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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 811-21409
Pioneer Municipal High Income Advantage 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, 2004
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.
PIONEER
-----------------------
MUNICIPAL
HIGH
INCOME
ADVANTAGE
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 18
Notes to Financial Statements 22
Report of Independent Auditors 29
The Pioneer Family of Mutual Funds 30
Trustees, Officers and Service Providers 31
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
LETTER TO SHAREOWNERS 3/31/04
- --------------------------------------------------------------------------------
Dear Shareowner,
- --------------------------------------------------------------------------------
Welcome to Pioneer. We thank you for your investment in Pioneer Municipal High
Income Advantage Trust and are pleased to provide you with the Trust's first
shareholder report since its inception on October 20, 2003.
Over the past several months, investors have been buoyed by encouraging factors
that bode well for a better economy. Gross domestic product, a tally of all
goods and services produced in the United States, expanded, thanks to increased
personal consumption, housing and business spending, low short-term interest
rates and lower taxes on individuals. As the economy appeared to strengthen,
investors grew less risk averse. In this environment, corporate bonds recorded
strong gains.
In managing the Pioneer Municipal High Income Advantage Trust, we seek the best
values in the high-income marketplace. In an interview on page four of this
report, David Eurkus, a member of the Trust's portfolio management team,
discusses the Trust's strategy since its inception in October.
The key drivers of the economic 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, and so
an appointment with your professional financial advisor may well be in order.
The value of an advisor is never more evident than when economic and market
conditions are changing.
To receive the latest information about Pioneer funds, as well as timely
informative articles on investing, I invite you to visit us at
www.pioneerfunds.com. All of us at Pioneer thank you for the confidence and
trust you have placed in us.
Sincerely,
/s/ Osbert M. Hood
Osbert M. Hood
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 Municipal High Income Advantage Trust
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PORTFOLIO SUMMARY 3/31/04
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Portfolio Diversification
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Health 24.2%
Airport 16.2%
Development 9.9%
Pollution Control 9.5%
Tobacco 8.4%
Insured 5.6%
Transportation 5.0%
Education 4.2%
Other 3.6%
Power 3.5%
Housing 2.3%
Water 2.2%
Escrowed in U.S. Government Securities 2.0%
General Obligation 2.0%
Facilities 1.4%
Portfolio Maturity
- --------------------------------------------------------------------------------
(Effective life as a percentage of long-term holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
0-1 years 2.7%
1-3 years 2.6%
3-6 years 22.3%
6-8 years 31.2%
8-10 years 14.1%
10+ years 27.1%
Quality Distribution
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Cash Equivalents 0.9%
AAA 11.1%
AA 5.7%
A 4.1%
BBB 25.2%
BB & Lower 53.0%
10 Largest Holdings
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(As a percentage of long-term holdings)*
1. Alaska State Housing Finance Corp., 6.0%, 6/1/49 2.80%
2. Brazos River Authority Pollution Control Revenue,
6.75%, 10/1/38 2.79
3. Valley Health System, 6.875%, 5/15/23 2.46
4. Massachusetts State Housing Finance Agency Revenue,
5.35%, 12/1/45 2.37
5. Indiana State Development Finance Authority Revenue,
5.75%, 10/1/11 2.31
6. New York State Environmental Facilities Corp., 5.0%, 6/15/33 2.22
7. Nassau County New York Industrial Development Agency,
5.25%, 6/1/27 2.18
8. Dallas-Fort Worth Texas International Airport Revenue,
7.125%, 11/1/26 2.03
9. Triborough Bridge and Tunnel Authority, 0.0%, 1/1/22 1.97
10. Alliance Airport Authority Special Facilities Revenue,
7.5%, 12/1/29 1.90
* This list excludes money market and derivative investments. Trust holdings
will vary for other periods.
2
Pioneer Municipal High Income Advantage Trust
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PERFORMANCE UPDATE 3/31/04
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Share Prices and Distributions
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Market Value
per Common Share 3/31/04 10/20/03
$15.05 $15.00
Net Asset Value
per Common Share 3/31/04 10/20/03
$14.51 $14.33
Distributions per
Common Share Income Short-Term Long-Term
(10/20/03 - 3/31/04) Dividends Capital Gains Capital Gains
$0.38 $ - $ -
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in common shares of Pioneer Municipal High Income Advantage
Trust at public offering price, compared to that of the Lehman Brothers
Municipal Bond Index and Lehman Brothers Non-Investment Grade Municipal Bond
Index.
- ---------------------------------------------
Cumulative Total Returns
(As of March 31, 2004)
Net Asset Market
Period Value Price*
Life-of-Trust
(10/20/03) 3.88% 2.93%
- ---------------------------------------------
* 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.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Value of a $10,000 Investment+
Pioneer Municipal
Advantage Lehman Brothers Non-Investment
High Income Lehman Brothers Municipal Grade Municipal
Trust* Bond Index Bond Index
"10/03" $10,000 $10,000 $10,000
"03/04" $10,293 $10,565 $10,364
+ Index comparison begins July 31, 2003. The Lehman Brothers Municipal Bond
Index is a widely recognized, unmanaged measure of approximately 15,000
municipal bonds. Bonds in the Index have a minimum credit rating of BBB,
were part of at least a $50 million issuance made within the past five
years and have a maturity of at least two years. Lehman Brothers
Non-Investment Grade Municipal Bond Index totals over $26 billion in market
value and maintains over 1300 securities. Municipal bonds in this index
have the following requirements: maturities of one year or greater, sub
investment grade (below Baa or non-rated), fixed coupon rate, dated date
greater than 12-31-90, deal size over $20 million, maturity size of at
least $3 trillion. 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 Municipal High Income Advantage Trust
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PORTFOLIO MANAGEMENT DISCUSSION 3/31/04
- --------------------------------------------------------------------------------
The first shareholder report for Pioneer Municipal High Income Advantage Trust
covers the Trust's abbreviated semiannual period from inception on October 20,
2003, through March 31, 2004. In this report, David Eurkus, a member of the
Trust's management team, reviews the Trust's investment process, strategy and
outlook.
Q: How has the Trust performed since its inception on October 20, 2003?
A: Since inception, Pioneer Municipal High Income Advantage Trust returned 3.88%
at net asset value and 2.93% at market price. As of March 31, 2004, the Trust
was selling at a premium of market price to net asset value of 3.7%. From
October 31, 2003, through March 31, 2004, the Lehman Brothers Municipal Bond
Index returned 3.64%. The Trust's performance was aided by positive security
selection. At the end of the period, the Trust held 131 issues in 35 states.
On March 31, 2004, the Trust's 30-day SEC yield was 8.41%.
Q: What is the Trust's investment approach?
A: In keeping with Pioneer's traditions, we are value investors, looking for
securities selling at attractive valuations. When selecting securities for
the Trust, we use a top-down/bottom-up approach. We first identify the sector
or regions of the municipal bond market that present the best relative value
opportunities. Once we establish the overall regional and sector weights, we
then focus on selecting securities that meet our criteria. We consider
fundamental indicators such as the rates of economic growth, inflation and
Federal Reserve monetary policy. When analyzing individual securities, we
take into account yields compared to U.S. Treasuries or comparable issuers,
liquidity, credit ratings, sectors and issuer diversification.
Under normal market conditions, we will invest at least 80% of the Trust's
assets in municipal securities with a broad range of maturities and credit
ratings. At least 40% of the Trust's assets may be invested in
investment-grade municipal securities. No more than 60% of assets may be
invested in below investment-grade municipal securities. In managing the
Trust, we will adjust the portfolio's duration and overall credit quality in
light of changing market and economic conditions.
4
Pioneer Municipal High Income Advantage Trust
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In the past, high yield municipal bonds have offered greater after-tax income
with significantly lower default rates than high-yield corporate bonds.
Average default rates on municipal bonds have been low relative to corporate
securities. Based on data compiled by Moody's Investors Services, Inc., only
18 of the 375,818 municipal issuers between 1970 and 2000, defaulted. In
particular, essential service revenue bonds, like the ones in which the Trust
has invested, have offered safe havens, with no defaults recorded for
Moody's-rated issuers during the same 30-year period.
Q: How did you manage the Trust during the period?
A: We focused on sectors that are vital to the growth of the U.S. economy,
including health care (24.6% of assets), transportation (17.9% of assets) and
various essential-service revenue bonds, which include public power and
energy bonds (23.3%). Many of the sectors in which we invested were hit hard
by the general economic slowdown, as well as problems related to their
industries. In the health care industry, many hospitals saw revenues decline
when the government reduced Medicare and Medicaid reimbursements. The
transportation sector, particularly airport and airline bonds, was negatively
affected by concerns about terrorism and the high cost of security. The
problems in these industries led to credit downgrades on corporate debt. Even
companies with healthy businesses saw their credit quality ratings decline.
As credit quality declined, yields rose and bond prices fell, creating a
large pool of lower quality securities.
We viewed the large supply of lower quality securities as an opportunity to
purchase the bonds of industries whose businesses we considered fundamentally
sound but whose debt ratings had deteriorated. We believe the securities in
which we have invested have the potential to provide a relatively high level
of income. At the end of the period, 46.1% of the Trust's assets were
invested in investment-grade securities, and 53% was in securities rated
below investment- grade. Less than 1.0% was in cash. Overall, the average
quality of the Trust was BBB.
5
Pioneer Municipal High Income Advantage Trust
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PORTFOLIO MANAGEMENT DISCUSSION 3/31/04 (continued)
- --------------------------------------------------------------------------------
Q: Most of the Trust's assets are invested in revenue bonds. Why did you favor
revenue bonds over general obligation bonds?
A: Most of the Trust's revenue bonds were essential-service bonds; that is, they
were in sectors, such as water and sewer, education and public power. We
preferred revenue bonds because their interest and principal is derived from
the particular asset that the bond was issued to finance. For example, a bond
issued to finance a utility would be paid from the fees the utility charges
its customers. General obligation bonds, however, are paid from the taxing
power of the state or municipality that issues them. Even though economic
growth has picked up, revenues going into municipal coffers are still
relatively low. Therefore, general obligation bonds have been more vulnerable
to credit quality downgrades. An example of this is the state of California,
which has had its bonds downgraded several times, even though economic growth
has picked up.
Q: What is your outlook over the next six months?
A: We are optimistic about the future course of the economy and the Trust. In
the fourth quarter of 2004, we saw strong corporate earnings and the
preliminary earnings for the first quarter of 2004 are also good. That is
positive for the Trust, because high income municipal bonds tend to perform
well in an improving economy. Should the economy continue to expand, interest
rates may rise, providing a higher level of income to the Trust. (However, it
is important to remember that rising interest rates tend to bring lower bond
prices.) An improving economy also benefits the Trust's underlying issuers,
which may see their revenues rise and credit quality upgraded. Better credit
quality ratings could increase bond prices, providing an opportunity for more
capital appreciation to the Trust.
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.
The Trust's primary investment objective is to provide its common shareholders
with a high level of current income exempt from regular federal income tax. As
a secondary investment objective, the Trust also may seek capital appreciation
to
6
Pioneer Municipal High Income Advantage Trust
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- --------------------------------------------------------------------------------
the extent consistent with its primary investment objective. Distributions from
sources other than interest income from the Trust's portfolio of municipal
securities, including capital gain distributions, are not exempt from regular
federal income tax. There can be no assurance that the Trust will achieve its
investment objectives. Under normal market conditions, the Trust seeks to
achieve its investment objectives by investing substantially all (at least 80%)
of its assets (net assets plus borrowings for investment purposes) in debt
securities and other obligations issued by or on behalf of states,territories
and possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities, the interest on which
is exempt from regular federal income tax ("municipal securities"). Up to 25%
of the Trust's total assets may be invested in municipal securities the
interest income on which is a preference item for purposes of the alternative
minimum tax. The Trust may invest in municipal securities with a broad range of
maturities and credit ratings, including both investment grade and below
investment grade municipal securities. Municipal securities of below investment
grade quality are regarded as having predominantly speculative characteristics
with respect to the issuer's capacity to pay interest and repay principal, and
are commonly referred to as "junk bonds" or "high yield 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 July 21, 2003.
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 3.88%.
The Trust's total return for the fiscal year ended March 31, 2004 based on
changes in market price was 2.93%.
7
Pioneer Municipal High Income Advantage Trust
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SCHEDULE OF INVESTMENTS 3/31/04
- --------------------------------------------------------------------------------
S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
TAX EXEMPT OBLIGATIONS - 143.3% of Net Assets
Alabama - 0.8%
$ 3,450,000 NR/NR Huntsville Carlton Cove Alabama Special Care
Facilities Financing Authority,
8.125%, 11/15/31 $ 2,501,250
------------
Alaska - 4.0%
12,500,000 AAA/Aaa Alaska State Housing Finance Corp.,
6.0%, 6/1/49 $ 13,154,625
------------
Arizona - 4.3%
5,000,000 NR/NR Casa Grande Industrial Development Authority,
Hospital Revenue, 7.625%, 12/1/29 $ 5,286,100
4,505,000 NR/NR Cochise County Arizona Industrial Development,
6.75%, 12/1/26 4,633,167
1,615,000 B-/NR Coconino County Arizona Pollution Control
Corporation Revenue, 6.375%, 10/1/36 1,574,625
1,000,000 NR/Baa3 Pima County Industrial Development Authority,
6.3%, 7/1/31 990,750
1,570,000 NR/Baa3 Pima County Industrial Development Authority,
6.75%, 7/1/31 1,603,912
------------
$ 14,088,554
------------
California - 4.3%
2,680,000 BBB/Baa2 Golden State Tobacco Securitization Corp.,
6.75%, 6/1/39 $ 2,647,706
14,000,000 B+/NR Valley Health System, 6.875%, 5/15/23 11,559,100
------------
$ 14,206,806
------------
Colorado - 0.9%
2,850,000 BBB/Baa3 Denver Health & Hospital Authority Healthcare
Revenue, 6.0%, 12/1/31 $ 2,911,275
------------
Connecticut - 1.7%
4,000,000 AAA/Aaa Connecticut State General Obligation,
5.25%, 8/15/17 $ 4,480,360
1,000,000 BBB-/NR Mohegan Tribe Indians Gaming Authority,
5.25%, 1/1/33 999,910
------------
$ 5,480,270
------------
8 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Advantage Trust
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S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
District of Columbia - 2.0%
$ 2,700,000 BBB/Baa2 District of Columbia Tobacco Settlement Financing
Corp., 6.5%, 5/15/33 $2,604,231
4,000,000 BBB/Baa2 District of Columbia Tobacco Settlement Financing
Corp., 6.75%, 5/15/40 3,930,560
----------
$6,534,791
----------
Florida - 2.9%
4,500,000 BBB-/Baa2 Hillsborough County Florida Industrial Development
Authority Pollution Control Revenue,
5.5%, 10/1/23 $4,557,555
2,000,000 NR/NR Hillsborough County Florida Industrial Development
Authority Pollution Control Revenue,
6.75%, 7/1/29 1,730,320
500,000 BB/NR Miami Beach Health Facilities Authority,
5.375%, 11/15/28 433,535
1,500,000 BB/Ba2 Miami Beach Health Facilities Authority,
6.7%, 11/15/19 1,554,630
1,000,000 NR/NR Seminole Tribe Convention-A, 8.95%, 10/1/33 1,174,010
----------
$9,450,050
----------
Georgia - 2.4%
1,065,000 NR/Ba3 Effingham County Industrial Development Authority,
6.5%, 6/1/31 $1,073,594
1,185,000 CCC/Caa2 Fulton County Development Authority Special
Facilities Revenue, 5.45%, 5/1/23 645,541
5,500,000 CCC/Caa2 Fulton County Development Authority Special
Facilities Revenue, 6.95%, 11/1/12 4,444,385
1,650,000 NR/NR Savannah Georgia Economic Development
Authority Revenue, 7.4%, 1/1/34 1,683,066
----------
$7,846,586
----------
Guam - 1.6%
5,000,000 B+/Ba3 Northern Mariana Islands, 6.75%, 10/1/33 $5,133,150
----------
Idaho - 2.4%
2,000,000 BB+/Ba3 Power County Industrial Development Corp.,
6.45%, 8/1/32 $2,005,560
5,920,000 BB+/Ba3 Power County Pollution Control Revenue,
5.625%, 10/1/14 5,841,678
----------
$7,847,238
----------
The accompanying notes are an integral part of these financial statements. 9
Pioneer Municipal High Income Advantage Trust
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SCHEDULE OF INVESTMENTS 3/31/04 (continued)
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S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
Illinois - 4.5%
$4,000,000 NR/NR Centerpoint Intermodal Center, 8.0%, 6/15/23
(144A) $ 3,949,880
2,340,000 NR/Baa2 Illinois Educational Facilities Authority Student
Housing Revenue, 6.25%, 5/1/34 2,414,272
1,625,000 BB+/NR Illinois Health Facilities Authority Revenue,
5.5%, 11/15/19 1,434,046
1,650,000 NR/B2 Illinois Health Facilities Authority Revenue,
6.7%, 3/1/14 1,302,032
2,400,000 NR/B2 Illinois Health Facilities Authority Revenue,
6.75%, 3/1/24 1,889,664
1,500,000 NR/NR Illinois Health Facilities Authority Revenue,
6.9%, 11/15/33 1,512,180
4,300,000 CC/Caa1 Illinois Health Facilities Authority Revenue,
7.0%, 1/1/15 2,403,442
-----------
$14,905,516
-----------
Indiana - 7.9%
3,200,000 B-/Caa3 East Chicago Industrial Pollution Control Revenue,
6.8%, 6/1/13 $ 2,669,440
1,000,000 CCC/Caa3 East Chicago Industrial Pollution Control Revenue,
7.125%, 6/1/07 898,600
4,500,000 B-/Caa3 Indiana State Development Finance Authority
Pollution Control Revenue, 6.85%, 12/1/12 3,755,340
1,200,000 CCC/Caa3 Indiana State Development Finance Authority
Pollution Control Revenue, 7.25%, 11/1/11 1,002,432
13,825,000 CCC/Caa3 Indiana State Development Finance Authority
Revenue, 5.75%, 10/1/11 10,863,270
5,000,000 NR/Ba3 Jasper County Industrial Economic Development
Revenue, 5.6%, 4/1/29 4,436,350
2,450,000 NR/NR Vincennes Industrial Economic Development
Revenue, 6.25%, 1/1/24 2,359,203
-----------
$25,984,635
-----------
Kentucky - 1.9%
855,000 CCC/Caa2 Kenton County Airport Revenue, 6.125%, 2/1/22 $ 670,123
1,000,000 CCC/Caa2 Kenton County Airport Revenue, 7.5%, 2/1/20 920,170
500,000 BB-/NR Kentucky Economic Development Finance Authority
Hospital System Revenue, 5.7%, 10/1/10 496,980
4,400,000 BB-/NR Kentucky Economic Development Finance Authority
Hospital System Revenue, 5.875%, 10/1/22 4,040,520
-----------
$ 6,127,793
-----------
10 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Advantage Trust
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S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
Louisiana - 2.4%
$ 750,000 BBB+/NR Opelousas Louisiana General Hospital Authority
Revenue, 5.75%, 10/1/23 $ 769,020
7,915,000 BBB/Baa2 Tobacco Settlement Financing Corp.,
5.875%, 5/15/39 7,055,352
-----------
$ 7,824,372
-----------
Massachusetts - 7.4%
2,000,000 AAA/Aaa Lynn Massachusetts Water and Sewer
Commission General Revenue, 4.75%, 12/1/27 $ 2,017,940
3,900,000 AAA/Aaa Lynn Massachusetts Water and Sewer
Commission General Revenue, 5.0%, 12/1/32 4,057,755
2,195,000 BBB-/Baa2 Massachusetts Health & Educational Facilities
Authority Revenue, 5.375%, 7/15/28 2,020,541
1,000,000 BBB-/Baa2 Massachusetts Health & Educational Facilities
Authority Revenue, 6.35%, 7/15/32 1,032,660
1,200,000 NR/Ba2 Massachusetts State Development Finance
Agency, 6.0%, 11/1/28 1,148,004
3,000,000 NR/NR Massachusetts State Development Finance
Agency, 7.1%, 7/1/32 2,974,260
10,760,000 AA-/Aaa3 Massachusetts State Housing Finance Agency,
5.35%, 12/1/45 11,102,168
-----------
$24,353,328
-----------
Michigan - 5.7%
3,000,000 BBB/Baa2 Delta County Michigan Economic Development
Corp., 6.25%, 4/15/27 $ 3,174,450
3,000,000 BBB-/NR Macomb County Michigan Hospital Finance
Authority, 5.875%, 11/15/34 2,835,000
7,390,000 A/A2 Michigan State Hospital Finance Authority
Revenue, 5.5%, 11/1/15 8,074,166
2,000,000 NR/NR Wayne Charter County Michigan Special Airport
Facilities Revenue, 6.0%, 12/1/29 1,566,500
3,285,000 NR/NR Wayne Charter County Michigan Special Airport
Facilities Revenue, 6.75%, 12/1/15 3,066,219
-----------
$18,716,335
-----------
Minnesota - 1.4%
4,800,000 NR/NR Minneapolis/St. Paul Metropolitan Airports,
7.0%, 4/1/25 $ 4,512,096
-----------
The accompanying notes are an integral part of these financial statements. 11
Pioneer Municipal High Income Advantage Trust
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SCHEDULE OF INVESTMENTS 3/31/04 (continued)
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S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
Missouri - 1.1%
$3,500,000 NR/NR St. Louis Missouri Industrial Development Authority
Revenue, 7.875%, 12/1/24 $ 3,605,350
-----------
New Hampshire - 1.2%
1,000,000 A/NR New Hampshire Health & Educational Facilities
Authority Revenue, 5.375%, 1/1/34 $ 1,021,340
3,000,000 NR/NR New Hampshire Higher Educational & Health
Facilities Authority Revenue, 6.25%, 1/1/18 2,975,100
-----------
$ 3,996,440
-----------
New Jersey - 7.2%
515,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.25%, 9/15/19 $ 435,026
10,000,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.25%, 9/15/29 8,018,200
750,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.625%, 9/15/12 687,465
2,500,000 BBB/Baa1 New Jersey Health Care Facilities Financing
Authority Revenue, 5.375%, 7/1/33 2,522,450
4,000,000 BBB/Baa2 Tobacco Settlement Financing Corp.,
6.25%, 6/1/43 3,689,400
3,250,000 BBB/Baa2 Tobacco Settlement Financing Corp.,
6.75%, 6/1/39 3,210,838
5,000,000 BBB/Baa2 Tobacco Settlement Financing Corp.,
7.0%, 6/1/41 5,076,950
-----------
$23,640,329
-----------
Nevada - 0.9%
1,600,000 NR/NR Nevada State Department of Business & Industry,
7.25%, 1/1/23 $ 1,603,120
1,000,000 NR/NR Nevada State Department of Business & Industry,
7.375%, 1/1/30 1,001,820
500,000 NR/NR Nevada State Department of Business & Industry,
7.375%, 1/1/40 488,905
-----------
$ 3,093,845
-----------
12 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
New York - 14.8%
$ 3,000,000 NR/NR Dutchess County Industrial Development Agency
Revenue, 7.5%, 3/1/29 $ 2,976,330
10,000,000 A/A3 Nassau County New York Industrial Development
Agency Revenue, 5.25%, 6/1/27 10,215,300
6,480,000 BB+/Ba2 New York City Industrial Development Agency,
5.25%, 12/1/32 4,782,758
3,000,000 NR/NR New York City Industrial Development Agency,
7.8%, 1/1/16 3,147,180
10,000,000(b) AA+/Aa2 New York City Transitional Finance Authority
Revenue, 0.0%, 11/1/29 7,698,000
10,000,000 AAA/Aaa New York State Environmental Facilities Corp,
5.0%, 6/15/33 10,441,800
20,755,000+ AAA/Aaa Triborough Bridge and Tunnel Authority,
0.0%, 1/1/22 9,258,390
-----------
$48,519,758
-----------
North Carolina - 4.4%
11,245,000 NR/NR Charlotte North Carolina Special Facilities
Revenue, 5.6%, 7/1/27 $ 6,522,100
3,140,000 NR/NR Charlotte North Carolina Special Facilities
Revenue, 7.75%, 2/1/28 2,135,200
5,400,000 AA+/Aa1 North Carolina Special Facilities Revenue,
5.125%, 7/1/42 5,602,608
-----------
$14,259,908
-----------
Ohio - 1.4%
3,900,000 BB/NR Belmont County Health System Revenue,
5.7%, 1/1/13 $ 3,605,550
1,000,000 BB/NR Belmont County Health System Revenue,
5.8%, 1/1/18 883,730
-----------
$ 4,489,280
-----------
Oklahoma - 1.2%
2,500,000 BB/NR Jackson County Oklahoma Memorial Hospital
Authority Revenue, 7.3%, 8/1/15 $ 2,529,425
1,500,000 B-/Caa2 Tulsa Oklahoma Municipal Airport Transportation
Revenue, 7.35%, 12/1/11 1,393,665
-----------
$ 3,923,090
-----------
The accompanying notes are an integral part of these financial statements. 13
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
Oregon - 5.0%
$ 5,900,000 NR/NR Klamath Falls Electric Revenue, 5.75%, 1/1/13 $ 6,005,964
8,000,000 NR/NR Klamath Falls Electric Revenue, 6.0%, 1/1/25 8,010,960
2,500,000 NR/NR Western Generation Agency Cogeneration Project
Revenue, 7.125%, 1/1/21 2,544,400
-----------
$16,561,324
-----------
Pennsylvania - 6.5%
3,000,000 B/B2 Allegheny County Hospital Development Authority
Revenue, 9.25%, 11/15/22 $ 3,318,270
500,000 B/B2 Allegheny County Hospital Development Authority
Revenue, 9.25%, 11/15/30 553,045
1,000,000 BBB-/NR Clarion County Pennsylvania Hospital Authority
Revenue, 5.625%, 7/1/21 920,430
3,730,000 BB-/NR Columbia County Hospital Authority Health Care
Revenue, 5.8%, 6/1/19 3,233,164
1,250,000 BBB/Ba2 Hazleton Pennsylvania Health Services Authority
Hospital Revenue, 6.125%, 7/1/16 1,164,738
3,210,000 NR/Baa3 Montgomery County Higher Education & Health
Authority Hospital Revenue, 6.6%, 7/1/10 3,375,443
1,430,000 BB+/NR Pennsylvania Economic Development Financing
Authority Revenue, 5.125%, 6/1/18 1,140,954
1,805,000 BB+/NR Pennsylvania Economic Development Financing
Authority Revenue, 5.3%, 6/1/10 1,639,770
2,330,000 BB+/NR Pennsylvania Economic Development Financing
Authority Revenue, 5.35%, 6/1/11 2,084,465
1,300,000 B-/B2 Philadelphia Hospitals & Higher Education
Facilities Authority Revenue, 6.2%, 5/1/11 993,759
2,005,000 B/NR Scranton-Lackawanna Health & Welfare Authority
Revenue, 6.1%, 7/1/11 1,292,062
2,245,000 B/NR Scranton-Lackawanna Health & Welfare Authority
Revenue, 6.15%, 7/1/12 1,445,758
-----------
$21,161,858
-----------
Rhode Island - 1.5%
5,285,000 BBB/Baa2 Tobacco Settlement Financing Corp.,
6.25%, 6/1/42 $ 4,837,043
-----------
14 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
South Carolina - 7.5%
$9,100,000 B-/NR Connector 2000 Association Inc., Toll Road
Revenue, 0.0%, 1/1/18 $ 1,742,559
2,785,000 AA-/A1 Greenville County School District, 5.5%, 12/1/28 2,942,380
1,600,000 BBB/NR Loris Community Hospital District, 5.625%, 1/1/29 1,561,232
1,000,000 BBB-/NR South Carolina Educational Facilities Authority
Revenue, 5.75%, 3/1/29 1,024,240
8,000,000 BBB/Baa2 South Carolina Jobs Economic Development
Authority Revenue, 6.375%, 8/1/34 8,498,320
5,000,000 BB-/NR South Carolina Jobs Economic Development
Authority Revenue, 6.625%, 4/1/36 4,642,200
4,400,000 BBB/Baa2 Tobacco Settlement Revenue Management,
6.375%, 5/15/30 4,157,164
-----------
$24,568,095
-----------
Tennessee - 2.2%
7,000,000 NR/Baa2 Knox County Health Educational & Housing
Facilities Board Hospital Revenue, 6.5%, 4/15/31 $ 7,264,460
-----------
Texas - 22.6%
9,850,000 CCC/Caa2 Alliance Airport Authority Special Facilities
Revenue, 7.0%, 12/1/11 $ 8,274,887
12,300,000 CCC/Caa2 Alliance Airport Authority Special Facilities
Revenue, 7.5%, 12/1/29 8,917,869
12,075,000 BBB/Baa2 Brazos River Authority Pollution Control Revenue,
6.75%, 10/1/38 13,103,066
4,000,000 CCC/Caa2 Dallas-Fort Worth International Airport Revenue,
6.0%, 11/1/14 2,780,360
13,550,000 CCC/Caa2 Dallas-Fort Worth International Airport Revenue,
7.125%, 11/1/26 9,512,100
6,965,000 CCC/Caa2 Dallas-Fort Worth International Airport Revenue,
7.625%, 11/1/21 5,247,292
10,000,000 AAA/Aaa Harris County Houston Texas Sports Authority,
0.0%, 11/15/30 2,477,800
10,000,000 B-/Caa2 Houston Texas Airport System Revenue,
6.75%, 7/1/29 8,416,200
7,750,000 BBB-/Ba2 Matagorda County Navigation District Number 1
Revenue, 5.95%, 5/1/30 7,767,283
5,000,000 NR/Baa2 Tomball Hospital Authority, 6.0%, 7/1/25 5,144,300
2,000,000 AAA/Aaa University of Texas Revenues, 5.25%, 8/15/19 2,262,720
-----------
$73,903,877
-----------
The accompanying notes are an integral part of these financial statements. 15
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
Virginia - 1.9%
$ 1,555,000 BB/NR Pocahontas Parkway Association of Virginia Toll
Road Revenue, 5.25%, 8/15/09 $ 1,527,819
1,500,000 BB/NR Pocahontas Parkway Association of Virginia Toll
Road Revenue, 0.00%, 8/15/14 722,385
8,800,000 BB/NR Pocahontas Parkway Association of Virginia Toll
Road Revenue, 0.00%, 8/15/15 3,906,584
-------------
$ 6,156,788
-------------
Washington - 4.8%
5,000,000 BBB/Baa2 Port Longview Washington Special Facilities
Revenue, 7.45%, 2/1/13 $ 5,114,000
5,500,000 NR/NR Port Seattle Washington Special Facilities
Revenue, 7.25, 4/1/30 5,051,475
1,490,000 BBB/Baa2 Tobacco Settlement Authority, 6.5%, 6/1/26 1,470,049
8,395,000 AAA/Aaa Washington State General Obligation,
0.0%, 12/1/18 4,216,976
-------------
$ 15,852,500
-------------
Wisconsin - 0.6%
1,000,000(a) NR/NR Wisconsin State Health & Educational Facilities
Authority Revenue, 6.125%, 4/1/24 $ 985,170
1,000,000(a) NR/NR Wisconsin State Health & Educational Facilities
Authority Revenue, 6.25%, 4/1/34 978,930
-------------
$ 1,964,100
-------------
TOTAL TAX-EXEMPT OBLIGATIONS
(Cost $466,035,725) $ 469,376,715
-------------
Shares TAX-EXEMPT MONEY MARKET MUTUAL FUND - 1.3%
of Net Assets
4,145,269 BlackRock Provident Institutional Municipal Fund $ 4,145,269
-------------
TOTAL TAX-EXEMPT MONEY MARKET MUTUAL FUND
(Cost $4,145,269) $ 4,145,269
-------------
TOTAL INVESTMENTS IN SECURITIES - 144.6%
(Cost $470,180,994) (c)(d) $ 473,521,984
-------------
Other Assets in Excess of Liabilities - 1.2% $ 3,970,492
-------------
Preferred Shares at Redemption Value - (45.8)% $(150,000,000)
-------------
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS - 100.0% $ 327,492,476
=============
16 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 $3,949,880, or 1.2% of total net
assets.
NR Security not rated by S&P or Moody's.
+ Escrowed to maturity in U.S. Government Securities.
(a) This security, or portion thereof, has been purchased on a "when issued"
basis.
(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 the
effective until final maturity.
(c) The concentration of investments by type of obligation/market sector is as
follows:
Insured 5.6%
Escrowed in U.S. Government Securities 2.0
General Obligation 2.0
Revenue Bonds:
Health Revenue 24.2
Airport Revenue 16.2
Development Revenue 9.9
Pollution Control Revenue 9.5
Tobacco Revenue 8.4
Transportation Revenue 5.0
Education Revenue 4.2
Other 3.6
Power Revenue 3.5
Housing Revenue 2.3
Water Revenue 2.2
Facilities Revenue 1.4
-----
100.0%
=====
(d) At March 31, 2004, the net unrealized gain on
investments based on cost for federal income
tax purposes of $469,724,514 was as follows:
Aggregate gross unrealized gain for all
investments in which there is an excess of
value over tax cost $ 13,848,996
Aggregate gross unrealized loss for all
investments in which there is an excess of
tax cost over value (10,051,526)
------------
Net unrealized gain $ 3,797,470
============
For financial reporting purposes net unrealized gain was $3,340,990 and cost of
investments aggregated $470,180,994.
Purchases and sales of securities (excluding temporary cash investments) for
the period ended March 31, 2004, aggregated $728,955,321 and $265,207,574,
respectively.
The accompanying notes are an integral part of these financial statements. 17
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 3/31/04
- --------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value (cost $470,180,994) $473,521,984
Cash 3,170,944
Receivables -
Investment securities sold 697,932
Interest 10,043,724
Reinvestment of distributions 295,017
Organization costs reimbursement 40,000
Prepaid expenses 29,362
------------
Total assets $487,798,963
------------
LIABILITIES:
Payables -
Investment securities purchased $ 9,486,714
Offering and organization costs payable - common 412,066
Offering costs payable - preferred 62,459
Due to affiliates 250,311
Administrative fee payable 28,610
Accrued expenses 66,327
------------
Total liabilities $ 10,306,487
------------
PREFERRED SHARES AT REDEMPTION VALUE:
$25,000 liquidation value per share applicable to
6,000 shares $150,000,000
------------
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Paid-in capital $321,013,737
Accumulated undistributed net investment income 1,231,785
Accumulated net realized gain on investments 1,905,964
Net unrealized gain on investments 3,340,990
------------
Net assets applicable to common shareowners $327,492,476
============
NET ASSET VALUE PER SHARE:
No par value, (unlimited number of shares authorized)
Based on $327,492,476/22,576,128 common shares $ 14.51
============
18 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the period 10/20/03 (commencement of operations) to 3/31/04
INVESTMENT INCOME:
Interest $11,514,084
-----------
EXPENSES:
Management fees $1,117,818
Administration fees 130,412
Transfer agent fees 24,426
Auction agent fees 96,322
Custodian fees 11,355
Registration fees 20,355
Organization costs 40,000
Professional fees 35,432
Printing fees 9,000
Trustees' fees 4,545
Miscellaneous 6,836
----------
Total expenses $ 1,496,501
-----------
Reimbursement of organization costs $ (40,000)
-----------
Less expense reductions by PIM $ (2,085)
-----------
Net expenses $ 1,454,416
-----------
Net investment income $10,059,668
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments $ 1,905,680
Net unrealized gain on investments 3,340,990
-----------
Net gain on investments $ 5,246,670
-----------
DISTRIBUTIONS TO PREFERRED SHAREOWNERS FROM NET
INVESTMENT INCOME $ (381,060)
-----------
Net increase in net assets applicable to common
shareowners resulting from operations $14,925,278
===========
The accompanying notes are an integral part of these financial statements. 19
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the period 10/20/03 (commencement of operations) to 3/31/04
10/20/03
to
3/31/04
FROM OPERATIONS:
Net investment income $ 10,059,668
Net realized gain on investments 1,905,680
Net unrealized gain on investments 3,340,990
Distributions to preferred shareowners from net investment income (381,060)
------------
Net increase in net assets applicable to common shareowners $ 14,925,278
------------
DISTRIBUTIONS TO COMMON SHAREOWNERS:
Net investment income ($0.38 per share) $ (8,446,539)
------------
Total dividends to common shareowners $ (8,446,539)
------------
FROM TRUST SHARE TRANSACTIONS:
Net proceeds from the issuance of common shares $293,662,500
Net proceeds from underwriters' over-allotment option exercised 28,427,934
Reinvestment of distributions 1,237,835
Common share offering expenses charged to paid-in capital (674,535)
Preferred share offering expenses charged to paid-in capital (1,740,000)
------------
Net increase in net assets applicable to common shareowners
resulting from Trust share transactions $320,913,734
------------
Net increase in net assets applicable to common shareowners $327,392,473
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Beginning of period 100,003
------------
End of period (including accumulated undistributed net investment
income of $1,231,785) $327,492,476
============
20 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 3/31/04
- --------------------------------------------------------------------------------
October 20, 2003 to
March 31, 2004 (a)(b)
Per Common Share Operating Performance
Net asset value, beginning of period $ 14.33+
-------
Increase (decrease) from investment operations:
Net investment income $ 0.46
Net realized and unrealized gain on investments 0.23
Distributions to preferred shareowners from net investment income (0.02)
-------
Net increase from investment operations $ 0.67
Distributions to common shareowners:
Net investment income (0.38)
Capital charge with respect to issuance of:
Common shares (0.03)
Preferred shares (0.08)
-------
Net increase in net asset value $ 0.18
-------
Net asset value, end of period* $ 14.51
=======
Market value, end of period* $ 15.05
=======
Total return++ 2.93%
Ratios to average net assets of common shareowners
Net Expenses+++ 1.01%**
Net investment income before preferred share dividends+++ 6.98%**
Preferred share dividends 0.26%**
Net investment income available to common shareowners 6.72%**
Portfolio turnover 62%
Net assets of common shareowners, end of period (in thousands) $327,492
Preferred shares outstanding (in thousands) $150,000
Asset coverage per preferred share, end of period $79,582
Average market value per preferred share $25,000
Liquidation value per preferred share $25,000
Ratios to average net assets of common shareowners before
reimbursement of organization expenses and expense reductions
Net Expenses+++ 1.04%**
Net investment income before preferred share dividends+++ 6.95%**
Preferred share dividends 0.26%**
Net investment income available to common shareowners 6.69%**
(a) The per common share data presented above is based upon the average common
shares outstanding for the period presented.
(b) Trust shares were first publicly offered on October 15, 2003.
* 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 period reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions. Total
investment return less than a full period is 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 period
indicated. This information has been determined based upon financial
information provided in the financial statements and market value data for the
Trust's common shares.
The accompanying notes are an integral part of these financial statements. 21
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/04
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Municipal High Income Advantage Trust (the "Trust") was organized as a
Delaware statutory trust on August 6, 2003. Prior to commencing operations on
October 20, 2003 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 agreed to pay all the Trust's
organizational expenses and to pay the amount by which the aggregate offering
costs (other than the sales load) exceeds $0.03 per share of the common share
offering. The investment objective of the Trust is to seek a high level of
current income exempt from regular federal income tax and the Trust may seek
capital appreciation to the extent that it is consistent with its primary
investment objective.
The Trust may invest in municipal securities with a broad range of maturities
and credit ratings, including both investment grade and below investment grade
municipal securities.
The Trust invests in below investment grade (high yield) municipal securities.
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, 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:
22
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A. Security Valuation
Security transactions are recorded as of trade date. 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. Discount and premium on fixed income securities are accreted or
amortized daily, respectively, on an effective yield to maturity basis and
are included in interest income. Interest income is recorded on an accrual
basis. Temporary cash investments are valued at amortized cost.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Federal Income Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with 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 investments
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
At March 31, 2004, the Trust reclassified $284 to decrease accumulated
undistributed net investment income and to increase accumulated net
realized gain on investments. The reclassification has no impact on the
net asset value of the Trust and presents the Trust's capital accounts on
a tax basis.
23
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
The tax character of distributions paid to common and preferred shareowners
during the period ended March 31, 2004 was as follows:
- ------------------------------------------------------
2004
Distributions paid from:
Tax exempt income $8,827,599
Long-term capital gain -
----------
Total $8,827,599
----------
- ------------------------------------------------------
The following shows components of distributable earnings on a federal income
tax basis at March 31, 2004.
- ------------------------------------------------------
2004
Undistributed tax-exempt income $ 765,189
Undistributed taxable ordinary income 1,916,081
Unrealized appreciation 3,797,469
----------
Total $6,478,739
----------
- ------------------------------------------------------
The difference between book basis and tax basis unrealized appreciation is
primarily attributable to the difference between book and tax amortization
methods for premiums and discounts on fixed income securities.
C. 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 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
24
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 or market premium ("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 daily at the
annual rate of 0.60% of the Trust's average daily managed assets. "Managed
assets" is the average daily value of the Trust's total assets minus the sum of
the Trust's liabilities, which liabilities exclude debt related to leverage,
short-term debt and the aggregate liquidation preference of any outstanding
preferred shares.
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. ("Princeton"), an affiliate of Merrill Lynch, Pierce,
Fenner & Smith Incorporated, to provide certain administrative services to the
Trust on its behalf. The Trust pays Princeton a monthly fee at an annual rate
of 0.07% of the average daily value of the Trust's managed assets, subject to a
minimum monthly fee of $10,000.
25
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
Also, PIM has agreed for the first three years of the Trust's investment
operations to limit the Trust's total annual expenses (excluding offering costs
for common and preferred shares, interest expense, the cost of defending or
prosecuting any claim or litigation to which the Trust is a party (together
with any amount in judgment or settlement), indemnification expense or taxes
incurred due to the failure of the Trust to qualify as a regulated investment
company under the Code or any other non-recurring or non-operating expenses) to
0.80% of the Trusts average daily managed assets. The dividend on any preferred
shares is not an expense. As of March 31, 2004, the expense reduction under
such arrangements was $2,085.
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 Preferred Shares (APS). 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. Trust Shares
There are an unlimited number of common shares of beneficial interest
authorized. Of the 22,576,128 common shares of beneficial interest outstanding
at March 31, 2004, PIM owned 6,981 shares.
Transactions in common shares of beneficial interest for the period October 20,
2003 (commencement of investment operations) to March 31, 2004 were as follows:
- -----------------------------------------------------------------------
Shares issued in connection with initial public offering 20,500,000
Shares issued from underwriters' over-allotment
option exercised 1,984,498
Reinvestment of distributions 84,649
----------
Net increase in shares outstanding 22,569,147
Shares outstanding at beginning of period 6,981
----------
Shares outstanding at end of period 22,576,128
==========
- -----------------------------------------------------------------------
26
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Offering costs of $674,535 incurred in connection with the Trust's offering of
common shares have been charged 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. On
December 19, 2003, the Trust reclassified and issued 6,000 shares of common
shares into two series of APS ("preferred shares") as follows: Series A-3,000
and Series B-3,000. Offering costs of $240,000 and underwriting discounts of
$1,500,000 have been charged to paid-in capital.
Dividends on Series A and Series B APS are cumulative at a rate which is reset
every seven days based on the results of an auction. Dividend rates ranged from
0.45% to 1.10% during the period ended March 31, 2004.
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 APS 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 APS 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 APS 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 APS 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.
27
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/04 (continued)
- --------------------------------------------------------------------------------
5. Subsequent Events
Subsequent to March 31, 2004 the Board of Trustees of the Trust declared a
dividend from undistributed net investment income of $0.09375 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 $131,490 in aggregate for the two outstanding preferred share
series.
ADDITIONAL INFORMATION
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.
28
Pioneer Municipal High Income Advantage Trust
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareowners
of Pioneer Municipal High Income Advantage Trust:
We have audited the statement of assets and liabilities, including the schedule
of investments, of Pioneer Municipal High Income Advantage Trust (the "Trust")
as of March 31, 2004, and the related statements of operations and changes in
net assets and the financial highlights for the period from October 20, 2003
(commencement of operations) to March 31, 2004. 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 audit.
We conducted our audit 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 audit provides 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 Municipal High Income Advantage Trust at March 31, 2004, the results of
its operations, the changes in its net assets and the financial highlights for
the period from October 20, 2003 (commencement of operations) to March 31,
2004, in conformity with accounting principles generally accepted in the Unites
States.
/s/ Ernst & Young LLP
Boston, Massachusetts
May 12, 2004
29
- --------------------------------------------------------------------------------
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.
30
- --------------------------------------------------------------------------------
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.
Shareholder 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.
31
- --------------------------------------------------------------------------------
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 September, 2003.
Trustee and President Term expires in 2004
*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 August, 2003.
Executive Vice President Term expires in 2005
**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 September, 2003.
3509 Woodbine Street, Term expires in 2006
Chevy Chase, MD 20815
- --------------------------------------------------------------------------------------------------------------
Richard H. Egdahl, M.D. (77) Trustee Since September, 2003.
Boston University Healthcare Term expires in 2004
Entrepreneurship Program,
53 Bay State Road,
Boston, MA 02215
- --------------------------------------------------------------------------------------------------------------
32
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
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 Ltd.
Management S.p.A. ("PGAM"); Non-Executive Chairman
and a Director of Pioneer Investment Management USA
Inc. ("PIM-USA"); Chairman and a Director of Pioneer;
Director of Pioneer Alternative Investment Management
Limited (Dublin); President and a Director of Pioneer
Alternative Investment Management (Bermuda) Limited
and affiliated funds; President and Director of Pioneer
Funds Distributor, Inc. ("PFD"); President of all of the
Pioneer Funds; and Of Counsel (since 2000, partner
prior to 2000), 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
- --------------------------------------------------------------------------------------------------------------
33
- --------------------------------------------------------------------------------
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 September, 2003.
1001 Sherbrooke Street West, Term expires in 2005
Montreal, Quebec, Canada
H3A 1G5
- ------------------------------------------------------------------------------------------------------
Marguerite A. Piret (56) Trustee Since September, 2003.
One Boston Place, 28th Floor, Term expires in 2006
Boston, MA 02108
- ------------------------------------------------------------------------------------------------------
Stephen K. West (75) Trustee Since September, 2003.
125 Broad Street, Term expires in 2004
New York, NY 10004
- ------------------------------------------------------------------------------------------------------
John Winthrop (67) Trustee Since September, 2003.
One North Adgers Wharf, Term expires in 2005
Charleston, SC 29401
- --------------------------------------------------------------------------------
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 September, 2003.
Serves at the discretion of board.
- ------------------------------------------------------------------------------------------------------
Luis I. Presutti (39) Assistant Treasurer Since September, 2003.
Serves at the discretion of board.
- ------------------------------------------------------------------------------------------------------
34
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------
35
- --------------------------------------------------------------------------------
FUND OFFICERS
- --------------------------------------------------------------------------------
Name and Age Positions Held With the Trust Term of Office and Length of Service
Gary Sullivan (46) Assistant Treasurer Since September, 2003.
Serves at the discretion of board.
- ------------------------------------------------------------------------------------------------------
Katherine Kim Sullivan (30) Assistant Treasurer Since September, 2003.
Serves at the discretion of board.
- ------------------------------------------------------------------------------------------------------
36
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------
37
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
Boston, Massachusetts 02109
www.pioneerfunds.com
15417-00-0504
(C) 2004 Pioneer Funds Distributor, Inc.
Underwriter of Pioneer mutual funds, Member SIPC
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit Fees
Fees for audit services provided to the Trust, including fees associated
with the initial and annual filings of its Form N-1A and issuance of
comfort letters, totaled approximately $59,000 in 2004.
(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 $12,500
in 2004, which were related to the 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 for 2004.
(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 other services provided to the Trust during the fiscal year
ended March 31, 2004.
(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 $20,100 in 2004 and $10,000 in 2003. These fees
include services provided prior to May 6, 2003, the effective date of the
pre-approval process.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
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.
Not applicable, Fund does not invest in voting securities
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 Municipal High Income Advantage 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.