<PAGE>
[Logo]
Pioneer
Pioneer Strategic
Income Fund
- -------------------------
SEMIANNUAL REPORT 3/31/00
- -------------------------
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule of Investments 9
Financial Statements 17
Notes to Financial Statements 23
Trustees, Officers and Service Providers 28
The Pioneer Family of Mutual Funds 29
</TABLE>
<PAGE>
Pioneer Strategic Income Fund
LETTER FROM THE CHAIRMAN 3/31/00
Dear Shareowner,
- --------------------------------------------------------------------------------
Only three months into the new millennium and already financial markets have
seen their share of activity. In March, for the fifth time in just nine months,
the Federal Reserve raised short-term interest rates in an effort to brake
unusually strong economic growth and deflect inflationary pressures.
In the United States stocks have continued to roar ahead, albeit in an uneven
manner. Increasingly, the financial media has distinguished between what's
become known as old economy and new economy stocks. In fact, so far in 2000,
we've seen a sharp divergence between the so-called old economy traditional
non-technology stocks and the new economy technology- and e-commerce-oriented
issues. Reflecting this divergence, the NASDAQ Composite Index, boosted by
strong technology stock performance, was up over 12%, while the Dow Jones
Industrial Index, composed of a select group of 30 blue-chip stocks, returned
- -5%. Meanwhile, long-term interest rates not only failed to rise in concert
with short-term rates but - in atypical fashion - have fallen below those
rates, enabling longer-term bond prices to remain fairly steady.
The recent market activity underscores the need for you to take a diversified
approach to your investment portfolio, making sure you have the optimal blend
of stocks, bonds and shorter-term investments like money market funds.
Experience tells us that, over the long term, maintaining a diversified
portfolio can help to smooth out the periodic jolts that are characteristic of
financial markets. Sharp market swings are often a good reminder to take
another look at your risk threshold and your investment time horizon. As
always, an investment professional who is familiar with your individual
circumstances can assist you in that exercise.
I encourage you to read this report closely. It offers you an opportunity to
review your Fund in depth. I would draw your attention to the Portfolio Manager
Discussion with Ken Taubes, the manager of your Fund. It's a chance to hear how
the Fund performed and what the manager sees as he looks ahead. If you have
questions, please contact your investment professional or call Pioneer at
1-800-225-6292. You may also want to visit our web site at
www.pioneerfunds.com.
Respectfully,
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman and President
1
<PAGE>
Pioneer Strategic Income Fund
- -----------------------------
PORTFOLIO SUMMARY 3/31/00
- -----------------------------
Portfolio Diversification
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[Start of Pie Charts]
Corporate Bonds 57%
U.S. Government Agency
Obligations 15%
Foreign Government
Bonds 8%
Convertible Corporate
Bonds 8%
U.S. Teasury
Obligations 6%
Asset-Backed
Obligations 4%
Supernational
Bonds 2%
[End of Pie Charts]
Portfolio Maturity
- --------------------------------------------------------------------------------
(Effective life as a percentage of total investment portfolio)
[Start of Pie Charts]
0-2 Years, 5%
2-5 Years, 18%
5-7 Years, 15%
7-10 Years, 44%
10-20 Years, 7%
20+ Years, 11%
[End of Pie Charts]
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of total debt holdings)
<TABLE>
<S> <C>
1. Nykredit, 7.0%, 10/1/32 3.48%
2. U.S. Treasury Bonds, 7.875%, 2/15/21 2.83
3. Frank Hypobk Centalboden, 4.75%, 4/20/00 2.59
4. Government National Mortgage Association, 8.0%, 12/15/29 2.49
5. Republic of Argentina, 6.0%, 3/31/23 2.18
6. U.S. Treasury Notes, 5.625%, 5/15/08 2.06
7. Government of France, 3.0%, 7/25/09 2.04
8. International Finance Corp., 6.75%, 7/15/09 1.81
9. Reliance Industries, Ltd., 10.5%, 8/6/46 (144A) 1.60
10. Republic of Brazil-C Bonds, 8.0%, 4/15/14 1.42
</TABLE>
2 Fund holdings will vary for other periods.
<PAGE>
Pioneer Strategic Income Fund
- ---------------------------------------------------------------------
PERFORMANCE UPDATE 3/31/00 CLASS A SHARES
- ---------------------------------------------------------------------
Share Prices and Distributions
- ---------------------------------------------------------------------
<TABLE>
Net Asset Value
per Share 3/31/00 9/30/99
<S> <C> <C
$ 9.26 $ 9.52
<CAPTION>
Distributions per Share Income Short-Term Long-Term
(9/30/99 - 3/31/00) Dividends Capital Gains Capital Gains
<S> <C> <C> <C>
$ 0.379 - -
</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.
- -------------------------------------------------------
<TABLE>
<CAPTION>
Cumulative
Total Returns
(As of March 31, 2000)
Net Asset Public Offering
Period Value Price*
<S> <C> <C>
Life-of-Fund -0.85% -5.30%
(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.
[Start of Tabular Representation of Mountain Chart]
<TABLE>
<CAPTION>
Pioneer Lehman Brothers
Strategic Aggregate
Income Fund* Bond Index
<S> <C> <C>
4/99 9550 10000
9390 9912
9404 9880
7/99 9339 9838
9274 9833
9/99 9314 9947
9335 9984
9362 9983
12/99 9414 9935
9336 9902
9399 10022
3/00 9432 10154
</TABLE>
[End of Tabular Representation of Mountain Chart]
+ 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
<PAGE>
Pioneer Strategic Income Fund
- ---------------------------------------------------------------------
PERFORMANCE UPDATE 3/31/00 CLASS B SHARES
- ---------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
per Share 3/31/00 9/30/99
<S> <C> <C> <C>
$ 9.27 $ 9.56
<CAPTION>
Distributions per Share Income Short-Term Long-Term
(9/30/99 - 3/31/00) Dividends Capital Gains Capital Gains
<S> <C> <C> <C>
$ 0.366 - -
</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.
- --------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns
(As of March 31, 2000)
If If
Period Held Redeemed*
<S> <C> <C>
Life-of-Fund -1.34% -5.05%
(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.
<TABLE>
<CAPTION>
Pioneer
Strategic Lehman Brothers
Income Aggregate
Fund* Bond Index
<S> <C> <C>
4/99 10000 10000
9816 9912
9837 9880
7/99 9765 9838
9703 9833
9/99 9741 9947
9753 9984
9769 9983
12/99 9807 9935
9733 9902
9785 10022
3/00 9448 10154
</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
- ---------------------------------------------------------------------
PERFORMANCE UPDATE 3/31/00 CLASS C SHARES
- ---------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
per Share 3/31/00 9/30/99
<S> <C> <C> <C>
$ 9.23 $ 9.52
<CAPTION>
Distributions per Share Income Short-Term Long-Term
(9/30/99 - 3/31/00) Dividends Capital Gains Capital Gains
<S> <C> <C> <C>
$ 0.366 - -
</TABLE>
Invest m e n t R e t u r n s
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Strategic Income Fund, compared to the growth of the Lehman Brothers
Aggregate Bond Index.
<TABLE>
<CAPTION>
Cumulative Total Returns
(As of March 31, 2000)
If If
Period Held Redeemed*
<S> <C> <C>
Life-of-Fund -1.30% -2.22%
(4/15/99)
</TABLE>
* Assumes reinvestment of distributions.
A 1% contingent deferred sales charge
(CDSC) applies to redemptions made
within one year of purchase.
<TABLE>
<CAPTION>
Pioneer
Stategic Lehman Brothers
Income Aggregate
Fund* Bond Index
<S> <C> <C>
4/99 10000 10000
9862 9912
9873 9880
7/99 9800 9838
9727 9833
9/99 9766 9947
9788 9984
9804 9983
12/99 9842 9935
9758 9902
9809 10022
3/00 9749 10154
</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
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 3/31/00
- --------------------------------------------------------------------------------
Rising interest rates precipitated a decline in prices for most bonds, with the
exception of the 30-year Treasury, during the six months ended March 31, 2000,
creating a generally poor environment for investing in fixed income securities.
The following is an interview with Kenneth J. Taubes, head of Pioneer Strategic
Income Fund's portfolio management team, where he discusses the events and
factors that influenced your Fund's performance over the most recent six-month
period.
Q: How did the Fund perform during this challenging period for bond investing,
Ken?
A: The Fund achieved its goal of providing attractive income to shareowners.
Class A shares returned 1.27%, while Class B returned 0.81% and Class C
0.81%, all at net asset value. In comparison, the Fund's performance
benchmark, the Lehman Brothers Aggregate Bond Index, returned 2.17% for
the period.The Fund's 30-day SEC yield was 8.40% at the end of the period.
Q: How did the environment affect different types of bonds during the six
months?
A: With few exceptions, bond classes experienced price losses as interest rates
rose, particularly during the final three months of 1999. Returns tended to
be positive, however, as interest income offset price declines. Domestically,
the worst-performing class was the high yield, below- investment-grade
sector, where price losses exceeded interest income. In general, investors
were concerned that companies who rely on debt would be the most vulnerable
to higher borrowing costs, resulting from the Federal Reserve's tightening of
the money supply to slow economic growth. Among domestic securities, only
30-year Treasurys stabilized in price. Overall, the best performing sector
during the six months was emerging market debt, the beneficiary of the
continued economic revival in Asia and Latin America after the financial
crisis of 1998.
6
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Q: Did you change your asset allocation during the six months?
A: Yes. We manage the Fund by searching for relative value among different bond
classes. We don't try to guess the direction of interest rates, so the Fund's
duration or interest rate sensitivity is similar to that of an
intermediate-term bond fund. At the start of the period in early October
1999, we were relatively underweighted in high-yield bonds, which comprised
about 35% of net assets. Investments in lower-rated bonds may be more
volatile and less liquid than more highly rated bonds. As high-yield bonds
declined in price, they became more attractive and we raised the allocation
to about 40% of net assets. Among high-yield sectors, we primarily invested
in bonds from the energy industry that benefited from accelerating global
economic growth. We added selectively in the technology sector, where we saw
attractive values.
We also increased the allocation to non-dollar-denominated securities,
primarily the euro, after the price of the European currency had slipped.
We started the period with less than 10% of net assets in non-dollar
denominated currencies, and increased that weighting to about 16% by March
31. Although the euro has had disappointing performance during the first
year of its existence, we believe the Fund can benefit in the long run by
increasing its diversification through investments in foreign currencies.
Moreover, the improving growth outlook in Europe and the prospect of
moderating economic growth in the United States increases the near-term
attractiveness of euro-denominated securities. Of course, investing in
non-U.S. securities involves special risks, including but not limited to,
currency fluctuations, and social and economic instability.
As we added to the Fund's high yield and foreign currency holdings, we
reduced the positions in long-term U.S. Treasurys, which had performed
relatively well during the period. The shifts in allocations to high yield
and European securities also should enhance the Fund's income-producing
ability.
7
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 3/31/00 (continued)
- --------------------------------------------------------------------------------
Q: What areas helped performance during the six months, and what areas proved
disappointing?
A: The Fund's performance was helped by strong returns from long-term Treasury
securities as well as from emerging market securities. As we indicated,
30-year Treasurys were the only domestic bonds with declining interest rates
and rising prices over the six months. Investors in long-term government
securities showed confidence in the Federal Reserve's policy to avoid
inflation problems by tightening the money supply and slowing economic
growth. In the case of emerging market debt, accelerating economic growth and
rising commodity prices contributed to the continued rebound in the value of
fixed income securities. Domestic high yield bond performance was
disappointing, although our relatively lower weighting at the beginning of
the period softened the impact. The poor performance of the euro during the
six months also detracted from overall performance.
Q: What is your outlook among the various fixed income sectors in which you
invest?
A: Looking out over the next six months, we believe it's reasonable to expect
economic growth in the United States to slow as a result of the Federal
Reserve's tightening of the money supply. The Fed already has raised
short-term rates by a total of 1.25% over the past nine months and further
increases are likely. Economic growth in the U.S. may be peaking and,
historically, interest rates peak with economic growth. If the Fed succeeds
and reduces economic growth rates from more than 7% per year to about
3.5 - 4%, corporate bond performance should improve and high yield bonds, in
particular, should benefit. The outlook for foreign-denominated securities
also may improve as the U.S. economy starts to slow and returns from foreign
securities become more attractive. We believe euro-denominated bonds may also
do well. While these changes may unfold over several months, we think our
multi-sector strategy should help the Fund produce attractive income while
cushioning the price fluctuations that tend to occur in individual sectors.
8
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/00 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount S&P/Moody's
USD($) Ratings Value
<S> <C> <C> <C>
CONVERTIBLE CORPORATE BONDS - 7.7%
225,000 B+/B1 Mascotech, Inc., 4.5%, 12/15/03 $ 167,062
200,000 BB-/B2 Pogo Producing Co., 5.5%, 6/15/06 172,880
182,000 B+/B2 Quantum Corp., 7.0%, 8/1/04 145,828
240,000 BBB/Baaa3 Thermo Electron Corp., 4.25%, 1/1/03
(144A) 220,406
200,000 NR/B2 Total Access Communication, 2.0%,
5/31/06 (144A) 226,000
175,000 BB/NR TVX Gold Inc., 5.0%, 3/28/02 122,938
215,000 BBB-/Ba3 Waste Management Inc., 4.0%, 2/1/02 189,230
----------
Total Convertible Corporate Bonds
(Cost $1,247,739) $1,244,344
----------
ASSET BACKED SECURITIES - 4.3%
DKK 1,063,000 AA-/Aa3 Nykredit, 6.0%, 10/1/32 $ 129,767
DKK 4,380,000 AA-/Aa3 Nykredit, 7.0%, 10/1/32 559,924
----------
Total Asset Backed Securities
(Cost $722,351) $ 689,691
----------
CORPORATE BONDS - 56.6%
Basic Materials - 6.1%
Chemicals - 4.0%
EURO 200,000 B+/B2 Huntsman ICI Chemicals LLC, 10.125%,
7/1/09 $ 199,098
200,000 BB/Ba3 Lyondell Petrochemical Co., 9.875%,
5/1/07 190,250
250,000 BB/Ba2 Reliance Industries, Ltd., 10.5%,
8/6/46 (144A) 256,478
----------
$ 645,826
----------
Metals Mining - 0.9%
135,000 CC/Ca AEI Resources, Inc., 11.5%, 12/15/06
(144A) $ 13,500
150,000 CCC/B3 Alatief Freeport Financial, 9.75%,
4/15/01 137,250
----------
$ 150,750
----------
Paper & Forest Products - 1.2%
225,000 CCC+/B3 APP Ghina Group, 14.0%, 3/15/10 $ 190,125
----------
Total Basic Materials $ 986,701
----------
</TABLE>
The accompanying notes are an integral part of these financial statements. 9
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/00 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount S&P/Moody's
USD($) Ratings Value
<S> <C> <C> <C>
Capital Goods - 2.5%
Engineering & Construction - 0.8%
135,000 B+/B2 Metromedia Fiber Network, Inc., 10.0%,
11/15/08 $ 128,925
----------
Waste Management - 1.7%
150,000 B+/B2 Allied Waste North America Inc., 10.0%,
8/1/09 $ 112,500
155,000 BB/Ba3 Azurix Corp., 10.75%, 2/15/10 (144A) 153,450
----------
$ 265,950
----------
Total Capital Goods $ 394,875
----------
Communication Services - 6.3%
Cellular/Wireless Communications - 2.3%
200,000 B/B3 Crown Castle International Corp., 9.0%,
5/15/11 $ 178,000
200,000 B/B2 NEXTLINK Communications, Inc.,
10.75%, 6/1/09 196,000
----------
$ 374,000
----------
Telecommunications (Long Distance) - 2.1%
EURO 201,000 BB/Ba1 KPNQwest NV, 7.125%, 6/1/09 $ 188,549
235,000 NR/NR SBA Communications, 12.0%, 3/1/08 155,100
----------
$ 343,649
----------
Telephone - 1.9%
125,000 B/B2 Intermedia Communications Inc., 8.6%,
6/1/08 $ 108,750
200,000 B+/B1 McLeodUSA Inc., 9.25%, 7/15/07 189,000
----------
$ 297,750
----------
Total Communication Services $1,015,399
----------
Consumer Cyclicals - 7.5%
Auto Parts & Equipment - 1.0%
200,000 BB+/Ba2 Federal Mogul Co., 7.5%, 1/15/09 $ 156,210
----------
Building Materials - 1.9%
150,000 B/B2 NCI Building Systems, Inc., 9.25%,
5/1/09 $ 138,750
190,000 B+/B1 Nortek Inc., 9.125%, 9/1/07 173,850
----------
$ 312,600
----------
</TABLE>
10 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount S&P/Moody's
USD($) Ratings Value
<S> <C> <C> <C>
Distributors (Durables) - 1.0%
EURO 175,000 B-/B2 United Pan Europe Communications NV,
11.25%, 11/1/09 (144A) $ 160,391
----------
Hardware & Tools - 1.4%
235,000 B+/B2 Scott's Corp., 8.625%, 1/15/09 (144A) $ 218,550
----------
Homebuilding - 1.2%
220,000 BB+/Ba2 Toll Corp., 8.125%, 2/1/09 $ 190,300
----------
Services (Commercial & Consumer) - 0.1%
25,000 BB+/Ba3 Laidlaw Inc., 7.65%, 5/15/06 $ 14,646
----------
Textiles (Apparel) - 0.9%
150,000 BBB-/Baa2 Jones Apparel Group, Inc., 7.875%,
6/15/06 $ 146,453
----------
Total Consumer Cyclicals $1,199,150
----------
Consumer Staples - 8.4%
Broadcasting (Television/Radio/Cable) - 3.8%
200,000 B+/B1 Adelphia Communications, 7.875%,
5/1/09 $ 171,000
125,000 BB+/Baa3 British Sky Broadcasting Corp., 8.2%,
7/15/09 123,179
135,000 B+/B2 Charter Communications Holdings LLC,
8.25%, 4/1/07 120,150
200,000 B/B2 Echostar DBS Communications Corp.,
9.25%, 2/1/06 193,500
----------
$ 607,829
----------
Distributors (Food & Health) - 2.2%
200,000 B-/B3 Fisher Scientific International Inc., 9.0%,
2/1/08 $ 181,000
200,000 B/B2 Wesco Distribution Inc., 9.125%, 6/1/08 175,000
----------
$ 356,000
----------
Entertainment - 1.2%
200,000 B-/B3 Premier Parks, Inc., 9.75%, 6/15/07 $ 186,000
----------
Household Products (Non-Durables) - 1.2%
200,000 B/B2 Playtex Family Products, Inc., 9.0%,
12/15/03 $ 194,000
----------
Total Consumer Staples $1,343,829
----------
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/00 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount S&P/Moody's
USD($) Ratings Value
<S> <C> <C> <C>
Energy - 6.3%
Oil & Gas (Drilling & Equipment) - 2.1%
200,000 B+/B1 Parker Drilling Co., 9.75%, 11/15/06 $ 190,000
150,000 BB-/Ba3 RBF Finance Co., 11.0%, 3/15/06 156,750
----------
$ 346,750
----------
Oil & Gas (Production & Exploration) - 4.2%
150,000 BB-/Ba2 Gulf Canada Resources Ltd., 9.625%,
7/1/05 $ 152,639
200,000 B/B2 HS Resources Inc., 9.25%, 11/15/06 194,000
200,000 B+/B1 Nuevo Energy Co., 9.5%, 6/1/08 191,000
135,000 BB+/Ba1 Santa Fe Snyder Corp., 8.05%, 6/15/04 131,294
----------
$ 668,933
----------
Total Energy $1,015,683
----------
Financial - 10.5%
Banks (Major Regional) - 3.9%
EURO 225,000 A/A1 Bank of Ireland, 6.45%, 2/10/10 $ 215,370
DEM 850,000 AAA/NR Eurohypo AG, 4.75%,
4/20/00 415,994
----------
$ 631,364
----------
Banks (Money Center) - 1.9%
100,000 A+/A1 Dresdner Funding Trust, 8.151%,
6/30/31 (144A) $ 95,586
210,000 NR/Aaa Skandinaviska Enskilda Bank, 8.125%,
9/6/49 (144A) 202,448
----------
$ 298,034
----------
Banks (Regional) - 0.9%
150,000 BBB-/Ba2 Imperial Bank, 8.375%, 4/1/09 $ 139,561
----------
Consumer Finance - 0.9%
150,000 BB-/B1 Advanta Corp., 7.0%, 5/1/01 $ 144,941
----------
Financial (Diversified) - 2.9%
159,000 BB-/Ba3 Forest City Enterprises, 8.375%,
3/15/08 $ 141,510
200,000 BBB-/Baa3 Colonial Realty LP, 7.0%, 7/14/07 183,970
150,000 BBB/Baa3 Mack-Cali Realty Corp., 7.25%, 3/15/09 139,057
----------
$ 464,537
----------
Total Financial $1,678,437
----------
</TABLE>
12 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount S&P/Moody's
USD($) Ratings Value
<S> <C> <C> <C>
Healthcare - 3.4%
Healthcare (Diversified) - 0.9%
150,000 B/B3 King Pharmaceutical Inc., 10.75%,
2/15/09 $ 148,500
----------
Healthcare (Hospital Management) - 1.8%
200,000 BB+/Ba2 Columbia HCA Healthcare Corp., 7.25%,
5/20/08 $ 177,402
125,000 B+/Ba3 Quorum Health Group, 8.75%, 11/1/05 116,250
----------
$ 293,652
----------
Healthcare (Medical Products/Supplies) - 0.7%
115,000 BB+/Ba1 Beckman Instruments, Inc., 7.05%,
6/1/26 $ 108,961
----------
Total Healthcare $ 551,113
----------
Technology - 2.2%
Communication (Equipment) - 1.1%
200,000 B/B2 L-3 Communication Holdings Corp., 8.5%,
5/15/08 $ 178,500
----------
Electronics (Semiconductors) - 1.1%
185,000 B/B3 Fairchild Semiconductor, 10.375%,
10/1/07 $ 181,763
----------
Total Technology $ 360,263
----------
Transportation - 1.3%
Airlines - 1.3%
225,000 BB/Ba2 Northwest Airlines Inc., 8.52%, 4/7/04 $ 205,036
----------
Total Transportation $ 205,036
----------
Utilities - 2.1%
Electric Companies - 1.2%
200,000 BBB-/Baa3 Great Lakes Power Inc., 8.3%, 3/1/05 $ 196,646
----------
Power Producers (Independent) - 0.9%
215,000 BB-/Ba3 AES China Generating Co., 10.125%,
12/15/06 $ 148,350
----------
Total Utilities $ 344,996
----------
Total Corporate Bonds
(Cost $9,537,321) $9,095,482
----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 21.1%
210,000 Federal Home Loan Bank, 7.01%, 1/13/04 $ 207,335
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/00 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount S&P/Moody's
USD($) Ratings Value
<S> <C> <C> <C>
U.S. Government and Agency
Obligations (continued)
116,525 Federal Home Loan Mortgage Corp.,
REMIC Series 2043 G, 6.5%, 4/15/28 $ 111,346
92,865 Federal National Mortgage Association,
7.5%, 1/01/28 91,522
181,231 Federal National Mortgage Association,
7.0%, 5/1/28 to 2/1/29 174,407
94,025 Federal National Mortgage Association,
6.5%, 4/1/14 to 4/1/29 89,667
59,760 Federal National Mortgage Association,
REMIC Series 1994-89, 8.0%, 6/25/23 60,462
127,646 Government National Mortgage
Association, 7.75%, 10/15/26 128,036
29,658 Government National Mortgage
Association, 6.0%, 4/15/29 27,214
214,295 Government National Mortgage
Association, 6.5%, 5/15/08 to 4/15/29 203,229
321,930 Government National Mortgage
Association, 7.0%, 4/15/07 to 6/15/29 313,410
297,454 Government National Mortgage
Association, 7.5%, 9/15/27 to 10/15/29 295,021
568,223 Government National Mortgage
Association, 8.0%, 12/15/29 to 1/15/30 575,048
27,631 Government National Mortgage
Association II, 6.5%, 1/20/28 26,015
97,203 Government National Mortgage
Association II, 7.5%, 8/20/29 96,084
205,000 U.S. Treasury Notes, 6.125%, 8/15/07 203,048
345,000 U.S. Treasury Notes, 5.625%, 5/15/08 331,659
380,000 U.S. Treasury Notes, 7.875%, 2/15/21 454,898
----------
Total U.S. Government and Agency
Obligations
(Cost $3,396,915) $3,388,401
----------
FOREIGN GOVERNMENT BONDS - 8.3%
220,000 B/B1 Export Credit of Turkey, 11.5%, 2/25/05
(144A) $ 219,450
EURO 360,000 AAA/Aaa Government of France, 3.0%, 7/25/09 327,846
</TABLE>
14 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount S&P/Moody's
USD($) Ratings Value
<S> <C> <C> <C>
Foreign Government Bonds (continued)
250,000 BB/Ba1 Government of Mexico W-B, 6.25%,
12/31/19 $ 212,969
303,302 B+/B2 Republic of Brazil - C Bonds, 8.0%,
4/15/14+ 227,477
500,000 BB/Ba3 Republic of Argentina, 6.0%, 3/31/23 350,937
-----------
Total Foreign Government Bonds
(Cost $1,231,973) $ 1,338,679
-----------
SUPERNATIONAL BONDS - 2.0%
NZD 620,000 AAA/Aaa International Finance Corp., 6.75%,
7/15/09 $ 291,588
EURO 25,000 BBB+/A3 Andina de Fomento, 4.75%, 5/6/04 (144A) 22,887
-----------
Total Supernational Bonds
(Cost $323,895) $ 314,475
-----------
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $16,460,194) $16,071,072
-----------
</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 March 31, 2000, the
value of these securities amounted to $1,789,146 or 10.7% of total net
assets.
(a) At March 31, 2000, the net unrealized loss on investments, based on cost
for federal income tax purposes of $16,473,705 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized gain for all investments in
which there is an excess of value over tax cost $ 240,896
Aggregate gross unrealized loss for all investments in
which there is an excess of tax cost over value (643,529)
---------
Net unrealized loss $(402,633)
---------
</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 Federal
National Mortgage Association (FNMA) and 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.
Note: Principal amounts are denominated in US dollars unless otherwise denoted.
DEM Deutsche marc.
DKK Danish kroner.
EURO Euro dollar.
NZD New Zealand dollar.
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Purchases and sales of securities (excluding temporary cash investments) for
the six months ended March 31, 2000 were as follows:
<TABLE>
<CAPTION>
Purchases Sales
-------- ------
<S> <C> <C>
Long-term U.S. Government $2,461,921 $3,473,797
Other Long-term Securities 8,529,664 3,164,330
</TABLE>
16 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
BALANCE SHEET 3/31/00 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (cost $16,460,194) $16,071,072
Cash 62,110
Foreign currencies, at value 131,121
Receivables -
Investment securities sold 121,118
Fund shares sold 36,350
Interest 341,984
Due from Pioneer Investment Management, Inc. 54,784
Other 2,042
-----------
Total assets $16,820,581
-----------
LIABILITIES:
Payables -
Forward foreign currency portoflio hedge contracts, open--net $ 1,488
Forward foreign currency portfolio hedge contracts, closed--net 221
Fund shares repurchased 37,344
Dividends 33,001
Due to affiliates 18,080
Accrued expenses 66,524
-----------
Total liabilities $ 156,658
-----------
NET ASSETS:
Paid-in capital $17,410,413
Accumulated distributions in excess of net investment income (26,011)
Accumulated net realized loss on investments and foreign
currency transactions (326,427)
Net unrealized loss on investments (389,122)
Net unrealized loss on forward foreign currency contracts and other
assets and liabilities denominated in foreign currencies (4,930)
-----------
Total net assets $16,663,923
-----------
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $7,916,165/854,646 shares) $ 9.26
-----------
Class B (based on $7,336,269/791,308 shares) $ 9.27
-----------
Class C (based on $1,411,489/152,905 shares) $ 9.23
-----------
MAXIMUM OFFERING PRICE:
Class A $ 9.70
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (unaudited)
- --------------------------------------------------------------------------------
For the Six Months Ended 3/31/00
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Interest $ 698,777
----------
EXPENSES:
Management fees $ 61,461
Transfer agent fees
Class A 4,203
Class B 3,119
Class C 733
Distribution fees
Class A 8,791
Class B 35,898
Class C 6,886
Administrative fees 15,793
Custodian fees 7,324
Registration fees 25,043
Professional fees 32,307
Printing 10,419
Fees and expenses of nonaffiliated trustees 9,150
Miscellaneous 5,591
----------
Total expenses $ 226,718
Less management fees waived and expenses
assumed by Pioneer Investment Management, Inc. (126,152)
Less fees paid indirectly (5,701)
----------
Net expenses $ 94,865
----------
Net investment income $ 603,912
----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized loss from:
Investments $ (259,913)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (58,901) $ (318,814)
---------- ----------
Change in net unrealized gain or loss from:
Investments $ (126,466)
Forward foreign currency contracts and other
assets and liabilities denominated in foreign
currencies (8,406) $ (134,872)
---------- ----------
Net loss on investments and foreign currency
transactions $ (453,686)
----------
Net increase in net assets resulting from operations $ 150,226
----------
</TABLE>
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Six Months Ended 3/31/00 and Year Ended 9/30/99
<TABLE>
<CAPTION>
Six Months
Ended
3/31/00 4/15/99 to
(unaudited) 9/30/99
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 603,912 $ 193,885
Net realized gain (loss) on investments and foreign
currency transactions (318,814) 3,611
Change in net unrealized loss on investments
and foreign currency transactions (134,872) (259,180)
------------ ------------
Net increase (decrease) in net assets resulting from
operations $ 150,226 $ (61,684)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.38 and $0.27 per share, respectively) $ (314,745) $ (97,780)
Class B ($0.37 and $0.23 per share, respectively) (277,865) (85,115)
Class C ($0.37 and $0.28 per share, respectively) (53,397) (9,827)
------------ ------------
Total distributions to shareholders $ (646,007) $ (192,722)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $10,236,239 $13,803,201
Reinvestment of distributions 460,934 152,069
Cost of shares repurchased (6,260,935) (1,077,398)
------------ ------------
Net increase in net assets resulting from
fund share transactions $ 4,436,238 $12,877,872
------------ ------------
Net increase in net assets $ 3,940,457 $12,623,466
NET ASSETS:
Beginning of period 12,723,466 100,000
------------ ------------
End of period (including accumulated undistributed/
(distributions in excess of) net investment income
of ($26,011) and $16,084, respectively) $16,663,923 $12,723,466
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
CLASS A '00 Shares '00 Amount '99 Shares '99 Amount
<S> <C> <C> <C> <C>
Shares sold 575,698 $5,433,338 704,044 $6,825,752
Reinvestment of distributions 28,146 263,397 9,424 90,363
Less shares repurchased (429,844) (4,025,955) (42,822) (411,832)
-------- ---------- ------- ----------
Net increase 174,000 $1,670,780 670,646 $6,504,283
-------- ---------- ------- ----------
CLASS B
Shares sold 383,240 $3,625,491 658,772 $6,413,785
Reinvestment of distributions 16,947 158,846 5,503 52,990
Less shares repurchased (204,213) (1,915,931) (68,941) (663,578)
-------- ---------- ------- ----------
Net increase 195,974 $1,868,406 595,334 $5,803,197
-------- ---------- ------- ----------
CLASS C
Shares sold 124,695 $1,177,410 57,522 $ 563,664
Reinvestment of distributions 4,139 38,691 904 8,716
Less shares repurchased (34,153) (319,049) (202) (1,988)
-------- ---------- ------- ----------
Net increase 94,681 $ 897,052 58,224 $ 570,392
-------- ---------- ------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 3/31/00
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended 4/15/99
3/31/00 to
(unaudited) 9/30/99
<S> <C> <C>
CLASS A
Net asset value, beginning of period $ 9.52 $ 10.00
------ -------
Increase (decrease) from investment operations:
Net investment income $ 0.37 $ 0.27
Net realized and unrealized loss on investments and foreign
currency transactions (0.25) (0.48)
-------- --------
Net increase (decrease) from investment operations $ 0.12 $ (0.21)
Distributions to shareholders:
Net investment income (0.38) (0.27)
-------- --------
Net decrease in net asset value $(0.26) $ (0.48)
-------- --------
Net asset value, end of period $ 9.26 $ 9.52
-------- --------
Total return* 1.27% (2.09)%
Ratio of net expenses to average net assets+ 0.81%** 0.93%**
Ratio of net investment income to average net assets+ 7.72%** 7.99%**
Portfolio turnover rate 88%** 61%**
Net assets, end of period (in thousands) $7,916 $ 6,481
Ratios assuming no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 2.37%** 5.72%* *
Net investment income 6.16%** 3.20%* *
Ratios assuming waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.75%** 0.89%* *
Net investment income 7.78%** 8.03%* *
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
20 The accompanying notes are an integral part of these financial
statements.
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 3/31/00
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended 4/15/99
3/31/00 to
(unaudited) 9/30/99
<S> <C> <C>
CLASS B
Net asset value, beginning of period $ 9.56 $ 10.00
------ -------
Increase (decrease) from investment operations:
Net investment income $ 0.33 $ 0.23
Net realized and unrealized loss on investments and foreign
currency transactions (0.25) ( 0.44)
-------- --------
Net increase (decrease) from investment operations $ 0.08 $ (0.21)
Distributions to shareholders:
Net investment income (0.37) (0.23)
-------- --------
Net decrease in net asset value $ (0.29) $ (0.44)
-------- --------
Net asset value, end of period $ 9.27 $ 9.56
-------- --------
Total return* 0.81% (2.10)%
Ratio of net expenses to average net assets+ 1.59%** 1.74%**
Ratio of net investment income to average net assets+ 6.93%** 7.07%**
Portfolio turnover rate 88%** 61%**
Net assets, end of period (in thousands) $ 7,336 $ 5,689
Ratios assuming no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 3.13%** 6.21%**
Net investment income 5.39%** 2.60%**
Ratios assuming waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.52%** 1.70%**
Net investment income 7.00%** 7.11%**
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 21
<PAGE>
Pioneer Strategic Income Fund
FINANCIAL HIGHLIGHTS 3/31/00
<TABLE>
<CAPTION>
Six Months
Ended 4/15/99
3/31/00 to
(unaudited) 9/30/99
<S> <C> <C>
CLASS C
Net asset value, beginning of period $ 9.52 $ 10.00
------ -------
Increase (decrease) from investment operations:
Net investment income $ 0.32 $ 0.27
Net realized and unrealized loss on investments and foreign
currency transactions (0.24) (0.47)
-------- --------
Net increase (decrease) from investment operations $ 0.08 $(0.20)
Distributions to shareholders:
Net investment income (0.37) ( 0.28)
-------- --------
Net decrease in net asset value $ (0.29) $ (0.48)
-------- --------
Net asset value, end of period $ 9.23 $ 9.52
-------- --------
Total return* 0.81% (2.04)%
Ratio of net expenses to average net assets+ 1.65%** 1.49%* *
Ratio of net investment loss to average net assets+ 6.87%** 6.65%* *
Portfolio turnover rate 88%** 61%**
Net assets, end of period (in thousands) $ 1,411 $ 554
Ratios assuming no waiver of management fees and assumption
of expense by PIM and no reduction for fees paid indirectly:
Net expenses 3.13%** 12.65%**
Net investment income (loss) 5.39%** (4.51)**
Ratios assuming waiver of management fees and assumption
of expense by PIM and reduction for fees paid indirectly:
Net expenses 1.58%** 1.45%**
Net investment income 6.94%** 6.69%**
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
22 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/00 (unaudited)
- --------------------------------------------------------------------------------
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 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 periods. Actual results could
differ from those estimates. The following is a summary of significant
accounting policies consistently followed by the Fund, which are in conformity
with those generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of 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 taxes witheld at the applicable country rates.
Temporary cash investments are valued at amortized cost.
23
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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).
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.
24
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/00 (unaudited) (cont'd)
- --------------------------------------------------------------------------------
Therefore, the source of the Fund's distributions may be shown in the
accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
E. Fund Shares
The Fund records sales and repurchases of its shares as of trade date. PFD,
the principal underwriter for the Fund and an indirect subsidiary of The
Pioneer Group, Inc., earned $6,484 in underwriting commissions on the sale of
fund shares during the six months ended March 31, 2000.
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.
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 Agreements
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),
25
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. PIM's agreement is voluntary and temporary and may be revised
or terminated at any time.
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 $8,587 in transfer agent fees payable to PSC at March 31,
2000.
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 average daily net assets attributable
to Class A shares in reimbursement of its actual expenditures to finance
activities primarily intended to result in the sale of Class A shares. 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
$9,493 in distribution fees payable to PFD at March 31, 2000.
26
<PAGE>
Pioneer Strategic Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/00 (unaudited) (cont'd)
- --------------------------------------------------------------------------------
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 six months ended March 31, 2000, CDSCs in the
amount of $12,331 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 six months ended March 31,
2000, the Fund's expenses were reduced by $5,701 under such arrangements.
6. Forward Foreign Currency Contracts
At March 31, 2000, 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 hedge
contracts as of Match 31, 2000 were as follows:
Forward Currency Contracts:
<TABLE>
<CAPTION>
Contracts to In Exchange Settlement Net Unrealized
Currency Receive For Date Value Loss
<S> <C> <C> <C> <C> <C>
EUR 100,000 $96,550 4/3/00 $95,717 $ (833)
</TABLE>
Forward Cross Currency Contracts:
<TABLE>
<CAPTION>
Deliver/Units of Receive/In Settlement Unrealized
Currency Exchange For Date Gain/(Loss)
<S> <C> <C> <C> <C> <C>
DKK 970,000 EUR 129,859 4/13/00 $ 44
NZD 310,000 AUD 252,699 6/29/00 (699)
------
$ (655)
------
</TABLE>
Included in accumulated net realized loss on investments and foreign currency
transactions is $221, which represents the realized loss on closed but
unsettled portfolio hedges as of March 31, 2000. The Fund had no open
settlement hedge contracts as of March 31, 2000.
27
<PAGE>
Pioneer Strategic Income Fund
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TRUSTEES, OFFICERS AND SERVICE PROVIDERS
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Trustees Officers
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 Eric W. Reckard, Treasurer
John W. Kendrick Joseph P. Barri, Secretary
Marguerite A. Piret
David D. Tripple
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneering Services Corporation
28
<PAGE>
- --------------------------------------------------------------------------------
THE PIONEER FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
For information about any Pioneer mutual fund, please contact your investment
professional, or call Pioneer at 1-800-225-6292. Ask for a free fund
information kit, which includes a fund prospectus. Please read the prospectus
carefully before you invest or send money.
Growth Funds
United States
Pioneer Growth Shares
Pioneer Micro-Cap Fund
Pioneer Mid-Cap Fund
Pioneer Mid-Cap Value Fund
Pioneer Science & Technology Fund
Pioneer Small Company Fund
Pioneer Tax-Managed Fund
International/Global
Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Indo-Asia Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
Growth and Income Funds
Pioneer Fund
Pioneer II
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Real Estate Shares
Income Funds
Taxable
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer High Yield Fund
Pioneer Limited Maturity Bond Fund
Pioneer Strategic Income Fund
Tax-Free
Pioneer Tax-Free Income Fund
Money Market Fund
Pioneer Cash Reserves Fund*
* 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 8125-00-0500
Boston, Massachusetts 02109 (C) Pioneer Funds Distributor, Inc.
www.pioneerfunds.com [recycle logo] Printed on Recycled Paper
