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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21043
Pioneer High Income Trust
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: March 31
Date of reporting period: April 1, 2005 through March 31, 2006
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
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PIONEER
-----------------------
HIGH
INCOME
TRUST
Annual
Report
3/31/06
[LOGO] PIONEER
Investments(R)
Table of Contents
--------------------------------------------------------------------------------
Letter to Shareowners 2
Portfolio Summary 4
Prices and Distributions 5
Performance Update 6
Portfolio Management Discussion 7
Schedule of Investments 12
Financial Statements 25
Financial Highlights 28
Notes to Financial Statements 30
Report of Independent Registered Public Accounting Firm 41
Factors Considered by the Independent Trustees in Approving
the Management Contract 42
Trustees, Officers and Service Providers 47
President's
Dear Shareowner,
--------------------------------------------------------------------------------
There's a conundrum seen when observing the U.S. economy. In spite of sky high
oil prices and real estate prices starting to soften, the U.S. economy was on a
tear in the first quarter of 2006. Sizzling, roaring, and surging are terms used
recently in headlines to describe the current state of our economy.
Our nation's gross domestic product (GDP), the broadest measure of the economy's
strength, rose at an annual rate of 4.8% in the first quarter, the fastest
growth rate since the third quarter of 2003. Part of this growth is a rebound
from a soft fourth quarter, but there is also real underlying growth. Business
spending is up 14.3% as the caution of previous years is being overcome by the
need for equipment and technology. Consumers are doing their part by pushing the
sales of consumer durables up 20.6% through the purchase of new household goods
and luxury items.
It is difficult to project how long this growth will last, but most economists
tend to agree that it can do so as long as business and consumer demand
continues and inflation remains low.
Foreign markets are also faring well, benefiting from growth-oriented economic
policies, and world economic growth is becoming more broadly based. The Japanese
economy is expanding, and there are signs of a sustained recovery in Europe.
Growth in the emerging economies and developing nations remains solid, with
tremendous strength in China, India and Russia. Looking forward, we expect
strong growth to continue, yet we remain cautious.
Investor confidence, a favorable economic climate and healthy corporate
profitability and cash flow have helped global stock markets continue their
strong performance in 2006.
The broad U.S. stock market is doing extremely well thus far in 2006. Investors
seem to have grown accustomed to companies generally delivering on their
earnings promises, lessening anxiety in the marketplace. Investors are feeling
confident with stocks, especially those of mid-sized and small companies, which
have far outpaced large-cap stocks.
2
Letter
Yet, the Federal Reserve response to the strong economy in the first quarter has
been cautious, weighing whether further interest hikes are necessary. This
concerns some in the financial markets, who have grown accustomed to the Fed
confidently determining the movement of rates in the past.
The Treasury-bond market ended the first quarter with short- and long-term bond
yields almost equal - a flat yield curve. Although municipal-bond yields are not
quite flat, the difference between short- and long-term interest rates is the
smallest it has been since 1989. Even if the Fed's interest rate hikes end soon,
intermediate and long interest rates are still low relative to inflation.
In summary, the economy and financial markets in the U.S. are prospering and the
fundamentals remain, in our view, healthy going forward. However, there are no
guarantees in investing: we know from a long-view of history that sudden shifts
can occur with little warning. We need only look to the natural disasters and
political upheavals of 2005. As such, we continue to pursue our philosophy in
stock and bond portfolio management: global resources dedicated to fundamental
research in the pursuit of opportunities that offer an attractive balance of
risk and reward to help our shareowners grow their assets.
Respectfully,
/s/ Osbert M. Hood
Osbert M. Hood, President
Pioneer Investment Management, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Trust's historical or future performance are
statements of the opinion of Fund management as of the date of the 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.
3
Pioneer High Income Trust
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PORTFOLIO SUMMARY 3/31/06
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Portfolio Diversification
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(As a percentage of total investment portfolio)
[The following table was depicted as a pie chart in the printed material.]
Corporate Bonds & Notes 86.1%
Municipal Bonds 5.8%
Temporary Cash Investments 4.8%
Sovereign Debt Obligations 1.6%
Collateralized Mortgage Obligations 0.8%
Convertible Bonds 0.8%
Common Stock 0.1%
Portfolio Maturity
--------------------------------------------------------------------------------
(As a percentage of long-term holdings)
[The following table was depicted as a pie chart in the printed material.]
0-1 Year 12.2%
1-3 Years 29.1%
3-4 Years 11.5%
4-6 Years 35.3%
6-8 Years 6.6%
8+ Years 5.3%
The portfolio is actively managed, and current holdings may be different.
4
Pioneer High Income Trust
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PRICES AND DISTRIBUTIONS 3/31/06
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Share Prices and Distributions
--------------------------------------------------------------------------------
Market Value
per Common Share 3/31/06 3/31/05
$16.80 $15.12
Net Asset Value
per Common Share 3/31/06 3/31/05
$16.13 $16.34
Distributions per Net
Common Share Investment Short-Term Long-Term
(4/1/05 - 3/31/06) Income Capital Gains Capital Gains
$1.65 $0.0352 $0.1942
10 Largest Holdings
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(As a percentage of long-term holdings)*
1. Xerox Capital Trust I, 8.0%, 2/1/27 2.18%
2. Baytex Energy, Ltd., 9.625%, 7/15/10 1.80
3. Huntsman International LLC, 10.125%, 7/1/09 1.76
4. Seabulk International, Inc., 9.5%, 8/15/13 1.58
5. GATX Financial Corp., 8.875%, 6/1/09 1.53
6. Kvaerner ASA, 0.0%, 10/30/11 1.52
7. Cia Brasileira de Bebida, 10.5%, 12/15/11 1.27
8. OM Group, Inc., 9.25%, 12/15/11 1.26
9. J. Ray McDermott SA, 11.0%, 12/15/13 (144A) 1.25
10. Goodyear Tire & Rubber Co., 9.0%, 7/1/15 1.18
* This list excludes temporary cash and derivative investments. The portfolio
is actively managed, and current holdings may be different.
5
Pioneer High Income Trust
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PERFORMANCE UPDATE 3/31/06
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Investment Returns
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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 High Income Trust, compared to that of the Merrill Lynch High
Yield Master II Index.
----------------------------------------------
Cumulative Total Returns
(As of March 31, 2006)
Net Asset Market
Period Value (NAV) Price
Life-of-Trust
(4/25/02) 74.79% 73.91%
1 Year 10.91 24.84
----------------------------------------------
[The following table was depicted as a mountain chart in the printed material.]
Value of $10,000 Investment
Merrill Lynch
Pioneer High High Yield
Income Trust Master II Index
4/02 10,000 10,000
10,735 10,169
3/04 13,668 12,428
13,919 13,291
3/06 17,391 14,252
Call 1-800-225-6292 or visit www.pioneerfunds.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 net asset value ("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 is total assets less total liabilities, which includes
preferred shares, 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 market price.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Trust distributions or the redemption of Trust
shares.
Index comparison begins April 30, 2002. The Merrill Lynch High Yield Master II
Index is a commonly accepted measure of the performance of high yield
securities. Index returns are calculated monthly, assume reinvestment of
dividends and, unlike Trust returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in an Index.
6
Pioneer High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 3/31/06
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High yield corporate bonds performed well during the 12 months ended March 31,
2006, despite suffering some price erosion as interest rates rose among
virtually all parts of the fixed-income market. In general, balance sheets of
high-yield issuers improved as corporate profits rose in a steadily growing
economy. The following is an interview with Kenneth J. Taubes and Andrew Feltus,
who discuss the performance of High Income Trust during the 12 months. Mr.
Taubes is director of Pioneer's Fixed Income Group, and Mr. Feltus is a member
of the team responsible for the daily management of the Trust.
Q: How did the Trust perform?
A: The Fund performed very well based on its net asset value and had extremely
strong results based on market price. For the 12 months ended March 31, 2006,
the Trust had a total return of 10.91% at net asset value, outperforming the
benchmark Merrill Lynch High Yield Master II, which returned 7.23%. The
Trust's return at market price was 24.84%, as the price of the Trust's shares
went from a 7.5% discount to a 4.2% premium price over net asset value. The
Trust also continued to produce a generous flow of dividend income. On March
31, 2006, the Trust's current SEC 30-day yield was 11.22%.
Call 1-800-225-6292 or visit www.pioneerfunds.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Q: What was the environment like during the 12 months?
A: Domestic high-yield bonds, which constitute our primary focus, performed well
as the economy continued to grow and corporate profits remained strong. While
interest rates rose in virtually all segments of the fixed-income markets,
high-yield bonds generated strong relative performance, suffering less price
loss than Treasuries and other high-grade securities. At the start of the
fiscal year, spreads - which reflect the yield differences between high-grade
and high-yield securities - were relatively tight, implying that investors
saw relatively little risk in high-yield bonds. That situation
7
Pioneer High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 3/31/06 (continued)
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changed abruptly in the spring of 2005 when the high-yield market slumped as
evidence accumulated about the mounting financial problems of automotive
leaders General Motors and Ford. The credit ratings of securities of both
companies eventually were downgraded from investment-grade to
below-investment-grade. The high-yield market recovered during the summer
months, but then fell again in the fall as the overall fixed-income market
slumped as interest rates rose and bond prices declined. While all fixed-
income securities felt the effects of this volatility, the high-yield market
suffered more than many other classes as investors grew increasingly cautious
about credit risk. Adding to the unease was the approach of a new federal
bankruptcy law, which led to the bankruptcy filings of several companies,
including automotive parts manufacturer Delphi and airlines Northwest and
Delta. However, this slump ended in late 2005, and the high-yield market
rallied during the final five months of the fiscal year, helped by the
expectation that the Federal Reserve Board was nearing the end of its round
of interest-rate hikes. In addition, the expectation that General Motors
would sell a majority stake in its financing unit, GMAC, helped the
high-yield market. The fiscal year ended with yield differentials again
tight, with high-yield bonds offering relatively little yield advantage when
judged by historical standards.
Q: What were your principal strategies in this environment?
A: The major change we made to the portfolio during the fiscal year was to
upgrade overall quality as the gaps between yields of different quality bonds
tightened, and lower-rated bonds offered less yield advantage. We lowered
duration - or sensitivity to changes in interest rates - and focused on
higher-rated bonds within the high-yield universe. At the end of the fiscal
year, on March 31, 2006, the Trust's average effective duration was 3.75
years, down from the 4.55 years six months earlier and substantially lower
than the 4.41 years of the Merrill Lynch sector index.
While the high-yield bond market by its nature has a heavy representation of
cyclical companies whose fortunes depend on the business cycle, we did reduce
our exposure to highly cyclical companies and focused more on companies with
greater earnings consistency, such as in the health care and consumer
sectors.
8
Pioneer High Income Trust
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At the end of the fiscal year, domestic high-yield bonds accounted for 72.9%
of Trust assets.
At the end of the fiscal year, slightly less than 25% of Trust assets were
leveraged. The Trust has the ability to use leverage and borrow up to 33% of
assets at short-term rates to invest in high-yield bonds. The ability to use
leverage helped contribute to performance.
Q: What types of investments had the greatest influence on performance, either
positively or negatively?
A: Our heavy position in the transportation industry was a major factor in the
Trust's strong results. Bonds backed by Continental Airlines, U.S. Airways
and AMR, parent company of American Airlines all did very well, although we
had a small position in Northwest Airline bonds. That position detracted from
results when the company filed for bankruptcy protection.
Also helping performance was our decision to maintain only a small exposure
to the automotive industry, which performed very poorly. Within our small
positions, we did have good results from truck manufacturers, which we
emphasized. The manufacturers benefited from new federal regulations that
increased the demand for trucks. We also had a position in Goodyear Tire that
performed well. Bonds of auto parts manufacturer Tenneco likewise contributed
to performance. However, another auto parts manufacturer, Delphi, filed for
bankruptcy protection and hurt performance during the year.
Another holding that detracted from results was Duane Reade, which operates
pharmacies and convenience stores in the New York metropolitan area. However,
it has brought in a new management team, and the bonds began showing improved
performance late in the fiscal year, even though they were a drag on
performance for the full 12 months.
Q: What is your investment outlook?
A: As we enter a new fiscal year, we find that valuations in the high-yield
market are not as attractive as they were two or three years ago. However,
the global economic resurgence continues to be strong, contributing to the
financial health of many high-yield
9
Pioneer High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 3/31/06 (continued)
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issuers. In this environment, we believe the market has the potential to
deliver decent returns. Shareowners also should be aware that if short-term
interest rates continue to rise and add to the Trust's borrowing costs, the
Trust's ability to sustain its level of dividends could be affected.
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.
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 fixed-income securities in the Trust
will generally fall. Conversely, when interest rates fall the prices of
fixed-income securities in the Trust will generally rise. Investments in the
Trust are subject to possible loss due to the financial failure of underlying
securities and their 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 are also 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 may use leverage through the issuance of preferred shares with an
aggregate liquidation preference of up to 25% of the Trust's total assets
after such issuance. Leverage creates significant risks, including the risk
that the Trust's income or capital appreciation will not be sufficient to
cover the cost of leverage, which may adversely affect the return for the
holders of common shares.
Risks of investing in the Trust are discussed in greater detail in the
Trust's registration statement on Form N-2 relating to its common shares.
10
Pioneer High Income Trust
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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.
11
Pioneer High Income Trust
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SCHEDULE OF INVESTMENTS 3/31/06
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
COLLATERIZED MORTGAGE OBLIGATIONS - 1.1% of Net Assets
Diversified Financials - 1.1%
4,860,000 NR/Ba2 Tower 2004-2A F, 6.376%, 12/15/14 (144A) $ 4,783,975
------------
TOTAL COLLATERIZED MORTGAGE OBLIGATIONS
(Cost $4,860,000) $ 4,783,975
------------
CORPORATE BONDS & NOTES - 117.0% of Net Assets
Energy - 12.2%
Oil & Gas Drilling - 1.0%
4,400,000 NR/NR DDI Holding AS, 9.3%, 1/19/12 (144A) $ 4,444,000
------------
Oil & Gas Equipment & Services - 3.3%
6,000,000 B+/B2 J. Ray McDermott SA, 11.0%, 12/15/13 (144A) $ 7,005,000
2,100,000(a) CCC+/B3 Pipe Acquisition Finance Plc, 10.913%,
12/15/10 (144A) 2,089,500
2,380,000 NR/B1 SemGroup L.P., 8.75%, 11/15/15 (144A) 2,427,600
2,000,000 NR/NR Sevan Marine ASA, 9.75%, 1/31/11 (144A) 2,030,000
820,000 B-/B2 Targa Resources, Inc., 8.5%, 11/1/13 (144A) 852,800
------------
$ 14,404,900
------------
Oil & Gas Exploration & Production - 7.3%
9,534,000 B-/B3 Baytex Energy, Ltd., 9.625%, 7/15/10 $ 10,094,122
1,570,000 B-/B3 Clayton William Energy, 7.75%, 8/1/13 1,475,800
1,735,000 B-/Caa1 Delta Petroleum Corp., 7.0%, 4/1/15 1,587,525
5,000,000 B+/B2 Energy Partners, Ltd., 8.75%, 8/1/10 5,112,500
4,500,000 BBB-/Ba1 Methanex Corp., 8.75%, 8/15/12 4,916,250
5,300,000 CCC+/Caa1 PetroQuest Energy, Inc., 10.375%, 5/15/12 5,618,000
3,135,000 B-/Caa1 Stone Energy Corp., 6.75%, 12/15/14 2,931,225
------------
$ 31,735,422
------------
Oil & Gas Storage & Transportation - 0.6%
2,188,000 B-/B3 Transmontaigne, Inc., 9.125%, 6/1/10 $ 2,324,750
------------
Total Energy $ 52,909,072
------------
Materials - 26.8%
Commodity Chemicals - 5.2%
4,635,000 BB-/B1 ARCO Chemical Co., 9.8%, 2/1/20 $ 5,052,150
2,920,000(a) B-/B3 Aventine Renewable Energy, 10.91%,
12/15/11 (144A) 3,066,000
3,200,000 B-/B2 Basell Finance Co., 8.1%, 3/15/27 (144A) 3,104,000
5,000,000 B+/B1 Invista, 9.25%, 5/1/12 (144A) 5,350,000
EURO 1,190,000 B-/B2 Nell AF S.a.r.l., 8.375%, 8/15/15 (144A) 1,504,889
4,280,000 B-/B3 VeraSun Energy Corp., 9.875%, 12/15/12 (144A) 4,536,800
------------
$ 22,613,839
------------
12 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
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Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Diversified Chemicals - 4.7%
810,000 BB/NR Braskem SA, 9.375%, 6/1/15 (144A) $ 897,075
2,200,000 BB/NR Braskem SA, 11.75%, 1/22/14 2,678,500
EURO 7,870,000 B/B3 Huntsman International LLC, 10.125%, 7/1/09 9,904,882
EURO 1,440,000 B-/B2 Ineos Group Holdings Plc., 7.785%,
2/15/16 (144A) 1,681,632
EURO 3,904,000 CCC+/Caa1 Rhodia SA, 9.25%, 6/1/11 5,078,781
------------
$ 20,240,870
------------
Specialty Chemicals - 5.9%
6,060,000(b) B/Caa2 Crystal US Holdings, 0.0%, 10/1/14 $ 4,696,500
1,000,000 B/NR Ferro Corp., 7.625%, 5/1/13 982,500
6,850,000 B-/Caa1 OM Group, Inc., 9.25%, 12/15/11 7,089,750
5,970,000(h) B+/B3 PolyOne Corp., 8.875%, 5/1/12 6,119,250
6,175,000 B-/Caa2 Resolution Performance Products LLC,
13.5%, 11/15/10 6,599,531
------------
$ 25,487,531
------------
Construction Materials - 1.5%
2,225,000 CCC+/Caa1 RMCC Acquisition Co., 9.5%, 11/1/12 (144A) $ 2,280,625
4,185,000 B-/B3 U.S. Concrete, Inc., 8.375%, 4/1/14 4,310,550
------------
$ 6,591,175
------------
Metal & Glass Containers - 2.0%
4,020,000 BB-/B1 Greif Bros. Corp., 8.875%, 8/1/12 $ 4,281,300
3,985,000 B-/B2 Vitro Envases, 10.75%, 7/23/11 (144A) 4,184,250
------------
$ 8,465,550
------------
Paper Packaging - 1.6%
1,685,000(h) CCC+/Caa2 Graham Packaging Co., L.P., 9.875%, 10/15/14 $ 1,706,062
5,540,000(h) B-/B3 Graphic Packaging International, Inc.,
9.5%, 8/15/13 5,179,900
------------
$ 6,885,962
------------
Aluminum - 0.8%
1,440,000 B/B3 Aleris International, Inc., 9.0%, 11/15/14 $ 1,508,400
2,180,000 B-/B3 Indalex Holding Corp., 11.5%, 2/1/14 (144A) 2,125,500
------------
$ 3,633,900
------------
Diversified Metals & Mining - 1.9%
3,300,000 B-/B3 American Rock Salt Co., LLC, 9.5%, 3/15/14 $ 3,333,000
4,600,000 B+/B1 Freeport-McMoRan Copper & Gold, Inc.,
10.125%, 2/1/10 4,956,500
------------
$ 8,289,500
------------
The accompanying notes are an integral part of these financial statements. 13
Pioneer High Income Trust
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SCHEDULE OF INVESTMENTS 3/31/06 (continued)
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Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Steel - 1.5%
2,900,000 BB/Ba2 CSN Islands VIII Corp., 9.75%, 12/16/13 (144A) $ 3,269,750
630,000 BB/Ba2 CSN Islands IX Corp., 10.5%, 1/15/15 (144A) 732,375
2,485,000 B-/B3 Edgen Acquisition Corp., 9.875%, 2/1/11 2,472,575
------------
$ 6,474,700
------------
Forest Products - 0.9%
1,645,000 B/B1 Mandra Forestry Holdings, Ltd., 12.0%,
5/15/13 (144A) $ 1,332,450
EURO 2,000,000 B-/B3 MDP Acquisitions Plc, 10.125%, 10/1/12 2,698,647
------------
$ 4,031,097
------------
Paper Products - 0.8%
3,450,000 B-/B2 Exopack Holding Corp., 11.25%, 2/1/14 (144A) $ 3,527,625
------------
Total Materials $116,241,749
------------
Capital Goods - 7.3%
Building Products - 1.4%
2,885,000(a) B/B3 Builders FirstSource, Inc., 8.999%, 2/15/12 $ 2,957,125
EURO 2,500,000 CCC+/Caa1 Ray Acquisition SCA, 9.375%, 3/16/15 (144A) 3,252,293
------------
$ 6,209,418
------------
Construction & Engineering - 2.9%
NOK 27,300,000(b) NR/NR Kvaerner ASA, 0.0%, 10/30/11 $3,993,387
8,897,000(b) NR/NR Kvaerner ASA, 0.0%, 10/30/11 8,541,120
------------
$ 12,534,507
------------
Heavy Electrical Equipment - 2.0%
4,790,000 CCC+/B3 Altra Industrial Motion, 9.0%, 12/1/11 $ 4,790,000
3,975,000 B/B2 Hawk Corp., 8.75%, 11/1/14 3,984,938
------------
$ 8,774,938
------------
Construction & Farm Machinery & Heavy Truck - 0.7%
1,000,000 B-/B3 Accuride Corp., 8.5%, 2/1/15 $ 991,250
1,800,000 B+/B1 Greenbrier Companies, Inc., 8.375%, 5/15/15 1,885,500
------------
$ 2,876,750
------------
Industrial Machinery - 0.3%
1,217,000 B+/B2 Manitowac Co., Inc., 10.5%, 8/1/12 $ 1,347,828
------------
Total Capital Goods $ 31,743,441
------------
14 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
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Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Commercial Services & Supplies - 8.7%
Diversified Commercial & Professional Services - 4.5%
3,500,000 CCC+/Caa1 Allied Security Escrow, 11.375%, 7/15/11 $ 3,325,000
385,000 B/B2 Ashtead Holdings Plc, 8.625%, 8/1/15 (144A) 400,400
1,850,000 B/B2 Brickman Group, Ltd., Series B,
11.75%, 12/15/09 2,009,562
4,455,000 B-/Caa1 Cardtronics, Inc., 9.25%, 8/15/13 (144A) 4,455,000
2,980,000 CCC+/B3 Cornell Companies, Inc., 10.75%, 7/1/12 3,129,000
3,620,000 CCC+/Caa1 Park-Ohio Industries, Inc., 8.375%, 11/15/14 3,411,850
2,745,000 B/Caa1 United Rentals North America, Inc.,
7.75%, 11/15/13 2,745,000
------------
$ 19,475,812
------------
Human Resource & Employment Services - 0.6%
2,700,000 B-/B3 Knowledge Learning Corp., Inc., 7.75%,
2/1/15 (144A) $ 2,571,750
------------
Environmental & Facilities Services - 3.6%
4,088,000 B+/B2 Clean Harbors, Inc., 11.25%, 7/15/12 $ 4,599,000
5,020,000 CCC+/Caa1 Hydrochem Industrial Services, Inc., 9.25%,
2/15/13 (144A) 4,982,350
5,800,000 CCC/Caa2 Waste Services, Inc., 9.5%, 4/15/14 5,981,250
------------
$ 15,562,600
------------
Total Commercial Service & Supplies $ 37,610,162
------------
Transportation - 10.6%
Airlines - 3.7%
1,316,928 CCC+/B3 American Airlines, Inc., 7.379%, 11/23/17 $ 1,195,112
2,065,000(h) CCC/Caa2 AMR Corp., 9.0%, 8/1/12 2,028,862
2,440,000 CCC/Caa2 AMR Corp., 9.8%, 10/1/21 2,165,500
3,200,000 CCC/Caa2 AMR Corp., 10.2%, 3/15/20 2,856,000
1,319,997 B+/B2 Continental Airlines, Inc., Series B,
8.499%, 11/1/12 1,269,691
5,000,000 B/B3 Continental Airlines, Inc., Series D,
7.568%, 12/1/06 4,967,203
1,500,000 NR/Ba2 GOL Finance, 8.75%, 4/29/49 (144A) 1,500,000
------------
$ 15,982,368
------------
The accompanying notes are an integral part of these financial statements. 15
Pioneer High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/06 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Marine - 5.3%
860,000 BB+/NR CMA CGM SA, 7.25%, 2/1/13 (144A) $ 851,611
3,899,000(b) CCC+/Caa2 H-Lines Finance Holding, 0.0%, 4/1/13 3,236,170
8,000,000 BBB-/Ba1 Seabulk International, Inc., 9.5%, 8/15/13 8,880,000
6,470,000 B/B1 Ship Finance International, Ltd., 8.5%, 12/15/13 6,081,800
1,000,000 BB-/Ba3 Stena AB, 7.5%, 11/1/13 987,500
2,900,000 B-/B3 Trailer Bridge, Inc., 9.25%, 11/15/11 2,983,375
------------
$ 23,020,456
------------
Railroads - 0.7%
2,250,000 B+/B2 Grupo Transportacion Ferroviaria Mexicana,
SA de CV, 9.375%, 5/1/12 $ 2,475,000
400,000 B+/B2 Grupo Transportacion Ferroviaria Mexicana,
SA de CV, 10.25%, 6/15/07 418,000
------------
$ 2,893,000
------------
Trucking - 0.8%
4,025,000 CCC+/Caa2 Atlantic Express Transportation Corp.,
12.0%, 4/15/08 $ 3,416,219
------------
Airport Services - 0.1%
535,000 B-/Caa1 K&F Acquisition, Inc., 7.75%, 11/15/14 $ 541,688
------------
Total Transportation $ 45,853,731
------------
Automobiles & Components - 4.5%
Auto Parts & Equipment - 2.4%
3,590,000 B-/Caa1 Cooper-Standard Automotive, Inc.,
8.375%, 12/15/14 $ 2,800,200
5,475,000 B-/Caa1 Stanadyne Corp., 10.0%, 8/15/14 5,242,313
2,000,000 B-/B3 UGS Corp., 10.0%, 6/1/12 2,200,000
------------
$ 10,242,513
------------
Tires & Rubber - 1.5%
6,510,000 B-/B3 Goodyear Tire & Rubber Co., 9.0%, 7/1/15 $ 6,607,650
------------
Automobile Manufacturers - 0.6%
3,000,000 BB-/Ba2 Ford Motor Credit Co., 7.375%, 10/28/09 $ 2,820,399
------------
Total Automobiles & Components $ 19,670,562
------------
Consumer Durable & Apparel - 1.0%
Homebuilding - 1.0%
1,165,000 B+/Ba3 WCI Communities, Inc., 7.875%, 10/1/13 $ 1,115,488
3,200,000 B/B2 William Lyon Homes, Inc., 7.5%, 2/15/14 2,760,000
700,000 B/B2 William Lyon Homes, Inc., 7.625%, 12/15/12 609,000
------------
Total Consumer Durable & Apparel $ 4,484,488
------------
16 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Consumer Services - 3.3%
Casinos & Gaming - 1.0%
4,500,000 B/B2 Little Traverse Bay Bands of Odawa Indians,
10.25%, 2/15/14 (144A) $ 4,438,125
------------
Hotels, Resorts & Cruise Lines - 1.7%
2,435,000 B+/B1 Galaxy Entertainment Finance Co., Ltd.,
9.875%, 12/15/12 (144A) $ 2,535,444
1,980,000 CCC+/Caa2 HRP Myrtle Beach Operations LLC,
12.5%, 4/1/13 (144A) 1,989,900
3,050,000 B-/Caa1 Trump Entertainment Resorts, Inc., 8.5%, 6/1/15 2,966,125
------------
$ 7,491,469
------------
Leisure Facilities - 0.6%
2,500,000 CCC+/Caa1 True Temper Sports, Inc., 8.375%, 9/15/11 $ 2,287,500
------------
Total Consumer Services $ 14,217,094
------------
Media - 4.9%
Broadcasting & Cable TV - 2.3%
1,435,000 BB+/Ba2 C&M Finance, Ltd., 8.1%, 2/1/16 (144A) $ 1,435,504
2,170,000 BB-/B1 Cablemas SA de CV, 9.375%, 11/15/15 (144A) 2,311,050
EURO 3,750,000 B-/B2 Kabel Deutschland GMBH, 10.75%,
7/1/14 (144A) 5,162,070
EURO 1,000,000(a)(c) B-/NR Kabel Deutschland GMBH, 11.084%,
12/15/14 (144A) 1,258,562
------------
$ 10,167,186
------------
Movies & Entertainment - 0.8%
3,000,000 B-/B3 LodgeNet Entertainment Corp., 9.5%, 6/15/13 $ 3,240,000
------------
Publishing - 1.8%
4,835,000 B/B1 Sheridan Acquisition Corp., 10.25%, 8/15/11 $ 4,974,006
3,700,000(b) B-/Caa2 Visant Holding Corp., 0.0%, 12/1/13 2,830,500
------------
$ 7,804,506
------------
Total Media $ 21,211,692
------------
Retailing - 3.4%
Distributors - 0.8%
3,535,000 B-/Caa1 Intcomex, Inc., 11.75%, 1/15/11 (144A) $ 3,517,325
------------
Department Stores - 0.9%
3,800,000 BB+/Baa3 J.C. Penney Co., Inc., 8.125%, 4/1/27 $ 3,966,250
------------
Computer & Electronics Retailing - 0.1%
345,000 B+/Ba3 GSC Holdings Corp., 8.0%, 10/1/12 (144A) $ 342,413
------------
Specialty Stores - 0.5%
1,980,000 B-/B3 Hines Nurseries, Inc., 10.25%, 10/1/11 $ 1,935,450
------------
The accompanying notes are an integral part of these financial statements. 17
Pioneer High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/06 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Automotive Retail - 1.1%
5,370,000 CCC/B3 Pep Boys-Manny, Moe & Jack, 7.5%, 12/15/14 $ 4,833,000
------------
Total Retailing $ 14,594,438
------------
Food & Staples Retailing - 2.2%
Drug Retail - 0.7%
550,000(a) CCC+/Caa1 Duane Reade, Inc., 9.41%, 12/15/10 $ 544,500
3,350,000 CCC-/Caa3 Duane Reade, Inc., 9.75%, 8/1/11 2,512,500
------------
$ 3,057,000
------------
Food Distributors - 1.5%
2,980,000 B-/Caa1 Doane Pet Care Co., 10.625%, 11/15/15 $ 3,158,800
3,380,000 B+/B2 Wornick Co., 10.875%, 7/15/11 3,481,400
------------
$ 6,640,200
------------
Total Food & Staples Retailing $ 9,697,200
------------
Food, Beverage & Tobacco - 1.6%
Brewers - 1.6%
5,885,000 BBB/Baa3 Cia Brasileira de Bebida, 10.5%, 12/15/11 $ 7,106,137
------------
Total Food, Beverage & Tobacco $ 7,106,137
------------
Health Care Equipment & Services - 3.8%
Health Care Equipment & Services - 2.3%
1,800,000 B-/Caa1 Accellent, Inc., 10.5%, 12/1/13 $ 1,921,500
5,515,000(h) CCC+/B3 Hanger Orthopedic Group, Inc.,
10.375%, 2/15/09 5,583,938
2,900,000(a) B-/B3 Medical Services Co., 12.1%, 10/15/11 (144A) 2,349,000
------------
$ 9,854,438
------------
Health Care Services - 1.5%
2,160,000 B-/Caa1 AMR HoldCo/Emcare HoldCo, 10.0%, 2/15/15 $ 2,305,800
4,055,000 CCC+/B3 Rural/Metro Corp., 9.875%, 3/15/15 4,369,263
------------
$ 6,675,063
------------
Total Health Care Equipment & Services $ 16,529,501
------------
Pharmaceuticals & Biotechnology - 1.6%
Biotechnology - 0.1%
540,000 B/B2 Angiotech Pharmaceuticals, Inc., 7.75%,
4/1/14 (144A) $ 545,400
------------
Pharmaceuticals - 1.5%
6,650,000 CCC+/Caa1 Warner Chilcott Corp., 9.25%, 2/1/15 (144A) $ 6,600,125
------------
Total Pharmaceuticals & Biotechnology $ 7,145,525
------------
18 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Diversified Financials - 3.5%
Specialized Finance - 3.5%
6,135,000 B+/B3 Dollar Financial Group, 9.75%, 11/15/11 $ 6,441,750
7,950,000 BBB/Baa3 GATX Financial Corp., 8.875%, 6/1/09 8,597,058
------------
Total Diversified Financials $ 15,038,808
------------
Insurance - 2.5%
Life & Health Insurance - 1.3%
5,725,000 B-/B2 Presidential Life Corp., 7.875%, 2/15/09 $ 5,725,000
------------
Multi-Line Insurance - 1.2%
5,300,000 BB+/Ba1 Allmerica Financial Corp., 7.625%, 10/15/25 $ 5,355,215
------------
Total Insurance $ 11,080,215
------------
Software & Services - 0.1%
Application Software - 0.1%
500,000 CCC+/Caa1 Serena Software, Inc., 10.375%, 3/15/16 (144A) $ 525,000
------------
Total Software & Services $ 525,000
------------
Technology Hardware & Equipment - 3.6%
Communications Equipment - 0.7%
2,900,000 B/B1 Lucent Technologies, Inc., 7.25%, 7/15/06 $ 2,907,250
------------
Electronic Equipment Manufacturers - 0.1%
215,000 B/B2 General Cable Corp., 9.5%, 11/15/10 $ 232,200
------------
Office Electronics - 2.8%
11,830,000 B+/Ba3 Xerox Capital Trust I, 8.0%, 2/1/27 $ 12,244,050
------------
Total Technology Hardware & Equipment $ 15,383,500
------------
Telecommunication Services - 12.6%
Integrated Telecommunication Services - 2.6%
1,250,000 B+/NR Dycom Industries, Inc., 8.125%, 10/15/15 $ 1,287,500
5,712,000 B-/B3 Eschelon Operating Co., 8.375%, 3/15/10 5,426,400
4,025,000 B+/B2 GCI, Inc., 7.25%, 2/15/14 3,954,562
691,000 NR/Baa3 Tele Norte Leste Participacoes SA,
8.0%, 12/18/13 735,915
------------
$ 11,404,377
------------
The accompanying notes are an integral part of these financial statements. 19
Pioneer High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/06 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Wireless Telecommunications Services - 10.0%
5,587,000(b) A-/Caa1 Alamosa Delaware, Inc., 12.0%, 7/31/09 $ 6,019,992
2,855,000(a) CCC+/Caa1 Cleveland Unlimited, Inc., 13.16%,
12/15/10 (144A) 2,926,375
1,500,000 NR/B3 Digicel, Ltd., 9.25%, 9/1/12 (144A) 1,586,250
3,900,000 B-/B3 Horizon PCS, Inc., 11.375%, 7/15/12 4,455,750
2,200,000(b) B/B2 Inmarsat Finance II Plc, 0.0%, 11/15/12 1,870,000
5,150,000 B+/B3 Mobifon Holdings BV, 12.5%, 7/31/10 5,883,875
2,500,000(b) NR/NR Mobile Satellite Venture, 0.0%, 4/1/13 (144A) 1,487,500
3,230,000 BB-/Ba3 Mobile Telesystems, 9.75%, 1/30/08 (144A) 3,395,538
546,712(a) CCC+/Caa1 NTELOS Holdings Corp., 13.35%,
10/15/13 (144A) 552,179
3,000,000(a) CCC/Caa2 Rural Cellular Corp., 10.43%, 11/1/12 (144A) 3,112,500
4,200,000 B-/B2 Stratos Global Corp., 9.875%, 2/15/13 (144A) 4,158,000
5,525,000 B-/Caa1 UbiquiTel Operating Co., 9.875%, 3/1/11 6,036,063
2,700,000(b) B/B3 Zeus Special Subsidiary, Ltd., 0.0%,
2/1/15 (144A) 1,869,750
------------
$ 43,353,772
------------
Total Telecommunication Services $ 54,758,149
------------
Utilities - 2.8%
Electric Utilities - 2.7%
2,000,000 B+/B1 Aes Chivor SA ESP, 9.75%, 12/30/14 (144A) $ 2,240,000
1,822,500 BBB-/Baa3 Empresa Electrica Guacolda SA, 8.625%,
4/30/13 (144A) 1,979,800
980,000(a) NR/NR Light Servicos de Eletricidade SA,
7.73%, 7/25/13 965,300
6,370,693 NR/NR Ormat Funding Corp., 8.25%, 12/30/20 6,561,814
------------
$ 11,746,914
------------
Multi-Utilities - 0.1%
700,000 B/B2 Reliant Energy, Inc., 6.75%, 12/15/14 $ 617,750
------------
Total Utilities $ 12,364,664
------------
TOTAL CORPORATE BONDS & NOTES
(Cost $477,726,194) $508,165,128
------------
CONVERTIBLE BONDS & NOTES - 1.1% of Net Assets
Capital Goods - 0.9%
Electrical Components & Equipment - 0.9%
4,000,000 B/B1 SCI Systems, Inc., 3.0%, 3/15/07 $ 3,870,000
------------
Total Consumer Services $ 3,870,000
------------
20 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Software & Services - 0.2%
Data Processing & Outsourced Services - 0.2%
850,000 NR/NR Pegasus Solutions, Inc., 3.875%, 7/15/23 $ 835,125
------------
Total Software & Services $ 835,125
------------
TOTAL CONVERTIBLE BONDS & NOTES
(Cost $4,459,227) $ 4,705,125
------------
MUNICIPAL BONDS - 7.8% of Net Assets
Indiana - 3.0%
1,650,000 BBB-/Ba1 East Chicago Industrial Pollution Ctl. Rev.,
7.0%, 1/1/14 $ 1,741,460
3,000,000 BBB-/Ba1 East Chicago Industrial Pollution Ctl. Rev.,
7.125%, 6/1/07 3,086,370
3,665,000 BBB-/Ba1 Indiana Dev. Fin. Auth. Pollution Ctl. Rev.,
7.25%, 11/1/11 3,771,468
4,250,000 BBB-/Ba1 Indiana Dev. Fin. Auth. Rev., 5.75%, 10/1/11 4,402,660
------------
$ 13,001,958
------------
Michigan - 0.4%
3,000,000(d) NR/NR Wayne Charter County, Spl. Arpt. Facs. Rev.,
6.75%, 12/1/15 $ 1,650,300
------------
New Jersey - 2.1%
4,525,000 B/Caa2 New Jersey Economic Dev. Auth. Rev.,
7.0%, 11/15/30 $ 4,606,269
4,000,000 BBB/Baa3 Tobacco Settlement Financing Corp.,
7.0%, 6/1/41 4,553,960
------------
$ 9,160,229
------------
New York - 0.9%
3,475,000 BB-/Ba2 New York City Ind. Dev. Agcy., British Airways Plc
Proj., 7.625%, 12/1/32 $ 3,784,588
------------
North Carolina - 1.4%
4,800,000 NR/NR Charlotte, Spl. Facs. Rev., Charlotte/Douglas Int'l
Airport, 5.60%, 7/1/27 $ 4,284,816
2,000,000 NR/NR Charlotte, Spl. Facs. Rev., Charlotte/Douglas Int'l
Airport, 7.75%, 2/1/28 2,009,180
------------
$ 6,293,996
------------
TOTAL MUNICIPAL BONDS
(Cost $26,402,782) $ 33,891,071
------------
The accompanying notes are an integral part of these financial statements. 21
Pioneer High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/06 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
SOVEREIGN DEBT OBLIGATIONS - 2.2% of Net Assets
Brazil - 0.8%
ITL 4,800,000,000(b) BB/Ba3 Banco Nacional de Desenvolimento Bndes,
8.0%, 4/28/10 $ 3,337,448
------------
Ecuador - 0.8%
3,515,000(b) CCC+/Caa1 Federal Republic of Ecuador, 9.0%,
8/15/30 (144A) $ 3,541,362
------------
Russia - 0.6%
2,320,000(b) BBB/Baa2 Russian Federation, 5.0%, 3/31/30 $ 2,545,504
------------
TOTAL SOVEREIGN DEBT OBLIGATIONS
(Cost $6,031,676) $ 9,424,314
------------
Shares
COMMON STOCKS - 0.1% of Net Assets
Pharmaceuticals & Biotechnology - 0.1%
Pharmaceuticals - 0.1%
17,818 Teva Pharmaceutical Industries Ltd. $ 733,745
------------
Total Pharmaceuticals & Biotechnology $ 733,745
------------
TOTAL COMMON STOCKS
(Cost $752,276) $ 733,745
------------
WARRANTS - 0.0% of Net Assets (e)
Materials - 0.0%
Forest Products - 0.0%
1,645 Mandra Forestry Holdings, Ltd. - CW13,
Expires 5/15/13 $ -
------------
Total Materials $ -
------------
Transportation - 0.0%
Trucking - 0.0%
4,525 Atlantic Express Transportation Corp.,
Expires 4/15/08 $ -
------------
Total Transportation $ -
------------
TOTAL WARRANTS
(Cost $0) $ -
------------
22 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal
Amount
USD($) Value
TEMPORARY CASH INVESTMENTS - 6.5% of Net Assets
Repurchase Agreement - 2.3%
9,800,000 Greenwich Capital, 4.45%, dated 3/31/06, repur-
chase price of $9,800,000 plus accrued inter-
est on 4/3/06 collateralized by $10,270,000
U.S. Treasury Notes, 3.125%, 10/15/08 $ 9,800,000
-------------
Shares
Security Lending Collateral - 4.2%
18,460,742 Securities Lending Investment Fund, 4.67% $ 18,460,742
-------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $28,260,742) $ 28,260,742
-------------
TOTAL INVESTMENTS IN SECURITIES - 135.8%
(Cost $548,492,897) (f) (g) (h) $ 589,964,100
-------------
OTHER ASSETS AND LIABILITIES - (1.0)% $ (4,443,494)
-------------
PREFERRED SHARES AT REDEMPTION VALUE,
INCLUDING DIVIDENDS PAYABLE - (34.8)% $(151,091,490)
-------------
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS - 100.0% $ 434,429,116
=============
NR Security not rated by S&P or Moody's.
(144A) Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At March
31, 2006, the value of these securities amounted to $139,098,422 or
32.0% of total net assets applicable to common shareowners.
(a) Floating rate note. The rate shown is the rate at year end.
(b) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specific date. The rate shown is the rate at year
end.
(c) Represents a pay-in-kind security which may pay interest in additional
principal.
(d) Security is in default and is non-income producing.
(e) Non-income producing.
(f) At March 31, 2006, the net unrealized gain on investments based on cost
for federal income tax purposes of $549,005,469 was as follows:
Aggregate gross unrealized gain for all investments in which there is
an excess of value over tax cost $47,393,190
Aggregate gross unrealized loss for all investments in which there is
an excess of tax cost over value (6,434,559)
-----------
Net unrealized gain $40,958,631
===========
For financial reporting purposes net unrealized gain was $41,471,203 and
cost of invest ments aggregated $548,492,897.
The accompanying notes are an integral part of these financial statements. 23
Pioneer High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 3/31/06 (continued)
--------------------------------------------------------------------------------
(g) Distribution of investments by country of issue, as a percentage of total
holdings, is as follows:
United States 76.3%
Norway 4.3
Canada 3.3
Brazil 2.9
Mexico 1.6
France 1.6
Panama 1.2
Germany 1.1
Great Britain 1.0
Russia 1.0
Romania 1.0
Cayman Islands 0.7
Ecuador 0.6
Ireland 0.5
Netherlands 0.5
Colombia 0.4
India 0.4
Chile 0.3
Bermuda 0.3
Luxembourg 0.3
South Korea 0.2
China 0.2
Sweden 0.2
Israel 0.1
----
100.0%
=====
(h) At March 31, 2006, the following securities were out on loan:
Principal Market
Amount Description Value
------ ----------- -----
$1,961,000 AMR Corp., 9.0%, 8/1/12 $ 1,926,683
1,100,000 Graham Packaging Co., L.P., 9.875%, 10/15/14 1,113,750
5,263,000 Graphic Packaging International, Inc.,
9.5%, 8/15/13 4,920,905
5,001,750 Hanger Orthopedic Group, Inc., 10.375%, 2/15/09 5,064,272
4,571,500 PolyOne Corp., 8.875%, 5/1/12 4,685,788
-----------
$17,711,398
===========
Note: Principal amounts are denominated in U.S. dollars unless otherwise
denoted.
EURO Euro
ITL Italian Lira
NOK Norwegian Krone
Purchases and sales of securities (excluding temporary cash investments) for the
year ended March 31, 2006 aggregated $162,975,598 and $111,940,929,
respectively.
24 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 3/31/06
--------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value (including securities
loaned of $17,711,398) (cost $548,492,897) $589,964,100
Cash 1,729,453
Foreign currencies, at value (cost $141,143) 141,928
Receivables -
Interest and foreign tax reclaim 11,783,951
Reinvestment of distributions 167,381
Forward foreign currency portfolio hedge contract - net 2,063,102
Prepaid expenses 26,287
------------
Total assets $605,876,202
------------
LIABILITIES:
Payables -
Investment securities purchased $ 1,500,000
Upon return of securities loaned 18,460,742
Due to affiliate 297,383
Accrued expenses 97,471
------------
Total liabilities $ 20,355,596
------------
PREFERRED SHARES AT REDEMPTION VALUE:
$25,000 liquidation value per share applicable to 6,040
shares, including dividends payable of $91,490 $151,091,490
------------
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Paid-in capital $383,431,992
Undistributed net investment income 6,053,152
Accumulated net realized gain on investments 1,403,313
Net unrealized gain on investments and foreign
currency transactions 41,471,203
Net unrealized gain on forward foreign currency
contracts and other assets and liabilities denominated
in foreign currencies 2,069,456
------------
Net assets applicable to common shareowners $434,429,116
============
NET ASSET VALUE PER SHARE:
No par value (unlimited number of shares authorized)
Based on $434,429,116/26,931,420 common shares $ 16.13
============
The accompanying notes are an integral part of these financial statements. 25
Pioneer High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Year Ended 3/31/06
INVESTMENT INCOME:
Interest $54,460,685
Dividends (net of foreign taxes withheld $206) 1,082
Income from securities loaned, net 315,370
-----------
Total investment income $54,777,137
-----------
EXPENSES:
Management fees $ 3,499,569
Transfer agent fees and expenses 63,167
Administrative reimbursements 40,969
Auction agent fees 407,693
Custodian fees 79,475
Registration fees 24,000
Professional fees 64,893
Printing expense 26,958
Trustees' fees 15,229
Pricing fee 18,533
Insurance fees 19,984
Miscellaneous 16,614
-----------
Total expenses $ 4,277,084
-----------
Net investment income $50,500,053
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain from:
Investments $ 2,970,178
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 791,555 $ 3,761,733
----------- -----------
Change in net unrealized gain from:
Investments $(5,731,947)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 2,019,931 $(3,712,016)
----------- -----------
Net gain on investments and foreign currency
transactions $ 49,717
-----------
DIVIDENDS AND DISTRIBUTIONS TO PREFERRED
SHAREOWNERS FROM:
Net investment income $(5,167,771)
Net realized gains (502,302)
-----------
Total distributions $(5,670,073)
-----------
Net increase in net assets applicable to common
shareowners resulting from operations $44,879,697
===========
26 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
For the Years Ended 3/31/06 and 3/31/05
Year Ended Year Ended
3/31/06 3/31/05
FROM OPERATIONS:
Net investment income $ 50,500,053 $ 50,150,097
Net realized gain on investments and foreign
currency transactions 3,761,733 11,252,767
Change in net unrealized gain on investments and
foreign currency transactions (3,712,016) (6,979,737)
Dividends and distributions to preferred
shareowners from:
Net investment income (5,167,771) (2,727,375)
Net realized gains (502,302) (79,055)
------------ ------------
Net increase in net assets applicable
to common shareowners $ 44,879,697 $ 51,616,697
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON
SHAREOWNERS FROM:
Net investment income
($1.65 and $1.65 per share, respectively) $(44,321,228) $(44,211,566)
Net realized capital gains
($0.23 and $0.13 per share, respectively) (6,166,115) (3,558,745)
------------ ------------
Total distributions to common shareowners $(50,487,343) $(47,770,311)
------------ ------------
FROM TRUST SHARE TRANSACTIONS:
Reinvestment of distributions $ 1,733,358 $ 900,543
------------ ------------
Net increase in net assets applicable to
common shareowners resulting from
Trust share transactions $ 1,733,358 $ 900,543
------------ ------------
Net increase (decrease) in net assets applicable
to common shareowners $ (3,874,288) $ 4,746,929
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS:
Beginning of the year 438,303,404 433,556,475
------------ ------------
End of year (including undistributed net
investment income of $6,053,152 and
$2,683,678, respectively) $434,429,116 $438,303,404
============ ============
The accompanying notes are an integral part of these financial statements. 27
Pioneer High Income Trust
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Year Year Year 4/25/02(b)
Ended Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/03
Per Common Share Operating Performance
Net asset value, beginning of period $ 16.34 $ 16.20 $ 13.43 $ 14.33(c)
-------- -------- -------- --------
Increase (decrease) from investment operations:(a) Net investment income $ 1.88 $ 1.87 $ 1.77 $ 1.41
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 0.00(d) 0.15 2.73 (0.81)
Dividends and distributions to preferred shareowners from:
Net investment income (0.19) (0.10) (0.06) (0.04)
Net realized gains (0.02) 0.00(d) - -
-------- -------- -------- --------
Net increase from investment operations $ 1.67 $ 1.92 $ 4.44 $ 0.56
Dividends and distributions to common shareowners from:
Net investment income (1.65) (1.65) (1.65) (1.38)
Net realized gains (0.23) (0.13) - -
Capital charge with respect to issuance of:
Common shares - - - (0.03)
Preferred shares - - (0.02) (0.05)
-------- -------- -------- --------
Net increase (decrease) in net asset value $ (0.21) $ 0.14 2.77 $ (0.90)
-------- -------- -------- --------
Net asset value, end of period(e) $ 16.13 $ 16.34 $ 16.20 $ 13.43
======== ======== ======== ========
Market value, end of period(e) $ 16.80 $ 15.12 $ 16.57 $ 14.49
======== ======== ======== ========
Total return(f) 24.84% 1.97% 27.33% 7.29%
Ratios to average net assets of common shareowners
Net expenses(g) 0.99% 1.00% 0.96% 0.87%(h)
Net investment income before preferred share dividends 11.68% 11.60% 11.64% 11.62%(h)
Preferred share dividends 1.19% 0.63% 0.39% 0.37%(h)
Net investment income available to common shareowners 10.49% 10.97% 11.25% 11.25%(h)
Portfolio turnover 20% 54% 66% 49%
Net assets of common shareowners, end of period (in thousands) $434,429 $438,303 $433,556 $358,123
Preferred shares outstanding (in thousands) $151,000 $151,000 $151,000 $101,000
Asset coverage per preferred share, end of period $ 96,940 $ 97,569 $ 96,781 $113,647
Average market value per preferred share $ 25,000 $ 25,000 $ 25,000 $ 25,000
Liquidation value, including dividends payable, per preferred share $ 25,015 $ 25,003 $ 25,000 $ 25,003
The accompanying notes are an integral part of these financial statements.
28
Pioneer High Income Trust
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
--------------------------------------------------------------------------------
Year Year Year 4/25/02(b)
Ended Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/03
Per Common Share Operating Performance
Ratios to average net assets of common shareowners before
reimbursement of organization expenses in 2002:
Net expenses(g) 0.88%(h)
Net investment income before preferred share dividends 11.61%(h)
Preferred share dividends 0.37%(h)
Net investment income available to common shareowners 11.24%(h)
(a) The per common share data presented above is based upon the average common
shares outstanding for the periods presented.
(b) Trust shares were first publicly offered on April 26, 2002.
(c) Net asset value immediately after the closing of the first public offering
was $14.30.
(d) Amount is less than $0.01 per common share.
(e) 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.
(f) 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 shareowner brokerage commissions.
Total investment returns less than a full period are not annualized. Past
performance is not a guarantee of future results.
(g) Expense ratios do not reflect the effect of dividend payments to preferred
shareowners.
(h) 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 of common shareowners and other supplemental data for the periods
indicated. This information has been determined based upon financial information
provided in the financial statements and market value data for the Trust's
common shares.
29
Pioneer High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/06
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer High Income Trust (the "Trust") was organized as a Delaware statutory
trust on January 30, 2002. Prior to commencing operations on April 25, 2002, the
Trust had no operations other than matters relating to its organization and
registration as a diversified, closed-end management investment company under
the Investment Company Act of 1940, as amended.
The Trust invests in below investment grade (high-yield) debt securities, loans
and preferred stocks. Certain high-yield securities held by the Trust may be
convertible into equity securities of the issuer. Debt securities rated below
investment grade are commonly referred to as "junk bonds" and are considered
speculative. These securities involve greater risk of loss, are subject to
greater price volatility, and are less liquid, especially during periods of
economic uncertainty or change, than higher rated debt securities.
The Trust's financial statements have been prepared in conformity with 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, and the reported amounts of income,
expenses and gains and losses on investments during the reporting year. Actual
results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements, which are consistent with
those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Fixed-income securities
are valued at prices supplied by independent pricing services, which consider
such factors as Treasury spreads, yields, maturities and ratings. Valuations
may be supplemented by dealers and other sources, as required. Equity
securities are valued at the last sales price on the principal exchanges
where they are traded. Securities for which market quotations are not readily
available are valued at their fair values as determined by, or under the
direction of, the Board of Trustees. Trading in foreign securities is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in computing the net
30
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
asset value of the Trust's shares are determined as of such times. The Trust
may also use the fair value of a security, including a non-U.S. security,
when the closing market price on the primary exchange where the security is
traded no longer accurately reflects the value of the security as of the
close of the exchange. As of March 31, 2006, the Trust had no fair valued
securities. Temporary cash investments are valued at amortized cost.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have passed
are recorded as soon as the Trust becomes aware of the ex-dividend data in
the exercise of reasonable diligence. Discount and premium on debt securities
are accreted or amortized, respectively, daily, on an effective yield to
maturity basis and are included in interest income. Premiums and discounts
related to certain mortgage-backed securities are amortized or accreted in
proportion to the underlying monthly paydowns. Interest income, including
income on interest bearing cash accounts, is recorded on an accrual basis.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
The Trust's investments in foreign markets or countries with limited
developing markets may subject the Trust to a greater degree of risk than in
a developed market. These risks include disruptive political or economic
conditions and the possible imposition of adverse governmental laws or
currency exchange restrictions.
Information regarding the Trust's principal risks are contained in the
Trust's prospectus, with additional information included in the Trust's
Shareholder reports from time to time. Please refer to those documents when
considering the Trust's risks. At times, The Trust's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries or sectors. Under
normal market conditions, the Trust invests at least 80% of its assets in
below investment grade (high-yield) debt securities, loans and preferred
stocks. Because the Trust's investments will be concentrated in the
high-yield securities, it will be subject to risks of such securities. Below
investment grade securities are commonly referred to as
31
Pioneer High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/06 (continued)
--------------------------------------------------------------------------------
"junk bonds" and are considered speculative with respect to the issuer's
capacity to pay interest and repay principal.
B. Foreign Currency Translation
The books and records of the Trust are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars using
current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
among other things, the net realized gains and losses on foreign currency
contracts, disposition of foreign currencies and the difference between the
amount of income accrued and the U.S. dollars actually received. Further, the
effects of changes in foreign currency exchange rates on investments are not
segregated in the Statement of Operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Trust enters into forward foreign currency contracts (contracts) for the
purchase or sale of a specific foreign currency at a fixed price on a future
date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Trust's
financial statements. The Trust records realized gains and losses at the time
a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar (see Note 4).
D. Federal Income Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
32
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal income
tax rules. Therefore, the source of the Trust's distributions may be shown in
the accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment and foreign currency
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
At March 31, 2006, the Trust reclassified $2,358,420 to increase
undistributed net investment income and to decrease accumulated net realized
gain on investments. The reclassification has no impact on the net asset
value of the Trust and presents the Trust's capital accounts on a tax basis.
The tax character of current year distributions paid to common and preferred
shareowners during the years ended March 31, 2006 and March 31, 2005 was as
follows:
--------------------------------------------------------------
2006 2005
-------------- -----------
Distributions paid from:
Ordinary Income $50,434,525 $48,778,440
Net long-term capital gains 5,722,891 1,798,301
----------- -----------
Total taxable distribution $56,157,416 $50,576,741
=========== ===========
--------------------------------------------------------------
The following shows components of distributable earnings on a federal income
tax basis at March 31, 2006.
------------------------------------------------
Undistributed ordinary income $11,104,072
Long-term capital gain 1,430,792
Dividends payable (91,490)
Unrealized appreciation 38,553,750
-----------
Total $50,997,124
===========
------------------------------------------------
The difference between book basis and tax basis unrealized appreciation is
primarily attributable to the tax deferral of losses on straddles and wash
sales, the realization for tax purposes of unrealized gains on certain
foreign currency contracts, the difference between book and tax amortization
methods for premiums and
33
Pioneer High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/06 (continued)
--------------------------------------------------------------------------------
discounts on fixed income securities and difference between book and tax in
the accrual of income on securities in default.
E. Repurchase Agreements
With respect to repurchase agreements entered into by the Trust, the value of
the underlying securities (collateral), including accrued interest received
from counterparties, is required to be at least equal to or in excess of the
repurchase agreement at the time of purchase. The collateral for all
repurchase agreements is held in safekeeping in the customer-only account of
the Trust's custodian, or subcustodians. Pioneer Investment Management, Inc.
("PIM"), the Trust's investment adviser is responsible for determining that
the value of the collateral remains at least equal to the repurchase price.
F. Securities Lending
The Trust lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Trust's custodian acting as the
lending agent. When entering into a loan, the Trust receives collateral which
is maintained by the custodian and earns income in the form of negotiated
lenders' fees. The Trust also continues to receive interest or payments in
lieu of dividends on the securities loaned. Unrealized gain or loss on the
fair value of the loaned securities that may occur during the term of the
loan will be for the account of the Trust. The loans are secured by
collateral of at least 102%, at all times, of the fair value of the
securities loaned. The amount of the collateral will be adjusted daily to
reflect any price fluctuation in the value of the loaned securities. The
Trust has the right under the securities lending arrangement to recover the
securities on loan from the borrower on demand. The Trust invests cash
collateral in the Securities Lending Investment Fund which is sponsored by
Brown Brothers Harriman & Co., the Trust's custodian.
G. Automatic Dividend Reinvestment Plan
All common shareowners automatically participate in the Automatic Dividend
Reinvestment Plan (the "Plan"), under which participants receive all
dividends and capital gain distributions (collectively, "dividends") in full
and fractional common shares of the Trust in lieu of cash. Shareowners may
elect not to participate in the Plan.
34
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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
Mellon Investor Services LLC, the agent for shareowners in administering the
Plan (the "Plan Agent"), in writing prior to any dividend record date;
otherwise such termination or resumption will be effective with respect to
any subsequently declared dividend or other distribution. Whenever the Trust
declares a dividend on common shares payable in cash, participants in the
Plan will receive the equivalent in common shares acquired by the Plan Agent
either (i) through receipt of additional unissued but authorized common
shares from the Trust or (ii) by purchase of outstanding common shares on the
New York Stock Exchange or elsewhere. If, on the payment date for any
dividend, the net asset value per common share is equal to or less than the
market price per share plus estimated brokerage trading fees ("market
premium"), the Plan Agent will invest the dividend amount in newly issued
common shares. The number of newly issued common shares to be credited to
each account will be determined by dividing the dollar amount of the dividend
by the net asset value per common share on the date the shares are issued,
provided that the maximum discount from the then current market price per
share on the date of issuance does not exceed 5%. If, on the payment date for
any dividend, the net asset value per common share is greater than the market
value ("market discount"), the Plan Agent will invest the dividend amount in
common shares acquired in open-market purchases. There are no brokerage
charges with respect to newly issued common shares. However, each participant
will pay a pro rata share of brokerage trading fees incurred with respect to
the Plan Agent's open-market purchases. Participating in the Plan does not
relieve shareowners from any federal, state or local taxes which may be due
on dividends paid in any taxable year. Shareowners holding Plan shares in a
brokerage account may not be able to transfer the shares to another broker
and continue to participate in the Plan.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of Unicredito Italiano S.p.A.
("Unicredito Italiano") manages the Trust's portfolio. Management fees are
calculated weekly at the annual rate of 0.60% of the Trust's average weekly
managed assets. "Managed assets" is the average
35
Pioneer High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/06 (continued)
--------------------------------------------------------------------------------
weekly value of the Trust's total assets minus the sum of the Trust's
liabilities, which liabilities exclude debt related to leverage, short-term debt
and the aggregate liquidation preference of any outstanding preferred shares. At
March 31, 2006, $297,383 was payable to PIM related to management fees.
In addition, under PIM's management and administration agreements, certain other
services and costs are paid by PIM and reimbursed by the Trust. For the year
ended March 31, 2006, the Trust recorded $40,969 as "Administrative
reimbursements" on the Statement of Operations.
PIM has retained Princeton Administrators, L.P., to provide certain
administrative services to the Trust on its behalf. PIM pays Princeton
Administrators, L.P., a monthly fee at an annual rate of 0.07% of the average
weekly value of the Trust's managed assets, subject to a minimum monthly fee of
$10,000. Princeton Administrators, L.P. receives no compensation directly from
the Trust.
3. Transfer Agents
Pioneer Investment Management Shareholder Services, Inc. ("PIMSS"), a wholly
owned indirect subsidiary of UniCredito Italiano, through a sub-transfer agency
agreement with Mellon Investor Services LLC, provides substantially all transfer
agent and shareowner services related to the Trust's common shares at negotiated
rates. Deutsche Bank Trust Company Americas is the transfer agent, registrar,
dividend paying agent and redemption agent with respect to the Trust's Auction
Market Preferred Shares ("AMPS"). The Trust pays Deutsche Bank Trust Company
Americas an annual fee, as is agreed to from time to time by the Trust and
Deutsche Bank Trust Company Americas, for providing such services.
4. Forward Foreign Currency Contracts
During the year ended March 31, 2006, the Trust had entered into contracts that
obligate the Trust to deliver currencies at specified future dates. At the
maturity of a contract, the Trust must make delivery of the foreign currency.
Alternatively, prior to the settlement date of contracts, the Trust may close
out such contracts by entering into an offsetting hedge contract.
36
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Open portfolio hedges at March 31, 2006 were as follows:
----------------------------------------------------------------------------------------
Net
Contracts Net
to (Deliver)/ In Exchange Settlement Unrealized
Currency Receive For US$ Date US$ Value Gain
----------------------------------------------------------------------------------------
EURO (17,000,000) $ (22,526,700) 4/26/06 $ (20,604,853) $1,921,847
EURO 4,900,000 5,929,000 4/26/06 5,936,134 7,134
EURO (8,800,000) (10,844,944) 7/3/06 (10,710,823) 134,121
----------
Total $2,063,102
==========
----------------------------------------------------------------------------------------
As of March 31, 2006, the Trust had no outstanding forward currency settlement
hedges.
5. Trust Shares
There are an unlimited number of common shares of beneficial interest
authorized. Of the 26,931,420 common shares of beneficial interest outstanding
at March 31, 2006 PIM owned 6,981 shares.
Transactions in common shares of beneficial interest for the years ended March
31, 2006 and March 31, 2005 were as follows:
-------------------------------------------------------------
3/2006 3/2005
------------ ----------
Shares outstanding at
beginning of year 26,823,948 26,768,347
Reinvestment of distributions 107,472 55,601
---------- ----------
Shares outstanding at
end of year 26,931,420 26,823,948
========== ==========
-------------------------------------------------------------
The Trust may classify or reclassify any unissued common shares of beneficial
interest into one or more series of preferred shares of beneficial interest. As
of March 31, 2006, there were 6,040 AMPS as follows: Series M7-2,020, Series
W28-2,020 and Series TH7-2,000.
Dividends on Series M7 and Series TH7 are cumulative at a rate, which is reset
every seven days based on the results of an auction. Dividends on Series W28 are
also cumulative at a rate reset every 28 days based on the results of an
auction. Dividend rates ranged from 2.89% to 4.82% during the year ended March
31, 2006.
37
Pioneer High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/06 (continued)
--------------------------------------------------------------------------------
The Trust may not declare dividends or make other distributions on its common
shares or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
preferred shares would be less than 200%.
The AMPS are redeemable at the option of the Trust, in whole or in part, on any
dividend payment date at $25,000 per share plus any accumulated or unpaid
dividends, whether or not declared. The AMPS are also subject to mandatory
redemption at $25,000 per share plus any accumulated or unpaid dividends,
whether or not declared, if certain requirements relating to the composition of
the assets and liabilities of the Trust as set forth in the Agreement and
Declaration of Trust are not satisfied.
The holders of AMPS have voting rights equal to the holders of the Trust's
common shares (one vote per share) and will vote together with holders of the
common shares as a single class. However, holders of AMPS are also entitled to
elect two of the Trust's Trustees. In addition, the Investment Company Act of
1940, as amended, requires that along with approval by shareowners that might
otherwise be required, the approval of the holders of a majority of any
outstanding preferred shares, voting separately as a class would be required to
(a) adopt any plan of reorganization that would adversely affect the preferred
shares and (b) take any action requiring a vote of security holders, including,
among other things, changes in the Trust's subclassification as a closed-end
management investment company or changes in its fundamental investment
restrictions.
6. Subsequent Events
Subsequent to March 31, 2006, the Board of Trustees of the Trust declared a
dividend from undistributed net investment income of $0.1375 per common share
payable April 28, 2006, to shareowners of record on April 18, 2006.
For the period April 1, 2006 to April 30, 2006, dividends declared on preferred
shares totaled $549,021 in aggregate for the three outstanding preferred share
series.
38
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (unaudited)
During the period, there have been no material changes in the Trust's investment
objective or fundamental policies that have not been approved by the
shareowners. There have been no changes in the Trust's charter or By-Laws that
would delay or prevent a change in control of the Trust which have not been
approved by the shareowners. There have been no changes in the principal risk
factors associated with investment in the Trust. There have been no changes in
the persons who are primarily responsible for the day-to-day management of the
Trust's portfolio.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Trust may purchase, from time to time, its common
shares in the open market.
CEO CERTIFICATION DISCLOSURE (unaudited)
The Trust's Chief Executive Officer has submitted to the New York Stock Exchange
the annual CEO certification as required by Section 303A.12(a) of the NYSE
Listed Company Manual. In addition, the Trust has filed with the Securities and
Exchange Commission the certification of its Chief Executive Officer and Chief
Financial Officer required by Section 302 of the Sarbanes-Oxley Act.
39
Pioneer High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 3/31/06 (continued)
--------------------------------------------------------------------------------
IMPORTANT TAX INFORMATION (unaudited)
The Pioneer High Income Trust paid a long-term capital gain distribution of
$0.194236 per share to common shareowners of record on December 12, 2005.
Additionally, the following summarizes the per shares long-term capital gain
distributions paid to preferred shareowners during the year:
----------------------------------------------
Long-Term
Payable Date Capital Gain
-------------- -------------
Series M 12/6/2005 $19.06
Series M 12/13/2005 $19.25
Series M 12/20/2005 $19.93
Series M 12/27/2005 $20.66
Series M 1/3/2006 $ 5.06
Series W 12/29/2005 $80.29
Series W 1/26/2006 $ 0.84
Series TH 12/2/2005 $19.15
Series TH 12/9/2005 $19.25
Series TH 12/16/2005 $19.20
Series TH 12/23/2005 $20.66
Series TH 12/30/2005 $ 6.15
----------------------------------------------
40
Pioneer High Income Trust
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
To the Board of Trustees and the Shareowners of Pio neer High Income Trust:
We have audited the accompanying statement of assets and liabilities of Pioneer
High Income Trust (the "Trust"), including the schedule of investments, as of
March 31, 2006, and the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the four years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with 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 March 31, 2006, by correspondence with the custodian 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 financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer High Income Trust at March 31, 2006, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the four years
in the period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
May 12, 2006
41
Pioneer High Income Trust
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FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN APPROVING THE MANAGEMENT
CONTRACT
--------------------------------------------------------------------------------
The Investment Company Act of 1940 requires that the Board of Trustees and a
majority of the Independent Trustees (collectively the "Trustees") voting
separately annually approve the Trust's Management Contract (the "Management
Contract"). The Trustees have determined that the terms of the Management
Contract are fair and reasonable and that renewal of the contract will enable
the Trust to receive quality investment advisory services at a cost deemed
reasonable and is in the best interests of the Trust and its shareowners. In
making such determinations, the Independent Trustees relied upon the assistance
of counsel to the Independent Trustees and counsel to the Trust.
Throughout the year, the Independent Trustees regularly met in executive
sessions separately from the Interested Trustees of the Trust and any officers
of Pioneer Investment Management, Inc., the Trust's adviser (the "Investment
Adviser"), or its affiliates. While the Trustees, including the Independent
Trustees, act on all major matters relating to the Trust, a significant portion
of the activities of the Board of Trustees (including certain of those described
herein) is conducted through committees whose members are comprised exclusively
of Independent Trustees. Such committee meetings are attended by officers of the
Trust or the Investment Adviser to the extent requested by the committee.
In evaluating the Management Contract, the Trustees conducted a review that was
specifically focused upon the renewal of the Management Contract, and also
relied upon their knowledge, resulting from their meetings throughout the year,
of the Investment Adviser, its services and the Trust. Both in meetings
specifically addressed to renewal of the Management Contract and at other
meetings during the course of the year, the Trustees, including the Independent
Trustees, received materials relating to the Investment Adviser's investment and
management services under the Management Contract. These materials included
information on (i) the investment performance of the Trust, a peer group of
funds and an index, in each case selected by the Independent Trustees for this
purpose, (ii) the general investment outlook in the markets in which the Trust
invests, (iii) the procedures employed to determine the value of each of the
Trust's assets, (iv) the Investment Adviser's management of the relationships
with the Trust's unaffiliated service providers, (v) the record of compliance
with the Trust's investment policies and restrictions and with the Trust's Code
of Ethics and the structure and responsibilities of the Investment Adviser's
42
Pioneer High Income Trust
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--------------------------------------------------------------------------------
compliance department, (vi) the nature, cost and character of non-investment
management services provided by the Investment Adviser and its affiliates, (vii)
the disclosures included in the Trust's reports to shareowners, (viii) analyses
of the benefits and costs of the use of leverage through the issuance of the
Trust's preferred shares and the sensitivity of such analysis to changes in
interest rates and (ix) the discount or premium of the market price of the
Trust's common stock relative to its net asset value and measures that are or
could be taken to address any discount.
Specifically in connection with the Independent Trustees' review of the
Management Contract, the Independent Trustees requested and the Investment
Adviser provided additional information in order to evaluate the quality of the
Investment Adviser's services and the reasonableness of the fee under the
Management Contract. Among other items, this information included data or
analyses of (1) investment performance for one year and three year periods for
the Trust and a peer group selected by the Independent Trustees for this
purpose, (2) management fees incurred by a peer group of funds selected by the
Independent Trustees for this purpose, (3) the advisory fees of comparable
portfolios of other clients of the Investment Adviser, (4) expense ratios for
the Trust and a peer group of funds selected by the Independent Trustees for
this purpose, (5) the overall organization of the Investment Adviser, (6) the
Investment Adviser's financial results and condition, including its and certain
of its affiliates profitability from services performed for the Trust, (7)
administrative reimbursements paid to the Investment Adviser or affiliates, (8)
investment management staffing, and (9) operating expenses paid to third
parties.
The following summarizes factors considered by the Trustees in connection with
reviewing the information described above and their renewal of the Trust's
Management Contract. The Trustees did not identify any single factor as
all-important or controlling, and the summary does not detail all the matters
that were considered.
A. Ancillary Benefits to Shareowners. The Trustees considered the benefits to
shareowners of investing in a closed-end fund that is part of an established
group of open and closed-end funds. The Trustees also noted that the
relationship of the market price relative to the Trust's net assets
attributed to its common shares was
43
Pioneer High Income Trust
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FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
--------------------------------------------------------------------------------
comparable relative to other closed-end funds with similar investment
approaches.
B. Compliance and Investment Performance. The Trustees determined that the
Investment Adviser had policies and systems reasonably designed to achieve
compliance with the Trust's investment objective and regulatory requirements.
The Trustees also reviewed the Trust's investment performance based on total
return, as well as the Trust's performance compared to both the performance
of a peer group and an index, in each case selected by the Independent
Trustees for this purpose. The Trust's performance based on total return was
in the first quintile of the peer group for the 12 months ended June 30, 2005
and was in the second quintile for the three years ended June 30, 2005. (In
all quintile rankings referred to throughout this discussion first quintile
is most favorable to the Trust's shareowners. Thus, highest relative
performance would be first quintile and lowest relative expenses also would
be first quintile.) The Trustees considered the yield (gross of expenses) to
the Trust's common shareholders compared to the yield (as of June 30, 2005)
of the Merrill Lynch Global High Yield and EMP index. The Trustees concluded
that the performance of the Trust supported the continuation of the
Management Contract.
C. The Investment Adviser's Personnel and Methods. The Trustees reviewed the
background of members of the team responsible for the daily management of the
Trust and the Trust's investment objective and discipline. The Independent
Trustees also have had discussions with senior management of the Investment
Adviser responsible for investment operations and the senior management of
the Investment Adviser's fixed income group. Among other things, the Trustees
considered the number, education and experience of the Investment Adviser's
investment staff and their use of technology and emphasis on analytics in
view of the risk profile of securities in which the Trust invests. The
Trustees concluded that the Investment Adviser had the quality and depth of
personnel and the well-developed methods essential to performing its duties
under the Management Contract.
D. Nature and Quality of Other Services. The Trustees considered the nature,
quality, cost and extent of other services provided to shareowners of the
Trust, including administrative and shareowner
44
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
services performed by the Investment Adviser under the Management Contract.
The Trustees also considered the reasonableness of the arrangements for
reimbursement of the Investment Adviser's out-of-pocket costs and expenses,
including overhead, for certain administrative services that the Investment
Adviser is not required to provide under the Management Contract. The
Trustees also considered the nature and extent of the other services provided
by the Investment Adviser's affiliates under other contracts and its
supervision of third party service providers. Based on these considerations,
the Trustees concluded that the nature, quality, cost and extent of such
services are satisfactory and reliable and serve the shareowners of the Trust
well.
E. Management Fee and Expenses. The Trustees considered the Investment Adviser's
fee under the Management Contract relative to the management fees charged by
a peer group of funds selected by the Independent Trustees for this purpose
using data provided by an independent third party. The Trust's management fee
for the 12 months ended June 30, 2005 was in the second quintile relative to
the management fees paid by the other funds in that peer group for the
comparable period. The Trustees determined that the fee under the Management
Contract was reasonable and fair in light of both the overall nature and
quality of services provided by the Investment Adviser and the fees charged
by the funds in the peer group. The Trustees also considered the Trust's
expense ratio and expense ratios of a peer group of funds selected by the
Independent Trustees for this purpose. The Trust's expense ratio for the 12
months ended June 30, 2005 was in the second quintile of the applicable peer
group for the most recent fiscal year of the peer group for the comparable
period. The Trustees concluded that the Trust's overall expense ratio was
reasonable compared to that of similar funds.
F. Profitability. The Trustees considered the level of the Investment Adviser's
profits with respect to the management of the Pioneer funds, including
details with respect to the Trust. This consideration included a review of
the Investment Adviser's methodology in allocating certain of its costs to
the management of each fund. The Trustees also considered the financial
results realized by the Investment Adviser in connection with the operation
of the Trust. They further considered the profits realized by the Investment
Adviser and its affiliates from non-fund businesses that may
45
Pioneer High Income Trust
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FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
--------------------------------------------------------------------------------
benefit from or be related to the Trust's business. The Trustees considered
the Investment Adviser's profit margins in comparison with the limited
available industry data. The Trustees concluded that the Investment Adviser's
profits from management of the Pioneer funds, including the financial results
derived from the Trust, bear a reasonable relationship to the services
rendered and are fair for the management of the Trust in light of the
business risks involved.
G. Economies of Scale. The Trustees considered whether the Trust has
appropriately benefited from any economies of scale, and whether there is
potential for realization of any further economies of scale. Since the Trust
is a closed-end fund and its size is relatively stable and at the level of
assets that was anticipated when the management fee was initially set, the
Trustees concluded that economies of scale were not a relevant consideration.
H. Other Benefits to the Investment Adviser. The Trustees also considered the
character and amount of fees paid by the Trust, other than under the
Management Contract, for services provided by the Investment Adviser and
affiliates. The Trustees further considered the revenues and profitability of
the Investment Adviser's businesses other than the fund business, including
the Investment Adviser's institutional investment advisory business. The
Trustees considered the intangible benefits that accrue to the Investment
Adviser and its affiliates by virtue of its relationship with the Trust and
the Pioneer funds as a group. The Trustees concluded that all these types of
benefits accruing to the Investment Adviser were reasonable in the context of
the overall relationship between the Investment Adviser and the Trust.
Conclusion. The Trustees, in light of the Investment Adviser's overall
performance, considered it appropriate to continue to retain the management
services of the Investment Adviser. Based on their evaluation of all material
factors deemed relevant and the advice of independent counsel, the Trustees
concluded that the Management Contract with the Trust is fair and reasonable and
voted to approve the continuation of the Management Contract for another year.
46
Pioneer High Income Trust
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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
Wilmer Cutler Pickering Hale and Dorr LLP
Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Shareowner Services and Sub-Transfer Agent
Mellon Investor Services LLC
Preferred Share Auction/Transfer Agent and Registrar
Deutsche Bank Trust Company Americas
Sub-Administrator
Princeton Administrators L.P.
Trustees and Officers
The Trust's Board of Trustees provides broad supervision over the Trust's
affairs. The officers of the Trust are responsible for the Trust's operations.
The Trust's Trustees and officers are listed below, together with their
principal occupations during the past five years. Trustees who are interested
persons of the Trust within the meaning of the Investment Company Act of 1940
are referred to as Interested Trustees. Trustees who are not interested persons
of the Trust are referred to as Independent Trustees. Each of the Trustees may
serve as a trustee of each of the 91 U.S. registered investment portfolios for
which Pioneer Investment Management, Inc. ("Pioneer") serves as investment
adviser (the "Pioneer Funds"). The address for all Interested Trustees and all
officers of the Trust is 60 State Street, Boston, Massachusetts 02109.
The Trust's statement of additional information provides more detailed
information regarding the Trust's Trustees and is available upon request,
without charge, by calling 1-800-225-6292.
Proxy Voting Policies and Procedures of the Trust are available without charge,
upon request, by calling our toll free number (1-800-225-6292). 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.pioneerfunds.com and on the SEC's web site at
http://www.sec.gov.
47
Pioneer High Income Trust
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INTERESTED TRUSTEES
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Positions Held Principal Occupation Other Directorships Held
Name and Age With the Trust Term of Office During Past Five Years by this Trustee
John F. Cogan, Jr. (79)* Chairman of the Class II Trustee Deputy Chairman and a Director of Chairman and Director
Board, Class II since 2002. Term Pioneer Global Asset Management of ICI Mutual Insurance
Trustee and expires in 2007. S.p.A. ("PGAM"); Non-Executive Company; Director
President. Elected by Chairman and a Director of Pioneer of Harbor Global
Preferred Investment Management USA Inc. Company, Ltd.
Shares only. ("PIM-USA"); Chairman and a
Director of Pioneer; Director of
Pioneer Alternative Investment
Management Limited (Dublin);
President and a Director of Pioneer
Alternative Investment Management
(Bermuda) Limited and affiliated
funds; President and Director of
Pioneer Funds Distributor, Inc.
("PFD"); President of all of the
Pioneer Funds; and Of Counsel
(since 2000, partner prior to
2000), Wilmer Cutler Pickering Hale
and Dorr LLP (counsel to PIM-USA
and the Pioneer Funds).
*Mr. Cogan is an Interested Trustee because he is an officer or director of Pioneer and certain of its affiliates.
-----------------------------------------------------------------------------------------------------------------------------------
Osbert M. Hood (53)** Class III Trustee Class III Trustee President and Chief Executive None
and Executive since 2003. Term Officer, PIM-USA since May 2003
Vice President. expires in 2008. (Director since January 2001);
President and Director of Pioneer
since May 2003; Chairman and
Director of Pioneer Investment
Management Shareholder Services,
Inc. ("PIMSS") since May 2003;
Executive Vice President of all of
the Pioneer Funds since June 2003;
Executive Vice President and Chief
Operating Officer of PIM-USA,
November 2000 to May 2003.
**Mr. Hood is an Interested Trustee because he is an officer or director of Pioneer and certain of its affiliates.
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48
Pioneer High Income Trust
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Positions Held Length of Service Principal Occupation Other Directorships Held
Name, Age and Address With the Trust and Term of Office During Past Five Years by this Trustee
David R. Bock **(62) Class II Trustee Class II Trustee Senior Vice President and Chief Director of The
3050 K. Street NW, since 2005. Financial Officer, I-trax, Inc. Enterprise Social
Washington, DC 20007 Term expires (publicly traded health care Investment Company
in 2007. services company) (2001 - present); (privately-held
Managing Partner, Federal City affordable housing
Capital Advisors (boutique merchant finance company);
bank)(1995 - 2000; 2002 to 2004); Director of New York
Executive Vice President and Chief Mortgage Trust
Financial Officer, Pedestal Inc. (publicly traded
(internet-based mortgage trading mortgage REIT)
company) (2000 - 2002).
**Mr. Bock became a Trustee of the Trust on January 1, 2005.
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Mary K. Bush (57) Class I Trustee Class I Trustee President, Bush International Director of Brady
3509 Woodbine Street, since 2002. (international financial advisory Corporation (industrial
Chevy Chase, MD 20815 Term expires firm). identification and
in 2006. specialty coated
material products
manufacturer),
Millennium Chemicals,
Inc. (commodity
chemicals), Mortgage
Guaranty Insurance
Corporation, and R.J.
Reynolds Tobacco
Holdings, Inc. (tobacco)
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Margaret B.W. Graham (58) Class III Trustee Class III Trustee Founding Director, The Winthrop None
1001 Sherbrooke since 2002. Term Group, Inc. (consulting firm);
Street West, expires in 2008. Professor of Management, Faculty of
Montreal, Quebec, Management, McGill University.
Canada H3A 1G5
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49
Pioneer High Income Trust
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INDEPENDENT TRUSTEES
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Positions Held Length of Service Principal Occupation Other Directorships Held
Name, Age and Address With the Trust and Term of Office During Past Five Years by this Trustee
Thomas J. Perna (55) Trustee Trustee since Private investor (2004 - present); Director of Quadriserv
89 Robbins Avenue, January 2006. Senior Executive Vice President, Inc. (technology
Berkeley Heights, Terms expires The Bank of New York (financial and products for securities
NJ 07922 in 2006. securities services) (1986 - 2004). lending industry)
-----------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (58) Class I Trustee Class I Trustee President and Chief Executive Director of New
One Boston Place, since 2002. Term Officer, Newbury, Piret & Company, America High Income
28th Floor, expires in 2006. Inc. (investment banking firm) Fund, Inc. (closed-end
Boston, MA 02108 Elected by Preferred investment company)
Shares only.
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Stephen K. West (77) Class II Trustee Class II Trustee Senior Counsel, Sullivan & Cromwell Director, The Swiss
125 Broad Street, since 2002. Term (law firm). Helvetia Fund, Inc.
New York, NY 10004 expires in 2007. (closed-end investment
John Winthrop (69) Class III Trustee Class III Trustee company) and
One North Adgers Wharf, since 2002. Term AMVESCAP PLC
Charleston, SC 29401 expires in 2008. (investment managers)
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John Winthrop (69) Class III Trustee Class III Trustee President, John Winthrop & Co., None
One North Adgers Wharf, since 2002. Term Inc. (private investment firm)
Charleston, SC 29401 expires in 2008.
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FUND OFFICERS
-----------------------------------------------------------------------------------------------------------------------------------
Dorothy E. Bourassa (58) Secretary Serves at Secretary of PIM-USA; Senior Vice None
the discretion President - Legal of Pioneer; and
of the Board Secretary/Clerk of most of
PIM-USA's subsidiaries; Secretary
of all of the Pioneer Funds since
September 2003 (Assistant Secretary
from November 2000 to September
2003).
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50
Pioneer High Income Trust
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Positions Held Length of Service Principal Occupation Other Directorships Held
Name and Age With the Trust Term of Office During Past Five Years by this Trustee
Christopher J. Kelley (41) Assistant Serves at Assistant Vice President and Senior None
Secretary the discretion Counsel of Pioneer since July 2002;
of the Board Vice President and Senior Counsel
of BISYS Fund Services, Inc. (April
2001 to June 2002); Senior Vice
President and Deputy General
Counsel of Funds Distributor, Inc.
(July 2000 to April 2001; Assistant
Secretary of all Pioneer Funds
since September 2003.
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David C. Phelan (48) Assistant Serves at Partner, Wilmer Cutler Pickering None
Secretary the discretion Hale and Dorr LLP; Assistant
of the Board Secretary of all Pioneer Funds
since September 2003.
-----------------------------------------------------------------------------------------------------------------------------------
Vincent Nave (60) Treasurer Serves at Vice President - Fund Accounting, None
the discretion Administration and Custody Services
of the Board of Pioneer; and Treasurer of all of
the Pioneer Funds.
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Mark E. Bradley (46) Assistant Serves at Deputy Treasurer of Pioneer since None
Treasurer the discretion 2004; Treasurer and Senior Vice
of the Board President, CDC IXIS Asset
Management Services from 2002 to
2003; Assistant Treasurer and Vice
President, MFS Investment
Management from 1997 to 2002; and
Assistant Treasurer of all of the
Pioneer Funds since November 2004.
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Luis I. Presutti (41) Assistant Serves at Assistant Vice President - Fund None
Treasurer the discretion Accounting, Administration and
of the Board Custody Services of Pioneer
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51
Pioneer High Income Trust
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FUND OFFICERS
-----------------------------------------------------------------------------------------------------------------------------------
Positions Held Length of Service Principal Occupation Other Directorships Held
Name and Age With the Trust Term of Office During Past Five Years by this Trustee
Gary Sullivan (47) Assistant Serves at Fund Accounting Manager - Fund None
Treasurer the discretion Accounting, Administration and
of the Board Custody Services of Pioneer; and
Assistant Treasurer of all of the
Pioneer Funds since May 2002.
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Katherine Kim Sullivan Assistant Serves at Fund Administration Manager - Fund None
(32) Treasurer the discretion Accounting, Administration and
of the Board Custody Services since June 2003;
Assistant Vice President - Mutual
Fund Operations of State Street
Corporation from June 2002 to June
2003 (formerly Deutsche Bank Asset
Management); Pioneer Fund
Accounting, Administration and
Custody Services (Fund Accounting
Manager from August 1999 to May
2002, Assistant Treasurer of all
Pioneer Funds since September 2003
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Terrence J. Cullen Chief Compliance Since March, 2006. Chief Compliance Officer of Pioneer None
(45) Officer Serves at the and Pioneer Funds since March 2006;
discretion of Vice President and Senior Counsel
the Board. of Pioneer since September 2004;
and Senior Vice President and
Counsel, State Street Research &
Management Company (February 1998
to September 2004).
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52
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HOW TO CONTACT PIONEER
--------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact Mellon
for assistance or information.
You can call Mellon Investor Services LLC for:
Account Information 1-800-710-0935
Telecommunications Device for the Deaf (TDD) 1-800-231-5469
Or write to Mellon Investor Services LLC:
For Write to
General inquiries, lost dividend checks P.O. Box 3315
South Hackensack, NJ
07606-1915
Change of address, account consolidation P.O. Box 3316
South Hackensack, NJ
07606-1916
Lost stock certificates P.O. Box 3317
South Hackensack, NJ
07606-1917
Stock transfer P.O. Box 3312
South Hackensack, NJ
07606-1912
Dividend reinvestment plan (DRIP) P.O. Box 3338
South Hackensack, NJ
07606-1938
For additional information, please contact your investment advisor or visit our
web site www.pioneerfunds.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 may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
The Trust's Chief Executive Officer is required by the New York Stock Exchange's
Listing Standards to file annually with the Exchange a certification that he is
not aware of any violation by the Trust of the Exchange's Corporate Governance
Standards applicable to the Trust. The Trust has filed such certification.
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 $23,920 in 2006 and $20,800 in 2005.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
Audit-Related Fees
Fees for the Trust's audit-related services totaled approximately $8,500
in 2006 and $8,000 in 2005, which were related to the issuance of agreed
upon procedures report to the rating agencies.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
Tax Fees
Fees for tax compliance services, primarily for tax returns, totaled
approximately $6,800 and $6,000 for 2006 and 2005, 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.
All Other Fees
There were no fees for other services provided to the Trust during the
fiscal years ended March 31, 2006 and 2005.
(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
March 31, 2006 and 2005, 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 $15,300 in 2006 and $15,100 in 2005.
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.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Fund's independent auditor, Ernst &
Young LLP ("E&Y"), has advised the Audit
Committee of the Fund's Board of Trustees that
E&Ys Spanish affiliate (E&Y Spain) performed
certain non-audit work for Pioneer Global
Investments Limited ("PGIL"), an affiliate of the
Funds investment adviser. The services involved
the receipt and disbursement of monies transferred
to E&Y Spain by PGIL in payment of individual
payroll and related income tax withholdings due on
returns prepared by E&Y Spain for certain PGIL
employees located in Spain from February 2001 to
October 2005. E&Y became auditors of the Fund in
May 2002. These payroll and tax services were
discontinued in November 2005. The annual fee
received by E&Y Spain for all such services totaled
approximately 9,000 Euro per year. E&Y has informed
the Audit Committee that based on its internal
reviews and the de minimus nature of the services
provided and fees received, E&Y does not believe
its independence with respect to the Fund has been
impaired or that it is disqualified from acting as
independent auditors to the Fund.
N/A
Item 5. Audit Committee of Listed Registrants
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrants audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
The registrant has a separately-designated standing audit
committe eestablished 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.
9
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%.
12
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.
14
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.
(a)(1)
As of the date of this report, day-to-day management of the fund's portfolio is
the responsibility of Andrew Feltus. Mr. Feltus is supported by the fixed income
team. Members of this team manage other Pioneer funds investing primarily in
fixed income securities. The portfolio manager and the team also may draw upon
the research and investment management expertise of the global research team,
which provides fundamental research on companies and includes members from
Pioneer's affiliate, Pioneer Investment Management Limited. Mr. Feltus, a vice
president, joined Pioneer in 1994 and has been an investment professional for
more than 10 years.
(a)(2)
Other Accounts Managed by the Portfolio Manager. The table below indicates, for
the 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
March 31, 2006. 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 Type of Account Number of Total Assets Number of Accounts Assets Managed
Manager Accounts Managed Managed for which for which
Managed Advisory Fee is Advisory Fee is
Performance-Based Performance-Based
-----------------------------------------------------------------------------------------------------------------------
Andrew Feltus Other Registered
Investment
Companies 3 $1,105,969,000 N/A N/A
-------------------------------------------------------------------------------------------------
Other Pooled
Investment
Vehicles 3 $875,085,000 N/A N/A
-------------------------------------------------------------------------------------------------
Other Accounts 2 $402,003,906 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 interests 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 interests. See "Compensation of Portfolio
Managers" below.
o 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.
o 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.
o 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.
o 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.
o 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.
(a)(3)
Compensation of Portfolio Managers. Pioneer has adopted a system of compensation
for portfolio managers and seeks to align the financial interests of the
portfolio managers with both those of shareholders of the accounts the portfolio
managers manage, through incentive payments based in part on the relative
investment performance of those funds, and also Pioneer through incentive
payments based in part on Pioneer's financial performance. Pioneer's
compensation arrangements with its portfolio managers are determined on the
basis of the portfolio manager's overall services to Pioneer and its affiliates
and not on the basis of specific funds or accounts managed by the portfolio
manager. 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 aligns the financial incentives of Pioneer and the investment
professional. 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:
o Quantitative Investment Performance. The quantitative investment
performance calculation is based on pre-tax 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 High Yield Master II Index. As a result of these
two benchmarks, the performance of the portfolio manager for
compensation purposes is measured against criteria that are
relevant to the portfolio manager's competitive universe.
o 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.
o 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.
Certain portfolio managers participate in an incentive plan whereby senior
executives or other key employees are granted options in stock of Pioneer Global
Asset Management S.p.A., an affiliate of Pioneer, at the then fair value of the
underlying stock. These options are generally exercisable within three years.
(a)(4)
Share Ownership by Portfolio Manager. The following table indicates as of March
31, 2006 the value, within the indicated range, of shares beneficially owned by
the portfolio manager of the fund.
--------------------------------------------------------------------------------
Name of Portfolio Manager Beneficial Ownership of the Fund*
--------------------------------------------------------------------------------
A
Andrew Feltus
--------------------------------------------------------------------------------
*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 controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer High Income Trust
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date May 30, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date May 30, 2006
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date May 30, 2006
* Print the name and title of each signing officer under his or her signature.