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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08657
Pioneer Equity Income Fund
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: October 31
Date of reporting period: November 1, 2005 through October 31, 2006
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
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PIONEER
-----------
EQUITY
INCOME
FUND
Annual
Report
10/31/06
[Logo] PIONEER
Investments(R)
Table of Contents
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Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 9
Prices and Distributions 10
Performance Update 11
Comparing Ongoing Fund Expenses 16
Schedule of Investments 18
Financial Statements 25
Notes to Financial Statements 34
Report of Independent Registered Public Accounting Firm 42
Trustees, Officers and Service Providers 43
President's
Dear Shareowner,
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Mature and emerging market economies around the world showed moderate
improvement after a flat second quarter. The U.S. saw some resurgence of
growth, which we expect to continue through the fourth quarter of 2006 and into
2007, although this growth may be slow with housing sector measures down in
recent months. While inflation pressures have risen slightly in recent months,
we believe the United States may now be at the end of the Fed's monetary
tightening cycle. Mature economies, led by Japan, remain firm, as do European
economic prospects, with strong GDP data reflecting the broad-based strength
seen in crucial indicators.
U.S. economic growth was back on track after lackluster market results prior to
Labor Day. Consumer spending rose with receding gas prices, just in time for
the back-to-school season, which retailers now consider the second most
lucrative period after the Christmas season. U.S. economic growth is in line
with our projections; we anticipate U.S. GDP finishing with a level of around
3.0% for 2006.
In our view, the pace of corporate earnings growth should slow amid pressure
from high raw materials costs and moderating economic growth. However, U.S.
dollar depreciation and improving growth overseas should offer some support to
U.S. earnings.
The European economy continues to improve and appears to be at its healthiest
in six years, with business confidence showing improvement across sectors and
consumers becoming more optimistic. While business sentiment indicators have
had a tendency to over-estimate growth in recent years, broad-based
improvements across countries since 2005 is a sign that European economic
growth should continue through 2006.
The positive long-term drivers of emerging markets remain in place: improving
domestic growth and inflation stability; structural reform; debt sustainability
and favorable demographics. Together, the emerging markets' current account
surplus is at record highs while external debt as a percentage of GDP is at its
lowest since 1991.
In summary, we think that despite the existence of some inflation pressures
seen by the Federal Reserve and its counterparts in developed economies, it
seems as if interest rates will remain mostly unchanged. U.S. economic growth
is expected to remain positive, as it
2
Letter
should among the developed nations for the remainder of 2006. Any further
geopolitical issues and rising energy prices could lead to deceleration, but
not a derailment from the current healthy pace of economic growth, as
investment is expected to remain robust, benefiting from sustained internal and
international demand worldwide.
Our cautiously optimistic outlook reinforces the importance of Pioneer's
message that investors should remain diversified, take a long-term view, and
base investment decisions on economic and market fundamentals rather than on
emotion. Our investment philosophy and approach continue to be based on the use
of fundamental research to identify a range of opportunities that offer an
attractive balance of risk and reward to help Fund shareowners work toward
their long-term goals.
Respectfully,
/s/ Osbert M. Hood
Osbert M. Hood, President
Pioneer Investment Management, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
3
Pioneer Equity Income Fund
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PORTFOLIO MANAGEMENT DISCUSSION 10/31/06
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In the following discussion John Carey, Portfolio Manager of Pioneer Equity
Income Fund discusses the Fund and its performance over the past year ended
October 31, 2006.
Q: What was the performance of the portfolio over the past six and twelve
months ended October 31, 2006?
A: Pioneer Equity Income Fund posted strong investment results over the past
six and twelve months relative both to its benchmark Russell 1000 Value
Index and the Standard & Poor's 500 Index. For the six months ended October
31, 2006, the Fund showed a total return of 9.28% at net asset value,
versus total returns of 7.61% for the Russell 1000 Value Index and 6.10%
for the S&P 500 Index; and for the fiscal year as a whole, the Fund
achieved a total return of 21.61% at net asset value, versus 21.46% for the
Russell 1000 Value Index and 16.33% for the S&P 500 Index. Our performance
was also strong versus our peer funds in the Lipper Analytical Services
equity-income category, which returned an average of 6.13% and 17.76%,
respectively, for the same six and twelve months. Throughout the year, the
Fund derived its above-average performance from both sector allocations and
stock selection. As always, the dividends paid by fund shareholdings also
provided a meaningful portion of the total return.
Call 1-800-225-6292 or visit pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Looking back on stock-market fluctuations during the year, we note that
both the Russell 1000 Value Index and the S&P 500 advanced from the end of
our prior fiscal year, October 31, 2005, through the first week of May
2006, then suffered more than two months of ragged, generally declining
results, and finally, from the middle of July through October 31, 2006,
resumed their upward paths. Indeed the last three-and-a-half months of our
fiscal year witnessed a rather impressive rally in share prices, with one
of the more positively sloping trend lines we have seen. The spark
4
Pioneer Equity Income Fund
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igniting the rally seemed to be the Federal Reserve indications that
interest rates had approximately reached their peaks, at least for now. Oil
prices also broke down, and gasoline prices retreated significantly. Most
importantly, corporate earnings remained strong, and merger-and-acquisition
activity put a "floor" under the prices of numerous stocks.
Q: Can you discuss in more detail the Fund's performance in the last six
months of the fiscal year?
A: The good performance of the Fund versus the benchmark Russell 1000 Value
Index during the six months ended October 31, 2006, can be attributed in
large part to: our overweights in the above-average-performing utilities,
telecommunications-services, and consumer-staples sectors; our underweights
in the below-average-performing energy, financials, and
information-technology sectors; and our stock selection in the health-care
and industrials sectors. Our approach is always stock specific, in that we
emphasize careful study of each company represented in the portfolio, and
we start with the company rather than its industry or sector.
Nevertheless, when we find that we are drawn to a number of companies in a
particular area, we do tend to look further in that area to see if there
might be other values there. That was the case with our investments in both
utilities and telecommunications services over the past few years, and our
investments in those sectors certainly paid off handsomely in this most
recently completed half-year. Similarly, we found about a year ago that we
were beginning to struggle with the valuations of some names in the energy
and financials sectors and so began to focus more on opportunities
elsewhere in the market. Sometimes it is not just a matter of where you are
invested, but also a matter of where you are not so heavily exposed! We
want to emphasize, however, our policy of starting with the individual
companies and letting our analysis and valuation of them guide our industry
and sector focus, rather than the reverse, "top-down" approach. We
certainly do pay attention to economic forecasts, and we spend a portion of
our time, to be sure, on general industry data. But our main activities
consist of talking with the managements of companies, reading corporate
documents, comparing competing companies with each other, and also studying
companies in relation to their customers and suppliers. Together with our
full-time staff of
5
Pioneer Equity Income Fund
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PORTFOLIO MANAGEMENT DISCUSSION 10/31/06 (continued)
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professional securities analysts, we estimate that we meet with several
hundred company managements each year, and much of the rest of the time we
are reading whatever we can find that might shed further light on the
companies and their prospects of building value for our shareholders longer
term.
Among stocks that provided especially positive performance to the portfolio
in the six-month period were longstanding positions Gorman-Rupp and PACCAR.
The first, a manufacturer of heavy-duty pumps used in waste-water
treatment, among other applications, and the second, a builder of large,
Class 8 trucks here in the United States and a line of medium-duty trucks
in Europe, both benefited from the strength in industrial activity. Key,
though, was that both were prepared to benefit, as a result of their strong
management and efficient operations and high-quality products. Merck, the
pharmaceutical company, staged a powerful come-back, in stock price, as
some of the worst fears abated with respect to litigation in which the
company is involved regarding its former drug Vioxx. BellSouth continued to
perform well after AT&T announced an acquisition offer for the company -
though late in the period, the completion of the deal was put in some doubt
due to disagreement among members of the Federal Communications Commission,
which must approve the transaction.
As usual, the portfolio also had detractors from performance, most notably
our stock selections in consumer discretionary. Long-time holdings Johnson
Controls and Cedar Fair both experienced sinking spells during the period,
though, oddly, both recovered by the end of the period almost exactly to
the same share price where they began the period. Johnson Controls, which
makes automotive interiors, principally seats, felt the effects of problems
at the Big Three automakers, and Cedar Fair, an amusement-park operator,
was buffeted by investor concerns following its acquisition of the old
Paramount parks from CBS. We think that both of the companies are still
well positioned for the years ahead, and so we have continued to hold the
stocks as of this reporting period. In financials, Washington Mutual, a
major savings and loan with a widespread home-mortgage lending business,
was punished by the downturn in housing. There, too, we think that the
near-term concerns, while definitely serious, are of less interest than the
longer-term opportunities.
6
Pioneer Equity Income Fund
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Q: Did you make many changes to the portfolio over the past six months? If so,
please describe.
A: In a lively market, we were fairly active. We initiated positions in nine
securities and liquidated holdings in ten. Broad investor concerns about a
possible economic slowdown gave us the chance to buy several cyclical
companies at prices we thought attractive: E. I. du Pont de Nemours,
probably best known for its synthetic fibers, is a global chemical company
with customers across many different industries; Alcoa is a major
international producer of aluminum, with important assets in all aspects of
aluminum making; and Weyerhaeuser is one of the largest forest-products
companies. Due to their dependence on advertising revenues, likewise
considered to be cyclical, many media companies also traded at prices we
regarded as depressed. Accordingly, we added shares of CBS, the television
and radio broadcasting company, and New York Times, publisher, of course,
of its namesake newspaper, but also the publisher of other papers and
magazines and, like CBS, owner of television and radio stations. Our other
new investments included Microchip Technology, which provided us with an
opportunity to invest in the growing microcontroller industry; J.M.
Smucker, well-known for its jams and jellies, but also a burgeoning
producer of health foods including natural beverages and peanut butter; and
Embarq and Windstream, both of them traditional telephone companies spun
out from their parents - respectively, Sprint Nextel and Alltel. Each of
the additions pays a dividend and has a record of dividend payments that
inspires confidence in us that dividends have decent prospects of
continuing.
Deletions included several stocks that we thought had reached adequate
valuations and warranted our taking profits: Johnson & Johnson, T. Rowe
Price, PNC Financial, and Hewlett-Packard. We also sold KeySpan at a big
gain following its acquisition by a foreign firm. In the cases of Olin,
Tupperware, Bristol-Myers Squibb, and Comerica, we simply felt that we
could find better opportunities elsewhere. We sold the common shares of
Ford after the continuation of dividend payments grew doubtful. It is our
general practice primarily to invest in dividend-paying companies in
Pioneer Equity Income Fund, and so it is our discipline to part company
with stocks that no longer have that characteristic.
7
Pioneer Equity Income Fund
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PORTFOLIO MANAGEMENT DISCUSSION 10/31/06 (continued)
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Q: What is your outlook?
A: The sharp rally in share prices since the middle of July has somewhat
surprised, but also, naturally, pleased, us. We had thought, during the
difficult spring and early summer market, that investors were already
beginning to discount the next recession, or at least some dire turn of
events that we had not yet quite been able to visualize! Then, well, what a
difference a few soothing words from the Federal Reserve can make! Suddenly
it was off to the races again, complete with frenzied activity in IPOs
(initial public offerings), bidding battles for acquisitions, rosy earnings
reports, and tremendous, renewed interest in stocks by average investors.
It is the virtue of our policy of remaining fully invested at all times
that we take part in market advances even when we are doubtful of their
underpinnings. In any case, looking ahead from this new vantage point, we
do think it likely that the economy will slow at least somewhat over the
next 12-18 months and that the pace of corporate-earnings growth will also
decrease. Right now there is much talk and debate among the pundits of
whether it will be a "hard" or a "soft" landing. We take no view on that,
but we will continue to emphasize the stocks we feel are more
conservatively priced and that have more of the possible "negative
scenario" already built into the share price. There is never any guarantee
that we will make the right choices or come up with the correct valuations,
but it is what we aim to do so that you will have a chance at meeting your
investment goals. Thank you, as ever, for your support.
At times, the Fund's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries and sectors.
Any information in this shareholder report regarding market or economic
trends or the factors influencing the Fund's historical or future
performance are statements of the opinion of Fund management as the date of
this report. These opinions should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is
no guarantee that market forecast discussed will be realized.
8
Pioneer Equity Income Fund
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PORTFOLIO SUMMARY 10/31/06
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Portfolio Diversification
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(As a percentage of total investment portfolio)
U.S. Common Stocks 95.7%
Temporary Cash Investments 3.8%
Convertible Preferred Stocks 0.5%
Sector Distribution
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(As a percentage of equity holdings)
Financials 22.4%
Utilities 15.6%
Telecommunication Services 11.0%
Industrials 9.9%
Consumer Staples 9.4%
Consumer Discretionary 8.9%
Materials 7.6%
Health Care 6.9%
Energy 6.0%
Information Technology 2.3%
10 Largest Holdings
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(As a percentage of total equity holdings)*
1. PACCAR, Inc. 3.19%
2. Chevron Corp. 2.89
3. Merck & Co., Inc. 2.79
4. BellSouth Corp. 2.69
5. Washington Mutual, Inc. 2.56
6. AT&T Corp. 2.53
7. Questar Corp. 2.42
8. Verizon Communications, Inc. 2.22
9. Gorman-Rupp Co. 2.05
10. Alcoa, Inc. 1.98
* This list excludes temporary cash and derivative instruments. The portfolio
is actively managed, and current holdings may be different. The holdings
listed should not be considered recommendations to buy or sell any security
listed.
9
Pioneer Equity Income Fund
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PRICES AND DISTRIBUTIONS
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Net Asset Value Per Share
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Class 10/31/06 10/31/05
- ------- ---------- ----------
A $33.53 $29.23
B $33.32 $29.05
C $33.20 $28.96
R $33.73 $29.39
Y $33.68 $29.35
Distributions Per Share
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11/1/05 - 10/31/06
----------------------
Short-Term Long-Term
Class Dividends Capital Gains Capital Gains
- ------- ----------- --------------- --------------
A $0.6559 $ - $1.0823
B $0.3832 $ - $1.0823
C $0.4192 $ - $1.0823
R $0.6000 $ - $1.0823
Y $0.7745 $ - $1.0823
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INDEX DEFINITIONS
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The Russell 1000 Value Index measures the performance of large-cap U.S.
value stocks. Index returns assume reinvestment of dividends and, unlike
Fund returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in the Index.
The index defined here pertains to the "Value of $10,000 Investment" charts
on pages 11-15.
10
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 10/31/06 CLASS A SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund at public offering price,
compared to that of the Russell 1000 Value Index.
Average Annual Total Returns
(As of October 31, 2006)
Net Asset Public Offering
Period Value (NAV) Price (POP)
10 Years 10.26% 9.61%
5 Years 9.70 8.40
1 Year 21.61 14.64
[The data below is represented by a mountain chart]
10/96 9425 10000
12291 13319
10/98 14589 15293
16231 17821
10/00 17352 18804
15754 16574
10/02 13766 14913
15953 18324
10/04 18558 21156
20576 23666
10/06 25023 28744
- --------------------------------
Call 1-800-225-6292 or visit pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
NAV results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. POP returns
reflect deduction of maximum 5.75% sales charge. All results are historical
and assume the reinvestment of dividends and capital gains. Other share
classes are available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during
the periods shown. Without such waivers Fund performance would be lower.
Waivers may not be in effect for all funds. Certain fee waivers are
contractual through a specified period. Otherwise, fee waivers can be
rescinded at any time. See the prospectus and financial statements for more
information.
The performance table and graph do not reflect the deduction of fees and
taxes that a shareowner would pay on Fund distributions or the redemption
of Fund shares.
11
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 10/31/06 CLASS B SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund, compared to that of the
Russell 1000 Value Index.
Average Annual Total Returns
(As of October 31, 2006)
Period If Held If Redeemed
10 Years 9.36% 9.36%
5 Years 8.76 8.76
1 Year 20.55 16.55
[The data below is represented by a mountain chart]
10/96 10000 10000
12935 13319
10/98 15241 15293
16831 17821
10/00 17847 18804
16080 16574
10/02 13936 14913
16013 18324
10/04 18468 21156
20295 23666
10/06 24467 28744
- --------------------------------
Call 1-800-225-6292 or visit pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
"If Held" results represent the percent change in net asset value per
share. Returns would have been lower had sales charges been reflected. "If
Redeemed" returns reflect the deduction of applicable contingent deferred
sales charge (CDSC). Effective December 1, 2004, the period during which a
CDSC is applied to withdrawals was shortened to 5 years. The maximum CDSC
for Class B shares continues to be 4%. For more complete information,
please see the prospectus for details. Note: Shares purchased prior to
December 1, 2004 remain subject to the CDSC in effect at the time you
purchased those shares. For performance information for shares purchased
prior to December 1, 2004, please visit pioneerinvestments.com/bshares.
All results are historical and assume the reinvestment of dividends and
capital gains. Other share classes are available for which performance and
expenses will differ.
Performance results reflect any applicable expense waivers in effect during
the periods shown. Without such waivers Fund performance would be lower.
Waivers may not be in effect for all funds. Certain fee waivers are
contractual through a specified period. Otherwise, fee waivers can be
rescinded at any time. See the prospectus and financial statements for more
information.
The performance table and graph do not reflect the deduction of fees and
taxes that a shareowner would pay on Fund distributions or the redemption
of Fund shares.
12
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 10/31/06 CLASS C SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund, compared to that of the
Russell 1000 Value Index.
Average Annual Total Returns
(As of October 31, 2006)
Period If Held If Redeemed
10 Years 9.35% 9.35%
5 Years 8.80 8.80
1 Year 20.66 20.66
[The data below is represented by a mountain chart]
10/96 10000 10000
12932 13319
10/98 15234 15293
16811 17821
10/00 17810 18804
16026 16574
10/02 13885 14913
15958 18324
10/04 18416 21156
20253 23666
10/06 24437 28744
- --------------------------------
Call 1-800-225-6292 or visit pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Class C shares held for less than one year are also subject to a 1%
contingent deferred sales charge (CDSC). The performance of Class C shares
does not reflect the 1% front-end sales charge in effect prior to February
1, 2004. If you paid a 1% sales charge, your returns would be lower than
those shown above. "If Held" results represent the percent change in net
asset value per share. Returns would have been lower had sales charges been
reflected. All results are historical and assume the reinvestment of
dividends and capital gains. Other share classes are available for which
performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during
the periods shown. Without such waivers Fund performance would be lower.
Waivers may not be in effect for all funds. Certain fee waivers are
contractual through a specified period. Otherwise, fee waivers can be
rescinded at any time. See the prospectus and financial statements for more
information.
The performance table and graph do not reflect the deduction of fees and
taxes that a shareowner would pay on Fund distributions or the redemption
of Fund shares.
13
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 10/31/06 CLASS R SHARES
- --------------------------------------------------------------------------------
Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund, compared to that of the
Russell 1000 Value Index.
Average Annual Total Returns
(As of October 31, 2006)
Period If Held If Redeemed
10 Years 9.84% 9.84%
5 Years 9.42 9.42
1 Year 21.41 21.41
[The data below is represented by a mountain chart]
10/96 10000 10000
12975 13319
10/98 15323 15293
16964 17821
10/00 18045 18804
16301 16574
10/02 14173 14913
16381 18324
10/04 19038 21156
21063 23666
10/06 25572 28744
- --------------------------------
Call 1-800-225-6292 or visit pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Class R shares are not subject to sales charges and are available for
limited groups of eligible investors, including retirement plan investors.
The performance of Class R shares for the period prior to the commencement
of operations of Class R shares on April 1, 2003 is based on the
performance of Class A shares, reduced to reflect the higher distribution
and service fees of Class R shares. For the period after April 1, 2003, the
actual performance of Class R shares is reflected. Class R shares are not
subject to sales charges and are available for limited groups of eligible
investors, including institutional investors. All results are historical
and assume the reinvestment of dividends and capital gains. Other share
classes are available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during
the periods shown. Without such waivers Fund performance would be lower.
Waivers may not be in effect for all funds. Certain fee waivers are
contractual through a specified period. Otherwise, fee waivers can be
rescinded at any time. See the prospectus and financial statements for more
information.
The performance table and graph do not reflect the deduction of fees and
taxes that a shareowner would pay on Fund distributions or the redemption
of Fund shares.
14
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 10/31/06 CLASS Y SHARES
- --------------------------------------------------------------------------------
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund, compared to that of the
Russell 1000 Value Index.
Average Annual Total Returns
(As of October 31, 2006)
Period If Held If Redeemed
10 Years 10.64% 10.64%
5 Years 10.18 10.18
1 Year 22.10 22.10
[The data below is represented by a mountain chart]
10/96 10000 10000
13040 13319
10/98 15499 15293
17308 17821
10/00 18578 18804
16927 16574
10/02 14855 14913
17298 18324
10/04 20219 21156
22506 23666
10/06 27479 28744
- --------------------------------
Call 1-800-225-6292 or visit pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Performance for periods prior to the inception of Y shares reflects the NAV
performance of the Fund's Class A shares. The performance does not reflect
differences in expenses, including the Rule 12b-1 fees applicable to Class
A shares. Since fees for Class A shares are generally higher than those of
Class Y shares, the performance shown for Class Y shares prior to their
inception would have been higher. Class A shares are used as a proxy from
7/25/90 to 7/2/98. Class Y shares are not subject to sales charges and are
available for limited groups of eligible investors, including institutional
investors. All results are historical and assume the reinvestment of
dividends and capital gains. Other share classes are available for which
performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during
the periods shown. Without such waivers Fund performance would be lower.
Waivers may not be in effect for all funds. Certain fee waivers are
contractual through a specified period. Otherwise, fee waivers can be
rescinded at any time. See the prospectus and financial statements for more
information.
The performance table and graph do not reflect the deduction of fees and
taxes that a shareowner would pay on Fund distributions or the redemption
of Fund shares.
15
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
COMPARING ONGOING FUND EXPENSES
- --------------------------------------------------------------------------------
As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value [divided by] $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Equity Income Fund
Based on actual returns from May 1, 2006 through October 31, 2006.
Share Class A B C R Y
- -------------------------------------------------------------------------------------------
Beginning Account $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Value On 5/1/06
Ending Account $1,092.83 $1,087.80 $1,088.50 $1,091.23 $1,094.87
Value On 10/31/06
Expenses Paid $ 5.43 $ 10.00 $ 9.58 $ 6.43 $ 3.43
During Period*
* Expenses are equal to the Fund's annualized expense ratio of 1.03%, 1.90%,
1.82%, 1.22% and 0.65%, for Class A, Class B, Class C, Class R and Class Y
shares, respectively, multiplied by the average account value over the
period, multiplied by 184/365 (to reflect the one-half year period).
16
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the
5% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Equity Income Fund
Based on a hypothetical 5% return per year before expenses, reflect
ing the period from May 1, 2006 through October 31, 2006.
Share Class A B C R Y
- -------------------------------------------------------------------------------------------
Beginning Account $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Value On 5/1/06
Ending Account $1,020.01 $1,015.63 $1,016.03 $1,019.06 $1,021.93
Value On 10/31/06
Expenses Paid $ 5.24 $ 9.65 $ 9.25 $ 6.21 $ 3.31
During Period*
* Expenses are equal to the Fund's annualized expense ratio of 1.03%, 1.90%,
1.82%, 1.22% and 0.65%, for Class A, Class B, Class C, Class R and Class Y
shares, respectively, multiplied by the average account value over the
period, multiplied by 184/365 (to reflect the one-half year period).
17
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/06
- --------------------------------------------------------------------------------
Shares Value
CONVERTIBLE PREFERRED STOCKS - 0.5%
Automobiles & Components - 0.4%
Automobile Manufacturers - 0.4%
150,000 Ford Cap Trust, 6.5%, 1/15/32 $ 5,169,000
--------------
Total Automobiles & Components $ 5,169,000
--------------
Pharmaceuticals & Biotechnology - 0.1%
Pharmaceuticals - 0.1%
15,745 Schering-Plough Corp., 6.0%, 9/14/07 $ 865,975
--------------
Total Pharmaceuticals & Biotechnology $ 865,975
--------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $6,010,850) $ 6,034,975
--------------
COMMON STOCKS - 98.7%
Energy - 5.9%
Integrated Oil & Gas - 5.9%
501,400 Chevron Corp. $ 33,694,080
317,560 ConocoPhillips 19,129,814
233,878 Exxon Mobil Corp. 16,703,567
--------------
$ 69,527,461
--------------
Total Energy $ 69,527,461
--------------
Materials - 7.6%
Aluminum - 2.0%
800,000 Alcoa, Inc. $ 23,128,000
--------------
Diversified Chemical - 2.1%
500,000 Dow Chemical Co. $ 20,395,000
100,000 E.I. du Pont de Nemours and Co. 4,580,000
--------------
$ 24,975,000
--------------
Diversified Metals & Mining - 0.6%
220,000 Compass Minerals International, Inc. $ 6,809,000
--------------
Forest Products - 0.8%
150,000 Weyerhaeuser Co. $ 9,538,500
--------------
Industrial Gases - 1.2%
200,000 Air Products & Chemicals, Inc. $ 13,934,000
--------------
18 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Specialty Chemicals - 0.9%
400,000 Valspar Corp. $ 10,716,000
--------------
Total Materials $ 89,100,500
--------------
Capital Goods - 9.0%
Aerospace & Defense - 0.9%
170,000 United Technologies Corp. $ 11,172,400
--------------
Construction & Farm Machinery & Heavy Trucks - 3.9%
100,000 Deere & Co. $ 8,513,000
627,937 PACCAR, Inc. 37,180,150
--------------
$ 45,693,150
--------------
Electrical Component & Equipment - 1.3%
175,000 Emerson Electric Co. $ 14,770,000
--------------
Industrial Machinery - 2.9%
632,446 Gorman-Rupp Co.+ $ 23,881,161
350,000 The Timken Co. 10,517,500
--------------
$ 34,398,661
--------------
Total Capital Goods $ 106,034,211
--------------
Commercial Services & Supplies - 0.8%
Office Services & Supplies - 0.8%
240,000 Mine Safety Appliances Co. (b) $ 9,076,800
--------------
Total Commercial Services & Supplies $ 9,076,800
--------------
Automobiles & Components - 1.8%
Auto Parts & Equipment - 1.8%
255,600 Johnson Controls, Inc. $ 20,841,624
--------------
Total Automobiles & Components $ 20,841,624
--------------
Consumer Services - 1.8%
Leisure Facilities - 1.5%
631,200 Cedar Fair, L.P. (b) $ 17,320,128
--------------
Specialized Consumer Services - 0.3%
300,000 Servicemaster Co. $ 3,399,000
--------------
Total Consumer Services $ 20,719,128
--------------
Media - 3.2%
Broadcasting & Cable Television - 0.7%
300,000 CBS Corp. (Class B) $ 8,682,000
--------------
The accompanying notes are an integral part of these financial statements. 19
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/06 (continued)
- --------------------------------------------------------------------------------
Shares Value
Publishing - 2.5%
320,000 McGraw-Hill Co., Inc. $ 20,534,400
350,000 New York Times Co. (b) 8,459,500
--------------
$ 28,993,900
--------------
Total Media $ 37,675,900
--------------
Retailing - 1.7%
Department Stores - 0.6%
153,944 Federated Department Stores, Inc. $ 6,759,681
--------------
Distributors - 1.1%
280,000 Genuine Parts Co. $ 12,745,600
--------------
Total Retailing $ 19,505,281
--------------
Food, Beverage & Tobacco - 6.6%
Packaged Foods & Meats - 6.0%
520,000 Campbell Soup Co. $ 19,437,600
265,000 General Mills, Inc. 15,057,300
522,550 H.J. Heinz Co., Inc. 22,030,708
180,000 Kellogg Co. 9,055,800
100,000 The J.M. Smucker Co. 4,900,000
--------------
$ 70,481,408
--------------
Soft Drinks - 0.6%
116,300 PepsiCo, Inc. $ 7,378,072
--------------
Total Food, Beverage & Tobacco $ 77,859,480
--------------
Household & Personal Products - 2.7%
Household Products - 2.7%
188,800 Clorox Co. $ 12,188,928
306,000 Colgate-Palmolive Co. 19,574,820
--------------
$ 31,763,748
--------------
Total Household & Personal Products $ 31,763,748
--------------
Pharmaceuticals & Biotechnology - 6.7%
Pharmaceuticals - 6.7%
306,600 Abbott Laboratories $ 14,566,566
240,000 Eli Lilly & Co. 13,442,400
715,400 Merck & Co., Inc. 32,493,468
20 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Pharmaceuticals - (continued)
700,000 Pfizer, Inc. $ 18,655,000
--------------
$ 79,157,434
--------------
Total Pharmaceuticals & Biotechnology $ 79,157,434
--------------
Banks - 12.1%
Diversified Banks - 3.9%
418,700 U.S. Bancorp $ 14,168,808
293,166 Wachovia Corp. 16,270,713
431,324 Wells Fargo & Co. 15,652,748
--------------
$ 46,092,269
--------------
Regional Banks - 5.7%
250,000 First Horizon National Corp. $ 9,830,000
358,600 National City Corp. 13,357,850
230,000 Regions Financial Corp. 8,728,500
275,000 SunTrust Banks, Inc. 21,722,250
400,000 Whitney Holding Corp. 13,064,000
--------------
$ 66,702,600
--------------
Thrifts & Mortgage Finance - 2.5%
705,000 Washington Mutual, Inc. $ 29,821,500
--------------
Total Banks $ 142,616,369
--------------
Diversified Financials - 3.0%
Asset Management & Custody Banks - 1.6%
416,000 Eaton Vance Corp. $ 12,912,640
100,000 State Street Corp. 6,423,000
--------------
$ 19,335,640
--------------
Investment Banking & Brokerage - 0.9%
175,000 A.G. Edwards, Inc. $ 9,983,750
--------------
Diversified Financial Services - 0.5%
100,000 Bank of America Corp. $ 5,387,000
--------------
Total Diversified Financials $ 34,706,390
--------------
Insurance - 4.5%
Life & Health Insurance - 1.4%
251,484 Lincoln National Corp. $ 15,921,452
--------------
The accompanying notes are an integral part of these financial statements. 21
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/06 (continued)
- --------------------------------------------------------------------------------
Shares Value
Property & Casualty Insurance - 3.1%
410,200 Chubb Corp. $ 21,802,130
259,300 Safeco Corp. 15,088,667
--------------
$ 36,890,797
--------------
Total Insurance $ 52,812,249
--------------
Real Estate - 2.7%
Diversified Real Estate Investment Trusts - 0.8%
200,000 Liberty Property Trust $ 9,640,000
--------------
Residential Real Estate Investment Trusts - 0.8%
150,000 Archstone-Smith Trust $ 9,031,500
--------------
Retail Real Estate Investment Trusts - 1.1%
300,000 Kimco Realty Corp. $ 13,329,000
--------------
Total Real Estate $ 32,000,500
--------------
Software & Services - 0.8%
Data Processing & Outsourced Services - 0.8%
200,000 Automatic Data Processing, Inc. $ 9,888,000
--------------
Total Software & Services $ 9,888,000
--------------
Semiconductors - 1.4%
Semiconductors - 1.4%
500,000 Microchip Technology $ 16,465,000
--------------
Total Semiconductors $ 16,465,000
--------------
Telecommunication Services - 10.9%
Integrated Telecommunication Services - 10.1%
862,906 AT&T Corp. $ 29,554,531
696,400 BellSouth Corp. 31,407,640
1,000,000 Citizens Utilities Co. (Class B) 14,660,000
100,000 Embarq Corp. 4,835,000
700,000 Verizon Communications, Inc. 25,900,000
890,847 Windstream Corp. 12,222,421
--------------
$ 118,579,592
--------------
Wireless Telecommunication Services - 0.8%
184,585 Alltel Corp. $ 9,840,226
--------------
Total Telecommunication Services $ 128,419,818
--------------
22 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Utilities - 15.5%
Electric Utilities - 2.3%
354,400 Great Plains Energy, Inc. $ 11,532,176
440,000 Southern Co. 16,016,000
--------------
$ 27,548,176
--------------
Gas Utilities - 6.0%
326,500 AGL Resources, Inc. $ 12,243,750
350,000 Atmos Energy Corp. 10,755,500
460,000 Equitable Resources, Inc. 18,639,200
346,600 Questar Corp. 28,240,967
--------------
$ 69,879,417
--------------
Multi-Utilities - 7.2%
285,000 Ameren Corp. (b) $ 15,418,500
275,000 Consolidated Edison, Inc. 13,296,250
640,000 Duke Energy Corp. 20,249,600
380,000 NSTAR 13,220,200
529,000 PG&E Corp. 22,821,060
--------------
$ 85,005,610
--------------
Total Utilities $ 182,433,203
--------------
TOTAL COMMON STOCKS
(Cost $801,765,958) $1,160,603,096
--------------
Principal
Amount
TEMPORARY CASH INVESTMENTS - 3.9%
Repurchase Agreement - 0.6%
$7,200,000 UBS Warburg, Inc., 5.22%, dated 10/31/06,
repurchase price of $7,200,000 plus accrued
interest on 11/1/06 collateralized by $7,529,000
U.S. Treasury Bill, 0.0%, 4/26/07 $ 7,200,000
--------------
The accompanying notes are an integral part of these financial statements. 23
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/06 (continued)
- --------------------------------------------------------------------------------
Shares Value
Security Lending Collateral - 3.3%
38,310,949 Securities Lending Investment Fund, 5.22% $ 38,310,949
--------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $45,510,949) $ 45,510,949
--------------
TOTAL INVESTMENT IN SECURITIES - 103.1%
(Cost $853,287,757) (a) $1,212,149,020
--------------
OTHER ASSETS AND LIABILITIES - (3.1)% $ (36,763,882)
--------------
TOTAL NET ASSETS - 100.0% $1,175,385,138
==============
+ Investment held by the Fund representing 5% or more of the voting stock of
such company.
(a) At October 31, 2006, the net unrealized gain on investments based on cost
for federal income tax purposes of $846,291,396 was as follows:
Aggregate gross unrealized gain for all investments in which there is
an excess of value over tax cost $369,542,528
Aggregate gross unrealized loss for all investments in which there is
an excess of tax cost over value (3,684,904)
------------
Net unrealized gain $365,857,624
============
(b) At October 31, 2006, the following securities were out on loan:
Shares Security Value
282,150 Ameren Corp. $15,264,315
288,100 Cedar Fair, L.P. 7,905,464
150,312 Mine Safety Appliances Co. 5,684,800
346,465 New York Times Co. 8,374,059
-----------
Total $37,228,638
===========
Purchases and sales of securities (excluding temporary cash investments) for
the year ended October 31, 2006 aggregated $349,556,768 and $326,494,543,
respectively.
24 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 10/31/06
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities of unaffiliated issuers, at value
(including securities loaned of $37,228,638)
(cost $845,381,261) $1,188,267,859
Investment in securities of affiliated issuers, at value
(cost $7,906,496) 23,881,161
--------------
Total Investment in securities, at value
(cost $853,287,757) $1,212,149,020
Receivables -
Fund shares sold 2,147,171
Dividends and interest 2,135,125
Other 70,243
--------------
Total assets $1,216,501,559
--------------
LIABILITIES:
Payables -
Fund shares repurchased $ 1,539,472
Upon return of securities loaned 38,310,949
Due to bank 996,048
Due to affiliates 186,402
Accrued expenses 83,550
--------------
Total liabilities $ 41,116,421
--------------
NET ASSETS:
Paid-in capital $ 705,763,273
Undistributed net investment income 8,323,080
Accumulated net realized gain on investments 102,437,522
Net unrealized gain on investments 358,861,263
--------------
Total net assets $1,175,385,138
==============
NET ASSET VALUE PER SHARE:
No par value (unlimited number of shares authorized)
Class A (based on $840,639,944/25,074,704 shares) $ 33.53
==============
Class B (based on $155,732,555/4,673,254 shares) $ 33.32
==============
Class C (based on $139,914,691/4,214,125 shares) $ 33.20
==============
Class R (based on $26,139,619/774,859 shares) $ 33.73
==============
Class Y (based on $12,958,329/384,757 shares) $ 33.68
==============
MAXIMUM OFFERING PRICE:
Class A ($33.53 [divided by] 94.25%) $ 35.58
==============
The accompanying notes are an integral part of these financial statements. 25
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended 10/31/06
INVESTMENT INCOME:
Dividends (including income from affiliated issuers
of $354,170) $33,955,501
Interest 154,031
Income from securities loaned, net 14,783
-----------
Total investment income $ 34,124,315
------------
EXPENSES:
Management fees $ 6,174,405
Transfer agent fees and expenses
Class A 1,060,338
Class B 400,176
Class C 232,564
Class R 11,786
Class Y 351
Distribution fees
Class A 1,809,256
Class B 1,525,027
Class C 1,266,109
Class R 79,712
Administrative reimbursements 201,260
Custodian fees 36,730
Registration fees 35,630
Professional fees 50,477
Printing expense 67,817
Fees and expenses of nonaffiliated trustees 26,851
Miscellaneous 43,271
-----------
Total expenses $ 13,021,760
Less fees paid indirectly (81,733)
------------
Net expenses $ 12,940,027
------------
Net investment income $ 21,184,288
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $102,425,371
------------
Change in net unrealized gain on investments $ 77,803,582
------------
Net gain on investments $180,228,953
------------
Net increase in net assets resulting from operations $201,413,241
============
26 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Years Ended 10/31/06 and 10/31/05, respectively
Year Ended Year Ended
10/31/06 10/31/05
FROM OPERATIONS:
Net investment income $ 21,184,288 $ 17,809,300
Net realized gain on investments 102,425,371 39,019,185
Change in net unrealized gain on investments 77,803,582 36,319,178
-------------- --------------
Net increase in net assets resulting from
operations $ 201,413,241 $ 93,147,663
-------------- --------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.66 and $0.60 per share, respectively) $ (15,462,450) $ (13,541,645)
Class B ($0.38 and $0.34 per share, respectively) (1,944,168) (2,040,384)
Class C ($0.42 and $0.38 per share, respectively) (1,749,386) (1,605,969)
Class R ($0.60 and $0.56 per share, respectively) (299,879) (101,927)
Class Y ($0.77 and $0.71 per share, respectively) (258,099) (109,218)
Net realized gain:
Class A ($1.08 and $0.00 per share, respectively) (24,622,115) -
Class B ($1.08 and $0.00 per share, respectively) (5,874,065) -
Class C ($1.08 and $0.00per share, respectively) (4,511,394) -
Class R ($1.08 and $0.00 per share, respectively) (389,136) -
Class Y ($1.08 and $0.00 per share, respectively) (279,331) -
-------------- --------------
Total distributions to shareowners $ (55,390,023) $ (17,399,143)
-------------- --------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 232,305,517 $ 203,260,260
Reinvestment of distributions 47,432,006 14,828,754
Cost of shares repurchased (215,122,539) (207,178,038)
-------------- --------------
Net increase in net assets resulting from
Fund share transactions $ 64,614,984 $ 10,910,976
-------------- --------------
Net increase in net assets $ 210,638,202 $ 86,659,496
NET ASSETS:
Beginning of year 964,746,936 878,087,440
-------------- --------------
End of year $1,175,385,138 $ 964,746,936
============== ==============
Undistributed net investment income $ 8,323,080 $ 6,886,711
============== ==============
The accompanying notes are an integral part of these financial statements. 27
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
'06 Shares '06 Amount '05 Shares '05 Amount
CLASS A
Shares sold 5,064,623 $ 157,436,154 4,282,411 $ 123,686,391
Reinvestment of distributions 1,229,591 36,136,130 414,127 12,028,807
Less shares repurchased (4,093,823) (125,012,223) (4,147,670) (120,070,812)
---------- -------------- ---------- --------------
Net increase 2,200,391 $ 68,560,061 548,868 $ 15,644,386
========== ============== ========== ==============
CLASS B
Shares sold 785,056 $ 24,209,812 1,257,967 $ 36,136,421
Reinvestment of distributions 216,181 6,261,964 56,959 1,643,334
Less shares repurchased (1,762,703) (53,369,074) (1,908,424) (54,838,775)
---------- -------------- ---------- --------------
Net decrease (761,467) $ (22,897,298) (593,498) $ (17,059,020)
========== ============== ========== ==============
CLASS C
Shares sold 794,660 $ 24,318,201 1,096,405 $ 31,260,204
Reinvestment of distributions 142,157 4,112,893 36,483 1,050,002
Less shares repurchased (917,325) (27,687,216) (1,052,603) (30,182,180)
---------- -------------- ---------- --------------
Net increase 19,492 $ 743,878 80,285 $ 2,128,026
========== ============== ========== ==============
CLASS R
Shares sold 454,753 $ 14,219,649 294,456 $ 8,655,038
Reinvestment of distributions 21,704 645,323 3,019 88,610
Less shares repurchased (49,032) (1,502,282) (26,548) (776,777)
---------- -------------- ---------- --------------
Net increase 427,426 $ 13,362,690 270,927 $ 7,966,871
========== ============== ========== ==============
CLASS Y
Shares sold 398,862 $ 12,121,701 117,705 $ 3,522,206
Reinvestment of distributions 9,332 275,696 608 18,001
Less shares repurchased (248,665) (7,551,744) (45,501) (1,309,494)
---------- -------------- ---------- --------------
Net increase 159,529 $ 4,845,653 72,812 $ 2,230,713
========== ============== ========== ==============
28 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
10/31/06 10/31/05 10/31/04 10/31/03 10/31/02
CLASS A
Net asset value, beginning of period $ 29.23 $ 26.91 $ 23.57 $ 20.80 $ 24.28
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations:
Net investment income $ 0.68 $ 0.61 $ 0.52 $ 0.47 $ 0.49
Net realized and unrealized gain (loss) on investments 5.36 2.31 3.30 2.78 (3.50)
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 6.04 $ 2.92 $ 3.82 $ 3.25 $ (3.01)
Distributions to shareowners:
Net investment income (0.66) (0.60) (0.48) (0.48) (0.47)
Net realized gain (1.08) - - - -
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 4.30 $ 2.32 $ 3.34 $ 2.77 $ (3.48)
-------- -------- -------- -------- --------
Net asset value, end of period $ 33.53 $ 29.23 $ 26.91 $ 23.57 $ 20.80
======== ======== ======== ======== ========
Total return* 21.61% 10.87% 16.33% 15.89% (12.62)%
Ratio of net expenses to average net assets+ 1.04% 1.06% 1.08% 1.17% 1.11%
Ratio of net investment income to average net assets+ 2.27% 2.11% 2.07% 2.24% 2.06%
Portfolio turnover rate 32% 14% 22% 15% 10%
Net assets, end of period (in thousands) $840,640 $668,556 $600,835 $501,283 $409,553
Ratios with reduction for fees paid indirectly:
Net expenses 1.03% 1.06% 1.08% 1.17% 1.10%
Net investment income 2.28% 2.11% 2.07% 2.24% 2.07%
* Assumes initial investment at net asset value at the beginning of each
year, reinvestment of all distributions, and the complete redemption of the
investment at net asset value at the end of each period.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
29
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
10/31/06 10/31/05 10/31/04 10/31/03 10/31/02
CLASS B
Net asset value, beginning of period $ 29.05 $ 26.75 $ 23.42 $ 20.67 $ 24.14
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations:
Net investment income $ 0.47 $ 0.38 $ 0.35 $ 0.32 $ 0.31
Net realized and unrealized gain (loss) on investments 5.26 2.26 3.23 2.73 (3.50)
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 5.73 $ 2.64 $ 3.58 $ 3.05 $ (3.19)
Distributions to shareowners:
Net investment income (0.38) (0.34) (0.25) (0.30) (0.28)
Net realized gain (1.08) - - - -
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 4.27 $ 2.30 $ 3.33 $ 2.75 $ (3.47)
-------- -------- -------- -------- --------
Net asset value, end of period $ 33.32 $ 29.05 $ 26.75 $ 23.42 $ 20.67
======== ======== ======== ======== ========
Total return* 20.55% 9.89% 15.34% 14.90% (13.34)%
Ratio of net expenses to average net assets+ 1.91% 1.93% 1.95% 2.02% 1.91%
Ratio of net investment income to average net assets+ 1.44% 1.24% 1.21% 1.41% 1.25%
Portfolio turnover rate 32% 14% 22% 15% 10%
Net assets, end of period (in thousands) $155,733 $157,889 $161,275 $170,283 $174,334
Ratios with reduction for fees paid indirectly:
Net expenses 1.90% 1.93% 1.95% 2.02% 1.90%
Net investment income 1.45% 1.24% 1.21% 1.41% 1.26%
* Assumes initial investment at net asset value at the beginning of each
year, reinvestment of all distributions, and the complete redemption of the
investment at net asset value at the end of each period.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
30
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
10/31/06 10/31/05 10/31/04 10/31/03 10/31/02
CLASS C
Net asset value, beginning of period $ 28.96 $ 26.68 $ 23.37 $ 20.63 $ 24.08
-------- -------- -------- ------- --------
Net increase (decrease) from investment operations:
Net investment income $ 0.45 $ 0.38 $ 0.29 $ 0.24 $ 0.26
Net realized and unrealized gain (loss) on investments 5.29 2.28 3.29 2.81 (3.45)
-------- -------- -------- ------- --------
Net increase (decrease) from investment operations $ 5.74 $ 2.66 $ 3.58 $ 3.05 $ (3.19)
Distributions to shareowners:
Net investment income (0.42) (0.38) (0.27) (0.31) (0.26)
Net realized gain (1.08) - - - -
-------- -------- -------- ------- --------
Net increase (decrease) in net asset value $ 4.24 $ 2.28 $ 3.31 $ 2.74 $ (3.45)
-------- -------- -------- ------- --------
Net asset value, end of period $ 33.20 $ 28.96 $ 26.68 $ 23.37 $ 20.63
======== ======== ======== ======== ========
Total return* 20.66% 9.98% 15.40% 14.93% (13.37)%
Ratio of net expenses to average net assets+ 1.83% 1.86% 1.89% 2.00% 1.99%
Ratio of net investment income to average net assets+ 1.49% 1.31% 1.26% 1.36% 1.19%
Portfolio turnover rate 32% 14% 22% 15% 10%
Net assets, end of period (in thousands) $139,915 $121,479 $109,787 $82,979 $ 42,903
Ratios with reduction for fees paid indirectly:
Net expenses 1.82% 1.86% 1.89% 2.00% 1.98%
Net investment income 1.50% 1.31% 1.26% 1.36% 1.20%
* Assumes initial investment at net asset value at the beginning of each
year, reinvestment of all distributions, and the complete redemption of the
investment at net asset value at the end of each period.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
31
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
4/1/03 (a)
Year Ended Year Ended Year Ended to
10/31/06 10/31/05 10/31/04 10/31/03
CLASS R
Net asset value, beginning of period $ 29.39 $ 27.08 $ 23.71 $ 19.97
------- ------- ------- --------
Net increase from investment operations:
Net investment income $ 0.51 $ 0.39 $ 0.44 $ 0.23
Net realized and unrealized gain on investments 5.51 2.48 3.38 3.73
------- ------- ------- --------
Net increase from investment operations $ 6.02 $ 2.87 $ 3.82 $ 3.96
Distributions to shareowners:
Net investment income (0.60) (0.56) (0.45) (0.22)
Net realized gain (1.08) - - -
------- ------- ------- --------
Net increase in net asset value $ 4.34 $ 2.31 $ 3.37 $ 3.74
------- ------- ------- --------
Net asset value, end of period $ 33.73 $ 29.39 $ 27.08 $ 23.71
======= ======= ======= ========
Total return* 21.41% 10.64% 16.23% 19.87%(b)
Ratio of net expenses to average net assets+ 1.23% 1.26% 1.17% 1.21%**
Ratio of net investment income to average net assets+ 2.00% 1.86% 1.98% 0.97%**
Portfolio turnover rate 32% 14% 22% 15%
Net assets, end of period (in thousands) $26,140 $10,213 $ 2,072 $ 1,098
Ratios with reduction for fees paid indirectly:
Net expenses 1.22% 1.26% 1.17% 1.21%**
Net investment income 2.01% 1.86% 1.98% 0.97%**
(a) Class R shares were first publicly offered on April 1, 2003.
(b) Not annualized.
* Assumes initial investment at net asset value at the beginning of each
year, reinvestment of all distributions, and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
32
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
10/31/06 10/31/05 10/31/04 10/31/03 10/31/02
CLASS Y
Net asset value, beginning of period $ 29.35 $ 27.02 $ 23.65 $ 20.85 $ 24.33
------- ------- ------- ------- --------
Net increase (decrease) from investment operations:
Net investment income $ 0.73 $ 0.63 $ 0.67 $ 0.52 $ 0.55
Net realized and unrealized gain (loss) on investments 5.45 2.41 3.29 2.85 (3.46)
------- ------- ------- ------- --------
Net increase (decrease) from investment operations $ 6.18 $ 3.04 $ 3.96 $ 3.37 $ (2.91)
Distributions to shareowners:
Net investment income (0.77) (0.71) (0.59) (0.57) (0.57)
Net realized gain (1.08) - - - -
------- ------- ------- ------- --------
Net increase (decrease) in net asset value $ 4.33 $ 2.33 $ 3.37 $ 2.80 $ (3.48)
------- ------- ------- ------- --------
Net asset value, end of period $ 33.68 $ 29.35 $ 27.02 $ 23.65 $ 20.85
======= ======= ======= ======= ========
Total return* 22.10% 11.31% 16.88% 16.45% (12.24)%
Ratio of net expenses to average net assets+ 0.65% 0.66% 0.64% 0.71% 0.69%
Ratio of net investment income to average net assets+ 2.61% 2.51% 2.43% 2.66% 2.49%
Portfolio turnover rate 32% 14% 22% 15% 10%
Net assets, end of period (in thousands) $12,956 $ 6,611 $ 4,119 $ 5,017 $ 2,842
Ratios with reduction for fees paid indirectly:
Net expenses 0.65% 0.66% 0.64% 0.71% 0.68%
Net investment income 2.61% 2.51% 2.43% 2.66% 2.50%
* Assumes initial investment at net asset value at the beginning of each
year, reinvestment of all distributions, and the complete redemption of the
investment at net asset value at the end of each period.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
33
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/06
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Equity Income Fund (the Fund) is a Delaware statutory trust registered
under the Investment Company Act of 1940 as a diversified, open-end management
investment company. The investment objectives of the Fund are current income and
long-term growth of capital from a portfolio consisting primarily of income
producing equity securities of U.S. corporations. Information regarding the
Fund's principal investment risks is contained in the Fund's prospectuses.
Please refer to those documents when considering the Fund's investment risks.
The Fund offers five classes of shares - Class A, Class B, Class C, Class R and
Class Y shares. Each class of shares represents an interest in the same
portfolio of investments of the Fund and have equal rights to voting,
redemptions, dividends and liquidation, except that each class of shares can
bear different transfer agent and distribution fees and have exclusive voting
rights with respect to the distribution plans that have been adopted by Class
A, Class B, Class C, and Class R shareowners, respectively. There is no
distribution plan for Class Y shareowners.
The Fund's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Fund to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses and gains and losses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements, which are consistent with those policies generally
accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Fund is computed once daily, on each day the New York Stock Exchange
(NYSE) is open, as of close of regular trading on the NYSE. In computing
the net asset value, securities are valued at the last sale price on the
principal exchange where they are traded. Securities that have not traded
on the date of valuation, or securities for which sale prices are not
generally reported,
34
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not readily available are valued at their
fair values as determined by, or under the direction of, the Board of
Trustees. Trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. The Fund also may use the fair value of a
security, including a non-U.S. security, when the closing market price on
the principal exchange where the security is traded no longer reflects the
value of the security. At October 31, 2006, there were no securities fair
valued. Temporary cash investments are valued at amortized cost.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Fund becomes aware of the ex-dividend
data in the exercise of reasonable diligence. Dividend and interest income
is recorded on the accrual basis, net of unrecoverable foreign taxes
withheld at the applicable country rates.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the sources of the Fund's distributions may be
shown in the accompanying financial statements as either from or in excess
of net investment income or net realized gain on investment transactions,
or from paid-in capital, depending on the type of book/tax differences that
may exist.
At October 31, 2006, the Fund has reclassified $13,937 to decrease
undistributed net investment income and $13,937 to
35
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/06 (continued)
- --------------------------------------------------------------------------------
increase accumulated net realized gain on investments to reflect permanent
book/tax differences. The reclassification has no impact on the net assets
of the Fund and is designed to present the Fund's capital accounts on a tax
basis.
The tax character of distributions paid during the years ended October 31,
2006 and October 31, 2005 were as follows:
- --------------------------------------------------------------------------------
2006 2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $19,695,888 $17,399,143
Long-term capital gain 35,694,135 -
----------- -----------
Total $55,390,023 $17,399,143
=========== ===========
- --------------------------------------------------------------------------------
The following shows the components of distributable earnings on a federal
income tax basis at October 31, 2006.
- --------------------------------------------------------------------------------
2006
- --------------------------------------------------------------------------------
Undistributed ordinary income $ 4,087,913
Undistributed long-term gain 99,676,328
Unrealized appreciation 365,857,624
------------
Total $469,621,865
============
- --------------------------------------------------------------------------------
The difference between book basis and tax-basis unrealized appreciation is
attributable to the tax adjustments on partnerships and preferred stocks.
C. Fund Shares
The Fund records sales and repurchases of its shares as of trade date.
Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the
Fund and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A.
(UniCredito Italiano) earned approximately $111,802 in underwriting
commissions on the sale of Class A shares during year ended October 31,
2006.
D. Class Allocations
Distribution fees are calculated based on the average daily net asset value
attributable to Class A, Class B, Class C and Class R shares of the Fund,
respectively. Class Y shares are not subject to
36
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
a distribution plan (see Note 4). Shareowners of each class share all
expenses and fees paid to the transfer agent, Pioneer Investment Management
Shareholder Services, Inc. (PIMSS), for its services, which are allocated
based on the number of accounts in each class and the ratable allocation of
related out-of-pocket expenses (see Note 3). Income, common expenses and
realized and unrealized gains and losses are calculated at the Fund level
and allocated daily to each class of shares based on the respective
percentage of adjusted net assets at the beginning of the day.
Distributions to shareowners are recorded as of the ex-dividend date.
Distributions paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time, and in the same amount,
except that Class A, Class B, Class C, Class R and Class Y shares can bear
different transfer agent and distribution fees.
E. Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, the value
of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Fund's custodian, or subcustodians. The Fund's
investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
F. Securities Lending
The Fund lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Fund's custodian acting as the
lending agent. When entering into a loan, the Fund receives collateral,
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Fund also continues to receive interest or
payments in lieu of dividends on the securities loaned. Gain or loss on the
fair value of the loaned securities that may occur during the term of the
loan will be for the account of the Fund. The loans are secured by
collateral of at least 102%, at all times, of the fair value of the
securities loaned. The amount of the collateral will be adjusted daily to
reflect any price fluctuation in the
37
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/06 (continued)
- --------------------------------------------------------------------------------
value of the loaned securities. The Fund has the right under the lending
agreements to recover the securities from the borrower on demand. The Fund
invests cash collateral in the Securities Lending Investment Fund, which is
sponsored by Brown Brothers Harriman & Co., the Fund's custodian.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
Fund's portfolio. PIM receives a basic fee that is calculated at the annual rate
of 0.60% of the Fund's average daily net assets up to $10 billion and 0.575% of
the excess over $10 billion. For the year ended October 31, 2006, the net
management fee was equivalent to 0.60% of the average daily net assets.
In addition, under the management and administrative agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At October 31, 2006, $24,871 was payable to PIM
related to management fees, administrative costs and certain other services and
is included in due to affiliates.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano, provides
substantially all transfer agent and shareowner services to the Fund at
negotiated rates. Included in due to affiliates is $146,711 in transfer agent
fees payable to PIMSS at October 31, 2006.
4. Distribution and Service Plans
The Fund adopted a Plan of Distribution with respect to Class A, Class B, Class
C and Class R shares (Class A Plan, Class B Plan, Class C Plan, Class R Plan)
in accordance with Rule 12b-1 of the Investment Company Act of 1940. Pursuant
to the Class A Plan, the Fund pays PFD a service fee of up to 0.25% of the
Fund's average daily net assets attributable to Class A shares in reimbursement
of its actual expenditures to finance activities primarily intended to result
in the sale of Class A shares. Pursuant to the Class B Plan and the Class C
Plan, the Fund pays PFD 1.00% of the average daily net assets attributable to
each class of shares. The fee consists of a 0.25% service fee and a 0.75%
distribution fee paid as compensation for personal services and/or account
maintenance services or distribution services with regard to Class B and Class
C shares.
38
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pursuant to the Class R Plan, the Fund pays PFD 0.50% of the average daily net
assets attributable to Class R shares as compensation for distribution
services. Included in due to affiliates is $14,820 in distribution fees payable
to PFD at October 31, 2006. The Fund also has adopted a separate service plan
for Class R shares (Service Plan). The Service Plan authorizes the Fund to pay
as compensation to securities dealers, plan administrators or other service
organizations that agree to provide certain services to retirement plans or
plan participants holding shares of the Fund a service fee of up to 0.25% of
the Fund's average daily net assets attributable to Class R shares held by such
plans in reimbursement for actual expenditures.
In addition, redemptions of Class A, Class B, Class C and Class R shares may be
subject to a contingent deferred sales charge (CDSC). A CDSC of 1.00% may be
imposed on redemptions of certain net asset value purchases of Class A shares
within 18 months of purchases. Effective December 1, 2004, Class B shares
redeemed within five years of purchase are subject to a CDSC at declining rates
beginning at 4.00%, based on the lower cost or market value of shares being
redeemed. Shares purchased prior to December 1, 2004 remain subject to the CDSC
in effect at the time those shares were purchased. Shares purchased as part of
an exchange or acquired as a result of a reorganization of another fund into
the Fund remain subject to any contingent deferred sales charges that applied
to the shares you originally purchased. Redemptions of Class C shares within
one year of purchase are subject to a CDSC of 1.00%. There are no CDSC for
Class R shares. Proceeds from the CDSCs are paid to PFD. For the year ended
October 31, 2006, CDSCs in the amount of $294,762 were paid to PFD.
5. Commission Recapture and Expense Offset Arrangements
Effective July 15, 2005, the Fund has entered into commission recapture
arrangements with brokers with whom PIM places trades on behalf of the Fund
where they provide services to the Fund in addition to trade execution. These
services included payments of certain expenses on behalf of the Fund. For the
year ended October 31, 2006, expenses were reduced by $37,328 under this
agreement. In addition, the Fund has entered into certain expense offset
arrangements with PIMSS resulting in a reduction in the Fund's total expenses
due to interest earned on cash held by PIMSS. For the year
39
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/06 (continued)
- --------------------------------------------------------------------------------
ended October 31, 2006, the Fund's expenses were reduced by $44,405 under such
arrangements.
6. Line Of Credit Facility
The Fund, along with certain others 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 is payable
at the Federal Funds Rate plus 1/2% on an annualized basis. 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 year ended
October 31, 2006, the Fund had no borrowings under this agreement. Effective
November 28, 2006 this facility was increased to $200 million.
7. Affiliated Companies
The Fund's investments in certain companies exceed 5% of the outstanding voting
stock. Such companies are deemed affiliates of the Fund for financial reporting
purposes. The following summarizes transactions with affiliates of the Fund for
the year ended October 31, 2006:
- ------------------------------------------------------------------------------------------
Beginning Ending
Balance Purchases Sales Dividend Balance
Affiliates (shares) (shares) (shares) Income (shares) Value
- ------------------------------------------------------------------------------------------
Gorman-Rupp Co 632,446 - - $354,170 632,446 $23,881,161
- ------------------------------------------------------------------------------------------
8. New Pronouncements
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48).
FIN 48 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Fund's tax returns to determine whether the tax positions have a
"more-likely-than-not" probability of being sustained by the applicable tax
authority. Tax positions deemed to not meet the more-likely-than-not threshold
would be recorded as a tax benefit or expense in the reporting period in which
they are realized. Adoption
40
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
of FIN 48 is required for fiscal years beginning after December 15, 2006 and is
to be applied to all open tax years as of the effective date. At this time,
management is evaluating the implications of FIN 48 and any impact in the
financial statements has not yet been determined.
In addition, in September 2006, Statement of Financial Accounting Standards No.
157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal
years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Fund's financial statement disclosures.
ADDITIONAL INFORMATION (unaudited)
For the fiscal year ended October 31, 2006, certain dividends paid by the Fund
may be subject to a maximum tax rate of 15%, as provided for by the Jobs and
Growth Tax Relief Reconciliation Act (the Act) of 2003. The Fund intends to
designate up to the maximum amount of such dividends allowable under the Act,
as taxed at a maximum rate of 15%. Complete information will be computed and
reported in conjunction with your 2006 form 1099-DIV.
The qualifying percentage of the Fund's ordinary income dividends for the
purpose of the corporate dividends received deduction was 87.56%.
41
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Pioneer Equity Income Fund:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Pioneer Equity Income Fund (the "Fund") as of
October 31, 2006, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Fund's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of October 31, 2006, by correspondence with
the custodian. 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 Equity Income Fund at October 31, 2006, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years in the period then ended, and financial highlights for each of the five
years in the period then ended, in conformity with U.S. generally accepted
accounting principles.
Ernst & Young LLP
Boston, Massachusetts
December 15, 2006
42
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Trustees and Officers
The fund's Board of Trustees provides broad supervision over the fund's affairs.
The officers of the fund are responsible for the fund's operations. The fund's
Trustees and officers are listed below, together with their principal
occupations during the past five years. Trustees who are interested persons of
the fund within the meaning of the 1940 Act are referred to as Interested
Trustees. Trustees who are not interested persons of the fund are referred to as
Independent Trustees. Each of the Trustees (except Mr. Hood and Mr. West) serves
as a Trustee of each of the 89 U.S. registered investment portfolios for which
Pioneer serves as investment adviser (the "Pioneer Funds"). Mr. Hood and Mr.
West each serves as Trustee of 37 of the 89 Pioneer Funds. The address for all
Interested Trustees and all officers of the fund is 60 State Street, Boston,
Massachusetts 02109.
The Fund's statement of additional information provides more detailed
information regarding the Fund's Trustees and is available upon request,
without charge, by calling 1-800-225-6292.
Proxy Voting Policies and Procedures of the fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the fund voted proxies relating to portfolio securities during the
most recent 12-month period ended June 30 is publicly available to shareowners
at www.pioneerinvestments.com and on the SEC's web site at http://www.sec.gov.
43
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
INTERESTED TRUSTEES
- --------------------------------------------------------------------------------
Position Held With Term of Office and
Name and Age the Fund Length of Service
John F. Cogan, Jr. (80)* Chairman of the Trustee since 1990.
Board, Trustee Serves until a succes-
and President sor trustee is elected
or earlier retirement
or removal.
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Trustee
John F. Cogan, Jr. (80)* Deputy Chairman and a Director of Pioneer Global Asset Director of ICI Mutual
Management S.p.A. ("PGAM"); Non-Executive Chairman Insurance Company
and a Director of Pioneer Investment Management USA
Inc. ("PIM-USA"); Chairman and a Director of Pioneer;
Chairman and Director of Pioneer Institutional Asset
Management, Inc. (since 2006); Director of Pioneer
Alternative Investment Management Limited (Dublin);
President and a Director of Pioneer Alternative Investment
Management (Bermuda) Limited and affiliated funds; Direc-
tor of PIOGLOBAL Real Estate Investment Fund (Russia)
(until June 2006); Director of Nano-C, Inc. (since 2003);
Director of Cole Investment Corporation (since 2004);
Director of Fiduciary Counseling, Inc.; President and Direc-
tor of Pioneer Funds Distributor, Inc. ("PFD") (until May
2006); President of all of the Pioneer Funds; and Of
Counsel, Wilmer Cutler Pickering Hale and Dorr LLP
(counsel to PIM-USA and the Pioneer Funds)
- --------------------------------------------------------------------------------------------------------------------
44
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Position Held With Term of Office and
Name and Age the Fund Length of Service
Osbert M. Hood (54)* Trustee and Executive Trustee since 2003.
Vice President Serves until a succes-
sor trustee is elected
or earlier retirement
or removal.
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Trustee
Osbert M. Hood (54)* President and Chief Executive Officer, PIM-USA since None
May 2003 (Director since January 2001; Executive Vice
President and Chief Operating Officer from November
2000 - May 2003); Director of PGAM since June 2003;
President and Director of Pioneer since May 2003;
President and Director of Pioneer Institutional Asset
Management, Inc. since February 2006; Chairman and
Director of Pioneer Investment Management Shareholder
Services, Inc. ("PIMSS") since May 2003; Director of PFD
since May 2006; Director of Oak Ridge Investments, LLC
(a registered investment adviser in which PIM-USA owns
a minority interest) since January 2005; Director of
Vanderbilt Capital Advisors, LLC (an institutional investment
adviser wholly-owned by PIM-USA) since June 2006; and
Executive Vice President of all of the Pioneer Funds since
June 2003
- --------------------------------------------------------------------------------------------------------------------
45
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- --------------------------------------------------------------------------------
Position Held With Term of Office and
Name, Age and Address the Fund Length of Service
David R. Bock (62) Trustee Trustee since 2005.
3050 K Street NW, Serves until a succes-
Washington, DC 20007 sor trustee is elected
or earlier retirement
or removal.
- --------------------------------------------------------------------------------
Mary K. Bush (58) Trustee Trustee since 1997.
3509 Woodbine Street Serves until a succes-
Chevy Chase, MD 20815 sor trustee is elected
or earlier retirement
or removal.
- --------------------------------------------------------------------------------
Margaret B.W. Graham (59) Trustee Trustee since 1990.
1001 Sherbrooke Street West, Serves until a succes-
Montreal, Quebec, Canada sor trustee is elected
H3A 1G5 or earlier retirement
or removal.
- --------------------------------------------------------------------------------
Other Directorships Held
Name, Age and Address Principal Occupation During Past Five Years by this Trustee
David R. Bock (62) Senior Vice President and Chief Financial Officer, I-trax, Director of The Enterprise
3050 K Street NW, Inc. (publicly traded health care services company) Social Investment
Washington, DC 20007 (2001 - present); Managing Partner, Federal City Capital Company (privately-held
Advisors (boutique merchant bank) (2002 to 2004); and affordable housing
Executive Vice President and Chief Financial Officer, finance company); and
Pedestal Inc. (internet-based mortgage trading company) Director of New York
(2000 - 2002) Mortgage Trust (publicly
traded mortgage REIT)
- --------------------------------------------------------------------------------------------------------------------
Mary K. Bush (58) President, Bush International (international financial Director of Brady
3509 Woodbine Street advisory firm) Corporation (industrial
Chevy Chase, MD 20815 identification and
specialty coated material
products manufacturer);
Director of Briggs &
Stratton Co. (engine
manufacturer); Director of
Mortgage Guaranty
Insurance Corporation;
and Director of UAL
Corporation (airline
holding company)
- --------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (59) Founding Director, The Winthrop Group, Inc. (consulting None
1001 Sherbrooke Street West, firm); and Desautels Faculty of Management, McGill
Montreal, Quebec, Canada University
H3A 1G5
- --------------------------------------------------------------------------------------------------------------------
46
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Position Held With Term of Office and
Name, Age and Address the Fund Length of Service
Thomas J. Perna (56) Trustee Trustee since
89 Robbins Avenue, February, 2006.
Berkeley Heights, NJ 07922 Serves until a
successor trustee
is elected or earlier
retirement or removal.
Marguerite A. Piret (58) Trustee Trustee since 1990.
200 State Street 12th Floor, Serves until a succes-
Boston, MA 02109 sor trustee is elected
or earlier retirement
or removal.
Stephen K. West (78) Trustee Trustee since 1993.
125 Broad Street, Serves until a succes-
New York, NY 10004 sor trustee is elected
or earlier retirement
or removal.
John Winthrop (70) Trustee Trustee since 1990.
One North Adgers Wharf, Serves until a succes-
Charleston, SC 29401 sor trustee is elected
or earlier retirement
or removal.
- --------------------------------------------------------------------------------
Pioneer Equity Income Fund
Other Directorships Held
Name, Age and Address Principal Occupation During Past Five Years by this Trustee
Thomas J. Perna (56) Private investor (2004 - present); and Senior Executive Director of Quadriserv
89 Robbins Avenue, Vice President, The Bank of New York (financial and Inc. (technology products
Berkeley Heights, NJ 07922 securities services) (1986 - 2004) for securities lending
industry)
- --------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (58) President and Chief Executive Officer, Newbury, Piret & Director of New America
200 State Street 12th Floor, Company, Inc. (investment banking firm) High Income Fund, Inc.
Boston, MA 02109 (closed-end investment
company)
- --------------------------------------------------------------------------------------------------------------------
Stephen K. West (78) Senior Counsel, Sullivan & Cromwell (law firm) Director, The Swiss
125 Broad Street, Helvetia Fund, Inc.
New York, NY 10004 (closed-end investment
company)
- --------------------------------------------------------------------------------------------------------------------
John Winthrop (70) President, John Winthrop & Co., Inc. None
One North Adgers Wharf, (private investment firm)
Charleston, SC 29401
47
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FUND OFFICERS
- --------------------------------------------------------------------------------
Position Held With Term of Office and
Name and Age the Fund Length of Service
Dorothy E. Bourassa (58) Secretary Since 2003. Serves
at the discretion of
the Board
- --------------------------------------------------------------------------------
Christopher J. Kelley (41) Assistant Secretary Since 2003. Serves
at the discretion of
the Board
- --------------------------------------------------------------------------------
Christopher P. Harvey (45) Assistant Secretary Since July 2006.
Serves at the discre-
tion of the Board
- --------------------------------------------------------------------------------
Vincent Nave (61) Treasurer Since 2000. Serves
at the discretion of
the Board
- --------------------------------------------------------------------------------
Mark E. Bradley (46) Assistant Treasurer Since 2004. Serves
at the discretion of
the Board
- --------------------------------------------------------------------------------
Luis I. Presutti (41) Assistant Treasurer Since 2000. Serves
at the discretion of
the Board
- --------------------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Trustee
Dorothy E. Bourassa (58) Secretary of PIM-USA; Senior Vice President - Legal None
of Pioneer; Secretary/Clerk of most of PIM-USA's
subsidiaries; and Secretary of all of the Pioneer Funds
since September 2003 (Assistant Secretary from
November 2000 to September 2003)
- --------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (41) Vice President and Senior Counsel of Pioneer since July None
2002; Vice President and Senior Counsel of BISYS Fund
Services, Inc. (April 2001 to June 2002); Senior Vice
President and Deputy General Counsel of Funds Distribu-
tor, Inc. (July 2000 to April 2001), and Assistant Secretary
of all of the Pioneer Funds since September 2003
- --------------------------------------------------------------------------------------------------------------------
Christopher P. Harvey (45) Partner, Wilmer Cutler Pickering Hale and Dorr LLP; None
and Assistant Secretary of all of the Pioneer Funds
since July 2006.
- --------------------------------------------------------------------------------------------------------------------
Vincent Nave (61) Vice President - Fund Accounting, Administration and None
Controllership Services of Pioneer; and Treasurer of
all of the Pioneer Funds
- --------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (46) Deputy Treasurer of Pioneer since 2004; Treasurer and None
Senior Vice President, CDC IXIS Asset Management
Services from 2002 to 2003; Assistant Treasurer and Vice
President, MFS Investment Management from 1997 to
2002; and Assistant Treasurer of all of the Pioneer Funds
since November 2004
- --------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (41) Assistant Vice President - Fund Accounting, Administration None
and Controllership Services of Pioneer; and Assistant
Treasurer of all of the Pioneer Funds
- --------------------------------------------------------------------------------------------------------------------
48
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Position Held With
Name and Age the Fund
Gary Sullivan (48) Assistant Treasurer
- --------------------------------------------------------------------------------------------------------------------
Katherine Kim Sullivan (32) Assistant Treasurer
- --------------------------------------------------------------------------------------------------------------------
Terrence J. Cullen (45) Chief Compliance
Officer
- --------------------------------------------------------------------------------------------------------------------
*Mr. Cogan and Mr. Hood are Interested Trustees because each is an officer or
director of the fund's investment adviser and certain of its affiliates. The
outstanding capital stock of PFD, Pioneer and PIMSS is indirectly wholly owned
by UniCredito Italiano S.p.A. ("UniCredito Italiano"), one of the largest
banking groups in Italy. Pioneer, the fund's investment adviser, provides
investment management and financial services to mutual funds, institutional and
other clients.
Term of Office and
Name and Age Length of Service
Gary Sullivan (48) Since 2002. Serves
at the discretion of
the Board
- --------------------------------------------------------------------------------------------------------------------
Katherine Kim Sullivan (32) Since 2003. Serves
at the discretion of
the Board
- --------------------------------------------------------------------------------------------------------------------
Terrence J. Cullen (45) Since March 2006.
Serves at the discre-
tion of the Board
- --------------------------------------------------------------------------------------------------------------------
49
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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50
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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51
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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52
- --------------------------------------------------------------------------------
HOW TO CONTACT PIONEER
- --------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
Call us for:
Account Information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our internet e-mail address ask.pioneer@pioneerinvestments.com
(for general questions about Pioneer only)
Visit our web site: pioneerinvestments.com
Before investing consider the Fund's investment objectives, risks, charges and
expenses. Contact your advisor or Pioneer Investments for a prospectus
containing this information. Read it carefully.
The Fund files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit Fees
Fees for audit services provided to the Fund,
including fees associated with the filings to
update its Form N-2 and issuance of comfort
letters, totaled approximately $31,810 in
2006 and $22,655 in 2005.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
Audit-Related Fees
There were no fees for audit-related or other
services provided to the Fund during the
fiscal years ended October 31, 2006 and
2005.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
Tax Fees
Fees for tax compliance services, primarily
for tax returns, totaled approximately $7,515
and $6,800 for 2006 and 2005, respectively.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
Other Fees
There were no fees for other services
provided to the Fund during the fiscal years
ended October 31, 2006 and 2005.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognize that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
- ---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
- ---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
- ---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
- ---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
- ----------------------- --------------------------- -----------------------------------------------
- ------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- -------------------------
- ------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
- ------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
- ----------------------- --------------------------- -----------------------------------------------
- --------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
- ------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
- ----------------------- ------------------------- -----------------------------------------------
- ------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
- ------------------------------------------- ------------------------------
- --------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
- --------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
Non-Audit Services
Beginning with non-audit service contracts
entered into on or after May 6, 2003, the
effective date of the new SEC pre-approval
rules, the Fund's audit committee is required
to pre-approve services to affiliates defined
by SEC rules to the extent that the services
are determined to have a direct impact on
the operations or financial reporting of the
Fund. For the years ended October 31, 2006
and 2005, there were no services provided to
an affiliate that required the Fund's audit
committee pre-approval.
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The aggregate non-audit fees for the Fund
and affiliates, as previously defined, totaled
approximately $7,515 in 2006 and $6,800 in
2005.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Fund's audit committee of the Board of
Trustees has considered whether the
provision of non-audit services that were
rendered to the Affiliates (as defined) that
were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with
maintaining the principal accountant's
independence.
Item 5. Audit Committee of Listed Registrants
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrants audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
N/A
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption
from the listing standards for audit committees.
N/A
Item 6. Schedule of Investments.
File Schedule I Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.12-
12 of Regulation S-X [17 CFR 210.12-12], unless the schedule is
included as part of the report to shareholders filed under Item
1 of this Form.
Included in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Not applicable to open-end management investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrants portfolio (Portfolio Manager). Also state each Portfolio
Managers business experience during the past 5 years.
Not applicable to open-end management investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
Not applicable to open-end management investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in
its definitive proxy statement, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer
and principal financial officer have
concluded that the registrant's disclosure
controls and procedures are effective based
on their evaluation of these controls and
procedures as of a date within 90 days of the
filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the
registrant's internal control over financial
reporting that occurred during the second
fiscal quarter of the period covered by this
report that have materially affected, or are
reasonably likely to materially affect, the
registrant's internal control over financial
reporting.
The registrant's principal executive officer and principal financial
officer, however, voluntarily are reporting the following information:
In August of 2006 the registrant's investment adviser
enhanced its internal procedures for reporting performance
information required to be included in prospectuses.
Those enhancements involved additional internal controls
over the appropriateness of performance data
generated for this purpose. Such enhancements were made
following an internal review which identified
prospectuses relating to certain classes of shares of
a limited number of registrants where, inadvertently,
performance information not reflecting the deduction of
applicable sales charges was included. Those prospectuses
were revised, and the revised prospectuses were distributed to
shareholders.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Equity Income Fund
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date December 29, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date December 29, 2006
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date December 29, 2006
* Print the name and title of each signing officer under his or her signature.