WILMER CUTLER PICKERING
HALE AND DORR LLP
David C. Phelan
March 18, 2005
60 STATE STREET
BOSTON, MA 02109
VIA EDGAR +1 617 526 6372
+1 617 526 5000 fax
Securities and Exchange Commission david.phelan@wilmerhale.com
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Mail Stop 0505
Attention: Dominic Minore, Esq.
Division of Investment Management
Re: Pioneer Floating Rate Trust (the "Fund")
Registration Statement on Form N-2
Registration Numbers 333-121930; 811-21654
Dear Ladies and Gentlemen:
The following information was transmitted to you electronically on
February 25, 2005, accompanied by a letter that contained draft responses to
comments of the staff of the Commission transmitted by letter dated February 9,
2005 relating to the Fund's Registration Statement on Form N-2. The draft
response letter was electronically filed on March 7, 2005.
If you have any questions or comments, please do not hesitate to
contact me at (617) 526-6372, Julian Bobb, Esq. at (617) 526-6575 or
Christina Lim, Esq. at (617) 526-6451, counsel to the Fund.
Best regards,
/s/ David C. Phelan
David C. Phelan
Enclosures
cc: Christopher J. Kelley, Esq.
BALTIMORE BEIJING BERLIN BOSTON BRUSSELS LONDON
MUNICH NEW YORK NORTHERN VIRGINIA OXFORD WALTHAM WASHINGTON
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED , 2005
PROSPECTUS
(PIONEER LOGO)
$
PIONEER FLOATING RATE TRUST
AUCTION MARKET PREFERRED SHARES ("AMPS")
[ ] SHARES, SERIES M7
[ ] SHARES, SERIES W7
[ ] SHARES, SERIES TH7
LIQUIDATION PREFERENCE $25,000 PER SHARE
----------------------
Pioneer Floating Rate Trust (the "Fund") is offering [ ] Series M7
Auction Market Preferred Shares, [ ] Series W7 Auction Market Preferred
Shares, and [ ] Series TH7 Auction Market Preferred Shares. The shares
are referred to in this prospectus as "AMPS." The Fund is a recently organized,
non-diversified, closed-end management investment company. The AMPS do not have
a maturity date but are subject to mandatory redemption in certain
circumstances. Any series of AMPS may be redeemed, in whole or in part, at the
option of the Fund at any time, subject to certain circumstances. Dividends on
the AMPS will be cumulative from the date the shares are issued.
Investment Objectives. The Fund's primary investment objective is to
provide a high level of current income. As a secondary investment objective, the
Fund seeks preservation of capital to the extent consistent with its primary
investment objective. There can be no assurance that the Fund will achieve its
investment objectives.
Portfolio Contents. Under normal market conditions, the Fund seeks to
achieve its investment objectives by investing at least 80% of its assets (net
assets plus borrowings for investment purposes) in senior floating rate loans
("Senior Loans"). Senior Loans are made to corporations, partnerships and other
business entities that operate in various industries and geographical regions,
including non-U.S. borrowers. Senior Loans pay interest at rates that are
redetermined periodically on the basis of a floating base lending rate plus a
premium. The Fund also may invest in other floating and variable rate
instruments, including second lien loans, and in high yield corporate bonds. The
Fund may invest in Senior Loans and other securities of any credit quality,
including Senior Loans and other investments that are rated below investment
grade, or are unrated but are determined by the investment subadviser to be of
equivalent credit quality, commonly referred to as "junk bonds." The Fund may
invest all or any portion of its assets in securities of issuers that are in
default or that are in bankruptcy. The Fund does not have a policy of
maintaining a specific average credit quality of its portfolio or a minimum
portion of its portfolio that must be rated investment grade. The Fund may
invest up to 10% of its total assets in Senior Loans and other securities of
non-U.S. issuers, including emerging market issuers, and may engage in certain
hedging transactions.
(continued on following page)
INVESTING IN THE AMPS INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK
FACTORS" SECTION BEGINNING ON PAGE OF THIS PROSPECTUS. THE MINIMUM PURCHASE
AMOUNT OF THE AMPS IS $25,000.
----------------------
<Table>
<Caption>
PER SHARE TOTAL
--------- -----
Public offering price (1)................................... $25,000 $
Sales load.................................................. $250 $
Estimated offering expenses................................. $ $
Proceeds, after expenses, to the Fund....................... $ $
</Table>
(1) Plus accumulated dividends, if any, from the date the AMPS are
issued.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The underwriters are offering the AMPS subject to various conditions. The
AMPS will be ready for delivery, in book-entry form only, through the facilities
of The Depository Trust Company on or about , 2005.
----------------------
MERRILL LYNCH & CO.
----------------------
The date of this prospectus is , 2005.
rate transactions such as swaps, caps, floors or collars or credit transactions
and credit default swaps. The Fund also may purchase derivative instruments that
combine features of these instruments. The Fund generally seeks to use these
instruments and transactions as a portfolio management or hedging technique that
seeks to protect against possible adverse changes in the market value of Senior
Loans or other securities held in or to be purchased for the Fund's portfolio,
to facilitate the sale of certain securities for investment purposes, manage the
effective interest rate exposure of the Fund, manage the effective maturity or
duration of the Fund's portfolio or establish positions in the derivatives
markets as a temporary substitute for purchasing or selling particular
securities.
USE OF LEVERAGE BY THE
FUND........................
The Fund expects to utilize financial leverage on an
ongoing basis for investment purposes, such as
through the issuance of the AMPS. After completion of
the offering of the AMPS, the Fund anticipates its
total leverage from the issuance of AMPS will be
approximately 33 1/3% of the Fund's total assets.
This amount may change but the Fund will not incur
additional leverage if the total leverage would
exceed 50% of the Fund's total assets. Although the
Fund may in the future offer other preferred shares
or incur indebtedness, which would further leverage
the Fund, the Fund does not currently intend to offer
preferred shares other than the AMPS offered hereby
or to incur indebtedness, other than short-term
credits in connection with the settlements of
portfolio transactions. The Fund may also invest in
derivative instruments, each of which may amplify the
effects of leverage in the Fund's portfolio since the
value of the derivative instruments may be more
volatile than the Senior Loans in which the Fund
primarily invests.
The Fund generally will not utilize leverage if the
Adviser anticipates that leverage would result in a
lower return to holders of the common shares over
time. Use of financial leverage creates an
opportunity for increased income for the holders of
the common shares but, at the same time, creates the
possibility for greater loss (including the
likelihood of greater volatility of net asset value
and market price of the common shares and of
dividends), and there can be no assurance that a
leveraging strategy will be successful during any
period in which it is employed. Because the fees paid
to the Adviser will be calculated on the basis of the
Fund's managed assets, the fees will be higher when
leverage (including the AMPS) is utilized, giving the
Adviser an incentive to utilize leverage.
SPECIAL RISK
CONSIDERATIONS..............
The following is a summary of the principal risks of
investing in the AMPS. You should read the fuller
discussion in this prospectus under "Risk Factors"
beginning on page [ ].
Risks of Investing in AMPS. The primary risks of
investing in AMPS are:
- If an auction fails you may not be able to sell
some or all of your shares.
12
- Because of the nature of the market for AMPS, you
may receive less than the price you paid for your
AMPS if you sell them outside of the auction,
especially when market interest rates are rising.
- A rating agency could, at any time, downgrade or
withdraw its rating assigned to the AMPS without
prior notice to the Fund or shareholders. Any
downgrading or withdrawal of rating could affect
the liquidity of the AMPS in an auction.
- The Fund may be forced to redeem AMPS to meet
regulatory or rating agency requirements or may
voluntarily redeem your shares in certain
circumstances.
- In certain circumstances, the Fund may not earn
sufficient income from its investments to pay
dividends on the AMPS.
- If interest rates rise, the value of the Fund's
investment portfolio will decline, reducing the
asset coverage for AMPS.
Leverage Risk. The Fund's leveraged capital
structure creates special risks not associated with
unleveraged funds having a similar investment
objective and policies. These include the possibility
of higher volatility of the net asset value of the
Fund and the value of assets serving as asset
coverage for the AMPS.
Interest Rate Risk. The AMPS pay dividends based on
shorter-term interest rates. The Fund may invest the
proceeds from the issuance of the AMPS in Senior
Loans which pay interest based upon rates that float
with changes in interest rates, similar to short-term
rates. The interest rates on Senior Loans are
typically, although not always, higher than
shorter-term interest rates of securities with a
AAA/Aaa credit rating, which is the credit rating the
Fund anticipates receiving from Moody's and Fitch on
the AMPS. Shorter-term rates, including the floating
rates paid on the Fund's portfolio of Senior Loans,
can be expected to fluctuate. [If shorter-term
interest rates rise, dividend rates on the AMPS may
also rise since the auction setting the dividends on
AMPS will compete for investors with other short-term
instruments.] This rise in dividends rates could
result in the amount of dividends to be paid to
holders of AMPS exceeding the income from the Senior
Loans purchased by the Fund with the proceeds from
the sale of the AMPS. Similarly, the anticipated
differential on the rate anticipated to be paid on
the AMPS and the Fund's portfolio of Senior Loans
would decline or be eliminated if, in the future, the
rating agencies lower the rating assigned to the
AMPS. Because income from the Fund's entire
investment portfolio (not just the portion of the
portfolio purchased with the proceeds of the AMPS
offering) is available to pay dividends on the AMPS,
however, dividend rates on the AMPS would need to
exceed the rate of return on the Fund's investment
portfolio by a wide margin before the Fund's ability
to pay dividends on the AMPS would be jeopardized.
13
Auction Risk. The dividend rate for the AMPS
normally is set through an auction process. In the
auction, holders of AMPS may indicate the dividend
rate at which they would be willing to hold or sell
their AMPS or purchase additional AMPS. The auction
also provides liquidity for the sale of AMPS. An
auction fails if there are more AMPS offered for sale
than there are buyers. You may not be able to sell
your AMPS at an auction if the auction fails. Also,
if you place bid orders (orders to retain AMPS) at an
auction only at a specified dividend rate, and that
rate exceeds the rate set at the auction, you will
not retain your AMPS. Additionally, if you buy AMPS
or elect to retain AMPS without specifying a dividend
rate below which you would not wish to buy or
continue to hold those AMPS, you could receive a
lower rate of return on your AMPS than the market
rate. Finally, the dividend periods for the AMPS may
be changed by the Fund, subject to certain conditions
and with notice to the holders of AMPS, which could
also affect the liquidity of your investment.
Secondary Market Risk. If you try to sell your AMPS
between auctions you may not be able to sell any or
all of your AMPS or you may not be able to sell them
for $25,000 per share or $25,000 per share plus
accumulated but unpaid dividends. If the Fund has
designated a special dividend period, changes in
interest rates could affect the price you would
receive if you sold your AMPS in the secondary
market. You may transfer AMPS outside of auctions
only to or through a Broker-Dealer that has entered
into a Broker-Dealer Agreement, or other person as
the Fund permits.
Ratings and Asset Coverage Risk. While it is
expected that Moody's will assign a rating of Aaa to
the AMPS and Fitch will assign a rating of AAA to the
AMPS, such ratings do not eliminate or necessarily
mitigate the risks of investing in AMPS. Moody's or
Fitch could downgrade its rating of the AMPS or
withdraw its rating of the AMPS at any time, which
may make your shares less liquid at an auction or in
the secondary market and may materially and adversely
affect the value of the AMPS if sold outside an
auction. If the Fund fails to satisfy the asset
coverage ratios discussed under "Description of
AMPS -- Rating Agency Guidelines and Asset Coverage,"
the Fund will be required to redeem, at a time that
is not favorable to the Fund or its shareholders, a
sufficient number of AMPS in order to return to
compliance with the asset coverage ratios.
Restrictions on Dividends and Other
Distributions. Restrictions imposed on the
declaration and payment of dividends or other
distributions to the holders of the Fund's common
shares and AMPS, both by the 1940 Act and by
requirements imposed by rating agencies, might impair
the Fund's ability to maintain its qualification as a
regulated investment company for federal income tax
purposes.
14
or other obligations into lower yielding instruments or Senior Loans with a
lower spread over the base lending rate. A decline in income could affect the
common shares' distribution rate and their overall return.
Senior Loans Risk. The risks associated with Senior
Loans are similar to the risks of junk bonds. Senior
Loans are typically senior and secured in contrast to
below investment grade debt securities, commonly
referred to as "junk bonds," which are often
subordinated and unsecured.
The Fund's investments in Senior Loans are typically
below investment grade and are considered speculative
because of the credit risk of their issuers. Economic
and other events, whether real or perceived, can
reduce the demand for certain Senior Loans or Senior
Loans generally, which may reduce market prices and
cause the Fund's net asset value per share to fall.
The frequency and magnitude of such changes cannot be
predicted.
In order to borrow money pursuant to a collateralized
Senior Loan, a Borrower will typically, for the term
of the Senior Loan, pledge as collateral assets,
which may include one or more of the following:
accounts receivable, inventory, buildings, other real
estate, trademarks, franchises and common and
preferred stock in its subsidiaries. In addition, in
the case of some Senior Loans, there may be
additional collateral pledged in the form of
guarantees by and/or securities of affiliates of the
Borrowers. In some instances, a collateralized Senior
Loan may be secured only by stock in the Borrower or
its subsidiaries. Collateral may consist of assets
that are not readily liquidated, and there is no
assurance that the liquidation of such assets would
satisfy fully a Borrower's obligations under a Senior
Loan. Similarly, in the event of bankruptcy
proceedings involving the Borrower, the Lenders may
be delayed or prevented from liquidating collateral
or may choose not to do so as part of their
participation in a plan of reorganization of the
Borrower. The Fund does not have a policy limiting
the Fund's investment in Senior Loans that may be
secured by similar types of collateral. Nor does the
Fund have a policy requiring that any specific loan
have a minimum ratio of the value of the collateral
to the value of the loan. With respect to the type
and value of the collateral, these are some of the
many factors that the Sub-Advisor relies upon in
evaluating a Senior Loan. The Fund does not believe
that the consideration of investment in Senior Loans
that have similar categories of underlying collateral
presents a risk that is separate from the
Sub-Adviser's overall evaluation of the Senior Loans.
Moreover, any specific collateral used to secure a
loan may decline in value or lose all its value or
become illiquid, which would adversely affect the
loan's value. In certain circumstances, it is
possible that the Fund or the agent bank of the
Senior Loan may receive actual possession of the
collateral and the Fund would incur the cost of
maintaining and disposing of the collateral.
16
Currency Risk. A portion of the Fund's assets may be
quoted or denominated in non-U.S. currencies. These
securities may be adversely affected by fluctuations
in relative currency exchange rates and by exchange
control regulations. The Fund's investment
performance may be negatively affected by a
devaluation of a currency in which the Fund's
investments are quoted or denominated. Further, the
Fund's investment performance may be significantly
affected, either positively or negatively, by
currency exchange rates because the U.S. dollar value
of securities quoted or denominated in another
currency will increase or decrease in response to
changes in the value of such currency in relation to
the U.S. dollar.
Liquidity Risk. Some Senior Loans are not readily
marketable and may be subject to restrictions on
resale. The Fund intends to manage the liquidity of
the Fund so that, in the event the Fund is required
to redeem any AMPS because it has failed to meet the
rating agencies' guidelines, the Fund will be able to
satisfy any redemption obligations. Senior Loans
generally are not listed on any national securities
exchange or automated quotation system and no active
trading market may exist for some of the Senior Loans
in which the Fund will invest. Where a secondary
market exists, such market for some Senior Loans may
be subject to irregular trading activity, wide
bid/ask spreads and extended trade settlement
periods. Senior Loans that are illiquid may be more
difficult to value or may impair the Fund's ability
to realize the full value of its assets in the event
of a voluntary or involuntary liquidation of such
assets and thus may cause a decline in the Fund's net
asset value. The Fund has no limitation on the amount
of its assets that may be invested in securities
which are not readily marketable or are subject to
restrictions on resale. In certain situations, the
Fund could find it more difficult to sell such
securities at desirable times and/or prices. Most
Senior Loans are valued by an independent pricing
service that uses market quotations of investors and
traders in Senior Loans. In other cases, Senior Loans
are valued at their fair value in accordance with
procedures approved by the Board of Trustees.
Derivatives Risk. Even a small investment in
derivatives can have a significant impact on the
Fund's exposure to interest rates. If changes in a
derivative's value do not correspond to changes in
the value of the Fund's other investments, the Fund
may not fully benefit from or could lose money on the
derivative position. In addition, some derivatives
involve risk of loss if the party that entered into
the derivative contract defaults on its obligation.
Certain derivatives, such as over-the-counter
options, may be less liquid and more difficult to
value than exchange traded options and futures. The
Fund generally seeks to use these instruments and
transactions as a portfolio management or hedging
technique that seeks to protect against possible
adverse changes in the market value of Senior Loans
or other securities held in or to be purchased
19
for the Fund's portfolio, to facilitate the sale of
certain securities for investment purposes, manage
the effective interest rate exposure of the Fund,
manage the effective maturity or duration of the
Fund's portfolio or establish positions in the
derivatives markets as a temporary substitute for
purchasing or selling particular securities. Some of
these uses may be deemed to be speculative.
Regulatory Risk. To the extent that legislation or
federal regulators that regulate certain financial
institutions impose additional requirements or
restrictions with respect to the ability of such
institutions to make loans, particularly in
connection with highly leveraged transactions, the
availability of Senior Loans for investment may be
adversely affected. In addition, such legislation
could depress the market value of Senior Loans.
Market Disruption Risk. The terrorist attacks in the
United States on September 11, 2001 had a disruptive
effect on the securities markets. The Fund cannot
predict the effects of similar events in the future
on the U.S. economy. These terrorist attacks and
related events, including the war in Iraq, its
aftermath, and continuing occupation of Iraq by
coalition forces, have led to increased short-term
market volatility and may have long-term effects on
U.S. and world economies and markets. A similar
disruption of the financial markets could impact
interest rates, auctions, secondary trading, ratings,
credit risk, inflation and other factors relating to
the common shares. In particular, below investment
grade securities tend to be more volatile than higher
rated fixed income securities so that these events
and any actions resulting from them may have a
greater impact on the prices and volatility of junk
bonds and Senior Loans than on higher rated fixed
income securities.
Anti-Takeover Provisions Risk. The Fund's Agreement
and Declaration of Trust and By-Laws include
provisions that could limit the ability of other
entities or persons to acquire control of the Fund or
to change the composition of its Board of Trustees.
Such provisions could limit the ability of
shareholders to sell their shares at a premium over
prevailing market prices by discouraging a third
party from seeking to obtain control of the Fund.
These provisions include staggered terms of office
for the Trustees, advance notice requirements for
shareholder proposals, super-majority voting
requirements for certain transactions with
affiliates, open-ending the Fund and a merger,
liquidation, asset sale or similar transaction.
INVESTMENT ADVISER..........
Pioneer Investment Management, Inc. is the Fund's
investment adviser. The Adviser has engaged Highland
Capital Management, L.P. to act as investment
subadviser to the Fund to manage the Fund's
portfolio. The Subadviser is responsible on a
day-to-day basis for investment of the Fund's
portfolio in accordance with its investment
objectives and principal investment strategies. The
Subadviser makes all investment decisions for the
Fund and places purchase and sale orders for the
Fund's portfolio securities.
20
FINANCIAL HIGHLIGHTS (UNAUDITED)
Information contained in the table below shows the unaudited operating
performance of the Fund from the commencement of the Fund's operations on
December 28, 2004 through January 31, 2005. Since the Fund was recently
organized and commenced investment operations on December 28, 2004, the table
covers approximately one month of operations, during which a substantial portion
of the Fund's portfolio was held in temporary investments pending investment in
securities that meet the Fund's investment objectives and principal investment
strategies. Accordingly, the information presented does not provide a meaningful
picture of the Fund's future operating performance.
<Table>
<Caption>
FOR THE PERIOD
FROM
DECEMBER 23, 2004(1)
THROUGH
JANUARY 31, 2005
(UNAUDITED)
- ----------------------------------------------------------------------------------
PER COMMON SHARE OPERATING PERFORMANCE(2)
Net asset value, beginning of period........................ $ 19.10(5)
--------
Increase (decrease) from investment operations:
Net investment income..................................... 0.04
Net realized and unrealized gain on investments........... 0.08
Distributions to preferred shareowners from net investment
income................................................. --
--------
Net increase from investment operations................... $ 0.12
Capital charge with respect to issuance of common shares.... (0.04)
--------
Net increase in net asset value............................. $ 0.08
--------
Net asset value, end of period(3)........................... $ 19.18
--------
Market value, end of period(3).............................. $ 20.00
--------
Total return at market value(6)........................... 0.00%
Total return on NAV(7).................................... 0.42%
RATIOS TO AVERAGE NET ASSETS OF HOLDERS OF COMMON SHARES
Net expenses(8)........................................... 0.84%(4)
Net investment income before preferred share
dividends(8)........................................... 2.00%(4)
Preferred share dividends................................. --%(4)
Net investment income available to holders of Common
Shares................................................. 2.00%(4)
Portfolio turnover.......................................... 6.47%
Net assets of holders of Common Shares, end of period (in
thousands)................................................ $432,563
Preferred shares outstanding (in thousands)................. $ --
Asset coverage per preferred share, end of period........... $ --
Average market value per preferred share.................... $ --
Liquidation value per preferred share....................... $ --
Ratios to average net assets of common shareowners before
reimbursement of organization expenses
Net Expenses(8)........................................... 0.94%(4)
Net investment income before preferred share
dividends(8)........................................... 1.90%(4)
</Table>
31
<Table>
<Caption>
FOR THE PERIOD
FROM
DECEMBER 23, 2004(1)
THROUGH
JANUARY 31, 2005
(UNAUDITED)
- ----------------------------------------------------------------------------------
Preferred share dividends................................. --%(4)
Net investment income available to common shareowners..... 1.90%(4)
</Table>
- ---------------
(1) Trust Common shares were first publicly offered on December 23, 2004.
(2) The per share data presented above is based upon the average common shares
outstanding for the period presented.
(3) Net asset value and market value are published in Barron's on Saturday, The
Wall Street Journal on Monday and The New York Times on Monday and Saturday.
(4) Annualized.
(5) Net asset value immediately after the closing of the first public offering
was $19.06.
(6) Total investment return is calculated assuming a purchase of common shares
at the current market value on the first day and a sale at the current
market value on the last day of the period reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions on the shares
of the Trust. Total investment returns less than a full period are not
annualized. Past performance is not a guarantee of future results.
(7) Total return on net asset value is calculated assuming a purchase at the
offering price of $20.00 less the sales load of $0.90, and the ending net
asset value per share of $19.18.
(8) Ratios do not reflect the effect of dividend payments to preferred
shareowners.
The information above represents the unaudited operating performance data
for a common share outstanding, total investment return, ratios to average net
assets and other supplemental data for the period indicated. This information
has been determined based upon financial information provided in the financial
statements and market value data for the Fund's common shares.
32
offering expenses of [ ] and a sales load of $250 per AMPS. The common
shareholders' paid in capital is charged with the cost of issuance of the AMPS.)
<Table>
<Caption>
ACTUAL AS ADJUSTED
------------ ------------
AMPS, $.0001 par value, $25,000 stated value
per share, at liquidation value, including
dividends payable; unlimited shares
authorized (no shares issued; [ ]
shares issued, as adjusted)................. $ --
============ ============
Shareholder's Equity:
Common shares, no par value per share;
unlimited shares authorized, 24,330,240
shares outstanding(1).................... $ $
Undistributed net investment income.........
Accumulated net realized gain/loss on
investments..............................
Net unrealized appreciation/depreciation on
investments..............................
------------ ------------
Net assets attributable to common shares....
------------ ------------
Net assets, plus liquidation preferences of
AMPS..................................... $ $
============ ============
</Table>
- ------------
(1) None of these outstanding shares are held by or for the account of the
Fund.
PORTFOLIO COMPOSITION
As of , 2005, approximately % of the market value of the
Fund's portfolio was invested in Senior Loans, approximately % of the
market value of the Fund's portfolio was invested in other fixed-income
securities and approximately % of the market value of the Fund's portfolio
was invested in short-term investment grade debt securities. The following table
sets forth certain information with respect to the composition of the Fund's
investment portfolio as of , 2005, based on the lowest rating assigned
each investment.
<Table>
<Caption>
VALUE++
CREDIT RATING+ (000) PERCENT
- -------------- -------- -------
$ %
Senior Loans
Aaa/AAA...............................................
Aa/AA.................................................
A/A...................................................
Baa/BB................................................
Ba/BB.................................................
B/B...................................................
Caa/CCC...............................................
Ca/CC.................................................
Unrated+++............................................
Other Fixed Income Securities...........................
Short-Term..............................................
-------- ----
TOTAL.............................................. $ %
======== ====
</Table>
- ------------
+ Ratings assigned by Moody's and S&P, respectively. These ratings are an
assessment of the capacity and willingness of an issuer to pay the principal
and interest on the securities being rated. The ratings are not a
recommendation to purchase, hold or sell the securities being rated inasmuch
as the rating does not comment as to market price or suitability for a
particular investor. The meanings assigned by Moody's and S&P to their
ratings are attached as an appendix to the Statement of Additional
Information.
++ Value is determined using the Fund's valuation policies as described under
the heading "Net Asset Value."
34
payment of interest and principal would likely make the values of such
securities more volatile and could limit the ability to sell securities at
favorable prices. In the absence of a liquid trading market for securities held
by it, the Fund may have difficulties determining the fair market value of such
securities. Because of the greater number of investment considerations involved
in investing in high yield, high risk bonds, the achievement of the Fund's
objectives depends more on the Subadviser's judgment and analytical abilities
than would be the case if invested primarily in securities in the higher ratings
categories.
No active trading market may exist for many Senior Loans, and some Senior
Loans may be subject to restrictions on resale. The Fund is not limited in the
percentage of its assets that may be invested in Senior Loans and other
securities deemed to be illiquid. A secondary market may be subject to irregular
trading activity, wide bid/ask spreads and extended trade settlement periods,
which may impair the ability to realize full value on the disposition of an
illiquid Senior Loan, and cause a material decline in the Fund's net asset
value.
The Fund may invest up to 10% of total assets in obligations of non-U.S.
issuers, predominantly in developed countries, but the Fund may also invest in
securities of emerging market issuers. The value of obligations of non-U.S.
issuers is affected by changes in foreign tax laws (including withholding tax),
government policies (in this country or abroad) and relations between nations,
and trading, settlement, custodial and other operational risks. In addition, the
costs of investing abroad are generally higher than in the United States.
Use of Agents. Senior Loans generally are arranged through private
negotiations between a borrower and a group of financial institutions initially
represented by an agent who is usually one of the originating lenders. In larger
transactions, it is common to have several agents. Generally, however, only one
such agent has primary responsibility for on-going administration of a Senior
Loan. In a typical Senior Loan, the Agent administers the terms of the Loan
Agreement and is responsible for the collection of principal and interest and
fee payments from the Borrower and the apportionment of those payments to the
credit of all Lenders that are parties to the Loan Agreement. The Fund generally
will rely on the Agent to collect its portion of the payments on a Senior Loan.
Furthermore, the Fund will rely on the Agent to use appropriate creditor
remedies against the Borrower. Typically, under a Loan Agreement, the Agent is
given broad discretion in monitoring the Borrower's performance under the Loan
Agreement and is obligated to use only the same care it would use in the
management of its own property. Upon an event of default, the Agent typically
will act to enforce the Loan Agreement after instruction from Lenders holding a
majority of the Senior Loan. The Borrower compensates the Agent for the Agent's
services. This compensation may include special fees paid on structuring and
funding the Senior Loan and other fees paid on a continuing basis. The typical
practice of an Agent in relying exclusively or primarily on reports from the
Borrower may involve a risk of fraud by the Borrower.
Credit agreements may provide for the termination of the agent's status in
the event that it fails to act as required under the relevant credit agreement,
becomes insolvent, enters FDIC receivership or, if not FDIC insured, enters into
bankruptcy. Should such an agent, lender or assignor with respect to an
assignment inter-positioned between the Fund and the borrower become insolvent
or enter FDIC receivership or bankruptcy, any interest in the Senior Loan of
such person and any loan payment held by such person for the benefit of the Fund
should not be included in such person's or entity's bankruptcy estate. If,
however, any such amount were included in such person's or entity's bankruptcy
estate, the Fund would incur certain costs and delays in realizing payment or
could suffer a loss of principal or interest. In this event, the Fund could
experience a decrease in net asset value.
Form of Investment. The Fund's investments in Senior Loans may take one
of several forms, including acting as one of the group of lenders originating a
Senior Loan, purchasing an assignment of a portion of a Senior Loan from a third
party or acquiring a participation in a Senior Loan. When the
40
loaned as well as the benefit of an increase and the detriment of any decrease
in the market value of the securities loaned and would also receive compensation
based on investment of the collateral. The Fund would not, however, have the
right to vote any securities having voting rights during the existence of the
loan, but would call the loan in anticipation of an important vote to be taken
among holders of the securities or of the giving or withholding of consent on a
material matter affecting the investment.
As with other extensions of credit, there are risks of delay in recovery
or even loss of rights in the collateral should the borrower of the securities
fail financially. The Fund will lend portfolio securities only to firms that
have been approved in advance by the Board of Trustees, which will monitor the
creditworthiness of any such firms.
PORTFOLIO TURNOVER
It is the policy of the Fund not to engage in trading for short-term
profits, although portfolio turnover rate is not considered a limiting factor in
the execution of investment decisions for the Fund.
RISK FACTORS
Investing in the Fund involves risk, including the risk that you may
receive little or no return on your investment or that you may lose part or all
of your investment. Therefore, before investing you should consider carefully
the following risks that you assume when you invest in AMPS.
RISKS OF INVESTMENT IN AMPS
Leverage Risk. The Fund expects to use financial leverage on an ongoing
basis for investment purposes. Taking into account the AMPS being offered in
this prospectus, the amount of leverage would, as of [ ], 2005,
represent approximately 33.3% of the Fund's total assets. The Fund's leveraged
capital structure creates special risks not associated with unleveraged funds
having a similar investment objectives and policies. These include the
possibility of higher volatility of both the net asset value of the Fund and the
value of assets serving as asset coverage for the AMPS.
Because the fee paid to the Adviser will be calculated on the basis of the
Fund's managed assets (which equals the aggregate net asset value of the common
shares plus the liquidation preference of the AMPS), the fee will be higher when
leverage is utilized, giving the Adviser an incentive to utilize leverage.
Interest Rate Risk. The AMPS pay dividends based on shorter-term interest
rates. The Fund may invests the proceeds from the issuance of the AMPS in Senior
Loans which pay interest based upon rates that float with changes in interest
rates, similar to short-term rates. The interest rates on Senior Loans are
typically, although not always, higher than shorter-term interest rates of
issuers with AAA credit ratings that the Fund anticipates receiving from the
rating agencies. Shorter-term interest rates, including the floating rates paid
on the Fund's portfolio of Senior Loans, can be expected to fluctuate. If
shorter-term interest rates rise, dividend rates on the AMPS may also rise since
the auction setting the dividends on AMPS will compete for investors with other
short-term instruments. This rise in dividends rates could result in the amount
of dividends to be paid to holders of AMPS exceeding the income from the Senior
Loans purchased by the Fund with the proceeds from the sale of AMPS. Similarly,
the anticipated differential on the rate of interest paid on the AMPS and the
Fund's portfolio of Senior Loans would decline or be eliminated if, in the
future, the rating agencies lower the rating assigned to the AMPS. Because
income from the Fund's entire investment portfolio (not just the portion of the
portfolio purchased with the proceeds of the AMPS offering) is available to pay
dividends on the AMPS, however, dividend rates on the AMPS would need to exceed
the rate of return on the Fund's investment portfolio by a wide margin before
the Fund's ability to pay dividends on the AMPS would be jeopardized.
49
Auction Risk. The dividend rate for the AMPS normally is set through an
auction process. In the auction, holders of AMPS may indicate the dividend rate
at which they would be willing to hold or sell their AMPS or purchase additional
AMPS. The auction also provides liquidity for the sale of AMPS. An auction fails
if there are more AMPS offered for sale than there are buyers. You may not be
able to sell your AMPS at an auction if the auction fails. Also, if you place
bid orders (orders to retain AMPS) at an auction only at a specified dividend
rate, and that rate exceeds the rate set at the auction, you will not retain
your AMPS. Additionally, if you buy AMPS or elect to retain AMPS without
specifying a dividend rate below which you would not wish to buy or continue to
hold those AMPS, you could receive a lower rate of return on your AMPS than the
market rate. Finally, the dividend periods for the AMPS may be changed by the
Fund, subject to certain conditions with notice to the holders of AMPS, which
could also effect the liquidation of your investment. See "Description of AMPS"
and "The Auction -- Auction Procedures."
Secondary Market Risk. If you try to sell your AMPS between auctions you
may not be able to sell any or all of your AMPS or you may not be able to sell
them for $25,000 per share or $25,000 per share plus accumulated but unpaid
dividends. If the Fund has designated a special dividend period (a rate period
of more than seven days), changes in interest rates could affect the price you
would receive if you sold your AMPS in the secondary market. You may transfer
AMPS outside of auctions only to or through a Broker-Dealer that has entered
into a Broker-Dealer Agreement or such other person as the Fund permits. The
Fund does not anticipate imposing significant restrictions on transfers to other
persons. However, unless any such other person has entered into a relationship
with a Broker-Dealer that has entered into a Broker-Dealer Agreement with the
Auction Agent, that person will not be able to submit bids at auctions with
respect to the AMPS. Broker-dealers that maintain a secondary trading market for
AMPS are not required to maintain this market, and the Fund is not required to
redeem AMPS either if an auction or an attempted secondary market sale fails
because of a lack of buyers. The AMPS will not be listed on a stock exchange or
the Nasdaq National Market. If you sell your AMPS to a broker-dealer between
auctions, you may receive less than the price you paid for them, especially if
market interest rates have risen since the last auction. In addition, a
Broker-Dealer may, in its own discretion, decide to sell the AMPS in the
secondary market to investors at any time and at any price, including at prices
equivalent to, below or above the par value of the AMPS.
Securities and Exchange Commission Inquiries. Merrill Lynch has advised
the Fund that it and certain Broker-Dealers and other participants in the
auction rate securities markets, including both taxable and tax exempt markets,
have received letters from the Securities and Exchange Commission requesting
that each of them voluntarily conduct an investigation regarding their
respective practices and procedures in those markets. Merrill Lynch and those
other Broker-Dealers are cooperating and expect to continue to cooperate with
the Securities and Exchange Commission in providing the requested information.
No assurance can be given as to whether the results of this process will affect
the market for the AMPS or the auctions.
Ratings and Asset Coverage Risk. While it is expected that Moody's will
assign a rating of Aaa to the AMPS and Fitch will assign a rating of AAA to the
AMPS, such ratings do not eliminate or necessarily mitigate the risks of
investing in AMPS. Moody's or Fitch could downgrade its rating of the AMPS or
withdraw its rating of the AMPS at any time, which may make your shares less
liquid at an auction or in the secondary market and may materially and adversely
affect the value of the AMPS if sold outside an auction. Moody's and Fitch are
not required to provide prior notice of a decision to downgrade the AMPS or to
withdraw their rating. If Moody's or Fitch downgrades the AMPS, the Fund may
alter its portfolio or redeem AMPS in an effort to improve the rating, although
there is no assurance that it will be able to do so to the extent necessary to
restore the prior rating. If the Fund fails to satisfy the asset coverage ratios
discussed under "Description of AMPS -- Rating Agency Guidelines and Asset
Coverage," the Fund will be required to redeem, at a time that is not favorable
to the Fund or its shareholders, a sufficient number of AMPS in order to return
to compliance with the asset coverage
50
Reinvestment Risk. Income from the Fund's portfolio will decline if the
Fund invests the proceeds on repayment or sale of Senior Loans or other
obligations into lower yielding instruments or Senior Loans with a lower spread
over the base lending rate. A decline in income could affect the common shares'
distribution rate and their overall return.
Senior Loans Risk. The risks associated with Senior Loans are similar to
the risks of junk bonds. Senior Loans are typically senior and secured in
contrast to below investment grade securities, commonly referred to as "junk
bonds," which are often subordinated and unsecured.
The Fund's investments in Senior Loans are typically below investment
grade and are considered speculative because of the credit risk of their
issuers. Economic and other events, whether real or perceived, can reduce the
demand for certain Senior Loans or Senior Loans generally, which may reduce
market prices and cause the Fund's net asset value per share to fall. The
frequency and magnitude of such changes cannot be predicted.
In order to borrow money pursuant to a collateralized Senior Loan, a
Borrower will typically, for the term of the Senior Loan, pledge as collateral
assets, which may include one or more of the following: accounts receivable,
inventory, buildings, other real estate, trademarks, franchises and common and
preferred stock in its subsidiaries. In addition, in the case of some Senior
Loans, there may be additional collateral pledged in the form of guarantees by
and/or securities of affiliates of the Borrowers. In some instances, a
collateralized Senior Loan may be secured only by stock in the Borrower or its
subsidiaries. Collateral may consist of assets that are not readily liquidated,
and there is no assurance that the liquidation of such assets would satisfy
fully a Borrower's obligations under a Senior Loan. Similarly, in the event of
bankruptcy proceedings involving the Borrower, the Lenders may be delayed or
prevented from liquidating collateral or may choose not to do so as part of
their participation in a plan of reorganization of the Borrower. The Fund does
not have a policy limiting the Fund's investment in Senior Loans that may be
secured by similar types of collateral. Nor does the Fund have a policy
requiring that any specific loan have a minimum ratio of the value of the
collateral to the value of the loan. With respect to the type and value of the
collateral, these are some of the many factors that the Sub-Advisor relies upon
in evaluating a Senior Loan. The Fund does not believe that the consideration of
investment in Senior Loans that have similar categories of underlying collateral
presents a risk that is separate from the Sub-Adviser's overall evaluation of
the Senior Loans. Moreover, any specific collateral used to secure a loan may
decline in value or lose all its value or become illiquid, which would adversely
affect the loan's value. In certain circumstances, it is possible that the Fund
or the agent bank of the Senior Loan may receive actual possession of the
collateral and the Fund would incur the cost of maintaining and disposing of the
collateral.
Senior Loans and other debt securities are also subject to the risk of
price declines and to increases in prevailing interest rates. Conversely, the
floating rate feature of Senior Loans means the Senior Loans will not generally
experience capital appreciation in a declining interest rate environment.
Declines in interest rate may also increase prepayments of debt obligations and
require the Fund to invest assets at lower yields. No active trading market may
exist for certain Senior Loans, which may impair the ability of the Fund to
realize full value in the event of the need to liquidate such assets. Adverse
market conditions may impair the liquidity of some actively traded Senior Loans.
Although Senior Loans in which the Fund will invest will often be secured
by collateral, there can be no assurance that liquidation of such collateral
would satisfy the borrower's obligation in the event of a default or that such
collateral could be readily liquidated. In the event of bankruptcy of a
borrower, the Fund could experience delays or limitations in its ability to
realize the benefits of any collateral securing a Senior Loan. The Fund may also
invest in Senior Loans that are not secured.
Credit Risk and Junk Bond Risk. Credit risk is the risk that an issuer of
Senior Loans and other debt obligations will become unable to meet its
obligation to make interest and principal payments.
52
control the repayment of the debt may be unable or unwilling to repay principal
or interest when due, and the Fund may have limited recourse in the event of a
default. During periods of economic uncertainty, the market prices of sovereign
debt may be more volatile than prices of debt obligations of U.S. issuers. In
the past, certain non-U.S. countries have encountered difficulties in servicing
their debt obligations, withheld payments of principal and interest and declared
moratoria on the payment of principal and interest on their sovereign debt.
A sovereign debtor's willingness or ability to repay principal and pay
interest in a timely manner may be affected by, among other factors, its cash
flow situation, the extent of its foreign currency reserves, the availability of
sufficient non-U.S. exchange, the relative size of the debt service burden, the
sovereign debtor's policy toward its principal international lenders and local
political constraints. Sovereign debtors may also be dependent on expected
disbursements from non-U.S. governments, multilateral agencies and other
entities to reduce principal and interest arrearages on their debt. The failure
of a sovereign debtor to implement economic reforms, achieve specified levels of
economic performance or repay principal or interest when due may result in the
cancellation of third-party commitments to lend funds to the sovereign debtor,
which may further impair such debtor's ability or willingness to service its
debts.
Liquidity Risk. Some Senior Loans are not readily marketable and may be
subject to restrictions on resale. The Fund intends to manage the liquidity of
the Fund so that, in the event the Fund is required to redeem any AMPS because
it has failed to meet the rating agencies' guidelines, the Fund will be able to
satisfy any redemption obligations. Senior Loans generally are not listed on any
national securities exchange or automated quotation system and no active trading
market may exist for some of the Senior Loans in which the Fund will invest.
Where a secondary market exists, such market for some Senior Loans may be
subject to irregular trading activity, wide bid/ask spreads and extended trade
settlement periods. Senior Loans that are illiquid may be more difficult to
value or may impair the Fund's ability to realize the full value of its assets
in the event of a voluntary or involuntary liquidation of such assets and thus
may cause a decline in the Fund's net asset value. The Fund has no limitation on
the amount of its assets that may be invested in securities which are not
readily marketable or are subject to restrictions on resale. In certain
situations, the Fund could find it more difficult to sell such securities at
desirable times and/or prices. Most Senior Loans are valued by an independent
pricing service that uses market quotations of investors and traders in Senior
Loans. In other cases, Senior Loans are valued at their fair value in accordance
with procedures approved by the Board of Trustees.
Derivatives Risk. Strategic Transactions, such as the use of derivatives,
have risks, including the imperfect correlation between the value of such
instruments and the underlying assets, the possible default of the other party
to the transaction or illiquidity of the derivative instruments. Furthermore,
the ability to successfully use Strategic Transactions depends on the
Subadviser's ability to predict pertinent market movements, which cannot be
assured. Thus, the use of Strategic Transactions may result in losses greater
than if they had not been used, may require the Fund to sell or purchase
portfolio securities at inopportune times or for prices other than current
market values, may limit the amount of appreciation the Fund can realize on an
investment or may cause the Fund to hold a security that it might otherwise
sell. Additionally, amounts paid by the Fund as premiums and cash or other
assets held in margin accounts with respect to Strategic Transactions are not
otherwise available to the Fund for investment purposes. Although the Subadviser
does not anticipate that Strategic Transactions will represent a significant
component of the Fund's investment strategy, the Fund does not have a policy
limiting the portion of the Fund's assets that may be subject to such
transactions or invested in such instruments.
There are several risks associated with the use of futures contracts and
futures options. A purchase or sale of a futures contract may result in losses
in excess of the amount invested in the futures contract. While the Fund may
enter into futures contracts and options on futures contracts for
56
asset value, the Fund will value Senior Loans at fair value pursuant to
procedures adopted by the Board of Trustees. A Senior Loan that is fair valued
may be valued at a price higher or lower than actual market quotations or the
value determined by other funds using their own fair valuation procedures. The
Fund may, with the approval of the Board of Trustees, implement new fair value
pricing methodologies of Senior Loans in the future, which may result in a
change in the Fund's net asset value per share. The Fund's net asset value per
share will also be affected by fair value pricing decisions and by changes in
the market for Senior Loans. In determining the fair value of a Senior Loan, the
Fund will consider relevant factors, data, and information, such as: (i) the
characteristics of and fundamental analytical data relating to the Senior Loan,
including the cost, size, current interest rate, period until next interest rate
reset, maturity and base lending rate of the Senior Loan, the terms and
conditions of the Senior Loan and any related agreements, and the position of
the Senior Loan in the borrower's debt structure; (ii) the nature, adequacy and
value of the collateral, including the Fund's rights, remedies and interests
with respect to the collateral; (iii) the creditworthiness of the borrower,
based on an evaluation of its financial condition, financial statements and
information about the borrower's business, cash flows, capital structure and
future prospects; (iv) information relating to the market for the Senior Loan,
including price quotations for and trading in the Senior Loan and interests in
similar Senior Loans and the market environment and investor attitudes towards
the Senior Loan and interests in similar Senior Loans; (v) the experience,
reputation, stability and financial condition of the agent and any intermediate
participants in the Senior Loan; and (vi) general economic and market conditions
affecting the fair value of the Senior Loan.
With respect to other securities, the Fund generally values securities
using closing market prices or readily available market quotations. The Fund may
use a pricing service or a pricing matrix to value some of its assets. When
closing market prices or market quotations of assets other than Senior Loans are
not available or are considered by the Fund to be unreliable, the Fund may use a
security's fair value. Fair value is the valuation of a security determined on
the basis of factors other than market value in accordance with procedures
approved by the Fund's Board of Trustees. The Fund also may use the fair value
of a security, including a non-U.S. security, when the Fund determines that the
closing market price on the primary exchange where the security is traded no
longer accurately reflects the value of the security due to factors affecting
one or more relevant securities markets or the specific issuer. The use of fair
value pricing by the Fund may cause the net asset value of its shares to differ
from the net asset value that would be calculated using closing market prices.
International securities markets may be open on days when the U.S. markets are
closed. For this reason, the value of any international securities owned by the
Fund could change on a day you cannot buy or sell shares of the Fund. Debt
securities with remaining maturities of 60 days or less are valued at amortized
cost, which is a method of estimating their fair value. The value of interest
rate swaps, caps and floors is determined in accordance with a formula and then
confirmed periodically by obtaining a bank quotation. Positions in options are
valued at the last sale price on the market where any such option is principally
traded. Positions in futures contracts are valued at closing prices for such
contracts established by the exchange on which they are traded. Repurchase
agreements are valued at cost plus accrued interest. This is a method, approved
by the Board of Trustees, of determining such repurchase agreement's fair value.
DESCRIPTION OF COMMON SHARES
The Fund is authorized to issue an unlimited number of common shares,
without par value. The Fund is also authorized to issue preferred shares. The
Board of Trustees is authorized to classify and reclassify any unissued shares
into one or more additional classes or series of shares. The Board of Trustees
may establish such series or class, including preferred shares, from time to
time by setting or changing in any one or more respects the designations,
preferences, conversion or other rights, voting
83
PIONEER FLOATING RATE TRUST
STATEMENT OF ASSETS AND LIABILITIES 1/31/05 (UNAUDITED)
ASSETS:
Investments in securities, at value (cost $524,161,362) $ 525,787,675
Cash 19,454,251
Receivables -
Investment securities sold 9,557,307
Interest 429,944
Unrealized appreciation on unfunded
corporate loans 106,080
Organization expense reimbursement 40,000
Other assets 3,694
-------------
Total assets $ 555,378,951
=============
LIABILITIES:
Payables -
Investment securities purchased $ 121,900,537
Offering costs payable 595,525
Due to affiliates 318,355
Accrued expenses 1,525
-------------
Total liabilities $ 122,815,942
-------------
PREFERRED SHARES AT REDEMPTION VALUE:
$25,000 liquidation value per share; no
shares outstanding $ -
-------------
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS $ 432,563,009
=============
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Paid-in capital $ 429,903,084
Undistributed net investment income 826,427
Accumulated net realized gain on
investments 83,741
Net unrealized gain on investments 1,749,757
-------------
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS $ 432,563,009
=============
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Based on $432,563,009/22,555,240 common shares $ 19.18
=============
The accompanying notes are an integral part of these financial statements.
PIONEER FLOATING RATE TRUST
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE PERIOD 12/23/04 (COMMENCEMENT OF OPERATIONS) TO 1/31/05
INVESTMENT INCOME:
Interest $ 1,168,405
Facility and other fees 4,827
-----------
Total investment income $ 1,173,232
------------
EXPENSES:
Management fees $ 289,414
Administration fees 28,941
Transfer agent fees and expenses 4,690
Custodian fees 3,759
Registration fees 3,006
Organization costs 40,000
Professional fees 7,145
Printing fees 1,864
Trustees' fees 1,657
Miscellaneous 6,329
-----------
Total expenses $ 386,805
------------
Reimbursement of organization fees $ (40,000)
------------
Net expenses $ 346,805
------------
Net investment income $ 826,427
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments $ 83,741
------------
Change in net unrealized gain on:
Investments $ 1,626,313
Unfunded corporate loans 123,444 $ 1,749,757
-----------
Net gain on investments $ 1,833,498
------------
DIVIDENDS TO PREFERRED SHAREOWNERS FROM NET
INVESTMENT INCOME $ -
------------
Net increase in net assets applicable to common
shareowners resulting from operations $ 2,659,925
============
The accompanying notes are an integral part of these financial statements.
PIONEER FLOATING RATE TRUST
STATEMENT OF CHANGES (UNAUDITED)
FOR THE PERIOD 12/23/04 (COMMENCEMENT OF OPERATIONS) TO 1/31/05
12/23/04
to
1/31/05
-------
FROM OPERATIONS:
Net investment income $ 826,427
Net realized gain on investments 83,741
Change in net unrealized gain on investments 1,749,757
Dividends to preferred shareowners from net investment income --
-------------
Net increase in net assets applicable to common shareowners $ 2,659,925
-------------
FROM TRUST SHARE TRANSACTIONS:
Net proceeds from the issuance of common shares $ 430,705,000
Common share offering expenses charged to paid-in capital (902,000)
-------------
Net increase in net assets applicable to common shareowners
resulting from Trust share transactions $ 429,803,000
-------------
Net increase in net assets applicable to common shareowners $ 432,462,925
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Beginning of period 100,084
-------------
End of period (including undistributed net investment income of $826,427) $ 432,563,009
=============
The accompanying notes are an integral part of these financial statements.
PIONEER FLOATING RATE TRUST
FINANCIAL HIGHLIGHTS 1/31/05 (UNAUDITED)
DECEMBER 23, 2004 TO
JANUARY 31, 2005 (1)
--------------------
PER COMMON SHARE OPERATING PERFORMANCE (2)
Net asset value, beginning of period $ 19.10(5)
---------
Increase (decrease) from investment operations:
Net investment income 0.04
Net realized and unrealized gain on investments 0.08
Distributions to preferred shareowners from net investment
income --
---------
Net increase from investment operations $ 0.12
Capital charge with respect to issuance of:
common shares (0.04)
---------
Net increase in net asset value $ 0.08
---------
Net asset value, end of period (3) $ 19.18
=========
Market value, end of period (3) $ 20.00
---------
Total return at market value (6) 0.00%
Total return on NAV (7) 0.42%
RATIOS TO AVERAGE NET ASSETS OF HOLDERS OF COMMON SHARES
Net expenses (8) 0.84%(4)
Net investment income before preferred share dividends (8) 2.00%(4)
Preferred share dividends --%(4)
Net investment income available to holders of Common Shares 2.00%(4)
Portfolio turnover 6.47%
Net assets of holders of Common Shares, end of period (in thousands) $ 432,563
Preferred shares outstanding (in thousands) $ --
Asset coverage per preferred share, end of period $ --
Average market value per preferred share $ --
Liquidation value per preferred share $ --
Ratios to average net assets of common shareowners before
reimbursement of organization expenses
Net Expenses (8) 0.94%(4)
Net investment income before preferred share dividends (8) 1.90%(4)
Preferred share dividends --%(4)
Net investment income available to common shareowners 1.90%(4)
(1) Trust shares were first publicly offered on December 23, 2004.
(2) The per share data presented above is based upon the average common
shares outstanding for the period presented.
(3) Net asset value and market value are published in Barron's on
Saturday, The Wall Street Journal on Monday and The New York Times
on Monday and Saturday.
(4) Annualized.
(5) Net asset value immediately after the closing of the first public
offering was $19.06.
(6) Total investment return is calculated assuming a purchase of common
shares at the current market value on the first day and a sale at
the current market value on the last day of the period reported.
Dividends and distributions, if any, are assumed for purposes of
this calculation to be reinvested at prices obtained under the
Trust's dividend reinvestment plan. Total investment return does not
reflect brokerage commissions on the shares of the Trust. Total
investment returns less than a full period are not annualized. Past
performance is not a guarantee of future results.
(7) Total return on net asset value is calculated assuming a purchase at
the offering price of $20.00 less the sales load of $0.90, and the
ending net asset value per share of $19.18.
(8) Ratios do not reflect the effect of dividend payments to preferred
shareowners.
The information above represents the unaudited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for the period indicated. This
information has been determined based upon financial information provided in the
financial statements and market value data for the Trust's common shares.
The accompanying notes are an integral part of these financial statements.
PIONEER FLOATING RATE TRUST
NOTES TO FINANCIAL STATEMENTS 1/31/05 (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Pioneer Floating Rate Trust (the "Trust") was organized as a Delaware business
trust on October 6, 2004. Prior to commencing operations on December 23, 2004,
the Trust had no operations other than matters relating to its organization and
registration as a non-diversified, closed-end management investment company
under the Investment Company Act of 1940, as amended, and the sale and issuance
to Pioneer Funds Distributor, Inc., an affiliate of Pioneer Investment
Management, Inc. ("PIM"), the Trust's investment adviser, a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), of
5,240 shares of beneficial interest at an aggregate purchase price of $100,084.
PIM has agreed to pay all the Trust's organizational expenses and to pay the
amount by which the aggregate offering costs (other than the sales load) exceeds
$0.04 per share of the common share offering. The investment objective of the
Trust is to provide a high level of current income. The Trust will, as a
secondary objective, also seek preservation of capital to the extent consistent
with its primary goal of high current income.
The Trust invests primarily in senior floating rate loans ("Senior Loans"). The
Trust may also invest in other floating and variable rate instruments, including
second lien loans, and high yield, high risk corporate bonds. The Trust may
invest in Senior Loans and other securities of any credit quality, including
Senior Loans and other investments that are rated below investment grade, or are
unrated but are determined by the investment subadviser to be of equivalent
credit quality, commonly referred to as "junk bonds" and are considered
speculative. These securities involve greater risk of loss, are subject to
greater price volatility, and are less liquid, especially during periods of
economic uncertainty or change, than higher rated debt securities.
The Trust's financial statements have been prepared in conformity with U.S.
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses and gains and losses on
investments during the reporting period. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
followed by the
Trust in preparation of its financial statements, which are
consistent with those generally accepted in the investment company industry:
A. SECURITY VALUATION
Security transactions are recorded as of trade date. Senior Loans are
valued in accordance with guidelines established by the Board of Trustees.
Senior Loans are valued at the mean between the last available bid and
asked prices from one or more brokers or dealers as obtained from Loan
Pricing Corporation. For the limited number of Senior Loans for which no
reliable price quotes are available, such Senior Loans will be valued by
Loan Pricing Corporation through the use of pricing matrices to determine
valuations. If the pricing service does not provide a value for the Senior
Loans, the subadviser will value the Senior Loans at fair value, which is
intended to approximate market value.
Debt securities are valued at prices supplied by independent pricing
services, which consider such factors as Treasury spreads, yields,
maturities and ratings. Valuations may be supplemented by dealers and
other sources, as required. Equity securities are valued at the last sale
price on the principal exchange where they are traded. Securities for
which quotations are not readily available are valued at their fair values
as determined by, or under the direction of, the Board of Trustees. The
Trust may also 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 accurately reflects the value of the
security as of the close of the exchange. As of January 31, 2005, the
Trust had no fair valued securities.
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 Trust becomes aware of the ex-dividend
data in the exercise of reasonable diligence. Discount and premium on debt
securities are accreted or amortized daily, respectively, on an effective
yield to maturity basis and are included in interest income. Interest
income, including income on interest bearing cash accounts, is recorded on
an accrual basis. Temporary cash investments are valued at amortized cost.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. FEDERAL INCOME TAXES
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
C. REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Trust, the value
of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the repurchase agreement at the time of purchase. The collateral
for all repurchase agreements is held in safekeeping in the customer-only
account of the Trust's custodian, or subcustodians. PIM is responsible for
determining that the value of the collateral remains at least equal to the
repurchase price.
D. AUTOMATIC DIVIDEND REINVESTMENT PLAN
All common shareowners automatically participate in the Automatic Dividend
Reinvestment Plan (the "Plan"), under which participants receive all
dividends and capital gain distributions (collectively, "dividends") in
full and fractional common shares of the Trust in lieu of cash.
Shareowners may elect not to participate in the Plan. Shareowners not
participating in the Plan receive all dividends and capital gain
distributions in cash. Participation in the Plan is completely voluntary
and may be terminated or resumed at any time by notifying Mellon Investor
Services LLC, the agent for shareowners in administering the Plan (the
"Plan Agent"), in writing prior to any dividend record date; otherwise
such termination or resumption will be effective with respect to any
subsequently declared dividend or other distribution. Whenever the Trust
declares a dividend on common shares payable in cash, participants in the
Plan will receive the equivalent in common shares acquired by the Plan
Agent either (i) through receipt of additional unissued but authorized
common shares from the Trust or (ii) by purchase of outstanding common
shares on the New York Stock Exchange or elsewhere. If, on the payment
date for any dividend the net asset value per common share is equal to or
less than the market price per share plus estimated brokerage trading fees
("market premium"), the Plan Agent will invest the dividend amount in
newly issued common shares. The number of newly issued common shares to be
credited to each account will be determined by dividing the
dollar amount of the dividend by the net asset value per common share on
the date the shares are issued, provided that the maximum discount from
the then current market price per share on the date of issuance does not
exceed 5%. If, on the payment date for any dividend, the net asset value
per common share is greater than the market value ("market discount"), the
Plan Agent will invest the dividend amount in common shares acquired in
open-market purchases. There are no brokerage charges with respect to
newly issued common shares. However, each participant will pay a pro rata
share of brokerage trading fees incurred with respect to the Plan Agent's
open-market purchases. Participating in the Plan does not relieve
shareowners from any federal, state or local taxes which may be due on
dividends paid in any taxable year. Shareowners holding Plan shares in a
brokerage account may not be able to transfer the shares to another broker
and continue to participate in the Plan.
2. MANAGEMENT AGREEMENT
The Trust has entered into an advisory agreement with PIM. Management fees are
calculated daily at the annual rate of 0.70% of the Trust's average daily
managed assets. "Managed assets" is the average daily value of the Trust's total
assets minus the sum of the Trust's liabilities, which liabilities exclude debt
related to leverage, short-term debt and the aggregate liquidation preference of
any outstanding preferred shares.
The adviser has engaged Highland Capital Management, L.P. to act as the Trust's
investment subadviser ("Subadviser") and manage the Trust's investments. Under
the terms of the subadvisory agreement, for its services, the Subadviser is
entitled to a subadvisory fee from PIM at an annual rate of 0.35% of the Trust's
average daily managed assets. The fee will be paid monthly in arrears. The Trust
does not pay a fee to the Subadviser.
The Trust has entered into an administration agreement with the Adviser,
pursuant to which the Adviser will provide certain administrative and accounting
services to the Trust. The Adviser has appointed Princeton Administrators, L.P.
("Princeton") as the sub-administrator to the Trust to perform certain of the
Adviser's administration and accounts obligations to the Trust. Under the
administration agreement, the Trust will pay the Adviser a monthly fee equal to
0.07% of the Trust's average daily managed assets up to $500 million and 0.03%
for average daily managed assets in excess of $500 million. The Adviser and not
the Trust, is responsible for paying the fees of Princeton, which is affiliated
with Merrill, Lynch & Co.
Also, PIM has agreed for the first three years of the Trust's investment
operations to limit the Trust's total annual expenses [excluding offering costs
for common and preferred shares, interest expense, the cost of defending or
prosecuting any claim or litigation to which the Trust is a party (together with
any amount in judgment or settlement), indemnification expenses or taxes
incurred due to the failure of the Trust to qualify as a regulated investment
company under the Code or any other non-recurring or non-operating expenses] to
0.95% of the Trust's average daily managed assets. The dividend on any preferred
shares is not an expense. As of January 31, 2005, the Trust's expenses were not
reduced under such arrangements.
3. UNFUNDED CORPORATE LOANS:
As of January 31, 2005, the Trust had unfunded loan commitments of approximately
$9,483,000, which would be extended at the option of the borrower, pursuant to
the following loan agreements:
Unfunded
Commitment
Borrower (in thousands)
- -------------------------------------------------------------------
Advanced Medical, Delayed Draw $ 1,000
Celanese Holdings, LLC, Delayed Draw $ 821
Cricket Communications, Inc., Revolver $ 1,000
Texas Genco, LLC, Delayed Draw $ 1,500
Wynn Las Vegas, LLC, Term Loan $ 5,162
4. TRANSFER AGENTS
Pioneer Investment Management Shareholder Services, Inc. ("PIMSS"), a wholly
owned indirect subsidiary of UniCredito Italiano, through a sub-transfer agency
agreement with Mellon Investor Services LLC, provides substantially all transfer
agent and shareowner services related to the Trust's common shares at negotiated
rates.
5. TRUST SHARES
There are an unlimited number of common shares of beneficial interest
authorized. Of the 22,555,240 common shares of beneficial interest outstanding
at January 31, 2005, PIM owned 5,240 shares.
Transactions in common shares of beneficial interest for the period December 23,
2004 (commencement of investment operations) to January 31, 2005 were as
follows:
Shares issued in connection with initial public offering 22,550,000
Shares outstanding at beginning of period 5,240
Shares outstanding at end of period 22,555,240
Offering costs of $902,000 incurred in connection with the Trust's offering of
common shares have been charged to paid-in capital.
6. SUBSEQUENT EVENT
The underwriters elected to exercise the over-allotment option. This resulted in
the issuance of 1,775,000 commons shares of beneficial interest on February 4,
2005. The net proceeds to the Trust from the exercise of the underwriters'
overallotment option were $33,902,500. The proceeds were invested in accordance
with the Trust's investment objection.
PIONEER FLOATING RATE TRUST
SCHEDULE OF INVESTMENTS 1/31/05 (UNAUDITED)
PRINCIPAL S&P MOODY'S
AMOUNT RATING RATING VALUE
SENIOR SECURED FLOATING RATE LOANS - 79.5% OF NET ASSETS*
AEROSPACE & DEFENSE - 3.5%
$ 3,500,000 B- B2 American Airlines, Term Facility, 12/17/10 $ 3,547,033
520,674 B- B3 DeCrane Aircraft Holdings, Inc., Term B, 6/30/08 520,674
2,628,366 B- B3 DeCrane Aircraft Holdings, Inc., Term D, 6/30/08 2,654,649
5,000,000 NR Ba3 United Airlines, Inc. DIP, Tranche B, 6/30/05 5,046,875
3,000,000 B+ Ba3 Vought Aircraft Industries, Inc., Tranche B L/C Deposit, 12/22/11 2,955,000
-----------
$14,724,231
-----------
BROADCASTING - 0.6%
2,500,000 B B2 Enterprise NewsMedia, LLC, Term, 6/30/12 $ 2,498,908
-----------
CABLE - 8.7%
2,000,000 B NR Century Cable Holdings, LLC, Discretionary Term, 12/31/09 $ 1,987,708
2,000,000 NR NR Century Cable Holdings, LLC, Term, 6/30/09 1,988,750
15,950,000 CCC+ B2 Charter Communications Operating, LLC, Tranche Term B, 4/27/11 15,921,513
4,000,000 B+ B1 NTL Investment Holdings, Ltd., B2 Sub-Tranche, 4/14/12 4,040,000
5,000,000 NR B3 Olympus Cable Holdings, LLC, Term A, 6/30/10 4,952,345
2,833,333 BB- B1 Telewest Communications Networks, Ltd., B Facility, 11/30/12 2,868,396
2,166,667 BB- B1 Telewest Communications Networks, Ltd., C Facility, 11/30/13 2,194,563
2,970,000 CCC+ B2 WideOpenWest Finance, LLC, Term B, 12/22/10 2,989,801
-----------
$36,943,076
-----------
CHEMICALS - 1.2%
3,178,943 B+ B1 Celanese Holdings, LLC, Term B (Dollar TL), 4/6/11 $ 3,238,548
2,000,000 B B2 Huntsman, LLC, Term B, 3/31/10 2,035,500
-----------
$ 5,274,048
-----------
CONSUMER - DURABLES - 0.2%
1,000,000 BB- Ba3 National Bedding Co., Term B, 2/28/08 $ 1,014,688
-----------
CONSUMER - NON-DURABLES - 2.6%
3,750,000 B B3 CEI Holdings, Inc. (Cosmetic Essence), First Lien Term, 12/3/10 $ 3,778,125
5,000,000 B+ B1 Jarden Corp., Term, 1/24/12 5,051,785
1,985,000 B+ B1 Solo Cup Co., Term, 2/27/11 2,022,840
-----------
$10,852,750
-----------
DIVERSIFIED MEDIA - 1.6%
4,000,000 BB- Ba3 Regal Cinemas, Inc., Term, 11/10/10 $ 4,051,668
2,818,354 BB Ba3 RH Donnelley, Tranche A-3 Term, 12/31/09 2,840,374
-----------
$ 6,892,042
-----------
ENERGY - 3.6%
6,000,000 BBB+ Ba3 Mainline, L.P., Term, 12/17/11 $ 6,052,500
3,000,000 NR B1 NSG Holdings II, LLC, Initial Term, 12/13/11 3,051,564
2,000,000 B+ B1 Regency Gas Services, LLC, Term, 6/1/10 2,037,500
4,000,000 BB- Ba2 Universal Compression, Inc., Term B, 2/15/12 4,056,252
-----------
$15,197,816
-----------
FOOD & DRUG - 0.5%
2,000,000 BB- Ba3 Herbalife International, Inc., Term, 12/21/10 $ 2,034,376
-----------
FOOD & TOBACCO - 5.1%
3,000,000 B NR Captain D's, LLC, First Lien Term, 12/27/10 $ 3,007,500
2,000,000 B NR Captain D's, LLC, Second Lien Term, 6/27/11 1,990,000
4,000,000 B+ B1 Carrols Corp., Term B, 12/31/10 4,070,000
4,000,000 BB Ba2 Constellation Brands, Inc., Tranche B Term, 11/30/11 4,055,000
2,000,000 BB- Ba2 Landry's Restaurants, Inc., Term, 12/28/10 2,022,500
997,468 B+ B2 Merisant Co., Tranche B Term, 1/11/10 1,001,832
5,471,275 B+ B1 Pinnacle Foods Holding Corp., Term, 11/25/10 5,475,833
-----------
$21,622,665
-----------
FOREST PRODUCTS - 0.5%
1,979,452 BB Ba3 Boise Cascade Holdings, LLC, Tranche C Term, 10/29/10 $ 1,984,175
-----------
GAMING & LEISURE - 6.0%
4,000,000 B Ba3 CNL Hospitality Properties, Inc., Term Facility, 10/13/06 $ 4,065,000
1,000,000 B+ B1 Herbst Gaming, Inc., Term, 10/8/10 1,015,938
5,000,000 B+ Ba3 Knowledge Learning Corp., Term, 1/7/12 5,046,875
4,959,193 B- NR OpBiz, LLC, Term A, 8/31/10 4,909,601
11,623 B- NR OpBiz, LLC, Term B, 8/31/10 11,497
1,259,259 B B1 Playpower, Inc., Dollar Term, 12/18/09 1,275,000
4,000,000 NR Ba3 Universal City Development Partners, Ltd., Term, 6/9/11 4,065,000
4,000,000 B- B1 Wyndham International, Inc., Term I, 6/30/06 4,024,168
838,409 B+ B2 Wynn Las Vegas, LLC, Term, 12/14/11 850,199
-----------
$25,263,278
-----------
HEALTHCARE - 2.2%
2,250,000 B B1 Aircast, Inc., First Lien Term, 12/7/10 $ 2,270,392
4,000,000 B+ B1 Alliance Imaging, Inc., Tranche C1 Term, 12/29/11 4,038,752
1,059,222 B B2 Hanger Orthopedic Group, Inc., Tranche Term B, 9/30/09 1,068,490
2,000,000 B+ B2 SFBC International, Inc., Term, 11/1/10 2,035,000
-----------
$ 9,412,634
-----------
The accompanying notes are an integral part of these financial statements.
PIONEER FLOATING RATE TRUST
SCHEDULE OF INVESTMENTS 1/31/05 (CONTINUED)(UNAUDITED)
PRINCIPAL S&P MOODY'S
AMOUNT RATING RATING VALUE
HOUSING - 8.2%
$4,000,000 B+ B2 Associated Materials, Inc., Term, 8/29/10 $ 4,065,000
4,000,000 B B1 Atrium Companies, Inc., Term, 12/28/11 4,053,332
7,000,000 BBB- Ba2 General Growth Properties, Inc., Tranche Term B, 11/12/08 7,056,147
4,000,000 B+ B1 Headwaters, Inc., Term B, 4/30/11 4,057,500
3,792,500 B B1 Lake at Las Vegas Joint Venture, First Lien Term, 11/1/09 3,822,131
5,000,000 B B2 LNR Property Corp., Tranche Term B, 1/21/08 5,029,690
2,500,000 B+ B3 Propex Fabrics, Inc., Term, 12/31/11 2,509,375
4,000,000 BB- Ba3 Woodlands Commercial Properties Co., L.P., Bridge, 8/30/05 4,035,000
-------------
$ 34,628,175
-------------
INFORMATION TECHNOLOGY - 3.5%
5,000,000 B B1 AMKOR Technology, Inc., Second Lien Term, 10/27/10 $ 5,170,835
5,000,000 B B3 ON Semiconductor Corp., Tranche Term G, 12/15/11 5,031,250
480,000 B+ B3 Verifone, Second Lien Term, 12/31/11 495,300
4,000,000 B B2 Vertafore, First Lien Term, 12/22/10 4,030,000
-------------
$ 14,727,385
-------------
MANUFACTURING - 1.0%
3,000,000 B+ B2 Maxim Crane Works, L.P., First Lien Term, 1/28/10 $ 3,052,500
1,000,000 B+ B3 Maxim Crane Works, L.P., Second Lien Term, 1/28/12 1,030,000
-------------
$ 4,082,500
-------------
METALS & MINERALS - 3.9%
4,620,694 B B3 CII Carbon, LLC, Term, 6/25/08 $ 4,562,936
3,500,000 B+ B1 International Mill Service, Inc., First Lien Tranche C Term, 12/31/10 3,561,250
3,500,000 NR B3 Murray Energy Corp., Tranche Term B, 1/28/10 3,513,750
1,826,923 BB- Ba2 Novelis, Inc., Canadian Term, 1/7/12 1,843,924
3,173,077 BB- Ba2 Novelis, Inc., US Term, 1/7/12 3,201,723
-------------
$ 16,683,583
-------------
RETAIL - 4.2%
4,000,000 BB Ba2 Blockbuster, Inc., Tranche B Term, 8/20/11 $ 3,990,500
5,000,000 B+ B1 Dollarama Group, L.P., Term B, 11/18/11 5,046,875
5,000,000 B+ B1 Harbor Freight Tools USA, Inc., Term, 7/15/10 5,018,125
3,968,254 B- B3 Home Interiors & Gifts, Initial Term, 3/31/11 3,847,222
-------------
$ 17,902,722
-------------
SERVICE - 3.7%
2,500,000 NR B2 Alliance Laundry Systems, LLC, Term, 8/2/07 $ 2,515,625
3,000,000 B B1 Alliance Laundry Systems, LLC, Term, 1/27/12 3,038,751
1,013,550 BB B1 Allied Waste North America, Inc., New Tranche B Term, 1/15/10 1,029,748
981,531 BB B1 Allied Waste North America, Inc., New Tranche C Term, 1/15/10 997,277
1,500,000 BB B1 IESI Corp., Term, 1/21/12 1,524,375
6,883,853 NR NR NEFF Rental, Inc., Initial Term, 5/1/08 6,746,176
-------------
$ 15,851,952
-------------
TELECOMMUNICATIONS - 7.5%
5,000,000 B+ B1 Alaska Communications Systems Holdings, Inc., Term, 2/1/12 $ 5,000,000
4,000,000 B- B1 Cricket Communications, Inc. (aka Leap Wireless), Term B, 1/10/11 4,008,332
5,000,000 BB B1 PanAmSat Corp., Tranche Term B, 8/20/11 5,044,470
4,000,000 CCC- B3 RCN Corp., Term, 12/21/11 4,030,000
3,500,000 B B1 United Online, Term, 12/13/08 3,548,125
1,000,000 B+ B3 Valor Telecommunications Enterprises, LLC, Second Lien Term, 11/3/11 1,031,125
5,000,000 NR Ba3 WestCom Corp., Tranche B Term, 12/17/10 5,084,375
4,000,000 B+ Caa1 WilTel Communications, LLC, Second Lien Term, 12/31/10 4,050,000
-------------
$ 31,796,427
-------------
TRANSPORTATION - 3.5%
2,000,000 NR B2 Accuride Corp., Term B, 1/31/12 $ 2,000,000
392,157 BB- Ba2 Federal-Mogul Corp., Letter of Credit, 12/9/05 394,853
3,607,843 BB- B1 Federal-Mogul Corp., Term, 12/9/11 3,629,267
4,000,000 BB- B2 Key Plastics LLC/Key Safety Systems, Inc., Term C, 6/29/11 4,030,000
3,500,000 BB Ba3 Laidlaw International, Inc., Term B Facility, 6/19/09 3,516,954
1,216,306 B- Caa1 Quality Distribution, Inc., Term, 11/13/09 1,216,306
-------------
$ 14,787,380
-------------
UTILITY - 5.4%
4,000,000 B B1 Basic Energy Services, Term B, 10/3/09 $ 4,030,000
4,442,782 B+ B2 LSP Kendall Energy, LLC, Project, 11/22/06 4,253,963
1,792,891 NR Ba3 Magellan Midstream Holdings, Loan, 12/10/11 1,817,543
1,750,000 B+ Ba3 NRG Energy, Inc., Credit Linked Deposit, 12/24/07 1,756,563
2,250,000 B+ Ba3 NRG Energy, Inc., Term, 12/24/11 2,264,625
2,250,000 BB- B1 Pike Electric, Inc., Tranche Term B, 12/10/12 2,290,079
3,000,000 B+ B1 Reliant Energy, Inc., Term, 4/30/10 3,023,838
3,500,000 BB- Ba2 Texas Genco, LLC, Initial Term, 12/14/11 3,548,125
-------------
$ 22,984,736
-------------
WIRELESS COMMUNICATION - 2.3%
2,000,000 B- B2 Centennial Cellular Operating Co., Term, 2/9/11 $ 2,017,968
7,500,000 B- B2 Triton PCS Holdings, Inc., Term, 11/18/09 7,610,160
-------------
$ 9,628,128
-------------
TOTAL SENIOR SECURED FLOATING RATE OBLIGATIONS
(Cost $335,161,362) (a) $ 336,787,675
-------------
The accompanying notes are an integral part of these financial statements.
PIONEER FLOATING RATE TRUST
SCHEDULE OF INVESTMENTS 1/31/05 (CONTINUED)(UNAUDITED)
PRINCIPAL S&P MOODY'S
AMOUNT RATING RATING VALUE
TEMPORARY CASH INVESTMENTS - 44.6% OF NET ASSETS
REPURCHASE AGREEMENTS - 44.6%
$46,352,000 Bear Stearns, Inc., 2.42%, dated 1/31/05, repurchase price of
$46,352,000 plus accrued interest on 2/1/05 collateralized by
$47,613,000 U.S. Treasury Bill, 2.48%, 5/12/05 $ 46,352,000
16,648,000 Bear Stearns, Inc., 2.42%, dated 1/31/05, repurchase price of
$16,648,000 plus accrued interest on 2/1/05 collateralized by
$17,179,000 U.S. Treasury Bill, 2.651%, 7/7/05 16,648,000
63,000,000 Greenwich Capital Markets, 2.40%, dated 1/31/05, repurchase price
of $63,000,000 plus accrued interest on 2/1/05 collateralized by
$64,447,000 U.S. Treasury Notes, 3.125%, 1/31/07 63,000,000
38,600,000 UBS Warburg, Inc., 2.44%, dated 1/31/05, repurchase price of
$38,600,000 plus accrued interest on 2/1/05 collateralized by
$45,952,000 U.S. Treasury STRIPS, 3.606%, 5/15/09 38,600,000
24,400,000 UBS Warburg, Inc., 2.44%, dated 1/31/05, repurchase price of
$24,400,000 plus accrued interest on 2/1/05 collateralized by
$28,145,000 U.S. Treasury STRIPS, 3.534%, 8/15/08 24,400,000
-------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $189,000,000) $ 189,000,000
-------------
TOTAL INVESTMENTS IN SECURITIES - 124.1%
(Cost $524,161,362) (a) $ 525,787,675
-------------
OTHER ASSETS AND LIABILITIES - (24.1)% $(102,224,666)
-------------
PREFERRED SHARES AT REDEMPTION VALUE - (0.0)% $ --
-------------
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS - 100.0% $ 423,563,009
=============
NR Security not rated by S&P or Moody's.
* Senior secured floating rate loans in which the Trust invests
generally pay interest at rates that are periodically
redetermined by reference to a base lending rate plus a premium.
These base lending rates are generally (i) the lending rate offered
by one or more major European banks, such as LIBOR
(London InterBank Offered Rate), (ii) the prime rate offered by one
or more major United States banks, (iii) the certificate of deposit
or (iv) other base lending rates used by commercial lenders.
(a) At January 31, 2005, the net unrealized loss on investments
based on cost for federal income tax purposes of $524,161,362
was as follows:
Aggregate gross unrealized gain for all investments in which there
is an excess of value over tax cost $ 1,994,023
Aggregate gross unrealized loss for all investments in which there
is an excess of tax cost over value (367,710)
-------------
Net unrealized gain $ 1,626,313
=============
For financial reporting purposes net unrealized gain on
investments was $524,161,362 and cost of investments aggregated
$1,626,313.
Purchases and sales of securities (excluding temporary
cash investments) for the period ended January 31, 2005,
aggregated $346,181,505 and $11,106,087, respectively.
The accompanying notes are an integral part of these financial statements.