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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 811-21043
Pioneer High Income Trust
(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: March 31
Date of reporting period: April 1, 2003 through March 31, 2004
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
[LOGO] PIONEER
-----------------------
HIGH
INCOME
TRUST
Annual
Report
3/31/04
[LOGO] PIONEER
Investments(R)
Table of Contents
- -----------------------------------------------
Letter to Shareowners 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 4
Schedule of Investments 8
Financial Statements 19
Notes to Financial Statements 23
Report of Independent Auditors 33
Pioneer Family of Mutual Funds 34
Trustees, Officers and Service Providers 35
Pioneer High Income Trust
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LETTER TO SHAREOWNERS 3/31/04
- --------------------------------------------------------------------------------
Dear Shareowner,
- --------------------------------------------------------------------------------
Last year's stock market rally carried over into early 2004 but ran out of steam
as investors reassessed the dramatic rise in stock valuations. The
technology-rich NASDAQ Composite Index, having risen the fastest, was the first
to feel pressure; the Dow Jones Industrial Average and Standard & Poor's 500
soon gave up some gains as well. By the end of March, these major indicators
were little changed from year-end levels but well ahead of where they stood a
year ago.
In general terms, smaller companies outperformed large companies, and emerging
markets outpaced developed countries, as both benefited from weakness in the
U.S. dollar. Corporate bonds, here and overseas, recorded strong gains. U.S.
Treasury issues also performed well, as the Federal Reserve Board signaled that
it was in no hurry to raise interest rates, given the mixed economic data it was
seeing.
Those mixed economic reports were also responsible for the stock market's
sluggishness. While corporate profits expanded at a healthy rate, unemployment
remained high and consumer confidence dropped sharply in February. Increased
productivity, a company's ability to produce more goods or services for each
hour worked, was a major factor in the disappointing pace of job creation.
However, jobs data improved markedly in March when the government reported U.S.
employers had added over 300,000 jobs, the largest figure in years; at the same
time, January and February numbers were revised upward. Payroll expansion
reached into most sectors, while employment held steady in manufacturing after a
long period of declines. The markets reacted positively to the jobs report. We
believe that renewed hiring means companies are optimistic about the outlook for
profits in the months ahead. In fact, many businesses are building up
inventories in expectation of increased product demand.
The key drivers of the expansion, low interest rates and reduced federal income
taxes, remain in place. Consequently, we think the U.S. economy retains
impressive growth potential through the rest of this year. An expanding economy
could have implications for the way your portfolio is balanced, so an
appointment with your professional financial advisor may well be in order.
Respectfully,
/s/ OSBERT M. HOOD
Osbert M. Hood, President and Chief Executive Officer
Pioneer Investment Management, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
1
Pioneer High Income Trust
PORTFOLIO SUMMARY 3/31/04
Portfolio Diversification
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Corporate Bonds & Notes 83.3%
Municipal Bonds 5.7
Convertible Bonds 4.7
Temporary Cash Investments 3.3
Sovereign Debt Obligations 2.2
Convertible Preferred Stock 0.3
Portfolio Maturity
- --------------------------------------------------------------------------------
(Effective life as a percentage of long-term holdings)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
4-6 years 42.8%
1-3 years 18.6
3-4 years 18.1
6-8 years 11.2
8+ years 5.6
0-1 years 3.7
10 Largest Holdings
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(As a percentage of long-term holdings)*
--------------------------------------------------------------------------
1. Xerox Capital Trust I, 8.0%, 2/1/27 2.14%
--------------------------------------------------------------------------
2. Baytex Energy Ltd., 9.625%, 7/15/10 1.84
--------------------------------------------------------------------------
3. IVAX Corp., 4.5%, 5/15/08 1.78
--------------------------------------------------------------------------
4. Burns, Philp Capital Property, Ltd., 9.75%, 7/15/12 (144A) 1.66
--------------------------------------------------------------------------
5. Huntsman International LLC, 10.125%, 7/1/09 1.63
--------------------------------------------------------------------------
6. GATX Financial Corp., 8.875%, 6/1/09 1.63
--------------------------------------------------------------------------
7. NMHG Holding Co., 10.0%, 5/15/09 1.57
--------------------------------------------------------------------------
8. Asbury Automotive Group, Inc., 9.0%, 6/15/12 1.54
--------------------------------------------------------------------------
9. J.C. Penney Co., Inc., 8.125%, 4/1/27 1.54
--------------------------------------------------------------------------
10. TSI Telecommunication Services, Inc., 12.75%, 2/1/09 1.53
--------------------------------------------------------------------------
*This list excludes money market and derivative instruments. Trust holdings will
vary for other periods.
2
Pioneer High Income Trust
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PERFORMANCE UPDATE 3/31/04
- --------------------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
Market Value
per Common Share 3/31/04 3/31/03
$16.57 $14.49
Net Asset Value
per Common Share 3/31/04 3/31/03
$16.20 $13.43
Net
Distributions per Share Investment Short-Term Long-Term
(3/31/03 - 03/31/04) Income Capital Gains Capital Gains
$1.65 $ - $ -
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in common shares of Pioneer High Income Trust at public
offering price, compared to that of the Merrill Lynch High Yield Master II
Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of March 31, 2004)
Net Asset Market
Period Value Price*
Life-of-Trust
(4/25/02) 39.80% 36.61%
1 Year 34.31 27.33
* When net asset value (NAV) is lower than market price, dividends are assumed
to be reinvested at the greater of NAV or 95% of the market price. When NAV
is higher, dividends are assumed to be reinvested at market price.
- --------------------------------------------------------------------------------
[DATA BELOW IS REPRESENTED BY A MOUNTAIN CHART IN THE ORIGINAL REPORT]
Value of $10,000 Investment+
Pioneer Merrill Lynch
High Income High Yield
Trust* Master II Index
4/02 10,000 10,000
3/03 10,457 10,171
3/04 13,661 12,428
+ Index comparison begins April 30, 2002. The Merrill Lynch High Yield Master II
Index is a broad-based measure of the performance of the non-investment grade
U.S. domestic bond market. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Trust returns, do not reflect any fees,
expenses or sales charges. You cannot invest directly in the Index.
Performance data shown represents past performance. Past performance does not
guarantee future results. Investment return and principal value fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance shown. For
performance data that is current to the most recent month-end, please call
1-800-225-6292 or visit our website www.pioneerfunds.com.
The performance table and graph do not reflect the deduction of taxes that a
shareowner would pay on Trust distributions or the redemption of Trust shares.
3
Pioneer High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 3/31/04
- --------------------------------------------------------------------------------
High-yield bonds posted strong returns during the 12 months ended March 31,
2004, as evidence grew of a quickening economic expansion globally, as well as
in the United States. At the same time, the Federal Reserve kept short-term
interest rates at 40-year lows, creating opportunities for leveraged investment
strategies to borrow funds inexpensively and then invest in appreciating assets.
The following is an interview with Kenneth J. Taubes, who discusses the
performance of High Income Trust during the period. Mr. Taubes, director of
Pioneer's Fixed Income Group, oversees the team responsible for the daily
management of the Trust.
Q: How did the Trust perform, Ken?
A: The Trust performed exceptionally well. For the 12 months ended March 31,
2004, Pioneer High Income Trust had a total return of 34.31% at net asset
value and 27.33% at market price, with a premium of market price-to-net asset
value of 2.3% on March 31, 2004. The benchmark Merrill Lynch High Yield
Master II Index returned 22.21% during the same 12 months. The Trust also
delivered healthy income. On March 31, the current 30-day SEC yield was
11.67%.
Q: What were the factors that influenced performance?
A: We had an excellent backdrop for high-yield bonds. The U.S. Federal Reserve
Board kept short-term interest rates low, which helped the portfolio in two
ways.
First, the liquidity in the economy helped stimulate growth, which benefited
corporations issuing high-yield bonds. Gross domestic product rose and
corporate profits increased, while overall corporate credit improved in
quality and default rates dropped. In addition, growth in the global economy
started accelerating, helping many companies, both directly and indirectly.
Domestic high-yield bonds were one of the better performing asset classes
over the 12 months, and they substantially outperformed high-grade fixed-
income securities, including Treasuries.
Second, the low rates enabled the Trust to borrow funds inexpensively and
invest in additional high-yield bonds, using the leverage to invest in
higher-yielding bonds, which generated additional income to the Trust. At the
end of the fiscal period, on March 31,
4
Pioneer High Income Trust
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2004, about 26% of the Trust was leveraged, giving a powerful stimulant to
performance as high-yield bonds gained in value.
In managing the Trust, we overweighted (relative to the Trust's benchmark)
the securities of cyclical companies and industrial corporations, which stood
to benefit from the expanding economy. At the same time, we deemphasized the
more defensive utilities sector. We also maintained an exposure to
international and emerging-market high-yield debt. At the end of the fiscal
year, more than 20% of assets were invested in foreign bonds.
Q: What were some of the investments that most affected performance?
A: Several European holdings performed particularly well, as the bonds
appreciated in the local currencies and the currencies gained in value
against the U.S. dollar. One of the leading performers was Aker Kvaerner, a
Norwegian engineering, construction and ship-building company. The bonds rose
in value as the company restructured its business and started to benefit from
the pickup in the global economy. At the same time, the Norwegian kroner rose
in value against the dollar. Other European companies that added to returns
included Huntsman International, a chemical company, and Crown Cork, a
packaging company.
Among the Trust's emerging markets investments, the bonds of Brazilian brewer
Ambev, a long-time holding, rose in value when the company was taken over by
the Dutch firm Interbrew.
One of the best performing investments was Continental Airlines. The airline
industry had been out of favor, but we believed Continental had successfully
attacked its cost structure and was poised to benefit from the cyclical
upturn. The bonds posted striking price gains after we invested in the summer
of 2003. We subsequently sold our position, and then reinvested in
Continental because we think it is the most sound among high-yield issuers in
the airline industry.
We invested in the bonds of Fonda Group, a packaging company, when they were
at distressed prices. The bonds then started gaining as the company improved
its operations and started to benefit from the economic rebound. Finally,
Fonda Group was acquired by
5
Pioneer High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 3/31/04 (continued)
- --------------------------------------------------------------------------------
its largest competitor, and the bond's prices rose above face value before
they were called away.
Another excellent performer was Alamosa Holdings, an affiliate of the Sprint
wireless network, which has restructured its debt and is poised to benefit
from the improving prospects in the wireless phone business.
While most portfolio investments did well, we did have some disappointments.
Evergreen Aviation, an international freight carrier with a big government
business, fell after the United States allowed only government planes to fly
cargo into Iraq. The policy meant that Evergreen lost much of its lucrative
freight business to Kuwait and Saudi Arabia. We have sold the portfolio's
position in Evergreen Aviation. The bonds of Constar, a packaging company
specializing in the manufacture of plastic soft-drink bottles, also
underperformed, as increasing competition in the industry weakened the
company's ability to set prices. We have reduced our position in Constar.
Q: What is your outlook for high-yield investments?
A: We think the investment backdrop should continue to be favorable for
high-yield bonds, which should benefit from the strong U.S. economy and the
expanding global economy. We believe the Federal Reserve is likely to keep
short-term interest rates low in the short run in an effort to provide
further stimulation to the economy, even if the board begins raising rates
later this year. Corporate revenues are increasing, and productivity has been
improving, resulting in healthy profit gains for many companies. We expect
that default rates by high-yield issuers should continue to decline.
After the strong performance by high-yield bonds since 2000, however, it
probably is not realistic to expect significant price gains in the near
future. The possibility exists for high-yield bonds to produce total returns
consistent with their stated interest (coupon) rates.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust 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.
6
Pioneer High Income Trust
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- --------------------------------------------------------------------------------
The Trust's investment objective is a high level of current income. The Trust
may, as a secondary objective, also seek capital appreciation to the extent
consistent with its investment objective. There can be no assurance that the
Trust will achieve its investment objectives. Under normal market conditions,
the Trust invests at least 80% of its assets (net assets plus borrowing for
investment purposes) in below investment grade (high yield) debt securities,
loans and preferred stocks. Because the Trust's investments will be concentrated
in high yield securities, it will be subject to risks of such securities. Below
investment grade securities are commonly referred to as "junk bonds" and are
considered speculative with respect to the issuer's capacity to pay interest and
repay principal. They 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. Risks of the investing
in the Trust are discussed in greater detail in the Trust's registrations
statement on Form N-2 relating to its common shares, which was filed with the
Securities and Exchange Commission on April 29, 2002.
The Trust's total return at net asset value for the fiscal year ended March 31,
2004, after net expenses and dividends to the preferred shareowners, was 34.31%.
The Trust's total return for the fiscal year ended March 31, 2004 based on
changes in market price was 27.33%.
7
Pioneer High Income Trust
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SCHEDULE OF INVESTMENTS 3/31/04
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
CORPORATE BONDS & NOTES - 113.5% of Net Assets
Energy - 8.4%
Energy Equipment & Services - 1.9%
3,985,000 B-/B2 Parker Drilling Co., 9.625%, 10/1/13 $ 4,373,537
1,750,000 B-/B3 Petro Stopping Centers LP, 9.0%, 2/15/12 (144A) 1,802,500
1,938,000 B+/B3 Transmontaigne, Inc., 9.125%, 6/1/10 (144A) 2,073,660
------------
$ 8,249,697
------------
Oil & Gas - 6.5%
9,984,000 B-/B3 Baytex Energy Ltd., 9.625%, 7/15/10 $ 10,508,160
6,000,000 B/B2 Compton Petroleum Corp., 9.9%, 5/15/09 6,705,000
5,000,000 B/B2 Dresser, Inc., 9.375%, 4/15/11 5,450,000
4,985,000 B+/B2 Energy Partners, Ltd., 8.75%, 8/1/10 5,333,950
------------
$ 27,997,110
------------
Total Energy $ 36,246,807
------------
Materials - 20.1%
Chemicals - 10.6%
4,635,000 B+/B1 ARCO Chemical Co., 9.8%, 2/1/20 $ 4,449,600
1,685,000 B/B2 Ethyl Corp., 8.875%, 5/1/10 1,819,800
7,800,000 BBB-/Baa3 Ferro Corp., 7.125%, 4/1/28 8,358,480
2,000,000 BB-/B3 Geon Co., 6.875%, 12/15/05 1,990,000
EURO 7,975,000 CCC+/Caa1 Huntsman International LLC, 10.125%, 7/1/09 9,334,953
5,000,000 NR/B3 M.A. Hanna Co., 6.875%, 12/1/04 4,987,500
4,500,000 BBB-/Ba1 Methanex Corp., 8.75%, 8/15/12 5,152,500
5,500,000 B-/Caa1 OM Group, Inc., 9.25%, 12/15/11 5,665,000
EURO 650,000 CCC+/Caa1 Rhodia SA, 9.25%, 6/1/11 662,991
EURO 3,485,000 CCC+/Caa1 Rhodia SA, 9.25%, 6/1/11 (144A) 3,554,654
------------
$ 45,975,478
------------
Construction Materials - 2.8%
5,350,000 B/B2 Ship Finance International, Ltd., 8.5%,
12/15/13 (144A) $ 5,243,000
6,000,000 BB-/B1 Texas Industries, Inc., 10.25%, 6/15/11 6,840,000
------------
$ 12,083,000
------------
Containers & Packaging - 2.4%
1,325,000 B/Caa1 Constar International, Inc., 11.0%, 12/1/12 $ 1,132,875
2,000,000 B+/B1 Crown Euro Holdings SA, 9.5%, 3/1/11 2,245,000
EURO 1,950,000 B+/NR Crown Euro Holdings SA, 10.25%, 3/1/11 2,683,917
4,020,000 B+/B2 Greif Bros. Corp., 8.875%, 8/1/12 4,381,800
------------
$ 10,443,592
------------
8 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Metals & Mining - 3.4%
5,685,000 B+/B1 CSN Islands VIII Corp., 9.75%, 12/16/13 (144A) $ 5,571,300
5,035,000+ B-/B2 Freeport-McMoRan Copper & Gold, Inc., 10.125%,
2/1/10 5,714,725
EURO 2,900,000 B-/Caa1 Ispat Europe Group SA, 11.875%, 2/1/11 3,688,543
------------
$ 14,974,568
------------
Paper & Forest Products - 0.9%
1,790,000(a) D/NR Corporacion Durango SA de CV, 13.125%, 8/1/06 $ 1,154,550
4,000,000(a) NR/NR Corporacion Durango SA de CV, 13.75%, 7/15/09
(144A) 2,580,000
------------
$ 3,734,550
------------
Total Materials $ 87,211,188
------------
Industrials - 21.6%
Aerospace & Defense - 2.6%
7,000,000 CCC+/Caa2 Hexcel Corp., 9.75%, 1/15/09 $ 7,280,000
3,670,000 B/B3 K&F Industries, Inc., Series B, 9.625%, 12/15/10 4,110,400
------------
$ 11,390,400
------------
Building Products - 0.1%
500,000 B-/B3 U.S. Concrete, Inc., 8.375%, 4/1/14 (144A) $ 510,000
------------
Construction & Engineering - 3.5%
NOK 27,300,000(b) NR/NR Kvaerner ASA, 0.0%, 10/30/11 $ 2,584,531
8,897,000(b) NR/NR Kvaerner ASA, 0.0%, 10/30/11 5,827,535
6,645,000 B+/B2 North American Energy Partners, 8.75%, 12/1/11
(144A) 6,645,000
------------
$ 15,057,066
------------
Electrical Equipment - 1.1%
4,600,000 NR/NR Ormat Funding Corp, 8.25%, 12/30/20 (144A) $ 4,600,000
------------
Machinery - 4.2%
4,750,000 B-/B3 American Rock Salt Co., LLC, 9.5%, 3/15/14
(144A) $ 4,868,750
1,980,000 B/B3 Hines Nurseries, Inc., 10.25%, 10/1/11 2,197,800
1,875,000 B/B2 Manitowac Co., Inc., 10.5%, 8/1/12 2,146,875
8,170,000 B+/B3 NMHG Holding Co., 10.0%, 5/15/09 8,987,000
------------
$ 18,200,425
------------
The accompanying notes are an integral part of these financial statements. 9
Pioneer High Income Trust
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SCHEDULE OF INVESTMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Commercial Services & Supplies - 2.2%
233,000 BB-/Ba3 Allied Waste North America, Inc., 7.875%, 1/1/09 $ 242,320
1,850,000 B/B2 Brickman Group, Ltd., Series B, 11.75%,
12/15/09 2,146,000
6,555,000 B-/B3 IESI Corp., 10.25%, 6/15/12 7,177,725
------------
$ 9,566,045
------------
Airlines - 3.9%
2,065,000+ CCC/Caa2 AMR Corp., 9.0%, 8/1/12 $ 1,760,412
2,640,000 CCC/Caa2 AMR Corp., 9.8%, 10/1/21 2,039,400
2,000,000 CCC/Caa2 AMR Corp., 10.2%, 3/15/20 1,595,000
4,000,000 B/B3 Continental Airlines, Inc. Series D, 7.568%,
12/1/06 3,435,317
4,885,000 B-/Caa1 Northwest Airlines, Inc., 8.7%, 3/15/07 4,030,125
2,376,000 B-/Caa1 Northwest Airlines, Inc., 8.875%, 6/1/06 2,055,240
2,500,000+ B-/Caa1 Northwest Airlines, Inc., 10.0%, 2/1/09 2,025,000
------------
$ 16,940,494
------------
Marine - 1.4%
5,000,000 BB+/Ba3 CP Ships, Ltd., 10.375%, 7/15/12 $ 5,918,750
------------
Road & Rail - 0.7%
400,000 B/B1 Grupo Transportacion Ferroviaria Mexicana, SA
de CV, 10.25%, 6/15/07 $ 414,000
2,550,000 B/B1 Grupo Transportacion Ferroviaria Mexicana, SA
de CV, 11.75%, 6/15/09 2,562,750
------------
$ 2,976,750
------------
Transportation Infrastructure - 1.9%
8,000,000 B/B2 Seabulk International, Inc., 9.5%, 8/15/13 $ 8,360,000
------------
Total Industrials $ 93,519,930
------------
Consumer Discretionary - 21.3%
Automobiles & Components - 2.2%
5,350,000 B+/B2 Intermet Corp., 9.75%, 6/15/09 $ 5,082,500
5,000,000+ B/Caa1 Metaldyne Corp., 11.0%, 6/15/12 4,475,000
------------
$ 9,557,500
------------
Leisure Equipment & Products - 0.4%
1,985,000 B/B3 American Color Graphics, 10.0%, 6/15/10 $ 1,746,800
------------
Textiles - 0.6%
3,700,000(b) B-/Caa2 Jostens Holding Corp, 0.0%, 12/1/13 $ 2,423,500
------------
10 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
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Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Hotels, Restaurants & Leisure - 6.6%
5,000,000 B/B2 John Q. Hamons Hotels L.P., Series B, 8.875%,
5/15/12 $ 5,562,500
2,990,000 CCC+/B2 MeriStar Hospitality Operating Partnership, L.P.,
10.5%, 6/15/09 3,214,250
6,000,000 B+/B2 Peninsula Gaming LLC, 8.75%, 4/15/12 (144A) 5,925,000
2,485,000 CCC+/Caa1 Pinnacle Entertainment, Inc. 8.75%, 10/1/13 2,528,488
1,250,000 B-/B3 Premier Entertainment Biloxi LLC, 10.75%,
2/1/12 (144A) 1,350,000
4,500,000 B-/B3 True Temper Sports, Inc., 8.375%, 9/15/11
(144A) 4,590,000
1,875,000 B+/B1 Turning Stone Casino Resort Enterprise, 9.125%,
12/15/10 (144A) 2,029,688
3,000,000 CCC+/B3 Wynn Las Vegas LLC, 12.0%, 11/1/10 3,615,000
------------
$ 28,814,926
------------
Media - 4.0%
2,000,000 CCC+/Caa1 Carmike Cinemas Inc, 7.5%, 2/15/14 (144A) $ 2,035,000
2,402,000 BB-/Ba3 EchoStar DBS Corp., 9.125%, 1/15/09 2,714,260
3,000,000 B-/B3 LodgeNet Entertainment Corp., 9.5%, 6/15/13 3,330,000
1,980,000 B+/B2 River Rock Entertainment, 9.75%, 11/1/11 (144A) 2,138,400
2,400,000 B-/B3 Telenet Communications NV, 9.0%, 12/15/13
(144A) 2,978,853
4,000,000+ B-/B3 Vertis, Inc., 10.875%, 6/15/09 4,030,000
------------
$ 17,226,513
------------
Distributors - 1.3%
1,000,000 B-/B3 Wesco Distribution, Inc., 9.125%, 6/1/08 $ 1,025,000
4,725,000 B-/B3 Wesco Distribution, Inc., Series B, 9.125%,
6/1/08 4,843,125
------------
$ 5,868,125
------------
Multiline Retail - 4.2%
3,255,000 B+/B2 Central Garden & Pet Co., 9.125%, 2/1/13 $ 3,637,463
824,000 BB+/Ba3 J.C. Penney Co., Inc., 9.75%, 6/15/21 850,780
7,800,000 BB+/Ba3 J.C. Penney Co., Inc., 8.125%, 4/1/27 8,775,000
4,855,000 B/B2 Vicap SA, 11.375%, 5/15/07 4,830,725
------------
$ 18,093,968
------------
Specialty Retail - 2.0%
8,250,000 B/B3 Asbury Automotive Group, Inc., 9.0%, 6/15/12 $ 8,827,500
------------
Total Consumer Discretionary $ 92,558,832
------------
The accompanying notes are an integral part of these financial statements. 11
Pioneer High Income Trust
SCHEDULE OF INVESTMENTS 3/31/04 (continued)
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Consumer Staples - 5.0%
Food & Staples Retailing - 2.8%
9,000,000 B-/B3 Burns, Philp Capital Property, Ltd., 9.75%,
7/15/12 (144A) $ 9,495,000
3,000,000 CCC/Caa1 Doane Pet Care Co., 9.75%, 5/15/07 2,647,500
------------
$ 12,142,500
------------
Beverages - 1.6%
5,885,000 BBB-/Baa3 Cia Brasileira de Bebida, 10.5%, 12/15/11 $ 7,032,575
------------
Household Products - 0.6%
2,375,000 B-/B3 Solo Cup Co., 8.5%, 2/15/14 (144A) $ 2,461,094
------------
Total Consumer Staples $ 21,636,169
------------
Health Care - 4.6%
Health Care Providers & Services - 3.7%
2,985,000 B-/B3 Ardent Health Services, 10.0%, 8/15/13 $ 3,313,350
1,500,000 B-/B3 National Nephrology Associates, Inc., 9.0%,
11/1/11 (144A) 1,740,000
3,985,000 B/B2 NDCHealth Corp., 10.5%, 12/1/12 4,582,750
2,335,000 BB+/B1 PacifiCare Health Systems, Inc., 10.75%, 6/1/09 2,743,625
4,000,000 B-/B3 Team Health, Inc., 9.0%, 4/1/12 (144A) 3,890,000
------------
$ 16,269,725
------------
Pharmaceuticals - 0.9%
3,700,000 B/B2 Alaris Medical, Inc., 7.25%, 7/1/11 $ 3,912,750
------------
Total Health Care $ 20,182,475
------------
Financials - 12.9%
Diversified Financials - 8.7%
8,512,000(b) CCC/Caa1 Alamosa Delaware Inc., 0.0%, 7/31/09 $ 7,745,920
5,085,000 B/B3 Dollar Financial Group, 9.75%, 11/15/11 5,517,225
7,950,000 BBB-/Baa3 GATX Financial Corp., 8.875%, 6/1/09 9,289,297
1,700,000 B-/Caa1 Global Cash Finance Corp., 8.75%, 3/15/12
(144A) 1,768,000
EURO 2,000,000 B/B3 MDP Acquisitions Plc, 10.125%, 10/1/12 2,752,736
3,385,000 B/B1 Sheridan Group, 10.25%, 8/15/11 (144A) 3,626,181
SEK 91,115,223 NR/NR Sydsvenska Kemi AB, 0.0%, 6/9/11 5,438,182
3,000,000(b) B-/Caa1 Tabletop Holdings Inc., 0.0%, 5/15/14 (144A) 1,620,000
------------
$ 37,757,541
------------
12 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Insurance - 4.2%
5,300,000 BB-/Ba3 Allmerica Financial Corp., 7.625%, 10/15/25 $ 5,512,000
3,380,000 BBB-/NR Kingsway America, Inc, 7.5%, 2/1/14 (144A) 3,423,034
4,000,000 BBB-/NR Odyssey Re Holdings Corp., 7.65%, 11/1/13 4,499,908
4,535,000 B+/B1 Presidential Life Corp., 7.875%, 2/15/09 4,580,350
------------
$ 18,015,292
------------
Total Financials $ 55,772,833
------------
Information Technology - 7.5%
Information Technology Services - 1.3%
5,480,000 B/B3 Stratus Technologies Inc., 10.375%, 12/1/08
(144A) $ 5,507,400
------------
Communications Equipment - 1.3%
3,000,000 CCC+/Caa1 Eschelon Operating Co., 8.375%, 3/15/10 (144A) $ 2,550,000
2,900,000+ B/Caa1 Lucent Technologies Inc., 7.25%, 7/15/06 3,037,750
------------
$ 5,587,750
------------
Electronic Equipment & Instruments - 1.1%
215,000 B/B2 General Cable Corp., 9.5%, 11/15/10 (144A) $ 236,500
4,000,000 BB-/Ba2 Sanmina-SCI Corp., 10.375%, 1/15/10 4,720,000
------------
$ 4,956,500
------------
Office Electronics - 3.8%
4,250,000 B+/B1 Xerox Capital (Europe) Plc, 5.875%, 5/15/04 $ 4,260,625
12,425,000 B-/B3 Xerox Capital Trust I, 8.0%, 2/1/27 12,207,563
------------
$ 16,468,188
------------
Total Information Technology $ 32,519,838
------------
Telecommunication Services - 10.5%
Diversified Telecommunication Services - 4.5%
2,325,000 B+/B2 GCI, Inc., 7.25%, 2/15/14 (144A) $ 2,278,500
2,980,000 B+/B2 Innova S de R.L., 9.375%, 9/19/13 3,233,300
5,375,000 CCC/B3 Primus Telecommunications Group, 8.0%,
1/15/14 (144A) 5,133,125
8,000,000 B-/B3 TSI Telecommunication Services, Inc., 12.75%,
2/1/09 8,760,000
------------
$ 19,404,925
------------
Wireless Telecommunications Services - 6.0%
5,855,000 CCC+/B3 MetroPCS, Inc., 10.75%, 10/1/11 $ 6,206,300
5,150,000 CCC+/B3 Mobifon Holdings BV, 12.5%, 7/31/10 5,922,500
3,230,000 B+/Ba3 Mobile Telesystems, 9.75%, 1/30/08 (144A) 3,553,000
1,400,000 B+/Ba3 Mobile Telesystems, 10.95%, 12/21/04 1,470,000
The accompanying notes are an integral part of these financial statements. 13
Pioneer High Income Trust
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Wireless Telecommunications Services (continued)
3,250,000 NR/Baa3 Tele Norte Leste Participacoes S.A., 8.0%,
12/18/13 (144A) $ 3,087,500
2,000,000(b) CC/Caa3 UbiquiTel Operating Co., 0.0%, 4/15/10 1,880,000
4,025,000 CCC/Caa1 UbiquiTel Operating Co., 9.875%, 3/1/11 (144A) 3,924,375
------------
$ 26,043,675
------------
Total Telecommunication Services $ 45,448,600
------------
Utilities - 1.6%
Electric Utilities - 0.5%
2,137,500 BBB-/Baa3 Empresa Electrica Guacolda SA, 8.625%, 4/30/13
(144A) $ 2,370,220
------------
Multi-Utilities - 1.1%
500,000 CCC+/Caa1 Coastal Corp., 7.5%, 8/15/06 $ 467,500
1,000,000+ CCC+/Caa1 El Paso Corp., 7.875%, 6/15/12 895,000
1,000,000 B/B1 Reliant Resources, Inc., 9.25%, 7/15/10 1,085,000
2,000,000 B/B1 Reliant Resources, Inc., 9.5%, 7/15/13 2,205,000
------------
$ 4,652,500
------------
Total Utilities $ 7,022,720
------------
TOTAL CORPORATE BONDS & NOTES
(Cost $452,632,463) $492,119,392
------------
CONVERTIBLE BONDS & NOTES - 6.4% of Net Assets
Leisure Equipment & Products - 1.6%
6,500,000 BB-/NR Aristocrat Leisure Limited, 5.0%, 5/31/06 $ 6,737,250
------------
Total Leisure Equipment & Products $ 6,737,250
------------
Health Care - 3.2%
Biotechnology - 0.9%
4,000,000 CCC/NR Human Genome Sciences, Inc., 3.75%,
3/15/07 $ 3,865,000
------------
Pharmaceuticals - 2.3%
10,060,000 NR/NR IVAX Corp., 4.5%, 5/15/08 $ 10,173,175
------------
Total Health Care $ 14,038,175
------------
Information Technology - 1.6%
Communications Equipment - 0.7%
2,333,000+ B-/B2 Juniper Networks, Inc., 4.75%, 3/15/07 $ 2,359,246
725,000 B/B3 Nortel Networks, 4.25%, 9/1/08 736,781
------------
$ 3,096,027
------------
14 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Electronic Equipment & Instruments - 0.9%
4,000,000 B/B1 SCI Systems, Inc., 3.0%, 3/15/07 $ 3,830,000
-----------
Total Information Technology $ 6,926,027
-----------
TOTAL CONVERTIBLE BONDS & NOTES
(Cost $23,292,892) $27,701,452
-----------
MUNICIPAL BONDS - 7.8% of Net Assets
Florida - 1.4%
4,800,000 NR/NR Capital Tribal Agency Rev., Seminole Tribe, 10.0%,
10/1/33 $ 5,954,064
-----------
Indiana - 2.0%
3,000,000 CCC/Caa3 East Chicago Industrial Pollution Ctl. Rev., 7.125%,
6/1/07 $ 2,695,800
2,500,000 CCC/Caa3 Indiana Dev. Fin. Auth. Pollution Ctl. Rev., 7.25%,
11/1/11 2,088,400
4,250,000 CCC/Caa3 Indiana Dev. Fin. Auth. Rev., 5.75%, 10/1/11 3,339,522
1,836,781(a) D/NR Indianapolis, Arpt. Auth. Rev. Spl. Fac., United
Airlines, Ser. A, 6.5%, 11/15/31 532,667
-----------
$ 8,656,389
-----------
Michigan - 0.6%
3,000,000 NR/NR Wayne Charter County, Spl. Arpt. Facs. Rev.,
6.75%, 12/1/15 $ 2,800,200
-----------
New Jersey - 0.9%
4,525,000 B/Caa2 New Jersey Economic Dev. Auth. Rev., 7.0%,
11/15/30 $ 3,975,258
-----------
New York - 1.6%
7,225,000 BB+/Ba2 New York City Ind. Dev. Agcy., British Airways Plc
Proj., 7.625%, 12/1/32 $ 7,136,855
-----------
North Carolina - 1.0%
4,800,000 NR/NR Charlotte, Spl. Facs. Rev., Charlotte/Douglas Int'l
Airport, 5.60%, 7/1/27 $ 2,784,000
2,000,000 NR/NR Charlotte, Spl. Facs. Rev., Charlotte/Douglas Int'l
Airport, 7.75%, 2/1/28 1,360,000
-----------
$ 4,144,000
-----------
Texas - 0.3%
1,500,000 CCC/Caa2 Alliance, Aprt. Auth. Inc. Spl. Facs. Rev, 7.0%,
12/1/11 $ 1,260,135
-----------
TOTAL MUNICIPAL BONDS
(Cost $29,212,288) $33,926,901
-----------
The accompanying notes are an integral part of these financial statements. 15
Pioneer High Income Trust
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
SOVEREIGN DEBT OBLIGATIONS - 2.9% of Net Assets
Brazil - 1.5%
ITL 6,000,000,000 B+/B2 Banco Nacional de Desenvolimento Bndes, 8.0%,
4/28/10 $ 3,560,520
1,000,000 B+/B2 Federal Republic of Brazil, 10.25%, 6/17/13 1,072,500
1,834,801 B+/B2 Federal Republic of Brazil-C Bonds, 8.0%,
4/15/14 1,788,931
-----------
$ 6,421,951
-----------
Ecuador - 0.9%
4,515,000 CCC+/Caa1 Federal Republic of Ecuador, 7.0%, 8/15/30
(144A) $ 3,995,775
-----------
Russia - 0.5%
2,320,000 BB+/Baa3 Russian Federation, 5.0%, 3/31/30 $ 2,322,900
-----------
TOTAL SOVEREIGN DEBT OBLIGATIONS
(Cost $9,691,181) $12,740,626
-----------
Shares CONVERTIBLE PREFERRED STOCKS - 1.2% of Net Assets
Information Technology - 1.2%
Communications Equipment - 0.9%
3,000 Lucent Technologies Capital Trust I, 7.75% $ 3,761,362
-----------
Wireless Telecommunications Services - 0.3%
2,563 Alamosa Holdings, Inc. Series B, 7.50% $ 1,204,610
-----------
Total Information Technology $ 4,965,972
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $2,874,036) $ 4,965,972
-----------
16 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
TEMPORARY CASH INVESTMENTS - 4.5% of Net Assets
Repurchase Agreement - 1.3%
5,800,000 Greenwich Capital, 0.95%, dated 3/31/04, repur-
chase price of $5,800,000, plus accrued interest
on 4/1/04 collaterized by $5,853,000 U.S.
Treasury Bonds, 1.625%, 4/30/05 $ 5,800,000
--------------
Security Lending Collateral - 3.2%
13,706,148 Securities Lending Investment Fund, 1.00% $ 13,706,148
--------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $19,506,148) $ 19,506,148
--------------
TOTAL INVESTMENTS IN SECURITIES - 136.3%
(Cost $537,209,008) (c) (d) $ 590,960,491
--------------
Liabilities In Excess of Other Assets - (1.5)% $ (6,404,016)
--------------
Preferred Shares at Redemption
Value - (34.8)% $ (151,000,000)
--------------
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS - 100.0% $ 433,556,475
==============
NR: Security not rated by S&P or Moody's.
(144A) Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At March
31, 2004, the value of these securities amounted to $119,155,509 or 27.5%
of total net assets.
(a) Security is in default and is non-income producing.
(b) Indicates a security that has a zero coupon that remains in effect until
a predetermined date at which time the stated coupon rate becomes
effective until final maturity.
(c) At March 31, 2004, the net unrealized gain on investments based on cost
for federal income tax purposes of $537,671,293 was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $59,649,293
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (6,360,095)
-----------
Net unrealized gain $53,289,198
===========
For financial reporting purposes net unrealized gain was $53,751,483 and
cost of investments aggregated $537,209,008.
(d) As of March 31, 2004, the Trust had a net capital loss carryforward of
$704,168 which will expire March 31, 2011 if not utilized.
The accompanying notes are an integral part of these financial statements. 17
Pioneer High Income Trust
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
Distribution of investments by country of issue, as a percentage of total
holdings, is as follows:
United States 74.0%
Canada 6.2
Brazil 2.9
Australia 2.8
Mexico 2.5
Netherlands 1.7
France 1.6
Norway 1.4
Russia 1.3
Turkey 1.0
Sweden 0.9
Bermuda 0.9
Great Britain 0.7
Ecuador 0.7
Ireland 0.5
Belgium 0.5
Chile 0.4
-----
100.0%
=====
Purchases and sales of securities (excluding temporary cash investments) for the
year ended March 31, 2004, aggregated $391,597,169 and $347,424,610,
respectively.
+ At March 31, 2004, the following securities were on loan:
Principal
Amount Description Market Value
- ---------- ------------------------------------------------------- -------------
$ 565,000 AMR Corp., 9.0%, 8/1/12 $ 481,662
1,080,000 Capstar Hotel, 8.75%, 8/15/07*** 1,117,800
917,000 El Paso Corp., 7.875%, 6/15/12 820,715
2,767,375 Freeport-McMoRan Copper & Gold, Inc., 10.125%, 2/1/10 3,140,971
960,000 Juniper Networks, Inc., 4.75%, 3/15/07 970,800
2,755,000 Lucent Technologies Inc., 7.25%, 7/15/06 2,885,863
403,000 Metaldyne Corp., 11.0%, 6/15/12 360,865
475,000 Northwest Airlines, Inc., 10.0%, 2/1/09 384,750
2,900,000 Vertis, Inc., 10.875%, 6/15/09 2,921,750
*** Awaiting pending sale, not part of portfolio at year end.
Note: Principal amounts are denominated in U.S. dollars unless otherwise
denoted.
EURO Euro
ITL Italian Lira
NOK Norwegian Krone
SEK Swedish Krona
18 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 3/31/04
- --------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value (including securities loaned
of $13,085,176) (cost $537,209,008) $590,960,491
Foreign currencies, at value (cost $205,836) 200,303
Receivables -
Investment securities sold 2,177,790
Interest and foreign tax reclaim 12,703,085
Reinvestment of distributions 138,397
Forward foreign currency portfolio hedge contracts - net 479,247
Forward foreign currency contracts - net 4,818
Prepaid expenses 27,122
------------
Total assets $606,691,253
------------
LIABILITIES:
Payables -
Investment securities purchased $ 5,915,760
Upon return of securities loaned 13,706,148
Due to custodian 2,126,895
Offering costs payable - preferred 5,894
Due to affiliates 297,448
Accrued expenses 82,633
------------
Total liabilities $ 22,134,778
------------
PREFERRED SHARES AT REDEMPTION VALUE:
$25,000 liquidation value per share applicable to 6,040 shares $151,000,000
------------
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Paid-in capital $380,798,091
Distributions in excess of net investment income (585,108)
Accumulated net realized loss on investments (888,920)
Net unrealized gain on investments 53,751,483
Net unrealized gain on forward foreign currency contracts and
other assets and liabilities denominated in foreign currencies 480,929
------------
Net assets applicable to common shareowners $433,556,475
============
NET ASSET VALUE PER SHARE:
No par value (unlimited number of shares authorized)
Based on $433,556,475/26,768,347 common shares $ 16.20
============
The accompanying notes are an integral part of these financial statements. 19
Pioneer High Income Trust
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended 3/31/04
INVESTMENT INCOME:
Interest $51,025,873
Dividends 73,498
Income from securities loaned, net 93,047
-----------
Total investment income $ 51,192,418
------------
EXPENSES:
Management fees $ 3,243,637
Transfer agent fees 65,228
Auction agent fees 356,272
Custodian fees 48,347
Registration fees 32,522
Professional fees 63,626
Printing fees 29,004
Trustees' fees 11,121
Miscellaneous 38,250
-----------
Total expenses $ 3,888,007
------------
Net investment income $ 47,304,411
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $20,791,404
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (436,764) $ 20,354,640
----------- ------------
Change in net unrealized gain from:
Investments $52,282,720
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 376,916 $ 52,659,636
----------- ------------
Net gain on investments and foreign currency
transactions $ 73,014,276
------------
DISTRIBUTIONS TO PREFERRED SHAREOWNERS FROM
NET INVESTMENT INCOME $ (1,565,017)
------------
Net increase in net assets applicable to common
shareowners resulting from operations $118,753,670
============
20 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Year Ended 3/31/04 and the period from 4/25/02
(Commencement of Operations) to 3/31/03
Year 4/25/02
Ended to
3/31/04 3/31/03
FROM OPERATIONS:
Net investment income $ 47,304,411 $ 37,219,346
Net realized gain (loss) on investments and foreign
currency transactions 20,354,640 (22,891,033)
Net unrealized gain on investments and foreign
currency transactions 52,659,636 1,572,776
Distributions to preferred shareowners from net
investment income (1,565,017) (1,181,983)
------------ ------------
Net increase in net assets applicable to common
shareowners resulting from operations $118,753,670 $ 14,719,106
------------ ------------
DISTRIBUTIONS TO COMMON SHAREOWNERS:
Net investment income ($1.65 and $1.38 per share,
respectively) $(44,088,258) $(36,626,134)
------------ ------------
Total dividends to common shareowners $(44,088,258) $(36,626,134)
------------ ------------
FROM TRUST SHARE TRANSACTIONS:
Net proceeds from the issuance of common shares $ - $343,800,000
Net proceeds from underwriters' over-allotment
option exercised - 37,245,000
Reinvestment of distributions 1,434,661 869,326
Common share offering expenses charged to
paid-in capital - (741,715)
Preferred share offering expenses charged to
paid-in capital (666,972) (1,242,212)
------------ ------------
Net increase in net assets applicable to common
shareowners resulting from Trust share
transactions $ 767,689 $379,930,399
------------ ------------
Net increase in net assets applicable to common
shareowners $ 75,433,101 $358,023,371
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Beginning of period 358,123,374 100,003
------------ ------------
End of period (including distributions in excess of net
investment income of $585,108 and $1,878,827,
respectively) $433,556,475 $358,123,374
============ ============
The accompanying notes are an integral part of these financial statements. 21
Pioneer High Income Trust
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year 4/25/02
Ended to
3/31/04 3/31/03(b)
Per Common Share Operating Performance
Net asset value, beginning of period $ 13.43 $ 14.33+
-------- --------
Increase (decrease) from investment operations:(a)
Net investment income 1.77 1.41
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 2.73 (0.81)
Distributions to preferred shareowners from net
investment income (0.06) (0.04)
-------- --------
Net increase from investment operations $ 4.44 $ 0.56
Distributions to common shareowners:
Net investment income (1.65) (1.38)
Capital charge with respect to issuance of:
Common shares - (0.03)
Preferred shares (0.02) (0.05)
-------- --------
Net increase (decrease) in net asset value $ 2.77 $ (0.90)
-------- --------
Net asset value, end of period* $ 16.20 $ 13.43
======== ========
Market value, end of period* $ 16.57 $ 14.49
======== ========
Total return++ 27.33% 7.29%
Ratios to average net assets of common shareowners
Net expenses+++ 0.96% 0.87%**
Net investment income before preferred share dividends+++ 11.64% 11.62%**
Preferred share dividends 0.39% 0.37%**
Net investment income available to common
shareowners 11.25% 11.25%**
Portfolio turnover 66% 49%
Net assets of common shareowners, end of period
(in thousands) $433,556 $358,123
Preferred shares outstanding (in thousands) $151,000 $101,000
Asset coverage per preferred share, end of period $ 96,781 $113,647
Average market value per preferred share $ 25,000 $ 25,000
Liquidation value per preferred share $ 25,000 $ 25,003
Ratios to average net assets of common shareowners
before reimbursement of organization expenses
Net expenses+++ 0.96% 0.88%**
Net investment income before preferred share
dividends+++ 11.64% 11.61%**
Preferred share dividends 0.39% 0.37%**
Net investment income available to common
shareowners 11.25% 11.24%**
(a) The per common share data presented above is based upon the average common
shares outstanding for the periods presented.
(b) Trust shares were first publicly offered on April 26, 2002.
* 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.
** Annualized.
+ Net asset value immediately after the closing of the first public offering
was $14.30.
++ 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 periods 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. Total
investment returns less than a full period are not annualized. Past
performance is not a guarantee of future results.
+++ Ratios do not reflect the effect of dividend payments to preferred
shareowners.
The information above represents the audited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets of common shareowners and other supplemental data for the periods
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.
22 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/04
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer High Income Trust (the "Trust") was organized as a Delaware statutory
trust on January 30, 2002. Prior to commencing operations on April 25, 2002, the
Trust had no operations other than matters relating to its organization and
registration as a diversified, closed-end management investment company under
the Investment Company Act of 1940, as amended, and the sale and issuance to
Pioneer Investment Management, Inc. (PIM), the Trust's investment adviser, a
wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito
Italiano), of 6,981 shares of beneficial interest at an aggregate purchase price
of $100,003. PIM has reimbursed the amount by which the aggregate of all the
Trust's organizational expenses and offering costs (other than the sales load)
exceeded $0.03 per share of the common share offering. The investment objective
of the Trust is to seek a high level of current income and the Trust may seek
capital appreciation to the extent that it is consistent with its investment
objective.
The Trust invests in below investment grade (high yield) debt securities and
preferred stocks. These high yield securities may be convertible into equity
securities of the issuer. Debt securities rated below investment grade are
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
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, and 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 consistently followed by the Trust, which are in conformity with those
generally accepted in the investment company industry:
23
Pioneer High Income Trust
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
A. Security Valuation
Security transactions are recorded as of trade date. Securities are valued at
the last sales price on the principal exchanges where they are traded. Fixed
income 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. Securities for which market quotations are not readily available
are valued at their fair values as determined by, or under the direction of,
the Board of Trustees. Trading in foreign securities is substantially
completed each day at various times prior to the close of the New York Stock
Exchange. The values of such securities used in computing the net asset value
of the Trust's shares are determined as of such times. The Trust may also use
the fair value of a security, including a non-U.S. security when the closing
market price on the primary exchange where the security is traded no longer
accurately reflects the value of the security as of the close of the
exchange. As of March 31, 2004 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 fixed income
securities are accreted and amortized daily, respectively, on an effective
yield to maturity basis and are included in interest income. Premiums and
discounts related to certain mortgage-backed securities are amortized or
accreted in proportion to the underlying monthly paydowns. Interest income,
including income on interest bearing cash accounts, is recorded on an accrual
basis. Temporary cash investments are valued at amortized cost.
The Trust's investments in foreign markets or countries with limited
developing markets may subject the Trust to a greater degree of risk than in
a developed market. These risks include disruptive political or economic
conditions and the possible imposition of adverse governmental laws or
currency exchange restrictions.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
24
Pioneer High Income Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B. Foreign Currency Translation
The books and records of the Trust are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars using
current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
among other things, the net realized gains and losses on foreign currency
contracts, disposition of foreign currencies and the difference between the
amount of income accrued and the U.S. dollars actually received. Further, the
effects of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Trust enters into forward foreign currency contracts (contracts) for the
purchase or sale of a specific foreign currency at a fixed price on a future
date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Trust's
financial statements. The Trust records realized gains and losses at the time
a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar (see Note 4).
D. 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.
The amount and characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with
25
Pioneer High Income Trust
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
federal income tax rules. Therefore, the source of the Trust'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 and
foreign currency transactions, or from paid-in capital, depending on the type
of book/tax differences that may exist.
At March 31, 2004, the Trust reclassified $357,417 to decrease accumulated
net realized loss on investments and foreign currency transactions and to
increase distributions in excess of net investment income. The
reclassification has no impact on the net asset value of the Trust and
presents the Trust's capital accounts on a tax basis.
The tax character of distributions paid to common and preferred shareowners
during the year ended March 31, 2004 and the period ended March 31, 2003 was
as follows:
- --------------------------------------------------------------------------------
2004 2003
Distributions paid from:
Ordinary Income $45,653,275 $37,808,117
Net long-term capital gains - -
----------- -----------
Total taxable distribution $45,653,275 $37,808,117
=========== ===========
- --------------------------------------------------------------------------------
The following shows components of distributable earnings on a federal income
tax basis at March 31, 2004.
- --------------------------------------------------------------------------------
Undistributed ordinary income $ 2,324,461
Capital loss carryforward (704,168)
Unrealized appreciation 53,172,715
-----------
Total $54,793,008
===========
- --------------------------------------------------------------------------------
The difference between book/basis and tax-basis unrealized appreciation is
primarily attributable to the tax deferral of losses on wash sales, the
realization for tax purposes of unrealized gains on certain foreign currency
contracts, differences in the accrual of income on securities in default and
the difference between book and tax amortization methods for premiums and
discounts on fixed income securities.
26
Pioneer High Income Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
E. 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.
F. Securities Lending
The Trust lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Trust's custodian acting as the
lending agent. When entering into a loan, the Trust receives collateral which
is maintained by the custodian and earns income in the form of negotiated
lenders' fees. The Trust also continues to receive interest or dividends on
the securities loaned. Unrealized gain or loss on the fair value of the
loaned securities that may occur during the term of the loan will be for
account of the Trust. 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 Trust has the right under the securities
lending arrangement to recover the securities on loan from the borrower on
demand. The Trust invests cash collateral in the Securities Lending
Investment Fund which is managed by Brown Brothers Harriman & Co., the
Trust's custodian.
G. 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"), prior to any
dividend
27
Pioneer High Income Trust
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
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
PIM manages the Trust's portfolio. Management fees are calculated weekly at the
annual rate of 0.60% of the Trust's average weekly managed assets. "Managed
assets" is the average weekly 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.
28
Pioneer High Income Trust
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- --------------------------------------------------------------------------------
In addition, under PIM's management and administration agreements, certain
other services and costs are paid by the Trust. PIM has retained Princeton
Administrators, L.P., an affiliate of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, to provide certain administrative services to the Trust on its
behalf. PIM pays Princeton Administrators, L.P., a monthly fee at an annual
rate of 0.08% of the average weekly value of the Trust's managed assets,
subject to a minimum monthly fee of $10,000. Princeton Administrators, L.P.
receives no compensation directly from the Trust.
3. 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. Deutsche Bank Trust Company Americas is the transfer agent,
registrar, dividend paying agent and redemption agent with respect to the
Trust's Auction Market Preferred Shares (AMPS). The Trust pays Deutsche Bank
Trust Company Americas an annual fee, as is agreed to from time to time by the
Trust and Deutsche Bank Trust Company Americas, for providing such services.
4. Forward Foreign Currency Contracts
During the year ended March 31, 2004, the Trust had entered into contracts that
obligate the Trust to deliver currencies at specified future dates. At the
maturity of a contract, the Trust must make delivery of the foreign currency.
Alternatively, prior to the settlement date of the portfolio hedge, the Trust
may close out such contracts by entering into an offsetting hedge contract
Open portfolio hedges at March 31, 2004 were as follows:
- --------------------------------------------------------------------------------
Net Net
Contracts In Exchange Settlement Unrealized
Currency to Deliver For Date Value Gain
- ---------- ------------ ------------- ------------ -------------- -----------
EURO 24,150,000 $30,144,860 4/15/04 $29,665,613 $479,247
- --------------------------------------------------------------------------------
The Trust's gross outstanding forward currency settlement contracts receivable
and payable were $704,818 and $700,000, respectively, resulting in a net
receivable of $4,818.
29
Pioneer High Income Trust
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
5. Trust Shares
There are an unlimited number of common shares of beneficial interest
authorized. Of the 26,768,347 common shares of beneficial interest outstanding
at March 31, 2004 PIM owned 6,981 shares.
Transactions in common shares of beneficial interest for the year ended March
31, 2004 and the period April 25, 2002 (commencement of investment operations)
to March 31, 2003 were as follows:
- --------------------------------------------------------------------------------
2004 2003
Shares issued in connection with initial
public offering - 24,000,000
Shares issued from underwriters'
over-allotment option exercised - 2,600,000
Reinvestment of distributions 94,272 67,094
------ ----------
Net increase in shares outstanding 94,272 26,667,094
------ ----------
Shares outstanding at beginning of period 26,674,075 6,981
---------- ----------
Shares outstanding at end of period 26,768,347 26,674,075
---------- ----------
- --------------------------------------------------------------------------------
For the year ended March 31, 2004 and the period ended March 31, 2003, the Trust
charged $0 and $741,715, respectively, in offering costs incurred in connection
with the Trust's offering of common shares to paid-in capital.
The Trust may classify or reclassify any unissued common shares of beneficial
interest into one or more series of preferred shares of beneficial interest. As
of March 31, 2004, there were 6,040 AMPS ("preferred shares") as follows: Series
M7-2,020, Series W28-2,020 and Series TH7-2,000. On August 1, 2003, the Trust
reclassified and issued 2,000 shares of common shares into Series TH. For the
year ended March 31, 2004 and the period ended March 31, 2003, estimated
offering costs of $166,972 and $232,212, respectively and underwriting discounts
of $500,000 and $1,010,000, respectively, have been charged to paid-in capital.
Dividends on Series M7 AMPS and Series TH7 AMPS are cumulative at a rate which
is reset every seven days based on the results of an auction. Dividends on
Series W28 AMPS are also cumulative at a rate reset every 28 days based on the
results of an auction. Dividend rates ranged from 1.00% to 1.48% during the year
ended March 31, 2004.
30
Pioneer High Income Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Trust may not declare dividends or make other distributions on its common
shares or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
preferred shares would be less than 200%.
The AMPS are redeemable at the option of the Trust, in whole or in part, on any
dividend payment date at $25,000 per share plus any accumulated or unpaid
dividends, whether or not declared. The AMPS are also subject to mandatory
redemption at $25,000 per share plus any accumulated or unpaid dividends,
whether or not declared, if certain requirements relating to the composition of
the assets and liabilities of the Trust as set forth in the Agreement and
Declaration of Trust are not satisfied.
The holders of AMPS have voting rights equal to the holders of the Trust's
common shares (one vote per share) and will vote together with holders of the
common shares as a single class. However, holders of AMPS are also entitled to
elect two of the Trust's Trustees. In addition, the Investment Company Act of
1940, as amended, requires that along with approval by shareowners that might
otherwise be required, the approval of the holders of a majority of any
outstanding preferred shares, voting separately as a class would be required to
(a) adopt any plan of reorganization that would adversely affect the preferred
shares and (b) take any action requiring a vote of security holders, including,
among other things, changes in the Trust's subclassification as a closed-end
management investment company or changes in its fundamental investment
restrictions.
6. Subsequent Events
Subsequent to March 31, 2004 the Board of Trustees of the Trust declared a
dividend from undistributed net investment income of $0.1375 per common share
payable April 30, 2004, to shareowners of record on April 15, 2004.
For the period April 1, 2004 to April 30, 2004, dividends declared on preferred
shares totaled $125,672 in aggregate for the three outstanding preferred share
series.
31
Pioneer High Income Trust
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (unaudited)
During the period, there have been no material changes in the Trust's investment
objective or fundamental policies that have not been approved by the
shareowners. There have been no changes in the Trust's charter or By-Laws that
would delay or prevent a change in control of the Trust which have not been
approved by the shareowners. There have been no changes in the principal risk
factors associated with investment in the Trust. There have been no changes in
the persons who are primarily responsible for the day-to-day management of the
Trust's portfolio.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Trust may purchase, from time to time, its common
shares in the open market.
32
Pioneer High Income Trust
- --------------------------------------------------------------------------------
Report of Independent Auditors
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareowners
of Pioneer High Income Trust:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Pioneer High Income Trust (the "Trust") as of
March 31, 2004, and the related statement of operations for the year then ended,
and the statements of changes in net assets and the financial highlights for
each of the periods indicated in the two years then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of March 31, 2004, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer High Income Trust at March 31, 2004, the result of its operations for
the year then ended, and the changes in its net assets and the financial
highlights for each of the periods indicated in the two years then ended, in
conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
May 12, 2004
33
THE PIONEER FAMILY OF MUTUAL FUNDS
For information about any Pioneer mutual fund, please contact your investment
professional, or call Pioneer at 1-800-225-6292. Ask for a free fund information
kit, which includes a fund prospectus. Please read the prospectus carefully
before you invest.
U.S. Equity International/Global Equity
Pioneer Fund Pioneer Emerging Markets Fund
Pioneer Balanced Fund Pioneer Europe Select Fund
Pioneer Equity Income Fund Pioneer Europe Fund
Pioneer Growth Shares Pioneer International Equity Fund
Pioneer Mid Cap Growth Fund Pioneer International Value Fund
Pioneer Mid Cap Value Fund
Pioneer Oak Ridge Large Cap Fixed Income
Growth Fund Pioneer America Income Trust
Pioneer Oak Ridge Small Cap Pioneer Bond Fund
Growth Fund Pioneer Global High Yield Fund
Pioneer Papp America-Pacific Pioneer High Yield Fund
Rim Fund Pioneer Strategic Income Fund
Pioneer Papp Small and Mid Cap Pioneer Tax Free Income Fund
Growth Fund
Pioneer Papp Stock Fund Money Market
Pioneer Papp Strategic Pioneer Cash Reserves Fund**
Growth Fund
Pioneer Real Estate Shares
Pioneer Research Fund*
Pioneer Small Cap Value Fund
Pioneer Small Company Fund
Pioneer Value Fund
* Name change effective December 11, 2003.
** An investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Fund.
34
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TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Auditors
Ernst & Young LLP
Legal Counsel
Hale and Dorr LLP
Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Shareowner Services and Sub-Transfer Agent
Mellon Investor Services LLC
Preferred Share Auction/Transfer Agent and Registrar
Deutsche Bank Trust Company Americas
Sub-Administrator
Princeton Administrators, L.P.
Trustees and Officers
The Trust's Board of Trustees provides broad supervision over the Trust's
affairs. The officers of the Trust are responsible for the Trust's operations.
The Trust's Trustees and officers are listed below, together with their
principal occupations during the past five years. Trustees who are interested
persons of the Trust within the meaning of the Investment Company Act of 1940
are referred to as Interested Trustees. Trustees who are not interested persons
of the Trust are referred to as Independent Trustees. Each of the Trustees
serves as a trustee of each of the 60 U.S. registered investment portfolios for
which Pioneer Investment Management, Inc. ("Pioneer") serves as investment
adviser (the "Pioneer Funds"). The address for all Interested Trustees and all
officers of the Trust is 60 State Street, Boston, Massachusetts 02109.
The Trust's statement of additional information provides more detailed
information regarding the Trust's Trustees and is available upon request,
without charge, by calling 1-800-225-6292.
Proxy Voting Policies and Procedures of the Trust are available without charge,
upon request, by calling our toll free number (1-800-225-6292). This information
is also available at pioneerfunds.com.
35
INTERESTED TRUSTEES
Name and Age Positions Held With the Trust Term of Office and Length of Service
John F. Cogan, Jr. (77)* Chairman of the Board, Since 2002.
Trustee and President Serves until a successor trustee is
elected or earlier retirement or removal.
*Mr. Cogan is an Interested Trustee because he is an officer or director of
Pioneer and certain of its affiliates.
- ----------------------------------------------------------------------------------------------------------
Osbert M. Hood (51)** Trustee and Since 2002.
Executive Vice President Serves until a successor trustee is
elected or earlier retirement or removal.
**Mr. Hood is an Interested Trustee because he is an officer or director of
Pioneer and certain of its affiliates.
- --------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- --------------------------------------------------------------------------------
Name, Age and Address Positions Held With the Trust Term of Office and Length of Service
Mary K. Bush (56) Trustee Since 2002.
3509 Woodbine Street, Serves until a successor trustee is
Chevy Chase, MD 20815 elected or earlier retirement or removal.
- ----------------------------------------------------------------------------------------------------------
Richard H. Egdahl, M.D. (77) Trustee Since 2002.
Boston University Healthcare Serves until a successor trustee is
Entrepreneurship Program, elected or earlier retirement or removal.
53 Bay State Road,
Boston, MA 02215
- ----------------------------------------------------------------------------------------------------------
36
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Principal Occupation During Past Five Years Other Directorships Held by this Trustee
Deputy Chairman and a Director of Pioneer Global Asset Director of Harbor Global Company,
Management S.p.A. ("PGAM"); Non-Executive Chairman Ltd.
and a Director of Pioneer Investment Management USA
Inc. ("PIM-USA"); Chairman and a Director of Pioneer;
Director of Pioneer Alternative Investment Management
Limited (Dublin); President and a Director of Pioneer
Alternative Investment Management (Bermuda) Limited
and affiliated funds; President and Director of Pioneer
Funds Distributor, Inc. ("PFD"); President of all of the
Pioneer Funds; and Of Counsel (since 2000, partner
prior to 2000), Hale and Dorr LLP (counsel to PIM-USA
and the Pioneer Funds)
- ----------------------------------------------------------------------------------------------------
President and Chief Executive Officer, PIM-USA since None
May, 2003 (Director since January, 2001); President
and Director of Pioneer since May, 2003; Chairman
and Director of Pioneer Investment Management
Shareholder Services, Inc. ("PIMSS") since May, 2003;
Executive Vice President of all of the Pioneer Funds
since June, 2003; Executive Vice President and Chief
Operating Officer of PIM-USA, November 2000 to May
2003; Executive Vice President, Chief Financial Officer
and Treasurer, John Hancock Advisers, L.L.C., Boston,
MA, November 1999 to November 2000; Senior Vice
President and Chief Financial Officer, John Hancock
Advisers, L.L.C., April 1997 to November 1999
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Principal Occupation During Past Five Years Other Directorships Held by this Trustee
President, Bush International (international financial Director of Brady Corporation
advisory firm) (industrial identification and
specialty coated material products
manufacturer), Millennium Chemicals,
Inc. (commodity chemicals), Mortgage
Guaranty Insurance Corporation, and
R.J. Reynolds Tobacco Holdings, Inc.
(tobacco)
- ----------------------------------------------------------------------------------------------------
Alexander Graham Bell Professor of Health Care None
Entrepreneurship, Boston University; Professor
of Management, Boston University School of
Management; Professor of Public Health, Boston
University School of Public Health; Professor of Surgery,
Boston University School of Medicine; and University
Professor, Boston University
- ----------------------------------------------------------------------------------------------------
37
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INDEPENDENT TRUSTEES
- ---------------------------------------------------------------------------------------------------------
Name, Age and Address Positions Held With the Trust Term of Office and Length of Service
Margaret B.W. Graham (57) Trustee Since 2002.
1001 Sherbrooke Street West, Serves until a successor trustee is
Montreal, Quebec, Canada elected or earlier retirement or removal.
H3A 1G5
- ---------------------------------------------------------------------------------------------------------
Marguerite A. Piret (56) Trustee Since 2002.
One Boston Place, 28th Floor, Serves until a successor trustee is
Boston, MA 02108 elected or earlier retirement or removal.
- ---------------------------------------------------------------------------------------------------------
Stephen K. West (75) Trustee Since 2002.
125 Broad Street, Serves until a successor trustee is
New York, NY 10004 elected or earlier retirement or removal.
- ---------------------------------------------------------------------------------------------------------
John Winthrop (67) Trustee Since 2002.
One North Adgers Wharf, Serves until a successor trustee is
Charleston, SC 29401 elected or earlier retirement or removal.
- ---------------------------------------------------------------------------------------------------------
FUND OFFICERS
- ---------------------------------------------------------------------------------------------------------
Name and Age Positions Held With the Trust Term of Office and Length of Service
Dorothy E. Bourassa (56) Secretary Since September, 2003.
Serves at the discretion of board.
- ---------------------------------------------------------------------------------------------------------
Christopher J. Kelley (39) Assistant Secretary Since September, 2003.
Serves at the discretion of board.
- ---------------------------------------------------------------------------------------------------------
David C. Phelan (46) Assistant Secretary Since September, 2003.
Serves at the discretion of board.
- ---------------------------------------------------------------------------------------------------------
Vincent Nave (58) Treasurer Since 2002.
Serves at the discretion of board.
- ---------------------------------------------------------------------------------------------------------
Luis I. Presutti (39) Assistant Treasurer Since 2002.
Serves at the discretion of board.
- ---------------------------------------------------------------------------------------------------------
38
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Other Directorships Held by this
Principal Occupation During Past Five Years Trustee
Founding Director, The Winthrop Group, Inc. (consulting firm); None
Professor of Management, Faculty of Management, McGill
University
- ---------------------------------------------------------------------------------------------------------
President and Chief Executive Officer, Newbury, Piret & None
Company, Inc. (investment banking firm)
- ---------------------------------------------------------------------------------------------------------
Senior Counsel, Sullivan & Cromwell (law firm) Director, The Swiss Helvetia Fund,
Inc. (closed-end investment
company) and AMVESCAP PLC
(investment managers)
- ---------------------------------------------------------------------------------------------------------
President, John Winthrop & Co., Inc. None
(private investment firm)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Other Directorships Held by this
Principal Occupation During Past Five Years Officer
Secretary of PIM-USA; Senior Vice President-Legal of None
Pioneer; and Secretary/Clerk of most of PIM-USA's
subsidiaries since October 2000; Secretary of all of the
Pioneer Funds since September 2003 (Assistant
Secretary from November 2000 to September 2003);
and Senior Counsel, Assistant Vice President and Director of
Compliance of PIM-USA from April 1998 through
October 2000
- ---------------------------------------------------------------------------------------------------------
Assistant Vice President and Senior Counsel of Pioneer since None
July 2002; Vice President and Senior Counsel of BISYS Fund
Services, Inc. (April 2001 to June 2002); Senior Vice
President and Deputy General Counsel of Funds Distributor,
Inc. (July 2000 to April 2001; Vice President and Associate
General Counsel from July 1996 to July 2000); Assistant
Secretary of all of the Pioneer Funds since September 2003
- ---------------------------------------------------------------------------------------------------------
Partner, Hale and Dorr LLP; Assistant Secretary of all of None
Pioneer Funds since September 2003
- ---------------------------------------------------------------------------------------------------------
Vice President-Fund Accounting, Administration and Custody None
Services of Pioneer (Manager from September 1996 to
February 1999); and Treasurer of all of the Pioneer Funds
(Assistant Treasurer from June 1999 to November 2000)
- ---------------------------------------------------------------------------------------------------------
Assistant Vice President-Fund Accounting, Administration None
and Custody Services of Pioneer (Fund Accounting Manager
from 1994 to 1999); and Assistant Treasurer of all of the
Pioneer Funds since November 2000
- ---------------------------------------------------------------------------------------------------------
39
- ---------------------------------------------------------------------------------------------------------
FUND OFFICERS
- ---------------------------------------------------------------------------------------------------------
Name and Age Positions Held With the Trust Term of Office and Length of Service
Gary Sullivan (46) Assistant Treasurer Since 2002.
Serves at the discretion of board.
- ---------------------------------------------------------------------------------------------------------
Katherine Kim Sullivan (30) Assistant Treasurer Since September, 2003.
Serves at the discretion of board.
- ---------------------------------------------------------------------------------------------------------
40
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Other Directorships Held by this
Principal Occupation During Past Five Years Officer
Fund Accounting Manager-Fund Accounting, Administration None
and Custody Services of Pioneer; and Assistant Treasurer of
all of the Pioneer Funds since May 2002
- ---------------------------------------------------------------------------------------------------------
Fund Administration Manager-Fund Accounting, None
Administration and Custody Services since June 2003;
Assistant Vice President-Mutual Fund Operations of
State Street Corporation from June 2002 to June 2003
(formerly Deutsche Bank Asset Management); Pioneer
Fund Accounting, Administration and Custody Services
(Fund Accounting Manager from August 1999 to May 2002,
Fund Accounting Supervisor from 1997 to July 1999);
Assistant Treasurer of all of the Pioneer Funds since
September 2003
- ---------------------------------------------------------------------------------------------------------
41
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Notes
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Notes
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Notes
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Notes
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HOW TO CONTACT PIONEER
- --------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact Mellon
for assistance or information.
You can call Mellon Investor Services LLC for:
Account Information 1-800-288-9541
Telecommunications Device for the Deaf (TDD) 1-800-231-5469
Or write to Mellon Investor Services LLC:
For Write to
General inquiries, lost dividend checks P.O. Box 3315
South Hackensack, NJ
07606-1915
Change of address, account consolidation P.O. Box 3316
South Hackensack, NJ
07606-1916
Lost stock certificates P.O. Box 3317
South Hackensack, NJ
07606-1917
Stock transfer P.O. Box 3312
South Hackensack, NJ
07606-1912
Dividend reinvestment plan (DRIP) P.O. Box 3338
South Hackensack, NJ
07606-1938
Please consider the Trust's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the Trust and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
[LOGO] PIONEER
Investments(R)
Pioneer Investment Management, Inc.
60 State Street 15419-00-0504
Boston, Massachusetts 02109 (C)2004 Pioneer Funds Distributor, Inc.
www.pioneerfunds.com Underwriter of Pioneer mutual funds, Member SIPC
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit Fees
Fees for audit services provided to the Trust, including fees associated with
the initial and annual filings of its Form N-1A and issuance of
comfort letters, totaled approximately $44,500 in 2004 and approximately
$69,500 in 2003.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
Audit-Related Fees
Fees for the Trust's audit-related services totaled approximately
$20,113 in 2004 and approximately $20,000 in 2003. These services included
a review of the semi annual financial statements and issuance of agreed
upon procedures report to the rating agencies.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
Tax Fees
Fees for tax compliance services, primarily for tax returns, totaled
approximately $3,600 and approximately $3,000 for 2004 and 2003,
respectively.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
Other Fees
There were no fees for other services provided to the Trust during the fiscal
years ended March 31, 2004 and 2003.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognizes the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognizes that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
- ---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
- ---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
- ---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
- ---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
- ----------------------- --------------------------- -----------------------------------------------
- ------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- -------------------------
- ------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
- ------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
- ----------------------- --------------------------- -----------------------------------------------
- --------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
- ------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
- ----------------------- ------------------------- -----------------------------------------------
- ------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
- ------------------------------------------- ------------------------------
- --------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
- --------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
N/A
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
Aggregate Non-Audit Fees
The aggregate non-audit fees for the Trust and affiliates, as
previously defined, totaled approximately $25,100 in 2004 and approximately
$42,300 in 2003. These fees include services provided prior to May 6, 2003,
the effective date of the pre-approval process.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Trust's audit committee of the Board of Trustees has considered whether
the provision of non-audit services that were rendered to the Affiliates
(as defined) that were not pre-approved pursuant to paragraph (c)(7)(ii)
of Rule 2-01 of Regulation S-X is compatible with maintaining the
principal accountant's independence.
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
APPENDIX B - PROXY VOTING POLICIES AND PROCEDURES
VERSION DATED MARCH 2, 2004
PROXY VOTING POLICIES
AND PROCEDURES OF
PIONEER INVESTMENT MANAGEMENT, INC.
TABLE OF CONTENTS
OVERVIEW.........................................................................................
PROXY VOTING PROCEDURES....................................................................
PROXY VOTING SERVICE.......................................................................
PROXY COORDINATOR..........................................................................
REFERRAL ITEMS.............................................................................
CONFLICTS OF INTEREST......................................................................
SECURITIES LENDING.........................................................................
SHARE-BLOCKING.............................................................................
RECORD KEEPING.............................................................................
DISCLOSURE.................................................................................
PROXY VOTING OVERSIGHT GROUP...............................................................
AMENDMENTS.................................................................................
PROXY VOTING POLICIES............................................................................
ADMINISTRATIVE.............................................................................
AUDITORS...................................................................................
BOARD OF DIRECTORS.........................................................................
TAKEOVER-RELATED MEASURES..................................................................
CAPITAL STRUCTURE..........................................................................
COMPENSATION...............................................................................
CORPORATE GOVERNANCE.......................................................................
MERGERS AND RESTRUCTURINGS.................................................................
MUTUAL FUNDS...............................................................................
SOCIAL ISSUES..............................................................................
OVERVIEW
Pioneer Investment Management, Inc. ("Pioneer") is a fiduciary that owes
each of its client's duties of care and loyalty with respect to all
services undertaken on the client's behalf, including proxy voting. When
Pioneer has been delegated proxy-voting authority for a client, the duty
of care requires Pioneer to monitor corporate events and to vote the
proxies. To satisfy its duty of loyalty, Pioneer must place its client's
interests ahead of its own and must cast proxy votes in a manner
consistent with the best interest of its clients. Pioneer will vote all
proxies presented in a timely manner.
The Proxy Voting Policies and Procedures are designed to complement
Pioneer's investment policies and procedures regarding its general
responsibility to monitor the performance and/or corporate events of
companies that are issuers of securities held in accounts managed by
Pioneer. Pioneer's Proxy Voting Policies summarize Pioneer's position on a
number of issues solicited by companies held by Pioneer's clients. The
policies are guidelines that provide a general indication on how Pioneer
would vote but do not include all potential voting scenarios.
Pioneer's Proxy Voting Procedures detail monitoring of voting, exception
votes, and review of conflicts of interest and ensure that case-by-case
votes are handled within the context of the overall guidelines (i.e. best
interest of client). The overriding goal is that all proxies for US and
non-US companies that are received promptly will be voted in accordance
with Pioneer's policies or specific client instructions. All shares in a
company held by Pioneer-managed accounts will be voted alike, unless a
client has given us specific voting instructions on an issue or has not
delegated authority to us or the Proxy Voting Oversight Group determines
that the circumstances justify a different approach.
Pioneer does not delegate the authority to vote proxies relating to its
clients to any of its affiliates, which include other subsidiaries of
UniCredito.
ANY QUESTIONS ABOUT THESE POLICIES AND PROCEDURES SHOULD BE DIRECTED TO
THE PROXY COORDINATOR.
PROXY VOTING PROCEDURES
PROXY VOTING SERVICE
Pioneer has engaged an independent proxy voting service to assist in the
voting of proxies. The proxy voting service works with custodians to
ensure that all proxy materials are received by the custodians and are
processed in a timely fashion. To the extent applicable, the proxy voting
service votes all proxies in accordance with the proxy voting policies
established by Pioneer. The proxy voting service will refer proxy
questions to the Proxy Coordinator (described below) for instructions
under circumstances where: (1) the application of the proxy voting
guidelines is unclear; (2) a particular proxy question is not covered by
the guidelines; or (3) the guidelines call for specific instructions on a
case-by-case basis. The proxy voting service is also requested to call to
the Proxy Coordinator's attention specific proxy questions that, while
governed by a guideline, appear to involve unusual or controversial
issues. Pioneer reserves the right to attend a meeting in person and may
do so when it determines that the company or the matters to be voted on at
the meeting are strategically important to its clients.
PROXY COORDINATOR
Pioneer's Director of Investment Operations (the "Proxy Coordinator")
coordinates the voting, procedures and reporting of proxies on behalf of
Pioneer's clients. The Proxy Coordinator will deal directly with the proxy
voting service and, in the case of proxy questions referred by the proxy
voting service, will solicit voting recommendations and instructions from
the Director of Portfolio Management US or, to the extent applicable,
investment sub-advisers. The Proxy Coordinator is responsible for ensuring
that these questions and referrals are responded to in a timely fashion
and for transmitting appropriate voting instructions to the proxy voting
service. The Proxy Coordinator is responsible for verifying with the
Compliance Department whether Pioneer's voting power is subject to any
limitations or guidelines issued by the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries).
REFERRAL ITEMS
From time to time, the proxy voting service will refer proxy questions to
the Proxy Coordinator that are described by Pioneer's policy as to be
voted on a case-by-case basis, that are not covered by Pioneer's
guidelines or where Pioneer's guidelines may be unclear with respect to
the matter to be voted on. Under such certain circumstances, the Proxy
Coordinator will seek a written voting recommendation from the Director of
Portfolio Management US. Any such recommendation will include: (i) the
manner in which the proxies should be voted; (ii) the rationale underlying
any such decision; and (iii) the disclosure of any contacts or
communications made between Pioneer and any outside parties concerning the
proxy proposal prior to the time that the voting instructions are
provided. In addition, the Proxy Coordinator will ask the Compliance
Department to review the question for any actual or apparent conflicts of
interest as described below under "Conflicts of Interest." The Compliance
Department will provide a "Conflicts of Interest Report," applying the
criteria set forth below under "Conflicts of Interest," to the Proxy
Coordinator summarizing the results of its review. In the absence of a
conflict of interest, the Proxy Coordinator will vote in accordance with
the recommendation of the Director of Portfolio Management US.
If the matter presents a conflict of interest for Pioneer, then the Proxy
Coordinator will refer the matter to the Proxy Voting Oversight Group for
a decision. In general, when a conflict of interest is present, Pioneer
will vote according to the recommendation of the Director of Portfolio
Management US where such recommendation would go against Pioneer's
interest or where the conflict is deemed to be immaterial. Pioneer will
vote according to the recommendation of its proxy voting service when the
conflict is deemed to be material and the Pioneer's internal vote
recommendation would favor Pioneer's interest, unless a client
specifically requests Pioneer to do otherwise. When making the final
determination as to how to vote a proxy, the Proxy Voting Oversight Group
will review the report from the Director of Portfolio Management US and
the Conflicts of Interest Report issued by the Compliance Department.
CONFLICTS OF INTEREST
A conflict of interest occurs when Pioneer's interests interfere, or
appear to interfere with the interests of Pioneer's clients. Occasionally,
Pioneer may have a conflict that can affect how its votes proxies. The
conflict may be actual or perceived and may exist when the matter to be
voted on concerns:
- An affiliate of Pioneer, such as another company belonging to
the UniCredito Italiano S.p.A. banking group (a "UniCredito
Affiliate");
- An issuer of a security for which Pioneer acts as a sponsor,
advisor, manager, custodian, distributor, underwriter, broker,
or other similar capacity (including those securities
specifically declared by PGAM to present a conflict of
interest for Pioneer);
- An issuer of a security for which UniCredito has informed
Pioneer that a UniCredito Affiliate acts as a sponsor,
advisor, manager, custodian, distributor, underwriter, broker,
or other similar capacity; or
- A person with whom Pioneer (or any of its affiliates) has an
existing, material contract or business relationship that was
not entered into in the ordinary course of Pioneer's business.
Any associate involved in the proxy voting process with knowledge of any
apparent or actual conflict of interest must disclose such conflict to the
Proxy Coordinator and the Compliance Department. The Compliance Department
will review each item referred to Pioneer to determine whether an actual
or potential conflict of interest with Pioneer exists in connection with
the proposal(s) to be voted upon. The review will be conducted by
comparing the apparent parties affected by the proxy proposal being voted
upon against the Compliance Department's internal list of interested
persons and, for any matches found, evaluating the anticipated magnitude
and possible probability of any conflict of interest being present. For
each referral item, the determination regarding the presence or absence of
any actual or potential conflict of interest will be documented in a
Conflicts of Interest Report to the Proxy Coordinator.
SECURITIES LENDING
In conjunction with industry standards Proxies are not available to be
voted when the shares are out on loan through either Pioneer's lending
program or a client's managed security lending program. However, Pioneer
will reserve the right to recall lent securities so that they may be voted
according to the Pioneer's instructions. If a portfolio manager would like
to vote a block of previously lent shares, the Proxy Coordinator will work
with the portfolio manager and Investment Operations to recall the
security, to the extent possible, to facilitate the vote on the entire
block of shares.
SHARE-BLOCKING
"Share-blocking" is a market practice whereby shares are sent to a
custodian (which may be different than the account custodian) for record
keeping and voting at the general meeting. The shares are unavailable for
sale or delivery until the end of the blocking period (typically the day
after general meeting date).
Pioneer will vote in those countries with "share-blocking." In the event a
manager would like to sell a security with "share-blocking", the Proxy
Coordinator will work with the Portfolio Manager and Investment Operations
Department to recall the shares (as allowable within the market time-frame
and practices) and/or communicate with executing brokerage firm. A list of
countries with "share-blocking" is available from the Investment
Operations Department upon request.
RECORD KEEPING
The Proxy Coordinator shall ensure that Pioneer's proxy voting service:
- Retains a copy of the proxy statement received (unless the
proxy statement is available from the SEC's Electronic Data
Gathering, Analysis, and Retrieval (EDGAR) system);
- Retains a record of the vote cast;
- Prepares Form N-PX for filing on behalf of each client that is
a registered investment company; and
- Is able to promptly provide Pioneer with a copy of the voting
record upon its request.
The Proxy Coordinator shall ensure that for those votes that may require
additional documentation (i.e. conflicts of interest, exception votes and
case-by-case votes) the following records are maintained:
- A record memorializing the basis for each referral vote
cast;
- A copy of any document created by Pioneer that was
material in making the decision on how to vote the
subject proxy; and
- A copy of any conflict notice, conflict consent or any
other written communication (including emails or other
electronic communications) to or from the client (or in
the case of an employee benefit plan, the plan's trustee
or other fiduciaries) regarding the subject proxy vote
cast by, or the vote recommendation of, Pioneer.
Pioneer shall maintain the above records in the client's file for a period
not less than ten (10) years.
DISCLOSURE
Pioneer shall take reasonable measures to inform its clients of the
process or procedures clients must follow to obtain information regarding
how Pioneer voted with respect to assets held in their accounts. In
addition, Pioneer shall describe to clients its proxy voting policies and
procedures and will furnish a copy of its proxy voting policies and
procedures upon request. This information may be provided to clients
through Pioneer's Form ADV (Part II) disclosure, by separate notice to the
client, or through Pioneer's website.
PROXY VOTING OVERSIGHT GROUP
The members of the Proxy Voting Oversight Group are Pioneer's: Director of
Portfolio Management US, Head of Investment Operations, and Director of
Compliance. Other members of Pioneer will be invited to attend meetings
and otherwise participate as necessary. The Head of Investment Operations
will chair the Proxy Voting Oversight Group.
The Proxy Voting Oversight Group is responsible for developing,
evaluating, and changing (when necessary) Pioneer's Proxy Voting Policies
and Procedures. The group meets at least annually to evaluate and review
these policies and procedures and the services of its third-party proxy
voting service. In addition, the Proxy Voting Oversight Group will meet as
necessary to vote on referral items and address other business as
necessary.
AMENDMENTS
Pioneer may not amend its Proxy Voting Policies And Procedures without the
prior approval of the Proxy Voting Oversight Group and its corporate
parent, Pioneer Global Asset Management S.p.A.
PROXY VOTING POLICIES
Pioneer's sole concern in voting proxies is the economic effect of the
proposal on the value of portfolio holdings, considering both the short-
and long-term impact. In many instances, Pioneer believes that supporting
the company's strategy and voting "for" management's proposals builds
portfolio value. In other cases, however, proposals set forth by
management may have a negative effect on that value, while some
shareholder proposals may hold the best prospects for enhancing it.
Pioneer monitors developments in the proxy-voting arena and will revise
this policy as needed.
All proxies that are received promptly will be voted in accordance with
the specific policies listed below. All shares in a company held by
Pioneer-managed accounts will be voted alike, unless a client has given us
specific voting instructions on an issue or has not delegated authority to
us. Proxy voting issues will be reviewed by Pioneer's Proxy Voting
Oversight Group, which consists of the Director of Portfolio Management
US, the Director of Investment Operations (the Proxy Coordinator), and the
Director of Compliance.
Pioneer has established Proxy Voting Procedures for identifying and
reviewing conflicts of interest that may arise in the voting of proxies.
Clients may request, at any time, a report on proxy votes for securities
held in their portfolios and Pioneer is happy to discuss our proxy votes
with company management. Pioneer retains a proxy voting service to provide
research on proxy issues and to process proxy votes.
ADMINISTRATIVE
While administrative items appear infrequently in U.S. issuer proxies,
they are quite common in non-U.S. proxies.
We will generally support these and similar management proposals:
- Corporate name change.
- A change of corporate headquarters.
- Stock exchange listing.
- Establishment of time and place of annual meeting.
- Adjournment or postponement of annual meeting.
- Acceptance/approval of financial statements.
- Approval of dividend payments, dividend reinvestment plans and
other dividend-related proposals.
- Approval of minutes and other formalities.
- Authorization of the transferring of reserves and allocation
of income.
- Amendments to authorized signatories.
- Approval of accounting method changes or change in fiscal
year-end.
- Acceptance of labor agreements.
- Appointment of internal auditors.
Pioneer will vote on a case-by-case basis on other routine business;
however, Pioneer will oppose any routine business proposal if insufficient
information is presented in advance to allow Pioneer to judge the merit of
the proposal. Pioneer has also instructed its proxy voting service to
inform Pioneer of its analysis of any administrative items inconsistent,
in its view, with supporting the value of Pioneer portfolio holdings so
that Pioneer may consider and vote on those items on a case-by-case basis.
AUDITORS
We normally vote for proposals to:
- Ratify the auditors. We will consider a vote against if we are
concerned about the auditors' independence or their past work
for the company. Specifically, we will oppose the ratification
of auditors and withhold votes from audit committee members if
non-audit fees paid by the company to the auditing firm exceed
the sum of audit fees plus audit-related fees plus permissible
tax fees according to the disclosure categories proposed by
the Securities and Exchange Commission.
- Restore shareholder rights to ratify the auditors.
We will normally oppose proposals that require companies to:
- Seek bids from other auditors.
- Rotate auditing firms, except where the rotation is
statutorily required or where rotation would demonstrably
strengthen financial disclosure.
- Indemnify auditors.
- Prohibit auditors from engaging in non-audit services for the
company.
BOARD OF DIRECTORS
On issues related to the board of directors, Pioneer normally supports
management. We will, however, consider a vote against management in
instances where corporate performance has been very poor or where the
board appears to lack independence.
GENERAL BOARD ISSUES
Pioneer will vote for:
- Audit, compensation and nominating committees composed of
independent directors exclusively.
- Indemnification for directors for actions taken in good faith
in accordance with the business judgment rule. We will vote
against proposals for broader indemnification.
- Changes in board size that appear to have a legitimate
business purpose and are not primarily for anti-takeover
reasons.
- Election of an honorary director.
We will vote against:
- Minimum stock ownership by directors.
- Term limits for directors. Companies benefit from experienced
directors, and shareholder control is better achieved through
annual votes.
- Requirements for union or special interest representation on
the board.
- Requirements to provide two candidates for each board seat.
We will vote on a case-by-case basis on these issues:
- Separate chairman and CEO positions. We will consider voting
with shareholders on these issues in cases of poor corporate
performance.
ELECTIONS OF DIRECTORS
In uncontested elections of directors we will vote against:
- Individual directors with absenteeism above 25% without valid
reason. We support proposals that require disclosure of
director attendance.
- Insider directors and affiliated outsiders who sit on the
audit, compensation, stock option or nominating committees.
For the purposes of our policy, we accept the definition of
affiliated directors provided by our proxy voting service.
We will also vote against:
- Directors who have failed to act on a takeover offer where the
majority of shareholders have tendered their shares.
- Directors who appear to lack independence or are associated
with very poor corporate performance.
We will vote on a case-by-case basis on these issues:
- Re-election of directors who have implemented or renewed a
dead-hand or modified dead-hand poison pill (a "dead-hand
poison pill" is a shareholder rights plan that may be altered
only by incumbent or "dead" directors. These plans prevent a
potential acquirer from disabling a poison pill by obtaining
control of the board through a proxy vote).
- Contested election of directors.
- Prior to phase-in required by SEC, we would consider
supporting election of a majority of independent directors in
cases of poor performance.
- Mandatory retirement policies.
- Directors who have ignored a shareholder proposal that has
been approved by shareholders for two consecutive years.
TAKEOVER-RELATED MEASURES
Pioneer is generally opposed to proposals that may discourage takeover
attempts. We believe that the potential for a takeover helps ensure that
corporate performance remains high.
Pioneer will vote for:
- Cumulative voting.
- Increase ability for shareholders to call special meetings.
- Increase ability for shareholders to act by written consent.
- Restrictions on the ability to make greenmail payments.
- Submitting rights plans to shareholder vote.
- Rescinding shareholder rights plans ("poison pills").
- Opting out of the following state takeover statutes:
- Control share acquisition statutes, which deny large holders voting
rights on holdings over a specified threshold.
- Control share cash-out provisions, which require large holders to
acquire shares from other holders.
- Freeze-out provisions, which impose a waiting period on large
holders before they can attempt to gain control.
- Stakeholder laws, which permit directors to consider interests of
non-shareholder constituencies.
- Disgorgement provisions, which require acquirers to disgorge profits
on purchases made before gaining control.
- Fair price provisions.
- Authorization of shareholder rights plans.
- Labor protection provisions.
- Mandatory classified boards.
We will vote on a case-by-case basis on the following issues:
- Fair price provisions. We will vote against provisions
requiring supermajority votes to approve takeovers. We will
also consider voting against proposals that require a
supermajority vote to repeal or amend the provision. Finally,
we will consider the mechanism used to determine the fair
price; we are generally opposed to complicated formulas or
requirements to pay a premium.
- Opting out of state takeover statutes regarding fair price
provisions. We will use the criteria used for fair price
provisions in general to determine our vote on this issue.
- Proposals that allow shareholders to nominate directors.
We will vote against:
- Classified boards, except in the case of closed-end mutual
funds.
- Limiting shareholder ability to remove or appoint directors.
We will support proposals to restore shareholder authority in
this area. We will review on a case-by-case basis proposals
that authorize the board to make interim appointments.
- Classes of shares with unequal voting rights.
- Supermajority vote requirements.
- Severance packages ("golden" and "tin" parachutes). We will
support proposals to put these packages to shareholder vote.
- Reimbursement of dissident proxy solicitation expenses. While
we ordinarily support measures that encourage takeover bids,
we believe that management should have full control over
corporate funds.
- Extension of advance notice requirements for shareholder
proposals.
- Granting board authority normally retained by shareholders
(e.g., amend charter, set board size).
- Shareholder rights plans ("poison pills"). These plans
generally allow shareholders to buy additional shares at a
below-market price in the event of a change in control and may
deter some bids.
CAPITAL STRUCTURE
Managements need considerable flexibility in determining the company's
financial structure, and Pioneer normally supports managements' proposals
in this area. We will, however, reject proposals that impose high barriers
to potential takeovers.
Pioneer will vote for:
- Changes in par value.
- Reverse splits, if accompanied by a reduction in number of
shares.
- Share repurchase programs, if all shareholders may participate
on equal terms.
- Bond issuance.
- Increases in "ordinary" preferred stock.
- Proposals to have blank-check common stock placements (other
than shares issued in the normal course of business) submitted
for shareholder approval.
- Cancellation of company treasury shares.
We will vote on a case-by-case basis on the following issues:
- Reverse splits not accompanied by a reduction in number of
shares, considering the risk of delisting.
- Increase in authorized common stock. We will make a
determination considering, among other factors:
- Number of shares currently available for issuance;
- Size of requested increase (we would normally approve increases of
up to 100% of current authorization);
- Proposed use of the additional shares; and
- Potential consequences of a failure to increase the number of shares
outstanding (e.g., delisting or bankruptcy).
- Blank-check preferred. We will normally oppose issuance of a
new class of blank-check preferred, but may approve an
increase in a class already outstanding if the company has
demonstrated that it uses this flexibility appropriately.
- Proposals to submit private placements to shareholder vote.
- Other financing plans.
We will vote against preemptive rights that we believe limit a company's
financing flexibility.
COMPENSATION
Pioneer supports compensation plans that link pay to shareholder returns
and believes that management has the best understanding of the level of
compensation needed to attract and retain qualified people. At the same
time, stock-related compensation plans have a significant economic impact
and a direct effect on the balance sheet. Therefore, while we do not want
to micromanage a company's compensation programs, we will place limits on
the potential dilution these plans may impose.
Pioneer will vote for:
- 401(k) benefit plans.
- Employee stock ownership plans (ESOPs), as long as shares
allocated to ESOPs are less than 5% of outstanding shares.
Larger blocks of stock in ESOPs can serve as a takeover
defense. We will support proposals to submit ESOPs to
shareholder vote.
- Various issues related to the Omnibus Budget and
Reconciliation Act of 1993 (OBRA), including:
- Amendments to performance plans to conform with OBRA;
- Caps on annual grants or amendments of administrative features;
- Adding performance goals; and
- Cash or cash-and-stock bonus plans.
- Establish a process to link pay, including stock-option
grants, to performance, leaving specifics of implementation to
the company.
- Require that option repricings be submitted to shareholders.
- Require the expensing of stock-option awards.
- Require reporting of executive retirement benefits (deferred
compensation, split-dollar life insurance, SERPs, and pension
benefits).
- Employee stock purchase plans where the purchase price is
equal to at least 85% of the market price, where the offering
period is no greater than 27 months and where potential
dilution (as defined below) is no greater than 10%.
We will vote on a case-by-case basis on the following issues:
- Executive and director stock-related compensation plans. We
will consider the following factors when reviewing these
plans:
- The program must be of a reasonable size. We will approve plans
where the combined employee and director plans together would
generate less than 15% dilution. We will reject plans with 15% or
more potential dilution.
Dilution = (A + B + C) / (A + B + C + D), where
A = Shares reserved for plan/amendment,
B = Shares available under continuing plans,
C = Shares granted but unexercised and
D = Shares outstanding.
- The plan must not:
- Explicitly permit unlimited option repricing authority or that
have repriced in the past without shareholder approval.
- Be a self-replenishing "evergreen" plan, plans that grant
discount options and tax offset payments.
- We are generally in favor of proposals that increase participation
beyond executives.
- All other employee stock purchase plans.
- All other compensation-related proposals, including deferred
compensation plans, employment agreements, loan guarantee
programs and retirement plans.
- All other proposals regarding stock compensation plans,
including extending the life of a plan, changing vesting
restrictions, repricing options, lengthening exercise periods
or accelerating distribution of awards and pyramiding and
cashless exercise programs.
We will vote against:
- Pensions for non-employee directors. We believe these
retirement plans reduce director objectivity.
- Elimination of stock option plans.
We will vote on a case-by-case basis on these issues:
- Limits on executive and director pay.
- Stock in lieu of cash compensation for directors.
CORPORATE GOVERNANCE
Pioneer will vote for:
- Confidential Voting.
- Equal access provisions, which allow shareholders to
contribute their opinion to proxy materials.
- Proposals requiring directors to disclose their ownership of
shares in the company.
We will vote on a case-by-case basis on the following issues:
- Change in the state of incorporation. We will support
reincorporations supported by valid business reasons. We will
oppose those that appear to be solely for the purpose of
strengthening takeover defenses.
- Bundled proposals. We will evaluate the overall impact of the
proposal.
- Adopting or amending the charter, bylaws or articles of
association.
- Shareholder appraisal rights, which allow shareholders to
demand judicial review of an acquisition price.
We will vote against:
- Shareholder advisory committees. While management should
solicit shareholder input, we prefer to leave the method of
doing so to management's discretion.
- Limitations on stock ownership or voting rights.
- Reduction in share ownership disclosure guidelines.
MERGERS AND RESTRUCTURINGS
Pioneer will vote on the following and similar issues on a case-by-case
basis:
- Mergers and acquisitions.
- Corporate restructurings, including spin-offs, liquidations,
asset sales, joint ventures, conversions to holding company
and conversions to self-managed REIT structure.
- Debt restructurings.
- Conversion of securities.
- Issuance of shares to facilitate a merger.
- Private placements, warrants, convertible debentures.
- Proposals requiring management to inform shareholders of
merger opportunities.
We will normally vote against shareholder proposals requiring that the
company be put up for sale.
MUTUAL FUNDS
Many of our portfolios may invest in shares of closed-end mutual funds or
exchange-traded funds. The non-corporate structure of these investments
raises several unique proxy voting issues.
Pioneer will vote for:
- Establishment of new classes or series of shares.
- Establishment of a master-feeder structure.
Pioneer will vote on a case-by-case on:
- Changes in investment policy. We will normally support changes
that do not affect the investment objective or overall risk
level of the fund. We will examine more fundamental changes on
a case-by-case basis.
- Approval of new or amended advisory contracts.
- Changes from closed-end to open-end format.
- Authorization for, or increase in, preferred shares.
- Disposition of assets, termination, liquidation, or mergers.
- Classified boards of closed-end mutual funds, but will
typically support such proposals.
SOCIAL ISSUES
Pioneer will abstain on stockholder proposals calling for greater
disclosure of corporate activities with regard to social issues. "Social
Issues" may generally be described as shareholder proposals for a company
to:
- Conduct studies regarding certain issues of public concern and
interest;
- Study the feasibility of the company taking certain actions
with regard to such issues; or
- Take specific action, including ceasing certain behavior and
adopting company standards and principles, in relation to
issues of public concern and interest.
We believe these issues are important and should receive management
attention.
Pioneer will vote against proposals calling for substantial changes in the
company's business or activities. We will also normally vote against
proposals with regard to contributions, believing that management should
control the routine disbursement of funds.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our evaluation of
these controls and procedures as of a date within 90 days prior to the filing
date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the registrant's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
Filed herewith.
(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 High Income Trust
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date June 3, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date June 3, 2004
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date June 3, 2004
* Print the name and title of each signing officer under his or her signature.