.27% 2.02% 2.35%
Net investment loss (1.64)% (1.70)% (1.52)% (1.36)% (1.62)%
Ratios with reduction for fees paid indirectly:
Net expenses 2.64% 2.20% 2.26% 2.02% 2.08%
Net investment loss (1.63)% (1.68)% (1.51)% (1.36)% (1.35)%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Effective August 2, 2004, PIM became the sub-advisor of the Fund and
subsequently became the advisor on December 10, 2004.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and 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.
+ Ratios with no reduction for fees paid indirectly.
(b) Net Investment loss per shares have been calculated using the average shares
method.
(c) Amount rounds to less than $0.01 cent per share.
The accompanying notes are an integral part of these financial statements.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 31
Financial Highlights (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended 9/23/05 to
12/31/08 12/31/07 12/31/06 12/31/05(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Class Y
Net asset value, beginning of period $ 25.59 $ 29.05 $ 31.19 $ 30.48
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment
operations:
Net investment income (loss) $ 0.05 $ (0.06) $ 0.01 $ (0.01)
Net realized and unrealized gain (loss)
on investments (9.07) (1.04) 1.63 0.72
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase from investment
operations $ (9.02) $ (1.10) $ 1.64 $ 0.71
Distributions to shareowners:
Net realized gain (0.31) (2.36) (3.78) --
Redemption fees $ -- $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (9.33) $ (3.46) $ (2.14) $ 0.71
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.26 $ 25.59 $ 29.05 $ 31.19
====================================================================================================================================
Total return* (35.06)% (3.48)% 5.46% 4.66%(b)
Ratio of net expenses to average net assets+ 0.79% 0.71% 0.72% 0.78%* *
Ratio of net investment income (loss) to
average net assets+ 0.23% (0.19)% 0.00% (0.15)%**
Portfolio turnover rate 221% 104% 99% 83%
Net assets, end of period (in thousands) $ 42,259 $75,001 $ 139,415 $215,755
Ratios assuming reduction for fees paid
indirectly:
Net expenses 0.79% 0.71% 0.70% 0.77%**
Net investment income (loss) 0.23% ( 0.19)% 0.02% ( 0.14)%**
- ------------------------------------------------------------------------------------------------------------------------------------
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
(a) Class Y shares were first offered September 23, 2005.
(b) Not Annualized.
The accompanying notes are an integral part of these financial statements.
32 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
Notes to Financial Statements | 12/31/08
1. Organization and Significant Accounting Policies
Pioneer Growth Opportunities Fund (the Fund) is one of seven series of
portfolios comprising Pioneer Series Trust II, a Delaware statutory trust
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Fund is the successor to the Safeco Growth
Opportunities Fund. Safeco Growth Opportunities Fund transferred all of its net
assets in exchange for the Fund's Investor Class shares on December 10, 2004
pursuant to an agreement and plan of reorganization (the "reorganization" which
was approved by the shareholders of Safeco Growth Opportunities Fund on
December 8, 2004). The Fund had no assets or liabilities prior to the
reorganization. Accordingly, the reorganization, which was a tax-free exchange,
had no effect on the Fund's operations. The investment objective of the Fund is
growth of capital.
The Fund offers four classes of shares designated as Class A, Class B, Class C
and Class Y shares. Investor Class shares converted to Class A shares on
December 10, 2006. Each class of shares represents an interest in the same
portfolio of investments of the Fund and has identical rights (based on
relative net asset values) to assets and liquidation proceeds. Share classes
can bear different class-specific fees and expenses such as transfer agent and
distribution fees. Differences in class-specific fees and expenses will result
in differences in net investment income and, therefore, the payment of
different dividends by each class. The Amended and Restated Declaration of
Trust of the Fund gives the Board the flexibility to specify either per share
voting or dollar-weighted voting when submitting matters for shareholder
approval. Under per share voting, each share of a class of the Fund is entitled
to one vote. Under dollar-weighted voting, a shareholder's voting power is
determined not by the number of shares owned, but by the dollar value of the
shares on the record date. Share classes have exclusive voting rights with
respect to matters affecting only that class, including with respect to the
distribution plan for that class. There is no distribution plan for Class Y
shares. Class B shares convert to Class A shares approximately eight years
after the date of purchase.
The Fund's financial statements have been prepared in conformity with U.S.
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 income, expenses, and gain or loss on investments during the
reporting period. Actual results could differ from those estimates.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 33
At times, the Fund's investments may represent industries or industry sectors
that are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors. The Fund's prospectuses contain unaudited information
regarding the Fund's principal risks. Please refer to those documents when
considering the Fund's principal risks.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements, which are consistent with
those policies 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 (NYSE) is open,
as of the close of regular trading on the NYSE. 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 using fair value
methods pursuant to procedures adopted by the Board of Trustees. Trading in
foreign securities is substantially completed each day at various times prior
to the close of the NYSE. The values of such securities used in computing the
net asset value of the Fund's shares are determined as of such times. The
Fund may also use fair value methods to value a security, including a
non-U.S. security, when the closing market price on the principal exchange
where the security is traded no longer reflects the value of the security. At
December 31, 2008 there were no securities that were valued using fair value
methods. Temporary cash investments are valued at cost which approximates
market value.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have passed
are recorded as soon as the Fund becomes aware of the ex-dividend data in the
exercise of reasonable diligence. Interest income, including interest on
income bearing cash accounts, is recorded on the accrual basis.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income 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
34 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
foreign currency contracts, disposition of foreign currencies and the
difference between the amount of income accrued and the U.S. dollars 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
shareowners. Therefore, no federal tax provision is required. Tax years for
the prior three fiscal years remain subject to examination by tax
authorities.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal income
tax rules. Therefore, the sources 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.
The Fund has elected to defer $28,317,595 of capital losses recognized
between November 1, 2008 and December 31, 2008 to its fiscal year ending
December 31, 2009.
At December 31, 2008, the Fund had a net capital loss carryforward of
$64,009,824, which will expire in 2016 if not utilized.
At December 31, 2008, the Fund has reclassified $624,134 to decrease
accumulated net investment loss, $25,867 to decrease accumulated net realized
loss on investments and $650,001 to decrease paid-in capital, to reflect
permanent book/tax differences. The reclassification has no impact on the net
assets of the Fund and presents the Fund's capital accounts on a tax basis.
The tax character of distributions paid during the years ended December 31,
2008 and December 31, 2007 was as follows:
- --------------------------------------------------------------------------------
2008 2007
- --------------------------------------------------------------------------------
Distributions paid from:
Long-term capital gain $4,171,328 $36,980,172
- --------------------------------------------------------------------------------
Total $4,171,328 $36,980,172
- --------------------------------------------------------------------------------
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 35
The following shows the components of distributable earnings on a federal
income tax basis at December 31, 2008.
- --------------------------------------------------------------------------------
2008
Distributable earnings:
Capital loss carryforward $ (64,009,824)
Current year post-October loss deferred (28,317,595)
Unrealized depreciation (12,756,116)
- --------------------------------------------------------------------------------
Total $ 105,083,535
- --------------------------------------------------------------------------------
The difference between book basis and tax basis unrealized appreciation is
attributable to the tax deferral of losses on wash sales.
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 a wholly owned indirect subsidiary of UniCredit S.p.A. (UniCredit),
earned $4,395 in underwriting commissions on the sale of Class A shares
during the year ended December 31, 2008.
E. Class Allocations
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 their respective percentage of adjusted net assets at the beginning
of the day. 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 (see Note 4). Class Y shares are not subject to a distribution
plan. Shareowners of each class participate in all expenses and fees paid to
the transfer agent, Pioneer Investment Management Shareholder Services, Inc.
(PIMSS), for its services, which are allocated based on the number of
accounts in each class and the ratable allocation of related out-of-pocket
expenses (see Note 3.)
Distributions to shareowners 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 and at the same time, except that Class A,
Class B, Class C, and Class Y shares can bear different transfer agent and
distribution expense rates.
F. Securities Lending
The Fund lends securities in its portfolio to certain broker-dealers or other
institutional investors. When entering into a securities loan transaction,
the Fund typically receives cash collateral from the borrower equal to at
least the value of the securities loaned, which is invested in temporary cash
investments. Credit Suisse, New York Branch, as the Fund's security lending
agent,
36 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
manages the Fund's securities lending collateral. The income earned on the
investment of collateral is shared with the borrower and the lending agent in
payment of any rebate due to the borrower with respect to the securities
loan, and in compensation for the lending agent's services to the Fund. The
Fund also continues to receive interest or payments in lieu of dividends on
the securities loaned. Gain or loss on the value of the loaned securities
that may occur during the term of the loan will be for the account of the
Fund. The amount of the collateral is required to be adjusted daily to
reflect any price fluctuation in the value of the loaned securities. The Fund
has the right, under the lending agreement, to terminate the loan and recover
the securities from the borrower with prior notice. The Fund will be required
to return the cash collateral to the borrower and could suffer a loss if the
value of the collateral, as invested, has declined.
G. Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, the value of
the underlying securities (collateral), including accrued interest, is
required to be at least equal to or in excess of the value of the repurchase
agreement. The collateral for all repurchase agreements is held in
safekeeping in the customer-only account of the Fund's custodian or
subcustodians. The Fund's investment adviser, Pioneer Investment Management,
Inc. (PIM), is responsible for determining that the value of the collateral
remains at least equal to the repurchase price.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit, manages the Fund's
portfolio. Management fees are calculated daily at the annual rate of 0.65% of
the Fund's average daily 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. Included in "Due to Affiliates" reflected on
the Statement of Assets and Liabilities is $3,943 in management fees,
administrative costs and certain other fees payable to PIM at December 31,
2008.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Fund at negotiated rates.
In addition, the Fund reimbursed PIMSS for out-of-pocket expenses related to
shareholder communications activities such as proxy and statement mailings,
outgoing phone calls and omnibus relationship contracts. For the year ended
December 31, 2008, such out of pocket expenses by class of shares were as
follows:
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 37
- --------------------------------------------------------------------------------
Shareholder Communications:
- --------------------------------------------------------------------------------
Class A $152,607
Class B 3,109
Class C 1,829
- --------------------------------------------------------------------------------
Total $157,545
================================================================================
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $70,172 in transfer agent fees and shareholder communications
expense payable to PIMSS at December 31, 2008
4. Distribution Plans
The Fund adopted a Distribution Plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940 with respect to its Class A, Class B and Class C shares.
Pursuant to the Plan, the Fund pays PFD 0.25% of the average daily net assets
attributable to Class A shares as compensation for personal services and/or
account maintenance services or distribution services with regard to Class A
shares. Pursuant to the Plan, the Fund pays PFD 1.00% of the average daily net
assets attributable to Class B and Class C shares. The fee for Class B and
Class C shares 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. Prior to
February 1, 2008, PFD was reimbursed under the Distribution Plan for
distribution expenses in an amount of up to 0.25% of the average daily net
assets attributable to Class A shares. Included in "Due to affiliates"
reflected on the Statement of Assets and Liabilities is $1,191 in distribution
fees payable to PFD at December 31, 2008.
In addition, redemptions of each class of shares (except Class Y 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 18 months of purchase. Class B shares that are redeemed within five
years of purchase are subject to a CDSC at declining rates beginning at 4.00%,
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% based on the lower of cost or market value of shares being redeemed.
Proceeds from the CDSCs are paid to PFD. For the year ended December 31, 2008,
CDSCs in the amount of $3,556 were paid to PFD.
5. Expense Offset Arrangements
The Fund has entered into certain expense offset arrangements with PIMSS
resulting in a reduction in the Fund's total expenses, due to interest earned
on cash held by PIMSS. For the year ended December 31, 2008, the Fund's
expenses were reduced by $13,682 under such arrangements.
38 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
6. New Pronouncement
In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures
about Derivative instruments and Hedging Activities (SFAS 161), was issued and
is effective for fiscal years beginning after November 15, 2008. SFAS 161
requires enhanced disclosures about an entity's derivative and hedging
activities. Management is currently evaluating the impact the adoption of SFAS
161 will have on the Fund's financial statement disclosures.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 39
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Pioneer Series Trust II and Shareowners of Pioneer
Growth Opportunities Fund:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of Pioneer
Growth Opportunities Fund, one of the series comprising Pioneer Series Trust II
(the "Trust"), including the schedule of investments, as of December 31, 2008,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Trust'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 the standards of the Public Company
Accounting Oversight Board (United States). 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. We were not engaged to perform an audit of the Trust's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Trust's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of December 31, 2008, by correspondence
with the custodian and brokers or by other appropriate audit procedures where
replies from brokers were not received. 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 Growth Opportunities Fund of Pioneer Series Trust II at December 31,
2008, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and financial
highlights for each of the periods indicated therein, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 18, 2009
40 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
Trustees, Officers and Service Providers
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerinvestments.com. This information is also available
on the Securities and Exchange Commission's web site at http://www.sec.gov.
Trustees and Officers
The Board of Trustees provides broad supervision over the fund's affairs. The
officers of the fund are responsible for the fund's operations. The Trustees
and officers are listed below, together with their principal occupations during
the past five years. Trustees who are interested persons of the fund within the
meaning of the 1940 Act are referred to as Interested Trustees. Trustees who
are not interested persons of the fund are referred to as Independent Trustees.
Each of the Trustees serves as a trustee of each of the 76 U.S. registered
investment portfolios for which Pioneer serves as investment adviser (the
"Pioneer Funds"). The address for all Trustees and all officers of the fund is
60 State Street, Boston, Massachusetts 02109.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 41
Interested Trustees
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service and Principal Occupation Other Directorships Held
Name and Age with the Fund Term of Office During Past Five Years by this Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
John F. Cogan, Jr. Chairman of the Trustee since 2003. Deputy Chairman and a Director of None
(82)* Board, Trustee Serves until a successor Pioneer Global Asset Management
and President trustee is elected or S.p.A. ("PGAM"); Non-Executive
earlier retirement or Chairman and a Director of Pioneer
removal. Investment Management USA Inc.
("PIM-USA"); Chairman and a Director
of Pioneer; Chairman and Director of
Pioneer Institutional Asset
Management, Inc. (since 2006);
Director of Pioneer Alternative
Investment Management Limited
(Dublin); President and a Director of
Pioneer Alternative Investment
Management (Bermuda) Limited and
affiliated funds; Director of
PIOGLOBAL Real Estate Investment Fund
(Russia) (until June 2006); Director
of Nano-C, Inc. (since 2003);
Director of Cole Management Inc.
(since 2004); Director of Fiduciary
Counseling, Inc.; President and
Director of Pioneer Funds
Distributor, Inc. ("PFD") (until May
2006); President of all of the
Pioneer Funds; and Of Counsel, Wilmer
Cutler Pickering Hale and Dorr LLP
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel K. Kingsbury Trustee and Trustee since 2008. Director, CEO and President of None
(50)* Executive Serves until a successor Pioneer Investment Management USA
Vice President trustee is elected or Inc. (since February 2007); Director
earlier retirement or and President of Pioneer Investment
removal. Management, Inc. and Pioneer Institu-
tional Asset Management, Inc. (since
February 2007); Executive Vice
President of all of the Pioneer Funds
(since March 2007); Director of
Pioneer Global Asset Management
S.p.A. (since April 2007); Head of
New Markets Division, Pioneer Global
Asset Management S.p.A. (2000 - 2007)
- ------------------------------------------------------------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are officers
or directors of the fund's investment adviser and certain of its affiliates.
42 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
Independent Trustees
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service and Principal Occupation Other Directorships Held
Name and Age with the Fund Term of Office During Past Five Years by this Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
David R. Bock (65) Trustee Trustee since 2005. Executive Vice President and Chief Director of Enterprise
Serves until a successor Financial Officer, I-trax, Inc. Com- munity Investment,
trustee is elected or (publicly traded health care services Inc. (privately-held
earlier retirement or company) (2004 - 2007); Partner, affordable housing
removal. Federal City Capital Advisors finance company); and
(boutique merchant bank) (1997 to Director of New York
2004 and 2008 - present); and Mortgage Trust (publicly
Executive Vice President and Chief traded mortgage REIT)
Financial Officer, Pedestal Inc.
(internet-based mortgage trading
company) (2000 - 2002)
- ------------------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (60) Trustee Trustee since 2003. President, Bush International, LLC Director of Marriott
Serves until a successor (international financial advisory firm) International, Inc.,
trustee is elected or Director of Discover
earlier retirement or Financial Services
removal. (credit card issuer and
electronic payment
services); Director of
Briggs & Stratton Co.
(engine manufacturer);
Director of UAL
Corporation (airline
holding company)
Director of Mantech
International
Corporation
(national security,
defense, and
intelligence
technology firm);
and Member, Board of
Governors,
Investment Company
Institute
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
43
Independent Trustees (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service and Principal Occupation Other Directorships Held
Name and Age with the Fund Term of Office During Past Five Years by this Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Benjamin M. Friedman Trustee Trustee since 2008. Professor, Harvard University Trustee, Mellon
(64) Serves until a successor Institutional Funds
trustee is elected or Investment Trust and
earlier retirement or Mellon Institutional
removal Funds Master
Portfolio (oversees
17 portfolios in
fund complex)
- ------------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham Trustee Trustee since 2003. Founding Director, Vice-President and None
(61) Serves until a successor Corporate Secretary, The Winthrop Group,
trustee is elected or Inc. (consulting firm); and Desautels
earlier retirement or Faculty of Management, McGill University
removal.
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas J. Perna (58) Trustee Trustee since 2006. Chief Executive Officer, Quadriserv, None
Serves until a successor Inc. (2008 -- present) (technology
trustee is elected or products for securities lending
earlier retirement or industry); Private investor (2004 --
removal. 2008); and Senior Executive Vice Presi-
dent, The Bank of New York (financial
and securities services) (1986 -- 2004)
- ------------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret Trustee Trustee since 2003. President and Chief Executive Officer, Director of New America
(60) Serves until a successor Newbury, Piret & Company, Inc. High Income Fund, Inc.
trustee is elected or (investment banking firm) (closed-end investment
earlier retirement or company)
removal.
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen K. West (80) Trustee Trustee since 2008. Senior Counsel, Sullivan & Cromwell LLP Director, The Swiss
Serves until a successor (law firm) Helvetia Fund, Inc.
trustee is elected or (closed-end
earlier retirement or investment company)
removal.
- ------------------------------------------------------------------------------------------------------------------------------------
44 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
Fund Officers
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service and Principal Occupation Other Directorships Held
Name and Age with the Fund Term of Office During Past Five Years by this Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Dorothy E. Bourassa Secretary Since 2003. Serves at Secretary of PIM-USA; Senior Vice None
(60) the discretion of the President - Legal of Pioneer;
Board Secretary/Clerk of most of PIM-USA's
subsidiaries; and Secretary of all of
the Pioneer Funds since September 2003
(Assistant Secretary from November 2000
to September 2003)
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley Assistant Since 2003. Serves at Associate General Counsel of Pioneer None
(44) Secretary the discretion of the since January 2008 and Assistant
Board Secretary of all of the Pioneer Funds
since September 2003; Vice President and
Senior Counsel of Pioneer from July 2002
to December 2007
- ------------------------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (49) Treasurer Since 2008. Serves at Vice President -- Fund Accounting, None
the discretion of the Administration and Controllership
Board Services of Pioneer; and Treasurer of
all of the Pioneer Funds since March
2008; Deputy Treasurer of Pioneer from
March 2004 to February 2008; Assistant
Treasurer of all of the Pioneer Funds
from March 2004 to February 2008; and
Treasurer and Senior Vice President, CDC
IXIS Asset Management Services from 2002
to 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (43) Assistant Since 2003. Serves at Assistant Vice President -- Fund None
Treasurer the discretion of the Accounting, Administration and
Board Controllership Services of Pioneer; and
Assistant Treasurer of all of the
Pioneer Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Gary Sullivan (50) Assistant Since 2003. Serves at Fund Accounting Manager -- Fund None
Treasurer the discretion of the Accounting, Administration and
Board Controllership Services of Pioneer; and
Assistant Treasurer of all of the
Pioneer Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
45
Fund Officers (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service and Principal Occupation Other Directorships Held
Name and Age with the Fund Term of Office During Past Five Years by this Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Katherine Kim Assistant Since 2003. Serves at Fund Administration Manager -- Fund None
Sullivan (35) Treasurer the discretion of the Accounting, Administration and
Board Controllership Services since June 2003
and Assistant Treasurer of all of the
Pioneer Funds since September 2003;
Assistant Vice President -- Mutual Fund
Opera- tions of State Street Corporation
from June 2002 to June 2003 (formerly
Deutsche Bank Asset Management)
- ------------------------------------------------------------------------------------------------------------------------------------
Teri W. Anderholm Chief Compliance Since 2007. Serves at Chief Compliance Officer of Pioneer None
(49) Officer the discretion of the since December 2006 and of all the
Board Pioneer Funds since January 2007; Vice
President and Compliance Officer, MFS
Investment Management (August 2005 to
December 2006); Consultant, Fidelity
Investments (February 2005 to July
2005); Independent Consultant (July 1997
to February 2005)
- ------------------------------------------------------------------------------------------------------------------------------------
46 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
This page for your notes.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 47
This page for your notes.
48 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
This page for your notes.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 49
This page for your notes.
50 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
This page for your notes.
Pioneer Growth Opportunities Fund | Annual Report | 12/31/08 51
This page for your notes.
52 Pioneer Growth Opportunities Fund | Annual Report | 12/31/08
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:
- --------------------------------------------------------------------------------
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our internet e-mail address ask.pioneer@pioneerinvestments.com
(for general questions about Pioneer only)
Visit our web site: pioneerinvestments.com
This report must be preceded or accompanied by a prospectus.
The Fund files a complete schedule of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Pioneer Small and Mid Cap
Growth Fund
- --------------------------------------------------------------------------------
Annual Report | December 31, 2008
- --------------------------------------------------------------------------------
Ticker Symbols:
Class A PAPPX
Class B MCSBX
Class C CGCPX
[Logo]PIONEER
Investments(R)
visit us: pioneerinvestments.com
Table of Contents
Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 8
Prices and Distributions 9
Performance Update 11
Comparing Ongoing Fund Expenses 14
Schedule of Investments 16
Financial Statements 21
Notes to Financial Statements 28
Report of Independent Registered Public Accounting Firm 35
Approval of Sub-Advisory Agreement 36
Trustees, Officers and Service Providers 39
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 1
President's Letter
Dear Shareowner,
Stock and bond markets around the globe this year have experienced one of their
most tumultuous periods in history. Investors have witnessed volatility of a
magnitude that many have never before seen. Distance often provides the best
vantage point for perspective. Still, we believe that the benefits of basic
investment principles that have stood the test of time -- even in the midst of
market turmoil -- cannot be underestimated.
First, invest for the long term. The founder of Pioneer Investments, Philip L.
Carret, began his investment career during the 1920s. One lesson he learned is
that while great prosperity affords an advantageous time for selling stocks,
extreme economic slumps can create opportunities for purchase. Indeed, many of
our portfolio managers, who follow the value-conscious investing approach of
our founder, are looking at recent market conditions as an opportunity to buy
companies whose shares we believe have been unjustifiably beaten down by
indiscriminate selling, but that we have identified as having strong prospects
over time. While investors may be facing a sustained market downturn, we
continue to believe that patience, along with staying invested in the market,
are important considerations for long-term investors.
A second principle is to stay diversified across different types of
investments. The global scope of the current market weakness poses challenges
for this basic investment axiom. But the turbulence makes now a good time to
reassess your portfolio and make sure that your investments continue to meet
your needs. We believe you should work closely with your financial advisor to
find the mix of stocks, bonds and money market assets that is best aligned to
your particular risk tolerance and investment objective.
As the investment markets sort through the continuing crisis in the financial
industry, we are staying focused on the fundamentals and risk management. With
more than 80 years of experience behind us, we have learned how to navigate
turbulent markets. At Pioneer Investments, risk management has always been a
critical part of our culture -- not just during periods of extraordinary
volatility. Our investment process is based on fundamental research,
quantitative analysis and active portfolio management. This three-pillared
process, which we apply to each of our portfolios, is supported by an
integrated team approach and is designed to carefully balance risk and reward.
While we
2 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
see potential chances for making money in many corners of the market, it takes
research and experience to separate solid investment opportunities from
speculation.
We invite you to learn more about Pioneer and our time-tested approach to
investing by consulting with your financial advisor or visiting us online at
www.pioneerinvestments.com. Thank you for investing with Pioneer.
Respectfully,
/s/ Daniel K. Kingsbury
Daniel K. Kingsbury
President and CEO
Pioneer Investment Management USA, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 3
Portfolio Management Discussion | 12/31/08
Problems that began in the credit markets spread throughout the economy during
2008, leading to one of the worst periods for equity investments in recent
history. In the following interview, members of the portfolio management team
from L. Roy Papp & Associates, the Fund's sub-adviser, who are responsible for
management of Pioneer Small and Mid Cap Growth Fund, discuss the factors that
influenced the performance of the Fund during the year.
Q How did the Fund perform during the 12 months ended December 31, 2008?
A Pioneer Small and Mid Cap Growth Fund Class A shares returned -32.31% at
net asset value for the 12 months ending December 31, 2008. During the same
period, the Russell Midcap Growth Index returned -44.32% while the Russell
2500 Growth Index returned -41.50%. Over the same 12 months, the average
return of the 602 mutual funds in Lipper's Mid-Cap Growth Core category was
-44.49%.
Q What were the principal factors affecting the Fund's performance during the
12 months ended December 31, 2008?
A It was a horrible year in the stock market, with deep declines in most
companies' share prices. The precipitous market drops were triggered by
loose money policies that resulted in imprudent loans, especially in real
estate, to unqualified borrowers. Those low-quality loans then were
packaged by investment banks into securities that were sold to investors
throughout the world. The poor quality of many mortgage loans became
evident when housing values began declining, unleashing a cascading series
of events that resulted in a deepening credit crisis that threatened the
existence of major financial institutions. Government rescues and bailouts,
and bankruptcies of well known financial corporations occurred over
virtually the entire year, starting with the JP Morgan Chase's buyout --
with the help of the federal government -- of Bear Stearns in March, and
extending until the end of the year when Bank of America acquired Merrill
Lynch and Wells Fargo bought Wachovia. While the credit crisis exacerbated
the existing problems of more troubled companies, such as General Motors,
it also created new problems for many profitable corporations that began to
see their credit dry up. Market volatility hit its highest point in the
weeks after investment bank Lehman Brothers filed for bankruptcy in
September, when investor confidence disappeared, consumers curtailed
spending and corporations throughout the economy saw revenues shrink at the
very time they lost access to credit. The financials sector was the area
that was most severely hit in this tumultuous
4 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
market, as the share prices of even higher-quality companies with little
credit exposure were pulled down with the rest of the sector.
While the economic onslaught affected all areas of the equity market,
small- and mid-cap stocks suffered some of the most severe effects because
of their vulnerability when credit markets freeze up. In particular,
corporations that did not have long, established track records found it
difficult to gain credit when the flow of such credit froze as the year
progressed.
The Fund's holdings could not escape the effects of the difficult market
environment, although the Fund did outperform both its Russell benchmarks
and its Lipper peers. The Fund's performance was helped by our traditional
emphasis on corporations with strong balance sheets, little debt, steady
earnings growth, good cash flow and experienced management teams.
Q What were some of the investments that most influenced the Fund's results
during the 12-month period ended December 31, 2008?
A The sharp downturn in the equity markets pulled down many of the Fund's
holdings, but the quality bias of our investment discipline did help the
Fund hold up better than the Russell benchmarks and the Lipper peer group
average. Holdings that helped the Fund's performance include DeVry, a
specialist in adult education programs which reduced its costs at the same
time it enjoyed healthy gains in enrollment. O'Reilly Auto Parts, a
retailing chain that recently made a significant acquisition, was another
of the better performers for the Fund during the period. Defensive stocks,
such as household products corporation Clorox, did well as investors were
attracted to corporations with more consistent revenue streams. That was
especially true in the health care group, where several Fund holdings
performed relatively well, including C.R. Bard, Medco Health, Express
Scripts, and Techne, which all outperformed. C.R. Bard produces medical
products for the hospital market; Medco and Express Scripts are pharmacy
benefits managers; and Techne produces proteins for the biotechnology and
medical markets. Elsewhere, two technology-related companies that fared
well were ChoicePoint, which provides employment screening services to
corporations, and Informatica, which produces software that helps integrate
information technology systems of different businesses. ChoicePoint was
acquired by LexisNexis during the year.
Several Fund holdings did produce disappointing results during the 12-month
period, however, including some smaller energy companies whose share prices
declined with the price of oil. They included Forest Oil, an exploration
and production company, and FMC Technologies, a leading provider of
undersea oil production systems. In the financials sector, one of the
Fund's poor-performing investments was Federated Investors, an asset
manager specializing in money market funds. Federated was hurt when low
interest rates drove down the yields of money market funds. In technology,
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 5
the share price of Micros Systems, which sells information technology
systems to the hospitality industry, declined because of concerns about
shrinking demand. However, we have continued to favor the company because
of the protection offered by the recurring revenues from its technology
installations.
Q What were some of the changes you made to the Fund during the 12 months
ended December 31, 2008?
A We sold some Fund holdings during the year for fundamental reasons, and
others for technical reasons related to the need to have smaller companies
to be consistent with the Russell indices. On a fundamental basis, we aimed
to shift the Fund to less volatile stocks and sold positions in the
following: DST, which produces information technology systems for the
financials industry; Harte-Hanks, a publisher of shopper newspapers;
International Speedway, which owns and operates automobile racing tracks;
and UCBH Holdings, a California-based bank hurt by the housing downturn. On
a technical basis, we sold the Fund's positions in Adobe Systems, the
software company; Cameron International, an oil field services corporation;
Coach, a specialty retailer specializing in luxury products; Newfield
Exploration, an oil and natural gas exploration and production company; and
ITT, a diversified corporation whose operations range from adult education
programs to water purification system production.
In our search for companies with superior long-term growth characteristics
and potential, we added positions to the Fund in: Air Gas, a corporation
providing chemicals to industrial corporations; FactSet Research, which
provides information to the financial services industry; Henry Schein,
which markets supplies to the dentistry market; Idex, which produces highly
engineered products for industrial customers; and Nuance, a corporation
that provides a leading speech-recognition technology system.
Q What is your investment outlook?
A The abrupt curtailment of consumer spending was a major contributor to the
economic downturn during 2008, but we believe several factors could give a
boost to consumer confidence and trigger more discretionary spending in
2009. They include: lower oil and gasoline prices, which have been putting
more money in consumers' pockets; lower interest rates, which should help
consumer spending and even housing sales; the massive federal government
stimulus packages, which should put more money into the economy; and the
possibility that the economy could improve under a new national
administration.
We also see some potential improvement in the capital markets. We already
have witnessed some evidence of progress in the bond market, and we think
6 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
huge amounts of money are on the sidelines, ready to be deployed into
higher-quality investments once some signs of progress appear.
We firmly believe that our bias toward higher-quality corporations gives
the Fund a portfolio of companies that are more likely to be the survivors
of the recent economic downturn. We think they should have the potential to
flourish in any potential recovery.
Please refer to the Schedule of Investments on pages 16-20 for a full listing
of Fund securities.
Small and mid-sized companies may offer the potential for higher returns, but
are also subject to greater short-term price fluctuations than larger, more
established companies. The Fund invests in a limited number of securities and,
as a result, the Fund's performance may be more volatile than the performance
of other funds holding more securities. At times, the Fund's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These opinions should not be relied upon for any other purposes.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 7
Portfolio Summary | 12/31/08
Portfolio Diversification
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE FOLLOWING IS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
U.S. Common Stocks 81.8%
Temporary Cash Investments 17.7%
Depository Receipts for International Stocks 0.5%
Sector Distribution
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
[THE FOLLOWING IS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Information Technology 26.7%
Health Care 21.6%
Consumer Discretionary 15.9%
Industrials 13.1%
Materials 8.1%
Financials 6.6%
Consumer Staples 4.1%
Energy 3.9%
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of equity holdings) *
1. O'Reilly Automotive, Inc. 6.36%
2. Informatica Corp. 5.60
3. DeVry, Inc. 5.55
4. Airgas, Inc. 4.75
5. Dentsply International, Inc. 4.50
6. AMETEK, Inc. 4.46
7. Clorox Co. 4.09
8. Gardner Denver, Inc. 4.01
9. ResMed, Inc. 3.79
10. Henry Schein, Inc. 3.71
* This list excludes temporary cash investments and derivative instruments.
The portfolio is actively managed, and current holdings may be different.
The holdings listed should not be considered recommendations to buy or sell
any security listed.
8 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Prices and Distributions | 12/31/08
Net Asset Value per Share
- --------------------------------------------------------------------------------
Class 12/31/08 12/31/07
A $ 20.69 $ 31.68
- ----------------------------------------------
B $ 19.72 $ 30.52
- ----------------------------------------------
C $ 19.80 $ 30.62
- ----------------------------------------------
Distributions per Share: 1/1/08-12/31/08
- --------------------------------------------------------------------------------
Short-Term Long-Term
Class Dividends Capital Gains Capital Gains
A $ -- $ -- $ 0.7449
- ---------------------------------------------------------------
B $ -- $ -- $ 0.7449
- ---------------------------------------------------------------
C $ -- $ -- $ 0.7449
- ---------------------------------------------------------------
Index Definitions
- --------------------------------------------------------------------------------
The Russell Mid Cap Growth Index measures the performance of U.S. mid-cap
growth stocks. The Russell 2500 Growth Index measures the performance of U.S.
small- and mid-cap growth stocks. Index returns assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in an index.
The index defined here pertains to the "Value of $10,000 Investment" charts on
pages 11-13.
Note to Shareholders: The Fund will institute the following investment policy
change on February 1, 2009, regarding the index it uses for market
capitalization purposes, and the corresponding section of the prospectus will
read as follows. Please refer to the prospectus for the full text of the
supplemented section.
Principal investment strategies: Normally, the Fund invests at least 80% of its
net assets (plus the amount of borrowings, if any, for investment purposes) in
equity securities of small and mid-capitalization issuers, that is those with
market values, at the time of investment, that do not exceed the market
capitalization of the largest company within the Russell Mid Cap Growth Index
(the Russell Index). (The Russell Mid Cap Growth Index measures the performance
of U.S. mid-cap growth stocks.) Previously, the Standard and Poor's 400 Mid Cap
400 Index was used by the Fund as a benchmark for market capitalization
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 9
Prices and Distributions | 12/31/08 (continued)
purposes. The size of the companies in the Russell Index may change
dramatically as a result of market conditions and the composition of the Index.
The Fund's investments will not be confined to securities issued by companies
included in an index. For purposes of the fund's investment policies, equity
securities include common stocks, convertible debt and other equity
instruments, such as exchange-traded funds (ETFs) that invest primarily in
equity securities, equity interests in real estate investment trusts (REITs),
depositary receipts, warrants, rights and preferred stocks.
10 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Performance Update | 12/31/08 Class A Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Small and Mid Cap Growth Fund at public offering
price, compared to that of the Russell Mid Cap Growth Index and the Russell
2500 Growth Index.
Average Annual Total Returns
(As of December 31, 2008)
- ------------------------------------------------------------------
Net Asset Public Offering
Period Value (NAV) Price (POP)
- ------------------------------------------------------------------
10 Years 3.89% 3.27%
5 Years -1.47 -2.63
1 Year -32.31 -36.20
- ------------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ------------------------------------------------------------------
Gross Net
- ------------------------------------------------------------------
1.52% 1.25%
- ------------------------------------------------------------------
[THE FOLLOWING DATA IS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
Value of $10,000 Investment
Pioneer Small
and Mid Cap Russell 2500 Russell Mid Cap
Growth Fund Growth Index Growth Index
12/98 9,425 10,000 10,000
10,626 15,129 15,548
12/00 13,919 13,351 13,046
14,041 10,661 11,632
12/02 11,443 7,739 8,248
14,859 11,045 12,068
12/04 15,670 12,754 13,829
16,432 14,298 14,959
12/06 17,445 15,821 16,794
20,389 17,629 18,421
12/08 13,801 9,815 10,776
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
NAV results represent the percent change in net asset value per share. Returns
would have been lower had sales charges been reflected. POP returns reflect
deduction of maximum 5.75% sales charge. All results are historical and assume
the reinvestment of dividends and capital gains. Other share classes are
available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
The net expense ratio reflects contractual expense limitations currently in
effect through 5/1/10 for Class A Shares. There can be no assurance that
Pioneer will extend the expense limitations beyond such time. Please see the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
Pioneer Small and Mid Cap Growth Fund acquired the assets of Papp Small &
Mid-Cap Growth Fund in a reorganization on 2/20/04. The performance of Class A
shares of the Fund from 12/15/98 to 2/20/04 is the performance of Papp Small &
Mid-Cap Growth Fund's single class, which has been restated to reflect any
applicable sales charges and Rule 12b-1 fees (but not other differences in
expenses). This adjustment has the effect of reducing the previously reported
performance of Papp Small & Mid-Cap Growth Fund.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 11
Performance Update | 12/31/08 Class B Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Small and Mid Cap Growth Fund, compared to that of
the Russell Mid Cap Growth Index and the Russell 2500 Growth Index.
Average Annual Total Returns
(As of December 31, 2008)
- ------------------------------------------------------------------
If If
Period Held Redeemed
- ------------------------------------------------------------------
10 Years 3.04% 3.04%
5 Years -2.35 -2.35
1 Year -32.92 -35.50
- ------------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ------------------------------------------------------------------
Gross Net
- ------------------------------------------------------------------
2.38% 2.15%
- ------------------------------------------------------------------
[THE FOLLOWING DATA IS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
Value of $10,000 Investment
Pioneer Small
and Mid Cap Russell 2500 Russell Mid Cap
Growth Fund Growth Index Growth Index
12/98 10,000 10,000 10,000
11,192 15,129 15,548
12/00 14,552 13,351 13,046
14,570 10,661 11,632
12/02 11,785 7,739 8,248
15,191 11,045 12,068
12/04 15,892 12,754 13,829
16,511 14,298 14,959
12/06 17,362 15,821 16,794
20,109 17,629 18,421
12/08 13,489 9,815 10,776
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
"If Held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. "If Redeemed"
returns reflect the deduction of applicable contingent deferred sales charge
(CDSC). Effective December 1, 2004, the period during which a CDSC is applied
to withdrawals was shortened to 5 years. The maximum CDSC for Class B shares
continues to be 4%. For more complete information, please see the prospectus
for details. Note: Shares purchased prior to December 1, 2004 remain subject to
the CDSC in effect at the time you purchased those shares. For performance
information for shares purchased prior to December 1, 2004, please visit
www.pioneerinvestments.com.
All results are historical and assume the reinvestment of dividends and capital
gains. Other share classes are available for which performance and expenses
will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
The net expense ratio reflects contractual expense limitations currently in
effect through 5/1/10 for Class B Shares. There can be no assurance that
Pioneer will extend the expense limitations beyond such time. Please see the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
Pioneer Small and Mid Cap Growth Fund acquired the assets of Papp Small &
Mid-Cap Growth Fund in a reorganization on 2/20/04. The performance of Class B
shares of the Fund from 12/15/98 to 2/20/04 is the performance of Papp Small &
Mid-Cap Growth Fund's single class, which has been restated to reflect any
applicable sales charges and Rule 12b-1 fees (but not other differences in
expenses). This adjustment has the effect of reducing the previously reported
performance of Papp Small & Mid-Cap Growth Fund.
12 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Performance Update | 12/31/08 Class C Shares
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Small and Mid Cap Growth Fund, compared to that of
the Russell Mid Cap Growth Index and the Russell 2500 Growth Index.
Average Annual Total Returns
(As of December 31, 2008)
- ------------------------------------------------------------------
If If
Period Held Redeemed
- ------------------------------------------------------------------
10 Years 3.08% 3.08%
5 Years -2.27 -2.27
1 Year -32.88 -32.88
- ------------------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2008)
- ------------------------------------------------------------------
Gross Net
- ------------------------------------------------------------------
2.42% 2.15%
- ------------------------------------------------------------------
[THE FOLLOWING DATA IS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
Value of $10,000 Investment
Pioneer Small
and Mid Cap Russell 2500 Russell Mid Cap
Growth Fund Growth Index Growth Index
12/98 10,000 10,000 10,000
12/99 11,192 15,129 15,548
12/00 14,552 13,351 13,046
12/09 14,570 10,661 11,632
12/09 11,785 7,739 8,248
12/09 15,191 11,045 12,068
12/09 15,905 12,754 13,829
12/09 16,536 14,298 14,959
12/09 17,423 15,821 16,794
12/09 20,170 17,629 18,421
12/09 13,539 9,815 10,776
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Class C shares held for less than one year are also subject to a 1% contingent
deferred sales charge (CDSC). "If Held" results represent the percent change in
net asset value per share. Returns would have been lower had sales charges been
reflected. All results are historical and assume the reinvestment of dividends
and capital gains. Other share classes are available for which performance and
expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
The net expense ratio reflects contractual expense limitations currently in
effect through 5/1/10 for Class C Shares. There can be no assurance that
Pioneer will extend the expense limitations beyond such time. Please see the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
Pioneer Small and Mid Cap Growth Fund acquired the assets of Papp Small &
Mid-Cap Growth Fund in a reorganization on 2/20/04. The performance of Class C
shares of the Fund from 12/15/98 to 2/20/04 is the performance of Papp Small &
Mid-Cap Growth Fund's single class, which has been restated to reflect any
applicable sales charges and Rule 12b-1 fees (but not other differences in
expenses). This adjustment has the effect of reducing the previously reported
performance of Papp Small & Mid-Cap Growth Fund.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 13
Comparing Ongoing Fund Expenses
As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
- --------------------------------------------------------------------------------
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
(1) Divide your account value by $1,000
Example: an $8,600 account value [divided by] $1,000 = 8.6
(2) Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Small and Mid Cap Growth Fund
Based on actual returns from July 1, 2008 through December 31, 2008.
Share Class A B C
Beginning Account $ 1,000.00 $ 1,000.00 $ 1,000.00
Value on 7/1/08
- ---------------------------------------------------------------------
Ending Account $ 696.26 $ 692.83 $ 693.17
Value on 12/31/08
- ---------------------------------------------------------------------
Expenses Paid $ 5.33 $ 9.15 $ 9.15
During Period*
- ---------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.25%, 2.15%
and 2.15% for Class A, Class B and Class C shares, respectively, multiplied
by the average account value over the period, multiplied by 184/366 (to
reflect the one-half year period).
14 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the
5% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Small and Mid Cap Growth Fund
Based on a hypothetical 5% per year return before expenses, reflecting the
period from July 1, 2008 through December 31, 2008.
Share Class A B C
Beginning Account $ 1,000.00 $ 1,000.00 $ 1,000.00
Value on 7/1/08
- ---------------------------------------------------------------------
Ending Account $ 1,018.85 $ 1,014.33 $ 1,014.33
Value on 12/31/08
- ---------------------------------------------------------------------
Expenses Paid $ 6.34 $ 10.89 $ 10.89
During Period*
- ---------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.25%, 2.15%
and 2.15% for Class A, Class B and Class C shares, respectively, multiplied
by the average account value over the period, multiplied by 184/366 (to
reflect the one-half year period).
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 15
Schedule of Investments | 12/31/08
Shares Value
COMMON STOCKS -- 96.4%
ENERGY -- 3.8%
Oil & Gas Equipment & Services -- 2.1%
27,700 FMC Technologies, Inc.* $ 660,091
52,700 TETRA Technologies, Inc.* 256,122
-----------
$ 916,213
- ----------------------------------------------------------------------------
Oil & Gas Exploration & Production -- 1.7%
20,000 Forest Oil Corp.*(b) $ 329,800
6,500 Pioneer Natural Resources Co. 105,170
10,300 Whiting Petroleum Corp.* 344,638
-----------
$ 779,608
-----------
Total Energy $ 1,695,821
- ----------------------------------------------------------------------------
MATERIALS -- 7.8%
Industrial Gases -- 4.6%
52,500 Airgas, Inc. $ 2,046,975
- ----------------------------------------------------------------------------
Specialty Chemicals -- 3.2%
34,500 Sigma-Aldrich Corp. (b) $ 1,457,280
-----------
Total Materials $ 3,504,255
- ----------------------------------------------------------------------------
CAPITAL GOODS -- 11.1%
Electrical Component & Equipment -- 4.3%
63,600 AMETEK, Inc. $ 1,921,356
- ----------------------------------------------------------------------------
Industrial Machinery -- 6.8%
74,000 Gardner Denver, Inc.* $ 1,727,160
54,000 Idex Corp. 1,304,100
-----------
$ 3,031,260
-----------
Total Capital Goods $ 4,952,616
- ----------------------------------------------------------------------------
TRANSPORTATION -- 1.5%
Air Freight & Couriers -- 1.5%
20,500 Expeditors International of Washington, Inc. (b) $ 682,035
-----------
Total Transportation $ 682,035
- ----------------------------------------------------------------------------
CONSUMER SERVICES -- 5.3%
Education Services -- 5.3%
41,600 DeVry, Inc. $ 2,388,256
-----------
Total Consumer Services $ 2,388,256
- ----------------------------------------------------------------------------
MEDIA -- 0.6%
Advertising -- 0.6%
9,000 WPP Plc $ 266,310
-----------
Total Media $ 266,310
- ----------------------------------------------------------------------------
RETAILING -- 9.4%
Automotive Retail -- 6.1%
89,100 O'Reilly Automotive, Inc.*(b) $ 2,738,934
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
16 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Shares Value
Specialty Stores -- 3.3%
78,600 PetSmart, Inc. $ 1,450,170
-----------
Total Retailing $ 4,189,104
- ------------------------------------------------------------------
HOUSEHOLD & PERSONAL PRODUCTS -- 3.9%
Household Products -- 3.9%
31,700 Clorox Co. $ 1,761,252
-----------
Total Household & Personal Products $ 1,761,252
- ------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 18.1%
Health Care Distributors -- 3.6%
43,500 Henry Schein, Inc.* $ 1,596,015
- ------------------------------------------------------------------
Health Care Equipment -- 6.1%
8,100 C. R. Bard, Inc. $ 682,506
43,500 ResMed Inc.* 1,630,380
10,800 Stryker Corp. 431,460
-----------
$ 2,744,346
- ------------------------------------------------------------------
Health Care Services -- 4.0%
19,800 Express Scripts, Inc.* $ 1,088,604
16,900 Medco Health Solutions, Inc.* 708,279
-----------
$ 1,796,883
- ------------------------------------------------------------------
Health Care Supplies -- 4.4%
68,700 Dentsply International, Inc. (b) $ 1,940,088
-----------
Total Health Care Equipment & Services $ 8,077,332
- ------------------------------------------------------------------
PHARMACEUTICALS & BIOTECHNOLOGY -- 2.8%
Life Sciences Tools & Services -- 2.8%
19,200 Techne Corp. $ 1,238,784
-----------
Total Pharmaceuticals & Biotechnology $ 1,238,784
- ------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 6.4%
Asset Management & Custody Banks -- 6.4%
85,000 Federated Investors, Inc.*(b) $ 1,441,600
40,000 T. Rowe Price Associates, Inc. 1,417,600
-----------
$ 2,859,200
-----------
Total Diversified Financials $ 2,859,200
- ------------------------------------------------------------------
SOFTWARE & SERVICES -- 13.8%
Application Software -- 10.0%
23,000 FactSet Research Systems, Inc. (b) $ 1,017,520
175,500 Informatica Corp.*(b) 2,409,615
98,500 Nuance Communications, Inc.*(b) 1,020,460
-----------
$ 4,447,595
- ------------------------------------------------------------------
Data Processing & Outsourced Services -- 0.9%
11,600 Fiserv, Inc.* $ 421,892
- ------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 17
Schedule of Investments | 12/31/08 (continued)
Shares Value
Systems Software -- 2.9%
79,100 Micros Systems, Inc.* $ 1,290,912
-----------
Total Software & Services $ 6,160,399
- -----------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 6.4%
Electronic Equipment & Instruments -- 3.3%
22,000 Mettler-Toledo International, Inc.* $ 1,482,800
- -----------------------------------------------------------------
Electronic Manufacturing Services -- 3.1%
63,300 Trimble Navigation, Ltd.* $ 1,367,913
-----------
Total Technology Hardware & Equipment $ 2,850,713
- -----------------------------------------------------------------
SEMICONDUCTORS -- 5.5%
38,200 Linear Technology Corp. (b) $ 844,984
81,700 Microchip Technology (b) 1,595,601
-----------
$ 2,440,585
-----------
Total Semiconductors $ 2,440,585
- -----------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $46,263,300) $43,066,662
- -----------------------------------------------------------------
Principal
Amount
TEMPORARY CASH INVESTMENTS -- 20.7%
Security Lending Collateral -- 20.7% (c)
Certificates of Deposit:
$214,506 Abbey National Plc, 3.15%, 8/13/09 $ 214,506
214,476 Bank of Nova Scotia, 3.21%, 5/5/09 214,476
342,796 Bank of Scotland NY, 2.92%, 6/5/09 342,796
386,110 Barclays Bank, 1.5%, 5/27/09 386,110
68,199 Calyon NY, 4.62%, 1/16/09 68,199
429,011 CBA, 4.87%, 7/16/09 429,011
386,110 DNB NOR Bank ASA NY, 3.04%, 6/5/09 386,110
392,974 Intesa SanPaolo S.p.A., 1.44%, 5/22/09 392,974
24,849 NORDEA NY, 4.13%, 4/9/09 24,849
321,758 Royal Bank of Canada NY, 2.7%, 8/7/09 321,758
214,506 Royal Bank of Scotland, 3.06%, 3/5/09 214,506
42,881 Skandinavian Enskilda Bank NY, 3.06%, 2/13/09 42,881
429,011 Societe Generale, 3.29%, 9/4/09 429,011
386,110 Svenska Bank NY, 4.61%, 7/8/09 386,110
429,011 U.S. Bank NA, 2.25%, 8/24/09 429,012
-----------
$ 4,282,309
- ----------------------------------------------------------------------------
Commercial Paper:
421,289 American Honda Finance Corp., 4.95%, 7/14/09 $ 421,289
40,880 BBVA U.S., 2.83%, 3/12/09 40,880
214,506 CME Group, Inc., 2.9%, 8/6/09 214,506
214,483 General Electric Capital Corp., 2.86%, 3/16/09 214,483
429,011 HSBC Bank, Inc., 2.5%, 8/14/09 429,011
The accompanying notes are an integral part of these financial statements.
18 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Principal
Amount
Commercial Paper -- (continued)
$214,506 IBM, 2.39%, 9/25/09 214,506
386,110 Met Life Global Funding, 3.19%, 6/12/09 386,110
429,011 Monumental Global Funding, Ltd., 2.5%, 8/17/09 429,011
386,110 New York Life Global, 2.13%, 09/04/09 386,110
364,659 Westpac Banking Corp., 2.34%, 6/1/09 364,658
----------
$ 3,100,564
- ----------------------------------------------------------------------------
Tri-party Repurchase Agreements:
72,880 Barclays Capital Markets, 0.5%, 1/2/09 $ 72,881
943,824 Deutsche Bank, 0.25%, 1/2/09 943,824
-----------
$ 1,016,705
- ----------------------------------------------------------------------------
Time Deposit:
429,011 BNP Paribas, 0.01%, 1/2/09 $ 429,011
- ----------------------------------------------------------------------------
Shares
Money Market Mutual Funds:
107,253 Columbia Government Reserves Fund, 0.82%, 1/2/09 $ 107,253
321,758 JP Morgan, U.S. Government Money Market Fund, 0.98%, 1/2/09 321,758
-----------
$ 429,011
- ----------------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $9,257,600) $ 9,257,600
- ----------------------------------------------------------------------------------------
TOTAL INVESTMENT IN SECURITIES -- 117.1%
(Cost $55,520,900) (a) $52,324,262
- ----------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (17.1)% $(7,637,045)
- ----------------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $44,687,217
========================================================================================
* Non-income producing security.
(a) At December 31, 2008, the net unrealized loss on investments based on cost
for federal income tax purposes of $56,055,440 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost $ 7,256,735
Aggregate gross unrealized loss for all investments in which there is an
excess of tax cost over value (10,987,913)
-----------
Net unrealized loss $(3,731,178)
===========
The accompanying notes are an integral part of these financial statements.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 19
Schedule of Investments | 12/31/08 (continued)
(b) At December 31, 2008, the following securities were out on loan:
Shares Security Market Value
5,000 Dentsply International, Inc. $ 141,200
20,000 Expeditors International of Washington, Inc. 665,400
22,600 FactSet Research Systems, Inc. 999,824
84,100 Federated Investors, Inc.* 1,426,336
4,000 Forest Oil Corp.* 65,960
101,400 Informatica Corp.* 1,392,222
36,800 Linear Technology Corp. 814,016
80,600 Microchip Technology 1,574,118
47,600 Nuance Communications, Inc.* 493,136
38,800 O'Reilly Automotive, Inc.* 1,192,712
5,600 Sigma-Aldrich Corp. 236,544
- -----------------------------------------------------------------------------
Total $9,001,468
=============================================================================
(c) Security lending collateral is managed by Credit Suisse New York Branch.
Purchases and sales of securities (excluding temporary cash investments) for
the year ended December 31, 2008 aggregated $31,059,397 and $28,913,533,
respectively.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below.
Highest priority is given to Level 1 inputs and lowest priority is given to
Level 3.
Level 1 - quoted prices in active markets for identical securities
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.)
Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining fair value of investments)
The following is a summary of the inputs used as of December 31, 2008, in
valuing the Fund's assets:
Investments
Valuation Inputs in Securities
Level 1 - Quoted Prices $ 43,066,662
Level 2 - Other Significant Observable Inputs 9,257,600
Level 3 - Significant Unobservable Inputs
- ---------------------------------------------------------------
Total $ 52,324,262
===============================================================
The accompanying notes are an integral part of these financial statements.
20 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Statement of Assets and Liabilities | 12/31/08
ASSETS:
Investment in securities (including securities loaned of $9,001,468)
(cost $55,520,900) $52,324,262
Cash 643,825
Receivables --
Fund shares sold 1,044,441
Dividends and interest 11,083
Due from Pioneer Investment Management, Inc. 41,649
Other 37,653
- --------------------------------------------------------------------------------------
Total assets $54,102,913
- --------------------------------------------------------------------------------------
LIABILITIES:
Payables --
Fund shares repurchased $ 75,714
Upon return of securities loaned 9,257,600
Due to affiliates 21,055
Accrued expenses 61,327
- --------------------------------------------------------------------------------------
Total liabilities $ 9,415,696
- --------------------------------------------------------------------------------------
NET ASSETS:
Paid-in capital $48,415,387
Accumulated net realized loss on investments (531,532)
Net unrealized loss on investments (3,196,638)
- --------------------------------------------------------------------------------------
Total net assets $44,687,217
=====================================================================================
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $36,374,458/1,758,084 shares) $ 20.69
Class B (based on $3,698,563/187,592 shares) $ 19.72
Class C (based on $4,614,196/233,089 shares) $ 19.80
MAXIMUM OFFERING PRICE:
Class A ($20.69 [divided by] 94.25%) $ 21.95
=====================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 21
Statement of Operations
For the Year Ended 12/31/08
INVESTMENT INCOME:
Dividends $693,535
Interest 20,569
Income from securities loaned, net 52,958
- --------------------------------------------------------------------------------------
Total investment income $ 767,062
- --------------------------------------------------------------------------------------
EXPENSES:
Management fees $488,688
Transfer agent fees
Class A 97,924
Class B 26,132
Class C 22,323
Distribution fees
Class A 109,715
Class B 62,019
Class C 66,462
Administrative fees 17,244
Shareholder communications expense 50,285
Custodian fees 41,173
Registration fees 56,996
Professional fees 51,382
Printing expense 34,239
Fees and expenses of nonaffiliated trustees 5,221
Miscellaneous 8,006
- --------------------------------------------------------------------------------------
Total expenses $ 1,137,809
Less fees waived and expenses reimbursed by Pioneer
Investment Management, Inc. (300,281)
Less fees paid indirectly (3,469)
- --------------------------------------------------------------------------------------
Net expenses $ 834,059
- --------------------------------------------------------------------------------------
Net investment loss $ (66,997)
- --------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments $ 1,077,016
- --------------------------------------------------------------------------------------
Change in net unrealized gain on investments $(24,087,904)
- --------------------------------------------------------------------------------------
Net loss on investments $(23,010,888)
- --------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(23,077,885)
======================================================================================
The accompanying notes are an integral part of these financial statements.
22 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Statement of Changes in Net Assets
For the Years Ended 12/31/08 and 12/01/07, respectively
Year Ended Year Ended
12/31/08 12/01/07
FROM OPERATIONS:
Net investment loss $ (66,997) $ (430,725)
Net realized gain on investments 1,077,016 3,210,883
Change in net unrealized gain (loss) on investments (24,087,904) 6,241,921
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $(23,077,885) $ 9,022,079
- ------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREOWNERS:
Net realized gain:
Class A ($0.74 and $2.11 per share, respectively) $ (1,235,565) $(2,981,034)
Class B ($0.74 and $2.11 per share, respectively) (139,362) (553,301)
Class C ($0.74 and $2.11 per share, respectively) (162,535) (526,388)
- ------------------------------------------------------------------------------------------
Total distributions to shareowners $ (1,537,462) $(4,060,723)
- ------------------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 44,133,440 $23,359,211
Reinvestment of distributions 1,260,724 3,595,362
Cost of shares repurchased (41,179,480) (24,390,963)
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from
Fund share transactions $ 4,214,684 $ 2,563,610
- ------------------------------------------------------------------------------------------
Net decrease (increase) in net assets $(20,400,663) $ 7,524,966
NET ASSETS:
Beginning of year 65,087,880 57,562,914
- ------------------------------------------------------------------------------------------
End of year $ 44,687,217 $65,087,880
- ------------------------------------------------------------------------------------------
Undistributed net investment income $ 0 $ 0
- ------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 23
Statement of Changes in Net Assets (continued)
'08 Shares '08 Amount '07 Shares '07 Amount
Class A
Shares sold 1,197,701 $34,866,133 496,691 $15,925,118
Reinvestment of distributions 49,032 1,002,762 85,598 2,682,740
Less shares repurchased (1,004,183) (28,054,837) (540,913) (17,154,448)
- --------------------------------------------------------------------------------------------------
Net increase 242,550 $ 7,814,058 41,376 $ 1,453,410
==================================================================================================
Class B
Shares sold 190,454 $ 5,488,855 163,157 $ 5,111,978
Reinvestment of distributions 6,289 123,066 16,518 499,275
Less shares repurchased (295,913) (8,076,041) (59,078) (1,845,845)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) (99,170) $(2,464,120) 120,597 $ 3,765,408
==================================================================================================
Class C
Shares sold 133,696 $ 3,778,452 72,445 $ 2,268,562
Reinvestment of distributions 6,852 134,896 13,631 413,347
Less shares repurchased (179,215) (5,048,602) (115,930) (3,571,127)
- --------------------------------------------------------------------------------------------------
Net decrease (38,667) $(1,135,254) (29,854) $ (889,218)
==================================================================================================
Class R*
Shares sold -- $ -- 1,832 $ 53,553
Less shares repurchased -- -- (61,079) (1,819,543)
- --------------------------------------------------------------------------------------------------
Net decrease -- $ -- (59,247) $(1,765,990)
==================================================================================================
* Class R shares were liquidated on February 1, 2007.
The accompanying notes are an integral part of these financial statements.
24 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Financial Highlights
Year Year
Ended Ended
12/31/08 12/31/07
Class A
Net asset value, beginning of period $ 31.68 $ 28.93
- --------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.02 $ (0.15)
Net realized and unrealized gain (loss) on investments (10.27) 5.01
- --------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (10.25) $ 4.86
Distributions to shareowners:
Net realized gain (0.74) (2.11)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (10.99) $ 2.75
- --------------------------------------------------------------------------------------------
Net asset value, end of period $ 20.69 $ 31.68
============================================================================================
Total return* (32.31)% 16.88%
Ratio of net expenses to average net assets+ 1.25% 1.26%
Ratio of net investment income (loss) to average net assets+ 0.10% (0.51)%
Portfolio turnover rate 51% 21%
Net assets, end of period (in thousands) $ 36,374 $48,012
Ratios assuming no waiver of fees and assumption of expenses by PIM
and no reduction for fees paid indirectly:
Net expenses 1.79% 1.52%
Net investment loss (0.44)% (0.77)%
Ratios assuming waiver of fees and assumption of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 1.25% 1.25%
Net investment income (loss) 0.10% (0.50)%
============================================================================================
Year Year Year
Ended Ended Ended
12/31/06 12/31/05 12/31/04
Class A
Net asset value, beginning of period $ 27.39 $ 26.12 $ 24.76
- ---------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment income (loss) $ (0.18) $ (0.15) $ (0.16)
Net realized and unrealized gain (loss) on investments 1.87 1.42 1.52
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ 1.69 $ 1.27 $ 1.36
Distributions to shareowners:
Net realized gain (0.15) -- --
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ 1.54 $ 1.27 $ 1.36
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 28.93 $ 27.39 $ 26.12
=========================================================================================================
Total return* 6.16% 4.86% 5.49%
Ratio of net expenses to average net assets+ 1.26% 1.25% 1.25%
Ratio of net investment income (loss) to average net assets+ (0.56)% (0.64)% (0.78)%
Portfolio turnover rate 13% 13% 8%
Net assets, end of period (in thousands) $42,654 $53,321 $40,504
Ratios assuming no waiver of fees and assumption of expenses by PIM
and no reduction for fees paid indirectly:
Net expenses 1.62% 1.71% 1.79%
Net investment loss (0.92)% (1.10)% (1.33)%
Ratios assuming waiver of fees and assumption of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 1.25% 1.25% 1.25%
Net investment income (loss) (0.55)% (0.64)% (0.78)%
=========================================================================================================
* 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.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 25
Financial Highlights (continued)
Year Year
Ended Ended
12/31/08 12/31/07
Class B
Net asset value, beginning of period $ 30.52 $ 28.19
- ----------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment loss $ (0.28) $ (0.30)
Net realized and unrealized gain (loss) on investments ( 9.78) 4.74
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (10.06) $ 4.44
Distributions to shareowners:
Net realized gain (0.74) (2.11)
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (10.80) $ 2.33
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 19.72 $ 30.52
==========================================================================================================
Total return* (32.92)% 15.82%
Ratio of net expenses to average net assets+ 2.16% 2.16%
Ratio of net investment loss to average net assets+ (0.87)% (1.40)%
Portfolio turnover rate 51% 21%
Net assets, end of period (in thousands) $ 3,699 $ 8,753
Ratios assuming no waiver of fees and assumption of expenses by PIM and no
reduction for fees paid indirectly:
Net expenses 2.68% 2.38%
Net investment loss (1.39)% (1.62)%
Ratios assuming waiver of fees and assumption of expenses by PIM and reduction for
fees paid indirectly:
Net expenses 2.15% 2.15%
Net investment loss (0.86)% (1.39)%
==========================================================================================================
Year Year
Ended Ended 2/21/04 (a)
12/31/06 12/31/05 to 12/31/04
Class B
Net asset value, beginning of period $ 26.95 $ 25.94 $ 25.32
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment loss $ (0.50) $ (0.29) $ (0.20)
Net realized and unrealized gain (loss) on investments 1.89 1.30 0.82
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ 1.39 $ 1.01 $ 0.62
Distributions to shareowners:
Net realized gain (0.15) -- --
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ 1.24 $ 1.01 $ 0.62
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 28.19 $ 26.95 $ 25.94
========================================================================================================================
Total return* 5.15% 3.89% 2.45%(b
Ratio of net expenses to average net assets+ 2.22% 2.17% 2.16%* *
Ratio of net investment loss to average net assets+ (1.52)% (1.56)% (1.68)%**
Portfolio turnover rate 13% 13% 8%
Net assets, end of period (in thousands) $ 4,684 $ 7,062 $ 3,927
Ratios assuming no waiver of fees and assumption of expenses by PIM and no
reduction for fees paid indirectly:
Net expenses 2.59% 2.62% 2.74%**
Net investment loss (1.89)% (2.01)% (2.26)%**
Ratios assuming waiver of fees and assumption of expenses by PIM and reduction for
fees paid indirectly:
Net expenses 2.21% 2.16% 2.16%**
Net investment loss (1.51)% (1.55)% (1.68)%**
========================================================================================================================
* 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 with no reduction for fees paid indirectly.
(a) Class B Shares were first publicly offered on February 21, 2004.
(b) Not Annualized.
The accompanying notes are an integral part of these financial statements.
26 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Year Year
Ended Ended
12/31/08 12/31/07
Class C
Net asset value, beginning of period $ 30.62 $ 28.29
- ----------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment loss $ (0.25) $ (0.43)
Net realized and unrealized gain (loss) on investments (9.83) 4.87
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ (10.08) $ 4.44
Distributions to shareowners:
Net realized gain (0.74) (2.11)
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (10.82) $ 2.33
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 19.80 $ 30.62
==========================================================================================================
Total return* (32.88)% 15.77%
Ratio of net expenses to average net assets+ 2.16% 2.17%
Ratio of net investment loss to average net assets+ (0.89)% (1.42)%
Portfolio turnover rate 51% 21%
Net assets, end of period (in thousands) $ 4,614 $ 8,322
Ratios assuming no waiver of fees and assumption of expenses by PIM and no
reduction for fees paid indirectly:
Net expenses 2.60% 2.42%
Net investment loss (1.33)% (1.67)%
Ratios assuming waiver of fees and assumption of expenses by PIM and reduction for
fees paid indirectly:
Net expenses 2.15% 2.15%
Net investment loss (0.88)% (1.40)%
==========================================================================================================
Year Year
Ended Ended 2/21/04 (a)
12/31/06 12/31/05 to 12/31/04
Class C
Net asset value, beginning of period $ 26.99 $ 25.96 $ 25.32
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
Net investment loss $ (0.44) $ (0.29) $ (0.17)
Net realized and unrealized gain (loss) on investments 1.89 1.32 0.81
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ 1.45 $ 1.03 $ 0.64
Distributions to shareowners:
Net realized gain ( 0.15) -- --
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ 1.30 $ 1.03 $ 0.64
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 28.29 $ 26.99 $ 25.96
========================================================================================================================
Total return* 5.37% 3.97% 2.53%(b
Ratio of net expenses to average net assets+ 2.05% 2.10% 2.07%* *
Ratio of net investment loss to average net assets+ (1.35)% (1.48)% (1.59)%**
Portfolio turnover rate 13% 13% 8%
Net assets, end of period (in thousands) $ 8,531 $11,054 $ 5,860
Ratios assuming no waiver of fees and assumption of expenses by PIM and no
reduction for fees paid indirectly:
Net expenses 2.41% 2.55% 2.67%**
Net investment loss (1.71)% (1.93)% (2.19)%**
Ratios assuming waiver of fees and assumption of expenses by PIM and reduction for
fees paid indirectly:
Net expenses 2.04% 2.09% 2.07%**
Net investment loss (1.34)% (1.47)% (1.59)%**
========================================================================================================================
* 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 with no reduction for fees paid indirectly.
(a) Class C Shares were first publicly offered on February 21, 2004.
(b) Not Annualized.
The accompanying notes are an integral part of these financial statements.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 27
Notes to Financial Statements | 12/31/08
1. Organization and Significant Accounting Policies
Pioneer Small and Mid Cap Growth Fund (the Fund), is one of seven series of
portfolios comprising Pioneer Series Trust II, a Delaware statutory trust
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Fund, which commenced operations on February
20, 2004, is the successor to the Papp Small and Mid Cap Growth Fund, Inc. Papp
Small and Mid Cap Growth Fund transferred all of its net assets in exchange for
the Fund's Class A shares in a one-to-one exchange ratio on February 20, 2004
pursuant to an agreement and plan of reorganization (the "Reorganization" was
approved by the Shareholders of Papp Small and Mid Cap Growth Fund, Inc. on
February 20, 2004). Accordingly, the reorganization, which was a tax-free
exchange, had no effect on the Fund's operations. The investment objective of
the Fund is long term capital growth.
The Fund offers three classes of shares designated as Class A, Class B and
Class C shares. Class R shares were liquidated on February 1, 2007. Each class
of shares represents an interest in the same portfolio of investments of the
Fund and has identical rights (based on relative net asset values) to assets
and liquidation proceeds. Share classes can bear different class-specific fees
and expenses such as transfer agent and distribution fees. Differences in
class-specific fees and expenses will result in differences in net investment
income and, therefore, the payment of different dividends by each class. The
Amended and Restated Declaration of Trust of the Fund gives the Board the
flexibility to specify either per share voting or dollar-weighted voting when
submitting matters for shareholder approval. Under per share voting, each share
of a class of the Fund is entitled to one vote. Under dollar-weighted voting, a
shareholder's voting power is determined not by the number of shares owned, but
by the dollar value of the shares on the record date. Share classes have
exclusive voting rights with respect to matters affecting only that class,
including with respect to the distribution plan for that class. Class B shares
convert to Class A shares approximately eight years after the date of purchase.
The Fund's financial statements have been prepared in conformity with U.S.
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 income, expenses and gains and losses on investments during the
reporting years. Actual results could differ from those estimates.
28 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
At times, the Fund's investments may represent industries or industry sectors
that are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors. The Fund's prospectuses contain unaudited information
regarding the Fund's principal risks. Please refer to these documents when
considering the Fund's principal risks.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements, which are consistent with
those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Fund is computed once daily, on each day the New York Stock Exchange
(NYSE) is open, as of the close of regular trading on the NYSE. 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 using fair value methods pursuant to procedures
adopted by the Board of Trustees. Trading in foreign securities is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in computing the net asset value
of the Fund's shares are determined as of such times. The Fund may also use
fair value methods to value a security, including a non-U.S. security, when
the closing market price on the principal exchange where the security is
traded no longer reflects the value of the security. At December 31, 2008
there were no securities that were valued using fair value methods.
Temporary cash investments are valued at cost which approximates market
value.
Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Fund becomes aware of the ex-dividend
data in the exercise of reasonable diligence. Dividend and interest income
is recorded on the accrual basis, net of unrecoverable foreign taxes
withheld at the applicable country rates.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 29
B. 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
shareowners. Therefore, no federal income tax provision is required. Tax
years for the prior three fiscal years remain subject to examination by tax
authorities.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the sources of the Fund's distributions may be
shown in the accompanying financial statements as from or in excess of net
investment income as from net realized gain on investment transactions, or
as from paid-in capital, depending on the type of book/tax differences that
may exist.
At December 31, 2008, the Fund has reclassified $66,997 to decrease
accumulated net investment loss and $66,997 to decrease paid-in capital, to
reflect permanent book/tax differences. The reclassification has no impact
on the net assets of the Fund and presents the Fund's capital accounts on a
tax basis.
The tax character of distributions paid during the years ended December 31,
2008 and December 31, 2007 was as follows:
2008 2007
Distributions paid from:
Ordinary income $1,537,462 $ --
Long-term capital gain -- 4,060,723
----------------------------------------------------------
Total $1,537,462 $4,060,723
==========================================================
The following shows components of distributable earnings on a federal
income tax basis at December 31, 2008:
2008
Distributable earnings:
Undistributed long-term gain $ 3,008
Unrealized Depreciation (3,731,178)
----------------------------------------------------------
Total $(3,728,170)
==========================================================
The difference between book basis and tax-basis unrealized appreciation is
attributable to the tax deferral of losses on wash sales.
C. 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 a wholly owned indirect subsidiary of UniCredit S.p.A.
30 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
(UniCredit), earned approximately $9,869 in underwriting commissions on the
sale of Class A shares during the year ended December 31, 2008.
D. Class Allocations
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.
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 (see Note 4). Shareowners of each class participate in all
expenses and fees paid to the transfer agent, Pioneer Investment Management
Shareholder Services, Inc. (PIMSS), for its services, which are allocated
based on the number of accounts in each class and the ratable allocation of
related out-of-pocket expenses (see Note 3).
Distributions to shareowners 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 on the same day, except
that Class A, Class B and Class C shares bear different transfer agent and
distribution expense rates.
E. Securities Lending
The Fund lends securities in its portfolio to certain broker-dealers or
other institutional investors. When entering into a securities loan
transaction, the Fund typically receives cash collateral from the borrower
equal to at least the value of the securities loaned, which is invested in
temporary cash investments. Credit Suisse, New York Branch, as the Fund's
security lending agent, manages the Fund's securities lending collateral.
The income earned on the investment of collateral is shared with the
borrower and the lending agent in payment of any rebate due to the borrower
with respect to the securities loan, and in compensation for the lending
agent's services to the Fund. The Fund also continues to receive interest
or payments in lieu of dividends on the securities loaned. Gain or loss on
the value of the loaned securities that may occur during the term of the
loan will be for the account of the Fund. The amount of the collateral is
required to be adjusted daily to reflect any price fluctuation in the value
of the loaned securities. The Fund has the right, under the lending
agreement, to terminate the loan and recover the securities from the
borrower with prior notice. The Fund will be required to return the cash
collateral to the borrower and could suffer a loss if the value of the
collateral, as invested, has declined.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 31
F. Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, the value
of the underlying securities (collateral), including accrued interest, is
required to be at least equal to or in excess of the value of the
repurchase agreement. The collateral for all repurchase agreements is held
in safekeeping in the customer-only account of the Fund's custodian or
subcustodians. The Fund's investment adviser, Pioneer Investment
Management, Inc. (PIM), is responsible for determining that the value of
the collateral remains at least equal to the repurchase price.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit, manages the Fund's
portfolio. Management fees are calculated daily at the annual rate of 0.85% of
the Fund's average daily net assets up to $1 billion and 0.80% on assets over
$1 billion. For the year ended December 31, 2008, the management fee was
equivalent to a rate of 0.85% of average net assets.
PIM, and not the Fund pays a portion of the fee it receives from the Fund to L.
Roy Papp & Associates LLP (Papp) as compensation for its sub advisory services
to the Fund.
Through May 1, 2010, PIM had agreed not to impose all or a portion of its
management fee and to assume other operating expenses of the Fund to the extent
necessary to limit expenses to 1.25%, 2.15%, 2.15%, for Classes A, B, and C
respectively.
Under the management and administration agreements, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Fund. Included in "Due to Affiliates" reflected on the Statement of
Assets and Liabilities is $1,034 in management fees, administrative costs and
certain others fees payable to PIM at December 31, 2008.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Fund at negotiated rates.
In addition, the Fund reimbursed PIMSS for out-of-pocket expenses related to
shareholder communications activities such as proxy and statement mailings,
outgoing phone calls and omnibus relationship contracts. For the year ended
December 31, 2008, such out of pocket expenses by class of shares were as
follows:
32 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Shareholder Communications:
Class A $43,431
- ---------------------------------------------------------------
Class B 3,316
- ---------------------------------------------------------------
Class C 3,538
- ---------------------------------------------------------------
Total $50,285
- ---------------------------------------------------------------
Included in "Due to affiliates" reflected on the Statement of Assets and
Liabilities is $19,548 in transfer agent fees and shareholder communications
expense payable to PIMSS at December 31, 2008.
4. Distribution and Service Plans
The Fund adopted a Distribution Plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940 with respect to its Class A, Class B and Class C shares.
Pursuant to the Plan, the Fund pays PFD 0.25% of the average daily net assets
attributable to Class A shares as compensation for personal services and/or
account maintenance services or distribution services with regard to Class A
shares. Pursuant to the Plan, the Fund pays PFD 1.00% of the average daily net
assets attributable to Class B and Class C shares. The fee for Class B and
Class C shares 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. Prior to
February 1, 2008, PFD was reimbursed under the Distribution Plan for
distribution expenses in an amount of up to 0.25% of the average daily net
assets attributable to Class A shares. Included in "Due to affiliates"
reflected on the Statement of Assets and Liabilities is $473 in distribution
fees payable to PFD at December 31, 2008.
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 certain net
asset value purchases of Class A shares that are redeemed within 18 months of
purchase. Class B shares that are redeemed within five years of purchase are
subject to a CDSC at declining rates beginning at 4.00%, 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% based on the lower
of cost or market value of shares being redeemed. Proceeds from the CDSCs are
paid to PFD. For the year ended December 31, 2008, CDSCs in the amount of
$16,774 were paid to PFD.
5. Expense Offset Arrangements
The Fund has entered into certain expense offset arrangements with PIMSS
resulting in a reduction in the Fund's total expenses due to interest earned on
cash held by PIMSS. For the year ended December 31, 2008, the Fund's expenses
were reduced by $3,469 under such arrangements.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 33
6. New Pronouncement
In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures
about Derivative Instruments and Hedging Activities ("SFAS 161"), was issued
and is effective for fiscal years beginning after November 15, 2008. SFAS 161
requires enhanced disclosures about an entity's derivative and hedging
activities. Management is currently evaluating the impact the adoption of SFAS
161 will have on the Fund's financial statement disclosures.
34 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Pioneer Series Trust II and the
Shareowners of Pioneer Small and Mid Cap Growth Fund:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of Pioneer
Small and Mid Cap Growth Fund, one of the series constituting Pioneer Series
Trust II (the "Trust"), including the schedule of investments, as of December
31, 2008, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Trust'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 the standards of the Public Company
Accounting Oversight Board (United States). 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. We were not engaged to perform an audit of the Trust's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Trust's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of December 31, 2008, by correspondence
with the custodian and brokers. 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 Small and Mid Cap Growth Fund of Pioneer Series Trust II at December
31, 2008, the results of its operations for the year then ended, the changes in
its net assets and financial highlights for each of the periods indicated
therein, in conformity with U.S. generally accepted accounting principles.
/s/Ernst & Young LLP
Boston, Massachusetts
February 18, 2009
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 35
Approval of Sub-Advisory Agreement (unaudited)
Pioneer Investment Management, Inc. (PIM) serves as the Fund's investment
adviser pursuant to an investment advisory agreement between PIM and the Fund.
PIM has retained L. Roy Papp & Associates, Inc. to serve as the sub-adviser to
the Fund pursuant to a sub-advisory agreement between PIM and the sub-adviser.
At a meeting held on January 8, 2008, the Trustees of the Fund approved an
amended and restated investment advisory agreement between the Fund and PIM.
Shareholders of the Fund approved the amended and restated investment advisory
agreement on May 13, 2008. The material factors and conclusions with respect
thereto that formed the basis for the Trustees' approval of the amended and
restated investment advisory agreement are included in the Fund's semi-annual
report for the period ended June 30, 2008.
At a meeting held on November 11, 2008, based on their evaluation of the
information provided by PIM and the sub-adviser, the Trustees of the Fund,
including the independent Trustees voting separately, unanimously approved the
continuation of the sub-advisory agreement for the Fund for another year. In
considering the continuation of the sub-advisory agreement, the Trustees
considered various factors that they determined were relevant, including the
factors described below. The Trustees did not identify any single factor as the
controlling factor in determining to approve the continuation of the sub-
advisory agreement.
Nature, Extent and Quality of Services
The Trustees considered the nature, extent and quality of the services provided
to the Fund by the sub-adviser, taking into account the investment objective
and strategy of the Fund and the information related to the Fund provided to
the Trustees at each quarterly meeting. The Trustees reviewed the terms of the
sub-advisory agreement. The Trustees also reviewed the sub-adviser's investment
approach for the Fund and its research process. The Trustees considered the
resources of the sub-adviser and the personnel of the sub-adviser who provide
investment management services to the Fund.
Based on these considerations, the Trustees concluded that the nature, extent
and quality of services provided by the sub-adviser to the Fund were
satisfactory and consistent with the terms of the sub-advisory agreement.
36 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Performance of the Fund
The Trustees considered the performance results of the Fund over various time
periods. They reviewed information comparing the Fund's performance with the
average performance of its peer group of funds as classified by Morningstar,
Inc. (Morningstar), an independent provider of investment company data, and
with the performance of the Fund's benchmark index. The Trustees considered
that the Fund's annualized total return was in the first quintile of its
Morningstar category for the one year period ended June 30, 2008 and that the
Fund's annualized total return was in the second quintile of its Morningstar
category for the three year period ended June 30, 2008. (In all quintile
rankings referred to throughout this disclosure, first quintile is most
favorable to the Fund's shareowners. Thus, highest relative performance would
be first quintile and lowest relative expenses would also be first quintile.)
The Trustees concluded that the investment performance of the Fund was
satisfactory.
Sub-advisory Fee and Expenses
The Trustees considered the fees payable to the sub-adviser under the sub-
advisory agreement. They also considered that PIM, not the Fund, paid the
sub-adviser out of the management fees paid to PIM under the investment
advisory agreement. The Trustees considered information regarding the
management fees and expenses of the Fund in comparison to the management fees
of its peer group of funds as classified by Morningstar and the expense ratios
of a peer group of funds selected on the basis of criteria determined by the
independent Trustees for this purpose using data provided by Strategic Insight
Mutual Fund Research and Consulting, LLC (Strategic Insight), an independent
third party.
The Trustees considered that the Fund's management fee for the twelve months
ended June 30, 2008 was in the third quintile relative to the management fees
paid by other funds in its peer group Morningstar category for the comparable
period. The Trustees also considered that the Fund's expense ratio for the
twelve months ended June 30, 2008 was in the first quintile relative to its
Strategic Insight peer group.
The Trustees also reviewed the advisory fees charged by the sub-adviser to its
separate account clients. The Trustees noted that the fee rates for those
separate accounts generally were higher than the sub-advisory fees paid to the
sub-adviser with respect to the Fund. It was noted that the sub-adviser
reported that it did not currently manage any accounts with investment
strategies that were similar to the Fund.
The Trustees concluded that the sub-advisory fee payable by PIM to the
sub-adviser of the Fund was reasonable in relation to the nature and quality of
services provided by the sub-adviser. The Trustees also concluded that the
Fund's expense ratio was reasonable.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 37
Profitability
The Trustees considered information provided by PIM regarding the profitability
of PIM with respect to the advisory services provided by PIM to the Fund,
including the methodology used by PIM in allocating certain of its costs to the
management of the Fund. They also considered PIM's profit margin in connection
with the overall operation of the Fund. The Trustees further considered the
sub-advisory fees received by the sub-adviser with respect to the Fund and the
percentage that such fees represented of the sub-adviser's overall revenues
(for the 12-month period ended December 31, 2007). They also reviewed the
financial results realized by PIM and its affiliates from non-fund businesses.
The Trustees considered the profit margins with respect to the Fund in
comparison to the limited industry data available and noted that the
profitability of any adviser was affected by numerous factors, including its
organizational structure and method for allocating expenses. The Trustees
recognized that each of PIM and the sub-adviser should be entitled to earn a
reasonable level of profit for the services provided to the Fund. The Trustees
concluded that the profit margins with respect to the management of the Fund
were not unreasonable.
Economies of Scale
The Trustees considered the economies of scale with respect to the management
of the Fund, whether the Fund had appropriately benefited from any economies of
scale, and whether there was potential for realization of any further economies
of scale. The Trustees concluded that, because of the breakpoints in the
management and sub-advisory fee schedules and the reduced fee rates above
certain asset levels, any perceived or potential economies of scale would be
shared with the Fund.
Other Benefits
The Trustees considered that the sub-adviser reported that it does not receive
any other benefits from its relationship with the Fund.
Conclusion
After consideration of the factors described above as well as other factors,
the Trustees, including all of the independent Trustees, concluded that the
sub-advisory agreement for the Fund between PIM and the sub-adviser, including
the fees payable thereunder, was fair and reasonable and voted to approve the
continuation of the sub-advisory agreement for the Fund.
38 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Trustees, Officers and Service Providers
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerinvestments.com. This information is also available
on the Securities and Exchange Commission's web site at http://www.sec.gov.
Trustees and Officers
The Board of Trustees provides broad supervision over the fund's affairs. The
officers of the fund are responsible for the fund's operations. The Trustees
and officers are listed below, together with their principal occupations during
the past five years. Trustees who are interested persons of the fund within the
meaning of the 1940 Act are referred to as Interested Trustees. Trustees who
are not interested persons of the fund are referred to as Independent Trustees.
Each of the Trustees serves as a trustee of each of the 76 U.S. registered
investment portfolios for which Pioneer serves as investment adviser (the
"Pioneer Funds"). The address for all Trustees and all officers of the fund is
60 State Street, Boston, Massachusetts 02109.
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08 39
Interested Trustees
Position Held Length of Service
Name and Age With the Fund and Term of Office
John F. Cogan, Jr. (82)* Chairman of the Board, Trustee since 2003.
Trustee and President Serves until a successor
trustee is elected or
earlier retirement or
removal.
- --------------------------------------------------------------------------------
Daniel K. Kingsbury (50)* Trustee and Executive Trustee since 2008.
Vice President Serves until a successor
trustee is elected or
earlier retirement or
removal.
- --------------------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Trustee
John F. Cogan, Jr. (82)* Deputy Chairman and a Director of Pioneer Global Asset Man- None
agement S.p.A. ("PGAM"); Non-Executive Chairman and a Direc-
tor of Pioneer Investment Management USA Inc. ("PIM-USA");
Chairman and a Director of Pioneer; Chairman and Director of
Pioneer Institutional Asset Management, Inc. (since 2006);
Director of Pioneer Alternative Investment Management Limited
(Dublin); President and a Director of Pioneer Alternative Invest-
ment Management (Bermuda) Limited and affiliated funds;
Director of PIOGLOBAL Real Estate Investment Fund (Russia)
(until June 2006); Director of Nano-C, Inc. (since 2003); Director
of Cole Management Inc. (since 2004); Director of Fiduciary
Counseling, Inc.; President and Director of Pioneer Funds Dis-
tributor, Inc. ("PFD") (until May 2006); President of all of the
Pioneer Funds; and Of Counsel, Wilmer Cutler Pickering Hale
and Dorr LLP
- --------------------------------------------------------------------------------------------------------------------------
Daniel K. Kingsbury (50)* Director, CEO and President of Pioneer Investment Management None
USA Inc. (since February 2007); Director and President of
Pioneer Investment Management, Inc. and Pioneer Institutional
Asset Management, Inc. (since February 2007); Executive
Vice President of all of the Pioneer Funds (since March 2007);
Director of Pioneer Global Asset Management S.p.A. (since
April 2007); Head of New Markets Division, Pioneer Global Asset
Management S.p.A. (2000 - 2007)
- --------------------------------------------------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are officers or directors of the fund's investment
adviser and certain of its affiliates.
40 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Independent Trustees
Position Held Length of Service
Name and Age With the Fund and Term of Office
David R. Bock (65) Trustee Trustee since 2005.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------
Mary K. Bush (60) Trustee Trustee since 2003.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Trustee
David R. Bock (65) Executive Vice President and Chief Financial Officer, I-trax, Inc. Director of Enterprise Com-
(publicly traded health care services company) (2004 - 2007); munity Investment, Inc.
Partner, Federal City Capital Advisors (boutique merchant bank) (privately-held affordable
(1997 to 2004 and 2008 - present); and Executive Vice Presi- housing finance company);
dent and Chief Financial Officer, Pedestal Inc. (internet-based and Director of New York
mortgage trading company) (2000 - 2002) Mortgage Trust (publicly
traded mortgage REIT)
- --------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (60) President, Bush International, LLC (international financial Director of Marriott Interna-
advisory firm) tional, Inc., Director of Dis-
cover Financial Services
(credit card issuer and elec-
tronic payment services);
Director of Briggs & Stratton
Co. (engine manufacturer);
Director of UAL Corporation
(airline holding company)
Director of Mantech Interna-
tional Corporation (national
security, defense, and intel-
ligence technology firm);
and Member, Board of
Governors, Investment
Company Institute
- --------------------------------------------------------------------------------------------------------------------------
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
41
Independent Trustees (continued)
Position Held Length of Service
Name and Age With the Fund and Term of Office
Benjamin M. Friedman (64) Trustee Trustee since 2008.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- --------------------------------------------------------------------
Margaret B.W. Graham (61) Trustee Trustee since 2003.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- --------------------------------------------------------------------
Thomas J. Perna (58) Trustee Trustee since 2006.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- --------------------------------------------------------------------
Marguerite A. Piret (60) Trustee Trustee since 2003.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- --------------------------------------------------------------------
Stephen K. West (80) Trustee Trustee since 2008.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- --------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Trustee
Benjamin M. Friedman (64) Professor, Harvard University Trustee, Mellon Institutional
Funds Investment Trust and
Mellon Institutional Funds
Master Portfolio (oversees 17
portfolios in fund complex)
- ------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (61) Founding Director, Vice-President and Corporate Secretary, The None
Winthrop Group, Inc. (consulting firm); and Desautels Faculty of
Management, McGill University
- ------------------------------------------------------------------------------------------------------------------------------
Thomas J. Perna (58) Chief Executive Officer, Quadriserv, Inc. (2008 - present) (tech- None
nology products for securities lending industry); Private investor
(2004 - 2008); and Senior Executive Vice President, The Bank of
New York (financial and securities services) (1986 - 2004)
- ------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (60) President and Chief Executive Officer, Newbury, Piret & Company, Director of New America
Inc. (investment banking firm) High Income Fund, Inc.
(closed-end investment
company)
- ------------------------------------------------------------------------------------------------------------------------------
Stephen K. West (80) Senior Counsel, Sullivan & Cromwell LLP (law firm) Director, The Swiss Helvetia
Fund, Inc. (closed-end
investment company)
- ------------------------------------------------------------------------------------------------------------------------------
42 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
Fund Officers
Position Held Length of Service
Name and Age With the Fund and Term of Office
Dorothy E. Bourassa (60) Secretary Since 2003. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------
Christopher J. Kelley (44) Assistant Secretary Since 2003. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------
Mark E. Bradley (49) Treasurer Since 2008. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------
Luis I. Presutti (43) Assistant Treasurer Since 2003. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------
Gary Sullivan (50) Assistant Treasurer Since 2003. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Officer
Dorothy E. Bourassa (60) Secretary of PIM-USA; Senior Vice President - Legal of Pioneer; None
Secretary/Clerk of most of PIM-USA's subsidiaries; and Secretary
of all of the Pioneer Funds since September 2003 (Assistant
Secretary from November 2000 to September 2003)
- ------------------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (44) Associate General Counsel of Pioneer since January 2008 None
and Assistant Secretary of all of the Pioneer Funds since
September 2003; Vice President and Senior Counsel of Pioneer
from July 2002 to December 2007
- ------------------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (49) Vice President - Fund Accounting, Administration and Controller- None
ship Services of Pioneer; and Treasurer of all of the Pioneer
Funds since March 2008; Deputy Treasurer of Pioneer from
March 2004 to February 2008; Assistant Treasurer of all of the
Pioneer Funds from March 2004 to February 2008; and Treasurer
and Senior Vice President, CDC IXIS Asset Management Services
from 2002 to 2003
- ------------------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (43) Assistant Vice President - Fund Accounting, Administration and None
Controllership Services of Pioneer; and Assistant Treasurer of all
of the Pioneer Funds
- ------------------------------------------------------------------------------------------------------------------------------
Gary Sullivan (50) Fund Accounting Manager - Fund Accounting, Administration and None
Controllership Services of Pioneer; and Assistant Treasurer of all
of the Pioneer Funds
- ------------------------------------------------------------------------------------------------------------------------------
Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
43
Fund Officers (continued)
Position Held Length of Service
Name and Age With the Fund and Term of Office
Katherine Kim Sullivan (35) Assistant Treasurer Since 2003. Serves at
the discretion of the
Board
- ------------------------------------------------------------------------------
Teri W. Anderholm (49) Chief Compliance Officer Since 2007. Serves at
the discretion of the
Board
- ------------------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Officer
Katherine Kim Sullivan (35) Fund Administration Manager - Fund Accounting, Administration None
and Controllership Services since June 2003 and Assistant Trea-
surer of all of the Pioneer Funds since September 2003; Assis-
tant Vice President - Mutual Fund Operations of State Street
Corporation from June 2002 to June 2003 (formerly Deutsche
Bank Asset Management)
- --------------------------------------------------------------------------------------------------------------------------
Teri W. Anderholm (49) Chief Compliance Officer of Pioneer since December 2006 None
and of all the Pioneer Funds since January 2007; Vice President
and Compliance Officer, MFS Investment Management
(August 2005 to December 2006); Consultant, Fidelity Invest-
ments (February 2005 to July 2005); Independent Consultant
(July 1997 to February 2005)
- --------------------------------------------------------------------------------------------------------------------------
The outstanding capital stock of PFD, Pioneer and PIMSS is indirectly wholly
owned by UniCredito Italiano S.p.A. ("UniCredito Italiano"), one of the largest
banking groups in Italy. Pioneer, the fund's investment adviser, provides
investment management and financial services to mutual funds, institutional and
other clients.
44 Pioneer Small and Mid Cap Growth Fund | Annual Report | 12/31/08
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:
- --------------------------------------------------------------------------------
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our internet e-mail address ask.pioneer@pioneerinvestments.com
(for general questions about Pioneer only)
Visit our web site: pioneerinvestments.com
This report must be accompanied by a prospectus.
The Fund files a complete schedule of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
- --------------------------------------------------------------------------------
Pioneer Tax Free
Money Market Fund
- --------------------------------------------------------------------------------
Annual Report | December 31, 2008
- --------------------------------------------------------------------------------
Ticker Symbols:
Class A TTAXX
Class Y PTYXX
[LOGO]PIONEER
Investments(R)
visit us: pioneerinvestments.com
Table of Contents
Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 8
Performance Update 9
Comparing Ongoing Fund Expenses 10
Schedule of Investments 12
Financial Statements 17
Notes to Financial Statements 23
Report of Independent Registered Public Accounting Firm 28
Trustees, Officers and Service Providers 30
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 1
President's Letter
Dear Shareowner,
Stock and bond markets around the globe this year have experienced one of their
most tumultuous periods in history. Investors have witnessed volatility of a
magnitude that many have never before seen. Distance often provides the best
vantage point for perspective. Still, we believe that the benefits of basic
investment principles that have stood the test of time -- even in the midst of
market turmoil -- cannot be underestimated.
First, invest for the long term. The founder of Pioneer Investments, Philip L.
Carret, began his investment career during the 1920s. One lesson he learned is
that while great prosperity affords an advantageous time for selling stocks,
extreme economic slumps can create opportunities for purchase. Indeed, many of
our portfolio managers, who follow the value-conscious investing approach of
our founder, are looking at recent market conditions as an opportunity to buy
companies whose shares we believe have been unjustifiably beaten down by
indiscriminate selling, but that we have identified as having strong prospects
over time. While investors may be facing a sustained market downturn, we
continue to believe that patience, along with staying invested in the market,
are important considerations for long-term investors.
A second principle is to stay diversified across different types of
investments. The global scope of the current market weakness poses challenges
for this basic investment axiom. But the turbulence makes now a good time to
reassess your portfolio and make sure that your investments continue to meet
your needs. We believe you should work closely with your financial advisor to
find the mix of stocks, bonds and money market assets that is best aligned to
your particular risk tolerance and investment objective.
As the investment markets sort through the continuing crisis in the financial
industry, we are staying focused on the fundamentals and risk management. With
more than 80 years of experience behind us, we have learned how to navigate
turbulent markets. At Pioneer Investments, risk management has always been a
critical part of our culture -- not just during periods of extraordinary
volatility. Our investment process is based on fundamental research,
quantitative analysis and active portfolio management. This three-pillared
process, which we apply to each of our portfolios, is supported by an
integrated team approach and is designed to carefully balance risk and reward.
While we
2 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
see potential chances for making money in many corners of the market, it takes
research and experience to separate solid investment opportunities from
speculation.
We invite you to learn more about Pioneer and our time-tested approach to
investing by consulting with your financial advisor or visiting us online at
www.pioneerinvestments.com. Thank you for investing with Pioneer.
Respectfully,
/s/ Daniel K. Kingsbury
Daniel K. Kingsbury
President and CEO
Pioneer Investment Management USA, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 3
Portfolio Management Discussion | 12/31/08
In the following interview, Pioneer Tax Free Money Market Fund Portfolio
Manager Seth Roman outlines the investment environment for tax-free money
market securities during the Fund's most recent fiscal year ended December 31,
2008, the Fund's performance during the period, his investment strategy, and
his outlook going forward.
Q How did the Fund perform during its most recent fiscal year ended
December 31, 2008?
A For the 12-month period ended December 31, 2008, the Fund's Class A shares
posted a 1.58% total return at net asset value. Over the same 12-month
period, the average return of the 108 funds in Lipper's Tax-Exempt Money
Market category was 1.69%.
Q Will you describe the investing environment for tax-exempt money market funds
during the 12-month period ended December 31, 2008?
A In March 2008, Wall Street was shocked by the rapid demise of Bear Stearns,
and the U.S. Federal Reserve Board (the Fed) stepped in to arrange that
firm's acquisition. In addition, during that time period the financial
status of the three largest "monoline" insurers -- AMBAC, FGIC and MBIA --
which had, since the 1970s, insured billions of dollars in tax-exempt
securities up to AAA ratings -- deteriorated swiftly. The three insurers'
exposure to significant mortgage securities losses caused the credit
ratings of the companies to be downgraded to below AAA. Those events, in
turn, prompted investors to look beyond bond insurance and reexamine the
underlying creditworthiness of hundreds of AAA-insured issues, creating
significant volatility within the short- and long-term tax-exempt markets.
During the fall of 2008, the financial crisis reached a crescendo, as
Lehman Brothers failed, and the U.S. government was forced to rescue a
number of major financial institutions, including AIG, Fannie Mae and
Freddie Mac. In the aftermath of those events, credit markets across the
maturity spectrum dried up, and market watchers worried over the health of
the global financial system.
In response to a massive credit crunch, a faltering U.S. economy and the
breakdown of trust (and lending) between major financial institutions, the
Fed and the U.S. Treasury Department (as well as foreign central banks and
governments) were forced to act swiftly and decisively in an effort to
restore liquidity to the financial system. Over the course of 2008, the Fed
lowered short-term interest rates on a number of occasions. (The target
range for the Federal funds rate, which began the year at 4%, was lowered
to between
4 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
0% and 0.25% by December 31, 2008.) In addition, the Fed acted
innovatively, creating a number of lending facilities for various areas of
the credit markets, including lending facilities for asset-backed
commercial paper and the money markets. By December, these actions had
restored a measure of normalcy to the money markets, and credit markets in
general.
Q What has been your strategy for the Fund over the 12-month period ended
December 31, 2008?
A We have continued to maintain broad diversification within the Fund's
portfolio, both on a regional and national basis, with AAA credits in
revenue issues. As we pursue our nationally focused diversification
strategy, we strongly emphasize high quality and safety of principal.
In a volatile period for all financial markets, we took an extremely
cautious approach in managing the Fund's average maturity. For this reason,
the Fund invested principally in daily and weekly floating rate securities.
These floating rate securities are extremely liquid, with yields that
adjust daily or weekly based on market conditions, thus providing us with
strategic flexibility and the Fund with reasonable yield. In terms of
insured securities, because of the deterioration of the monoline insurers,
we have discounted any insurance that may be associated with a particular
security and continue to investigate closely the creditworthiness of each
issuer whose securities we are considering for purchase. In addition, we
chose not to extend the Fund's maturity during most of the 12-month period
because we perceived a lack of creditworthy longer-term notes in the
marketplace. By December 2008, when liquidity began to return to credit
markets, we looked for opportunities within commercial paper issues and
extended the Fund's maturity slightly to pick up additional yield. The Fund
also emphasized education-related securities, especially within the state
of Texas, where the economy is well diversified and has been holding up
reasonably well in a difficult environment.
Q What is your outlook?
A Having endured a very difficult period last fall, the credit market
environment has improved. However, economic statistics, including
employment reports continue to be unfavorable, and it is difficult to
predict how long the U.S. recession will last. Because of the government's
active and innovative approach to monetary and fiscal policy, we agree with
Fed Chairman Bernanke that the country will avoid another Great Depression.
However, concern over a possible deflationary spiral persists. We believe
that the Obama Administration will provide enough fiscal stimulus --
including funds for infrastructure and aid to municipalities -- to spur the
economy eventually to recovery, possibly later this year or by mid-2010.
For the economy to bounce back, housing prices must stabilize, and job
losses will have to abate.
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 5
In the coming months, we will continue to look for opportunities to extend
the Fund's maturity, though with due caution. Because state and local tax
receipts are likely to decline and negatively impact municipal budgets
across the United States, we will continue to examine credit quality
carefully and invest with extreme caution. In addition, we will monitor
market movements strictly, and seek to take advantage of any upward
movement in short-term yields while maintaining a high-quality portfolio.
Please refer to the Schedule of Investments on pages 12-16 for a full listing
of Fund securities.
The performance of each class of the Fund is the performance of the predecessor
fund's Investor Class, which has been restated to reflect differences in any
applicable sales charges but not Rule 12b-1 fees or other differences in
expenses. If all the expenses of the Pioneer fund were reflected, the
performance would be lower.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund. Fund shares are
not federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. When interest rates rise, the
prices of fixed income securities in the Fund will generally fall. Conversely,
when interest rates fall, the prices of fixed income securities in the Fund
will generally rise.
The Fund has enrolled in the U.S. Treasury Department's Temporary Guarantee
Program for Money Market Funds (the "Program").
The Program seeks to guarantee the $1.00 net asset value (NAV) of certain
shares of money market funds as of September 19, 2008. The guarantee would be
triggered in the event the market-based net asset value of a participating
fund's share falls below $0.995 and that situation has not been cured. Recovery
under the Program would require the Fund to liquidate. Upon liquidation, and
subject to the availability of assets under the Program, eligible shareholders
who have continued to maintain accounts would be entitled to receive a payment
equal to any shortfall between the amount received by a shareholder in the
liquidation and $1.00 per share.
Only shareholders of record of the Fund as of September 19, 2008, are eligible
to receive the benefit of the guarantee. Any increase in the number of shares
held in the Fund in excess of shares held at the close of business on September
19, 2008 will not be covered. If, following September 19, 2008, the number of
shares held in an account fluctuates, shareholders will be covered for either
the number of shares held as of the close of business on September 19, 2008, or
the number of shares held on the date of the trigger event, whichever is less.
If a shareholder's account is closed with the Fund, any future investments in
the Fund will not be guaranteed.
6 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
The Treasury has extended the Program's expiration date from December 18, 2008
to April 30, 2009. The Treasury has discretion to continue the Program until
September 18, 2009. The Fund has submitted an extension notice to the Treasury
in order to participate in the extended Program. If the Program were extended
beyond April 30, 2009, eligible funds would have to renew their participation
to maintain coverage. There is no assurance that the Fund will participate in
the Program if it is extended beyond April 30, 2009.
In order to participate in the initial three-month period of the Program, the
Fund paid to the U.S. Treasury Department a fee in the amount of 0.01 % of the
Fund's net asset value as of the close of business on September 19, 2008. In
order to participate in the extended period of the Program, the Fund paid to
the U.S. Treasury Department a fee in the amount of 0.015% of the Fund's net
asset value as of the close of business on September 19, 2008. These expenses
will be borne by the Fund without regard to any expense limitation currently in
effect for the Fund and are reflected in the Statement of Operations. Any
additional cost to participate in the extended Program also will be borne by
the Fund.
For more information about the Program's scope and limitations, please see the
Fund's most recent prospectus as supplemented on December 22, 2008.
Investments in the Fund are subject to possible loss due to the financial
failure of issuers of underlying securities and their inability to meet their
debt obligations. Investing in foreign and/or emerging markets securities
involves risks relating to interest rates, currency exchange rates, economic,
and political conditions. At times, the Fund's investments may represent
industries or industry sectors that are interrelated or have common risks,
making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes.
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 7
Portfolio Summary | 12/31/08
Sector Distribution
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Medical 19.23%
Utilities 12.91%
Education 11.60%
Higher Education 11.25%
Government 10.15%
Development 7.89%
Water 5.21%
Diversified 5.20%
Facilities 4.88%
Pollution 4.83%
Transportation 2.55%
Power 1.74%
General 1.61%
Airport 0.95%
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of debt holdings)*
1. Southeast, Alabama Gas District, Floating Rate Note, 8/1/27 4.17%
2. Boston Massachusetts Water & Sewer Commercial Revenue, Floating Rate Note, 11/1/24 3.94
3. Texas State Tax & Revenue Anticipation Note, 3.0%, 8/28/09 3.51
4. City of Jacksonville Florida, 0%, 3/2/09 3.48
5. New Hampshire Health & Education, Floating Rate Note, 7/1/35 3.31
6. Washington State Health Care Facilities, Floating Rate Note, 10/1/28 3.02
7. Harris County Texas Health, Floating Rate Note, 12/01/41 2.96
8. Vanderbilt University, 1.2%, 2/5/09 2.90
9. Board of Governors of the University, 0.75%, 4/3/09 2.90
10. University of Michigan, Floating Rate Note, 12/1/37 2.89
* This list excludes temporary cash and derivative instruments. Portfolio
holdings will vary for other periods. The holdings listed should not be
considered recommendations to buy or sell any securities listed.
8 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
Performance Update | 12/31/08
Share Prices
- --------------------------------------------------------------------------------
Net Asset Value Per Share 12/31/08 12/31/07
Class A Shares $ 1.00 $ 1.00
Class Y Shares $ 1.00 $ 1.00
Distributions Per Share
- --------------------------------------------------------------------------------
Income Short-Term Long-Term
(1/1/08 - 12/31/08) Dividends Capital Gains Capital Gains
Class A Shares $ 0.0157 $ - $ -
Class Y Shares $ 0.0174 $ - $ -
Yields**
- --------------------------------------------------------------------------------
Per Share 7-Day Annualized 7-Day Effective*
Class A Shares 0.32% 0.32%
Class Y Shares 0.49% 0.49%
* Assumes daily compounding of dividends.
** Please contact Pioneer to obtain the Fund's current yield.
Expense Ratio
- --------------------------------------------------------------------------------
(Per Prospectus dated May 1, 2008)
Gross Net
Class A Shares 0.65% 0.65%
Class Y Shares 0.44% 0.44%
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
Performance data shown represents past performance. Past performance does not
guarantee future results. Investment returns will fluctuate, and there can be
no guarantee the Fund will be able to maintain a stable net asset value of
$1.00 per share. 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 $1.00 per share, it
is possible to lose money by investing in the Fund.
Pioneer Tax Free Money Market was created through the reorganization of the
predecessor Safeco Tax Free Money Market Fund on December 10, 2004. The
performance of each class of the Fund is the performance of the predecessor
fund's Investor Class, which has been restated to reflect differences in any
applicable sales charges (but not Rule 12b-1 fees or other differences in
expenses). If all the expenses of the Fund were reflected, the performance
would be lower.
Performance does not reflect the deduction of taxes that a shareowner would pay
on Fund distributions or the redemption of Fund shares.
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 9
Comparing Ongoing Fund Expenses
As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
- --------------------------------------------------------------------------------
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
(1) Divide your account value by $1,000
Example: an $8,600 account value [divided by] $1,000 = 8.6
(2) Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Tax Free Money Market Fund
Based on actual returns from July 1, 2008 through December 31, 2008.
Share Class A Y
Beginning Account $ 1,000.00 $ 1,000.00
Value on 7/1/08
- -------------------------------------------------------------------------------
Ending Account $ 1,007.94 $ 1,008.82
Value on 12/31/08
- -------------------------------------------------------------------------------
Expenses Paid $ 3.63 $ 2.78
During Period*
- -------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.72% and 0.55%,
for Class A and Class Y shares, respectively, multiplied by the average
account value over the period, multiplied by 184/366 (to reflect the
one-half year period).
10 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the
5% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Tax Free Money Market Fund
Based on a hypothetical 5% per year return before expenses, reflecting the
period from July 1, 2008 through December 31, 2008.
Share Class A Y
Beginning Account $ 1,000.00 $ 1,000.00
Value on 7/1/08
- -------------------------------------------------------------------------------
Ending Account $ 1,021.52 $ 1,022.37
Value on 12/31/08
- -------------------------------------------------------------------------------
Expenses Paid $ 3.66 $ 2.80
During Period*
- -------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.72% and 0.55%,
for Class A and Class Y shares, respectively, multiplied by the average
account value over the period, multiplied by 184/366 (to reflect the
one-half year period).
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 11
Schedule of Investments | 12/31/08
Floating S&P/Moody's
Principal Rate (b) Ratings
Amount (unaudited) (unaudited) Value
MUNICIPAL BONDS -- 83.5%
MISCELLANEOUS -- 2.1%
Miscellaneous
$ 3,525,000 AAA/Aaa Henrico County Virginia, 5.0% 12/01/09 $ 3,656,788
------------
Miscellaneous $ 3,656,788
- ---------------------------------------------------------------------------------------------------------
GOVERNMENT -- 81.4%
Government -- 8.0%
610,000 3.40 AAA/Aa1 Guilford County North Carolina, Floating Rate
Note, 4/1/23 $ 610,000
6,000,000 SP-1/MIG1 Texas State Tax & Revenue Anticipation Note,
3.0%, 8/28/09 6,052,738
3,700,000 1.15 AAA/Aaa Wake County North Carolina, Floating Rate
Note, 4/1/21 3,700,000
2,485,000 1.20 AA+/NR Washington State Putters-Ser, Floating Rate
Note, 7/1/13 2,485,000
1,000,000 AAA/Aa1 Washington State Various Purposes General,
5.0%, 1/1/09 1,000,000
------------
$ 13,847,738
- ---------------------------------------------------------------------------------------------------------
Municipal Airport -- 0.9%
1,630,000 1.10 AA-/NA Sarasota-Manatee Airport Authority Florida,
Floating Rate Note, 8/1/14 $ 1,630,000
- ---------------------------------------------------------------------------------------------------------
Municipal Development -- 7.8%
2,000,000 0.85 AAA/Aa3 Albemarle County Virginia Industrial
Development Authority, Floating Rate Note,
8/1/37 $ 2,000,000
2,500,000 1.05 AA/Aa1 Jackson County Mississippi, Floating Rate Note,
6/1/23 2,500,000
3,000,000 0.85 AA-/Aa1 Pima County Arizona Industrial Development
Authority, Floating Rate Note, 12/1/22 3,000,000
800,000 1.05 AAA/Aa1 Syracuse New York, Industrial Development
Agency, Floating Rate Note, 12/1/37 800,000
2,400,000 1.10 AA/Aa1 Valdez Alaska Marine Revenue, Floating Rate
Note, 6/1/37 2,400,000
2,900,000 1.10 AA+/Aa1 Valdez Alaska Marine Term, Floating Rate Note,
7/1/37 2,900,000
------------
$ 13,600,000
- ---------------------------------------------------------------------------------------------------------
Municipal Education -- 4.6%
4,000,000 1.10 AA/NR Broward County Florida, Floating Rate
Note, 4/1/24 $ 4,000,000
1,000,000 AAA/AA1 Florida State Board of Education, 5.0%,
6/1/09 1,012,233
3,000,000 1.20 AA-/NA Illinois Financial Authority Revenue, Floating
Rate Note, 9/1/41 3,000,000
------------
$ 8,012,233
- ---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
12 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
Floating S&P/Moody's
Principal Rate (b) Ratings
Amount (unaudited) (unaudited) Value
Municipal Facilities -- 4.8%
$ 2,000,000 1.10 NR/Aa2 Clarksville Tennessee Public, Floating Rate
Note, 1/1/33 $ 2,000,000
2,495,000 1.10 NR/Aa2 Clarksville Tennessee Public, Floating Rate
Note, 7/1/34 2,495,000
700,000 1.30 NR/Aa2 Holland Creek Metropolitan District Colorado,
Floating Rate Note, 6/1/41 700,000
1,000,000 0.75 AA+/NR Oregon State Facilities Authority Revenue,
Floating Rate Note, 8/1/34 1,000,000
2,225,000 1.30 AA+/NR Richland Washington Golf Enterprise Revenue,
Floating Rate Note, 12/1/21 2,225,000
------------
$ 8,420,000
- ---------------------------------------------------------------------------------------------------------
Municipal General -- 1.6%
1,000,000 0.75 AAA/Aa1 Illinois Finance Authority, Floating Rate
Note, 7/1/32 $ 1,000,000
750,000 AAA/Aaa North Carolina State, 5.0%, 3/1/09 754,157
1,000,000 AAA/Aaa Wake County North Carolina, 3.5%, 10/15/09 1,013,868
------------
$ 2,768,025
- ---------------------------------------------------------------------------------------------------------
Municipal Higher Education -- 11.2%
4,000,000 0.90 AAA/Aa1 District of Columbia University Revenue,
Floating Rate Note, 4/1/41 $ 4,000,000
2,000,000 0.85 AA-/Aa3 Maryland State Health & Higher Education,
Floating Rate Note, 12/1/23 2,000,000
2,265,000 1.15 AA+/Aa2 Maryland State Health & Higher, Floating Rate
Note, 7/1/34 2,265,000
2,700,000 0.90 AAA/Aaa Missouri State Health & Educational Facility,
Floating Rate Note, 3/1/40 2,700,000
430,000 1.32 AAA/Aaa New Hampshire Health & Educational Facility,
Floating Rate Note, 1/1/28 430,000
4,990,000 1.10 AA+/Aa2 University of Michigan, Floating Rate
Note, 12/1/37 4,990,000
1,520,000 AA-/Aa3 University North Carolina Hospital Chapel Hill,
5.0%, 2/1/09 1,522,886
1,500,000 AAA/Aaa University of Texas, 1.1% 07/01/37 1,500,000
------------
$ 19,407,886
- ---------------------------------------------------------------------------------------------------------
Municipal Medical -- 19.0%
1,000,000 0.80 AAA/Aa1 Aurora Colorado Hospital Revenue, Floating
Rate Note, 12/1/33 $ 1,000,000
400,000 1.05 AA-/AA3 Charlotte-Mecklenburg Hospital Authority,
Floating Rate Note, 1/15/26 400,000
200,000 0.90 AA/Aa1 Elmhurst Illinois, Floating Rate Note, 7/1/18 200,000
5,100,000 0.95 AA/Aaa Harris County Texas Health, Floating Rate
Note, 12/01/41 5,100,000
2,100,000 0.95 AA/Aaa Harris County Texas Health, Floating Rate
Note, 12/01/41 2,100,000
The accompanying notes are an integral part of these financial statements.
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 13
Schedule of Investments | 12/31/08 (continued)
Floating S&P/Moody's
Principal Rate (b) Ratings
Amount (unaudited) (unaudited) Value
Municipal Medical -- continued
$ 3,000,000 1.27 AA-/Aa3 Highlands County Florida Health Facilities
Revenue, Floating Rate Note, 11/15/35 $ 3,000,000
2,185,000 1.00 AAA/Aaa Loudoun County Virginia Industrial
Development Authority, Floating Rate
Note, 2/15/38 2,185,000
600,000 0.60 AAA/Aaa Loudoun County Virginia Industrial
Development Authority, Floating Rate
Note, 2/15/38 600,000
1,400,000 1.27 AA-/AAA Maryland Health Department, Floating Rate
Note, 7/1/28 1,400,000
1,775,000 0.70 AA/Aa2 Maryland State Health & Higher Educational
Facilities Authority Revenue, Floating Rate
Note, 7/1/36 1,775,000
5,700,000 1.20 NR/A1 New Hampshire Health & Education, Floating
Rate Note, 7/1/35 5,700,000
1,200,000 0.80 NR/Aa1 Nueces County Texas Health Facilities
Development Corp., Revenue, Floating Rate
Note, 7/1/15 1,200,000
1,300,000 0.80 AAA/Aa1 Washington State Health Care Facilities,
Floating Rate Note, 10/1/28 1,300,000
5,200,000 0.80 AA+/Aaa Washington State Health Care Facilities,
Floating Rate Note, 10/1/28 5,200,000
2,000,000 0.80 AAA/Aaa Wisconsin State Health & Educational
Facilities, Floating Rate Note, 12/1/33 2,000,000
------------
$ 33,160,000
- ---------------------------------------------------------------------------------------------------------
Municipal Pollution -- 4.8%
4,000,000 0.75 AA-/Aaa Apache County Arizona Industrial Development
Authority, Floating Rate Note, 12/15/18 $ 4,000,000
950,000 1.15 AA/NR Hammond Indiana Pollution Center, Floating
Rate Note, 2/1/22 950,000
1,590,000 1.10 AA/Aa1 Hurley New Mexico Pollution, Floating Rate
Note, 12/1/15 1,590,000
1,000,000 0.80 AAA/Aa1 Pleasant Prairie Wisconsin Pollution, Floating
Rate Note, 9/1/30 1,000,000
785,000 2.00 A/A1 Sabine River Industrial Development Authority
Texas, Floating Rate Note, 8/15/14 785,000
------------
$ 8,325,000
- ---------------------------------------------------------------------------------------------------------
Municipal Power -- 1.7%
3,000,000 1.10 NR/Aaa Florida State Municipal Power Agency, Floating
Rate Note, 10/1/30 $ 3,000,000
- ---------------------------------------------------------------------------------------------------------
Municipal Transportation -- 2.5%
1,500,000 1.15 AA/P-1 JP Morgan Chase Putter, 1.07%, 4/15/10 $ 1,500,000
1,500,000 1.22 AAA/Aaa Orlando & Orange County Expressway, Floating
Rate Note, 07/01/40 1,500,000
The accompanying notes are an integral part of these financial statements.
14 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
Floating S&P/Moody's
Principal Rate (b) Ratings
Amount (unaudited) (unaudited) Value
Municipal Transportation -- continued
$ 1,100,000 1.05 AA/Aa1 Port Arthur Texas Navigation District, Floating
Rate Note, 10/1/24 $ 1,100,000
300,000 1.10 AA/Aa1 Valdez Alaska Marine Term, Floating Rate
Note, 7/1/37 300,000
------------
$ 4,400,000
- ---------------------------------------------------------------------------------------------------------
Municipal Utilities -- 9.3%
6,800,000 1.15 AA/Aa2 Boston Massachusetts Water & Sewer
Commerce Revenue, Floating Rate Note,
11/1/24 $ 6,800,000
870,000 0.80 AA/Aa2 Gainesville Florida Utilities, Floating Rate
Note, 10/1/38 870,000
300,000 1.15 AA/Aa2 Gainesville Utilities, Floating Rate
Note, 10/1/26 300,000
990,000 1.15 NR/Aaa Lancaster Port Authority Ohio, Floating Rate
Note, 5/1/38 990,000
7,200,000 1.05 NR/Aa2 Southeast, Alabama Gas District, Floating Rate
Note, 8/1/27 7,200,000
------------
$ 16,160,000
- ---------------------------------------------------------------------------------------------------------
Municipal Water -- 5.2%
2,500,000 3.10 AA+/Aa1 Las Vegas Nevada Water, Floating Rate
Note, 6/1/36 $ 2,500,000
3,325,000 1.10 AA+/Aa1 Las Vegas Nevada Water, Floating Rate
Note, 6/1/36 3,325,000
3,164,000 1.30 AAA/Aaa Texas Water Development Board, Floating Rate
Note, 7/15/19 3,164,000
------------
$ 8,989,000
- ---------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS $141,719,882
------------
(Cost $145,376,670) $145,376,670
- ---------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER -- 15.6%
5,000,000 A-1+/P-1 Board of Governors of the University,
0.75%, 4/3/09 $ 5,000,000
2,000,000 NR/NR City of Burlington Kansas, 0.93% 01/14/09 2,000,000
1,500,000 A-1+/P-1 City of Burlington Kansas, 0.93%, 2/3/09 1,500,000
2,600,000 A-1+/P-1 City of Burlington Kansas, 1.55%, 1/13/09 2,600,000
6,000,000 NR/NR City of Jacksonville Florida, 0%, 3/2/09 6,000,000
1,000,000 A-1+/NR City of Jacksonville, 0%, 01/14/09 1,000,000
1,000,000 A-1+/NR City of Jacksonville, 0.88%, 1/14/09 1,000,000
1,000,000 NR/NR Texas Public Financial Authority, 0%, 1/14/09 1,000,000
1,985,000 A-1+/P-1 University of Texas, 0%, 2/25/09 1,985,000
The accompanying notes are an integral part of these financial statements.
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 15
Schedule of Investments | 12/31/08 (continued)
Floating S&P/Moody's
Principal Rate (b) Ratings
Amount (unaudited) (unaudited) Value
COMMERCIAL PAPER -- continued
$ 5,000,000 NR/NR Vanderbilt University, 1.2%, 2/5/09 $ 5,000,000
------------
$ 27,085,000
- ---------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER $ 27,085,000
------------
(Cost $27,085,000) $ 27,085,000
- ---------------------------------------------------------------------------------------------------------
Shares
MUTUAL FUND -- 0.0%
729 1.30 Blackrock Liquidity Funds Municipal
Fund Portfolio $ 729
- ---------------------------------------------------------------------------------------------------------
TOTAL MUTUAL FUND
(Cost $729) $ 729
- ---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT IN SECURITIES -- 99.0%
(Cost $172,462,400) (a) $172,462,400
- ---------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 1.0% $ 1,690,109
- ---------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $174,152,509
=========================================================================================================
(a) At December 31, 2008 cost for federal income tax purpose was
$172,462,400.
(b) The rate shown is the rate at period end.
NR Not Rated by either S&P or Moody's.
Various inputs are used in determining the value of the Portfolio's
investments. These inputs are summarized in the three broad levels listed
below.
Highest priority is given to Level 1 inputs and lowest priority is given to
Level 3.
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own
assumptions in determining fair value of investments)
The following is a summary of the inputs used as of December 31, 2008, in
valuing the Portfolio's assets:
Investments
Valuation Inputs in Securities
Level 1 -- Quoted Prices $ --
Level 2 -- Other Significant Observable Inputs $ 172,462,400
Level 3 -- Significant Unobservable Inputs --
- -------------------------------------------------------------------------------
Total $ 172,462,400
===============================================================================
The accompanying notes are an integral part of these financial statements.
16 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
Statement of Assets and Liabilities | 12/31/08
ASSETS:
Investment in securities (cost $172,462,400) $172,462,400
Cash 1,351,089
Receivables --
Fund shares sold 118,104
Dividends, interest 334,928
Other 53,592
- ----------------------------------------------------------------------
Total assets $174,320,113
- ----------------------------------------------------------------------
LIABILITIES:
Payables --
Fund shares repurchased $ 241
Dividends 76,530
Due to affiliates 7,202
Auditing 29,124
Miscellaneous 14,185
Custodian 13,671
Printing 11,655
Insurance 10,494
Accrued expenses 4,502
- ----------------------------------------------------------------------
Total liabilities $ 167,604
- ----------------------------------------------------------------------
NET ASSETS:
Paid-in capital $174,209,558
Distribution in excess of net investment income (30,085)
Accumulated net realized loss on investments (26,964)
- ----------------------------------------------------------------------
Total net assets $174,152,509
======================================================================
NET ASSET VALUE PER SHARE:
(No par value, Unlimited number of shares authorized)
Class A (based on $70,331,042/70,339,070 shares) $ 1.00
Class Y (based on $103,821,467/103,833,696 shares) $ 1.00
======================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 17
Statement of Operations
For the Year Ended 12/31/2008
INVESTMENT INCOME:
Interest $3,683,592
Other Income 313,233
- --------------------------------------------------------------------------------------
Total investment income $3,996,825
- --------------------------------------------------------------------------------------
EXPENSES:
Management fees $ 696,780
Transfer agent fees
Class A 11,276
Distribution fees
Class A 116,135
Administrative fees 52,396
Custodian fees 5,515
Registration fees 44,377
Professional fees 79,434
Printing expense 22,643
Fees and expenses of nonaffiliated trustees 5,775
Miscellaneous 48,694
- --------------------------------------------------------------------------------------
Total expenses $1,083,025
Less fees paid indirectly (296)
- --------------------------------------------------------------------------------------
Net expenses $1,082,729
- --------------------------------------------------------------------------------------
Net investment income $2,914,096
- --------------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on Investments $ (730)
- --------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $2,913,366
======================================================================================
The accompanying notes are an integral part of these financial statements.
18 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
Statements of Changes in Net Assets
For the Years Ended 12/31/2008 and 12/31/2007, respectively
Year Ended Year Ended
12/31/2008 12/31/2007
FROM OPERATIONS:
Net investment income $ 2,914,096 $ 5,732,842
Net realized gain (loss) on investments (730) 402
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 2,913,366 $ 5,733,244
- ---------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.0157 and $0.0299 per share, respectively) $ (1,143,102) $ (2,433,164)
Class Y ($0.0174 and $0.0320 per share, respectively) (1,789,000) (3,311,757)
- ---------------------------------------------------------------------------------------------
Total distributions to shareowners $ (2,932,102) $ (5,744,921)
- ---------------------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $374,175,942 $ 428,959,997
Reinvestment of distributions 749,252 1,558,526
Cost of shares repurchased (387,714,720) $(437,445,730)
- ---------------------------------------------------------------------------------------------
Net decrease in net assets resulting from fund
share transactions $(12,789,526) $ (6,927,207)
- ---------------------------------------------------------------------------------------------
Net decrease in net assets $(12,808,262) $ (6,938,884)
NET ASSETS:
Beginning of year 186,960,771 193,899,655
- ---------------------------------------------------------------------------------------------
End of year $174,152,509 $ 186,960,771
- ---------------------------------------------------------------------------------------------
Distributions in excess of net investment income $ (30,085) $ (12,079)
=============================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 19
Statements of Changes in Net Assets (continued)
'08 Shares '08 Amount '07 Shares '07 Amount
Class A
Shares sold 220,983,959 $ 220,983,959 293,983,129 $ 293,983,129
Reinvestment of distributions 749,193 749,193 1,558,526 1,558,526
Less shares repurchased (222,958,098) (222,958,098) (296,819,723) (296,819,723)
- -----------------------------------------------------------------------------------------------------
Net decrease (1,224,946) $ (1,224,946) (1,278,068) $ (1,278,068)
=====================================================================================================
Class Y
Shares sold 153,191,983 $ 153,191,983 134,976,868 $ 134,976,868
Reinvestment of distributions 59 59 -- --
Less shares repurchased (164,756,622) (164,756,622) (140,626,007) (140,626,007)
- -----------------------------------------------------------------------------------------------------
Net decrease (11,564,580) $ (11,564,580) (5,649,139) $ (5,649,139)
=====================================================================================================
The accompanying notes are an integral part of these financial statements.
20 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
Financial Highlights
Year Ended Year Ended
12/31/08 12/31/07
Class A (a)
Net asset value, beginning of period $ 1.0000 $ 1.0000
- ---------------------------------------------------------------------------------------------------------
Increase from investment operations:
Net investment income $ 0.0157 $ (0.0299)
- ---------------------------------------------------------------------------------------------------------
Distributions to shareowners:
Net investment income (0.0157) 0.0299
Net realized and unrealized gain (loss) on investments 0.0000 0.0003
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.0000 $ 1.0003
=========================================================================================================
Total return* 1.58% 3.03%
Ratio of net expenses to average net assets+ 0.72% 0.65%
Ratio of net investment income to average net assets+ 1.56% 2.96%
Net assets, end of period (in thousands) $ 70,331 $ 71,568
Ratios with no waiver of management fees and assumptions of expense by PIM and
no reductions for fees paid indirectly:
Net expenses 0.72% 0.65%
Net investment income 1.56% 2.96%
Ratios with waiver of management fees and assumptions of expense by PIM and
no reductions for fees paid indirectly:
Net expenses 0.72% 0.64%
Net investment income 1.56% 2.96%
=========================================================================================================
Year Ended Year Ended 12/11/04 (a)
12/31/06 12/31/05 to 12/31/04
Class A (a)
Net asset value, beginning of period $ 1.0000 $ 1.0000 $ 1.0000
- ---------------------------------------------------------------------------------------------------------------------------
Increase from investment operations:
Net investment income $ 0.0270 $ 0.0126 $ 0.0004
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareowners:
Net investment income (0.0270) (0.0126) (0.0004)
Net realized and unrealized gain (loss) on investments -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.0000 $ 1.0000 $ 1.0000
===========================================================================================================================
Total return* 2.76% 1.28% 0.04%(b)
Ratio of net expenses to average net assets+ 0.75% 0.78% 0.94%**
Ratio of net investment income to average net assets+ 2.82% 1.75% 1.38%**
Net assets, end of period (in thousands) $ 72,854 $ 31,232 $ 317
Ratios with no waiver of management fees and assumptions of expense by PIM and
no reductions for fees paid indirectly:
Net expenses 0.75% 0.81% 1.17%**
Net investment income 2.82% 1.72% 1.15%**
Ratios with waiver of management fees and assumptions of expense by PIM and
no reductions for fees paid indirectly:
Net expenses 0.75% 0.78% --**
Net investment income 2.82% 1.75% --**
===========================================================================================================================
(a) Class I shares were first publicly offered on December 11, 2004.
(b) Not annualized.
* 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.
+ Ratio with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 21
Financial Highlights (continued)
Year Ended Year Ended
12/31/08 12/31/07
Class Y (a)
Net asset value, beginning of period $ 1.0000 $ 1.0000
- ---------------------------------------------------------------------------------------------------------
Increase from investment operations:
Net investment income $ 0.0174 $ 0.0320
- ---------------------------------------------------------------------------------------------------------
Distributions to shareowners:
Net investment income (0.0174) (0.0320)
Net realized and unrealized gain (loss) on investments 0.00 --
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.0000 $ 1.0000
=========================================================================================================
Total return* 1.75% 3.19%
Ratio of net expenses to average net assets+ 0.55% 0.44%
Ratio of net investment income to average net assets+ 1.75% 3.16%
Net assets, end of period (in thousands) $ 103,821 $ 115,393
Ratios with no waiver of management fees and assumptions of expense by PIM and
no reductions for fees paid indirectly:
Net expenses 0.55% 0.44%
Net investment income 1.75% 3.16%
Ratios with waiver of management fees and assumptions of expense by PIM and
no reductions for fees paid indirectly:
Net expenses 0.55% 0.44%
Net investment income 1.75% 3.16%
=========================================================================================================
Year Ended 9/23/05 (a)
12/31/06 to 12/31/05
Class Y (a)
Net asset value, beginning of period $ 1.0000 $ 1.0000
- -------------------------------------------------------------------------------------------------------------
Increase from investment operations:
Net investment income $ 0.0284 $ 0.0054
- -------------------------------------------------------------------------------------------------------------
Distributions to shareowners:
Net investment income (0.0284) (0.0054)
Net realized and unrealized gain (loss) on investments -- --
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.0000 $ 1.0000
=============================================================================================================
Total return* 2.99% 0.54%
Ratio of net expenses to average net assets+ 0.57% 0.56%**
Ratio of net investment income to average net assets+ 2.99% 1.96%**
Net assets, end of period (in thousands) $ 121,046 $ 91,177
Ratios with no waiver of management fees and assumptions of expense by PIM and
no reductions for fees paid indirectly:
Net expenses 0.57% 0.56%**
Net investment income 2.99% 1.96%**
Ratios with waiver of management fees and assumptions of expense by PIM and
no reductions for fees paid indirectly:
Net expenses 0.57% 0.56%**
Net investment income 2.99% 1.96%**
=============================================================================================================
(a) Class Y shares were first publicly offered on September 23, 2005.
* 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.
+ Ratio with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
22 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
Notes to Financial Statements | 12/31/08
1. Organization and Significant Accounting Policies
Pioneer Tax Free Money Market Fund (the Fund), is one of seven series of
portfolios comprising Pioneer Series Trust II, a Delaware statutory trust
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. Class Y shares were first publicly offered on
September 23, 2005. The investment objective of the Fund is to provide current
income, exempt from federal income tax, as is consistent with the preservation
of capital.
The Fund offers two classes of shares -- Class A and Class Y shares. Shares of
each class represent an interest in the same portfolio of investments of the
Fund and have identical rights (based on relative net asset values) to assets
and liquidation proceeds. Share classes can bear different class-specific fees
and expenses such as transfer agent and distribution fees. Differences in
class-specific fees and expenses will result in differences in net investments
income and, therefore, the payment of different dividends by each class. The
Amended and restated Declaration of Trust of the Fund gives the Board the
flexibility to specify either per share voting or dollar-weighted voting when
submitting matters for shareholder approval. Under per share voting, a
shareholder's voting power is determined not by the number of shares owned, but
by the dollar value of the shares on the record date. Share classes have
exclusive voting rights with respect to matters affecting only that class,
including with respect to the distribution plan for that class.
The Fund's prospectuses contain unaudited information regarding the Fund's
principal risks. Please refer to these documents when considering the Fund's
principal risks. Investments in the Fund are subject to possible loss due to
the financial failure of underlying securities and their inability to meet
their debt obligations.
The Fund's financial statements have been prepared in conformity with U.S.
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 income, expenses and gains and losses on investments during the
reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund in preparation of its financial statements, which are consistent with
those policies generally accepted in the investment company industry:
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 23
A. Security Valuation
Security transactions are recorded as of trade date. Securities are valued
at amortized cost, which approximates fair market value. Investments
purchased at a discount or premium are valued by amortizing the difference
between the original purchase price and maturity value of the issue over the
period to maturity. Interest income, including interest on income bearing
cash accounts, is recorded on the accrual basis.
B. 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
shareowners. Therefore, no federal income tax provision is required. Tax
years for the prior three fiscal years remain subject to examination by tax
authorities.
At December 31, 2008, the Fund has reclassified $74,496 to decrease paid in
capital, $74,496 to decrease accumulated net realized loss on investments.
The reclassification has no impact on the net assets of the Fund and
presents the Fund's capital accounts on a tax basis.
At December 31, 2008 the Fund had a net capital loss carryforward of $26,964
of which the following amounts will expire between 2010 and 2016 if not
utilized; $14,681 in 2010, $56 in 2011, $6,547 in 2012, $4,950 in 2014 and
$730 in 2016.
The tax character of distributions paid during the years ended December 31,
2008 and 2007 was as follows:
2008 2007
Distributions paid from:
Ordinary income $ 228,871 $ --
Tax exempt income 2,703,231 5,744,921
- -------------------------------------------------------------------------------
Total $2,932,102 $5,744,921
===============================================================================
The following shows the components of distributable earnings on a federal
income tax basis at December 31, 2008:
2008
Distributable earnings:
Capital loss carryforward $ (26,964)
Current year net dividend payable (30,085)
- -------------------------------------------------------------------------------
Total $ (57,049)
===============================================================================
24 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
C. Fund Shares
The Fund records sales and repurchases of its shares as of trade date. The
Fund declares as daily dividends substantially all of its net investment
income. All dividends are paid on a monthly basis. Short-term capital gain
distributions, if any, may be declared with the daily dividends.
D. Class Allocations
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.
Distribution fees are calculated based on the average daily net asset value
attributable to Class A shares of the Fund (see Note 4). Class Y shares are
not subject to a distribution plan. Shareowners of each class share all
expenses and fees paid to the transfer agent, Pioneer Investment Management
Shareholder Services, Inc. (PIMSS), for its services, which are allocated
based on the number of accounts in each class and the ratable allocation of
related out-of-pocket expenses (see Note 3).
Distributions to shareowners 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 and Class Y shares bear different transfer agent and
distribution expense rates.
2. Management Agreement
Pioneer Investment Management, Inc. (PIM), a wholly-owned indirect subsidy of
UniCredit, S.p.A., (UniCredit), manages the Fund's portfolio. Management fees
are calculated daily at the annual rate of 0.40% of the Fund's average daily
net assets up to $1 billion and 0.35% on assets over $1 billion. For the year
ended December 31, 2008, the management fee was equivalent to a rate of 0.40%
of average daily 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. Included in "Due to Affiliates" reflected on
the Statement of Assets and Liabilities is $1,743 in management fees,
administrative cost and certain other services payable to PIM at December 31,
2008.
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 25
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredit, provides substantially
all transfer agent and shareowner services to the Fund at negotiated rates.
Included in "Due to Affiliates" is $5,167 in transfer agent fees payable to
PIMSS at December 31, 2008.
4. Distribution and Service Plans
The Fund adopted a Distribution plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940, with respect to its Class A and Class Y shares. Pursuant
to the Plan, the Fund pays Pioneer Funds Distributor, Inc. (PFD), 0.15% of the
average daily net assets attributable to Class A shares as compensation for
personal services and/or account maintenance services or distribution services
with regard to Class A shares. Prior to February 1, 2008, PFD was reimbursed
under the Distribution Plan for distribution expenses in an amount of up to
0.15% of the average daily net assets attributable to Class A shares. Included
in "Due to Affiliates" is $292 in distribution fees payable to PFD at
December 31, 2008.
In addition, redemptions of Class A 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 18 months of
purchase. Proceeds from the CDSCs are paid to PFD. For the year ended December
31, 2008, no CDSC's were paid to PFD.
5. Expense Offsets
The Fund has entered into certain expense offset arrangements with PIMSS
resulting in a reduction in the Fund's total expenses, due to interest earned
on cash held by PIMSS. For the year ended December 31, 2008, the Fund's
expenses were reduced by $296 under such arrangements.
6. Money Market Temporary Guarantee Program Fees
The Fund has enrolled in the U.S. Treasury Department's Temporary Guarantee
Program for Money Market Funds (the "Program"). The Program provides a
guarantee to participating money market fund shareholders based on the number
of shares invested in the Fund at the close of business on September 19, 2008.
The guarantee would be triggered in the event the market-based net asset value
of a participating fund falls below $0.995 and that situation has not been
cured. Recovery under the Program would require the Fund to liquidate. Upon
liquidation, and subject to the availability of assets under the Program,
eligible shareholders would be entitled to receive a payment equal to any
shortfall between the amount received by a shareholder in liquidation and $1.00
per share.
Only shareholders of record as of September 19, 2008 would be eligible to
receive the benefit of the guarantee. Any increase in the number of shares held
26 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
in the Fund in excess of shares held at the close of business on September 19,
2008 will not be covered. If the number of shares held in an account fluctuates
over the period, shareholders will be covered for either the number of shares
held as of the close of business on September 19, 2008 or the number of shares
held on the date of the trigger event, whichever is less. If a shareholder's
account is closed with the Fund or a broker-dealer, any future investments in
the Fund will not be guaranteed.
The Treasury has extended the Program's expiration date from December 18, 2008
to April 30, 2009. The Treasury has discretion to continue the Program until
September 18, 2009.
In order to participate in the initial three month period and the extended
period of the Program, the Fund paid to the U.S. Treasury Department fees in
the amount of 0.01% and 0.015% of the Fund's net asset value as of the close of
business on September 19, 2008, respectively. These expenses will be borne by
the Fund without regard to any expense limitation currently in effect for the
Fund and are reflected in the statement of operations.
7. New Pronouncement
In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures
about Derivative Instruments and Hedging Activities ("SFAS 161"), was issued
and is effective for fiscal years beginning after November 15, 2008. SFAS 161
requires enhanced disclosures about an entity's derivative and hedging
activities. Management is currently evaluating the impact the adoption of
SFAS 161 will have on the Fund's financial statement disclosures.
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 27
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Pioneer Series Trust II and Shareowners of
Pioneer Tax Free Money Market Fund:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of
Pioneer Tax Free Money Market Fund, one of the series comprising the Pioneer
Series Trust II (the "Trust"), including the schedule of investments, as of
December 31, 2008, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Trust'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 the standards of the Public Company
Accounting Oversight Board (United States). 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. We were not engaged to perform an audit of the Trust's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Trust's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of December 31, 2008, by correspondence
with the custodian. 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 Tax Free Money Market Fund of Pioneer Series Trust II at December 31,
2008, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and financial
highlights for each of the periods indicated therein, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 24, 2009
28 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
ADDITIONAL INFORMATION (unaudited)
The percentage of the Fund's ordinary income distributions that are exempt from
nonresident alien (NRA) tax withholding resulting from qualified interest
income was 91.67%.
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 29
Trustees, Officers and Service Providers
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerinvestments.com. This information is also available
on the Securities and Exchange Commission's web site at http://www.sec.gov.
Trustees and Officers
The Board of Trustees provides broad supervision over the Fund's affairs. The
officers of the Fund are responsible for the Fund's operations. The Trustees
and officers are listed below, together with their principal occupations during
the past five years. Trustees who are interested persons of the Fund within the
meaning of the 1940 Act are referred to as Interested Trustees. Trustees who
are not interested persons of the Fund are referred to as Independent Trustees.
Each of the Trustees serves as a trustee of each of the 76 U.S. registered
investment portfolios for which Pioneer serves as investment adviser (the
"Pioneer Funds"). The address for all Trustees and all officers of the Fund is
60 State Street, Boston, Massachusetts 02109.
30 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
Interested Trustees
Position Held Length of Service
Name and Age with the Fund and Term of Office
John F. Cogan, Jr. (82)* Chairman of the Board, Trustee since 2005.
Trustee and President Serves until a successor
trustee is elected or
earlier retirement or
removal.
- -------------------------------------------------------------------------------
Daniel K. Kingsbury (50)* Trustee and Executive Trustee since 2008.
Vice President Serves until a successor
trustee is elected or
earlier retirement or
removal.
- -------------------------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Trustee
John F. Cogan, Jr. (82)* Deputy Chairman and a Director of Pioneer Global Asset None
Management S.p.A. ("PGAM"); Non-Executive Chairman and a
Director of Pioneer Investment Management USA Inc. ("PIM-USA");
Chairman and a Director of Pioneer; Chairman and Director of
Pioneer Institutional Asset Management, Inc. (since 2006);
Director of Pioneer Alternative Investment Management Limited
(Dublin); President and a Director of Pioneer Alternative
Investment Management (Bermuda) Limited and affiliated funds;
Director of PIOGLOBAL Real Estate Investment Fund (Russia)
(until June 2006); Director of Nano-C, Inc. (since 2003); Director
of Cole Management Inc. (since 2004); Director of Fiduciary
Counseling, Inc.; President and Director of Pioneer Funds
Distributor, Inc. ("PFD") (until May 2006); President of all of
the Pioneer Funds; and Of Counsel, Wilmer Cutler Pickering Hale
and Dorr LLP
- ---------------------------------------------------------------------------------------------------------------------
Daniel K. Kingsbury (50)* Director, CEO and President of Pioneer Investment Management None
USA Inc. (since February 2007); Director and President of
Pioneer Investment Management, Inc. and Pioneer Institutional
Asset Management, Inc. (since February 2007); Executive Vice
President of all of the Pioneer Funds (since March 2007);
Director of Pioneer Global Asset Management S.p.A. (since April
2007); Head of New Markets Division, Pioneer Global Asset
Management S.p.A. (2000 - 2007)
- ---------------------------------------------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are officers
or directors of the Fund's investment adviser and certain of its affiliates.
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 31
Independent Trustees
Position Held Length of Service
Name and Age with the Fund and Term of Office
David R. Bock (65) Trustee Trustee since 2005.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------
Mary K. Bush (60) Trustee Trustee since 2005.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Trustee
David R. Bock (65) Executive Vice President and Chief Financial Officer, I-trax, Inc. Director of Enterprise
(publicly traded health care services company) (2004 - 2007); Community Investment, Inc.
Partner, Federal City Capital Advisors (boutique merchant bank) (privately-held affordable
(1997 to 2004 and 2008 - present); and Executive Vice housing finance company);
President and Chief Financial Officer, Pedestal Inc. (internet- and Director of New York
based mortgage trading company) (2000 - 2002) Mortgage Trust (publicly
traded mortgage REIT)
- -------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (60) President, Bush International, LLC (international financial Director of Marriott
advisory firm) International, Inc.; Director
of Discover Financial Services
(credit card issuer and
electronic payment services);
Director of Briggs & Stratton
Co. (engine manufacturer);
Director of UAL Corporation
(airline holding company);
Director of Mantech
International Corporation
(national security, defense,
and intelligence technology
firm); and Member, Board of
Governors, Investment
Company Institute
- -------------------------------------------------------------------------------------------------------------------------
32 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
Position Held Length of Service
Name and Age with the Fund and Term of Office
Benjamin M. Friedman (64) Trustee Trustee since 2008.
Serves until a successor
trustee is elected or
earlier retirement or
removal
- ----------------------------------------------------------------------
Margaret B.W. Graham (61) Trustee Trustee since 2005.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------------
Thomas J. Perna (58) Trustee Trustee since 2006.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------------
Marguerite A. Piret (60) Trustee Trustee since 2005.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------------
Stephen K. West (80) Trustee Trustee since 2008.
Serves until a successor
trustee is elected or
earlier retirement or
removal.
- ----------------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Trustee
Benjamin M. Friedman (64) Professor, Harvard University Trustee, Mellon Institutional
Funds Investment Trust and
Mellon Institutional Funds
Master Portfolio (oversees
17 portfolios in fund
complex)
- ----------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (61) Founding Director, Vice President and Corporate Secretary, The None
Winthrop Group, Inc. (consulting firm); and Desautels Faculty of
Management, McGill University
- ----------------------------------------------------------------------------------------------------------------------------------
Thomas J. Perna (58) Chief Executive Officer, Quadriserv, Inc. (technology products for None
securities lending industry) (2008 - present) ; Private investor
(2004 - 2008); and Senior Executive Vice President, The Bank of
New York (financial and securities services) (1986 - 2004)
- ----------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (60) President and Chief Executive Officer, Newbury, Piret & Company, Director of New America
Inc. (investment banking firm) High Income Fund, Inc.
(closed-end investment
company)
- ----------------------------------------------------------------------------------------------------------------------------------
Stephen K. West (80) Senior Counsel, Sullivan & Cromwell LLP (law firm) Director, The Swiss Helvetia
Fund, Inc. (closed-end
investment company)
- ----------------------------------------------------------------------------------------------------------------------------------
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 33
Fund Officers
Position Held Length of Service
Name and Age with the Fund and Term of Office
Dorothy E. Bourassa (60) Secretary Since 2005. Serves
at the discretion of
the Board
- -------------------------------------------------------------------------
Christopher J. Kelley (44) Assistant Secretary Since 2005. Serves
at the discretion of
the Board
- -------------------------------------------------------------------------
Mark E. Bradley (49) Treasurer Since 2008. Serves
at the discretion of
the Board
- -------------------------------------------------------------------------
Luis I. Presutti (43) Assistant Treasurer Since 2005. Serves
at the discretion of
the Board
- -------------------------------------------------------------------------
Gary Sullivan (50) Assistant Treasurer Since 2005. Serves
at the discretion of
the Board
- -------------------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Officer
Dorothy E. Bourassa (60) Secretary of PIM-USA; Senior Vice President - Legal of Pioneer; None
Secretary/Clerk of most of PIM-USA's subsidiaries; and Secretary
of all of the Pioneer Funds since September 2003 (Assistant
Secretary from November 2000 to September 2003)
- ----------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (44) Associate General Counsel of Pioneer since January 2008 and None
Assistant Secretary of all of the Pioneer Funds since September
2003; Vice President and Senior Counsel of Pioneer from
July 2002 to December 2007
- ----------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (49) Vice President - Fund Accounting, Administration and None
Controllership Services of Pioneer; and Treasurer of all of the
Pioneer Funds since March 2008; Deputy Treasurer of Pioneer from
March 2004 to February 2008; Assistant Treasurer of all of the
Pioneer Funds from March 2004 to February 2008; and Treasurer
and Senior Vice President, CDC IXIS Asset Management Services
from 2002 to 2003
- ----------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (43) Assistant Vice President - Fund Accounting, Administration and None
Controllership Services of Pioneer; and Assistant Treasurer of all
of the Pioneer Funds
- ----------------------------------------------------------------------------------------------------------------------
Gary Sullivan (50) Fund Accounting Manager - Fund Accounting, Administration None
and Controllership Services of Pioneer; and Assistant Treasurer of
all of the Pioneer Funds
- ----------------------------------------------------------------------------------------------------------------------
34 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
Position Held Length of Service
Name and Age with the Fund and Term of Office
Katherine Kim Sullivan (35) Assistant Treasurer Since 2005. Serves
at the discretion of
the Board
- -------------------------------------------------------------------------------
Teri W. Anderholm (49) Chief Compliance Officer Since 2007. Serves
at the discretion of
the Board
- -------------------------------------------------------------------------------
Other Directorships
Name and Age Principal Occupation During Past Five Years Held by this Officer
Katherine Kim Sullivan (35) Fund Administration Manager - Fund Accounting, Administration None
and Controllership Services since June 2003 and Assistant
Treasurer of all of the Pioneer Funds since September 2003;
Assistant Vice President - Mutual Fund Operations of State
Street Corporation from June 2002 to June 2003 (formerly
Deutsche Bank Asset Management)
- ---------------------------------------------------------------------------------------------------------------------
Teri W. Anderholm (49) Chief Compliance Officer of Pioneer since December 2006 and None
of all the Pioneer Funds since January 2007; Vice President and
Compliance Officer, MFS Investment Management (August 2005
to December 2006); Consultant, Fidelity Investments (February
2005 to July 2005); Independent Consultant (July 1997 to
February 2005)
- ---------------------------------------------------------------------------------------------------------------------
Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08 35
This page for your notes.
36 Pioneer Tax Free Money Market Fund | Annual Report | 12/31/08
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:
- --------------------------------------------------------------------------------
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our internet e-mail address ask.pioneer@pioneerinvestments.com
(for general questions about Pioneer only)
Visit our web site: pioneerinvestments.com
This report must be accompanied by a prospectus.
The Fund files a complete schedule of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit Fees
Fees for audit services provided to the Trust's seven series,
including fees associated with the initial and routine filings
of its Form N-1A, totaled approximately $229,700 in 2008
and $213,025 in 2007.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
Audit-Related and Other Fees
There were no audit-related and other services provided to
the Trust during the fiscal years ended December 31, 2008
and 2007.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
Tax Fees
Fees for tax compliance services, primarily for tax returns,
totaled $58,030 in 2008 and $54,740 in 2007.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
N/A
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognize that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
- ---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
- ---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
- ---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
- ---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
- ----------------------- --------------------------- -----------------------------------------------
- ------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- -------------------------
- ------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
- ------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
- ----------------------- --------------------------- -----------------------------------------------
- --------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
- ------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
- ----------------------- ------------------------- -----------------------------------------------
- ------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
- ------------------------------------------- ------------------------------
- --------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
- --------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
Non-Audit Services
Beginning with non-audit service contracts entered into on
or after May 6, 2003, the effective date of the new SEC pre-
approval rules, the Trust's audit committee is required to
pre-approve services to affiliates defined by SEC rules to the
extent that the services are determined to have a direct
impact on the operations or financial reporting of the Trust.
For the years ended December 31, 2008 and 2007, there
were no services provided to an affiliate that required the
Trust's audit committee pre-approval.
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The aggregate non-audit fees for the Fund and affiliates, as
previously defined, totaled $58,030 in 2008 and $54,740 in
2007.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Fund's audit committee of the Board of Trustees has
considered whether the provision of non-audit services that
were rendered to the Affiliates (as defined) that were not pre-
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal
accountant's independence.
Item 5. Audit Committee of Listed Registrants
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrants audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
N/A
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption
from the listing standards for audit committees.
N/A
Item 6. Schedule of Investments.
File Schedule I Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.12-
12 of Regulation S-X [17 CFR 210.12-12], unless the schedule is
included as part of the report to shareholders filed under Item
1 of this Form.
Included in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Not applicable to open-end management investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrants portfolio (Portfolio Manager). Also state each Portfolio
Managers business experience during the past 5 years.
Not applicable to open-end management investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
Not applicable to open-end management investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in
its definitive proxy statement, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer
and principal financial officer have
concluded that the registrant's disclosure
controls and procedures are effective based
on their evaluation of these controls and
procedures as of a date within 90 days of the
filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the
registrant's internal control over financial
reporting that occurred during the second
fiscal quarter of the period covered by this
report that have materially affected, or are
reasonably likely to materially affect, the
registrant's internal control over financial
reporting.
The registrant's principal executive officer and principal financial
officer, however, voluntarily are reporting the following information:
In August of 2006 the registrant's investment adviser
enhanced its internal procedures for reporting performance
information required to be included in prospectuses.
Those enhancements involved additional internal controls
over the appropriateness of performance data
generated for this purpose. Such enhancements were made
following an internal review which identified
prospectuses relating to certain classes of shares of
a limited number of registrants where, inadvertently,
performance information not reflecting the deduction of
applicable sales charges was included. Those prospectuses
were revised, and the revised prospectuses were distributed to
shareholders.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Series Trust II
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date February 27, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date February 27, 2009
By (Signature and Title)* /s/ Mark Bradley
Mark Bradley, Treasurer
Date February 27, 2009
* Print the name and title of each signing officer under his or her signature.