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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, 2004 through April 30, 2005
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
Semiannual
Report
4/30/05
[LOGO] PIONEER
Investments(R)
Table of Contents
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Letter to Shareowners 1
Portfolio Summary 2
Prices and Distributions 3
Performance Update 4
Comparing Ongoing Fund Expenses 9
Portfolio Management Discussion 11
Schedule of Investments 15
Financial Statements 22
Notes to Financial Statements 31
Factors Considered by the Independent Trustees in Approving
the Management Contract 38
Trustees, Officers and Service Providers 43
Pioneer Equity Income Fund
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LETTER TO SHAREOWNERS 4/30/05
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Dear Shareowner,
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U.S. stocks moved higher early in 2005, with the Standard & Poor's 500 Stock
Index and the Dow Jones Industrial Average advancing to three-year highs in
early March. But from then on, soaring prices for heating oil and gasoline,
plus the steady ratcheting up of interest rates by the Federal Reserve Board
overwhelmed sentiment and caused stocks to retrace their gains. By the end of
April, the Dow Industrials, the S&P 500 and the tech-heavy NASDAQ composite
were in negative territory for the year.
With investors less welcoming of risk and the economy giving mixed signals,
value stocks were more resilient than growth stocks. In addition,
large-capitalization stocks held up better than small- and mid-sized issues
that might be more vulnerable in an economic "soft patch," in the phrase of
Federal Reserve Board Chairman Alan Greenspan.
Determined to prevent damaging inflation, the Fed has repeatedly raised
short-term interest rates. As a result, bond returns were modestly negative in
most sectors. Fixed-income investors also became more risk-averse; high-yield
and other corporate sectors retrenched after a run of stellar performance while
Treasuries and mortgage-backed securities showed small declines, with long-term
issues showing positive. Municipal revenue bonds trended higher even against a
backdrop of heavy new issuance by states and localities.
Higher U.S. interest rates enhanced the dollar's appeal and brought at least a
pause in its long, sharp drop. But the stronger dollar muted returns for U.S.
investors in overseas markets. Globally, economies rich in metals and other
industrial commodities continued to thrive on heavy demand from China and
elsewhere. Meanwhile, growth in Japan may have stalled, and Europe's expansion
moved ahead slowly.
We believe that the U.S. economy and corporate earnings will continue to grow
at a moderate pace. Oil prices have receded from their record highs, but high
energy costs and rising interest rates may be in the headlines for a while.
Looking beyond present concerns, Pioneer's global investment experts continue
to find stocks and bonds with attractive long-term potential for our domestic
and international funds.
Expanding your opportunities
This period was like all others; different classes of investments delivered
different returns. That's why allocating your portfolio across several
investment categories is one way to seek wider opportunities. Pioneer's
disciplined approach and growing range of products are designed to help you
achieve this important objective. For thoughtful guidance on how to align your
portfolio with your goals, contact your financial professional.
Please consider a fund's investment objective, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about each fund and should be read carefully before you invest or send money.
To obtain a prospectus and for other information on any Pioneer fund, contact
your financial advisor, call 1-800-225-6292 or visit our web site at
www.pioneerfunds.com.
Respectfully,
/s/ 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.
1
Pioneer Equity Income Fund
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PORTFOLIO SUMMARY 4/30/05
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Portfolio Diversification
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(As a percentage of total investment portfolio)
[The following data was represented as a pie chart in the printed material.]
U.S. Common Stocks 98.4%
Convertible Preferred Stocks 0.8%
Temporary Cash Investments 0.8%
Sector Distribution
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(As a percentage of equity holdings)
[The following data was represented as a pie chart in the printed material.]
Financials 20.9%
Utilities 17.6%
Consumer Discretionary 11.7%
Health Care 9.5%
Energy 9.0%
Telecommunication Services 8.8%
Consumer Staples 7.2%
Industrials 6.9%
Materials 6.1%
Information Technology 2.3%
10 Largest Holdings
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(As a percentage of total investment in securities)*
1. Exxon Mobil Corp. 3.83% 6. Verizon Communications, Inc. 2.65%
2. PACCAR, Inc. 3.73 7. Merck & Co., Inc. 2.57
3. Washington Mutual, Inc. 3.09 8. Constellation Energy Group. 2.43
4. ConocoPhillips 2.87 9. T. Rowe Price Associates, Inc. 2.35
5. Questar Corp. 2.76 10. ChevronTexaco Corp. 2.27
*This list excludes temporary cash and derivative instruments. The portfolio is
actively managed, and current holdings may be different.
2
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 4/30/05 10/31/04
----- ------- --------
A $28.44 $26.91
B $28.26 $26.75
C $28.18 $26.68
R $28.60 $27.08
Y $28.56 $27.02
Distributions Per Share
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11/1/04 - 4/30/05
-----------------
Net
Investment Short-Term Long-Term
Class Income Capital Gains Capital Gains
----- ---------- ------------- -------------
A $0.3075 $ - $ -
B $0.1926 $ - $ -
C $0.2075 $ - $ -
R $0.3026 $ - $ -
Y $0.3644 $ - $ -
3
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 4/30/05 CLASS A SHARES
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Investment Returns
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The mountain chart below 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 April 30, 2005)
Public
Net Asset Offering
Period Value Price (POP)
10 Years 10.75% 10.10%
5 Years 5.06 3.83
1 Year 14.71 8.13
[The following data was represented as a mountain chart in the printed
material.]
Value of a $10,000 Investment
Pioneer Equity Russell 1000
Income Fund Value Index
4/95 9423 10000
11910 12988
4/97 13731 15918
19219 22633
4/99 21576 25825
20447 24826
4/01 23194 26420
22112 25387
4/03 18423 22084
22811 27885
4/05 26166 31765
Call 1-800-225-6292 or visit www.pioneerfunds.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.
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 any Index.
4
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 4/30/05 CLASS B SHARES
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Investment Returns
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The mountain chart below 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 April 30, 2005)
If If
Period Held Redeemed
10 Years 9.88% 9.88%
5 Years 4.19 4.19
1 Year 13.69 9.69
[The following data was represented as a mountain chart in the printed
material.]
Value of a $10,000 Investment
Pioneer Equity Russell 1000
Income Fund Value Index
4/95 10000 10000
12553 12988
4/97 14358 15918
19942 22633
4/99 22225 25825
20896 24826
4/01 23511 26420
22240 25387
4/03 18381 22084
22568 27885
4/05 25658 31765
Call 1-800-225-6292 or visit www.pioneerfunds.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
(CSDC). 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
www.pioneerfunds.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.
The Russell 1000 Value Index measures 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 any Index.
5
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 4/30/05 CLASS C SHARES
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Investment Returns
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The mountain chart below 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 April 30, 2005)
If If
Period Held Redeemed
Life-of-Class
(1/31/96) 8.15% 8.15%
5 Years 4.19 4.19
1 Year 13.79 13.79
[The following data was represented as a mountain chart in the printed
material.]
Value of a $10,000 Investment
Pioneer Equity Russell 1000
Income Fund Value Index
1/96 10000 10000
10133 10286
4/97 11575 12607
16075 17925
4/99 17908 20453
16813 19661
4/01 18910 20923
17871 20105
4/03 14769 17490
18138 22083
4/05 20639 25156
Call 1-800-225-6292 or visit www.pioneerfunds.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. 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. 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.
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 any Index.
6
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 4/30/05 CLASS R SHARES
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Investment Returns
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The mountain chart below 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 April 30, 2005)
If If
Period Held Redeemed
10 Years 10.35% 10.35%
5 Years 4.82 4.82
1 Year 14.55 14.55
[The following data was represented as a mountain chart in the printed
material.]
Value of a $10,000 Investment
Pioneer Equity Russell 1000
Income Fund Value Index
4/95 10000 10000
12988 12570
4/97 15918 14418
22633 20081
4/99 25825 22435
24826 21154
4/01 26420 23877
25387 22651
4/03 22084 18891
27885 23372
4/05 31765 26773
Call 1-800-225-6292 or visit www.pioneerfunds.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, which performance may be influenced by the smaller
asset size of Class R shares compared to Class A shares. The performance of
Class R shares does not reflect the 1% CDSC that was in effect prior to July 1,
2004. 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.
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 any Index.
7
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 4/30/05 CLASS Y SHARES
- --------------------------------------------------------------------------------
Investment Returns
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The mountain chart below 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 April 30, 2005)
If If
Period Held Redeemed
10 Years 11.07% 11.07%
5 Years 5.52 5.52
1 Year 15.22 15.22
[The following data was represented as a mountain chart in the printed
material.]
Value of a $10,000 Investment
Pioneer Equity Russell 1000
Income Fund Value Index
4/95 10000 10000
12988 12639
4/97 15918 14571
22633 20395
4/99 25825 22967
24826 21846
4/01 26420 24865
25387 23807
4/03 22084 19937
27885 24801
4/05 31765 28575
Call 1-800-225-6292 or visit www.pioneerfunds.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 A shares. The performance does not reflect differences
in expenses, including the Rule 12b-1 fees applicable to A shares. Since fees
for A shares are generally higher than those of Y shares, the performance shown
for 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.
The Russell 1000 Value Index measures 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 any Index.
8
Pioneer Equity Income Fund
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COMPARING ONGOING FUND EXPENSES
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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 - $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 November 1, 2004 through April 30, 2005
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 11/1/04
Ending Account $1,068.20 $1,063.60 $1,063.90 $1,067.20 $1,070.40
Value On 4/30/05
Expenses Paid $ 5.49 $ 9.93 $ 9.52 $ 6.20 $ 3.39
During Period*
* Expenses are equal to the Fund's annualized expense ratio of 1.07%, 1.94%,
1.86%, 1.21% and 0.66%, 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 181/365 (to reflect the one-half year period).
9
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
COMPARING ONGOING FUND EXPENSES (continued)
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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, reflecting the
period from November 1, 2004 through April 30, 2005
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 11/1/04
Ending Account $1,019.49 $1,015.17 $1,015.57 $1,018.79 $1,021.52
Value On 4/30/05
Expenses Paid $ 5.36 $ 9.69 $ 9.30 $ 6.06 $ 3.31
During Period*
* Expenses are equal to the Fund's annualized expense ratio of 1.07%, 1.94%,
1.86%, 1.21% and 0.66%, 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 181/365 (to reflect the one-half year period).
10
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 4/30/05
- --------------------------------------------------------------------------------
In the following discussion, John Carey, portfolio manager of Pioneer Equity
Income Fund reviews the overall market and the performance of Pioneer Equity
Income Fund over the six months ended April 30, 2005.
Q: How did the Fund perform during the period in relation to the overall stock
market and its peer group?
A: Pioneer Equity Income Fund showed positive performance in the six months
ended April 30, 2005. The total return on Class A shares was 6.82% at net
asset value. By comparison, the Russell 1000 Value Index and the Standard &
Poor's 500, both of them unmanaged indexes of the general stock market,
rose, respectively, 6.72% and 3.28%. The average fund in the Lipper
Analytical Services equity-income category rose 5.35%. The rates of
appreciation for both the Fund and the market slowed from the pace of the
previous six months, but investors were still rewarded for their efforts.
Concerns about rising short-term interest rates, high oil prices, the weak
dollar, and trade deficits notwithstanding, investors appeared to take heart
from the growing economy and improving corporate earnings.
Call 1-800-225-6292 or visit www.pioneerfunds.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.
Throughout the period, your Fund stayed fully invested in dividend-paying,
United States-headquartered companies, researched and monitored by our
independent staff of securities analysts. We have always believed that the
foundation of a sound mutual-fund management strategy is research. At
Pioneer in Boston we have approximately twenty full-time analysts whose
responsibility it is to keep track of their assigned industries and
sectors and make investment recommendations. We are proud of the record of
Pioneer Equity Income Fund using that careful, methodical, patient
approach. In July the Fund will mark its 15th anniversary. Over the next
fifteen years there will be both challenges and opportunities. We believe
that our "all-weather" strategy is well suited to the normal stresses of
economic and market cycles, and it is our intention to continue along the
same path.
11
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 4/30/05 (continued)
- --------------------------------------------------------------------------------
Q: What contributed to the above-average performance of the Fund in the
six-month period?
A: In general, more "value"-oriented strategies like ours did better than more
"growth"-oriented approaches. We think, without being able to confirm it,
that the new, favorable Federal tax treatment of qualified dividends
provided ongoing support to income-producing stocks. We were struck by the
superior returns on stocks in so-called "old economy" sectors, including
energy, consumer staples, and utilities, and the persistently poor returns
on information-technology stocks. Our sector positioning, which customarily
emphasizes mature, financially strong, dividend-paying stocks, was the major
reason for our outperformance. We note that the Fund also had an
above-average weighting relative to the Russell 1000 Value Index in the
well-performing health-care sector, and that, too, helped our relative
returns.
Among positive contributors to results were our shares of utilities
Constellation Energy and Questar, oil producer ConocoPhillips, steel mill
Roanoke Electric Steel, and pharmaceutical companies Merck and Abbott
Laboratories. The Fund also saw a large gain on its holdings of May
Department Stores, which received a premium take-over offer from Federated
Department Stores. Our investment posture in financial services likewise
contributed positively, though mainly through our successful avoidance of
poor-performing JPMorgan Chase and American International Group.
Negative impact was felt from our holdings of struggling auto manufacturer
Ford Motor. Two other transportation-equipment-related stocks, PACCAR and
Johnson Controls, also hurt somewhat. Finally, due to our longstanding
policy against owning tobacco, liquor, and gambling stocks, we did not
have shares of Altria, formerly Philip Morris, a relatively strong
performer in the period.
Q: Did you make any changes to the portfolio?
A: Shareholders will note nine new entries to the portfolio and ten
liquidations. Some of the purchases were securities we had owned previously
and sold, but that we decided were worth revisiting. In that category were:
Bristol-Myers Squibb, the pharmaceutical maker; Coca-Cola, the well-known
beverages company; and Bank of America and Citigroup, the large banking and
financial-services enterprises. In each case, the concerns that had prompted
us earlier to sell the shares seemed diminished due to constructive actions
on the part of the corporate management.
12
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Also new were: Compass Minerals, supplier of highway deicing salts;
Citizens Communications, a Stamford, Connecticut-based
telecommunications-services provider; Genuine Parts, a leading distributor
of auto parts nationwide; and Atmos Energy, a Dallas, Texas-based
distributor of natural gas. We also acquired shares of Wachovia in
exchange for our shares of SouthTrust when Wachovia, a large regional
bank, acquired our former holding.
In addition to the sale of SouthTrust in the merger, we took gains on the
sale of some of our cyclical stocks that we thought had reached ample
values, including Phelps Dodge, Occidental Petroleum, Boeing, and General
Dynamics. We also realized a profit on our sale of Simon Properties,
likewise, in our minds, fully valued. General Motors was a less happy
situation, but after pondering the serious financial questions surrounding
the company, we decided that the stock was better to watch from a
distance. Pfizer and International Business Machines also seemed less
attractive to us than they had when we purchased them. Finally, we sold at
a profit a small position in the Gap 5 3/4% convertible debenture.
Q: What is your outlook, especially in view of rising interest rates?
A: The striking thing about the bond market over the past year or so, since the
Federal Reserve began raising short-term interest rates, has been the
moderation in medium- and long-term rates. Evidently bond investors are not
particularly fearful of inflation in coming years, and they are not
demanding higher interest rates from borrowers over the more distant time
periods. So one must be careful in speaking of "rising interest rates." The
only rates that have risen are the very short-term rates. Nevertheless,
there will be some pressures on earnings with the consequent flattening of
the yield curve, particularly in the financial sector. Banks, for instance,
will see their profit-margin "spreads" narrow as they find they have to pay
higher interest rates to attract short-term deposits, but also find that
they are loaning longer-term money at the same or even slightly lower rates
than in the past. We shall be watching earnings closely over the next couple
of quarters to see how companies are affected.
High oil prices have also been a focus of investors, particularly as they
reduce the amount of money consumers have to spend on other things and as
they mean higher costs for businesses. Your Fund has participated in the
profitability of the energy sector by owning shares of a number of the
leading companies. We cannot predict where oil prices will go from here,
though they have been
13
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 4/30/05 (continued)
- --------------------------------------------------------------------------------
declining as we write this letter. We tend to agree with the forecasts for
expanding demand for energy from the rapidly growing countries in Asia,
including China and India, and we also remain unconvinced that there will
always be plentiful supplies of oil at low production cost. Always,
though, becoming nervous when there is too much of a consensus in one
direction, we have lightened our weighting in energy from 10.4% of
portfolio net assets at October 31, 2004, to 9.0% at April 30, 2005, even
while the percentage weighting in our benchmark index, the Russell 1000
Value, has grown, through appreciation, from 12.1% to 13.5%. We think that
the current prices of many energy shares already reflect the good
prospects.
Otherwise, we think that the economy is still in reasonably good shape and
observe that corporate earnings are still on an upswing. While
acknowledging that market action is often less driven by current
fundamentals and more influenced by expectations for the future, we remain
fairly optimistic about the market and the chances of making money in it.
Thank you for your support.
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.
14
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/05 (unaudited)
- --------------------------------------------------------------------------------
Shares Value
CONVERTIBLE PREFERRED STOCKS - 0.8%
Automobiles & Components - 0.7%
Automobile Manufacturers - 0.7%
175,000 Ford Capital Trust, 6.5%, 1/15/32 $ 6,812,750
------------
Total Automobiles & Components $ 6,812,750
------------
Pharmaceuticals & Biotechnology - 0.1%
Pharmaceuticals - 0.1%
15,745 Schering-Plough Corp., 6.0%, 9/14/07 $ 915,178
------------
Total Pharmaceuticals & Biotechnology $ 915,178
------------
TOTAL COVERTIBLE PREFERRED STOCKS
(Cost $8,995,070) $ 7,727,928
------------
COMMON STOCKS - 99.0%
Energy - 9.0%
Integrated Oil & Gas - 9.0%
411,400 ChevronTexaco Corp. $ 21,392,800
258,780 ConocoPhillips 27,133,083
633,878 Exxon Mobil Corp. 36,150,062
------------
$ 84,675,945
------------
Total Energy $ 84,675,945
------------
Materials - 6.0%
Commodity Chemicals - 1.7%
200,000 Air Products & Chemicals, Inc. $ 11,746,000
105,232 E.I. du Pont de Nemours & Co. 4,957,480
------------
$ 16,703,480
------------
Construction Materials - 0.6%
100,000 Vulcan Materials Co. $ 5,304,000
------------
Diversified Chemical - 1.0%
135,000 PPG Industries, Inc. $ 9,119,250
------------
Diversified Metals & Mining - 0.3%
120,000 Compass Minerals International, Inc. $ 2,898,000
------------
Paper Products - 0.7%
230,000 Meadwestvaco Corp. $ 6,773,500
------------
Specialty Chemicals - 0.6%
150,000 Valspar Corp. $ 6,199,500
------------
The accompanying notes are an integral part of these financial statements. 15
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
Shares Value
Steel - 1.1%
513,705 Roanoke Electric Steel Corp. $ 10,145,674
------------
Total Materials $ 57,143,404
------------
Capital Goods - 5.8%
Electrical Component & Equipment - 1.2%
175,000 Emerson Electric Co. $ 10,967,250
------------
Industrial Conglomerates - 2.4%
255,600 Johnson Controls, Inc. $ 14,024,772
85,000 United Technologies Corp. 8,646,200
------------
$ 22,670,972
------------
Industrial Machinery - 2.2%
632,446 Gorman-Rupp Co.+ $ 12,648,920
350,000 The Timken Co. 8,694,000
------------
$ 21,342,920
------------
Total Capital Goods $ 54,981,142
------------
Transportation - 1.0%
Railroads - 1.0%
205,000 Burlington Northern, Inc. $ 9,891,250
------------
Total Transportation $ 9,891,250
------------
Automobiles & Components - 4.3%
Automobile Manufacturers - 4.3%
550,000 Ford Motor Corp. $ 5,010,500
518,625 PACCAR, Inc. 35,214,638
------------
$ 40,225,138
------------
Total Automobiles & Components $ 40,225,138
------------
Consumer Durables & Apparel - 0.8%
Housewares & Specialties - 0.8%
340,000 Tupperware Corp. $ 7,174,000
------------
Total Consumer Durables & Apparel $ 7,174,000
------------
Consumer Services - 0.4%
Specialized Consumer Services - 0.4%
300,000 Servicemaster Co. $ 3,849,000
------------
Total Consumer Services $ 3,849,000
------------
16 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Media - 3.2%
Movies & Entertainment - 1.7%
531,200 Cedar Fair, L.P. $ 16,026,304
------------
Publishing - 1.5%
160,000 McGraw-Hill Co., Inc. $ 13,932,800
------------
Total Media $ 29,959,104
------------
Retailing - 2.4%
Department Stores - 2.0%
528,000 May Department Stores Co. $ 18,522,240
------------
Distributors - 0.4%
100,000 Genuine Parts Co.* $ 4,290,000
------------
Total Retailing $ 22,812,240
------------
Food, Beverage & Tobacco - 6.1%
Packaged Foods & Meats - 4.3%
520,000 Campbell Soup Co. $ 15,464,800
225,000 General Mills, Inc. 11,115,000
272,550 H.J. Heinz Co., Inc. 10,043,467
184,000 Sara Lee Corp. 3,935,760
------------
$ 40,559,027
------------
Soft Drinks - 1.8%
250,000 The Coca-Cola Co. $ 10,860,000
116,300 PepsiCo, Inc. 6,470,932
------------
$ 17,330,932
------------
Total Food, Beverage & Tobacco $ 57,889,959
------------
Household & Personal Products - 1.1%
Household Products - 1.1%
108,800 Clorox Co. (b) $ 6,887,040
66,000 Colgate-Palmolive Co. 3,286,140
------------
$ 10,173,180
------------
Total Household & Personal Products $ 10,173,180
------------
The accompanying notes are an integral part of these financial statements. 17
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
Shares Value
Health Care Equipment & Services - 5.6%
Health Care Distributors - 5.1%
356,600 Abbott Laboratories $ 17,530,456
620,000 Bristol-Myers Squibb Co. 16,120,000
210,000 Johnson & Johnson 14,412,300
------------
$ 48,062,756
------------
Health Care Equipment - 0.5%
88,000 Becton, Dickinson & Co. $ 5,149,760
------------
Total Health Care Equipment & Services $ 53,212,516
------------
Pharmaceuticals & Biotechnology - 3.8%
Pharmaceuticals - 3.8%
200,000 Eli Lilly & Co. $ 11,694,000
715,400 Merck & Co., Inc. 24,252,060
------------
$ 35,946,060
------------
Total Pharmaceuticals & Biotechnology $ 35,946,060
------------
Banks - 12.3%
Diversified Banks - 4.7%
50,000 Bank of America Corp. $ 2,252,000
100,000 Comerica, Inc. 5,726,000
318,700 U.S. Bancorp 8,891,730
293,166 Wachovia Corp. 15,004,236
215,662 Wells Fargo & Co. 12,926,780
------------
$ 44,800,746
------------
Regional Banks - 4.5%
250,000 First Horizon National Corp. $ 10,382,500
358,600 National City Corp. 12,178,056
275,000 SunTrust Banks, Inc. 20,028,250
------------
$ 42,588,806
------------
Thrifts & Mortgage Finance - 3.1%
705,000 Washington Mutual, Inc. $ 29,130,600
------------
Total Banks $116,520,152
------------
18 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Diversified Financials - 5.1%
Asset Management & Custody Banks - 3.9%
416,000 Eaton Vance Corp. (b) $ 9,746,880
100,000 State Street Corp. 4,623,000
402,000 T. Rowe Price Associates, Inc. 22,178,340
------------
$ 36,548,220
------------
Investment Banking & Brokerage - 0.7%
175,000 A.G. Edwards, Inc. $ 6,949,250
------------
Diversified Financial Services - 0.5%
100,000 Citigroup, Inc. $ 4,696,000
------------
Total Diversified Financials $ 48,193,470
------------
Insurance - 3.4%
Property & Casualty Insurance - 3.4%
205,100 Chubb Corp. $ 16,773,078
299,300 Safeco Corp. 15,764,131
------------
$ 32,537,209
------------
Total Insurance $ 32,537,209
------------
Software & Services - 0.7%
Data Processing & Outsourced Services - 0.7%
150,000 Automatic Data Processing, Inc. $ 6,516,000
------------
Total Software & Services $ 6,516,000
------------
Technology Hardware & Equipment - 1.6%
Communications Equipment - 0.5%
300,000 Motorola, Inc. $ 4,602,000
------------
Computer Hardware - 1.1%
222,550 Diebold, Inc. $ 10,764,744
------------
Total Technology Hardware & Equipment $ 15,366,744
------------
Telecommunication Services - 8.8%
Integrated Telecommunication Services - 8.8%
184,585 Alltel Corp. $ 10,513,961
230,000 AT&T Corp. 4,399,900
696,400 BellSouth Corp. 18,447,636
700,000 Citizens Communications Co. (Class B) 8,925,000
The accompanying notes are an integral part of these financial statements. 19
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
Shares Value
Integrated Telecommunication Services (continued)
644,669 SBC Communications, Inc. $ 15,343,122
700,000 Verizon Communications, Inc. 25,060,000
------------
$ 82,689,619
------------
Total Telecommunication Services $ 82,689,619
------------
Utilities - 17.6%
Electric Utilities - 8.6%
285,000 Ameren Corp. $ 14,734,500
235,400 American Electric Power Co., Inc. 8,290,788
275,000 Consolidated Edison, Inc. 11,902,000
240,000 FPL Group, Inc. 9,796,800
384,400 Great Plains Energy, Inc. 11,754,952
190,000 NSTAR 10,286,600
440,000 Southern Co. 14,498,000
------------
$ 81,263,640
------------
Gas Utilities - 4.7%
50,000 Atmos Energy Corp. $ 1,315,000
454,700 KeySpan Energy Corp. 17,246,771
446,600 Questar Corp. 26,081,440
------------
$ 44,643,211
------------
Independent Power Producer & Energy Traders - 2.4%
436,500 Constellation Energy Group $ 22,942,440
------------
Multi-Utilities - 1.1%
180,000 Equitable Resources, Inc. $ 10,375,200
------------
Water Utilities - 0.8%
275,625 Aqua America, Inc. $ 7,359,188
------------
Total Utilities $166,583,679
------------
TOTAL COMMON STOCKS
(Cost $661,518,640) $936,339,811
------------
20 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
TEMPORARY CASH INVESTMENT - 0.8%
Security Lending Collateral - 0.8%
7,639,200 Securities Lending Investment Fund, 2.88% $ 7,639,200
------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $7,639,200) $ 7,639,200
------------
TOTAL INVESTMENT IN SECURITIES - 100.6%
(Cost $678,152,910)(a) $951,706,939
------------
OTHER ASSETS AND LIABILITIES - (0.6)% $ (6,139,739)
------------
TOTAL NET ASSETS - 100.0% $945,567,200
============
* Non-income producing security
+ Investment held by the Fund representing 5% or more of the outstanding
voting stock of such company and is deemed to be an affiliate of the Fund.
(a) At April 30, 2005, the net unrealized gain on investments based on cost for
federal income tax purposes of $672,515,801 was as follows:
Aggregate gross unrealized gain for all investments in which there is
an excess of value over tax cost $290,425,998
Aggregate gross unrealized loss for all investments in which there is
an excess of tax cost over value (11,234,860)
------------
Net unrealized gain $279,191,138
============
(b) At April 30, 2005, the following securities were out on loan:
Shares Security Market Value
56,000 Clorox Co. $3,544,800
168,500 Eaton Vance Corp. 3,947,955
------------
Total $7,492,755
============
Purchases and sales of securities (excluding temporary cash investments) for
the six months ended April 30, 2005 aggregated $97,297,834 and $79,822,703,
respectively.
The accompanying notes are an integral part of these financial statements. 21
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 4/30/05 (unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities of unaffiliated issuers,
at value (including securities loaned of $7,492,755)
(cost $670,246,414) $939,058,019
Investment in securities of affiliated issuers, at value
(cost $7,906,496) 12,648,920
------------
Total Investment in securities, at value
(cost $678,152,910) $951,706,939
Receivables -
Investment securities sold 6,869,813
Fund shares sold 1,146,789
Dividends and interest 2,591,958
Other 8,606
------------
Total assets $962,324,105
------------
LIABILITIES:
Payables -
Fund shares repurchased $ 3,872,705
Upon return of securities loaned 7,639,200
Due to bank 4,030,435
Due to affiliates 1,147,863
Accrued expenses 66,702
------------
Total liabilities $ 16,756,905
------------
NET ASSETS:
Paid-in capital $648,305,693
Undistributed net investment income 6,686,522
Accumulated net realized gain on investments 17,020,956
Net unrealized gain on investments 273,554,029
------------
Total net assets $945,567,200
============
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $650,580,294/22,876,532 shares) $ 28.44
============
Class B (based on $165,751,391/5,865,235 shares) $ 28.26
============
Class C (based on $120,882,333/4,289,553 shares) $ 28.18
============
Class R (based on $4,341,316/151,773 shares) $ 28.60
============
Class Y (based on $4,011,866/140,477 shares) $ 28.56
============
MAXIMUM OFFERING PRICE:
Class A ($28.44 [divided by] 94.25%) $ 30.18
============
22 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (unaudited)
- --------------------------------------------------------------------------------
For the Six Months Ended 4/30/05
INVESTMENT INCOME:
Dividends (including income from affiliated issuers
of $177,085) $15,295,478
Interest 62,952
Income from securities loaned, net 2,081
-----------
Total investment income $15,360,511
-----------
EXPENSES:
Management fees $ 2,807,383
Transfer agent fees and expenses
Class A 509,252
Class B 238,715
Class C 119,012
Class R 784
Class Y 157
Distribution fees
Class A 798,820
Class B 848,278
Class C 596,766
Class R 9,340
Administrative reimbursements 78,904
Custodian fees 20,476
Registration fees 76,945
Professional fees 29,687
Printing expense 24,613
Fees and expenses of nonaffiliated trustees 10,017
Miscellaneous 22,203
-----------
Total expenses $ 6,191,352
Less fees paid indirectly (11,202)
-----------
Net expenses $ 6,180,150
-----------
Net investment income $ 9,180,361
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $20,463,643
-----------
Change in net unrealized gain on investments $28,815,526
-----------
Net gain on investments $49,279,169
-----------
Net increase in net assets resulting from operations $58,459,530
===========
The accompanying notes are an integral part of these financial statements. 23
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Six Months Ended 4/30/05 and the Year Ended 10/31/04
Six Months
Ended
4/30/05 Year Ended
(unaudited) 10/31/04
FROM OPERATIONS:
Net investment income $ 9,180,361 $ 15,041,610
Net realized gain on investments 20,463,643 17,268,323
Change in net unrealized gain on investments 28,815,526 89,703,695
------------- -------------
Net increase in net assets resulting
from operations $ 58,459,530 $ 122,013,628
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.31 and $0.48 per share, respectively) $ (6,906,126) $ (10,358,673)
Class B ($0.19 and $0.25 per share, respectively) (1,169,731) (1,656,118)
Class C ($0.21 and $0.27 per share, respectively) (880,342) (1,084,083)
Class R ($0.30 and $0.45 per share, respectively) (41,201) (23,930)
Class Y ($0.36 and $0.59 per share, respectively) (50,750) (208,297)
------------- -------------
Total distributions to shareowners $ (9,048,150) $ (13,331,101)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 116,429,272 $ 205,247,057
Reinvestment of distributions 7,727,793 11,207,005
Cost of shares repurchased (106,088,685) (207,709,556)
------------- -------------
Net increase in net assets resulting from
Fund share transactions $ 18,068,380 $ 8,744,506
------------- -------------
Net increase in net assets $ 67,479,760 $ 117,427,033
NET ASSETS:
Beginning of period 878,087,440 760,660,407
------------- -------------
End of period (including undistributed net investment
income of $6,686,522 and $6,554,311,
respectively) $ 945,567,200 $ 878,087,440
============= =============
24 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
'05 Shares '05 Amount
(unaudited) (unaudited) '04 Shares '04 Amount
CLASS A
Shares sold 2,455,930 $ 70,070,971 4,973,509 $ 127,027,390
Reinvestment of distributions 214,516 6,157,946 356,620 9,120,357
Less shares repurchased (2,119,358) (60,430,213) (4,273,759) (108,706,870)
---------- ------------ ---------- -------------
Net increase 551,088 $ 15,798,704 1,056,370 $ 27,440,877
========== ============ ========== =============
CLASS B
Shares sold 786,236 $ 22,391,671 1,288,365 $ 32,697,780
Reinvestment of distributions 33,333 952,414 53,483 1,357,596
Less shares repurchased (982,552) (27,831,524) (2,583,099) (65,816,809)
---------- ------------ ---------- -------------
Net decrease (162,983) $ (4,487,439) (1,241,251) $ (31,761,433)
========== ============ ========== =============
CLASS C
Shares sold 747,444 $ 21,140,431 1,481,014 $ 37,244,660
Reinvestment of distributions 20,397 581,035 27,128 688,893
Less shares repurchased (592,636) (16,786,461) (944,232) (23,934,932)
---------- ------------ ---------- -------------
Net increase 175,205 $ 4,935,005 563,910 $ 13,998,621
========== ============ ========== =============
CLASS R (a)
Shares sold 84,931 $ 2,436,206 42,478 $ 1,110,868
Reinvestment of distributions 1,190 34,366 896 23,098
Less shares repurchased (10,855) (314,434) (13,178) (324,142)
---------- ------------ ---------- -------------
Net increase 75,266 $ 2,156,138 30,196 $ 809,824
========== ============ ========== =============
CLASS Y
Shares sold 13,482 $ 389,993 279,396 $ 7,166,359
Reinvestment of distributions 71 2,032 682 17,061
Less shares repurchased (25,492) (726,053) (339,787) (8,926,803)
---------- ------------ ---------- -------------
Net decrease (11,939) $ (334,028) (59,709) $ (1,743,383)
========== ============ ========== =============
(a) Class R shares were first publicly offered on April 1, 2003.
The accompanying notes are an integral part of these financial statements. 25
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
4/30/05 Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS A (unaudited) 10/31/04 10/31/03 10/31/02 10/31/01 10/31/00
Net asset value, beginning of period $ 26.91 $ 23.57 $ 20.80 $ 24.28 $ 29.55 $ 29.97
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations:
Net investment income $ 0.31 $ 0.52 $ 0.47 $ 0.49 $ 0.47 $ 0.58
Net realized and unrealized gain (loss) on investments 1.53 3.30 2.78 (3.50) (2.97) 1.28
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 1.84 $ 3.82 $ 3.25 $ (3.01) $ (2.50) $ 1.86
Distributions to shareowners:
Net investment income (0.31) (0.48) (0.48) (0.47) (0.45) (0.52)
Net realized gain - - - - (2.29) (1.76)
Tax return of capital - - - - (0.03) -
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 1.53 $ 3.34 $ 2.77 $ (3.48) $ (5.27) $ (0.42)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 28.44 $ 26.91 $ 23.57 $ 20.80 $ 24.28 $ 29.55
======== ======== ======== ======== ======== ========
Total return* 6.82% 16.33% 15.89% (12.62)% (9.21)% 6.90%
Ratio of net expenses to average net assets+ 1.07%** 1.08% 1.17% 1.11% 1.08% 1.11%
Ratio of net investment income to average net assets+ 2.22%** 2.07% 2.24% 2.06% 1.77% 1.95%
Portfolio turnover rate 17%** 22% 15% 10% 15% 14%
Net assets, end of period (in thousands) $650,580 $600,835 $501,283 $409,553 $464,792 $539,602
Ratios with reduction for fees paid indirectly:
Net expenses 1.07%** 1.08% 1.17% 1.10% 1.06% 1.08%
Net investment income 2.22%** 2.07% 2.24% 2.07% 1.79% 1.98%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
26
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
4/30/05 Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS B (unaudited) 10/31/04 10/31/03 10/31/02 10/31/01 10/31/00
Net asset value, beginning of period $ 26.75 $ 23.42 $ 20.67 $ 24.14 $ 29.37 $ 29.78
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations:
Net investment income $ 0.19 $ 0.35 $ 0.32 $ 0.31 $ 0.25 $ 0.35
Net realized and unrealized gain (loss) on investments 1.51 3.23 2.73 (3.50) (2.93) 1.28
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 1.70 $ 3.58 $ 3.05 $ (3.19) $ (2.68) $ 1.63
Distributions to shareowners:
Net investment income (0.19) (0.25) (0.30) (0.28) (0.23) (0.28)
Net realized gain - - - - (2.29) (1.76)
Tax return of capital - - - - (0.03) -
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 1.51 $ 3.33 $ 2.75 $ (3.47) $ (5.23) $ (0.41)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 28.26 $ 26.75 $ 23.42 $ 20.67 $ 24.14 $ 29.37
======== ======== ======== ======== ======== ========
Total return* 6.36% 15.34% 14.90% (13.34)% (9.90)% 6.04%
Ratio of net expenses to average net assets+ 1.94%** 1.95% 2.02% 1.91% 1.87% 1.91%
Ratio of net investment income to average net assets+ 1.35%** 1.21% 1.41% 1.25% 0.98% 1.15%
Portfolio turnover rate 17%** 22% 15% 10% 15% 14%
Net assets, end of period (in thousands) $165,751 $161,275 $170,283 $174,334 $230,268 $257,999
Ratios with reduction for fees paid indirectly:
Net expenses 1.94%** 1.95% 2.02% 1.90% 1.85% 1.89%
Net investment income 1.35%** 1.21% 1.41% 1.26% 1.00% 1.17%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
27
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
4/30/05 Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS C unaudited) 10/31/04 10/31/03 10/31/02 10/31/01 10/31/00
Net asset value, beginning of period $ 26.68 $ 23.37 $ 20.63 $ 24.08 $ 29.32 $ 29.75
-------- -------- ------- --------- --------- -------
Net increase (decrease) from investment operations:
Net investment income $ 0.19 $ 0.29 $ 0.24 $ 0.26 $ 0.21 $ 0.30
Net realized and unrealized gain (loss) on investments 1.52 3.29 2.81 (3.45) (2.92) 1.30
-------- -------- ------- --------- --------- -------
Net increase (decrease) from investment operations $ 1.71 $ 3.58 $ 3.05 $ (3.19) $ (2.71) $ 1.60
Distributions to shareowners:
Net investment income (0.21) (0.27) (0.31) (0.26) (0.21) (0.27)
Net realized gain - - - - (2.29) (1.76)
Tax return of capital - - - - (0.03) -
-------- -------- ------- --------- --------- -------
Net increase (decrease) in net asset value $ 1.50 $ 3.31 $ 2.74 $ (3.45) $ (5.24) $ (0.43)
-------- -------- ------- --------- --------- -------
Net asset value, end of period $ 28.18 $ 26.68 $ 23.37 $ 20.63 $ 24.08 $ 29.32
======== ======== ======= ========= ========= =======
Total return* 6.39% 15.40% 14.93% (13.37)% (10.02)% 5.94%
Ratio of net expenses to average net assets+ 1.86%** 1.89% 2.00% 1.99% 1.98% 2.02%
Ratio of net investment income to average net assets+ 1.43%** 1.26% 1.36% 1.19% 0.84% 1.05%
Portfolio turnover rate 17%** 22% 15% 10% 15% 14%
Net assets, end of period (in thousands) $120,882 $109,787 $82,979 $ 42,903 $ 37,618 $32,050
Ratios with reduction for fees paid indirectly:
Net expenses 1.86%** 1.89% 2.00% 1.98% 1.96% 1.98%
Net investment income 1.43%** 1.26% 1.36% 1.20% 0.86% 1.09%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
28
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 4/1/03 (a)
4/30/05 Year Ended to
CLASS R (unaudited) 10/31/04 10/31/03
Net asset value, beginning of period $ 27.08 $ 23.71 $ 19.97
------- ------- -------
Net increase from investment operations:
Net investment income $ 0.18 $ 0.44 $ 0.23
Net realized and unrealized gain on investments 1.64 3.38 3.73
------- ------- -------
Net increase from investment operations $ 1.82 $ 3.82 $ 3.96
Distributions to shareowners:
Net investment income (0.30) (0.45) (0.22)
------- ------- -------
Net increase in net asset value $ 1.52 $ 3.37 $ 3.74
------- ------- -------
Net asset value, end of period $ 28.60 $ 27.08 $ 23.71
======= ======= =======
Total return* 6.72% 16.23% 19.87%
Ratio of net expenses to average net assets+ 1.21%** 1.17% 1.21%**
Ratio of net investment income to average
net assets+ 2.03%** 1.98% 0.97%**
Portfolio turnover rate 17%** 22% 15%
Net assets, end of period (in thousands) $ 4,341 $ 2,072 $ 1,098
Ratios with reduction for fees paid indirectly:
Net expenses 1.21%** 1.17% 1.21%**
Net investment income 2.03%** 1.98% 0.97%**
(a) Class R shares were first publically offered on April 1, 2003.
* 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.
29
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
4/30/05 Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS Y (unaudited) 10/31/04 10/31/03 10/31/02 10/31/01 10/31/00
Net asset value, beginning of period $27.02 $23.65 $20.85 $ 24.33 $29.59 $30.00
------ ------ ------ ------- ------ ------
Net increase (decrease) from investment operations:
Net investment income $ 0.40 $ 0.67 $ 0.52 $ 0.55 $ 0.55 $ 0.70
Net realized and unrealized gain (loss) on investments 1.50 3.29 2.85 (3.46) (2.97) 1.27
------ ------ ------ ------- ------ ------
Net increase (decrease) from investment operations $ 1.90 $ 3.96 $ 3.37 $ (2.91) $(2.42) $ 1.97
Distributions to shareowners:
Net investment income (0.36) (0.59) (0.57) (0.57) (0.52) (0.62)
Net realized gain - - - - (2.29) (1.76)
Tax return of capital - - - - (0.03) -
------ ------ ------ ------- ------ ------
Net increase (decrease) in net asset value $ 1.54 $ 3.37 $ 2.80 $ (3.48) $(5.26) $(0.41)
------ ------ ------ ------- ------ ------
Net asset value, end of period $28.56 $27.02 $23.65 $ 20.85 $24.33 $29.59
====== ====== ====== ======= ====== ======
Total return* 7.04% 16.88% 16.45% (12.24)% (8.89)% 7.33%
Ratio of net expenses to average net assets+ 0.66%** 0.64% 0.71% 0.69% 0.66% 0.70%
Ratio of net investment income to average net assets+ 2.63%** 2.43% 2.66% 2.49% 2.17% 2.37%
Portfolio turnover rate 17%** 22% 15% 10% 15% 14%
Net assets, end of period (in thousands) $4,012 $4,119 $5,017 $ 2,842 $2,530 $2,669
Ratios with reduction for fees paid indirectly:
Net expenses 0.66%** 0.64% 0.71% 0.68% 0.64% 0.68%
Net investment income 2.63%** 2.43% 2.66% 2.50% 2.19% 2.39%
* Assumes initial investment at net asset value at the beginning of each
period, 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.
30
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/05 (unaudited)
- --------------------------------------------------------------------------------
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.
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, 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
31
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
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 April 30, 2005,
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, 2004, the Fund had a net capital loss carryforward of
$3,442,687, which will expire in 2010 if not utilized.
32
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The tax character of distributions
paid during the year ended October 31, 2004 was as follows:
- --------------------------------------------------------------------------------
2004
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $13,331,101
Long-term capital gain -
-----------
Total $13,331,101
===========
- --------------------------------------------------------------------------------
The following shows the components of distributable earnings on a federal
income tax basis at October 31, 2004.
- --------------------------------------------------------------------------------
2004
- --------------------------------------------------------------------------------
Undistributed ordinary income $ 917,202
Capital loss carryforward (3,442,687)
Unrealized appreciation 250,375,612
------------
Total $247,850,127
------------
- --------------------------------------------------------------------------------
The difference between book basis and tax-basis unrealized appreciation is
attributable to the tax adjustments on partnerships, preferred stocks and
REIT holdings.
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 $74,591 in underwriting
commissions on the sale of Class A shares during the six months ended,
April 30, 2005.
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 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 ser-
33
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
vices, 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 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
34
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Investment Fund, which is managed 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.
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 April 30, 2005, $501,848 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 $257,985 in transfer agent
fees payable to PIMSS at April 30, 2005.
4. Distribution and Service Plans
The Fund adopted a Plan of Distribution for each class of shares, except Class
Y 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. Pursuant to
the Class R Plan, the Fund pays PFD 0.50% of the average daily net assets
attributable to Class R shares for distribution services. Included in due to
affiliates is $388,030 in distribution fees payable to PFD at April 30, 2005.
The Fund also has adopted a separate service plan for Class R shares (Service
Plan). The Service Plan authorizes the Fund to pay
35
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
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 addition, redemptions of each class of shares (except Class Y shares) may be
subject to a contingent deferred sales charge (CDSC). Effective February 1,
2004, a CDSC of 1.00% may be imposed on redemptions of certain net asset value
purchases of Class A shares within 18 months of purchase (12 months for shares
purchased prior to February 1, 2004). Class B shares subscribed on or after
December 1, 2004 that are redeemed within five years of purchase are subject to
a CDSC at declining rates beginning at 4.00%, based on the lower of 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. Redemptions of Class C shares within one year of purchase are
subject to a CDSC of 1.00%. Redemptions of Class R shares within 18 months of
purchase were subject to a CDSC of 1.00%. Effective July 1, 2004, the CDSC on
Class R shares was eliminated. Proceeds from the CDSCs are paid to PFD. For the
six months ended April 30, 2005, CDSCs in the amount of $126,068 were paid to
PFD.
5. Expense Offset Arrangements
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 six months ended April 30, 2005, the Fund's
expenses were reduced by $11,202 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
36
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
six months ended April 30, 2005, the Fund had no borrowings under this
agreement.
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 six months ended, April 30, 2005:
- -------------------------------------------------------------------------------------------
Beginning Ending
Balance Purchases Sales Dividend Balance
Affiliates (shares) (shares) (shares) Income (shares) Value
- -------------------------------------------------------------------------------------------
Gorman-Rupp Co. 632,446 - - $177,085 632,446 $12,648,920
- -------------------------------------------------------------------------------------------
37
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT
- --------------------------------------------------------------------------------
The Investment Company Act of 1940 requires that both the Board of Trustees and
a majority of the Independent Trustees (collectively "the Trustees") vote
separately annually to approve the Fund's management contract (the "Management
Contract"). The Trustees have determined that the terms of the Management
Contract are fair and reasonable and that renewal of the contract will enable
the Fund to receive quality investment advisory services at a cost deemed
reasonable and in the best interests of the Fund and its shareholders. In
making such determinations, the Independent Trustees relied upon the assistance
of counsel to the Independent Trustees and counsel to the Fund.
Throughout the year, the Independent Trustees regularly met in executive
session separately from the Interested Trustees of the Fund and any officer of
Pioneer Investment Management, Inc., the Fund's adviser (the "Investment
Adviser"), or its affiliates. While the Trustees, including the Independent
Trustees, act on all major matters relating to the Fund, a significant portion
of the activities of the Board of Trustees (including certain of those
described herein) is conducted through committees, the members of which are
comprised exclusively of Independent Trustees. Such committee meetings are
attended by officers of the Fund or the Investment Adviser to the extent
requested by the members of the committee.
In evaluating the Management Contract, the Trustees conducted a review that was
specifically focused upon the renewal of the Management Contract, and relied
upon their knowledge, resulting from their meetings throughout the year, of the
Investment Adviser, its services and the Fund. Both in meetings specifically
dedicated to renewal of the Management Contract and at other meetings during
the course of the year, the Trustees, including the Independent Trustees,
received materials relating to the Investment Adviser's investment and
management services under the Management Contract. These materials included (i)
information on the investment performance of the Fund, a peer group of funds
and two indices, in each case selected by the Independent Trustees for this
purpose, (ii) sales and redemption data in respect to the Fund, (iii) the
general investment outlook in the markets in which the Fund invests, (iv)
arrangements in respect of the distribution of the Fund's shares, (v) the
procedures employed to determine the value of each of the Fund's assets, (vi)
the Investment Adviser's management of the relationships with the Fund's
unaffiliated service providers, (vii) the record of compliance with the Fund's
investment policies and restrictions and with the Fund's Code
38
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
of Ethics and the structure and responsibilities of the Investment Adviser's
compliance department, (viii) the nature, cost and character of non-investment
management services provided by the Investment Adviser and its affiliates and
(ix) the disclosures included in the Fund's prospectuses and reports to
shareholders.
Specifically in connection with the Independent Trustees' review of the
Management Contract, the Independent Trustees requested and the Investment
Adviser provided additional information in order to evaluate the quality of the
Investment Adviser's services and the reasonableness of the fee under the
Management Contract. Among other items, this information included data or
analyses of (1) investment performance for one and three years and life of the
Fund periods for the Fund and a peer group selected by the Independent Trustees
for this purpose, (2) management fees incurred by a peer group of funds
selected by the Independent Trustees for this purpose, (3) the advisory fees of
comparable portfolios of other clients of the Investment Adviser, (4) expense
ratios for the Fund and a peer group of funds selected by the Independent
Trustees for this purpose, (5) the overall organization of the Investment
Adviser, (6) the Investment Adviser's financial results and condition,
including its and certain of its affiliates profitability from services
performed for the Fund, (7) transfer agency fees and administrative
reimbursements paid to the Investment Adviser or affiliates, (8) investment
management staffing, and (9) operating expenses paid to third parties. The
Trustees also reviewed information regarding the potential for the Fund and the
Investment Adviser to benefit from further economies of scale in the management
of the Fund in light of reasonable growth expectations for the Fund and certain
of the Fund's expenses that are not incurred as fees based on a percentage of
net assets.
The following summarizes matters considered by the Trustees in connection with
their renewal of the Fund's Management Contract. The Trustees did not identify
any single factor as all-important or controlling, and the summary does not
detail all the matters that were considered.
A. Ancillary Benefits to Shareholders. The Trustees considered the benefits to
shareholders of investing in a Fund that is part of a large number of
investment companies offering a variety of investment disciplines and
providing for a large variety of Fund and shareholder services.
39
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
- --------------------------------------------------------------------------------
B. Compliance and Investment Performance. The Trustees determined that the
Investment Adviser had policies and systems reasonably designed to achieve
compliance with the Fund's investment objectives and regulatory
requirements. The Trustees also reviewed the Fund's investment performance
based upon total return and yield, as well as the Fund's performance
compared to both the performance of a peer group and an index, in each case
selected by the Independent Trustees for this purpose. The Fund's
performance based upon total return was in the third quintile of the peer
group for the 12 months ended June 30, 2004, the third quintile of the peer
group for the three years ended June 30, 2004, and the third quintile for
the five years ended June 30, 2004. (In all quintile rankings referred to
throughout this discussion first quintile is most favorable to the Fund's
shareholders. Thus, highest relative performance would be first quintile and
lowest relative expenses also would be first quintile.) The Trustees also
considered that the yield before expenses to Fund Class A shareholders (as
of October 2004) exceeded the yield of the Standard & Poor's 500 Index. The
Trustees concluded that the performance of the Fund supported the
continuation of the Management Contract.
C. The Investment Adviser's Personnel and Methods. The Trustees reviewed the
background of members of the team responsible for the daily management of
the Fund and the Fund's investment objective and discipline. The Independent
Trustees also have had discussions with senior management of the Investment
Adviser responsible for investment operations and the senior management of
the Investment Adviser's equities group. Among other things, the Trustees
considered the number, education and experience of the Investment Adviser's
investment staff and their use of technology and emphasis on analytics in
view of the risk profile of securities in which the Fund invests. The
Trustees concluded that the Investment Adviser had the quality and depth of
personnel and the well-developed methods essential to performing its duties
under the Management Contract.
D. Nature and Quality of Other Services. The Trustees considered the nature,
quality, cost and extent of other services provided to shareholders of the
Fund, including administrative and shareholder services performed by the
Investment Adviser under the Management Contract. The Trustees also
considered the reasonableness
40
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
of the arrangements for reimbursement of the Investment Adviser's
out-of-pocket costs and expenses, including overhead, for certain
administrative services that the Investment Adviser is not required to
provide under the Management Contract. The Trustees also considered the
nature and extent of the other services provided by the Investment
Adviser's affiliates under other contracts and its supervision of third
party service providers. Based on these considerations, the Trustees
concluded that the nature, quality, cost and extent of such services are
satisfactory and reliable and serve the shareholders of the Fund well.
E. Management Fee and Expenses. The Trustees considered the Investment
Adviser's fee under the Management Contract relative to the management fees
charged by a peer group of funds selected by the Independent Trustees for
this purpose using data provided by an independent third party. The Fund's
management fee for the 12 months ended June 30, 2004 was in the second
quintile relative to the management fees paid by the other funds in that
peer group for the comparable period. The Trustees determined that the fee
under the Management Contract was reasonable and fair in light of both the
overall nature and quality of services provided by the Investment Adviser
and the fees charged by the funds in the peer group. The Trustees also
considered the Fund's expense ratio and expense ratios of a peer group of
funds selected by the Independent Trustees for this purpose. The Fund's
expense ratio for the 12 months ended June 30, 2004 was in the second
quintile of the applicable peer group for the most recent fiscal year of the
peer group for the comparable period. The Trustees concluded that the Fund's
overall expense ratio was lower than that of comparable funds.
F. Profitability. The Trustees considered the level of the Investment Adviser's
profits with respect to the management of the Pioneer Funds, including
details with respect to the Fund. This consideration included a review of
the Investment Adviser's methodology in allocating certain of its costs to
the management of each Fund. The Trustees also considered the financial
results realized by the Investment Adviser in connection with the operation
of the Fund. They further considered the profits realized by the Investment
Adviser and its affiliates from non-fund businesses that may benefit from or
be related to the Fund's business. The Trustees considered the Investment
Adviser's profit margins in comparison
41
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
- --------------------------------------------------------------------------------
with the limited available industry data. The Trustees concluded that the
Investment Adviser's profits from management of the Pioneer Funds,
including the financial results derived from the Fund, bear a reasonable
relationship to the services rendered and are fair for the management of
the Fund.
G. Economies of Scale. The Trustees considered the economies of scale with
respect to the management of the Fund, whether the Fund had appropriately
benefited from any economies of scale, and whether there was potential for
realization of any further economies of scale. Because of break points in
the management fee, the Trustees concluded that any perceived or potential
economies of scale would be shared at future asset levels in a reasonable
manner as the Fund grows in size between Fund's shareholders and the
Investment Adviser.
H. Other Benefits to the Investment Adviser. The Trustees also considered the
character and amount of fees paid by the Fund, other than under the
Management Contract, for services provided by the Investment Adviser and
affiliates, including fees for services such as shareholder services. The
Trustees also considered the receipt of sales loads and payments under Rule
12b-1 plans in respect to the Pioneer Funds (including the Fund), and
benefits to the Investment Adviser from the use of "soft" commission dollars
to pay for research and brokerage services. The Trustees further considered
the revenues and profitability of the Investment Adviser's businesses other
than the fund business, including the Investment Adviser's institutional
investment advisory business. The Trustees considered the intangible
benefits that accrue to the Investment Adviser and its affiliates by virtue
of its relationship with the Fund and the Pioneer Funds as a group. The
Trustees concluded that all these types of benefits accruing to the
Investment Adviser were reasonable in the context of the overall
relationship between the Investment Adviser and the Fund.
Conclusion. The Trustees, in light of the Investment Adviser's overall
performance, considered it appropriate to continue to retain the management
services of the Investment Adviser. Based on their evaluation of all material
factors deemed relevant and the advice of independent counsel, the Trustees
concluded that the Management Contract with the Fund is fair and reasonable and
voted to approve the continuation of the Management Contract for another year.
42
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive
Mary K. Bush Vice President
Margaret B.W. Graham Vincent Nave, Treasurer
Osbert M. Hood Dorothy E. Bourassa, Secretary
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
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.
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 6-month period ended August 31, 2004 is publicly available to
shareowners at www.pioneerfunds.com. This information is also available on the
Securities and Exchange Commission's web site at http://www.sec.gov.
43
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
44
- --------------------------------------------------------------------------------
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@pioneerinvest.com
(for general questions about Pioneer only)
Visit our web site: www.pioneerfunds.com
Please consider the Fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the Fund and should be read carefully before you invest. To obtain a
prospectus and for other information on any Pioneer fund, contact your advisor,
call 1-800-225-6292 or visit our web site www.pioneerfunds.com.
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. Shareowners 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.
N/A
(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.
N/A
(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.
N/A
(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.
N/A
(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.
N/A
(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 Fund's independent auditor, Ernst & Young
LLP ("E&Y"), has advised the Securities
and Exchange Commission, the Public Company
Accounting Oversight Board, and the Audit
Committee of the Fund's Board of Trustees that
certain non-audit work performed by E&Y's China
affiliate raised questions regarding E&Y's
independence with respect to its performance of
audit services for the Fund. In July 2004, E&Y
became aware that member firms in China ("E&Y
China") provided certain tax services to offices of
UniCredito Italiano, S.p.A. ("UCI"), a member of
the Fund's Investment Company Complex. The
services included receipt and disbursement of
monies transferred to E&Y China by UCI in
payment of individual expatriate income taxes due
on returns prepared by E&Y China for certain UCI
employees located in China from October 1998 to
May 2003. E&Y became auditors of the Fund in
May 2002. These expatriate tax services were
discontinued in May 2003. The fees received by
E&Y China for all such services totaled $3,685.
The Fund's Audit Committee and E&Y have
discussed the matter, including the nature of the
services provided, the personnel involved in
providing the services and the fees received by
E&Y for performing the services. E&Y has informed
the Audit Committee that based on its internal reviews
and the de minimis nature of the services provided and
fees received, it does not believe its independence
with respect to the Fund has been impaired.
N/A
(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.
N/A
ITEMS 5-6. [RESERVED]
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. [RESERVED]
ITEM 9. 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 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.
ITEM 10. 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 June 28, 2005
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 June 28, 2005
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date June 28, 2005
* Print the name and title of each signing officer under his or her signature.