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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, 2004 through September 30, 2004
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1.REPORTS TO SHAREOWNERS.
PIONEER
-------
HIGH
INCOME
TRUST
Semiannual
Report
9/30/04
[LOGO] PIONEER
Investments(R)
Table of Contents
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Letter to Shareowners 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 4
Schedule of Investments 8
Financial Statements 18
Notes to Financial Statements 22
Pioneer Family of Mutual Funds 31
Trustees, Officers and Service Providers 32
Pioneer High Income Trust
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LETTER TO SHAREOWNERS 9/30/04
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Dear Shareowner,
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High energy prices and rising interest rates caused concern among investors
during the third quarter of 2004. As oil prices touched $50 per barrel for the
first time, many consumers, faced with high priced gasoline and anticipating a
winter of hefty heating bills, responded by holding back on spending. Consumers
account for the bulk of the nation's economic activity, and retail sales over
the summer were erratic. Beyond soaring energy costs, which have the effect of
a tax increase on individuals and businesses, the slack job creation data of
the last few months also undermined confidence in the economic outlook. The
markets in general fell during the third quarter. Continued unsettled
conditions in Iraq and the ever present specter of terrorism also weighed on
investors' minds. Overseas, global markets were fairly stable, after stumbling
earlier in the year.
But the fuzzy economic picture was good news for bond investors. Despite three
hikes in short-term interest rates, the first increases in four years, bond
prices rose and yields fell over the period. Longer-term Treasury securities
were the strongest performers, with corporate bonds, including high-yield
issues, also delivering favorable returns. Lower long-term rates were also
beneficial to the housing and mortgage industries. Behind the rally in bonds
lies investor skepticism about the strength and durability of the current
economic recovery. A slowing recovery leading to an easing of inflationary
pressures may convince the Federal Reserve Board to slow the pace of future
rate increases. Less inflation would also mean better real returns for bond
holders.
Pioneer believes that the economy will continue to expand in 2005, but at a
more measured tempo. After an extended period of cutting costs and bolstering
balance sheets, many corporations are financially stronger than they have been
in some time. And although short-term interest rates have risen, they are still
relatively low and do not appear to be a barrier for companies needing to
borrow for expansion. Equity valuations now appear better aligned with earnings
prospects than was the case a year ago, when prices ran ahead of profit
expectations. Therefore, steady but moderate expansion in corporate profits has
the potential to drive stock prices higher.
As always, thank you for your investment in Pioneer High Income Trust.
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 Trust management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
1
Pioneer High Income Trust
PORTFOLIO SUMMARY 9/30/04
Portfolio Diversification
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(As a percentage of total investment portfolio)
[REPRESENTATION OF PIE CHART]
Corporate Bonds & Notes 83.5%
Temporary Cash Investments 6.4%
Municipal Bonds 6.0%
Convertible Bonds 2.4%
Sovereign Debt Obligations 1.7%
Portfolio Maturity
--------------------------------------------------------------------------------
(As a percentage of long-term holdings)
[REPRESENTATION OF PIE CHART]
0-1 Year 4.4%
1-3 Years 19.1%
3-4 Years 20.9%
4-6 Years 44.3%
6-8 Years 7.1%
8+ Years 4.2%
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 1.91
3. Huntsman International LLC, 10.125%, 7/1/09 1.81
4. IVAX Corp., 4.5%, 5/15/08 1.77
5. Burns, Philip Capital Property, Ltd., 9.75%, 7/15/12 1.71
6. GATX Financial Corp., 8.875%, 6/1/09 1.64
7. TSI Telecommunication Services, Inc., 12.75%, 2/1/09 1.59
8. Alamosa Delaware, Inc., 0.0%, 7/31/09 1.56
9. Seabulk International, Inc., 9.5%, 8/15/13 1.48
10. OM Group, Inc., 9.25%, 12/15/11 1.32
*This list excludes temporary cash and derivative investments. Trust holdings
will vary for other periods.
2
Pioneer High Income Trust
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PERFORMANCE UPDATE 9/30/04
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Share Prices and Distributions
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Market Value
per Common Share 9/30/04 3/31/04
$16.57 $16.57
Net Asset Value
per Common Share 9/30/04 3/31/04
$16.03 $16.20
Net
Distributions per Share Investment Short-Term Long-Term
(4/1/04 - 9/30/04) Income Capital Gains Capital Gains
$0.825 $ - $ -
Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in common shares of Pioneer High Income Trust, compared to that
of the Merrill Lynch High Yield Master II Index.
Average Annual Total Returns
(As of September 30, 2004)
Net Asset Market
Period Value Price
Life-of-Trust
(4/25/02) 16.77% 16.16%
1 Year 17.80 20.26
[The following data is represented as a mountain chart in the printed material.]
Value of $10,000 Investment
Pioneer High Merrill Lynch
Income Trust High Yield
Master II
Index
4/02 10,000 10,000
3/03 10,457 10,171
3/04 14,056 12,429
9/04 14,398 12,899
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. 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 and 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 broad-based measure of the performance of the non-investment grade
U.S. domestic bond market. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Trust returns, do not reflect any fees,
expenses or sales charges. You cannot invest directly in the Index.
3
Pioneer High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 9/30/04
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As the U.S. economy expanded, corporate profits increased and the overall
credit quality of corporate bonds strengthened during the six-month period
ending September 30, 2004. During the same period, emerging market bonds also
performed strongly, as an expanding global economy created strong demand for
products such as raw materials. The following is an interview with Kenneth J.
Taubes and Andrew Feltus, who discuss the performance of High Income Trust
during the period. Mr. Taubes is director of the 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 Fund perform?
A: The Trust continued to perform well, benefiting from continued strength in
the high-yield corporate and emerging-market bond markets. For the six
months ended September 30, 2004, Pioneer High Income Trust had a total
return of 4.29% at net asset value and 5.40% at market price, with a
premium of market price-to-net asset value of 3.4% on September 30, 2004.
The benchmark Merrill Lynch High Yield Master II Index returned 3.79%
during the same six months. The Trust also delivered generous current
income. On September 30, 2004, the SEC 30-day yield of High Income Trust
was 10.78%.
Q: What was the investment environment like during the six months?
A: Supported by the accommodative monetary policy of the U.S. Federal Reserve,
the U.S. economy continued to grow. Steady improvement in corporate
capital spending became the primary driver of this expansion after a
prolonged period in which persistent consumer spending had been the
principal factor sustaining the economy. Finally, corporations began
rebuilding depleted inventories and increasing investments for expansion.
Gross domestic product in the United States grew at an annual rate of 3.3%
during the second quarter of 2004 after growing at a rate of 4.5% in the
first quarter. Outside the United States, vigorous growth in China helped
stimulate other economies in Asia and in materials-rich regions such as
Latin America.
While the Federal Reserve began to raise short-term interest rates in the
United States gradually to diminish the chances of an over-heated economy
sparking new inflationary pressures, inflation was
4
Pioneer High Income Trust
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not a significant issue. Inflation remained modest when viewed from an
historical perspective.
Q: What were the principal strategies during the period?
A: With a backdrop of strong economic growth, we tilted the portfolio toward
the bonds of more cyclical companies, including those in the chemicals and
materials industries. At the end of the period, 16.9% of Trust assets were
invested in bonds from the industrials sector and 14.4% in the materials
sector. We also saw opportunities in the telecommunications services
industries, especially wireless service providers that were able to
accelerate their earnings growth as they added new subscribers. We
maintained strong exposure to the emerging markets, particularly in
countries exporting raw materials such as oil, iron ore and copper, as
well as to foreign nations such as Canada that benefited from rising
prices of oils and basic materials. At the end of the six-month period,
65.5% of portfolio assets were invested in domestic high-yield securities
and another 20% were invested in foreign markets, including about 10% in
emerging markets such as Brazil and Russia.
We continued to be 26% leveraged and made no changes to this position. The
spread between the short-term rate at which we borrow and the high-yield
bonds in which we invest was still attractive and allowed us to generate
greater income.
Q: What types of investments helped performance during the six months?
A: Our investments in the bonds of more cyclical companies proved particularly
successful. Bonds of chemical companies Huntsman International and
Lyondell performed particularly well. In the materials industries, bonds
of mining company Freeport-McMoRan and steel companies CSN and Inland
Steel. In the telecommunications services sector, several Sprint
affiliates contributed, as did Mobil Telesystems of Russia and Mobilfon of
Romania. The bonds of several European cable companies also helped,
including NTL Cable of the United Kingdom and Kabel Deutschland of
Germany. Within the shipping industry, investments that supported Trust
performance included bonds of Ship Finance, based in Norway, CP Ships of
Canada and Horizon Lines of the United States.
5
Pioneer High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 9/30/04 (continued)
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Q: What types of investments detracted from performance?
A: Holding back performance were several investments in the airline industry.
While airline revenues increased, the industry nevertheless struggled with
higher energy prices that it could not pass along to its customers. Our
investment in U.S. Air lost value when the company filed for bankruptcy
protection. We believe, however, that our investment still had value, as
it was backed by gate leases in Charlotte, N.C., and we retained the
holding.
Q: What is your investment outlook?
A: We continue to be optimistic about the outlook for high-yield securities in
an environment of economic expansion. As corporate profits increase,
overall credit quality improves. It may be unrealistic, however, to expect
significant price appreciation in the high yield bond market. While
fundamentals are strong, the prices of many corporate securities are not
cheap.
Up to this point, the Trust has had no difficulty paying its dividend.
However, as business conditions continue to improve, more high-yield
issuers can be expected to call back their existing bonds. When this
happens, we may find that we are investing in lower-yielding bonds, which
eventually could affect the Trust's dividend. Likewise, a strong economy
would also lead to rising short-term rates, which would ultimately
pressure the ability to pay the current dividend.
In this environment, we anticipate continuing to pay close attention to
fundamental analysis and individual security selection and intend to avoid
taking on undue risks.
Investments in high yield or lower-rated securities are subject to
greater-than-average risk. 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.
When concentrating on one issuer, the portfolio is sensitive to changes in the
value of these securities. 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.
6
Pioneer High Income Trust
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Any information in this shareholder report regarding market or economic trends
or the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
The Trust's investment objective is a high level of current income. The Trust
may, as a secondary objective, also seek capital appreciation to the extent
consistent with its investment objective. There can be no assurance that the
Trust will achieve its investment objectives. Under normal market conditions,
the Trust invests at least 80% of its assets (net assets plus borrowing for
investment purposes) in below investment grade (high yield) debt securities,
loans and preferred stocks. Because the Trust's investments will be
concentrated in high yield securities, it will be subject to risks of such
securities. Below investment grade securities are commonly referred to as "junk
bonds" and are considered speculative with respect to the issuer's capacity to
pay interest and repay principal. They involve greater risk of loss, are
subject to greater price volatility and are less liquid, especially during
periods of economic uncertainty or change, than higher rated debt securities.
Risks of the investing in the Trust are discussed in greater detail in the
Trust's registrations statement on Form N-2 relating to its common shares,
which was filed with the Securities and Exchange Commission on April 29, 2002.
The Trust's total return at net asset value for the six months ended September
30, 2004, after net expenses and dividends to the preferred shareowners, was
4.29%. The Trust's total return for the six months ended September 30, 2004
based on changes in market price was 5.40%.
7
Pioneer High Income Trust
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SCHEDULE OF INVESTMENTS 9/30/04 (unaudited)
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Principal
Amount S&P/Moody's
USD ($) Ratings Value
CORPORATE BONDS & NOTES - 116.8% of Net Assets
Energy - 9.9%
Energy Equipment & Services - 3.5%
3,985,000 B-/B2 Parker Drilling Co., 9.625%, 10/1/13 $ 4,443,275
8,000,000 B/B2 Seabulk International, Inc., 9.5%, 8/15/13 8,340,000
1,938,000 B/B3 Transmontaigne, Inc., 9.125%, 6/1/10 2,175,405
-------------
$ 14,958,680
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Oil & Gas - 6.4%
9,984,000 B-/B3 Baytex Energy, Ltd., 9.625%, 7/15/10 $ 10,732,800
2,500,000 B/B2 Dresser, Inc., 9.375%, 4/15/11 2,750,000
5,000,000 B+/B2 Energy Partners, Ltd., 8.75%, 8/1/10 5,425,000
6,000,000 B/B3 Paramount Resources, Ltd., 8.875%, 7/15/14 6,600,000
2,000,000 B-/B3 Petro Stopping Centers LP, 9.0%, 2/15/12 2,120,000
-------------
$ 27,627,800
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Total Energy $ 42,586,480
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Materials - 18.8%
Chemicals - 10.8%
750,000 B+/B1 ARCO Chemical Co., 9.375%, 12/15/05 $ 776,250
4,635,000 B+/B1 ARCO Chemical Co., 9.8%, 2/1/20 4,831,987
1,000,000 BB-/NR Braskem SA, 11.75%, 1/22/14 1,075,000
5,800,000 BB+/Baa3 Ferro Corp., 7.125%, 4/1/28 5,738,027
EURO 7,875,000 CCC+/Caa1 Huntsman International LLC, 10.125%, 7/1/09 10,171,980
4,500,000 BBB-/Ba1 Methanex Corp., 8.75%, 8/15/12 5,175,000
7,100,000 B-/Caa1 OM Group, Inc., 9.25%, 12/15/11 7,401,750
400,000 B-/B3 Resolution Performance Products LLC, 9.5%, 4/15/10 413,000
5,750,000(e) CCC+/Caa2 Resolution Performance Products LLC, 13.5%,
11/15/10 5,577,500
EURO 4,970,000 NR/Caa1 Rhodia SA, 9.25%, 6/1/11 5,308,556
-------------
$ 46,469,050
-------------
Construction Materials - 1.6%
6,000,000 BB-/B1 Texas Industries, Inc., 10.25%, 6/15/11 $ 6,900,000
-------------
Containers & Packaging - 3.7%
1,000,000(e) B/Caa1 Constar International, Inc., 11.0%, 12/1/12 $ 945,000
2,000,000 B+/B1 Crown Euro Holdings SA, 9.5%, 3/1/11 2,230,000
EURO 1,950,000 B+/NR Crown Euro Holdings SA, 10.25%, 3/1/11 2,754,911
800,000 CCC+/Caa2 Graham Packaging Co., Inc., 9.875%, 10/15/14
(144A) 819,000
4,020,000 B+/B2 Greif Bros. Corp., 8.875%, 8/1/12 4,482,300
4,650,000 B+/B2 Vitro Envases, 10.75%, 7/23/11 (144A) 4,557,000
-------------
$ 15,788,211
-------------
8 The accompanying notes are an integral part of these financial
statements.
Pioneer High Income Trust
Principal
Amount S&P/Moody's
USD ($) Ratings Value
Metals & Mining - 2.7%
3,880,000 BB-/B1 CSN Islands VIII Corp., 9.75%, 12/16/13 (144A) $ 3,889,700
1,805,000 BB-/B1 CSN Islands IX Corp., 10.0%, 1/15/15 (144A) 1,805,000
5,035,000 B/B2 Freeport-McMoRan Copper & Gold, Inc.,
10.125%, 2/1/10 5,695,844
-----------
$11,390,544
-----------
Total Materials $80,547,805
-----------
Industrials - 23.3%
Aerospace & Defense - 2.0%
7,000,000 CCC+/Caa2 Hexcel Corp., 9.75%, 1/15/09 $ 7,350,000
1,125,000 B/B3 K&F Industries, Inc., Series B, 9.625%, 12/15/10 1,251,563
-----------
$ 8,601,563
-----------
Building Products - 0.1%
500,000 B-/B3 U.S. Concrete, Inc., 8.375%, 4/1/14 $ 522,500
-----------
Construction & Engineering - 4.5%
NOK 27,300,000(b) NR/NR Kvaerner ASA, 0.0%, 10/30/11 $ 2,920,003
8,897,000(b) NR/NR Kvaerner ASA, 0.0%, 10/30/11 6,405,840
6,645,000 B+/B2 North American Energy Partners, 8.75%,
12/1/11 (144A) 6,478,875
3,400,000(e) BB-/Ba3 Shaw Group, Inc., 10.75%, 3/15/10 3,570,000
-----------
$19,374,718
-----------
Electrical Equipment - 1.1%
4,594,787 NR/NR Ormat Funding Corp, 8.25%, 12/30/20 (144A) $ 4,548,839
-----------
Machinery - 1.8%
3,300,000 B-/B3 American Rock Salt Co., LLC, 9.5%, 3/15/14 (144A) $ 3,415,500
1,980,000 B/B3 Hines Nurseries, Inc., 10.25%, 10/1/11 2,098,800
1,875,000 B/B2 Manitowac Co., Inc., 10.5%, 8/1/12 2,160,938
-----------
$ 7,675,238
-----------
Commercial Services & Supplies - 5.3%
1,850,000 B/B2 Brickman Group, Ltd., Series B, 11.75%, 12/15/09 $ 2,136,750
3,250,000 B-/B3 Cornell Companies, Inc., 10.75%, 7/1/12 (144A) 3,258,125
6,555,000 B-/B3 IESI Corp., 10.25%, 6/15/12 7,079,400
1,700,000 B/B1 Sheridan Group, Inc., 10.25%, 8/15/11 (144A) 1,840,250
5,650,000(e) B+/B2 United Rentals North America, Inc., 7.75%, 11/15/13 5,296,875
3,250,000 CCC/Ca Waste Services, Inc., 9.5%, 4/15/14 (144A) 3,087,500
-----------
$22,698,900
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The accompanying notes are an integral part of these financial statements. 9
Pioneer High Income Trust
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SCHEDULE OF INVESTMENTS 9/30/04 (unaudited) (continued)
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Principal
Amount S&P/Moody's
USD ($) Ratings Value
Airlines - 3.6%
1,100,000 NR/B3 American Airlines, Inc., 10.38%, 3/4/06 $ 991,375
2,065,000(e) CCC/Caa2 AMR Corp., 9.0%, 8/1/12 1,259,650
1,000,000 CCC/Caa2 AMR Corp., 9.0%, 9/15/16 580,000
2,640,000 CCC/Caa2 AMR Corp., 9.8%, 10/1/21 1,452,000
2,000,000 CCC/Caa2 AMR Corp., 10.2%, 3/15/20 1,100,000
4,100,000 B/B3 Continental Airlines, Inc., Series D, 7.568%, 12/1/06 3,001,503
4,885,000 CCC+/Caa1 Northwest Airlines, Inc., 8.7%, 3/15/07 3,566,050
2,450,000(e) CCC+/Caa1 Northwest Airlines, Inc., 9.875%, 3/15/07 1,849,750
2,500,000(e) CCC+/Caa1 Northwest Airlines, Inc., 10.0%, 2/1/09 1,725,000
------------
$ 15,525,328
------------
Marine - 3.2%
5,000,000 BB+/Ba3 CP Ships, Ltd., 10.375%, 7/15/12 $ 5,725,000
1,300,000 B-/B3 Horizon Lines LLC, 9.0%, 11/1/12 (144A) 1,371,500
6,850,000 B/B1 Ship Finance International, Ltd., 8.5%, 12/15/13 6,815,750
------------
$ 13,912,250
------------
Road & Rail - 1.7%
4,275,000 B/B3 Atlantic Express Transportation, 12.0%,
4/15/08 (144A) $ 4,189,500
400,000 B/B2 Grupo Transportacion Ferroviaria Mexicana,
SA de CV, 10.25%, 6/15/07 414,000
2,550,000 B/B2 Grupo Transportacion Ferroviaria Mexicana,
SA de CV, 11.75%, 6/15/09 2,575,500
------------
$ 7,179,000
------------
Total Industrials $100,038,336
------------
Consumer Discretionary - 14.0%
Automobiles & Components - 1.8%
4,350,000(a) D/Caa3 Intermet Corp., 9.75%, 6/15/09 $ 1,674,750
2,500,000(e) B/Caa1 Metaldyne Corp., 11.0%, 6/15/12 1,987,500
4,000,000 B/Caa1 Stanadyne Corp., 10.0%, 8/15/14 (144A) 4,160,000
------------
$ 7,822,250
------------
Leisure Equipment & Products - 1.1%
4,625,000 B/B3 Clean Harbors, Inc., 11.25%, 7/15/12 (144A) $ 4,879,375
------------
Textiles - 1.6%
4,000,000 B+/B1 Invista, 9.25%, 5/1/12 (144A) $ 4,270,000
3,700,000(b) B-/Caa2 Jostens Holding Corp, 0.0%, 12/1/13 2,543,750
------------
$ 6,813,750
------------
10 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
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Principal
Amount S&P/Moody's
USD ($) Ratings Value
Hotels, Restaurants & Leisure - 3.1%
1,600,000 BB-/Ba3 Grupo Posadas SA, 8.75%, 10/4/11 (144A) $ 1,632,000
2,990,000 CCC+/B2 MeriStar Hospitality Operating Partnership, L.P.,
10.5%, 6/15/09 3,274,050
1,500,000 CCC+/Caa1 Pinnacle Entertainment, Inc., 8.25%, 3/15/12 1,503,750
2,485,000 CCC+/Caa1 Pinnacle Entertainment, Inc., 8.75%, 10/1/13 2,547,125
2,500,000 CCC+/B3 True Temper Sports, Inc., 8.375%, 9/15/11 2,325,000
1,875,000 B+/B1 Turning Stone Casino Resort Enterprise, 9.125%,
12/15/10 (144A) 2,025,000
-----------
$13,306,925
-----------
Media - 3.1%
2,402,000 BB-/Ba3 EchoStar DBS Corp., 9.125%, 1/15/09 $ 2,672,225
EURO 3,750,000 B/B2 Kabel Deutschland Gmbh, 10.75%, 7/1/14 (144A) 5,111,606
3,000,000 B-/B3 LodgeNet Entertainment Corp., 9.5%, 6/15/13 3,270,000
2,000,000 B-/B3 Vertis, Inc., 10.875%, 6/15/09 2,150,000
-----------
$13,203,831
-----------
Distributors - 1.4%
1,000,000 B-/B3 Wesco Distribution, Inc., 9.125%, 6/1/08 $ 1,031,250
4,725,000 B-/B3 Wesco Distribution, Inc., Series B, 9.125%, 6/1/08 4,872,656
-----------
$ 5,903,906
-----------
Multiline Retail - 1.0%
3,800,000 BB+/Ba3 J.C. Penney Co., Inc., 8.125%, 4/1/27 $ 4,180,000
-----------
Specialty Retail - 0.9%
3,840,000 B/B3 Asbury Automotive Group, Inc., 9.0%, 6/15/12 $ 4,051,200
-----------
Total Consumer Discretionary $60,161,237
-----------
Consumer Staples - 8.2%
Food & Staples Retailing - 3.0%
5,750,000(e) CCC/Caa1 Doane Pet Care Co., 9.75%, 5/15/07 $ 5,505,625
4,500,000 CCC+/B3 Duane Reade, Inc., 9.75%, 8/1/11 (144A) 4,252,500
2,880,000 B+/ B2 Wornick Co., 10.875%, 7/15/11 (144A) 3,081,600
-----------
$12,839,725
-----------
Beverages - 1.7%
5,885,000 BBB-/Baa3 Cia Brasileira de Bebida, 10.5%, 12/15/11 $ 7,253,263
-----------
Food Products - 2.2%
9,000,000 B-/B3 Burns, Philp Capital Property, Ltd., 9.75%, 7/15/12 $ 9,630,000
-----------
Household Products - 1.3%
5,625,000 B-/B3 Solo Cup Co., 8.5%, 2/15/14 $ 5,540,625
-----------
Total Consumer Staples $35,263,613
-----------
The accompanying notes are an integral part of these financial statements. 11
Pioneer High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 9/30/04 (unaudited) (continued)
--------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
Health Care - 6.1%
Biotechnology - 0.7%
3,000,000 B-/Caa1 Polypore, Inc., 8.75%, 5/15/12 (144A) $ 3,112,500
-----------
Health Care Providers & Services - 5.4%
5,485,000 B-/B3 Ardent Health Services, 10.0%, 8/15/13 $ 5,622,125
5,360,000 B-/B3 Curative Health Services, Inc., 10.75%, 5/1/11 4,904,400
1,500,000 B/B1 National Nephrology Associates, Inc., 9.0%,
11/1/11 (144A) 1,734,375
3,985,000 B/B2 NDCHealth Corp., 10.5%, 12/1/12 4,353,613
2,335,000 BBB-/Ba3 PacifiCare Health Systems, Inc., 10.75%, 6/1/09 2,691,088
4,000,000 B-/B3 Team Health, Inc., 9.0%, 4/1/12 (144A) 3,980,000
-----------
$23,285,601
-----------
Total Health Care $26,398,101
-----------
Financials - 16.3%
Diversified Financials - 9.7%
8,512,000(b) CCC/Caa1 Alamosa Delaware, Inc., 0.0%, 7/31/09 $ 8,767,360
3,500,000 B-/Caa1 Allied Security Escrow, 11.375%, 7/15/11 (144A) 3,675,000
2,450,000 B-/ B3 Consolidated Communications Illinois/Texas
Holdings, Inc. 9.75%, 4/1/12 (144A) 2,511,250
5,335,000 B/B3 Dollar Financial Group, 9.75%, 11/15/11 5,655,100
800,000 B/B3 Dollar Financial Group, 9.75%, 11/15/11 (144A) 848,000
7,950,000 BBB-/Baa3 GATX Financial Corp., 8.875%, 6/1/09 9,228,996
EURO 2,000,000 B/B3 MDP Acquisitions Plc, 10.125%, 10/1/12 2,794,500
3,385,000 B/B1 Sheridan Group, 10.25%, 8/15/11 (144A) 3,664,263
3,000,000(b) B-/Caa1 Tabletop Holdings, Inc., 0.0%, 5/15/14 (144A) 1,560,000
2,600,000 B-/B3 UGS Corp., 10.0%, 6/1/12 (144A) 2,834,000
-----------
$41,538,469
-----------
Capital Markets - 2.5%
EURO 3,975,000 B-/B3 BCP Caylux Holdings, 10.375%, 6/15/14 (144A) $ 5,319,563
4,950,000 B/B3 Refco Finance Holdings, 9.0%, 8/1/12 (144A) 5,284,125
-----------
$10,603,688
-----------
Insurance - 4.1%
5,300,000 BB/Ba1 Allmerica Financial Corp., 7.625%, 10/15/25 $ 5,273,500
3,380,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 3,505,050
4,000,000 BBB-/NR Odyssey Re Holdings Corp., 7.65%, 11/1/13 4,362,804
4,535,000 B+/B2 Presidential Life Corp., 7.875%, 2/15/09 4,535,000
-----------
$17,676,354
-----------
Total Financials $69,818,511
-----------
12 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
Information Technology - 6.5%
Information Technology Services - 1.2%
5,480,000 B/B3 Stratus Technologies, Inc., 10.375%, 12/1/08 $ 4,959,400
-----------
Communications Equipment - 1.4%
3,500,000 CCC+/Caa1 Eschelon Operating Co., 8.375%, 3/15/10 $ 2,800,000
2,900,000(e) B/B2 Lucent Technologies, Inc., 7.25%, 7/15/06 3,074,000
-----------
$ 5,874,000
-----------
Electronic Equipment & Instruments - 1.1%
215,000 B/B2 General Cable Corp., 9.5%, 11/15/10 $ 238,650
4,000,000 BB-/Ba2 Sanmina-SCI Corp., 10.375%, 1/15/10 4,575,000
-----------
$ 4,813,650
-----------
Office Electronics - 2.8%
12,425,000 B-/Ba3 Xerox Capital Trust I, 8.0%, 2/1/27 $12,238,625
-----------
Total Information Technology $27,885,675
-----------
Telecommunication Services - 12.4%
Diversified Telecommunication Services - 5.1%
2,675,000 B+/B2 GCI, Inc., 7.25%, 2/15/14 $ 2,621,500
2,980,000 B+/B2 Innova S de R.L., 9.375%, 9/19/13 3,240,750
EURO 2,385,000 B-/B3 NTL Cable Plc, 8.75%, 4/15/14 (144A) 3,006,602
5,375,000 CCC/B3 Primus Telecommunications Group, 8.0%, 1/15/14 3,977,500
8,000,000 B-/B3 TSI Telecommunication Services, Inc.,
12.75%, 2/1/09 8,960,000
-----------
$21,806,352
-----------
Wireless Telecommunications Services - 7.3%
1,900,000 CCC/B3 Horizon PCS, Inc., 11.375%, 7/15/12 (144A) $ 1,976,000
6,855,000 CCC+/B3 MetroPCS, Inc., 10.75%, 10/1/11 7,369,125
5,150,000 B-/B3 Mobifon Holdings BV, 12.5%, 7/31/10 6,025,500
3,230,000 BB-/Ba3 Mobile Telesystems, 9.75%, 1/30/08 (144A) 3,431,875
1,400,000 BB-/Ba3 Mobile Telesystems, 10.95%, 12/21/04 1,414,000
2,000,000(e) CCC/Caa2 Rural Cellular Corp., 9.75%, 1/15/10 1,740,000
3,250,000 NR/Baa3 Tele Norte Leste Participacoes S.A., 8.0%,
12/18/13 (144A) 3,152,500
6,025,000 CCC/Caa1 UbiquiTel Operating Co., 9.875%, 3/1/11 6,273,531
-----------
$31,382,531
-----------
Total Telecommunication Services $53,188,883
-----------
Utilities - 1.3%
Electric Utilities - 0.5%
2,025,000 BBB-/Baa3 Empresa Electrica Guacolda SA, 8.625%,
4/30/13 (144A) $ 2,278,828
-----------
The accompanying notes are an integral part of these financial statements. 13
Pioneer High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 9/30/04 (unaudited) (continued)
--------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
Multi-Utilities - 0.8%
1,000,000 B/B1 Reliant Resources, Inc., 9.25%, 7/15/10 $ 1,073,750
2,300,000 B/B1 Reliant Resources, Inc., 9.5%, 7/15/13 2,498,375
------------
$ 3,572,125
------------
Total Utilities $ 5,850,953
------------
TOTAL CORPORATE BONDS & NOTES
(Cost $469,434,091) $501,739,594
------------
CONVERTIBLE BONDS & NOTES - 3.4% of Net Assets
Health Care - 2.3%
Pharmaceuticals - 2.3%
10,060,000 NR/NR IVAX Corp., 4.5%, 5/15/08 $ 9,959,400
------------
Total Health Care $ 9,959,400
------------
Information Technology - 1.1%
Communications Equipment - 0.2%
725,000 B-/B3 Nortel Networks, 4.25%, 9/1/08 $ 699,625
------------
Electronic Equipment & Instruments - 0.9%
4,000,000 B/B1 SCI Systems, Inc., 3.0%, 3/15/07 $ 3,760,000
------------
Total Information Technology $ 4,459,625
------------
TOTAL CONVERTIBLE BONDS & NOTES
(Cost $12,513,772) $ 14,419,025
------------
MUNICIPAL BONDS - 8.4% of Net Assets
Arizona - 0.5%
2,500,000 B-/Ca Gila County Industrial Development Authority Rev.,
5.55%, 1/1/27 $ 2,133,775
------------
Florida - 1.3%
4,800,000 NR/NR Capital Tribal Agency Rev., Seminole Tribe,
10.0%, 10/1/33 $ 5,746,656
------------
Indiana - 2.9%
1,650,000 CCC+/Caa2 East Chicago Industrial Pollution Ctl. Rev.,
7.0%, 1/1/14 $ 1,577,845
3,000,000 CCC+/Caa2 East Chicago Industrial Pollution Ctl. Rev.,
7.125%, 6/1/07 2,967,390
3,665,000 CCC+/Caa2 Indiana Dev. Fin. Auth. Pollution Ctl. Rev.,
7.25%, 11/1/11 3,626,627
4,250,000 CCC+/Caa2 Indiana Dev. Fin. Auth. Rev., 5.75%, 10/1/11 4,063,723
1,060,033(a) NR/NR Indianapolis, Arpt. Auth. Rev. Spl. Fac., United
Airlines, Ser. A, 6.5%, 11/15/31 132,504
------------
$ 12,368,089
------------
14 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
Michigan - 0.6%
3,000,000 NR/NR Wayne Charter County, Spl. Arpt. Facs. Rev.,
6.75%, 12/1/15 $ 2,528,010
-----------
New Jersey - 1.7%
4,525,000 B/Caa2 New Jersey Economic Dev. Auth. Rev., 7.0%,
11/15/30 $ 3,571,130
4,000,000 BBB/Baa3 Tobacco Settlement Financing Corp., 7.0%, 6/1/41 3,932,120
-----------
$ 7,503,250
-----------
New York - 0.8%
3,475,000 BB+/Ba2 New York City Ind. Dev. Agcy., British Airways Plc
Proj., 7.625%, 12/1/32 $ 3,440,285
-----------
North Carolina - 0.6%
4,800,000(a) NR/NR Charlotte, Spl. Facs. Rev., Charlotte/Douglas Int'l
Airport, 5.60%, 7/1/27 $ 1,632,000
2,000,000(a) NR/NR Charlotte, Spl. Facs. Rev., Charlotte/Douglas Int'l
Airport, 7.75%, 2/1/28 740,000
-----------
$ 2,372,000
-----------
TOTAL MUNICIPAL BONDS
(Cost $32,599,812) $36,092,065
===========
SOVEREIGN DEBT OBLIGATIONS - 2.3% of Net Assets
Brazil - 1.1%
ITL 4,800,000,000 BB-/Ba2 Banco Nacional de Desenvolimento Bndes,
8.0%, 4/28/10 $ 3,032,726
1,852,977 BB-/B1 Federal Republic of Brazil-C Bonds, 8.0%, 4/15/14 1,832,223
===========
$ 4,864,949
===========
Ecuador - 0.7%
3,515,000 CCC+/Caa1 Federal Republic of Ecuador, 8.0%, 8/15/30 (144A) $ 2,864,725
-----------
Russia - 0.5%
2,320,000 BB+/Baa3 Russian Federation, 5.0%, 3/31/30 $ 2,230,100
-----------
TOTAL SOVEREIGN DEBT OBLIGATIONS
(Cost $7,602,919) $ 9,959,774
-----------
The accompanying notes are an integral part of these financial statements. 15
Pioneer High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 9/30/04 (unaudited) (continued)
--------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
TEMPORARY CASH INVESTMENTS - 9.0% of Net Assets
Repurchase Agreement - 2.6%
11,300,000 Greenwich Capital, 1.68%, dated 9/30/04, repur-
chase price of $11,300,000, plus accrued
interest on 10/1/04 collaterized by $16,422,000
U.S. Treasury Bonds, 1.625%, 3/31/05 $ 11,300,000
-------------
Shares
Security Lending Collateral - 6.4%
27,529,614 Securities Lending Investment Fund, 1.74% $ 27,529,614
-------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $38,829,614) $ 38,829,614
-------------
TOTAL INVESTMENTS IN SECURITIES - 139.9%
(Cost $560,980,208) (c)(d) $ 601,040,072
-------------
OTHER ASSETS AND LIABILITIES - (4.7)% $ (20,509,045)
-------------
PREFERRED SHARES AT REDEMPTION VALUE
INCLUDING DIVIDENDS PAYABLE - (35.2)% $(151,018,860)
-------------
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS - 100.0% $ 429,512,167
=============
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
September 30, 2004, the value of these securities amounted to
$119,906,476 or 27.9% of total net assets.
(a) Security is in default and is non-income producing.
(b) Indicates a security that has a zero coupon that remains in effect until
a predetermined date at which time the stated coupon rate becomes
effective until final maturity.
(c) At September 30, 2004, the net unrealized gain on investments based on
cost for federal income tax purposes of $561,409,323 was as follows:
Aggregate gross unrealized gain for all investments in which there is
an excess of value over tax cost $ 51,714,653
Aggregate gross unrealized loss for all investments in which there is an
excess of tax cost over value (12,083,904)
------------
Net unrealized gain $ 39,630,749
============
For financial reporting purposes net unrealized gain was $40,059,864 and cost of
investments aggregated $560,980,208.
16 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(d) Distribution of investments by country of issue, as a percentage of total
holdings, is as follows:
United States 77.9%
Canada 5.9
Brazil 2.7
Norway 2.6
Mexico 2.1
France 1.7
Australia 1.6
Russia 1.2
Romania 1.0
Turkey 1.0
Germany 0.9
Great Britain 0.5
Ecuador 0.5
Ireland 0.4
-----
100.0%
=====
(e) At September 30, 2004, the following securities were out on loan:
Principal
Amount Description Market Value
-----------------------------------------------------------------------------------------------
$1,961,750 AMR Corp., 9.0%, 8/1/12 $ 1,196,668
950,000 Constar International, Inc., 11.0%, 12/1/12 889,750
4,750,000 Doane Pet Care Co., 9.75%, 5/15/07 4,548,125
2,755,000 Lucent Technologies, Inc., 7.25%, 7/15/06 2,920,300
2,375,000 Metaldyne Corp., 11.0%, 6/15/12 1,888,125
2,327,500 Northwest Airlines, Inc., 9.875%, 3/15/07 1,757,262
2,375,000 Northwest Airlines, Inc., 10.0%, 2/1/09 1,638,750
5,462,500 Resolution Performance Products LLC, 13.5%, 11/15/10 5,298,625
1,900,000 Rural Cellular Corp., 9.75%, 1/15/10 1,653,000
641,250 Shaw Group, Inc., 10.75%, 3/15/10 673,312
3,562,500 United Rentals North America, Inc., 7.75%, 11/15/13 339,844
-----------
$22,803,761
===========
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 six months ended September 30, 2004, aggregated $150,108,736 and
$156,683,919, respectively.
The accompanying notes are an integral part of these financial statements. 17
Pioneer High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 9/30/04 (unaudited)
--------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value (including securities loaned
of $22,803,761) (cost $560,980,208) $601,040,072
Cash 3,536,515
Receivables -
Investment securities sold 446,312
Interest and foreign tax reclaim 13,096,219
Reinvestment of distributions 150,474
Prepaid expenses 27,122
------------
Total assets $618,296,714
------------
LIABILITIES:
Payables -
Investment securities purchased $ 9,362,449
Upon return of securities loaned 27,529,614
Due to custodian - foreign currencies, at value
(cost $161,648) 163,032
Forward foreign currency portfolio hedge contract - net 325,567
Due to affiliates 285,471
Accrued expenses 99,554
------------
Total liabilities $ 37,765,687
------------
PREFERRED SHARES AT REDEMPTION VALUE:
$25,000 liquidation value per share applicable to 6,040 shares,
including dividends payable of $18,860 $151,018,860
------------
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Paid-in capital $381,251,071
Undistributed net investment income 1,042,328
Accumulated net realized gain on investments and foreign
currency transactions 7,464,891
Net unrealized gain on investments 40,059,864
Net unrealized loss on forward foreign currency contracts and
other assets and liabilities denominated in foreign currencies (305,987)
------------
Net assets applicable to common shareowners $429,512,167
============
NET ASSET VALUE PER SHARE:
No par value (unlimited number of shares authorized)
Based on $429,512,167/26,796,886 common shares $ 16.03
============
18 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (unaudited)
--------------------------------------------------------------------------------
For the Six Months Ended 9/30/04
INVESTMENT INCOME:
Interest $ 26,832,894
Dividends 12,014
Income from securities loaned, net 35,762
------------
Total investment income $ 26,880,670
------------
EXPENSES:
Management fees $ 1,725,198
Transfer agent fees and expenses 34,164
Auction agent fees 198,845
Custodian fees 24,210
Registration fees 11,941
Professional fees 68,204
Printing expense 13,566
Trustees' fees 6,294
Miscellaneous 25,076
------------
Total expenses $ 2,107,498
------------
Net investment income $ 24,773,172
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain from:
Investments $ 7,580,170
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 773,641 $ 8,353,811
------------ ------------
Change in net unrealized gain (loss) on:
Investments $(13,691,619)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (786,916) $(14,478,535)
------------ ------------
Net loss on investments and foreign currency
transactions $ (6,124,724)
------------
DISTRIBUTIONS TO PREFERRED SHAREOWNERS FROM
NET INVESTMENT INCOME $ (1,055,341)
------------
Net increase in net assets applicable to common
shareowners resulting from operations $ 17,593,107
============
The accompanying notes are an integral part of these financial statements. 19
Pioneer High Income Trust
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
For the Six Months Ended 9/30/04 and the Year Ended 3/31/04
Six Months
Ended
9/30/04 Year Ended
(unaudited) 3/31/04
FROM OPERATIONS:
Net investment income $ 24,773,172 $ 47,304,411
Net realized gain on investments and foreign
currency transactions 8,353,811 20,354,640
Net unrealized gain (loss) on investments and
foreign currency transactions (14,478,535) 52,659,636
Distributions to preferred shareowners from net
investment income (1,055,341) (1,565,017)
------------ ------------
Net increase in net assets applicable to common
shareowners resulting from operations $ 17,593,107 $118,753,670
------------ ------------
DISTRIBUTIONS TO COMMON SHAREOWNERS:
Net investment income ($0.83 and $1.65 per
share, respectively) $(22,090,395) $(44,088,258)
------------ ------------
Total dividends to common shareowners $(22,090,395) $(44,088,258)
------------ ------------
FROM TRUST SHARE TRANSACTIONS:
Reinvestment of distributions $ 451,055 $ 1,434,661
Changes in (estimated) preferred share
offering expenses 1,925 (666,972)
------------ ------------
Net increase in net assets applicable to
common shareowners resulting from Trust
share transactions $ 452,980 $ 767,689
------------ ------------
Net increase (decrease) in net assets applicable
to common shareowners $ (4,044,308) $ 75,433,101
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Beginning of period 433,556,475 358,123,374
------------ ------------
End of period (including undistributed (distributions
in excess of) net investment income of
$1,042,328 and $(585,108) respectively) $429,512,167 $433,556,475
============ ============
20 The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Six Months
Ended Year 4/25/02
9/30/04 Ended to
(unaudited) 3/31/04 3/31/03(b)
Per Common Share Operating Performance
Net asset value, beginning of period $ 16.20 $ 13.43 $ 14.33+
-------- -------- --------
Increase (decrease) from investment operations: (a)
Net investment income $ 0.93 $ 1.77 $ 1.41
Net realized and unrealized gain (loss) on investments
and foreign currency transactions (0.23) 2.73 (0.81)
Distributions to preferred shareowners from net
investment income (0.04) (0.06) (0.04)
-------- -------- --------
Net increase from investment operations $ 0.66 $ 4.44 $ 0.56
Distributions to common shareowners:
Net investment income (0.83) (1.65) (1.38)
Changes in (estimated) with respect to issuance of:
Common shares - - (0.03)
Preferred shares - (0.02) (0.05)
-------- -------- --------
Net increase (decrease) in net asset value $ (0.17) $ 2.77 $ (0.90)
-------- -------- --------
Net asset value, end of period* $ 16.03 $ 16.20 $ 13.43
======== ======== ========
Market value, end of period* $ 16.57 $ 16.57 $ 14.49
-------- -------- --------
Total return++ 5.40% 27.33% 7.29%
Ratios to average net assets of common shareowners
Net expenses+++ 0.99%** 0.96% 0.87%**
Net investment income before preferred share dividends+++ 11.70%** 11.64% 11.62%**
Preferred share dividends 0.50%** 0.39% 0.37%**
Net investment income available to common shareowners 11.20%** 11.25% 11.25%**
Portfolio turnover 27% 66% 49%
Net assets of common shareowners, end of period
(in thousands) $429,512 $433,556 $358,123
Preferred shares outstanding (in thousands) $151,000 $151,000 $101,000
Asset coverage per preferred share, end of period $ 96,114 $ 96,781 $113,647
Average market value per preferred share $ 25,000 $ 25,000 $ 25,000
Liquidation value per preferred share $ 25,003 $ 25,000 $ 25,003
Ratios to average net assets of common shareowners
before reimbursement of organization expenses
Net expenses+++ 0.99%** 0.96% 0.88%**
Net investment income before preferred share
dividends+++ 11.70%** 11.64% 11.61%**
Preferred share dividends 0.50%** 0.39% 0.37%**
Net investment income available to common shareowners 11.20%** 11.25% 11.24%**
(a) The per common share data presented above is based upon the average common
shares outstanding for the periods presented.
(b) Trust shares were first publicly offered on April 26, 2002.
* Net asset value and market value are published in Barron's on Saturday, The
Wall Street Journal on Monday and The New York Times on Monday and Saturday.
** Annualized.
+ Net asset value immediately after the closing of the first public offering
was $14.30.
++ Total investment return is calculated assuming a purchase of common shares
at the current market value on the first day and a sale at the current
market value on the last day of the periods reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions. Total
investment returns less than a full period are not annualized. Past
performance is not a guarantee of future results.
+++ Ratios do not reflect the effect of dividend payments to preferred
shareowners.
The information above represents the 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.
The accompanying notes are an integral part of these financial statements. 21
Pioneer High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 9/30/04 (unaudited)
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer High Income Trust (the "Trust") was organized as a Delaware statutory
trust on January 30, 2002. Prior to commencing operations on April 25, 2002,
the Trust had no operations other than matters relating to its organization and
registration as a diversified, closed-end management investment company under
the Investment Company Act of 1940, as amended, and the sale and issuance to
Pioneer Investment Management, Inc. "PIM", the Trust's investment adviser, a
wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito
Italiano), of 6,981 shares of beneficial interest at an aggregate purchase
price of $100,003. The investment objective of the Trust is to seek a high
level of current income and the Trust may seek capital appreciation to the
extent that it is consistent with its investment objective.
The Trust invests in below investment grade (high yield) debt securities and
preferred stocks. These high yield securities may be convertible into equity
securities of the issuer. Debt securities rated below investment grade are
commonly referred to as "junk bonds" and are considered speculative. These
securities involve greater risk of loss, are subject to greater price
volatility, and are less liquid, especially during periods of economic
uncertainty or change, than higher rated debt securities.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, and expenses and gains and
losses on investments during the reporting period. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies 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. Securities are valued
at the last sales price on the principal exchanges where
22
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
they are traded. Fixed income securities are valued at prices supplied by
independent pricing services, which consider such factors as Treasury
spreads, yields, maturities and ratings. Valuations may be supplemented by
dealers and other sources, as required. Securities for which market
quotations are not readily available are valued at their fair values as
determined by, or under the direction of, the Board of Trustees. Trading in
foreign securities is substantially completed each day at various times prior
to the close of the New York Stock Exchange. The values of such securities
used in computing the net asset value of the Trust's shares are determined
as of such times. The Trust may also use the fair value of a security,
including a non-U.S. security when the closing market price on the primary
exchange where the security is traded no longer accurately reflects the value
of the security as of the close of the exchange. As of September 30, 2004 the
Trust had no fair valued securities.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have passed
are recorded as soon as the Trust becomes aware of the ex-dividend data in
the exercise of reasonable diligence. Discount and premium on fixed income
securities are accreted or amortized daily, respectively, on an effective
yield to maturity basis and are included in interest income. Premiums and
discounts related to certain mortgage-backed securities are amortized or
accreted in proportion to the underlying monthly paydowns. Interest income,
including income on interest bearing cash accounts, is recorded on an accrual
basis. Temporary cash investments are valued at amortized cost.
The Trust's investments in foreign markets or countries with limited
developing markets may subject the Trust to a greater degree of risk than in
a developed market. These risks include disruptive political or economic
conditions and the possible imposition of adverse governmental laws or
currency exchange restrictions.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
23
Pioneer High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 9/30/04 (unaudited) (continued)
--------------------------------------------------------------------------------
B. Foreign Currency Translation
The books and records of the Trust are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars using
current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
among other things, the net realized gains and losses on foreign currency
contracts, disposition of foreign currencies and the difference between the
amount of income accrued and the U.S. dollars actually received. Further, the
effects of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Trust enters into forward foreign currency contracts (contracts) for the
purchase or sale of a specific foreign currency at a fixed price on a future
date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Trust's
financial statements. The Trust records realized gains and losses at the time
a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar (see Note 4).
D. Federal Income Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with
24
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
federal income tax rules. Therefore, the source of the Trust's distributions
may be shown in the accompanying financial statements as either from or in
excess of net investment income or net realized gain on investment and
foreign currency transactions, or from paid-in capital, depending on the type
of book/tax differences that may exist.
At March 31, 2004, the Trust had a net capital loss carryforward of $704,168,
which will expire on March 31, 2011 if not utilized.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The tax character of distributions paid
to common and preferred shareowners during the year ended March 31, 2004 was
as follows:
--------------------------------------------------------------------------------
2004
Distributions paid from:
Ordinary Income $45,653,275
Net long-term capital gains -
-----------
Total taxable distribution $45,653,275
-----------
--------------------------------------------------------------------------------
The following shows components of distributable earnings on a federal income
tax basis at March 31, 2004.
--------------------------------------------------------------------------------
Undistributed ordinary income $ 2,324,461
Capital loss carryforward (704,168)
Unrealized appreciation 53,172,715
-----------
Total $54,793,008
-----------
--------------------------------------------------------------------------------
The difference between book/basis and tax-basis unrealized appreciation is
primarily attributable to the tax deferral of losses on wash sales, the
realization for tax purposes of unrealized gains on certain foreign currency
contracts, differences in the accrual of income on securities in default and
the difference between book and tax amortization methods for premiums and
discounts on fixed income securities.
25
Pioneer High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 9/30/04 (unaudited) (continued)
--------------------------------------------------------------------------------
E. Repurchase Agreements
With respect to repurchase agreements entered into by the Trust, the value of
the underlying securities (collateral), including accrued interest received
from counterparties, is required to be at least equal to or in excess of the
repurchase agreement at the time of purchase. The collateral for all
repurchase agreements is held in safekeeping in the customer-only account of
the Trust's custodian, or subcustodians. PIM is responsible for determining
that the value of the collateral remains at least equal to the repurchase
price.
F. Securities Lending
The Trust lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Trust's custodian acting as the
lending agent. When entering into a loan, the Trust receives collateral which
is maintained by the custodian and earns income in the form of negotiated
lenders' fees. The Trust also continues to receive interest or 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
value of cash collateral at period end is disclosed on the statement of
assets and liabilities. The Trust has the right under the securities lending
arrangement to recover the securities on loan from the borrower on demand.
The Trust invests cash collateral in the Securities Lending Investment Fund
which is managed by Brown Brothers Harriman & Co., the Trust's custodian.
G. Automatic Dividend Reinvestment Plan
All common shareowners automatically participate in the Automatic Dividend
Reinvestment Plan (the "Plan"), under which participants receive all
dividends and capital gain distributions (collectively, "dividends") in full
and fractional common shares of the Trust in lieu of cash. Shareowners may
elect not to participate in the Plan. Shareowners not participating in the
Plan receive all dividends and capital gain distributions in cash.
Participation in the Plan is completely voluntary and may be terminated or
resumed at any time by
26
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
notifying Mellon Investor Services LLC, the agent for shareowners in
administering the Plan (the "Plan Agent"), prior to any dividend record date;
otherwise such termination or resumption will be effective with respect to
any subsequently declared dividend or other distribution. Whenever the Trust
declares a dividend on common shares payable in cash, participants in the
Plan will receive the equivalent in common shares acquired by the Plan Agent
either (i) through receipt of additional unissued but authorized common
shares from the Trust or (ii) by purchase of outstanding common shares on the
New York Stock Exchange or elsewhere. If, on the payment date for any
dividend the net asset value per common share is equal to or less than the
market price per share plus estimated brokerage trading fees ("market
premium"), the Plan Agent will invest the dividend amount in newly issued
common shares. The number of newly issued common shares to be credited to
each account will be determined by dividing the dollar amount of the dividend
by the net asset value per common share on the date the shares are issued,
provided that the maximum discount from the then current market price per
share on the date of issuance does not exceed 5%. If, on the payment date for
any dividend, the net asset value per common share is greater than the market
value ("market discount"), the Plan Agent will invest the dividend amount in
common shares acquired in open-market purchases. There are no brokerage
charges with respect to newly issued common shares. However, each participant
will pay a pro rata share of brokerage trading fees incurred with respect to
the Plan Agent's open-market purchases. Participating in the Plan does not
relieve shareowners from any federal, state or local taxes, which may be due
on dividends paid in any taxable year. Shareowners holding Plan shares in a
brokerage account may not be able to transfer the shares to another broker
and continue to participate in the Plan.
2. Management Agreement
PIM manages the Trust's portfolio. Management fees are calculated weekly at the
annual rate of 0.60% of the Trust's average weekly managed assets. "Managed
assets" is the average weekly value of the Trust's total assets minus the sum
of the Trust's liabilities, which liabilities exclude debt related to leverage,
short-term debt and the aggregate liquidation preference of any outstanding
preferred shares.
27
Pioneer High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 9/30/04 (unaudited) (continued)
--------------------------------------------------------------------------------
In addition, under PIM's management and administration agreements, certain
other services and costs are paid by the Trust. PIM has retained Princeton
Administrators, L.P., an affiliate of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, to provide certain administrative services to the Trust on its
behalf. PIM pays Princeton Administrators, L.P., a monthly fee at an annual
rate of 0.08% of the average weekly value of the Trust's managed assets,
subject to a minimum monthly fee of $10,000. Princeton Administrators, L.P.
receives no compensation directly from the Trust.
3. Transfer Agents
Pioneer Investment Management Shareholder Services, Inc. ("PIMSS"), a wholly
owned indirect subsidiary of UniCredito Italiano, through a sub-transfer agency
agreement with Mellon Investor Services LLC, provides substantially all
transfer agent and shareowner services related to the Trust's common shares at
negotiated rates. Deutsche Bank Trust Company Americas is the transfer agent,
registrar, dividend paying agent and redemption agent with respect to the
Trust's Auction Market Preferred Shares (AMPS). The Trust pays Deutsche Bank
Trust Company Americas an annual fee, as is agreed to from time to time by the
Trust and Deutsche Bank Trust Company Americas, for providing such services.
4. Forward Foreign Currency Contracts
During the six months ended September 30, 2004, the Trust had entered into
contracts that obligate the Trust to deliver currencies at specified future
dates. At the maturity of a contract, the Trust must make delivery of the
foreign currency. Alternatively, prior to the settlement date of the portfolio
hedge, the Trust may close out such contracts by entering into an offsetting
hedge contract.
Open portfolio hedges at September 30, 2004 were as follows:
--------------------------------------------------------------------------------
Net Net
Contracts In Exchange Settlement Unrealized
Currency to Deliver For Date Value Loss
---------- ------------ ------------- ------------ -------------- --------------
EURO 21,900,000 $26,869,110 10/25/04 $27,194,677 $ (325,567)
--------------------------------------------------------------------------------
As of September 30, 2004, the Trust had no outstanding forward currency
settlement contracts.
28
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5. Trust Shares
There are an unlimited number of common shares of beneficial interest
authorized. Of the 26,796,886 common shares of beneficial interest outstanding
at September 30, 2004 PIM owned 6,981 shares.
Transactions in common shares of beneficial interest for the six months ended
September 30, 2004 and the year ended March 31, 2004 were as follows:
--------------------------------------------------------------------------------
9/04 3/04
Shares outstanding at beginning of period 26,768,347 26,674,075
Reinvestment of distributions 28,539 94,272
---------- ----------
Shares outstanding at end of period 26,796,886 26,768,347
========== ==========
--------------------------------------------------------------------------------
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 September 30, 2004, there were 6,040 Auction Market Preferred Shares
("AMPS") as follows: Series M7-2,020, Series W28-2,020 and Series TH7-2,000.
Dividends on Series M7 AMPS and Series TH7 AMPS are cumulative at a rate which
is reset every seven days based on the results of an auction. Dividends on
Series W28 AMPS are also cumulative at a rate reset every 28 days based on the
results of an auction. Dividend rates ranged from 1.03% to 1.94% during the six
months ended September 30, 2004.
The Trust may not declare dividends or make other distributions on its common
shares or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
preferred shares would be less than 200%.
The 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.
29
Pioneer High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 9/30/04 (unaudited) (continued)
--------------------------------------------------------------------------------
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 September 30, 2004 the Board of Trustees of the Trust declared a
dividend from undistributed net investment income of $0.1375 per common share
payable October 29, 2004, to shareowners of record on October 15, 2004.
For the period October 1, 2004 to October 31, 2004, dividends declared on
preferred shares totaled $216,765 in aggregate for the three outstanding
preferred share series.
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.
30
--------------------------------------------------------------------------------
THE PIONEER FAMILY OF MUTUAL FUNDS
--------------------------------------------------------------------------------
Please consider a fund's investment objective, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about a fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, contact your
advisor, call 1-800-225-6292 or visit our web site at www.pioneerfunds.com.
U.S. Equity Asset Allocation
Pioneer Fund Pioneer Ibbotson Moderate
Pioneer Balanced Fund Allocation Fund
Pioneer Equity Income Fund Pioneer Ibbotson Growth
Pioneer Growth Shares Allocation Fund
Pioneer Mid Cap Growth Fund Pioneer Ibbotson Aggressive
Pioneer Mid Cap Value Fund Allocation Fund
Pioneer Oak Ridge Large Cap
Growth Fund International/Global Equity
Pioneer Oak Ridge Small Cap Pioneer Emerging Markets Fund
Growth Fund Pioneer Europe Select Fund
Pioneer Papp America-Pacific Pioneer Europe Fund
Rim Fund Pioneer International Equity Fund
Pioneer Papp Small and Mid Cap Pioneer International Value Fund
Growth Fund
Pioneer Papp Stock Fund Fixed Income
Pioneer Papp Strategic Pioneer America Income Trust
Growth Fund Pioneer Bond Fund
Pioneer Real Estate Shares Pioneer Global High Yield Fund
Pioneer Research Fund* Pioneer High Yield Fund
Pioneer Small Cap Value Fund Pioneer Short Term Income Fund
Pioneer Small Company Fund Pioneer Strategic Income Fund
Pioneer Value Fund Pioneer Tax Free Income Fund
Money Market
Pioneer Cash Reserves Fund**
* Name change effective December 11, 2003. Formerly known as Pioneer Core
Equity Fund.
** An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible
to lose money by investing in the Fund.
31
Pioneer High Income Trust
--------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
--------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
Mary K. Bush Osbert M. Hood, Executive
Richard H. Egdahl, M.D. Vice President
Margaret B.W. Graham Vincent Nave, Treasurer
Osbert M. Hood Dorothy E. Bourassa, Secretary
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
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.
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 6-month period ended September 30, 2004 is publicly available
to shareowners at www.pioneerfunds.com. This information is also available on
the Securities and Exchange Commission's web site at http://www.sec.gov.
32
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HOW TO CONTACT PIONEER
--------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact Mellon
for assistance or information.
You can call Mellon Investor Services LLC for:
Account Information 1-800-288-9541
Telecommunications Device for the Deaf (TDD) 1-800-231-5469
Or write to Mellon Investor Services LLC:
For Write to
General inquiries, lost dividend checks P.O. Box 3315
South Hackensack, NJ
07606-1915
Change of address, account consolidation P.O. Box 3316
South Hackensack, NJ
07606-1916
Lost stock certificates P.O. Box 3317
South Hackensack, NJ
07606-1917
Stock transfer P.O. Box 3312
South Hackensack, NJ
07606-1912
Dividend reinvestment plan (DRIP) P.O. Box 3338
South Hackensack, NJ
07606-1938
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. Shareholders may view the filed Form N-Q by visiting the Commission's
website at 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.
[ Logo Pioneer
Investments]
Pioneer Investment Management, Inc.
60 State Street
Boston, MA 02109
www.pioneerfunds.com
16412-00-1104
(C)2004 Pioneer Funds Distributor, Inc.
Underwriter of Pioneer mutual funds
Member SIPC
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
N/A
(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.
N/A
(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.
N/A
(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.
N/A
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognizes the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognizes that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
----------------------- --------------------------- -----------------------------------------------
------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- -------------------------
------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
----------------------- --------------------------- -----------------------------------------------
--------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
----------------------- ------------------------- -----------------------------------------------
------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
------------------------------------------- ------------------------------
--------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
--------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
N/A
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The Fund's independent auditor, Ernst & Young
LLP ("E&Y"), recently has advised the Securities
and Exchange Commission, the Public Company
Accounting Oversight Board, and the Audit
Committee of the Fund's Board of Trustees that
certain non-audit work performed by E&Y's China
affiliate has raised questions regarding E&Y's
independence with respect to its performance of
audit services for the Fund. In July 2004, E&Y
became aware that member firms in China ("E&Y
China") provided certain tax services to offices of
UniCredito Italiano, S.p.A. ("UCI"), a member of
the Fund's Investment Company Complex. The
services included receipt and disbursement of
monies transferred to E&Y China by UCI in
payment of individual expatriate income taxes due
on returns prepared by E&Y China for certain UCI
employees located in China from October 1998 to
May 2003. E&Y became auditors of the Fund in
May 2002. These expatriate tax services were
discontinued in May 2003. The fees received by
E&Y China for all such services totaled $3,685.
The Fund's Audit Committee and E&Y have
discussed the matter, including the nature of the
services provided, the personnel involved in
providing the services and the fees received by
E&Y for performing the services. The Committee
continues to review the facts and circumstances
surrounding the matter, including the issue of
whether the monies transferred for employees' taxes
were de facto monies due the employees for tax
payments rather than monies belonging to UCI.
E&Y has informed the Audit Committee that based
on its internal reviews and the de minimis nature of
the services provided and fees received, it does not
believe its independence with respect to the Fund
has been impaired.
(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.
N/A
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's 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 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(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 November 29, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date November 29, 2004
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date November 29, 2004
* Print the name and title of each signing officer under his or her signature.