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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 811-07339
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, 2003 through October 31, 2004
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.
PIONEER
-------
EQUITY
INCOME
FUND
Annual
Report
10/31/04
[LOGO] PIONEER
Investments(R)
Table of Contents
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Letter to Shareowners 1
Portfolio Summary 2
Performance Update 3
Comparing Ongoing Fund Expenses 8
Portfolio Management Discussion 10
Schedule of Investments 14
Financial Statements 21
Notes to Financial Statements 30
Report of Independent Registered Public Accounting Firm 36
The Pioneer Family of Mutual Funds 37
Trustees, Officers and Service Providers 38
Pioneer Equity Income Fund
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LETTER TO SHAREOWNERS 10/31/04
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Dear Shareowner,
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High energy prices and rising interest rates caused concern among investors
during the third quarter of 2004. As oil prices touched $50 per barrel for the
first time, many consumers, faced with high priced gasoline and anticipating a
winter of hefty heating bills, responded by holding back on spending. Consumers
account for the bulk of the nation's economic activity, and retail sales over
the summer were erratic. Beyond soaring energy costs, which have the effect of
a tax increase on individuals and businesses, the slack job creation data of
the last few months also undermined confidence in the economic outlook. The
markets in general fell during the third quarter. Continued unsettled
conditions in Iraq and the ever present specter of terrorism also weighed on
investors' minds. Overseas, global markets were fairly stable, after stumbling
earlier in the year.
But the fuzzy economic picture was good news for bond investors. Despite three
hikes in short-term interest rates, the first increases in four years, bond
prices rose and yields fell over the period. Longer-term Treasury securities
were the strongest performers, with corporate bonds, including high-yield
issues, also delivering favorable returns. Lower long-term rates were also
beneficial to the housing and mortgage industries. Behind the rally in bonds
lies investor skepticism about the strength and durability of the current
economic recovery. A slowing recovery leading to an easing of inflationary
pressures may convince the Federal Reserve Board to slow the pace of future
rate increases. Less inflation would also mean better real returns for bond
holders.
Pioneer believes that the economy will continue to expand in 2005, but at a
more measured tempo. After an extended period of cutting costs and bolstering
balance sheets, many corporations are financially stronger than they have been
in some time. And although short-term interest rates have risen, they are still
relatively low and do not appear to be a barrier for companies needing to
borrow for expansion. Equity valuations now appear better aligned with earnings
prospects than was the case a year ago, when prices ran ahead of profit
expectations. Therefore, steady but moderate expansion in corporate profits has
the potential to drive stock prices higher.
A one-step approach to portfolio allocation
Building and maintaining a long-term strategy for your portfolio means deciding
on an appropriate mix of investments, then adjusting the weightings as time
passes and your goals change. The Pioneer Ibbotson Asset Allocation Series is a
family of three portfolios - moderate, growth and aggressive - each comprising
a select group of Pioneer funds. Ibbotson Associates, a leading authority on
investing and asset allocation, diversifies, reallocates and automatically
rebalances the portfolios periodically. By rebalancing the portfolio as rates
of return on stocks, bonds and other investments vary, Ibbotson seeks to manage
risk and to keep your holdings in line with the Fund's stated goals.
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
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
PORTFOLIO SUMMARY 10/31/04
Portfolio Diversification
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(As a percentage of total investment portfolio)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stocks 98.1%
Convertible Preferred Stocks 1.1%
Temporary Cash Investment 0.7%
Convertible Corporate Bonds 0.1%
Sector Distribution
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(As a percentage of total investment in securities)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Financials 22.4%
Utilities 17.0%
Consumer Discretionary 11.9%
Energy 10.4%
Industrials 10.3%
Telecommunication Services 6.9%
Materials 6.8%
Consumer Staples 6.0%
Health Care 5.9%
Information Technology 2.4%
10 Largest Holdings
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(As a percentage of total investment in securities)*
1. Paccar, Inc. 4.33% 6. ConocoPhillips 2.49%
2. ChevronTexaco Corp. 3.70 7. Questar Corp. 2.44
3. Exxon Mobil Corp. 3.56 8. SunTrust Banks, Inc. 2.21
4. Washington Mutual, Inc. 3.11 9. KeySpan Energy Corp. 2.07
5. T. Rowe Price Associates, Inc. 2.56 10. Constellation Energy Group 2.02
*This list excludes money market and derivative instruments. The portfolio is
actively managed, and current holdings may be different.
2
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 10/31/04 CLASS A SHARES
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Share Prices and Distributions
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Net Asset Value
per Share 10/31/04 10/31/03
$26.91 $23.57
Net
Distributions per Share Investment Short-Term Long-Term
(11/1/03 - 10/31/04) Income Capital Gains Capital Gains
$0.4796 $ - $ -
Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund at public offering price,
compared to that of the Russell 1000 Value Index.
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Average Annual Total Returns
(As of October 31, 2004)
Net Asset Public Offering
Period Value Price (POP)
10 Years 10.52% 9.86%
5 Years 2.72 1.51
1 Year 16.33 9.63
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Value of $10,000 Investment
[DATA BELOW IS REPRESENTED BY A MOUNTAIN CHART IN THE ORIGINAL REPORT]
Pioneer Equity Russell 1000
Date Income Fund Value Index
10/31/1994 $9,425 $10,000
$11,261 $12,471
10/31/1996 $13,010 $15,431
$16,964 $20,551
10/31/1998 $20,135 $23,601
$22,402 $27,502
10/31/2000 $23,948 $29,020
$21,743 $25,577
10/31/2002 $18,999 $23,014
$22,018 $28,280
10/31/2004 $25,613 $32,646
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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.
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 and can be rescinded at any time. See the
prospectus and financial statements for complete details.
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 is a measure of 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.
3
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 10/31/04 CLASS B SHARES
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Share Prices and Distributions
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Net Asset Value
per Share 10/31/04 10/31/03
$26.75 $23.42
Net
Distributions per Share Investment Short-Term Long-Term
(11/1/03 - 10/31/04) Income Capital Gains Capital Gains
$0.2479 $ - $ -
Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund, compared to that of the Russell
1000 Value Index.
- ----------------------------------
Average Annual Total Returns
(As of October 31, 2004)
If If
Period Held Redeemed
10 Years 9.70% 9.70%
5 Years 1.88 1.71
1 Year 15.34 11.34
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Value of $10,000 Investment
[DATA BELOW IS REPRESENTED BY A MOUNTAIN CHART IN THE ORIGINAL REPORT]
Pioneer Equity Russell 1000
Date Income Fund Value Index
10/31/1994 $10,000 $10,000
$11,865 $12,471
10/31/1996 $13,609 $15,431
$17,603 $20,551
10/31/1998 $20,741 $23,601
$22,905 $27,502
10/31/2000 $24,288 $29,020
$21,884 $25,577
10/31/2002 $18,965 $23,014
$21,792 $28,280
10/31/2004 $25,134 $32,646
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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 redeemed" returns reflect deduction of applicable contingent deferred sales
charge (CDSC). The maximum CDSC is 4% and declines over six years. 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 and can be rescinded at any time. See the
prospectus and financial statements for complete details.
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.
Index comparison begins on 4/30/94. The Russell 1000 Value Index is a measure
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 10/31/04 CLASS C SHARES
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Share Prices and Distributions
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Net Asset Value
per Share 10/31/04 10/31/03
$26.68 $23.37
Net
Distributions per Share Investment Short-Term Long-Term
(11/1/03 - 10/31/04) Income Capital Gains Capital Gains
$0.2743 $ - $ -
Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund at public offering price,
compared to that of the Russell 1000 Value Index.
- ----------------------------------------
Average Annual Total Returns
(As of October 31, 2004)
If If
Period Held Redeemed
Life-of-Class
(1/31/96) 7.87% 7.87%
5 Years 1.84 1.84
1 Year 15.40 15.40
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Value of $10,000 Investment
[DATA BELOW IS REPRESENTED BY A MOUNTAIN CHART IN THE ORIGINAL REPORT]
Pioneer Equity Russell 1000
Date Income Fund Value Index
1/31/1996 $10,000 $10,000
10/31/1996 $10,534 $11,142
$13,622 $14,839
10/31/1998 $16,047 $17,040
$17,708 $19,857
10/31/2000 $18,761 $20,953
$16,882 $18,467
10/31/2002 $14,626 $16,617
$16,810 $20,419
10/31/2004 $19,399 $23,570
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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 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 and can be rescinded at any time. See the
prospectus and financial statements for complete details.
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 is a measure of 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.
5
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 10/31/04 CLASS R SHARES
- --------------------------------------------------------------------------------
Share Prices and Distributions
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Net Asset Value
per Share 10/31/04 10/31/03
$27.08 $23.71
Net
Distributions per Share Investment Short-Term Long-Term
(11/1/03 - 10/31/04) Income Capital Gains Capital Gains
$0.4493 $ - $ -
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund at public offering price,
compared to that of the Russell 1000 Value Index.
- -----------------------------------
Average Annual Total Returns
(As of October 31, 2004)
If If
Period Held Redeemed
10 Years 10.10% 10.10%
5 Years 2.46 2.46
1 Year 16.23 16.23
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Value of $10,000 Investment
[DATA BELOW IS REPRESENTED BY A MOUNTAIN CHART IN THE ORIGINAL REPORT]
Pioneer Equity Russell 1000
Date Income Fund Value Index
10/31/1994 $10,000 $10,000
$11,891 $12,471
10/31/1996 $13,669 $15,431
$17,733 $20,551
10/31/1998 $20,941 $23,601
$23,180 $27,502
10/31/2000 $24,657 $29,020
$22,277 $25,577
10/31/2002 $19,370 $23,014
$22,519 $28,280
10/31/2004 $26,172 $32,646
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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.
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. 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 and can be rescinded at any time. See the
prospectus and financial statements for complete details.
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 is a measure of 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 10/31/04 CLASS Y SHARES
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Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value
per Share 10/31/04 10/31/03
$27.02 $23.65
Net
Distributions per Share Investment Short-Term Long-Term
(11/1/03 - 10/31/04) Income Capital Gains Capital Gains
$0.5866 $ - $ -
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund, compared to that of the Russell
1000 Value Index.
- -----------------------------------
Average Annual Total Returns
(As of October 31, 2004)
If If
Period Held Redeemed
10 Years 10.81% 10.81%
5 Years 3.16 3.16
1 Year 16.88 16.88
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Value of $10,000 Investment
[DATA BELOW IS REPRESENTED BY A MOUNTAIN CHART IN THE ORIGINAL REPORT]
Pioneer Equity Russell 1000
Date Income Fund Value Index
7/31/1998 $10,000 $10,000
$10,167 $9,698
$11,354 $11,301
10/31/2000 $12,187 $11,925
$11,103 $10,510
10/31/2002 $9,744 $9,457
$11,347 $11,621
10/31/2004 $13,263 $13,415
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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 and can be rescinded at any time. See the
prospectus and financial statements for complete details.
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.
Index comparison begins 7/31/98. The Russell 1000 Value Index is a measure 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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COMPARING ONGOING FUND EXPENSES
- --------------------------------------------------------------------------------
As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value - $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Equity Income Fund
Based on actual returns from May 1, 2004 through October 31, 2004
Share Class A B C R Y
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Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 5/1/04
Ending Account Value $1,073.85 $1,068.95 $1,069.51 $1,073.42 $1,076.34
On 10/31/04
Expenses Paid During Period* $ 5.60 $ 9.99 $ 9.59 $ 6.11 $ 3.33
* Expenses are equal to the Fund's annualized expense ratio of 1.07%, 1.92%,
1.84%, 1.17% and 0.64%, for Class A, Class B, Class C, Class R and Class Y
shares, respectively, multiplied by the average account value over the
period, multiplied by 184/366 (to reflect the one-half year period).
8
Pioneer Equity Income Fund
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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). 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 May 1, 2004 through October 31, 2004
Share Class A B C R Y
- ----------------------------------------------------------------------------------------
Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 5/1/04
Ending Account Value $1,019.71 $1,015.33 $1,015.63 $1,019.25 $1,021.92
On 10/31/04
Expenses Paid During Period* $ 5.45 $ 9.73 $ 9.34 $ 5.95 $ 3.24
* Expenses are equal to the Fund's annualized expense ratio of 1.07%, 1.92%,
1.84%, 1.17% and 0.64%, for Class A, Class B, Class C, Class R and Class Y
shares, respectively, multiplied by the average account value over the
period, multiplied by 184/366 (to reflect the one-half year period).
9
Pioneer Equity Income Fund
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PORTFOLIO MANAGEMENT DISCUSSION 10/31/04
- --------------------------------------------------------------------------------
In the following discussion, John Carey, portfolio manager of Pioneer Equity
Income Fund reviews the investment environment and the Fund's performance over
the past year.
Q: What were the investment results for Pioneer Equity Income Fund in the last
year, and how did the results compare with those of the stock market in
general?
A: Pioneer Equity Income Fund turned in a strong performance in the year ended
October 31, 2004. The total return on Class A shares at net asset value
was 16.33%. By comparison, the Russell 1000 Value Index rose by 15.98% and
the Standard & Poor's 500 Index gained 9.72% over the same twelve months.
Both the Russell and the S&P are unmanaged indexes of the general stock
market. The Fund also outperformed its peers, which, as measured by the
average fund in the Lipper equity-income category, rose 12.42%. The second
half of the Fund's fiscal year was also reasonably successful. Class A
shares of Pioneer Equity Income Fund rose 7.38% in the six months ended
October 31, versus 6.75% for the Russell 1000 Value Index, 9.72% for the
Standard & Poor's 500 Index, and 4.56% for the average fund in the Lipper
equity-income category.
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 year, the American economy continued to gather strength.
Key measures such as employment, capital spending, and industrial
production all indicated an economy on the upswing. Improving corporate
earnings provided the key impetus to the stock market. Certainly some
investors had concerns about the sharp rise in energy and other commodity
prices. The persistently weak dollar, attributable perhaps in large
measure to our trade deficit, also gave investors pause. There was
likewise unease about the political uncertainty heading into the fall
elections; that uncertainty at least was resolved shortly after the end of
our fiscal year. As for unease about terrorism, that we shall probably
continue to experience for some time, though at this point investors
appear to have put it into perspective much as they did in the
10
Pioneer Equity Income Fund
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- --------------------------------------------------------------------------------
1950s and 1960s with the threat of nuclear war with the Soviet Union. On
the whole, we tend to think there is still too much pessimism about the
economy, which, paradoxically, may be positive for the stock market as it
means there are still potential buyers waiting in the wings. We look for
another year of good economic growth in 2005, and we think that there will
be additional opportunities to make money on reasonably priced stocks with
above-average prospects.
Q: Can you discuss investments that helped performance of the Fund during the
year and also the investments that hurt results?
A: The bright spots for Pioneer Equity Income Fund in the year were our
investments in financial services, industrials, energy, materials,
utilities, and consumer discretionary. Areas of weakness, though of lesser
magnitude than our points of strength, were consumer staples,
telecommunications services, and health care. In financials, two of our
regional banks, SouthTrust and Charter One Financial, received takeover
offers from other banks at high premiums to their market prices. Our
shares of T. Rowe Price, an investment-management company, also did very
well with the rising financial markets. At the same time, we benefited
from not owning shares of Citigroup, which did not keep up with other
stocks in the financial sector.
For the third year in a row, Paccar, the builder of heavy trucks, was a
top performer for us in industrials. Another good performer for us in
industrials was Timken, producer of tapered roller bearings and specialty
steels. High oil and natural-gas prices helped our energy holdings, most
particularly ConocoPhillips and ChevronTexaco. One final success story to
highlight was Questar, classified as a utility, but also participating in
oil and gas exploration and production as well as pipeline operation.
With regard to weak areas, we had trouble again this year with
higher-dividend-paying, "value" names in food processing, pharmaceuticals,
and telecommunications. Campbell Soup, Eli Lilly, Merck, and AT&T were a
few of the individual names that lagged the rest of the portfolio.
11
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 10/31/04 (continued)
- --------------------------------------------------------------------------------
Q: Please describe changes you made to the portfolio in the second half of the
year.
A: As in the first half of the year, we were fairly active in the six months
ended October 31, initiating nine positions and liquidating ten. New were:
Phelps Dodge, leading copper miner, profiting from high metals prices;
Servicemaster, provider of a broad range of services to residential and
commercial customers, including lawn care and termite control, plumbing
and furniture repair; and Tupperware. To our previous holdings of their
convertible securities, we added common shares of both Ford Motor and
General Motors, U.S. auto manufacturers showing higher cyclical earnings.
We took a small position in a new offering of convertibles in Schering
Plough, a recovering story in the drug industry. We added two names in
banking, State Street and Comerica. Finally, we purchased shares of
Ameren, a St. Louis, Missouri-based electric and gas utility with a very
generous dividend yield.
Sales in the six-month period included stocks we felt had reached their
reasonable appreciation potential, for instance J.C. Penney and Biomet,
and stocks where we had developed concerns about the potential, namely
Vectren, Coca Cola, and St. Paul Travelers. Our shares of Charter One
Financial were acquired for cash by Royal Bank of Scotland, resulting in a
nice realized gain for the Fund. Also sold were Bank of America, Sears
Roebuck, the Electronic Data Systems convertible preferred, and Hewlett
Packard. In the case of Sears, with whose earnings prospects we had become
distinctly discouraged, we could not have foretold that after our fiscal
year end, KMart would make a premium acquisition offer for the company.
Q: What is your outlook for the new fiscal year?
A: We think that 2005 could be another decent year for the stock market,
though, as always, there are things that might happen to throw the market
off track. We shall be watching interest rates and inflation closely, and
we would also feel more comfortable with some stabilization in the dollar.
So far the market has seemed to react positively to the presidential
election result, though we have to believe that the reaction is due at
least in part just to relief over the quick resolution of the election
this time
12
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
around. We have always felt that our business cycle in the U.S. runs its
own course and that, while governmental policies can surely influence
developments, the main economic drivers are the forces of the free market.
We know that the shareholders of Pioneer Equity Income Fund include both
Republicans and Democrats, undoubtedly many independents, also members of
other parties, and possibly even some monarchists, utopians, and
millenarians. It is always our goal to manage the Fund in the interests of
all of our shareholders, putting our own political views to one side and
instead working all the time at positioning the Fund in the best way we
can, striving to make money for you over the long term. 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.
13
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/04
- --------------------------------------------------------------------------------
Shares Value
CONVERTIBLE PREFERRED STOCKS - 1.1%
Automobiles & Components - 1.0%
Automobile Manufacturers - 1.0%
10,000 General Motors Corp., Series B, 5.25%, 3/6/32 $ 232,500
175,000 Ford Capital Trust, 6.5%, 1/15/32 8,743,000
------------
$ 8,975,500
------------
Total Automobiles & Components $ 8,975,500
------------
Pharmaceuticals & Biotechnology - 0.1%
Pharmaceuticals - 0.1%
15,745 Schering-Plough Corp., 6.0%, 9/14/07 $ 810,868
------------
Total Pharmaceuticals & Biotechnology $ 810,868
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $9,245,070) $ 9,786,368
------------
Principal
Amount
CONVERTIBLE CORPORATE BONDS - 0.1%
Retailing - 0.1%
Apparel Retail - 0.1%
$ 800,000 GAP, Inc., 5.75%, 3/15/09 $ 1,020,000
------------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $800,000) $ 1,020,000
------------
Shares
COMMON STOCKS - 98.7%
Energy - 10.4%
Integrated Oil & Gas - 10.4%
258,780 ConocoPhillips $ 21,817,742
611,400 ChevronTexaco Corp. 32,440,884
100,000 Occidental Petroleum Corp. 5,583,000
633,878 Exxon Mobil Corp. 31,199,475
------------
$ 91,041,101
------------
Total Energy $ 91,041,101
------------
Materials - 6.7%
Commodity Chemicals - 1.7%
200,000 Air Products & Chemicals, Inc. $ 10,636,000
105,232 E.I. du Pont de Nemours and Co. 4,511,296
------------
$ 15,147,296
------------
Construction Materials - 0.6%
100,000 Vulcan Materials Co. $ 4,978,000
------------
The accompanying notes are an integral part of these financial statements.
14
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Diversified Chemicals - 1.0%
135,000 PPG Industries, Inc. $ 8,606,250
------------
Diversified Metals & Mining - 1.0%
100,000 Phelps Dodge Corp. $ 8,754,000
------------
Paper Products - 0.8%
230,000 Meadwestvaco Corp. $ 7,251,900
------------
Specialty Chemicals - 0.8%
150,000 Valspar Corp. $ 6,999,000
------------
Steel - 0.8%
513,705 Roanoke Electric Steel Corp. $ 7,525,778
------------
Total Materials $ 59,262,224
------------
Capital Goods - 8.9%
Aerospace & Defense - 2.7%
125,000 Boeing Co. $ 6,237,500
168,700 General Dynamics Corp. 17,227,644
------------
$ 23,465,144
------------
Electrical Component & Equipment - 1.3%
175,000 Emerson Electric Co. $ 11,208,750
------------
Industrial Conglomerates - 2.4%
235,600 Johnson Controls, Inc. $ 13,511,660
85,000 United Technologies Corp. 7,889,700
------------
$ 21,401,360
------------
Industrial Machinery - 2.5%
632,446 Gorman-Rupp Co.+ $ 13,724,078
350,000 The Timken Co. 8,400,000
------------
$ 22,124,078
------------
Total Capital Goods $ 78,199,332
------------
Commercial Services & Supplies - 0.4%
Employment Services - 0.4%
300,000 Servicemaster Co.* $ 3,852,000
------------
Total Commercial Services & Supplies $ 3,852,000
------------
Transportation - 1.0%
Railroads - 1.0%
205,000 Burlington Northern, Inc. $ 8,571,050
------------
Total Transportation $ 8,571,050
------------
The accompanying notes are an integral part of these financial statements.
15
Pioneer Equity Income Fund
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SCHEDULE OF INVESTMENTS 10/31/04 (continued)
- --------------------------------------------------------------------------------
Shares Value
Automobiles & Components - 5.7%
Automobile Manufacturers - 5.7%
450,000 Ford Motor Corp. $ 5,863,500
165,000 General Motors Corp. (b) 6,360,750
548,625 Paccar, Inc. 38,025,199
------------
$ 50,249,449
------------
Total Automobiles & Components $ 50,249,449
------------
Consumer Durables & Apparel - 0.4%
Housewares & Specialties - 0.4%
200,000 Tupperware Corp. $ 3,338,000
------------
Total Consumer Durables & Apparel $ 3,338,000
------------
Media - 3.3%
Movies & Entertainment - 1.7%
531,200 Cedar Fair, L.P. $ 15,479,168
------------
Publishing - 1.6%
160,000 McGraw-Hill Co., Inc. $ 13,800,000
------------
Total Media $ 29,279,168
------------
Retailing - 1.3%
Department Stores - 1.3%
428,000 May Department Stores Co. $ 11,153,680
------------
Total Retailing $ 11,153,680
------------
Food, Beverage & Tobacco - 5.0%
Packaged Foods & Meats - 4.3%
520,000 Campbell Soup Co. $ 13,956,800
225,000 General Mills, Inc. 9,956,250
272,550 H.J. Heinz Co., Inc. 9,907,193
184,000 Sara Lee Corp. 4,283,520
------------
$ 38,103,763
------------
Soft Drinks - 0.7%
116,300 PepsiCo, Inc. $ 5,766,154
------------
Total Food, Beverage & Tobacco $ 43,869,917
------------
Household & Personal Products - 1.0%
Household Products - 1.0%
66,000 Colgate-Palmolive Co. $ 2,944,920
108,800 Clorox Co. 5,940,480
------------
$ 8,885,400
------------
Total Household & Personal Products $ 8,885,400
------------
The accompanying notes are an integral part of these financial statements.
16
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Health Care Equipment & Services - 3.7%
Health Care Distributors - 3.2%
356,600 Abbott Laboratories $ 15,201,858
210,000 Johnson & Johnson 12,259,800
------------
$ 27,461,658
------------
Health Care Equipment - 0.5%
88,000 Becton, Dickinson & Co. $ 4,620,000
------------
Total Health Care Equipment & Services $ 32,081,658
------------
Pharmaceuticals & Biotechnology - 2.1%
Pharmaceuticals - 2.1%
200,000 Eli Lilly & Co. $ 10,982,000
190,400 Merck & Co., Inc. 5,961,424
60,000 Pfizer, Inc. 1,737,000
------------
$ 18,680,424
------------
Total Pharmaceuticals & Biotechnology $ 18,680,424
------------
Banks - 13.0%
Diversified Banks - 3.2%
100,000 Comerica, Inc. $ 6,151,000
318,700 U.S. Bancorp 9,118,007
215,662 Wells Fargo & Co. 12,879,335
------------
$ 28,148,342
------------
Regional Banks - 6.7%
250,000 First Horizon National Corp. $ 10,820,000
358,600 National City Corp. 13,974,641
329,400 SouthTrust Corp. 14,351,958
275,000 SunTrust Banks, Inc. 19,354,500
------------
$ 58,501,099
------------
Thrifts & Mortgage Finance - 3.1%
705,000 Washington Mutual, Inc. $ 27,290,550
------------
Total Banks $113,939,991
------------
Diversified Financials - 4.8%
Asset Management & Custody Banks - 4.1%
208,000 Eaton Vance Corp. $ 9,072,960
100,000 State Street Corp. 4,505,000
402,000 T. Rowe Price Associates, Inc. 22,419,540
------------
$ 35,997,500
------------
The accompanying notes are an integral part of these financial statements.
17
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/04 (continued)
- --------------------------------------------------------------------------------
Shares Value
Investment Banking & Brokerage - 0.7%
175,000 A.G. Edwards, Inc. $ 6,345,500
------------
Total Diversified Financials $ 42,343,000
------------
Insurance - 3.3%
Property & Casualty Insurance - 3.3%
205,100 Chubb Corp. $ 14,793,863
299,300 Safeco Corp. 13,839,632
------------
$ 28,633,495
------------
Total Insurance $ 28,633,495
------------
Real Estate - 1.3%
Real Estate Investment Trust - 1.3%
200,000 Simon DeBartolo Group, Inc. $ 11,664,000
------------
Total Real Estate $ 11,664,000
------------
Software & Services - 1.1%
Application Software - 0.3%
100,000 Microsoft Corp. $ 2,799,000
------------
Data Processing & Outsourced Services - 0.8%
150,000 Automatic Data Processing, Inc. $ 6,508,500
------------
Total Software & Services $ 9,307,500
------------
Technology Hardware & Equipment - 1.4%
Computer Hardware - 1.4%
222,550 Diebold, Inc. $ 10,649,017
20,000 IBM Corp. 1,795,000
------------
$ 12,444,017
------------
Total Technology Hardware & Equipment $ 12,444,017
------------
Telecommunication Services - 6.9%
Integrated Telecommunication Services - 6.9%
184,585 Alltel Corp. $ 10,139,254
230,000 AT&T Corp. 3,935,300
496,400 BellSouth Corp. 13,238,988
694,669 SBC Communications, Inc. 17,547,339
400,000 Verizon Communications, Inc. 15,640,000
------------
$ 60,500,881
------------
Total Telecommunication Services $ 60,500,881
------------
The accompanying notes are an integral part of these financial statements.
18
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Utilities - 17.0%
Electric Utilities - 10.7%
285,000 Ameren Corp. $ 13,680,000
235,400 American Electric Power Co., Inc. 7,751,722
436,500 Constellation Energy Group 17,730,630
275,000 Consolidated Edison, Inc. 11,948,750
120,000 FPL Group, Inc. 8,268,000
384,400 Great Plains Energy, Inc. 10,951,556
190,000 NSTAR 9,399,300
440,000 Southern Co. 13,899,600
------------
$ 93,629,558
------------
Gas Utilities - 4.5%
454,700 KeySpan Energy Corp. $ 18,165,265
446,600 Questar Corp. 21,436,800
------------
$ 39,602,065
------------
Multi-Utilities & Unregulated Power - 1.1%
180,000 Equitable Resources, Inc. $ 9,954,000
------------
Water Utilities - 0.7%
275,625 Aqua America, Inc. $ 6,025,163
------------
Total Utilities $149,210,786
------------
TOTAL COMMON STOCKS
(Cost $622,529,868) $866,507,073
------------
TEMPORARY CASH INVESTMENT - 0.7%
Security Lending Collateral - 0.7%
6,270,000 Securities Lending Investment Fund, 1.76% $ 6,270,000
------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $6,270,000) $ 6,270,000
------------
TOTAL INVESTMENTS IN SECURITIES - 100.6%
(Cost $638,844,938)(a) $883,583,441
------------
OTHER ASSETS AND LIABILITIES - (0.6)% $ (5,496,001)
------------
TOTAL NET ASSETS - 100.0% $878,087,440
------------
The accompanying notes are an integral part of these financial statements.
19
Pioneer Equity Income Fund
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SCHEDULE OF INVESTMENTS 10/31/04 (continued)
- --------------------------------------------------------------------------------
* 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 October 31, 2004, the net unrealized gain on investments based on
cost for federal income tax purposes of $633,207,829 was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $262,427,058
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (12,051,446)
------------
Net unrealized gain $250,375,612
------------
(b) At October 31, 2004, the following security was out on loan:
Shares Security Market Value
156,750 General Motors Corp. $6,042,713
----------
Total $6,042,713
----------
Purchases and sales of securities (excluding temporary cash investments) for
the year ended October 31, 2004 aggregated $212,497,344 and $182,430,023,
respectively.
The accompanying notes are an integral part of these financial statements.
20
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 10/31/04
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities of unaffiliated issuers, at value
(including securities loaned of $6,042,713)
(cost $630,938,442) $869,859,363
Investment in securities of affiliated issuers, at value
(cost $7,906,496) 13,724,078
------------
Total Investment in securities at value
(cost $638,844,938) $883,583,441
Cash 300,031
Receivables -
Fund shares sold 657,532
Dividends and interest 2,488,859
------------
Total assets $887,029,863
------------
LIABILITIES:
Payables -
Fund shares repurchased $ 1,589,259
Upon return of securities loaned 6,270,000
Due to affiliates 1,002,511
Accrued expenses 80,653
------------
Total liabilities $ 8,942,423
------------
NET ASSETS:
Paid-in capital $630,237,313
Undistributed net investment income 6,554,311
Accumulated net realized loss on investments (3,442,687)
Net unrealized gain on investments 244,738,503
------------
Total net assets $878,087,440
------------
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $600,834,690/22,325,444 shares) $ 26.91
------------
Class B (based on $161,274,686/6,028,218 shares) $ 26.75
------------
Class C (based on $109,787,437/4,114,348 shares) $ 26.68
------------
Class R (based on $2,071,745/76,507 shares) $ 27.08
------------
Class Y (based on $4,118,882/152,416 shares) $ 27.02
------------
MAXIMUM OFFERING PRICE:
Class A ($26.91 [divided by] 94.25%) $ 28.55
------------
The accompanying notes are an integral part of these financial statements.
21
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For The Year Ended 10/31/04
INVESTMENT INCOME:
Dividends (including income from affiliated issuers
of $346,581) $26,083,091
Interest 151,264
Income from securities loaned, net 11,873
-----------
Total investment income $ 26,246,228
------------
EXPENSES:
Management fees $ 4,999,074
Transfer agent fees and expenses
Class A 1,016,397
Class B 520,693
Class C 246,119
Class R 372
Class Y 190
Distribution fees
Class A 1,386,140
Class B 1,684,904
Class C 1,000,756
Class R 7,125
Administrative reimbursements 170,301
Custodian fees 43,042
Registration fees 87,228
Professional fees 34,155
Fees and expenses of nonaffiliated trustees 12,626
Miscellaneous 11,992
-----------
Total expenses $ 11,221,114
Less fees paid indirectly (16,496)
------------
Net expenses $ 11,204,618
------------
Net investment income $ 15,041,610
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $ 17,268,323
------------
Change in net unrealized gain on investments $ 89,703,695
------------
Net gain on investments $106,972,018
------------
Net increase in net assets resulting from operations $122,013,628
------------
The accompanying notes are an integral part of these financial statements.
22
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Years Ended 10/31/04 and 10/31/03, respectively
Year Ended Year Ended
10/31/04 10/31/03
FROM OPERATIONS:
Net investment income $ 15,041,610 $ 12,937,620
Net realized gain on investments 17,268,323 10,051,456
Change in net unrealized gain on investments 89,703,695 74,072,740
------------ ------------
Net increase in net assets resulting from
operations $122,013,628 $ 97,061,816
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.48 and $0.48 per share, respectively) $(10,358,673) $ (9,674,061)
Class B ($0.25 and $0.30 per share, respectively) (1,656,118) (2,357,374)
Class C ($0.27 and $0.31 per share, respectively) (1,084,083) (794,271)
Class R ($0.45 and $0.22 per share, respectively) (23,930) (8)
Class Y ($0.59 and $0.57 per share, respectively) (208,297) (94,823)
------------ ------------
Total distributions to shareowners $(13,331,101) $(12,920,537)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $205,247,057 $207,349,923
Reinvestment of distributions 11,207,005 11,091,391
Cost of shares repurchased (207,709,556) (171,554,173)
------------ ------------
Net increase in net assets resulting from Fund
share transactions $ 8,744,506 $ 46,887,141
------------ ------------
Net increase in net assets $117,427,033 $131,028,420
NET ASSETS:
Beginning of year 760,660,407 629,631,987
------------ ------------
End of year (including undistributed net investment
income of $6,554,311 and $5,191,944
respectively) $878,087,440 $760,660,407
------------ ------------
The accompanying notes are an integral part of these financial statements.
23
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
For the Years Ended 10/31/04 and 10/31/03, respectively
'04 Shares '04 Amount '03 Shares '03 Amount
CLASS A
Shares sold 4,973,509 $ 127,027,390 5,644,025 $122,023,366
Reinvestment of distributions 356,620 9,120,357 398,147 8,548,876
Less shares repurchased (4,273,759) (108,706,870) (4,465,589) (94,953,674)
---------- -------------- ---------- ------------
Net increase 1,056,370 $ 27,440,877 1,576,583 $ 35,618,568
---------- -------------- ---------- ------------
CLASS B
Shares sold 1,288,365 $ 32,697,780 1,586,012 $ 34,548,323
Reinvestment of distributions 53,483 1,357,596 93,929 1,992,008
Less shares repurchased (2,583,099) (65,816,809) (2,843,895) (60,772,852)
---------- -------------- ---------- ------------
Net decrease (1,241,251) $ (31,761,433) (1,163,954) $(24,232,521)
---------- -------------- ---------- ------------
CLASS C
Shares sold 1,481,014 $ 37,244,660 2,165,681 $ 47,543,081
Reinvestment of capital gains 27,128 688,893 23,341 499,891
Less shares repurchased (944,232) (23,934,932) (718,383) (15,300,896)
---------- -------------- ---------- ------------
Net increase 563,910 $ 13,998,621 1,470,639 $ 32,742,076
---------- -------------- ---------- ------------
CLASS R (a)
Shares sold 42,478 $ 1,110,868 46,311 $ 1,088,556
Reinvestment of distributions 896 23,098 - 3
Less shares repurchased (13,178) (324,142) - (9)
---------- -------------- ---------- ------------
Net increase 30,196 $ 809,824 46,311 $ 1,088,550
---------- -------------- ---------- ------------
CLASS Y
Shares sold 279,396 $ 7,166,359 98,343 $ 2,146,597
Reinvestment of distributions 682 17,061 2,346 50,613
Less shares repurchased (339,787) (8,926,803) (24,898) (526,742)
---------- -------------- ---------- ------------
Net increase (decrease) (59,709) $ (1,743,383) 75,791 $ 1,670,468
---------- -------------- ---------- ------------
(a) Class R shares were first publicly offered on April 1, 2003.
The accompanying notes are an integral part of these financial statements.
24
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS A 10/31/04 10/31/03 10/31/02 10/31/01 10/31/00
Net asset value, beginning of period $ 23.57 $ 20.80 $ 24.28 $ 29.55 $ 29.97
-------- -------- -------- ------- --------
Net increase (decrease) from investment operations:
Net investment income $ 0.52 $ 0.47 $ 0.49 $ 0.47 $ 0.58
Net realized and unrealized gain (loss) on investments 3.30 2.78 (3.50) (2.97) 1.28
-------- -------- -------- ------- --------
Net increase (decrease) from investment operations $ 3.82 $ 3.25 $ (3.01) $ (2.50) $ 1.86
Distributions to shareowners:
Net investment income (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 $ 3.34 $ 2.77 $ (3.48) $ (5.27) $ (0.42)
-------- -------- -------- ------- --------
Net asset value, end of period $ 26.91 $ 23.57 $ 20.80 $ 24.28 $ 29.55
-------- -------- -------- ------- --------
Total return* 16.33% 15.89% (12.62)% (9.21)% 6.90%
Ratio of net expenses to average net assets+ 1.08% 1.17% 1.11% 1.08% 1.11%
Ratio of net investment income to average net assets+ 2.07% 2.24% 2.06% 1.77% 1.95%
Portfolio turnover rate 22% 15% 10% 15% 14%
Net assets, end of period (in thousands) $600,835 $501,283 $409,553 $464,792 $539,602
Ratios with reduction for fees paid indirectly:
Net expenses 1.08% 1.17% 1.10% 1.06% 1.08%
Net investment income 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.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
25
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS B 10/31/04 10/31/03 10/31/02 10/31/01 10/31/00
Net asset value, beginning of period $ 23.42 $ 20.67 $ 24.14 $ 29.37 $ 29.78
-------- -------- -------- ------- --------
Net increase (decrease) from investment operations:
Net investment income $ 0.35 $ 0.32 $ 0.31 $ 0.25 $ 0.35
Net realized and unrealized gain (loss) on investments 3.23 2.73 (3.50) (2.93) 1.28
-------- -------- -------- ------- --------
Net increase (decrease) from investment operations $ 3.58 $ 3.05 $ (3.19) $ (2.68) $ 1.63
Distributions to shareowners:
Net investment income (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 $ 3.33 $ 2.75 $ (3.47) $ (5.23) $ (0.41)
-------- -------- -------- ------- --------
Net asset value, end of period $ 26.75 $ 23.42 $ 20.67 $ 24.14 $ 29.37
-------- -------- -------- ------- --------
Total return* 15.34% 14.90% (13.34)% (9.90)% 6.04%
Ratio of net expenses to average net assets+ 1.95% 2.02% 1.91% 1.87% 1.91%
Ratio of net investment income to average net assets+ 1.21% 1.41% 1.25% 0.98% 1.15%
Portfolio turnover rate 22% 15% 10% 15% 14%
Net assets, end of period (in thousands) $161,275 $170,283 $174,334 $230,268 $257,999
Ratios with reduction for fees paid indirectly:
Net expenses 1.95% 2.02% 1.90% 1.85% 1.89%
Net investment income 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.
+ 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
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS C 10/31/04 10/31/03 10/31/02 10/31/01 10/31/00
Net asset value, beginning of period $ 23.37 $ 20.63 $ 24.08 $ 29.32 $ 29.75
-------- ------- -------- -------- -------
Net increase (decrease) from investment operations:
Net investment income $ 0.29 $ 0.24 $ 0.26 $ 0.21 $ 0.30
Net realized and unrealized gain (loss) on investments 3.29 2.81 (3.45) (2.92) 1.30
-------- ------- -------- -------- -------
Net increase (decrease) from investment operations $ 3.58 $ 3.05 $ (3.19) $ (2.71) $ 1.60
Distributions to shareowners:
Net investment income (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 $ 3.31 $ 2.74 $ (3.45) $ (5.24) $ (0.43)
-------- ------- -------- -------- -------
Net asset value, end of period $ 26.68 $ 23.37 $ 20.63 $ 24.08 $ 29.32
-------- ------- -------- -------- -------
Total return* 15.40% 14.93% (13.37)% (10.02)% 5.94%
Ratio of net expenses to average net assets+ 1.89% 2.00% 1.99% 1.98% 2.02%
Ratio of net investment income to average net assets+ 1.26% 1.36% 1.19% 0.84% 1.05%
Portfolio turnover rate 22% 15% 10% 15% 14%
Net assets, end of period (in thousands) $109,787 $82,979 $ 42,903 $ 37,618 $32,050
Ratios with reduction for fees paid indirectly:
Net expenses 1.89% 2.00% 1.98% 1.96% 1.98%
Net investment income 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.
+ 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
- --------------------------------------------------------------------------------
Year Ended 4/1/03 to (a)
10/31/04 10/31/03
CLASS R
Net asset value, beginning of period $ 23.71 $ 19.97
------- -------
Net increase from investment operations:
Net investment income $ 0.44 $ 0.23
Net realized and unrealized gain on investments 3.38 3.73
------- -------
Net increase from investment operations $ 3.82 $ 3.96
Distributions to shareowners:
Net investment income (0.45) (0.22)
------- -------
Net increase in net asset value $ 3.37 $ 3.74
------- -------
Net asset value, end of period $ 27.08 $ 23.71
------- -------
Total return* 16.23% 19.87%
Ratio of net expenses to average net assets+ 1.17% 1.21%**
Ratio of net investment income to average net assets+ 1.98% 0.97%**
Portfolio turnover rate 22% 15%
Net assets, end of period (in thousands) $ 2,072 $ 1,098
Ratios with reduction for fees paid indirectly:
Net expenses 1.17% 1.21%**
Net investment income 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
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.
28
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS Y 10/31/04 10/31/03 10/31/02 10/31/01 10/31/00
Net asset value, beginning of period $ 23.65 $ 20.85 $ 24.33 $ 29.59 $ 30.00
------- ------- -------- ------- -------
Net increase (decrease) from investment operations:
Net investment income $ 0.67 $ 0.52 $ 0.55 $ 0.55 $ 0.70
Net realized and unrealized gain (loss) on investments 3.29 2.85 (3.46) (2.97) 1.27
------- ------- -------- ------- -------
Net increase (decrease) from investment operations $ 3.96 $ 3.37 $ (2.91) $ (2.42) $ 1.97
Distributions to shareowners:
Net investment income (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 $ 3.37 $ 2.80 $ (3.48) $ (5.26) $ (0.41)
------- ------- -------- ------- -------
Net asset value, end of period $ 27.02 $ 23.65 $ 20.85 $ 24.33 $ 29.59
------- ------- -------- ------- -------
Total return* 16.88% 16.45% (12.24)% (8.89)% 7.33%
Ratio of net expenses to average net assets+ 0.64% 0.71% 0.69% 0.66% 0.70%
Ratio of net investment income to average net assets+ 2.43% 2.66% 2.49% 2.17% 2.37%
Portfolio turnover rate 22% 15% 10% 15% 14%
Net assets, end of period (in thousands) $ 4,119 $ 5,017 $ 2,842 $ 2,530 $ 2,669
Ratios with reduction for fees paid indirectly:
Net expenses 0.64% 0.71% 0.68% 0.64% 0.68%
Net investment income 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.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
29
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/04
- --------------------------------------------------------------------------------
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.
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 year.
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 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.
30
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund also may use the fair value of a security, including a non-U.S.
security, when the closing market price on the principal exchange where
the security is traded no longer reflects the value of the security. At
October 31, 2004, 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.
The tax character of distributions paid during the years ended October 31,
2004 and October 31, 2003 were as follows:
- --------------------------------------------------------------------------------
2004 2003
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $13,331,101 $12,920,537
Long-term capital gain - -
----------- -----------
Total $13,331,101 $12,920,537
----------- -----------
- --------------------------------------------------------------------------------
31
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/04 (continued)
- --------------------------------------------------------------------------------
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.
At October 31, 2004, the Fund reclassified $348,142 to decrease
undistributed net investment income and $348,142 to decrease accumulated
net realized loss on investments to reflect permanent book/tax
differences. The reclassification has no impact on the net assets of the
Fund and presents the Fund's capital accounts on a tax basis.
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 $151,007 in underwriting
commissions on the sale of Class A shares during the year ended October
31, 2004.
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 services, which are allocated based on the number of
accounts in each class and the ratable allocation of related out-of-pocket
expenses (see Note 3). Income, common expenses and realized and unrealized
gains and losses are calculated at the Fund level and allocated daily to
each class of shares based on the respective percentage of adjusted net
assets at the beginning of the day.
32
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 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.
33
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/04 (continued)
- --------------------------------------------------------------------------------
In addition, under the management and administrative agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At October 31, 2004, $474,817, 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 $160,758 in transfer agent
fees payable to PIMSS at October 31, 2004.
4. Distribution and Service Plans
The Fund adopted a Plan of Distribution for each class of shares, except Class
Y (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 $366,936 in distribution fees payable to PFD at October 31, 2004.
The Fund also has adopted a separate service plan for Class R shares (Service
Plan). The Service Plan authorizes the Fund to pay 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 that are redeemed within
six 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
34
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
redeemed. 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 year
ended October 31, 2004, CDSCs in the amount of $176,070 were paid to PFD.
5. Directed Brokerage and Expense Offset Arrangements
The Fund has entered into directed brokerage arrangements with brokers with
whom PIM places trades on behalf of the Fund where they provide services to the
Fund in addition to trade execution. These services included payments of
certain expenses on behalf of the Fund. For the year ended October 31, 2004 the
Fund's expenses were reduced by $5,378 under this agreement. In addition, the
Fund has entered into certain expense offset arrangements with PIMSS resulting
in a reduction in the Fund's total expenses due to interest earned on cash held
by PIMSS. For the year ended October 31, 2004, the Fund's expenses were reduced
by $11,118 under such arrangements.
6. Line Of Credit Facility
The Fund, along with certain others in the Pioneer Family of Funds (the Funds),
collectively participate in a $50 million committed, unsecured revolving line
of credit facility. Borrowings are used solely for temporary or emergency
purposes. The Fund may borrow up to the lesser of $50 million or the limits set
by its prospectus for borrowings. Interest on collective borrowings is payable
at the Federal Funds Rate plus 1/2% on an annualized basis. The Funds pay an
annual commitment fee for this facility. The commitment fee is allocated among
such Funds based on their respective borrowing limits. For the year ended
October 31, 2004, 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 as
of and for the year ended, October 31, 2004:
- --------------------------------------------------------------------------------
Dividend
Shares Shares Income
Beginning held at Purchases Sales Held at for the Value at
Affiliates Value 11/1/03 (shares) (shares) 10/31/04 year 10/31/04
- -----------------------------------------------------------------------------------------------------
Gorman-Rupp Co.
(Common
Stock) $11,960,823 505,957 126,489 - 632,446 $346,581 $13,724,078
- --------------------------------------------------------------------------------
35
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareowners of
Pioneer Equity Income Fund:
We have audited the statement of assets and liabilities, including the schedule
of investments, of Pioneer Equity Income Fund (the "Fund") as of October 31,
2004, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the three years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the two years in the period ended
October 31, 2001 were audited by other auditors who have ceased operations and
whose report, dated December 7, 2001, expressed an unqualified opinion on those
financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements and financial
highlights. Our procedures included confirmation of securities owned as of
October 31, 2004, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Equity Income Fund at October 31, 2004, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years in the period then ended, and the financial highlights for each of the
three years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
December 10, 2004
36
- --------------------------------------------------------------------------------
THE PIONEER FAMILY OF MUTUAL FUNDS
- --------------------------------------------------------------------------------
Please consider a fund's investment objective, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about a 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
advisor, call 1-800-225-6292 or visit our web site at www.pioneerfunds.com.
U.S. Equity Asset Allocation
Pioneer Fund Pioneer Ibbotson Moderate
Pioneer Balanced Fund Allocation Fund
Pioneer Equity Income Fund Pioneer Ibbotson Growth
Pioneer Equity Opportunity Fund Allocation Fund
Pioneer Growth Shares Pioneer Ibbotson Aggressive
Pioneer Mid Cap Growth Fund Allocation Fund
Pioneer Mid Cap Value Fund
Pioneer Oak Ridge Large Cap International/Global Equity
Growth Fund Pioneer Emerging Markets Fund
Pioneer Oak Ridge Small Cap Pioneer Europe Select Fund
Growth Fund Pioneer Europe Fund
Pioneer Papp America-Pacific Pioneer International Equity Fund
Rim Fund Pioneer International Value Fund
Pioneer Papp Small and Mid Cap
Growth Fund Fixed Income
Pioneer Papp Stock Fund Pioneer America Income Trust
Pioneer Papp Strategic Pioneer Bond Fund
Growth Fund Pioneer Global High Yield Fund
Pioneer Real Estate Shares Pioneer High Yield Fund
Pioneer Research Fund* Pioneer Short Term Income Fund
Pioneer Small Cap Value Fund Pioneer Strategic Income Fund
Pioneer Small Company Fund Pioneer Tax Free Income Fund
Pioneer Value Fund
Money Market
Pioneer Cash Reserves Fund**
* Name change effective December 11, 2003. Formerly known as Pioneer Core
Equity Fund.
** An investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Fund.
37
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Trustees and Officers
The Fund's Board of Trustees provides broad supervision over the Fund's
affairs. The officers of the Fund are responsible for the Fund's operations.
The Fund's Trustees and officers are listed below, together with their
principal occupations during the past five years. Trustees who are interested
persons of the Fund within the meaning of the Investment Company Act of 1940
are referred to as Interested Trustees. Trustees who are not interested persons
of the Fund are referred to as Independent Trustees. Each of the Trustees
serves as a trustee of each of the 65 U.S. registered investment portfolios for
which Pioneer Investment Management, Inc. ("Pioneer") serves as investment
adviser (the "Pioneer Funds"). The address for all Interested Trustees and all
officers of the Fund is 60 State Street, Boston, Massachusetts 02109.
The Fund's statement of additional information provides more detailed
information regarding the Fund's Trustees and is available upon request,
without charge, by calling 1-800-225-6292.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerfunds.com and on the SEC's website at
http://www.sec.gov.
38
- --------------------------------------------------------------------------------
INTERESTED TRUSTEES
- --------------------------------------------------------------------------------
Positions Held Term of Office and Principal Occupation During Past Other Directorships Held
Name and Age With the Fund Length of Service Five Years by this Trustee
John F. Cogan, Jr. (78)* Chairman of the Board, Since 1999. Deputy Chairman and a Director of Director of Harbor
Trustee and President Serves until Pioneer Global Asset Management Global Company, Ltd.
retirement or S.p.A. ("PGAM"); Non-Executive
removal Chairman and a Director of Pioneer
Investment Management USA Inc.
("PIM-USA"); Chairman and a Director
of Pioneer; Director of Pioneer
Alternative Investment Management
Limited (Dublin); President and a
Director of Pioneer Alternative
Investment Management (Bermuda)
Limited and affiliated funds;
President and Director of Pioneer
Funds Distributor, Inc. ("PFD");
President of all of the Pioneer
Funds; and Of Counsel (since 2000,
partner prior to 2000), Wilmer
Cutler Pickering Hale and Dorr LLP
(counsel to PIM-USA and the Pioneer
Funds)
*Mr. Cogan is an Interested Trustee because he is an officer or director of Pioneer and certain of its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
Osbert M. Hood (52)** Trustee and Since June, 2003. President and Chief Executive None
Executive Vice Serves until Officer, PIM-USA since May 2003
President retirement or (Director since January 2001);
removal President and Director of Pioneer
since May 2003; Chairman and
Director of Pioneer Investment
Management Shareholder Services,
Inc. ("PIMSS") since May 2003;
Executive Vice President of all of
the Pioneer Funds since June 2003;
Executive Vice President and Chief
Operating Officer of PIM-USA,
November 2000 to May 2003; Executive
Vice President, Chief Financial
Officer and Treasurer, John Hancock
Advisers, L.L.C., Boston, MA,
November 1999 to November 2000;
Senior Vice President and Chief
Financial Officer, John Hancock
Advisers, L.L.C., April 1997 to
November 1999
**Mr. Hood is an Interested Trustee because he is an officer or director of Pioneer and certain of its affiliates.
- ------------------------------------------------------------------------------------------------------------------------------------
39
- --------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- --------------------------------------------------------------------------------
Positions Held Term of Office and Principal Occupation During Past Other Directorships
Name and Age With the Fund Length of Service Five Years Held by this Trustee
Mary K. Bush (56) Trustee Since 1999. President, Bush International Director of Brady
3509 Woodbine Street, Serves until (international financial advisory Corporation (industrial
Chevy Chase, MD 20815 retirement or firm) identification and
removal specialty coated
material products
manufacturer),
Millennium Chemicals,
Inc. (commodity
chemicals), Mortgage
Guaranty Insurance
Corporation, and R.J.
Reynolds Tobacco
Holdings, Inc. (tobacco)
- ------------------------------------------------------------------------------------------------------------------------------------
Richard H. Egdahl, M.D. (77) Trustee Since 1999. Alexander Graham Bell Professor of None
Boston University Healthcare Serves until Health Care Entrepreneurship, Boston
Entrepreneurship Program, retirement or University; Professor of Management,
53 Bay State Road, removal Boston University School of
Boston, MA 02215 Management; Professor of Public
Health, Boston University School of
Public Health; Professor of Surgery,
Boston University School of
Medicine; and University Professor,
Boston University
- ------------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (57) Trustee Since 1999. Founding Director, The Winthrop None
1001 Sherbrooke Street West, Serves until Group, Inc. (consulting firm);
Montreal, Quebec, Canada retirement or Professor of Management, Faculty of
H3A 1G5 removal Management, McGill University
- ------------------------------------------------------------------------------------------------------------------------------------
40
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Positions Held Term of Office and Principal Occupation During Past Other Directorships
Name and Age With the Fund Length of Service Five Years Held by this Trustee
Marguerite A. Piret (56) Trustee Since 1999. President and Chief Executive Director of New America
One Boston Place, 28th Floor, Serves until Officer, Newbury, Piret & Company, High Income Fund, Inc.
Boston, MA 02108 retirement or Inc. (investment banking firm) (closed-end investment
removal company)
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen K. West (76) Trustee Since 1999. Senior Counsel, Sullivan & Cromwell Director, The Swiss
125 Broad Street, Serves until (law firm) Helvetia Fund, Inc.
New York, NY 10004 retirement or (closed-end investment
removal company) and
AMVESCAP PLC
(investment managers)
- ------------------------------------------------------------------------------------------------------------------------------------
John Winthrop (68) Trustee Since 1999. President, John Winthrop & Co., Inc. None
One North Adgers Wharf, Serves until (private investment firm)
Charleston, SC 29401 retirement or
removal
- ------------------------------------------------------------------------------------------------------------------------------------
41
- --------------------------------------------------------------------------------
FUND OFFICERS
- --------------------------------------------------------------------------------
Positions Held Term of Office and Principal Occupation During Past Other Directorships
Name and Age With the Fund Length of Service Five Years Held by this Trustee
Dorothy E. Bourassa (56) Secretary Since September, 2003. Secretary of PIM-USA; Senior Vice None
Serves at the discretion President-Legal of Pioneer; and
of board. Secretary/Clerk of most of PIM-USA's
subsidiaries since October 2000;
Secretary of all of the Pioneer
Funds since September 2003
(Assistant Secretary from November
2000 to September 2003); and Senior
Counsel, Assistant Vice President
and Director of Compliance of
PIM-USA from April 1998 through
October 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (39) Assistant Secretary Since September, 2003. Assistant Vice President and Senior None
Serves at the discretion Counsel of Pioneer since July 2002;
of board. Vice President and Senior Counsel of
BISYS Fund Services, Inc. (April
2001 to June 2002); Senior Vice
President and Deputy General Counsel
of Funds Distributor, Inc. (July
2000 to April 2001); Vice President
and Associate General Counsel from
July 1996 to July 2000; Assistant
Secretary of all of the Pioneer
Funds since September 2003
- ------------------------------------------------------------------------------------------------------------------------------------
David C. Phelan (47) Assistant Secretary Since September, 2003. Partner, William Cutler Pickering None
Serves at the discretion Hale and Dorr LLP; Assistant
of board. Secretary of all of Pioneer Funds
since September 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Vincent Nave (59) Treasurer Since November, 2000. Vice President-Fund Accounting, None
Serves at the discretion Administration and Custody Services
of board. of Pioneer (Manager from September
1996 to February 1999); and
Treasurer of all of the Pioneer
Funds (Assistant Treasurer from June
1999 to November 2000)
- ------------------------------------------------------------------------------------------------------------------------------------
42
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Positions Held Term of Office and Principal Occupation During Past Other Directorships
Name and Age With the Fund Length of Service Five Years Held by this Trustee
Mark E. Bradley (45) Assistant Treasurer Since November 2004. Deputy Treasurer of Pioneer since None
Serves at the discretion 2004; Treasurer and Senior Vice
of the Board President, CDC IXIS Asset Management
Services from 2002 to 2003;
Assistant Treasurer and Vice
President, MFS Investment Management
from 1997 to 2002; and Assistant
Treasurer of all of the Pioneer
Funds since November 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (39) Assistant Treasurer Since November, 2000. Assistant Vice President-Fund None
Serves at the discretion Accounting, Administration and
of board. Custody Services of Pioneer (Fund
Accounting Manager from 1994 to
1999); and Assistant Treasurer of
all of the Pioneer Funds since
November 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Gary Sullivan (46) Assistant Treasurer Since May, 2002. Fund Accounting Manager-Fund None
Serves at the discretion Accounting, Administration and
of board. Custody Services of Pioneer; and
Assistant Treasurer of all of the
Pioneer Funds since May 2002
- ------------------------------------------------------------------------------------------------------------------------------------
Katherine Kim Sullivan (30) Assistant Treasurer Since September, 2003. Fund Administration Manager-Fund None
Serves at the discretion Accounting, Administration and
of board. Custody Services since June 2003;
Assistant Vice President-Mutual Fund
Operations of State Street
Corporation from June 2002 to June
2003 (formerly Deutsche Bank Asset
Management); Pioneer Fund
Accounting, Administration and
Custody Services (Fund Accounting
Services Manager from August 1999 to
May 2002, Fund Accounting Supervisor
from 1997 to July 1999); Assistant
Treasurer of all of the Pioneer
Funds since September 2003
- ------------------------------------------------------------------------------------------------------------------------------------
43
- --------------------------------------------------------------------------------
FUND OFFICERS (continued)
- --------------------------------------------------------------------------------
Positions Held Term of Office and Principal Occupation During Past Other Directorships
Name and Age With the Fund Length of Service Five Years Held by this Trustee
Martin J. Wolin (37) Chief Compliance Since October 2004. Chief Compliance Officer of Pioneer None
Officer Serves at the discretion (Director of Compliance and Senior
of the Board Counsel from November 2000 to
September 2004); Vice President and
Associate General Counsel of UAM
Fund Services, Inc. (mutual fund
administration company) from
February 1998 to November 2000; and
Chief Compliance Officer of all of
the Pioneer Funds.
- ------------------------------------------------------------------------------------------------------------------------------------
The outstanding capital stock of PFD, Pioneer and PIMSS is indirectly wholly
owned by UniCredito Italiano S.p.A. ("UniCredito Italiano"), one of the largest
banking groups in Italy. Pioneer, the Fund's investment adviser, provides
investment management and financial services to mutual funds, institutional and
other clients.
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(S)M 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 or send money. To
obtain a prospectus and for other information on any Pioneer fund, 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.
[LOGO] PIONEER
Investments(R)
Pioneer Investment Management, Inc.
60 State Street
Boston, MA 02109
www.pioneerfunds.com
16547-00-1204
(C) 2004 Pioneer Funds Distributor, Inc.
Underwriter of Pioneer mutual funds
Member SIPC
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit Fees
Fees for audit services provided to the Fund,
including fees associated with the routine
filings of its Form N-1A, totaled
approximately $19,700 in 2004 and
approximately $19,600 in 2003.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
Audit-Related and Other Fees
There were no audit-related and other services
provided to the Fund during the fiscal years
ended October 31, 2004 and 2003.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
Tax Fees
Fees for tax compliance services, primarily for
tax returns, totaled $6,000 in 2004 and $3,600
in 2003. Additionally, there were fees for tax
compliance services in 2003 that totaled
approximately $4,100 for the 2002 tax returns.
(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.
Audit-Related and Other Fees
There were no audit-related and other services
provided to the Fund during the fiscal years ended
October 31, 2004 and 2003.
(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 recognizes 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 recognizes 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"), recently 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 has 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. The Committee
continues to review the facts and circumstances
surrounding the matter, including the issue of
whether the monies transferred for employees' taxes
were de facto monies due the employees for tax
payments rather than monies belonging to UCI.
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.
Aggregate Non-Audit Fees
The aggregate non-audit fees for the Fund and
affiliates, as previously defined, totaled $6,000
in 2004 and $31,000 in 2003. These fees
include services provided prior to May 6,
2003, the effective date of the pre-approval
process
(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.
Non-Audit Services
Beginning with non-audit service contracts
entered into on or after May 6, 2003, the
effective date of the new SEC pre-approval
rules, the Funds audit committee is required
to pre-approve services to affiliates defined by
SEC rules to the extent that the services are
determined to have a direct impact on the
operations or financial reporting of the Fund.
For the years ended October 31, 2004 and
2003, there were no services provided to an
affiliate that required the Funds audit
committee pre-approval.
The Funds audit committee of the Board of Trustees
has considered whether the provision of non-audit
services that were rendered to the Affiliates (as
defined) that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X
is compatible with maintaining the principal
accountants independence.
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 December 28, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date December 28, 2004
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date December 28, 2004
* Print the name and title of each signing officer under his or her signature.