<PAGE>
[Pioneer logo]
Pioneer
Short-Term Income
Trust
SEMIANNUAL REPORT 5/31/98
<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 10
Financial Statements 16
Notes to Financial Statements 23
Report of Independent Public Accountants 27
Trustees, Officers and Service Providers 28
Retirement Plans from Pioneer 29
</TABLE>
<PAGE>
Pioneer Short-Term Income Trust
LETTER FROM THE CHAIRMAN 5/31/98
Dear Shareowner,
- --------------------------------------------------------------------------------
I am pleased to introduce this semiannual report for Pioneer Short-Term Income
Trust, covering the six months ended May 31, 1998. On behalf of your investment
team, I thank you for your interest and this opportunity to comment on today's
investing environment.
I would like to welcome the institutional shareowners who have joined the Fund
through its new Class Y Shares. Although this particular class has only been in
existence since April 9, 1998, we look forward to helping you pursue your
investment goals for many years to come.
The United States' economic news continued to be positive, propelling the
domestic stock market to yet another series of record highs. The Federal
Reserve maintained its steady monetary policy. This, coupled with low interest
rates and benign inflation, propelled the bond markets forward. Holders of
long-term bonds saw a significant appreciation in their holdings when rates on
new bonds dropped dramatically. More conservative investors who selected
short-term securities enjoyed relatively stable prices and competitive yields.
Your Fund performed well, especially when you compare its performance to
similar funds on a risk-adjusted return basis. Recently, two nationally
recognized firms that analyze mutual funds - Morningstar and Value Line - did
just that, and we are pleased to report that the Fund received a favorable
review from both.
I encourage you to read on to learn more about Pioneer Short-Term Income Trust.
If you have questions, please contact your investment professional, or Pioneer
at 1-800-225-6292.
Respectfully,
/s/ John F. Cogan, Jr.
- ----------------------
John F. Cogan, Jr.,
Chairman and President
1
<PAGE>
Pioneer Short-Term Income Trust
PORTFOLIO SUMMARY 5/31/98
Portfolio Diversification
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
U.S. Government Agency Obligations 49%
U.S. Government Obligations 27%
Corporate Bonds 21%
Short-Term Cash Equivalents 3%
Portfolio Quality
- --------------------------------------------------------------------------------
(As a percentage of long-term holdings)
Treasury/Agency 78%
AAA 6%
BBB 6%
AA 5%
A 5%
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of long-term holdings)
<TABLE>
<S> <C>
1. U.S. Treasury Notes, 7.75%, 11/30/99 10.75%
2. U.S. Treasury Notes, 7.125%, 9/30/99 5.31
3. U.S. Treasury Notes, 6.5%, 8/31/01 4.28
4. U.S. Treasury Notes, 6.25%, 4/30/01 4.24
5. U.S. Treasury Notes, 6.25%, 1/31/02 3.19
6. Tennessee Valley Authority, 8.375%, 10/1/99 2.16
7. Federal National Mortgage Association, REMIC Series 1993-30PG,
6.65%, 9/25/17 2.10
8. Federal National Mortgage Association, Medium Term Note, 7.17%,
6/29/01 2.09
9. Federal National Mortgage Association, REMIC Series 1993-23PJ,
6.7%, 7/25/19 1.72
10. Spieker Properties L.P., 6.8%, 12/15/01 1.69
</TABLE>
Fund holdings will vary for other periods.
2
<PAGE>
Pioneer Short-Term Income Trust
PERFORMANCE UPDATE 5/31/98 CLASS A SHARES
Share Prices and Distributions
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 5/31/98 11/30/97
$3.76 $3.77
Distributions per Share Income Short-Term Long-Term
(11/30/97 -5/31/98) Dividends Capital Gains Capital Gains
$0.113 - -
</TABLE>
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Short-Term Income Trust at public offering price, compared to the
growth of the Merrill Lynch 1-3 Year Treasury Index.
<TABLE>
<CAPTION>
Average Annual Total Returns
(As of May 31, 1998)
Net Asset Public Offering
Period Value Price*
<S> <C> <C>
Life-of-Fund 5.24% 4.79%
(8/10/92)
5 Year 5.11 4.59
1 Year 6.18 3.43
</TABLE>
* Reflects deduction of the maximum 2.5% sales charge at the beginning of the
period and assumes reinvest-ment of distributions at net asset value.
[mountain chart]
Growth of $10,000+
<TABLE>
<CAPTION>
Pioneer Merrill
Short-Term Lynch
Income 1-3 Year
Trust* Treasury
Index
<S> <C>
08/31/92 9750 10000
11/30/92 9809 10018
05/31/93 10204 10372
11/30/93 10424 10622
05/31/94 10466 10585
11/30/94 10457 10697
05/31/95 11122 11375
11/30/95 11466 11810
05/31/96 11606 11975
11/30/96 12062 12493
05/31/97 12332 12765
11/30/97 12743 13234
05/31/98 13094 13656
</TABLE>
+ Index comparison begins 8/31/92. The Merrill Lynch 1-3 Year Treasury Index is
an unmanaged, composite index of debt obligations of the U.S. Treasury and
U.S. government agencies (excluding mortgage-backed securities). All issues
have a maturity of at least one year and no more than three years. 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 Short-Term Income Trust
PERFORMANCE UPDATE 5/31/98 CLASS B SHARES
Share Prices and Distributions
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 5/31/98 11/30/97
$3.75 $3.76
Distributions per Share Income Short-Term Long-Term
(11/30/97 -5/31/98) Dividends Capital Gains Capital Gains
$0.092 - -
</TABLE>
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Short-Term Income Trust, compared to the growth of the Merrill Lynch
1-3 Year Treasury Index.
<TABLE>
<CAPTION>
Average Annual Total Returns
(As of May 31, 1998)
If If
Period Held Redeemed*
<S> <C> <C>
Life-of-Fund 4.74% 4.74%
(4/4/94)
1 Year 5.09 3.09
</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 2% declines over three years.
[mountain chart]
Growth of $10,000+
<TABLE>
<CAPTION>
Pioneer Merrill
Short-Term Lynch
Income 1-3 Year
Trust* Treasury
Index
<S> <C>
04/30/94 10000 10000
05/31/94 9987 10014
08/31/94 10027 10166
11/31/94 9961 10120
02/28/95 10221 10426
05/31/95 10539 10762
08/31/95 10643 10929
11/30/95 10850 11173
02/29/96 10922 11307
05/31/96 10910 11329
08/31/96 11044 11495
11/30/96 11325 11819
02/28/97 11367 11902
05/31/97 11521 12077
08/31/97 11700 12305
11/30/97 11845 12521
02/28/98 11991 12740
05/31/98 12107 12920
</TABLE>
+ Index comparison begins 4/30/94. The Merrill Lynch 1-3 Year Treasury Index is
an unmanaged, composite index of debt obligations of the U.S. Treasury and
U.S. government agencies (excluding mortgage-backed securities). All issues
have a maturity of at least one year and no more than three years. 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 Short-Term Income Trust
PERFORMANCE UPDATE 5/31/98 CLASS Y SHARES
Share Prices and Distributions
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 5/31/98 4/9/98
$3.76 $3.77
Distributions per Share Income Short-Term Long-Term
(4/9/98 -5/31/98) Dividends Capital Gains Capital Gains
$0.030 - -
</TABLE>
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Short-Term Income Trust, compared to the growth of the Merrill Lynch
1-3 Year Treasury Index.
<TABLE>
<CAPTION>
Cumulative Total Returns
(As of May 31, 1998)
If If
Period Held Redeemed
<S> <C> <C>
Life-of-Fund 0.53% 0.53%
(4/9/98)
</TABLE>
[mountain chart]
Growth of $10,000+
<TABLE>
<CAPTION>
Pioneer Merrill
Short-Term Lynch
Income 1-3 Year
Trust Treasury
Index
<S> <C>
04/30/98 10000 10000
05/31/98 10050 10053
</TABLE>
+ Index comparison begins 4/30/98. The Merrill Lynch 1-3 Year Treasury Index is
an unmanaged, composite index of debt obligations of the U.S. Treasury and
U.S. government agencies (excluding mortgage-backed securities). All issues
have a maturity of at least one year and no more than three years. 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 Short-Term Income Trust
PORTFOLIO MANAGEMENT DISCUSSION 5/31/98
Dear Shareowner,
- --------------------------------------------------------------------------------
I am pleased to report on the progress of Pioneer Short-Term Income Trust for
the first six months of its seventh fiscal year. Short-term fixed-income
investments remained fairly stable over the period as the U.S. economy
continued to show strong growth, full employment and low inflation. The United
States' progress contrasted sharply with many economies of the world - notably
those in Asia - which began to show signs of recession.
In the United States, short-term interest rates declined slightly over the
period, while rates on long-term bonds dropped dramatically to almost the same
levels as short-term bonds. As a whole, short-term income funds performed well.
Your Fund generated a six-month total return of 2.75% for Class A Shares and
2.21% for Class B Shares. Class Y Shares, in existence for only 52 days,
returned 0.53%. By comparison, the 102 funds in Lipper Analytical Services'
Short-Term Investment Grade Debt category generated an average 2.96% return
during the same time. (Returns do not reflect sales charges.)
On May 31, 94% of the portfolio's holdings were rated A or above. (Ratings
apply to the creditworthiness of the issuer, not to the stability or safety of
the Fund.) As a shareowner, you should understand that because of its
conservative maturity and strategy, the Fund will tend to perform better than
similar funds when interest rates are rising and lag when rates are declining.
The main reason for this is that the Fund, as stated in the prospectus, holds
only securities with remaining maturities of five years or less. This typically
makes the Fund less volatile than funds that invest in intermediate- and
long-term bonds. Because the portfolio is comprised of high-quality securities,
we believe your Fund is a good alternative to money market funds, if you are
willing to accept a fluctuating share price.
At the close of the period, the Fund's Class A Shares offered a 30-day SEC
yield of 4.71%. Although the Fund's net asset value was virtually unchanged at
the beginning and end of the period, $3.76 on May 31,
6
<PAGE>
Pioneer Short-Term Income Trust
1998 versus $3.77 on November 30, 1997, its yield of 5.94% at the end of the
period was higher than 30-year Treasury bonds, which closed at 5.80% on May 29.
Strategy Driven by Interest Rates
For more than a year, the Federal Reserve (the Fed) has kept a tight rein on
monetary policy by threatening to raise interest rates in response to strong
domestic employment and demand pressures. But in February 1998, the Fed raised
the possibility of a rate cut in reaction to Asia's financial crisis. In fact,
the Fed did not move interest rates - either up or down - and we expect it to
maintain its neutral policy until clearer global economic signals are evident.
Currently, the Federal Funds rate (the rate the Fed sets for inter-bank
lending) is 5.5%. This rate has remained in effect since March, 1997.
At this level the difference between yields on long-term bonds versus
short-term bonds is incredibly small. For instance, the yield on a 30-year
Treasury bond is 5.80%, only 0.27% more than the yield on a two-year Treasury
which yielded 5.53% on May 29. With interest rates this flat, we were able to
add lower risk short-term securities that pay virtually the same rates as
higher risk long-term bonds.
Adding Corporate Bonds
As always, we allocated holdings among three primary sectors: U.S. government
and agency securities, collateralized mortgage obligations (CMOs) and corporate
securities. We reshaped the portfolio by adjusting the mix over the past six
months; corporate bonds and CMOs now represent approximately 21% and 22%,
respectively, of the portfolio versus 16% and 31% six months ago.
As interest rates started to decline, more companies issued debt securities,
temporarily driving down prices and leading to wider spreads between Treasury
and corporate bonds. We viewed this as an opportunity to purchase corporate
bonds that offered attractive yields, high credit quality and better potential
for appreciation than Treasury bonds. For example, in January we purchased
California Infrastructure, a AAA-rated asset-backed security that was selling
at the same price as AA-rated securities. We
7
<PAGE>
Pioneer Short-Term Income Trust
PORTFOLIO MANAGEMENT DISCUSSION 5/31/98 (continued)
added another position in Ford Motor Credit in February and Norwest in April.
Other attractive purchases during the period were Northern Illinois Gas and
Sony. If interest rates continue to decline and corporate issuance remains
robust, we will continue to add these types of securities.
We trimmed the Fund's exposure to CMOs - which represent pools of individual
mortgages - during the period and would expect them to comprise between 20 and
25% of the portfolio in this environment of falling interest rates. CMOs are
unique because they are subject to 'prepayment risk,' triggered by homeowners
refinancing to take advantage of falling interest rates. Because of this early
mortgage pay off, investors who hold the mortgage-backed securities must
reinvest earlier than planned, usually at lower interest rates. To combat this
situation, we watch interest rates closely and typically buy only the highest
quality CMOs, often with 'protection' - meaning they have a more defined cash
flow than conventional collateral and are less likely to be affected by
prepayment risk or extension risk.
Increasing Duration for Better Returns
By design, the Fund holds only securities with maturities of five years or
less, and the portfolio's average maturity cannot exceed three years, which can
help limit volatility. At the end of November 1997, the Fund's effective
duration and average maturity were 1.42 years and 1.52 years, respectively.
Effective maturity takes into account the time left until a bond matures or can
be called on demand by the issuer, whichever is sooner. Duration reflects both
the effective maturity and the effects of expected income. Duration is a good
indicator of risk - the longer a bond's duration, the more its price reacts to
movement in interest rates - rising when interest rates fall and declining when
interest rates climb.
We adjusted the portfolio's maturity by small increments throughout the
six-month period. By the end of May, effective duration and average maturity
were at 1.67 and 1.84 years, respectively. We are comfortable with this
position although we expect to gradually increase the portfolio's duration when
we feel it will enhance total return.
8
<PAGE>
Pioneer Short-Term Income Trust
Looking Ahead
At period-end, bonds were selling at prices that reflected our "goldilocks
economy" - solid growth with low inflation and low unemployment. Also, the
federal budget is showing a surplus, which is helping hold down long-term
interests rates. As we look ahead, we see these positive trends continuing.
Even so, with long-term interest rates at historically low levels, there is not
much further room for improvement and much opportunity for volatility until the
Federal Reserve signals a change in policy. A key going forward will be the
performance of the stock market. If the stock market wavers, investors may look
for more conservative investments, leading to increased activity in the
fixed-income markets.
With its emphasis on high-quality, short-term securities, we think Pioneer
Short-Term Income Trust is positioned to produce strong risk-adjusted returns
in an uncertain investing environment. We look forward to managing the Fund and
thank you for investing with Pioneer.
Respectfully,
/s/ Richard A. Schlanger
- ------------------------
Richard A. Schlanger,
Portfolio Manager
9
<PAGE>
Pioneer Short-Term Income Trust
SCHEDULE OF INVESTMENTS 5/31/98
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
INVESTMENT IN SECURITIES - 97.4%
Corporate Bonds - 21.2%
Asset - Backed - 5.5%
$500,000 AAA/Aaa California Infrastructure SCE-1, Series
1997-1, 6.28%, 9/25/05 $ 507,560
600,000 AAA/Aaa Carco Auto Loan Master Trust, Series
1997-1A, 6.689%, 8/15/04 603,162
500,000 AAA/Aaa Discover Card Master Trust, Series
1997-2, 6.792%, 4/16/10 502,510
577,950 AAA/Aaa Premier Auto Trust, Series 1995-2A6,
7.2%, 10/4/99 580,984
500,000 AAA/Aaa Sears Credit Account Master Trust, Series
1994-1A, 7.0%, 1/15/04 507,300
-----------
$ 2,701,516
-----------
Financial - 7.3%
600,000 A+/A1 Banc One Corp., 7.25%, 8/1/02 $ 626,604
500,000 A/A1 Ford Motor Credit Co., 6.55%, 8/15/00 508,340
500,000 A/A1 Ford Motor Credit Co., 6.85%, 9/10/02 508,955
400,000 AA-/Aa3 Norwest Corp., 6.8%, 5/15/02 410,348
250,000 BBB/Baa2 Spieker Properties L.P., 6.65%, 12/15/00 251,848
800,000 BBB/Baa2 Spieker Properties L.P., 6.8%, 12/15/01 810,240
500,000 A-/Baa1 Transamerica Financial Corp., 6.75%,
6/1/00 506,905
-----------
$ 3,623,240
-----------
Industrial - 8.4%
500,000 BBB-/Baa2 A. H. Belo Corp., 6.875%, 6/1/02 $ 512,765
780,000 BBB+/Baa1 Comdisco Inc., 6.5%, 6/15/00 786,965
500,000 AA/Aa2 McDonald's Corp., 7.375%, 7/15/02 506,975
500,000 AA/Aa1 Northern Illinois Gas Co., 6.75%, 6/1/02 513,245
500,000 A-/A2 Sears Roebuck Co., 8.45%, 11/1/98 505,705
800,000 A+/Aa3 Sony Corp., 6.125%, 3/4/03 801,640
500,000 BBB-/Baa3 TCI Communications, Inc., 6.375%,
5/1/03 501,465
-----------
$ 4,128,760
-----------
Total Corporate Bonds
(Cost $10,393,191) $10,453,516
-----------
</TABLE>
10 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Short-Term Income Trust
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
U.S. Government Obligations - 27.1%
$2,500,000 U.S. Treasury Notes, 7.125%, 9/30/99 $ 2,549,200
5,000,000 U.S. Treasury Notes, 7.75%, 11/30/99 5,155,800
2,000,000 U.S. Treasury Notes, 6.25%, 4/30/01 2,035,860
2,000,000 U.S. Treasury Notes, 6.5%, 8/31/01 2,053,340
1,500,000 U.S. Treasury Notes, 6.25%, 1/31/02 1,531,830
-----------
Total U.S. Government Obligations
(Cost $13,432,031) $13,326,030
-----------
U.S. Government Agency Obligations - 49.1%
500,000 Aid-Israel, 7.75%, 11/15/99 $ 514,730
250,000 Federal Farm Credit Bank, Medium Term
Note, 7.3%, 9/11/01 251,240
500,000 Federal Farm Credit Bank, Medium Term
Note, 6.62%, 11/9/01 502,125
500,000 Federal Farm Credit Bank, Medium Term
Note, 6.59%, 9/23/02 501,825
500,000 Federal Farm Credit Bank, Medium Term
Note, 6.42%, 10/15/02 501,660
500,000 Federal Farm Credit Bank, Medium Term
Note, 6.24%, 12/13/02 503,485
500,000 Federal Home Loan Bank, 6.36%,
3/29/01 501,855
800,000 Federal Home Loan Bank, 6.17%,
11/20/02 805,640
400,000 Federal Home Loan Bank, 6.25%,
1/7/03 400,857
600,000 Federal Home Loan Mortgage Corp.,
6.29%, 10/13/00 601,758
500,000 Federal Home Loan Mortgage Corp.,
6.87%, 4/16/01 504,540
500,000 Federal Home Loan Mortgage Corp.,
6.92%, 7/9/01 505,855
370,812 Federal Home Loan Mortgage Corp.,
REMIC Series 1191EB, 7.0%, 8/15/02 376,660
84,306 Federal Home Loan Mortgage Corp.,
REMIC Series 1238G, 7.25%, 1/15/06 84,737
329,776 Federal Home Loan Mortgage Corp.,
REMIC Series 1132I, 8.0%, 5/15/06 336,896
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
Pioneer Short-Term Income Trust
SCHEDULE OF INVESTMENTS 5/31/98 (continued)
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
U.S. Government Agency Obligations - (continued)
$ 200,000 Federal Home Loan Mortgage Corp.,
REMIC Series 1181H, 7.0%, 7/15/06 $201,850
740,149 Federal Home Loan Mortgage Corp.,
REMIC Series 1145G, 8.0%, 9/15/06 762,643
225,885 Federal Home Loan Mortgage Corp.,
REMIC Series 1564J, 6.5%, 7/15/08 225,496
102,875 Federal Home Loan Mortgage Corp.,
REMIC Series 153F, 7.75%, 8/15/15 102,862
297,178 Federal Home Loan Mortgage Corp.,
REMIC Series 1281F, 8.0%, 7/15/18 298,320
8,198 Federal Home Loan Mortgage Corp.,
REMIC Series 1358F, 6.75%, 1/15/19 8,198
500,000 Federal Home Loan Mortgage Corp.,
REMIC Series 1848PB, 7.0%, 2/15/20 512,585
379,970 Federal Home Loan Mortgage Corp.,
REMIC Series 112H, 8.8%, 9/15/20 385,563
500,000 Federal Home Loan Mortgage Corp.,
REMIC Series 1142H, 7.95%, 12/15/20 505,590
204,000 Federal Home Loan Mortgage Corp.,
REMIC Series 1206H, 7.0%, 3/15/21 206,289
330,645 Federal Home Loan Mortgage Corp.,
REMIC Series 189C, 8.0%, 6/15/21 336,917
500,000 Federal Home Loan Mortgage Corp.,
REMIC Series 1761G, 8.0%, 6/15/21 513,965
232,117 Federal Home Loan Mortgage Corp.,
REMIC Series 1590K, 6.5%, 10/15/23 232,683
235,000 Federal National Mortgage Association,
7.85%, 9/10/98 236,509
500,000 Federal National Mortgage Association,
6.45%, 4/12/01 502,370
500,000 Federal National Mortgage Association,
Medium Term Note, 6.64%, 6/19/00 500,335
500,000 Federal National Mortgage Association,
Medium Term Note, 6.63%, 6/5/01 507,650
1,000,000 Federal National Mortgage Association,
Medium Term Note, 7.17%, 6/29/01 1,001,400
285,000 Federal National Mortgage Association,
Medium Term Note, 7.04%, 9/24/01 286,350
</TABLE>
12 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Short-Term Income Trust
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
U.S. Government Agency Obligations - (continued)
$500,000 Federal National Mortgage Association,
Medium Term Note, 6.61%, 11/13/01 $502,285
600,000 Federal National Mortgage Association,
Medium Term Note, 6.4%, 12/10/01 601,956
450,000 Federal National Mortgage Association,
Medium Term Note, 6.78%, 1/15/02 453,168
500,000 Federal National Mortgage Association,
Medium Term Note, 6.97%, 3/25/02 504,875
500,000 Federal National Mortgage Association,
Medium Term Note, 7.15%, 4/8/02 506,170
350,000 Federal National Mortgage Association,
Medium Term Note, 6.45%, 7/25/02 354,886
300,000 Federal National Mortgage Association,
Medium Term Note, 6.52%, 9/5/02 304,722
300,000 Federal National Mortgage Association,
Medium Term Note, 6.36%, 10/23/02 302,022
27,419 Federal National Mortgage Association,
REMIC Series G93-26PL, 7.0%, 7/25/98 27,362
75,185 Federal National Mortgage Association,
REMIC Series 1991-175E, 7.0%,
12/25/98 75,125
260,593 Federal National Mortgage Association,
REMIC Series 1992-97DB, 8.0%, 9/25/99 263,509
286,859 Federal National Mortgage Association,
REMIC Series 1992-145J, 7.15%,
7/25/03 294,168
444,941 Federal National Mortgage Association,
REMIC Series 1992-110G, 7.0%, 9/25/05 446,084
300,000 Federal National Mortgage Association,
REMIC Series 1991-119M, 8.5%,
11/25/08 303,908
79,488 Federal National Mortgage Association,
REMIC Series 1992-84G, 7.5%, 10/25/14 79,489
47,943 Federal National Mortgage Association,
REMIC Series 1992-171PB, 6.5%,
4/25/17 47,798
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
Pioneer Short-Term Income Trust
SCHEDULE OF INVESTMENTS 5/31/98 (continued)
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
U.S. Government Agency Obligations - (continued)
$1,000,000 Federal National Mortgage Association,
REMIC Series 1993-30PG, 6.65%,
9/25/17 $ 1,008,210
402,626 Federal National Mortgage Association,
REMIC Series 1988-26C, 7.5%, 7/25/18 409,100
44,604 Federal National Mortgage Association,
REMIC Series 1990-8E, 8.5%, 8/25/18 44,567
279,979 Federal National Mortgage Association,
REMIC Series 1992-131G, 7.25%,
4/25/19 279,618
8,741 Federal National Mortgage Association,
REMIC Series 1990-48G, 7.95%, 4/25/19 8,741
550,000 Federal National Mortgage Association,
REMIC Series 1993-17PE, 6.75%,
6/25/19 551,925
817,000 Federal National Mortgage Association,
REMIC Series 1993-23PJ, 6.7%, 7/25/19 826,101
126,630 Federal National Mortgage Association,
REMIC Series G92-35C, 7.5%, 7/25/20 126,940
474,964 Federal National Mortgage Association,
REMIC Series 1991-169PJ, 7.0%,
9/25/20 476,005
35,533 Federal National Mortgage Association,
REMIC Series 1992-77G, 8.0%, 1/25/21 35,645
95,663 Federal National Mortgage Association,
REMIC Series 1992-64M, 7.0%,
11/25/22 95,650
1,000,000 Tennessee Valley Authority, 8.375%,
10/1/99 1,033,760
-----------
Total U.S. Government Agency Obligations
(Cost $24,172,264) $24,185,227
-----------
TOTAL INVESTMENT IN SECURITIES
(Cost $47,997,486) $47,964,773
-----------
</TABLE>
14 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Short-Term Income Trust
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
TEMPORARY CASH INVESTMENT - 2.6%
Commercial Paper - 2.6%
$1,262,000 Household Finance Corp., 5.62%, 6/1/98 $ 1,262,000
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $1,262,000) $ 1,262,000
-----------
TOTAL INVESTMENT IN SECURITIES AND
TEMPORARY CASH INVESTMENT - 100%
(Cost $49,259,486) (a) (b) $49,226,773
</TABLE>
(a) At May 31, 1998, the net unrealized loss on investments based on cost for
federal income tax purposes of $49,259,486 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over cost $ 199,965
Aggregate gross unrealized loss for all investments in which there is an
excess of tax cost over value (232,678)
Net unrealized loss $ (32,713)
(b) At November 30, 1997, the Fund had a net capital loss carryforward of
$3,365,002 which will expire between 2000 and 2005 if not utilized.
Purchases and sales of securities (excluding temporary cash investments) for
the six months ended May 31, 1998 were as follows:
<TABLE>
<CAPTION>
Purchases Sales
----------- -----------
<S> <C> <C>
Long-term U.S. Government $13,779,897 $14,192,882
Other Long-term Securities 3,497,442 1,297,050
</TABLE>
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
Pioneer Short-Term Income Trust
BALANCE SHEET 5/31/98
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash
investment of $1,262,000) (cost $49,259,486) $49,226,773
Receivables -
Fund shares sold 2,208,508
Interest 771,244
Due from Pioneering Management Corporation 4,917
Other 375
-----------
Total assets $52,211,817
-----------
LIABILITIES:
Payables -
Fund shares repurchased $ 62,403
Dividends 51,343
Due to bank 888
Due to affiliates 36,634
Accrued expenses 52,363
-----------
Total liabilities $ 203,631
-----------
NET ASSETS:
Paid-in capital $55,591,075
Accumulated distributions in excess of net investment income (21,422)
Accumulated net realized loss on investments (3,528,754)
Net unrealized loss on investments (32,713)
-----------
Total net assets $52,008,186
-----------
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $45,702,883/12,159,106 shares) $ 3.76
-----------
Class B (based on $6,078,463/1,619,327 shares) $ 3.75
-----------
Class Y (based on $226,840/60,251 shares) $ 3.76
-----------
MAXIMUM OFFERING PRICE:
Class A $ 3.86
-----------
</TABLE>
16 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Short-Term Income Trust
STATEMENT OF OPERATIONS
For the Six Months Ended 5/31/98
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Interest $1,613,099
----------
EXPENSES:
Management fees $119,120
Transfer agent fees
Class A 37,754
Class B 7,905
Class Y 5
Distribution fees
Class A 52,607
Class B 27,540
Accounting 35,372
Custodian fees 8,871
Registration fees 38,903
Professional fees 21,430
Printing 13,760
Fees and expenses of nonaffiliated trustees 7,500
Miscellaneous 11,010
--------
Total expenses $ 381,777
Less management fees waived and expenses
reimbursed by Pioneering Management
Corporation (154,848)
Less fees paid indirectly (853)
----------
Net expenses $ 226,076
----------
Net investment income $1,387,023
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments $ (172,094)
Change in net unrealized loss on investments 23,824
----------
Net loss on investments $ (148,270)
----------
Net increase in net assets resulting from operations $1,238,753
----------
</TABLE>
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
Pioneer Short-Term Income Trust
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended 5/31/98 and the Year Ended 11/30/97
<TABLE>
<CAPTION>
Six Months Year Ended
5/31/98 11/30/97
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 1,387,023 $ 3,068,969
Net realized loss on investments (172,094) (315,856)
Change in net unrealized gain or loss on investments 23,824 (88,164)
----------- ------------
Net increase in net assets resulting from operations $ 1,238,753 $ 2,664,949
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.11 and $0.23 per share, respectively) (1,260,275) (2,774,220)
Class B ($0.09 and $0.20 per share, respectively) (136,162) (257,396)
Class Y ($0.03 and $0.00 per share, respectively) (1,657) -
----------- ------------
Total distributions to shareholders $(1,398,094) $ (3,031,616)
----------- ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $24,504,900 $ 35,938,522
Reinvestment of distributions 1,088,293 2,292,014
Cost of shares repurchased (20,671,292) (50,223,665)
----------- ------------
Net increase (decrease) in net assets resulting
from fund share transactions $ 4,921,901 $(11,993,129)
----------- ------------
Net increase (decrease) in net assets $ 4,762,560 $(12,359,796)
NET ASSETS:
Beginning of period 47,245,626 59,605,422
----------- ------------
End of period (including accumulated distributions in
excess of net investment income of $21,422 and
$10,351, respectively) $52,008,186 $ 47,245,626
----------- ------------
</TABLE>
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Short-Term Income Trust
STATEMENT OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
'98 Shares '98 Amount '97 Shares '97 Amount
<S> <C> <C> <C> <C>
CLASS A
Shares sold 3,939,700 $14,829,041 6,898,656 $ 25,945,608
Reinvestment of distributions 264,196 995,118 562,149 2,116,959
Less shares repurchased (3,195,019) (12,036,682) (10,708,837) (40,309,982)
---------- ----------- ----------- ------------
Net increase (decrease) 1,008,877 $ 3,787,477 (3,248,032) $(12,247,415)
---------- ----------- ----------- ------------
CLASS B
Shares sold 2,511,406 $ 9,450,384 2,657,915 $ 9,992,914
Reinvestment of distributions 24,330 91,514 46,605 175,055
Less shares repurchased (2,294,370) (8,634,610) (2,638,370) (9,913,683)
---------- ----------- ----------- ------------
Net increase 241,366 $ 907,288 66,150 $ 254,286
---------- ----------- ----------- ------------
CLASS Y*
Shares sold 59,809 $ 225,475
Reinvestment of distributions 442 1,661
---------- -----------
Net increase 60,251 $ 227,136
---------- -----------
</TABLE>
* Class Y Shares were first publicly offered on April 9, 1998.
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
Pioneer Short-Term Income Trust
FINANCIAL HIGHLIGHTS 5/31/98
<TABLE>
<CAPTION>
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
5/31/98 11/30/97 11/30/96 11/30/95 11/30/94(a) 11/30/93
CLASS A
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 3.77 $ 3.79 $ 3.84 $ 3.75 $ 3.95 $ 3.95
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.11 $ 0.21 $ 0.24 $ 0.25 $ 0.22 $ 0.24
Net realized and unrealized gain (loss) on
investments (0.01) - (0.05) 0.10 (0.21) -
------- ------- ------- ------- ------- -------
Net increase from investment operations $ 0.10 $ 0.21 $ 0.19 $ 0.35 $ 0.01 $ 0.24
Distributions to shareholders:
Net investment income (0.11) (0.23) (0.24) (0.26) (0.21) (0.24)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.01) $ (0.02) $ (0.05) $ 0.09 $ (0.20) $ -
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 3.76 $ 3.77 $ 3.79 $ 3.84 $ 3.75 $ 3.95
------- ------- ------- ------- ------- -------
Total return* 2.75% 5.64% 5.20% 9.64% 0.32% 6.28%
Ratio of net expenses to average net assets 0.85%**+ 0.87%+ 0.87%+ 0.86%+ 0.85% 0.66%
Ratio of net investment income to average net
assets 5.91%**+ 6.10%+ 6.25%+ 6.43%+ 5.89% 5.80%
Portfolio turnover rate 67%** 31% 65% 110% 144% 83%
Net assets, end of period (in thousands) $45,703 $42,058 $54,637 $53,860 $59,088 $57,482
Ratios assuming no waiver of management fees and
assumption of expenses by PMC and no reduction
for fees paid indirectly:
Net expenses 1.50%** 1.44% 1.33% 1.38% 1.20% 1.33%
Net investment income 5.26%** 5.53% 5.79% 5.92% 5.54% 5.13%
Ratios assuming waiver of management fees and
assumption of expenses by PMC and reduction for
fees paid indirectly:
Net expenses 0.85%** 0.85% 0.85% 0.85 - -
Net investment income 5.91%** 6.12% 6.27% 6.44 - -
</TABLE>
(a)The per share data presented above is based upon the average shares
outstanding for the period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
20 The accompanying notes are an integral part of these financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS 5/31/98
Pioneer Short-Term Income Trust
<TABLE>
<CAPTION>
Six Months
Ended Year Ended Year Ended Year Ended 4/4/94 to
CLASS B 5/31/98 11/30/97 11/30/96 11/30/95 11/30/94(a)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 3.76 $ 3.79 $ 3.85 $ 3.75 $ 3.89
------ ------ ------ ------ ------
Increase (decrease) from investment operations:
Net investment income $ 0.10 $ 0.20 $ 0.21 $ 0.22 $ 0.15
Net realized and unrealized gain (loss) on
investments (0.02) (0.03) (0.05) 0.11 (0.16)
------ ------ ------ ------ ------
Net increase (decrease) from investment
operations $ 0.08 $ 0.17 $ 0.16 $ 0.33 $(0.01)
Distributions to shareholders:
Net investment income (0.09) (0.20) (0.21) (0.23) (0.13)
In excess of net investment income - - (0.01) - -
------ ------ ------ ------ ------
Net increase (decrease) in net asset value $(0.01) $(0.03) $(0.06) $ 0.10 $(0.14)
------ ------ ------ ------ ------
Net asset value, end of period $ 3.75 $ 3.76 $ 3.79 $ 3.85 $ 3.75
------ ------ ------ ------ ------
Total return* 2.21% 4.60% 4.37% 8.93% (0.24)%
Ratio of net expenses to average net assets 1.71%**+ 1.67%+ 1.69%+ 1.63%+ 1.41%**
Ratio of net investment income to average net
assets 5.05%**+ 5.29%+ 5.40%+ 5.61%+ 6.05%**
Portfolio turnover rate 67%** 31% 65% 110% 144%
Net assets, end of period (in thousands) $6,078 $5,187 $4,969 $2,924 $3,182
Ratios assuming no waiver of management fees and
assumption of expenses by PMC and no reduction
for fees paid indirectly:
Net expenses 2.35%** 2.25% 2.15% 2.17% 1.82%**
Net investment income 4.41%** 4.71% 4.94% 5.08% 5.64%**
Ratios assuming waiver of management fees and
assumption of expenses by PMC and reduction for
fees paid indirectly:
Net expenses 1.70%** 1.66% 1.67% 1.60% -
Net investment income 5.06%** 5.30% 5.42% 5.64% -
</TABLE>
(a)The per share data presented above is based upon the average shares
outstanding for the period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net value at the end of each period, and no sales charges.
Total return would be reduced if sales charges were taken into account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 21
<PAGE>
Pioneer Short-Term Income Trust
FINANCIAL HIGHLIGHTS 5/31/98
<TABLE>
<CAPTION>
4/9/98 to
CLASS Y(a) 5/31/98
<S> <C>
Net asset value, beginning of period $ 3.77
------
Increase from investment operations:
Net investment income $ 0.04
Net realized and unrealized loss on investments (0.02)
------
Net increase from investment operations $ 0.02
Distributions to shareholders:
Net investment income (0.03)
------
Net decrease in net asset value $(0.01)
------
Net asset value, end of period $ 3.76
------
Total return* 0.53%
Ratio of net expenses to average net assets 0.49%**
Ratio of net investment income to average net assets 6.60%**
Portfolio turnover rate 67%**
Net assets, end of period (in thousands) $ 227
Ratios assuming no waiver of management fees and assumption of
expenses by PMC and no reduction for fees paid indirectly:
Net expenses 1.13%**
Net investment income 5.96%**
</TABLE>
(a) Class Y shares were first publicly offered on April 9, 1998.
* Assumes initial investment at net asset value at the beginning of the
period, reinvestment of distributions, and the complete redemption of the
investment at net asset value at the end of the period.
** Annualized.
22 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Short-Term Income Trust
NOTES TO FINANCIAL STATEMENTS 5/31/98
1. Organization and Significant Accounting Policies
Pioneer Short-Term Income Trust (the Trust) is a Massachusetts business trust
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Trust's investment objective is to seek a
high level of current income consistent with a high level of principal
stability.
The Trust offers three classes of shares - Class A, Class B and Class Y shares.
Class Y shares were first publicly offered on April 9, 1998. Each class of
shares represent an interest in the same portfolio of investments of the Fund
and have equal rights to voting, redemptions, dividends and liquidation, except
that the level of transfer agent and distribution fees may differ among
classes. Class A and Class B shareholders have exclusive voting rights with
respect to the distribution plan for each class. There is no distribution plan
for Class Y shares.
The Trust's financial statements have been prepared in conformity with
generally accepted accounting principles that require the management of the
Trust 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 Trust, which are in conformity
with those generally accepted in the investment company industry.
A. Security Valuation
Security transactions are recorded on trade date. Securities are valued at
prices supplied by independent pricing services, which consider such factors
as Treasury spreads, yields, maturities and ratings, and valuations may be
supplemented by other sources, as required. 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. Interest income is
recorded on the accrual basis. Temporary cash investments are valued at
amortized cost.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes. It
is the Trust'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.
23
<PAGE>
Pioneer Short-Term Income Trust
NOTES TO FINANCIAL STATEMENTS 5/31/98 (continued)
B. Federal Income Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareholders. Therefore, no federal income tax provision is required.
The characterization of distributions to shareholders for financial reporting
purposes is determined in accordance with federal income tax rules.
Therefore, the source of the Trust'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.
C. Fund Shares
The Trust records sales and repurchases of its shares on trade date. Net
losses, if any, as a result of cancellations are absorbed by Pioneer Funds
Distributor, Inc. (PFD), the principal underwriter for the Trust and an
indirect subsidiary of The Pioneer Group, Inc. (PGI). PFD earned $7,719 in
underwriting commissions on the sale of fund shares during the six months
ended May 31, 1998.
D. Class Allocations
Distribution fees are calculated based on the average daily net assets
attributable to Class A and Class B shares of the Trust, respectively. Class
Y shares are not subject to a distribution plan. 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 Trust level and allocated
daily to each class of shares based on the respective percentage of adjusted
net assets at the beginning of the day.
The Trust 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 Trust 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 Y shares can bear different transfer
agent and distribution fees.
24
<PAGE>
Pioneer Short-Term Income Trust
E. Repurchase Agreements
With respect to repurchase agreements entered into by the Trust, 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 Trust's custodian, or subcustodians. The Trust's investment adviser,
Pioneering Management Corporation (PMC), is responsible for determining that
the value of the collateral remains at least equal to the repurchase price.
2. Management Agreement
PMC manages the Trust's portfolio and is a wholly owned subsidiary of PGI.
Management fees are calculated daily at the annual rate of 0.50% of the Trust's
average daily net assets up to $100 million; 0.45% of the next $200 million;
and 0.40% of the excess over $300 million.
PMC has agreed not to impose a portion of its management fee and to assume
other operating expenses of the Trust to the extent necessary to limit Class A
expenses to 0.85% of the average daily net assets attributable to Class A
shares; the portion of the Trust-wide expenses attributable to Class B and
Class Y shares will be reduced only to the extent that such expenses are
reduced for Class A shares. PMC's agreement is voluntary and temporary and may
be revised or terminated at any time.
In addition, under the management agreement, certain other services and costs,
including accounting, regulatory reporting and insurance premiums, are paid by
the Trust.
3. Transfer Agent
PSC, a wholly owned subsidiary of PGI, provides substantially all transfer
agent and shareholder services to the Trust at negotiated rates. Included in
due to affiliates is $13,517 in transfer agent fees payable to PSC at May 31,
1998.
4. Distribution Plans
The Trust adopted a Plan of Distribution with respect to Class A and Class B
shares (Class A Plan and Class B Plan) in accordance with Rule 12b-1 of the
Investment Company Act of 1940. Pursuant to the Class A Plan, the Trust pays
PFD a service fee of up to 0.25% of the Trust's average daily net assets in
reimbursement of its actual expenditures to finance activities primarily
intended to result in the sale of Class A shares. Pursuant to the
25
<PAGE>
Pioneer Short-Term Income Trust
NOTES TO FINANCIAL STATEMENTS 5/31/98 (continued)
Class B Plan, the Trust pays PFD 1.00% of the average daily net assets
attributable to the Class B 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
shares. Included in due to affiliates is $23,117 in distribution fees payable
to PFD at May 31, 1998.
In addition, redemptions of each class of shares (except Class Y shares) may be
subject to a contingent deferred sales charge (CDSC). A CDSC of 0.50% 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 three
years of purchase are subject to a CDSC at declining rates beginning at 2.0%,
based on the lower of cost or market value of shares being redeemed. Proceeds
from the CDSCs are paid to PFD. For the six months ended May 31, 1998, CDSCs in
the amount of $7,444 were paid to PFD.
5. Expense Offsets
The Trust has entered into certain expense offset arrangements resulting in a
reduction in the Trust's total expenses. For the six months ended May 31, 1998,
the Trust's expenses were reduced by $853 under such arrangements.
6. Line of Credit Facility
Effective April 14, 1998, the Trust, along with certain other funds in the
Pioneer Family of Funds (the "Funds"), collectively participate in a $50
million committed, unsecured revolving line of credit facility. Borrowings are
used solely for temporary or emergency purposes. The Trust may borrow up to the
lesser of $50 million or the limits set by its prospectus for borrowings.
Interest on collective borrowings of up to $25 million is payable at the
Federal Funds Rate plus 3/8% on an annualized basis, or at the Federal Funds
Rate plus 1/2% if the borrowing exceeds $25 million at any one time. The Funds
pay an annual commitment fee for this facility. The commitment fee is allocated
among such Funds based on their respective borrowing limits. For the period
ended May 31, 1998, there were no borrowings under this agreement.
26
<PAGE>
Pioneer Short-Term Income Trust
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and the Board of Trustees of
Pioneer Short-Term Income Trust:
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer Short-Term Income Trust, as of May 31, 1998, and the
related statement of operations, statements of changes in net assets and the
financial highlights for the periods presented. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1998 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 Short-Term Income Trust as of May 31, 1998, the results of its
operations, the changes in its net assets and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
July 8, 1998
27
<PAGE>
Pioneer Short-Term Income Trust
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
John W. Kendrick Richard A. Schlanger, Vice President
Marguerite A. Piret William H. Keough, Treasurer
David D. Tripple Joseph P. Barri, Secretary
Stephen K. West
John Winthrop
Investment Adviser
Pioneering Management Corporation
Custodian
Brown Brothers Harriman & Co.
Independent Public Accountants
Arthur Andersen LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneering Services Corporation
28
<PAGE>
RETIREMENT PLANS FROM PIONEER
Pioneer offers retirement plans suited to the individual investor and
businesses of all sizes. For information, contact your investment professional,
or call Pioneer at 1-800-622-0176.
Individual Plans
Individual Retirement Account (IRA) The $2,000 maximum annual contribution may
be tax-deductible; earnings are tax-deferred.
Roth IRA New in 1998, $2,000 maximum annual contributions are not tax-
deductible. Earnings are tax-free for qualified withdrawals.
Plans for Small Businesses or the Self-Employed
SIMPLE (Savings Incentive Match PLan for Employees)
IRA or 401(k) Plan For firms with 100 or fewer employees. Employees can make
pre-tax contributions of up to $6,000 annually, and an employer contribution is
required.
Simplified Employee Pension Plan (SEP) Self-employed people and small- business
owners can make tax-deductible contributions of up to 15% of their income.
Employer-Sponsored Plans
401(k) Plan Allows employees to make pre-tax contributions. Also allows for
employer contributions.
403(b) Plan Lets employees of tax-exempt organizations set aside part of their
salary, before taxes, through payroll deduction.
Profit Sharing Plan Employers contribute on a discretionary basis, usually
based on profits.
Age-Weighted Profit Sharing Plan Employer makes discretionary contributions
based on employees' age and salary.
Money Purchase Pension Plan (MPP) Employers contribute based on a fixed
formula.
Most retirement plan withdrawals must meet specific conditions to avoid
penalties.
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
FactFoneSM 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 at:
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 Funds Distributor, Inc.
60 State Street 0798-5321
Boston, Massachusetts 02109 (C) Pioneer Funds Distributor, Inc.
www.pioneerfunds.com [Recycle bug] Printed on Recycled Paper
