[Pioneer Logo]
Pioneer
Short-Term Income
Trust
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ANNUAL REPORT 11/30/98
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<PAGE>
Table of Contents
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<TABLE>
<S> <C>
Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule of Investments 9
Financial Statements 15
Notes to Financial Statements 22
Report of Independent Public Accountants 26
Trustees, Officers and Service Providers 27
Retirement Plans from Pioneer 28
The Pioneer Family of Mutual Funds 29
</TABLE>
<PAGE>
Pioneer Short-Term Income Trust
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LETTER FROM THE CHAIRMAN 11/30/98
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Dear Shareowner,
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I am pleased to introduce this annual report for Pioneer Short-Term Income
Trust, covering the 12 months ended November 30, 1998. On behalf of your
investment team, I thank you for your interest.
We recently made some enhancements to the Fund's management team and its
investment policies. We are pleased that Kenneth J. Taubes has joined Pioneer's
fixed-income team as a Senior Vice President. He has 18 years of investment
experience focused on bonds. Ken joins Sherman B. Russ as co-leader of the team
of portfolio managers and analysts who work on your Fund. Richard Schlanger
continues to be an important contributor to Fund strategy and performance.
In addition, we have increased the Fund's flexibility to help it become more
competitive with similar funds. We believe these portfolio changes will help
the management team provide you with the potential for higher yields while
maintaining the overall high credit quality you expect. To this end, the
portfolio can now have an average life of three to five years, with no single
security having an average life of more than 10 years. The Fund will also be
able to have 10% of its total assets in "high-yield" securities that are below
investment grade. Bear in mind that, under normal circumstances, at least 90%
of the Fund's assets will continue to be issued or guaranteed by the U.S.
government or have one of the four highest grades from the national rating
organizations.
I encourage you to read the pages that follow, including the Portfolio
Management Discussion where the investment team reviews the Fund's performance.
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
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PORTFOLIO SUMMARY 11/30/98
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Portfolio Diversification
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(As a percentage of total investment portfolio)
[Pie Chart]
U.S. Government Agency Obligations 39%
Corporate Bonds 33%
U.S. Government Obligations 25%
Short-Term Cash Equivalents 2%
[End Pie Chart]
Portfolio Quality
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(As a percentage of long-term holdings)
[Pie Chart]
Treasury/Agent 67%
AAA 6%
AA 4%
A 15%
BBB 8%
[End Pie Chart]
10 Largest Holdings
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(As a percentage of long-term holdings)
<TABLE>
<S> <C>
1. U.S. Treasury Notes, 6.25%, 1/31/02 7.26%
2. U.S. Treasury Notes, 6.25%, 4/30/01 7.18
3. U.S. Treasury Notes, 6.50%, 8/31/01 6.35
4. U.S. Treasury Notes, 7.75%, 11/30/99 4.90
5. Sony Corp., 6.125%, 3/4/03 1.87
6. Citicorp, 7.125%, 6/1/03 1.84
7. NationsBank Corp., 6.5%, 8/15/03 1.80
8. Aid-Israel, 6.375%, 8/15/01 1.79
9. Tennessee Valley Authority, 8.375%, 10/1/99 1.78
10. Federal Home Loan Mortgage Corp., REMIC Series 2082 PC, 1.74
5.75%, 2/15/17
</TABLE>
Fund holdings will vary for other periods.
2
<PAGE>
Pioneer Short-Term Income Trust
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PERFORMANCE UPDATE 11/30/98 CLASS A SHARES
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Share Prices and Distributions
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<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 11/30/98 11/30/97
$3.78 $3.77
Distributions per Share Income Short-Term Long-Term
(11/30/97-11/30/98) Dividends Capital Gains Capital Gains
$0.221 - -
</TABLE>
Investment Returns
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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 November 30, 1998)
Net Asset Public Offering
Period Value Price*
<S> <C> <C>
Life-of-Fund 5.38% 4.97%
(8/10/92)
5 Years 5.37 4.85
1 Year 6.28 3.54
- ---------------------------------------------
</TABLE>
* Reflects deduction of the maximum 2.5% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
[Mountain Chart]
<TABLE>
<CAPTION>
Merill
Pioneer Lynch
Short-term 1-3 Year
Income Treasury
Trust* Index
<S> <C> <C>
8/92 9,750 10,000
11/92 9,809 10,018
10,204 10,372
11/93 10,424 10,622
10,466 10,585
11/94 10,457 10,697
11,122 11,375
11/95 11,466 11,810
11,606 11,975
11/96 12,062 12,493
12,332 12,765
11/97 12,743 13,234
13,094 13,656
11/98 13,553 14,207
</TABLE>
[End Mountain Chart]
+ 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
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PERFORMANCE UPDATE 11/30/98 CLASS B SHARES
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Share Prices and Distributions
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<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 11/30/98 11/30/97
$3.78 $3.76
Distributions per Share Income Short-Term Long-Term
(11/30/97-11/30/98) Dividends Capital Gains Capital Gains
$0.182 - -
</TABLE>
Investment Returns
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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 November 30, 1998)
If If
Period Held Redeemed*
<S> <C> <C>
Life-of-Fund 4.93% 4.93%
(4/4/94)
1 Year 5.49 3.49
- ---------------------------------------------
</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]
<TABLE>
<CAPTION>
Merill
Pioneer Lynch
Short-term 1-3 Year
Income Treasury
Trust* Index
<S> <C> <C>
4/94 10,000 10,000
9,987 10,014
10,027 10,166
11/94 9,961 10,120
10,021 10,426
10,539 10,762
10,643 10,929
11/95 10,850 11,173
10,922 11,307
10,910 11,329
11,044 11,495
11/96 11,325 11,819
11,367 11,902
11,521 12,077
11,700 12,305
11/97 11,845 12,521
11,991 12,740
12,107 12,920
12,320 13,212
11/98 12,496 13,441
</TABLE>
[End Mountain Chart]
+ 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
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PERFORMANCE UPDATE 11/30/98 CLASS Y SHARES
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Share Prices and Distributions
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<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 11/30/98 4/9/98
$3.79 $3.77
Distributions per Share Income Short-Term Long-Term
(4/9/98-11/30/98) Dividends Capital Gains Capital Gains
$0.141 - -
</TABLE>
Investment Returns
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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>
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<CAPTION>
Cumulative Total Returns
(As of November 30, 1998)
If If
Period Held Redeemed*
<S> <C> <C>
Life-of-Fund 4.35% 4.35%
(4/9/98)
- ----------------------------------------
</TABLE>
* Assumes reinvestment of distributions.
<TABLE>
<CAPTION>
Merill
Pioneer Lynch
Short-term 1-3 Year
Income Treasury
Trust* Index
<S> <C> <C>
4/98 10,000 10,000
5/98 10,050 10,053
6/98 10,100 10,106
7/98 10,151 10,153
8/98 10,255 10,280
9/98 10,414 10,417
10/98 10,437 10,468
11/98 10,432 10,459
</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
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PORTFOLIO MANAGEMENT DISCUSSION 11/30/98
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In the following discussion, Richard Schlanger details the investment
environment and the strategies that affected your Fund's performance over the
past 12 months. An investment professional for more than 18 years, Mr.
Schlanger is a member of the team responsible for the management of Pioneer
Short-Term Income Trust.
Q: How did Pioneer Short-Term Income Trust perform over the past 12 months?
A: We are pleased with the results for the year. For the 12 months ended
November 30, the Fund's Class A Shares returned 6.28% at net asset value.
This was slightly ahead of the 6.00% average return of the 103 funds in
Lipper Analytical Services' Short-Term Investment Grade Debt category.
(Returns do not reflect sales charges.) On November 30, the Fund's 30-day
SEC yield stood at an attractive 4.44%.
The Fund's conservative strategy helped performance throughout the year. The
portfolio held more U.S. Treasury issues, and fewer corporate bonds and
asset-backed securities, than many similar funds. Prices rose for U.S.
Treasury securities as the global financial crisis drove many investors to
what they consider to be the safest investments available in the world,
thanks to the "full faith and credit" backing of the U.S. government.
(Remember, ratings apply to the creditworthiness of the issuer, not the
Fund.) The increased demand for Treasurys sent yields on long-term bonds, as
measured by the benchmark 30-year Treasury bond, to an historical low of
4.72%.
Q: What was the investment environment like during the past year?
A: It was basically a tale of two economies - the domestic economy and the
global economy. The economic picture in the United States was strong, with
low inflation, low unemployment and moderate growth. In fact, the U.S.
economy is in its second longest expansion since the end of World War II,
and it hasn't shown any signs of slipping into recession.
6
<PAGE>
Pioneer Short-Term Income Trust
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On the other hand, the global financial situation was in chaos. Late in 1997,
Asian economies were battered by a currency crisis that began in Thailand and
swept through the region. In mid-1998, Russia's problems came to a critical
juncture, and the government defaulted on its debt. In response to these
crises, the Federal Reserve, acting as the world's top banker, added
liquidity to world markets in an effort to stave off a worldwide recession.
The Fed added liquidity by dropping U.S. short-term interest rates by 25
basis points (0.25%) three times in the fall of 1998, bringing them down to
4.75%. These were the first U.S. interest rate cuts in almost three years.
Q: What strategies did you use to manage the Fund?
A: There was little incentive to own anything other than Treasurys for most of
the year. The spread, or the difference in yields, between the broader bond
market - corporate bonds, asset-backed securities and collateralized
mortgage obligations (CMOs) - and government issues was extremely small. In
short, investors were not being paid to take additional risk. But during
the past several months of the Fund's fiscal year, spreads widened to more
reasonable levels as investors demanded to be compensated - in the form of
higher yields - for buying riskier bonds. We recognized this and
dramatically increased the Fund's holdings in corporate bonds. We looked
for sectors that offered the best relative value. Some issues we found
attractive were Associates Corp.(6.5%, 7/15/02), Citicorp.(7.125%, 6/1/03)
and Sony Corp. (6.125%, 3/4/03). We also added a number of asset-backed
securities. These bonds are backed by a pool of receivables and are
AAA-rated, but have been trading at historically high prices relative to
Treasury notes.
Q: What is duration and why is it important to bond investors?
A: Duration is a mathematical measure of risk. It measures a fund's interest
rate sensitivity - the longer a fund's duration, the more sensitive the
fund is to shifts in interest rates. For each year of duration, the Fund's
net asset value will change by 1% for each 1% change in interest rates, up
or down. So, if a fund has a duration of four years, a 1% change in rates
would trigger a 4% change in fund price.
7
<PAGE>
Pioneer Short-Term Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 11/30/98 (continued)
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Six months ago, the portfolio's effective duration was a modest 1.6 years. In
August, with the global financial crisis at its height, we shortened the
portfolio's effective duration to 1.58 years. Since then, with the Fed easing
interest rates, we started to lengthen the effective duration to capture
rising bond prices. On November 30, it stood at 2.07 years.
Q: What is your outlook for the next six months?
A: We're cautiously optimistic but there are still many hurdles that must be
overcome. Among the key concerns that could significantly affect economic
growth are impeachment proceedings, the situation in Iraq and technology
concerns about the year 2000. Another "wild card" is the stock market, as
uncertainty about future corporate earnings comes into play.
Even so, we expect the domestic economy to remain solid and developments
regarding the federal budget surplus to be positive. We also believe the
ailing global economy will force the Fed to further ease interest rates over
the first two quarters of 1999. This should benefit Treasurys, but hurt CMOs,
which would experience the increased prepayment activity from refinancings
sparked by falling interest rates. As long as the economy and corporate
profits remain favorable, we will continue to selectively add corporate
issues.
The Fund's credit quality remains high at AA so, if the economy does run into
trouble, it should not affect the Fund to the extent it might many other
funds. If interest rates do drop, we expect that short-term rates would be
affected more than long-term rates, and the Fund should benefit. We are
confident that our emphasis on high-quality, short-term securities can
continue to provide a solid, income-based total return going forward.
8
<PAGE>
Pioneer Short-Term Income Trust
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SCHEDULE OF INVESTMENTS 11/30/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
INVESTMENT IN SECURITIES - 98.2%
Corporate Bonds - 32.7%
Asset-Backed - 6.2%
$ 337,467 AAA/Aaa Advanta Mortgage Loan Trust, Series
93-4A, 5.55%, 3/25/10 $ 332,233
500,000 AAA/Aaa California Infrastructure SCE-1, Series
1997-1, 6.28%, 9/25/05 517,125
600,000 AAA/Aaa Carco Auto Loan Master Trust, Series
1997-1A, 6.689%, 8/15/04 606,006
500,000 A-/Baa1 Continental Airlines, Series 1998-3 Pass
Through Trust C-1, 7.08%, 11/1/04 499,700
500,000 AAA/Aaa Discover Card Master Trust, Series
1998-7A, 5.6%, 5/15/06 515,095
500,000 AAA/Aaa Discover Card Master Trust, Series
1997-2, 6.792%, 4/16/10 519,175
184,411 AAA/Aaa Premier Auto Trust, Series 1995-2A6,
7.2%, 10/4/99 184,787
437,500 AAA/Aaa Sears Credit Account Master Trust, Series
1994-1A, 7.0%, 1/15/04 444,246
----------
$3,618,367
----------
CMO-Non Agency - 0.3%
167,740 AAA/AAA Mortgage Capital Funding Inc., 1995-MCI
Class A1B, 7.6%, 5/25/27 $ 173,191
----------
Financial - 13.1%
528,000 AA-/Aa3 Associates Corp., 6.5%, 7/15/02 $ 546,242
600,000 A/A1 Banc One Corp., 7.25%, 8/1/02 635,826
1,000,000 A+/A1 Citicorp, 7.125%, 6/1/03 1,062,180
500,000 A/A1 Ford Motor Credit Co., 6.55%, 8/15/00 518,785
500,000 A/A1 Ford Motor Credit Co., 6.85%, 9/10/02 512,070
350,000 A/A2 General Motors Acceptance Corp.,
6.375%, 12/1/01 358,649
500,000 A/A2 General Motors Acceptance Corp.,
7.05%, 4/23/02 524,510
500,000 A/A2 General Motors Acceptance Corp.,
6.75%, 3/15/03 522,355
1,000,000 A/Aa3 NationsBank Corp., 6.5%, 8/15/03 1,040,880
400,000 A+/Aa3 Norwest Corp., 6.8%, 5/15/02 416,156
</TABLE>
The accompanying notes are an integral part of these financial statements. 9
<PAGE>
Pioneer Short-Term Income Trust
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SCHEDULE OF INVESTMENTS 11/30/98 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
Financial - (continued)
$ 250,000 BBB/Baa2 Spieker Properties L.P., 6.65%, 12/15/00 $ 249,115
800,000 BBB/Baa2 Spieker Properties L.P., 6.8%, 12/15/01 794,303
500,000 A-/Baa1 Transamerica Financial Corp., 6.75%,
6/1/00 506,750
-----------
$ 7,687,821
-----------
Industrial - 13.1%
500,000 BBB-/Baa2 A. H. Belo Corp., 6.875%, 6/1/02 $ 511,250
500,000 A/A2 Akzo Nobel, North America, 6.0%,
11/15/03 499,860
930,000 BBB+/Baa1 Comdisco Inc., 6.5%, 6/15/00 934,762
350,000 A+/A1 IBM Corp., 5.8%, 5/15/01 355,352
1,000,000 BBB-/Baa2 KN Energy Inc., 6.45%, 11/30/01 1,006,830
500,000 AA/Aa2 McDonald's Corp., 7.375%, 7/15/02 506,455
500,000 AA/Aa1 Northern Illinois Gas Co., 6.75%, 6/1/02 515,780
500,000 BBB-/Baa3 Shopko Stores, 6.5%, 8/15/03 506,005
1,050,000 A+/Aa3 Sony Corp., 6.125%, 3/4/03 1,081,038
500,000 A-/Baa1 Sprint Capital Corp., 5.7%, 11/15/03 505,230
750,000 BBB-/Baa3 TCI Communications, Inc., 6.375%, 5/1/03 778,598
500,000 AA/Aa2 Wal-Mart Stores, 6.75%, 5/15/02 524,885
-----------
$ 7,726,045
-----------
Total Corporate Bonds
(Cost $18,998,800) $19,205,424
-----------
U.S. Government Obligations - 26.0%
450,000 U.S. Treasury Notes, 7.125%, 9/30/99 $ 458,802
2,750,000 U.S. Treasury Notes, 7.75%, 11/30/99 2,831,675
4,000,000 U.S. Treasury Notes, 6.25%, 4/30/01 4,148,200
3,500,000 U.S. Treasury Notes, 6.5%, 8/31/01 3,667,930
4,000,000 U.S. Treasury Notes, 6.25%, 1/31/02 4,189,520
-----------
Total U.S. Government Obligations
(Cost $15,170,118) $15,296,127
-----------
U.S. Government Agency Obligations - 39.5%
500,000 Aid-Israel, 7.75%, 11/15/99 $ 514,065
1,000,000 Aid-Israel, 6.375%, 8/15/01 1,035,170
500,000 Federal Farm Credit Bank, Medium Term
Note, 6.24%, 12/13/02 513,865
500,000 Federal Home Loan Bank, 6.36%, 3/29/01 502,355
</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 Agency Obligations - (continued)
$ 800,000 Federal Home Loan Bank, 6.17%,
11/20/02 $ 821,664
400,000 Federal Home Loan Bank, 6.25%, 1/7/03 403,096
500,000 Federal Home Loan Mortgage Corp.,
6.87%, 4/16/01 503,555
500,000 Federal Home Loan Mortgage Corp.,
6.92%, 7/9/01 505,745
500,000 Federal Home Loan Mortgage Corp.,
5.96%, 7/2/03 513,375
332,627 Federal Home Loan Mortgage Corp.,
REMIC Series 1191EB, 7.0%, 8/15/02 335,388
31,069 Federal Home Loan Mortgage Corp.,
REMIC Series 1238G, 7.25%, 1/15/06 31,079
235,505 Federal Home Loan Mortgage Corp.,
REMIC Series 1132I, 8.0%, 5/15/06 239,141
157,270 Federal Home Loan Mortgage Corp.,
REMIC Series 1181H, 7.0% 7/15/06 158,589
617,208 Federal Home Loan Mortgage Corp.,
REMIC Series 1145G, 8.0%, 9/15/06 640,168
118,062 Federal Home Loan Mortgage Corp.,
REMIC Series 1564J, 6.5%, 7/15/08 119,010
1,000,000 Federal Home Loan Mortgage Corp.,
REMIC Series 2082PC, 5.75%, 2/15/17 1,006,890
52,222 Federal Home Loan Mortgage Corp.,
REMIC Series 1281F, 8.0%, 7/15/18 52,194
500,000 Federal Home Loan Mortgage Corp.,
REMIC Series 1848PB, 7.0%, 2/15/20 508,800
166,253 Federal Home Loan Mortgage Corp.,
REMIC Series 112H, 8.8%, 9/15/20 166,964
284,015 Federal Home Loan Mortgage Corp.,
REMIC Series 1142H, 7.95%, 12/15/20 286,008
204,000 Federal Home Loan Mortgage Corp.,
REMIC Series 1206H, 7.0%, 3/15/21 206,821
205,848 Federal Home Loan Mortgage Corp.,
REMIC Series 189C, 8.0%, 6/15/21 208,281
500,000 Federal Home Loan Mortgage Corp.,
REMIC Series 1761-G, 8.0%, 10/15/21 505,285
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
Pioneer Short-Term Income Trust
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 11/30/98 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/Moody's
Principal Ratings
Amount (Unaudited) Value
<S> <C> <C> <C>
U.S. Government Agency Obligations - (continued)
$ 500,000 Federal Home Loan Mortgage Corp.,
REMIC Series 1987PM, 6.5%, 10/15/21 $ 504,735
107,374 Federal Home Loan Mortgage Corp.,
REMIC Series 1590K, 6.5%, 10/15/23 107,546
435,100 Federal Home Loan Mortgage Corp.,
REMIC Series 2017C, 6.5%, 11/15/23 437,663
500,000 Federal Home Loan Mortgage Corp.,
REMIC Series 2072PK, 6.0%, 7/15/24 505,469
500,000 Federal National Mortgage Association,
6.45%, 4/12/01 502,700
500,000 Federal National Mortgage Association,
Medium Term Note, 6.63%, 6/5/01 513,160
600,000 Federal National Mortgage Association,
Medium Term Note, 6.4%, 12/10/01 600,240
450,000 Federal National Mortgage Association,
Medium Term Note, 6.78%, 1/15/02 450,963
500,000 Federal National Mortgage Association,
Medium Term Note, 6.97%, 3/25/02 503,315
500,000 Federal National Mortgage Association,
Medium Term Note, 7.15%, 4/8/02 504,030
350,000 Federal National Mortgage Association,
Medium Term Note, 6.45%, 7/25/02 359,632
300,000 Federal National Mortgage Association,
Medium Term Note, 6.52%, 9/5/02 309,162
300,000 Federal National Mortgage Association,
Medium Term Note, 6.36%, 10/23/02 307,755
1,000,000 Federal National Mortgage Association,
Medium Term Note, 5.46%, 11/3/03 991,460
161,315 Federal National Mortgage Association,
REMIC Series 1992-97DB, 8.0%, 9/25/99 161,933
258,583 Federal National Mortgage Association,
REMIC Series 1992-145J, 7.15%, 7/25/03 263,579
227,533 Federal National Mortgage Association,
REMIC Series 1992-110G, 7.0%, 9/25/05 227,064
514,283 Federal National Mortgage Association,
REMIC Series 1993-129KB, 6.5%, 4/25/08 519,478
196,956 Federal National Mortgage Association,
REMIC Series 1991-119M, 8.5%, 11/25/08 198,262
</TABLE>
12 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Short-Term Income Trust
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- --------------------------------------------------------------------------------
<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 $ 1,003,780
280,207 Federal National Mortgage Association,
REMIC Series 1988-26C, 7.5%, 7/25/18 283,559
550,000 Federal National Mortgage Association,
REMIC Series 1993-17PE, 6.75%, 6/25/19 550,479
817,000 Federal National Mortgage Association,
REMIC Series 1993-23PJ, 6.7%, 7/25/19 822,523
68,021 Federal National Mortgage Association,
REMIC Series G92-35C, 7.5%, 7/25/20 68,251
265,334 Federal National Mortgage Association,
REMIC Series 1991-169PJ, 7.0%, 9/25/20 266,019
4,387 Federal National Mortgage Association,
REMIC Series 1992-77G, 8.0%, 1/25/21 4,375
959,579 Federal National Mortgage Association,
REMIC Series 1998-50EN, 6.5%, 9/25/28 961,479
495,783 Government National Mortgage
Association, REMIC Series 1998-24 A,
6.5%, 11/20/24 500,097
1,000,000 Tennessee Valley Authority, 8.375%,
10/1/99 1,028,110
-----------
Total U.S. Government Agency Obligations
(Cost $23,159,452) $23,234,326
-----------
TOTAL INVESTMENT IN SECURITIES
(Cost $57,328,370) $57,735,877
-----------
TEMPORARY CASH INVESTMENT - 1.8%
Commercial Paper - 1.8%
1,044,000 Household Finance Corp., 5.38%, 12/1/98 $ 1,044,000
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $1,044,000) $ 1,044,000
-----------
TOTAL INVESTMENT IN SECURITIES AND
TEMPORARY CASH INVESTMENT - 100%
(Cost $58,372,370) (a) (b) $58,779,877
===========
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
Pioneer Short-Term Income Trust
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 11/30/98 (continued)
- --------------------------------------------------------------------------------
(a) At November 30, 1998, the net unrealized gain on investments
based on cost for federal income tax purposes of $58,372,370
was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $ 514,199
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (106,692)
---------
Net unrealized gain $ 407,507
=========
</TABLE>
(b) At November 30, 1998, the Fund had a net capital loss carryforward of
$3,702,260 which will expire between 2000 and 2006 if not utilized.
Purchases and sales of securities (excluding temporary cash investments) for
the year ended November 30, 1998 were as follows:
<TABLE>
<CAPTION>
Purchases Sales
---------- -----------
<S> <C> <C>
Long-Term U.S. Government $31,906,688 $31,938,111
Other Long-Term Securities 14,158,240 2,840,212
</TABLE>
14 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Short-Term Income Trust
- --------------------------------------------------------------------------------
BALANCE SHEET 11/30/98
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash
investment of $1,044,000) (cost $58,372,370) $58,779,877
Cash 999,984
Receivables -
Fund shares sold 811,691
Interest 720,733
Other 3,596
-----------
Total assets $61,315,881
-----------
LIABILITIES:
Payables -
Investment securities purchased $ 1,154,669
Fund shares repurchased 155,947
Dividends 41,635
Due to affiliates 140,668
Accrued expenses 46,952
-----------
Total liabilities $ 1,539,871
-----------
NET ASSETS:
Paid-in capital $63,090,509
Accumulated distributions in excess of net investment income (5,769)
Accumulated net realized loss on investments (3,716,237)
Net unrealized gain on investments 407,507
-----------
Total net assets $59,776,010
-----------
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $49,072,372/12,983,827 shares) $ 3.78
===========
Class B (based on $10,264,080/2,716,464 shares) $ 3.78
===========
Class Y (based on $439,558/116,061 shares) $ 3.79
===========
MAXIMUM OFFERING PRICE:
Class A $ 3.88
===========
</TABLE>
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
Pioneer Short-Term Income Trust
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended 11/30/98
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Interest $3,415,456
----------
EXPENSES:
Management fees $257,307
Transfer agent fees
Class A 69,228
Class B 12,110
Class Y 142
Distribution fees
Class A 111,167
Class B 68,067
Accounting 28,667
Custodian fees 16,634
Registration fees 71,363
Professional fees 38,792
Printing 15,561
Fees and expenses of nonaffiliated trustees 18,126
Miscellaneous 10,015
--------
Total expenses $ 717,179
Less management fees waived and
expenses reimbursed by Pioneer
Investment Management, Inc. (225,209)
Less fees paid indirectly (1,925)
----------
Net expenses $ 490,045
----------
Net investment income $2,925,411
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments $ (340,080)
Change in net unrealized loss on investments 464,044
----------
Net gain on investments $ 123,964
----------
Net increase in net assets resulting from operations $3,049,375
=========
</TABLE>
16 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Short-Term Income Trust
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Years Ended 11/30/98 and 11/30/97
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/98 11/30/97
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 2,925,411 $ 3,068,969
Net realized loss on investments (340,080) (315,856)
Change in net unrealized gain or loss on investments 464,044 (88,164)
----------- ------------
Net increase in net assets resulting from operations $ 3,049,375 $ 2,664,949
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.22 and $0.23 per share, respectively) $(2,584,947) $ (2,774,220)
Class B ($0.18 and $0.20 per share, respectively) (327,714) (257,396)
Class Y ($0.14 and $0.00 per share, respectively) (10,981) -
----------- ------------
Total distributions to shareholders $(2,923,642) $ (3,031,616)
----------- ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $58,766,110 $ 35,938,522
Reinvestment of distributions 2,314,221 2,292,014
Cost of shares repurchased (48,675,680) (50,223,665)
----------- ------------
Net increase (decrease) in net assets resulting
from fund share transactions $12,404,651 $(11,993,129)
----------- ------------
Net increase (decrease) in net assets $12,530,384 $(12,359,796)
NET ASSETS:
Beginning of year 47,245,626 59,605,422
----------- ------------
End of year (including accumulated distributions in
excess of net investment income of $5,769 and
$10,351, respectively) $59,776,010 $ 47,245,626
=========== ============
</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 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
'98 Shares '98 Amount '97 Shares '97 Amount
<S> <C> <C> <C> <C>
CLASS A
Shares sold 9,455,747 $35,650,906 6,898,656 $ 25,945,608
Reinvestment of distributions 550,731 2,078,817 562,149 2,116,959
Less shares repurchased (8,172,880) (30,815,032) (10,708,837) (40,309,982)
---------- ----------- ----------- ------------
Net increase (decrease) 1,833,598 $ 6,914,691 (3,248,032) $(12,247,415)
========== =========== =========== ============
CLASS B
Shares sold 6,017,333 $22,668,229 2,657,915 $ 9,992,914
Reinvestment of distributions 59,471 224,347 46,605 175,055
Less shares repurchased (4,738,301) (17,841,391) (2,638,370) (9,913,683)
---------- ----------- ----------- ------------
Net increase 1,338,503 $ 5,051,185 66,150 $ 254,286
========== =========== =========== ============
CLASS Y *
Shares sold 118,231 $ 446,975
Reinvestment of distributions 2,920 11,057
Less shares repurchased (5,090) (19,257)
---------- -----------
Net increase 116,061 $ 438,775
========== ===========
* Class Y Shares were first publicly offered on April 9, 1998.
</TABLE>
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Short-Term Income Trust
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 11/30/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
11/30/98 11/30/97 11/30/96 11/30/95 11/30/94(a)
CLASS A
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 3.77 $ 3.79 $ 3.84 $ 3.75 $ 3.95
------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.22 $ 0.21 $ 0.24 $ 0.25 $ 0.22
Net realized and unrealized gain (loss) on investments 0.01 -- (0.05) 0.10 (0.21)
------- ------- ------- ------- -------
Net increase from investment operations $ 0.23 $ 0.21 $ 0.19 $ 0.35 $ 0.01
Distributions to shareholders:
Net investment income (0.22) (0.23) (0.24) (0.26) (0.21)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.01 $ (0.02) $ (0.05) $ 0.09 $ (0.20)
------- ------- ------- ------- -------
Net asset value, end of year $ 3.78 $ 3.77 $ 3.79 $ 3.84 $ 3.75
======= ======= ======= ======= =======
Total return* 6.28% 5.64% 5.20% 9.64% 0.32%
Ratio of net expenses to average net assets 0.85%+ 0.87%+ 0.87%+ 0.86%+ 0.85%
Ratio of net investment income to average net assets 5.78%+ 6.10%+ 6.25%+ 6.43%+ 5.89%
Portfolio turnover rate 70% 31% 65% 110% 144%
Net assets, end of year (in thousands) $49,072 $42,058 $54,637 $53,860 $59,088
Ratios assuming no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.30% 1.44% 1.33% 1.38% 1.20%
Net investment income 5.33% 5.53% 5.79% 5.92% 5.54%
Ratios assuming waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.85% 0.85% 0.85% 0.85% -
Net investment income 5.78% 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.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
Pioneer Short-Term Income Trust
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 11/30/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
CLASS B 11/30/98 11/30/97
<S> <C> <C>
Net asset value, beginning of period $ 3.76 $ 3.79
------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.19 $ 0.20
Net realized and unrealized gain (loss) on investments 0.01 (0.03)
------- -------
Net increase (decrease) from investment operations $ 0.20 $ 0.17
Distributions to shareholders:
Net investment income (0.18) (0.20)
In excess of net investment income - -
------- -------
Net increase (decrease) in net asset value $ 0.02 $ (0.03)
------- -------
Net asset value, end of period $ 3.78 $ 3.76
======= =======
Total return* 5.49% 4.60%
Ratio of net expenses to average net assets 1.63%+ 1.67%+
Ratio of net investment income to average net assets 5.00%+ 5.29%+
Portfolio turnover rate 70% 31%
Net assets, end of period (in thousands) $10,264 $ 5,187
Ratios assuming no waiver of management fees and
assumption of expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.99% 2.25%
Net investment income 4.64% 4.71%
Ratios assuming waiver of management fees and assumption of expenses by
PIM and reduction for fees paid indirectly:
Net expenses 1.62% 1.66%
Net investment income 5.01% 5.30%
<CAPTION>
Year Ended Year Ended 4/4/94 to
CLASS B 11/30/96 11/30/95 11/30/94(a)
<S> <C> <C> <C>
Net asset value, beginning of period $ 3.85 $ 3.75 $ 3.89
------- ------- ------
Increase (decrease) from investment operations:
Net investment income $ 0.21 $ 0.22 $ 0.15
Net realized and unrealized gain (loss) on investments (0.05) 0.11 (0.16)
------- ------- ------
Net increase (decrease) from investment operations $ 0.16 $ 0.33 $(0.01)
Distributions to shareholders:
Net investment income (0.21) (0.23) (0.13)
In excess of net investment income (0.01) - -
------- ------- ------
Net increase (decrease) in net asset value $ (0.06) $ 0.10 $(0.14)
------- ------- ------
Net asset value, end of period $ 3.79 $ 3.85 $ 3.75
======= ======= ======
Total return* 4.37% 8.93% (0.24)%
Ratio of net expenses to average net assets 1.69%+ 1.63%+ 1.41%**
Ratio of net investment income to average net assets 5.40%+ 5.61%+ 6.05%**
Portfolio turnover rate 65% 110% 144%
Net assets, end of period (in thousands) $ 4,969 $ 2,924 $3,182
Ratios assuming no waiver of management fees and
assumption of expenses by PIM and no reduction for fees paid indirectly:
Net expenses 2.15% 2.17% 1.82%**
Net investment income 4.94% 5.08% 5.64%**
Ratios assuming waiver of management fees and assumption of expenses by
PIM and reduction for fees paid indirectly:
Net expenses 1.67% 1.60% -
Net investment income 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.
20 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Short-Term Income Trust
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 11/30/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4/9/98 to
CLASS Y(a) 11/30/98
<S> <C>
Net asset value, beginning of period $3.77
-----
Increase from investment operations:
Net investment income $0.14
Net realized and unrealized gain on investments 0.02
-----
Net increase from investment operations 0.16
Distributions to shareholders:
Net investment income (0.14)
-----
Net increase in net asset value $0.02
-----
Net asset value, end of period $3.79
=====
Total return* 4.35%
Ratio of net expenses to average net assets 0.55%**+
Ratio of net investment income to average net assets 5.99%**+
Portfolio turnover rate 70%
Net assets, end of period (in thousands) $ 440
Ratios assuming no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.74%**
Net investment income 5.80%**
Ratios assuming waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.55%**
Net investment income 5.99%**
</TABLE>
(a) Class Y shares were first publicly offered on April 9, 1998.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions and the complete redemption of the
investment at net asset value at the end of the period.
** 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
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/98
- --------------------------------------------------------------------------------
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 Valuatio
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.
22
<PAGE>
Pioneer Short-Term Income Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
The Fund has reclassified $2,813 and $16,684 from accumulated distributions
in excess of net investment income and paid-in capital, respectively, to
accumulated net realized loss on investments. 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.
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 $15,236 in
underwriting commissions on the sale of fund shares during the year ended
November 30, 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.
23
<PAGE>
Pioneer Short-Term Income Trust
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/98 (continued)
- --------------------------------------------------------------------------------
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.
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,
Pioneer Investment Management, Inc. (PIM) (formerly Pioneering Management
Corp.), is responsible for determining that the value of the collateral
remains at least equal to the repurchase price.
2. Management Agreement
PIM 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.
PIM 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. 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 Trust. At November 30, 1998, $107,388 was payable to
PIM related to management fees, administrative and certain other services.
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 $14,781 in transfer agent fees payable to PSC at November
30, 1998.
24
<PAGE>
Pioneer Short-Term Income Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 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 $18,499 in distribution fees payable to PFD at
November 30, 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 year ended November 30, 1998, CDSCs in
the amount of $14,902 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 year ended November 30, 1998,
the Trust's expenses were reduced by $1,925 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 Fund 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 November 30, 1998, there were no borrowings under this agreement.
25
<PAGE>
Pioneer Short-Term Income Trust
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareowners 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 November 30, 1998, and
the related statement of operations, the 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
November 30, 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 November 30, 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
January 8, 1999
26
<PAGE>
Pioneer Short-Term Income Trust
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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 John A. Boynton, Treasurer
David D. Tripple Joseph P. Barri, Secretary
Stephen K. West
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
</TABLE>
27
<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 The $2,000 maximum annual contribution is 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.
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THE PIONEER FAMILY OF MUTUAL FUNDS
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For information about any Pioneer mutual fund, please contact your investment
representative, or call Pioneer at 1-800-225-6292. Ask for a free fund
information kit, which includes a fund prospectus. Please read the prospectus
carefully before you invest or send money.
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Growth Funds Income Funds
United States Taxable
Pioneer Capital Growth Fund Pioneer America Income Trust
Pioneer Growth Shares Pioneer Bond Fund
Pioneer Micro-Cap Fund Pioneer Short-Term Income Trust
Pioneer Mid-Cap Fund
Pioneer Small Company Fund Tax-Free
Pioneer Tax-Free Income Fund
International/Global
Pioneer Emerging Markets Fund Money Market Fund
Pioneer Cash Reserves Fund
Pioneer Europe Fund
Pioneer Gold Shares
Pioneer Indo-Asia Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
Growth and Income Funds
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
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HOW TO CONTACT PIONEER
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We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
Call us for:
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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 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
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This report must be preceded or accompanied by a current Fund prospectus.
[Pioneer Logo]
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Pioneer Investment Management, Inc.
60 State Street 0199-5883
Boston, Massachusetts 02109 (C) Pioneer Funds Distributor, Inc.
www.pioneerfunds.com [Recycle Symbol] Printed on Recycled Paper
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