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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08657
Pioneer Equity Income Fund
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: October 31
Date of reporting period: November 1, 2005 through April 30, 2006
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
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PIONEER
-------
EQUITY
INCOME
FUND
Semiannual
Report
4/30/06
[LOGO]PIONEER
Investments(R)
Table of Contents
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Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 9
Prices and Distributions 10
Performance Update 11
Comparing Ongoing Fund Expenses 16
Schedule of Investments 18
Financial Statements 25
Notes to Financial Statements 34
Factors Considered by the Independent Trustees in Approving
the Management Contract 41
Trustees, Officers and Service Providers 47
President's
Dear Shareowners,
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The six and 12 months ending April 30, 2006, have been characterized by strong
global growth, rising commodity and stock prices, and rising interest rates.
While markets reversed in May (U.S. Treasury bond yields, stock markets, and
commodity prices all turned down), we believe the basic fundamental pattern of
strong global economic growth remains intact.
According to the International Monetary Fund, global economic growth in 2004-5
was the fastest of any two-year period in more than 30 years, and 2006 growth
is projected to match 2005 levels. Growth has been broad-based, with Europe,
Japan, and emerging market economies all showing strength. The result has been
rising prices across a broad range of commodities, rising corporate profits,
and rising interest rates. These have been the basic ingredients of the equity
bull market and relatively weak bond market over the six months ending April
30, 2006.
The bond markets' concern has been that strong economic growth would spark
inflation - we have already seen commodity prices rise, and U.S. labor costs
are threatening to rise as the economy reaches full employment. In this
environment, strong economic growth may lead to inflation and higher interest
rates, while slowing economic growth is welcomed by the markets.
While first quarter economic growth was strong, it looks as if the slowdown in
the U.S. economy that we have been anticipating for the second half of the year
may be starting to unfold. The U.S. unemployment rate reached a five-year low
of 4.6 percent in May, but employment growth slowed to only 75,000 new jobs,
the smallest increase since the Katrina-distorted result of October 2005. The
housing market is cooling, as is non-essential consumer spending.
The U.S. Federal Reserve has not yet paused in its program of measured
increases in short-term interest rates, and it appears likely that the Fed will
raise rates again at the end of June. Global stock markets declined in May
after the Fed warned that the central bank remains determined to keep inflation
low. Fed vigilance against inflation and resolve to hike interest rates as
necessary to keep inflation pressures well-contained puts short-term pressure
on markets, but is investor-friendly over the intermediate-to-longer term. By
restraining inflation,
2
Letter
the Fed may limit upward pressure on longer-maturity bond yields and downward
pressure on stocks' price/earnings ratios.
In summary, we believe a desirable moderate slowing of U.S. economic growth
appears likely, with beneficial impacts on inflation and interest rates, while
global growth prospects remain strong. We think security market valuations
remain reasonable. However, there are no guarantees in investing. We know from
a long-view of history that sudden shifts in investor sentiment can occur with
little warning. This unpredictability reinforces the importance of Pioneer's
message that investors should remain diversified, take a long-term view, and
base investment decisions on economic and market fundamentals, rather than on
emotion. Our investment philosophy and approach continue to be based on the use
of fundamental research to identify a range of opportunities that offer an
attractive balance of risk and reward to help Fund shareowners work toward
their long-term goals.
Respectfully,
/s/ Osbert M. Hood
Osbert M. Hood, President
Pioneer Investment Management, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
Please consider the Fund's investment objectives, risks, charges and expenses.
Contact your advisor or Pioneer investments for a prospectus containing this
information. Please read the information carefully.
3
Pioneer Equity Income Fund
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PORTFOLIO MANAGEMENT DISCUSSION 4/30/06
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In the following discussion John Carey, Portfolio Manager of Pioneer Equity
Income Fund discusses the Fund and its performance over the past six months
ended April 30, 2006.
Q: How did the Fund perform over the last six months?
A: Equity markets performed well in the six months ended April 30, 2006. The
Russell 1000 Value Index and the Standard & Poor's 500 rose,
respectively, 12.87% and 9.63% during the period. At net asset value, and
assuming the reinvestment of all distributions to shareholders, Pioneer
Equity Income Fund Class A shares rose 11.28%. By further comparison, the
average fund in the Lipper Analytical Services Equity Income category
gained 10.80%. So our performance was certainly positive, and competitive
with that of peer funds, if behind the performance of the Russell 1000
Value Index.
Call 1-800-225-6292 or visit pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
The performance of the equity markets was striking in that the economic
and world news over the past few months has been vexing. Oil and other
commodities prices have touched new highs, sparking concerns about
inflation. The housing market, so strong for so long, appears to be
slowing. Opinion polls in the U.S. suggest a contentious upcoming election
season, with the attendant political uncertainties. Iran appears intent on
ratcheting up our anxiety about the Middle East and the political
situation there. The cost of our military involvement in Iraq continues to
mount. Recent nationalizations and expropriations in Bolivia, Ecuador, and
Venezuela point to renewed tensions in our own Western Hemisphere. At the
same time, corporate earnings have remained good, capital spending is
strong, and consumer demand has been pretty robust. Truly the period
served to confirm the old Wall Street saw about bull markets climbing a
wall of worry.
4
Pioneer Equity Income Fund
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Q: Please highlight some of the areas of outperformance and underperformance
for the Fund during the period.
A: Our best relative performance versus the Russell 1000 Value Index was in
the financials and consumer staples sectors. In both cases, we benefited
from good stock selection. In financials, our holdings of T. Rowe Price
Group and Whitney Holding did particularly well, and in consumer staples
we had good results from our large holdings in Campbell Soup and H. J.
Heinz. We also benefited from not owning shares in two important names in
those sectors that were sluggish performers: American International
Group, in financials; and Altria, in consumer staples.
The main reasons for our overall underperformance versus the Russell 1000
Value Index were our perennial overweight in the above-average
dividend-paying utility sector, which as a whole was hurt by rising
interest rates, although our stock selection in that slow-moving sector
was good; and our stock selection in energy, where we emphasized, as we
usually do (on account of their better dividend yields), the large,
integrated oil companies, like Chevron and ConocoPhillips, rather than the
"higher growth" and lower yielding oil-service names, which were
positively "on fire." While our energy holdings overall showed a gain in
the six months, the amount of the gain was less than that for the energy
sector in the Russell Value.
Q: What changes did you make in the portfolio over the past six months?
A: We added 13 holdings and also eliminated 13. On the addition side, Dow
Chemical and Olin are chemical producers that were selling at
below-market-average price-to-earnings multiples and paying generous
dividends. Both may benefit from any moderation we may see in the price
of energy. Mine Safety Appliances is a world leader in precisely what its
name suggests, as well as in many other health and safety products for
workers in other industries. Pfizer stock appeared to us finally to have
discounted most of the corporate difficulties that we could see, and the
long decline in the share price meant that the dividend, which the
company has continued to raise every year, produced an attractive yield.
In financials, we added PNC Financial, Regions Financial, and Jefferson
Pilot; the last was acquired by Lincoln National, and we ended the period
with shares of that company. PNC and Regions are both mid-sized banks
with investment management
5
Pioneer Equity Income Fund
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PORTFOLIO MANAGEMENT DISCUSSION 4/30/06 (continued)
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or investment banking operations as well as traditional deposit gathering
and lending. Also in financials, Kimco Realty is a real-estate investment
trust (REIT) specializing in shopping centers, and Liberty Property Trust
is a REIT that owns suburban office and industrial properties.
Hewlett-Packard, in information technology, has made an impressive
improvement in its operations following a management change and appears to
be well positioned for continued growth in printers and computers.
Finally, we added three utilities, AGL Resources (formerly, and more
descriptively, Atlanta Gas Light), Duke Energy, and PG&E (formerly, and
also more descriptively, Pacific Gas and Electric). All seemed to us to
have above-average prospects for growth and continued operational
improvement.
Among deletions, one of the largest was actually a substitution: SBC
Communications acquired AT&T with stock and then dropped its old name and
took back its even older name, AT&T. (Recall that American Telephone and
Telegraph was split up by court action at the beginning of 1984 into AT&T
and the seven "Baby Bells," of which one was Southwestern Bell, which
later changed its name to SBC and merged with two of the other Baby Bells,
Pacific Telesis and Ameritech; and which plans soon to merge with yet
another of the Baby Bells, BellSouth!) So the AT&T that you see in the
portfolio is not actually the AT&T that you saw in our last shareholder
letter, but rather our old SBC combined with some of our old AT&T.
Other deletions were more straightforward. We took substantial profits on
Roanoke Electric Steel after it received a take-over bid from Steel
Dynamics. Sales of Vulcan Materials, Burlington Northern Santa Fe, Becton
Dickinson, and Motorola also produced good gains. Following a merger bid
for FPL (Florida Power and Light) we realized our gains on that stock,
too. Other sales netted unexceptional results, but seemed to us to be
indicated by better uses for the money: E. I. du Pont de Nemours, PPG,
American Electric Power, Coca-Cola, Citigroup, and MeadWestvaco.
Q: Please remind us of the investment discipline you use in managing Pioneer
Equity Income Fund and tell us why that discipline is appropriate in
today's market.
A: Ours is a dividend-focused strategy, emphasizing an overall portfolio yield
that we think shareholders will find attractive in the context of current
market conditions. As a point of reference we look at the dividend yield
on the Standard & Poor's 500 Index for an
6
Pioneer Equity Income Fund
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indication of the broad trend of dividend payments. It is our aim to
produce a net yield on our Class A shares in excess of the S&P yield, and
we have consistently achieved that goal every year since the Fund's
inception. But we do not emphasize yield exclusively. Instead we look as
well for potential growth in dividends over time at our portfolio
companies. Since that dividend growth is usually made possible by earnings
growth, we actually find ourselves oftentimes with stocks having decent
price-appreciation potential.
We focus in the portfolio exclusively on U.S. based and headquartered
companies, and we apply a value approach to our investment analysis,
favoring companies less richly valued than the average stock and maybe
also not quite so popular as the market favorites. Accordingly, some
portfolio holdings are probably not well known at all to the average
investor-- for example, Gorman-Rupp, Timken, Cedar Fair, and PACCAR-- yet
all have met our analytical criteria.
As with the other funds managed by Pioneer Investment Management in
Boston, we base our investment decisions on our own, in-house research,
and we follow the companies closely once we have made our initial
investment. In Pioneer Equity Income Fund, we buy for the long term, and
as a result our portfolio turnover ratio has historically been low by
comparison with that of many other similar funds. We also aim to stay
fully invested at all times, believing that you have entrusted your money
to us for precisely that reason. Finally, ours is a true equity-income
fund. We demand that every security in the portfolio produce income, and
we derive nearly all income from common stocks or, occasionally,
securities convertible into common stock.
Right now, as we noted above, the market is roiled by concerns. But, then,
when is it not? For us, our biggest concern is helping you, our
shareholders, work toward your financial goals. For that reason we have
always distributed our funds exclusively through professional financial
advisers, who can assist their clients in finding the right investment for
them. While we cannot know why each of you has invested in our fund, we
hope that the goals and strategy I have outlined are in line with your
expectations. We especially favor companies that have stood the test of
time and that appear strong enough to withstand even severe stresses in
the economy. Keep in mind, there is no assurance that the Fund will meet
its objectives.
7
Pioneer Equity Income Fund
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PORTFOLIO MANAGEMENT DISCUSSION 4/30/06 (continued)
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Thank you as always for your support.
At times, the Fund's investments may represent industries or industry sectors
that are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as the date of this report. These
opinions should not be relied upon for any other purposes. Past performance is
no guarantee of future results, and there is no guarantee that market forecast
discussed will be realized.
8
Pioneer Equity Income Fund
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PORTFOLIO SUMMARY 4/30/06
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Portfolio Diversification
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(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 97.0%
Temporary Cash Investment 2.5%
Convertible Preferred Stocks 0.5%
Sector Distribution
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(As of percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Financials 29.5%
Utilities 15.5%
Consumer Discretionary 9.7%
Industrials 9.4%
Telecommunication Services 9.2%
Consumer Staples 8.3%
Health Care 7.5%
Energy 5.9%
Materials 4.0%
Information Technology 1.0%
10 Largest Holdings
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(As a percentage of total investment in securities)*
1. T. Rowe Price Associates, Inc. 3.29%
2. Washington Mutual, Inc. 3.09
3. PACCAR, Inc. 2.93
4. Questar Corp. 2.70
5. Merck & Co., Inc. 2.40
6. Chevron Corp. 2.38
7. BellSouth Corp. 2.29
8. Verizon Communications, Inc. 2.25
9. AT&T Corp. 2.20
10. H.J. Heinz Co., Inc. 2.11
* This list excludes temporary cash and derivative instruments. The portfolio
is actively managed, and current holdings may be different.
9
Pioneer Equity Income Fund
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PRICES AND DISTRIBUTIONS
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Net Asset Value Per Share
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Class 4/30/06 10/31/05
- ----- ------- --------
A $31.01 $29.23
B $30.82 $29.05
C $30.71 $28.96
R $31.21 $29.39
Y $31.15 $29.35
Distributions Per Share
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11/1/05 - 4/30/06
-----------------
Short-Term Long-Term
Class Dividends Capital Gains Capital Gains
----- --------- ------------- -------------
A $0.3259 $ -- $1.0823
B $0.1932 $ -- $1.0823
C $0.2092 $ -- $1.0823
R $0.3000 $ -- $1.0823
Y $0.3845 $ -- $1.0823
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INDEX DEFINITIONS
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The Russell 1000 Value Index measures the performance of large-cap U.S. value
stocks. Index returns assume reinvestment of dividends and, unlike Fund returns,
do not reflect any fees, expenses or sales charges. You cannot invest directly
in the Index.
The index defined here pertains to the Value of $10,000 Investment charts on
pages 11-15.
10
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 4/30/06 CLASS A SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund at public offering price, compared
to that of the Russell 1000 Value Index.
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Average Annual Total Returns
(As of April 30, 2006)
Net Asset Public
Value Offering
Period (NAV) Price (POP)
10 Years 9.76% 9.11%
5 Years 5.44 4.19
1 Year 15.51 8.84
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[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Pioneer Equity Russell 1000
Income Fund Value Index
4/96 9425 10000
10868 12256
4/98 15212 17426
17077 19881
4/00 16184 19110
18358 20338
4/02 17502 19544
14582 17001
4/04 18055 21466
20710 24455
4/06 23921 28931
Call 1-800-225-6292 or visit pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
NAV results represent the percent change in net asset value per share. Returns
would have been lower had sales charges been reflected. POP returns reflect
deduction of maximum 5.75% sales charge. All results are historical and assume
the reinvestment of dividends and capital gains. Other share classes are
available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
11
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 4/30/06 CLASS B SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund, compared to that of the Russell
1000 Value Index.
- -----------------------------------------
Average Annual Total Returns
(As of April 30, 2006)
Period If Held If Redeemed
10 Years 8.88% 8.88%
5 Years 4.56 4.56
1 Year 14.51 10.51
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[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Pioneer Equity Russell 1000
Income Fund Value Index
4/96 10000 10000
11438 12256
4/98 15886 17426
17706 19881
4/00 16646 19110
18730 20338
4/02 17717 19544
14643 17001
4/04 17978 21466
20440 24455
4/06 23405 28931
Call 1-800-225-6292 or visit pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
"If Held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. "If Redeemed"
returns reflect the deduction of applicable contingent deferred sales charge
(CDSC). Effective December 1, 2004, the period during which a CDSC is applied to
withdrawals was shortened to 5 years. The maximum CDSC for Class B shares
continues to be 4%. For more complete information, please see the prospectus for
details. Note: Shares purchased prior to December 1, 2004 remain subject to the
CDSC in effect at the time you purchased those shares. For performance
information for shares purchased prior to December 1, 2004, please visit
pioneerinvestments.com/bshares.
All results are historical and assume the reinvestment of dividends and capital
gains. Other share classes are available for which performance and expenses will
differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
12
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 4/30/06 CLASS C SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund, compared to that of the Russell
1000 Value Index.
- ----------------------------------------
Average Annual Total Returns
(As of April 30, 2006)
Period If Held If Redeemed
10 Years 8.84% 8.84%
5 Years 4.57 4.57
1 Year 14.58 14.58
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[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Pioneer Equity Russell 1000
Income Fund Value Index
4/96 10000 10000
11423 12256
4/98 15863 17426
17673 19881
4/00 16592 19110
18662 20338
4/02 17636 19544
14575 17001
4/04 17899 21466
20368 24455
4/06 23338 28931
Call 1-800-225-6292 or visit pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Class C shares held for less than one year are also subject to a 1% contingent
deferred sales charge (CDSC). The performance of Class C shares does not reflect
the 1% front-end sales charge in effect prior to February 1, 2004. If you paid a
1% sales charge, your returns would be lower than those shown above. All results
are historical and assume the reinvestment of dividends and capital gains. Other
share classes are available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
13
Pioneer Equity Income Fund
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PERFORMANCE UPDATE 4/30/06 CLASS R SHARES
- --------------------------------------------------------------------------------
Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund, compared to that of the Russell
1000 Value Index.
Average Annual Total Returns
(As of April 30, 2006)
- --------------------------------------
If If
Period Held Redeemed
10 Years 9.34% 9.34%
5 Years 5.15 5.15
1 Year 15.34 15.34
- --------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Pioneer Equity Russell 1000
Income Fund Value Index
4/96 10000 10000
11472 12256
4/98 15977 17426
17846 19881
4/00 16828 19110
18994 20338
4/02 18018 19544
14938 17001
4/04 18481 21466
21171 24455
4/06 24419 28931
Call 1-800-225-6292 or visit pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Class R shares are not subject to sales charges and are available for limited
groups of eligible investors, including retirement plan investors.
The performance of Class R shares for the period prior to the commencement of
operations of Class R shares on April 1, 2003 is based on the performance of
Class A shares, reduced to reflect the higher distribution and service fees of
Class R shares. For the period after April 1, 2003, the actual performance of
Class R shares is reflected, which performance may be influenced by the smaller
asset size of Class R shares compared to Class A shares. The performance of
Class R shares does not reflect the 1% CDSC that was in effect prior to July 1,
2004. Class R shares are not subject to sales charges and are available for
limited groups of eligible investors, including institutional investors. All
results are historical and assume the reinvestment of dividends and capital
gains. Other share classes are available for which performance and expenses will
differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
14
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 4/30/06 CLASS Y SHARES
- --------------------------------------------------------------------------------
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Equity Income Fund, compared to that of the Russell
1000 Value Index.
- --------------------------------------
Average Annual Total Returns
(As of April 30, 2006)
If If
Period Held Redeemed
10 Years 10.12% 10.12%
5 Years 5.91 5.91
1 Year 15.97 15.97
- --------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Pioneer Equity Russell 1000
Income Fund Value Index
4/96 10000 10000
11529 12256
4/98 16137 17426
18171 19881
4/00 17284 19110
19673 20338
4/02 18836 19544
15774 17001
4/04 19622 21466
22608 24455
4/06 26218 28931
Call 1-800-225-6292 or visit pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Performance for periods prior to the inception of Y shares reflects the NAV
performance of the Fund's A shares. The performance does not reflect differences
in expenses, including the Rule 12b-1 fees applicable to A shares. Since fees
for A shares are generally higher than those of Y shares, the performance shown
for Y shares prior to their inception would have been higher. Class A shares are
used as a proxy from 7/25/90 to 7/2/98. Class Y shares are not subject to sales
charges and are available for limited groups of eligible investors, including
institutional investors. All results are historical and assume the reinvestment
of dividends and capital gains. Other share classes are available for which
performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
15
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
COMPARING ONGOING FUND EXPENSES
- --------------------------------------------------------------------------------
As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value [divided by] $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's
number in the third row under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this
period.
Expenses Paid on a $1,000 Investment in Pioneer Equity Income Fund
Based on actual returns from November 1, 2005 through April 30,
2006.
Share Class A B C R Y
- -------------------------------------------------------------------------------------------
Beginning Account $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Value On 11/1/05
Ending Account $1,112.80 $1,108.20 $1,108.50 $1,112.60 $1,115.20
Value On 4/30/06
Expenses Paid $ 5.45 $ 10.09 $ 9.57 $ 6.08 $ 3.41
During Period*
* Expenses are equal to the Fund's annualized expense ratio of 1.04%, 1.93%,
1.83%, 1.16% and 0.65%, for Class A, Class B, Class C, Class R and Class Y
shares, respectively, multiplied by the average account value over the
period, multiplied by 181/365 (to reflect the one-half year period).
16
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the
5% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Equity Income Fund
Based on a hypothetical 5% return per year before expenses, reflect
ing the period from November 1, 2005 through April 30, 2006.
Share Class A B C R Y
- -------------------------------------------------------------------------------------------
Beginning Account $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Value On 11/1/05
Ending Account $1,019.64 $1,015.22 $1,015.72 $1,019.04 $1,021.57
Value On 4/30/06
Expenses Paid $ 5.21 $ 9.64 $ 9.15 $ 5.81 $ 3.26
During Period*
* Expenses are equal to the Fund's annualized expense ratio of 1.04%, 1.93%,
1.83%, 1.16% and 0.65%, for Class A, Class B, Class C, Class R and Class Y
shares, respectively, multiplied by the average account value over the
period, multiplied by 181/365 (to reflect the one-half year period).
17
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/06 (unaudited)
- --------------------------------------------------------------------------------
Shares Value
CONVERTIBLE PREFERRED STOCKS - 0.5%
Automobiles & Components - 0.4%
Automobile Manufacturers - 0.4%
175,000 Ford Capital Trust, 6.5%, 1/15/32 $ 4,873,750
--------------
Total Automobiles & Components $ 4,873,750
--------------
Pharmaceuticals & Biotechnology - 0.1%
Pharmaceuticals - 0.1%
15,745 Schering-Plough Corp., 6.0%, 9/14/07 $ 806,931
--------------
Total Pharmaceuticals & Biotechnology $ 806,931
--------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $8,995,070) $ 5,680,681
--------------
COMMON STOCKS - 99.3%
Energy - 5.9%
Integrated Oil & Gas - 5.9%
401,400 Chevron Corp. $ 24,493,428
317,560 ConocoPhillips 21,244,764
233,878 Exxon Mobil Corp. 14,753,024
--------------
$ 60,491,216
--------------
Total Energy $ 60,491,216
--------------
Materials - 4.0%
Diversified Chemical - 1.3%
200,000 Dow Chemical Co. $ 8,122,000
230,000 Olin Corp. 4,726,500
--------------
$ 12,848,500
--------------
Diversified Metals & Mining - 0.3%
120,000 Compass Minerals International, Inc. $ 3,159,600
--------------
Industrial Gases - 1.3%
200,000 Air Products & Chemicals, Inc. $ 13,704,000
--------------
Specialty Chemicals - 1.1%
400,000 Valspar Corp. $ 11,320,000
--------------
Total Materials $ 41,032,100
--------------
Capital Goods - 9.0%
Aerospace & Defense - 1.0%
170,000 United Technologies Corp. $ 10,677,700
--------------
18 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Construction, Farm Machinery & Heavy Trucks - 3.8%
100,000 Deere & Co. $ 8,778,000
418,625 PACCAR, Inc. 30,111,696
--------------
$ 38,889,696
--------------
Electrical Component & Equipment - 1.4%
175,000 Emerson Electric Co. $ 14,866,250
--------------
Industrial Machinery - 2.8%
632,446 Gorman-Rupp Co.+ $ 16,399,325
350,000 The Timken Co. 12,215,000
--------------
$ 28,614,325
--------------
Total Capital Goods $ 93,047,971
--------------
Commercial Services & Supplies - 0.4%
Office Services & Supplies - 0.4%
100,000 Mine Safety Appliances Co.* $ 4,180,000
--------------
Total Commercial Services & Supplies $ 4,180,000
--------------
Automobiles & Components - 2.7%
Auto Parts & Equipment - 2.0%
255,600 Johnson Controls, Inc. $ 20,844,180
--------------
Automobile Manufacturers - 0.7%
1,050,000 Ford Motor Corp. (b) $ 7,297,500
--------------
Total Automobiles & Components $ 28,141,680
--------------
Consumer Durables & Apparel - 0.7%
Housewares & Specialties - 0.7%
340,000 Tupperware Brands Corp. $ 7,174,000
--------------
Total Consumer Durables & Apparel $ 7,174,000
--------------
Consumer Services - 1.8%
Leisure Facilities - 1.5%
531,200 Cedar Fair, L.P. $ 14,953,280
--------------
Specialized Consumer Services - 0.3%
300,000 Servicemaster Co. $ 3,612,000
--------------
Total Consumer Services $ 18,565,280
--------------
The accompanying notes are an integral part of these financial statements. 19
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/06 (unaudited) (continued)
- --------------------------------------------------------------------------------
Shares Value
Media - 1.7%
Publishing - 1.7%
320,000 McGraw-Hill Co., Inc. $ 17,811,200
--------------
Total Media $ 17,811,200
--------------
Retailing - 2.2%
Department Stores - 1.2%
164,472 Federated Department Stores, Inc. $ 12,804,145
--------------
Distributors - 1.0%
230,000 Genuine Parts Co. $ 10,039,500
--------------
Total Retailing $ 22,843,645
--------------
Food, Beverage & Tobacco - 6.0%
Packaged Foods & Meats - 5.3%
520,000 Campbell Soup Co. $ 16,712,800
165,000 General Mills, Inc. 8,141,100
522,550 H.J. Heinz Co., Inc. 21,691,051
180,000 Kellogg Co. 8,335,800
--------------
$ 54,880,751
--------------
Soft Drinks - 0.7%
116,300 PepsiCo, Inc. $ 6,773,312
--------------
Total Food, Beverage & Tobacco $ 61,654,063
--------------
Household & Personal Products - 2.3%
Household Products - 2.3%
188,800 Clorox Co. $ 12,117,184
206,000 Colgate-Palmolive Co. 12,178,720
--------------
$ 24,295,904
--------------
Total Household & Personal Products $ 24,295,904
--------------
Pharmaceuticals & Biotechnology - 7.4%
Pharmaceuticals - 7.4%
356,600 Abbott Laboratories $ 15,241,084
670,000 Bristol-Myers Squibb Co. 17,004,600
200,000 Eli Lilly & Co. 10,584,000
100,000 Johnson & Johnson 5,861,000
715,400 Merck & Co., Inc. 24,624,068
20 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Pharmaceuticals - continued
100,000 Pfizer, Inc. $ 2,533,000
--------------
$ 75,847,752
--------------
Total Pharmaceuticals & Biotechnology $ 75,847,752
--------------
Banks - 15.6%
Diversified Banks - 5.0%
100,000 Comerica, Inc. $ 5,687,000
418,700 U.S. Bancorp 13,163,928
293,166 Wachovia Corp. 17,545,985
215,662 Wells Fargo & Co. 14,813,823
--------------
$ 51,210,736
--------------
Regional Banks - 7.5%
250,000 First Horizon National Corp. $ 10,605,000
358,600 National City Corp. 13,232,340
150,000 PNC Bank Corp. 10,720,500
200,000 Regions Financial Corp. 7,302,000
275,000 SunTrust Banks, Inc. 21,265,750
400,000 Whitney Holding Corp. 14,224,000
--------------
$ 77,349,590
--------------
Thrifts & Mortgage Finance - 3.1%
705,000 Washington Mutual, Inc. $ 31,767,300
--------------
Total Banks $ 160,327,626
--------------
Diversified Financials - 6.5%
Asset Management & Custody Banks - 5.1%
416,000 Eaton Vance Corp. (b) $ 11,843,520
100,000 State Street Corp. 6,532,000
402,000 T. Rowe Price Associates, Inc. 33,844,380
--------------
$ 52,219,900
--------------
Investment Banking & Brokerage - 0.9%
175,000 A.G. Edwards, Inc. $ 9,247,000
--------------
Diversified Financial Services - 0.5%
100,000 Bank of America Corp. $ 4,992,000
--------------
Total Diversified Financials $ 66,458,900
--------------
The accompanying notes are an integral part of these financial statements. 21
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/06 (unaudited) (continued)
- --------------------------------------------------------------------------------
Shares Value
Insurance - 4.8%
Life & Health Insurance - 1.4%
251,484 Lincoln National Corp. $ 14,606,191
--------------
Property & Casualty Insurance - 3.4%
410,200 Chubb Corp. $ 21,141,708
259,300 Safeco Corp. 13,457,670
--------------
$ 34,599,378
--------------
Total Insurance $ 49,205,569
--------------
Real Estate - 2.7%
Diversified Real Estate Investment Trust - 0.9%
200,000 Liberty Property Trust $ 8,940,000
--------------
Residential Real Estate Investment Trust - 0.7%
150,000 Archstone Communities Trust (b) $ 7,332,000
--------------
Retail Real Estate Investment Trust - 1.1%
300,000 Kimco Realty Corp. $ 11,139,000
--------------
Total Real Estate $ 27,411,000
--------------
Software & Services - 0.6%
Data Processing & Outsourced Services - 0.6%
150,000 Automatic Data Processing, Inc. $ 6,612,000
--------------
Total Software & Services $ 6,612,000
--------------
Technology Hardware & Equipment - 0.3%
Computer Hardware - 0.3%
100,000 Hewlett-Packard Co. $ 3,247,000
--------------
Total Technology Hardware & Equipment $ 3,247,000
--------------
Telecommunication Services - 9.2%
Integrated Telecommunication Services - 8.0%
862,906 AT&T Corp. $ 22,616,766
696,400 BellSouth Corp. 23,524,392
1,000,000 Citizens Utilities Co. (Class B) 13,280,000
700,000 Verizon Communications, Inc. 23,121,000
--------------
$ 82,542,158
--------------
Wireless Telecommunication Services - 1.2%
184,585 Alltel Corp. $ 11,881,736
--------------
Total Telecommunication Services $ 94,423,894
--------------
22 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Utilities - 15.5%
Electric Utilities - 2.3%
354,400 Great Plains Energy, Inc. (b) $ 10,011,800
440,000 Southern Co. 14,181,200
--------------
$ 24,193,000
--------------
Gas Utilities - 5.2%
100,000 AGL Resources, Inc. $ 3,538,000
350,000 Atmos Energy Corp. 9,289,000
360,000 Equitable Resources, Inc. 12,783,600
346,600 Questar Corp. 27,745,330
--------------
$ 53,355,930
--------------
Multi-Utilities - 8.0%
285,000 Ameren Corp. $ 14,355,450
275,000 Consolidated Edison, Inc. 11,858,000
200,000 Duke Energy Corp. 5,824,000
454,700 KeySpan Energy Corp. 18,360,786
380,000 NSTAR 10,507,000
529,000 PG&E Corp. 21,075,360
--------------
$ 81,980,596
--------------
Total Utilities $ 159,529,526
--------------
TOTAL COMMON STOCKS
(Cost $716,905,249) $1,022,300,326
--------------
TEMPORARY CASH INVESTMENT - 2.6%
Security Lending Collateral - 2.6%
26,443,446 Securities Lending Investment Fund, 4.75% $ 26,443,446
--------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $26,443,446) $ 26,443,446
--------------
TOTAL INVESTMENT IN SECURITIES - 102.4%
(Cost $752,343,765)(a) $1,054,424,453
--------------
OTHER ASSETS AND LIABILITIES - (2.4)% $ (24,992,501)
--------------
TOTAL NET ASSETS - 100.0% $1,029,431,952
==============
The accompanying notes are an integral part of these financial statements. 23
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/06 (unaudited) (continued)
- --------------------------------------------------------------------------------
+ Investment held by the Fund representing 5% or more of the voting stock of
such company.
(a) At April 30, 2006, the net unrealized gain on investments based on cost
for federal income tax purposes of $746,062,427 was as follows:
Aggregate gross unrealized gain for all investments
in which there is an excess of value over tax cost $325,455,582
Aggregate gross unrealized loss for all investments
in which there is an excess of tax cost over value (17,093,556)
------------
Net unrealized gain $308,362,026
============
(b) At April 30, 2006, the following securities were out on loan:
Shares Security Value
148,500 Archstone Communities Trust $ 7,258,680
14,538 Eaton Vance Corp. 413,897
1,039,500 Ford Motor Corp. 7,224,525
354,186 Great Plains Energy, Inc. 10,005,755
-----------
Total $24,902,856
===========
Purchases and sales of securities (excluding temporary cash investments) for
the six months ended April 30, 2006 aggregated $169,367,634 and $199,262,216,
respectively.
24 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 4/30/06 (unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities of unaffiliated issuers, at value
(including securities loaned of $24,902,856)
(cost $744,437,269) $1,038,025,128
Investment in securities of affiliated issuers, at value
(cost $7,906,496) 16,399,325
--------------
Total Investment in securities, at value
(cost $752,343,765) $1,054,424,453
Receivables -
Investment securities sold 1,503,890
Fund shares sold 332,341
Dividends and interest 2,993,487
Other 79,273
--------------
Total assets $1,059,333,444
--------------
LIABILITIES:
Payables -
Fund shares repurchased $ 1,315,236
Upon return of securities loaned 26,443,446
Due to bank 1,840,328
Due to affiliates 230,873
Accrued expenses 71,609
--------------
Total liabilities $ 29,901,492
--------------
NET ASSETS:
Paid-in capital $ 645,599,405
Undistributed net investment income 8,678,075
Accumulated net realized gain on investments 73,073,784
Net unrealized gain on investments 302,080,688
--------------
Total net assets $1,029,431,952
==============
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $723,497,072/23,330,691 shares) $ 31.01
==============
Class B (based on $151,296,751/4,909,505 shares) $ 30.82
==============
Class C (based on $127,609,227/4,154,632 shares) $ 30.71
==============
Class R (based on $15,042,113/482,009 shares) $ 31.21
==============
Class Y (based on $11,986,789/384,812 shares) $ 31.15
==============
MAXIMUM OFFERING PRICE:
Class A ($31.01 [divided by] 94.25%) $ 32.90
==============
The accompanying notes are an integral part of these financial statements. 25
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (unaudited)
- --------------------------------------------------------------------------------
For the Six Months Ended 4/30/06
INVESTMENT INCOME:
Dividends (including income from affiliated issuers
of $177,085) $17,877,278
Interest 26,650
Income from securities loaned, net 5,183
-----------
Total investment income $ 17,909,111
------------
EXPENSES:
Management fees $ 2,974,333
Transfer agent fees and expenses
Class A 512,086
Class B 223,270
Class C 117,453
Class R 552
Class Y 288
Distribution fees
Class A 865,960
Class B 778,471
Class C 619,163
Class R 31,750
Administrative reimbursements 91,570
Custodian fees 20,076
Registration fees 12,670
Professional fees 16,115
Printing expense 21,717
Fees and expenses of nonaffiliated trustees 12,654
Miscellaneous 33,327
-----------
Total expenses $ 6,331,455
Less fees paid indirectly (46,814)
------------
Net expenses $ 6,284,641
------------
Net investment income $ 11,624,470
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $ 73,075,570
------------
Change in net unrealized gain on investments $ 21,023,007
------------
Net gain on investments $ 94,098,577
------------
Net increase in net assets resulting from operations $105,723,047
============
26 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Six Months Ended 4/30/06 and the Year Ended 10/31/05
Six Months
Ended
4/30/06 Year Ended
(unaudited) 10/31/05
FROM OPERATIONS:
Net investment income $ 11,624,470 $ 17,809,300
Net realized gain on investments 73,075,570 39,019,185
Change in net unrealized gain on investments 21,023,007 36,319,178
-------------- --------------
Net increase in net assets resulting from
operations $ 105,723,047 $ 93,147,663
-------------- --------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.33 and $0.60 per share, respectively) $ (7,613,970) $ (13,541,645)
Class B ($0.19 and $0.34 per share, respectively) (1,043,752) (2,040,384)
Class C ($0.21 and $0.38 per share, respectively) (888,089) (1,605,969)
Class R ($0.30 and $0.56 per share, respectively) (125,454) (101,927)
Class Y ($0.38 and $0.71 per share, respectively) (141,842) (109,218)
Net realized gain:
Class A ($1.08 and $0.00 per share, respectively) (24,622,115) -
Class B ($1.08 and $0.00 per share, respectively) (5,874,065) -
Class C ($1.08 and $0.00 per share, respectively) (4,511,394) -
Class R ($1.08 and $0.00 per share, respectively) (389,135) -
Class Y ($1.08 and $0.00 per share, respectively) (279,331) -
-------------- --------------
Total distributions to shareowners $ (45,489,147) $ (17,399,143)
-------------- --------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 81,129,193 $ 203,260,260
Reinvestment of distributions 38,991,270 14,828,754
Cost of shares repurchased (115,669,347) (207,178,038)
-------------- --------------
Net increase in net assets resulting from
Fund share transactions $ 4,451,116 $ 10,910,976
-------------- --------------
Net increase in net assets $ 64,685,016 $ 86,659,496
NET ASSETS:
Beginning of period 964,746,936 878,087,440
-------------- --------------
End of period (including undistributed net investment
income of $8,678,075 and $6,886,711,
respectively) $1,029,431,952 $ 964,746,936
============== ==============
The accompanying notes are an integral part of these financial statements. 27
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
'06 Shares '06 Amount '05 Shares '05 Amount
(unaudited) (unaudited)
CLASS A
Shares sold 1,737,472 $ 51,720,621 4,282,411 $ 123,686,391
Reinvestment of distributions 1,004,598 29,161,228 414,127 12,028,807
Less shares repurchased (2,285,691) (68,041,888) (4,147,670) (120,070,812)
---------- ------------- ---------- --------------
Net increase 456,379 $ 12,839,961 548,868 $ 15,644,386
========== ============= ========== ==============
CLASS B
Shares sold 306,148 $ 9,031,974 1,257,967 $ 36,136,421
Reinvestment of distributions 193,259 5,556,528 56,959 1,643,334
Less shares repurchased (1,024,622) (30,355,691) (1,908,424) (54,838,775)
---------- ------------- ---------- --------------
Net decrease (525,215) $ (15,767,189) (593,498) $ (17,059,020)
========== ============= ========== ==============
CLASS C
Shares sold 353,259 $ 10,370,185 1,096,405 $ 31,260,204
Reinvestment of distributions 123,993 3,555,383 36,483 1,050,002
Less shares repurchased (517,253) (15,258,251) (1,052,603) (30,182,180)
---------- ------------- ---------- --------------
Net increase (decrease) (40,001) $ (1,332,683) 80,285 $ 2,128,026
========== ============= ========== ==============
CLASS R
Shares sold 144,051 $ 4,293,100 294,456 $ 8,655,038
Reinvestment of distributions 16,391 479,135 3,019 88,610
Less shares repurchased (25,867) (776,392) (26,548) (776,777)
---------- ------------- ---------- --------------
Net increase 134,575 $ 3,995,843 270,927 $ 7,966,871
========== ============= ========== ==============
CLASS Y
Shares sold 192,636 $ 5,713,313 117,705 $ 3,522,206
Reinvestment of distributions 8,147 238,996 608 18,001
Less shares repurchased (41,199) (1,237,125) (45,501) (1,309,494)
---------- ------------- ---------- --------------
Net increase 159,584 $ 4,715,184 72,812 $ 2,230,713
========== ============= ========== ==============
28 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
4/30/06 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 10/31/05 10/31/04 10/31/03 10/31/02 10/31/01
CLASS A
Net asset value, beginning of period $ 29.23 $ 26.91 $ 23.57 $ 20.80 $ 24.28 $ 29.55
------- -------- -------- -------- -------- -------
Net increase (decrease) from investment operations:
Net investment income $ 0.37 $ 0.61 $ 0.52 $ 0.47 $ 0.49 $ 0.47
Net realized and unrealized gain (loss) on investments 2.82 2.31 3.30 2.78 (3.50) (2.97)
------- -------- -------- -------- -------- -------
Net increase (decrease) from investment operations $ 3.19 $ 2.92 $ 3.82 $ 3.25 $ (3.01) $ (2.50)
Distributions to shareowners:
Net investment income (0.33) (0.60) (0.48) (0.48) (0.47) (0.45)
Net realized gain (1.08) - - - - (2.29)
Tax return of capital - - - - - (0.03)
------- -------- -------- -------- -------- -------
Net increase (decrease) in net asset value $ 1.78 $ 2.32 $ 3.34 $ 2.77 $ (3.48) $ (5.27)
------- -------- -------- -------- -------- -------
Net asset value, end of period $ 31.01 $ 29.23 $ 26.91 $ 23.57 $ 20.80 $ 24.28
======= ======== ======== ======== ======== =======
Total return* 11.28% 10.87% 16.33% 15.89% (12.62)% (9.21)%
Ratio of net expenses to average net assets+ 1.04%** 1.06% 1.08% 1.17% 1.11% 1.08%
Ratio of net investment income to average net assets+ 2.57%** 2.11% 2.07% 2.24% 2.06% 1.77%
Portfolio turnover rate 34%** 14% 22% 15% 10% 15%
Net assets, end of period (in thousands) $723,497 $668,556 $600,835 $501,283 $409,553 $464,792
Ratios with reduction for fees paid indirectly:
Net expenses 1.03%** 1.06% 1.08% 1.17% 1.10% 1.06%
Net investment income 2.58%** 2.11% 2.07% 2.24% 2.07% 1.79%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
29
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
4/30/06 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 10/31/05 10/31/04 10/31/03 10/31/02 10/31/01
CLASS B
Net asset value, beginning of period $ 29.05 $ 26.75 $ 23.42 $ 20.67 $ 24.14 $ 29.37
------- -------- -------- -------- -------- -------
Net increase (decrease) from investment operations:
Net investment income $ 0.27 $ 0.38 $ 0.35 $ 0.32 $ 0.31 $ 0.25
Net realized and unrealized gain (loss) on investments 2.77 2.26 3.23 2.73 (3.50) (2.93)
------- -------- -------- -------- -------- -------
Net increase (decrease) from investment operations $ 3.04 $ 2.64 $ 3.58 $ 3.05 $ (3.19) $ (2.68)
Distributions to shareowners:
Net investment income (0.19) (0.34) (0.25) (0.30) (0.28) (0.23)
Net realized gain (1.08) - - - - (2.29)
Tax return of capital - - - - - (0.03)
------- -------- -------- -------- -------- -------
Net increase (decrease) in net asset value $ 1.77 $ 2.30 $ 3.33 $ 2.75 $ (3.47) $ (5.23)
------- -------- -------- -------- -------- -------
Net asset value, end of period $ 30.82 $ 29.05 $ 26.75 $ 23.42 $ 20.67 $ 24.14
======= ======== ======== ======== ======== =======
Total return* 10.82% 9.89% 15.34% 14.90% (13.34)% (9.90)%
Ratio of net expenses to average net assets+ 1.93%** 1.93% 1.95% 2.02% 1.91% 1.87%
Ratio of net investment income to average net assets+ 1.70%** 1.24% 1.21% 1.41% 1.25% 0.98%
Portfolio turnover rate 34%** 14% 22% 15% 10% 15%
Net assets, end of period (in thousands) $151,297 $157,889 $161,275 $170,283 $174,334 $230,268
Ratios with reduction for fees paid indirectly:
Net expenses 1.92%** 1.93% 1.95% 2.02% 1.90% 1.85%
Net investment income 1.71%** 1.24% 1.21% 1.41% 1.26% 1.00%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
30
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
4/31/06 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 10/31/05 10/31/04 10/31/03 10/31/02 10/31/01
CLASS C
Net asset value, beginning of period $ 28.96 $ 26.68 $ 23.37 $ 20.63 $ 24.08 $ 29.32
------- -------- -------- ------- --------- ---------
Net increase (decrease) from investment operations:
Net investment income $ 0.26 $ 0.38 $ 0.29 $ 0.24 $ 0.26 $ 0.21
Net realized and unrealized gain (loss) on investments 2.78 2.28 3.29 2.81 (3.45) (2.92)
------- -------- -------- ------- --------- ---------
Net increase (decrease) from investment operations $ 3.04 $ 2.66 $ 3.58 $ 3.05 $ (3.19) $ (2.71)
Distributions to shareowners:
Net investment income (0.21) (0.38) (0.27) (0.31) (0.26) (0.21)
Net realized gain (1.08) - - - - (2.29)
Tax return of capital - - - - - (0.03)
------- -------- -------- ------- --------- ---------
Net increase (decrease) in net asset value $ 1.75 $ 2.28 $ 3.31 $ 2.74 $ (3.45) $ (5.24)
------- -------- -------- ------- --------- ---------
Net asset value, end of period $ 30.71 $ 28.96 $ 26.68 $ 23.37 $ 20.63 $ 24.08
======= ======== ======== ======= ========= =========
Total return* 10.85% 9.98% 15.40% 14.93% (13.37)% (10.02)%
Ratio of net expenses to average net assets+ 1.83%** 1.86% 1.89% 2.00% 1.99% 1.98%
Ratio of net investment income to average net assets+ 1.78%** 1.31% 1.26% 1.36% 1.19% 0.84%
Portfolio turnover rate 34%** 14% 22% 15% 10% 15%
Net assets, end of period (in thousands) $127,609 $121,479 $109,787 $82,979 $ 42,903 $ 37,618
Ratios with reduction for fees paid indirectly:
Net expenses 1.82%** 1.86% 1.89% 2.00% 1.98% 1.96%
Net investment income 1.79%** 1.31% 1.26% 1.36% 1.20% 0.86%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
31
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 4/1/03 (a)
4/31/06 Year Ended Year Ended to
(unaudited) 10/31/05 10/31/04 10/31/03
CLASS R
Net asset value, beginning of period $ 29.39 $ 27.08 $ 23.71 $ 19.97
------- ------- ------- --------
Net increase from investment operations:
Net investment income $ 0.30 $ 0.39 $ 0.44 $ 0.23
Net realized and unrealized gain on investments 2.90 2.48 3.38 3.73
------- ------- ------- --------
Net increase from investment operations $ 3.20 $ 2.87 $ 3.82 $ 3.96
Distributions to shareowners:
Net investment income (0.30) (0.56) (0.45) (0.22)
Net realized gain (1.08) - - -
------- ------- ------- --------
Net increase in net asset value $ 1.82 $ 2.31 $ 3.37 $ 3.74
------- ------- ------- --------
Net asset value, end of period $ 31.21 $ 29.39 $ 27.08 $ 23.71
======= ======= ======= ========
Total return* 11.26% 10.64% 16.23% 19.87%(b)
Ratio of net expenses to average net assets+ 1.16%** 1.26% 1.17% 1.21%**
Ratio of net investment income to average net assets+ 2.43%** 1.86% 1.98% 0.97%**
Portfolio turnover rate 34%** 14% 22% 15%
Net assets, end of period (in thousands) $15,042 $10,213 $ 2,072 $ 1,098
Ratios with reduction for fees paid indirectly:
Net expenses 1.15%** 1.26% 1.17% 1.21%**
Net investment income 2.44%** 1.86% 1.98% 0.97%**
(a) Class R Shares were first publicly offered on April 1, 2003.
(b) Not annualized.
* Assumes initial investment at net asset value at the beginning of each year,
reinvestment of all distributions, and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
32
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
4/30/06 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 10/31/05 10/31/04 10/31/03 10/31/02 10/31/01
CLASS Y
Net asset value, beginning of period $ 29.35 $ 27.02 $ 23.65 $ 20.85 $ 24.33 $ 29.59
------- ------- ------- ------- -------- -------
Net increase (decrease) from investment operations:
Net investment income $ 0.32 $ 0.63 $ 0.67 $ 0.52 $ 0.55 $ 0.55
Net realized and unrealized gain (loss) on investments 2.94 2.41 3.29 2.85 (3.46) (2.97)
------- ------- ------- ------- -------- -------
Net increase (decrease) from investment operations $ 3.26 $ 3.04 $ 3.96 $ 3.37 $ (2.91) $ (2.42)
Distributions to shareowners:
Net investment income (0.38) (0.71) (0.59) (0.57) (0.57) (0.52)
Net realized gain (1.08) - - - - (2.29)
Tax return of capital - - - - - (0.03)
------- ------- ------- ------- -------- -------
Net increase (decrease) in net asset value $ 1.80 $ 2.33 $ 3.37 $ 2.80 $ (3.48) $ (5.26)
------- ------- ------- ------- -------- -------
Net asset value, end of period $ 31.15 $ 29.35 $ 27.02 $ 23.65 $ 20.85 $ 24.33
======= ======= ======= ======= ======== =======
Total return* 11.52% 11.31% 16.88% 16.45% (12.24)% (8.89)%
Ratio of net expenses to average net assets+ 0.65%** 0.66% 0.64% 0.71% 0.69% 0.66%
Ratio of net investment income to average net assets+ 2.93%** 2.51% 2.43% 2.66% 2.49% 2.17%
Portfolio turnover rate 34%** 14% 22% 15% 10% 15%
Net assets, end of period (in thousands) $11,987 $ 6,611 $ 4,119 $ 5,017 $ 2,842 $ 2,530
Ratios with reduction for fees paid indirectly:
Net expenses 0.65%** 0.66% 0.64% 0.71% 0.68% 0.64%
Net investment income 2.93%** 2.51% 2.43% 2.66% 2.50% 2.19%
* 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.
33
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/06 (unaudited)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Equity Income Fund (the Fund) is a Delaware statutory trust registered
under the Investment Company Act of 1940 as a diversified, open-end management
investment company. The investment objectives of the Fund are current income
and long-term growth of capital from a portfolio consisting primarily of income
producing equity securities of U.S. corporations.
The Fund offers five classes of shares - Class A, Class B, Class C, Class R and
Class Y shares. Each class of shares represents an interest in the same
portfolio of investments of the Fund and have equal rights to voting,
redemptions, dividends and liquidation, except that each class of shares can
bear different transfer agent and distribution fees and have exclusive voting
rights with respect to the distribution plans that have been adopted by Class
A, Class B, Class C, and Class R shareowners, respectively. There is no
distribution plan for Class Y shareowners.
The Fund's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Fund to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses and gains and losses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements, which are consistent with those policies generally
accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value
of the Fund is computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of close of regular trading on the NYSE. In
computing the net asset value, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that
have not traded on the date of valuation, or securities for which sale
prices are not generally reported, are valued at the mean between the last
bid and asked prices. Securities for which market quotations are not
readily available are valued at their fair values as determined by, or
under the direction of, the
34
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Board of Trustees. Trading in foreign securities is substantially
completed each day at various times prior to the close of the NYSE. The
values of such securities used in computing the net asset value of the
Fund's shares are determined as of such times. The Fund also may use the
fair value of a security, including a non-U.S. security, when the closing
market price on the principal exchange where the security is traded no
longer reflects the value of the security. At April 30, 2006, there were
no securities fair valued. Temporary cash investments are valued at
amortized cost.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Fund becomes aware of the ex-dividend
data in the exercise of reasonable diligence. Dividend and interest income
is recorded on the accrual basis, net of unrecoverable foreign taxes
withheld at the applicable country rates.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
Information regarding the Fund's principal investment risks is contained
in the Fund's prospectus(es). Please refer to those documents when
considering the Fund's investment risks.
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.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The tax character
35
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/06 (unaudited) (continued)
- --------------------------------------------------------------------------------
of distributions paid during the year ended October 31, 2005 was as
follows:
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $17,399,143
Long-term capital gain -
-----------
Total $17,399,143
===========
- --------------------------------------------------------------------------------
The following shows the components of distributable earnings on a
federal income tax basis at October 31, 2005.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Undistributed ordinary income $ 585,373
Undistributed long-term gain 35,674,255
Unrealized appreciation 287,339,019
------------
Total $323,598,647
============
- --------------------------------------------------------------------------------
The difference between book basis and tax-basis unrealized appreciation is
attributable to the tax adjustments on partnerships and preferred stocks.
C. Fund Shares
The Fund records sales and repurchases of its shares as of trade date.
Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the
Fund and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A.
(UniCredito Italiano) earned approximately $48,422 in underwriting
commissions on the sale of Class A shares during the six months ended
April 30, 2006.
D. Class Allocations
Distribution fees are calculated based on the average daily net asset
value attributable to Class A, Class B, Class C and Class R shares of the
Fund, respectively. Class Y shares are not subject to 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
36
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses and realized and unrealized gains
and losses are calculated at the Fund level and allocated daily to each
class of shares based on the respective percentage of adjusted net assets
at the beginning of the day.
Distributions to shareowners are recorded as of the ex-dividend date.
Distributions paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time, and in the same amount,
except that Class A, Class B, Class C, Class R and Class Y shares can bear
different transfer agent and distribution fees.
E. Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, the value
of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Fund's custodian, or subcustodians. The
Fund's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
F. Securities Lending
The Fund lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Fund's custodian acting as the
lending agent. When entering into a loan, the Fund receives collateral,
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Fund also continues to receive interest or
payments in lieu of dividends on the securities loaned. Gain or loss on
the fair value of the loaned securities that may occur during the term of
the loan will be for the account of the Fund. The loans are secured by
collateral of at least 102%, at all times, of the fair value of the
securities loaned. The amount of the collateral will be adjusted daily to
reflect any price fluctuation in the value of the loaned securities. The
Fund has the right under the lending agreements to recover the securities
from the borrower on demand. The Fund invests cash collateral in the
Securities Lending
37
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/06 (unaudited) (continued)
- --------------------------------------------------------------------------------
Investment Fund, which is sponsored by Brown Brothers Harriman & Co., the
Fund's custodian.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
Fund's portfolio. PIM receives a basic fee that is calculated at the annual
rate of 0.60% of the Fund's average daily net assets up to $10 billion and
0.575% of the excess over $10 billion. For the six months ended April 30, 2006,
the net management fee was equivalent to 0.60% of the average daily net assets.
In addition, under the management and administrative agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At April 30, 2006, $54,256 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 $137,966 in transfer agent
fees payable to PIMSS at April 30, 2006.
4. Distribution and Service Plans
The Fund adopted a Plan of Distribution for each class of shares, except Class
Y shares (Class A Plan, Class B Plan, Class C Plan, Class R Plan) in accordance
with Rule 12b-1 of the Investment Company Act of 1940. Pursuant to the Class A
Plan, the Fund pays PFD a service fee of up to 0.25% of the Fund's average
daily net assets attributable to Class A shares in reimbursement of its actual
expenditures to finance activities primarily intended to result in the sale of
Class A shares. Pursuant to the Class B Plan and the Class C Plan, the Fund
pays PFD 1.00% of the average daily net assets attributable to each class of
shares. The fee consists of a 0.25% service fee and a 0.75% distribution fee
paid as compensation for personal services and/or account maintenance services
or distribution services with regard to Class B and Class C shares. Pursuant to
the Class R Plan, the Fund pays PFD 0.50% of the average daily net assets
attributable to Class R shares as compensation for distribution services.
Included in due to affiliates is $38,651 in distribution fees payable to PFD at
38
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
April 30, 2006. The Fund also has adopted a separate service plan for Class R
shares (Service Plan). The Service Plan authorizes the Fund to pay as
compensation to securities dealers, plan administrators or other service
organizations that agree to provide certain services to retirement plans or
plan participants holding shares of the Fund a service fee of up to 0.25% of
the Fund's average daily net assets attributable to Class R shares held by such
plans in reimbursement for actual expenditures.
In addition, redemptions of each class of shares (except Class Y shares) may be
subject to a contingent deferred sales charge (CDSC). Effective February 1,
2004, a CDSC of 1.00% may be imposed on redemptions of certain net asset value
purchases of Class A shares within 18 months of purchase (12 months for shares
purchased prior to February 1, 2004). Class B shares subscribed on or after
December 1, 2004 that are redeemed within five years of purchase are subject to
a CDSC at declining rates beginning at 4.00%, based on the lower of cost or
market value of shares being redeemed. Shares purchased prior to December 1,
2004, remain subject to the CDSC in effect at the time those shares were
purchased. Shares purchased as part of an exchange or acquired as a result of a
reorganization of another fund into the Fund remain subject to any contingent
deferred sales charges that applied to the shares you originally purchased.
Redemptions of Class C shares within one year of purchase are subject to a CDSC
of 1.00%. Redemptions of Class R shares within 18 months of purchase were
subject to a CDSC of 1.00%. Effective July 1, 2004, the CDSC on Class R shares
was eliminated. Proceeds from the CDSCs are paid to PFD. For the six months
ended April 30, 2006, CDSCs in the amount of $161,543 were paid to PFD.
5. Commission Recapture and Expense Offset Arrangements
Effective July 15, 2005, the Fund has entered into commission recapture
arrangements with brokers with whom PIM places trades on behalf of the Fund
where they provide services to the Fund in addition to trade execution. These
services included payments of certain expenses on behalf of the Fund. For the
six months ended April 30, 2006, expenses were reduced by $31,912 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 six
39
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/06 (unaudited) (continued)
- --------------------------------------------------------------------------------
months ended April 30, 2006, the Fund's expenses were reduced by $14,902 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 six months ended
April 30, 2006, the Fund had no borrowings under this agreement.
7. Affiliated Companies
The Fund's investments in certain companies exceed 5% of the outstanding voting
stock. Such companies are deemed affiliates of the Fund for financial reporting
purposes. The following summarizes transactions with affiliates of the Fund for
the six months ended, April 30, 2006:
- -------------------------------------------------------------------------------------------
Beginning Ending
Balance Purchases Sales Dividend Balance
Affiliates (shares) (shares) (shares) Income (shares) Value
- -------------------------------------------------------------------------------------------
Gorman-Rupp Co. 632,446 - - $177,085 632,446 $16,399,325
- -------------------------------------------------------------------------------------------
40
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT
- --------------------------------------------------------------------------------
The Investment Company Act of 1940 requires that both the Board of Trustees and
a majority of the Independent Trustees (collectively "the Trustees") vote
separately annually to approve the Fund's management contract (the "Management
Contract"). The Trustees have determined that the terms of the Management
Contract are fair and reasonable and that renewal of the contract will enable
the Fund to receive quality investment advisory services at a cost deemed
reasonable and in the best interests of the Fund and its shareholders. In
making such determinations, the Independent Trustees relied upon the assistance
of counsel to the Independent Trustees and counsel to the Fund.
Throughout the year, the Independent Trustees regularly met in executive
session separately from the Interested Trustees of the Fund and any officer of
Pioneer Investment Management, Inc., the Fund's adviser (the "Investment
Adviser"), or its affiliates. While the Trustees, including the Independent
Trustees, act on all major matters relating to the Fund, a significant portion
of the activities of the Board of Trustees (including certain of those
described herein) is conducted through committees, the members of which are
comprised exclusively of Independent Trustees. Such committee meetings are
attended by officers of the Fund or the Investment Adviser to the extent
requested by the members of the committee.
In evaluating the Management Contract, the Trustees conducted a review that was
specifically focused upon the renewal of the Management Contract, and relied
upon their knowledge, resulting from their meetings throughout the year, of the
Investment Adviser, its services and the Fund. Both in meetings specifically
dedicated to renewal of the Management Contract and at other meetings during
the course of the year, the Trustees, including the Independent Trustees,
received materials relating to the Investment Adviser's investment and
management services under the Management Contract. These materials included (i)
information on the investment performance of the Fund, a peer group of funds
and an index, in each case selected by the Independent Trustees for this
purpose, (ii) sales and redemption data in respect to the Fund, (iii) the
general investment outlook in the markets in which the Fund invests, (iv)
arrangements in respect of the distribution of the Fund's shares, (v) the
procedures employed to determine the value of each of the Fund's assets, (vi)
the Investment Adviser's management of the relationships with the Fund's
unaffiliated service providers, (vii) the record of compliance with
41
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
- --------------------------------------------------------------------------------
the Fund's investment policies and restrictions and with the Fund's Code of
Ethics and the structure and responsibilities of the Investment Adviser's
compliance department, (viii) the nature, cost and character of non-investment
management services provided by the Investment Adviser and its affiliates and
(ix) the disclosures included in the Fund's prospectuses and reports to
shareholders.
Specifically in connection with the Independent Trustees' review of the
Management Contract, the Independent Trustees requested and the Investment
Adviser provided additional information in order to evaluate the quality of the
Investment Adviser's services and the reasonableness of the fee under the
Management Contract. Among other items, this information included data or
analyses of (1) investment performance for one, three, five and ten years and a
peer group selected by the Independent Trustees for this purpose, (2)
management fees incurred by a peer group of funds selected by the Independent
Trustees for this purpose, (3) the advisory fees of comparable portfolios of
other clients of the Investment Adviser, (4) expense ratios for the Fund and a
peer group of funds selected by the Independent Trustees for this purpose, (5)
the overall organization of the Investment Adviser, (6) the Investment
Adviser's financial results and condition, including its and certain of its
affiliates profitability from services performed for the Fund, (7) transfer
agency fees and administrative reimbursements paid to the Investment Adviser or
affiliates, (8) investment management staffing, and (9) operating expenses paid
to third parties. The Trustees also reviewed information regarding the
potential for the Fund and the Investment Adviser to benefit from further
economies of scale in the management of the Fund in light of reasonable growth
expectations for the Fund, break points in the management fee for the Fund and
a peer group selected by the Independent Trustees for this purpose and certain
of the Fund's expenses that are not incurred as fees based on a percentage of
net assets.
The following summarizes factors considered by the Trustees in connection with
reviewing the information described above and their renewal of the Fund's
Management Contract. The Trustees did not identify any single factor as
all-important or controlling, and the summary does not detail all the matters
that were considered.
A. Ancillary Benefits to Shareholders. The Trustees considered the benefits to
shareholders of investing in a Fund that is part of a
42
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
large number of investment companies offering a variety of investment
disciplines and providing for a large variety of Fund and shareholder
services.
B. Compliance and Investment Performance. The Trustees determined that the
Investment Adviser had policies and systems reasonably designed to achieve
compliance with the Fund's investment objectives and regulatory
requirements. The Trustees also reviewed the Fund's investment performance
based upon total return and yield, as well as the Fund's performance
compared to both the performance of a peer group and an index, in each
case selected by the Independent Trustees for this purpose. The Fund's
performance, based upon total return, was in the first quintile of the
peer group for the 12 months ended June 30, 2005, the third quintile of
the peer group for the three years ended June 30, 2005, the third quintile
for the five years ended June 30, 2005 and the second quintile for the ten
year period ended June 30, 2005. (In all quintile rankings referred to
throughout this discussion first quintile is most favorable to the Fund's
shareholders. Thus, highest relative performance would be first quintile
and lowest relative expenses also would be first quintile.) The Trustees
also considered that the yield (gross of expenses) to Class A shareholders
compared to the yield (as of June 30, 2005) of the Russell 1000 Value
Index. The Trustees concluded that the performance of the Fund supported
the continuation of the Management Contract.
C. The Investment Adviser's Personnel and Methods. The Trustees reviewed the
background of members of the team responsible for the daily management of
the Fund and the Fund's investment objective and discipline. The
Independent Trustees also have had discussions with senior management of
the Investment Adviser responsible for investment operations and the
senior management of the Investment Adviser's equities group. Among other
things, the Trustees considered the number, education and experience of
the Investment Adviser's investment staff and their use of technology and
emphasis on analytics in view of the risk profile of securities in which
the Fund invests. The Trustees concluded that the Investment Adviser had
the quality and depth of personnel and the well-developed methods
essential to performing its duties under the Management Contract.
43
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
- --------------------------------------------------------------------------------
D. Nature and Quality of Other Services. The Trustees considered the nature,
quality, cost and extent of other services provided to shareholders of the
Fund, including administrative and shareholder services performed by the
Investment Adviser under the Management Contract. The Trustees also
considered the reasonableness of the arrangements for reimbursement of the
Investment Adviser's out-of-pocket costs and expenses, including overhead,
for certain administrative services that the Investment Adviser is not
required to provide under the Management Contract. The Trustees also
considered the nature and extent of the other services provided by the
Investment Adviser's affiliates under other contracts and its supervision
of third party service providers. Based on these considerations, the
Trustees concluded that the nature, quality, cost and extent of such
services are satisfactory and reliable and serve the shareholders of the
Fund well.
E. Management Fee and Expenses. The Trustees considered the Investment
Adviser's fee under the Management Contract relative to the management
fees charged by a peer group of funds selected by the Independent Trustees
for this purpose using data provided by an independent third party. The
Fund's management fee for the 12 months ended June 30, 2005 was in the
second quintile relative to the management fees paid by the other funds in
that peer group for the comparable period. The Trustees determined that
the fee under the Management Contract was reasonable and fair in light of
both the overall nature and quality of services provided by the Investment
Adviser and the fees charged by the funds in the peer group. The Trustees
also considered the Fund's expense ratio and expense ratios of a peer
group of funds selected by the Independent Trustees for this purpose. The
Fund's expense ratio for the 12 months ended June 30, 2005 was in the
second quintile of the applicable peer group for the most recent fiscal
year of the peer group for the comparable period. The Trustees concluded
that the Fund's overall expense ratio was comparable to that of similar
funds.
F. Profitability. The Trustees considered the level of the Investment
Adviser's profits with respect to the management of the Pioneer Funds,
including details with respect to the Fund. This consideration included a
review of the Investment Adviser's methodology in allocating certain of
its costs to the management of each Fund.
44
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Trustees also considered the financial results realized by the
Investment Adviser in connection with the operation of the Fund. They
further considered the profits realized by the Investment Adviser and its
affiliates from non-fund businesses that may benefit from or be related to
the Fund's business. The Trustees considered the Investment Adviser's
profit margins in comparison with the limited available industry data. The
Trustees concluded that the Investment Adviser's profits from management
of the Pioneer Funds, including the financial results derived from the
Fund, bear a reasonable relationship to the services rendered and are fair
for the management of the Fund.
G. Economies of Scale. The Trustees considered the economies of scale with
respect to the management of the Fund, whether the Fund had appropriately
benefited from any economies of scale, and whether there was potential for
realization of any further economies of scale. Because of break points in
the management fee, the Trustees concluded that any perceived or potential
economies of scale would be shared at future asset levels in a reasonable
manner as the Fund grows in size between Fund's shareholders and the
Investment Adviser.
H. Other Benefits to the Investment Adviser. The Trustees also considered the
character and amount of fees paid by the Fund, other than under the
Management Contract, for services provided by the Investment Adviser and
affiliates, including fees for services such as shareholder services. The
Trustees also considered the receipt of sales loads and payments under
Rule 12b-1 plans in respect to the Pioneer Funds (including the Fund), and
benefits to the Investment Adviser from the use of "soft" commission
dollars to pay for research services. The Trustees further considered the
revenues and profitability of the Investment Adviser's businesses other
than the fund business, including the Investment Adviser's institutional
investment advisory business. The Trustees considered the intangible
benefits that accrue to the Investment Adviser and its affiliates by
virtue of its relationship with the Fund and the Pioneer Funds as a group.
The Trustees concluded that all these types of benefits accruing to the
Investment Adviser were reasonable in the context of the overall
relationship between the Investment Adviser and the Fund.
45
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
- --------------------------------------------------------------------------------
Conclusion. The Trustees, in light of the Investment Adviser's overall
performance, considered it appropriate to continue to retain the management
services of the Investment Adviser. Based on their evaluation of all material
factors deemed relevant and the advice of independent counsel, the Trustees
concluded that the Management Contract with the Fund is fair and reasonable and
voted to approve the continuation of the Management Contract for another year.
46
Pioneer Equity Income Fund
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive
Mary K. Bush Vice President
Margaret B.W. Graham Vincent Nave, Treasurer
Osbert M. Hood Dorothy E. Bourassa, Secretary
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll-free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at pioneerinvestments.com. This information is also available on
the Securities and Exchange Commission's web site at http://www.sec.gov.
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HOW TO CONTACT PIONEER
- --------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
Call us for:
Account Information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our internet e-mail address ask.pioneer@pioneerinvest.com
(for general questions about Pioneer only)
Visit our web site: pioneerinvestments.com
Before investing consider the Fund's investment objectives, risks, charges and
expenses. Contact your advisor or Pioneer Investments for a prospectus
containing this information. Read it carefully.
The Fund files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
N/A
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
N/A
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
N/A
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
N/A
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognize that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
- ---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
- ---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
- ---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
- ---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
- ----------------------- --------------------------- -----------------------------------------------
- ------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- -------------------------
- ------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
- ------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
- ----------------------- --------------------------- -----------------------------------------------
- --------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
- ------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
- ----------------------- ------------------------- -----------------------------------------------
- ------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
- ------------------------------------------- ------------------------------
- --------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
- --------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
N/A
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
N/A
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Fund's independent auditor, Ernst &
Young LLP ("E&Y"), has advised the Audit
Committee of the Fund's Board of Trustees that
E&Ys Spanish affiliate (E&Y Spain) performed
certain non-audit work for Pioneer Global
Investments Limited ("PGIL"), an affiliate of the
Funds investment adviser. The services involved
the receipt and disbursement of monies transferred
to E&Y Spain by PGIL in payment of individual
payroll and related income tax withholdings due on
returns prepared by E&Y Spain for certain PGIL
employees located in Spain from February 2001 to
October 2005. E&Y became auditors of the Fund in
May 2002. These payroll and tax services were
discontinued in November 2005. The annual fee
received by E&Y Spain for all such services totaled
approximately 9,000 Euro per year. E&Y has informed
the Audit Committee that based on its internal
reviews and the de minimus nature of the services
provided and fees received, E&Y does not believe
its independence with respect to the Fund has been
impaired or that it is disqualified from acting as
independent auditors to the Fund.
N/A
Item 5. Audit Committee of Listed Registrants
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrants audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
N/A
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption
from the listing standards for audit committees.
N/A
Item 6. Schedule of Investments.
File Schedule I Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.12-
12 of Regulation S-X [17 CFR 210.12-12], unless the schedule is
included as part of the report to shareholders filed under Item
1 of this Form.
Included in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Not applicable to open-end management investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrants portfolio (Portfolio Manager). Also state each Portfolio
Managers business experience during the past 5 years.
Not applicable to open-end management investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
Not applicable to open-end management investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in
its definitive proxy statement, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer and principal financial
officer have concluded, that the registrant's disclosure controls and
procedures are effective based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the registrant's internal 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 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Equity Income Fund
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date June 30, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date June 30, 2006
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date June 30, 2006
* Print the name and title of each signing officer under his or her signature.