UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22014
Pioneer Diversified High Income Trust
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Terrence J. Cullen, Amundi Pioneer Asset Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: April 30
Date of reporting period: May 1, 2017 through April 30, 2018
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 STOCKHOLDERS.
Pioneer Diversified
High Income Trust
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Annual Report | April 30, 2018
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Ticker Symbol: HNW
[LOGO] Amundi Pioneer
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ASSET MANAGEMENT
visit us: www.amundipioneer.com
Table of Contents
President's Letter 2
Portfolio Management Discussion 4
Portfolio Summary 11
Prices and Distributions 12
Performance Update 13
Schedule of Investments 14
Financial Statements 49
Financial Highlights 53
Notes to Financial Statements 55
Report of Independent Registered Public Accounting Firm 73
Additional Information 75
Trustees, Officers and Service Providers 78
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 1
President's Letter
While 2017 delivered strong positive performance, 2018, thus far, has introduced
market volatility. Equity and fixed-income markets pulled back in the first
quarter of this year, as the Standard & Poor's 500 Index and the Bloomberg
Barclays U.S. Aggregate Bond Index both finished in negative territory,
returning -0.76% and -1.46%, respectively, for the three-month period ended
March 31, 2018. Concerns about the sustainability of the pace of economic
growth, extended equity valuations, and rising interest rates drove a
significant stock market sell-off beginning in late January, approaching
correction levels. The market did recover from its initial slump, but this
year's significant fluctuations have served to remind investors that even the
strongest "bulls" cannot run forever. Within fixed income, rising interest rates
helped drive down returns of most asset classes in the first quarter, though
floating-rate sectors such as bank loans fared well in the rising-rate
environment.
Our view is that the first-quarter pause in the market's near-continuous upward
momentum over the previous 15 months, dating back to the final quarter of 2016,
presents an opportunity for investors to enter the market at healthier valuation
levels. We believe fundamentals are still quite positive, yet also believe that
caution is warranted given that the market remains vulnerable to corrections.
Some areas, such as growth stocks, appear expensive, but we do see opportunity
in value stocks, with prices supported by better corporate earnings due to the
recent tax reforms in the U.S. as well as robust, nominal gross domestic product
(GDP) growth. In fact, GDP growth in the U.S. rose to close to or better than 3%
over the final three quarters of 2017, and GDP growth in the first quarter of
2018 registered at 2.3%.
In the fixed-income markets, we believe investors should consider positioning
their portfolios to defend against rising interest rates, with underweight
positions in U.S. Treasuries. We see more attractive valuations within
structured investment vehicles, such as mortgage-backed securities (MBS) in both
the agency and non-agency residential MBS sectors, as fundamentals within the
U.S. housing market remain positive. We believe that agency MBS, in particular,
offer investors reasonable value.
Since 1928, the foundation of Amundi Pioneer's investment approach has been
active management, which is especially important during periods of market
volatility. We believe investors can benefit from the experience and tenure of
our investment teams who make active and informed decisions across our funds. In
fact, the Pioneer Fund, the third-oldest mutual fund in the U.S., recently
celebrated its 90th birthday. We believe the Fund serves as an important
ambassador of our time-tested value style of investing and our early focus on
understanding the potential benefits of investing in companies with
2 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
sustainable business models. Over its nine decades of existence - a time period
that included a Great Depression, a devastating World War, a long Cold War, and
enormous technological as well as societal changes - the Fund has been
well-served by this investment approach.
As always, and particularly during times of market uncertainty, we encourage you
to work with your financial advisor to develop an overall investment plan that
addresses both your short- and long-term goals, and to implement such a plan in
a disciplined manner.
We greatly appreciate the trust you have placed in us and look forward to
continuing to serve you in the future.
/s/ Lisa M. Jones
Lisa M. Jones
Head of the Americas, President and CEO of U.S.
Amundi Pioneer Asset Management USA, Inc.
April 30, 2018
Any information in this shareowner report regarding market or economic trends or
the factors influencing the Trust's historical or future performance are
statements of opinion as of the date of this report. Past performance is no
guarantee of future results.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 3
Portfolio Management Discussion | 4/30/18
In the following interview, Andrew Feltus, Charles Melchreit, Jonathan Sharkey,
and Chin Liu discuss the factors that affected the performance of Pioneer
Diversified High Income Trust during the 12-month period ended April 30, 2018.
Mr. Feltus, Managing Director, Co-Director of High Yield, and a portfolio
manager at Amundi Pioneer Asset Management, Inc. ("Amundi Pioneer"), Mr.
Melchreit*, Senior Managing Director, Deputy Head of Fixed Income, U.S., and a
portfolio manager at Amundi Pioneer, Mr. Sharkey, a senior vice president and a
portfolio manager at Amundi Pioneer, and Mr. Liu, Senior Vice President,
Director of Insurance-Linked Securities (ILS), and a portfolio manager at Amundi
Pioneer, were responsible for the day-to-day management of the Trust during the
12-month period.
Q How did the Trust perform during the 12 months ended April 30, 2018?
A Pioneer Diversified High Income Trust returned 4.58% at net asset value
(NAV) and -2.82% at market price during the 12-month period ended April
30, 2018. During the same 12-month period, the Trust's composite benchmark
returned 4.79%.
The Trust's composite benchmark is based on equal weights of the ICE Bank
of America Merrill Lynch (ICE BofA ML) Global High Yield and Emerging
Markets Plus (GHY & EMP) Index and the Standard & Poor's/Loan Syndications
& Trading Association (S&P/LSTA) Leveraged Loan Index. Unlike the Trust,
the composite benchmark does not use leverage. While the use of leverage
increases investment opportunity, it also increases investment risk.
During the same period, the average return (at market price) of the 50
closed end funds in Morningstar's High Yield Closed End Bond Funds
Category (which may or may not be leveraged) was 2.16%, and the average
return (at NAV) of the 50 closed end funds in the same Morningstar
category was 4.46%. Meanwhile, the average return (at market price) of the
40 closed end funds in Morningstar's Bank Loan Closed End Funds Category
(which may or may not be leveraged) was 3.07%, and the average return (at
NAV) of the 40 closed end funds in the same Morningstar category was
5.20%.
* NOTE: Charles Melchreit was a portfolio manager of the Trust during the
full 12-month period ended April 30, 2018. Mr. Melchreit departed from
Amundi Pioneer effective June 8, 2018. Effective June 8, 2018, Mr. Feltus,
Mr. Sharkey, Mr. Liu, and Lawrence R. Zeno, a vice president and a
portfolio manager at Amundi Pioneer, are responsible for the day-to-day
management of the Trust.
4 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
The shares of the Trust were selling at a 12.2% discount to NAV at the end
of the period on April 30, 2018. Comparatively, the shares of the Trust
were selling at a 5.5% discount to NAV on April 30, 2017.
As of April 30, 2018, the 30-day SEC yield on the Trust's shares was
8.15%**.
Q How would you describe the investment environment in the global
fixed-income markets during the 12-month period ended April 30, 2018?
A Entering the period, credit-oriented areas of the bond market (bonds
sensitive to credit risk rather than interest-rate risk) continued to be
supported by positive global economic data, accommodative policy stances
by leading overseas central banks, and the U.S. Federal Reserve System's
(the Fed's) well-signaled, incremental approach towards interest-rate
normalization as well as the tapering of its balance sheet.
The U.S. economy posted gross domestic product (GDP) growth in the 3%
range over the last three quarters of 2017, against a backdrop of robust
corporate earnings and arguably full employment. The economies of Europe
and Japan were comfortably in positive territory over that same period,
while China continued to report economic growth in the 7% range.
In October of 2017, the Fed began to taper its reinvestment of maturing
Treasury and mortgage-backed security (MBS) positions. Because the Fed's
plan to taper its balance sheet had been telegraphed well in advance, the
actual launch date created little stir in the markets. U.S. credit-market
sentiment received an additional boost as 2017 drew to a close with the
passage of a tax reform package in the U.S. that included a lowering of
the corporate tax rate and a window during which companies are permitted
to accelerate the expensing of capital investments.
While so-called "risk" markets opened 2018 with a positive tenor,
volatility would soon come to the forefront. In January, U.S. employment
data surprised to the upside, leading the market to revise inflation
expectations higher and raising concerns that the Fed would feel compelled
to accelerate the pace of its rate hikes. While sentiment around inflation
stabilized fairly quickly, the markets received another jolt in March as
the Trump administration announced its intention to impose tariffs on
steel and aluminum as well as on a wide range of imports from China. The
move raised the prospect of a trade war with the potential to undermine
global economic growth, while leading indicators in Europe suggested that
the recovery had peaked in the world's second-largest economic region.
April saw U.S. Treasury yields embark on another upward leg in the wake of
the release of the Fed's March meeting minutes, which pointed toward a
consensus among committee members that U.S. inflation was safely headed
** The 30-day SEC yield is a standardized formula that is based on the
hypothetical annualized earning power (investment income only) of the
Trust's portfolio securities during the period indicated.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 5
toward its target and that there was, perhaps, room to raise the federal
funds rate more rapidly than previously expected. The ongoing climb in
crude oil prices, which broke through the $50 per barrel trading range in
late 2017, fueled additional anxiety about inflation and interest rates,
while also promising to at least partially offset the benefit to consumers
from lower individual tax rates in the U.S. The firming outlook for higher
U.S. interest rates led to a weakening in some of the less fundamentally
sound emerging market bond markets and currencies.
While fixed-income returns in general finished the 12-month period in
negative territory, credit-oriented issues such as U.S. high-yield
corporates, emerging markets corporates, and leveraged bank loans
outperformed higher-quality, more interest-rate-sensitive market segments.
Q What factors affected the Trust's performance during the 12-month period
ended April 30, 2018?
A As with other fixed-income categories, performance for high-yield bonds
was constrained during the period by the rise in Treasury yields. However,
the continued decline in high-yield default rates supported a narrowing in
credit spreads that, combined with coupon income, resulted in a positive
return for the asset class. (Credit spreads are commonly defined as the
differences in yield between Treasuries and other types of fixed-income
securities with similar maturities.)
The Trust's security selection results within high yield added to
performance over the period, with positive contributions led by a pair of
the portfolio's utility holdings: Vistra Energy and NRG Energy. During the
period, Vistra Energy finalized its acquisition of portfolio holding
Dynegy. News of the completed merger boosted the newly combined company's
performance and aided the Trust's returns. NRG benefited from a general
recovery in the utilities sector, which was driven in part by the
relatively volatile market environment that developed over the second half
of the period. Valuation concerns regarding investments in high-growth
market segments - such as information technology - and the potential
income-generating ability of utilities-related investments were among the
factors contributing to the sector's rally. In addition, the Trust's
significant weighting in the energy sector contributed positively to
returns. Among the portfolio's energy holdings, refiner Calumet Specialty
Products and exploration-and-production companies WPX Energy and Halcon
Resources were standout performers over the period. A position in the
euro-denominated debt of drug company Valeant Pharmaceuticals also was a
leading contributor to the Trust's performance, with improved sentiment
driven by management's steps to reduce Valeant's debt burden and move to
6 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
a more sustainable business model. Another positive factor in the Trust's
performance was the rise of the euro relative to the U.S. dollar during
the period, which boosted the return of the portfolio's position.
The Trust's position in leveraged bank loans provided the strongest
absolute returns within the portfolio over the 12 months, even as the
portfolio's underweight to its target loan allocation for the full
reporting cycle acted as a constraint on relative returns. As with U.S.
high-yield corporates, performance for the loan asset class benefited from
a continued low default rate during the period. In addition, loans
received interest from investors who were attracted to the floating-rate
feature of bank loans in a rising-interest-rate environment.
Finally, the portfolio's meaningful short-duration stance relative to the
benchmark supported results, as U.S. Treasury yields moved higher over the
12 months. (Duration is measure of the sensitivity of the price, or the
value of principal, of a fixed-income investment to a change in interest
rates, expressed as a number of years.)
On the downside, the portfolio's exposure to the debt of PetSmart held
back the Trust's results, as investor concerns over competition from
online retailers weighed on the bond price. Exposure to wireline companies
Windstream Communications and Frontier Communications also detracted from
the Trust's performance.
While the Trust's security selection results within the insurance-linked
security (ILS) asset category were positive, the portfolio's overall
exposure to ILS detracted modestly from relative performance for the 12
months. ILS are used by property-and-casualty insurers to help mitigate
some of the risk associated with claims payouts in the event of a major
disaster. Returns for ILS issues suffered in late 2017 in the wake of a
number of catastrophes, including three severe hurricanes which hit the
U.S. mainland and Puerto Rico, two major earthquakes which shook western
Mexico, and California's worst wild fires on record. Those events, all of
which occurred over a relatively short time period, resulted in a 12-year
high in natural-disaster-related damage claims in the global insurance
industry, while costing the industry $110 billion in estimated losses.
While the ILS market rebounded to a degree in early 2018, it nonetheless
lagged the high-yield corporate, emerging markets corporate, and bank loan
segments over the full 12 months.
Investing in ILS has been part of the portfolio's diversification*
strategy since the Trust's inception in May 2007, and the 12 months ended
April 30, 2018, marked the first annual reporting period during which ILS
exposure detracted from the Trust's performance relative to the benchmark.
* Diversification does not assure a profit nor protect against loss.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 7
Q How did the level of leverage in the Trust change over the 12-month period
ended April 30, 2018?
A The Trust employs leverage through a credit agreement. (See Note 8 to the
Financial Statements.)
At the end of the 12-month period on April 30, 2018, 31.0% of the Trust's
total managed assets were financed by leverage, compared with 27.9% of the
Trust's total managed assets financed by leverage at the start of the
period on May 1, 2017. The Trust's leverage ratio rose primarily due to an
increased absolute amount of funds borrowed by the Trust early in the
twelve-month period, and marginally due to the depreciation of the value
of the Trust's holdings.
Q Did the Trust's distributions** to shareholders change during the 12-month
period ended April 30, 2018?
A The Trust's distributions declined during the period as the portfolio's
newer investments in high-yield bonds and bank loans tended to pay yields
that were lower than older investments issued when interest rates were
higher. The Trust has drawn on accumulated net investment income in paying
the Trust's distributions in recent periods, and these reserves may be
depleted over time.
Q Did the Trust invest in any derivative securities during the 12-month
period ended April 30, 2018? If so, did the derivatives have a notable
effect on benchmark-relative performance?
A We invested the portfolio in forward foreign currency contracts during the
period to help manage the risk of the portfolio's exposures to foreign
currencies. The contracts had a small negative impact on the Trust's
benchmark-relative results given the rise in the euro relative to the U.S.
dollar over the 12 months.
Q What is your investment outlook?
A In our view, fundamentals remain supportive of credit-oriented segments of
the market. Economic growth and corporate earnings remain strong,
unemployment is low, wages have been trending modestly higher, and
consumer balance sheets are sound in aggregate. That backdrop is also a
positive for corporate profitability, which should help keep default rates
low.
At the same time, credit-asset valuations are relatively high, as
reflected in meaningfully tight spreads by historical standards. In
addition, after an extended period of seeing risk assets more or less
grind steadily higher, volatility appears to have returned to the markets,
driven in large part by speculation over the pace of the Fed's
interest-rate hikes as well as
** Distributions are not guaranteed.
8 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
geopolitical uncertainty. The markets will be watching closely for any
data - such as accelerating wage growth - that could signal the potential
for higher inflation and thus spur the Fed to increase its benchmark rate
more rapidly than currently anticipated.
Given that backdrop, we are being cautious in adding credit risk to the
Trust's portfolio. In addition, we are maintaining a meaningfully below-
benchmark duration in order to keep the Trust positioned to take advantage
of any rise in market interest rates, or a widening of credit spreads,
that could result in valuation opportunities.
Please refer to the Schedule of Investments on pages 14-48 for a full listing of
Trust securities.
All investments are subject to risk, including the possible loss of principal.
In the past several years, financial markets have experienced increased
volatility, depressed valuations, decreased liquidity and heightened
uncertainty. These conditions may continue, recur, worsen or spread.
Investments in high-yield or lower-rated securities are subject to greater-than-
average risk. The Trust may invest in securities of issuers that are in default
or that are in bankruptcy.
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
When interest rates rise, the prices of debt securities in the Trust will
generally fall. Conversely, when interest rates fall the prices of debt
securities in the Trust generally will rise. Investments in the Trust are
subject to possible loss due to the financial failure of the issuers of the
underlying securities and the issuers' inability to meet their debt obligations.
Interest rates in the U.S. recently have been historically low, so the Trust
faces a heightened risk that interest rates may rise. A general rise in interest
rates could adversely affect the price and liquidity of fixed income securities.
The Trust may invest a significant amount of its total assets in illiquid
securities. Illiquid securities may be difficult to dispose of at a price
reflective of their value at the times when the Trust believes it is desirable
to do so and the market price of illiquid securities is generally more volatile
than that of more liquid securities. Illiquid securities also are more difficult
to value, and investment of the Trust's assets in illiquid securities may
restrict the Trust's ability to take advantage of market opportunities.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 9
The Trust is authorized to borrow from banks and issue debt securities, which
are forms of leverage. Leverage creates significant risks, including the risk
that the Trust's incremental income or capital appreciation for investments
purchased with the proceeds of leverage will not be sufficient to cover the cost
of the leverage, which may adversely affect the return for shareholders.
The Trust is required to maintain certain regulatory and other asset coverage
requirements in connection with its use of leverage. In order to maintain
required asset coverage levels, the Trust may be required to reduce the amount
of leverage employed by the Trust, alter the composition of its investment
portfolio or take other actions at what might be inopportune times in the
market. Such actions could reduce the net earnings or returns to shareowners
over time, which is likely to result in a decrease in the market value of the
Trust's shares.
Certain securities in which the Trust invests, including floating rate loans,
once sold, may not settle for an extended period (for example, several weeks or
even longer). The Trust will not receive its sale proceeds until that time,
which may constrain the Trust's ability to meet its obligations.
Insurance-linked securities may include event-linked bonds (also known as
insurance-linked bonds or catastrophe bonds). The return of principal and the
payment of interest on insurance-linked securities are contingent on the non-
occurrence of a predefined "trigger" event that leads to physical or economic
loss, such as a hurricane or an aerospace catastrophe.
These risks may increase share price volatility.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of opinion as of the date of this report. Past performance is no
guarantee of future results.
10 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
Portfolio Summary | 4/30/18
Portfolio Diversification*
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(As a percentage of total investments)**
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Corporate Bonds & Notes 68.0%
Senior Secured Floating Rate Loan Interests 26.1%
Sovereign Debt Obligations 1.7%
Commercial Mortgage-Backed Securities 1.3%
Convertible Bond & Notes 1.0%
Preferred Stocks 0.8%
Convertible Preferred Stocks 0.5%
Asset Backed Securities 0.4%
Collateralized Mortgage Obligations 0.2%
Common Stocks 0.0%+
Options Purchased 0.0%+
Rights/Warrants 0.0%+
* Includes investments in Insurance-Linked Securities totaling 18.8% of
total investments.
+ Amount rounds to less than 0.1%.
10 Largest Holdings
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(As a percentage of total investments)**
1. Fixed Income Trust Series 2013-A, 0.0%, 10/15/97 (144A) 3.42%
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2. Queen Street X Re, 7.557% (3 Month U.S. Treasury Bill + 575 bps),
6/8/18 (144A) (Cat Bond) 1.00
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3. Hercules LLC, 6.5%, 6/30/29 0.96
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4. SIG Combibloc Holdings SCA, 7.75%, 2/15/23 (144A) 0.86
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5. Berwick Re 2018-1, Variable Rate Notes, 12/31/21 0.74
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6. Uniti Group, Inc. / CSL Capital LLC, 8.25%, 10/15/23 0.73
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7. Light Servicos de Eletricidade SA / Light Energia SA, 7.25%, 5/3/23 (144A) 0.64
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8. MARB BondCo Plc, 6.875%, 1/19/25 (144A) 0.62
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9. Williams Cos., Inc., 5.75%, 6/24/44 0.61
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10. Windstream Services LLC / Windstream Finance Corp., 8.625%, 10/31/25 (144A) 0.60
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** Excludes temporary cash investments and all derivative contracts except
for options purchased. The portfolio is actively managed, and current
holdings may be different. The holdings listed should not be considered
recommendations to buy or sell any security listed.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 11
Prices and Distributions | 4/30/18
Market Value per Share^
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4/30/18 4/30/17
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Market Value $15.00 $16.70
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Premium/(Discount) (12.2)% (5.5)%
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Net Asset Value per Share^
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--------------------------------------------------------------------------------
4/30/18 4/30/17
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Net Asset Value $17.09 $17.68
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Distributions per Share:*
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Net Investment Short-Term Long-Term
Income Capital Gains Capital Gains
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5/1/17 - 4/30/18 $1.2600 $-- $--
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Yields
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4/30/18 4/30/17
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30-Day SEC Yield 8.15% 9.56%
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The data shown above represents past performance, which is no guarantee of
future results.
^ 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. Net asset value and market value are published daily on the
Trust's website at www.amundipioneer.com.
* The amount of distributions made to shareowners during the period was in
excess of the net investment income earned by the Trust during the period.
12 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
Performance Update | 4/30/18
Investment Returns
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The mountain chart on the right shows the change in market value, plus
reinvested dividends and distributions, of a $10,000 investment made in shares
of Pioneer Diversified High Income Trust during the periods shown, compared to
that of the composite (50%/50%) ICE BofA ML GHY & EMP Index and S&P/LSTA
Leveraged Loan Index benchmark.
Average Annual Total Returns
(As of April 30, 2018)
--------------------------------------------------------------------------------
50% ICE
BofA ML
Global High
Yield & EMP
Net Index/50%
Asset S&P/LSTA
Value Market Leveraged
Period (NAV) Price Loan Index
--------------------------------------------------------------------------------
10 years 8.41% 7.78% 6.26%
5 years 5.87 2.07 3.91
1 year 4.58 -2.82 4.79
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[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer Diversified 50% ICE BofA ML GHY & EMP Index/50%
High Income Trust S&P/LSTA Leveraged Loan Index
4/08 $10,000 $10,000
4/09 $ 7,689 $ 8,639
4/10 $13,320 $11,885
4/11 $15,711 $13,095
4/12 $15,923 $13,617
4/13 $19,105 $15,160
4/14 $20,464 $15,919
4/15 $18,848 $16,049
4/16 $18,611 $16,157
4/17 $21,776 $17,521
4/18 $21,162 $18,361
Call 1-800-225-6292 or visit www.amundipioneer.com for the most recent month-end
performance results. Current performance may be lower or higher than the
performance data quoted.
Performance data shown represents past performance. Past performance is no
guarantee of future results. Investment return and market price will fluctuate,
and your shares may trade below NAV due to such factors as interest rate changes
and the perceived credit quality of borrowers.
Total investment return does not reflect broker sales charges or commissions.
All performance is for common shares of the Trust.
Shares of closed-end funds, unlike open-end funds, are not continuously offered.
There is a one-time public offering and, once issued, shares of closed-end funds
are bought and sold in the open market through a stock exchange and frequently
trade at prices lower than their NAV. NAV per share is total assets less total
liabilities, which include preferred shares or borrowings, as applicable,
divided by the number of common shares outstanding.
When NAV is lower than market price, dividends are assumed to be reinvested at
the greater of NAV or 95% of the market price. When NAV is higher, dividends are
assumed to be reinvested at prices obtained through open-market purchases under
the Trust's dividend reinvestment plan.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Trust distributions or the sale of Trust shares.
Had these fees and taxes been reflected, performance would have been lower.
The ICE BofA ML GHY & EMP Index is an unmanaged index that tracks the
performance of the below- and border-line investment-grade global debt markets
denominated in the major developed market currencies. The Index includes
sovereign issuers rated BBB1 and lower along with corporate issues rated BB1 and
lower. There are no restrictions on issuer country of domicile. The S&P/LSTA
Leveraged Loan Index provides broad and comprehensive total return metrics of
the U.S. universe of syndicated term loans.
Index returns are calculated monthly, assume reinvestment of dividends and,
unlike Trust returns, do not reflect any fees, expenses or sales charges. The
indices do not use leverage. It is not possible to invest directly in an index.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 13
Schedule of Investments | 4/30/18
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Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
UNAFFILIATED ISSUERS -- 145.2%
ASSET BACKED SECURITIES -- 0.6% of Net Assets
299,996 Axis Equipment Finance Receivables III LLC,
Series 2015-1A, Class E, 5.27%, 5/20/20 (144A) $ 300,073
500,000 VB-S1 Issuer LLC, Series 2016-1A, Class F, 6.901%,
6/15/46 (144A) 511,497
------------------------------------------------------------------------------------------------------------
TOTAL ASSET BACKED SECURITIES
(Cost $799,908) $ 811,570
------------------------------------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS --
0.3% of Net Assets
38,713 Global Mortgage Securitization, Ltd., Series 2004-A,
Class B1, 5.25%, 11/25/32 (144A) $ 30,303
73,325 Global Mortgage Securitization, Ltd., Series 2005-A,
Class B3, 5.25%, 4/25/32 (144A) 7,605
290,000(a) GMAT Trust, Series 2013-1A, Class M, 5.0%,
11/25/43 (144A) 199,445
155,433(b) GMAT Trust, Series 2015-1A, Class A1, 4.25%,
9/25/20 (144A) 156,476
------------------------------------------------------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $540,574) $ 393,829
------------------------------------------------------------------------------------------------------------
COMMERCIAL MORTGAGE-BACKED SECURITIES --
1.8% of Net Assets
200,000(a) BAMLL Commercial Mortgage Securities Trust,
Series 2016-FR14, Class C, 1.374%, 2/27/48 (144A) $ 183,000
183,323(a) Banc of America Commercial Mortgage Trust,
Series 2007-4, Class D, 6.07%, 2/10/51 (144A) 184,455
109,303(a) Bear Stearns Commercial Mortgage Securities Trust,
Series 2005-PWR7, Class B, 5.214%, 2/11/41 108,907
500,000(a) Citigroup Commercial Mortgage Trust, Series 2014-GC23,
Class E, 3.208%, 7/10/47 (144A) 325,926
500,000(a) COBALT CMBS Commercial Mortgage Trust,
Series 2007-C3, Class C, 6.001%, 5/15/46 352,120
250,000(c) COMM Mortgage Trust, Series 2014-FL5, Class D,
5.897% (1 Month USD LIBOR + 400 bps),
10/15/31 (144A) 237,445
200,000(a) JPMBB Commercial Mortgage Securities Trust,
Series 2013-C17, Class D, 5.044%, 1/15/47 (144A) 187,759
332,031(a) Morgan Stanley Capital I Trust, Series 2007-T25,
Class AJ, 5.574%, 11/12/49 335,245
450,000(a) Wachovia Bank Commercial Mortgage Trust,
Series 2006-C27, Class B, 5.865%, 7/15/45 449,030
250,000 Wells Fargo Commercial Mortgage Trust, Series
2016-BNK1, Class D, 3.0%, 8/15/49 (144A) 197,048
------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES
(Cost $2,663,484) $ 2,560,935
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
14 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
SENIOR SECURED FLOATING RATE
LOAN INTERESTS -- 36.5% of Net Assets*(c)
AUTOMOBILES & COMPONENTS -- 1.3%
Auto Parts & Equipment -- 1.2%
231,475 American Axle & Manufacturing, Inc., Tranche B Term
Loan, 4.15% (LIBOR + 225 bps), 4/6/24 $ 232,849
200,000(d) BBB Industries US Holdings, Inc., First Lien Term B
Loan, 11/3/21 202,500
337,771 Electrical Components International, Inc., Term Loan,
7.052% (LIBOR + 475 bps), 5/28/21 339,037
143,248 TI Group Automotive Systems LLC, Initial US Term Loan,
4.401% (LIBOR + 250 bps), 6/30/22 144,523
771,605 Tower Automotive Holdings USA LLC, Initial Term Loan,
4.688% (LIBOR + 275 bps), 3/7/24 775,785
---------------
$ 1,694,694
------------------------------------------------------------------------------------------------------------
Automobile Manufacturers -- 0.1%
106,796 Federal-Mogul Corp., Tranche C Term Loan, 5.650%
(LIBOR + 375 bps), 4/15/21 $ 108,024
---------------
Total Automobiles & Components $ 1,802,718
------------------------------------------------------------------------------------------------------------
CAPITAL GOODS -- 5.1%
Aerospace & Defense -- 1.3%
987,500^ ADS Tactical, Inc., Term Loan, 9.401%
(LIBOR + 750 bps), 12/31/22 $ 1,007,250
294,710 DAE Aviation Holdings, Inc., Initial Term Loan, 5.65%
(LIBOR + 375 bps), 7/7/22 297,421
322,348 DynCorp International, Inc., Term Loan B2, 7.896%
(LIBOR + 600 bps), 7/7/20 324,228
221,409 Vencore, Inc. (fka SI Organization, Inc.), First Lien Initial
Term Loan, 6.651% (LIBOR + 475 bps), 11/23/19 221,962
---------------
$ 1,850,861
------------------------------------------------------------------------------------------------------------
Building Products -- 0.8%
867,994 Builders FirstSource, Inc., Refinancing Term Loan,
5.302% (LIBOR + 300 bps), 2/29/24 $ 873,961
297,727 Summit Materials LLC, New Term Loan, 4.151%
(LIBOR + 225 bps), 11/21/24 299,867
---------------
$ 1,173,828
------------------------------------------------------------------------------------------------------------
Construction Machinery & Heavy Trucks -- 0.9%
366,260 Clark Equipment Co. (aka Doosan Bobcat, Inc.),
Repriced Term Loan, 4.302% (LIBOR +
200 bps), 5/18/24 $ 367,151
490,625 Commercial Vehicle Group, Inc., Initial Term Loan,
7.901% (LIBOR + 600 bps), 4/12/23 494,305
382,217 Navistar, Inc., Tranche B Term Loan, 5.4% (LIBOR +
350 bps), 11/6/24 385,322
---------------
$ 1,246,778
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 15
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Electrical Components & Equipment -- 0.5%
100,000(d) Pelican Products, Inc., First Lien Term Loan, 5/1/25 $ 100,937
247,423 Pelican Products, Inc., Retired 05/01/2018 First Lien
Term Loan, 5.65% (LIBOR + 325 bps), 4/10/20 248,351
412,306 WireCo WorldGroup, Inc., First Lien Initial Term Loan,
7.484% (LIBOR + 550 bps), 9/29/23 416,429
---------------
$ 765,717
------------------------------------------------------------------------------------------------------------
Industrial Conglomerates -- 0.9%
571,174 DTI Holdco, Inc., Replacement B-1 Term Loan, 6.711%
(LIBOR + 475 bps), 9/29/23 $ 573,940
168,897 Filtration Group Corp., Initial Dollar Term Loan, 5.302%
(LIBOR + 300 bps), 3/29/25 170,657
497,690 Shape Technologies Group, Inc., Initial Term Loan,
4.897% (LIBOR + 300 bps), 4/20/25 499,556
---------------
$ 1,244,153
------------------------------------------------------------------------------------------------------------
Industrial Machinery -- 0.3%
187,156 Blount International, Inc., Refinancing Term Loan,
6.137% (LIBOR + 425 bps), 4/12/23 $ 189,768
167,014 NN, Inc., Tranche B Term Loan, 5.651% (LIBOR +
375 bps), 10/19/22 167,119
---------------
$ 356,887
------------------------------------------------------------------------------------------------------------
Trading Companies & Distributors -- 0.4%
500,000 Beacon Roofing Supply, Inc., Initial Term Loan, 4.128%
(LIBOR + 225 bps), 1/2/25 $ 503,344
105,450 WESCO Distribution, Inc., Tranche B-1 Term Loan,
4.901% (LIBOR + 300 bps), 12/12/19 105,581
---------------
$ 608,925
---------------
Total Capital Goods $ 7,247,149
------------------------------------------------------------------------------------------------------------
COMMERCIAL & PROFESSIONAL SERVICES -- 0.8%
Environmental & Facilities Services -- 0.2%
242,417 Infiltrator Water Technologies LLC, Term B-1 Loan,
5.302% (LIBOR + 300 bps), 5/27/22 $ 244,538
------------------------------------------------------------------------------------------------------------
Security & Alarm Services -- 0.6%
744,375 Constellis Holdings LLC, First Lien Term B Loan,
7.302% (LIBOR + 500 bps), 4/21/24 $ 749,338
125,350 Prime Security Services Borrower LLC, First Lien 2016-2
Refinancing Term B-1 Loan, 4.651% (LIBOR +
275 bps), 5/2/22 126,316
---------------
$ 875,654
---------------
Total Commercial & Professional Services $ 1,120,192
------------------------------------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 0.8%
Home Furnishings -- 0.3%
522,133 Serta Simmons Bedding LLC, Second Lien Initial Term
Loan, 10.331% (LIBOR + 800 bps), 11/8/24 $ 418,577
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
16 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Leisure Products -- 0.5%
348,250 Bass Pro Group LLC, Initial Term Loan, 6.901%
(LIBOR + 500 bps), 9/25/24 $ 350,644
360,038 Bombardier Recreational Products, Inc., Term B Loan,
4.4% (LIBOR + 250 bps), 6/30/23 362,739
---------------
$ 713,383
---------------
Total Consumer Durables & Apparel $ 1,131,960
------------------------------------------------------------------------------------------------------------
CONSUMER SERVICES -- 2.3%
Casinos & Gaming -- 0.5%
164,957 Eldorado Resorts, Inc., Term Loan, 4.18% (LIBOR +
225 bps), 4/17/24 $ 165,936
556,398 Scientific Games International, Inc., Initial Term B-5
Loan, 4.726% (LIBOR + 275 bps), 8/14/24 560,609
---------------
$ 726,545
------------------------------------------------------------------------------------------------------------
Education Services -- 0.8%
731,363 KUEHG Corp. (fka KC MergerSub, Inc.), Term B-2 Loan,
6.052% (LIBOR + 375 bps), 8/12/22 $ 737,876
466,667 Laureate Education, Inc., Series 2024 Term Loan,
5.401% (LIBOR + 350 bps), 4/26/24 470,459
---------------
$ 1,208,335
------------------------------------------------------------------------------------------------------------
Leisure Facilities -- 0.2%
252,150 Fitness International LLC, Term B Loan, 5.55%
(LIBOR + 325 bps), 4/18/25 $ 253,316
------------------------------------------------------------------------------------------------------------
Restaurants -- 0.4%
345,772 1011778 BC Unlimited Liability Co. (New Red
Finance, Inc.) (aka Burger King/Tim Hortons), Term B-3
Loan, 4.151% (LIBOR + 225 bps), 2/16/24 $ 346,817
241,026 Golden Nugget, Inc. (aka Landry's, Inc.), Initial Term
Loan B, 4.648% (LIBOR + 275 bps), 10/4/23 242,344
---------------
$ 589,161
------------------------------------------------------------------------------------------------------------
Specialized Consumer Services -- 0.4%
528,536 Creative Artists Agency LLC, Refinancing Term Loan,
4.897% (LIBOR + 300 bps), 2/15/24 $ 533,491
---------------
Total Consumer Services $ 3,310,848
------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 1.1%
Diversified Capital Markets -- 0.2%
243,750 Freedom Mortgage Corp., Initial Term Loan, 6.648%
(LIBOR + 475 bps), 2/23/22 $ 246,949
------------------------------------------------------------------------------------------------------------
Investment Banking & Brokerage -- 0.2%
175,000 Duff & Phelps Investment Management Co., Initial
Term Loan, 5.552% (LIBOR + 325 bps), 2/13/25 $ 175,525
178,603 LPL Holdings, Inc., Tranche B Term Loan, 4.557%
(LIBOR + 225 bps), 9/23/24 179,570
---------------
$ 355,095
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 17
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Specialized Finance -- 0.7%
200,000 CTC AcquiCo GmbH, Facility B2, 5.243% (LIBOR +
325 bps), 3/7/25 $ 200,000
242,500 DBRS, Ltd., Initial Term Loan, 7.234% (LIBOR +
525 bps), 3/4/22 244,622
496,250 Peraton Corp. (fka MHVC Acquisition Corp.), First Lien
Initial Term Loan, 7.56% (LIBOR + 525 bps), 4/29/24 499,972
---------------
$ 944,594
---------------
Total Diversified Financials $ 1,546,638
------------------------------------------------------------------------------------------------------------
ENERGY -- 1.9%
Oil & Gas Drilling -- 0.4%
250,000 Gavilan Resources LLC, Second Lien Initial Term Loan,
7.897% (LIBOR + 600 bps), 3/1/24 $ 249,218
250,000 Traverse Midstream Partners LLC, Advance Term Loan,
5.85% (LIBOR + 400 bps), 9/27/24 251,680
---------------
$ 500,898
------------------------------------------------------------------------------------------------------------
Oil & Gas Equipment & Services -- 0.1%
280,014 FR Dixie Acquisition Corp., Term Loan, 6.734%
(LIBOR + 475 bps), 12/18/20 $ 121,806
------------------------------------------------------------------------------------------------------------
Oil & Gas Exploration & Production -- 0.6%
250,000 California Resources Corp., Term Loan, 12.273%
(LIBOR + 1,038 bps), 12/31/21 $ 281,250
550,000 Chesapeake Energy Corp., Term Loan, Class A, 9.444%
(LIBOR + 750 bps), 8/23/21 583,344
---------------
$ 864,594
------------------------------------------------------------------------------------------------------------
Oil & Gas Storage & Transportation -- 0.4%
669,643 Gulf Finance LLC, Tranche B Term Loan, 7.56%
(LIBOR + 525 bps), 8/25/23 $ 612,723
------------------------------------------------------------------------------------------------------------
Pipeline -- 0.4%
558,800 Summit Midstream Partners Holdings LLC, Term Loan
Credit Facility, 7.901% (LIBOR + 600 bps), 5/13/22 $ 565,785
---------------
Total Energy $ 2,665,806
------------------------------------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 0.6%
Agricultural Products -- 0.0%+
98,499 NVA Holdings, Inc., First Lien Term B3 Loan, 5.052%
(LIBOR + 275 bps), 2/2/25 $ 99,007
------------------------------------------------------------------------------------------------------------
Packaged Foods & Meats -- 0.6%
462,424 Dole Food Co., Inc., Tranche B Term Loan, 4.648%
(LIBOR + 275 bps/PRIME + 200 bps), 4/6/24 $ 464,695
348,250 Give and Go Prepared Foods Corp. (fka GG Foods
Acquisition Corp.), First Lien 2017 Term Loan, 6.194%
(LIBOR + 425 bps), 7/29/23 350,136
---------------
$ 814,831
---------------
Total Food, Beverage & Tobacco $ 913,838
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
18 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 3.0%
Health Care Facilities -- 0.7%
148,191 CHS/Community Health Systems, Inc., Incremental 2019
Term G Loan, 4.984% (LIBOR + 300 bps), 12/31/19 $ 146,052
441,463 CHS/Community Health Systems, Inc., Incremental 2021
Term H Loan, 5.234% (LIBOR + 325 bps), 1/27/21 428,771
142,217 Envision Healthcare Corp. (fka Emergency Medical
Services Corp.), Initial Term Loan, 4.91% (LIBOR +
300 bps), 12/1/23 143,119
309,696 Kindred Healthcare, Inc., New Term Loan, 5.875%
(LIBOR + 350 bps), 4/9/21 311,094
---------------
$ 1,029,036
------------------------------------------------------------------------------------------------------------
Health Care Services -- 1.2%
247,494 ExamWorks Group, Inc. (fka Gold Merger Co., Inc.),
Term B-1 Loan, 5.151% (LIBOR + 325 bps/PRIME +
225 bps), 7/27/23 $ 249,427
200,000 Genoa Healthcare Co., LLC, Second Lien Initial Term
Loan, 9.901% (LIBOR + 800 bps), 10/28/24 202,750
341,250 HC Group Holdings III, Inc., First Lien Initial Term Loan,
6.901% (LIBOR + 500 bps), 4/7/22 346,369
196,800 National Mentor Holdings, Inc., Tranche B Term Loan,
5.302% (LIBOR + 300 bps), 1/31/21 198,399
197,487 nThrive, Inc. (fka Precyse Acquisition Corp.), Additional
Term B-2 Loan, 6.401% (LIBOR + 450 bps), 10/20/22 198,722
492,500 Prospect Medical Holdings, Inc., Term B-1 Loan, 7.438%
(LIBOR + 550 bps), 2/22/24 494,347
---------------
$ 1,690,014
------------------------------------------------------------------------------------------------------------
Health Care Supplies -- 0.5%
183,613 Kinetic Concepts, Inc., Dollar Term Loan, 5.552%
(LIBOR + 325 bps), 2/2/24 $ 185,076
495,000 Sterigenics-Nordion Holdings LLC, Incremental Term
Loan, 4.901% (LIBOR + 300 bps), 5/15/22 498,326
---------------
$ 683,402
------------------------------------------------------------------------------------------------------------
Health Care Technology -- 0.6%
247,500 Change Healthcare Holdings, Inc. (fka Emdeon, Inc.),
Closing Date Term Loan, 4.651% (LIBOR + 275 bps),
3/1/24 $ 248,757
250,000 Chloe OX Parent LLC, Initial Term Loan, 7.302%
(LIBOR + 500 bps), 12/23/24 252,031
375,258^ Medical Card System, Inc., Term Loan, 2.848%
(LIBOR + 50 bps), 5/31/19 243,918
167,875 Quintiles IMS, Inc., Term B-1 Dollar Loan, 4.302%
(LIBOR + 200 bps), 3/7/24 168,924
---------------
$ 913,630
---------------
Total Health Care Equipment & Services $ 4,316,082
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 19
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
HOUSEHOLD & PERSONAL PRODUCTS -- 1.0%
Cleaning Products -- 0.1%
148,875 Parfums Holding Co., Inc., First Lien Initial Term Loan,
7.052% (LIBOR + 475 bps), 6/30/24 $ 150,689
------------------------------------------------------------------------------------------------------------
Household Products -- 0.5%
348,250 Alphabet Holding Co., Inc. (aka Nature's Bounty),
First Lien Initial Term Loan, 5.401% (LIBOR +
350 bps), 9/26/24 $ 301,599
397,000 WKI Holding Co., Inc., Initial Term Loan, 5.773%
(LIBOR + 400 bps), 5/1/24 398,985
---------------
$ 700,584
------------------------------------------------------------------------------------------------------------
Personal Products -- 0.4%
766,223 Revlon Consumer Products Corp., Initial Term B Loan,
5.401% (LIBOR + 350 bps), 9/7/23 $ 601,126
---------------
Total Household & Personal Products $ 1,452,399
------------------------------------------------------------------------------------------------------------
INSURANCE -- 1.8%
Life & Health Insurance -- 0.4%
488,892 Integro, Inc., First Lien Initial Term Loan, 7.658%
(LIBOR + 575 bps), 10/31/22 $ 488,892
------------------------------------------------------------------------------------------------------------
Multi-Line Insurance -- 0.1%
163,549 Alliant Holdings I LLC, Initial Term Loan, 5.151%
(LIBOR + 325 bps), 8/12/22 $ 164,820
------------------------------------------------------------------------------------------------------------
Property & Casualty Insurance -- 1.3%
300,501 Acrisure LLC, 2017-2 First Lien Refinancing Term Loan,
6.609% (LIBOR + 425 bps), 11/22/23 $ 303,788
593,765 Confie Seguros Holding II Co., Second Lien Term Loan,
11.484% (LIBOR + 950 bps), 5/8/19 579,416
505,770 Confie Seguros Holding II Co., Term B Loan, 7.234%
(LIBOR + 525 bps), 4/19/22 506,718
497,500 USI, Inc. (fka Compass Investors, Inc.), 2017 New Term
Loan, 5.302% (LIBOR + 300 bps), 5/16/24 500,209
---------------
$ 1,890,131
---------------
Total Insurance $ 2,543,843
------------------------------------------------------------------------------------------------------------
MATERIALS -- 5.1%
Construction Materials -- 0.4%
115,500 84 Lumber Co., Term B-1 Loan, 7.147% (LIBOR +
525 bps), 10/25/23 $ 117,160
493,734 American Bath Group LLC, First Lien Replacement
Term Loan, 7.552% (LIBOR + 525 bps), 9/30/23 499,443
---------------
$ 616,603
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
20 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Diversified Chemicals -- 1.3%
310,101 Allnex (Luxembourg) & Cy SCA (fka AI Chem & Cy SCA),
Tranche B-2 Term Loan, 5.206% (LIBOR +
325 bps), 9/13/23 $ 312,427
233,627 Allnex (Luxembourg) & Cy SCA (fka AI Chem & Cy SCA),
Tranche B-3 Term Loan, 5.206% (LIBOR +
325 bps), 9/13/23 235,379
290,751 Chemours Co., Tranche B-2 US Dollar Term Loan,
3.66% (LIBOR + 175 bps), 4/3/25 291,387
366,686 Tata Chemicals North America, Term Loan, 5.063%
(LIBOR + 275 bps), 8/7/20 371,041
128,167 Tronox, Ltd., First Lien Blocked Dollar Term Loan,
5.302% (LIBOR + 300 bps), 9/23/24 129,643
295,770 Tronox, Ltd., First Lien Initial Dollar Term Loan, 5.302%
(LIBOR + 300 bps), 9/23/24 299,177
233,442 Univar USA, Inc., Term B-3 Loan, 4.401% (LIBOR +
250 bps), 7/1/24 235,673
---------------
$ 1,874,727
------------------------------------------------------------------------------------------------------------
Diversified Metals & Mining -- 0.6%
492,500 Global Brass and Copper, Inc., Initial Term Loan,
5.188% (LIBOR + 325 bps), 7/18/23 $ 497,425
300,000(d) US Silica Co., Term Loan B, 4/25/25 303,611
---------------
$ 801,036
------------------------------------------------------------------------------------------------------------
Metal & Glass Containers -- 0.9%
224,628 Coveris Holdings SA (fka Exopack Holdings SA), USD
Term B-1 Loan, 6.552% (LIBOR + 425 bps), 6/29/22 $ 225,751
473,204 Tank Holding Corp. (Roto Acquisition Corp.), Replacement
Term Loan, 5.726% (LIBOR + 350 bps), 3/16/22 477,936
597,000 Twist Beauty International Holdings SA, Facility B2,
5.295% (LIBOR + 300 bps), 4/22/24 600,731
---------------
$ 1,304,418
------------------------------------------------------------------------------------------------------------
Paper Packaging -- 0.4%
513,318 Caraustar Industries, Inc., Refinancing Term Loan,
7.802% (LIBOR + 550 bps), 3/14/22 $ 515,243
------------------------------------------------------------------------------------------------------------
Paper Products -- 0.4%
244,818 Expera Specialty Solutions LLC, Term Loan B, 6.151%
(LIBOR + 425 bps), 11/3/23 $ 247,878
161,060 Ranpak Corp., Second Lien Initial Term Loan, 9.147%
(LIBOR + 725 bps), 10/3/22 163,074
197,455 Ranpak Corp., Tranche B-1 USD Term Loan, 5.15%
(LIBOR + 325 bps), 10/1/21 198,936
---------------
$ 609,888
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 21
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Specialty Chemicals -- 0.8%
267,822 MacDermid, Inc. (Platform Specialty Products Corp.),
Tranche B-6 Term Loan, 4.401% (LIBOR +
250 bps), 6/7/20 $ 269,665
567,277 Omnova Solutions, Inc., Term B-2 Loan, 5.151%
(LIBOR + 325 bps), 8/25/23 574,368
248,128 Unifrax I LLC, Initial Dollar Term Loan, 5.802%
(LIBOR + 350 bps), 4/4/24 250,764
---------------
$ 1,094,797
------------------------------------------------------------------------------------------------------------
Steel -- 0.3%
491,281 Zekelman Industries, Inc. (fka JMC Steel Group, Inc.),
Term Loan, 4.999% (LIBOR + 275 bps), 6/14/21 $ 494,454
---------------
Total Materials $ 7,311,166
------------------------------------------------------------------------------------------------------------
MEDIA -- 2.5%
Advertising -- 0.5%
246,267 CB Poly Investments LLC, First Lien Closing Date Term
Loan, 5.651% (LIBOR + 375 bps), 8/16/23 $ 248,730
497,500 Red Ventures LLC (New Imagitas, Inc.), First Lien Term
Loan, 5.901% (LIBOR + 400 bps), 11/8/24 504,237
---------------
$ 752,967
------------------------------------------------------------------------------------------------------------
Broadcasting -- 0.9%
162,542 A-L Parent LLC (aka Learfield Communications), First
Lien Initial Term Loan, 5.16% (LIBOR + 325 bps),
12/1/23 $ 164,574
198,000 CSC Holdings LLC (fka CSC Holdings, Inc. (Cablevision)),
March 2017 Refinancing Term Loan, 4.147% (LIBOR +
225 bps), 7/17/25 198,223
210,000 Hubbard Radio LLC, Term Loan, 4.91% (LIBOR +
300 bps), 3/28/25 211,609
216,064 MediArena Acquisition BV (fka AP NMT Acquisition BV),
First Lien Dollar Term B Loan, 8.058% (LIBOR +
575 bps), 8/13/21 216,367
447,656 Univision Communications, Inc., First Lien 2017
Replacement Repriced Term Loan, 4.651% (LIBOR +
275 bps), 3/15/24 442,184
---------------
$ 1,232,957
------------------------------------------------------------------------------------------------------------
Publishing -- 1.1%
484,079 DH Publishing LP, Term B-6 Loan, 4.144% (LIBOR +
225 bps), 8/20/23 $ 486,759
244,542 Houghton Mifflin Harcourt Co., Inc., Term Loan, 4.901%
(LIBOR + 300 bps), 5/28/21 227,424
13,244 Lee Enterprises, Inc., First Lien Term Loan, 8.151%
(LIBOR + 625 bps), 3/31/19 13,285
The accompanying notes are an integral part of these financial statements.
22 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Publishing -- (continued)
908,739 McGraw-Hill Global Education Holdings LLC, First Lien
Term B Loan, 5.901% (LIBOR + 400 bps), 5/4/22 $ 892,431
---------------
$ 1,619,899
---------------
Total Media $ 3,605,823
------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS, BIOTECHNOLOGY &
LIFE SCIENCES -- 0.8%
Life Sciences Tools & Services -- 0.3%
362,577 Catalent Pharma Solutions, Inc. (fka Cardinal
Health 409, Inc.), Dollar Term Loan, 4.151% (LIBOR +
225 bps), 5/20/24 $ 364,793
------------------------------------------------------------------------------------------------------------
Pharmaceuticals -- 0.5%
495,000 Horizon Pharma, Inc., Third Amendment Refinanced Term
Loan, 5.188% (LIBOR + 325 bps), 3/29/24 $ 508,613
246,722 VRX Escrow Corp., Series F-4 Tranche B Term Loan,
5.394% (LIBOR + 350 bps), 4/1/22 249,764
---------------
$ 758,377
---------------
Total Pharmaceuticals, Biotechnology & Life Sciences $ 1,123,170
------------------------------------------------------------------------------------------------------------
REAL ESTATE -- 0.3%
Specialized REIT -- 0.3%
488,803 Communications Sales & Leasing, Inc. (CSL Capital
LLC), Shortfall Term Loan, 4.901% (LIBOR +
300 bps), 10/24/22 $ 473,281
---------------
Total Real Estate $ 473,281
------------------------------------------------------------------------------------------------------------
RETAILING -- 0.8%
Automotive Retail -- 0.4%
630,628 CWGS Group LLC, Term Loan, 4.641% (LIBOR +
275/300 bps), 11/23/23 $ 634,963
------------------------------------------------------------------------------------------------------------
Department Stores -- 0.3%
497,403 Neiman Marcus Group, Ltd., LLC, Other Term Loan,
5.141% (LIBOR + 325 bps), 10/25/20 $ 438,780
------------------------------------------------------------------------------------------------------------
Specialty Stores -- 0.1%
153,729 PetSmart, Inc., Tranche B-2 Term Loan, 4.89%
(LIBOR + 300 bps), 3/11/22 $ 120,806
---------------
Total Retailing $ 1,194,549
------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 0.5%
Semiconductors -- 0.5%
492,452 MACOM Technology Solutions Holdings, Inc.
(fka M/A-COM Technology Solutions Holdings, Inc.),
Initial Term Loan, 4.151% (LIBOR + 225 bps), 5/17/24 $ 485,373
247,481 Micron Technology, Inc., Term Loan, 3.66% (LIBOR +
175 bps), 4/26/22 249,570
---------------
Total Semiconductors & Semiconductor Equipment $ 734,943
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 23
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 2.2%
Application Software -- 0.3%
500,000 STG-Fairway Acquisitions, Inc., First Lien Term Loan,
7.151% (LIBOR + 525 bps), 6/30/22 $ 500,625
------------------------------------------------------------------------------------------------------------
Data Processing & Outsourced Services -- 0.2%
230,733 First Data Corp., 2024A New Dollar Term Loan, 4.147%
(LIBOR + 225 bps), 4/26/24 $ 231,832
------------------------------------------------------------------------------------------------------------
Internet Software & Services -- 0.2%
234,686 Avast Holding BV, Refinancing Dollar Term Loan,
5.052% (LIBOR + 275 bps), 9/30/23 $ 236,391
------------------------------------------------------------------------------------------------------------
IT Consulting & Other Services -- 1.2%
346,999 Go Daddy Operating Co., LLC (GD Finance Co., Inc.),
Tranche B-1 Term Loan, 4.151% (LIBOR + 225 bps),
2/15/24 $ 348,927
247,505 Rackspace Hosting, Inc., First Lien Initial Term B Loan,
4.787% (LIBOR + 300 bps), 11/3/23 247,230
300,000 Rocket Software, Inc., Second Lien Term Loan,
11.802% (LIBOR + 950 bps), 10/14/24 304,250
609,375 Sitel Worldwide Corp., First Lien Term B-1 Loan,
7.875% (LIBOR + 550 bps), 9/18/21 613,945
248,125 Tempo Acquisition LLC, Initial Term Loan, 4.901%
(LIBOR + 300 bps), 5/1/24 249,769
---------------
$ 1,764,121
------------------------------------------------------------------------------------------------------------
Systems Software -- 0.3%
51,870 MA FinanceCo., LLC (aka Micro Focus International Plc),
Tranche B-3 Term Loan, 4.651% (LIBOR + 275 bps),
6/21/24 $ 51,546
347,130 Seattle Spinco, Inc. (aka Micro Focus International Plc),
Initial Term Loan, 4.651% (LIBOR + 275 bps), 6/21/24 345,394
---------------
$ 396,940
---------------
Total Software & Services $ 3,129,909
------------------------------------------------------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 0.8%
Communications Equipment -- 0.4%
623,438 Avaya, Inc., Initial Term Loan, 6.647% (LIBOR +
475 bps), 12/15/24 $ 631,231
------------------------------------------------------------------------------------------------------------
Electronic Components -- 0.4%
545,180 Mirion Technologies (Finance) LLC (Mirion
Technologies, Inc.), First Lien Initial Term Loan, 7.052%
(LIBOR + 475 bps), 3/31/22 $ 544,668
---------------
Total Technology Hardware & Equipment $ 1,175,899
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
24 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 1.3%
Integrated Telecommunication Services -- 0.9%
748,125 CenturyLink, Inc., Initial Term B Loan, 4.651% (LIBOR +
275 bps), 1/31/25 $ 738,071
486,811 Level 3 Financing, Inc., Tranche B 2024 Term Loan,
4.148% (LIBOR + 225 bps), 2/22/24 489,202
---------------
$ 1,227,273
------------------------------------------------------------------------------------------------------------
Wireless Telecommunication Services -- 0.4%
199,000 Digicel International Finance, Ltd., First Lien Initial Term B
Loan, 5.61% (LIBOR + 325 bps), 5/27/24 $ 199,125
346,500 Sprint Communications, Inc., Initial Term Loan, 4.438%
(LIBOR + 250 bps), 2/2/24 347,799
---------------
$ 546,924
---------------
Total Telecommunication Services $ 1,774,197
------------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 1.1%
Marine -- 0.6%
559,916 Commercial Barge Line Co., Initial Term Loan, 10.651%
(LIBOR + 875 bps), 11/12/20 $ 330,141
475,000 Navios Maritime Partners LP, Initial Term Loan, 7.08%
(LIBOR + 500 bps), 9/14/20 477,969
---------------
$ 808,110
------------------------------------------------------------------------------------------------------------
Trucking -- 0.5%
684,029 YRC Worldwide, Inc., Tranche B-1 Term Loan, 10.401%
(LIBOR + 850 bps), 7/26/22 $ 691,082
---------------
Total Transportation $ 1,499,192
------------------------------------------------------------------------------------------------------------
UTILITIES -- 1.4%
Electric Utilities -- 0.7%
508,651 APLP Holdings, Ltd., Partnership, Term Loan, 4.901%
(LIBOR + 300 bps), 4/13/23 $ 514,215
484,610 TPF II Power LLC (TPF II Convert Midco LLC), Term Loan,
5.651% (LIBOR + 375 bps), 10/2/23 486,580
---------------
$ 1,000,795
------------------------------------------------------------------------------------------------------------
Independent Power Producers & Energy Traders -- 0.7%
453,786 Dynegy, Inc., Tranche C-2 Term Loan, 4.398% (LIBOR +
250 bps), 2/7/24 $ 457,370
530,000 TerraForm AP Acquisition Holdings LLC, Term Loan,
6.552% (LIBOR + 425 bps), 6/27/22 533,975
---------------
$ 991,345
---------------
Total Utilities $ 1,992,140
------------------------------------------------------------------------------------------------------------
TOTAL SENIOR SECURED FLOATING RATE
LOAN INTERESTS
(Cost $52,251,862) $ 52,065,742
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 25
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
CORPORATE BONDS --
95.3% of Net Assets
AUTOMOBILES & COMPONENTS -- 0.8%
Auto Parts & Equipment -- 0.8%
EUR 165,000(e) IHO Verwaltungs GmbH, 3.25% (4.0% PIK 0.0% cash),
9/15/23 (144A) $ 205,542
EUR 395,000(e) IHO Verwaltungs GmbH, 3.75% (4.5% PIK 0.0% cash),
9/15/26 (144A) 501,059
454,000 International Automotive Components Group SA,
9.125%, 6/1/18 (144A) 455,816
---------------
Total Automobiles & Components $ 1,162,417
------------------------------------------------------------------------------------------------------------
BANKS -- 4.5%
Diversified Banks -- 3.6%
200,000 Access Bank Plc, 10.5%, 10/19/21 (144A) $ 222,936
300,000(a) Banco de Galicia y Buenos Aires, 8.25% (5 Year CMT
Index + 716 bps), 7/19/26 (144A) 322,410
200,000(a)(f) Banco Santander SA, 6.375% (5 Year USD Swap
Rate + 479 bps) 202,677
950,000(a)(f) BNP Paribas SA, 7.625% (5 Year USD Swap
Rate + 631 bps) (144A) 1,023,387
240,000(a)(f) Goldman Sachs Capital II, 4.0% (3 Month USD
LIBOR + 77 bps) 204,480
350,000(a)(f) ING Groep NV, 6.5% (5 Year USD Swap Rate + 445 bps) 360,255
225,000(a)(f) Intesa Sanpaolo S.p.A., 7.7% (5 Year USD Swap
Rate + 546 bps) (144A) 237,937
250,000(a)(f) Royal Bank of Scotland Group Plc, 8.0% (5 Year
USD Swap Rate + 572 bps) 273,438
400,000(a)(f) Royal Bank of Scotland Group Plc, 8.625% (5 Year
USD Swap Rate + 760 bps) 438,000
200,000 Sberbank of Russia Via SB Capital SA, 5.25%,
5/23/23 (144A) 198,500
460,000(a)(f) Societe Generale SA, 7.375% (5 Year USD Swap
Rate + 624 bps) (144A) 487,600
344,000(a) Turkiye Vakiflar Bankasi TAO, 8.0% (5 Year USD Swap
Rate + 585 bps), 11/1/27 (144A) 349,880
750,000 UBS AG, 7.625%, 8/17/22 842,775
---------------
$ 5,164,275
------------------------------------------------------------------------------------------------------------
Thrifts & Mortgage Finance -- 0.9%
880,000 Financiera Independencia SAB de CV SOFOM ENR,
8.0%, 7/19/24 (144A) $ 855,800
450,000 Vnesheconombank Via VEB Finance Plc, 6.902%,
7/9/20 (144A) 467,168
---------------
$ 1,322,968
---------------
Total Banks $ 6,487,243
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
26 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
CAPITAL GOODS -- 1.1%
Agricultural & Farm Machinery -- 0.4%
505,000 Titan International, Inc., 6.5%, 11/30/23 (144A) $ 512,575
------------------------------------------------------------------------------------------------------------
Construction & Engineering -- 0.3%
455,000 Tutor Perini Corp., 6.875%, 5/1/25 (144A) $ 466,238
------------------------------------------------------------------------------------------------------------
Industrial Conglomerates -- 0.4%
490,000 APTIM Corp., 7.75%, 6/15/25 (144A) $ 427,525
126,169(e) Boart Longyear Management Pty, Ltd., 10.0%
(12.0% PIK 10.0% cash), 12/31/22 123,961
5,000 Park-Ohio Industries, Inc., 6.625%, 4/15/27 5,188
---------------
$ 556,674
---------------
Total Capital Goods $ 1,535,487
------------------------------------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 2.0%
Homebuilding -- 0.8%
135,000 Beazer Homes USA, Inc., 8.75%, 3/15/22 $ 145,327
350,000 Brookfield Residential Properties, Inc., 6.375%,
5/15/25 (144A) 354,812
250,000 KB Home, 7.0%, 12/15/21 265,313
340,000 KB Home, 7.625%, 5/15/23 373,575
---------------
$ 1,139,027
------------------------------------------------------------------------------------------------------------
Leisure Products -- 0.5%
560,000 PetSmart, Inc., 5.875%, 6/1/25 (144A) $ 401,800
539,000 PetSmart, Inc., 7.125%, 3/15/23 (144A) 312,620
---------------
$ 714,420
------------------------------------------------------------------------------------------------------------
Textiles -- 0.7%
655,000 Grupo Kaltex SA de CV, 8.875%, 4/11/22 (144A) $ 569,850
460,000 Springs Industries, Inc., 6.25%, 6/1/21 466,325
---------------
$ 1,036,175
---------------
Total Consumer Durables & Apparel $ 2,889,622
------------------------------------------------------------------------------------------------------------
CONSUMER SERVICES -- 3.5%
Casinos & Gaming -- 1.8%
EUR 750,000 Intralot Capital Luxembourg SA, 6.75%, 9/15/21 (144A) $ 950,283
365,000 MGM Resorts International, 6.0%, 3/15/23 381,881
100,000 Scientific Games International, Inc., 6.25%, 9/1/20 100,125
1,050,000 Scientific Games International, Inc., 10.0%, 12/1/22 1,131,690
---------------
$ 2,563,979
------------------------------------------------------------------------------------------------------------
Hotels, Resorts & Cruise Lines -- 0.8%
320,000 Hilton Grand Vacations Borrower LLC / Hilton Grand
Vacations Borrower, Inc., 6.125%, 12/1/24 $ 338,432
250,000 Silversea Cruise Finance, Ltd., 7.25%, 2/1/25 (144A) 264,450
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 27
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Hotels, Resorts & Cruise Lines -- (continued)
366,000 Viking Cruises, Ltd., 5.875%, 9/15/27 (144A) $ 353,190
245,000 Viking Cruises, Ltd., 6.25%, 5/15/25 (144A) 246,225
---------------
$ 1,202,297
------------------------------------------------------------------------------------------------------------
Restaurants -- 0.4%
495,000 Golden Nugget, Inc., 6.75%, 10/15/24 (144A) $ 502,425
------------------------------------------------------------------------------------------------------------
Specialized Consumer Services -- 0.5%
160,000 Monitronics International, Inc., 9.125%, 4/1/20 $ 113,440
540,000 StoneMor Partners LP / Cornerstone Family Services WV,
7.875%, 6/1/21 533,250
---------------
$ 646,690
---------------
Total Consumer Services $ 4,915,391
------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 8.4%
Consumer Finance -- 1.0%
600,000 Credito Real SAB de CV SOFOM ER, 7.25%,
7/20/23 (144A) $ 617,280
445,000 Jefferies Finance LLC / JFIN Co-Issuer Corp., 7.375%,
4/1/20 (144A) 448,894
440,000 TMX Finance LLC / TitleMax Finance Corp., 8.5%,
9/15/18 (144A) 418,968
---------------
$ 1,485,142
------------------------------------------------------------------------------------------------------------
Diversified Capital Markets -- 1.3%
480,000 Freedom Mortgage Corp., 8.125%, 11/15/24 (144A) $ 480,000
710,000 Freedom Mortgage Corp., 8.25%, 4/15/25 (144A) 710,000
615,000 Oxford Finance LLC / Oxford Finance Co-Issuer II, Inc.,
6.375%, 12/15/22 (144A) 627,300
---------------
$ 1,817,300
------------------------------------------------------------------------------------------------------------
Other Diversified Financial Services -- 4.8%
6,000,000^(b) Fixed Income Trust Series 2013-A, 0.0%,
10/15/97 (144A) $ 6,816,404
------------------------------------------------------------------------------------------------------------
Specialized Finance -- 0.5%
175,000 Nationstar Mortgage LLC / Nationstar Capital Corp.,
6.5%, 7/1/21 $ 177,187
580,000 Nationstar Mortgage LLC / Nationstar Capital Corp.,
6.5%, 6/1/22 595,950
---------------
$ 773,137
------------------------------------------------------------------------------------------------------------
Supranational -- 0.8%
200,000 Banque Ouest Africaine de Developpement, 5.0%,
7/27/27 (144A) $ 196,300
680,000 Banque Ouest Africaine de Developpement, 5.5%,
5/6/21 (144A) 699,550
IDR 2,730,000,000 European Investment Bank, 7.2%, 7/9/19 (144A) 196,813
---------------
$ 1,092,663
---------------
Total Diversified Financials $ 11,984,646
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
28 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
ENERGY -- 17.2%
Integrated Oil & Gas -- 3.0%
145,000 Ascent Resources Utica Holdings LLC / ARU Finance
Corp., 10.0%, 4/1/22 (144A) $ 155,875
950,000 Indigo Natural Resources LLC, 6.875%, 2/15/26 (144A) 912,000
410,000 Petrobras Global Finance BV, 6.25%, 3/17/24 431,320
650,000 Petrobras Global Finance BV, 7.375%, 1/17/27 697,125
390,000 Petroleum Co. of Trinidad & Tobago, Ltd., 9.75%,
8/14/19 (144A) 410,475
995,000 YPF SA, 6.95%, 7/21/27 (144A) 978,831
325,000 YPF SA, 8.875%, 12/19/18 (144A) 334,344
ARS 7,750,000 YPF SA, 16.5%, 5/9/22 (144A) 350,164
---------------
$ 4,270,134
------------------------------------------------------------------------------------------------------------
Oil & Gas Drilling -- 1.0%
225,000 Ensco Plc, 7.75%, 2/1/26 $ 212,063
600,000 Precision Drilling Corp., 7.125%, 1/15/26 (144A) 606,000
375,000 Shelf Drilling Holdings, Ltd., 8.25%, 2/15/25 (144A) 380,625
120,000 Transocean, Inc., 7.5%, 1/15/26 (144A) 121,200
160,000 Trinidad Drilling, Ltd., 6.625%, 2/15/25 (144A) 153,400
---------------
$ 1,473,288
------------------------------------------------------------------------------------------------------------
Oil & Gas Equipment & Services -- 1.6%
540,000 Archrock Partners LP / Archrock Partners Finance Corp.,
6.0%, 10/1/22 $ 540,000
383,000 Calfrac Holdings LP, 7.5%, 12/1/20 (144A) 379,170
750,000 KCA Deutag UK Finance Plc, 9.625%, 4/1/23 (144A) 772,500
425,000 McDermott International, Inc., 8.0%, 5/1/21 (144A) 433,500
170,000 SESI LLC, 7.75%, 9/15/24 (144A) 175,950
---------------
$ 2,301,120
------------------------------------------------------------------------------------------------------------
Oil & Gas Exploration & Production -- 6.2%
300,000 Alta Mesa Holdings LP / Alta Mesa Finance Services
Corp., 7.875%, 12/15/24 $ 310,500
795,000 Covey Park Energy LLC / Covey Park Finance Corp.,
7.5%, 5/15/25 (144A) 798,975
410,000 Great Western Petroleum LLC / Great Western Finance
Corp., 9.0%, 9/30/21 (144A) 422,300
740,000 Gulfport Energy Corp., 6.0%, 10/15/24 703,000
450,000 Gulfport Energy Corp., 6.375%, 5/15/25 431,861
335,000 Halcon Resources Corp., 6.75%, 2/15/25 (144A) 332,906
67,000 Halcon Resources Corp., 6.75%, 2/15/25 66,916
420,000 MEG Energy Corp., 6.5%, 1/15/25 (144A) 420,084
1,045,000 Nostrum Oil & Gas Finance BV, 8.0%, 7/25/22 (144A) 1,063,442
450,000 Novatek OAO via Novatek Finance, DAC, 4.422%,
12/13/22 (144A) 440,267
390,000 Oasis Petroleum, Inc., 6.875%, 3/15/22 401,700
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 29
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Oil & Gas Exploration & Production -- (continued)
571,627(e) PetroQuest Energy, Inc., 10.0% (9.0% PIK
1.0% cash), 2/15/21 $ 448,727
400,000 Resolute Energy Corp., 8.5%, 5/1/20 (144A) 400,000
225,000 Sanchez Energy Corp., 7.25%, 2/15/23 (144A) 227,250
870,000 Sanchez Energy Corp., 7.75%, 6/15/21 806,925
707,000 SEPLAT Petroleum Development Co. Plc, 9.25%,
4/1/23 (144A) 715,979
480,000 Whiting Petroleum Corp., 5.75%, 3/15/21 491,400
100,000 Whiting Petroleum Corp., 6.625%, 1/15/26 (144A) 102,500
150,000 WPX Energy, Inc., 8.25%, 8/1/23 170,250
---------------
$ 8,754,982
------------------------------------------------------------------------------------------------------------
Oil & Gas Refining & Marketing -- 0.6%
669,000 Calumet Specialty Products Partners LP / Calumet
Finance Corp., 6.5%, 4/15/21 $ 660,637
200,000 PBF Holding Co., LLC / PBF Finance Corp.,
7.0%, 11/15/23 206,500
---------------
$ 867,137
------------------------------------------------------------------------------------------------------------
Oil & Gas Storage & Transportation -- 4.8%
220,000 Blue Racer Midstream LLC / Blue Racer Finance Corp.,
6.125%, 11/15/22 (144A) $ 225,500
200,000 Cheniere Corpus Christi Holdings LLC, 7.0%, 6/30/24 218,752
230,000 DCP Midstream Operating LP, 5.6%, 4/1/44 225,400
555,000 Delek Logistics Partners LP, 6.75%, 5/15/25 (144A) 550,838
450,000(c) Energy Transfer Partners LP, 5.376% (3 Month USD
LIBOR + 302 bps), 11/1/66 391,500
118,000 EnLink Midstream Partners LP, 5.05%, 4/1/45 106,958
344,000 EnLink Midstream Partners LP, 5.6%, 4/1/44 335,811
950,000 Genesis Energy LP / Genesis Energy Finance Corp.,
6.75%, 8/1/22 964,250
480,000 Global Partners LP / GLP Finance Corp., 7.0%, 6/15/23 484,800
585,000 Hess Infrastructure Partners LP / Hess Infrastructure
Partners Finance Corp., 5.625%, 2/15/26 (144A) 590,850
765,000 PBF Logistics LP / PBF Logistics Finance Corp.,
6.875%, 5/15/23 (144A) 772,650
170,000 PBF Logistics LP / PBF Logistics Finance Corp.,
6.875%, 5/15/23 171,700
600,000 TransMontaigne Partners LP / TLP Finance Corp.,
6.125%, 2/15/26 597,000
1,175,000 Williams Cos., Inc., 5.75%, 6/24/44 1,224,938
---------------
$ 6,860,947
---------------
Total Energy $ 24,527,608
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
30 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING -- 0.3%
Food Retail -- 0.3%
200,000 C&S Group Enterprises LLC, 5.375%, 7/15/22 (144A) $ 188,000
169,849(g) Tonon Luxembourg SA, 10.5%, 5/14/24 (144A) 69,650
260,000 Tops Holding LLC / Tops Markets II Corp., 8.0%,
6/15/22 (144A) 122,200
---------------
Total Food & Staples Retailing $ 379,850
------------------------------------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 4.6%
Agricultural Products -- 0.3%
444,769 Pinnacle Operating Corp., 9.0%, 5/15/23 (144A) $ 411,411
------------------------------------------------------------------------------------------------------------
Packaged Foods & Meats -- 3.7%
655,000 JBS Investments GmbH, 7.25%, 4/3/24 (144A) $ 645,797
1,317,000 MARB BondCo Plc, 6.875%, 1/19/25 (144A) 1,237,980
975,000 Marfrig Holdings Europe BV, 8.0%, 6/8/23 (144A) 985,969
700,000 Marfrig Holdings Europe BV, 11.25%, 9/20/21 (144A) 719,250
580,000 Minerva Luxembourg SA, 6.5%, 9/20/26 (144A) 548,100
600,000 Pesquera Exalmar SAA, 7.375%, 1/31/20 (144A) 594,000
EUR 411,000 Picard Bonco, 5.5%, 11/30/24 (144A) 488,903
---------------
$ 5,219,999
------------------------------------------------------------------------------------------------------------
Tobacco -- 0.6%
160,000 Alliance One International, Inc., 8.5%, 4/15/21 (144A) $ 165,200
800,000 Alliance One International, Inc., 9.875%, 7/15/21 758,000
---------------
$ 923,200
---------------
Total Food, Beverage & Tobacco $ 6,554,610
------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 1.8%
Health Care Facilities -- 1.5%
700,000 Kindred Healthcare, Inc., 6.375%, 4/15/22 $ 718,375
810,000 RegionalCare Hospital Partners Holdings, Inc.,
8.25%, 5/1/23 (144A) 850,257
455,000 Team Health Holdings, Inc., 6.375%, 2/1/25 (144A) 395,850
167,000 Universal Hospital Services, Inc., 7.625%, 8/15/20 168,252
---------------
$ 2,132,734
------------------------------------------------------------------------------------------------------------
Health Care Services -- 0.3%
425,000 BioScrip, Inc., 8.875%, 2/15/21 $ 408,000
---------------
Total Health Care Equipment & Services $ 2,540,734
------------------------------------------------------------------------------------------------------------
INSURANCE -- 26.4%
Reinsurance -- 26.4%
500,000+(h)(i) Ailsa Re 2017, Variable Rate Notes, 6/15/18 $ 499,600
500,000(c) Alamo Re, 5.47% (3 Month U.S. Treasury Bill + 375 bps),
6/8/20 (144A) (Cat Bond) 508,350
500,000(c) Aozora Re, 4.484% (6 Month USD LIBOR + 220 bps),
4/7/20 (144A) (Cat Bond) 504,100
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 31
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Reinsurance -- (continued)
1,460,307+(h)(i) Berwick Re 2018-1, Variable Rate Notes, 12/31/21 $ 1,484,548
400,000+(h)(i) Blue Lotus Re 2018, Variable Rate Notes, 12/31/21 415,160
750,000(c) Bosphorus Re, 4.761% (6 Month USD LIBOR +
325 bps), 8/17/18 (144A) (Cat Bond) 753,450
250,000+(h)(i) Brotherhood Mutual Insurance, Variable Rate
Notes, 12/31/20 261,000
400,000(c) Caelus Re V, Series C, 8.307% (3 Month U.S. Treasury
Bill + 650 bps), 6/5/20 (144A) (Cat Bond) 9,120
375,000(c) Caelus Re V, 11.057% (3 Month U.S. Treasury Bill +
925 bps), 6/5/20 (144A) (Cat Bond) 5,550
800,000+(h)(i) Carnoustie Re 2015, Variable Rate Notes, 7/1/18 16,320
1,000,000+(h)(i) Carnoustie Re 2016, Variable Rate Notes, 11/30/20 108,200
1,000,000+(h)(i) Carnoustie Re 2017, Variable Rate Notes, 11/30/21 301,400
250,000+(h)(i) Carnoustie Re 2018, Variable Rate Notes, 12/31/21 255,200
400,000+(h)(i) Castle Stuart Re 2018, Variable Rate Notes, 12/1/21 402,480
750,000(c) Citrus Re, 9.547% (3 Month U.S. Treasury Bill +
774 bps), 2/25/19 (144A) (Cat Bond) 750,750
500,000+(h)(i) Clarendon Re 2018, Variable Rate Notes, 1/15/19 439,100
750,000(c) Cranberry Re, 4.073% (6 Month USD LIBOR +
200 bps), 7/13/20 (144A) (Cat Bond) 757,500
500,000+(h)(i) Cypress Re 2018, Variable Rate Notes, 1/15/19 471,850
650,000+(h)(i) Cyprus Re 2017, Variable Rate Notes, 1/10/19 297,440
250,000+(h)(i) Darmouth Re 2018, Variable Rate Notes, 1/15/19 204,225
400,000+(h)(i) Denning Re 2017, Variable Rate Notes, 7/13/18 399,880
250,000+(h)(i) Eden Re II, Variable Rate Notes, 3/22/21 (144A) 176,050
750,000+(h)(i) Eden Re II, Variable Rate Notes, 3/22/22 (144A) 772,200
250,000+(h)(i) Eden Re II, Variable Rate Notes, 3/22/22 (144A) 257,400
250,000(c) Galilei Re, 9.948% (6 Month USD LIBOR + 841 bps),
1/8/21 (144A) (Cat Bond) 251,625
250,000(c) Galilei Re, 15.398% (6 Month USD LIBOR + 1,388 bps),
1/8/20 (144A) (Cat Bond) 247,225
250,000(c) Galilei Re, 15.418% (6 Month USD LIBOR +
1,388 bps), 1/8/21 (144A) (Cat Bond) 249,425
500,000(c) Galileo Re, 9.109% (3 Month USD LIBOR + 750 bps),
11/6/20 (144A) (Cat Bond) 502,900
250,000(c) Galileo Re, 10.747% (3 Month U.S. Treasury Bill +
894 bps), 1/8/19 (144A) (Cat Bond) 248,400
250,000(c) Galileo Re, 15.317% (3 Month U.S. Treasury Bill +
1,351 bps), 1/8/19 (144A) (Cat Bond) 250,725
2,400,000+(h)(i) Gleneagles Re 2016, Variable Rate Notes, 11/30/20 281,280
1,500,000+(h)(i) Gleneagles Re 2017, Variable Rate Notes, 11/30/21 1,066,650
250,000+(h)(i) Gleneagles Re 2018, Variable Rate Notes, 12/31/21 257,300
300,000+(h)(i) Gloucester Re 2018, Variable Rate Notes, 1/15/19 218,880
1,000,000+(h)(i) Gullane Re 2018, Variable Rate Notes, 12/31/21 975,900
The accompanying notes are an integral part of these financial statements.
32 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Reinsurance -- (continued)
1,000,000+(h)(i) Harambee Re 2018, Variable Rate Notes, 12/31/21 $ 1,003,900
750,000(c) Integrity Re, 5.322% (6 Month USD LIBOR + 325 bps),
6/10/20 (144A) (Cat Bond) 747,825
500,000(c) Integrity Re, 6.072% (6 Month USD LIBOR + 400 bps),
6/10/20 (144A) (Cat Bond) 499,450
250,000(c) International Bank for Reconstruction & Development,
7.626% (6 Month USD LIBOR + 590 bps), 12/20/19
(144A) (Cat Bond) 249,975
300,000(c) International Bank for Reconstruction & Development,
8.388% (6 Month USD LIBOR + 7 bps), 7/15/20
(144A) (Cat Bond) 299,991
250,000(c) International Bank for Reconstruction & Development,
11.026% (6 Month USD LIBOR + 930 bps), 12/20/19
(144A) (Cat Bond) 249,952
300,000(c) International Bank for Reconstruction & Development,
13.126% (6 Month USD LIBOR + 1,150 bps), 7/15/20
(144A) (Cat Bond) 299,790
326,836+(h)(i) Kilarney Re 2018, Variable Rate Notes, 4/15/19 336,968
500,000(c) Kilimanjaro II Re, 9.322% (6 Month USD LIBOR +
714 bps), 4/20/21 (144A) (Cat Bond) 505,450
500,000(c) Kilimanjaro II Re, 11.672% (6 Month USD LIBOR +
949 bps), 4/20/21 (144A) (Cat Bond) 503,850
500,000(c) Kizuna Re II, 4.307% (3 Month U.S. Treasury Bill +
250 bps), 4/11/23 (144A) (Cat Bond) 500,300
750,000+(h)(i) Lahinch Re 2017, Variable Rate Notes, 5/10/22 25,125
EUR 500,000(c) Lion II Re, 3.17% (3 Month EURIBOR + 317 bps),
7/15/21 (144A) (Cat Bond) 605,077
1,000,000+(h)(i) Lorenz Re 2017, Variable Rate Notes, 3/31/20 867,600
500,000+(h)(i) Madison Re 2018, Variable Rate Notes, 12/31/21 516,450
350,000+(h)(i) Merion Re 2018, Variable Rate Notes, 12/31/21 305,165
500,000+(h)(i) Merion Re 2018-2, Variable Rate Notes, 12/31/21 527,500
500,000(c) Merna Re, 3.807% (3 Month U.S. Treasury Bill +
200 bps), 4/8/20 (144A) (Cat Bond) 500,500
500,000(c) Nakama Re, 4.28% (6 Month USD LIBOR + 220 bps),
10/13/21 (144A) (Cat Bond) 506,000
250,000+(h)(i) NCM Re 2018, Variable Rate Notes, 12/31/21 255,725
750,000(c) Northshore Re II, 9.057% (3 Month U.S. Treasury Bill +
725 bps), 7/6/20 (144A) (Cat Bond) 755,250
400,000+(h)(i) Old Head Re 2018, Variable Rate Notes, 12/31/21 341,880
300,000+(h)(i) Oyster Bay Re 2018, Variable Rate Notes, 1/15/19 273,780
3,000,000+(h)(i) Pangaea Re 2015-1, Variable Rate Notes, 2/1/19 6,154
2,000,000+(h)(i) Pangaea Re 2016-1, Variable Rate Notes, 11/30/20 19,095
2,000,000+(h)(i) Pangaea Re 2017-1, Variable Rate Notes, 11/30/21 31,430
1,000,000+(h)(i) Pangaea Re 2018-1, Variable Rate Notes, 12/31/21 1,050,800
750,000+(h)(i) Portrush 2017, Variable Rate Notes, 6/15/18 698,550
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 33
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Reinsurance -- (continued)
2,000,000(c) Queen Street X Re, 7.557% (3 Month U.S. Treasury Bill +
575 bps), 6/8/18 (144A) (Cat Bond) $ 2,000,400
700,000+(h)(i) Resilience Re, Variable Rate Notes, 4/1/18 528,850
750,000+(h)(i) Resilience Re, Variable Rate Notes, 6/4/18 753,375
AUD 250,000+(h)(i) Rewire Securities LLC, Variable Rate Notes, 7/15/18 186,782
500,000(c) Sanders Re, 5.324% (6 Month USD LIBOR + 325 bps),
6/5/20 (144A) (Cat Bond) 503,400
500,000+(h)(i) Seminole Re 2018, Variable Rate Notes, 1/15/19 448,300
750,000+(h)(i) Shinnecock Re 2017, Variable Rate Notes, 6/15/18 746,250
1,000,000+(h)(i) Silverton Re 2016, Variable Rate Notes, 9/17/18 (144A) 8,100
1,000,000+(h)(i) Silverton Re 2017, Variable Rate Notes, 9/16/19 (144A) 380,000
500,000(c) Spectrum Capital, 7.661% (6 Month USD LIBOR +
575 bps), 6/8/21 (144A) (Cat Bond) 494,450
1,000,000+(h)(i) St. Andrews Re 2017-1, Variable Rate Notes, 2/1/19 202,400
500,000+(h)(i) Thopas Re 2018, Variable Rates Notes, 12/31/21 511,950
400,000(c) Ursa Re, 5.25% (3 Month U.S. Treasury Bill + 525 bps),
12/10/20 (144A) (Cat Bond) 402,680
500,000+(h)(i) Versutus Re 2018, Variable Rate Notes, 12/31/21 506,950
500,000+(h)(i) Viribus Re 2018, Variable Rate Notes, 12/31/21 521,900
1,000,000(c) Vitality Re VII, 4.457% (3 Month U.S. Treasury Bill +
265 bps), 1/7/20 (144A) (Cat Bond) 1,012,700
500,000+(h)(i) Wentworth Re 2017, Variable Rate Notes, 7/13/18 489,600
250,000+(h)(i) Wentworth 2018, Variable Rate Notes, 12/31/21 225,125
500,000+(h)(i) Woburn Re 2018, Variable Rate Notes, 12/31/21 512,500
---------------
Total Insurance $ 37,520,427
------------------------------------------------------------------------------------------------------------
MATERIALS -- 6.6%
Commodity Chemicals -- 0.6%
300,000 Basell Finance Co. BV, 8.1%, 3/15/27 (144A) $ 377,742
175,000 Hexion US Finance Corp., 6.625%, 4/15/20 164,281
336,000 Rain CII Carbon LLC / CII Carbon Corp., 7.25%,
4/1/25 (144A) 346,080
---------------
$ 888,103
------------------------------------------------------------------------------------------------------------
Construction Materials -- 0.2%
215,000 Cemex SAB de CV, 7.75%, 4/16/26 (144A) $ 235,748
------------------------------------------------------------------------------------------------------------
Copper -- 1.0%
500,000 First Quantum Minerals, Ltd., 6.875%, 3/1/26 (144A) $ 475,000
425,000 First Quantum Minerals, Ltd., 7.25%, 4/1/23 (144A) 423,853
465,000 Freeport-McMoRan, Inc., 3.55%, 3/1/22 448,725
---------------
$ 1,347,578
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
34 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Diversified Chemicals -- 0.8%
55,000 Blue Cube Spinco, Inc., 9.75%, 10/15/23 $ 63,250
55,000 Blue Cube Spinco, Inc., 10.0%, 10/15/25 64,487
1,025,000 Koks OAO Via Koks Finance, DAC, 7.5%, 5/4/22 (144A) 1,038,157
---------------
$ 1,165,894
------------------------------------------------------------------------------------------------------------
Diversified Metals & Mining -- 0.6%
200,000 Hudbay Minerals, Inc., 7.25%, 1/15/23 (144A) $ 208,500
IDR 812,959,000^ PT Bakrie & Brothers Tbk, 0.0%, 12/22/22 58,434
70,000 Teck Resources, Ltd., 8.5%, 6/1/24 (144A) 78,137
160,000 Vale Overseas, Ltd., 6.25%, 8/10/26 176,464
375,000 Vedanta Resources Plc, 6.375%, 7/30/22 (144A) 377,325
---------------
$ 898,860
------------------------------------------------------------------------------------------------------------
Fertilizers & Agricultural Chemicals -- 0.2%
200,000 CVR Partners LP / CVR Nitrogen Finance Corp.,
9.25%, 6/15/23 (144A) $ 205,750
------------------------------------------------------------------------------------------------------------
Metal & Glass Containers -- 1.6%
100,000(e) ARD Finance SA, 7.125% (7.875% PIK
0.0% cash), 9/15/23 $ 102,250
320,000 Ardagh Packaging Finance Plc / Ardagh Holdings
USA, Inc., 7.25%, 5/15/24 (144A) 337,600
EUR 150,000 Horizon Holdings I SAS, 7.25%, 8/1/23 (144A) 189,535
EUR 1,365,000 SIG Combibloc Holdings SCA, 7.75%, 2/15/23 (144A) 1,715,019
---------------
$ 2,344,404
------------------------------------------------------------------------------------------------------------
Paper Packaging -- 0.3%
390,000 Eldorado International Finance GmbH, 8.625%,
6/16/21 (144A) $ 413,400
------------------------------------------------------------------------------------------------------------
Specialty Chemicals -- 0.4%
410,000 A Schulman, Inc., 6.875%, 6/1/23 $ 430,500
150,000 Koppers, Inc., 6.0%, 2/15/25 (144A) 152,625
---------------
$ 583,125
------------------------------------------------------------------------------------------------------------
Steel -- 0.9%
1,093,000 Metinvest BV, 7.75%, 4/23/23 (144A) $ 1,062,615
215,000 SunCoke Energy Partners LP / SunCoke Energy Partners
Finance Corp., 7.5%, 6/15/25 (144A) 220,912
---------------
$ 1,283,527
---------------
Total Materials $ 9,366,389
------------------------------------------------------------------------------------------------------------
MEDIA -- 1.9%
Advertising -- 0.2%
270,000 MDC Partners, Inc., 6.5%, 5/1/24 (144A) $ 265,613
------------------------------------------------------------------------------------------------------------
Broadcasting -- 0.2%
315,000 CSC Holdings LLC, 5.5%, 4/15/27 (144A) $ 302,337
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 35
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Cable & Satellite -- 0.5%
250,000 Altice Finco SA, 8.125%, 1/15/24 (144A) $ 256,562
300,000 Altice SA, 7.75%, 5/15/22 (144A) 286,500
220,000 DISH DBS Corp., 7.75%, 7/1/26 200,063
---------------
$ 743,125
------------------------------------------------------------------------------------------------------------
Movies & Entertainment -- 0.4%
600,000 Gibson Brands, Inc., 8.875%, 8/1/18 (144A) $ 465,000
------------------------------------------------------------------------------------------------------------
Publishing -- 0.6%
855,000 Gannett Co., Inc., 6.375%, 10/15/23 $ 882,787
---------------
Total Media $ 2,658,862
------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS, BIOTECHNOLOGY &
LIFE SCIENCES -- 1.9%
Pharmaceuticals -- 1.9%
650,000 Endo Finance LLC / Endo, Ltd. / Endo Finco, Inc.,
6.0%, 7/15/23 (144A) $ 472,875
240,000 Endo Finance LLC / Endo, Ltd. / Endo Finco, Inc.,
6.0%, 2/1/25 (144A) 168,600
225,000 Horizon Pharma, Inc., 6.625%, 5/1/23 225,000
70,000 Horizon Pharma, Inc. / Horizon Pharma USA, Inc.,
8.75%, 11/1/24 (144A) 74,550
EUR 450,000 VRX Escrow Corp., 4.5%, 5/15/23 493,907
EUR 345,000 VRX Escrow Corp., 4.5%, 5/15/23 (144A) 378,662
494,000 VRX Escrow Corp., 5.875%, 5/15/23 (144A) 453,862
430,000 VRX Escrow Corp., 7.0%, 3/15/24 (144A) 453,650
---------------
Total Pharmaceuticals, Biotechnology & Life Sciences $ 2,721,106
------------------------------------------------------------------------------------------------------------
REAL ESTATE -- 1.0%
Specialized REIT -- 1.0%
1,520,000 Uniti Group, Inc. / CSL Capital LLC, 8.25%, 10/15/23 $ 1,455,400
---------------
Total Real Estate $ 1,455,400
------------------------------------------------------------------------------------------------------------
RETAILING -- 0.5%
Department Stores -- 0.5%
500,000 JC Penney Corp., Inc., 8.625%, 3/15/25 (144A) $ 466,250
350,000 Neiman Marcus Group, Ltd., LLC, 8.0%, 10/15/21 (144A) 236,250
---------------
Total Retailing $ 702,500
------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 0.3%
Semiconductors -- 0.3%
200,000 Micron Technology, Inc., 5.5%, 2/1/25 $ 208,000
150,000 Micron Technology, Inc., 5.625%, 1/15/26 (144A) 161,205
---------------
Total Semiconductors & Semiconductor Equipment $ 369,205
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
36 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 0.5%
IT Consulting & Other Services -- 0.5%
130,000 Dell International LLC / EMC Corp., 7.125%,
6/15/24 (144A) $ 138,450
635,000 Rackspace Hosting, Inc., 8.625%, 11/15/24 (144A) 643,731
---------------
Total Software & Services $ 782,181
------------------------------------------------------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 2.3%
Communications Equipment -- 1.8%
325,000 CB Escrow Corp., 8.0%, 10/15/25 (144A) $ 308,750
300,000 Cincinnati Bell, Inc., 7.0%, 7/15/24 (144A) 275,220
280,000 CommScope Technologies LLC, 6.0%, 6/15/25 (144A) 287,700
500,000 Frontier Communications Corp., 8.5%, 4/1/26 (144A) 486,250
1,165,000 Frontier Communications Corp., 8.75%, 4/15/22 969,862
290,000 Frontier Communications Corp., 11.0%, 9/15/25 222,575
---------------
$ 2,550,357
------------------------------------------------------------------------------------------------------------
Technology Hardware, Storage & Peripherals -- 0.5%
710,000 Diebold Nixdorf, Inc., 8.5%, 4/15/24 $ 736,625
---------------
Total Technology Hardware & Equipment $ 3,286,982
------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 3.4%
Integrated Telecommunication Services -- 1.1%
1,300,000 Windstream Services LLC / Windstream Finance Corp.,
8.625%, 10/31/25 (144A) $ 1,192,750
529,000 Windstream Services LLC / Windstream Finance Corp.,
8.75%, 12/15/24 (144A) 316,078
---------------
$ 1,508,828
------------------------------------------------------------------------------------------------------------
Wireless Telecommunication Services -- 2.3%
225,000 Digicel Group, Ltd., 8.25%, 9/30/20 (144A) $ 201,094
750,000 Digicel, Ltd., 6.0%, 4/15/21 (144A) 713,437
200,000 Mobile Telesystems OJSC via MTS International
Funding, Ltd., 5.0%, 5/30/23 (144A) 198,179
340,000 Sprint Corp., 7.125%, 6/15/24 352,325
485,000 Sprint Corp., 7.25%, 9/15/21 514,706
850,000 Sprint Corp., 7.625%, 3/1/26 895,688
250,000 Unison Ground Lease Funding LLC, 5.78%,
3/15/20 (144A) 248,082
200,000 Wind Tre S.p.A., 5.0%, 1/20/26 (144A) 167,880
---------------
$ 3,291,391
---------------
Total Telecommunication Services $ 4,800,219
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 37
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 1.1%
Airlines -- 0.3%
155,000 Intrepid Aviation Group Holdings LLC / Intrepid
Finance Co., 6.875%, 2/15/19 (144A) $ 152,675
300,000 Latam Finance, Ltd., 6.875%, 4/11/24 (144A) 308,670
---------------
$ 461,345
------------------------------------------------------------------------------------------------------------
Highways & Railtracks -- 0.4%
MXN 4,500,000 Red de Carreteras de Occidente SAPIB de CV, 9.0%,
6/10/28 (144A) $ 229,317
260,000 Rumo Luxembourg S.a.r.l., 7.375%, 2/9/24 (144A) 275,990
---------------
$ 505,307
------------------------------------------------------------------------------------------------------------
Logistics -- 0.1%
200,000 Aeropuertos Dominicanos Siglo XXI SA, 6.75%,
3/30/29 (144A) $ 215,250
------------------------------------------------------------------------------------------------------------
Marine -- 0.3%
375,000 Navios South American Logistics, Inc. / Navios Logistics
Finance US, Inc., 7.25%, 5/1/22 (144A) $ 360,000
---------------
Total Transportation $ 1,541,902
------------------------------------------------------------------------------------------------------------
UTILITIES -- 5.2%
Electric Utilities -- 2.3%
400,000 Cemig Geracao e Transmissao SA, 9.25%,
12/5/24 (144A) $ 433,500
575,000 Centrais Eletricas Brasileiras SA, 5.75%, 10/27/21 586,500
460,000(a) Enel S.p.A., 8.75% (5 Year USD Swap Rate + 588 bps),
9/24/73 (144A) 543,950
1,275,000 Light Servicos de Eletricidade SA / Light Energia SA,
7.25%, 5/3/23 (144A) 1,284,562
375,000 Stoneway Capital Corp., 10.0%, 3/1/27 (144A) 399,484
---------------
$ 3,247,996
------------------------------------------------------------------------------------------------------------
Gas Utilities -- 0.7%
425,000 Ferrellgas LP / Ferrellgas Finance Corp., 6.5%, 5/1/21 $ 406,937
665,000 Ferrellgas LP / Ferrellgas Finance Corp., 6.75%, 6/15/23 600,994
---------------
$ 1,007,931
------------------------------------------------------------------------------------------------------------
Independent Power Producers & Energy Traders -- 1.9%
224,000 Calpine Corp., 5.75%, 1/15/25 $ 205,542
570,000 NRG Energy, Inc., 6.625%, 1/15/27 586,387
320,000 NRG Energy, Inc., 7.25%, 5/15/26 341,245
225,506 NSG Holdings LLC / NSG Holdings, Inc., 7.75%,
12/15/25 (144A) 246,929
585,000(b) TerraForm Power Operating LLC, 6.625%, 6/15/25 (144A) 624,488
633,000 Vistra Energy Corp., 8.0%, 1/15/25 (144A) 686,014
---------------
$ 2,690,605
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
38 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
------------------------------------------------------------------------------------------------------------
Pipeline -- 0.3%
492,450 Transportadora de Gas del Sur SA, 9.625%,
5/14/20 (144A) $ 508,849
---------------
Total Utilities $ 7,455,381
------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost $131,620,664) $ 135,638,162
------------------------------------------------------------------------------------------------------------
CONVERTIBLE BOND & NOTE -- 1.3% of Net Assets
MATERIALS -- 1.3%
Specialty Chemicals -- 1.3%
1,900,000(j) Hercules LLC, 6.5%, 6/30/29 $ 1,914,250
---------------
Total Materials $ 1,914,250
------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BOND & NOTE
(Cost $1,262,127) $ 1,914,250
------------------------------------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS --
2.4% of Net Assets
Argentina -- 1.8%
188,320 Province of Salta Argentina, 9.5%, 3/16/22 (144A) $ 194,440
360,000 Provincia de Buenos Aires, 9.125%, 3/16/24 (144A) 399,600
230,000 Provincia de Buenos Aires, 9.95%, 6/9/21 (144A) 255,229
670,000 Provincia de Entre Rios Argentina, 8.75%, 2/8/25 (144A) 672,345
1,135,000 Provincia del Chubut Argentina, 7.75%, 7/26/26 (144A) 1,061,225
---------------
$ 2,582,839
------------------------------------------------------------------------------------------------------------
Bahrain -- 0.2%
300,000 Bahrain Government International Bond, 7.0%,
10/12/28 (144A) $ 286,039
------------------------------------------------------------------------------------------------------------
Kenya -- 0.4%
500,000 Kenya Government International Bond, 6.875%,
6/24/24 (144A) $ 518,060
------------------------------------------------------------------------------------------------------------
Mexico -- 0.0%+
MXN 970,000 Mexican Bonos, 7.75%, 11/13/42 $ 52,359
------------------------------------------------------------------------------------------------------------
TOTAL SOVEREIGN DEBT OBLIGATIONS
(Cost $3,336,874) $ 3,439,297
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Shares
------------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 0.1% of Net Assets
CAPITAL GOODS -- 0.0%+
Industrial Machinery -- 0.0%+
10,289^(k) Liberty Tire Recycling LLC $ 103
---------------
Total Capital Goods $ 103
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 39
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Shares Value
------------------------------------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 0.0%+
Homebuilding -- 0.0%+
89,094(k) Desarrolladora Homex SAB de CV $ 848
---------------
Total Consumer Durables & Apparel $ 848
------------------------------------------------------------------------------------------------------------
ENERGY -- 0.0%+
Oil & Gas Exploration & Production -- 0.0%+
279(k) Midstates Petroleum Co., Inc. $ 3,903
11,059(k) PetroQuest Energy, Inc. 6,236
---------------
Total Energy $ 10,139
------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 0.0%+
Health Care Technology -- 0.0%+
69,875^(k) Medical Card System, Inc. $ 699
---------------
Total Health Care Equipment & Services $ 699
------------------------------------------------------------------------------------------------------------
RETAILING -- 0.1%
Computer & Electronics Retail -- 0.1%
42,088^(k) Targus Cayman SubCo., Ltd. $ 82,913
---------------
Total Retailing $ 82,913
------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $223,884) $ 94,702
------------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK --
0.7% of Net Assets
BANKS -- 0.7%
Diversified Banks -- 0.7%
770(f) Bank of America Corp., 7.25% $ 980,210
---------------
Total Banks $ 980,210
------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCK
(Cost $739,352) $ 980,210
------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS -- 1.2% of Net Assets
BANKS -- 0.7%
Diversified Banks -- 0.7%
40,675(a) GMAC Capital Trust I, 7.624% (3 Month USD LIBOR +
579 bps), 2/15/40 $ 1,081,548
---------------
Total Banks $ 1,081,548
------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 0.4%
Specialized Finance -- 0.4%
500(a)(f) Compeer Financial ACA, 6.75% (3 Month USD LIBOR +
458 bps) (144A) $ 527,500
---------------
Total Diversified Financials $ 527,500
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
40 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------
Shares Value
------------------------------------------------------------------------------------------------------------
MATERIALS -- 0.1%
Diversified Chemicals -- 0.1%
455,230^(k) Pinnacle Agriculture $ 45,523
---------------
Total Materials $ 45,523
------------------------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $1,810,581) $ 1,654,571
------------------------------------------------------------------------------------------------------------
RIGHT / WARRANT -- 0.0% of Net Assets
ENERGY -- 0.0%+
Oil & Gas Exploration & Production -- 0.0%+
1,981^(k)(l) Midstates Petroleum Co., Inc., 4/21/20 $ --
---------------
Total Energy $ --
------------------------------------------------------------------------------------------------------------
TOTAL RIGHT / WARRANT
(Cost $0) $ --
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($)
------------------------------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS --
5.0% of Net Assets
REPURCHASE AGREEMENTS -- 0.6%
415,000 $415,000 TD Securities USA LLC, 1.73%,
dated 4/30/18 plus accrued interest on 5/1/18
collateralized by the following:
$423,378 U.S. Treasury Notes, 2.0%, 4/30/24. $ 415,000
415,000 $415,000 TD Securities USA LLC, 1.75%,
dated 4/30/18 plus accrued interest on 5/1/18
collateralized by the following:
$423,378 U.S. Treasury Notes, 2.0%, 4/30/24. 415,000
---------------
$ 830,000
------------------------------------------------------------------------------------------------------------
TREASURY BILLS -- 4.4%
1,035,000(m) U.S. Treasury Bills, 5/3/18 $ 1,034,910
1,765,000(m) U.S. Treasury Bills, 5/10/18 1,764,323
3,000,000(m) U.S. Treasury Bills, 5/17/18 2,997,873
500,000(m) U.S. Treasury Bills, 5/24/18 499,490
---------------
$ 6,296,596
------------------------------------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $7,126,502) $ 7,126,596
------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 41
Schedule of Investments | 4/30/18 (continued)
------------------------------------------------------------------------------------------------------------
Number of Counter- Strike Expiration
Contracts Description party Notional Price Date Value
------------------------------------------------------------------------------------------------------------
CALL OPTIONS PURCHASED -- 0.0%+
18,332^(n) Desarrolladora Bank of
Homex SAB New York
de CV Mellon
Corp. MXN18,332 USD-(p) 10/23/22 $ --
18,332^(o) Desarrolladora Bank of
Homex SAB New York
de CV Mellon
Corp. MXN18,332 USD-(p) 10/23/22 --
---------------
$ --
------------------------------------------------------------------------------------------------------------
TOTAL CALL OPTIONS PURCHASED
(Premium paid $0) $ --
------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN UNAFFILIATED
ISSUERS -- 145.2%
(Cost $202,375,812)(q) $ 206,679,864
------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (45.2)% $ (64,308,086)
------------------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 142,371,778
============================================================================================================
bps Basis Points.
CMT Constant maturity Treasury.
EURIBOR The Euro Interbank Offer Rate.
LIBOR London Interbank Offered Rate.
PRIME U.S. Federal Funds Rate.
REIT Real Estate Investment Trust.
(144A) Security is exempt from registration under Rule 144A of the
Securities Act of 1933. Such securities may be resold normally to
qualified institutional buyers in a transaction exempt from
registration. At April 30, 2018, the value of these securities
amounted to $90,004,252, or 63.2% of net assets.
(Cat Bond) Catastrophe or event-linked bond. At April 30, 2018, the value of
these securities amounted to $15,676,160, or 11.0% of net assets.
See Notes to Financial Statements -- Note 1F.
+ Amount rounds to less than 0.1%.
* Senior secured floating rate loan interests in which the Fund invests
generally pay interest at rates that are periodically redetermined by
reference to a base lending rate plus a premium. These base lending
rates are generally (i) the lending rate offered by one or more major
European banks, such as LIBOR, (ii) the prime rate offered by one or
more major United States banks, (iii) the rate of a certificate of
deposit or (iv) other base lending rates used by commercial lenders.
The interest rate shown is the rate accruing at April 30, 2018.
+ Securities that used significant unobservable inputs to determine
their value.
^ Security is valued using fair value methods (other than supplied by
independent pricing services). See Notes to Financial
Statements -- Note 1A.
(a) The interest rate is subject to change periodically. The interest
rate, reference index and spread shown at April 30, 2018.
(b) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specific date. The rate shown is the rate at
April 30, 2018.
The accompanying notes are an integral part of these financial statements.
42 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
(c) Floating rate note. Coupon rate, reference index and spread shown at
April 30, 2018.
(d) This term loan will settle after April 30, 2018, at which time the
interest rate will be determined.
(e) Payment in Kind (PIK) security which may pay interest in the form of
additional principal amount.
(f) Security is perpetual in nature and has no stated maturity date.
(g) Security is in default.
(h) Structured reinsurance investment. At April 30, 2018, the value of
these securities amounted to $21,844,267, or 15.4% of net assets.
See Notes to Financial Statements -- Note 1F.
(i) Rate to be determined.
(j) Security is priced as a unit.
(k) Non-income producing security.
(l) Midstates Petroleum Co., Inc. is exercisable into 1,981 shares.
(m) Security issued with a zero coupon. Income is recognized through
accretion of discount.
(n) Option does not become effective until underlying company's
outstanding common shares reach a market capitalization of
MXN 12.5 Billion.
(o) Option does not become effective until underlying company's
outstanding common shares reach a market capitalization of
MXN 15.5 Billion.
(p) Strike price is 1 Mexican Peso (MXN).
(q) Distribution of investments by country of issue, as a percentage
total investments based on country of domicile, is as follows:
United States 57.2%
Bermuda 16.4
Netherlands 3.1
Luxembourg 3.0
Canada 3.0
Ireland 2.5
Argentina 2.5
United Kingdom 1.8
Supranational 1.4
Mexico 1.2
Cayman Islands 1.2
Brazil 1.1
Other (individually less than 1%) 5.6
------
100.0%
======
FORWARD FOREIGN CURRENCY CONTRACTS
-------------------------------------------------------------------------------------------------------------------
In Unrealized
Currency Exchange Currency Settlement Appreciation
Purchased for Sold Deliver Counterparty Date (Depreciation)
-------------------------------------------------------------------------------------------------------------------
USD 3,958,693 EUR (3,262,128) Brown Brothers Harriman & Co. 5/31/18 $ 9,037
USD 287,375 MXN (5,454,955) Goldman Sachs International 5/16/18 (3,453)
-------------------------------------------------------------------------------------------------------------------
TOTAL FORWARD FOREIGN CURRENCY CONTRACTS $ 5,584
===================================================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 43
Schedule of Investments | 4/30/18 (continued)
SWAP CONTRACTS
OVER THE COUNTER (OTC) CREDIT DEFAULT SWAP CONTRACTS -- SELL PROTECTION
-------------------------------------------------------------------------------------------------------------------------
Obligation Annual
Notional Reference Pay/ Fixed Expiration Premiums Unrealized Market
Amount ($)(1) Counterparty Index Receive(2) Rate Date Received Appreciation Value
-------------------------------------------------------------------------------------------------------------------------
80,000 Goldman Sachs Chesapeake Receive 5.00% 6/20/22 $ (9,000) $ 7,537 $ (1,463)
International Energy Corp.
45,000 Goldman Sachs Chesapeake Receive 5.00% 6/20/22 (5,512) 4,689 (823)
International Energy Corp.
75,000 Goldman Sachs Chesapeake Receive 5.00% 6/20/22 (9,188) 7,816 (1,372)
International Energy Corp.
-------------------------------------------------------------------------------------------------------------------------
TOTAL SWAP CONTRACTS $(23,700) $20,042 $ (3,658)
=========================================================================================================================
(1) The notional amount is the maximum amount that a seller of credit
protection would be obligated to pay upon occurrence of a credit event.
(2) Receives Quarterly.
Principal amounts are denominated in U.S. dollars unless otherwise noted.
ARS -- Argentine Peso
AUD -- Australian Dollar
EUR -- Euro
IDR -- Indonesian Rupiah
MXN -- Mexican Peso
USD -- United States Dollar
Purchases and sales of securities (excluding temporary cash investments) for the
year ended April 30, 2018 were as follows:
--------------------------------------------------------------------------------
Purchases Sales
--------------------------------------------------------------------------------
Long-Term U.S. Government $ -- $ 5,009,832
Other Long-Term Securities $74,212,132 $85,597,184
The Trust is permitted to engage in purchase and sale transactions ("cross
trades") with certain funds and accounts for which Amundi Pioneer Asset
Management, Inc. (the "Adviser") serves as the investment adviser, as set forth
in Rule 17a-7 under the Investment Company Act of 1940, pursuant to procedures
adopted by the Board of Trustees. Under these procedures, cross trades are
effected at current market prices. During the year ended April 30, 2018, the
Trust engaged in purchases and sales pursuant to these procedures amounting to
$19,853 and $413,272, respectively resulting in a gain of $10,125.
At April 30, 2018, the net unrealized appreciation on investments based on cost
for federal tax purposes of $203,533,554 was as follows:
Aggregate gross unrealized appreciation for all investments in which
there is an excess of value over tax cost $10,667,931
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value (7,519,695)
-----------
Net unrealized appreciation $ 3,148,236
===========
The accompanying notes are an integral part of these financial statements.
44 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
Various inputs are used in determining the value of the Trust's investments.
These inputs are summarized in the three broad levels below.
Level 1 -- quoted prices in active markets for identical securities.
Level 2 -- other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit
risks, etc.). See Notes to Financial Statements -- Note 1A.
Level 3 -- significant unobservable inputs (including the Trust's own
assumptions in determining fair value of investments).
See Notes to Financial Statements -- Note 1A.
The following is a summary of the inputs used as of April 30, 2018, in valuing
the Trust's investments.
-----------------------------------------------------------------------------------------------------------------
Level 1 Level 2 Level 3 Total
-----------------------------------------------------------------------------------------------------------------
Asset Backed Securities $ -- $ 811,570 $ -- $ 811,570
Collateralized Mortgage Obligations -- 393,829 -- 393,829
Commercial Mortgage-Backed
Securities -- 2,560,935 -- 2,560,935
Senior Secured Floating Rate
Loan Interests
Capital Goods
Aerospace & Defense -- 843,611 1,007,250 1,850,861
Health Care Equipment & Services
Health Care Technology -- 669,712 243,918 913,630
All Other Senior Secured Floating
Rate Loan Interests -- 49,301,251 -- 49,301,251
Corporate Bonds & Notes
Diversified Financials
Other Diversified Financial
Services -- -- 6,816,404 6,816,404
Insurance
Reinsurance -- 15,676,160 21,844,267 37,520,427
All Other Corporate Bonds & Notes -- 91,301,331 -- 91,301,331
Convertible Bond & Note -- 1,914,250 -- 1,914,250
Sovereign Debt Obligations -- 3,439,297 -- 3,439,297
Common Stocks
Capital Goods
Industrial Machinery -- -- 103 103
Health Care Equipment & Services
Health Care Technology -- -- 699 699
Retailing
Computer & Electronics Retail -- -- 82,913 82,913
All Other Common Stocks 10,987 -- -- 10,987
Convertible Preferred Stock 980,210 -- -- 980,210
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 45
Schedule of Investments | 4/30/18 (continued)
--------------------------------------------------------------------------------------------------------
Level 1 Level 2 Level 3 Total
--------------------------------------------------------------------------------------------------------
Preferred Stocks
Diversified Financials
Specialized Finance $ -- $ 527,500 $ -- $ 527,500
Materials
Diversified Chemicals -- -- 45,523 45,523
All Other Preferred Stocks 1,081,548 -- -- 1,081,548
Right/Warrant
Energy
Oil & Gas Exploration &
Production -- --* -- --*
Repurchase Agreements -- 830,000 -- 830,000
Treasury Bills -- 6,296,596 -- 6,296,596
Call Options Purchased -- --* -- --*
--------------------------------------------------------------------------------------------------------
Total Investments in Securities $ 2,072,745 $ 174,566,042 $30,041,077 $206,679,864
========================================================================================================
Other Financial Instruments
Unrealized appreciation
on forward foreign
currency contracts $ -- $ 5,584 $ -- $ 5,584
Swap contracts, at value -- (3,658) -- (3,658)
--------------------------------------------------------------------------------------------------------
Total Other
Financial Instruments $ -- $ 1,926 $ -- $ 1,926
========================================================================================================
* Includes securities that are valued $0.
The accompanying notes are an integral part of these financial statements.
46 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
The following is a reconciliation of assets valued using significant
unobservable inputs (Level 3):
------------------------------------------------------------------------------------------------------------------------------------
Change in Transfers
Balance Realized unrealized Accrued in and out Balance
as of gain appreciation discounts/ of Level 3 as of
4/30/17 (loss)(1) (depreciation)(2) Purchases Sales premiums Categories* 4/30/18
------------------------------------------------------------------------------------------------------------------------------------
Senior Secured
Floating Rate
Loan Interests
Capital Goods
Aerospace &
Defense $ 997,500 $ 83 $ 17,670 $ -- $ (10,000) $ 1,997 $ -- $ 1,007,250
Health Care
Equipment &
Services
Health Care
Technology 243,918 -- (14,559) -- -- 14,559 -- 243,918
Corporate Bonds
& Notes
Diversified Financials
Other Diversified
Financial
Services -- -- 926,417 -- -- 24,429 5,865,558 6,816,404
Insurance
Property &
Casualty
Insurance 5,865,558 -- -- -- -- -- (5,865,558) --
Reinsurance 17,775,556 (97,841) (1,779,810) 17,532,636 (11,611,349) 25,075 -- 21,844,267
Common Stocks
Capital Goods
Industrial
Machinery 103 -- -- -- -- -- -- 103
Health Care
Equipment
& Services
Health Care
Technology 699 -- -- -- -- -- -- 699
Retailing
Computer &
Electronics
Retail 40,825 -- 42,088 -- -- -- -- 82,913
Preferred Stocks
Materials
Diversified
Chemicals -- -- (331,061) 376,584 -- -- -- 45,523
------------------------------------------------------------------------------------------------------------------------------------
Total $24,924,159 $(97,758) $(1,139,255) $17,909,220 $(11,621,349) $ 66,060 $ -- $30,041,077
====================================================================================================================================
(1) Realized gain (loss) on these securities is included in the net realized
gain (loss) from investments on the Statement of Operations.
(2) Unrealized appreciation (depreciation) on these securities is included in
the change in unrealized appreciation (depreciation) on investments on the
Statement of Operations.
* Transfers are calculated on the beginning of period values. The change in
level designation within the fair value hierarchy was due to a change in
global industry classification standard (GICS) from Insurance to
Diversified Financials. During the year ended April 30, 2018, there were
no transfers between Levels 1, 2 and 3.
Net change in unrealized depreciation of Level 3 investments still held and
considered Level 3 at April 30, 2018: $(453,838).
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 47
Schedule of Investments | 4/30/18 (continued)
The following table presents additional information about valuation techniques
and inputs used for investments categorized as Level 3 at April 30, 2018. These
amounts exclude valuations provided by a broker.
----------------------------------------------------------------------------------------------------------
Fair Value Valuation Unobservable Value/
Asset Type 04/30/2018 Technique Input Range
----------------------------------------------------------------------------------------------------------
Senior Secured
Floating Rate
Loan Interests $1,251,168 Market Comparables Yield Comparables 6.54%-14.0%
----------------------------------------------------------------------------------------------------------
Corporate Bonds
& Notes $6,816,404 Market Comparables Yield Premiums(2) 0.078%
----------------------------------------------------------------------------------------------------------
Common Stocks $ 83,715 Market Comparables EBITDA Multiples(1) 4x-6x
----------------------------------------------------------------------------------------------------------
Preferred Stocks $ 45,523 Market Comparables EBITDA Multiples(1) 7x-8.5x
----------------------------------------------------------------------------------------------------------
(1) An increase in this unobservable input would result in a higher fair value
measurement, while a decrease would result in a lower fair value
measurement.
(2) An increase in this unobservable input would result in a lower fair value
measurement, while a decrease would result in a higher fair value
measurement.
The accompanying notes are an integral part of these financial statements.
48 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
Statement of Assets and Liabilities | 4/30/18
ASSETS:
Investments in unaffiliated issuers, at value (cost $202,375,812) $206,679,864
Cash 383,079
Foreign currencies, at value (cost $289,965) 284,555
Net unrealized appreciation on forward foreign currency contracts 5,584
Receivables --
Investment securities sold 133,368
Interest 1,955,181
Other assets 822
-----------------------------------------------------------------------------------------
Total assets $209,442,453
=========================================================================================
LIABILITIES:
Payables --
Credit agreement $ 64,000,000
Investment securities purchased 2,092,782
Distributions 791,615
Trustees' fees 698
Swap contracts, at value (net premiums received $(23,700)) 3,658
Due to affiliates 23,412
Accrued expenses 158,510
-----------------------------------------------------------------------------------------
Total liabilities $ 67,070,675
=========================================================================================
NET ASSETS:
Paid-in capital $172,050,019
Distributions in excess of net investment income (1,327,299)
Accumulated net realized loss on investments (32,671,603)
Net unrealized appreciation on investments 4,320,661
-----------------------------------------------------------------------------------------
Net assets $142,371,778
=========================================================================================
NET ASSET VALUE PER SHARE:
No par value
Based on $142,371,778/8,332,790 shares $ 17.09
=========================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 49
Statement of Operations
For the Year Ended 4/30/18
INVESTMENT INCOME:
Interest from unaffiliated issuers $ 13,814,426
Dividends from unaffiliated issuers 162,143
----------------------------------------------------------------------------------------
Total investment income $ 13,976,569
========================================================================================
EXPENSES:
Management fees $ 1,773,832
Administrative expense 79,314
Transfer agent fees 17,017
Shareowner communications expense 11,275
Custodian fees 45,633
Professional fees 83,653
Printing expense 21,610
Pricing fees 39,515
Interest expense 1,545,576
Trustees' fees 7,504
Insurance expense 2,077
Miscellaneous 71,465
----------------------------------------------------------------------------------------
Total expenses $ 3,698,471
----------------------------------------------------------------------------------------
Net investment income $ 10,278,098
========================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Investments in unaffiliated issuers $ (938,473)
Forward foreign currency contracts (430,000)
Swap contracts 5,211
Other assets and liabilities denominated in
foreign currencies (281) $ (1,363,543)
----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) on:
Investments in unaffiliated issuers $ (3,344,713)
Forward foreign currency contracts (15,971)
Swap contracts 20,042
Other assets and liabilities denominated in
foreign currencies (12,188) $ (3,352,830)
----------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $ (4,716,373)
----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 5,561,725
========================================================================================
The accompanying notes are an integral part of these financial statements.
50 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
Statements of Changes in Net Assets
----------------------------------------------------------------------------------------
Year Year
Ended Ended
4/30/18 4/30/17*
----------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income (loss) $ 10,278,098 $ 10,778,243
Net realized gain (loss) on investments (1,363,543) (3,030,833)
Change in net unrealized appreciation (depreciation)
on investments (3,352,830) 13,016,437
----------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations $ 5,561,725 $ 20,763,847
----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income ($1.26 and $1.44 per
share, respectively) $ (10,499,315) $ (12,024,216)
----------------------------------------------------------------------------------------
Total distributions to shareowners $ (10,499,315) $ (12,024,216)
----------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Trust
shares transactions $ (4,937,590) $ 8,739,631
NET ASSETS:
Beginning of year $ 147,309,368 $ 138,569,737
----------------------------------------------------------------------------------------
End of year $ 142,371,778 $ 147,309,368
----------------------------------------------------------------------------------------
Distributions in excess of net investment income $ (1,327,299) $ (1,231,618)
========================================================================================
* The Trust was audited by an independent registered public accounting firm
other than Ernst & Young LLP.
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 51
Statement of Cash Flows
For the Year Ended 4/30/18
Cash Flows From Operating Activities:
Net increase in net assets resulting from operations $ 5,561,725
----------------------------------------------------------------------------------------------
Adjustments to reconcile net increase in net assets resulting from operations
to net cash and foreign currencies from operating activities:
Purchases of investment securities $ (92,242,771)
Proceeds from disposition and maturity of investment securities 93,424,648
Net purchases of temporary cash investments (6,626,608)
Net accretion and amortization of discount/premium on investment securities (509,690)
Change in unrealized depreciation on investments 3,344,713
Change in unrealized depreciation on forward foreign currency contracts 15,971
Change in unrealized depreciation on swap contracts 3,658
Change in unrealized depreciation on foreign currency 6,355
Net realized loss on investments 938,473
Decrease in interest receivable 186,722
Decrease in dividends receivable 13,956
Increase in other assets (822)
Decrease in prepaid expenses 52
Decrease in due to affiliates (118,146)
Increase in trustees' fees payable 80
Decrease in administration fees payable (83,767)
Increase in accrued expenses payable 111,884
----------------------------------------------------------------------------------------------
Net cash and foreign currencies from operating activities $ 4,026,433
----------------------------------------------------------------------------------------------
Cash Flows Used in Financing Activities:
Increase in due to custodian $ (658,881)
Payment on borrowings 7,000,000
Distributions to shareowners (9,707,700)
----------------------------------------------------------------------------------------------
Net cash and foreign currencies used in financing activities $ (3,366,581)
----------------------------------------------------------------------------------------------
Effect of Foreign Exchange Fluctuations on Cash:
Effect of foreign exchange fluctuations on cash $ (6,355)
----------------------------------------------------------------------------------------------
Cash and Foreign Currencies:
Beginning of the year $ 14,137
----------------------------------------------------------------------------------------------
End of the year $ 667,634
==============================================================================================
Cash Flow Information:
Cash paid for interest $ 1,545,576
----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
52 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
Financial Highlights
--------------------------------------------------------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
4/30/18 4/30/17* 4/30/16* 4/30/15* 4/30/14
--------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance
Net asset value, beginning of period $ 17.68 $ 16.63 $ 18.39 $ 20.03 $ 20.70
--------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations: (a)
Net investment income $ 1.23 $ 1.29 $ 1.55 $ 1.82 $ 1.98
Net realized and unrealized gain (loss) on investments (0.56) 1.20 (1.81) (1.63) (0.36)
--------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ 0.67 $ 2.49 $ (0.26) $ 0.19 $ 1.62
--------------------------------------------------------------------------------------------------------------------------
Distributions to shareowners from:
Net investment income and previously undistributed
net investment income $ (1.26)** $ (1.44)** $ (1.50) $ (1.83)** $ (2.29)**
--------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (0.59) $ 1.05 $ (1.76) $ (1.64) $ (0.67)
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.09 $ 17.68 $ 16.63 $ 18.39 $ 20.03
--------------------------------------------------------------------------------------------------------------------------
Market value, end of period $ 15.00 $ 16.70 $ 15.60 $ 17.42 $ 20.85
==========================================================================================================================
Total return at net asset value (b) 4.58% 16.20% (1.01)% 1.21% 8.47%
Total return at market value (b) (2.82)% 17.01% (1.26)% (7.90)% 7.12%
Ratios to average net assets of shareowners:
Total expenses plus interest expense (c) 2.54% 2.12% 1.99% 1.85% 1.86%
Net investment income available to shareowners 7.07% 7.52% 9.11% 9.52% 9.88%
Portfolio turnover 37% 58% 36% 48% 38%
Net assets, end of year (in thousands) $142,372 $147,309 $138,570 $153,276 $166,611
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 53
Financial Highlights (continued)
--------------------------------------------------------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
4/30/18 4/30/17* 4/30/16* 4/30/15* 4/30/14
--------------------------------------------------------------------------------------------------------------------------
Total amount of debt outstanding (in thousands) $64,000 $57,000 $57,000 $64,000 $67,000
Asset coverage per $1,000 of indebtedness $ 3,225 $ 3,584 $ 3,431 $ 3,395 $ 3,487
==========================================================================================================================
* The Trust was audited by an independent registered public accounting firm
other than Ernst & Young LLP.
** The amount of distributions made to shareowners during the year were in
excess of the net investment income earned by the Trust during the year.
The Trust has accumulated undistributed net investment income which is
part of the Trust's net asset value ("NAV"). A portion of the accumulated
net investment income was distributed to shareowners during the year.
(a) The per common share data presented above is based upon the average common
shares outstanding for the periods presented.
(b) Total investment return is calculated assuming a purchase of common shares
at the current net asset value or market value on the first day and a sale
at the current net asset value or 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. Past performance is not a guarantee of
future results.
(c) Includes interest expense of 1.06%, 0.62%, 0.50%, 0.43% and 0.45%,
respectively.
The accompanying notes are an integral part of these financial statements.
54 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
Notes to Financial Statements | 4/30/18
1. Organization and Significant Accounting Policies
Pioneer Diversified High Income Trust (the "Trust") was organized as a Delaware
statutory trust on January 30, 2007. Prior to commencing operations on May 30,
2007, the Trust had no operations other than matters relating to its
organization and registration as a diversified, closed-end management investment
company under the Investment Company Act of 1940, as amended. The investment
objective of the Trust is to seek a high level of current income and the Trust
may, as a secondary objective, also seek capital appreciation to the extent that
it is consistent with its investment objective.
On July 3, 2017, Amundi acquired Pioneer Investments, a group of asset
management companies located throughout the world. Amundi, one of the world's
largest asset managers, is headquartered in Paris, France. As a result of the
transaction, Pioneer Investment Management, Inc., the Trust's investment
adviser, became an indirect wholly owned subsidiary of Amundi and Amundi's
wholly owned subsidiary, Amundi USA, Inc. Prior to July 3, 2017, Pioneer
Investments was owned by Pioneer Global Asset Management S.p.A., a wholly owned
subsidiary of UniCredit S.p.A.
In connection with the transaction, the names of the Trust's investment adviser
and principal underwriter changed. Effective July 3, 2017, the name of Pioneer
Investment Management, Inc. changed to Amundi Pioneer Asset Management, Inc.
(the "Adviser") and the name of Pioneer Funds Distributor, Inc. changed to
Amundi Pioneer Distributor, Inc. (the "Distributor").
In October 2016, the Securities and Exchange Commission ("SEC") released its
Final Rule on Investment Company Reporting Modernization. In addition to
introducing two new regulatory reporting forms (Form N-PORT and Form N-CEN), the
Final Rule amends Regulation S-X, which impacts financial statement
presentation, particularly related to the presentation of derivative
investments. The Trust's financial statements were prepared in compliance with
the amendments to Regulation S-X.
The Trust's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles ("U.S. GAAP") that require the
management of the Trust to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses and gain or loss on investments during the reporting
period. Actual results could differ from those estimates.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 55
The Trust is an investment company and follows investment company accounting and
reporting guidance under U.S. GAAP. The following is a summary of significant
accounting policies followed by the Trust in the preparation of its financial
statements:
A. Security Valuation
The net asset value of the Trust is computed once daily, on each day the
New York Stock Exchange ("NYSE") is open, as of the close of regular
trading on the NYSE.
Fixed income securities are valued by using prices supplied by independent
pricing services, which consider such factors as market prices, market
events, quotations from one or more brokers, Treasury spreads, yields,
maturities and ratings, or may use a pricing matrix or other fair value
methods or techniques to provide an estimated value of the security or
instrument. A pricing matrix is a means of valuing a debt security on the
basis of current market prices for other debt securities, historical
trading patterns in the market for fixed income securities and/or other
factors. Non-U.S. debt securities that are listed on an exchange will be
valued at the bid price obtained from an independent third party pricing
service. When independent third party pricing services are unable to
supply prices, or when prices or market quotations are considered to be
unreliable, the value of that security may be determined using quotations
from one or more broker-dealers.
Loan interests are valued in accordance with guidelines established by the
Board of Trustees at the mean between the last available bid and asked
prices from one or more brokers or dealers as obtained from Loan Pricing
Corporation, an independent third party pricing service. If price
information is not available from Loan Pricing Corporation, or if the
price information is deemed to be unreliable, price information will be
obtained from an alternative loan interest pricing service. If no reliable
price quotes are available from either the primary or alternative pricing
service, broker quotes will be solicited.
Event-linked bonds or catastrophe bonds are valued at the bid price
obtained from an independent third party pricing service. Other insurance
linked securities (including sidecars, collateralized reinsurance and
industry loss warranties) may be valued at the bid price obtained from an
independent pricing service, or through a third party using a pricing
matrix, insurance industry valuation models, or other fair value methods
or techniques to provide an estimated value of the instrument.
Equity securities that have traded on an exchange are valued by using the
last sale price on the principal exchange where they are traded. Equity
securities that have not traded on the date of valuation, or securities
for which sale
56 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
prices are not available, generally are valued using the mean between the
last bid and asked prices or, if both last bid and asked prices are not
available, at the last quoted bid price. Last sale and bid and asked
prices are provided by independent third party pricing services. In the
case of equity securities not traded on an exchange, prices are typically
determined by independent third party pricing services using a variety of
techniques and methods.
The value of foreign securities is translated in U.S. dollars based on
foreign currency exchange rate quotations supplied by a third party
pricing source. Trading in non-U.S. equity securities is substantially
completed each day at various times prior to the close of the NYSE. The
values of such securities used in computing the net asset value of the
Trust's shares are determined as of such times. The Trust may use a fair
value model developed by an independent pricing service to value non-U.S.
equity securities.
Option contracts are generally valued at the mean between the last bid and
ask prices on the principal exchange where they are traded.
Over-the-counter ("OTC") options and options on swaps ("swaptions") are
valued using prices supplied by independent pricing services, which
consider such factors as market prices, market events, quotations from one
or more brokers, Treasury spreads, yields, maturities and ratings, or may
use a pricing matrix or other fair value methods or techniques to provide
an estimated value of the security or instrument.
Swap contracts, including interest rate swaps, caps and floors (other than
centrally cleared swap contracts) are valued at the dealer quotations
obtained from reputable International Swap Dealers Association members.
Centrally cleared swaps are valued at the daily settlement price provided
by the central clearing counterparty.
Forward foreign currency contracts are valued daily using the foreign
exchange rate or, for longer term forward contract positions, the spot
currency rate, in each case provided by a third party pricing service.
Contracts whose forward settlement date falls between two quoted days are
valued by interpolation.
Shares of open-end registered investment companies (including money market
mutual funds) are valued at such funds' net asset value. Repurchase
agreements are valued at par. Cash may include overnight time deposits at
approved financial institutions.
Securities or loan interests for which independent pricing services or
broker-dealers are unable to supply prices or for which market prices
and/or quotations are not readily available or are considered to be
unreliable are valued by a fair valuation team comprised of certain
personnel of the Adviser, pursuant to procedures adopted by the Trust's
Board of Trustees. The Adviser's fair valuation team uses fair value
methods approved by the
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 57
Valuation Committee of the Board of Trustees. The Adviser's fair valuation
team is responsible for monitoring developments that may impact fair
valued securities and for discussing and assessing fair values on an
ongoing basis, and at least quarterly, with the Valuation Committee of the
Board of Trustees.
Inputs used when applying fair value methods to value a security may
include credit ratings, the financial condition of the company, current
market conditions and comparable securities. The Trust may use fair value
methods if it is determined that a significant event has occurred after
the close of the exchange or market on which the security trades and prior
to the determination of the Trust's net asset value. Examples of a
significant event might include political or economic news, corporate
restructurings, natural disasters, terrorist activity or trading halts.
Thus, the valuation of the Trust's securities may differ significantly
from exchange prices and such differences could be material.
At April 30, 2018, eleven securities were valued using fair value methods
(in addition to securities valued using prices supplied by independent
pricing services, broker-dealers or using a third party insurance pricing
model) representing 5.8% of net assets. The value of these fair valued
securities was $8,255,244.
B. Investment Income and Transactions
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. Interest income, including
interest on income bearing cash accounts, is recorded on an accrual basis,
net of unrecoverable foreign taxes withheld at the applicable country
rates and net of income accrued on defaulted securities.
Discounts and premiums on purchase prices of debt securities are accreted
or amortized, respectively, daily, into interest income on an effective
yield to maturity basis with a corresponding increase or decrease in the
cost basis of the security. Premiums and discounts related to certain
mortgage-backed securities are amortized or accreted in proportion to the
monthly paydowns. Interest and dividend income payable by delivery of
additional shares is reclassified as PIK (payment-in-kind) income upon
receipt and is included in interest and dividend income, respectively.
Security transactions are recorded as of trade date. Gains and losses on
sales of investments are calculated on the identified cost method for both
financial reporting and federal income tax purposes.
58 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
C. Foreign Currency Translation
The books and records of the Trust are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars using
current exchange rates.
Net realized gains and losses on foreign currency transactions, if any,
represent, among other things, the net realized gains and losses on
foreign currency contracts 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 on the Statement of Operations from the effects of changes in
the market prices of those securities but are included with the net
realized and unrealized gain or loss on investments.
D. Forward Foreign Currency Contracts
The Trust may enter into forward foreign currency contracts ("contracts")
for the purchase or sale of a specific foreign currency at a fixed price
on a future date. All contracts are marked to market daily at the
applicable exchange rates, and any resulting unrealized appreciation or
depreciation is recorded in the Trust's financial statements. The Trust
records realized gains and losses at the time a contract 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.
During year ended April 30, 2018, the Trust had entered into various
forward foreign currency contracts that obligate the Trust to deliver or
take delivery of currencies at specified future maturity dates.
Alternatively, prior to the settlement date of a forward foreign currency
contract, the Trust may close out such contract by entering into an
offsetting contract. The average notional value of contracts open during
year ended April 30, 2018 was $5,451,876.
Forward foreign currency contracts outstanding at April 30, 2018 are
listed in the Schedule of Investments.
E. 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 net taxable income and net realized capital gains,
if any, to its shareowners. Therefore, no provision for federal Income
taxes is required. As of April 30, 2018, the Trust did not accrue any
interest or penalties with respect to uncertain tax positions, which, if
applicable, would be recorded as
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 59
an income tax expense on the Statement of Operations. Tax returns filed
within the prior three years remain subject to examination by federal and
state tax authorities.
The amount and character of income and capital gain distributions to
shareowners are determined in accordance with federal income tax rules,
which may differ from U.S. GAAP. Distributions in excess of net investment
income or net realized gains are temporary overdistributions for financial
statement purposes resulting from differences in the recognition or
reclassification of income or distributions for financial statement and
tax purposes. Capital accounts within the financial statements are
adjusted for permanent book/tax differences to reflect tax character, but
are not adjusted for temporary differences.
At April 30, 2018, the Trust reclassified $21,948,862 to decrease paid-in
capital, $125,536 to decrease distributions in excess of net investment
income and $21,823,326 to decrease accumulated net realized loss on
investments to reflect permanent book/tax differences. These adjustments
have no impact on the net assets or results of operations.
At April 30, 2018, the Trust was permitted to carry forward $2,365,189 of
short-term capital losses and $29,055,262 of long-term capital losses
without limitation. Additionally, at April 30, 2018, the Trust had a net
capital loss carryforward of $1,249,417 which will expire in 2019 if not
utilized. Since unlimited losses are required to be used first, loss carry
forwards that are subject to expiration may be more likely to expire
unused.
Capital loss carryforward not utilized and expired in 2018 amounts to
$21,948,862.
The tax character of distributions paid to shareowners during the years
ended April 30, 2018 and April 30, 2017 were as follows:
--------------------------------------------------------------------------
2018 2017
--------------------------------------------------------------------------
Distributions paid from:
Ordinary income $10,499,315 $12,024,216
--------------------------------------------------------------------------
Total $10,499,315 $12,024,216
==========================================================================
60 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
The following shows the components of distributable earnings (losses) on a
federal income tax basis at April 30, 2018:
--------------------------------------------------------------------------
2018
--------------------------------------------------------------------------
Distributable earnings:
Undistributed ordinary income $ 644,023
Capital loss carryforward (32,669,868)
Other book/tax temporary differences (1,973,057)
Unrealized appreciation 4,320,661
--------------------------------------------------------------------------
Total $(29,678,241)
==========================================================================
The difference between book-basis and tax-basis unrealized depreciation is
primarily attributable to the realization for tax purposes of unrealized
gains on investments in passive foreign investment companies, the book/tax
differences in the accrual of income on securities in default, the
difference between book and tax amortization methods and discounts on
fixed income securities.
F. Insurance Linked Securities ("ILS")
The Trust invests in event-linked bonds. Event-linked bonds are floating
rate debt obligations for which the return of principal and the payment of
interest are contingent on the non-occurrence of a pre-defined "trigger"
event, such as a hurricane or an earthquake of a specific magnitude. The
trigger event's magnitude may be based on losses to a company or industry,
industry indexes or readings of scientific instruments, or may be based on
specified actual losses. If a trigger event occurs, as defined within the
terms of an event-linked bond, the Trust may lose a portion or all of its
accrued interest and/or principal invested in such event-linked bond. The
Trust is entitled to receive principal and interest payments so long as no
trigger event occurs of the description and magnitude specified by the
instrument. In addition to the specified trigger events, event-linked
bonds may expose the Trust to other risks, including but not limited to
issuer (credit) default, adverse regulatory or jurisdictional
interpretations and adverse tax consequences.
The Trust's investments in ILS may include special purpose vehicles
("SPVs") or similar instruments structured to comprise a portion of a
reinsurer's catastrophe-oriented business, known as quota share
instruments (sometimes referred to as reinsurance sidecars), or to provide
reinsurance relating to specific risks to insurance or reinsurance
companies through a collateralized instrument, known as collateralized
reinsurance. Structured reinsurance investments also may include industry
loss warranties ("ILWs"). A traditional ILW takes the form of a bilateral
reinsurance contract, but there are also products that take the form of
derivatives, collateralized structures, or exchange traded instruments.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 61
Structured reinsurance investments, including quota share instruments,
collateralized reinsurance investments and ILWs, generally are subject to
the same risks as event-linked bonds. In addition, where the instruments
are based on the performance of underlying reinsurance contracts, the
Trust has limited transparency into the individual underlying contracts,
and therefore must rely upon the risk assessment and sound underwriting
practices of the issuer. Accordingly, it may be more difficult for the
Adviser to fully evaluate the underlying risk profile of the Trust's
structured reinsurance investments, and therefore the Trust's assets are
placed at greater risk of loss than if the Adviser had more complete
information. Structured reinsurance instruments generally will be
considered illiquid securities by the Trust. These securities may be
difficult to purchase, sell or unwind. Illiquid securities also may be
difficult to value. If the Trust is forced to sell an illiquid asset, the
Trust may be forced to sell at a loss.
G. Purchased Options
The Trust may purchase put and call options to seek increase total return.
Purchased call and put options entitle the Trust to buy and sell a
specified number of shares or units of a particular security, currency or
index at a specified price at a specific date or within a specific period
of time. Upon the purchase of a call or put option, the premium paid by
the Trust is included on the Statement of Assets and Liabilities as an
investment. All premiums are marked-to-market daily, and any unrealized
appreciation or depreciation is recorded on the Trust's financial
statements. As the purchaser of an index option, the Trust has the right
to receive a cash payment equal to any depreciation in the value of the
index below the strike price of the option (in the case of a put) or equal
to any appreciation in the value of the index over the strike price of the
option (in the case of a call) as of the valuation date of the option.
Premiums paid for purchased calls and put options which have expired are
treated as realized losses on investments on the Statement of Operations.
Upon the exercise or closing of a purchased put option, the premium is
offset against the proceeds on the sale of the underlying security or
financial instrument in order to determine the realized gain or loss on
investments. Upon the exercise or closing of a purchased call option, the
premium is added to the cost of the security or financial instrument. The
risk associated with purchasing option contracts is limited to the premium
originally paid. The average value of purchased options contracts open
during the year ended April 30, 2018 was $0. Purchased option contracts
outstanding at April 30, 2018 are listed within the Schedule of
Investments.
62 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
H. Risks
At times, the Trust's investments may represent industries or industry
sectors that are interrelated or have common risks, making the Trust more
susceptible to any economic, political, or regulatory developments or
other risks affecting those industries and sectors.
The value of securities held by the Trust may go up or down, sometimes
rapidly or unpredictably, due to general market conditions, such as real
or perceived adverse economic, political or regulatory conditions,
inflation, changes in interest rates, lack of liquidity in the bond
markets or adverse investor sentiment. In the past several years,
financial markets have experienced increased volatility, depressed
valuations, decreased liquidity and heightened uncertainty. These
conditions may continue, recur, worsen or spread.
The Trust invests in below investment grade (high yield) debt securities,
floating rate loans and insurance-linked securities. The Trust may invest
in securities and other obligations of any credit quality, including those
that are rated below investment grade, or are unrated but are determined
by the Adviser to be of equivalent credit quality. Below investment grade
securities are commonly referred to as "junk bonds" and are considered
speculative with respect to the issuer's capacity to pay interest and
repay principal. Below investment grade securities, including floating
rate loans, involve greater risk of loss, are subject to greater price
volatility, and may be less liquid and more difficult to value, especially
during periods of economic uncertainty or change, than higher rated debt
securities. Certain securities in which the Trust invests, including
floating rate loans, once sold, may not settle for an extended period (for
example, several weeks or even longer). The Trust will not receive its
sale proceeds until that time, which may constrain the Trust's ability to
meet its obligations. The Trust may invest in securities of issuers that
are in default or that are in bankruptcy. The value of collateral, if any,
securing a floating rate loan can decline or may be insufficient to meet
the issuer's obligations or may be difficult to liquidate. No active
trading market may exist for many floating rate loans, and many loans are
subject to restrictions on resale. Any secondary market may be subject to
irregular trading activity and extended settlement periods. The Trust's
investments in certain foreign markets or countries with limited
developing markets may subject the Trust to a greater degree of risk than
in a developed market. These risks include disruptive political or
economic conditions and the possible imposition of adverse governmental
laws or currency exchange restrictions. The Trust may invest up to 50% of
its total assets in illiquid securities. Illiquid securities are
securities that cannot be disposed of by the Trust within seven days in
the ordinary course of business at approximately the amounts which the
Trust values the securities.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 63
Interest rates in the U.S. recently have been historically low, so the
Trust faces a heightened risk that interest rates may rise. A general rise
in interest rates could adversely affect the price and liquidity of fixed
income securities.
With the increased use of technologies such as the Internet to conduct
business, the Trust is susceptible to operational, information security
and related risks. While the Trust's Adviser has established business
continuity plans in the event of, and risk management systems to prevent,
limit or mitigate, such cyber-attacks, there are inherent limitations in
such plans and systems including the possibility that certain risks have
not been identified. Furthermore, the Trust cannot control the
cybersecurity plans and systems put in place by service providers to the
Trust such as Brown Brothers Harriman & Co., the Trust's custodian and
accounting agent, and American Stock Transfer & Trust Company ("AST"), the
Trust's transfer agent. In addition, many beneficial owners of Trust
shares hold them through accounts at broker-dealers, retirement platforms
and other financial market participants over which neither the fund nor
Amundi Pioneer exercises control. Each of these may in turn rely on
service providers to them, which are also subject to the risk of
cyber-attacks. Cybersecurity failures or breaches at Amundi Pioneer or the
Trust's service providers or intermediaries have the ability to cause
disruptions and impact business operations potentially resulting in
financial losses, interference with the Trust's ability to calculate its
NAV, impediments to trading, the inability of Trust shareowners to effect
share purchases or receive distributions, loss of or unauthorized access
to private shareowner information and violations of applicable privacy and
other laws, regulatory fines, penalties, reputational damage, or
additional compliance costs. Such costs and losses may not be covered
under any insurance. In addition, maintaining vigilance against
cyber-attacks may involve substantial costs over time, and system
enhancements may themselves be subject to cyber-attacks.
I. Repurchase Agreements
Repurchase agreements are arrangements under which the Trust purchases
securities from a broker-dealer or a bank, called the counterparty, upon
the agreement of the counterparty to repurchase the securities from the
Trust at a later date, and at a specific price, which is typically higher
than the purchase price paid by the Trust. The securities purchased serve
as the Trust's collateral for the obligation of the counterparty to
repurchase the securities. The value of the collateral, including accrued
interest, is required to be equal to or in excess of the repurchase price.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Trust's custodian or a subcustodian of the
Trust. The Adviser is responsible for determining that the value of the
collateral remains at least equal to the repurchase price. In the
64 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
event of a default by the counterparty, the Trust is entitled to sell the
securities, but the Trust may not be able to sell them for the price at
which they were purchased, thus causing a loss to the Trust. Additionally,
if the counterparty becomes insolvent, there is some risk that the Trust
will not have a right to the securities, or the immediate right to sell
the securities. Open repurchase agreements as of April 30, 2018 are
disclosed in the Trust's Schedule of Investments.
J. Credit Default Swap Contracts
A credit default swap is a contract between a buyer of protection and a
seller of protection against a pre-defined credit event on an underlying
reference obligation, which may be a single security or a basket or index
of securities. The Trust may buy or sell credit default swap contracts to
seek to increase the Trust's income, or to attempt to hedge the risk of
default on portfolio securities. A credit default swap index is used to
hedge risk or take a position on a basket of credit entities or indices.
As a seller of protection, the Trust would be required to pay the notional
(or other agreed-upon) value of the referenced debt obligation to the
counterparty in the event of a default by a U.S. or foreign corporate
issuer of a debt obligation, which would likely result in a loss to the
Trust. In return, the Trust would receive from the counterparty a periodic
stream of payments during the term of the contract provided that no event
of default occurred. The maximum exposure of loss to the seller would be
the notional value of the credit default swaps outstanding. If no default
occurs, the Trust would keep the stream of payments and would have no
payment obligation. The Trust may also buy credit default swap contracts
in order to hedge against the risk of default of debt securities, in which
case the Trust would function as the counterparty referenced above.
As a buyer of protection the Trust makes an upfront or periodic payment to
the protection seller in exchange for the right to receive a contingent
payment. An upfront payment made by the Trust, as the protection buyer, is
recorded as a component of "Swap contracts, at value" on the Statement of
Assets and Liabilities. Periodic payments received or paid by the Trust
are recorded as realized gains or losses on the Statement of Operations.
Credit default swap contracts are marked-to-market daily using valuations
supplied by independent sources and the change in value, if any, is
recorded within the "Swap contracts, at value" line item on the Statement
of Assets and Liabilities. Payments received or made as a result of a
credit event or upon termination of the contract are recognized, net of
the appropriate amount of the upfront payment, as realized gains or losses
on the Statement of Operations.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 65
Credit default swap contracts involving the sale of protection may involve
greater risks than if the Trust had invested in the referenced debt
instrument directly. Credit default swap contracts are subject to general
market risk, liquidity risk, counterparty risk and credit risk. If the
Trust is a protection buyer and no credit event occurs, it will lose its
investment. If the Trust is a protection seller and a credit event occurs,
the value of the referenced debt instrument received by the Trust,
together with the periodic payments received, may be less than the amount
the Trust pays to the protection buyer, resulting in a loss to the Trust.
Certain swap contracts that are cleared through a central clearinghouse
are referred to as centrally cleared swaps. All payments made or received
by the Trust are pursuant to a centrally cleared swap contracts with the
central clearing party rather than the original counterparty. Upon
entering into a centrally cleared swap contract, the Trust is required to
make an initial margin deposit, either in cash or in securities. The daily
change in value on open centrally cleared swap contracts is recorded as
"Variation margin for centrally cleared swaps" on the Statement of Assets
and Liabilities. Cash received from or paid to the broker related to
previous margin movement is held in a segregated account at the broker and
is recorded as either "Due from broker for swaps" or "Due to broker for
swaps" on the Statement of Assets and Liabilities.
The amount of cash deposited with the broker as collateral at April 30,
2018 is recorded as "Swaps collateral" on the Statement of Assets and
Liabilities.
Open credit default swap contracts at April 30, 2018 are listed in the
Schedule of Investments. The average notional value of credit default swap
contracts open during the year ended April 30, 2018 was $117,372.
K. Automatic Dividend Reinvestment Plan
All shareowners whose shares are registered in their own names
automatically participate in the Automatic Dividend Reinvestment Plan (the
"Plan"), under which participants receive all dividends and capital gain
distributions (collectively, dividends) in full and fractional shares of
the Trust in lieu of cash. Shareowners may elect not to participate in the
Plan. Shareowners not participating in the Plan receive all dividends and
capital gain distributions in cash. Participation in the Plan is
completely voluntary and may be terminated or resumed at any time without
penalty by notifying American Stock Transfer & Trust Company, the agent
for shareowners in administering the Plan (the "Plan Agent"), in writing
prior to any dividend record date; otherwise such termination or
resumption will be effective with respect to any subsequently declared
dividend or other distribution.
66 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
If a shareowner's shares are held in the name of a brokerage firm, bank or
other nominee, the shareowner can ask the firm or nominee to participate
in the Plan on the shareowner's behalf. If the firm or nominee does not
offer the Plan, dividends will be paid in cash to the shareowner of
record. A firm or nominee may reinvest a shareowner's cash dividends in
shares of the Trust on terms that differ from the terms of the Plan.
Whenever the Trust declares a dividend on shares payable in cash,
participants in the Plan will receive the equivalent in shares acquired by
the Plan Agent either (i) through receipt of additional unissued but
authorized shares from the Trust or (ii) by purchase of outstanding shares
on the New York Stock Exchange or elsewhere. If, on the payment date for
any dividend, the net asset value per 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
shares. The number of newly issued shares to be credited to each account
will be determined by dividing the dollar amount of the dividend by the
net asset value per 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 share is greater than the market value
(market discount), the Plan Agent will invest the dividend amount in
shares acquired in open-market purchases. There are no brokerage charges
with respect to newly issued 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 be able to transfer the shares to another broker and
continue to participate in the Plan.
2. Management Agreement
The Adviser manages the Trust's portfolio. Management fees payable under the
Trust's Advisory Agreement with the Adviser are calculated daily at the annual
rate of 0.85% of the Trust's average daily managed assets. "Managed assets"
means (a) the total assets of the Trust, including any form of investment
leverage, minus (b) all accrued liabilities incurred in the normal course of
operations, which shall not include any liabilities or obligations attributable
to investment leverage obtained through (i) indebtedness of any type (including,
without limitation, borrowing through a credit facility or the issuance of debt
securities), (ii) the issuance of preferred stock or other similar preference
securities, and/or (iii) any other means. For the year ended April 30, 2018 the
net management fee was 0.85% of the Trust's average daily managed assets, which
was equivalent to 1.22% of the Trust's average daily net assets.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 67
In addition, under the management and administration agreements, certain other
services and costs are paid by the Adviser and reimbursed by the Trust. At April
30, 2018, $23,412 was payable to the Adviser related to management costs,
administrative costs and certain other services is included in "Due to
affiliates" on the Statement of Assets and Liabilities.
3. Transfer Agent
American Stock Transfer & Trust Company ("AST") serves as the transfer agent
with respect to the Trust's shares. The Trust pays AST an annual fee, as is
agreed to from time to time by the Trust and AST, for providing such services.
In addition, the Trust reimbursed the transfer agent for out-of-pocket expenses
incurred by the transfer agent related to shareowner communications activities
such as proxy and statement mailings and outgoing calls.
4. Assets and Liabilities Offsetting
The Trust has entered into an International Swaps and Derivatives Association,
Inc. Master Agreement (ISDA Master Agreement) or similar agreement with
substantially all its derivative counterparties. An ISDA Master Agreement is a
bilateral agreement between the Trust and a counterparty that governs the
trading of certain OTC derivatives and typically contains, among other things,
close-out and set-off provisions which apply upon the occurrence of an event of
default and/or a termination event as defined under the relevant ISDA Master
Agreement. The ISDA Master Agreement may also give a party the right to
terminate all transactions traded under such agreement if, among other things,
there is deterioration in the credit quality of the other party. Upon an event
of default or a termination of the ISDA Master Agreement, the non-defaulting
party has the right to close out all transactions under such agreement and to
net amounts owed under each transaction to determine one net amount payable by
one party to the other. The right to close out and net payments across all
transactions under the ISDA Master Agreement could result in a reduction of the
Trust's credit risk to its counterparty equal to any amounts payable by the
Trust under the applicable transactions, if any. However, the Trust's right to
setoff may be restricted or prohibited by the bankruptcy or insolvency laws of
the particular jurisdiction to which each specific ISDA of each counterparty is
subject.
The collateral requirements for derivatives transactions under an ISDA Master
Agreement are governed by a credit support annex to the ISDA Master Agreement.
Collateral requirements are generally determined at the close of business each
day and are typically based on changes in market values for each transaction
under an ISDA Master Agreement and netted into one amount for such agreement.
Generally, the amount of collateral due from or to a counterparty is subject to
threshold (a minimum transfer amount) before a transfer is required, which may
vary by counterparty. Collateral pledged for
68 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
the benefit of the Trust and/or counterparty is held in segregated accounts by
the Trust's custodian and cannot be sold, re-pledged, assigned or otherwise
used while pledged. Cash that has been segregated to cover the Trust's
collateral obligations, if any, will be reported separately on the Statement of
Assets and Liabilities as "Swaps collateral". Securities pledged by the Trust as
collateral, if any, are identified as such in the Schedule of Investments.
Financial instruments subject to an enforceable master netting agreement such
as an ISDA Master Agreement have not been offset on the Statement of Assets
and Liabilities. The following charts show gross assets and liabilities of the
Trust as of April 30, 2018:
------------------------------------------------------------------------------------------------------
Derivative
Assets
Subject to Derivatives Non-Cash Cash Net Amount
Master Netting Available Collateral Collateral of Derivative
Counterparty Agreement for Offset Received (a) Received (a) Assets (b)
------------------------------------------------------------------------------------------------------
Brown Brothers $ 9,037 $ -- $ -- $ -- $ 9,037
Harriman & Co.
Goldman Sachs 20,042 (3,453) -- -- 16,589
International
------------------------------------------------------------------------------------------------------
Total $29,079 $ (3,453) $ -- $ -- $25,626
======================================================================================================
------------------------------------------------------------------------------------------------------
Derivative
Liabilities
Subject to Derivatives Non-Cash Cash Net Amount
Master Netting Available Collateral Collateral of Derivative
Counterparty Agreement for Offset Pledged (a) Pledged (a) Liabilities (c)
------------------------------------------------------------------------------------------------------
Goldman Sachs $ 3,453 $(3,453) $ -- $ -- $ --
International
------------------------------------------------------------------------------------------------------
Total $ 3,453 $(3,453) $ -- $ -- $ --
======================================================================================================
(a) The amount presented here may be less than the total amount of collateral
received/pledged as the net amount of derivative assets and liabilities
cannot be less than $0.
(b) Represents the net amount due from the counterparty in the event of
default.
(c) Represents the net amount payable to the counterparty in the event of
default.
5. Additional Disclosures about Derivative Instruments and Hedging Activities
The Trust's use of derivatives may enhance or mitigate the Trust's exposure to
the following risks:
Interest rate risk relates to the fluctuations in the value of interest-bearing
securities due to changes in the prevailing levels of market interest rates.
Credit risk relates to the ability of the issuer of a financial instrument to
make further principal or interest payments on an obligation or commitment that
it has to the Trust.
Foreign exchange rate risk relates to fluctuations in the value of an asset or
liability due to changes in currency exchange rates.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 69
Equity risk relates to the fluctuations in the value of financial instruments as
a result of changes in market prices (other than those arising from interest
rate risk or foreign exchange rate risk), whether caused by factors specific to
an individual investment, its issuer, or all factors affecting all instruments
traded in a market or market segment.
Commodity risk relates to the risk that the value of a commodity or commodity
index will fluctuate based on increases or decreases in the commodities market
and factors specific to a particular industry or commodity.
The fair value of open derivative instruments (not considered to be hedging
instruments for accounting disclosure purposes) by risk exposure at April 30,
2018 was as follows:
--------------------------------------------------------------------------------------
Statement of Assets and Liabilities
Foreign
Interest Credit Exchange Equity Commodity
Rate Risk Risk Rate Risk Risk Risk
--------------------------------------------------------------------------------------
Assets:
Unrealized
appreciation on
forward foreign
currency contracts $ -- $ -- $ 5,584 $ -- $ --
--------------------------------------------------------------------------------------
Total Value $ -- $ -- $ 5,584 $ -- $ --
======================================================================================
Liabilities:
Swap contracts,
at value $ -- $ 3,658 $ -- $ -- $ --
--------------------------------------------------------------------------------------
Total Value $ -- $ 3,658 $ -- $ -- $ --
======================================================================================
The effect of derivative instruments (not considered to be hedging instruments
for accounting disclosure purposes) on the Statement of Operations by risk
exposure at April 30, 2018 was as follows:
--------------------------------------------------------------------------------------
Statement of Operations
Foreign
Interest Credit Exchange Equity Commodity
Rate Risk Risk Rate Risk Risk Risk
--------------------------------------------------------------------------------------
Net realized
gain (loss):
Swap contracts $ -- $ 5,211 $ -- $ -- $ --
Forward foreign
currency contracts -- -- (430,000) -- --
--------------------------------------------------------------------------------------
Total Value $ -- $ 5,211 $(430,000) $ -- $ --
======================================================================================
Change in net
unrealized
appreciation
(depreciation) on:
Swap contracts $ -- $20,042 $ -- $ -- $ --
Forward foreign
currency contracts -- -- (15,971) -- --
--------------------------------------------------------------------------------------
Total Value $ -- $20,042 $ (15,971) $ -- $ --
======================================================================================
70 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
6. Unfunded Loan Commitments
The Trust may enter into unfunded loan commitments. Unfunded loan commitments
may be partially or wholly unfunded. During the contractual period, the Trust is
obliged to provide funding to the borrower upon demand. A fee is earned by the
Trust on the unfunded commitment and is recorded as interest income on the
Statement of Operations.
As of April 30, 2018, the Trust had the following unfunded loan commitments
outstanding:
----------------------------------------------------------------------------------------------------
Unrealized
Appreciation/
Loan Principal Cost Value (Depreciation)
----------------------------------------------------------------------------------------------------
Centene Corp. $1,515,000 $1,515,000 $1,515,000 $ --
Nationstar Mortgage
Holdings, Inc. (Tranche A) 609,091 609,091 609,091 --
Nationstar Mortgage
Holdings, Inc. (Tranche B) 609,091 609,091 609,091 --
Nationstar Mortgage
Holdings, Inc. (Tranche C) 456,818 456,818 456,818 --
----------------------------------------------------------------------------------------------------
Total Value $3,190,000 $3,190,000 $3,190,000 $ --
====================================================================================================
7. Trust Shares
Transactions in shares of beneficial interest for the year ended April 30, 2018
and the year ended April 30, 2017 were as follows:
--------------------------------------------------------------------------------
4/30/18 4/30/17
--------------------------------------------------------------------------------
Shares outstanding at beginning of year 8,332,790 8,332,790
--------------------------------------------------------------------------------
Shares outstanding at end of year 8,332,790 8,332,790
================================================================================
8. Credit Agreement
Effective January 27, 2017, the Trust extended the maturity of its existing
Revolving Credit Facility (the "credit agreement") with the Bank of Scotia to
January 27, 2020. There is a $70 million borrowing limit.
At April 30, 2018, the Trust had a borrowing outstanding under the credit
agreement totaling $64,000,000. The interest rate charged at April 30, 2018 was
2.87%. During the year ended April 30, 2018, the average daily balance was
$63,271,233 at an average interest rate of 2.44%. Interest expense of $1,545,576
in connection with the credit agreement is included on the Statement of
Operations.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 71
The Trust is required to maintain 300% asset coverage with respect to amounts
outstanding under the credit agreement. Asset coverage is calculated by
subtracting the Trust's total liabilities not including any bank loans and
senior securities, from the Trust's total assets and dividing such amount by the
principal amount of the borrowing outstanding.
9. Subsequent Events
A monthly dividend was declared on May 4, 2018 from undistributed and
accumulated net investment income of $0.0950 per share payable May 31, 2018, to
shareowners of record on May 16, 2018.
72 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and the Shareholders of
Pioneer Diversified High Income Trust:
--------------------------------------------------------------------------------
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of Pioneer
Diversified High Income Trust (the "Trust"), including the schedule of
investments, as of April 30, 2018, and the related statements of operations,
changes in net assets, and the financial highlights for the year then ended and
the related notes and the financial highlights for the year ended April 30, 2014
(collectively referred to as the "financial statements"). The statement of
changes in net assets for the year ended April 30, 2017 and the financial
highlights for the periods ended April 30, 2015, April 30, 2016 and April 30,
2017 were audited by another independent registered public accounting firm whose
report, dated June 19, 2017, expressed an unqualified opinion on the statement
of changes in net assets and those financial highlights. In our opinion, the
financial statements present fairly, in all material respects, the financial
position of Pioneer Diversified High Income Trust at April 30, 2018, the results
of its operations, the changes in its net assets, and the financial highlights
for the year ended and the financial highlights for the year ended April 30,
2014, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust's management. Our
responsibility is to express an opinion on the Trust's financial statements
based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) ("PCAOB") and are required to
be independent with respect to the Trust in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Trust is not required to have,
nor were we engaged to perform, an audit of the Trust's internal control over
financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting, but not for the
purpose of expressing an opinion on the effectiveness of the Trust's internal
control over financial reporting. Accordingly, we express no such opinion.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 73
Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of April 30, 2018, by correspondence with the custodian and brokers or
by other appropriate auditing procedures where replies from brokers were not
received. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
/s/ Ernst & Young LLP
Boston, Massachusetts
We have served as the Trust's auditor since 2017.
June 25, 2018
74 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
ADDITIONAL INFORMATION
During the period, there have been no material changes in the Trust's investment
objective or fundamental policies that have not been approved by the
shareowners. There have been no changes in the Trust's charter or By-Laws that
would delay or prevent a change in control of the Trust which has not been
approved by the shareowners. During the period, there have been no changes in
the principal risk factors associated with investment in the Trust.
During the period there were no changes in the persons who are primarily
responsible for the day-to-day management of the Trust's portfolio. Charles
Melchreit, a portfolio manager of the Trust during the 12-month period ended
April 30, 2018, departed from Amundi Pioneer effective June 8, 2018. Andrew
Feltus, Jonathan Sharkey and Chin Liu continue to be responsible for the day-
to-day management of the Trust. In addition, effective June 8, 2018, Lawrence R.
Zeno, a vice president and portfolio manager at Amundi Pioneer, became a
portfolio manager of the Trust. Lawrence Zeno is a Vice President and Portfolio
Manager based in Chicago. His primary responsibility is the CMBS sector. He also
manages the residential NPL allocation and co-manages the legacy sub-prime
sector. Previously, Lawrence was a Partner and Senior Manager of Trading at
Asset Allocation & Management Company, where he also managed the CMBS and RMBS
sectors. He holds a B.A. from Northwestern University and has been in the
investment industry since 1989. Lawrence Zeno joined Amundi Pioneer in 2001.
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 shares
in the open market.
Change in Independent Registered Public Accounting Firm
Prior to July 3, 2017 Pioneer Investment Management, Inc. (the "Adviser"), the
Trust's investment adviser, was an indirect, wholly owned subsidiary of
UniCredit S.p.A. ("UniCredit"). On that date, UniCredit completed the sale of
its Pioneer Investments business, which includes the Adviser, to Amundi (the
"Transaction"). As a result of the Transaction, the Adviser became an indirect,
wholly owned subsidiary of Amundi. Amundi is controlled by Credit Agricole S.A.
Amundi is headquartered in Paris, France, and, as of September 30, 2016, had
more than $1.1 trillion in assets under management worldwide. Deloitte & Touche
LLP ("D&T"), the Trust's previous independent registered public accounting firm,
informed the Audit Committee and the Board that it would no longer be
independent with respect to the Trust upon the completion of the Transaction as
a result of certain services being provided to Amundi and Credit Agricole, and,
accordingly, that it intended to resign as the Trust's independent registered
public accounting firm upon the completion of the Transaction. D&T's resignation
was effective on July 3, 2017, when the Transaction was completed.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 75
During the periods as to which D&T has served as the Trust's independent
registered public accounting firm, including the Trust's two most recent fiscal
years, D&T's reports on the Trust's financial statements have not contained an
adverse opinion or disclaimer of opinion and have not been qualified or modified
as to uncertainty, audit scope or accounting principles. Further, there have
been no disagreements with D&T on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to the satisfaction of D&T, would have caused D&T to make
reference to the subject matter of the disagreement in connection with its
report on the financial statements. In addition, there have been no reportable
events of the kind described in Item 304(a)(1)(v) of Regulation S-K under the
Securities Exchange Act of 1934.
Effective immediately following the completion of the Transaction on July 3,
2017, the Board, acting upon the recommendation of the Audit Committee, engaged
a new independent registered public accounting firm, Ernst & Young LLP ("EY"),
for the Trust's fiscal year ended April 30, 2018.
Prior to its engagement, EY had advised the Trust's Audit Committee that EY had
identified the following matters, in each case relating to services rendered by
other member firms of Ernst & Young Global Limited, all of which are located
outside the United States, to UniCredit and certain of its subsidiaries during
the period commencing July 1, 2016, that it determined to be inconsistent with
the auditor independence rules set forth by the Securities and Exchange
Commission ("SEC"): (a) project management support services to UniCredit in the
Czech Republic, Germany, Italy, Serbia and Slovenia in relation to twenty-two
projects, that were determined to be inconsistent with Rule 2-01(c)(4)(vi) of
Regulation S-X (management functions); (b) two engagements for UniCredit in
Italy where fees were contingent/success based and that were determined to be
inconsistent with Rule 2-01(c)(5) of Regulation S-X (contingent fees); (c) four
engagements where legal and expert services were provided to UniCredit in the
Czech Republic and Germany, and twenty engagements where the legal advisory
services were provided to UniCredit in Austria, Czech Republic, Italy and
Poland, that were determined to be inconsistent with Rule 2-01(c)(4)(ix) and (x)
of Regulation S-X (legal and expert services); and (d) two engagements for
UniCredit in Italy involving assistance in the sale of certain assets, that were
determined to be inconsistent with Rule 2-01(c)(4)(viii) of Regulation S-X
(broker-dealer, investment adviser or investment banking services). None of the
foregoing services involved the Trust, any of the other Trusts in the Pioneer
Family of Trusts or any other Pioneer entity sold by UniCredit in the
Transaction.
76 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
EY advised the Audit Committee that it had considered the matters described
above and had concluded that such matters would not impair EY's ability to
exercise objective and impartial judgment in connection with the audits of the
financial statements of the Trust under the SEC and Public Company Accounting
Oversight Board independence rules, and that a reasonable investor with
knowledge of all relevant facts and circumstances would reach the same
conclusion. Management and the Audit Committee considered these matters and
discussed the matters with EY and, based upon EY's description of the matters
and statements made by EY, Management and the Audit Committee believe that EY
will be capable of exercising objective and impartial judgment in connection
with the audits of the financial statements of the Trust, and Management further
believes that a reasonable investor with knowledge of all relevant facts and
circumstances would reach the same conclusion.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 77
Trustees, Officers and Service Providers
Investment Adviser
Amundi Pioneer Asset Management, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Principal Underwriter
Amundi Pioneer Distributor, Inc.
Legal Counsel
Morgan, Lewis & Bockius LLP
Shareowner Services and Transfer Agent
American Stock Transfer & Trust Company
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during the
most recent 12-month period ended June 30 is publicly available to shareowners
at www.amundipioneer.com. This information is also available on the Securities
and Exchange Commission's web site at www.sec.gov.
Trustees and Officers
The Trust's Trustees and officers are listed below, together with their
principal occupations and other directorships they have held during at least the
past five years. Trustees who are interested persons of the Trust within the
meaning of the 1940 Act are referred to as Interested Trustees. Trustees who are
not interested persons of the Trust are referred to as Independent Trustees.
Each of the Trustees serves as a Trustee of each of the 44 U.S. registered
investment portfolios for which Amundi Pioneer serves as investment adviser (the
"Pioneer Funds"). The address for all Trustees and all officers of the Trust is
60 State Street, Boston, Massachusetts 02109.
The Statement of Additional Information of the Fund includes additional
information about the Trustees and is available, without charge, upon request,
by calling 1-800-225-6292.
78 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
Independent Trustees
------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Term of Office and Other Directorships
Position Held With the Trust Length of Service Principal Occupation Held by Trustee
------------------------------------------------------------------------------------------------------------------------------------
Thomas J. Perna (67) Class II Trustee since Private investor (2004 - 2008 and 2013 - Director, Broadridge
Chairman of the Board 2007. Term expires in present); Chairman (2008 - 2013) and Chief Financial Solutions, Inc.
and Trustee 2018 Executive Officer (2008 - 2012), Quadriserv, (investor communications and
Inc. (technology products for securities securities processing
lending industry); and Senior Executive Vice provider for financial
President, The Bank of New York (financial services industry) (2009 -
and securities services) (1986 - 2004) present); Director,
Quadriserv, Inc. (2005 -
2013); and Commissioner, New
Jersey State Civil Service
Commission (2011 - 2015)
------------------------------------------------------------------------------------------------------------------------------------
David R. Bock (74) Class III Trustee Managing Partner, Federal City Capital Director of New York Mortgage
Trustee since 2007. Term Advisors (corporate advisory services Trust (publicly-traded
expires in 2019. company) (1997 - 2004 and 2008 - present); mortgage REIT) (2004 - 2009,
Interim Chief Executive Officer, Oxford 2012 - present); Director of
Analytica, Inc. (privately held research and The Swiss Helvetia Fund, Inc.
consulting company) (2010); Executive Vice (closed-end fund) (2010 -
President and Chief Financial Officer, present); Director of Oxford
I-trax, Inc. (publicly traded health care Analytica, Inc. (2008 -
services company) (2004 - 2007); and present); and Director of
Executive Vice President and Chief Financial Enterprise Community
Officer, Pedestal Inc. (internet-based Investment, Inc.
mortgage trading company) (2000 - 2002); (privately-held affordable
Private Consultant (1995 - 1997); Managing housing finance company)
Director, Lehman Brothers (1992 - 1995); and (1985 - 2010)
Executive, The World Bank (1979 - 1992)
------------------------------------------------------------------------------------------------------------------------------------
Benjamin M. Friedman (73) Class I Trustee since William Joseph Maier Professor of Political Trustee, Mellon Institutional
Trustee 2008. Term expires in Economy, Harvard University (1972 - present) Funds Investment Trust and
2020. Mellon Institutional Funds
Master Portfolio (oversaw 17
portfolios in fund complex)
(1989 - 2008)
------------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (70) Class I Trustee since Founding Director, Vice-President and None
Trustee 2007. Term expires in Corporate Secretary, The Winthrop Group, Inc.
2020. (consulting firm) (1982 - present); Desautels
Faculty of Management, McGill University
(1999 - 2017); and Manager of Research
Operations and Organizational Learning, Xerox
PARC, Xerox's advance research center
(1990-1994)
------------------------------------------------------------------------------------------------------------------------------------
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 79
Independent Trustees (continued)
------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Term of Office and Other Directorships
Position Held With the Trust Length of Service Principal Occupation Held by Trustee
------------------------------------------------------------------------------------------------------------------------------------
Lorraine H. Monchak (62) Class III Trustee Chief Investment Officer, 1199 SEIU Funds None
Trustee since 2015. Term (healthcare workers union pension funds)
expires in 2019. (2001 - present); Vice President -
International Investments Group, American
International Group, Inc. (insurance company)
(1993 - 2001); Vice President - Corporate
Finance and Treasury Group, Citibank, N.A.
(1980 - 1986 and 1990 - 1993); Vice President
- Asset/Liability Management Group, Federal
Farm Funding Corporation
(government-sponsored issuer of debt
securities) (1988 - 1990); Mortgage
Strategies Group, Shearson Lehman Hutton,
Inc. (investment bank) (1987 - 1988); and
Mortgage Strategies Group, Drexel Burnham
Lambert, Ltd. (investment bank) (1986 - 1987)
------------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (69) Class II Trustee since President and Chief Executive Officer, Director of New America High
Trustee 2007. Term expires in Newbury Piret Company (investment banking Income Fund, Inc. (closed-end
2018. firm) (1981 - present) investment company) (2004 -
present); and Member, Board
of Governors, Investment
Company Institute (2000 -
2006)
------------------------------------------------------------------------------------------------------------------------------------
Fred J. Ricciardi (71) Class II Trustee since Consultant (investment company services) None
Trustee 2014. Term expires in (2012 - present); Executive Vice President,
2018. BNY Mellon (financial and investment company
services) (1969 - 2012); Director, BNY
International Financing Corp. (financial
services) (2002 - 2012); and Director, Mellon
Overseas Investment Corp. (financial
services) (2009 - 2012)
------------------------------------------------------------------------------------------------------------------------------------
80 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
Interested Trustees
------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Term of Office and Other Directorships
Position Held With the Trust Length of Service Principal Occupation Held by Trustee
------------------------------------------------------------------------------------------------------------------------------------
Lisa M. Jones (56)* Class III Trustee Director, CEO and President of Amundi Pioneer None
Trustee, President and since 2015. Term Asset Management USA, Inc. (since September
Chief Executive Officer expires in 2019. 2014); Director, CEO and President of Amundi
Pioneer Asset Management, Inc. (since
September 2014); Director, CEO and President
of Amundi Pioneer Distributor, Inc. (since
September 2014); Director, CEO and President
of Amundi Pioneer Institutional Asset
Management, Inc. (since September 2014);
Chair, Amundi Pioneer Asset Management USA,
Inc., Amundi Pioneer Distributor, Inc. and
Amundi Pioneer Institutional Asset
Management, Inc. (September 2014 - 2018);
Managing Director, Morgan Stanley Investment
Management (2010 - 2013); and Director of
Institutional Business, CEO of International,
Eaton Vance Management (2005 - 2010)
------------------------------------------------------------------------------------------------------------------------------------
Kenneth J. Taubes (60)* Class I Trustee since Director and Executive Vice President (since None
Trustee 2014. Term expires in 2008) and Chief Investment Officer, U.S.
2020. (since 2010) of Amundi Pioneer Asset
Management USA, Inc.; Executive Vice
President and Chief Investment Officer, U.S.
of Amundi Pioneer (since 2008); Executive
Vice President of Amundi Pioneer
Institutional Asset Management, Inc. (since
2009); and Portfolio Manager of Amundi
Pioneer (since 1999)
------------------------------------------------------------------------------------------------------------------------------------
* Ms. Jones and Mr. Taubes are Interested Trustees because they are officers
or directors of the Trust's investment adviser and certain of its
affiliates.
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 81
Trust Officers
------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Term of Office and Other Directorships
Position Held With the Trust Length of Service Principal Occupation Held by Trustee
------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (53) Since 2007. Serves at Vice President and Associate General Counsel None
Secretary and Chief Legal the discretion of the of Amundi Pioneer since January 2008;
Officer Board Secretary and Chief Legal Officer of all of
the Pioneer Funds since June 2010; Assistant
Secretary of all of the Pioneer Funds from
September 2003 to May 2010; and Vice
President and Senior Counsel of Amundi
Pioneer from July 2002 to December 2007
------------------------------------------------------------------------------------------------------------------------------------
Carol B. Hannigan (57) Since 2010. Serves at Fund Governance Director of Amundi Pioneer None
Assistant Secretary the discretion of the since December 2006 and Assistant Secretary
Board of all the Pioneer Funds since June 2010;
Manager - Fund Governance of Amundi Pioneer
from December 2003 to November 2006; and
Senior Paralegal of Amundi Pioneer from
January 2000 to November 2003
------------------------------------------------------------------------------------------------------------------------------------
Thomas Reyes (55) Since 2010. Serves at Senior Counsel of Amundi Pioneer since May None
Assistant Secretary the discretion of the 2013 and Assistant Secretary of all the
Board Pioneer Funds since June 2010; and Counsel of
Amundi Pioneer from June 2007 to May 2013
------------------------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (58) Since 2008. Serves at Vice President - Fund Treasury of Amundi None
Treasurer and Chief Financial the discretion of the Pioneer; Treasurer of all of the Pioneer
and Accounting Officer Board Funds since March 2008; Deputy Treasurer of
Amundi Pioneer from March 2004 to February
2008; and Assistant Treasurer of all of the
Pioneer Funds from March 2004 to February
2008
------------------------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (53) Since 2007. Serves at Director - Fund Treasury of Amundi Pioneer; None
Assistant Treasurer the discretion of the and Assistant Treasurer of all of the Pioneer
Board Funds
------------------------------------------------------------------------------------------------------------------------------------
Gary Sullivan (60) Since 2007. Serves at Fund Accounting Manager - Fund Treasury of None
Assistant Treasurer the discretion of the Amundi Pioneer; and Assistant Treasurer of
Board all of the Pioneer Funds
------------------------------------------------------------------------------------------------------------------------------------
David F. Johnson (38) Since 2009. Serves at Fund Administration Manager - Fund Treasury None
Assistant Treasurer the discretion of the of Amundi Pioneer since November 2008;
Board Assistant Treasurer of all of the Pioneer
Funds since January 2009; and Client Service
Manager - Institutional Investor Services at
State Street Bank from March 2003 to March
2007
------------------------------------------------------------------------------------------------------------------------------------
82 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Term of Office and Other Directorships
Position Held With the Trust Length of Service Principal Occupation Held by Trustee
------------------------------------------------------------------------------------------------------------------------------------
Jean M. Bradley (65) Since 2010. Serves at Chief Compliance Officer of Amundi Pioneer None
Chief Compliance Officer the discretion of the and of all the Pioneer Funds since
Board March 2010; Chief Compliance Officer of
Amundi Pioneer Institutional Asset
Management, Inc. since January 2012; Chief
Compliance Officer of Vanderbilt Capital
Advisors, LLC since July 2012: Director of
Adviser and Portfolio Compliance at Amundi
Pioneer since October 2005; and Senior
Compliance Officer for Columbia Management
Advisers, Inc. from October 2003 to October
2005
------------------------------------------------------------------------------------------------------------------------------------
Kelly O'Donnell (47) Since 2007. Serves at Vice President - Investor Services Group of None
Anti-Money Laundering the discretion of the Amundi Pioneer and Anti-Money Laundering
Officer Board Officer of all the Pioneer Funds since 2006
------------------------------------------------------------------------------------------------------------------------------------
Pioneer Diversified High Income Trust | Annual Report | 4/30/18 83
This page is for your notes.
84 Pioneer Diversified High Income Trust | Annual Report | 4/30/18
How to Contact Amundi Pioneer
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
You can call American Stock Transfer & Trust Company (AST) for:
--------------------------------------------------------------------------------
Account Information 1-800-710-0935
Or write to AST:
--------------------------------------------------------------------------------
For Write to
General inquiries, lost dividend checks, American Stock
change of address, lost stock certificates, Transfer & Trust
stock transfer Operations Center
6201 15th Ave.
Brooklyn, NY 11219
Dividend reinvestment plan (DRIP) American Stock
Transfer & Trust
Wall Street Station
P.O. Box 922
New York, NY 10269-0560
Website www.amstock.com
For additional information, please contact your investment advisor or visit our
web site www.amundipioneer.com.
The Trust files a complete schedule of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at www.sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
[LOGO] Amundi Pioneer
==============
ASSET MANAGEMENT
Amundi Pioneer Asset Management, Inc.
60 State Street
Boston, MA 02109
www.amundipioneer.com
Securities offered through Amundi Pioneer Distributor, Inc.
60 State Street, Boston, MA 02109
Underwriter of Pioneer Mutual Funds, Member SIPC
(C) 2018 Amundi Pioneer Asset Management 21909-10-0618
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 12(a)(1), 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 (see attachment);
(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.
The audit fees for the Trust were $38,500
payable to Ernst & Young LLP for the year ended
April 30, 2018 and $53,954 payable to Deloitte & Touche LLP
for the year ended April 30, 2017.
(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.
There were no audit-related services in 2018 or 2017.
(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.
The tax fees for the Trust were $10,115
payable to Ernst & Young LLP for the year ended
April 30, 2018 and $9,904 payable to Deloitte & Touche LLP
for the year ended April 30, 2017.
(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.
There were no other fees in 2018 or 2017.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Amudi Pioneer Asset Management, Inc, the audit committee and
the independent auditors.
The Funds recognize that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
----------------------- --------------------------- -----------------------------------------------
------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- -------------------------
------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
----------------------- --------------------------- -----------------------------------------------
--------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
----------------------- ------------------------- -----------------------------------------------
------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
------------------------------------------- ------------------------------
--------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
--------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
Non-Audit Services
Beginning with non-audit service contracts entered
into on or after May 6, 2003, the effective date of the
new SEC pre-approval rules, the Trust's audit
committee is required to pre-approve services to
affiliates defined by SEC rules to the extent that the
services are determined to have a direct impact on the
operations or financial reporting of the Trust. For the
years ended April 30 2018 and 2017, there were no
services provided to an affiliate that required the
Trust's audit committee pre-approval.
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountants 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 registrants accountant
for services rendered to the registrant, and rendered to the registrants
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The aggregate non-audit fees for the Trust were $10,115
payable to Ernst & Young LLP for the year ended
April 30, 2018 and $9,904 payable to Deloitte & Touche LLP
for the year ended April 30, 2017.
(h) Disclose whether the registrants audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrants investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Fund's audit committee of the Board of Trustees
has considered whether the provision of non-audit
services that were rendered to the Affiliates (as
defined) that were not pre- approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is
compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrant's audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
N/A
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption
from the listing standards for audit committees.
N/A
ITEM 6. SCHEDULE OF INVESTMENTS.
File Schedule of Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.1212
of Regulation S-X [17 CFR 210.12-12], unless the schedule is
included as part of the report to shareholders filed under Item
1 of this Form.
Included in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Proxy Voting Policies and Procedures of
Pioneer Investment Management, Inc.
VERSION DATED July, 2004
Overview
Pioneer Investment Management, Inc. ("Pioneer") is a fiduciary that owes
each of its client's duties of care and loyalty with respect to all
services undertaken on the client's behalf, including proxy voting. When
Pioneer has been delegated proxy-voting authority for a client, the duty of
care requires Pioneer to monitor corporate events and to vote the proxies.
To satisfy its duty of loyalty, Pioneer must place its client's interests
ahead of its own and must cast proxy votes in a manner consistent with the
best interest of its clients. Pioneer will vote all proxies presented in a
timely manner.
The Proxy Voting Policies and Procedures are designed to complement
Pioneer's investment policies and procedures regarding its general
responsibility to monitor the performance and/or corporate events of
companies that are issuers of securities held in accounts managed by
Pioneer. Pioneer's Proxy Voting Policies summarize Pioneer's position on a
number of issues solicited by companies held by Pioneer's clients. The
policies are guidelines that provide a general indication on how Pioneer
would vote but do not include all potential voting scenarios.
Pioneer's Proxy Voting Procedures detail monitoring of voting, exception
votes, and review of conflicts of interest and ensure that case-by-case
votes are handled within the context of the overall guidelines (i.e. best
interest of client). The overriding goal is that all proxies for US and
non-US companies that are received promptly will be voted in accordance
with Pioneer's policies or specific client instructions. All shares in a
company held by Pioneer-managed accounts will be voted alike, unless a
client has given us specific voting instructions on an issue or has not
delegated authority to us or the Proxy Voting Oversight Group determines
that the circumstances justify a different approach.
Pioneer does not delegate the authority to vote proxies relating to its
clients to any of its affiliates, which include other subsidiaries of
UniCredito.
Any questions about these policies and procedures should be directed to the
Proxy Coordinator.
1
Proxy Voting Procedures
Proxy Voting Service
Pioneer has engaged an independent proxy voting service to assist in the
voting of proxies. The proxy voting service works with custodians to ensure
that all proxy materials are received by the custodians and are processed
in a timely fashion. To the extent applicable, the proxy voting service
votes all proxies in accordance with the proxy voting policies established
by Pioneer. The proxy voting service will refer proxy questions to the
Proxy Coordinator (described below) for instructions under circumstances
where: (1) the application of the proxy voting guidelines is unclear; (2) a
particular proxy question is not covered by the guidelines; or (3) the
guidelines call for specific instructions on a case-by-case basis. The
proxy voting service is also requested to call to the Proxy Coordinator's
attention specific proxy questions that, while governed by a guideline,
appear to involve unusual or controversial issues. Pioneer reserves the
right to attend a meeting in person and may do so when it determines that
the company or the matters to be voted on at the meeting are strategically
important to its clients.
Proxy Coordinator
Pioneer's Director of Investment Operations (the "Proxy Coordinator")
coordinates the voting, procedures and reporting of proxies on behalf of
Pioneer's clients. The Proxy Coordinator will deal directly with the proxy
voting service and, in the case of proxy questions referred by the proxy
voting service, will solicit voting recommendations and instructions from
the Director of Portfolio Management US or, to the extent applicable,
investment sub-advisers. The Proxy Coordinator is responsible for ensuring
that these questions and referrals are responded to in a timely fashion and
for transmitting appropriate voting instructions to the proxy voting
service. The Proxy Coordinator is responsible for verifying with the
Compliance Department whether Pioneer's voting power is subject to any
limitations or guidelines issued by the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries).
Referral Items
From time to time, the proxy voting service will refer proxy questions to
the Proxy Coordinator that are described by Pioneer's policy as to be voted
on a case-by-case basis, that are not covered by Pioneer's guidelines or
where Pioneer's guidelines may be unclear with respect to the matter to be
voted on. Under such certain circumstances, the Proxy Coordinator will seek
a written voting recommendation from the Director of Portfolio Management
US. Any such recommendation will include: (i) the manner in which the
proxies should be voted; (ii) the rationale underlying any such decision;
and (iii) the disclosure of any contacts or communications made between
Pioneer and any outside parties concerning the proxy proposal prior to the
time that the voting instructions are provided. In addition, the Proxy
Coordinator will ask the Compliance Department to review the question for
any actual or apparent conflicts of interest as described below under
"Conflicts of
2
Interest." The Compliance Department will provide a "Conflicts of Interest
Report," applying the criteria set forth below under "Conflicts of
Interest," to the Proxy Coordinator summarizing the results of its review.
In the absence of a conflict of interest, the Proxy Coordinator will vote
in accordance with the recommendation of the Director of Portfolio
Management US.
If the matter presents a conflict of interest for Pioneer, then the Proxy
Coordinator will refer the matter to the Proxy Voting Oversight Group for a
decision. In general, when a conflict of interest is present, Pioneer will
vote according to the recommendation of the Director of Portfolio
Management US where such recommendation would go against Pioneer's interest
or where the conflict is deemed to be immaterial. Pioneer will vote
according to the recommendation of its proxy voting service when the
conflict is deemed to be material and the Pioneer's internal vote
recommendation would favor Pioneer's interest, unless a client specifically
requests Pioneer to do otherwise. When making the final determination as to
how to vote a proxy, the Proxy Voting Oversight Group will review the
report from the Director of Portfolio Management US and the Conflicts of
Interest Report issued by the Compliance Department.
Conflicts of Interest
A conflict of interest occurs when Pioneer's interests interfere, or appear
to interfere with the interests of Pioneer's clients. Occasionally, Pioneer
may have a conflict that can affect how its votes proxies. The conflict may
be actual or perceived and may exist when the matter to be voted on
concerns:
o An affiliate of Pioneer, such as another company belonging to
the UniCredito Italiano S.p.A. banking group (a "UniCredito
Affiliate");
o An issuer of a security for which Pioneer acts as a sponsor,
advisor, manager, custodian, distributor, underwriter, broker, or
other similar capacity (including those securities specifically
declared by PGAM to present a conflict of interest for Pioneer);
o An issuer of a security for which UniCredito has informed Pioneer
that a UniCredito Affiliate acts as a sponsor, advisor, manager,
custodian, distributor, underwriter, broker, or other similar
capacity; or
o A person with whom Pioneer (or any of its affiliates) has an
existing, material contract or business relationship that was not
entered into in the ordinary course of Pioneer's business.
o Pioneer will abstain from voting with respect to companies
directly or indirectly owned by UniCredito Italiano Group, unless
otherwise directed by a client. In addition, Pioneer will inform
PGAM Global Compliance and the PGAM Independent Directors before
exercising such rights.
Any associate involved in the proxy voting process with knowledge of any
apparent or actual conflict of interest must disclose such conflict to the
Proxy Coordinator and the Compliance Department. The Compliance Department
will review each item referred to Pioneer to determine whether an actual or
potential conflict of interest with Pioneer exists in connection with the
proposal(s) to be voted upon. The review will be conducted by comparing the
apparent parties affected by the proxy proposal being
3
voted upon against the Compliance Department's internal list of interested
persons and, for any matches found, evaluating the anticipated magnitude
and possible probability of any conflict of interest being present. For
each referral item, the determination regarding the presence or absence of
any actual or potential conflict of interest will be documented in a
Conflicts of Interest Report to the Proxy Coordinator.
Securities Lending
In conjunction with industry standards Proxies are not available to be
voted when the shares are out on loan through either Pioneer's lending
program or a client's managed security lending program. However, Pioneer
will reserve the right to recall lent securities so that they may be voted
according to the Pioneer's instructions. If a portfolio manager would like
to vote a block of previously lent shares, the Proxy Coordinator will work
with the portfolio manager and Investment Operations to recall the
security, to the extent possible, to facilitate the vote on the entire
block of shares.
Share-Blocking
"Share-blocking" is a market practice whereby shares are sent to a
custodian (which may be different than the account custodian) for record
keeping and voting at the general meeting. The shares are unavailable for
sale or delivery until the end of the blocking period (typically the day
after general meeting date).
Pioneer will vote in those countries with "share-blocking." In the event a
manager would like to sell a security with "share-blocking", the Proxy
Coordinator will work with the Portfolio Manager and Investment Operations
Department to recall the shares (as allowable within the market time-frame
and practices) and/or communicate with executing brokerage firm. A list of
countries with "share-blocking" is available from the Investment Operations
Department upon request.
Record Keeping
The Proxy Coordinator shall ensure that Pioneer's proxy voting service:
o Retains a copy of the proxy statement received (unless the proxy
statement is available from the SEC's Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system);
o Retains a record of the vote cast;
o Prepares Form N-PX for filing on behalf of each client that is a
registered investment company; and
o Is able to promptly provide Pioneer with a copy of the voting
record upon its request.
4
The Proxy Coordinator shall ensure that for those votes that may require
additional documentation (i.e. conflicts of interest, exception votes and
case-by-case votes) the following records are maintained:
o A record memorializing the basis for each referral vote cast;
o A copy of any document created by Pioneer that was material in
making the decision on how to vote the subject proxy; and
o A copy of any conflict notice, conflict consent or any other
written communication (including emails or other electronic
communications) to or from the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries)
regarding the subject proxy vote cast by, or the vote
recommendation of, Pioneer.
o Pioneer shall maintain the above records in the client's file for a
period not less than ten (10) years.
Disclosure
Pioneer shall take reasonable measures to inform its clients of the process
or procedures clients must follow to obtain information regarding how
Pioneer voted with respect to assets held in their accounts. In addition,
Pioneer shall describe to clients its proxy voting policies and procedures
and will furnish a copy of its proxy voting policies and procedures upon
request. This information may be provided to clients through Pioneer's Form
ADV (Part II) disclosure, by separate notice to the client, or through
Pioneer's website.
Proxy Voting Oversight Group
The members of the Proxy Voting Oversight Group are Pioneer's: Director of
Portfolio Management US, Head of Investment Operations, and Director of
Compliance. Other members of Pioneer will be invited to attend meetings and
otherwise participate as necessary. The Head of Investment Operations will
chair the Proxy Voting Oversight Group.
The Proxy Voting Oversight Group is responsible for developing, evaluating,
and changing (when necessary) Pioneer's Proxy Voting Policies and
Procedures. The group meets at least annually to evaluate and review these
policies and procedures and the services of its third-party proxy voting
service. In addition, the Proxy Voting Oversight Group will meet as
necessary to vote on referral items and address other business as
necessary.
Amendments
Pioneer may not amend its Proxy Voting Policies And Procedures without the
prior approval of the Proxy Voting Oversight Group and its corporate
parent, Pioneer Global Asset Management S.p.A
5
Proxy Voting Policies
Pioneer's sole concern in voting proxies is the economic effect of the
proposal on the value of portfolio holdings, considering both the short-
and long-term impact. In many instances, Pioneer believes that supporting
the company's strategy and voting "for" management's proposals builds
portfolio value. In other cases, however, proposals set forth by management
may have a negative effect on that value, while some shareholder proposals
may hold the best prospects for enhancing it. Pioneer monitors developments
in the proxy-voting arena and will revise this policy as needed.
All proxies that are received promptly will be voted in accordance with the
specific policies listed below. All shares in a company held by
Pioneer-managed accounts will be voted alike, unless a client has given us
specific voting instructions on an issue or has not delegated authority to
us. Proxy voting issues will be reviewed by Pioneer's Proxy Voting
Oversight Group, which consists of the Director of Portfolio Management US,
the Director of Investment Operations (the Proxy Coordinator), and the
Director of Compliance.
Pioneer has established Proxy Voting Procedures for identifying and
reviewing conflicts of interest that may arise in the voting of proxies.
Clients may request, at any time, a report on proxy votes for securities
held in their portfolios and Pioneer is happy to discuss our proxy votes
with company management. Pioneer retains a proxy voting service to provide
research on proxy issues and to process proxy votes.
Administrative
While administrative items appear infrequently in U.S. issuer proxies, they
are quite common in non-U.S. proxies.
We will generally support these and similar management proposals:
o Corporate name change.
o A change of corporate headquarters.
o Stock exchange listing.
o Establishment of time and place of annual meeting.
o Adjournment or postponement of annual meeting.
o Acceptance/approval of financial statements.
o Approval of dividend payments, dividend reinvestment plans and other
dividend-related proposals.
o Approval of minutes and other formalities.
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o Authorization of the transferring of reserves and allocation of
income.
o Amendments to authorized signatories.
o Approval of accounting method changes or change in fiscal year-end.
o Acceptance of labor agreements.
o Appointment of internal auditors.
Pioneer will vote on a case-by-case basis on other routine business;
however, Pioneer will oppose any routine business proposal if insufficient
information is presented in advance to allow Pioneer to judge the merit of
the proposal. Pioneer has also instructed its proxy voting service to
inform Pioneer of its analysis of any administrative items inconsistent, in
its view, with supporting the value of Pioneer portfolio holdings so that
Pioneer may consider and vote on those items on a case-by-case basis.
Auditors
We normally vote for proposals to:
o Ratify the auditors. We will consider a vote against if we are
concerned about the auditors' independence or their past work for
the company. Specifically, we will oppose the ratification of
auditors and withhold votes from audit committee members if
non-audit fees paid by the company to the auditing firm exceed the
sum of audit fees plus audit-related fees plus permissible tax
fees according to the disclosure categories proposed by the
Securities and Exchange Commission.
o Restore shareholder rights to ratify the auditors.
We will normally oppose proposals that require companies to:
o Seek bids from other auditors.
o Rotate auditing firms, except where the rotation is statutorily
required or where rotation would demonstrably strengthen financial
disclosure.
o Indemnify auditors.
o Prohibit auditors from engaging in non-audit services for the
company.
Board of Directors
On issues related to the board of directors, Pioneer normally supports
management. We will, however, consider a vote against management in
instances where corporate performance has been very poor or where the board
appears to lack independence.
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General Board Issues
Pioneer will vote for:
o Audit, compensation and nominating committees composed of
independent directors exclusively.
o Indemnification for directors for actions taken in good faith in
accordance with the business judgment rule. We will vote against
proposals for broader indemnification.
o Changes in board size that appear to have a legitimate business
purpose and are not primarily for anti-takeover reasons.
o Election of an honorary director.
We will vote against:
o Minimum stock ownership by directors.
o Term limits for directors. Companies benefit from experienced
directors, and shareholder control is better achieved through
annual votes.
o Requirements for union or special interest representation on the
board.
o Requirements to provide two candidates for each board seat.
We will vote on a case-by case basis on these issues:
o Separate chairman and CEO positions. We will consider voting with
shareholders on these issues in cases of poor corporate
performance.
Elections of Directors
In uncontested elections of directors we will vote against:
o Individual directors with absenteeism above 25% without valid
reason. We support proposals that require disclosure of director
attendance.
o Insider directors and affiliated outsiders who sit on the audit,
compensation, stock option or nominating committees. For the
purposes of our policy, we accept the definition of affiliated
directors provided by our proxy voting service.
We will also vote against:
o Directors who have failed to act on a takeover offer where the
majority of shareholders have tendered their shares.
o Directors who appear to lack independence or are associated with
very poor corporate performance.
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We will vote on a case-by case basis on these issues:
o Re-election of directors who have implemented or renewed a
dead-hand or modified dead-hand poison pill (a "dead-hand poison
pill" is a shareholder rights plan that may be altered only by
incumbent or "dead " directors. These plans prevent a potential
acquirer from disabling a poison pill by obtaining control of the
board through a proxy vote).
o Contested election of directors.
o Prior to phase-in required by SEC, we would consider supporting
election of a majority of independent directors in cases of poor
performance.
o Mandatory retirement policies.
o Directors who have ignored a shareholder proposal that has been
approved by shareholders for two consecutive years.
Takeover-Related Measures
Pioneer is generally opposed to proposals that may discourage takeover
attempts. We believe that the potential for a takeover helps ensure that
corporate performance remains high.
Pioneer will vote for:
o Cumulative voting.
o Increase ability for shareholders to call special meetings.
o Increase ability for shareholders to act by written consent.
o Restrictions on the ability to make greenmail payments.
o Submitting rights plans to shareholder vote.
o Rescinding shareholder rights plans ("poison pills").
o Opting out of the following state takeover statutes:
o Control share acquisition statutes, which deny large holders voting
rights on holdings over a specified threshold.
o Control share cash-out provisions, which require large holders to
acquire shares from other holders.
o Freeze-out provisions, which impose a waiting period on large
holders before they can attempt to gain control.
o Stakeholder laws, which permit directors to consider interests of
non-shareholder constituencies.
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o Disgorgement provisions, which require acquirers to disgorge profits
on purchases made before gaining control.
o Fair price provisions.
o Authorization of shareholder rights plans.
o Labor protection provisions.
o Mandatory classified boards.
We will vote on a case-by-case basis on the following issues:
o Fair price provisions. We will vote against provisions requiring
supermajority votes to approve takeovers. We will also consider
voting against proposals that require a supermajority vote to
repeal or amend the provision. Finally, we will consider the
mechanism used to determine the fair price; we are generally
opposed to complicated formulas or requirements to pay a premium.
o Opting out of state takeover statutes regarding fair price
provisions. We will use the criteria used for fair price
provisions in general to determine our vote on this issue.
o Proposals that allow shareholders to nominate directors.
We will vote against:
o Classified boards, except in the case of closed-end mutual funds.
o Limiting shareholder ability to remove or appoint directors. We
will support proposals to restore shareholder authority in this
area. We will review on a case-by-case basis proposals that
authorize the board to make interim appointments.
o Classes of shares with unequal voting rights.
o Supermajority vote requirements.
o Severance packages ("golden" and "tin" parachutes). We will support
proposals to put these packages to shareholder vote.
o Reimbursement of dissident proxy solicitation expenses. While we
ordinarily support measures that encourage takeover bids, we
believe that management should have full control over corporate
funds.
o Extension of advance notice requirements for shareholder proposals.
o Granting board authority normally retained by shareholders (e.g.,
amend charter, set board size).
o Shareholder rights plans ("poison pills"). These plans generally
allow shareholders to buy additional shares at a below-market
price in the event of a change in control and may deter some bids.
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Capital Structure
Managements need considerable flexibility in determining the company's
financial structure, and Pioneer normally supports managements' proposals
in this area. We will, however, reject proposals that impose high barriers
to potential takeovers.
Pioneer will vote for:
o Changes in par value.
o Reverse splits, if accompanied by a reduction in number of shares.
o Share repurchase programs, if all shareholders may participate on
equal terms.
o Bond issuance.
o Increases in "ordinary" preferred stock.
o Proposals to have blank-check common stock placements (other than
shares issued in the normal course of business) submitted for
shareholder approval.
o Cancellation of company treasury shares.
We will vote on a case-by-case basis on the following issues:
o Reverse splits not accompanied by a reduction in number of shares,
considering the risk of delisting.
o Increase in authorized common stock. We will make a determination
considering, among other factors:
o Number of shares currently available for issuance;
o Size of requested increase (we would normally approve increases of up to
100% of current authorization);
o Proposed use of the additional shares; and
o Potential consequences of a failure to increase the number of shares
outstanding (e.g., delisting or bankruptcy).
o Blank-check preferred. We will normally oppose issuance of a new
class of blank-check preferred, but may approve an increase in a
class already outstanding if the company has demonstrated that it
uses this flexibility appropriately.
o Proposals to submit private placements to shareholder vote.
o Other financing plans.
We will vote against preemptive rights that we believe limit a company's
financing flexibility.
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Compensation
Pioneer supports compensation plans that link pay to shareholder returns
and believes that management has the best understanding of the level of
compensation needed to attract and retain qualified people. At the same
time, stock-related compensation plans have a significant economic impact
and a direct effect on the balance sheet. Therefore, while we do not want
to micromanage a company's compensation programs, we will place limits on
the potential dilution these plans may impose.
Pioneer will vote for:
o 401(k) benefit plans.
o Employee stock ownership plans (ESOPs), as long as shares
allocated to ESOPs are less than 5% of outstanding shares. Larger
blocks of stock in ESOPs can serve as a takeover defense. We will
support proposals to submit ESOPs to shareholder vote.
o Various issues related to the Omnibus Budget and Reconciliation Act
of 1993 (OBRA), including:
o Amendments to performance plans to conform with OBRA;
o Caps on annual grants or amendments of administrative features;
o Adding performance goals; and
o Cash or cash-and-stock bonus plans.
o Establish a process to link pay, including stock-option grants, to
performance, leaving specifics of implementation to the company.
o Require that option repricings be submitted to shareholders.
o Require the expensing of stock-option awards.
o Require reporting of executive retirement benefits (deferred
compensation, split-dollar life insurance, SERPs, and pension
benefits).
o Employee stock purchase plans where the purchase price is equal to
at least 85% of the market price, where the offering period is no
greater than 27 months and where potential dilution (as defined
below) is no greater than 10%.
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We will vote on a case-by-case basis on the following issues:
o Executive and director stock-related compensation plans. We will
consider the following factors when reviewing these plans:
o The program must be of a reasonable size. We will approve plans
where the combined employee and director plans together would
generate less than 15% dilution. We will reject plans with 15% or
more potential dilution.
Dilution = (A + B + C) / (A + B + C + D), where
A = Shares reserved for plan/amendment,
B = Shares available under continuing plans,
C = Shares granted but unexercised and
D = Shares outstanding.
o The plan must not:
o Explicitly permit unlimited option repricing authority or that
have repriced in the past without shareholder approval.
o Be a self-replenishing "evergreen" plan, plans that grant
discount options and tax offset payments.
o We are generally in favor of proposals that increase participation beyond
executives.
o We generally support proposals asking companies to adopt rigorous
vesting provisions for stock option plans such as those that vest
incrementally over, at least, a three- or four-year period with a pro
rata portion of the shares becoming exercisable on an annual basis
following grant date.
o We generally support proposals asking companies to disclose their
window period policies for stock transactions. Window period policies
ensure that employees do not exercise options based on insider
information contemporaneous with quarterly earnings releases and other
material corporate announcements.
o We generally support proposals asking companies to adopt stock holding
periods for their executives.
o All other employee stock purchase plans.
o All other compensation-related proposals, including deferred
compensation plans, employment agreements, loan guarantee programs
and retirement plans.
o All other proposals regarding stock compensation plans, including
extending the life of a plan, changing vesting restrictions,
repricing options, lengthening exercise periods or accelerating
distribution of awards and pyramiding and cashless exercise
programs.
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We will vote against:
o Pensions for non-employee directors. We believe these retirement
plans reduce director objectivity.
o Elimination of stock option plans.
We will vote on a case-by case basis on these issues:
o Limits on executive and director pay.
o Stock in lieu of cash compensation for directors.
Corporate Governance
Pioneer will vote for:
o Confidential Voting.
o Equal access provisions, which allow shareholders to contribute
their opinion to proxy materials.
o Proposals requiring directors to disclose their ownership of shares
in the company.
We will vote on a case-by-case basis on the following issues:
o Change in the state of incorporation. We will support
reincorporations supported by valid business reasons. We will
oppose those that appear to be solely for the purpose of
strengthening takeover defenses.
o Bundled proposals. We will evaluate the overall impact of the
proposal.
o Adopting or amending the charter, bylaws or articles of association.
o Shareholder appraisal rights, which allow shareholders to demand
judicial review of an acquisition price.
We will vote against:
o Shareholder advisory committees. While management should solicit
shareholder input, we prefer to leave the method of doing so to
management's discretion.
o Limitations on stock ownership or voting rights.
o Reduction in share ownership disclosure guidelines.
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Mergers and Restructurings
Pioneer will vote on the following and similar issues on a case-by-case
basis:
o Mergers and acquisitions.
o Corporate restructurings, including spin-offs, liquidations, asset
sales, joint ventures, conversions to holding company and
conversions to self-managed REIT structure.
o Debt restructurings.
o Conversion of securities.
o Issuance of shares to facilitate a merger.
o Private placements, warrants, convertible debentures.
o Proposals requiring management to inform shareholders of merger
opportunities.
We will normally vote against shareholder proposals requiring that the
company be put up for sale.
Mutual Funds
Many of our portfolios may invest in shares of closed-end mutual funds or
exchange-traded funds. The non-corporate structure of these investments
raises several unique proxy voting issues.
Pioneer will vote for:
o Establishment of new classes or series of shares.
o Establishment of a master-feeder structure.
Pioneer will vote on a case-by-case on:
o Changes in investment policy. We will normally support changes
that do not affect the investment objective or overall risk level
of the fund. We will examine more fundamental changes on a
case-by-case basis.
o Approval of new or amended advisory contracts.
o Changes from closed-end to open-end format.
o Authorization for, or increase in, preferred shares.
o Disposition of assets, termination, liquidation, or mergers.
o Classified boards of closed-end mutual funds, but will typically
support such proposals.
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Social Issues
Pioneer will abstain on stockholder proposals calling for greater
disclosure of corporate activities with regard to social issues. "Social
Issues" may generally be described as shareholder proposals for a company
to:
o Conduct studies regarding certain issues of public concern and
interest;
o Study the feasibility of the company taking certain actions with
regard to such issues; or
o Take specific action, including ceasing certain behavior and
adopting company standards and principles, in relation to issues
of public concern and interest.
We believe these issues are important and should receive management
attention.
Pioneer will vote against proposals calling for substantial changes in the
company's business or activities. We will also normally vote against
proposals with regard to contributions, believing that management should
control the routine disbursement of funds.
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ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrant's portfolio ("Portfolio Manager"). Also state each Portfolio
Manager's business experience during the past 5 years.
ADDITIONAL INFORMATION ABOUT THE PORTFOLIO MANAGERS
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
The table below indicates, for the portfolio managers of the fund, information
about the accounts other than the fund over which the portfolio manager has
day-to-day investment responsibility. All information on the number of accounts
and total assets in the table is as of April 30, 2018. For purposes of the
table, "Other Pooled Investment Vehicles" may include investment partnerships,
undertakings for collective investments in transferable securities ("UCITS")
and other non-U.S. investment funds and group trusts, and "Other Accounts" may
include separate accounts for institutions or individuals, insurance company
general or separate accounts, pension funds and other similar institutional
accounts but generally do not include the portfolio manager's personal
investment accounts or those which the manager may be deemed to own
beneficially under the code of ethics. Certain funds and other accounts managed
by the portfolio manager may have substantially similar investment strategies.
NUMBER OF ASSETS
ACCOUNTS MANAGED
MANAGED FOR FOR WHICH
WHICH ADVISORY ADVISORY
NUMBER OF FEE IS FEE IS
NAME OF ACCOUNTS TOTAL ASSETS PERFORMANCE- PERFORMANCE-
PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED MANAGED (000'S) BASED BASED (000'S)
------------------- ---------------------------------- ----------- ----------------- ---------------- --------------
Charles Melchreit Other Registered Investment
Companies 11 $18,601,420 N/A N/A
Other Pooled Investment Vehicles 3 $ 6,059,109 1 $4,469,637
Other Accounts 18 $ 2,805,101 N/A N/A
------------------- ---------------------------------- -- ----------- ---------------- ----------
Andrew Feltus Other Registered
Investment Companies 10 $ 7,874,096 N/A N/A
Other Pooled Investment Vehicles 5 $ 9,366,142 2 $7,308,433
Other Accounts 5 1,451,908 N/A N/A
------------------- ---------------------------------- -- ----------- ---------------- ----------
Jonathan Sharkey Other Registered Investment
Companies 3 $ 5,743,205 N/A N/A
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
Other Accounts 4 $ 557,819 N/A N/A
------------------- ---------------------------------- -- ----------- ---------------- ----------
POTENTIAL CONFLICTS OF INTEREST
When a portfolio manager is responsible for the management of more than one
account, the potential arises for the portfolio manager to favor one account
over another. The principal types of potential conflicts of interest that may
arise are discussed below. For the reasons outlined below, Amundi Pioneer does
not believe that any material conflicts are likely to arise out of a portfolio
manager's responsibility for the management of the fund as well as one or more
other accounts. Although Amundi Pioneer has adopted procedures that it believes
are reasonably designed to detect and prevent violations of the federal
securities laws and to mitigate the potential for conflicts of interest to
affect its portfolio management decisions, there can be no assurance that all
conflicts will be identified or that all procedures will be effective in
mitigating the potential for such risks. Generally, the risks of such conflicts
of interest are increased to the extent that a portfolio manager has a
financial incentive to favor one account over another. Amundi Pioneer has
structured its compensation arrangements in a manner that is intended to limit
such potential for conflicts of interest. See "Compensation of Portfolio
Managers" below.
o A portfolio manager could favor one account over another in allocating new
investment opportunities that have limited supply, such as initial public
offerings and private placements. If, for example, an initial
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public offering that was expected to appreciate in value significantly shortly
after the offering was allocated to a single account, that account may be
expected to have better investment performance than other accounts that did
not receive an allocation of the initial public offering. Generally,
investments for which there is limited availability are allocated based upon a
range of factors including available cash and consistency with the accounts'
investment objectives and policies. This allocation methodology necessarily
involves some subjective elements but is intended over time to treat each
client in an equitable and fair manner. Generally, the investment opportunity
is allocated among participating accounts on a pro rata basis. Although Amundi
Pioneer believes that its practices are reasonably designed to treat each
client in an equitable and fair manner, there may be instances where a fund
may not participate, or may participate to a lesser degree than other clients,
in the allocation of an investment opportunity.
o A portfolio manager could favor one account over another in the order in
which trades for the accounts are placed. If a portfolio manager determines
to purchase a security for more than one account in an aggregate amount that
may influence the market price of the security, accounts that purchased or
sold the security first may receive a more favorable price than accounts
that made subsequent transactions. The less liquid the market for the
security or the greater the percentage that the proposed aggregate purchases
or sales represent of average daily trading volume, the greater the
potential for accounts that make subsequent purchases or sales to receive a
less favorable price. When a portfolio manager intends to trade the same
security on the same day for more than one account, the trades typically are
"bunched," which means that the trades for the individual accounts are
aggregated and each account receives the same price. There are some types of
accounts as to which bunching may not be possible for contractual reasons
(such as directed brokerage arrangements). Circumstances may also arise
where the trader believes that bunching the orders may not result in the
best possible price. Where those accounts or circumstances are involved,
Amundi Pioneer will place the order in a manner intended to result in as
favorable a price as possible for such client.
o A portfolio manager could favor an account if the portfolio manager's
compensation is tied to the performance of that account to a greater degree
than other accounts managed by the portfolio manager. If, for example, the
portfolio manager receives a bonus based upon the performance of certain
accounts relative to a benchmark while other accounts are disregarded for
this purpose, the portfolio manager will have a financial incentive to seek
to have the accounts that determine the portfolio manager's bonus achieve
the best possible performance to the possible detriment of other accounts.
Similarly, if Amundi Pioneer receives a performance-based advisory fee, the
portfolio manager may favor that account, whether or not the performance of
that account directly determines the portfolio manager's compensation.
o A portfolio manager could favor an account if the portfolio manager has a
beneficial interest in the account, in order to benefit a large client or to
compensate a client that had poor returns. For example, if the portfolio
manager held an interest in an investment partnership that was one of the
accounts managed by the portfolio manager, the portfolio manager would have
an economic incentive to favor the account in which the portfolio manager
held an interest.
o If the different accounts have materially and potentially conflicting
investment objectives or strategies, a conflict of interest could arise. For
example, if a portfolio manager purchases a security for one account and
sells the same security for another account, such trading pattern may
disadvantage either the account that is long or short. In making portfolio
manager assignments, Amundi Pioneer seeks to avoid such potentially
conflicting situations. However, where a portfolio manager is responsible
for accounts with differing investment objectives and policies, it is
possible that the portfolio manager will conclude that it is in the best
interest of one account to sell a portfolio security while another account
continues to hold or increase the holding in such security.
COMPENSATION OF PORTFOLIO MANAGERS
Amundi Pioneer has adopted a system of compensation for portfolio managers that
seeks to align the financial interests of the portfolio managers with those of
shareholders of the accounts (including Pioneer funds) the portfolio managers
manage, as well as with the financial performance of Amundi Pioneer. The
1
compensation program for all Amundi Pioneer portfolio managers includes a base
salary (determined by the rank and tenure of the employee) and an annual bonus
program, as well as customary benefits that are offered generally to all
full-time employees. Base compensation is fixed and normally reevaluated on an
annual basis. Amundi Pioneer seeks to set base compensation at market rates,
taking into account the experience and responsibilities of the portfolio
manager. The bonus plan is intended to provide a competitive level of annual
bonus compensation that is tied to the portfolio manager achieving superior
investment performance and align the interests of the investment professional
with those of shareholders, as well as with the financial performance of Amundi
Pioneer. Any bonus under the plan is completely discretionary, with a maximum
annual bonus that may be in excess of base salary. The annual bonus is based
upon a combination of the following factors:
o QUANTITATIVE INVESTMENT PERFORMANCE. The quantitative investment performance
calculation is based on pre-tax investment performance of all of the
accounts managed by the portfolio manager (which includes the fund and any
other accounts managed by the portfolio manager) over a one-year period (20%
weighting) and four-year period (80% weighting), measured for periods ending
on December 31. The accounts, which include the fund, are ranked against a
group of mutual funds with similar investment objectives and investment
focus (60%) and a broad-based securities market index measuring the
performance of the same type of securities in which the accounts invest
(40%), which, in the case of the fund, is the Merrill Lynch Global High
Yield and Emerging Markets Index and the CSFB Leveraged Loan Index. As a
result of these two benchmarks, the performance of the portfolio manager for
compensation purposes is measured against the criteria that are relevant to
the portfolio manager's competitive universe.
o QUALITATIVE PERFORMANCE. The qualitative performance component with respect
to all of the accounts managed by the portfolio manager includes objectives,
such as effectiveness in the areas of teamwork, leadership, communications
and marketing, that are mutually established and evaluated by each portfolio
manager and management.
o AMUNDI PIONEER RESULTS AND BUSINESS LINE RESULTS. Amundi Pioneer's financial
performance, as well as the investment performance of its investment
management group, affect a portfolio manager's actual bonus by a leverage
factor of plus or minus (+/-) a predetermined percentage.
The quantitative and qualitative performance components comprise 80% and 20%,
respectively, of the overall bonus calculation (on a pre-adjustment basis). A
portion of the annual bonus is deferred for a specified period and may be
invested in one or more Pioneer funds.
Certain portfolio managers participate in other programs designed to reward and
retain key contributors. Portfolio managers also may participate in a deferred
compensation program, whereby deferred amounts are invested in one or more
Pioneer funds.
SHARE OWNERSHIP BY PORTFOLIO MANAGERS
The following table indicates as of April 30, 2018 the value, within the
indicated range, of shares beneficially owned by the portfolio managers of the
fund.
BENEFICIAL OWNERSHIP
NAME OF PORTFOLIO MANAGER OF THE FUND*
--------------------------- ---------------------
Charles Melchreit A
--------------------------- ---------------------
Andrew Feltus E
--------------------------- ---------------------
Jonathan Sharkey B
--------------------------- ---------------------
* Key to Dollar Ranges
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A. None
B. $1 - $10,000
C. $10,001 - $50,000
D. $50,001 - $100,000
E. $100,001 - $500,000
F. $500,001 - $1,000,000
G. Over $1,000,000
3
- The significant investment strategies for Pioneer Diversified High Income
Trust (a closed-end fund) and certain other similarly managed accounts
with investment objectives of a high level of current income, with a
potential for capital appreciation as a secondary objective. The fund
invests in a unique blend of higher yielding asset classes, including
global high yield bonds, leveraged bank loans and event-linked bonds (cat
bonds).
Under normal market conditions, the fund invests at least 80% of its managed
assets (net assets plus borrowings or other leverage for investment purposes)
in diversified portfolio of below investment grade (high yield) debt
securities, loans and preferred stocks. The fund allocates its investments
principally among three sectors of the fixed income securities markets: (i)
below investment grade debt securities and preferred stocks of U.S. and
non-U.S. issuers, including governmental and corporate issuers in emerging
markets ("global high yield debt securities"), (ii) floating rate loans and
(iii) "event-linked" bonds, which sometimes are referred to as
"insurance-linked" or "catastrophe" bonds.
PIM believes that this actively managed, diversified portfolio of asset classes
- global high yield debt securities, floating rate loans and event-linked bonds
- may provide investors with a range of potential benefits across various
market cycles and under various market conditions. These benefits include,
among others, the potential to provide investors with a relatively high level
of current income without undue risk as a result of the low correlation among
these asset classes, reduced volatility due to limited exposure to interest
rate and duration risk, as well as a favorable risk return profile.
Specifically, the floating rate feature of both floating rate loans and
event-linked bonds serves to reduce sensitivity to changes in prevailing
interest rates. In addition, the introduction of event-linked bonds to the
diversified portfolio enhances these benefits by reducing volatility, while
providing the potential for above average returns. Moreover, the fund's
investments in event-linked bonds offer investors access to a unique asset
class that otherwise may be unavailable to them.
The fund does not have a policy of maintaining a specific average credit
quality or a targeted maturity range for its portfolio. The fund may invest any
portion of its assets in securities and other instruments of non-U.S. issuers,
including emerging market issuers, and may engage in certain strategic
transactions.
PIM is responsible for managing the fund's overall investment program,
including allocating the fund's investments among the different asset classes
and managing the fund's investments in global high income debt securities and
floating rate loans. PIM considers both broad economic and issuer specific
factors in selecting a portfolio designed to achieve the fund's investment
objectives. PIM selects individual securities based upon the terms of the
securities (such as yields compared to U.S. Treasuries or comparable issues),
liquidity and rating, sector and issuer diversification. PIM also employs due
diligence and fundamental quantitative and qualitative research to assess an
issuer's credit quality, taking into account financial condition and
profitability, future capital needs, potential for change in rating, industry
outlook, the competitive environment and management ability. PIM may sell a
portfolio security when it believes the security no longer will contribute to
meeting the fund's investment objectives. PIM makes that determination based on
the same criteria it uses to select portfolio securities. In making these
portfolio decisions, PIM relies on the knowledge, experience and judgment of
its staff and the staff of its affiliates who have access to a wide variety of
research.
The fund may use financial leverage on an ongoing basis for investment purposes
by borrowing from banks through a revolving credit facility. Leverage creates
special risks not associated with unleveraged funds having a similar investment
objectives and policies. These include the possibility of higher volatility of
both the net asset value of the fund and the value of assets serving as asset
coverage for the preferred shares.
4
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrant's equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781).
During the period covered by this report, there were no purchases
made by or on behalf of the registrant or any affiliated purchaser
as defined in Rule 10b-18(a)(3) under the Securities Exchange Act
of 1934 (the Exchange Act), of shares of the registrants equity
securities that are registered by the registrant pursuant to
Section 12 of the Exchange Act.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrant's board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 407(c)(2)(iv) of
Regulation S-R(17 CFR 229.407)(as required by Item 22(b)(15))
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrant's board of
directors since the registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-R of Schedule 14(A)
in its definitive proxy statement, or this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive and
principal financials officers, or persons performing similar functions,
regarding the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR
270.30a-3(c))) as of a date within 90 days of the filing date of the report
that includes the disclosure required by this paragraph,
based on the evaluation of these controls and procedures required by Rule
30a-3(b) under the Act (17 CFR 270.30(a)-3(b) and Rules 13a-15(b) or 15d-15(b)
under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)).
The registrant's principal executive officer
and principal financial officer have
concluded that the registrant's disclosure
controls and procedures are effective based
on the evaluation of these controls and
procedures as of a date within 90 days of the
filing date of this report.
(b) Disclose any change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act (17CFR 270.30a-3(d)) that
occured during the second fiscal quarter of the period covered by this report
that has materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting.
There were no significant changes in the
registrant's internal control over financial
reporting that occurred during the second
fiscal quarter of the period covered by this
report that have materially affected, or are
reasonably likely to materially affect, the
registrant's internal control over financial
reporting.
The registrant's principal executive officer and principal financial
officer, however, voluntarily are reporting the following information:
In August of 2006 the registrant's investment adviser
enhanced its internal procedures for reporting performance
information required to be included in prospectuses.
Those enhancements involved additional internal controls
over the appropriateness of performance data
generated for this purpose. Such enhancements were made
following an internal review which identified
prospectuses relating to certain classes of shares of
a limited number of registrants where, inadvertently,
performance information not reflecting the deduction of
applicable sales charges was included. Those prospectuses
were revised, and the revised prospectuses were distributed to
shareholders.
Item 12. Disclosure of Securities Lending Activities for Closed-End
Management Investment Companies.
(a) If the registrant is a closed-end management investment company,
provide the following dollar amounts of income and compensation related
to the securities lending activities of the registrant during its most
recent fiscal year:
N/A
(1) Gross income from securities lending activities;
N/A
(2) All fees and/or compensation for each of the following securities
lending activities and related services: any share of revenue generated
by the securities lending program paid to the securities lending agent(s)
(revenue split); fees paid for cash collateral management services
(including fees deducted from a pooled cash collateral reinvestment
vehicle) that are not included in the revenue split; administrative
fees that are not included in the revenue split; fees for
indemnification that are not included in the revenue split; rebates
paid to borrowers; and any other fees relating to the securities lending
program that are not included in the revenue split, including a description
of those other fees;
N/A
(3) The aggregate fees/compensation disclosed pursuant to paragraph (2); and
N/A
(4) Net income from securities lending activities (i.e., the dollar amount in
paragraph (1) minus the dollar amount in paragraph (3)).
If a fee for a service is included in the revenue split, state that the fee
is included in the revenue split.
N/A
(b) If the registrant is a closed-end management investment company, describe
the services provided to the registrant by the securities lending agent in
the registrants most recent fiscal year.
N/A
ITEM 13. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(1) 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.
(2) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2(a) under the Act
(17 CFR 270.30a-2(a)) , exactly as set forth below:
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Diversified High Income Trust
By (Signature and Title)* /s/ Lisa M. Jones
Lisa M. Jones, President & Chief Executive Officer
Date June 28, 2018
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/ Lisa M. Jones
Lisa M. Jones, President & Chief Executive Officer
Date June 28, 2018
By (Signature and Title)* /s/ Mark E. Bradley
Mark E. Bradley, Treasurer & Chief Accounting & Financial Officer
Date June 28, 2018
* Print the name and title of each signing officer under his or her signature.