<PAGE>
[Pioneer Logo]
Pioneer
Strategic Income
Fund
ANNUAL REPORT 9/30/00
<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 16
Notes to Financial Statements 22
Report of Independent Public Accountants 27
Results of Shareowner Meeting 28
Trustees, Officers and Service Providers 29
</TABLE>
<PAGE>
Pioneer Strategic Income Fund
LETTER FROM THE CHAIRMAN 9/30/00
Dear Shareowner,
--------------------------------------------------------------------------------
By the time you read this report, we will all know how the financial markets
responded to this year's election. Market reactions to presidential elections
are often short-lived; after digesting the outcome, investors return to
thinking about the factors that influence their portfolios: the economic
outlook, the impact of higher interest rates and selecting the right
investments.
In addition to squeezing corporate profits, higher interest rates cause
consumers to postpone or reduce nonessential purchases. The cumulative weight
of these individual decisions and today's high energy prices can already be
seen in spotty retail activity and lower sales of new cars and homes. As a
result, the economy will probably back off from its extraordinary recent growth
pace to lower, more sustainable levels.
Now could be a perfect time to straighten up your financial house. Some of the
steps you can take include contributing as much as you can to your company's
retirement programs, deciding whether a Roth or Traditional IRA might be a
better choice in your circumstances, and reassessing your investments in the
light of changing markets. Your investment professional is your best guide to
making these important decisions.
An important announcement from Pioneer
I'm very happy to report that, on October 24, 2000, Pioneer Group, Inc. was
acquired by UniCredito Italiano S.p.A. Based in Milan, UniCredito is one of
Italy's largest banking groups, with assets under management of over $150
billion. As part of UniCredito, Pioneer will have access to greater resources
and enjoy expanded global asset management expertise with multi-national
operations and a significant presence in eight countries. Pioneer's tradition
of fundamental investment analysis that has been the hallmark of our success
will continue and be strengthened. We are very pleased to be joining an
organization with the reputation and breadth of UniCredito. Its flourishing
investment management business will be combined with Pioneer's U.S. and
European investment operations to form a truly world class investment asset
management company.
Sincerely,
[signature of John F. Cogan, Jr.]
John F. Cogan, Jr.
Chairman and President
1
<PAGE>
Pioneer Strategic Income Fund
PORTFOLIO SUMMARY 9/30/00
Portfolio Diversification
--------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[pie chart]
Portfolio Maturity
--------------------------------------------------------------------------------
(Effective life as a percentage of total investment portfolio)
[pie chart]
10 Largest Holdings
--------------------------------------------------------------------------------
(As a percentage of debt holdings)
<TABLE>
<S> <C>
1. Government of France, 3.0%, 7/25/09 3.95%
2. Nykredit, 8.0%, 10/1/32 3.24
3. U.S. Treasury Bonds, 7.875%, 2/15/21 2.86
4. Republic of Argentina, 6.0%, 3/31/23 2.12
5. Government National Mortgage Association, 8.0%, 12/15/29 2.02
6. International Finance Corp., 6.75%, 7/15/09 1.52
7. SBA Communications Systems, 12.0%, 3/1/08 1.49
8. Republic of Brazil-C Bonds, 8.0%, 4/15/14 1.47
9. EOTT Energy Partners L.P., 11.0%, 10/1/09 1.46
10. Thermo Electron Corp., 4.25%, 1/1/03 1.42
</TABLE>
Fund holdings will vary for other periods.
2
<PAGE>
Pioneer Strategic Income Fund
PERFORMANCE UPDATE 9/30/00 CLASS A SHARES
Share Prices and Distributions
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 9/30/00 9/30/99
$9.12 $9.52
Distributions per Share Income Short-Term Long-Term
(9/30/99 - 9/30/00) Dividends Capital Gains Capital Gains
$0.756 - -
</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>
<S> <C> <C>
Average Annual Total Returns
(As of September 30, 2000)
Net Asset Public Offering
Period Value Price*
Life-of-Fund 1.20% -1.94%
(4/15/99)
1 Year 3.93% -0.76%
</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]
+ 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 9/30/00 CLASS B SHARES
Share Prices and Distributions
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 9/30/00 9/30/99
$9.11 $9.56
Distributions per Share Income Short-Term Long-Term
(9/30/99 - 9/30/00) Dividends Capital Gains Capital Gains
$0.727 - -
</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>
<S> <C> <C>
Average Annual Total Returns
(As of September 30, 2000)
If If
Period Held Redeemed*
Life-of-Fund 0.61% -1.90%
(4/15/99)
1 Year 3.05% -0.76%
</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]
+ 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 9/30/00 CLASS C SHARES
Share Prices and Distributions
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 9/30/00 9/30/99
$9.06 $9.52
Distributions per Share Income Short-Term Long-Term
(9/30/99 - 9/30/00) Dividends Capital Gains Capital Gains
$0.715 - -
</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>
<S> <C> <C>
Average Annual Total Returns
(As of September 30, 2000)
If If
Period Held Redeemed*
Life-of-Fund 0.49% 0.49%
(4/15/99)
1 Year 2.82% 1.87%
</TABLE>
* Assumes reinvestment of distributions. A 1% contingent deferred sales charge
(CDSC) applies to redemptions made within one year of purchase.
[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.
5
<PAGE>
Pioneer Strategic Income Fund
PORTFOLIO MANAGEMENT DISCUSSION 9/30/00
Changing interest rate trends and growing concerns about the effects of slowing
economic growth led to a mixed environment for fixed income investing during
the 12-month period ended September 30, 2000. The following is an interview
with Kenneth J. Taubes, head of the portfolio management team for Pioneer
Strategic Income Fund. Mr. Taubes discusses the events and factors that
influenced your Fund's performance over the 12-month period.
Q: How did the Fund perform in this mixed period, Ken?
A: The Fund provided attractive income, with limited movement in its share
price. For the 12 months ended September 30, 2000, Class A shares had a total
return of 3.93%, while Class B shares returned 3.05% and Class C shares
returned 2.82%, all at net asset value. While these results lagged the
benchmark Lehman Brothers Aggregate Bond Index's return of 6.99%, they
surpassed the average 2.84% return of multi-sector income funds tracked by
Lipper Inc. (Lipper is an independent firm that tracks mutual fund
performance.) The Fund's performance relative to the Lipper group improved
substantially during the final nine months of the period, from January
through September 2000. Reflecting the Fund's generous income, the 30-day SEC
yield was 8.72% on September 30, 2000.
Q: What factors had the greatest impact on Fund returns?
A: It was a highly unusual year. Some sectors of the fixed income markets did
extraordinarily well, while other parts did poorly. Even sectors that usually
perform similarly - such as U.S. high yield and emerging market debt - had
divergent returns during the period. On the positive side, emerging market
bonds and 30-year U.S. Treasury bonds helped the Fund's performance. Economic
recoveries in many emerging markets supported the rally in their bonds.
Reflecting this rally, the J.P. Morgan Emerging Markets Index had a total
return of more than 29%. Long-term Treasuries also contributed, particularly
during the second half of the fiscal year, as their interest rates came down
despite rising rates among shorter-maturity Treasuries. The shorter-term
government securities were more heavily influenced by the Federal Reserve
Board's efforts to slow the pace of economic growth by raising short-term
interest rates.
6
<PAGE>
Pioneer Strategic Income Fund
The Fund typically emphasizes U.S. corporate bonds, both high yield and
investment grade, and they did not perform well over the 12 months. The
Merrill Lynch High Yield Index, for example, had a return of just over 1%,
which implies a significant loss in principal for many high yield bonds,
which started the year with yields of more than 10%-to-11%. Fortunately,
the Fund had a relatively low weighting in high yield securities at the
start of the fiscal year, which helped soften the impact on performance.
The poor performance of corporate bonds reflected investors' worries that
corporate profits could decline as the U.S. Federal Reserve Board moved to
slow the economy. The Fund's exposure to euro-denominated securities also
held back performance, as the U.S. dollar appreciated against the European
currency.
Q: How did your allocations to the different sectors change over the 12-month
period?
A: We began the year with a relative underweighting in U.S. domestic high yield
bonds, at about 35% of net assets. As the year progressed, high yield bonds
continued to underperform high-quality bonds, particularly Treasuries. As a
result, the difference in yields between high yield bonds and Treasuries grew
wider and high yield bonds became increasingly attractive on a relative value
basis. We gradually raised our commitment to high yield bonds, which at the
end of the fiscal year accounted for more than 50% of net assets. Within the
high yield sector, we emphasized the energy and healthcare sectors. Our
investments included energy-related securities of exploration and production
companies such as Pogo Producing, as well as firms such as RBF Finance and
Santa Fe Snyder, both of which became subjects of acquisition proposals from
larger companies. In healthcare, our investments included companies such as
Fisher Scientific and Columbia Healthcare. We have funded our increased
allocation to high yield by reducing our commitment to Treasury and mortgage
securities after those sectors performed well.
We began to lower our exposure to emerging market securities as the sector
rallied and yields fell to about the same levels as U.S. high yield bonds.
With those yield relationships, we believed high yield represented superior
value on a risk/reward basis. We kept our weighting in non-dollar denomi-
7
<PAGE>
Pioneer Strategic Income Fund
PORTFOLIO MANAGEMENT DISCUSSION 9/30/00 (continued)
nated currencies constant. Even as the U.S. Federal Reserve attempts to
slow domestic growth, other countries, particularly in Europe, are
attempting to increase their growth. Despite rate hikes in Europe by the
European Central Bank, countries in Europe such as Germany, France and
Italy have begun to cut tax rates and foster deregulation to make a more
attractive environment for long-term growth. At some point, we believe the
European currency, the euro, should start to strengthen in value versus the
dollar.
Q: What types of investments helped performance, and what types proved
disappointing?
A: Our investments in emerging market securities and mortgage-backed securities
tended to do well. Among emerging market investments, one particularly strong
performer was Grupo Elektra, a Mexican retailer that benefited from a strong
Mexican economy. Mortgage-backed securities kept pace with Treasuries, the
best performing sector in the fixed income markets. Among our domestic high
yield holdings, investments in the automotive sector failed to meet our
expectations. One particularly disappointing company was Federal Mogul, an
automobile parts manufacturer hurt by currency fluctuations, acquisition
difficulties and production problems among some of its customers, such as
Ford. Near the end of the period, we sold the Fund's position in Federal
Mogul because we see continuing problems in the company.
Q: What is your outlook?
A: We are optimistic. We believe Strategic Income Fund is an excellent means to
simplify an investor's fixed income mix. In a single portfolio, investors
have access to investments that are spread throughout all fixed income
sectors, with emphasis on those securities representing the most attractive
relative value. The Fund is positioned to perform well when the dollar
stabilizes versus the euro and when the high yield sector begins to recover.
The income produced by domestic high yield bonds, with yields 7.0% greater
than U.S. Treasuries, is particularly attractive. Moreover, these bonds have
the potential to recover after three years of underperformance once default
rates begin to recede in the next year or two.
8
<PAGE>
Pioneer Strategic Income Fund
SCHEDULE OF INVESTMENTS 9/30/00
<TABLE>
<CAPTION>
Principal
Amount S&P/Moody's
USD ($) Ratings Value
<S> <C> <C> <C>
CONVERTIBLE CORPORATE BONDS - 9.6%
235,000 NR/B1 Adaptec Inc., 4.75%, 2/01/04 $ 197,146
100,000 BBB+/Baa1 EOP Operating LP, 7.25%, 11/15/08 (144A) 101,859
200,000 NR/B3 Key Energy Group, 5.0%, 9/15/04 162,274
225,000 B+/B2 Mascotech, Inc., 4.5%, 12/15/03 153,000
200,000 BB-/B2 Pogo Producing Co., 5.5%, 6/15/06 170,250
232,000 B+/B2 Quantum Corp, 7.0%, 8/1/04 185,229
240,000 BBB/Baa3 Thermo Electron Corp., 4.25%, 1/1/03 (144A) 227,666
175,000 BB/NR TVX Gold Inc., 5.0%, 3/28/02 142,625
215,000 BBB-/Ba3 Waste Management Inc., 4.0%, 2/1/02 200,965
-----------
Total Convertible Corporate Bonds
(Cost $1,559,181) $ 1,541,014
-----------
ASSET BACKED SECURITIES - 4.0%
DKK 1,053,000 AA-/Aa3 Nykredit, 6.0%, 10/1/29 $ 115,962
DKK 4,385,000 AA-/Aa3 Nykredit, 8.0%, 10/1/32 518,570
-----------
Total Asset Backed Securities
(Cost $686,290) $ 634,532
-----------
CORPORATE BONDS - 59.9%
Basic Materials - 4.4%
Chemicals - 3.7%
EURO 200,000 B+/B2 Huntsman ICI Chemicals LLC, 10.125%,
7/1/09 $ 175,827
200,000 BB/Ba3 Lyondell Petrochemical Co., 9.875%, 5/1/07 194,500
250,000 BB/Ba2 Reliance Industries, 10.5%, 8/6/46 (144A) 226,468
-----------
$ 596,795
-----------
Paper & Forest Products - 0.7%
225,000 CCC+/B3 APP China Group, 14.0%, 3/15/10 $ 110,250
-----------
Total Basic Materials $ 707,045
-----------
Capital Goods - 3.7%
Electrical Equipment - 1.3%
200,000 B+/B1 Hadco Corp., 9.50%, 6/15/08 $ 203,000
-----------
Engineering & Construction - 1.2%
200,000 B+/B2 Metromedia Fiber Network, Inc., 10.0%,
11/15/08 $ 188,000
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements. 9
<PAGE>
Pioneer Strategic Income Fund
SCHEDULE OF INVESTMENTS 9/30/00 (continued)
<TABLE>
<CAPTION>
Principal
Amount S&P/Moody's
USD ($) Ratings Value
<S> <C> <C> <C>
Waste Management - 1.2%
225,000 BB/Ba3 Azurix Corp., 10.75%, 2/15/10 $ 200,250
-----------
Total Capital Goods $ 591,250
-----------
Communication Services - 7.2%
Cellular/Wireless Communications - 2.3%
200,000 B/B3 Crown Castle International Corp., 9.0%,
5/15/11 $ 186,000
200,000 B/B2 NEXTLINK Communications Inc., 10.75%,
6/1/09 185,000
-----------
$ 371,000
-----------
Telecommunications (Long Distance) - 2.5%
EURO 201,000 BB/Ba1 KPNQwest NV, 7.125%, 6/1/09 $ 158,946
310,000 NR/NR SBA Communications System, 12.0%,
3/1/08 238,700
-----------
$ 397,646
-----------
Telephone - 2.4%
200,000 B+/B1 McLeodUSA Inc., 9.25%, 7/15/07 $ 189,000
220,000 B+/B2 Williams Communication Group Inc.,
10.875%, 10/1/09 202,400
-----------
$ 391,400
-----------
Total Communication Services $ 1,160,046
-----------
Consumer Cyclicals - 8.7%
Auto Parts & Equipment - 1.2%
200,000 BB+/Ba1 Lear Corp. 7.96%, 5/15/05 $ 191,270
-----------
Building Materials - 2.5%
225,000 B/B2 NCI Building Systems, Inc., 9.25%, 5/1/09 $ 216,000
200,000 B+/B1 Nortek Inc., 9.125%, 9/1/07 189,500
-----------
$ 405,500
-----------
Hardware & Tools - 1.4%
235,000 B+/B2 Scott's Corp., 8.625%, 1/15/09 (144A) $ 226,775
-----------
Homebuilding - 1.3%
220,000 BB+/Ba2 Toll Corp., 8.125%, 2/1/09 $ 209,000
-----------
Retail (Specialty) - 1.4%
220,000 B+/B1 Grupo Elektra SA, 12.0% , 4/1/08 (144A) $ 213,400
-----------
</TABLE>
10 The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount S&P/Moody's
USD ($) Ratings Value
<S> <C> <C> <C>
Textiles (Apparel) - 0.9%
150,000 BBB-/Baa2 Jones Apparel Group, Inc., 7.875%, 6/15/06 $ 141,746
----------
Total Consumer Cyclicals $1,387,691
----------
Consumer Staples - 9.0%
Broadcasting (Cable/Television/Radio) - 4.2%
200,000 B+/B2 Adelphia Communications, 7.875%, 5/1/09 $ 168,500
125,000 BB+/Ba1 British Sky Broadcasting, 8.2%, 7/15/09 117,171
210,000 B+/B2 Charter Communications Holdings LLC,
8.25%, 4/1/07 190,575
200,000 B+/B1 Echostar DBS Communications Corp.,
9.25%, 2/1/06 196,000
----------
$ 672,246
----------
Distributors (Food & Health) - 2.3%
200,000 B-/B3 Fisher Scientific International Inc., 9.0%,
2/1/08 $ 186,000
200,000 B/B2 Wesco Distribution Inc., 9.125%, 6/1/08 188,000
----------
$ 374,000
----------
Entertainment - 1.2%
200,000 B-/B3 Premier Parks, Inc., 9.75%, 6/15/07 $ 191,000
----------
Household Products (Non-Durables) - 1.3%
200,000 B/B2 Playtex Family Products, Inc., 9.0%,
12/15/03 $ 198,000
----------
Total Consumer Staples $1,435,246
----------
Energy - 9.3%
Oil & Gas (Drilling & Equipment) - 2.5%
225,000 B+/B1 Parker Drilling Co., 9.75%, 11/15/06 $ 226,125
150,000 BB-/Ba3 RBF Finance Co., 11.0%, 3/15/06 173,250
----------
$ 399,375
----------
Oil & Gas (Production & Exploration) - 6.8%
220,000 BB/Ba2 EOTT Energy Partners L.P., 11.0%, 10/1/09 $ 234,300
150,000 BB/Ba2 Gulf Canada Resources Ltd., 9.625%,
7/1/05 154,709
200,000 B/B2 HS Resources Inc., 9.25%, 11/15/06 200,000
200,000 B+/B1 Nuevo Energy Co., 9.5%, 6/1/08 200,500
155,000 BBB+/Baa1 Pemex Finance Ltd., 9.69%, 8/15/09 163,430
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
Pioneer Strategic Income Fund
SCHEDULE OF INVESTMENTS 9/30/00 (continued)
<TABLE>
<CAPTION>
Principal
Amount S&P/Moody's
USD ($) Ratings Value
<S> <C> <C> <C>
Oil & Gas (Production & Exploration) -
(continued)
135,000 A-/Baa2 Santa Fe Snyder, 8.05%, 6/15/04 $ 136,007
-----------
$ 1,088,946
-----------
Total Energy $ 1,488,321
-----------
Financial - 8.3%
Banks (Major Regional) - 2.2%
EURO 225,000 A/A1 Bank of Ireland, 6.45%, 2/10/10 $ 197,010
EURO 180,000 A-/A1 HSBC Capital Funding, 8.03%, 12/29/49
(144A) 163,206
-----------
$ 360,216
-----------
Banks (Money Center) - 1.8%
100,000 A/A1 Dresdner Funding Trust, 8.151%, 6/30/31
(144A) $ 89,121
210,000 NR/A3 Skandinaviska Enskilda Bank, 8.125%,
9/6/49 (144A) 204,756
-----------
$ 293,877
-----------
Banks (Regional) - 0.7%
EURO 25,000 BBB+/A3 Andina de Fomento, 4.75%, 5/6/04 (144A) $ 20,880
EURO 100,000 AAA/Aaa KFW International Finance, Floating Rate,
8/1/05 88,797
-----------
$ 109,677
-----------
Financial (Diversified) - 3.6%
195,000 B-/B3 BF Saul Real Estate Investment Trust,
9.75%, 4/1/08 $ 167,700
234,000 BB-/Ba3 Forest City Enterprises, 8.375%, 3/15/08 222,300
200,000 BBB/Baa3 Mack-Cali Realty Corp., 7.25%, 3/15/09 186,570
-----------
$ 576,570
-----------
Total Financial $ 1,340,340
-----------
Healthcare - 3.3%
Healthcare (Hospital Management) - 1.2%
200,000 BB+/Ba2 Columbia/HCA Healthcare Corp., 7.25%,
5/20/08 $ 186,108
-----------
</TABLE>
12 The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount S&P/Moody's
USD ($) Ratings Value
<S> <C> <C> <C>
Healthcare (Medical Products/Supplies) -
2.1%
140,000 BB+/Ba1 Beckman Instruments, Inc., 7.05%, 6/1/26 $ 133,802
200,000 B/B2 Bio-Rad Laboratories, Inc., 11.625%, 2/15/07 210,000
-----------
$ 343,802
-----------
Total Healthcare $ 529,910
-----------
Technology - 2.3%
Communication (Equipment) - 1.1%
200,000 B+/B2 L-3 Communication Holdings Corp., 8.5%,
5/15/08 $ 186,500
-----------
Electronics (Semiconductor) - 1.2%
185,000 B/B2 Fairchild Semiconductor, 10.375%, 10/1/07 $ 186,850
-----------
Total Technology $ 373,350
-----------
Transportation - 1.4%
Airlines - 1.4%
225,000 BB/Ba2 Northwest Airlines Inc., 8.52%, 4/7/04 $ 216,396
-----------
Total Transportation $ 216,396
-----------
Utilities - 2.3%
Electric Companies - 1.3%
200,000 BBB-/Baa3 Great Lakes Power Inc., 8.3%, 3/1/05 $ 200,264
-----------
Power Producers (Independent) - 1.0%
215,000 BB-/Ba3 AES China Generating Co., 10.125%,
12/15/06 $ 163,400
-----------
Total Utilities $ 363,664
-----------
Total Corporate Bonds
(Cost $9,794,849) $ 9,593,259
-----------
U.S. Government and Agency Obligations -
12.4%
107,239 Federal Home Loan Mortgage Corp., REMIC
Series 2043 G, 6.5%, 4/15/28 $ 101,402
171,662 Federal National Mortgage Association,
7.0%, 5/1/28 to 2/1/29 168,526
35,718 Federal National Mortgage Association,
6.5%, 4/1/29 34,313
250,458 Federal National Mortgage Association,
7.5%, 1/1/28 to 6/1/30 250,337
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
Pioneer Strategic Income Fund
SCHEDULE OF INVESTMENTS 9/30/00 (continued)
<TABLE>
<CAPTION>
Principal
Amount S&P/Moody's
USD ($) Ratings Value
<S> <C> <C> <C>
U.S. Government and Agency Obligations -
(continued)
52,224 Federal National Mortgage Association,
REMIC Series 1994-89, 8.0%, 6/25/23 $ 53,073
120,882 Government National Mortgage Association,
7.75%, 10/15/26 122,329
26,116 Government National Mortgage Association,
6.5%, 1/20/28 25,117
154,155 Government National Mortgage Association,
7.0%, 5/15/29 to 6/15/29 151,912
192,285 Government National Mortgage Association,
7.5%, 9/15/27 to 8/15/29 193,031
316,585 Government National Mortgage Association,
8.0%, 12/15/29 322,540
100,000 Government National Mortgage Association,
7.0%, TBA 98,469
5,000 U.S. Treasury Notes, 5.625%, 5/15/08 4,908
380,000 U.S. Treasury Bonds, 7.875%, 2/15/21 457,151
-----------
Total U.S. Government and Agency Obligations
(Cost $1,954,747) $ 1,983,108
-----------
Foreign Government Bonds - 12.6%
220,000 B/B1 Export Credit of Turkey, 11.5% , 2/25/05
(144A) $ 217,250
EURO 745,000 AAA/Aaa Government of France, 3.0%, 7/25/09 632,189
DEM 400,000 BB/Ba1 Government of Mexico, 8.25%, 2/24/09 183,231
250,000 BB/Ba1 Government of Mexico W-B, 6.25%, 12/31/19 223,125
500,000 BB/Ba3 Republic of Argentina , 6.0%, 3/31/23 338,750
307,852 B+/B2 Republic of Brazil--C Bonds, 8.0%, 4/15/14+ 235,507
175,000 BBB-/Baa3 Republic of Trinidad & Tobago, 9.75%,
7/1/20, (144A) 179,330
-----------
Total Foreign Government Bonds
(Cost $1,937,196) $ 2,009,382
-----------
Supernational Bonds - 1.5%
NZD 620,000 AAA/Aaa International Finance Corp., 6.75%, 7/15/09 $ 243,897
-----------
Total Supernational Bonds
(Cost $298,283) $ 243,897
-----------
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $16,230,546) $16,005,192
===========
</TABLE>
14 The accompanying notes are an integral part of these financial statements.
<PAGE>
+ 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, 2000,
the value of these securities amounted to $1,870,711 or 11.3% of total net
assets.
(a) At September 30, 2000, the net unrealized loss on investments, based on
cost for federal income tax purposes of $16,241,070 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized gain for all investments in
which there is an excess of value over tax cost $ 371,961
Aggregate gross unrealized loss for all investments in
which there is an excess of tax cost over value (607,839)
---------
Net unrealized loss $(235,878)
=========
</TABLE>
(b) At September 30, 2000, the Fund had a capital loss carryforward of $53,339
which will expire between 2007 and 2008 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, 2000 were as follows:
<TABLE>
<S> <C> <C>
Purchases Sales
-------- ------
Long-term U.S. Government $3,299,434 $5,736,865
Other Long-term Securities 12,797,243 5,875,802
</TABLE>
Note: Principal amounts are denominated in US dollars unless otherwise denoted.
DEM Deutsche mark
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
BALANCE SHEET 9/30/00
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including cost $16,230,546) $16,005,192
Cash 123,887
Foreign currencies, at value 103
Receivables -
Investments securities sold 233,064
Forward foreign currency portfolio hedge contracts, open-net 4,546
Fund shares sold 114,506
Interest 359,113
Due from Pioneer Investment Management, Inc. 67,887
Other 4,469
-----------
Total assets $16,912,767
-----------
LIABILITIES:
Payables -
Investment securities purchased $ 111,016
Fund shares repurchased 35,637
Dividends 33,145
Due to affiliates 15,633
Accrued expenses 92,484
-----------
Total liabilities $ 287,915
-----------
NET ASSETS:
Paid-in capital $17,632,755
Accumulated distributions in excess of net investment income (205,973)
Accumulated net realized loss on investments and foreign
currency transactions (579,060)
Net unrealized loss on investments (225,354)
Net unrealized gain on forward foreign currency contracts and other
assets and liabilities denominated in foreign currencies 2,484
-----------
Total net assets $16,624,852
===========
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $9,006,612/987,135 shares) $ 9.12
===========
Class B (based on $6,825,573/748,866 shares) $ 9.11
===========
Class C (based on $792,667/87,502 shares) $ 9.06
===========
MAXIMUM OFFERING PRICE:
Class A $ 9.55
===========
</TABLE>
16 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
STATEMENT OF OPERATIONS
For the Year Ended 9/30/00
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest $1,466,569
----------
EXPENSES:
Management fees $ 124,386
Transfer agent fees
Class A 6,358
Class B 2,352
Class C 3,614
Distribution fees
Class A 19,527
Class B 72,079
Class C 11,659
Administrative fees 29,996
Custodian fees 15,548
Registration fees 35,434
Professional fees 59,690
Printing 24,239
Fees and expenses of nonaffiliated trustees 21,470
Miscellaneous 7,998
----------
Total expenses $ 434,350
Less management fees waived and expenses
assumed by Pioneer Investment Management, Inc. (238,044)
Less fees paid indirectly (8,222)
----------
Net expenses $ 188,084
----------
Net investment income $1,278,485
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized loss from:
Investments $ (688,958)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (62,822) $ (751,780)
---------- ----------
Changes in net unrealized gain (loss) from:
Investments $ 37,302
Forward foreign currency contracts and other
assets and liabilities denominated in foreign
currencies (992) $ 36,310
---------- ----------
Net loss on investments and foreign currency
transactions $ (715,470)
----------
Net increase in net assets resulting from operations $ 563,015
==========
</TABLE>
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
Pioneer Strategic Income Fund
STATEMENT OF CHANGES IN NET ASSETS
For the Year Ended 9/30/2000 and the Period Ended 9/30/1999
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended 4/15/99 to
FROM OPERATIONS: 9/30/00
9/30/99
Net investment income $ 1,278,485 $ 193,885
Net realized gain (loss) on investments and foreign
currency transactions (751,780) 3,611
Change in net unrealized gain (loss) on investments and
foreign currency transactions 36,310 (259,180)
----------- ------------
Net increase (decrease) in net assets resulting
from operations $ 563,015 $ (61,684)
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.76 and $0.27 per share, respectively) $ (667,767) $ (97,780)
Class B ($0.73 and $0.23 per share, respectively) (562,142) (85,115)
Class C ($0.72 and $0.28 per share, respectively) (90,300) (9,827)
----------- ------------
Total distributions to shareholders $(1,320,209) $ (192,722)
----------- ------------
FROM FUND SHARE TRANSACTION
Net proceeds from sale of shares $14,366,131 $13,803,201
Reinvestment of distributions 923,903 152,069
Cost of shares repurchased (10,631,454) (1,077,398)
----------- ------------
Net increase in net assets resulting from
Fund share transactions $ 4,658,580 $12,877,872
----------- ------------
Net increase in net assets $ 3,901,386 $12,623,466
NET ASSETS:
Beginning of period 12,723,466 100,000
----------- ------------
End of period (including accumulated undistributed/
(distributions in excess) net investment income of
$205,973 and $16,084, respectively) $16,624,852 $12,723,466
=========== ============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CLASS A '00 Shares '00 Amount '99 Shares '99 Amount
Shares sold 848,020 $7,920,152 704,044 $6,825,752
Reinvestment of distributions 59,266 548,066 9,424 90,363
Less shares repurchased (600,797) (5,591,345) (42,822) (411,832)
-------- ---------- ------- -----------
Net increase 306,489 $2,876,873 670,646 $6,504,283
======== ========== ======= ===========
CLASS B
Shares sold 554,238 $5,186,651 658,772 $6,413,785
Reinvestment of distributions 34,514 319,485 5,503 52,990
Less shares repurchased (435,220) (4,031,167) (68,941) (663,578)
-------- ---------- ------- -----------
Net increase 153,532 $1,474,969 595,334 $5,803,197
======== ========== ======= ===========
CLASS C
Shares sold 133,650 $1,259,328 57,522 $ 563,664
Reinvestment of distributions 6,082 56,352 904 8,716
Less shares repurchased (110,454) (1,008,942) (202) (1,988)
-------- ---------- ------- -----------
Net increase 29,278 $ 306,738 58,224 $ 570,392
======== ========== ======= ===========
</TABLE>
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
FINANCIAL HIGHLIGHTS 9/30/00
<TABLE>
<CAPTION>
Year 4/15/99
Ended to
9/30/00 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 $ 0.75 $ 0.27
Net realized and unrealized loss on investments and
foreign currency transactions (0.39) (0.48)
------- --------
Net increase (decrease) from investment operations $ 0.36 $ (0.21)
Distributions to shareholders:
Net investment income (0.76) (0.27)
------- --------
Net decrease in net asset value $(0.40) $ (0.48)
------- --------
Net asset value, end of period $ 9.12 $ 9.52
======= ========
Total return* 3.93% (2.09)%
Ratio of net expenses to average net assets+ 0.80% 0.93%**
Ratio of net investment income to average net assets+ 8.06% 7.99%**
Portfolio turnover rate 74% 61%**
Net assets, end of period (in thousands) $9,007 $ 6,481
Ratios assuming no waiver of management fees and
assumption of expenses by PIM and no reduction for fees
paid indirectly:
Net expenses 2.23% 5.72%**
Net investment income 6.63% 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 8.11% 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.
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
Pioneer Strategic Income Fund
FINANCIAL HIGHLIGHTS 9/30/00
<TABLE>
<CAPTION>
Year 4/15/99
Ended to
9/30/00 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 $ 0.68 $ 0.23
Net realized and unrealized loss on investments and
foreign currency transactions (0.40) (0.44)
------- --------
Net increase (decrease) from investment operations $ 0.28 $ (0.21)
Distributions to shareholders:
Net investment income (0.73) (0.23)
------- --------
Net decrease in net asset value $(0.45) $ (0.44)
------- --------
Net asset value, end of period $ 9.11 $ 9.56
======= ========
Total return* 3.05% (2.10)%
Ratio of net expenses to average net assets+ 1.52% 1.74%**
Ratio of net investment income to average net assets+ 7.31% 7.07%**
Portfolio turnover rate 74% 61%**
Net assets, end of period (in thousands) $6,826 $ 5,689
Ratios assuming no waiver of management fees and
assumption of expenses by PIM and no reduction for fees
paid indirectly:
Net expenses 2.96% 6.21%**
Net investment income 5.87% 2.60%**
Ratios assuming waiver of management fees and assumption
of expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.47% 1.70%**
Net investment income 7.36% 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.
20 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Strategic Income Fund
FINANCIAL HIGHLIGHTS 9/30/00
<TABLE>
<CAPTION>
Year 4/15/99
Ended to
9/30/00 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 $ 0.62 $ 0.27
Net realized and unrealized loss on investments and
foreign currency transactions (0.36) (0.47)
------- --------
Net increase (decrease) from investment operations $ 0.26 $ (0.20)
Distributions to shareholders:
Net investment income (0.72) (0.28)
------- --------
Net decrease in net asset value $(0.46) $ (0.48)
------- --------
Net asset value, end of period $ 9.06 $ 9.52
======= ========
Total return* 2.82% (2.04)%
Ratio of net expenses to average net assets+ 1.80% 1.49%**
Ratio of net investment income to average net assets+ 6.97% 6.65%**
Portfolio turnover rate 74% 61%**
Net assets, end of period (in thousands) $ 793 $ 554
Ratios assuming no waiver of management fees and
assumption of expenses by PIM and no reduction for fees
paid indirectly:
Net expenses 3.24% 12.65%**
Net investment income (loss) 5.53% (4.51)%**
Ratios assuming waiver of management fees and assumption
of expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.75% 1.45%**
Net investment income 7.02% 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.
The accompanying notes are an integral part of these financial statements. 21
<PAGE>
Pioneer Strategic Income Fund
NOTES TO FINANCIAL STATEMENTS 9/30/00
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). After shareholder and
regulatory approval, UniCredito Italiano S.p.A. completed its acquisition of
the Pioneer Group, Inc. (PGI) on October 24, 2000. 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
accounting principles generally accepted in the United States 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
22
<PAGE>
premium are accreted or amortized daily on a straight-line basis. Interest
income is recorded on the accrual basis, net of unrecoverable foreign taxes
withheld at the applicable country rates. Temporary cash investments are
valued at amortized cost.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
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.
23
<PAGE>
Pioneer Strategic Income Fund
NOTES TO FINANCIAL STATEMENTS 9/30/00 (continued)
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, 2000, the Fund reclassified $180,333 from accumulated
distribution in excess of net investment income to accumulated net realized
loss on investments and foreign currency transactions. 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 as of trade date.
Pioneer Funds Distributors, Inc. (PFD), the principal underwriter for the
Fund and an indirect subsidiary of The Pioneer Group, Inc. (PGI), earned
$6,545 in underwriting commissions on the sale of fund shares during the
period ended September 30, 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.
24
<PAGE>
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, the Fund's investment adviser, 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; and 0.65% of the next $500 million; and 0.60%
on assets 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 $4,438 in transfer agent fees payable to PSC at September 30,
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 reimburse-
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS 9/30/00 (continued)
ment 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 $11,195 in distribution
fees payable to PFD at September 30, 2000.
In addition, redemptions of each class of shares may be subject to a contingent
deferred sales charge (CDSC). A CDSC of 1.00% may be imposed on redemptions of
certain net asset value purchases of Class A shares within one year of
purchase. Class B shares that are redeemed within six years of purchase are
subject to a CDSC at declining rates beginning at 4%, 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, 2000, CDSCs in the
amount of $25,953 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,
2000, the Fund's expenses were reduced by $8,222 under such arrangements.
6. Forward Foreign Currency Contracts
At September 30, 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 hedges at period end date 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 143,800 $122,719 10/20/00 $127,265 $4,546
</TABLE>
-------------------------------------------------------------------------------
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, 2000, and the
related statement of operations, the statement of changes in net assets, and
the financial highlights for the periods presented. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. 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, 2000 by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Strategic Income Fund as of September 30, 2000, the results of its
operations, the changes in its net assets, and the financial highlights for the
periods presented, in conformity with accounting principles generally accepted
in the United States.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 3, 2000
27
<PAGE>
Pioneer Strategic Income Fund
RESULTS OF SHAREOWNER MEETING
On September 11, 2000, Pioneer Strategic Income Fund held a special meeting of
shareowners to approve a new management contract between the Fund and Pioneer
Investment Management, Inc. ("Pioneer"), the Fund's investment adviser. The new
contract will take effect only if the proposed acquisition of The Pioneer
Group, Inc., the parent of Pioneer, by UniCredito Italiano S.p.A. is
consummated. Shareowners also voted to elect trustees. Both proposals passed by
shareowner vote. Here are the detailed results of the votes.
Proposal 1 -- To approve a new management contract.
<TABLE>
<CAPTION>
Affirmative Against Abstain
<S> <C> <C>
1,319,026.784 31,867.027 4,326.900
</TABLE>
Proposal 2 -- To elect trustees.
<TABLE>
<CAPTION>
Nominee Affirmative Withheld
<S> <C> <C>
M.K. Bush 1,341,431.256 13,789.455
J.F. Cogan, Jr. 1,313,208.636 42,012.075
Dr. R. H. Egdahl 1,340,392.634 14,828.077
M.B.W. Graham 1,341,431.256 13,789.455
M.A. Piret 1,341,431.256 13,789.455
D.D. Tripple 1,313,208.636 42,012.075
S.K. West 1,341,431.256 13,789.455
J. Winthrop 1,341,431.256 13,789.455
</TABLE>
28
<PAGE>
Pioneer Strategic Income Fund
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
Trustees Officers
John F. Cogan, Jr. John F. Cogan, Jr., Chairman and
Mary K. Bush President
Richard H. Egdahl, M.D. David D. Tripple, Executive Vice
Margaret B.W. Graham President
Marguerite A. Piret Sherman B. Russ, Vice President
David D. Tripple Eric W. Reckard, Treasurer
Stephen K. West Joseph P. Barri, Secretary
John Winthrop
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
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. 9089-00-1100
60 State Street (C) Pioneer Funds Distributor, Inc.
Boston, Massachusetts 02109 [recycle symbol] Printed on Recycled Paper
www.pioneerfunds.com
