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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 811-22014
Pioneer Diversified High Income Trust
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Terrence J. Cullen, 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: April 30
Date of reporting period: May 1, 2010 through April 30, 2011
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 Diversified
High Income Trust
--------------------------------------------------------------------------------
Annual Report | April 30, 2011
--------------------------------------------------------------------------------
Ticker Symbol: HNW
[LOGO] PIONEER
Investments(R)
visit us: pioneerinvestments.com
Table of Contents
Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 9
Prices and Distributions 10
Performance Update 11
Schedule of Investments 12
Financial Statements 41
Financial Highlights 45
Notes to Financial Statements 47
Report of Independent Registered Public Accounting Firm 58
Approval of Investment Advisory Agreement 60
Trustees, Officers and Service Providers 64
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 1
President's Letter
Dear Shareowner,
The U.S. economy is moving forward on a slow path to recovery. We believe the
theme for the economy in 2011 may be modest but positive growth. The private
sector is showing signs of slow but steady improvement, led by higher capital
investment, solid exports, improved consumption, and gradually rising demand
for consumer auto loans and commercial loans. At the same time, the risks to a
steady recovery remain substantial, including the continued delays in the
housing sector's recovery, rising oil prices, and the fiscal drag of U.S.
federal and state budget cuts. We are concerned about the long-term risk of
inflation in an environment of accommodative Fed policy, continued low nominal
and "real" interest rates and rising commodity prices.
The recovery process may occur more slowly than many would like, and will
almost certainly be accompanied by short-term market swings. But our investment
professionals are finding good opportunities to invest. Through the first
quarter of 2011, although bonds remained popular with investors, we believed
there was value in the equity market. In both equity and bond markets, we are
finding good opportunities to invest using the same disciplined approach we
have used at Pioneer since 1928, which is to focus on identifying undervalued
individual securities with the greatest potential for success, carefully
weighing risk against reward. Our teams of investment professionals continually
monitor and analyze the relative valuations of different sectors and securities
globally to help build portfolios that we believe can help you achieve your
investment goals.
At Pioneer, we have long advocated the benefits of staying diversified and
investing for the long term. The strategy has generally performed well for many
investors. For instance, bond markets certainly rewarded investors for most of
2010, even though equity valuations seemed quite reasonable and were
inexpensive relative to bonds and compared with historic levels -- conditions
which represented potentially good value for long-term investors.
Our advice, as always, is to work closely with a trusted financial advisor to
discuss your goals and work together to develop an investment strategy that
meets your individual needs. There is no single best strategy that works for
every investor.
2 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
We invite you to learn more about Pioneer and our time-tested approach to
investing by consulting with your financial advisor or visiting us online at
www.pioneerinvestments.com. We greatly appreciate your trust in us and we thank
you for investing with Pioneer.
Sincerely,
/s/ Daniel K. Kingsbury
Daniel K. Kingsbury
President and CEO
Pioneer Investment Management USA Inc.
Any information in this shareowner 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.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 3
Portfolio Management Discussion | 4/30/11
Despite concerns early in the period that the global economic recovery might be
fading, high-yield investments produced solid returns over the 12 months ended
April 30, 2011. Lower-rated, higher-yielding securities were aided both by
increasing evidence of improving business conditions and by added liquidity
injections into the financial system from the U.S. Federal Reserve System (the
Fed). In the following interview, Andrew Feltus discusses the factors that
influenced the performance of Pioneer Diversified High Income Trust during the
12-month-period ended April 30, 2011. Mr. Feltus, senior vice president and
portfolio manager at Pioneer, is a member of Pioneer's fixed-income team, and
is responsible for the daily management of the Trust.
Q What was the high-yield investment environment like during the 12 months
ended April 30, 2011?
A It was a generally positive period to be invested in high-yield corporate
bonds, emerging market securities and other credit-sensitive investments,
such as bank loans. The period did not, however, start out so positively.
In the spring of 2010 investors were worried that the global economic
rebound was losing energy and that the U.S. economy could even fall back
into recession. Starting in August 2010, those fears eventually subsided
and investor confidence returned, a positive development which continued
through the end of the 12-month period. The rally in higher-yielding,
lower-rated securities was propelled by two forces. First, the Fed's second
round of quantitative easing, which involved Fed purchases of U.S. Treasury
securities in the open market to inject more liquidity into the financial
system, provided stimulus to the high-yield market. Second, investors saw
growing signs that the economy was turning the corner and moving away from
the risk of a "double-dip" recession. Corporate profits climbed, bank
lending activity increased, consumer spending improved, and even the job
market improved, although at a moderate pace.
Meanwhile, investors saw relatively low default rates in the high-yield
bond market as further evidence of the credit-worthiness of lower-rated
debt. As a consequence, the yield differences -- or yield spreads -- of
high-yield bonds compared with Treasuries continued to contract and
high-yield bonds outperformed other fixed-income securities. Consistent
with the overall trends favoring higher-risk securities, lower-rated
credits outperformed higher-rated securities within the high-yield
universe. Floating-rate bank loans, however, tended to lag high-yield bonds
in performance. As interest rates declined over the period, the
floating-rate feature of existing bank loans kept their incomes from
rising. At the same time, many companies that had borrowed money via bank
loans repaid their existing loans and refinanced their debt at lower rates.
4 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
Q How did the Trust perform in that environment during the 12 months ended
April 30, 2011?
A Pioneer Diversified High Income Trust produced a total return of 14.52% at
net asset value and 17.95% at market price during the 12 months ended April
30, 2011, with shares of the Trust selling at a 4.5% premium to net asset
value at the end of the period. During the same 12-month period, the
Trust's custom benchmark returned 10.45%. The Trust's custom benchmark is
based on equal weightings of the Bank of America Merrill Lynch Global High
Yield and Emerging Markets Plus Index, which returned 13.42%, and the
Credit Suisse (CS) Leveraged Loan Index, which returned 7.47%. Unlike the
Trust, the custom benchmark is not leveraged. Over the same 12-month period
ended April 30, 2011, the average return (at market price) of the 39 closed
end funds in Lipper's Closed-End Fund High Yield (Leveraged) category, was
16.15%. On April 30, 2011, the Trust's 30-day SEC yield was 9.27%.
Q What were your principal strategies during the 12 months ended April 30,
2011, and how did they affect the Trust's performance?
A The Trust's largest investment focus remained on domestic, high-yield
corporate bonds, which performed well during the 12-month period, both
because of the rally in high-yield debt and because the Trust had very good
security selection among high-yield investments, taking advantage of
Pioneer's emphasis on fundamental analysis of high-yield debt instruments.
At the end of the Trust's fiscal year on April 30, 2011, 38.8% of the
Trust's total investment portfolio was invested in domestic high-yield
corporate bonds.
Consistent with the diversified investment strategy we employ with the
Trust, the portfolio also had healthy allocations to floating-rate bank
loans, which represented 22.9% of the Trust's total investment portfolio as
of April 30, 2011, emerging market and international high-yield securities,
which accounted for 18.3% of the Trust's total investment portfolio, and
catastrophe-linked bonds (also known as "event-linked" bonds), which
accounted for 16.0% of the Trust's total investment portfolio. The emerging
market and international high-yield component of the Trust's portfolio
performed well over the 12 months ended April 30, 2011. Investments in
floating-rate loans and catastrophe-linked bonds helped the Trust's
performance early in the period, but were drags on performance over the
final seven months of the Trust's fiscal year. The Trust's floating-rate
loans were affected by declining interest rates late in the period, and the
risk that companies would refinance their debt at lower interest rates.
Catastrophe-linked bonds are securities sold by property-and-casualty
reinsurance companies to spread out the risks associated with property
claims from large national disasters. The March 2011 earthquake and
resulting tsunami in Japan caused the entire catastrophe-linked group to
decline in value. In addition,
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 5
the Trust also had a very small position in a catastrophe-linked bond
issued by Muteki, which had direct exposure to the damage in Japan. The
Muteki bond plummeted in value after the natural disaster hit.
The Trust's overall performance was good over the 12-month period, in terms
of both current yield and total return. In managing Pioneer Diversified
High Income Trust, we employ a buy-and-hold strategy, keeping the Trust's
portfolio turnover relatively low -- especially the corporate bond holdings
-- and focusing on maintaining a high current yield for distribution to
investors. Our purchases and sales of securities for the Trust tend to
occur when we see very attractive opportunities, when our opinion of a
particular security has changed, or when a security is called away by the
issuing corporation. We tend to buy and sell floating-rate loans and
catastrophe-linked bonds more frequently than corporate bonds.
Q What were some of the individual investments that affected the Trust's
performance, either positively or negatively, during the 12 months ended
April 30, 2011?
A The Trust had a number of holdings that performed very well during the
12-month period. Positive performers included the convertible securities of
Hologic, a producer of medical devices; debt issued by Graham Packaging,
which restructured its balance sheet by issuing new equity shares; and
issues of Terremark Worldwide, which was acquired by another corporation.
Other contributors to the Trust's performance included bonds of coffee
chain Dunkin Donuts, chemical company Hexion/Momentive Specialty Materials,
and automotive transmission corporation Altran Technologies.
Disappointments during the period, in addition to the catastrophe-linked
bond of Muteki, included bonds of: Blaze Recycling, a metals recycling
specialist that defaulted on company debt; Alliance One International, a
tobacco processor; and Horizon Lines, a shipping company. The only
investment in the Trust that defaulted was the debt of Blaze Recycling,
which eventually was converted into equity.
Q Does the Trust use derivatives in its investment strategy?
A We do not use derivatives except for some small exposure to currency forward
contracts intended to reduce the risk to the Trust's portfolio from
fluctuations in currency values that could affect the value of investments
denominated in foreign currencies. The exposure to forward contracts did
not have a material effect on Trust performance.
Q Could you describe how leverage is used in managing the Trust?
A Leverage is used to increase the yield of the Trust. Leverage was obtained by
borrowing from a bank. The borrowings were used to increase the amount of
assets available to be invested in additional portfolio securities. As the
6 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
cost of borrowing is generally obtained at a lower interest rate than the
returns produced by investing in additional portfolio securities, a higher
level of income is generated for the Trust's common shareholders. This
results in an increased yield.
Leverage may also have an impact on the common shareowners' total return
(which is the combination of yield and the increase/decrease in the Trust's
share price). As discussed above, leverage allows the Trust to invest in
additional portfolio securities. By owning these additional securities at a
time when the value of the underlying investments are rising, the total
return of the Trust may be enhanced in the form of additional increases in
the Trust's share price from holding the additional securities. However,
when the values of the underlying portfolio securities are falling, the
opposite may occur and total return may be reduced from the same effect.
Q How did the level of leverage employed by the Trust change over the 12 months
ended April 30, 2011?
A At the end of the Trust's fiscal year on April 30, 2011, 28.5% of the Trust's
total managed assets were financed by leverage, compared with 28.8% of the
Trust's total managed assets being financed by leverage at the start of the
Trust's fiscal year (May 1, 2010).
Q What is your investment outlook?
A We think that high-yield bonds should be able to maintain their
outperformance of other fixed-income sectors as the current economic
expansion persists and corporate profits continue to grow. However,
investors should not expect a repeat of the strong absolute returns
high-yield bonds have generated over the past 18 months. We believe that
investors also should be mindful that Treasury interest rates eventually
could start to rise and that the trend will erode the performance of
fixed-income securities in general, although high-yield bonds still have
the potential to outperform.
Many of the Trust's corporate bond investments have been held in the
Trust's portfolio since we acquired them at favorable prices in 2008 and
2009. Going forward, as the risk of higher interest rates increases, we may
boost the Trust's exposures to both bank loans and catastrophe-linked
bonds, as both sectors offer the advantage of floating interest rates that
can move higher as market interest rates go up.
Please refer to the Schedule of Investments on pages 12-40 for a full listing
of Trust securities.
Investments in high-yield or lower-rated securities are subject to
greater-than-average risk. The Trust may invest in securities of issuers that
are in default or that are in bankruptcy.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 7
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
When interest rates rise, the prices of debt securities in the Trust will
generally fall. Conversely, when interest rates fall the prices of debt
securities in the Trust generally will rise. Investments in the Trust are
subject to possible loss due to the financial failure of the issuers of the
underlying securities and the issuers' inability to meet their debt
obligations.
The Trust may invest up to 50% of its total assets in illiquid securities.
Illiquid securities may be difficult to dispose of at a fair price at the times
when the Trust believes it is desirable to do so and their market price is
generally more volatile than that of more liquid securities. Illiquid
securities also are more difficult to value, and investment of the Trust's
assets in illiquid securities may restrict the Trust's ability to take
advantage of market opportunities.
The Trust is authorized to borrow from banks and issue debt securities, which
are forms of leverage. Leverage creates significant risks, including the risk
that the Trust's incremental income or capital appreciation will not be
sufficient to cover the cost of leverage, which may adversely affect the return
for shareholders.
Risks of investing in the Trust are discussed in greater detail in the Trust's
original offering prospectus and in shareowner reports issued from time to
time.
These risks may increase share price volatility.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
Any information in this shareowner report regarding market or economic trends
or the factors influencing the Trust's historical or future performance are
statements of opinion as of the date of this report. These statements should
not be relied upon for any other purposes.
8 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
Portfolio Summary | 4/30/11
Portfolio Diversification
--------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Corporate Bonds & Notes 69.2%
Senior Floating Rate Loan Interests 22.9%
Temporary Cash Investments 2.3%
Convertible Bonds 2.2%
Asset Backed Securities 0.9%
Collateralized Mortgage Obligations 0.8%
Sovereign Debt Obligation 0.5%
Common Stock 0.4%
Municipal Bonds 0.3%
Preferred Stock 0.3%
Convertible Preferred Stock 0.2%
Rights/Warrants* 0.0%
*Amount is less than 0.1%
Portfolio Quality
--------------------------------------------------------------------------------
(As a percentage of total investment portfolio; based on Standard & Poor's
ratings (S&P))
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
AAA 0.6%
AA 0.1%
A 0.5%
BBB 2.9%
BB 24.8%
B 39.4%
CCC 14.6%
CC 0.7%
D 0.1%
NR 16.3%
Bond ratings are ordered highest to lowest in portfolio. Based on S&P's
measures, AAA (highest possible rating) through BBB are considered investment
grade; BB or lower ratings are considered non-investment grade. Cash
equivalents and some bonds may not be rated.
The portfolio is actively managed, and current holdings may be different.
10 Largest Holdings
--------------------------------------------------------------------------------
(As a percentage of long-term holdings)*
1. Lodestone Re Ltd., 7.336%, 1/8/14 (144A) 1.18%
---------------------------------------------------------------------------------------------
2. Alliance One International, Inc., 10.0%, 7/15/16 0.88
---------------------------------------------------------------------------------------------
3. Lodestone Re Ltd., 8.36%, 5/17/13 (144A) 0.85
---------------------------------------------------------------------------------------------
4. Blue Fin, Ltd., 4.693%, 4/10/12 (144A) 0.84
---------------------------------------------------------------------------------------------
5. Successor X, Ltd., 14.637%, 4/4/13 (144A) 0.84
---------------------------------------------------------------------------------------------
6. Montana Re, Ltd., 16.71%, 1/8/14 (144A) 0.83
---------------------------------------------------------------------------------------------
7. Successor X, Ltd., 16.294%, 4/4/13 (144A) 0.83
---------------------------------------------------------------------------------------------
8. U.S.I. Holdings Corp., Tranche B Term Loan, 2.76%, 5/5/14 0.82
---------------------------------------------------------------------------------------------
9. Ineos Group Holdings Plc, 7.875%, 2/15/16 (144A) 0.81
---------------------------------------------------------------------------------------------
10. SunGard Data Systems, Inc., Tranche A U.S. Term Loan, 1.979%, 2/28/14 0.80
---------------------------------------------------------------------------------------------
* This list excludes temporary cash investments and derivative instruments. The
portfolio is actively managed, and current holdings may be different. The
holdings listed should not be considered recommendations to buy or sell any
security listed.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 9
Prices and Distributions | 4/30/11
Market Value per Common Share
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4/30/11 4/30/10
--------------------------------------------------------------------------------
$ 21.95 $ 20.46
--------------------------------------------------------------------------------
Premium 4.5% 1.4%
--------------------------------------------------------------------------------
Net Asset Value per Common Share
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4/30/11 4/30/10
--------------------------------------------------------------------------------
$ 21.01 $ 20.17
--------------------------------------------------------------------------------
Distributions per Common Share: 5/1/10-4/30/11
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net
Investment Tax Return Short-Term Long-Term
Income of Capital Capital Gains Capital Gains
--------------------------------------------------------------------------------
$ 1.92 $ -- $ -- $ --
--------------------------------------------------------------------------------
10 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
Performance Update | 4/30/11
Investment Returns
--------------------------------------------------------------------------------
The mountain chart on the right shows the change in market value, plus
reinvested dividends and distributions, of a $10,000 investment made in common
shares of Pioneer Diversified High Income Trust, compared to that of the
combined (50%/50%) Bank of America Merrill Lynch Global High Yield and Emerging
Markets Plus Index (BofA ML Global HY and EMP Index) and CS Leveraged Loan
Index.
Cumulative Total Returns
(As of April 30, 2011)
--------------------------------------------------------------------------------
Net Asset Market
Period Value (NAV) Price
--------------------------------------------------------------------------------
Life-of-Trust
(5/30/07) 40.66% 40.34%
1 Year 14.52 17.95
--------------------------------------------------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
50% BofA ML Global HY
and EMP Index
Pioneer Diversified 50% CS Leveraged
High Income Trust Loan Index
----------------- ----------
5/07 10000 10000
4/08 8933 9879
4/09 6868 8422
4/10 11898 11487
4/11 14034 12707
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
Performance data shown represents past performance. Past performance is no
guarantee of future results. Investment return and market price will fluctuate,
and your shares may trade below NAV due to such factors as interest rate
changes and the perceived credit quality of borrowers.
Total investment return does not reflect broker sales charges or commissions.
All performance is for common shares of the Trust.
Closed-end funds, unlike open-end funds, are not continuously offered. There is
a one-time public offering and, once issued, shares of closed-end funds are
sold in the open market through a stock exchange and frequently trade at prices
lower than their NAV. NAV per common share is total assets less total
liabilities, which includes bank borrowing, divided by the number of common
shares outstanding.
When 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 prices obtained under the Trust's dividend
reinvestment plan.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Trust distributions.
The BofA ML Global High Yield and Emerging Markets Plus Index tracks the
performance of the below- and border-line investment-grade global debt markets
denominated in the major developed market currencies. The Index includes
sovereign issuers rated BBB1 and lower along with corporate issues rated BB1
and lower. There are no restrictions on issuer country of domicile. The CS
Leveraged Loan Index is designed to mirror the investible universe of the U.S.
dollar-denominated leveraged loan market. The CS Leveraged Loan Index consists
of tradable term loans with at least one year to maturity and rated BBB or
lower.
Index returns are calculated monthly, assume reinvestment of dividends and,
unlike Trust returns, do not reflect any fees, expenses or sales charges. The
indices are not leveraged. You cannot invest directly in an index.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 11
Schedule of Investments | 4/30/11 (Consolidated)
-------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-------------------------------------------------------------------------------------------------------
ASSET BACKED SECURITIES -- 1.2% of Net Assets
BANKS -- 0.7%
Thrifts & Mortgage Finance -- 0.7%
246,741(a) AA+/Baa2 Ace Securities Corp., 1.113%, 12/25/34 $ 189,079
699,000(a) BBB+/Caa2 Carrington Mortgage Loan Trust, 0.413, 2/25/37 489,069
488,956(a) CCC/NR Countrywide Asset-Backed Certificates, 0.663%,
3/25/47 (144A) 245,080
178,907(a) B-/B3 GSAMP Trust, 0.343%, 1/25/37 162,003
555,197(a) CC/Ca Lehman XS Trust, 0.563%, 12/25/35 165,863
------------
Total Banks $ 1,251,094
-------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 0.5%
Other Diversified Financial Services -- 0.4%
1,116,931(a) B-/Caa1 Aircraft Finance Trust, 0.699%, 5/15/24 (144A) $ 681,328
57,139(a) B-/Ba3 Aircraft Finance Trust, 0.719%, 5/15/24 (144A) 53,139
------------
$ 734,467
-------------------------------------------------------------------------------------------------------
Specialized Finance -- 0.1%
150,000 BBB-/Baa3 Dominos Pizza Master Issuer LLC, 5.261%,
4/25/37 (144A) $ 152,250
------------
Total Diversified Financials $ 886,717
-------------------------------------------------------------------------------------------------------
TOTAL ASSET BACKED SECURITIES
(Cost $2,098,781) $ 2,137,811
-------------------------------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS --
1.1% of Net Assets
BANKS -- 1.1%
Thrifts & Mortgage Finance -- 1.1%
238,720(a) CCC/C Countrywide Home Loans, 0.563%, 3/25/35 $ 63,621
489,658(a) CC/C Downey Savings and Loan Association Mortgage Loan
Trust, 0.584%, 10/19/45 216,706
171,008(a) D/C Downey Savings and Loan Association Mortgage Loan
Trust, 0.634%, 10/19/45 17,540
188,758(a) BBB+/NR GSR Mortgage Loan Trust, Series 2004-3F,
5.717%, 2/25/34 165,714
1,054,116(a) AAA/Baa3 Impac CMB Trust, 0.973%, 1/25/35 841,766
62,471(a)(b) D/B3 Impac Secured Assets CMN Owner Trust,
0.303%, 11/25/36 59,193
226,172(a) D/C Luminent Mortgage Trust, 0.473%, 7/25/36 8,652
362,372(a) AAA/Caa1 WaMu Mortgage Pass-Through Certificates,
0.443%, 4/25/45 309,139
198,419(a) CCC/NR WaMu Mortgage Pass-Through Certificates,
5.544%, 4/25/45 182,058
------------
Total Banks $ 1,864,389
-------------------------------------------------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $2,242,437) $ 1,864,389
-------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
12 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
--------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
--------------------------------------------------------------------------------------------------------
CORPORATE BONDS & NOTES -- 95.6% of Net Assets
ENERGY -- 8.4%
Coal & Consumable Fuels -- 1.0%
850,000 BB/Ba3 Bumi Capital Pte, Ltd., 12.0%, 11/10/16 (144A) $ 1,003,000
738,000 BB-/B1 Drummond Co., Inc., 9.0%, 10/15/14 (144A) 779,512
------------
$ 1,782,512
--------------------------------------------------------------------------------------------------------
Oil & Gas Drilling -- 2.5%
NOK 500,000(a) NR/NR Aker Drilling ASA, 9.62%, 2/24/16 $ 97,346
NOK 1,000,000 NR/NR Aker Drilling ASA, 11.0%, 2/24/16 194,692
1,200,000 B/Caa1 Foresight Energy Corp., 9.625%, 8/15/17 (144A) 1,299,000
1,000,000 NR/NR Ocean Rig UDW, Inc., 9.5%, 4/27/16 (144A) 1,000,000
670,000 B-/B3 Offshore Group Investments, Ltd., 11.5%, 8/1/15 747,888
500,000 B/NR Pioneer Drilling Co., 9.875%, 3/15/18 540,000
500,000 B/Caa1 Xinergy Corp., 9.25%, 5/15/19 500,000
------------
$ 4,378,926
--------------------------------------------------------------------------------------------------------
Oil & Gas Equipment & Services -- 2.2%
1,358,000 B+/B1 American Petroleum Tankers LLC, 10.25%,
5/1/15 (144A) $ 1,439,480
730,000 B-/B2 Expro Finance Luxembourg SCA, 8.5%,
12/15/16 (144A) 713,575
65,067(b) NR/NR Nexus 1 Pte., Ltd., 10.5%, 3/7/12 (144A) 65
820,000(a) NR/NR Sevan Marine ASA, 3.443%, 5/14/13 (144A) 742,100
NOK 2,560,000(a) NR/NR Sevan Marine ASA, 12.7%, 10/24/12 (144A) 512,459
NOK 2,500,000 NR/NR Sevan Marine ASA, 14.0%, 10/24/14 479,572
------------
$ 3,887,251
--------------------------------------------------------------------------------------------------------
Oil & Gas Exploration & Production -- 2.1%
505,000 BB-/B2 Berry Petroleum Co., 10.25%, 6/1/14 $ 587,062
125,000 BB+/Ba3 Chesapeake Energy Corp., 9.5%, 2/15/15 150,469
970,000 BB-/B2 Hilcorp Energy I LP, 9.0%, 6/1/16 (144A) 1,013,650
444,000 B/B2 Linn Energy LLC/Linn Energy Finance Corp.,
11.75%, 5/15/17 528,360
NOK 2,500,000 NR/NR Norwegian Energy Co. AS, 12.9%, 11/20/14 501,045
240,000 B-/B3 Quicksilver Resources, Inc., 7.125%, 4/1/16 239,400
472,000 B-/Caa1 Rosetta Resources, Inc., 9.5%, 4/15/18 523,920
------------
$ 3,543,906
--------------------------------------------------------------------------------------------------------
Oil & Gas Storage & Transportation -- 0.6%
500,000 B+/B1 Holly Energy Partners LP, 6.25%, 3/1/15 $ 500,000
450,000(a) BB/Ba1 Southern Union Co., 7.2%, 11/1/66 442,125
------------
$ 942,125
------------
Total Energy $ 14,534,720
--------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 13
Schedule of Investments | 4/30/11 (Consolidated) (continued)
----------------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------------
MATERIALS -- 11.7%
Aluminum -- 1.0%
1,351,578(a)(c) CCC+/B2 Noranda Aluminum Acquisition Corp.,
5.193%, 5/15/15 $ 1,307,652
405,000 B/B2 Novelis, Inc., 8.75%, 12/15/20 452,587
------------
$ 1,760,239
----------------------------------------------------------------------------------------------------------------
Building Products -- 0.1%
EURO 200,000(a)(d) B-/NR C10 -- EUR Capital SPV, Ltd., 6.277% $ 216,606
----------------------------------------------------------------------------------------------------------------
Commodity Chemicals -- 0.2%
300,000 NR/WR Montell Finance Co. BV, 8.1%, 3/15/27 (144A) $ 336,000
----------------------------------------------------------------------------------------------------------------
Construction Materials -- 0.7%
865,000 CCC+/B3 AGY Holding Corp., 11.0%, 11/15/14 $ 841,212
300,000(a)(d) B-/NR C8 Capital SPV, Ltd., 6.64% (144A) 233,662
100,000 B/NR Cemex SAB de CV, 9.0%, 1/11/18 (144A) 103,625
------------
$ 1,178,499
----------------------------------------------------------------------------------------------------------------
Diversified Chemicals -- 1.3%
EURO 1,275,000 CCC/NR Ineos Group Holdings Plc, 7.875%, 2/15/16 (144A) $ 1,882,132
275,000 CCC/Caa1 Momentive Performance Materials, Inc., 9.0%,
1/15/21 (144A) 296,312
------------
$ 2,178,444
----------------------------------------------------------------------------------------------------------------
Diversified Metals & Mining -- 0.9%
200,000 B-/B2 Mirabela Nickel, Ltd., 8.75%, 4/15/18 (144A) $ 204,500
428,000 BBB/Baa2 Teck Resources, Ltd., 10.25%, 5/15/16 516,810
750,000 BB/Ba2 Vedanta Resources Plc, 9.5%, 7/18/18 (144A) 832,500
------------
$ 1,553,810
----------------------------------------------------------------------------------------------------------------
Metal & Glass Containers -- 1.0%
EURO 255,000 BB-/BA3 Ardagh Glass Finance Plc, 9.25%, 7/1/16 (144A) $ 414,258
175,000 CCC+/B3 BWAY Holdings Co., 10.0%, 6/15/18 192,062
1,000,000(c) CCC+/Caa1 BWAY Parent Co., Inc., 10.125%, 11/1/15 (144A) 1,030,000
------------
$ 1,636,320
----------------------------------------------------------------------------------------------------------------
Paper Packaging -- 1.5%
750,103(c)(e) NR/NR Corporacion Durango SAB de CV, 7.0%, 8/27/16 $ 675,093
700,000 CCC+/Caa1 Graham Packaging Co., Inc., 9.875%, 10/15/14 730,625
500,000 B/B3 Pretium Packing LLC, 11.5%, 4/1/16 (144A) 513,750
750,000 NR/NR U.S. Corrugated, Inc., 10.0%, 6/1/13 735,000
------------
$ 2,654,468
----------------------------------------------------------------------------------------------------------------
Paper Products -- 1.8%
667,000 B+/B1 ABI Escrow Corp., 10.25%, 10/15/18 (144A) $ 737,035
500,000 B+/B1 Appleton Papers, Inc., 10.5%, 6/15/15 (144A) 527,500
200,000 CCC+/B3 Appleton Papers, Inc., 11.25%, 12/15/15 200,500
260,000 BB/Ba3 Clearwater Paper Corp., 10.625%, 6/15/16 293,800
The accompanying notes are an integral part of these financial statements.
14 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
-------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-------------------------------------------------------------------------------------------------------
Paper Products -- (continued)
814,000 B/B3 Exopack Holding Corp., 11.25%, 2/1/14 $ 840,455
186,000 BB-/Ba3 Grupo Papelero Scribe SA, 8.875%, 4/7/20 (144A) 176,700
344,000 B/B3 Mercer International, Inc., 9.5%, 12/1/17 377,540
------------
$ 3,153,530
-------------------------------------------------------------------------------------------------------
Precious Metals & Minerals -- 0.3%
500,000 BB-/Ba3 ALROSA Finance SA, 8.875%, 11/17/14 (144A) $ 575,750
-------------------------------------------------------------------------------------------------------
Steel -- 2.9%
1,245,000 CCC+/Caa2 Algoma Acquisition Corp., 9.875%, 6/15/15 (144A) $ 1,159,406
350,000 B+/B3 Atkore International, Inc., 9.875%, 1/1/18 (144A) 380,625
450,000 B+/B3 Essar Steel Algoma, Inc., 9.375%, 3/15/15 (144A) 450,000
250,000 B+/B2 Evraz Group SA, 8.875%, 4/24/13 (144A) 274,700
250,000 B+/B2 Evraz Group SA, 9.5%, 4/24/18 (144A) 290,625
700,000 NR/B2 Metinvest BV, 8.75%, 2/14/18 (144A) 750,750
500,000 NR/B2 Metinvest BV, 10.25%, 5/20/15 (144A) 562,500
920,000 CCC+/Caa1 Ryerson, Inc., 12.0%, 11/1/15 993,600
EURO 50,000 NR/NR Zlomrex International Finance SA, 8.5%,
2/1/14 (144A) 58,602
------------
$ 4,920,808
------------
Total Materials $ 20,164,474
-------------------------------------------------------------------------------------------------------
CAPITAL GOODS -- 5.5%
Aerospace & Defense -- 0.7%
600,000 B/B3 ADS Tactical, Inc., 11.0%, 4/1/18 (144A) $ 621,000
405,000 BBB-/Ba3 DigitalGlobe, Inc., 10.5%, 5/1/14 455,625
90,000 BB-/Ba3 GeoEye, Inc., 9.625%, 10/1/15 101,812
------------
$ 1,178,437
-------------------------------------------------------------------------------------------------------
Building Products -- 0.2%
365,000 BB/B2 USG Corp., 9.75%, 8/1/14 (144A) $ 397,850
-------------------------------------------------------------------------------------------------------
Construction & Engineering -- 1.0%
900,000 B+/Ba3 Empresas ICA S.A.B. de C.V., 8.9%, 2/4/21 (144A) $ 936,000
850,000 B+/Caa1 New Enterprise Stone & Lime Co., 11.0%,
9/1/18 (144A) 853,187
------------
$ 1,789,187
-------------------------------------------------------------------------------------------------------
Construction & Farm Machinery & Heavy Trucks -- 0.4%
720,000 B+/Caa1 American Railcar Industries, Inc., 7.5%, 3/1/14 $ 739,800
-------------------------------------------------------------------------------------------------------
Electrical Components & Equipment -- 0.5%
750,000 B-/B3 WireCo WorldGroup, 9.5%, 5/15/17 (144A) $ 806,250
-------------------------------------------------------------------------------------------------------
Industrial Conglomerates -- 0.1%
90,000 NR/NR Little Traverse Bay Bands of Odawa Indians, 9.0%,
8/31/20 (144A) $ 81,000
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 15
Schedule of Investments | 4/30/11 (Consolidated) (continued)
-----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-----------------------------------------------------------------------------------------------------------
Industrial Conglomerates -- (continued)
EURO 100,000 NR/NR Mark IV USA/EURO LUX, 8.875%, 12/15/17 (144A) $ 156,520
------------
$ 237,520
-----------------------------------------------------------------------------------------------------------
Industrial Machinery -- 1.2%
500,000(b) NR/WR Indalex Holding Corp., 11.5%, 2/1/14 $ 8,750
335,000 B/B3 Liberty Tire Recycling, 11.0%, 10/1/16 (144A) 375,199
875,000 CCC+/B3 Mueller Water Products, Inc., 7.375%, 6/1/17 868,437
665,000 B+/NR WPE International Cooperatief UA, 10.375%,
9/30/20 (144A) 704,900
------------
$ 1,957,286
-----------------------------------------------------------------------------------------------------------
Trading Companies & Distributors -- 1.4%
150,000 B/B2 Avis Budget Car Rental LLC/Avis Budget Finance, Inc.,
9.625%, 3/15/18 $ 166,500
1,090,000 NR/B3 Intcomex, Inc., 13.25%, 12/15/14 1,147,225
1,000,000 B/B1 Wesco Distribution, Inc., 7.5%, 10/15/17 1,032,500
------------
$ 2,346,225
------------
Total Capital Goods $ 9,452,555
-----------------------------------------------------------------------------------------------------------
COMMERCIAL & PROFESSIONAL SERVICES -- 0.4%
Diversified Support Services -- 0.2%
400(f) NR/Caa1 MSX International, Ltd., UK, 12.5%, 4/1/12 (144A) $ 344,000
-----------------------------------------------------------------------------------------------------------
Environmental & Facilities Services -- 0.2%
700,000(b) NR/WR Aleris International, Inc., 10.0%, 12/15/16 $ 70
210,000 BB-/B2 Casella Waste Systems, Inc., 11.0%, 7/15/14 238,087
EURO 107,128 NR/NR New Reclamation Group Pty., Ltd., 8.125%,
2/1/13 (144A) 143,041
------------
$ 381,198
------------
Total Commercial & Professional Services $ 725,198
-----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 2.1%
Air Freight & Logistics -- 0.6%
929,000 CCC+/Caa1 CEVA Group Plc, 11.5%, 4/1/18 (144A) $ 1,013,771
-----------------------------------------------------------------------------------------------------------
Airlines -- 0.2%
305,000 BB-/Ba2 Delta Air Lines, Inc., 9.5%, 9/15/14 (144A) $ 327,112
-----------------------------------------------------------------------------------------------------------
Airport Services -- 0.3%
445,500 B/B2 Aeropuertos Argentina 2000 SA, 10.75%,
12/1/20 (144A) $ 485,595
-----------------------------------------------------------------------------------------------------------
Marine -- 0.2%
375,000(g) B+/B3 Navios South American Logistics, 9.25%,
4/15/19 (144A) $ 382,500
-----------------------------------------------------------------------------------------------------------
Marine Ports & Services -- 0.3%
835,000 NR/NR Oceanografia SA de CV, 11.25%, 7/15/15 (144A) $ 434,200
-----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
16 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
--------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
--------------------------------------------------------------------------------------------------------
Railroads -- 0.1%
250,000(c) CCC/Caa3 Florida East Coast Holdings, 10.5%, 8/1/17 (144A) $ 258,542
--------------------------------------------------------------------------------------------------------
Trucking -- 0.4%
425,000 B-/Caa1 Swift Services Holdings, Inc., 10.0%,
11/15/18 (144A) $ 466,437
300,000 B/B3 Syncreon Global Ireland, Ltd., 9.5%, 5/1/18 (144A) 312,000
------------
$ 778,437
------------
Total Transportation $ 3,680,157
--------------------------------------------------------------------------------------------------------
AUTOMOBILES & COMPONENTS -- 1.9%
Auto Parts & Equipment -- 1.7%
980,000 CCC+/Caa1 Allison Transmission, Inc., 11.0%, 11/1/15 (144A) $ 1,065,750
160,000 CCC/Caa1 Stanadyne Corp., 10.0%, 8/15/14 163,800
500,000 CCC-/Caa3 Stanadyne Corp., 12.0%, 2/15/15 512,500
1,124,000(g) B+/B1 Tower Automotive Holdings USA LLC, 10.625%,
9/1/17 (144A) 1,257,475
------------
$ 2,999,525
--------------------------------------------------------------------------------------------------------
Tires & Rubber -- 0.2%
235,000 B+/B1 Goodyear Tire & Rubber Co., 10.5%, 5/15/16 $ 266,137
------------
Total Automobiles & Components $ 3,265,662
--------------------------------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 2.7%
Homebuilding -- 1.0%
530,000 CCC/Caa2 Beazer Homes USA, Inc., 9.125%, 6/15/18 $ 528,675
430,000 BB-/Ba3 Desarrolladora Homex SA de CV, 9.5%,
12/11/19 (144A) 480,525
695,000 B+/B1 Meritage Homes Corp., 6.25%, 3/15/15 693,263
------------
$ 1,702,463
--------------------------------------------------------------------------------------------------------
Housewares & Specialties -- 1.1%
500,000 B-/Caa1 Reynolds Group Holdings, Ltd., 9.0%,
4/15/19 (144A) $ 526,875
1,000,000 CCC+/B3 Yankee Acquisition Corp., 9.75%, 2/15/17 1,067,500
350,000(c) CCC+/Caa1 YCC Holdings LLC, 10.25%, 2/15/16 (144A) 360,500
------------
$ 1,954,875
--------------------------------------------------------------------------------------------------------
Leisure Products -- 0.6%
1,000,000 B-/B2 Icon Health & Fitness, 11.875%, 10/15/16 (144A) $ 1,041,250
------------
Total Consumer Durables & Apparel $ 4,698,588
--------------------------------------------------------------------------------------------------------
CONSUMER SERVICES -- 3.8%
Casinos & Gaming -- 2.2%
500,000(b) NR/WR Buffalo Thunder Development Authority, 9.375%,
12/15/14 (144A) $ 182,500
EURO 1,155,000 B/B2 Codere Finance Luxembourg SA, 8.25%,
6/15/15 (144A) 1,754,427
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 17
Schedule of Investments | 4/30/11 (Consolidated) (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Casinos & Gaming -- (continued)
395,000 B+/B2 FireKeepers Development Authority, 13.875%,
5/1/15 (144A) $ 465,113
1,615,000(b) NR/WR Mashantucket Western Pequot Tribe, 8.5%,
11/15/15 (144A) 201,875
EURO 500,000 B/B3 Peermont Global, Ltd., 7.75%, 4/30/14 (144A) 667,620
450,000 BB-/B1 Scientific Games International, Inc., 9.25%, 6/15/19 497,250
585,000(b) NR/WR Station Casinos, Inc., 6.625%, 3/15/18 59
------------
$ 3,768,844
----------------------------------------------------------------------------------------------------------
Restaurants -- 0.8%
1,235,000(e) CCC+/Caa1 Burger King Capital Holdings LLC, 0.0%,
4/15/19 (144A) $ 728,650
400,000(g) B-/B3 Burger King Corp., 9.875%, 10/15/18 423,000
274,000 CCC+/Caa2 Dunkin Finance Corp., 9.625%, 12/1/18 (144A) 279,480
------------
$ 1,431,130
----------------------------------------------------------------------------------------------------------
Specialized Consumer Services -- 0.8%
300,000(c) B-/B3 Aramark Holdings Corp., 8.625%, 5/1/16 (144A) $ 308,250
685,000 BB-/Ba3 Service Corp. International, 7.0%, 5/15/19 727,813
350,000 B-/B3 StoneMor Operating LLC/Cornerstone Family Services/
Osiris Holdings, 10.25%, 12/1/17 364,000
------------
$ 1,400,063
------------
Total Consumer Services $ 6,600,037
----------------------------------------------------------------------------------------------------------
MEDIA -- 5.1%
Advertising -- 1.6%
1,100,000 B-/B3 Affinity Group, Inc., 11.5%, 12/1/16 (144A) $ 1,163,250
716,000 B+/B2 MDC Partners, Inc., 11.0%, 11/1/16 801,920
800,000 B-/Caa2 Sitel LLC/Sitel Finance Corp., 11.5%, 4/1/18 754,000
------------
$ 2,719,170
----------------------------------------------------------------------------------------------------------
Broadcasting -- 1.8%
182,676 B/B2 CCH II LLC, 13.5%, 11/30/16 $ 220,353
840,000 B/B1 Hughes Network Systems LLC, 9.5%, 4/15/14 865,200
989,557(c) CCC+/Caa3 Intelsat Bermuda, Ltd., 11.5%, 2/4/17 1,083,564
EURO 100,000 B-/B2 Nara Cable Funding, Ltd., 8.875%, 12/1/18 (144A) 153,375
430,000 B-/Caa1 Telesat Canada, 12.5%, 11/1/17 511,700
EURO 200,000 B+/B1 TVN Finance Corp II AB, 10.75%, 11/15/17 (144A) 330,824
------------
$ 3,165,016
----------------------------------------------------------------------------------------------------------
Movies & Entertainment -- 1.2%
1,710,000 CCC+/Caa1 AMC Entertainment, Inc., 9.75%, 12/1/20 (144A) $ 1,821,150
200,000 B-/B3 Production Resource Group, Inc., 8.875%,
5/1/19 (144A) 206,500
------------
$ 2,027,650
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
18 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
--------------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
--------------------------------------------------------------------------------------------------------------
Publishing -- 0.5%
600,000 CCC+/Caa2 Cengage Learning Acquisitions, Inc., 10.5%,
1/15/15 (144A) $ 616,500
245,000 B-/Caa1 Interactive Data Corp., 10.25%, 8/1/18 (144A) 273,175
------------
$ 889,675
------------
Total Media $ 8,801,511
--------------------------------------------------------------------------------------------------------------
RETAILING -- 1.8%
Distributors -- 0.9%
1,438,000 B/B3 Minerva Overseas II, Ltd., 10.875%,
11/15/19 (144A) $ 1,599,775
--------------------------------------------------------------------------------------------------------------
Internet Retail -- 0.4%
640,000 B/B3 Ticketmaster Entertainment, Inc., 10.75%, 8/1/16 $ 700,000
--------------------------------------------------------------------------------------------------------------
Specialty Stores -- 0.5%
800,000(g) B/Caa1 Sally Holdings LLC, 10.5%, 11/15/16 $ 871,000
------------
Total Retailing $ 3,170,775
--------------------------------------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 4.1%
Agricultural Products -- 0.7%
1,127,000 B+/B3 Southern States Cooperative, Inc., 11.25%,
5/15/15 (144A) $ 1,217,160
--------------------------------------------------------------------------------------------------------------
Packaged Foods & Meats -- 2.2%
650,000 NR/B1 Bertin Ltda, 10.25%, 10/5/16 (144A) $ 723,125
491,000 NR/B2 Corporacion Pesquera Inca SAC, 9.0%,
2/10/17 (144A) 515,550
750,000 B-/B3 FAGE Dairy Industry SA/FAGE USA Dairy Industry, Inc.,
9.875%, 2/1/20 (144A) 757,500
224,421(b)(c) NR/NR Independencia International, Ltd., 12.0%,
12/30/16 (144A) 1,683
475,000 B+/B1 Marfrig Overseas, Ltd., 9.5%, 5/4/20 (144A) 503,500
700,000 B+/B1 Marfrig Overseas, Ltd., 9.625%, 11/16/16 (144A) 752,500
200,000 BB-/B3 Pilgrim's Pride Corp., 7.875%, 12/15/18 (144A) 187,500
275,000(e) NR/B2 SA Fabrica de Produtos Alimenticios Vigor,
9.25%, 2/23/17 (144A) 272,493
------------
$ 3,713,851
--------------------------------------------------------------------------------------------------------------
Tobacco -- 1.2%
2,015,000 B+/B2 Alliance One International, Inc., 10.0%, 7/15/16 $ 2,060,338
------------
Total Food, Beverage & Tobacco $ 6,991,349
--------------------------------------------------------------------------------------------------------------
HOUSEHOLD & PERSONAL PRODUCTS -- 0.2%
Personal Products -- 0.2%
300,000 B/B2 Revlon Consumer Products Corp., 9.75%, 11/15/15 $ 327,000
------------
Total Household & Personal Products $ 327,000
--------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 19
Schedule of Investments | 4/30/11 (Consolidated) (continued)
----------------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 3.4%
Health Care Equipment -- 0.4%
750,000 CCC+/Caa2 Accellent, Inc., 10.0%, 11/1/17 (144A) $ 757,500
----------------------------------------------------------------------------------------------------------------
Health Care Facilities -- 0.3%
700,000 CCC+/Caa1 Vanguard Health Systems, Inc., 0.0%, 2/1/16 (144A) $ 453,250
----------------------------------------------------------------------------------------------------------------
Health Care Services -- 1.7%
378,000 B-/Caa1 BioScrip, Inc., 10.25%, 10/1/15 $ 378,000
476,000 B-/NR Gentiva Health Services, Inc., 11.5%, 9/1/18 540,260
796,459(c) CCC+/B3 Surgical Care Affiliates, Inc., 8.875%, 7/15/15 (144A) 818,362
1,170,000(g) CCC+/Caa1 Surgical Care Affiliates, Inc., 10.0%, 7/15/17 (144A) 1,208,025
------------
$ 2,944,647
----------------------------------------------------------------------------------------------------------------
Health Care Supplies -- 1.0%
750,000 B/Caa1 Bausch & Lomb, Inc., 9.875%, 11/1/15 $ 808,125
815,000(c) B-/B3 Biomet, Inc., 10.375%, 10/15/17 906,688
------------
$ 1,714,813
------------
Total Health Care Equipment & Services $ 5,870,210
----------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS & BIOTECHNOLOGY & LIFE SCIENCES -- 1.8%
Biotechnology -- 0.8%
300,000 B/Caa1 ConvaTec Healthcare E SA, 10.5%, 12/15/18 (144A) $ 323,250
1,043,000 NR/B3 Lantheus Medical Imaging, Inc., 9.75%, 5/15/17 1,084,720
------------
$ 1,407,970
----------------------------------------------------------------------------------------------------------------
Life Sciences Tools & Services -- 0.3%
131,406(c) B/Caa1 Catalent Pharma Solutions, Inc., 9.5%, 4/15/15 $ 134,363
420,000 B+/B3 PharmaNet Development Group, Inc., 10.875%,
4/15/17 (144A) 464,100
------------
$ 598,463
----------------------------------------------------------------------------------------------------------------
Pharmaceuticals -- 0.7%
1,215,000 NR/NR KV Pharmaceutical Co., 12.0%, 3/18/15 (144A) $ 1,119,319
------------
Total Pharmaceuticals & Biotechnology &
Life Sciences $ 3,125,752
----------------------------------------------------------------------------------------------------------------
BANKS -- 1.9%
Diversified Banks -- 1.2%
400,000(a)(d) BB+/Ba3 ABN Amro North American Holding Preferred Capital
Repackage Trust I, 6.523% (144A) $ 380,000
500,000(a) NR/B2 Banco Macro SA, 9.75%, 12/18/36 497,500
700,000(a) NR/Ba2 Banco Macro SA, 10.75%, 6/7/12 521,500
525,000 B/B2 BCO de Galicia y Buenos Aires SA de CV, 8.75%,
5/14/18 (144A) 530,250
The accompanying notes are an integral part of these financial statements.
20 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
-----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-----------------------------------------------------------------------------------------------------------
Diversified Banks -- (continued)
BRL 350,000 AAA/NR International Finance Corp., 9.25%, 3/15/13 $ 227,592
15,747 B/NR JSC Temirbank, 14.0%, 6/30/22 (144A) 18,818
------------
$ 2,175,660
-----------------------------------------------------------------------------------------------------------
Regional Banks -- 0.7%
600,000(a)(d) BBB/Baa3 PNC Financial Services Group, Inc., 8.25% $ 635,029
500,000(a)(d) A-/Baa3 Wells Fargo Capital XV, 9.75% 550,625
------------
$ 1,185,654
------------
Total Banks $ 3,361,314
-----------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 16.8%
Asset Management & Custody Banks -- 0.4%
665,000(a) BBB-/Baa3 Janus Capital Group, Inc., 6.7%, 6/15/17 $ 728,087
-----------------------------------------------------------------------------------------------------------
Consumer Finance -- 0.4%
610,000 NR/NR Tarjeta Naranja SA, 9.0%, 1/28/17 (144A) $ 628,754
-----------------------------------------------------------------------------------------------------------
Investment Banking & Brokerage -- 0.2%
450,000(a)(d) BBB-/Baa2 Goldman Sachs Capital II, 5.793% $ 388,125
-----------------------------------------------------------------------------------------------------------
Multi-Sectior Holdings -- 0.4%
600,000 B/B2 Constellation Enterprise, 10.625%, 2/1/16 (144A) $ 624,000
----------------------------------------------------------------------------------------------------------
Other Diversified Financial Services -- 8.5%
EURO 500,000(a) BB-/NR ATLAS VI Capital, Ltd., 10.731%, 4/6/13 (144A) $ 710,570
EURO 500,000(a) B-/NR ATLAS VI Capital, Ltd., 11.491%, 4/7/14 (144A) 709,458
311,937(a) NR/NR BTA Bank JSC, 0.0%, 7/1/20 (144A) 21,524
34,213 NR/NR BTA Bank JSC, 10.75%, 7/1/18 (144A) 23,265
150,993(e) NR/NR BTA Bank JSC, Sub Note, 7.2%, 7/1/25 (144A) 158,354
1,500,000(a) BB+/NR Caelus Re II, Ltd., 6.626%, 5/24/13 (144A) 1,502,700
500,000(a) BB/NR Ibis Re, Ltd., 6.274%, 5/3/13 (144A) 487,400
1,000,000(a) B+/NR Ibis Re, Ltd., 9.336%, 5/3/13 (144A) 995,100
400,000(a) BB/NR Ibis Re, Ltd., 10.556%, 5/10/12 (144A) 412,280
2,800,000(a) BB/NR Lodestone Re, Ltd., 7.336%, 1/8/14 (144A) 2,753,800
2,000,000 BB/NR Lodestone Re, Ltd., 8.36%, 5/17/13 (144A) 1,994,400
500,000(a) B/NR Mariah Re, Ltd., 6.351%, 1/8/14 (144A) 494,400
1,000,000(a) NR/B1 Nelson Re, Ltd., 4.813%, 6/6/11 (144A) 999,800
500,000(a) NR/B3 Nelson Re, Ltd., 11.563%, 6/6/11 (144A) 502,250
1,200,000(a) BB-/NR Queen Street II Capital, Ltd., 17.589%,
4/9/14 (144A) 1,183,680
250,000(a) NR/NR Residential Reinsurance 2010, Ltd., 7.365%,
6/6/13 (144A) 243,350
1,250,000(a) NR/NR Residential Reinsurance 2010, Ltd., 10.854%,
6/6/13 (144A) 1,202,875
250,000(a) B-/NR Residential Reinsurance 2010, Ltd., 13.115%,
6/6/13 (144A) 251,000
------------
$ 14,646,206
-----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 21
Schedule of Investments | 4/30/11 (Consolidated) (continued)
-------------------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-------------------------------------------------------------------------------------------------------------------
Specialized Finance -- 6.9%
500,000 BB/Baa3 Capital One Capital V, 10.25%, 8/15/39 $ 540,000
1,000,000(a) B/NR Montana Re, Ltd., 12.21%, 1/8/14 (144A) 956,500
1,000,000(a) B-/NR Montana Re, Ltd., 13.56%, 12/7/12 (144A) 974,800
2,000,000(a) NR/NR Montana Re, Ltd., 16.71%, 1/8/14 (144A) 1,938,400
425,000(a) B+/B2 National Money Mart Co., 10.375%, 12/15/16 473,875
755,000(a) CCC-/Caa2 NCO Group, Inc., 5.188%, 11/15/13 670,063
510,000 CCC-/Caa3 NCO Group, Inc., 11.875%, 11/15/14 445,613
500,000(a) B-/NR Successor X, Ltd., 9.824%, 4/4/13 (144A) 482,750
1,250,000(a) NR/NR Successor X, Ltd., 11.824%, 4/1/13 (144A) 1,181,375
2,000,000(a) B-/NR Successor X, Ltd., 14.637%, 4/4/13 (144A) 1,964,600
2,000,000(a) NR/NR Successor X, Ltd., 16.294%, 4/4/13 (144A) 1,935,200
500,000(a) NR/NR Successor X, Ltd., 16.824%, 4/4/13 (144A) 433,350
------------
$ 11,996,526
------------
Total Diversified Financials $ 29,011,698
-------------------------------------------------------------------------------------------------------------------
INSURANCE -- 11.4%
Insurance Brokers -- 2.1%
250,000 CCC/Caa1 Alliant Holdings I, Inc., 11.0%, 5/1/15 (144A) $ 264,375
1,050,000 CCC+/Caa1 HUB International Holdings, Inc., 10.25%,
6/15/15 (144A) 1,092,000
GBP 325,000 NR/B3 Towergate Finance PLC, 10.5%, 2/15/19 (144A) 561,057
827,000(a) CCC/B3 U.S.I. Holdings Corp., 4.188%, 11/15/14 (144A) 800,123
804,000 CCC/Caa1 U.S.I. Holdings Corp., 9.75%, 5/15/15 (144A) 824,100
------------
$ 3,541,655
-------------------------------------------------------------------------------------------------------------------
Multi-Line Insurance -- 1.1%
1,000,000(a) BB/Baa3 Liberty Mutual Group, Inc., 7.0%, 3/15/37 (144A) $ 985,000
670,000(a) BB/Baa3 Liberty Mutual Group, Inc., 10.75%, 6/15/58 (144A) 911,200
65,000 BB-/NR Sul America Participacoes SA, 8.625%,
2/15/12 (144A) 67,275
------------
$ 1,963,475
-------------------------------------------------------------------------------------------------------------------
Property & Casualty Insurance -- 0.0%
40,000(a)(d) BB/Ba2 White Mountains Insurance Group, Ltd.,
7.506% (144A) $ 39,294
-------------------------------------------------------------------------------------------------------------------
Reinsurance -- 8.2%
1,500,000(a) BB+/NR Akibare, Ltd., 3.263%, 5/22/12 (144A) $ 1,496,100
1,000,000(a) BB+/NR Akibare, Ltd., 3.463%, 5/22/12 (144A) 999,000
2,000,000(a) BB+/NR Blue Fin, Ltd., 4.693%, 4/10/12 (144A) 1,971,800
1,000,000(a) BB-/NR Blue Fin, Ltd., 13.776%, 4/16/12 (144A) 1,043,900
1,500,000(a) BB/NR East Lane Re, Ltd., 7.304%, 5/6/11 (144A) 1,498,950
1,750,000(a) BB+/NR Fhu-Jin, Ltd., 4.211%, 8/10/11 (144A) 1,743,700
1,000,000(a) BB+/NR Foundation Re III, Ltd., 5.051%, 2/3/14 (144A) 979,800
1,000,000(a) BB+/NR Foundation Re III, Ltd., 5.887%, 2/3/15 (144A) 987,700
1,000,000(a) NR/B1 GlobeCat, Ltd., 6.303%, 1/2/13 (144A) 989,800
The accompanying notes are an integral part of these financial statements.
22 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
------------------------------------------------------------------------------------------------------
Reinsurance -- (continued)
350,000(a) NR/B3 GlobeCat, Ltd., 9.553%, 1/2/13 (144A) $ 330,960
599,999(a) BB+/NR Merna Reinsurance II, Ltd., 3.751%, 4/8/13 (144A) 603,360
250,000(a) B/NR MultiCat Mexico, Ltd., Series 2009-I Class A,
11.546%, 10/19/12 (144A) 265,575
250,000(a) B/NR MultiCat Mexico, Ltd., Series 2009-I Class B,
10.296%, 10/19/12 (144A) 260,425
250,000(a) B/NR MultiCat Mexico, Ltd., Series 2009-I Class C,
10.311%, 10/19/12 (144A) 260,650
250,000(a) BB-/NR MultiCat Mexico, Ltd., Series 2009-I Class D,
10.311,%, 10/19/12 (144A) 257,000
2,500,000(a) NR/C Muteki, Ltd., 4713%, 5/24/11 (144A) 3,000
500,000(a) BB/NR Mystic Re II, Ltd., 12.311%, 3/20/12 (144A) 512,950
------------
$ 14,204,670
------------
Total Insurance $ 19,749,094
------------------------------------------------------------------------------------------------------
REAL ESTATE -- 0.2%
Real Estate Operating Companies -- 0.2%
54,428(a) B/NR Alto Palermo SA, 11.0%, 6/11/12 (144A) $ 23,676
410,000 B/NR IRSA Inversiones y Representaciones SA,
8.5%, 2/2/17 (144A) 407,950
------------
Total Real Estate $ 431,626
------------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 2.5%
Application Software -- 1.1%
539,000 B/B3 Allen Systems Group, Inc., 8.5%, 11/15/16 (144A) $ 552,475
1,390,000 CCC+/Caa2 Vangent, Inc., 9.625%, 2/15/15 1,398,688
------------
$ 1,951,163
------------------------------------------------------------------------------------------------------
Data Processing & Outsourced Services -- 0.3%
404,000 B-/Caa1 First Data Corp., 8.25%, 1/15/21 (144A) $ 401,980
91,000 B-/Caa1 First Data Corp., 9.875%, 9/24/15 94,071
------------
$ 496,051
------------------------------------------------------------------------------------------------------
Internet Software & Services -- 0.4%
587,000 A-/A3 Terremark Worldwide, Inc., 12.0%, 6/15/17 $ 720,543
------------------------------------------------------------------------------------------------------
IT Consulting & Other Services -- 0.3%
405,000 CCC+/Caa1 Activant Solutions, Inc., 9.5%, 5/1/16 $ 425,756
------------------------------------------------------------------------------------------------------
Systems Software -- 0.4%
776,942(c) NR/NR Pegasus Solutions, Inc., 13.0%, 4/15/14 (144A) $ 730,325
------------
Total Software & Services $ 4,323,838
------------------------------------------------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 0.6%
Computer Storage & Peripherals -- 0.3%
415,000 BBB/Baa3 Seagate Technology International, Inc., 10.0%,
5/1/14 (144A) $ 487,625
------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 23
Schedule of Investments | 4/30/11 (Consolidated) (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 0.3%
486,000 B/B1 Da-Lite Screen Co., Inc., 12.5%, 4/1/15 $ 524,880
------------
Total Technology Hardware & Equipment $ 1,012,505
----------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 0.5%
Semiconductor Equipment -- 0.5%
750,000 B/B3 Aeroflex. Inc., 11.75%, 2/15/15 $ 816,563
------------
Total Semiconductors & Semiconductor Equipment $ 816,563
----------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 6.3%
Alternative Carriers -- 2.0%
945,000 B/B2 Global Crossing, Ltd., 12.0%, 9/15/15 $ 1,105,650
750,000 B/Ba3 PAETEC Holding Corp., 8.875%, 6/30/17 818,438
1,010,000 CCC+/Caa1 PAETEC Holding Corp., 9.5%, 7/15/15 1,060,500
350,000 CCC+/Caa1 PAETEC Holding Corp., 9.875%, 12/1/18 (144A) 378,875
------------
$ 3,363,463
----------------------------------------------------------------------------------------------------------
Integrated Telecommunication Services -- 2.2%
700,000 B/NR Bakrie Telecom Tbk PT, 11.5%, 5/7/15 (144A) $ 745,500
910,000 B-/B3 Broadview Networks Holdings, Inc., 11.375%, 9/1/12 896,350
388,000(g) CCC+/B3 Cincinnati Bell, Inc., 8.75%, 3/15/18 372,480
1,250,000 BB-/B2 GCI, Inc., 7.25%, 2/15/14 1,262,500
500,000 B+/Ba3 Windstream Corp., 8.625%, 8/1/16 527,500
------------
$ 3,804,330
----------------------------------------------------------------------------------------------------------
Wireless Telecommunication Services -- 2.1%
300,000 NR/Caa1 Digicel Group, Ltd., 10.5%, 4/15/18 (144A) $ 342,000
750,000 B+/B2 NII Capital Corp., 10.0%, 8/15/16 860,625
790,000(g) BB/Ba3 OJSC Vimpel Communications Via VIP Ireland, Ltd.,
9.125%, 4/30/18 (144A) 906,525
1,330,000 B-/B2 True Move Co., Ltd., 10.375%, 8/1/14 (144A) 1,439,725
100,000 B-/B2 True Move Co., Ltd., 10.75%, 12/16/13 (144A) 108,500
------------
$ 3,657,375
------------
Total Telecommunication Services $ 10,825,168
----------------------------------------------------------------------------------------------------------
UTILITIES -- 2.5%
Electric Utilities -- 1.2%
750,000 B-/NR Cia de Transporte de Energia Electrica de Alta Tension
SA, 8.875%, 12/15/16 (144A) $ 735,000
419,000 NR/B2 Empresa Distribuidora Y Comercializadora Norte,
9.75%, 10/25/22 (144A) 431,570
225,000 BB-/Ba2 PNM Resources, Inc., 9.25%, 5/15/15 252,844
240,000 CCC/B2 Texas Competitive Electric Holdings LLC, 11.5%,
10/1/20 (144A) 246,600
510,000(g) CC/Caa3 Texas Competitive Electric Holdings LLC, 15.0%,
4/1/21 (144A) 451,350
------------
$ 2,117,364
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
24 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
--------------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
--------------------------------------------------------------------------------------------------------------
Gas Utilities -- 0.7%
1,135,000 B/B2 Transportadora de Gas del Sur SA, 7.875%,
5/14/17 (144A) $ 1,129,325
--------------------------------------------------------------------------------------------------------------
Independent Power Producers & Energy Traders -- 0.6%
500,000 BB-/Ba3 Intergen NV, 9.0%, 6/30/17 (144A) $ 542,500
500,000 NR/B2 Star Energy Geothermal (Wayang Windu), Ltd., 11.5%,
2/12/15 (144A) 575,008
------------
1,117,508
------------
Total Utilities $ 4,364,197
--------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS & NOTES
(Cost $161,502,155) $165,303,991
--------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS & NOTES -- 3.1% of Net Assets
MATERIALS -- 0.9%
Diversified Chemicals -- 0.9%
1,900(f) BB-/NR Hercules, Inc., 6.5%, 6/30/29 $ 1,503,375
------------
Total Materials $ 1,503,375
--------------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 0.5%
Marine -- 0.5%
990,000(b)(g) CC-/Ca Horizon Lines, Inc., 4.25%, 8/15/12 $ 845,212
------------
Total Transportation $ 845,212
--------------------------------------------------------------------------------------------------------------
MEDIA -- 0.4%
Movies & Entertainment -- 0.4%
659,000 B-/NR Live Nation, Inc., 2.875%, 7/15/27 $ 612,046
------------
Total Media $ 612,046
--------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 1.0%
Health Care Equipment & Services -- 0.7%
1,040,000(e)(g) BB+/NR Hologic, Inc., 2.0%, 12/15/37 $ 1,254,500
--------------------------------------------------------------------------------------------------------------
Health Care Facilities -- 0.3%
405,000 B/NR LifePoint Hospitals, Inc., 3.5%, 5/15/14 $ 436,387
--------------------------------------------------------------------------------------------------------------
Health Care Services -- 0.0%
15,000 B+/B2 Omnicare, Inc., 3.25%, 12/15/35 $ 14,025
------------
Total Health Care Equipment & Services $ 1,704,912
--------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 0.2%
Semiconductors -- 0.2%
150,000 NR/NR JA Solar Holdings Co., Ltd., 4.5%, 5/15/13 $ 143,813
271,000 NR/NR Suntech Power Holdings Co., Ltd., 3.0%, 3/15/13 252,708
------------
Total Semiconductors & Semiconductor Equipment $ 396,521
--------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 25
Schedule of Investments | 4/30/11 (Consolidated) (continued)
-----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-----------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 0.1%
Wireless Telecommunication Services -- 0.1%
250,000 B-/NR NII Holdings, Inc., 3.125%, 6/15/12 $ 250,000
------------
Total Telecommunication Services $ 250,000
-----------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS & NOTES
(Cost $4,073,838) $ 5,312,066
-----------------------------------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATION -- 0.7% of Net Assets
Brazil -- 0.7%
BRL 1,750,000 BBB-/BAA3 Brazilian Government International Bond,
10.25%, 1/10/28 $ 1,189,920
-----------------------------------------------------------------------------------------------------------
TOTAL SOVEREIGN DEBT OBLIGATION
(Cost $947,277) $ 1,189,920
-----------------------------------------------------------------------------------------------------------
SENIOR FLOATING RATE LOAN INTERESTS -- 31.7%
of Net Assets (h)
ENERGY -- 0.4%
Coal & Consumable Fuels -- 0.3%
450,000 NR/NR PT Bumi Resources Tbk, Term Loan, 11.236%, 8/7/13 $ 449,999
-----------------------------------------------------------------------------------------------------------
Integrated Oil & Gas -- 0.1%
246,638 B-/B1 Hudson Products Holdings, Inc., Term Loan,
8.5%, 8/24/15 $ 239,239
------------
Total Energy $ 689,238
-----------------------------------------------------------------------------------------------------------
MATERIALS -- 3.7%
Diversified Chemicals -- 1.1%
351,264 BB-/NR Huntsman International LLC, Extended Term Loan B,
2.773%, 4/19/17 $ 349,691
128,831 BB-/Ba2 Huntsman International LLC, New Dollar Term Loan B,
1.742%, 4/19/14 127,865
EURO 116,772 B/B1 Ineos US Finance LLC, Facility Term Loan B-1, 0.0%,
12/16/13 181,451
EURO 128,229 B/B1 Ineos US Finance LLC, Facility Term Loan C-1, 0.0%,
12/16/14 199,621
256,890 B/B1 Ineos US Finance LLC, Senior Credit Facility Term Loan
B-2, 7.5%, 12/16/13 266,444
283,608 B/B1 Ineos US Finance LLC, Senior Credit Facility Term Loan
C-2, 8.0%, 12/16/14 294,155
203,309 BB+/Ba1 Solutia, Inc., Term Loan 1, 3.5%, 8/1/17 205,015
349,125 B/B2 Univar, Inc., Term Loan B, 5.0%, 6/30/17 352,211
------------
$ 1,976,453
-----------------------------------------------------------------------------------------------------------
Forest Products -- 0.9%
1,500,000 B+/Ba3 Ainsworth Lumber Co., Ltd., Term Loan,
5.25%, 6/26/14 $ 1,502,970
-----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
26 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Paper Packaging -- 0.5%
456,692 B+/B1 Graham Packaging Co., LP, Term Loan C, 6.75%,
4/5/14 $ 461,331
89,550 B+/B1 Graham Packaging Co., LP, Term Loan D, 6.0%,
9/23/16 90,515
384,268 BB+/Ba3 Graphic Packaging International, Inc., Incremental
Term Loan, 3.041%, 5/16/14 385,442
------------
$ 937,288
----------------------------------------------------------------------------------------------------------
Paper Products -- 0.4%
700,881 BB+/Ba1 Georgia-Pacific LLC, Term Loan B, 2.309%, 12/23/12 $ 701,915
----------------------------------------------------------------------------------------------------------
Precious Metals & Minerals -- 0.1%
225,000 BB-/B1 Fairmount Minerals, Ltd., Tranche B Term Loan,
6.253%, 8/5/16 $ 226,512
----------------------------------------------------------------------------------------------------------
Specialty Chemicals -- 0.2%
250,000 NR/Ba1 Chemtura Corp., Facility Term Loan, 5.5%, 8/29/16 $ 252,812
----------------------------------------------------------------------------------------------------------
Steel -- 0.5%
882,413(c) B/B3 Niagara Corp., New Term Loan, 8.5%, 6/29/14 $ 878,001
------------
Total Materials $ 6,475,951
----------------------------------------------------------------------------------------------------------
CAPITAL GOODS -- 2.5%
Aerospace & Defense -- 1.3%
605,843 B/B2 DAE Aviation Holdings, Inc., Tranche B-1 Term Loan,
5.28%, 7/31/14 $ 612,658
246,640 BB/B1 Hunter Defense Technologies, Inc., Term Loan,
3.56%, 8/22/14 241,707
484,873 BBB-/Ba1 Spirit Aerosystems, Inc., Term Loan B-2, 3.531%,
9/30/16 485,782
583,629 B/B2 Standard Aero, Ltd., Tranche B-2 Term Loan,
5.28%, 7/31/14 590,195
357,338 BB/Ba2 TASC, Inc., Tranche A Term Loan, 5.5%, 12/18/14 358,008
------------
$ 2,288,350
----------------------------------------------------------------------------------------------------------
Building Products -- 0.7%
1,119,375 B+/B1 Goodman Global, Inc., First Lien Initial Term Loan,
5.75%, 10/28/16 $ 1,130,915
----------------------------------------------------------------------------------------------------------
Construction & Farm Machinery & Heavy Trucks -- 0.4%
495,084 BB+/Ba2 Bucyrus International, Inc., Tranche C U.S. Dollar Term
Loan, 4.25%, 2/19/16 $ 498,385
119,583 BB/Ba2 Manitowoc Co., Inc., Term Loan B, 8.0%, 11/6/14 120,159
------------
$ 618,544
----------------------------------------------------------------------------------------------------------
Industrial Conglomerates -- 0.1%
246,039 BB/Ba2 Tomkins LLC, Term Loan, 4.25%, 9/29/16 $ 248,128
------------
Total Capital Goods $ 4,285,937
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 27
Schedule of Investments | 4/30/11 (Consolidated) (continued)
--------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
--------------------------------------------------------------------------------------------------
COMMERCIAL & PROFESSIONAL SERVICES -- 1.6%
Commercial Printing -- 0.2%
249,375 BB-/Caa1 Cenveo Corp., Facility Term Loan B, 6.25%, 12/21/16 $ 252,025
--------------------------------------------------------------------------------------------------
Environmental & Facilities Services -- 1.3%
812,963 B+/B1 Brickman Group Holdings, Inc., Tranche B Term Loan,
7.25%, 10/14/16 $ 830,915
1,203,125 CCC+/B3 Synagro Technologies, Inc., First Lien Term Loan,
2.23%, 4/2/14 1,139,961
300,000 B+/B1 Waste Industries USA, Inc., Term Loan B, 4.75%,
3/17/17 302,434
------------
$ 2,273,310
--------------------------------------------------------------------------------------------------
Security & Alarm Services -- 0.1%
232,740 BB/B1 Protection One, Inc., Term Loan, 6.0%, 6/4/16 $ 233,807
------------
Total Commercial & Professional Services $ 2,759,142
--------------------------------------------------------------------------------------------------
TRANSPORTATION -- 0.9%
Air Freight & Logistics -- 0.8%
439,482 B/B1 Ceva Group Plc, Pre-Funded Tranche B LC Loan,
0.207%, 8/31/16 $ 432,066
919,588 NR/B1 Ceva Group Plc, U.S. Tranche B Term Loan, 5.273%,
8/31/16 904,070
------------
$ 1,336,136
--------------------------------------------------------------------------------------------------
Airlines -- 0.1%
275,000 BB-/Ba2 Delta Air Lines, Inc., New Term Loan, 4.25%, 3/7/16 $ 273,900
------------
Total Transportation $ 1,610,036
--------------------------------------------------------------------------------------------------
AUTOMOBILES & COMPONENTS -- 1.4%
Auto Parts & Equipment -- 0.6%
140,549 B+/Ba3 Federal-Mogul Corp., Tranche B Term Loan, 2.173%,
12/29/14 $ 137,321
71,709 B+/Ba3 Federal-Mogul Corp., Tranche C Term Loan, 2.151%,
12/28/15 70,061
597,000 B+/B1 Metaldyne LLC, Term Loan, 7.75%, 10/22/16 611,925
144,638 B/Ba2 UCI International, Inc., Term Loan, 5.5%, 7/26/17 146,295
------------
$ 965,602
--------------------------------------------------------------------------------------------------
Automobile Manufacturers -- 0.2%
447,247 BB+/Baa3 Ford Motor Co., Tranche B-1 Term Loan, 2.97%,
12/15/13 $ 448,294
--------------------------------------------------------------------------------------------------
Tires & Rubber -- 0.6%
1,000,000 BB/Ba1 Goodyear Tire & Rubber Co., Second Lien Term Loan,
1.94%, 4/30/14 $ 987,750
------------
Total Automobiles & Components $ 2,401,646
--------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
28 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
-------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-------------------------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 0.2%
Leisure Products -- 0.2%
398,534 BB-/Ba3 SRAM LLC, Term Loan, 5.007%, 4/30/15 $ 399,531
------------
Total Consumer Durables & Apparel $ 399,531
-------------------------------------------------------------------------------------------------
CONSUMER SERVICES -- 0.3%
Specialized Consumer Services -- 0.3%
442,065 B+/B1 Wash MultiFamily Laundry Systems LLC, Term Loan,
7.0%, 8/28/14 $ 443,171
------------
Total Consumer Services $ 443,171
-------------------------------------------------------------------------------------------------
MEDIA -- 3.1%
Advertising -- 0.5%
990,004 BB-/Ba3 Affinion Group, Inc., Tranche B Term Loan, 5.0%,
10/9/16 $ 993,562
-------------------------------------------------------------------------------------------------
Broadcasting -- 1.4%
492,280 NR/Caa2 FoxCo Acquisition Sub LLC, Replacement Term Loan,
4.768%, 7/14/15 $ 494,664
919,342 B+/Ba3 Insight Midwest Holdings LLC, Term Loan B, 2.021%,
4/7/14 913,361
413,963 BB-/Ba3 TWCC Holding Corp., Term Loan, 4.25%, 2/11/17 418,749
590,050 B+/B2 Univision Communications, Inc., Extended First Lien
Term Loan, 4.461%, 3/31/17 578,278
------------
$ 2,405,052
-------------------------------------------------------------------------------------------------
Cable & Satellite -- 0.3%
549,363 B-/B1 WideOpenWest Finance LLC, Series A Term Loan,
6.746%, 6/30/14 $ 552,110
-------------------------------------------------------------------------------------------------
Movies & Entertainment -- 0.5%
212,843 NR/Ba1 Cinedigm Digital Funding I LLC, Term Loan, 5.25%,
4/29/16 $ 212,489
628,133 B/B3 Lodgenet Entertainment Corp., Closing Date Term
Loan, 6.5% , 4/4/14 603,531
------------
$ 816,020
-------------------------------------------------------------------------------------------------
Publishing -- 0.4%
811,973 B/B1 RH Donnelley, Inc., Term Loan, 9.0%, 10/24/14 $ 641,290
------------
Total Media $ 5,408,034
-------------------------------------------------------------------------------------------------
RETAILING -- 0.5%
Automotive Retail -- 0.2%
249,375 BB+/Ba3 Autotrader.com, Inc., Tranche B Term Loan, 4.75%,
12/15/16 $ 251,806
-------------------------------------------------------------------------------------------------
Specialty Stores -- 0.3%
550,000 B+/Ba3 Savers, Inc., New Term Loan, 4.25%, 3/14/17 $ 554,239
------------
Total Retailing $ 806,045
-------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 29
Schedule of Investments | 4/30/11 (Consolidated) (continued)
-----------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-----------------------------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 0.6%
Packaged Foods & Meats -- 0.6%
250,000 B+/Ba3 Del Monte Foods Co., Initial Term Loan, 4.5%, 3/8/18 $ 251,386
249,375 B+/Ba3 Green Mountain Coffee Roasters, Inc., Facility Term
Loan B, 5.5%, 12/16/16 253,038
500,000 BB-/B2 Pierre Foods, Inc., Second Lien Term Loan, 11.25%,
9/29/17 509,688
------------
Total Food, Beverage & Tobacco $ 1,014,112
-----------------------------------------------------------------------------------------------------
HOUSEHOLD & PERSONAL PRODUCTS -- 0.4%
Household Products -- 0.1%
220,000 BB/Ba3 Reynolds Group Holdings, Inc., U.S. Term Loan, 4.25%,
2/19/18 $ 221,513
-----------------------------------------------------------------------------------------------------
Personal Products -- 0.3%
249,375 BB-/Ba3 NBTY, Inc., Term Loan B-1, 4.25%, 10/1/17 $ 251,479
247,500 BB-/Ba3 Revlon Consumer Products Corp., Term Loan, 6.0%,
3/11/15 249,221
------------
$ 500,700
------------
Total Household & Personal Products $ 722,213
-----------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 4.8%
Health Care Facilities -- 0.9%
247,500 B/B1 Ardent Medical Services, Inc., Term Loan, 6.5%,
9/15/15 $ 248,944
49,684 BB/Ba3 Community Health Systems, Inc., Non-Extended
Delayed Draw Term Loan, 2.561%, 7/25/14 48,567
965,697 BB/Ba3 Community Health Systems, Inc., Non-Extended Term
Loan, 2.561%, 7/25/14 943,969
82,579 BB/Ba3 HCA, Inc., Tranche B-1 Term Loan, 2.557%, 11/18/13 82,556
198,040 BB/Ba3 HCA, Inc., Tranche B-2 Term Loan, 3.557%, 3/31/17 198,563
------------
$ 1,522,599
-----------------------------------------------------------------------------------------------------
Health Care Services -- 2.2%
496,875 NR/NR AccentCare, Inc., Term Loan, 6.5%, 12/22/16 $ 498,117
296,756 B+/B1 Aveta, Inc., NAMM Term Loan, 8.5%, 4/14/15 299,229
1,331,008 BB-/Ba3 Catalent Pharma, Inc., Dollar Term Loan, 2.461%,
4/10/14 1,299,563
466,481 BB-/Ba3 Inventiv Health, Inc., Replacement Term Loan B,
4.75%, 8/4/16 469,979
58,188 BB-/Ba3 Inventiv Health, Inc., Term Loan B-1, 4.75%, 8/4/16 58,515
410,000 B+/B1 National Mentor Holdings, Inc., Tranche B Term Loan,
7.0%, 2/9/17 405,900
255,446 B/B2 National Speciality Hospitals, Inc., Initial Term Loan,
8.25%, 2/3/17 255,126
The accompanying notes are an integral part of these financial statements.
30 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
--------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
--------------------------------------------------------------------------------------------------
Health Care Services -- (continued)
371,250 NR/B1 Prime Healthcare Services, Inc., Term Loan B, 7.25%,
4/28/15 $ 364,753
244,444 B+/Ba2 Sun Healthcare Group, Inc., Term Loan,
7.5%, 10/18/16 244,750
------------
$ 3,895,932
--------------------------------------------------------------------------------------------------
Health Care Supplies -- 1.0%
111,849 BB-/B1 Bausch & Lomb, Inc., Delayed Draw Term Loan,
3.461%, 4/24/15 $ 112,087
460,078 BB-/B1 Bausch & Lomb, Inc., Parent Term Loan, 3.535%,
4/24/15 461,055
481,250 BB/Ba2 IM US Holdings LLC, First Lien Term Loan, 2.225%,
6/26/14 476,287
600,000 B-/B1 IM US Holdings LLC, Second Lien Term Loan, 4.461%,
6/26/15 599,438
------------
$ 1,648,867
--------------------------------------------------------------------------------------------------
Health Care Technology -- 0.5%
247,502 BB/NR IMS Health, Inc., Tranche B Dollar Term Loan,
4.5%, 8/26/17 $ 247,915
395,000 B/B2 Medical Card System, Inc., Term Loan,
12.003%, 9/17/15 420,675
223,929 B/B2 Physician Oncology Services LP, Effective Date Term
Loan, 6.25%, 1/31/17 223,369
------------
$ 891,959
--------------------------------------------------------------------------------------------------
Managed Health Care -- 0.2%
296,756 B+/B1 Aveta, Inc., MMM Term Loan, 8.5%, 4/14/15 $ 299,476
------------
Total Health Care Equipment & Services $ 8,258,833
--------------------------------------------------------------------------------------------------
PHARMACEUTICALS & BIOTECHNOLOGY & LIFE SCIENCES -- 0.9%
Biotechnology -- 0.8%
498,750 BB/B1 Axcan Intermediate Holdings, Inc., Term Loan,
5.5%, 2/10/17 $ 498,750
436,571 BBB-/Ba3 Warner Chilcott Co. LLC, Term Loan B-1,
4.25%, 3/15/18 440,664
218,286 BBB-/Ba3 Warner Chilcott Co. LLC, Term Loan B-2,
6.25%, 3/15/18 220,332
300,143 BBB-/Ba3 Warner Chilcott Co. LLC, Term Loan B-3,
4.25%, 3/15/18 302,957
------------
$ 1,462,703
--------------------------------------------------------------------------------------------------
Pharmaceuticals -- 0.1%
146,714 BBB/Baa3 Mylan, Inc., U.S. Tranche B Term Loan,
3.563%, 10/2/14 $ 147,549
------------
Total Pharmaceuticals & Biotechnology &
Life Sciences $ 1,610,252
--------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 31
Schedule of Investments | 4/30/11 (Consolidated) (continued)
----------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 1.5%
Other Diversified Financial Services -- 0.5%
147,789 B-/B2 BNY ConvergEX Group LLC, Second Lien (EZE) Term
Loan, 8.75%, 12/18/17 $ 152,531
352,211 B+/NR BNY ConvergEX Group LLC, Second Lien (TOP) Term
Loan, 8.75%, 12/18/17 363,512
222,454 NR/NR Long Haul Holdings, Ltd. and PT Bakrie & Brothers Tbk,
Tranche A, Vallar Loan, 0.0%, 3/15/12 222,454
177,546 B/B2 Long Haul Holdings, Ltd. and PT Bakrie & Brothers Tbk,
Tranche B Vallar Loan, 0.0%, 3/15/12 177,546
------------
$ 916,043
----------------------------------------------------------------------------------------------------
Specialized Finance -- 1.0%
664,925 BB+/B1 Asset Acceptance Capital Corp., Tranche B Term Loan,
3.81%, 6/12/13 $ 661,600
808,995 CCC+/B2 Collect Acquisition Corp., Advance Term Loan B, 8.0%,
5/15/13 802,544
222,573 BB+/Ba1 MSCI, Inc., Term Loan, 3.75%, 3/14/17 225,007
------------
$ 1,689,151
------------
Total Diversified Financials $ 2,605,194
----------------------------------------------------------------------------------------------------
INSURANCE -- 3.4%
Insurance Brokers -- 2.4%
1,397,955 B-/B2 Alliant Holdings I, Inc., Term Loan, 3.307%, 8/21/14 $ 1,390,966
127,217 B/B2 HUB International, Ltd., Delay Draw Term Loan,
2.807%, 6/13/14 126,374
565,946 B/B2 HUB International, Ltd., Initial Term Loan,
2.807%, 6/13/14 562,197
98,500 B-/B3 U.S.I. Holdings Corp., Series C Term Loan,
7.0%, 5/5/14 98,459
1,925,000 B-/B2 U.S.I. Holdings Corp., Tranche B Term Loan,
2.76%, 5/5/14 1,905,750
------------
$ 4,083,746
----------------------------------------------------------------------------------------------------
Multi-Line Insurance -- 1.0%
790,101 B-/B2 AmWins Group, Inc., Initial Term Loan, 2.816%,
6/8/13 $ 784,669
1,000,000 CCC/B3 AmWins Group, Inc., Second Lien Initial Term Loan,
5.81%, 6/9/14 925,000
------------
$ 1,709,669
------------
Total Insurance $ 5,793,415
----------------------------------------------------------------------------------------------------
REAL ESTATE -- 0.1%
Real Estate Development -- 0.1%
247,500 B/Ba3 Ozburn-Hessey Holding Co. LLC, First Lien Term Loan,
7.5%, 4/8/16 $ 251,831
------------
Total Real Estate $ 251,831
----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
32 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
----------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 3.2%
Application Software -- 0.8%
966,921 BB+/Ba2 Nuance Communications, Inc., Term Loan, 1.97%,
3/29/13 $ 963,749
500,000 NR/Caa1 Vertafore, Inc., Second Lien Term Loan, 9.75%,
10/29/17 510,000
------------
$ 1,473,749
----------------------------------------------------------------------------------------------------
Data Processing & Outsourced Services -- 0.3%
525,000 B-/B2 Fifth Third Processing Solutions LLC, Second Lien Term
Loan, 8.25%, 11/3/17 $ 538,125
----------------------------------------------------------------------------------------------------
IT Consulting & Other Services -- 1.3%
388,382 B+/B1 Activant Solutions, Inc., Term Loan B-1, 2.313%,
5/2/13 $ 387,290
1,887,369 BB/Ba3 SunGard Data Systems, Inc., Tranche A U.S.Term Loan,
1.979%, 2/28/14 1,872,617
------------
$ 2,259,907
----------------------------------------------------------------------------------------------------
Systems Software -- 0.8%
1,345,956 BB-/B1 Vangent, Inc., Term Loan, 2.32%, 2/14/13 $ 1,329,132
------------
Total Software & Services $ 5,600,913
----------------------------------------------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 0.6%
Communications Equipment -- 0.3%
250,000 BB/Ba3 Commscope, Inc., Term Loan, 5.0%, 1/14/18 $ 252,864
250,000 BB-/Ba3 Towerco Finance LLC, Term Loan, 5.25%, 2/2/17 251,952
------------
$ 504,816
----------------------------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 0.3%
513,713 B/B2 Scitor Corp., Term Loan, 5.0%, 2/15/17 $ 515,639
------------
Total Technology Hardware & Equipment $ 1,020,455
----------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 0.9%
Semiconductor Equipment -- 0.9%
698,721 BB/B2 Aeroflex, Inc., Tranche B-2 Term Loan, 4.813%,
8/15/14 $ 698,721
770,252 B-/B1 Freescale Semiconductor, Inc., Extended Maturity Term
Loan, 4.493%, 12/1/16 771,576
------------
Total Semiconductors & Semiconductor Equipment $ 1,470,297
----------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 0.3%
Integrated Telecommunication Services -- 0.3%
428,270 B+/B1 Telesat Canada, U.S. Term I Loan,
3.222%, 10/31/14 $ 428,538
36,788 B+/B1 Telesat Canada, U.S. Term II Loan,
3.222%, 10/31/14 36,811
------------
Total Telecommunication Services $ 465,349
----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 33
Schedule of Investments | 4/30/11 (Consolidated) (continued)
----------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------
UTILITIES -- 0.4%
Electric Utilities -- 0.3%
629,720 CCC/B2 Texas Competitive Electric Holdings Co. LLC, Extending
Term Loan, 4.736%, 10/10/17 $ 505,665
----------------------------------------------------------------------------------------------------
Independent Power Producers & Energy Traders -- 0.1%
184,378 BB-/Ba3 Mach Gen LLC, First Lien Synthetic LC Loan, 0.057%,
2/22/13 $ 172,393
------------
Total Utilities $ 678,058
----------------------------------------------------------------------------------------------------
TOTAL SENIOR FLOATING RATE LOAN INTERESTS
(Cost $54,155,842) $ 54,769,653
----------------------------------------------------------------------------------------------------
MUNICIPAL BONDS -- 0.5% of Net Assets
Texas -- 0.5%
950,000 CCC+/NR Alliance Airport Authority Income Special Facilities
Revenue, 5.75%, 12/1/29 $ 663,166
175,000 CCC+/Caa2 Dallas-Fort Worth International Airport Facility
Improvement Revenue, 6.375%, 5/1/35 127,334
----------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $845,124) $ 790,500
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
Shares
----------------------------------------------------------------------------------------------------
COMMON STOCKS -- 0.5% of Net Assets
ENERGY -- 0.0%
Oil & Gas Drilling -- 0.0%
1,109(i) Rowan Companies, Inc. $ 46,245
------------
Total Energy $ 46,245
----------------------------------------------------------------------------------------------------
MATERIALS -- 0.3%
Commodity Chemicals -- 0.1%
2,459(i) Georgia Gulf Corp. $ 96,835
1,121(i) Lyondell Basell Industries NV 49,885
------------
$ 146,720
----------------------------------------------------------------------------------------------------
Diversified Metals & Mining -- 0.1%
371,096(i)(j)(k) Blaze Recycling and Metals LLC Class A Units $ 256,056
----------------------------------------------------------------------------------------------------
Forest Products -- 0.0%
13,963(i) Ainsworth Lumber Co., Ltd. $ 45,472
----------------------------------------------------------------------------------------------------
Steel -- 0.1%
15,083(i)(k) KNIA Holdings, Inc. $ 105,430
------------
Total Materials $ 553,678
----------------------------------------------------------------------------------------------------
AUTOMOBILES & COMPONENTS -- 0.2%
Auto Parts & Equipment -- 0.2%
6,296(i) Lear Corp. $ 321,977
------------
Total Automobiles & Components $ 321,977
----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
34 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
-------------------------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 0.0%
Diversified Financial Services -- 0.0%
731(i) BTA Bank JSC (144A) $ 10,289
------------
Total Diversified Financials $ 10,289
-------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 0.0%
Systems Software -- 0.0%
2,114(i)(j)(k) Perseus Holding Corp. (144A) $ --
------------
Total Software & Services $ --
-------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $781,650) $ 932,189
-------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK -- 0.3% of Net Assets
DIVERSIFIED FINANCIALS -- 0.3%
Other Diversified Financial Services -- 0.3%
470 Bank of America Corp. $ 490,680
------------
Total Diversified Financials $ 490,680
-------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCK
(Cost $382,900) $ 490,680
-------------------------------------------------------------------------------------------------
PREFERRED STOCK -- 0.3% of Net Assets
DIVERSIFIED FINANCIALS -- 0.3%
Other Diversified Financials -- 0.3%
22,000 GMAC Capital Trust I, 8.125% $ 564,417
------------
Total Diversified Financials $ 564,417
-------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 0.0%
Systems Software -- 0.0%
1,110(i) Perseus Holding Corp. (144A) $ 27,750
------------
Total Software & Services $ 27,750
-------------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCK
(Cost $550,000) $ 592,167
-------------------------------------------------------------------------------------------------
RIGHTS/WARRANTS -- 0.0% of Net Assets
REAL ESTATE -- 0.0%
Real Estate Development -- 0.0%
750,000(i)(j) Neo-China Group Holdings, Ltd., Expires
7/22/12 (144A) $ 17,012
-------------------------------------------------------------------------------------------------
TOTAL RIGHTS/WARRANTS
(Cost $17,012) $ 17,012
-------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 35
Schedule of Investments | 4/30/11 (Consolidated) (continued)
------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 3.2% of Net Assets
SECURITIES LENDING COLLATERAL -- 3.2%(l)
Certificates of Deposit:
142,108 Bank of Nova Scotia, 0.27%, 9/29/11 $ 142,108
99,476 BBVA Group NY, 1.11%, 7/26/11 99,476
142,108 BNP Paribas Bank NY, 0.34%, 5/9/11 142,108
142,108 Canadian Imperial Bank of Commerce NY,
0.22%, 10/3/11 142,108
142,108 DnB NOR Bank ASA NY, 0.24%, 6/7/11 142,108
71,052 National Australia Bank NY, 0.29%, 10/19/11 71,052
156,350 RoboBank Netherland NV NY, 0.34%, 4/2/12 156,350
85,265 Royal Bank of Canada NY, 0.34%, 12/2/11 85,265
142,109 Skandinav Enskilda Bank NY, 0.38%, 6/7/11 142,109
42,633 SOCGEN NY, 0.18%, 5/20/11 42,633
85,265 SOCGEN NY, 0.28%, 7/14/11 85,265
56,843 SOCGEN NY, 0.37%, 6/10/11 56,843
99,476 Svenska NY, 0.20%, 7/19/11 99,476
142,108 Svenska NY, 0.28%, 5/12/11 142,108
142,108 Westpac Banking Corp. NY, 0.34%, 12/6/11 142,108
------------
$ 1,691,117
------------------------------------------------------------------------------------------
Commercial Paper:
56,843 American Honda Finance, 0.34%, 1/11/12 $ 56,843
56,906 American Honda Finance, 1.06%, 6/20/11 56,906
52,097 Australia & New Zealand Banking Group,
0.91%, 8/4/11 52,097
85,258 BBVLON, 0.35%, 5/9/11 85,258
56,836 BBVLON, 0.55%, 5/9/11 56,836
21,305 BCSFUN, 0.22%, 7/29/11 21,305
142,054 BCSFUN, 0.25%, 6/24/11 142,054
144,403 Caterpillar Financial Services Corp., 1.06%, 6/24/11 144,403
127,877 CBAPP, 0.26%, 5/23/11 127,877
142,111 Federal Home Loan Bank, 0.27%, 6/1/11 142,111
14,210 General Electric Capital Corp., 0.39%, 6/6/11 14,210
113,678 HSBC, 0.25%, 5/11/11 113,678
127,898 JPMorgan Chase & Co., 0.30%, 5/18/11 127,898
21,336 JPMorgan Chase & Co., 1.06%, 6/13/11 21,336
71,039 NABPP, 0.25%, 6/1/11 71,039
113,619 NORDNA, 0.27%, 7/18/11 113,619
113,630 PARFIN, 0.23%, 7/11/11 113,630
56,843 Royal Bank of Canada NY, 0.30%, 4/30/12 56,843
85,255 SANU, 0.68%, 5/13/11 85,255
71,011 SANU, 0.68%, 6/1/11 71,011
85,182 SANU, 0.68%, 6/17/11 85,182
85,259 SEB, 0.19%, 5/13/11 85,259
The accompanying notes are an integral part of these financial statements.
36 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------
Commercial Paper -- (continued)
71,052 SOCNAM, 0.37%, 5/3/11 $ 71,052
142,109 Toyota Motor Credit Corp., 0.34%, 9/8/11 142,109
56,865 Wachovia, 0.43%, 10/15/11 56,865
42,674 Wachovia, 0.46%, 3/1/12 42,674
28,442 Wells Fargo & Co., 0.39%, 1/24/12 28,442
------------
$ 2,185,792
------------------------------------------------------------------------------
Tri-party Repurchase Agreements:
254,948 Barclays Capital Plc, 0.03%, 5/2/11 $ 254,948
284,217 Deutsche Bank AG, 0.03, 5/2/11 284,217
284,217 HSBC Bank USA NA, 0.03%, 5/2/11 284,217
284,217 RBS Securities, Inc., 0.04%, 5/2/11 284,217
------------
$ 1,107,599
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Shares
------------------------------------------------------------------------------
Money Market Mutual Funds:
255,795 Dreyfus Preferred Money Market Fund $ 255,795
255,795 Fidelity Prime Money Market Fund 255,795
------------
$ 511,590
------------
Total Securities Lending Collateral $ 5,496,098
------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $5,496,098) $ 5,496,098
------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES -- 138.2%
(Cost $233,093,114)(m) $238,896,476
------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (38.2)% $(66,014,705)
------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS -- 100.0% $172,881,771
==============================================================================
NR Security not rated by S&P or Moody's.
WR Withdrawn rating.
(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 April
30, 2011, the value of these securities amounted to $113,219,987 or
65.5% of total net assets applicable to common shareowners.
(a) Floating rate note. The rate shown is the coupon rate at April 30, 2011.
(b) Security is in default and is non-income producing.
(c) Payment-in-Kind (PIK) security which may pay interest in the form of
additional principal.
(d) Security is perpetual in nature and has no stated maturity date.
(e) Debt obligation initially issued at one coupon rate which converts to
another coupon rate at a specific date. The coupon rate shown is the
coupon rate at April 30, 2011.
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 37
Schedule of Investments | 4/30/11 (Consolidated) (continued)
(f) Security is priced as a unit.
(g) At April 30, 2011, the following securities were out on loan:
------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Description Value
------------------------------------------------------------------------------------------
391,000 Burger King Corp., 9.875%, 10/15/18 $ 413,483
384,000 Cincinnati Bell, Inc., 8.75%, 3/15/18 368,640
285,000 Hologic, Inc., 2.0%, 12/15/37 343,781
980,000 Horizon Lines, Inc., 4.25%, 8/15/12 836,675
370,000 Navios South American Logistics, 9.25%, 4/15/19 (144A) 377,400
200,000 Sally Holdings LLC, 10.5%, 11/15/16 217,750
210,000 Surgical Care Affiliates, Inc., 10.0%, 7/15/17 (144A) 216,825
435,000 Texas Competitive Electric Holdings LLC, 15.0%, 4/1/21 (144A) 384,975
1,112,000 Tower Automotive Holdings USA LLC, 10.625%, 9/1/17 (144A) 1,244,050
750,000 OJSC Vimpel Communications Via VIP Ireland, Ltd., 9.125%,
4/30/18 (144A) 860,625
------------------------------------------------------------------------------------------
$5,264,204
==========================================================================================
(h) Floating rate loan interests in which the Trust invests generally pay
interest at rates that are periodically redetermined by reference to a
base lending rate plus a premium. These base lending rates are generally
(i) the lending rate offered by one or more major European banks, such
as LIBOR (London InterBank Offered Rate), (ii) the prime rate offered by
one or more major United States banks, (iii) the certificate of deposit
(iv) other base lending rates used by commercial lenders. The interest
rate shown is the coupon rate accruing at April 30, 2011.
(i) Non-income producing.
(j) Indicates a security that has been deemed illiquid. The aggregate cost
of illiquid securities is $314,083. The aggregate value $273,068
represents 0.2% of total net assets applicable to common shareowners.
(k) Security is valued using fair value methods (other than prices supplied
by independent pricing services). (See Note 1A).
(l) Securities lending collateral is managed by Credit Suisse AG, New York
branch.
(m) At April 30, 2011, the net unrealized gain on investments based on cost
for federal income tax purposes of $233,854,364 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost $15,100,935
Aggregate gross unrealized loss for all investments in which there is an
excess of tax cost over value (10,058,823)
-----------
Net unrealized gain $ 5,042,112
===========
For financial reporting purposes net unrealized gain was $5,803,362 and cost of
investments aggregated $233,093,114.
Glossary of Terms:
LC Letter of Credit
The accompanying notes are an integral part of these financial statements.
38 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
Note: Principal amounts are denominated in U.S. dollars unless otherwise
denoted.
BRL Brazilian Real
EURO Euro
GBP British Pound
NOK Norwegian Krone
Purchases and sales of securities (excluding temporary cash investments) for
the period ended April 30, 2011, aggregated $81,920,205 and $67,527,865,
respectively.
Various inputs are used in determining the value of the Trust's investments.
These inputs are summarized in the three broad levels listed below.
Highest priority is given to Level 1 inputs and lowest priority is given to
Level 3.
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit
risk, etc.)
Level 3 -- significant unobservable inputs (including the Trust's own
assumptions in determining fair value of investments)
Generally, equity securities are categorized as Level 1, fixed income
securities and senior loans are categorized as Level 2 and securities valued
using fair value methods (see Note 1A) are categorized as Level 3.
The following is a summary of the inputs used as of April 30, 2011, in valuing
the Trust's investments:
----------------------------------------------------------------------------------------------------
Level 1 Level 2 Level 3 Total
----------------------------------------------------------------------------------------------------
Asset backed securities $ -- $ 2,137,811 $ -- $ 2,137,811
Collateralized mortgage obligations 1,864,389 -- 1,864,389
Corporate bonds & notes -- 165,303,991 -- 165,303,991
Convertible bonds & notes -- 5,312,066 -- 5,312,066
Sovereign debt obligation -- 1,189,920 -- 1,189,920
Senior Floating rate loan interests -- 54,769,653 -- 54,769,653
Municipal Bonds -- 790,500 -- 790,500
Common stock (diversified metals
& mining) -- -- 256,056 256,056
Common stock (steel) -- -- 105,430 105,430
Common stock (systems
software) -- -- -- --
Common stock (other industries) 560,414 10,289 -- 570,703
Convertible preferred stock 490,680 -- -- 490,680
Preferred stock -- 592,167 -- 592,167
Rights/Warrants -- 17,012 -- 17,012
Temporary cash investments -- 4,984,508 -- 4,984,508
Money market mutual funds 511,590 -- -- 511,590
----------------------------------------------------------------------------------------------------
Total $1,562,684 $236,972,306 $361,486 $238,896,476
----------------------------------------------------------------------------------------------------
Other Financial Instruments* $ -- $ (157,388) $ -- $ (157,388)
=====================================================================================================
* Other financial investments include foreign exchange contracts and net
unrealized loss on unfunded loan commitments.
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 39
Schedule of Investments | 4/30/11 (Consolidated) (continued)
The following is a reconciliation of assets valued using significant
unobservable inputs (level 3):
--------------------------------------------------------------------------------------------------------------------
Change in Transfer
Balance Realized unrealized Net in and Balance
as of gain appreciation purchases out of as of
4/30/10 (loss) (depreciation)1 (sales) Level 3* 4/30/11
--------------------------------------------------------------------------------------------------------------------
Corporate bonds & notes
(systems software) $ 513,749 $-- $ -- $ -- $ (513,749) $ --
Floating rate loan interests
(steel) 891,034 -- -- -- (891,034) --
Common stock (diversified
metal and mining) -- -- (41,015) 297,071 -- 256,056
Common stock (steel) 117,044 -- (11,614) -- -- 105,430
---------------------------------------------------------------------------------------------------------------------
Ending balance $ 1,521,827 $-- $ (52,629) $ 297,071 $ (1,404,783) $ 361,486
=====================================================================================================================
1 Unrealized appreciation (depreciation) on these securities is included in
the change in unrealized gain (loss) from investments in the Statement of
Operations.
* Transfers are calculated beginning of period.
The accompanying notes are an integral part of these financial statements.
40 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
Statement of Assets and Liabilities | 4/30/11 (Consolidated)
ASSETS:
Investments in securities, at value (including securities loaned of
$5,264,204) (cost $233,093,114) $238,896,476
Cash 3,585,292
Foreign currencies, at value (cost $3,638,647) 3,998,000
Receivables --
Investment securities sold 1,430,514
Interest receivable 4,104,727
Forward foreign currency settlement hedge contracts -- net 923
Prepaid expenses 12,428
Other assets 81,780
---------------------------------------------------------------------------------------
Total assets $252,110,140
---------------------------------------------------------------------------------------
LIABILITIES:
Payables --
Notes payable $ 69,000,000
Investment securities purchased 2,490,780
Upon return of securities loaned 5,496,098
Forward foreign currency portfolio hedge contracts -- net 152,069
Dividends to shareowners 1,316,351
Depreciation on unfunded loan commitments -- net 6,242
Unamortized facility fees 1,106
Due to affiliates 283,342
Accrued interest expense 150,330
Accrued expenses 298,779
Other liabilities 33,272
---------------------------------------------------------------------------------------
Total liabilities $ 79,228,369
---------------------------------------------------------------------------------------
NET ASSETS:
Paid-in capital $192,549,501
Distribution in excess of investment income (1,515,690)
Accumulated net realized loss on investments and foreign currency
transactions (24,141,622)
Net unrealized gain on investments 5,797,120
Net unrealized gain on forward foreign currency contracts and other
assets and liabilities denominated in foreign currencies 192,462
---------------------------------------------------------------------------------------
Net assets applicable to common shareowners $172,881,771
=======================================================================================
NET ASSET VALUE PER SHARE:
No par value (unlimited number of shares authorized)
Based on $172,881,771/8,227,194 shares $ 21.01
=======================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 41
Statement of Operations (Consolidated)
For the Year Ended 4/30/11
INVESTMENT INCOME:
Interest (net of foreign taxes withheld $10,563) $20,024,729
Dividends 39,393
Facility and other fees 220,643
Income from securities loaned, net 17,382
-------------------------------------------------------------------------------------------------------
Total investment income $20,302,147
-------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees $1,981,098
Administrative fees 225,001
Transfer agent fees and expenses 12,814
Shareowner communications expense 65,724
Bank loan fees and expenses 141,333
Custodian fees 37,012
Registration fees 17,499
Professional fees 105,665
Printing expenses 40,612
Trustees' fees 7,592
Pricing fees 36,149
Miscellaneous 48,815
-------------------------------------------------------------------------------------------------------
Net operating expenses $ 2,719,314
-------------------------------------------------------------------------------------------------------
Interest expense $ 959,938
-------------------------------------------------------------------------------------------------------
Net operating expenses and interest expense $ 3,679,252
Less management fees waived and expenses reimbursed by
Pioneer Investment Management, Inc. ("PIM") (27,859)
-------------------------------------------------------------------------------------------------------
Net expenses $ 3,651,393
-------------------------------------------------------------------------------------------------------
Net investment income $16,650,754
-------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ (31,327)
Forward foreign currency contracts and other assets and liabilities
denominated in foreign currencies 180,056 $ 148,729
-------------------------------------------------------------------------------------------------------
Change in net unrealized gain (loss) from:
Investments $5,773,402
Unfunded loan commitments (6,242)
Forward foreign currency contracts and other assets and liabilities
denominated in foreign currencies 167,078 $ 5,934,238
-------------------------------------------------------------------------------------------------------
Net gain on investments and foreign currency transactions $ 6,082,967
-------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $22,733,721
=======================================================================================================
The accompanying notes are an integral part of these financial statements.
42 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
Statement of Changes in Net Assets
For the Years Ended 4/30/11 and 4/30/10, respectively
----------------------------------------------------------------------------------------------------
Year Ended
4/30/11 Year Ended
(Consolidated) 4/30/10
----------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 16,650,754 $ 14,411,873
Net realized gain (loss) on investments and foreign currency
transactions 148,729 (9,588,054)
Change in net unrealized gain (loss) on investments, unfunded
loan commitments and foreign currency transactions 5,934,238 62,597,723
----------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 22,733,721 $ 67,421,542
----------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREOWNERS FROM:
Net investment income ($1.920 and $1.686 per share,
respectively) $(15,772,901) $(13,800,249)
Tax return of capital ($0.000 and $0.324 per share respectively) -- (2,651,977)
----------------------------------------------------------------------------------------------------
Total distributions to shareowners $(15,772,901) $(16,452,226)
----------------------------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Reinvestment of distributions $ 639,838 $ 499,351
----------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Trust share
transactions $ 639,838 $ 499,351
----------------------------------------------------------------------------------------------------
Net increase in net assets $ 7,600,658 $ 51,468,667
NET ASSETS:
Beginning of year 165,281,113 113,812,446
----------------------------------------------------------------------------------------------------
End of year $172,881,771 $165,281,113
----------------------------------------------------------------------------------------------------
Distribution in excess of net investment income $ (1,515,690) $ (1,765,037)
=====================================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 43
Statement of Cash Flows (Consolidated)
For the Year Ended April 30, 2011
Cash Flows From Operating Activities
Net investment income $ 16,650,754
--------------------------------------------------------------------------
Adjustment to Reconcile Net Investment Income to Net Cash
and Foreign Currency Provided From Operating Activities
Purchase of investment securities $(891,399,505)
Proceeds from disposition of investment securities 895,607,497
Increase in receivable for investments sold (362,080)
Increase in interest, foreign tax reclaim and dividends
receivable (491,362)
Decrease in prepaid expenses 673
Increase in other assets (81,350)
Increase in accrued interest payable 85,255
Decrease in payable for investments purchased (1,337,571)
Increase in accrued expenses 178,453
Increase in other liabilities 33,272
Increase in due to affiliates 123,095
Increase in unamortized facility fee 1,106
Decrease in unrealized appreciation on foreign currency
transactions 318,224
Net realized gain from foreign currency transactions 180,056
Net amortization/(accretion) of premium/(discount) (1,311,082)
--------------------------------------------------------------------------
Net adjustment to reconcile net investment income 1,544,681
--------------------------------------------------------------------------
Net cash and foreign currency provided from operating
activities $ 18,195,435
--------------------------------------------------------------------------
Cash Flows Used in Financing Activities
Increase in notes payable $ 2,000,000
Cash dividends paid to common shareowners (15,127,947)
--------------------------------------------------------------------------
Net cash flow used in financing activities $ (13,127,947)
--------------------------------------------------------------------------
Net increase in cash and foreign currency $ 5,067,488
--------------------------------------------------------------------------
Cash and Foreign Currency
Beginning of the year $ 2,515,804
--------------------------------------------------------------------------
End of the year $ 7,583,292
--------------------------------------------------------------------------
Cash Flow Information
Cash paid for interest $ 874,683
==========================================================================
The accompanying notes are an integral part of these financial statements.
44 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
Financial Highlights
------------------------------------------------------------------------------------------------------------------------------------
Year Ended
4/30/11 Year Ended Year Ended 5/30/07 (b)
(Consolidated) 4/30/10 4/30/09 to 4/30/08
------------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance
Net asset value, beginning of period $ 20.17 $ 13.94 $ 22.02 $ 23.88(c)
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:(a)
Net investment income $ 2.03 $ 1.76 $ 2.10 $ 1.77
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 0.73 6.48 (7.67) (1.80)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ 2.76 $ 8.24 $ (5.57) $ (0.03)
Distributions from
Net investment income (1.92) (1.69) (2.47) (1.78)
Tax return of capital -- (0.32) (0.04) --
Capital charge with respect to issuance of shares -- -- -- (0.05)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ 0.84 $ 6.23 $ (8.08) $ (1.86)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period(d) $ 21.01 $ 20.17 $ 13.94 $ 22.02
------------------------------------------------------------------------------------------------------------------------------------
Market value, end of period(d) $ 21.95 $ 20.46 $ 13.23 $ 20.47
====================================================================================================================================
Total return at market value (e) 17.95% 73.25% (23.11)% (10.67)%
Ratios to average net assets
Net operating expenses 1.62% 1.39% 1.38% 0.99%(f)
Interest expense 0.58% 0.83% 1.14% 0.33%(f)
Net expenses 2.20% 2.22% 2.52% 1.32%(f)
Net investment income 10.02% 9.84% 12.27% 8.48%(f)
Portfolio turnover 30% 24% 25% 21%
Net assets, end of period (in thousands) $172,881 $165,281 $113,812 $ 179,515
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 45
Financial Highlights (continued)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended
4/30/11 Year Ended Year Ended 5/30/07 (b)
(Consolidated) 4/30/10 4/30/09 to 4/30/08
------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets before waivers and reimbursements
of expenses
Net operating expenses 1.64% 1.61% 1.68% 1.29%(f)
Interest expense 0.58% 0.83% 1.14% 0.33%(f)
Net expenses 2.22% 2.44% 2.82% 1.62%(f)
Net investment income 10.00% 9.62% 11.97% 8.18%(f)
====================================================================================================================================
(a) The per common share data presented above is based upon the average common
shares outstanding for the periods presented.
(b) Trust shares were first publicly offered on May 24, 2007 and commenced
operations on May 30, 2007.
(c) Net asset value immediately after the closing of the first public offering
was $23.83.
(d) 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.
(e) Total investment return is calculated assuming a purchase of common shares
at the current market value on the first day and a sale at the current
market value on the last day of the periods reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions. Total
investment returns less than a full period are not annualized. Past
performance is not a guarantee of future results.
(f) Annualized.
The information above represents the audited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for the periods indicated. This
information has been determined based upon financial information provided in
the financial statements and market value data for the Trust's common shares.
The accompanying notes are an integral part of these financial statements.
46 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
Notes to Financial Statements | 4/30/11 (Consolidated)
1. Organization and Significant Accounting Policies
Pioneer Diversified High Income Trust (the Trust) was organized as a Delaware
statutory trust on January 30, 2007. Prior to commencing operations on May 30,
2007, 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. The
investment objective of the Trust is to provide a high level of current income
and, as a secondary objective, the Trust may seek capital appreciation to the
extent that it is consistent with its investment objective.
Information regarding the Trust's principal risks is contained in the Trust's
original offering prospectus, with additional information included in the
Trust's shareowner reports issued from time to time. Please refer to those
documents when considering the Trust's principal risks. At times, the Trust's
investments may represent industries or industry sectors that are interrelated
or have common risks, making the Trust more susceptible to any economic,
political, or regulatory developments or other risks affecting those industries
and sectors.
The Trust invests in below investment grade (high yield) debt securities,
floating rate loans and event-linked bonds sometimes referred to as
"catastrophe" bonds or "insurance-linked" bonds. The Trust may invest in
securities and other obligations of any credit quality, including those that
are rated below investment grade, or are unrated but are determined by the
investment adviser to be of equivalent credit quality. Below investment grade
securities are commonly referred to as "junk bonds" and are considered
speculative with respect to the issuer's capacity to pay interest and repay
principal. 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
may invest in securities of issuers that are in default or that are in
bankruptcy.
The Trust's investments in certain foreign markets or countries with limited
developing markets may subject the Trust to a greater degree of risk than in a
developed market. These risks include disruptive political or economic
conditions and the possible imposition of adverse governmental laws or currency
exchange restrictions.
The Trust's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles 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
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 47
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses and gains and losses on investments during the
reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Trust in preparation of its financial statements, which are consistent with
those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Investments in loan
interests are valued in accordance with guidelines established by the Board
of Trustees at the mean between the last available bid and asked prices from
one or more brokers or dealers as obtained from Loan Pricing Corporation.
Senior loans for which no reliable price quotes are available will be valued
by Loan Pricing Corporation through the use of pricing matrices to determine
valuations. Fixed income securities with remaining maturity of more than
sixty days are valued at prices supplied by independent pricing services,
which consider such factors as market prices, market events, quotations from
one or more brokers, Treasury spreads, yields, maturities and ratings.
Valuations may be supplemented by dealers and other sources, as required.
Equity securities that have traded on an exchange are valued at the last sale
price on the principal exchange where they are traded. Equity securities or
senior loans for which independent pricing services are unable to supply
prices or for which market prices and/or quotations are not readily available
or are considered to be unreliable are valued using fair value methods
pursuant to procedures adopted by the Board of Trustees.
Trading in foreign securities is subs tantially completed each day at various
times prior to the close of the NYSE. The values of such securities used in
computing the net asset value of the Trust's shares are determined as of such
times.
The Trust may use fair value methods if it is determined that a significant
event has occurred after the close of the exchange or market on which the
security trades and prior to the determination of the Trust's net asset
value. Thus, the valuation of the Trust's securities may differ from exchange
prices.
At April 30, 2011, three securities were valued using fair value methods (in
addition to securities valued using prices supplied by independent pricing
services) representing 0.2% of net assets. Inputs used when applying fair
value methods to value a security may include credit ratings, the financial
condition of the company, current market conditions and comparable
securities. Short-term fixed income securities with remaining maturities of
sixty days or less generally are valued at amortized cost. Money market
mutual funds are valued at net asset value.
48 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
Discounts and premiums on debt securities are accreted or amortized,
respectively, daily, into interest income on an effective yield to maturity
basis with a corresponding increase or decrease in the cost basis of the
security. Premiums and discounts related to certain mortgage-backed
securities are amortized or accreted in proportion to the monthly paydowns.
Interest income, including income on interest bearing cash accounts, is
recorded on an accrual basis, net of unrecoverable foreign taxes withheld at
the applicable country rates.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have passed
are recorded as soon as the Trust becomes aware of the ex-dividend data in
the exercise of reasonable diligence.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Foreign Currency Translation
The books and records of the Trust are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars using
current exchange rates.
Net realized gains and losses on foreign currency transactions, if any,
represent, among other things, the net realized gains and losses on foreign
currency contracts, disposition of foreign currencies and the difference
between the amount of income accrued and the U.S. dollars actually received.
Further, the effects of changes in foreign currency exchange rates on
investments are not segregated in the Statement of Operations from the
effects of changes in market price of those securities but are included with
the net realized and unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Trust may enter into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date. All contracts are marked to market daily at the applicable
exchange rates, and any resulting unrealized gains or losses are recorded in
the Trust's financial statements. The Trust records realized gains and losses
at the time a portfolio hedge is offset by entry into a closing transaction
or extinguished by delivery of the currency. Risks may arise upon entering
into these contracts from the potential inability of counterparties to meet
the terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar (see Note 6).
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 49
D. Federal Income Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required. Tax
years for the prior three fiscal years remain subject to examination by tax
authorities.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal income
tax rules. Therefore, the sources of the Trust's distributions may be shown
in the accompanying financial statements as either from or in excess of net
investment income or as from net realized gain (loss) on investment and
foreign currency transactions, or from paid-in capital, depending on the type
of book/tax differences that may exist.
At April 30, 2011, the Trust reclassified $628,506 to increase distributions
in excess of net investment income, $628,775 to decrease net realized loss on
investments and $269 to decrease paid-in capital to reflect permanent book/
tax differences. The reclassification has no impact on the net assets of the
Trust and presents the Trust's capital accounts on a tax basis.
At April 30, 2011, the Trust had a net capital loss carryforward of
$23,843,173 of which the following amounts will expire between 2016 and 2019
if not utilized: $231,744 in 2016, $413,150 in 2017, $21,948,862 in 2018 and
$1,249,417 in 2019.
The Trust has elected to defer approximately $450,629 of currency losses
recognized between November 1, 2010 and April 30, 2011 to its fiscal year
ending April 30, 2012.
The tax character of current year distributions paid to shareowners during
the years ended April 30, 2011 and April 30, 2010 was as follows:
--------------------------------------------------------------------------------
2011 2010
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $15,772,901 $13,800,249
Tax return of capital -- 2,651,977
--------------------------------------------------------------------------------
Total $15,772,901 $16,452,226
================================================================================
50 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
The following shows the components of distributable earnings (loss) on a
federal income tax basis at April 30, 2011.
--------------------------------------------------------------------------------
2011
--------------------------------------------------------------------------------
Distributable earnings:
Undistributed ordinary income $ 516,102
Capital loss carryforward (23,843,173)
Post-October loss deferred (450,629)
Dividends payable (1,316,351)
Unrealized appreciation 5,426,321
--------------------------------------------------------------------------------
Total $(19,667,730)
================================================================================
The difference between book-basis and tax-basis unrealized appreciation is
primarily attributable to the tax deferral of losses on wash sales, the
realization for tax purposes of unrealized gains on investments in passive
foreign investment companies, the book/tax differences in the accrual of
income on securities in default, the difference between book and tax
amortization methods for premiums and discounts on fixed income securities
and other book/tax temporary differences.
E. Repurchase Agreements
With respect to repurchase agreements entered into by the Trust, the value of
the underlying securities (collateral), including accrued interest, is
required to be equal to or in excess of the repurchase price. The collateral
for all repurchase agreements is held in safekeeping in the customer-only
account of the Trust's custodian or a subcustodian of the Trust. The Trust's
investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible
for determining that the value of the collateral remains at least equal to
the repurchase price.
F. Securities Lending
The Trust lends securities in its portfolio to certain broker-dealers or
other institutional investors. When entering into a securities loan
transaction, the Trust typically receives cash collateral from the borrower
equal to at least the value of the securities loaned, which is invested in
temporary investments. Credit Suisse AG, New York Branch, as the Trust's
securities lending agent, manages the Trust's securities lending collateral.
The income earned on the investment of collateral is shared with the borrower
and the lending agent in payment of any rebate due to the borrower with
respect to the securities loan, and in compensation for the lending agent's
services to the Trust. The Trust also continues to receive payments in lieu
of dividends or interest on the securities loaned. Gain or loss on the value
of the loaned securities that may occur during the term of the loan will be
for the account of the Trust. The amount of the collateral is required to be
adjusted daily to reflect any price fluctuation in the value of the loaned
securities. If the required market
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 51
value of the collateral is less than the value of the loaned securities, the
borrower is required to deliver additional collateral for the account of the
Trust prior to the close of business on that day. The Trust has the right,
under the lending agreement, to terminate the loan and recover the securities
from the borrower with prior notice. The Trust is required to return the cash
collateral to the borrower and could suffer a loss if the value of the
collateral, as invested, has declined.
G. Automatic Dividend Reinvestment Plan
All common shareowners whose shares are registered in their own names
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 without penalty by
notifying American Stock Transfer & Trust Company, the agent for shareowners
in administering the Plan (the Plan Agent), in writing prior to any dividend
record date; otherwise such termination or resumption will be effective with
respect to any subsequently declared dividend or other distribution.
If a shareowner's shares are held in the name of a brokerage firm, bank or
other nominee, the shareowner can ask the firm or nominee to participate in
the Plan on the shareowner's behalf. If the firm or nominee does not offer
the Plan, dividends will be paid in cash to the shareowner of record. A firm
or nominee may reinvest a shareowner's cash dividend in common shares of the
Trust on terms that differ from the terms of the Plan.
Whenever the Trust declares a dividend on common shares payable in cash,
participants in the Plan will receive the equivalent in common shares
acquired by the Plan Agent either (i) through receipt of additional unissued
but authorized common shares from the Trust or (ii) by purchase of
outstanding common shares on the NYSE Amex or elsewhere. If, on the payment
date for any dividend, the net asset value per common share is equal to or
less than the market price per share plus estimated brokerage trading fees
(market premium), the Plan Agent will invest the dividend amount in newly
issued common shares. The number of newly issued common shares to be credited
to each account will be determined by dividing the dollar amount of the
dividend by the net asset value per common share on the date the shares are
issued, provided that the maximum discount from the then current market price
per share on the date of issuance does not exceed 5%. If, on the payment date
for any dividend, the net asset value per common share is greater than the
market value (market discount), the Plan Agent will invest the dividend
amount in common shares acquired in open-market
52 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
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, a wholly owned indirect subsidiary of UniCredit S.p.A. (UniCredit),
manages the Trust's portfolio. Management fees payable under the Trust's
Advisory Agreement with PIM are calculated daily at the annual rate of 0.85% of
the Trust's average daily managed assets. "Managed assets" means (a) the total
assets of the Trust, including any form of investment leverage, minus (b) all
accrued liabilities incurred in the normal course of operations, which shall
not include any liabilities or obligations attributable to investment leverage
obtained through (i) indebtedness of any type (including, without limitation,
borrowing through a credit facility or the issuance of debt securities), (ii)
the issuance of preferred stock or other similar preference securities, and/or
(iii) any other means. For the year ended April 30, 2011, the net management
fee (excluding waivers and reimbursements) was 0.85% of the Trust's average
daily managed assets, which was equivalent to 1.19% of the Trust's average
daily net assets.
In addition, under PIM's management and administration agreements, certain
other services and costs are paid by PIM and reimbursed by the Trust. At April
30, 2011, $283,342 was payable to PIM related to management costs,
administrative costs and certain other reimbursements and is included in "Due
to affiliates" on the Statement of Assets and Liabilities.
Effective September 1, 2010, PIM has retained State Street Bank and Trust
Company (State Street) to provide certain administrative and accounting
services to the Trust on its behalf. For such services, PIM pays State Street a
monthly fee at an annual rate of 0.07% of the Trust's average daily managed
assets up to $500 million and 0.03% for average daily managed assets in excess
of $500 million, subject to a minimum monthly fee of $10,000. Previously, PIM
had retained Princeton Administrators, LLC (Princeton) to provide such
services. PIM paid Princeton a monthly fee at an annual rate of 0.07% of the
Trust's average daily managed assets up to $500 million and 0.03% for average
daily managed assets in excess of $500 million, subject to a minimum monthly
fee of $10,000. Neither State Street nor Princeton received compensation
directly from the Trust for providing such services.
PIM has entered into a Research Services Agreement with Montpelier Capital
Advisors, Ltd. (Montpelier). Under the research services agreement, Montpelier
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 53
will provide research services to PIM with regard to event-linked bonds. PIM
pays Montpelier a flat fee of $325,000 annually. Montpelier received no
compensation directly from the Trust.
Also, PIM had 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 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
Internal Revenue Code or any other non-recurring or non-operating expenses, to
0.90% of the Trust's average daily managed assets in year one, 0.95% of the
Trust's average daily managed assets in year two and 1.00% of the Trust's
average daily managed assets in year three. This was a contractual limit which
terminated on May 30, 2010. For the year ended April 30, 2011, the expense
reduction under such arrangement was $27,859.
3. Transfer Agents
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredit, through a sub-transfer agency agreement
with American Stock Transfer & Trust Company, provides substantially all
transfer agent and shareowner services related to the Trust at negotiated
rates.
In addition, the Trust reimburses PIMSS for out-of-pocket expenses incurred by
PIMSS related to shareowner communications activities such as proxy and
statement mailings and outgoing phone calls.
4. Basis for Consolidation for the Pioneer Diversified High Income Trust
The consolidated financial statements of the Trust include the accounts of
Blaze Holding DHINCT, Inc. ("the Subsidiary"). All intercompany accounts and
transactions have been eliminated in consolidation. The Subsidiary, a Delaware
corporation, was incorporated on February 10, 2011 and is wholly-owned and
controlled by the Trust. It is intended that the Trust will remain the sole
shareholder of, and will continue to control, the Subsidiary. The Subsidiary
acts as an investment vehicle for the Trust's interest in Blaze Recycling and
Metals LLC, Class A Units. As of April 30, 2011, the Subsidiary represented
approximately $256,056 or approximately 0.1% of the net assets of the Trust.
5. Expense Offset Arrangements
The Trust has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion
of the Trust's custodian expenses. For the year ended April 30, 2011, the Trust
expenses were not reduced under such arrangement.
54 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
6. Forward Foreign Currency Contracts
During the year ended April 30, 2011, the Trust had entered into various
forward foreign currency contracts that obligate the Trust to deliver or take
delivery of currencies at specified future maturity dates. Alternatively, prior
to the settlement date of a forward foreign currency contract, the Trust may
close out such contract by entering into an offsetting contract. The average
number of contracts open during the year ended April 30, 2011 was 863,302.
Open portfolio hedges at April 30, 2011, were as follows:
------------------------------------------------------------------------------------
Net Contracts In Net
to Receive/ Exchange Settlement US $ Unrealized
Currency (Deliver) for US $$ Date Value Loss
------------------------------------------------------------------------------------
EUR (460,000) (633,905) 6/15/11 680,528 $ (46,623)
EUR (1,000,000) (1,362,301) 1/31/12 1,467,747 (105,446)
------------------------------------------------------------------------------------
Total $ (152,069)
====================================================================================
The Trust's gross forward currency settlement contracts receivable and payable
were $220,005 and $219,082, respectively, resulting in a net receivable of
$923.
7. Loan Agreement
Effective February 4, 2011, the Trust extended the maturity of its existing
Revolving Credit Facility (the Credit Agreement) with the Bank of Nova Scotia
and, among other things, decreased the size of the Credit Agreement from
$80,000,000 to $75 million.
At April 30, 2011, the Trust had a borrowing outstanding under the Credit
Agreement totaling $69,000,000. The interest rate charged at April 30, 2011 was
1.34%. During the year ended April 30, 2011, the average daily balance was
$66,876,712 at a weighted average interest rate of 1.42%. With respect to the
loan, interest expense of $959,938 is included in the Statement of Operations.
The Trust is required to maintain 300% asset coverage with respect to amounts
outstanding under the Credit Agreement. Asset coverage is calculated by
subtracting the Trust's total liabilities, not including any bank loans and
senior securities, from the Trust's total assets and dividing such amount by
the principal amount of the borrowings outstanding. As of the date indicated
below, the Trust's debt outstanding and asset coverage were as follows:
--------------------------------------------------------------------------------
Total Asset coverage
Amount of Debt per $1,000 of
Date Outstanding Indebtedness
--------------------------------------------------------------------------------
4/30/11 $69,000,000 $3,506
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 55
8. Unfunded Loan Commitments
As of April 30, 2011, the Trust had unfunded loan commitments of $186,731
(excluding unrealized appreciation on this commitment of $1,570 as of April 30,
2011) which could be extended at the option of the borrower pursuant to the
following loan agreements:
--------------------------------------------------------------------------------
Unfunded
Loan
Borrower Commitment
--------------------------------------------------------------------------------
Inventiv Health, Inc., Term Loan B-2 $116,667
National Specialty Hospitals, Inc., Delayed Draw Term Loan $ 44,554
Physician Oncology Services LP, Delayed Draw Term Loan $ 25,510
--------------------------------------------------------------------------------
Total $186,731
================================================================================
In addition, the Trust had the following bridge loan commitments outstanding as
of April 30, 2011:
-------------------------------------------------------------------------------------------------------
Net
Unrealized
Loan Par Cost Value Loss
-------------------------------------------------------------------------------------------------------
EchoStar Satellite Services LLC, Senior
Secured Bridge Loan, 0.0%, 6/30/19 $ 850,000 $ 850,000 $ 850,000 $ --
-------------------------------------------------------------------------------------------------------
EchoStar Satellite Services, LLC Senior
Unsecured Bridge Loan, 0.0%, 6/30/19 $ 425,000 $ 425,000 $ 425,000 $ --
-------------------------------------------------------------------------------------------------------
Emergency Medical Services Corp., First
Lien Bridge Loan, 0.0%, 3/1/12 $1,250,000 $1,250,000 $1,242,188 $ (7,812)
-------------------------------------------------------------------------------------------------------
Endo Pharmaceuticals Holdings, Inc.,
Bridge Loan, 0.0%, 4/10/12 $ 675,000 $ 675,000 $ 675,000 $ --
-------------------------------------------------------------------------------------------------------
Kindred HealthCare, Inc., Senior
Unsecured Bridge Loan, 0.0%, 2/7/12 $ 850,000 $ 850,000 $ 850,000 $ --
-------------------------------------------------------------------------------------------------------
Silgan Holdings, Inc., Senior
Subordinated Bridge Loan, 0.0%,
4/27/12 $ 725,000 $ 725,000 $ 725,000
-------------------------------------------------------------------------------------------------------
Total $ (7,812)
=======================================================================================================
9. Trust Shares
There are an unlimited number of common shares of beneficial interest
authorized.
Transactions in common shares of beneficial interest for the years ended April
30, 2011 and the year ended April 30, 2010 were as follows:
--------------------------------------------------------------------------------
4/30/11 4/30/10
--------------------------------------------------------------------------------
Shares outstanding at beginning of year 8,195,218 8,165,927
Reinvestment of distributions 31,976 29,291
--------------------------------------------------------------------------------
Shares outstanding at end of year 8,227,194 8,195,218
================================================================================
56 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
10. Additional Disclosures about Derivative Instruments and Hedging Activities:
Values of derivative instruments as of April 30, 2011 were as follows
-----------------------------------------------------------------------------------------------------------
Asset Derivatives Liabilities Derivatives
---------------------------------- ----------------------------------------
Derivatives Balance Sheet Location Value Balance Sheet Location Value
-----------------------------------------------------------------------------------------------------------
Foreign Exchange Contracts Receivables $923 Payables $ (152,069)
-----------------------------------------------------------------------------------------------------------
Total $923 $ (152,069)
===========================================================================================================
The effect of derivative instruments on the Statement of Operations for the
year ended April 30, 2011 was as follows:
--------------------------------------------------------------------------------------------
Change in
Unrealized Gain
or (Loss) on
Location of Gain or Realized Gain or Derivatives
(Loss) on Derivatives (Loss) on Derivatives Recognized
Derivatives Recognized in Income Recognized in Income in Income
--------------------------------------------------------------------------------------------
Foreign Exchange Net realized gain on forward $108,987
Contracts foreign currency contracts
and other assets and
liabilities denominated in
foreign currencies
--------------------------------------------------------------------------------------------
Foreign Exchange Change in net unrealized $ (151,146)
Contracts gain (loss) on forward
foreign currency contracts
and other assets and
liabilities denominated in
foreign currencies
--------------------------------------------------------------------------------------------
11. Subsequent Events
The Board of Trustees of the Trust declared on May 6, 2011 a dividend from
undistributed net investment income of $0.16 per common share payable May 31,
2011 to shareowners of record on May 16, 2011.
In preparing these financial statements, PIM has evaluated the impact of all
events and transactions for potential recognition or disclosure, and has
determined that other than disclosed above, there were no subsequent events
requiring recognition or disclosure in the financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 57
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and the Shareowners of
Pioneer Diversified High Income Trust:
--------------------------------------------------------------------------------
We have audited the accompanying consolidated statement of assets and
liabilities of Pioneer Diversified High Income (the "Trust"), including the
consolidated schedule of investments, as of April 30, 2011, and the related
consolidated statement of operations, consolidated statement of changes in net
assets, and consolidated financial highlights for the year then ended, and the
statement of changes in net assets for the year ended April 30, 2010 and the
financial highlights for each of the four years in the period ended April 30,
2010. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Trust's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Trust's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of April 30, 2011, by correspondence with
the custodian, agent banks, and brokers or by other appropriate auditing
procedures where replies from brokers were not received. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Pioneer Diversified High Income Trust at April 30, 2011, the
consolidated results of its operations, changes in its net assets and financial
highlights for the year then ended, and the changes in its net assets for the
year ended April 30, 2010 and the financial highlights for each of the four
years in the period ended April 30, 2010, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young, LLP
Boston, Massachusetts
June 24, 2011
58 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
ADDITIONAL INFORMATION (unaudited)
During the period, there have been no material changes in the Trust's
investment objective or fundamental policies that have not been approved by the
shareowners. There have been no changes in the Trust's charter or By-Laws that
would delay or prevent a change in control of the Trust that have not been
approved by the shareowners. During the period, there have been no changes in
the principal risk factors associated with investment in the Trust. There were
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.
IMPORTANT TAX INFORMATION (unaudited)
The following information is provided with respect to the ordinary income
distributions paid by Pioneer Diversified High Income Trust during the fiscal
year ended April 30, 2011:
Interest-Related Dividends for Non-U.S. Residents 86.84%*
* Represents the portion of the taxable ordinary income dividends eligible for
tax exemption from U.S. withholding tax for nonresident aliens and foreign
corporations.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 59
Approval of Investment Advisory Agreement
Pioneer Investment Management, Inc. (PIM) serves as the investment adviser to
Pioneer Diversified High Income Trust (the Trust) pursuant to an investment
advisory agreement between PIM and the Trust. In order for PIM to remain the
investment adviser of the Trust, the Trustees of the Trust must determine
annually whether to renew the investment advisory agreement for the Trust.
The contract review process began in March 2010 as the Trustees of the Trust
agreed on, among other things, an overall approach and timeline for the
process. In July 2010, the Trustees approved the format of the contract review
materials and submitted their formal request to PIM to furnish information
necessary to evaluate the terms of the investment advisory agreement. The
contract review materials were provided to the Trustees in July 2010 and
September 2010. After reviewing and discussing the materials, the Trustees
submitted a request for additional information to PIM, and materials were
provided in response to this request. Meetings of the Independent Trustees of
the Trust were held in July, September, October, and November, 2010 to review
and discuss the contract review materials. In addition, the Trustees took into
account the information related to the Trust provided to the Trustees at each
regularly scheduled meeting.
At a meeting held on November 16, 2010, based on their evaluation of the
information provided by PIM and third parties, the Trustees of the Trust,
including the Independent Trustees voting separately, unanimously approved the
renewal of the investment advisory agreement for another year. In considering
the renewal of the investment advisory agreement, the Trustees considered
various factors that they determined were relevant, including the factors
described below. The Trustees did not identify any single factor as the
controlling factor in determining to approve the renewal of the agreement.
Nature, Extent and Quality of Services
The Trustees considered the nature, extent and quality of the services that had
been provided by PIM to the Trust, taking into account the investment objective
and strategy of the Trust. The Trustees reviewed the terms of the investment
advisory agreement. The Trustees also reviewed PIM's investment approach for
the Trust, its research process and its process for trade execution. The
Trustees considered the resources of PIM and the personnel of PIM who provide
investment management services to the Trust. The Trustees considered the
non-investment resources and personnel of PIM involved in PIM's services to the
Trust, including PIM's compliance and legal resources and personnel. In
addition, the Trustees considered the arrangements put in place to retain key
60 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
investment and other personnel. The Trustees also considered the substantial
attention and high priority given by PIM's senior management to the Pioneer
fund complex.
The Trustees considered that PIM supervises and monitors the performance of the
Trust's service providers and provides the Trust with personnel (including
Trust officers) and other resources that are necessary for the Trust's business
management and operations. The Trustees also considered that, as administrator,
PIM is responsible for the administration of the Trust's business and other
affairs. The Trustees considered the fees paid to PIM for the provision of
administration services.
Based on these considerations, the Trustees concluded that the nature, extent
and quality of services that had been provided by PIM to the Trust were
satisfactory and consistent with the terms of the investment advisory
agreement.
Performance of the Trust
The Trustees considered the performance results of the Trust over various time
periods. They reviewed information comparing the Trust's performance with the
performance of its peer group of funds as classified by Morningstar, Inc.
(Morningstar), an independent provider of investment company data, and with the
performance of the Trust's benchmark index. The Trustees considered that the
Trust's annualized total return was in the third quintile of its Morningstar
category for the one year period ended June 30, 2010, and in the first quintile
of its Morningstar category for the three year period ended June 30, 2010. (In
all quintile rankings referred to throughout this disclosure, first quintile is
most favorable to the Trust's shareowners. Thus, highest relative performance
would be first quintile and lowest relative expenses would also be first
quintile.) The Trustees noted that the yield of the Trust compared favorably to
the yield of the Trust's benchmark as of June 30, 2010. The Trustees reviewed
data provided by PIM showing how leverage had benefited the Trust's common
shareholders. The Trustees concluded that the investment performance of the
Trust was satisfactory.
Management Fee and Expenses
The Trustees considered information on the fees and expenses of the Trust in
comparison to the management fees and the expense ratios of a peer group of
funds selected on the basis of criteria determined by the Independent Trustees
for this purpose using data provided by Strategic Insight Mutual Fund Research
and Consulting, LLC (Strategic Insight), an independent third party.
The Trustees considered that the Trust's management fee rate based on common
shares assets for the twelve months ended June 30, 2010 was in the fifth
quintile relative to the management fees paid by other funds in its Strategic
Insight peer group for the comparable period. The Trustees noted that the Trust
has not issued preferred shares, but did have debt outstanding, and considered
the effect of leverage on the Trust's management fee relative to its peers
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 61
by reviewing the management fee ratios of the Trust and its peers based on
managed assets rather than common shares assets. The Trustees noted that the
Trust is a specialized fund and that additional research is required in order
to implement the Trust's investment strategy. The Trustees also considered that
the Trust did not have a clear cut peer group, noting that other funds in the
peer group invested primarily in traditional high yield bonds.
The Trustees considered that the Trust's expense ratio based on common shares
assets for the twelve months ended June 30, 2010 was in the fifth quintile
relative to its Strategic Insight peer group for the comparable period. The
Trustees noted that the other funds in the Trust's peer group invested
primarily in traditional high yield bonds and thus were not directly comparable
and that no directly comparable peer group exists. The Trustees noted the
impact of the Trust's higher relative management fee on its expense ratio. The
Trustees also considered the impact of leverage on the Trust's expense ratio,
noting that the expense ratio based on managed assets was in the third quintile
relative to the peer group.
The Trustees also reviewed management fees charged by PIM to its institutional
and other clients. In evaluating the fees associated with PIM's client
accounts, the Trustees took into account the respective demands, resources and
complexity associated with the Trust and client accounts. The Trustees noted
that in some instances the fee rates for those clients were lower than the
management fee for the Trust and considered that, under the investment advisory
agreement with the Trust, PIM performs additional services for the Trust that
it does not provide to those other clients or services that are broader in
scope, including oversight of the Trust's other service providers and
activities related to compliance and the extensive regulatory and tax regimes
to which the Trust is subject. The Trustees concluded that the management fee
payable by the Trust to PIM was reasonable in relation to the nature and
quality of the services provided by PIM.
Profitability
The Trustees considered information provided by PIM regarding the profitability
of PIM with respect to the advisory services provided by PIM to the Trust,
including the methodology used by PIM in allocating certain of its costs to the
management of the Trust. The Trustees also considered PIM's profit margin in
connection with the overall operation of the Trust. They further reviewed the
financial results realized by PIM and its affiliates from non-fund businesses.
The Trustees considered PIM's profit margins with respect to the Trust in
comparison to the limited industry data available and noted that the
profitability of any adviser was affected by numerous factors, including its
organizational structure and method for allocating expenses. The Trustees
concluded that PIM's profitability with respect to the management of the Trust
was not unreasonable.
62 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
Economies of Scale
The Trustees considered the extent to which PIM may realize economies of scale
or other efficiencies in managing and supporting the Trust. Since the Trust is
a closed-end fund that has not raised additional capital, the Trustees
concluded that economies of scale were not a relevant consideration in the
renewal of the investment advisory agreement.
Other Benefits
The Trustees considered the other benefits to PIM from its relationship with
the Trust. The Trustees considered the character and amount of fees paid by the
Trust, other than under the investment advisory agreement, for services
provided by PIM and its affiliates. The Trustees further considered the
revenues and profitability of PIM's businesses other than the fund business.
The Trustees considered the intangible benefits to PIM by virtue of its
relationship with the Trust and the other Pioneer funds. The Trustees concluded
that the receipt of these benefits was reasonable in the context of the overall
relationship between PIM and the Trust.
Conclusion
After consideration of the factors described above as well as other factors,
the Trustees, including all of the Independent Trustees, concluded that the
investment advisory agreement between PIM and the Trust, including the fees
payable thereunder, was fair and reasonable and voted to approve the proposed
renewal of the investment advisory agreement for the Trust.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 63
Trustees, Officers and Service Providers
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Legal Counsel
Bingham McCutchen LLP
Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Shareowner Services and Sub-Transfer Agent
American Stock Transfer & Trust Company
Sub-Administrator
State Street Bank and Trust Company
Proxy Voting Policies and Procedures of the Trust are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Trust voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerinvestments.com. This information is also available
on the Securities and Exchange Commission's web site at http://www.sec.gov.
Trustees and Officers
The Trust's Trustees and officers are listed on the following pages, together
with their principal occupations during at least the past five years. Trustees
who are interested persons of the Trust within the meaning of the 1940 Act 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, except
Mr. West, serves as a trustee of each of the 56 U.S. registered investment
portfolios for which Pioneer serves as investment adviser (the "Pioneer
Funds"). Mr. West serves as a trustee of 44 U.S. registered investment
portfolios for which Pioneer serves as investment adviser. The address for all
Trustees and all officers of the Trust is 60 State Street, Boston,
Massachusetts 02109.
The Statement of Additional Information of the Trust includes, additional
information about the Trustees and is available, without charge, upon request,
by calling 1-800-225-6292.
64 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
Interested Trustees
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Other Directorships
Name and Age With the Trust and Term of Office Principal Occupation Held by this Trustee
------------------------------------------------------------------------------------------------------------------------------------
John F. Cogan, Chairman of the Class III Trustee since Non-Executive Chairman and a director of None
Jr. (84)* Board, Trustee 2007. Term expires in Pioneer Investment Management USA Inc.
and President 2013. ("PIM-USA"); Chairman and a director of
Pioneer; Chairman and Director of Pioneer
Institutional Asset Management, Inc. (since
2006); Director of Pioneer Alternative
Investment Management Limited (Dublin);
President and a director of Pioneer
Alternative Investment Management (Bermuda)
Limited and affiliated funds; Deputy Chairman
and a director of Pioneer Global Asset
Management S.p.A. ("PGAM") (until April
2010); Director of PIOGLOBAL Real Estate
Investment Fund (Russia) (until June 2006);
Director of Nano-C, Inc. (since 2003);
Director of Cole Management Inc. (since
2004); Director of Fiduciary Counseling,
Inc.; President and Director of Pioneer Funds
Distributor, Inc. ("PFD") (until May 2006);
President of all of the Pioneer Funds; and Of
Counsel, Wilmer Cutler Pickering Hale and
Dorr LLP
------------------------------------------------------------------------------------------------------------------------------------
Daniel K. Trustee and Class I Trustee since Director, CEO and President of PIM-USA (since None
Kingsbury (52)* Executive 2007. Term expires in February 2007); Director and President of
Vice President 2011. Pioneer and Pioneer Institutional Asset
Management, Inc. (since February 2007);
Executive Vice President of all of the
Pioneer Funds (since March 2007); Director of
PGAM (2007 - 2010); Head of New Europe
Division, PGAM (2000 - 2005); and Head of New
Markets Division, PGAM (2005 - 2007)
------------------------------------------------------------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are officers
or directors of the Trust's investment adviser and certain of its affiliates.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 65
Independent Trustees
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Other Directorships
Name and Age With the Trust and Term of Office Principal Occupation Held by this Trustee
------------------------------------------------------------------------------------------------------------------------------------
David R. Bock Trustee Class III Trustee since Managing Partner, Federal City Capital Director of
(67) 2007. Term expires in Advisors (corporate advisory services Enterprise Com-
2013. company) (1997 - 2004 and 2008 - present); munity Investment,
Interim Chief Executive Officer, Oxford Inc. (privately held
Analytica, Inc. (privately held research and affordable housing
consulting company) (2010); Executive Vice finance company)
President and Chief Financial Officer, (1985 - 2010);
I-trax, Inc. (publicly traded health care Director of Oxford
services company) (2004 - 2007); and Analytica, Inc.
Executive Vice President and Chief Financial (2008 - present);
Officer, Pedestal Inc. (internet- based Director of The
mortgage trading company) (2000 - 2002) Swiss Helvetia Fund,
Inc. (closed-end
fund) (2010 -
present); and
Director of New York
Mortgage Trust
(publicly traded
mortgage REIT) (2004
- 2009)
------------------------------------------------------------------------------------------------------------------------------------
Mary K. Bush Trustee Class II Trustee since Chairman, Bush International, LLC Director of Marriott
(63) 2007. Term expires in (international financial advisory firm) International,
2012. (1991 - present); Senior Managing Director, Inc. (2008 -
Brock Capital Group, LLC (strategic business present); Director
advisors) (2010 - present); Managing of Discover
Director, Federal Housing Finance Board Financial Services
(oversight of Federal Home Loan Bank system) (credit card issuer
(1989 - 1991); Vice President and Head of and electronic
International Finance, Federal National payment services)
Mortgage Association (1988 - 1989); U.S. (2007 - present);
Alternate Executive Director, International Former Director of
Monetary Fund (1984 - 1988); Executive Briggs & Stratton
Assistant to Deputy Secretary of the U.S. Co. (engine
Treasury, U.S. Treasury Department (1982 - manufacturer) (2004
1984); and Vice President and Team Leader in - 2009); Former
Corporate Banking, Bankers Trust Co. (1976 - Director of UAL
1982) Corporation (airline
holding company)
66 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Other Directorships
Name and Age With the Trust and Term of Office Principal Occupation Held by this Trustee
------------------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (continued) (2006 - 2010);
Director of ManTech
International Cor-
poration (national
security, defense,
and intelligence
technology firm)
(2006 - present);
Member, Board of
Governors,
Investment Company
Institute (2007 -
present); Member,
Board of Governors,
Independent
Directors Council
(2007 - present);
Former Director of
Brady Corporation
(2000 - 2007);
Former Director of
Mortgage Guaranty
Insurance
Corporation (1991 -
2006); Former
Director of
Millennium
Chemicals, Inc.
(commodity
chemicals) (2002 -
2005); Former
Director, R.J.
Reynolds Tobacco
Holdings, Inc.
(tobacco) (1999 -
2005); and Former
Director of Texaco,
Inc. (1997 - 2001)
------------------------------------------------------------------------------------------------------------------------------------
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 67
Independent Trustees (continued)
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Other Directorships
Name and Age With the Trust and Term of Office Principal Occupation Held by this Trustee
------------------------------------------------------------------------------------------------------------------------------------
Benjamin M. Trustee Class I Trustee since William Joseph Maier Professor of Political Trustee, Mellon
Friedman (66) 2008. Term expires in Economy, Harvard University (1972 - present) Institutional Funds
2011. Investment Trust and
Mellon Institutional
Funds Master
Portfolio (oversaw
17 portfolios in
fund complex)
(1989 - 2008)
------------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Trustee Class I Trustee since Founding Director, Vice President and None
Graham (63) 2007. Term expires in Corporate Secretary, The Winthrop Group, Inc.
2011. (consulting firm) (1982 - present); Desautels
Faculty of Management, McGill University
(1999 - present); and Manager of Research
Operations and Organizational Learning,
Xerox PARC, Xerox's Advance Research Center
(1990 - 1994)
------------------------------------------------------------------------------------------------------------------------------------
Thomas J. Trustee Class II Trustee since Chairman and Chief Executive Officer, Director, Broadridge
Perna (60) 2007. Term expires in Quadriserv, Inc. (technology products for Financial
2012. securities lending industry) (2008 - Solutions, Inc.
present); private investor (2004 - 2008); and (investor
Senior Executive Vice President, The Bank communications and
of New York (financial and securities securities
services) (1986 - 2004) processing provider
for financial
services industry)
(2009 - present);
and Director,
Quadriserv, Inc.
(2005 - present)
------------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Trustee Class II Trustee since President and Chief Executive Officer, Director of New
Piret (62) 2007. Term expires in Newbury, Piret & Company, Inc. (investment America High Income
2012. banking firm) (1981 - present) Fund, Inc.
(closed-end
investment company)
(2004 - present);
and member, Board of
Governors,
Investment Company
Institute (2000 -
2006)
------------------------------------------------------------------------------------------------------------------------------------
68 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Other Directorships
Name and Age With the Trust and Term of Office Principal Occupation Held by this Trustee
------------------------------------------------------------------------------------------------------------------------------------
Stephen K. West Trustee Class III Trustee since Senior Counsel, Sullivan & Cromwell LLP (law Director, The Swiss
(82) 2007. Term expires in firm) (1998 - present); and Partner, Sullivan Helvetia Fund, Inc.
2013. & Cromwell LLP (prior to 1998) (closed-end
investment company);
and Director,
AMVESCAP, PLC
(investment manager)
(1997 - 2005)
------------------------------------------------------------------------------------------------------------------------------------
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 69
Trust Officers
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Other Directorships
Name and Age With the Trust and Term of Office Principal Occupation Held by this Officer
------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Secretary Since 2010. Serves at Vice President and Associate General Counsel None
Kelley (46) the discretion of the of Pioneer since January 2008 and Secretary
Board. of all of the Pioneer Funds since June 2010;
Assistant Secretary of all of the Pioneer
Funds from September 2003 to May 2010; and
Vice President and Senior Counsel of Pioneer
from July 2002 to December 2007
------------------------------------------------------------------------------------------------------------------------------------
Carol B. Assistant Since 2010. Serves at Fund Governance Director of Pioneer since None
Hannigan (50) Secretary the discretion of the December 2006 and Assistant Secretary of all
Board. the Pioneer Funds since June 2010; Manager -
Fund Governance of Pioneer from December 2003
to November 2006; and Senior Paralegal of
Pioneer from January 2000 to November 2003
------------------------------------------------------------------------------------------------------------------------------------
Thomas Reyes Assistant Since 2010. Serves at Counsel of Pioneer since June 2007 and None
(48) Secretary the discretion of the Assistant Secretary of all the Pioneer Funds
Board. since June 2010; and Vice President and
Counsel at State Street Bank from October
2004 to June 2007
------------------------------------------------------------------------------------------------------------------------------------
Mark E. Bradley Treasurer Since 2008. Serves at Vice President - Fund Accounting, None
(51) the discretion of the Administration and Controller- ship Services
Board. of Pioneer; Treasurer of all of the Pioneer
Funds since March 2008; Deputy Treasurer of
Pioneer from March 2004 to February 2008;
Assistant Treasurer of all of the Pioneer
Funds from March 2004 to February 2008; and
Treasurer and Senior Vice President, CDC IXIS
Asset Management Services, from 2002 to 2003
------------------------------------------------------------------------------------------------------------------------------------
Luis I. Assistant Since 2007. Serves at Assistant Vice President - Fund Accounting, None
Presutti (46) Treasurer the discretion of the Administration and Controllership Services of
Board. Pioneer; and Assistant Treasurer of all of
the Pioneer Funds
------------------------------------------------------------------------------------------------------------------------------------
Gary Sullivan Assistant Since 2007. Serves at Fund Accounting Manager - Fund Accounting, None
(53) Treasurer the discretion of the Administration and Controllership Services of
Board. Pioneer; and Assistant Treasurer of all of
the Pioneer Funds
------------------------------------------------------------------------------------------------------------------------------------
70 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Other Directorships
Name and Age With the Trust and Term of Office Principal Occupation Held by this Officer
------------------------------------------------------------------------------------------------------------------------------------
David F. Assistant Since 2009. Serves at Fund Administration Manager - Fund None
Johnson (31) Treasurer the discretion of the Accounting, Administration and Controllership
Board. Services since November 2008; Assistant
Treasurer of all of the Pioneer Funds since
January 2009; and Client Service Manager -
Institutional Investor Services at State
Street Bank from March 2003 to March 2007
------------------------------------------------------------------------------------------------------------------------------------
Jean M. Bradley Chief Compliance Since 2010. Serves at Chief Compliance Officer of Pioneer and of None
(58) Officer the discretion of the all the Pioneer Funds since March 2010;
Board. Director of Adviser and Portfolio Compliance
at Pioneer since October 2005; and Senior
Compliance Officer for Columbia Management
Advisers, Inc. from October 2003 to October
2005
------------------------------------------------------------------------------------------------------------------------------------
The outstanding capital stock of PFD, Pioneer and Pioneer Investment Management
Shareholder Services, Inc. ("PIMSS") is indirectly wholly owned by UniCredit
S.p.A. ("UniCredit"), one of the largest banking groups in Italy. Pioneer, the
Trust's investment adviser, provides investment management and financial
services to mutual funds, institutional and other clients.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 71
This page for your notes.
72 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
This page for your notes.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 73
This page for your notes.
74 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
This page for your notes.
Pioneer Diversified High Income Trust | Annual Report | 4/30/11 75
This page for your notes.
76 Pioneer Diversified High Income Trust | Annual Report | 4/30/11
How to Contact Pioneer
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
You can call American Stock Transfer & Trust Company (AST) for:
--------------------------------------------------------------------------------
Account Information 1-800-710-0935
Or write to AST:
--------------------------------------------------------------------------------
For Write to
General inquiries, lost dividend checks, American Stock
change of address, lost stock certificates, Transfer & Trust
stock transfer Operations Center
6201 15th Ave.
Brooklyn, NY 11219
Dividend reinvestment plan (DRIP) American Stock
Transfer & Trust
Wall Street Station
P.O. Box 922
New York, NY 10269-0560
Website www.amstock.com
For additional information, please contact your investment advisor or visit our
web site www.pioneerinvestments.com.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form also may be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit Fees
Fees for audit services provided to the Trust, including fees
associated with the filings to update its Form N-2 and
issuance of comfort letters, totaled approximately $51,700 in
2011 and $41,600 in 2010.
(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
There were no audit-related fees for 2011 and
2010.
(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 $8,290 and $8,290 for 2011 and 2010,
respectively.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
Other Fees
There were no other fees for 2011 and
2010.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognize that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
----------------------- --------------------------- -----------------------------------------------
------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- -------------------------
------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
----------------------- --------------------------- -----------------------------------------------
--------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
----------------------- ------------------------- -----------------------------------------------
------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
------------------------------------------- ------------------------------
--------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
--------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
Non-Audit Services
Beginning with non-audit service contracts entered into on
or after May 6, 2003, the effective date of the new SEC pre-
approval rules, the Trust's audit committee is required to
pre-approve services to affiliates defined by SEC rules to the
extent that the services are determined to have a direct
impact on the operations or financial reporting of the Trust.
For the years ended April 30, 2011 and 2010, there were no
services provided to an affiliate that required the Trust's
audit committee pre-approval.
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The aggregate non-audit fees for the Trust and affiliates, as
previously defined, totaled approximately $8,290 in 2011
and $8,290 in 2010.
(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.
Item 5. Audit Committee of Listed Registrants
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrants audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
The registrant has a separately-designated standing audit
committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption
from the listing standards for audit committees.
N/A
Item 6. Schedule of Investments.
File Schedule I Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.12-
12 of Regulation S-X [17 CFR 210.12-12], unless the schedule is
included as part of the report to shareholders filed under Item
1 of this Form.
Included in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Proxy Voting Policies and Procedures of
Pioneer Investment Management, Inc.
VERSION DATED July, 2004
Overview
Pioneer Investment Management, Inc. ("Pioneer") is a fiduciary that owes
each of its client's duties of care and loyalty with respect to all
services undertaken on the client's behalf, including proxy voting. When
Pioneer has been delegated proxy-voting authority for a client, the duty of
care requires Pioneer to monitor corporate events and to vote the proxies.
To satisfy its duty of loyalty, Pioneer must place its client's interests
ahead of its own and must cast proxy votes in a manner consistent with the
best interest of its clients. Pioneer will vote all proxies presented in a
timely manner.
The Proxy Voting Policies and Procedures are designed to complement
Pioneer's investment policies and procedures regarding its general
responsibility to monitor the performance and/or corporate events of
companies that are issuers of securities held in accounts managed by
Pioneer. Pioneer's Proxy Voting Policies summarize Pioneer's position on a
number of issues solicited by companies held by Pioneer's clients. The
policies are guidelines that provide a general indication on how Pioneer
would vote but do not include all potential voting scenarios.
Pioneer's Proxy Voting Procedures detail monitoring of voting, exception
votes, and review of conflicts of interest and ensure that case-by-case
votes are handled within the context of the overall guidelines (i.e. best
interest of client). The overriding goal is that all proxies for US and
non-US companies that are received promptly will be voted in accordance
with Pioneer's policies or specific client instructions. All shares in a
company held by Pioneer-managed accounts will be voted alike, unless a
client has given us specific voting instructions on an issue or has not
delegated authority to us or the Proxy Voting Oversight Group determines
that the circumstances justify a different approach.
Pioneer does not delegate the authority to vote proxies relating to its
clients to any of its affiliates, which include other subsidiaries of
UniCredito.
Any questions about these policies and procedures should be directed to the
Proxy Coordinator.
1
Proxy Voting Procedures
Proxy Voting Service
Pioneer has engaged an independent proxy voting service to assist in the
voting of proxies. The proxy voting service works with custodians to ensure
that all proxy materials are received by the custodians and are processed
in a timely fashion. To the extent applicable, the proxy voting service
votes all proxies in accordance with the proxy voting policies established
by Pioneer. The proxy voting service will refer proxy questions to the
Proxy Coordinator (described below) for instructions under circumstances
where: (1) the application of the proxy voting guidelines is unclear; (2) a
particular proxy question is not covered by the guidelines; or (3) the
guidelines call for specific instructions on a case-by-case basis. The
proxy voting service is also requested to call to the Proxy Coordinator's
attention specific proxy questions that, while governed by a guideline,
appear to involve unusual or controversial issues. Pioneer reserves the
right to attend a meeting in person and may do so when it determines that
the company or the matters to be voted on at the meeting are strategically
important to its clients.
Proxy Coordinator
Pioneer's Director of Investment Operations (the "Proxy Coordinator")
coordinates the voting, procedures and reporting of proxies on behalf of
Pioneer's clients. The Proxy Coordinator will deal directly with the proxy
voting service and, in the case of proxy questions referred by the proxy
voting service, will solicit voting recommendations and instructions from
the Director of Portfolio Management US or, to the extent applicable,
investment sub-advisers. The Proxy Coordinator is responsible for ensuring
that these questions and referrals are responded to in a timely fashion and
for transmitting appropriate voting instructions to the proxy voting
service. The Proxy Coordinator is responsible for verifying with the
Compliance Department whether Pioneer's voting power is subject to any
limitations or guidelines issued by the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries).
Referral Items
From time to time, the proxy voting service will refer proxy questions to
the Proxy Coordinator that are described by Pioneer's policy as to be voted
on a case-by-case basis, that are not covered by Pioneer's guidelines or
where Pioneer's guidelines may be unclear with respect to the matter to be
voted on. Under such certain circumstances, the Proxy Coordinator will seek
a written voting recommendation from the Director of Portfolio Management
US. Any such recommendation will include: (i) the manner in which the
proxies should be voted; (ii) the rationale underlying any such decision;
and (iii) the disclosure of any contacts or communications made between
Pioneer and any outside parties concerning the proxy proposal prior to the
time that the voting instructions are provided. In addition, the Proxy
Coordinator will ask the Compliance Department to review the question for
any actual or apparent conflicts of interest as described below under
"Conflicts of
2
Interest." The Compliance Department will provide a "Conflicts of Interest
Report," applying the criteria set forth below under "Conflicts of
Interest," to the Proxy Coordinator summarizing the results of its review.
In the absence of a conflict of interest, the Proxy Coordinator will vote
in accordance with the recommendation of the Director of Portfolio
Management US.
If the matter presents a conflict of interest for Pioneer, then the Proxy
Coordinator will refer the matter to the Proxy Voting Oversight Group for a
decision. In general, when a conflict of interest is present, Pioneer will
vote according to the recommendation of the Director of Portfolio
Management US where such recommendation would go against Pioneer's interest
or where the conflict is deemed to be immaterial. Pioneer will vote
according to the recommendation of its proxy voting service when the
conflict is deemed to be material and the Pioneer's internal vote
recommendation would favor Pioneer's interest, unless a client specifically
requests Pioneer to do otherwise. When making the final determination as to
how to vote a proxy, the Proxy Voting Oversight Group will review the
report from the Director of Portfolio Management US and the Conflicts of
Interest Report issued by the Compliance Department.
Conflicts of Interest
A conflict of interest occurs when Pioneer's interests interfere, or appear
to interfere with the interests of Pioneer's clients. Occasionally, Pioneer
may have a conflict that can affect how its votes proxies. The conflict may
be actual or perceived and may exist when the matter to be voted on
concerns:
o An affiliate of Pioneer, such as another company belonging to
the UniCredito Italiano S.p.A. banking group (a "UniCredito
Affiliate");
o An issuer of a security for which Pioneer acts as a sponsor,
advisor, manager, custodian, distributor, underwriter, broker, or
other similar capacity (including those securities specifically
declared by PGAM to present a conflict of interest for Pioneer);
o An issuer of a security for which UniCredito has informed Pioneer
that a UniCredito Affiliate acts as a sponsor, advisor, manager,
custodian, distributor, underwriter, broker, or other similar
capacity; or
o A person with whom Pioneer (or any of its affiliates) has an
existing, material contract or business relationship that was not
entered into in the ordinary course of Pioneer's business.
o Pioneer will abstain from voting with respect to companies
directly or indirectly owned by UniCredito Italiano Group, unless
otherwise directed by a client. In addition, Pioneer will inform
PGAM Global Compliance and the PGAM Independent Directors before
exercising such rights.
Any associate involved in the proxy voting process with knowledge of any
apparent or actual conflict of interest must disclose such conflict to the
Proxy Coordinator and the Compliance Department. The Compliance Department
will review each item referred to Pioneer to determine whether an actual or
potential conflict of interest with Pioneer exists in connection with the
proposal(s) to be voted upon. The review will be conducted by comparing the
apparent parties affected by the proxy proposal being
3
voted upon against the Compliance Department's internal list of interested
persons and, for any matches found, evaluating the anticipated magnitude
and possible probability of any conflict of interest being present. For
each referral item, the determination regarding the presence or absence of
any actual or potential conflict of interest will be documented in a
Conflicts of Interest Report to the Proxy Coordinator.
Securities Lending
In conjunction with industry standards Proxies are not available to be
voted when the shares are out on loan through either Pioneer's lending
program or a client's managed security lending program. However, Pioneer
will reserve the right to recall lent securities so that they may be voted
according to the Pioneer's instructions. If a portfolio manager would like
to vote a block of previously lent shares, the Proxy Coordinator will work
with the portfolio manager and Investment Operations to recall the
security, to the extent possible, to facilitate the vote on the entire
block of shares.
Share-Blocking
"Share-blocking" is a market practice whereby shares are sent to a
custodian (which may be different than the account custodian) for record
keeping and voting at the general meeting. The shares are unavailable for
sale or delivery until the end of the blocking period (typically the day
after general meeting date).
Pioneer will vote in those countries with "share-blocking." In the event a
manager would like to sell a security with "share-blocking", the Proxy
Coordinator will work with the Portfolio Manager and Investment Operations
Department to recall the shares (as allowable within the market time-frame
and practices) and/or communicate with executing brokerage firm. A list of
countries with "share-blocking" is available from the Investment Operations
Department upon request.
Record Keeping
The Proxy Coordinator shall ensure that Pioneer's proxy voting service:
o Retains a copy of the proxy statement received (unless the proxy
statement is available from the SEC's Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system);
o Retains a record of the vote cast;
o Prepares Form N-PX for filing on behalf of each client that is a
registered investment company; and
o Is able to promptly provide Pioneer with a copy of the voting
record upon its request.
4
The Proxy Coordinator shall ensure that for those votes that may require
additional documentation (i.e. conflicts of interest, exception votes and
case-by-case votes) the following records are maintained:
o A record memorializing the basis for each referral vote cast;
o A copy of any document created by Pioneer that was material in
making the decision on how to vote the subject proxy; and
o A copy of any conflict notice, conflict consent or any other
written communication (including emails or other electronic
communications) to or from the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries)
regarding the subject proxy vote cast by, or the vote
recommendation of, Pioneer.
o Pioneer shall maintain the above records in the client's file for a
period not less than ten (10) years.
Disclosure
Pioneer shall take reasonable measures to inform its clients of the process
or procedures clients must follow to obtain information regarding how
Pioneer voted with respect to assets held in their accounts. In addition,
Pioneer shall describe to clients its proxy voting policies and procedures
and will furnish a copy of its proxy voting policies and procedures upon
request. This information may be provided to clients through Pioneer's Form
ADV (Part II) disclosure, by separate notice to the client, or through
Pioneer's website.
Proxy Voting Oversight Group
The members of the Proxy Voting Oversight Group are Pioneer's: Director of
Portfolio Management US, Head of Investment Operations, and Director of
Compliance. Other members of Pioneer will be invited to attend meetings and
otherwise participate as necessary. The Head of Investment Operations will
chair the Proxy Voting Oversight Group.
The Proxy Voting Oversight Group is responsible for developing, evaluating,
and changing (when necessary) Pioneer's Proxy Voting Policies and
Procedures. The group meets at least annually to evaluate and review these
policies and procedures and the services of its third-party proxy voting
service. In addition, the Proxy Voting Oversight Group will meet as
necessary to vote on referral items and address other business as
necessary.
Amendments
Pioneer may not amend its Proxy Voting Policies And Procedures without the
prior approval of the Proxy Voting Oversight Group and its corporate
parent, Pioneer Global Asset Management S.p.A
5
Proxy Voting Policies
Pioneer's sole concern in voting proxies is the economic effect of the
proposal on the value of portfolio holdings, considering both the short-
and long-term impact. In many instances, Pioneer believes that supporting
the company's strategy and voting "for" management's proposals builds
portfolio value. In other cases, however, proposals set forth by management
may have a negative effect on that value, while some shareholder proposals
may hold the best prospects for enhancing it. Pioneer monitors developments
in the proxy-voting arena and will revise this policy as needed.
All proxies that are received promptly will be voted in accordance with the
specific policies listed below. All shares in a company held by
Pioneer-managed accounts will be voted alike, unless a client has given us
specific voting instructions on an issue or has not delegated authority to
us. Proxy voting issues will be reviewed by Pioneer's Proxy Voting
Oversight Group, which consists of the Director of Portfolio Management US,
the Director of Investment Operations (the Proxy Coordinator), and the
Director of Compliance.
Pioneer has established Proxy Voting Procedures for identifying and
reviewing conflicts of interest that may arise in the voting of proxies.
Clients may request, at any time, a report on proxy votes for securities
held in their portfolios and Pioneer is happy to discuss our proxy votes
with company management. Pioneer retains a proxy voting service to provide
research on proxy issues and to process proxy votes.
Administrative
While administrative items appear infrequently in U.S. issuer proxies, they
are quite common in non-U.S. proxies.
We will generally support these and similar management proposals:
o Corporate name change.
o A change of corporate headquarters.
o Stock exchange listing.
o Establishment of time and place of annual meeting.
o Adjournment or postponement of annual meeting.
o Acceptance/approval of financial statements.
o Approval of dividend payments, dividend reinvestment plans and other
dividend-related proposals.
o Approval of minutes and other formalities.
6
o Authorization of the transferring of reserves and allocation of
income.
o Amendments to authorized signatories.
o Approval of accounting method changes or change in fiscal year-end.
o Acceptance of labor agreements.
o Appointment of internal auditors.
Pioneer will vote on a case-by-case basis on other routine business;
however, Pioneer will oppose any routine business proposal if insufficient
information is presented in advance to allow Pioneer to judge the merit of
the proposal. Pioneer has also instructed its proxy voting service to
inform Pioneer of its analysis of any administrative items inconsistent, in
its view, with supporting the value of Pioneer portfolio holdings so that
Pioneer may consider and vote on those items on a case-by-case basis.
Auditors
We normally vote for proposals to:
o Ratify the auditors. We will consider a vote against if we are
concerned about the auditors' independence or their past work for
the company. Specifically, we will oppose the ratification of
auditors and withhold votes from audit committee members if
non-audit fees paid by the company to the auditing firm exceed the
sum of audit fees plus audit-related fees plus permissible tax
fees according to the disclosure categories proposed by the
Securities and Exchange Commission.
o Restore shareholder rights to ratify the auditors.
We will normally oppose proposals that require companies to:
o Seek bids from other auditors.
o Rotate auditing firms, except where the rotation is statutorily
required or where rotation would demonstrably strengthen financial
disclosure.
o Indemnify auditors.
o Prohibit auditors from engaging in non-audit services for the
company.
Board of Directors
On issues related to the board of directors, Pioneer normally supports
management. We will, however, consider a vote against management in
instances where corporate performance has been very poor or where the board
appears to lack independence.
7
General Board Issues
Pioneer will vote for:
o Audit, compensation and nominating committees composed of
independent directors exclusively.
o Indemnification for directors for actions taken in good faith in
accordance with the business judgment rule. We will vote against
proposals for broader indemnification.
o Changes in board size that appear to have a legitimate business
purpose and are not primarily for anti-takeover reasons.
o Election of an honorary director.
We will vote against:
o Minimum stock ownership by directors.
o Term limits for directors. Companies benefit from experienced
directors, and shareholder control is better achieved through
annual votes.
o Requirements for union or special interest representation on the
board.
o Requirements to provide two candidates for each board seat.
We will vote on a case-by case basis on these issues:
o Separate chairman and CEO positions. We will consider voting with
shareholders on these issues in cases of poor corporate
performance.
Elections of Directors
In uncontested elections of directors we will vote against:
o Individual directors with absenteeism above 25% without valid
reason. We support proposals that require disclosure of director
attendance.
o Insider directors and affiliated outsiders who sit on the audit,
compensation, stock option or nominating committees. For the
purposes of our policy, we accept the definition of affiliated
directors provided by our proxy voting service.
We will also vote against:
o Directors who have failed to act on a takeover offer where the
majority of shareholders have tendered their shares.
o Directors who appear to lack independence or are associated with
very poor corporate performance.
8
We will vote on a case-by case basis on these issues:
o Re-election of directors who have implemented or renewed a
dead-hand or modified dead-hand poison pill (a "dead-hand poison
pill" is a shareholder rights plan that may be altered only by
incumbent or "dead " directors. These plans prevent a potential
acquirer from disabling a poison pill by obtaining control of the
board through a proxy vote).
o Contested election of directors.
o Prior to phase-in required by SEC, we would consider supporting
election of a majority of independent directors in cases of poor
performance.
o Mandatory retirement policies.
o Directors who have ignored a shareholder proposal that has been
approved by shareholders for two consecutive years.
Takeover-Related Measures
Pioneer is generally opposed to proposals that may discourage takeover
attempts. We believe that the potential for a takeover helps ensure that
corporate performance remains high.
Pioneer will vote for:
o Cumulative voting.
o Increase ability for shareholders to call special meetings.
o Increase ability for shareholders to act by written consent.
o Restrictions on the ability to make greenmail payments.
o Submitting rights plans to shareholder vote.
o Rescinding shareholder rights plans ("poison pills").
o Opting out of the following state takeover statutes:
o Control share acquisition statutes, which deny large holders voting
rights on holdings over a specified threshold.
o Control share cash-out provisions, which require large holders to
acquire shares from other holders.
o Freeze-out provisions, which impose a waiting period on large
holders before they can attempt to gain control.
o Stakeholder laws, which permit directors to consider interests of
non-shareholder constituencies.
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o Disgorgement provisions, which require acquirers to disgorge profits
on purchases made before gaining control.
o Fair price provisions.
o Authorization of shareholder rights plans.
o Labor protection provisions.
o Mandatory classified boards.
We will vote on a case-by-case basis on the following issues:
o Fair price provisions. We will vote against provisions requiring
supermajority votes to approve takeovers. We will also consider
voting against proposals that require a supermajority vote to
repeal or amend the provision. Finally, we will consider the
mechanism used to determine the fair price; we are generally
opposed to complicated formulas or requirements to pay a premium.
o Opting out of state takeover statutes regarding fair price
provisions. We will use the criteria used for fair price
provisions in general to determine our vote on this issue.
o Proposals that allow shareholders to nominate directors.
We will vote against:
o Classified boards, except in the case of closed-end mutual funds.
o Limiting shareholder ability to remove or appoint directors. We
will support proposals to restore shareholder authority in this
area. We will review on a case-by-case basis proposals that
authorize the board to make interim appointments.
o Classes of shares with unequal voting rights.
o Supermajority vote requirements.
o Severance packages ("golden" and "tin" parachutes). We will support
proposals to put these packages to shareholder vote.
o Reimbursement of dissident proxy solicitation expenses. While we
ordinarily support measures that encourage takeover bids, we
believe that management should have full control over corporate
funds.
o Extension of advance notice requirements for shareholder proposals.
o Granting board authority normally retained by shareholders (e.g.,
amend charter, set board size).
o Shareholder rights plans ("poison pills"). These plans generally
allow shareholders to buy additional shares at a below-market
price in the event of a change in control and may deter some bids.
10
Capital Structure
Managements need considerable flexibility in determining the company's
financial structure, and Pioneer normally supports managements' proposals
in this area. We will, however, reject proposals that impose high barriers
to potential takeovers.
Pioneer will vote for:
o Changes in par value.
o Reverse splits, if accompanied by a reduction in number of shares.
o Share repurchase programs, if all shareholders may participate on
equal terms.
o Bond issuance.
o Increases in "ordinary" preferred stock.
o Proposals to have blank-check common stock placements (other than
shares issued in the normal course of business) submitted for
shareholder approval.
o Cancellation of company treasury shares.
We will vote on a case-by-case basis on the following issues:
o Reverse splits not accompanied by a reduction in number of shares,
considering the risk of delisting.
o Increase in authorized common stock. We will make a determination
considering, among other factors:
o Number of shares currently available for issuance;
o Size of requested increase (we would normally approve increases of up to
100% of current authorization);
o Proposed use of the additional shares; and
o Potential consequences of a failure to increase the number of shares
outstanding (e.g., delisting or bankruptcy).
o Blank-check preferred. We will normally oppose issuance of a new
class of blank-check preferred, but may approve an increase in a
class already outstanding if the company has demonstrated that it
uses this flexibility appropriately.
o Proposals to submit private placements to shareholder vote.
o Other financing plans.
We will vote against preemptive rights that we believe limit a company's
financing flexibility.
11
Compensation
Pioneer supports compensation plans that link pay to shareholder returns
and believes that management has the best understanding of the level of
compensation needed to attract and retain qualified people. At the same
time, stock-related compensation plans have a significant economic impact
and a direct effect on the balance sheet. Therefore, while we do not want
to micromanage a company's compensation programs, we will place limits on
the potential dilution these plans may impose.
Pioneer will vote for:
o 401(k) benefit plans.
o Employee stock ownership plans (ESOPs), as long as shares
allocated to ESOPs are less than 5% of outstanding shares. Larger
blocks of stock in ESOPs can serve as a takeover defense. We will
support proposals to submit ESOPs to shareholder vote.
o Various issues related to the Omnibus Budget and Reconciliation Act
of 1993 (OBRA), including:
o Amendments to performance plans to conform with OBRA;
o Caps on annual grants or amendments of administrative features;
o Adding performance goals; and
o Cash or cash-and-stock bonus plans.
o Establish a process to link pay, including stock-option grants, to
performance, leaving specifics of implementation to the company.
o Require that option repricings be submitted to shareholders.
o Require the expensing of stock-option awards.
o Require reporting of executive retirement benefits (deferred
compensation, split-dollar life insurance, SERPs, and pension
benefits).
o Employee stock purchase plans where the purchase price is equal to
at least 85% of the market price, where the offering period is no
greater than 27 months and where potential dilution (as defined
below) is no greater than 10%.
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We will vote on a case-by-case basis on the following issues:
o Executive and director stock-related compensation plans. We will
consider the following factors when reviewing these plans:
o The program must be of a reasonable size. We will approve plans
where the combined employee and director plans together would
generate less than 15% dilution. We will reject plans with 15% or
more potential dilution.
Dilution = (A + B + C) / (A + B + C + D), where
A = Shares reserved for plan/amendment,
B = Shares available under continuing plans,
C = Shares granted but unexercised and
D = Shares outstanding.
o The plan must not:
o Explicitly permit unlimited option repricing authority or that
have repriced in the past without shareholder approval.
o Be a self-replenishing "evergreen" plan, plans that grant
discount options and tax offset payments.
o We are generally in favor of proposals that increase participation beyond
executives.
o We generally support proposals asking companies to adopt rigorous
vesting provisions for stock option plans such as those that vest
incrementally over, at least, a three- or four-year period with a pro
rata portion of the shares becoming exercisable on an annual basis
following grant date.
o We generally support proposals asking companies to disclose their
window period policies for stock transactions. Window period policies
ensure that employees do not exercise options based on insider
information contemporaneous with quarterly earnings releases and other
material corporate announcements.
o We generally support proposals asking companies to adopt stock holding
periods for their executives.
o All other employee stock purchase plans.
o All other compensation-related proposals, including deferred
compensation plans, employment agreements, loan guarantee programs
and retirement plans.
o All other proposals regarding stock compensation plans, including
extending the life of a plan, changing vesting restrictions,
repricing options, lengthening exercise periods or accelerating
distribution of awards and pyramiding and cashless exercise
programs.
13
We will vote against:
o Pensions for non-employee directors. We believe these retirement
plans reduce director objectivity.
o Elimination of stock option plans.
We will vote on a case-by case basis on these issues:
o Limits on executive and director pay.
o Stock in lieu of cash compensation for directors.
Corporate Governance
Pioneer will vote for:
o Confidential Voting.
o Equal access provisions, which allow shareholders to contribute
their opinion to proxy materials.
o Proposals requiring directors to disclose their ownership of shares
in the company.
We will vote on a case-by-case basis on the following issues:
o Change in the state of incorporation. We will support
reincorporations supported by valid business reasons. We will
oppose those that appear to be solely for the purpose of
strengthening takeover defenses.
o Bundled proposals. We will evaluate the overall impact of the
proposal.
o Adopting or amending the charter, bylaws or articles of association.
o Shareholder appraisal rights, which allow shareholders to demand
judicial review of an acquisition price.
We will vote against:
o Shareholder advisory committees. While management should solicit
shareholder input, we prefer to leave the method of doing so to
management's discretion.
o Limitations on stock ownership or voting rights.
o Reduction in share ownership disclosure guidelines.
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Mergers and Restructurings
Pioneer will vote on the following and similar issues on a case-by-case
basis:
o Mergers and acquisitions.
o Corporate restructurings, including spin-offs, liquidations, asset
sales, joint ventures, conversions to holding company and
conversions to self-managed REIT structure.
o Debt restructurings.
o Conversion of securities.
o Issuance of shares to facilitate a merger.
o Private placements, warrants, convertible debentures.
o Proposals requiring management to inform shareholders of merger
opportunities.
We will normally vote against shareholder proposals requiring that the
company be put up for sale.
Mutual Funds
Many of our portfolios may invest in shares of closed-end mutual funds or
exchange-traded funds. The non-corporate structure of these investments
raises several unique proxy voting issues.
Pioneer will vote for:
o Establishment of new classes or series of shares.
o Establishment of a master-feeder structure.
Pioneer will vote on a case-by-case on:
o Changes in investment policy. We will normally support changes
that do not affect the investment objective or overall risk level
of the fund. We will examine more fundamental changes on a
case-by-case basis.
o Approval of new or amended advisory contracts.
o Changes from closed-end to open-end format.
o Authorization for, or increase in, preferred shares.
o Disposition of assets, termination, liquidation, or mergers.
o Classified boards of closed-end mutual funds, but will typically
support such proposals.
15
Social Issues
Pioneer will abstain on stockholder proposals calling for greater
disclosure of corporate activities with regard to social issues. "Social
Issues" may generally be described as shareholder proposals for a company
to:
o Conduct studies regarding certain issues of public concern and
interest;
o Study the feasibility of the company taking certain actions with
regard to such issues; or
o Take specific action, including ceasing certain behavior and
adopting company standards and principles, in relation to issues
of public concern and interest.
We believe these issues are important and should receive management
attention.
Pioneer will vote against proposals calling for substantial changes in the
company's business or activities. We will also normally vote against
proposals with regard to contributions, believing that management should
control the routine disbursement of funds.
16
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrants portfolio (Portfolio Manager). Also state each Portfolio
Managers business experience during the past 5 years.
PORTFOLIO MANAGEMENT
ADDITIONAL INFORMATION ABOUT THE PORTFOLIO MANAGERS
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS. The table below indicates,
for each portfolio manager of the fund, information about the accounts other
than the fund over which the portfolio manager has day-to-day investment
responsibility. All information on the number of accounts and total assets in
the table is as of April 30, 2011. For purposes of the table, "Other Pooled
Investment Vehicles" may include investment partnerships, undertakings for
collective investments in transferable securities ("UCITS") and other non-U.S.
investment funds and group trusts, and "Other Accounts" may include separate
accounts for institutions or individuals, insurance company general or separate
accounts, pension funds and other similar institutional accounts but generally
do not include the portfolio manager's personal investment accounts or those
which the manager may be deemed to own beneficially under the code of ethics.
Certain funds and other accounts managed by the portfolio manager may have
substantially similar investment strategies.
NAME OF PORTFOLIO MANAGER TYPE OF ACCOUNT NUMBER OF ACCOUNTS MANAGED
------------------------- --------------- --------------------------
TOTAL ASSETS MANAGED NUMBER OF ACCOUNTS MANAGED FOR WHICH ADVISORY FEE IS
-------------------- ----------------------------------------------------
PERFORMANCE-BASED ASSETS MANAGED FOR WHICH ADVISORY FEE IS PERFORMANCE-BASED
----------------- ----------------------------------------------------------
Charles Melchreit
-----------------
Other Registered Investment Companies 4 $501,345,000 N/A
------------------------------------- - ------------ ---
N/A
---
Other Pooled Investment Vehicles 2 $461,698,000 N/A N/A
-------------------------------- - ------------ --- ---
Other Accounts 2 $1,353,970,000 N/A N/A
-------------- - -------------- --- ---
NAME OF PORTFOLIO MANAGER TYPE OF ACCOUNT NUMBER OF ACCOUNTS MANAGED
------------------------- --------------- --------------------------
TOTAL ASSETS MANAGED NUMBER OF ACCOUNTS MANAGED FOR WHICH ADVISORY FEE IS
-------------------- ----------------------------------------------------
PERFORMANCE-BASED ASSETS MANAGED FOR WHICH ADVISORY FEE IS PERFORMANCE-BASED
----------------- ----------------------------------------------------------
Andrew Feltus
-------------
Other Registered Investment Companies 5 $7,375,345,000 N/A
------------------------------------- - -------------- ---
N/A
---
Other Pooled Investment Vehicles 3 $4,355,356,000 N/A N/A
-------------------------------- - -------------- --- ---
Other Accounts 1 $489,040,000 N/A N/A
-------------- - ------------ --- ---
NAME OF PORTFOLIO MANAGER TYPE OF ACCOUNT NUMBER OF ACCOUNTS MANAGED
------------------------- --------------- --------------------------
TOTAL ASSETS MANAGED NUMBER OF ACCOUNTS MANAGED FOR WHICH ADVISORY FEE IS
-------------------- ----------------------------------------------------
PERFORMANCE-BASED ASSETS MANAGED FOR WHICH ADVISORY FEE IS PERFORMANCE-BASED
----------------- ----------------------------------------------------------
Jonathan Sharkey
----------------
Other Registered Investment Companies 3 $863,923,000 N/A
------------------------------------- - ------------ ---
N/A
---
Other Pooled Investment Vehicles 0 $0 N/A N/A
-------------------------------- - -- --- ---
Other Accounts 1 $36,806,000 N/A N/A
-------------- - ----------- --- ---
POTENTIAL CONFLICTS OF INTEREST. When a portfolio manager is responsible for
the management of more than one account, the potential arises for the portfolio
manager to favor one account over another. The principal types of potential
conflicts of interest that may arise are discussed below. For the reasons
outlined below, Pioneer does not believe that any material conflicts are likely
to arise out of a portfolio manager's responsibility for the management of the
fund as well as one or more other accounts. Although Pioneer has adopted
procedures that it believes are reasonably designed to detect and prevent
violations of the federal securities laws and to mitigate the potential for
conflicts of interest to affect its portfolio management decisions, there can be
no assurance that all conflicts will be identified or that all procedures will
be effective in mitigating the potential for such risks. Generally, the risks of
such conflicts of interest are increased to the extent that a portfolio manager
has a financial incentive to favor one account over another. Pioneer has
structured its compensation arrangements in a manner that is intended to limit
such potential for conflicts of interest. The funds investment subadviser also
has adopted certain compliance procedures which are designed to address these
types of conflicts. However, there is no guarantee that such procedures will
detect each situation in which a conflict might arise. See "Compensation of
Portfolio Managers" below.
- A portfolio manager could favor one account over another in allocating new
investment opportunities that have limited supply, such as initial public
offerings and private placements. If, for example, an initial public offering
that was expected to appreciate in value significantly shortly after the
offering was allocated to a single account, that account may be expected to have
better investment performance than other accounts that did not receive an
allocation of the initial public offering. Generally, investments for which
there is limited availability are allocated based upon a range of factors
including available cash and consistency with the accounts' investment
objectives and policies. This allocation methodology necessarily involves some
subjective elements but is intended over time to treat each client in an
equitable and fair manner. Generally, the investment opportunity is allocated
among participating accounts on a pro rata basis. Although Pioneer believes
that its practices are reasonably designed to treat each client in an equitable
and fair manner, there may be instances where a fund may not participate, or may
participate to a lesser degree than other clients, in the allocation of an
investment opportunity.
- A portfolio manager could favor one account over another in the order in
which trades for the accounts are placed. If a portfolio manager determines to
purchase a security for more than one account in an aggregate amount that may
influence the market price of the security, accounts that purchased or sold the
security first may receive a more favorable price than accounts that made
subsequent transactions. The less liquid the market for the security or the
greater the percentage that the proposed aggregate purchases or sales represent
of average daily trading volume, the greater the potential for accounts that
make subsequent purchases or sales to receive a less favorable price. When a
portfolio manager intends to trade the same security on the same day for more
than one account, the trades typically are "bunched," which means that the
trades for the individual accounts are aggregated and each account receives the
same price. There are some types of accounts as to which bunching may not be
possible for contractual reasons (such as directed brokerage arrangements).
Circumstances may also arise where the trader believes that bunching the orders
may not result in the best possible price. Where those accounts or circumstances
are involved, Pioneer will place the order in a manner intended to result in as
favorable a price as possible for such client.
- A portfolio manager could favor an account if the portfolio manager's
compensation is tied to the performance of that account to a greater degree than
other accounts managed by the portfolio manager. If, for example, the portfolio
manager receives a bonus based upon the performance of certain accounts relative
to a benchmark while other accounts are disregarded for this purpose, the
portfolio manager will have a financial incentive to seek to have the accounts
that determine the portfolio manager's bonus achieve the best possible
performance to the possible detriment of other accounts. Similarly, if Pioneer
receives a performance-based advisory fee, the portfolio manager may favor that
account, whether or not the performance of that account directly determines the
portfolio manager's compensation.
- A portfolio manager could favor an account if the portfolio manager has a
beneficial interest in the account, in order to benefit a large client or to
compensate a client that had poor returns. For example, if the portfolio manager
held an interest in an investment partnership that was one of the accounts
managed by the portfolio manager, the portfolio manager would have an economic
incentive to favor the account in which the portfolio manager held an interest.
- If the different accounts have materially and potentially conflicting
investment objectives or strategies, a conflict of interest could arise. For
example, if a portfolio manager purchases a security for one account and sells
the same security for another account, such trading pattern may disadvantage
either the account that is long or short. In making portfolio manager
assignments, Pioneer seeks to avoid such potentially conflicting situations.
However, where a portfolio manager is responsible for accounts with differing
investment objectives and policies, it is possible that the portfolio manager
will conclude that it is in the best interest of one account to sell a portfolio
security while another account continues to hold or increase the holding in such
security.
COMPENSATION OF PORTFOLIO MANAGERS. Pioneer has adopted a system of
compensation for portfolio managers that seeks to align the financial interests
of the portfolio managers with those of shareholders of the accounts (including
Pioneer funds) the portfolio managers manage, as well as with the financial
performance of Pioneer. The compensation program for all Pioneer portfolio
managers includes a base salary (determined by the rank and tenure of the
employee) and an annual bonus program, as well as customary benefits that are
offered generally to all full-time employees. Base compensation is fixed and
normally reevaluated on an annual basis. Pioneer seeks to set base compensation
at market rates, taking into account the experience and responsibilities of the
portfolio manager. The bonus plan is intended to provide a competitive level of
annual bonus compensation that is tied to the portfolio manager achieving
superior investment performance and align the interests of the investment
professional with those of shareholders, as well as with the financial
performance of Pioneer. Any bonus under the plan is completely discretionary,
with a maximum annual bonus that may be in excess of base salary. The annual
bonus is based upon a combination of the following factors:
- Quantitative Investment Performance. The quantitative investment
performance calculation is based on pre-tax investment performance of all of the
accounts managed by the portfolio manager (which includes the fund and any other
accounts managed by the portfolio manager) over a one-year period (20%
weighting) and four-year period (80% weighting), measured for periods ending on
December 31. The accounts, which include the fund, are ranked against a group of
mutual funds with similar investment objectives and investment focus (60%) and a
broad-based securities market index measuring the performance of the same type
of securities in which the accounts invest (40%), which, in the case of the
fund, is the Merrill Lynch Global High Yield and Emerging Markets Index and the
CSFB Leveraged Loan Index. As a result of these two benchmarks, the performance
of the portfolio manager for compensation purposes is measured against the
criteria that are relevant to the portfolio manager's competitive universe.
- Qualitative Performance. The qualitative performance component with
respect to all of the accounts managed by the portfolio manager includes
objectives, such as effectiveness in the areas of teamwork, leadership,
communications and marketing, that are mutually established and evaluated by
each portfolio manager and management.
- Pioneer Results and Business Line Results. Pioneer's financial
performance, as well as the investment performance of its investment management
group, affect a portfolio manager's actual bonus by a leverage factor of plus or
minus (+/-) a predetermined percentage.
The quantitative and qualitative performance components comprise 80% and 20%,
respectively, of the overall bonus calculation (on a pre-adjustment basis). A
portion of the annual bonus is deferred for a specified period and may be
invested in one or more Pioneer funds.
Certain portfolio managers may participate in other programs designed to reward
and retain key contributors. Senior executives or other key employees may be
granted performance units based on the stock price performance of UniCredit and
the financial performance of Pioneer Global Asset Management S.p.A., which are
affiliates of Pioneer. Portfolio managers also may participate in a deferred
compensation program, whereby deferred amounts are invested in one or more
Pioneer funds.
SHARE OWNERSHIP BY PORTFOLIO MANAGERS. The following table indicates as of
April 30, 2011 the value, within the indicated range, of shares beneficially
owned by the portfolio managers of the fund.
NAME OF PORTFOLIO MANAGER BENEFICIAL OWNERSHIP OF THE FUND*
------------------------- ---------------------------------
Charles Melchreit A
----------------- -
Andrew Feltus E
------------- -
Jonathan Sharkey B
---------------- -
*Key to Dollar Ranges
A. None
B. $1 - $10,000
C. $10,001 - $50,000
D. $50,001 - $100,000
E. $100,001 - $500,000
F. $500,001 - $1,000,000
G. Over $1,000,000
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
During the period covered by this report, there were no purchases
made by or on behalf of the registrant or any affiliated purchaser
as defined in Rule 10b-18(a)(3) under the Securities Exchange Act
of 1934 (the Exchange Act), of shares of the registrants equity
securities that are registered by the registrant pursuant to
Section 12 of the Exchange Act.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in
its definitive proxy statement, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer
and principal financial officer have
concluded that the registrant's disclosure
controls and procedures are effective based
on their evaluation of these controls and
procedures as of a date within 90 days of the
filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the
registrant's internal control over financial
reporting that occurred during the second
fiscal quarter of the period covered by this
report that have materially affected, or are
reasonably likely to materially affect, the
registrant's internal control over financial
reporting.
The registrant's principal executive officer and principal financial
officer, however, voluntarily are reporting the following information:
In August of 2006 the registrant's investment adviser
enhanced its internal procedures for reporting performance
information required to be included in prospectuses.
Those enhancements involved additional internal controls
over the appropriateness of performance data
generated for this purpose. Such enhancements were made
following an internal review which identified
prospectuses relating to certain classes of shares of
a limited number of registrants where, inadvertently,
performance information not reflecting the deduction of
applicable sales charges was included. Those prospectuses
were revised, and the revised prospectuses were distributed to
shareholders.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Diversified High Income Trust
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date June 29, 2011
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 29, 2011
By (Signature and Title)* /s/ Mark Bradley
Mark Bradley, Treasurer
Date June 29, 2011
* Print the name and title of each signing officer under his or her signature.