<PAGE>
[Logo: Pioneer logo]
Pioneer Strategic
Income Fund
ANNUAL REPORT 9/30/99
<PAGE>
Table of Contents
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<TABLE>
<S> <C>
Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule of Investments 9
Financial Statements 15
Notes to Financial Statements 21
Report of Independent Public Accountants 27
Trustees, Officers and Service Providers 28
The Pioneer Family of Mutual Funds 29
</TABLE>
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
LETTER FROM THE CHAIRMAN 9/30/99
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Dear Shareowner,
- --------------------------------------------------------------------------------
I am very pleased to introduce this first annual report for Pioneer Strategic
Income Fund, covering the period from the Fund's inception on April 15, 1999 to
September 30, 1999. I thank you for your interest and am confident that your
relationship with Pioneer will be rewarding.
As we approach the new millennium, it seems a suitable time to look back on how
the world of investing has changed since Pioneer was founded in 1928. The
creation of affordable investment options, including mutual funds, has brought
opportunity to millions of people worldwide and surely should be counted among
this century's greatest accomplishments. Just consider the impact a few notable
innovations - money market funds, employer-sponsored retirement vehicles and the
concept of international investing - have had on your life.
In some ways, investing has changed a great deal. One thing, however, remains
the same - our belief in the importance of a long-term perspective. Attempts at
market timing and the advent of day-trading unfortunately have led some to adopt
a "get rich quick" mentality. Looking back over time, lasting wealth has come to
investors who held to their discipline and didn't veer off course to chase the
rising star of the day. A solid, forward-thinking plan can offer great rewards,
even though it can be a tad dull moment-to-moment.
This year, we are taking extra steps to make your planning easier, especially
tax planning. I'm pleased to announce that Pioneer funds will distribute their
capital gains in November - a month earlier than in past years. We hope you'll
take advantage of the extra time to work with your investment professional to
prepare for the new century.
I encourage you to read on to learn more about your Fund, including the question
and answer session with your portfolio management team. If you have any
questions, please contact your investment professional. You can also visit our
web site at www.pioneerfunds.com to obtain information about our funds and to
view 1999 distribution information.
Respectfully,
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman and President
1
<PAGE>
Pioneer Strategic Income Fund
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PORTFOLIO SUMMARY 9/30/99
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Portfolio Diversification
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(As a percentage of total investment portfolio)
[Pie chart data]
<TABLE>
<S> <C>
Corporate Bonds 43.0%
U.S. Treasury Obligations 18.1%
Mortgages 17.4%
Foreign Government Bonds 6.3%
Convertible Corporate Bonds 5.9%
Short-Term Cash Equivalents 4.7%
Asset-Backed Securities 4.4%
Supernational Bonds 0.2%
</TABLE>
Portfolio Maturity
- --------------------------------------------------------------------------------
(Effective life as a percentage of total investment portfolio)
[Pie chart data]
0-2 Years, 5%
2-5 Years, 18%
5-7 Years, 15%
7-10 Years, 44%
10-20 Years, 7%
20+ Years, 11%
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of debt holdings)
<TABLE>
<S> <C> <C>
1. U.S. Treasury Notes, 6.125%, 8/15/07 5.65%
2. U.S. Treasury Notes, 5.625%, 5/15/08 5.36
3. Stadshypotek AB, 5.0%, 12/17/03 2.94
4. U.S. Treasury Notes, 6.0%, 8/15/04 2.93
5. Republic of Argentina, 6.0%, 3/31/23 2.65
6. U.S. Treasury Notes, 5.25%, 5/15/04 2.43
7. U.S. Treasury Bonds, 7.875%, 2/15/21 2.08
8. Realkredit Danmark, 6.0%, 10/1/29 1.84
9. Reliance Industries, Ltd., 10.5%, 8/6/46 1.79
10. Huntsman ICI Chemicals LLC, 10.125%, 7/1/09 1.75
</TABLE>
2
Fund holdings will vary for other periods.
<PAGE>
Pioneer Strategic Income Fund
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PERFORMANCE UPDATE 9/30/99 CLASS A SHARES
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Share Prices and Distributions
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<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 9/30/99 4/15/99
$ 9.52 $ 10.00
Distributions per Share Income Short-Term Long-Term
(4/15/99 - 9/30/99) Dividends Capital Gains Capital Gains
$0.271 - -
</TABLE>
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Strategic Income Fund at public offering price, compared to the
growth of the Lehman Brothers Aggregate Bond Index.
Cumulative Total Returns
(As of September 30, 1999)
<TABLE>
<S> <C> <C>
Net Asset Public Offering
Period Value Price*
Life-of-Fund -2.09% -6.50%
(4/15/99)
</TABLE>
* Reflects deduction of the maximum 4.5% sales charge at the beginning of
the period and assumes reinvestment of distributions at net asset value.
[Mountain chart data]
Growth of $10,000+
<TABLE>
<CAPTION>
Pioneer Strategic Lehman Aggregate
Income Fund* Bond Index
<S> <C> <C>
4/99 9,550 10,000
5/99 9,390 9,912
6/99 9,404 9,880
7/99 9,339 9,838
8/99 9,274 9,833
9/99 9,314 9,947
</TABLE>
+ Index comparison begins April 30, 1999. The Lehman Brothers Aggregate Bond
Index is a market value-weighted measure of treasury and agency issues,
corporate bond issues and mortgage-backed securities. 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 the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
3
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Pioneer Strategic Income Fund
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PERFORMANCE UPDATE 9/30/99 CLASS B SHARES
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Share Prices and Distributions
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<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 9/30/99 4/15/99
$9.56 $10.00
Distributions per Share Income Short-Term Long-Term
(4/15/99 - 9/30/99) Dividends Capital Gains Capital Gains
$0.231 - -
</TABLE>
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Strategic Income Fund, compared to the growth of the Lehman Brothers
Aggregate Bond Index.
Cumulative Total Returns
(As of September 30, 1999)
<TABLE>
<S> <C> <C>
If If
Period Held Redeemed*
Life-of-Fund -2.10% -5.92%
(4/15/99)
</TABLE>
* Reflects deduction of the maximum applicable contingent deferred sales
charge (CDSC) at the end of the period and assumes reinvestment of
distributions. The maximum CDSC of 4% declines over six years.
[Mountain chart data]
Growth of $10,000+
<TABLE>
<CAPTION>
Pioneer Strategic Lehman Brothers
Income Fund* Aggregate Bond Index
<S> <C> <C>
4/99 10,000 10,000
5/99 9,816 9,912
6/99 9,837 9,880
7/99 9,765 9,838
8/99 9,703 9,833
9/99 9,361 9,947
</TABLE>
+ Index comparison begins April 30, 1999. The Lehman Brothers Aggregate Bond
Index is a market value-weighted measure of treasury and agency issues,
corporate bond issues and mortgage-backed securities. 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 the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
4
<PAGE>
Pioneer Strategic Income Fund
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PERFORMANCE UPDATE 9/30/99 CLASS C SHARES
- --------------------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 9/30/99 4/15/99
$9.52 $10.00
Distributions per Share Income Short-Term Long-Term
(4/15/99 - 9/30/99) Dividends Capital Gains Capital Gains
$0.277 - -
</TABLE>
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Strategic Income Fund, compared to the growth of the Lehman Brothers
Aggregate Bond Index.
Cumulative Total Returns
(As of September 30, 1999)
<TABLE>
<S> <C> <C>
If If
Period Held Redeemed*
Life-of-Fund -2.04% -3.00%
(4/15/99)
</TABLE>
* Assumes reinvestment of distributions. A 1% contingent deferred sales charge
(CDSC) applies to redemptions made within one year of purchase.
[Mountain chart data]
Growth of $10,000+
<TABLE>
<CAPTION>
Pioneer Strategic Lehman Brothers
Income Fund* Aggregate Bond Index
<S> <C> <C>
4/99 10,000 10,000
5/99 9,862 9,912
6/99 9,873 9,880
7/99 9,800 9,838
8/99 9,727 9,833
9/99 9,671 9,947
</TABLE>
+ Index comparison begins April 30, 1999. The Lehman Brothers Aggregate Bond
Index is a market value-weighted measure of treasury and agency issues,
corporate bond issues and mortgage-backed securities. 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 the Index.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
5
<PAGE>
Pioneer Strategic Income Fund
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PORTFOLIO MANAGEMENT DISCUSSION 9/30/99
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Pioneer Strategic Income Fund's first fiscal period closed on September 30,
1999. The following discussion with your investment team - Kenneth J. Taubes,
Salvatore P. Pramas and Margaret D. Patel - details the investment environment
and strategies that affected your Fund's performance since its inception on
April 15, 1999.
Q: Ken, how is Pioneer Strategic Income Fund's investment team structured?
A: A team of specialists, each of whom is responsible for a different area of
the fixed-income market, manages the Fund. The team meets formally each week
to review and evaluate market data. In addition, we meet informally every
day to manage security decisions. I oversee the team's day-to-day management
of the Fund and also focus on the overall asset allocation. Sal oversees the
Fund's international investments, while Margaret has responsibility for the
high-yield portion of the Fund. We believe our team approach benefits
shareowners by bringing together many disciplines and leveraging our
resources.
Q: How did the Fund perform with interest rates rising?
A: From the Fund's inception on April 15 to September 30, the Fund's Class A
shares returned -2.09% at net asset value. In comparison, the Lehman
Brothers Aggregate Bond Index returned -0.52% (April 30 through September
30). While we never like to see a negative return, the Fund's performance
was in line with the across-the-board decline brought on by higher rates.
However, the Fund did produce an attractive level of income. Its 30-day SEC
yield stood at an attractive 8.18% at the end of the period.
The Fund's position in mortgage-backed securities and foreign currencies
particularly the euro - contributed positively to performance, offsetting
some of the declines incurred in high-yield bonds, a sector that was
particularly hard-hit during the summer.
Q: How did the Fund's broad investment parameters benefit shareowners?
A: The Fund's ability to diversify makes for a "one-stop shop" in the fixed-
income markets. We actively manage the Fund, focusing on relative value
6
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Pioneer Strategic Income Fund
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and price appreciation, seeking the "best blend" of investment sectors as
market conditions shift. This can provide investors with above-average
returns while potentially carrying lower volatility than stocks. We saw the
benefit of this flexibility when U.S. interest rates rose, and the Fund was
not limited to domestic investments when the outlook for foreign markets
appeared brighter.
Q: How did you determine the Fund's current asset allocation?
A: We applied a value-oriented approach, targeting attractively priced bonds
capable of generating solid income, as well as the potential for price
appreciation. During the period, this meant underweighting high-yield
issues, as compared to our peer group. Rising U.S. interest rates and
concerns that the pace of the U.S. economy was growing at an unsustainable
rate worked against the performance of the high-yield sector. Consequently,
we focused on the higher-quality segments of the U.S. bond market, such as
mortgage-backed securities. Internationally, we found Danish mortgage-backed
securities, Swedish corporate bonds and German government bonds attractive.
In addition, we built a position in the euro, the currency uniting eleven
European countries, as it strengthened over the summer.
We also took advantage of some compelling opportunities in the emerging
markets, particularly in Asia and Latin America. For example, Thailand has
responded quickly to reform its financial system and the Fund's position in
Total Access Communication, the largest cellular phone company in that
country, performed well. India is another example of where we believe our
analysis revealed opportunity through a petrochemical company, Reliance
Industries. Overall, the average quality of the portfolio was BBB. (Ratings
apply to underlying securities, not Fund shares.)
Q: Did rising interest rates create investment opportunities?
A: Yes, especially in Europe. European high quality bond yields increased more
than those of their U.S. counterparts, despite economic growth that was
weaker than in the United States. Typically, higher yields are associated
with stronger economic growth. We took advantage of the combination of
high quality and attractive yields available in Europe, building a
7
<PAGE>
Pioneer Strategic Income Fund
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PORTFOLIO MANAGEMENT DISCUSSION 9/30/99 (continued)
- --------------------------------------------------------------------------------
position in German government bonds in the middle of the period. The interest
rate outlook also appeared to be more favorable abroad. We believe that many
investors are anticipating interest rate hikes by the European Central Bank,
and have built those expectations into current bond prices. While European
bond prices may fall somewhat if interest rates are raised, the fact that the
increases are widely expected should cushion price declines.
Q: Where do you expect to find the best value over the next six months?
A: We are most optimistic about the investment environment in Europe, as well
as prospects in Latin America and Asia. European bond yields have risen to
attractive levels, and we believe, its economy is poised for stronger
growth. The Europeans have implemented sound economic and monetary policies,
and earlier weakness in the euro has given exports a lift. In Latin America,
the economic recovery appears to be sustainable. Many Latin American
securities have attractive relative value, although we continue to be
selective because prospects for growth vary by individual country. Most of
Asia, as well, seems to be moving in the right direction in terms of
economic reform.
We also believe the high-yield sector will continue to produce interesting
investment prospects, particularly in the energy and health care industries.
Oil prices have risen and are beginning to stabilize, and stronger overseas
economies should help support the demand for oil. We also have become more
positive about value in health care bonds. Yield advantages available in that
industry rose dramatically over the past few years - pushing their prices
lower relative to other industries - because of legislation that put pressure
on the profits of hospitals. With improved pricing power, many hospitals seem
to be getting some relief from that situation.
We are optimistic about the prospects for the domestic bond market. A lot
depends on whether the Federal Reserve can achieve a "soft landing" for the
economy. We are seeing signs that rate increases are taking effect, as
mortgage rates are rising and refinancings have slowed dramatically. If
economic growth slows, inflationary pressures should subside. This scenario
should bode well for a long-term decline in interest rates.
8
<PAGE>
Pioneer Strategic Income Fund
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SCHEDULE OF INVESTMENTS 9/30/99
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
INVESTMENT IN SECURITIES - 95.3%
CONVERTIBLE CORPORATE BONDS - 5.9%
$ 260,000 CCC+/Caa1 APP Finance VII, 3.5%, 4/30/03 $ 134,229
200,000 B+/B1 Mascotech, Inc., 4.5%, 12/15/03 161,750
150,000 B+/B2 Pogo Producing Co., 5.5%, 6/15/06 119,813
200,000 NR/B2 Total Access Communication Public Co.,
Ltd., 2.0%, 5/31/06 (144A) 193,000
175,000 NR/NR TVX Gold Inc., 5.0%, 3/28/02 138,250
-----------
Total Convertible Corporate Bonds
(Cost $811,926) $ 747,042
-----------
ASSET BACKED SECURITIES - 4.4%
1,073,000 NR/Aa3 Nykredit, 6.0%, 10/1/29 $ 139,945
1,400,000 NR/Aa3 Nykredit, 7.0%, 10/1/29 194,119
1,699,000 NR/Aa3 Realkredit Danmark, 6.0%, 10/1/29 221,956
-----------
Total Asset Backed Securities
(Cost $563,267) $ 556,020
-----------
CORPORATE BONDS - 43.0%
Agricultural Products - 1.0%
135,000 B+/B2 Royster-Clark Inc., 10.25%, 4/1/09 (144A) $ 124,875
-----------
Airlines - 1.3%
175,000 BB/Ba2 Northwest Airlines Inc., 8.52%, 4/7/04 $ 168,298
-----------
Banks (Major Regional) - 2.8%
3,000,000 NR/NR Stadshypotek AB, 5.0%, 12/17/03 $ 353,898
-----------
Banks (Money Center) - 1.5%
100,000 A+/A1 Dresdner Funding Trust, 8.151%, 6/30/31
(144A) $ 93,741
100,000 A+/Aa3 National Westminster Bancorp, Inc., 7.75%,
4/29/49 97,705
-----------
$ 191,446
-----------
Banks (Regional) - 1.1%
150,000 BBB-/Baa2 Imperial Bank, 8.375%, 4/1/09 $ 143,050
-----------
Broadcasting (Cable/Television/Radio) - 3.2%
125,000 BBB-/Baa2 British Sky Broadcasting, 8.2%, 7/15/09
(144A) $ 124,034
135,000 B+/B2 Charter Communications Holdings LLC,
8.25%, 4/1/07 (144A) 125,888
</TABLE>
The accompanying notes are an integral part of these financial statements. 9
<PAGE>
Pioneer Strategic Income Fund
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SCHEDULE OF INVESTMENTS 9/30/99 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
Broadcasting (Cable/Television/Radio) -
(continued)
$ 150,000 B/B2 Echostar DBS Communications Corp.,
9.25%, 2/1/06 $ 148,125
-----------
$ 398,047
-----------
Building Materials - 1.1%
150,000 B/B2 NCI Building Systems, Inc., 9.25%, 5/1/09 $ 138,750
-----------
Cellular/Wireless Communications - 2.7%
200,000 B/B3 Crown Castle International Corp., 9.0%,
5/15/11 $ 187,000
150,000 B/B3 NEXTLINK Communications, Inc., 10.75%,
6/1/09 151,125
-----------
$ 338,125
-----------
Chemicals - 1.6%
200,000 BB/Ba3 Lyondell Petrochemical Co, 9.875%,
5/1/07 $ 199,000
-----------
Chemicals (Diversified) - 1.6%
200,000 B+/B2 Huntsman ICI Chemicals LLC, 10.125%,
7/1/09 $ 210,209
-----------
Chemicals (Specialty) - 1.7%
250,000 BB/Ba2 Reliance Industries Ltd., 10.5%, 8/6/46
(144A) $ 215,327
-----------
Consumer Finance - 2.4%
150,000 BB-/B1 Advanta Corp., 7.0%, 5/1/01 $ 144,534
202,000 B/B3 Delta Financial Corp., 9.5%, 8/1/04 161,600
-----------
$ 306,134
-----------
Distributors (Food & Health) - 0.8%
150,000 CCC+/Caa1 Ameriserve Food Distribution, Inc.,
10.125%, 7/15/07 $ 100,500
-----------
Electric Companies - 1.6%
200,000 BBB-/Baa3 Great Lakes Power Inc., 8.30%, 3/1/05 $ 199,686
-----------
Electrical Equipment - 1.0%
140,000 B/B2 Wesco Distribution Inc, 9.125%, 6/1/08 $ 130,900
-----------
</TABLE>
10 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
Engineering & Construction - 1.0%
$ 135,000 B/B2 Metromedia Fiber Network, Inc., 10.0%,
11/15/08 $ 130,950
-----------
Entertainment - 1.1%
150,000 B-/B3 Premier Parks, Inc., 9.75%, 6/15/07 $ 145,125
-----------
Foods - 1.0%
135,000 B/B3 Agrilink Foods Inc., 11.875%, 11/1/08 $ 123,863
-----------
Healthcare (Drugs/Major Pharmaceutical) -
1.2%
150,000 B/B3 King Pharmaceutical Inc., 10.75%,
2/15/09 $ 154,500
-----------
Healthcare (Hospital Management) - 0.9%
125,000 B+/Ba3 Quorum Health Group Inc., 8.75%,
11/1/05 $ 111,250
-----------
Healthcare (Medical Products/Supplies) -
0.9%
30,000 NR/Ba1 Beckman Instruments, Inc., 7.05%, 6/1/26 $ 28,271
90,000 B-/B3 Fisher Scientific International Inc., 9.0%,
2/1/08 84,150
-----------
$ 112,421
-----------
Metals Mining - 0.9%
135,000 Ba3/BB- AEI Resources, Inc., 11.5%, 12/15/06
(144A) $ 118,800
-----------
Oil & Gas (Drilling & Equipment) - 1.3%
150,000 BB-/Ba3 RBF Finance Co., 11.0%, 3/15/06 $ 158,250
-----------
Oil & Gas (Production & Exploration) - 2.3%
150,000 BB-/Ba2 Gulf Canada Resources Ltd., 9.625%,
7/1/05 $ 153,015
135,000 BB+/Ba1 Santa Fe Snyder Corp., 8.05%, 6/15/04 133,310
-----------
$ 286,325
-----------
Power Producers (Independent) - 1.0%
215,000 BB-/Ba3 AES China Generating Co., 10.125%,
12/15/06 $ 129,000
-----------
Real Estate - 2.5%
200,000 BBB-/Baa3 Colonial Realty LP, Senior Note, 7.0%,
7/14/07 $ 180,584
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 9/30/99 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
Real Estate - (continued)
$ 150,000 BBB/Baa3 Mack-Cali Realty Corp., 7.25%, 3/15/09 $ 139,878
-----------
$ 320,462
-----------
Services (Commercial & Consumer) - 0.2%
25,000 BBB/Baa3 Laidlaw Inc., 7.65%, 5/15/06 $ 23,691
-----------
Telephone - 0.9%
125,000 B/B2 Intermedia Communications Inc., 8.60%,
6/1/08 $ 107,812
-----------
Textiles (Apparel) - 1.3%
150,000 BBB-/Baa2 Jones Apparel Group, Inc., 7.875%,
6/15/06 (144A) $ 147,953
15,000 BBB/Baa3 Levi Strauss & Co., 7.0%, 11/1/06 (144A) 13,350
-----------
$ 161,303
-----------
Waste Management - 1.1%
150,000 B+/B2 Allied Waste North America Inc., 10.0%,
8/1/09 (144A) $ 136,874
-----------
Total Corporate Bonds
(Cost $5,610,613) $ 5,438,871
-----------
U.S. Government and Agency
Obligations - 35.5%
147,743 Federal Home Loan Mortgage Corp., REMIC
Series 2043 G, 6.5%, 4/15/28 $ 145,234
98,313 Federal National Mortgage Association,
7.5%, 1/1/28 98,706
97,809 Federal National Mortgage Association,
6.5%, 4/1/14 to 4/1/29 95,143
238,353 Federal National Mortgage Association,
7.0%, 5/1/28 to 5/1/29 234,357
134,761 Government National Mortgage Association,
7.75%, 10/15/26 136,694
361,784 Government National Mortgage Association,
7%, 4/15/07 to 6/15/29 357,297
308,055 Government National Mortgage Association,
6%, 5/15/14 to 6/15/29 289,222
459,797 Government National Mortgage Association,
6.5%, 5/15/08 to 7/15/29 446,825
</TABLE>
12 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
U.S. Government and Agency
Obligations - (continued)
$ 262,786 Government National Mortgage Association,
7.5%, 6/15/23 to 8/15/29 $ 264,048
28,808 Government National Mortgage Association
II, 6.5%, 1/20/28 27,564
99,877 Government National Mortgage Association
II, 7.5%, 8/20/29 100,321
215,000 U.S. Treasury Bonds, 7.875%, 2/15/21 250,146
70,000 U.S. Treasury Notes, 5.25%, 8/15/03 68,612
300,000 U.S. Treasury Notes, 5.25%, 5/15/04 293,163
350,000 U.S. Treasury Notes, 6.00%, 8/15/04 353,307
680,000 U.S. Treasury Notes, 6.125%, 8/15/07 680,721
665,000 U.S. Treasury Notes, 5.625%, 5/15/08 645,495
-----------
Total U.S. Government and
Agency Obligations
(Cost $4,502,153) $ 4,486,855
-----------
Foreign Government Bonds - 6.3%
301,659 B+/B2 Republic of Brazil - C Bond, 8.0%, 4/15/14+ $ 187,594
200,000 NR/Aaa Deutschland Bundes Republic, 5.625%,
1/4/28 206,622
250,000 NR/Caa1 Republic of Ecuador - Par Step Bond, 4.0%,
2/28/25 76,929
500,000 BB/Ba3 Republic of Argentina - Par, 6.0%, 3/31/23 319,375
-----------
Total Foreign Government Bonds
(Cost $792,889) $ 790,520
-----------
Supernational Bonds - 0.2%
25,000 NR/A3 Andina de Fomento, 4.75%, 5/6/04 (144A) $ 25,159
-----------
Total Supernational Bonds
(Cost $26,275) $ 25,159
-----------
TOTAL INVESTMENT IN SECURITIES - 95.3%
(Cost $12,307,123) $12,044,467
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
Pioneer Strategic Income Fund
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SCHEDULE OF INVESTMENTS 9/30/99 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
TEMPORARY CASH INVESTMENT - 4.7%
Repurchase Agreement - 4.7%
$ 600,000 Chase Manhattan Corp., 4.5%, 9/30/99,
repurchase price of $600,000 plus accrued
interest on 10/1/99, collateralized by
$597,000 U.S. Treasury Notes, 7.75%,
12/31/99 $ 600,000
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $600,000) $ 600,000
-----------
TOTAL INVESTMENT IN SECURITIES AND
TEMPORARY CASH INVESTMENT - 100%
(Cost $12,907,123) (a)(b) $12,644,467
-----------
</TABLE>
+ Coupon consists of 5% cash payment and 3% paid-in-kind securities.
144A Security is exempt from registration under Rule 144A of the Securities Act
of 1933. Such securities may be resold normally to qualified institutional
buyers in a transaction exempt from registration. At September 30, 1999,
the value of these securities amounted to $1,319,001 or 10.4% of total net
assets.
(a) At September 30, 1999, the net unrealized loss on investments, based on
cost for federal income tax purposes of $12,913,904 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized gain for all investments in
which there is an excess of value over tax cost $ 68,536
Aggregate gross unrealized loss for all investments in
which there is an excess of tax cost over value (337,973)
---------
Net unrealized loss $(269,437)
---------
</TABLE>
(b) At September 30, 1999, the Fund had a capital loss carryforward of $832
which will expire in 2007 if not utilized.
Note: The Fund's investments in mortgage-backed securities of the Government
National Mortgage Association (GNMA) are interests in separate pools of
mortgages. All separate investments in this issuer which have the same
coupon rate have been aggregated for the purpose of presentation in this
schedule of investments.
Purchases and sales of securities (excluding temporary cash investments) for the
period ended September 30, 1999 were as follows:
<TABLE>
<S> <C> <C>
Purchases Sales
--------- -----
Long-term U.S. Government $5,522,552 $1,395,897
Other Long-term Securities 8,439,757 272,524
</TABLE>
14 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
BALANCE SHEET 9/30/99
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash
investment of $600,000) (cost $12,907,123) $12,644,467
Foreign currencies, at value 224
Receivables -
Forward foreign currency portfolio hedge contracts, open-net 3,676
Forward foreign currency portfolio hedge contracts, closed-net 220
Forward foreign currency settlement contracts-net 1,541
Fund shares sold 263,159
Interest 251,558
Due from Pioneer Investment Management, Inc. 85,011
Other 4,210
-----------
Total assets $13,254,066
-----------
LIABILITIES:
Payables -
Investment securities purchased $ 279,804
Fund shares repurchased 350
Dividends 16,324
Due to bank 137,769
Due to affiliates 22,705
Accrued expenses 73,648
-----------
Total liabilities $ 530,600
-----------
NET ASSETS:
Paid-in capital $12,974,175
Accumulated undistributed net investment income 16,084
Accumulated net realized loss on investments and foreign
currency transactions (7,613)
Net unrealized loss on investments (262,656)
Net unrealized gain on forward foreign currency contracts and other
assets and liabilities denominated in foreign currencies 3,476
-----------
Total net assets $12,723,466
-----------
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $6,480,572/680,646 shares) $ 9.52
-----------
Class B (based on $5,688,792/595,334 shares) $ 9.56
-----------
Class C (based on $554,102/58,224 shares) $ 9.52
-----------
MAXIMUM OFFERING PRICE:
Class A $ 9.97
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Period from 4/15/99 (Commencement of Operations) to 9/30/99
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Interest $ 227,161
----------
EXPENSES:
Management fees $ 19,942
Transfer agent fees
Class A 9,203
Class B 8,672
Class C 1,147
Distribution fees
Class A 3,211
Class B 12,252
Class C 1,492
Administrative fees 13,139
Custodian fees 19,040
Registration fees 23,153
Professional fees 25,209
Printing 10,985
Fees and expenses of nonaffiliated trustees 11,758
Miscellaneous 3,718
----------
Total expenses $ 162,921
Less management fees waived and expenses
assumed by Pioneer Investment Management, Inc. (128,594)
Less fees paid indirectly (1,051)
----------
Net expenses $ 33,276
----------
Net investment income $ 193,885
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ (7,627)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 11,238 $ 3,611
---------- ----------
Net unrealized gain (loss) from:
Investments $ (262,656)
Forward foreign currency contracts and other
assets and liabilities denominated in foreign
currencies 3,476 $ (259,180)
---------- ----------
Net loss on investments and foreign currency
transactions $ (255,569)
----------
Net decrease in net assets resulting from operations $ (61,684)
----------
</TABLE>
16 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Period from 4/15/99 (Commencement of Operations) to 9/30/99
<TABLE>
<S> <C>
FROM OPERATIONS:
Net investment income $ 193,885
Net realized gain on investments and foreign currency transactions 3,611
Net unrealized loss on investments and foreign currency transactions (259,180)
------------
Net decrease in net assets resulting from operations $ (61,684)
------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.27 per share) $ (97,780)
Class B ($0.23 per share) (85,115)
Class C ($0.28 per share) (9,827)
------------
Total distributions to shareholders $ (192,722)
------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $13,803,201
Reinvestment of distributions 152,069
Cost of shares repurchased (1,077,398)
------------
Net increase in net assets resulting from fund share transactions $12,877,872
------------
Net increase in net assets $12,623,466
NET ASSETS:
Beginning of period (initial capitalization - 10,000 shares) 100,000
------------
End of period (including accumulated undistributed net investment
income of $16,084) $12,723,466
------------
</TABLE>
<TABLE>
<CAPTION>
'99 Shares '99 Amount
<S> <C> <C>
CLASS A
Shares sold 704,044 $6,825,752
Reinvestment of distributions 9,424 90,363
Less shares repurchased (42,822) (411,832)
------- ----------
Net increase 670,646 $6,504,283
------- ----------
CLASS B
Shares sold 658,772 $6,413,785
Reinvestment of distributions 5,503 52,990
Less shares repurchased (68,941) (663,578)
------- ----------
Net increase 595,334 $5,803,197
------- ----------
CLASS C
Shares sold 57,522 $ 563,664
Reinvestment of distributions 904 8,716
Less shares repurchased (202) (1,988)
------- ----------
Net increase 58,224 $ 570,392
------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 9/30/99
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4/15/99
to
9/30/99
<S> <C>
CLASS A
Net asset value, beginning of period $ 10.00
-------
Increase (decrease) from investment operations:
Net investment income $ 0.27
Net realized and unrealized loss on investments and
foreign currency transactions (0.48)
--------
Net decrease from investment operations $ (0.21)
Distributions to shareholders:
Net investment income (0.27)
--------
Net decrease in net asset value $ (0.48)
--------
Net asset value, end of period $ 9.52
--------
Total return* ( 2.09)%
Ratio of net expenses to average net assets 0.93%**+
Ratio of net investment income to average net assets 7.99%**+
Portfolio turnover rate 61%**
Net assets, end of period (in thousands) $ 6,481
Ratios assuming no waiver of management fees and
assumption of expenses by PIM and no reduction
for fees paid indirectly:
Net expenses 5.72%**
Net investment income 3.20%**
Ratios assuming waiver of management fees and
assumption of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 0.89%**
Net investment income 8.03%**
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 9/30/99
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4/15/99
to
9/30/99
<S> <C>
CLASS B
Net asset value, beginning of period $ 10.00
-------
Increase (decrease) from investment operations:
Net investment income $ 0.23
Net realized and unrealized loss on investments and
foreign currency transactions (0.44)
--------
Net decrease from investment operations $ (0.21)
Distributions to shareholders:
Net investment income (0.23)
--------
Net decrease in net asset value $ (0.44)
--------
Net asset value, end of period $ 9.56
--------
Total return* (2.10)%
Ratio of net expenses to average net assets 1.74%**+
Ratio of net investment income to average net assets 7.07%**+
Portfolio turnover rate 61%**
Net assets, end of period (in thousands) $ 5,689
Ratios assuming no waiver of management fees and
assumption of expenses by PIM and no reduction for fees
paid indirectly:
Net expenses 6.21%**
Net investment income 2.60%**
Ratios assuming waiver of management fees and
assumption of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 1.70%**
Net investment income 7.11%**
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 9/30/99
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4/15/99
to
9/30/99
<S> <C>
CLASS C
Net asset value, beginning of period $ 10.00
-------
Increase (decrease) from investment operations:
Net investment income $ 0.27
Net realized and unrealized loss on investments and
foreign currency transactions (0.47)
--------
Net decrease from investment operations $ (0.20)
Distributions to shareholders:
Net investment income (0.28)
--------
Net decrease in net asset value $ (0.48)
--------
Net asset value, end of period $ 9.52
--------
Total return* (2.04)%
Ratio of net expenses to average net assets 1.49%**+
Ratio of net investment income to average net assets 6.65%**+
Portfolio turnover rate 61%**
Net assets, end of period (in thousands) $ 554
Ratios assuming no waiver of management fees and
assumption of expenses by PIM and no reduction for fees
paid indirectly:
Net expenses 12.65%**
Net investment loss (4.51)%**
Ratios assuming waiver of management fees and
assumption of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 1.45%**
Net investment income 6.69%**
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
20 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 9/30/99
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Strategic Income Fund (the Fund) is a Delaware business trust registered
under the Investment Company Act of 1940 as a diversified, open-end management
investment company. The Fund was organized on January 5, 1999 and commenced
operations on April 15, 1999. Prior to April 15, 1999 the Fund had no operations
other than those relating to organizational matters and the initial
capitalization of the Fund by The Pioneer Group, Inc. (PGI). The investment
objective of the Fund is to produce a high level of current income.
The Fund offers three classes of shares--Class A, Class B and Class C shares.
Shares of Class A, Class B and Class C each represent an interest in the same
portfolio of investments of the Fund and have equal rights to voting,
redemptions, dividends and liquidation, except that each class of shares can
bear different transfer agent and distribution fees and have exclusive voting
rights with respect to the distribution plans that have been adopted by Class A,
Class B and Class C shareholders, respectively.
The Fund's financial statements have been prepared in conformity with generally
accepted accounting principles that require the management of the Fund to, among
other things, make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
consistently followed by the Fund, which are in conformity with those generally
accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded on trade date. 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 is no other readily available valuation method are valued at their fair
values as determined by, or under the direction of, the Board of Trustees.
Principal amounts of mortgage-backed securities are adjusted for monthly
paydowns. Premium and discount related to certain mortgage-backed securities
are amortized or accreted in proportion to the underlying monthly paydowns.
Market discount and premium are accreted or amortized daily on a straight-line
basis. Interest income is recorded on the accrual basis, net of unrecoverable
foreign
21
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 9/30/99 (continued)
- --------------------------------------------------------------------------------
taxes witheld at the applicable country rates. Temporary cash investments
are valued at amortized cost.
Gains and losses on sales of investments are calculated on the identified cost
method for both financial reporting and federal income tax purposes. It is the
Fund's practice to first select for sale those securities that have the
highest cost and also qualify for long-term capital gain or loss treatment for
tax purposes.
B. Foreign Currency Translation
The books and records of the Fund are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars using
current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
among other things, the net realized gains and losses on foreign currency
contracts, disposition of foreign currencies and the difference between the
amount of income accrued and the U.S. dollar actually received. Further, the
effects of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Fund enters into forward foreign currency contracts (contracts) for the
purchase or sale of a specific foreign currency at a fixed price on a future
date as a hedge or cross-hedge against either specific investment transactions
(settlement hedges) or portfolio positions (portfolio hedges). All contracts
are marked to market daily at the applicable exchange rates, and any resulting
unrealized gains or losses are recorded in the Fund's financial statements.
The Fund records realized gains and losses at the time a portfolio hedge is
offset by entry into a closing transaction or extinguished by delivery of the
currency. Risks may arise upon entering into these contracts from the
potential inability of counterparties to meet the terms of the contract and
from unanticipated movements in the value of foreign currencies relative to
the U.S. dollar (see Note 6).
22
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareholders. Therefore, no federal income tax provision is required.
The characterization of distributions to shareholders for financial reporting
purposes is determined in accordance with federal income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying
financial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital,
depending on the type of book/tax differences that may exist.
At September 30, 1999, the Fund reclassified $11,224 and $3,697 from
accumulated undistributed net realized gain on investments and paid-in
capital, respectively, to accumulated undistributed net investment income. The
reclassification has no impact on the net asset value of the Fund and is
designed to present the Fund's capital accounts on a tax basis.
E. Fund Shares
The Fund records sales and repurchases of its shares on trade date. Net
losses, if any, as a result of cancellations are absorbed by Pioneer Funds
Distributor, Inc. (PFD), the principal underwriter for the Fund and an
indirect subsidiary of PGI. PFD earned $12,366 in underwriting commissions on
the sale of fund shares during the period ended September 30, 1999.
F. Class Allocations
Distribution fees are calculated based on the average daily net asset value
attributable to Class A, Class B and Class C shares of the Fund, respectively.
Shareholders of each class share all expenses and fees paid to the transfer
agent, Pioneering Services Corporation (PSC), for their services, which are
allocated based on the number of accounts in each class and the ratable
allocation of related out-of-pocket expense (see Note 3). Income, common
expenses and realized and unrealized gains and losses are calculated at the
Fund level and allocated daily to all classes of shares based on their
respective percentage of adjusted net assets at the beginning of the day.
23
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 9/30/99 (continued)
- --------------------------------------------------------------------------------
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 shareholders are recorded as of the ex-dividend date. Distributions paid by
the Fund with respect to each class of shares are calculated in the same
manner, at the same time, and in the same amount, except that Class A, Class
B, and Class C shares can bear different transfer agent and distribution fees.
G. Repurchase Agreement
With respect to repurchase agreements entered into by the Fund, the value of
the underlying securities (collateral), including accrued interest received
from counterparties, is required to be at least equal to or in excess of the
value of the repurchase agreement at the time of purchase. 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 manages the Fund's portfolio and is a wholly owned subsidiary of PGI.
Management fees are calculated daily at the annual rate of 0.75% of the Fund's
average daily net assets up to $100 million; 0.70% of the next $400 million;
0.65% of the next $500 million; and 0.60% of the excess over $1 billion.
PIM has agreed not to impose a portion of its management fee and to assume other
operating expenses of the Fund to the extent necessary to limit Class A expenses
to 0.75% of the average daily net assets attributable to Class A shares; the
portion of the Fund-wide expenses attributable to Class B and Class C shares
will be reduced only to the extent that such expenses are reduced for Class A
shares. Prior to July 8, 1999, PIM had voluntarily agreed to limit management
fees and other operating expenses to the extent that such expenses exceeded
1.50% of the Class A expenses; the portion of the Fund-wide expenses
attributable to Class B and Class C shares were reduced only to the extent that
such expenses were reduced for Class A shares. PIM's agreement is voluntary and
temporary and may be revised or terminated at any time.
24
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
3. Transfer Agent
PSC, a wholly owned subsidiary of PGI, provides substantially all transfer agent
and shareholder services to the Fund at negotiated rates. Included in due to
affiliates is $16,305 in transfer agent fees payable to PSC at September 30,
1999.
4. Distribution Plans
The Fund adopted Plans of Distribution with respect to each class of shares
(Class A Plan, Class B Plan, and Class C Plan) in accordance with Rule 12b-1 of
the Investment Company Act of 1940. Pursuant to the Class A Plan, the Fund pays
PFD a service fee of up to 0.25% of the Fund's average daily net assets in
reimbursement of its actual expenditures to finance activities primarily
intended to result in the sale of Class A shares. Pursuant to the Class B Plan
and the Class C Plan, the Fund pays PFD 1.00% of the average daily net assets
attributable to each class of shares. The fee consists of a 0.25% service fee
and a 0.75% distribution fee paid as compensation for personal services and/or
account maintenance services or distribution services with regard to Class B and
Class C shares. Included in due to affiliates is $6,400 in distribution fees
payable to PFD at September 30, 1999.
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%, based on the lower of cost or market
value of shares being redeemed. Redemptions of Class C shares within one year of
purchase are subject to a CDSC of 1.00%. Proceeds from the CDSCs are paid to
PFD. For the period ended September 30, 1999, CDSCs in the amount of $1,294 were
paid to PFD.
5. Expense Offsets
The Fund has entered into certain expense offset arrangements resulting in a
reduction in the Fund's total expenses. For the period ended September 30, 1999,
the Fund's expenses were reduced by $1,051 under such arrangements.
25
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 9/30/9 (continued)
- --------------------------------------------------------------------------------
6. Forward Foreign Currency Contracts
At September 30, 1999, the Fund had entered into various contracts that obligate
the Fund to deliver currencies at specified future dates. At the maturity of a
contract, the Fund must make delivery of the foreign currency. Alternatively,
prior to the settlement date of a portfolio hedge, the Fund may close out such
contracts by entering into an offsetting hedge contract. Open portfolio hedges
at September 30, 1999 were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Contracts In Exchange Settlement Net Unrealized
Currency to Deliver For Date Value Gain
=========================================================================================
<S> <C> <C> <C> <C> <C>
EUR 170,000 $177,404 10/18/99 $181,080 $3,676
- -----------------------------------------------------------------------------------------
</TABLE>
Included in accumulated net realized gain on investments and foreign currency
transactions is $220, which represents the realized gain on closed but unsettled
portfolio hedges totaling $62,855.
At September 30, 1999, the gross forward foreign currency settlement contracts
receivable and payable were $119,460 and $117,919 respectively, resulting in a
net receivable of $1,541.
26
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareowners and the Board of Trustees of Pioneer Strategic Income Fund:
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer Strategic Income Fund as of September 30, 1999, and the
related statement of operations, the statement of changes in net assets, and the
financial highlights for the period presented. These financial statements and
the financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of September 30, 1999 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides 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 Strategic Income Fund as of September 30, 1999, the results of its
operations, the changes in its net assets, and the financial highlights for the
period presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 5, 1999
27
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Officers Trustees
John F. Cogan, Jr. John F. Cogan, Jr., Chairman and
Mary K. Bush President
Richard H. Egdahl, M.D. David D. Tripple, Executive Vice President
Margaret B.W. Graham Sherman B. Russ, Vice President
John W. Kendrick Eric W. Reckard, Treasurer
Marguerite A. Piret Joseph P. Barri, Secretary
David D. Tripple
Stephen K. West
John Winthrop
</TABLE>
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Public Accountants
Arthur Andersen LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneering Services Corporation
28
<PAGE>
- --------------------------------------------------------------------------------
THE PIONEER FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
For information about any Pioneer mutual fund, please contact your investment
professional, or call Pioneer at 1-800-225-6292. Ask for a free fund information
kit, which includes a fund prospectus. Please read the prospectus carefully
before you invest or send money.
<TABLE>
<S> <C>
Growth Funds Income Funds
United States Taxable
Pioneer Capital Growth Fund Pioneer America Income Trust
Pioneer Growth Shares Pioneer Bond Fund
Pioneer Micro-Cap Fund Pioneer Limited Maturity Bond Fund
Pioneer Mid-Cap Fund Pioneer Strategic Income Fund
Pioneer Small Company Fund
Pioneer Tax-Managed Fund
Tax-Free
Pioneer Tax-Free Income Fund
Pioneer Europe Fund
International/Global
Pioneer Emerging Markets Fund
Pioneer Indo-Asia Fund Money Market Fund
Pioneer International Growth Fund Pioneer Cash Reserves Fund*
Pioneer World Equity Fund
Growth and Income Funds
Pioneer Fund
Pioneer II
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Real Estate Shares
</TABLE>
* An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1 per share, it is possible to
lose money by investing in the Fund.
29
<PAGE>
- --------------------------------------------------------------------------------
HOW TO CONTACT PIONEER
- --------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
Call us for:
Account information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
Pioneering Services Corporation
60 State Street
Boston, Massachusetts 02109
Our toll-free fax 1-800-225-4240
Our Internet e-mail address [email protected]
(for general questions about Pioneer only)
Visit our web site: www.pioneerfunds.com
This report must be preceded or accompanied by a current Fund prospectus.
[Pioneer Logo]
Pioneer Investment Management, Inc.
60 State Street 7093-00-1199
Boston, Massachusetts 02109 (C) Pioneer Funds Distributor, Inc.
www.pioneerfunds.com [recycle logo] Printed on Recycled Paper
