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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22014
Pioneer Diversified High Income Trust
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: April 30
Date of reporting period: May 1, 2007 through April 30, 2008
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
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PIONEER
-----------------------
DIVERSIFIED
HIGH
INCOME
TRUST
HNW
Ticker Symbol
Annual
Report
4/30/08
[LOGO] PIONEER
Investments(R)
Table of Contents
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Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 9
Prices and Distributions 10
Performance Update 11
Schedule of Investments 12
Financial Statements 38
Financial Highlights 42
Notes to Financial Statements 43
Report of Independent Registered Public Accounting Firm 54
Trustees, Officers and Service Providers 55
President's
Dear Shareowner,
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Staying diversified and keeping your portfolio invested in the markets are two
general investment principles that have served investors well over time. They
are particularly useful guides to keep in mind today, at a time when markets
around the globe are being buffeted by problems in the financial and real estate
industries and by concerns about a slowing economy.
After an extended period of steady economic growth with sustained low
unemployment and low inflation, the U.S. economy ran into difficulty as 2007
drew to a close. Investors in subprime mortgages were forced to mark down the
value of their assets, imperiling leveraged balance sheets. The ensuing credit
crunch forced central banks in the United States and Europe to assume the role
of "lender of last resort" to keep credit markets functioning. Conditions
worsened in the first quarter of 2008, as falling prices, margin calls and
deleveraging continued, the auction-rate preferred market seized up. The U.S.
Federal Reserve expanded its lender-of-last-resort role to include lending to
primary dealers and continued to cut interest rates. By then, recession talk was
widespread as concern grew that falling home prices, rising unemployment,
sharply rising food and energy prices, and disruptions in financial markets
posed a significant threat to economic growth.
Markets reacted poorly to the developments leading up to the difficulties
surrounding Bear Stearns, with fixed-income credit spreads (the difference in
rates between corporate and U.S. government bonds) widening dramatically and
stock markets declining, wiping out the positive returns markets had delivered
in the preceding calendar year. Treasury bond prices rose as the market
underwent a flight to quality. In the six weeks between the near failure of Bear
Stearns and the end of April 2008, though, there were no further market crises,
recession fears faded in light of positive economic news, and stock markets
rallied, recouping some of their first-quarter losses, while Treasury bond
prices fell back.
For the 12 months ending April 30, 2008, the Dow Jones Industrial Average was
essentially flat, the Standard & Poor's 500 Index declined 5%, the NASDAQ
Composite Index fell 4%, and the MSCI EAFE Developed Market Index of
international stock markets fell 1%. The MSCI Emerging Markets Index was a
standout performer, ending the 12-month period up 26%. The U.S. investment-grade
bond market, as measured by the Lehman Brothers Aggregate Bond Index, rose 7%
over
2
Letter
the 12 months ending April 30, 2008, but the U.S. high-yield bond market, as
measured by the Merrill Lynch High Yield Bond Master II Index, fell 1% over the
same period as its higher-coupon yield could not offset a fall in bond prices
triggered by widening credit spreads.
Looking forward, the risk of a 2008 recession seems diminished, but substantial
risks remain in both financial markets and the real economy. On the other hand,
a weak U.S. dollar and substantial fiscal and monetary stimulus are potent
support for the economy. Markets remain volatile, and falling risk tolerances
and deleveraging may depress asset prices in the short term, but equity and
corporate bond valuations look attractive over a longer time horizon unless the
U.S. economy falls into a severe and protracted recession.
Sudden swings in the markets are always to be expected, but they are difficult
to time. Maintaining a long-term time horizon, being diversified, and paying
attention to asset allocation are important investment principles. As always,
we encourage you to work closely with your financial advisor to find the mix of
stocks, bonds and money market assets that is best aligned to your particular
risk tolerance and investment objective and to adhere to a strategic plan
rather than letting emotion drive investment decisions.
Respectfully,
/s/ Daniel K. Kingsbury
Daniel K. Kingsbury, President and CEO
Pioneer Investment Management USA, Inc.
Any information in this shareowner report regarding market or economic trends or
the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of the report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
3
Pioneer Diversified High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 4/30/08
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Turmoil in the capital markets buffeted lower-rated, high-yielding corporate
bonds as well as bank-loan investments during much of the latter part of 2007
and the early months of 2008. Problems that began with a crisis in domestic
subprime mortgages spread through the credit markets in general until late March
of 2008. High-yield bonds and loans staged a comeback in the final weeks of the
period, however, following the intervention of the U.S. Federal Reserve to
inject more liquidity into financial markets and stabilize conditions. The
following is an interview with Andrew Feltus and Jonathan Sharkey, members of
Pioneer's Fixed Income Group. Mr. Feltus and Mr. Sharkey are leaders of the
investment management team that has managed Pioneer Diversified High Income
Trust from its inception on May 30, 2007, through the end of its fiscal year on
April 30, 2008.
Q: How did the Trust perform during the 11 months of its operations?
A: Pioneer Diversified High Income Trust had a total return of 0.62% at net
asset value, from its inception on May 30, 2007, through April 30, 2008.
During the same period, the Trust's benchmark returned -1.22%. The
benchmark is based on a 50% weighting of the Merrill Lynch Global High
Yield and Emerging Markets Plus Index and a 50% weighting of the CSFB
Leveraged Loan Index. At market price, the Trust's total return for the 11
months was -10.67%. As of April 30, 2008, the Trust was selling at a
discount of market price to net asset value of 7.0%. During the period, the
Trust provided a generous yield. The SEC 30-day yield on April 30, 2008,
was 10.35%, based on market price.
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted. The performance data quoted represents
past performance, which is no guarantee of future results. Investment
return and principal value will fluctuate, and shares, when redeemed, may
be worth more or less than their original cost.
Q: What was the investment environment like during the 11 months ending April
30, 2008?
A: Capital market trends provided a favorable backdrop when Diversified High
Income Trust was launched on May 30, 2007, as healthy economic growth and
rising corporate profits encouraged
4
Pioneer Diversified High Income Trust
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investments in high-yield corporate bonds and bank loans. However, the
momentum began turning in the summer of 2007 as growing fears about credit
risk brought sharp declines in credit-sensitive investments. A market
downturn, originating in the U.S. subprime mortgage market, created fears
about investment quality that undermined values of credit-sensitive
fixed-income sectors generally. The sectors staged a comeback in October
and November 2007 amid growing hopes that the subprime problems would be
limited. The comeback proved to be short-lived, however, as major banks
throughout the world reported significant losses related to their exposure
to subprime mortgages late in 2007. The announcements set the stage for
rising concerns about credit quality in general, which led to significant
underperformance by the most credit-sensitive parts of the fixed income
markets, including high-yield corporate bonds and bank loans. In this
period of uncertainty and growing market volatility, the U.S. Federal
Reserve attempted to stabilize the markets by cutting the key Fed funds
rate several times and initiating new policies intended to provide more
money for lending activities. In a series of actions that started in
September 2007 and continued through the end of April 2008, the Federal
Reserve cut the Fed funds rate from 5.25% to 2.00%. In March 2008, the
Federal Reserve also helped arrange the rescue of the faltering investment
bank Bear Stearns by JPMorgan Chase & Co. and opened up lending facilities
to investment banks. These actions of the Federal Reserve led to a sharp
comeback by higher yielding securities in the final weeks of the fiscal
year. The Merrill Lynch High Yield and Emerging Markets Plus Index, for
example, rose by 2.99% in April 2008, while the Lehman High Yield Leveraged
Loan Index rose 4.14% during the same period.
Q: What were your principal strategies during the period ended April 30, 2008?
A: We manage the Trust to seek both high income and the potential for capital
appreciation by investing in global high-yield securities, floating-rate
bank loans, and event-linked bonds. Our strategy is to maintain a balanced,
high-yielding portfolio that has the potential to perform well in a variety
of environments. For most of the period ending April 30, 2008, we allocated
37.5% of Trust assets to corporate high-yield assets, primarily domestic
bonds, and 37.5% to floating-rate loans with relatively solid credit
ratings and strong covenant protection. We invested the remaining 25% of
Trust assets
5
Pioneer Diversified High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 4/30/08 (continued)
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in event-linked bonds that were issued as reinsurance securities against
the possible high occurrence of natural catastrophes, such as hurricanes or
earthquakes. That portion of the Trust's portfolio is managed with the
assistance of Montpelier Capital Advisors, Ltd., as sub-advisor. The
company has expertise in evaluating catastrophic and insurance-related
risk.
At the end of the period ending April 30, 2008, 35% of Trust assets
remained in high-yield bonds, 32% in bank loans, 25% in event-linked bonds
and 8% in cash (including other receivables and payables).
The Trust has the ability to borrow funds, or use leverage, to seek
additional opportunities in investments. Closed-end funds had commonly
issued auction-rate preferred shares to borrow funds. However, the turmoil
in the credit markets created problems that made the issuance of
auction-rate preferred shares unattractive. In early 2008, we began
employing an alternative strategy, using a revolving credit facility. By
the close of the period, we had built up our cash position, and we were
prepared to invest additional funds in the markets.
Q: What types of investments most influenced result during the period ending
April 30, 2008?
A: The Trust's exposure to event-linked bonds provided significant support to
performance during the period. We initiated the Trust's investments when
event-linked bonds were selling at very attractive prices compared to the
valuations of high-yield bonds and bank loans. The insurance industry
experienced no significant catastrophe-caused losses over the fiscal year,
as the storm season was relatively quiet.
Individual investments within our high-yield allocation that performed well
included bonds of Cell C Property, a South African telecommunications
service company, and C&M Financial, a Korean cable communications
corporation. Cell C reported improvement in its operations after earlier
struggles, while both companies benefited from growing expectations that
they might be acquired. In addition, bonds issued by TXU Energy, a
Texas-based utility, rose during a period when utilities did well. The
bonds were issued in connection with a leveraged buyout during 2007. While
leveraged buyouts generally fell out of favor, the strong asset
6
Pioneer Diversified High Income Trust
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values supporting TXU bonds helped them perform well. Also supporting the
Trust's results were investments in the energy sector and in foreign
currencies.
Bank loans in general traded off during the period, holding back
performance. They were affected by the general problems in the credit
markets, which decreased demand for bank loans from traditional investors,
including hedge funds and other institutions. In addition, as the Fed cut
interest rates, benchmark rates such as the LIBOR, which influence the
adjustable rates of bank loans, started to decline, lowering the yields
from bank loans. Despite these factors, the generally higher credit quality
of the Trust's bank-loan investments enabled them to withstand the market
volatility better and perform well relative to the overall market for bank
loans.
Individual holdings that detracted from the Trust's results included those
of Huawei-3Com, a technology company, and Telesat Canada, a satellite
communications corporation. Both underperformed in the general market
downturn. In addition, bonds of two ethanol producers, Aventine Renewables
and Verasun Energy, declined as rising corn prices pressured their
operating margins, even during a period of rising energy prices. Other
investments that held back results included loans related to the real
estate operations of LandSource, a venture backed by homebuilder Lennar and
by the California Public Employees' Retirement System (CALPERS). The
venture's securities encountered difficulty because of real-estate problems
in the California market.
Q: What is your investment outlook?
A: We believe the valuations of domestic corporate high-yield bonds continue
to appear attractive, and high-yield bonds retain wide yield advantages
over Treasuries. The fixed-income markets may continue to be volatile in
the weeks ahead, but we believe investors are well compensated for the
credit risks of high-yield bonds.
While the market for floating-rate bank loans also may fluctuate, we
believe they also are selling at significant discounts to their underlying
values, giving investors the opportunity for capital appreciation. In
addition, new loans becoming available are structured with less leverage,
good covenant protection and interest rates that should be attractive to
investors.
7
Pioneer Diversified High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 4/30/08 (continued)
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Investments in high-yield or lower-rated securities are subject to
greater-than-average risk. The Trust may invest in securities of issuers
that are in default or that are in bankruptcy.
Investing in foreign and/or emerging markets securities involves risks
relating to interest rates, currency exchange rates, economic, and
political conditions.
When interest rates rise, the prices of fixed-income securities in the
Trust will generally fall. Conversely, when interest rates fall the prices
of fixed-income securities in the Trust will generally rise. Investments in
the Trust are subject to possible loss due to the financial failure of
underlying securities and their inability to meet their debt obligations.
The Trust may invest significantly in illiquid securities. Illiquid
securities may be difficult to dispose of at a fair price at the times when
the Trust believes it is desirable to do so and their market price is
generally more volatile than that of more liquid securities. Illiquid
securities are also more difficult to value and investment of the Trust's
assets in illiquid securities may restrict the Trust's ability to take
advantage of market opportunities.
The Trust may use leverage through the issuance of preferred shares with an
aggregate liquidation preference of up to 331/3% of the Trust's total
assets after such issuance. Leverage creates significant risks, including
the risk that the Trust's income or capital appreciation will not be
sufficient to cover the cost of leverage, which may adversely affect the
return for the holders of common shares.
Risks of investing in the Trust are discussed in greater detail in the
Trust's registration statement on Form N-2 relating to its common shares,
which may be viewed by visiting the Securities and Exchange Commission's
web site at http://www.sec.gov.
Any information in this shareowner report regarding market or economic
trends or the factors influencing the Trust's historical or future
performance are statements of the opinion of Trust management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
8
Pioneer Diversified High Income Trust
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PORTFOLIO SUMMARY 4/30/08
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Portfolio Diversification
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(As a percentage of total investment portfolio)
[The following data was represented as a pie chart in the printed material]
Corporate Bonds & Notes 56.0%
Floating Rate Loan Interests 26.3%
Temporary Cash Investments 15.9%
Collateralized Mortgage Obligations 1.1%
Fixed Rate Loan Interests 0.6%
Convertible Bonds 0.1%
Warrants* 0.0%
* Amount is less than 0.1%.
Portfolio Quality
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(As a percentage of total investment portfolio; based on S&P ratings)
[The following data was represented as a pie chart in the printed material]
A & Higher 1.3%
BBB 0.1%
BB 27.2%
B 35.4%
CCC & Lower 8.6%
Cash Equivalents 15.9%
Not Rated 11.5%
The portfolio is actively managed, and current holdings may be different.
9
Pioneer Diversified High Income Trust
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PRICES AND DISTRIBUTIONS 4/30/08
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Share Prices and Distributions
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Market Value
per Common Share 4/30/08 5/30/07
$20.47 $25.10
Net Asset Value
per Common Share 4/30/08 5/30/07
$22.02 $23.88
Net
Distributions per Investment Short-Term Long-Term
Common Share Income Capital Gains Capital Gains
(5/30/07 - 4/30/08) $1.7820 $ - $ -
10 Largest Holdings
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(As a percentage of long-term holdings)*
1. Cascadia, Ltd., 6.115%, 6/13/08 (144A) 2.19%
2. Blue Fin, Ltd., 7.128%, 4/10/12 (144A) 1.96
3. Foundation Re, Ltd., 7.17%, 11/24/08 (144A) 1.61
4. Australis, Ltd., 6.762%, 3/24/09 (144A) 1.54
5. Fhu-Jin, Ltd., 7.012%, 8/10/11 (144A) 1.34
6. Australis, Ltd., 7.112%, 2/3/09 (144A) 1.33
7. Atlantic & Western Re, Ltd., 8.948%, 1/9/09 (144A) 1.32
8. Residential Reinsurance 2005, Ltd., 11.526%, 6/6/08 (144A) 1.27
9. Redwood Capital X, Ltd., 11.96%, 1/9/09 (144A) 1.10
10. Atlas Reinsurance Plc, 14.981%, 1/10/11 (144A) 1.04
* This list excludes temporary cash and derivative investments. 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.
10
Pioneer Diversified High Income Trust
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PERFORMANCE UPDATE 4/30/08
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Investment Returns
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The mountain chart on the right shows the change in market value, plus
reinvested dividends and distributions, of a $10,000 investment made in common
shares of Pioneer Diversified High Income Trust, compared to that of the
combined (50%/50%) Merrill Lynch Global High Yield and Emerging Market Plus
Index and CSFB Leveraged Loan Index.
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Cumulative Total Returns
(As of April 30, 2008)
Net Asset Market
Period Value (NAV) Price
Life-of-Trust
(5/30/07) 0.62% -10.67%
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[The following data was represented as a mountain graph in the printed material]
50% ML Global
HY and EM
Pioneer Plus Index
Diversified 50% CSFB
High Income Leveraged
Trust Loan Index
5/07 10,020 10,000
6/07 10,000 10,000
8/07 8,885 10,000
10/07 8,661 10,000
12/07 8,392 10,000
2/08 8,428 10,000
4/08 8,933 10,246
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
Performance data shown represents past performance. Past performance is no
guarantee of future results. Investment return and market price will fluctuate,
and your shares may trade below net asset value ("NAV"), due to such factors as
interest rate changes, and the perceived credit quality of borrowers.
Total investment return does not reflect broker sales charges or commissions.
All performance is for common shares of the Trust.
Closed-end funds, unlike open-end funds, are not continuously offered. There is
a one-time public offering and, once issued, shares of closed-end funds are sold
in the open market through a stock exchange and frequently trade at prices lower
than their NAV. NAV per common share is total assets less total liabilities,
which includes bank borrowing, divided by the number of common shares
outstanding.
When NAV is lower than market price, dividends are assumed to be reinvested at
the greater of NAV or 95% of the market price. When NAV is higher, dividends are
assumed to be reinvested at prices obtained under the Trust's dividend
reinvestment plan.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Trust distributions.
The Merrill Lynch Global High Yield and Emerging Markets Plus Index tracks the
performance of the below- and border-line investment-grade global debt markets
denominated in the major developed market currencies. The Index includes
sovereign issuers rated BBB1 and lower along with corporate issues rated BB1 and
lower. There are no restrictions on issuer country of domicile. The CSFB
Leveraged Loan Index is designed to mirror the investible universe of the U.S.
dollar-denominated leveraged loan market. The CSFB Leveraged Loan Index consists
of tradable term loans with at least one year to maturity and rated BBB or
lower.
Index returns are calculated monthly, assume reinvestment of dividends and,
unlike Trust returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in an index.
11
Pioneer Diversified High Income Trust
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SCHEDULE OF INVESTMENTS 4/30/08
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Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.6%
of Net Assets
Consumer Services - 0.2%
Restaurants - 0.2%
500,000 BB/Ba3 DB Master Finance LLC, 8.285%,
6/20/31 (144A) $ 429,865
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Total Consumer Services $ 429,865
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Banks - 0.5%
Thrifts & Mortgage Finance - 0.5%
250,000(a) AAA/Aaa Credit-Based Asset Servicing and Securitization,
3.065%, 3/25/36 $ 235,198
200,000(a) AAA/Aaa Carrington Mortgage Loan Trust,
2.995%, 10/25/36 187,691
522,560(a) AAA/Aaa WAMU Mortgage Pass-Through Certificates,
3.125%, 4/25/45 431,724
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Total Banks $ 854,613
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Diversified Financials - 0.9%
Other Diversified Financial Services - 0.7%
2,000,000(a) AAA/Aaa Countrywide Asset-Backed Certificates,
3.185%, 8/25/36 $ 1,248,468
90,000(a) AAA/Aaa First Franklin Mortgage Loan Asset-Backed
Certificates, 3.085%, 3/25/36 84,333
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$ 1,332,801
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Investment Banking & Brokerage - 0.2%
296,928(a) AA/Aa2 GSAMP Trust, 3.325%, 3/25/35 $ 271,670
------------
Total Diversified Financials $ 1,604,471
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TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $2,846,115) $ 2,888,949
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CORPORATE BONDS & NOTES - 84.6%
of Net Assets
Energy - 5.7%
Oil & Gas Drilling - 0.7%
NOK 5,000,000 NR/NR Norwegian Energy Co. AS, 11.0%,
7/13/10 (144A) $ 924,658
300,000 NR/NR Skeie Drilling & Production ASA, 11.25%,
3/8/13 (144A) 259,500
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$ 1,184,158
------------
12 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
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Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Oil & Gas Equipment & Services - 0.7%
400,000 BB/Ba2 Bristow Group, Inc., 7.5%, 9/15/17 $ 413,000
350,000 BB-/B2 Complete Production Services, Inc.,
8.0%, 12/15/16 350,875
600,000(a) NR/NR Sevan Marine ASA, 7.744%, 5/14/13 (144A) 546,000
------------
$ 1,309,875
------------
Integrated Oil & Gas - 0.3%
600,000 NR/B2 Tristan Oil, Ltd., 10.5%, 1/1/12 (144A) $ 573,000
------------
Oil & Gas Exploration & Production - 1.9%
300,000 B/B3 Baytex Energy, Ltd., 9.625%, 7/15/10 $ 304,500
500,000 CCC+/Caa1 Harvest Operations Corp., 7.875%, 10/15/11 473,750
970,000 B+/B3 Hilcorp Energy I L.P./Hilcorp Finance Co., 9.0%,
6/1/16 (144A) 1,011,225
675,000 CCC+/Caa1 Parallel Petroleum Corp., 10.25%, 8/1/14 675,000
NOK 3,000,000 NR/NR Petromena AS, 9.75%, 5/24/12 (144A) 566,536
225,000 B/Caa1 PetroQuest Energy, Inc., 10.375%, 5/15/12 234,000
150,000 B+/B1 Quicksilver Resources, Inc., 7.125%, 4/1/16 148,500
------------
$ 3,413,511
------------
Oil & Gas Refining & Marketing - 0.6%
955,000 B+/B3 Aventine Renewable Energy Holdings, Inc.,
10.0%, 4/1/17 (144A) $ 596,875
600,000 B-/B3 VeraSun Energy Corp., 9.375%, 6/1/17 (144A) 396,000
50,000 B+/Ba3 VeraSun Energy Corp., 9.875%, 12/15/12 45,875
------------
$ 1,038,750
------------
Oil & Gas Storage & Transportation - 1.0%
490,000 B+/B1 Inergy L.P./Inergy Finance Corp., 8.25%, 3/1/16 $ 502,250
250,000 BB+/NR LPG International, Inc., 7.25%, 12/20/15 255,000
250,000 CCC+/Caa1 MacDermid, Inc., 9.5%, 4/15/17 (144A) 238,750
275,000 NR/B1 SemGroup L.P., 8.75%, 11/15/15 (144A) 260,563
800,000 B+/B1 Transportadora de Gas del Sur SA, 7.875%,
5/14/17 (144A) 610,000
------------
$ 1,866,563
------------
Coal & Consumable Fuels - 0.5%
900,000 B+/B2 Massey Energy Co., 6.875%, 12/15/13 $ 900,000
------------
Total Energy $ 10,285,857
------------
The accompanying notes are an integral part of these financial statements. 13
Pioneer Diversified High Income Trust
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SCHEDULE OF INVESTMENTS 4/30/08 (continued)
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Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Materials - 9.7%
Commodity Chemicals - 1.3%
400,000 B/B3 ARCO Chemical Co., 9.8%, 2/1/20 $ 350,000
1,750,000(k) CCC/Caa2 Georgia Gulf Corp., 10.75%, 10/15/16 1,268,750
500,000 BB/Ba3 Invista, 9.25%, 5/1/12 (144A) 518,125
EURO 200,000 B+/B2 Kronos International, Inc., 6.5%, 4/15/13 222,637
------------
$ 2,359,512
------------
Diversified Chemicals - 1.1%
EURO 1,275,000 B-/B3 Ineos Group Holdings Plc, 7.875%,
2/15/16 (144A) $ 1,483,828
650,000 B-/B3 Montell Finance Co. BV, 8.1%, 3/15/27 (144A) 432,250
------------
$ 1,916,078
------------
Specialty Chemicals - 0.2%
350,000 B/B3 Tronox Worldwide LLC/Tronox Finance Corp.,
9.5%, 12/1/12 $ 301,000
------------
Construction Materials - 0.5%
500,000 B/B2 AGY Holding Corp., 11.0%, 11/15/14 (144A) $ 452,500
500,000 B/B2 U.S. Concrete, Inc., 8.375%, 4/1/14 405,000
------------
$ 857,500
------------
Metal & Glass Containers - 0.7%
EURO 625,000 B-/B3 Impress Holdings BV, 9.25%, 9/15/14 (144A) $ 958,470
330,000 B/B2 Vitro, S.A.B. de CV, 9.125%, 2/1/17 283,305
------------
$ 1,241,775
------------
Paper Packaging - 1.4%
250,000 B/B1 AEP Industries, Inc., 7.875%, 3/15/13 $ 238,750
600,000 B-/B3 Exopack Holding Corp., 11.25%, 2/1/14 573,000
700,000 CCC+/Caa1 Graham Packaging Co., Inc., 9.875%, 10/15/14 658,000
500,000 B-/B3 Graphic Packaging International, Inc.,
9.5%, 8/15/13 497,500
750,000 B/B3 U.S. Corrugated, Inc., 10.0%, 6/1/13 577,500
------------
$ 2,544,750
------------
Aluminum - 0.9%
700,000(k) B-/Caa1 Aleris International, Inc., 10.0%, 12/15/16 $ 434,000
600,000 B+/B1 Asia Aluminum Holdings, Ltd., 8.0%,
12/23/11 (144A) 567,000
300,000 CCC+/B3 CII Carbon LLC, 11.125%, 11/15/15 (144A) 288,000
500,000 B-/Caa2 Indalex Holding Corp., 11.5%, 2/1/14 390,000
------------
$ 1,679,000
------------
14 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Diversified Metals & Mining - 1.5%
350,000 B-/B3 American Rock Salt Co., LLC, 9.5%, 3/15/14 $ 358,750
250,000 B+/B1 FMG Finance Pty., Ltd., 10.625%, 9/1/16 (144A) 284,375
1,085,000 B/NR Industrias Metalurgicas Pescarmona SA,
11.25%, 10/22/14 (144A) 1,032,106
1,200,000(a)(b) B-/B3 Noranda Aluminum Acquisition Corp., 8.738%,
5/15/15 (144A) 1,014,000
------------
$ 2,689,231
------------
Steel - 1.6%
1,245,000 B-/Caa1 Algoma Acquisition Corp., 9.875%,
6/15/15 (144A) $ 1,132,950
320,000 NR/NR Blaze Recycling & Metals LLC/Blaze Finance
Corp., 10.875%, 7/15/12 (144A) 294,400
EURO 600,000 NR/Caa3 Bulgaria Steel Finance BV, 12.0%, 5/4/13 597,851
920,000 B+/B2 Ryerson, Inc., 12.0%, 11/1/15 (144A) 915,400
EURO 50,000 CCC+/Caa2 Zlomrex International Finance SA, 8.5%,
2/1/14 (144A) 50,599
------------
$ 2,991,200
------------
Forest Products - 0.5%
250,000(k) CC/Ca Ainsworth Lumber Co., Ltd., 7.25%, 10/1/12 $ 140,000
500,000 B-/B3 Mandra Forestry Holdings, Ltd., 12.0%,
5/15/13 (144A) 492,500
250,000 BB/Ba2 Sino-Forest Corp., 9.125%, 8/17/11 (144A) 255,000
------------
$ 887,500
------------
Total Materials $ 17,467,546
------------
Capital Goods - 4.1%
Building Products - 0.2%
300,000(a)(c) BBB-/NR C8 Capital SPV, Ltd., 6.64% (144A) $ 278,784
------------
Construction & Engineering - 0.4%
500,000 B-/NR Cia Latinoamericana de Infraestructura &
Servicios SA, 9.75%, 5/10/12 $ 416,250
200,000 BB-/Ba3 Dycom Industries, Inc., 8.125%, 10/15/15 192,000
------------
$ 608,250
------------
Electrical Components & Equipment - 0.3%
650,000(c) NR/B3 Rede Empresas de Energia Eletrica SA,
11.125% (144A) $ 607,750
------------
The accompanying notes are an integral part of these financial statements. 15
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Construction & Farm Machinery &
Heavy Trucks - 2.6%
850,000(k) B-/B3 Accuride Corp., 8.5%, 2/1/15 $ 756,500
720,000 BB-/B1 American Railcar Industries, Inc., 7.5%, 3/1/14 648,000
770,000 B+/B2 Commercial Vehicle Group, Inc., 8.0%, 7/1/13 660,275
500,000 B/B2 Esco Corp., 8.625%, 12/15/13 (144A) 497,500
1,200,000 B/B2 Greenbrier Companies, Inc., 8.375%, 5/15/15 1,146,000
500,000(d) CCC+/Caa2 Stanadyne Corp., 0.0%, 2/15/15 377,500
160,000 B-/B3 Stanadyne Corp., 10.0%, 8/15/14 154,400
400,000 B-/Caa1 Titan International, Inc., 8.0%, 1/15/12 400,000
------------
$ 4,640,175
------------
Industrial Machinery - 0.4%
875,000 B/B3 Mueller Water Products, Inc., 7.375%, 6/1/17 $ 761,250
------------
Trading Companies & Distributors - 0.2%
125,000 BB-/B1 United Rentals North America, Inc.,
6.5%, 2/15/12 $ 117,188
300,000 B/B1 Wesco Distribution, Inc., 7.5%, 10/15/17 273,000
------------
$ 390,188
------------
Total Capital Goods $ 7,286,397
------------
Commercial Services & Supplies - 0.9%
Diversified Commercial & Professional Services - 0.9%
425,000(a) B-/B3 NCO Group, Inc., 7.94%, 11/15/13 $ 336,281
900,000 B-/Caa1 NCO Group, Inc., 11.875%, 11/15/14 693,000
600,000 B-/B3 Park-Ohio Industries, Inc., 8.375%, 11/15/14 516,750
------------
Total Commercial Services & Supplies $ 1,546,031
------------
Transportation - 0.6%
Air Freight & Logistics - 0.4%
775,000 B-/B3 CEVA Group Plc, 10.0%, 9/1/14 (144A) $ 798,250
------------
Airlines - 0.1%
147,371 B-/B1 American Airlines, Inc., 7.377%, 5/23/19 $ 112,739
------------
Railroads - 0.1%
240,000 B+/B2 Kansas City Southern de Mexico,
7.625%, 12/1/13 $ 229,500
------------
Total Transportation $ 1,140,489
------------
16 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Automobiles & Components - 1.6%
Auto Parts & Equipment - 1.6%
530,000(k) B-/Caa1 Allison Transmission, Inc.,
11.0%, 11/1/15 (144A) $ 516,750
500,000(b) B-/Caa1 Allison Transmission, Inc.,
11.25%, 11/1/15 (144A) 471,250
985,000 CCC+/Caa1 Cooper-Standard Automotive, Inc.,
8.375%, 12/15/14 812,625
1,140,000 B-/B3 Lear Corp., 8.75%, 12/1/16 1,071,600
------------
Total Automobiles & Components $ 2,872,225
------------
Consumer Durables & Apparel - 1.9%
Homebuilding - 1.0%
650,000(a) B+/B3 Builders FirstSource, Inc., 7.315%, 2/15/12 $ 484,250
750,000 NR/B2 Desarrolladora Metropolitana SA de CV,
10.875%, 5/9/17 (144A) 759,375
695,000 BB-/B1 Meritage Homes Corp., 6.25%, 3/15/15 576,850
------------
$ 1,820,475
------------
Housewares & Specialties - 0.5%
200,000 B/B3 Jarden Corp., 7.5%, 5/1/17 $ 184,000
800,000(k) B-/B3 Yankee Acquisition Corp., 8.5%, 2/15/15 676,000
------------
$ 860,000
------------
Footwear - 0.4%
EURO 730,000(a) B-/Caa1 Edcon Holdings Proprietary, Ltd., 10.106%,
6/15/15 (144A) $ 656,352
------------
Total Consumer Durables & Apparel $ 3,336,827
------------
Consumer Services - 2.4%
Casinos & Gaming - 2.4%
200,000 B/B2 Buffalo Thunder Development Authority,
9.375%, 12/15/14 (144A) $ 136,000
EURO 550,000 BB-/B2 Codere Finance Luxembourg SA, 8.25%,
6/15/15 (144A) 770,668
550,000 CCC+/Caa1 Fontainebleau Las Vegas Holdings LLC/
Fontainebleau Las Vegas Capital Corp.,
10.25%, 6/15/15 (144A) 394,625
250,000 B+/B1 Galaxy Entertainment Finance Co., Ltd,
9.875%, 12/15/12 (144A) 252,500
The accompanying notes are an integral part of these financial statements. 17
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Casinos & Gaming - (continued)
275,000 B/B2 Little Traverse Bay Bands of Odawa Indians,
10.25%, 2/15/14 (144A) $ 264,688
1,000,000 BB+/Ba1 Mashantucket Western Pequot Tribe,
8.5%, 11/15/15 (144A) 908,750
EURO 50,000 B/B3 Peermont Global, Ltd., 7.75%, 4/30/14 (144A) 69,282
750,000 B-/Caa1 Station Casinos, Inc., 6.625%, 3/15/18 450,000
750,000(k) B/Caa1 Trump Entertainment Resorts, Inc.,
8.5%, 6/1/15 481,875
EURO 405,000 NR/NR Unibet Group Plc, 9.7%, 12/21/10 624,241
------------
Total Consumer Services $ 4,352,629
------------
Media - 1.3%
Broadcasting & Cable Television - 0.6%
40,000(k) CCC/Caa3 CCH I LLC/CCH I Capital Corp.,
11.0%, 10/1/15 $ 31,100
250,000 CCC/Caa2 CCH II LLC/CCH II Capital Corp.,
10.25%, 9/15/10 240,000
1,245,000(b)(k) CCC/B3 Univision Communications, Inc., 9.75%,
3/15/15 (144A) 890,175
------------
$ 1,161,275
------------
Publishing - 0.7%
576,469(b) CCC+/NR AAC Group Holding Corp., 14.75%, 10/1/12 $ 426,587
600,000 CCC+/Caa1 TL Acquisitions, Inc., 10.5%, 1/15/15 (144A) 543,000
250,000(d) B-/B3 Visant Holding Corp., 0.0%, 12/1/13 240,000
------------
$ 1,209,587
------------
Total Media $ 2,370,862
------------
Retailing - 1.1%
Distributors - 0.3%
500,000 B-/B3 Intcomex, Inc., 11.75%, 1/15/11 $ 477,500
------------
General Merchandise Stores - 0.1%
205,000 CCC+/Caa1 Central Garden and Pet Co., 9.125%, 2/1/13 $ 173,225
------------
Home Improvement Retail - 0.2%
500,000 CCC/Caa1 KAR Holdings, Inc., 10.0%, 5/1/15 (144A) $ 475,000
------------
Specialty Stores - 0.5%
950,000(k) CCC+/Caa1 Sally Holdings LLC, 10.5%, 11/15/16 $ 945,250
------------
Total Retailing $ 2,070,975
------------
18 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Food & Staples Retailing - 0.3%
Drug Retail - 0.1%
275,000(k) CCC-/Caa3 Duane Reade, Inc., 9.75%, 8/1/11 $ 255,062
------------
Food Distributors - 0.2%
250,000 B+/B1 JBS SA, 10.5%, 8/4/16 (144A) $ 258,750
------------
Total Food & Staples Retailing $ 513,812
------------
Food, Beverage & Tobacco - 1.7%
Agricultural Products - 0.4%
700,000 B+/B1 Marfrig Overseas, Ltd., 9.625%,
11/16/16 (144A) $ 707,000
------------
Packaged Foods & Meats - 1.0%
400,000 B+/Ba3 Bertin Ltda, 10.25%, 10/5/16 (144A) $ 417,000
1,175,000 B/NR Minerva Overseas, Ltd., 9.5%, 2/1/17 (144A) 1,110,375
275,000(d) NR/B2 SA Fabrica de Produtos Alimenticios Vigor,
9.25%, 2/23/17 (144A) 266,750
------------
$ 1,794,125
------------
Tobacco - 0.3%
570,000 B+/B2 Alliance One International, Inc., 8.5%, 5/15/12 $ 541,500
25,000 B+/B2 Alliance One International, Inc., 11.0%, 5/15/12 25,750
------------
$ 567,250
------------
Total Food, Beverage & Tobacco $ 3,068,375
------------
Health Care Equipment & Services - 3.4%
Health Care Equipment & Services - 0.5%
750,000 CCC+/Caa3 Accellent, Inc., 10.5%, 12/1/13 $ 641,250
400,000 CCC/Caa1 Angiotech Pharmaceuticals, Inc., 7.75%, 4/1/14 292,000
------------
$ 933,250
------------
Health Care Supplies - 1.0%
1,265,000(b) B-/B3 LVB Acquisition Merger Sub, Inc., 10.375%,
10/15/17 (144A) $ 1,344,062
500,000(a) CCC+/Caa1 Medical Services Co., 10.213%, 10/15/11 447,500
------------
$ 1,791,562
------------
Health Care Services - 0.2%
350,000 CCC+/B3 Rural/Metro Corp., 9.875%, 3/15/15 $ 302,750
------------
The accompanying notes are an integral part of these financial statements. 19
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Health Care Facilities - 1.4%
750,000 B/B3 Community Health Systems, Inc.,
8.875%, 7/15/15 $ 780,000
420,000 CCC+/Caa1 Hanger Orthopedic Group, Inc.,
10.25%, 6/1/14 430,500
725,000(b) B-/B3 Surgical Care Affiliates, Inc.,
8.875%, 7/15/15 (144A) 580,000
1,170,000 CCC+/Caa1 Surgical Care Affiliates, Inc., 10.0%,
7/15/17 (144A) 807,300
------------
$ 2,597,800
------------
Managed Health Care - 0.3%
500,000 B-/Caa1 Multiplan, Inc., 10.375%, 4/15/16 (144A) $ 485,000
------------
Total Health Care Equipment & Services $ 6,110,362
------------
Pharmaceuticals & Biotechnology & Life Sciences - 0.3%
Pharmaceuticals - 0.3%
250,000 B/B2 Phibro Animal Health Corp., 10.0%,
8/1/13 (144A) $ 247,500
200,000 CCC+/Caa1 Phibro Animal Health Corp., 13.0%,
8/1/14 (144A) 198,000
150,000 B-/B3 Warner Chilcott Corp., 8.75%, 2/1/15 152,250
------------
Total Pharmaceuticals & Biotechnology &
Life Sciences $ 597,750
------------
Banks - 1.6%
Diversified Banks - 1.6%
750,000(a)(c) NR/B2 ALB Finance BV, 9.375% $ 475,290
250,000 BB+/Baa2 ATF Capital BV, 9.25%, 2/21/14 (144A) 253,125
500,000(a) NR/B2 Banco Macro SA, 9.75%, 12/18/36 378,750
700,000(a) NR/Ba1 Banco Macro SA, 10.75%, 6/7/12 556,500
200,000 B+/Ba2 JSC TemirBank, 9.5%, 5/21/14 (144A) 168,500
300,000 B+/Ba3 Petrocommerce Finance SA, 8.75%, 12/17/09 299,250
500,000 BB/Ba1 TuranAlem Finance BV, 8.5%, 2/10/15 (144A) 420,000
EURO 200,000 NR/Ba3 URSA Bank, 7.0%, 5/21/10 284,135
------------
Total Banks $ 2,835,550
------------
Diversified Financials - 10.2%
Other Diversified Financial Services - 0.6%
1,000,000(a) B/NR Carillon, Ltd., 18.05%, 1/10/11 (144A) $ 1,015,200
------------
20 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Specialized Finance - 9.1%
3,500,000(a) BB/NR Australis, Ltd., 6.762%, 3/24/09 (144A) $ 3,518,550
3,000,000(a) BB/NR Australis, Ltd., 7.112%, 2/3/09 (144A) 3,027,900
5,000,000(a) BB+/NR Cascadia, Ltd., 6.115%, 6/13/08 (144A) 4,998,000
305,000 B/B3 FireKeepers Development Authority,
13.875%, 5/1/15 (144A) 309,575
440,000(a) NR/NR Successor II, Ltd., 19.758%, 4/6/10 (144A) 439,252
2,000,000(a) NR/NR Successor II, Ltd., 28.008%, 4/6/10 (144A) 1,996,000
2,000,000(a) NR/NR Successor II, Ltd., 42.258%, 6/6/08 (144A) 2,053,800
------------
$ 16,343,077
------------
Consumer Finance - 0.5%
250,000 B-/Caa1 ACE Cash Express, Inc., 10.25%,
10/1/14 (144A) $ 200,000
225,000 B+/Ba3 AmeriCredit Corp., 8.5%, 7/1/15 174,375
550,000 BB-/Ba2 Russian Standard Finance SA, 7.5%,
10/7/10 (144A) 506,000
------------
$ 880,375
------------
Total Diversified Financials $ 18,238,652
------------
Insurance - 24.7%
Insurance Brokers - 1.0%
250,000 CCC/Caa1 Alliant Holdings I, Inc., 11.0%, 5/1/15 (144A) $ 205,000
1,050,000 CCC+/Caa1 HUB International Holdings, Inc.,
10.25%, 6/15/15 (144A) 766,500
500,000(a) CCC/B3 USI Holdings Corp., 6.94%, 11/15/14 (144A) 395,000
500,000 CCC/Caa1 USI Holdings Corp., 9.75%, 5/15/15 (144A) 395,000
------------
$ 1,761,500
------------
Multi-Line Insurance - 0.5%
1,000,000(a) BB+/Baa3 Liberty Mutual Group, Inc., 7.0%,
3/15/37 (144A) $ 921,836
65,000 B+/NR Sul America Participacoes SA, 8.625%,
2/15/12 (144A) 66,950
------------
$ 988,786
------------
Property & Casualty Insurance - 3.1%
625,000(a) A+/A1 AMBAC Financial Group, Inc., 6.15%, 2/15/37 $ 206,961
4,500,000(a) BB+/NR Blue Fin, Ltd., 7.128%, 4/10/12 (144A) 4,470,750
900,000(a) AA/Aa2 MBIA Insurance Corp., 14.0%, 1/15/33 (144A) 823,500
------------
$ 5,501,211
------------
The accompanying notes are an integral part of these financial statements. 21
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Reinsurance - 20.1%
2,250,000(a) BB+/NR AKIBARE, 6.028%, 5/22/12 (144A) $ 2,267,775
1,500,000(a) BB+/NR AKIBARE, 6.228%, 5/22/12 (144A) 1,509,150
3,000,000(a) CCC/NR Atlantic & Western Re, Ltd., 8.948%,
1/9/09 (144A) 3,010,800
EURO 1,500,000(a) B/NR Atlas Reinsurance Plc, 14.981%,
1/10/11 (144A) 2,382,064
2,000,000(a) BB/NR Calabash Re, Ltd., 11.593%, 6/1/09 (144A) 2,031,600
1,000,000(a) BB/NR Calabash Re II, Ltd., 11.2%, 1/8/10 (144A) 1,004,900
1,500,000(a) B+/NR Calabash Re II, Ltd., 12.4%, 1/8/10 (144A) 1,583,700
1,500,000(a) BB+/NR East Lane Re, Ltd., 10.239%, 5/6/11 (144A) 1,501,950
3,000,000(a) BB+/NR Fhu-Jin, Ltd., 7.012%, 8/10/11 (144A) 3,063,900
3,750,000(a) BB/NR Foundation Re, Ltd., 7.17%, 11/24/08 (144A) 3,664,500
1,000,000(a) NR/B1 GlobeCat, Ltd., 8.688%, 1/2/13 (144A) 1,016,700
350,000(a) NR/B3 GlobeCat, Ltd., 11.938%, 1/2/13 (144A) 353,780
EURO 1,500,000(a) BB+/NR Green Valley, Ltd., 8.342%, 1/10/11 (144A) 2,350,771
1,000,000(a) BB+/NR Newton Re, Ltd., 7.249%, 12/24/10 (144A) 1,001,100
1,000,000(a) BB/NR Newton Re, Ltd., 9.549%, 12/24/10 (144A) 984,000
2,500,000(a) NR/B2 Redwood Capital X, Ltd., 11.96%,
1/9/09 (144A) 2,502,000
2,000,000(a) NR/NR Redwood Capital X, Ltd., 15.96%,
1/9/09 (144A) 1,999,800
2,900,000(a) B-/NR Residential Reinsurance 2005, Ltd., 11.526%,
6/6/08 (144A) 2,898,840
500,000(a) B/NR Residential Reinsurance 2006, Ltd., 13.076%,
6/5/09 (144A) 502,000
500,000(a) BB+/NR Willow Re, Ltd., 8.024%, 6/16/10 (144A) 504,450
------------
$ 36,133,780
------------
Total Insurance $ 44,385,277
------------
Real Estate - 0.6%
Real Estate Management & Development - 0.6%
100,000(a) B+/NR Alto Palermo SA, 11.0%, 6/11/12 (144A) $ 81,090
105,000 B+/B1 China Properties Group, Ltd., 9.125%,
5/4/14 (144A) 73,500
410,000 B+/NR IRSA Inversiones y Representaciones SA,
8.5%, 2/2/17 (144A) 335,175
1,100,000 B+/B1 Neo-China Group Holdings, Ltd., 9.75%,
7/23/14 (144A) 533,500
------------
Total Real Estate $ 1,023,265
------------
22 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Software & Services - 2.4%
IT Consulting & Other Services - 0.2%
400(e) B-/B2 MSX International UK/MXS International
Business Services FR/MXS International
GmbH, 12.5%, 4/1/12 (144A) $ 320,000
------------
Data Processing & Outsourced Services - 1.4%
1,690,000(k) B/B3 First Data Corp., 9.875%, 9/24/15 (144A) $ 1,537,900
1,110,000 B-/Caa1 Pegasus Solutions, Inc., 10.5%, 4/15/15 (144A) 888,000
------------
$ 2,425,900
------------
Application Software - 0.2%
500,000 CCC+/Caa1 Open Solutions, Inc., 9.75%, 2/1/15 (144A) $ 405,000
------------
Systems Software - 0.6%
1,390,000 B-/Caa1 Vangent, Inc., 9.625%, 2/15/15 $ 1,167,600
------------
Total Software & Services $ 4,318,500
------------
Technology Hardware & Equipment - 0.4%
Computer Hardware - 0.2%
405,000 CCC+/Caa1 Activant Solutions, Inc., 9.5%, 5/1/16 $ 340,200
------------
Electronic Manufacturing Services - 0.1%
70,000 B-/B3 Sanmina-SCI Corp., 6.75%, 3/1/13 $ 63,350
------------
Technology Distributors - 0.1%
250,000 B/B1 Da-Lite Screen Co., Inc., 9.5%, 5/15/11 $ 237,500
------------
Total Technology Hardware & Equipment $ 641,050
------------
Semiconductors & Semiconductor Equipment - 1.1%
Semiconductors - 1.1%
650,000(b) B-/B2 Freescale Semiconductor, Inc., 9.125%, 12/15/14 $ 534,625
1,750,000(k) B-/B3 Freescale Semiconductor, Inc., 10.125%,
12/15/16 1,378,125
------------
Total Semiconductors &
Semiconductor Equipment $ 1,912,750
------------
Telecommunication Services - 6.3%
Integrated Telecommunication Services - 1.5%
1,200,000 B-/B3 GC Impsat Holdings I Plc, 9.875%,
2/15/17 (144A) $ 1,041,000
1,250,000 B+/B1 GCI, Inc., 7.25%, 2/15/14 1,043,750
142,000 NR/Baa3 Tele Norte Leste Participacoes SA,
8.0%, 12/18/13 148,390
500,000 BB/Ba3 Windstream Corp., 8.625%, 8/1/16 523,750
------------
$ 2,756,890
------------
The accompanying notes are an integral part of these financial statements. 23
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Alternative Carriers - 0.7%
1,260,000 CCC+/Caa1 PAETEC Holding Corp., 9.5%, 7/15/15 $ 1,184,400
------------
Wireless Telecommunication Services - 4.1%
125,000 BB/Baa3 Alamosa Delaware, Inc., 8.5%, 1/31/12 $ 115,938
920,000 B-/Caa1 Alltel Corp., 7.0%, 7/1/12 782,000
910,000 CCC+/B3 Broadview Networks Holdings, Inc.,
11.375%, 9/1/12 869,050
EURO 250,000 B+/B3 Cell C Property, Ltd, 8.625%, 7/1/12 (144A) 392,437
500,000(k) CCC/Caa3 Cell C Property, Ltd., 11.0%, 7/1/15 (144A) 497,500
500,000(a) B-/Caa1 Cricket Communications, Inc., 9.875%,
11/1/14 (144A) 490,625
400,000 NR/B3 Digicel, Ltd., 9.25%, 9/1/12 (144A) 404,000
EURO 500,000(a) CCC+/Caa1 Hellas Telecommunications Luxembourg II,
10.747%, 1/15/15 (144A) 609,139
840,000 B-/B1 Hughes Network Systems LLC/HNS Finance
Corp., 9.5%, 4/15/14 840,000
400,000 B-/B2 Kabel Deutschland GmbH, 10.625%, 7/1/14 416,000
540,000 BB+/Ba2 OJSC Vimpel Communications, 9.125%,
4/30/18 (144A) 540,474
1,330,000 B/B1 True Move Co., Ltd., 10.375%, 8/1/14 (144A) 1,396,748
------------
$ 7,353,911
------------
Total Telecommunication Services $ 11,295,201
------------
Utilities - 2.3%
Electric Utilities - 1.6%
750,000 B/NR Cia de Transporte de Energia Electrica de Alta
Tension SA, 8.875%, 12/15/16 (144A) $ 575,625
2,000,000 BB-/Ba3 Intergen NV, 9.0%, 6/30/17 (144A) 2,090,000
250,000 NR/NR Mirant JPSCo. Finance, Ltd., 11.0%,
7/6/16 (144A) 262,500
------------
$ 2,928,125
------------
Independent Power Producers &
Energy Traders - 0.7%
1,240,000 CCC/B3 Texas Competitive Electric Holdings Co. LLC,
10.25%, 11/1/15 (144A) $ 1,292,700
------------
Total Utilities $ 4,220,825
------------
TOTAL CORPORATE BONDS & NOTES
(Cost $158,104,205) $151,891,207
------------
24 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
CONVERTIBLE BONDS & NOTES - 0.2%
of Net Assets
Transportation - 0.2%
Marine - 0.2%
375,000 B/B3 Horizon Lines, Inc., 4.25%, 8/15/12 $ 279,375
------------
TOTAL CONVERTIBLE BONDS & NOTES
(Cost $281,765) $ 279,375
------------
FLOATING RATE LOAN INTERESTS - 39.9%
of Net Assets (f)
Energy - 1.5%
Oil & Gas Exploration & Production - 1.5%
557,000 B+/Ba3 Concho Resources, Inc., Second Lien Term
Loan, 7.145%, 3/27/12 $ 553,519
250,000 B/B3 SandRidge Energy, Inc., Floating Rate Loan,
6.323%, 4/1/14 238,125
1,000,000 B/B3 Venoco, Inc., Second Lien Term Loan,
7.125%, 9/20/11 910,000
989,286 NR/Ba2 W&T Offshore, Inc., Tranche B Term Loan,
4.95%, 5/26/10 981,866
------------
Total Energy $ 2,683,510
------------
Materials - 3.8%
Diversified Chemicals - 0.5%
1,000,000 BB+/Ba1 Huntsman International LLC, New Dollar Term
Loan B, 1.75%, 4/21/14 $ 970,469
------------
Paper Packaging - 1.1%
1,488,579 BB+/NR Georgia-Pacific LLC, Term Loan B,
4.446% - 4.835%, 12/20/12 $ 1,430,198
500,000 B-/B3 Graphic Packaging International, Inc.,
Incremental Term Loan, 5.44% - 5.67%,
5/16/14 483,541
------------
$ 1,913,739
------------
Steel - 1.2%
1,310,931 BB-/B3 Algoma Steel, Inc., Term Loan, 7.33%, 6/20/13 $ 1,215,888
1,242,371 NR/B1 Niagara Corp., Term Loan, 7.71% - 8.271%,
6/29/14 1,031,168
------------
$ 2,247,056
------------
The accompanying notes are an integral part of these financial statements. 25
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Forest Products - 1.0%
1,500,000 NR/Ba3 Ainsworth Lumber Co., Ltd., Term Loan,
5.938%, 6/26/14 $ 1,159,999
598,489 B+/B1 Graham Packaging Co., L.P., New Term Loan,
5.25%, 10/7/11 568,606
------------
$ 1,728,605
------------
Total Materials $ 6,859,869
------------
Capital Goods - 3.1%
Aerospace & Defense - 1.6%
750,000 CCC+/Caa1 Aeroflex, Inc., Sr. Unsecured Bridge Loan,
9.5%, 8/15/08 $ 671,250
746,250 B+/NR Aeroflex, Inc., Tranche B-2 Term Loan,
6.875%, 8/15/14 698,676
500,231 BB-/NR DAE Aviation Holdings, Inc., Tranche B-1 Term
Loan, 6.45% - 6.99%, 7/31/14 492,259
500,000 BB+/Ba3 Spirit Aerosystems, Inc., Term Loan B,
4.568%, 9/30/13 494,063
496,871 NR/NR Standard Aero, Ltd. (DAE Aviation Holdings, Inc.),
Tranche B-2 Term Loan, 6.99%, 7/31/14 494,387
------------
$ 2,850,635
------------
Construction & Farm Machinery & Heavy Trucks - 1.5%
1,000,000 BB-/Ba3 Accuride Corp., Term Loan, 6.232% - 6.313%,
1/31/12 $ 970,000
2,000,000 BB-/B2 Rental Service Corp., Second Lien Initial Term
Loan, 6.23%, 11/30/13 1,746,250
------------
$ 2,716,250
------------
Total Capital Goods $ 5,566,885
------------
Commercial Services & Supplies - 1.6%
Diversified Commercial & Professional Services - 0.4%
744,375 BB+/B1 Asset Acceptance Capital Corp., Tranche B Term
Loan, 5.22% - 7.46%, 6/12/13 $ 688,547
------------
Environmental & Facilities Services - 1.2%
1,240,625 BB-/Ba3 Synagro Technologies, Inc., First Lien Term Loan,
4.7% - 5.07%, 4/2/14 $ 1,057,633
1,033,331 B/Ba3 Waste Services, Inc., Tranche E Term Loan,
5.15%, 3/31/11 1,025,581
------------
$ 2,083,214
------------
Total Commercial Services & Supplies $ 2,771,761
------------
26 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Transportation - 0.9%
Air Freight & Logistics - 0.9%
439,482 NR/Ba2 Ceva Group Plc, Pre-Funded LC Loan,
2.596%, 11/4/13 $ 403,225
1,330,685 NR/Ba2 Ceva Group Plc, U.S. Term Loan,
5.704%, 11/4/13 1,220,904
------------
Total Transportation $ 1,624,129
------------
Automobiles & Components - 0.5%
Tires & Rubber - 0.5%
1,000,000 BB/Ba1 Goodyear Tire & Rubber Co., Second Lien Term
Loan, 4.54%, 4/30/14 $ 950,000
------------
Total Automobiles & Components $ 950,000
------------
Consumer Durables & Apparel - 0.7%
Homebuilding - 0.2%
2,000,000(g) BB/Ba3 LandSource Communities Development LLC,
Second Lien Term Loan, 7.59%, 2/27/14 $ 420,000
------------
Housewares & Specialties - 0.5%
925,583 BB-/Ba3 Yankee Candle Company, Inc., Term Loan,
4.61% - 4.9%, 2/6/14 $ 845,057
------------
Total Consumer Durables & Apparel $ 1,265,057
------------
Consumer Services - 1.5%
Casinos & Gaming - 1.5%
1,000,000(h) B/NR Fontainebleau Las Vegas LLC/Fontainebleau
Las Vegas II LLC, Initial Term Loan,
6.258%, 6/6/14 $ 840,000
172,829 B-/B2 Gateway Casinos & Entertainment, First Lien
Delayed Draw Term Loan, 5.188%, 9/30/14 147,337
945,112 BB-/NR Gateway Casinos & Entertainment, First Lien
Term Loan, 5.188%, 9/30/14 805,708
1,000,000 BB-/Caa1 Gateway Casinos & Entertainment, Second Lien
Term Loan, 8.188%, 3/31/15 720,000
250,000 BB-/B2 Riviera Holdings Corp., Term Loan, 4.89%,
6/8/14 217,500
------------
Total Consumer Services $ 2,730,545
------------
The accompanying notes are an integral part of these financial statements. 27
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Media - 2.9%
Broadcasting & Cable Television - 1.5%
1,995,000 B+/B1 Charter Communications Operating LLC,
Replacement Term Loan, 5.26%, 3/6/14 $ 1,767,237
1,000,000 B+/Ba3 Insight Midwest Holdings LLC, Term Loan B,
4.69%, 4/7/14 953,393
------------
$ 2,720,630
------------
Movies & Entertainment - 0.5%
992,500 B+/B1 Lodgenet Entertainment Corp., Closing Date
Term Loan, 4.7%, 4/4/14 $ 878,362
------------
Publishing - 0.9%
691,875 BB+/Ba1 Dex Media West LLC, New Tranche B-2 Term
Loan, 4.2% - 4.57%, 3/9/10 $ 677,749
953,570 BB-/Ba1 RH Donnelley, Inc., Tranche D-1 Term Loan,
1.5%, 6/30/11 905,296
------------
$ 1,583,045
------------
Total Media $ 5,182,037
------------
Retailing - 0.8%
Apparel, Accessories & Luxury Goods - 0.8%
1,505,978 BB-/Ba2 Hanesbrands, Inc., First Lien Term Loan B,
4.424% - 7.11%, 9/5/13 $ 1,481,505
------------
Total Retailing $ 1,481,505
------------
Food, Beverage & Tobacco - 0.4%
Packaged Foods & Meats - 0.4%
748,111 BB/B1 Dean Foods Co., Tranche B Term Loan,
4.45% - 4.46%, 4/2/14 $ 715,173
------------
Total Food, Beverage & Tobacco $ 715,173
------------
Household & Personal Products - 0.4%
Personal Products - 0.4%
797,985 NR/Ba3 Brickman Group Holdings, Inc., Tranche B Term
Loan, 4.696%, 1/23/14 $ 748,111
------------
Total Household & Personal Products $ 748,111
------------
Health Care Equipment & Services - 5.6%
Health Care Equipment & Services - 0.9%
1,736,809 NR/B2 Talecris Biotherapeutics Holdings Corp., First
Lien Term Loan, 6.57% - 9.5%, 12/6/13 $ 1,541,418
------------
28 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Health Care Supplies - 1.3%
30,000 NR/NR Bausch & Lomb, Inc., Delayed Draw Term Loan,
5.946%, 4/24/15 $ 29,670
359,100 NR/NR Bausch & Lomb, Inc., Parent Term Loan,
5.946%, 4/24/15 355,153
1,000,000 BB-/Ba3 Cardinal Health, Inc., Dollar Term Loan,
4.946%, 4/10/14 892,500
496,250 B+/B2 IM US Holdings LLC, First Lien Term Loan,
4.671%, 6/26/14 460,685
600,000 B+/B2 IM US Holdings LLC, Second Lien Term Loan,
6.921%, 6/26/15 541,500
------------
$ 2,279,508
------------
Health Care Services - 0.6%
1,087,931 B/B3 HealthSouth Corp., Term Loan, 5.21% - 5.23%,
3/11/13 $ 1,035,235
------------
Health Care Facilities - 2.8%
907,327 NR/Ba3 CHS/Community Health Systems, Inc., Term
Loan, 5.335%, 7/25/14 $ 870,510
1,736,361 B+/Ba3 Hanger Orthopedic Group, Inc., Tranche B Term
Loan, 4.68%, 5/26/13 1,643,032
1,292,462 B+/Ba2 HCA, Inc., Tranche B Term Loan,
4.946%, 11/18/13 1,229,517
497,226 BB-/Ba3 Psychiatric Solutions, Inc., Term Loan,
4.45% - 6.568%, 7/2/12 478,580
102,280 B+/B1 Sun Healthcare Group, Inc., Delayed Draw Term
Loan, 4.654% - 4.696%, 4/19/14 93,842
162,256 B+/B1 Sun Healthcare Group, Inc., Synthetic LC Loan,
2.596%, 4/19/14 148,870
706,608 B+/B1 Sun Healthcare Group, Inc., Term Loan,
4.599% - 5.078%, 4/19/14 648,313
------------
$ 5,112,664
------------
Total Health Care Equipment & Services $ 9,968,825
------------
Pharmaceuticals & Biotechnology & Life Sciences - 0.4%
Pharmaceuticals - 0.4%
748,125 NR/NR Mylan, Inc., U.S. Tranche B Term Loan,
5.938% - 6.0%, 10/2/14 $ 735,137
------------
Total Pharmaceuticals & Biotechnology &
Life Sciences $ 735,137
------------
The accompanying notes are an integral part of these financial statements. 29
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Diversified Financials - 2.7%
Other Diversified Financial Services - 0.5%
997,500 BB/Ba2 Metavante Corp., Term Loan, 4.989%, 11/1/14 $ 943,468
------------
Specialized Finance - 0.4%
873,461 BB-/B3 Ace Cash Express, Inc., Term Loan,
5.71% - 7.91%, 10/5/13 $ 703,136
------------
Consumer Finance - 1.4%
982,207 B-/B2 Collect Acquisition Corp., Facility Term Loan B,
6.95% - 7.35%, 5/15/13 $ 920,001
1,000,854 BB-/NR Dollar Financial Corp., Canadian Borrower Term
Loan, 5.45%, 10/30/12 880,751
735,922 BB-/NR Dollar Financial Corp., Delayed Draw Term Loan,
5.45%, 10/30/12 647,611
------------
$ 2,448,363
------------
Investment Banking & Brokerage - 0.4%
698,250 NR/NR MSCI, Inc., Term Loan B, 5.835%, 11/20/14 $ 702,614
------------
Total Diversified Financials $ 4,797,581
------------
Insurance - 2.8%
Insurance Brokers - 2.1%
1,492,500 B-/B3 Alliant Holdings I, Inc., Term Loan,
5.696%, 8/21/14 $ 1,402,950
85,042 B/B2 HUB International, Ltd., Delay Draw Term Loan,
5.196% - 7.33%, 6/13/14 76,644
486,893 B/B3 HUB International, Ltd., Initial Term Loan,
5.196%, 6/13/14 438,812
1,985,000 B-/B2 U.S.I. Holdings Corp., Tranche B Term Loan,
5.45%, 5/5/14 1,865,900
------------
$ 3,784,306
------------
Multi-Line Insurance - 0.7%
795,496 B-/B2 AmWins Group, Inc., Initial Term Loan,
5.23% - 5.59%, 6/8/13 $ 624,465
1,000,000 B-/B2 AmWins Group, Inc., Second Lien Initial Term
Loan, 8.23%, 6/9/14 537,500
------------
$ 1,161,965
------------
Total Insurance $ 4,946,271
------------
30 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Software & Services - 1.2%
Application Software - 0.5%
997,455 B/B1 Nuance Communications, Inc., Term Loan,
5.21%, 3/31/13 $ 934,284
------------
Systems Software - 0.7%
1,439,787 BB-/B3 Vangent, Inc., Term Loan, 4.93% - 5.35%,
2/14/13 $ 1,313,806
------------
Total Software & Services $ 2,248,090
------------
Technology Hardware & Equipment - 2.5%
Communications Equipment - 0.3%
675,000 B/Ba3 Univision Communications, Inc., Initial Term
Loan, 4.954% - 5.494%, 9/29/14 $ 570,164
------------
Computer Storage & Peripherals - 1.0%
1,979,950 B+/Ba3 SunGard Data Systems, Inc., New U.S.Term
Loan, 4.878%, 2/28/14 $ 1,880,277
------------
Electronic Equipment Manufacturers - 1.2%
1,899,818 BB/Ba2 H3C Holdings, Ltd., Tranche B Term Loan,
5.632%, 9/28/12 $ 1,624,344
512,425 B/B3 Scitor Corp., Term Loan, 6.96%, 9/26/14 502,177
------------
$ 2,126,521
------------
Total Technology Hardware & Equipment $ 4,576,962
------------
Semiconductors & Semiconductor
Equipment - 0.5%
Semiconductors - 0.5%
992,462 BB-/Ba3 Freescale Semiconductor, Inc., Term Loan,
4.459%, 11/29/13 $ 862,315
------------
Total Semiconductors & Semiconductor
Equipment $ 862,315
------------
Telecommunication Services - 2.6%
Integrated Telecommunication Services - 0.8%
1,215,989 B-/Ba3 PAETEC Holding Corp., Replacement Term Loan,
5.204%, 2/28/13 $ 1,177,989
306,013 B+/B2 Telesat Canada, U.S. Term I Loan,
5.71% - 7.84%, 10/31/14 289,732
12,931 B+/B2 Telesat Canada, U.S. Term II Loan,
5.79% - 6.26%, 10/31/14 12,243
------------
$ 1,479,964
------------
The accompanying notes are an integral part of these financial statements. 31
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Wireless Telecommunication Services - 1.8%
992,424 B-/B1 Cricket Communications, Inc., Term Loan B,
5.696%, 6/16/13 $ 978,701
1,736,776 B/B1 MetroPCS Wireless, Inc., New Tranche B Term
Loan, 5.0% - 5.5%, 11/4/13 1,640,892
593,434 B+/B1 Stratos Global Corp./Stratos Funding L.P., Facility
Term Loan B, 5.446%, 2/13/12 564,134
------------
$ 3,183,727
------------
Total Telecommunication Services $ 4,663,691
------------
Utilities - 3.5%
Multi-Utilities - 0.7%
1,200,000 BB/Ba3 Goodman Global, Inc., Term Loan,
7.5%, 2/13/14 $ 1,190,626
------------
Independent Power Producers & Energy Traders - 2.8%
1,980,037 NR/NR Calpine Corp., First Priority Term Loan,
5.575%, 3/31/14 $ 1,866,362
187,926 B/B2 Mach Gen LLC, First Lien Synthetic LC Loan,
2.446%, 2/22/13 182,366
1,791,213 B/B2 Mach Gen LLC, First Lien Term Loan B,
5.1%, 2/22/14 1,738,223
418,256 B+/Ba1 NRG Energy, Inc., Credit-Linked Deposit Loan,
2.596%, 2/1/13 402,206
856,389 B+/Ba1 NRG Energy, Inc., Term Loan, 4.196%, 2/1/13 823,525
------------
$ 5,012,682
------------
Total Utilities $ 6,203,308
------------
TOTAL FLOATING RATE LOAN INTERESTS
(Cost $77,864,967) $ 71,580,762
------------
FIXED RATE LOAN INTERESTS - 0.8%
of Net Assets
Energy - 0.3%
Oil & Gas Exploration & Production - 0.3%
600,000 B/B3 SandRidge Energy, Inc., Term Loan,
8.625%, 4/1/15 $ 603,750
------------
Total Energy $ 603,750
------------
32 The accompanying notes are an integral part of these financial
statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Telecommunication Services - 0.5%
Integrated Telecommunication Services - 0.5%
1,000,000 BB-/B3 Intelsat, Ltd., Sr. Notes Backstop Loan,
8.5%, 1/15/13 $ 925,000
------------
Total Telecommunication Services $ 925,000
------------
TOTAL FIXED RATE LOAN INTERESTS
(Cost $1,524,353) $ 1,528,750
------------
Shares
WARRANTS - 0.0% of Net Assets
Real Estate - 0.0%
Real Estate Management & Development - 0.0%
750,000(i) Neo-China Group Holdings, Ltd.,
Expires 7/22/12 $ 28,866
------------
TOTAL WARRANTS
(Cost $17,012) $ 28,866
------------
Principal
Amount
USD($)
TEMPORARY CASH INVESTMENTS - 24.1% of Net Assets
Repurchase Agreement - 19.5%
6,995,000 Bank of America Corp., 1.98%, dated 4/30/08,
repurchase price of $6,995,000 plus accrued
interest on 5/1/08 collateralized by the
following:
$7,481,780 Federal National Mortgage
Association, 5.0% - 5.5%,
10/1/34 - 7/1/37
$330,354 Freddie Mac Giant, 5.0%, 4/1/38 $ 6,995,000
6,995,000 Barclays Plc, 1.98%, dated 4/30/08, repurchase
price of $6,995,000 plus accrued interest on
5/1/08 collateralized by the following:
$570,365 Federal Home Loan Mortgage
Corp., 5.927% - 6.28%, 8/1/36 - 12/1/36
$5,279,999 Federal National Mortgage
Association, 4.0% - 6.5%,
9/1/20 - 2/1/48
$733,825 Federal National Mortgage
Association (ARM), 4.777% - 6.432%,
8/1/35 - 11/1/37
$2,124,049 Freddie Mac Giant, 4.5% - 7.0%,
5/1/20 - 11/1/47 6,995,000
The accompanying notes are an integral part of these financial statements. 33
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Repurchase Agreement - (continued)
6,995,000 Deutsche Bank AG, 2.0%, dated 4/30/08,
repurchase price of $6,995,000 plus accrued
interest on 5/1/08 collateralized by the
following:
$869,322 Federal Home Loan Mortgage
Corp., 4.955% - 5.894%, 2/1/37 - 4/1/38
$2,120,370 Federal National Mortgage
Association (ARM), 4.414% - 6.308%,
8/1/12 - 6/1/36
$6,890,773 Freddie Mac Giant, 4.0% - 7.0%,
4/1/19 - 4/1/38 $ 6,995,000
6,995,000 JP Morgan Chase & Co., 1.96%, dated 4/30/08,
repurchase price of $6,995,000 plus accrued
interest on 5/1/08 collateralized by
$7,434,460 Federal National Mortgage
Association, 4.5% - 7.0%, 1/1/21 - 2/1/38 6,995,000
6,995,000 Merrill Lynch & Co., 1.98%, dated 4/30/08,
repurchase price of $6,995,000 plus
accrued interest on 5/1/08 collateralized
by $7,097,001 Freddie Mac Giant,
5.5%, 3/1/38 6,995,000
------------
$ 34,975,000
------------
Security Lending Collateral - 4.6%
Certificates of Deposit:
822,788 Banco Santander NY, 2.80%, 10/7/08 $ 69,407
914,209 Bank Bovespa NY, 2.86%, 5/6/08 77,088
2,285,524 Bank of America, 2.80%, 8/22/08 192,716
822,788 Bank of Scotland NY, 2.89%, 11/4/08 69,263
1,142,762 Bank of Scotland NY, 3.03%, 9/26/08 96,249
2,285,524 BNP Paribas NY, 2.88%, 7/23/08 192,716
365,684 BNP Paribas NY, 3.035%, 5/23/08 30,840
1,371,314 Calyon NY, 2.85%, 8/25/08 115,633
457,105 Calyon NY, 2.69%, 01/16/09 61,074
2,285,524 Citibank, 2.85%, 7/29/08 192,715
1,695,858 Dexia Bank NY, 3.37%, 09/29/08 142,665
196,555 Fortis, 3.11%, 09/30/08 16,541
457,105 Fortis, 3.14%, 06/30/08 38,522
2,285,524 NORDEA NY, 2.81%, 8/29/08 192,716
365,684 Rabobank Nederland NY, 2.37%, 8/29/08 30,821
1,142,762 Royal Bank of Canada NY, 2.57%, 7/15/08 96,358
34 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Security Lending Collateral - (continued)
882,212 Skandinavian Enskilda Bank NY, 2.70%,
7/17/08 74,390
265,121 Skandinavian Enskilda Bank NY, 3.18%,
09/22/08 22,326
457,105 Skandinavian Enskilda Bank NY, 3.06%
02/13/09 38,424
914,209 Svenska Bank NY, 2.70%, 7/17/08 77,088
457,105 Wachovia Bank, 2.82%, 6/9/08 177,295
----------
$2,004,847
----------
Commercial Paper:
246,111 Bank of America, 2.62%, 8/26/08 $ 58,971
456,865 Calyon, 2.71%, 5/8/08 38,523
685,657 CBA, 2.71%, 7/11/08 57,508
457,104 Deutsche Bank Financial, 2.55%, 7/9/08 38,356
365,683 Deutsche Bank Financial, 2.55%, 6/16/08 30,734
548,526 HSBC, 2.67%, 6/16/08 46,095
457,105 HSBC, 2.72%, 6/9/08 38,432
457,104 HSBC, 2.89% 7/21/08 38,294
457,105 Lloyds Bank, 2.60%, 6/6/08 38,443
1,142,762 Macquarie Bank, 2.87%, 6/26/08 95,908
457,105 Macquarie Bank, 2.87%, 6/9/08 38,424
685,657 Natixis, 2.87%, 7/10/08 57,494
685,657 Natixis, 2.87%, 7/21/08 57,422
455,774 PARFIN, 2.70%, 6/9/08 38,431
457,105 RAB USA, 2.61%, 6/10/08 38,432
914,209 Royal Bank of Scotland, 2.66%, 10/21/08 75,990
438,821 Royal Bank of Scotland, 3.00%, 6/12/08 36,887
365,684 Societe Generale, 2.85%, 5/2/08 30,832
1,142,762 Societe Generale, 2.93%, 7/30/08 95,657
457,105 Societe Generale, 2.98%, 7/2/08 38,347
2,056,971 Unicredit Group, 2.89%, 7/17/08 172,322
457,104 Wachovia, 3.62%,10/28/08 38,416
365,165 WestPac, 2.72%, 7/10/08 30,627
457,104 WestPac, 2.72%, 7/7/08 38,349
685,657 WestPac, 2.77%, 7/9/08 57,510
----------
$1,326,404
----------
The accompanying notes are an integral part of these financial statements. 35
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Security Lending Collateral - (continued)
Tri-party Repurchase Agreements:
16,221,229 Barclay's Bank,1.96% 5/1/08 $ 1,367,775
13,713,141 Deutsche Bank, 1.97% 5/1/08 1,156,293
13,713,141 Lehman Brothers, 1.99% 5/1/08 1,156,293
13,713,141 Merrill Lynch, 1.95% 5/1/08 1,156,293
-------------
$ 4,836,654
-------------
Other:
1,599,866 ABS CFAT 2008-A A1 $ 134,901
-------------
TOTAL SECURITIES LENDING COLLATERAL $ 8,302,806
-------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $43,277,806) $ 43,277,806
-------------
TOTAL INVESTMENTS IN SECURITIES - 151.2%
(Cost $283,916,223)(j) $ 271,475,715
-------------
OTHER ASSETS AND LIABILITIES - (51.2)% $ (91,960,580)
-------------
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS - 100.0% $ 179,515,135
=============
NR Security not rated by S&P or Moody's.
(144A) Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At
April 30, 2008, the value of these securities amounted to $109,148,042
or 60.8% of total net assets applicable to common shareowners.
(a) Floating rate note. The rate shown is the coupon rate at April 30,
2008.
(b) Payment-in-Kind (PIK) security which may pay interest in additional
principal amount.
(c) Security is a perpetual bond and has no definite maturity date.
(d) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specific date. The rate shown is the coupon rate at
April 30, 2008.
(e) Security is priced as a unit.
(f) Floating rate loan interests in which the Trust invests generally pay
interest at rates that are periodically redetermined by reference to a
base lending rate plus a premium. These base lending rates are
generally (i) the lending rate offered by one or more major European
banks, such as LIBOR (London InterBank Offered Rate), (ii) the prime
rate offered by one or more major United States banks, (iii) the
certificate of deposit (iv) other base lending rates used by commercial
lenders. The interest rate shown is the coupon rate accruing at April
30, 2008.
(g) Security is in default and is non-income producing.
(h) Indicates a security that has been deemed illiquid. The aggregate cost
of illiquid securities is $996,458. The aggregate value $840,000
represents 0.5% of the net assets.
(i) Non-income producing.
36 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(j) At April 30, 2008, the net unrealized loss on investments based on cost
for federal income tax purposes of $284,929,263 was as follows:
Aggregate gross unrealized gain for all investments in which there is
an excess of value over tax cost $ 2,338,209
Aggregate gross unrealized loss for all investments in which there is
an excess of tax cost over value (15,791,757)
------------
Net unrealized loss $(13,453,548)
============
For financial reporting purposes net unrealized loss was $12,440,508
and cost of investments aggregated $283,916,223.
(k) At April 30, 2008, the following securities were out on loan:
Principal
Amount
USD ($) Description Value
807,000 Accuride Corp., 8.5%, 2/1/15 $ 728,543
100,000 Ainsworth Lumber Co., Ltd., 7.25%, 10/1/12 58,397
638,000 Aleris International, Inc., 10.0%, 12/15/16 417,714
524,000 Allison Transmission, Inc., 11.0%, 11/1/15 (144A) 540,164
490,000 Cell C Property, Ltd., 11.0%, 7/1/15 (144A) 528,750
39,000 CCH I LLC/CCH I Capital Corp., 11.0%, 10/1/15 30,306
240,000 Duane Reade, Inc., 9.75%, 8/1/11 225,962
700,000 First Data Corp., 9.875%, 9/24/15 (144A) 637,144
1,732,000 Freescale Semiconductor, Inc., 10.125%, 12/15/16 1,406,782
1,000,000 Georgia Gulf Corp., 10.75%, 10/15/16 727,424
742,000 Sally Holdings LLC, 10.5%, 11/15/16 768,191
710,000 Trump Entertainment Resorts, Inc., 8.5%, 6/1/15 481,721
1,225,000 Univision Communications, Inc., 9.75%, 3/15/15 (144A) 810,850
792,000 Yankee Acquisition Corp., 8.5%, 2/15/15 683,870
----------
$8,045,818
==========
Glossary of Terms:
LC - Letter of Credit
Note: Principal amounts are denominated in U.S. dollars unless otherwise
denoted.
EURO - Euro
NOK - Norwegian Krone
Purchases and sales of securities (excluding temporary cash investments) for the
period ended April 30, 2008, aggregated $277,518,244 and $33,571,069,
respectively.
The accompanying notes are an integral part of these financial statements. 37
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 4/30/08
--------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value (including securities
loaned of $8,045,818) (cost $283,916,223) $ 271,475,715
Foreign currencies, at value (cost $180,107) 6,189
Receivables -
Investment securities sold 455,245
Paydowns 2,500
Interest 4,240,291
Commitment fees 969
Forward foreign currency portfolio hedge contracts - net 14,154
Prepaid expenses 12,897
-------------
Total assets $ 276,207,960
-------------
LIABILITIES:
Payables -
Notes payable $ 68,000,000
Investment securities purchased 7,392,110
Dividends 1,614,529
Upon return of securities loaned 8,302,806
Depreciation on unfunded corporate loans 86,092
Unamortized facility fees 2,018
Due to custodian 10,993,360
Due to affiliates 61,333
Accrued interest expense 129,772
Accrued other expenses 110,805
-------------
Total liabilities $ 96,692,825
-------------
NET ASSETS:
Paid-in capital $ 194,273,750
Undistributed net investment income 269,847
Accumulated net realized loss on investments and foreign
currency transactions (2,345,760)
Net unrealized loss on investments (12,526,600)
Net unrealized loss on forward foreign currency contracts
and other assets and liabilities denominated in
foreign currencies (156,102)
-------------
Total net assets $ 179,515,135
=============
NET ASSET VALUE PER SHARE:
No par value (unlimited number of shares authorized)
Based on $179,515,135/8,154,188 shares $ 22.02
=============
38 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the period 5/30/07 (commencement of operations) to 4/30/08
INVESTMENT INCOME:
Interest (net of foreign taxes withheld $3,214) $ 16,521,741
Facility and other fees 32,048
------------
Total investment income $ 16,553,789
------------
EXPENSES:
Management fees $ 1,565,880
Administrative fees 161,193
Transfer agent fees and expenses 18,266
Custodian fees 35,776
Registration fees 17,500
Organization costs 51,000
Professional fees 235,416
Printing expenses 25,302
Trustees' fees 6,000
Pricing fees 38,629
Commitment fees 5,026
Miscellaneous 18,438
------------
Net operating expenses $ 2,178,426
------------
Interest expense $ 561,908
------------
Net operating expenses and interest expense $ 2,740,334
Less management fees waived and expenses
reimbursed by Pioneer Investment
Management, Inc. ("PIM") (453,137)
Reimbursement of organization fees by PIM (51,000)
------------
Net expenses $ 2,236,197
------------
Net investment income $ 14,317,592
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ (2,254,717)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 391,975 $ (1,862,742)
------------ ------------
Net unrealized loss from:
Investments $(12,440,508)
Unfunded corporate loans (86,092)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (156,102) $(12,682,702)
------------ ------------
Net loss on investments and foreign currency
transactions $(14,545,444)
------------
Net decrease in net assets resulting from operations $ (227,852)
============
The accompanying notes are an integral part of these financial statements. 39
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
For the period 5/30/07 (commencement of operations) to 4/30/08
5/30/07
to
4/30/08
FROM OPERATIONS:
Net investment income $ 14,317,592
Net realized loss on investments and foreign currency transactions (1,862,742)
Net unrealized loss on investments and foreign currency
transactions (12,682,702)
-------------
Net decrease in net assets resulting from operations $ (227,852)
-------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income ($1.78 per share) $ (14,530,763)
-------------
Total distributions to shareowners $ (14,530,763)
-------------
FROM TRUST SHARE TRANSACTIONS:
Net proceeds from the issuance of shares $ 174,287,500
Net proceeds from the underwriters' over-allotment option exercised 20,293,750
Offering expenses charged to paid-in-capital (407,500)
-------------
Net increase in net assets resulting from Trust share transactions $ 194,173,750
-------------
Net increase in net assets $ 179,415,135
NET ASSETS:
Beginning of period 100,000
-------------
End of period $ 179,515,135
=============
Undistributed net investment income $ 269,847
=============
40 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF CASH FLOW
--------------------------------------------------------------------------------
For the period 5/30/07 (commencement of operations) to 4/30/08
Cash Flows Used in Operating Activities
Net investment income $ 14,317,592
---------------
Adjustment to Reconcile Net Investment Income to Net Cash
and Foreign Currency Used in Operating Activities
Purchase of investment securities $(9,504,671,582)
Proceeds from disposition of investment securities 9,227,453,347
Increase in receivable for investments sold (455,245)
Increase in paydowns receivable (2,500)
Increase in interest and foreign tax reclaim receivable (4,240,291)
Increase in commitment fees receivable (969)
Increase in prepaid expenses (12,897)
Increase in interest payable 129,772
Increase in payable for investments purchased 7,392,110
Increase in accrued expenses and other liabilities 174,156
Increase in unrealized appreciation on foreign currency
transactions (170,256)
Net realized gain from foreign currency transactions 391,975
Net amortization/(accretion) of premium/(discount) (649,899)
---------------
Net cash and foreign currency used in operating activities $ (260,344,687)
---------------
Cash Flows from Financing Activities
Net cash provided from common shares initial public offering $ 194,173,750
Increase in notes payable 68,000,000
Cash dividends paid to common shareowners (12,916,234)
Bank overdrafts 10,987,171
---------------
Net cash flow from financing activities $ 260,244,687
---------------
Net decrease in cash and foreign currency $ (100,000)
---------------
Cash and Foreign Currency
Beginning of the period $ 100,000(a)
---------------
End of the period $ -
===============
(a) Represents initial seed capital.
The accompanying notes are an integral part of these financial statements. 41
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
5/30/07 (b)
to
4/30/08
Per Share Operating Performance
Net asset value, beginning of period $ 23.88(c)
-----------
Increase (decrease) from investment operations:(a)
Net investment income 1.77
Net realized and unrealized loss on investments and
foreign currency transactions (1.80)
-----------
Net decrease from investment operations $ (0.03)
Distributions from net investment income (1.78)
Capital charge with respect to issuance of shares (0.05)(c)
-----------
Net decrease in net asset value $ (1.86)
-----------
Net asset value, end of period(d) $ 22.02
-----------
Market value, end of period(d) $ 20.47
===========
Total return at market value (e) (10.67)%
Ratios to average net assets
Net operating expenses 0.99%(f)
Interest expense 0.33%(f)
Net expenses 1.32%(f)
Net investment income 8.48%(f)
Portfolio turnover 21%
Net assets, end of period (in thousands) $ 179,515
Ratios to average net assets before waivers and reimbursements
of expenses
Net operating expenses 1.29%(f)
Interest expense 0.33%(f)
Net expenses 1.62%(f)
Net investment income 8.18%(f)
(a) The per common share data presented above is based upon the average common
shares outstanding for the period presented.
(b) The Trust's common shares were first publicly offered on May 24, 2007 and
commenced operations on May 30, 2007.
(c) Net asset value immediately after the closing of the first public offering
was $23.83.
(d) Net asset value and market value are published in Barron's on Saturday, The
Wall Street Journal on Monday and The New York Times on Monday and
Saturday.
(e) Total investment return is calculated assuming a purchase of common shares
at the current market value on the first day and a sale at the current
market value on the last day of the period reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions. Total
investment return less than a full period is not annualized. Past
performance is not a guarantee of future results.
(f) Annualized.
The information above represents the audited operating performance data for
a share of common stock outstanding, total investment return, ratios to
average net assets of common shareowners and other supplemental data for
the period indicated. This information has been determined based upon
financial information provided in the financial statements and market value
data for the Trust's common shares.
42 The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/08
--------------------------------------------------------------------------------
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, and the sale and
issuance to Pioneer Investment Management, Inc. ("PIM"), the Trust's investment
adviser, a wholly owned indirect subsidiary of UniCredit S.p.A. ("UniCredit"),
of 4,188 shares of beneficial interest at an aggregate purchase price of
$100,000. PIM has agreed to reimburse all the Trust's organizational expenses
and to pay the amount by which the aggregate offering costs (other than the
sales load) exceed $0.05 per share of the common share offering. The investment
objective of the Trust is to provide a high level of current income and the
Trust may seek capital appreciation to the extent that it is consistent with its
investment objective.
The Trust'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.
Information regarding the Trust's principal risks is contained in the Trust's
original offering prospectus, with additional information included in the
Trust's Shareowner reports from time to time. Please refer to those documents
when considering the Trust's risks. At times, the Trust's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
The Trust invests in below investment grade (high yield) debt securities,
floating rate loans and event-linked bonds sometimes referred to as
"catastrophic" bonds or "insurance-linked" bonds. The Trust may invest in
securities and other obligations of any credit quality, including those that are
rated below investment grade, or are unrated but are determined by the
investment adviser and/or subadviser to be of equivalent credit quality. Below
investment grade securities are
43
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
commonly referred to as "junk bonds" and are considered speculative with respect
to the issuer's capacity to pay interest and repay principal. These securities
involve greater risk of loss, are subject to greater price volatility, and are
less liquid, especially during periods of economic uncertainty or change, than
higher rated debt securities. The Trust may invest in securities of issuers that
are in default or that are in bankruptcy.
The Trust's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Trust to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses and gains and losses on investments during the
reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Trust in preparation of its financial statements, which are consistent with
those generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Investments in loan
interests are valued in accordance with guidelines established by the Board
of Trustees at the mean between the last available bid and asked prices
from one or more brokers or dealers as obtained from Loan Pricing
Corporation. For loan interests for which no reliable price quotes are
available, such investments are valued by Loan Pricing Corporation through
the use of pricing matrices to determine valuations.
Fixed-income securities are valued at prices supplied by independent
pricing services, which consider such factors as Treasury spreads, yields,
maturities and ratings. Valuations may be supplemented by values obtained
from dealers and other sources, as required. Equity securities are valued
at the last sale price on the principal exchange where they are traded.
Securities or Loan Interests for which quotations are not readily available
are valued using fair value methods pursuant to procedures adopted by the
44
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Board of Trustees. Trading in foreign securities is substantially completed
each day at various times prior to the close of the NYSE. The values of
such securities used in computing the net asset value of the Trust's shares
are determined as of such times. The Trust may also use the fair value of a
security, including a non-U.S. security, when the closing market price on
the primary exchange where the security is traded no longer accurately
reflects the value of the security as of the close of the exchange. As of
April 30, 2008, the Trust held no fair valued securities. Temporary cash
investments are valued at amortized cost.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Trust becomes aware of the ex-dividend
date in the exercise of reasonable diligence. Discounts and premiums on
debt securities are accreted or amortized, respectively, daily, on an
effective yield to maturity basis and are included in interest income.
Premiums and discounts related to certain mortgage-backed securities are
amortized or accreted in proportion to the monthly paydowns. Interest
income, including income on interest bearing cash accounts, is recorded on
an accrual basis.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Foreign Currency Translation
The books and records of the Trust are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars using
the appropriate current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
among other things, the net realized gains and losses on foreign currency
contracts, disposition of foreign currencies and the difference between the
amount of income accrued and the U.S. dollars actually received. Further,
the effects of changes in foreign currency exchange rates on investments
are not segregated in the Statement of Operations from the effects of
changes in market prices of those securities but are included with the net
realized and unrealized gain or loss on investments.
45
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
C. Forward Foreign Currency Contracts
The Trust enters into forward foreign currency contracts ("contracts") for
the purchase or sale of a specific foreign currency at a fixed price on a
future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Trust's
financial statements. The Trust records realized gains and losses at the
time a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering
into these contracts from the potential inability of counterparties to meet
the terms of the contracts and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar (see Note 3).
D. Federal Income Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required. All
tax returns filed thus far are subject to examination by tax authorities.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the sources of the Trust's distributions may
be shown in the accompanying financial statements as either from or in
excess of net investment income or net realized gain (loss) on investment
and foreign currency transactions, or from paid-in capital, depending on
the type of book/tax differences that may exist.
At April 30, 2008, the Trust reclassified $483,018 to increase
undistributed net investment income and to increase accumulated net
realized loss on investments. The reclassification has no impact on the net
asset value of the Trust and presents the Trust's capital accounts on a tax
basis.
The Trust has elected to defer $1,725,324 in capital losses realized
between November 1, 2007 and April 30, 2008 to its fiscal year ending April
30, 2009.
46
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
At April 30, 2008, the Trust had a capital loss carryforward of $231,744
which will expire in 2016, if not utilized.
The tax character of distributions paid to shareowners during the period
ended April 30, 2008 was as follows:
--------------------------------------------------------------------------------
2008
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $14,530,763
-----------
Total $14,530,763
===========
--------------------------------------------------------------------------------
The following shows the components of distributable earnings on a federal
income tax basis at April 30, 2008.
--------------------------------------------------------------------------------
Undistributed ordinary income $ 2,237,614
Capital loss carryforward (231,744)
Post-October loss deferred (1,725,324)
Dividend payable (1,614,529)
Unrealized depreciation (13,424,632)
------------
Total $(14,758,615)
============
--------------------------------------------------------------------------------
The difference between book basis and tax basis unrealized depreciation is
primarily attributable to the tax deferral of losses on wash sales, the
realization for tax purposes of unrealized gains on investments in passive
foreign investment companies, the realization for tax purposes of
unrealized gains on certain foreign currency contracts, the book/tax
differences in the accrual of income on securities in default, the
difference between book and tax amortization methods for premiums and
discounts on fixed income securities and other book/tax temporary
differences.
E. Repurchase Agreements
With respect to repurchase agreements entered into by the Trust, the value
of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Trust's
47
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
custodian, or subcustodians. PIM is responsible for determining that the
value of the collateral remains at least equal to the repurchase price.
F. Securities Lending
The Trust lends securities in its portfolio to certain broker-dealers or
other institutional investors. When entering into a loan, the Trust
receives collateral and earns income in the form of negotiated lenders'
fees. The Trust also continues to receive interest or payments in lieu of
dividends on the securities loaned. Gain or loss on the fair value of the
loaned securities that may occur during the term of the loan will be for
the account of the Trust. The loans are secured by collateral which is
required to be at least 102%, at all times, of the fair value of the
securities loaned. The amount of collateral is required to be adjusted
daily to reflect any price fluctuation in the value of the loaned
securities. The Trust has the right under the lending agreement to recover
the securities from the borrower on demand. The Trust invests cash
collateral in cash equivalent investments.
G. Automatic Dividend Reinvestment Plan
All common shareowners automatically participate in the Automatic Dividend
Reinvestment Plan (the "Plan"), under which participants receive all
dividends and capital gain distributions (collectively, "dividends") in
full and fractional common shares of the Trust in lieu of cash. Shareowners
may elect not to participate in the Plan. Shareowners not participating in
the Plan receive all dividends and capital gain distributions in cash.
Participation in the Plan is completely voluntary and may be terminated or
resumed at any time 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.
Whenever the Trust declares a dividend on common shares payable in cash,
participants in the Plan will receive the equivalent in common shares
acquired by the Plan Agent either (i) through receipt of additional
unissued but authorized common shares from the Trust or (ii) by purchase of
outstanding common shares on the American Stock Exchange or elsewhere. If,
on the payment date for
48
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
any dividend, the net asset value per common share is equal to or less than
the market price per share plus estimated brokerage trading fees ("market
premium"), the Plan Agent will invest the dividend amount in newly issued
common shares. The number of newly issued common shares to be credited to
each account will be determined by dividing the dollar amount of the
dividend by the net asset value per common share on the date the shares are
issued, provided that the maximum discount from the then current market
price per share on the date of issuance does not exceed 5%. If, on the
payment date for any dividend, the net asset value per common share is
greater than the market value ("market discount"), the Plan Agent will
invest the dividend amount in common shares acquired in open-market
purchases. There are no brokerage charges with respect to newly issued
common shares. However, each participant will pay a pro rata share of
brokerage trading fees incurred with respect to the Plan Agent's
open-market purchases. Participating in the Plan does not relieve
shareowners from any federal, state or local taxes which may be due on
dividends paid in any taxable year. Shareowners holding Plan shares in a
brokerage account may not be able to transfer the shares to another broker
and continue to participate in the Plan.
2. Management Agreement
PIM manages the Trust's portfolio. Management fees payable under the Trust's
Advisory Agreement with PIM are calculated daily at the annual rate of 0.85% of
the Trust's average daily managed assets. "Managed assets" is the average daily
value of the Trust's total assets minus the sum of the Trust's liabilities,
which liabilities exclude debt related to leverage, short-term debt and the
aggregate liquidation preference of any outstanding preferred shares. For the
period ended April 30, 2008, the net management fee was equivalent to 0.60% of
the Trust's average daily managed assets, which was equivalent to 0.66% of the
Trust's average daily net assets.
In addition, under PIM's management and administration agreements, certain other
services and costs are paid by PIM and reimbursed by the Trust. At April 30,
2008, $61,333 was payable to PIM related to management costs, administrative
costs and certain other services and is in included in "Due to affiliates" on
the Statement of Assets and Liabilities.
49
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
PIM has retained Princeton Administrators, LLC ("Princeton") to provide certain
administrative and accounting services to the Trust on its behalf. PIM pays
Princeton a monthly fee at an annual rate of 0.07% of the average daily value of
the Trust's managed assets up to $500 million and 0.03% for average daily
managed assets in excess of $500 million, subject to a minimum monthly fee of
$10,000. Princeton receives no compensation directly from the Trust.
PIM has engaged Montpelier Capital Advisors, Ltd. to act as the Trust's
investment sub-adviser ("Sub-adviser") with respect to the Trust's investments
in event-linked bonds. PIM pays the Sub-adviser a monthly fee at an annual rate
of 0.80% of the average daily value of the Trust's Sub-advised assets; provided,
however, that such fee shall in no event be less than 0.15% of the Trust's
average daily managed assets. The fee is paid monthly in arrears. The
Sub-adviser receives no compensation directly from the Trust.
Also, PIM has agreed for the first three years of the Trust's investment
operations to limit the Trust's total annual expenses excluding offering costs
for common shares, interest expense, the cost of defending or prosecuting any
claim or litigation to which the Trust is a party (together with any amount in
judgment or settlement), indemnification expense or taxes incurred due to the
failure of the Trust to qualify as a regulated investment company under the Code
or any other non-recurring or non-operating expenses to 0.90% of the Trust's
average daily managed assets in year 1, 0.95% of the Trust's average daily
managed assets in year 2 and 1.00% of the Trust's average daily managed assets
in year 3. This is a contractual limit and may not be terminated by the adviser
for three years. There can be no assurance that it will be continued after that
time. For the period ended April 30, 2008, the expense reduction under such
arrangements was $453,137.
3. Forward Foreign Currency Contracts
The Trust may enter into contracts that obligate the Trust to deliver currencies
at specified future dates. At the maturity of a contract, the Trust must make
delivery of the specific currency. Alternatively, prior to the settlement date
for these hedges, the Trust may close out such contracts by entering into
offsetting hedge contracts.
50
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Net Contracts In Exchange Settlement Net Unrealized
Currency to (Deliver) For US$ Date US$ Value Gain
-------------------------------------------------------------------------------------------------
EURO (2,115,000) $(3,304,159) 5/30/08 $(3,290,005) $14,154
=======
-------------------------------------------------------------------------------------------------
At April 30, 2008, the Trust had no outstanding forward currency settlement
hedges.
4. Unfunded Loan Commitments
As of April 30, 2008, the Trust had unfunded loan commitments of approximately
$661,000 which could be extended at the option of the borrower, pursuant to the
following loan agreements:
--------------------------------------------------------------------------------
Unfunded
Commitment
Borrower (in thousands)
--------------------------------------------------------------------------------
Bausch & Lomb, Inc., Delayed Draw $ 60
CHS/Community Health Systems, Inc., Delayed
Draw Term Loan $ 47
Fontainebleau Las Vegas LLC/Fontainebleau
Las Vegas II LLC, Delayed Draw Term Loan $500
Gateway Casinos & Entertainment, First Lien
Delayed Draw Term Loan $ 17
HUB International Holdings, Inc., Delayed Draw
Term Loan $ 24
Telesat Canada, U.S. Term II Loan $ 13
--------------------------------------------------------------------------------
5. Loan Agreement
Effective February 8, 2008, the Trust entered into a $90,000,000 Revolving
Credit Facility (the "Credit Agreement") with the Bank of Nova Scotia.
At April 30, 2008, the Trust had a borrowing outstanding under the Credit
Agreement totaling $68,000,000. The interest rate charged at April 30, 2008 was
3.273%. The average daily balance was $68,198,795 at a weighted average interest
rate of 3.574%. With respect to the loan, interest expense of $561,908 is
included in the Statement of Operations.
The Trust is required to maintain 300% asset coverage with respect to amounts
outstanding under the Credit Agreement. Asset coverage is calculated by
subtracting the Trust's total liabilities, not including
51
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/08 (continued)
--------------------------------------------------------------------------------
any bank loans and senior securities, from the Trust's total assets and dividing
such amount by the principal amount of the borrowings outstanding. As of the
date indicated below, the Trust's debt outstanding and asset coverage was as
follows:
--------------------------------------------------------------------------------
Total Asset coverage
Amount per $1,000 of
Date Outstanding Indebtedness
--------------------------------------------------------------------------------
4/30/08 $68,000,000 $ 3,640
--------------------------------------------------------------------------------
6. Transfer Agents
Pioneer Investment Management Shareholder Services, Inc. ("PIMSS"), a wholly
owned indirect subsidiary of UniCredit, through a sub-transfer agency agreement
with American Stock Transfer & Trust Company, provides substantially all
transfer agent and shareowner services related to the Trust's common shares at
negotiated rates.
7. Trust Shares
There are an unlimited number of common shares of beneficial interest
authorized.
Transactions in common shares of beneficial interest for the period May 30, 2007
(commencement of investment operation) to April 30, 2008 were as follows:
--------------------------------------------------------------------------------
Shares issued in connection with initial
public offering 7,300,000
Shares issued from underwriters' over-allotment
option exercised 850,000
Shares at beginning of period 4,188
---------
Shares outstanding at end of period 8,154,188
=========
--------------------------------------------------------------------------------
Offering costs of $407,500 incurred in connection with the Trust's offering of
common shares have been charged to paid-in capital.
52
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
8. New Pronouncements
In September 2006, Statement of Financial Accounting Standards No. 157 Fair
Value Measurements ("SFAS 157") was issued and is effective for fiscal years
beginning after November 15, 2007. SFAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. Management is currently evaluating the impact the adoption of SFAS
157 will have on the Trust's financial statement disclosures.
In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures
about Derivative Instruments and Hedging Activities ("SFAS 161"), was issued and
is effective for fiscal years beginning after November 15, 2008. SFAS 161
requires enhanced disclosures about an entity's derivative and hedging
activities. Management is currently evaluating the impact the adoption of SFAS
161 will have on the Trust's financial statement disclosures.
9. Subsequent Event
Subsequent to April 30, 2008, the Board of Trustees of the Trust declared a
dividend from undistributed net investment income of $0.198 per common share
payable May 30, 2008, to shareowners of record on May 15, 2008.
ADDITIONAL INFORMATION (unaudited)
During the period, there were no material changes in the Trust's investment
objective or fundamental policies that were not approved by the shareowners.
There were 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. There were no changes in the principal risk factors associated with
investment in the Trust. There were no changes in the persons who are primarily
responsible for the day-to-day management of the Trust's portfolio.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Trust may purchase, from time to time, its common
shares in the open market.
53
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
To the Board of Trustees and the Shareowners of
Pioneer Diversified High Income Trust:
We have audited the accompanying statement of assets and liabilities of Pioneer
Diversified High Income Trust (the "Trust"), including the schedule of
investments, as of April 30, 2008, and the related statement of operations,
changes in net assets, the financial highlights, and cash flow for the period
from May 30, 2007 (commencement of operations) to April 30, 2008. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Trust's internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of April 30, 2008, by correspondence with the custodian and
brokers or by other appropriate auditing procedures where replies from brokers
were not received. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Diversified High Income Trust at April 30, 2008, the related statement
of operations, statement of changes in net assets, financial highlights, and
statement of cash flow for the period from May 30, 2007 (commencement of
operations) to April 30, 2008, in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
June 20, 2008
54
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
--------------------------------------------------------------------------------
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Legal Counsel
Bingham McCutchen LLP
Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Shareowner Services and Sub-Transfer Agent
American Stock Transfer & Trust Company
Investment Sub-Adviser
Montpelier Capital Advisors, Ltd.
Sub-Administrator
Princeton Administrators, LLC
Trustees and Officers
The Board of Trustees provides broad supervision over the Trust's affairs. The
officers of the Trust are responsible for the Trust's operations. The Trustees
and officers are listed below, together with their principal occupations during
the past five years. Trustees who are interested persons of the Trust within the
meaning of the Investment Company 1940 Act are referred to as Interested
Trustees. Trustees who are not interested persons of the Trust are referred to
as Independent Trustees. Each of the Trustees (except Mr. Kingsbury, Mr. West
and Mr. Bock) serves as a Trustee of each of the 77 U.S. registered investment
portfolios for which Pioneer serves as investment adviser (the "Pioneer Funds").
Mr. Kingsbury serves as Trustee of 34 of the 77 Pioneer Funds, Mr. West serves
as Trustee of 33 of the 77 Pioneer Funds, and Mr. Bock serves as Trustee of 76
of the 77 Pioneer Funds. The address for all Trustees and all officers of the
fund is 60 State Street, Boston, Massachusetts 02109.
The Trust's statement of additional information provides more detailed
information regarding the Trust's Trustees and is available upon request,
without charge, by calling 1-800-225-6292.
Proxy Voting Policies and Procedures of the Trust are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Trust voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerinvestments.com and on the SEC's web site at
http://www.sec.gov.
55
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
INTERESTED TRUSTEES
--------------------------------------------------------------------------------
Positions Held Length of Service Principal Occupation Other Directorships
Name and Age With the Trust and Term of Office During Past Five Years Held by this Trustee
John F. Cogan, Jr. (81)* Chairman of the Class III Trustee Deputy Chairman and a Director of None
Board, Trustee and since 2007. Term Pioneer Global Asset Management S.p.A.
President expires in 2010. ("PGAM"); Non-Executive Chairman and a
Director of Pioneer Investment
Management USA Inc. ("PIM-USA");
Chairman and a Director of Pioneer;
Chairman and Director of Pioneer
Institutional Asset Management, Inc.
(since 2006); Director of Pioneer
Alternative Investment Management
Limited (Dublin); President and a
Director of Pioneer Alternative
Investment Management (Bermuda)
Limited and affiliated funds; Director
of PIOGLOBAL Real Estate Investment
Fund (Russia) (until June 2006);
Director of Nano-C, Inc. (since 2003);
Director of Cole Management Inc.
(since 2004); Director of Fiduciary
Counseling, Inc.; President and
Director of Pioneer Funds Distributor,
Inc. ("PFD") (until May 2006);
President of all of the Pioneer Funds;
and Of Counsel, Wilmer Cutler
Pickering Hale and Dorr LLP
------------------------------------------------------------------------------------------------------------------------------------
Daniel K. Kingsbury (49)* Trustee and Execu- Class I Trustee Director, Chief Executive Officer and None
tive Vice President since 2007. Term President of PIM-USA (since February
expires in 2008. 2007); Director and President of
Pioneer Investment Management, Inc.
and Pioneer Institutional Asset
Management, Inc. (since February
2007); Executive Vice President of all
of the Pioneer Funds (since March
2007); Director of PGAM (since April
2007); Head of New Markets Division,
PGAM (2000 - 2007)
------------------------------------------------------------------------------------------------------------------------------------
*Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are officers or directors of the Trust's investment adviser and
certain of its affiliates.
56
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
--------------------------------------------------------------------------------
Positions Held Length of Service Principal Occupation Other Directorships
Name and Age With the Trust and Term of Office During Past Five Years Held by this Trustee
David R. Bock (64) Trustee Class III Trustee Executive Vice President and Chief Director of The
since 2007. Term Financial Officer, I-trax, Inc. Enterprise Community
expires in 2010. (publicly traded health care services Investment, Inc.
company) (2004 - 2007); Partner, (privately-held
Federal City Capital Advisors affordable housing
(boutique merchant bank) (1997 to 2004 finance company);
and 2008 - present); and Executive and Director of New
Vice President and Chief Financial York Mortgage Trust
Officer, Pedestal Inc. (internet-based (publicly traded
mortgage trading company) (2000 - (2002) mortgage REIT)
-----------------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (59) Trustee Class II Trustee President, Bush International, LLC Director of Brady
since 2007. Term (international financial advisory Corporation
expires in 2009. firm) (industrial
identification and
specialty coated
material products
manufacturer);
Director of Briggs &
Stratton Co. (engine
manufacturer);
Director of UAL
Corporation (airline
holding company);
Director of Mantech
International
Corporation
(national security,
defense, and
intelligence
technology firm);
and Member, Board of
Governors,
Investment Company
Institute
-----------------------------------------------------------------------------------------------------------------------------------
57
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
--------------------------------------------------------------------------------
Positions Held Length of Service Principal Occupation Other Directorships
Name and Age With the Trust and Term of Office During Past Five Years Held by this Trustee
Margaret B.W. Graham (60) Trustee Class I Trustee Founding Director, Vice-President and None
since 2007. Term Corporate Secretary, The Winthrop
expires in 2008. Group, Inc. (consulting firm); and
Desautels Faculty of Management,
McGill University
------------------------------------------------------------------------------------------------------------------------------------
Thomas J. Perna (57) Trustee Class II Trustee Private investor (2004 - present); and Director of
since February 2007. Senior Executive Vice President, The Quadriserv Inc.
Term expires in 2009. Bank of New York (financial and (technology products
securities services) (1986 - 2004) for securities
lending industry)
------------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (59) Trustee Class II Trustee President and Chief Executive Officer, Director of New
since 2007. Term Newbury, Piret & Company, Inc. America High Income
expires in 2009. (investment banking firm) Fund, Inc.
(closed-end
investment company)
------------------------------------------------------------------------------------------------------------------------------------
Stephen K. West (79) Trustee Class III Trustee Senior Counsel, Sullivan & Cromwell Director, The Swiss
since 2007. Term LLP (law firm) Helvetia Fund, Inc.
expires in 2010. (closed-end
investment company)
------------------------------------------------------------------------------------------------------------------------------------
John Winthrop (71) Trustee Class I Trustee President, John Winthrop & Co., Inc. None
since 2007. Term (private investment firm)
expires in 2008.
------------------------------------------------------------------------------------------------------------------------------------
58
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
TRUST OFFICERS
--------------------------------------------------------------------------------
Positions Held Length of Service Principal Occupation Other Directorships
Name and Age With the Trust and Term of Office During Past Five Years Held by this Trustee
Dorothy E. Bourassa (60) Secretary Since 2007. Serves Senior Vice President, General Counsel Nope
at the discretion of and Secretary of PIM-USA; Senior Vice
the Board President and General Counsel of
Pioneer; Secretary/Clerk of most of
PIM-USA's subsidiaries; and Secretary
of all of the Pioneer Funds since
September 2003 (Assistant Secretary
from November 2000 to September 2003)
------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (43)Assistant Secretary Since 2007. Serves Vice President and Associate General Nope
at the discretion of Counsel of Pioneer since January 2008
the Board and Assistant Secretary of all of the
Pioneer Funds since September 2003;
Vice President and Senior Counsel of
Pioneer from July 2002 to December
2007
------------------------------------------------------------------------------------------------------------------------------------
Mark E Bradley (48) Treasurer Since 2008. Serves Vice President -- Fund Accounting, Nope
at the discretion of Administration and Controllership
the Board Services of Pioneer; and Treasurer of
all of the Pioneer Funds since March
2008; Deputy Treasurer of Pioneer and
Assistant Treasurer of all of the
Pioneer Funds from November 2004 to
March 2008; Treasurer and Senior Vice
President, CDC IXIS Asset Management
Services from 2002 to 2003
------------------------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (42) Assistant Treasurer Since 2007. Serves Assistant Vice President - Fund Nope
at the discretion of Accounting, Administration and
the Board Controllership Services of Pioneer;
and Assistant Treasurer of all of the
Pioneer Funds
------------------------------------------------------------------------------------------------------------------------------------
Gary Sullivan (49) Assistant Treasurer Since 2007. Serves Fund Accounting Manager - Fund Nope
at the discretion of Accounting, Administration and
the Board Controllership Services of Pioneer;
and Assistant Treasurer of all of the
Pioneer Funds
------------------------------------------------------------------------------------------------------------------------------------
59
Pioneer Diversified High Income Trust
--------------------------------------------------------------------------------
TRUST OFFICERS
--------------------------------------------------------------------------------
Positions Held Length of Service Principal Occupation Other Directorships
Name and Age With the Trust and Term of Office During Past Five Years Held by this Trustee
Katherine Kim Sullivan Assistant Treasurer Since 2007. Serves Fund Administration Manager - Fund Nope
(34) at the discretion of Accounting, Administration and
the Board Controllership Services since June
2003 and Assistant Treasurer of all of
the Pioneer Funds since September
2003; Assistant Vice President -
Mutual Fund Operations of State Street
Corporation from June 2002 to June
2003 (formerly Deutsche Bank Asset
Management)
------------------------------------------------------------------------------------------------------------------------------------
Teri W. Anderholm (48) Chief Compliance Since 2007. Serves Chief Compliance Officer of Pioneer Nope
Officer at the discretion of since December 2006 and of all the
the Board Pioneer Funds since January 2007; Vice
President and Compliance Officer, MFS
Investment Management (August 2005 to
December 2006); Consultant, Fidelity
Investments (February 2005 to July
2005); Independent Consultant (July
1997 to February 2005)
------------------------------------------------------------------------------------------------------------------------------------
The outstanding capital stock of PFD, Pioneer and PIMSS is indirectly wholly
owned by UniCredit S.p.A. ("UniCredit"), one of the largest banking groups in
Italy. PIM, the Trust's investment adviser, provides investment management and
financial services to mutual funds, institutional and other clients.
60
--------------------------------------------------------------------------------
HOW TO CONTACT PIONEER
--------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
You can call American Stock Transfer & Trust Company (AST) for:
Account Information 1-800-710-0935
Or write to AST:
For Write to
General inquiries, lost dividend checks, American Stock
change of address, lost stock certificates, Transfer & Trust
stock transfer Operations Center
6201 15th Ave.
Brooklyn, NY 11219
Dividend reinvestment plan (DRIP) American Stock
Transfer & Trust
Wall Street Station
P.O. Box 922
New York, NY 10269-0560
Website www.amstock.com
For additional information, please contact your investment advisor or visit our
web site www.pioneerinvestments.com.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
The Trust has filed with the Securities and Exchange Commission the
certification of its Chief Executive Officer and Chief Financial Officer
required by Section 302 of the Sarbanes-Oxley Act.
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit Fees
Fees for audit services provided to the Trust, including fees
associated with the filings to update its Form N-2 and issuance
of comfort letters, totaled approximately $50,545 in 2008.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
Audit-Related Fees
Fees for the Trust's audit-related services totaled approximately
$9,285 in 2008, which were related to the issuance of agreed upon
procedures report to the rating agencies.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
Tax Fees
Fees for tax compliance services, primarily for tax returns, totaled
approximately $7,820 for 2008.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
Other Fees
There were no fees for other services provided to the Trust during
the fiscal year ended April 30, 2008.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognize that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
----------------------- --------------------------- -----------------------------------------------
------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- -------------------------
------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
----------------------- --------------------------- -----------------------------------------------
--------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
----------------------- ------------------------- -----------------------------------------------
------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
------------------------------------------- ------------------------------
--------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
--------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
Non-Audit Services
Beginning with non-audit service contracts entered into on or
after May 6, 2003, the effective date of the new SEC pre-approval
rules, the Trust's audit committee is required to pre-approve
services to affiliates defined by SEC rules to the extent that the
services are determined to have a direct impact on the operations or
financial reporting of the Trust. For the year ended April 30,
2008, there were no services provided to an affiliate that required
the Trust's audit committee pre-approval.
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The aggregate non-audit fees for the Trust and affiliates,
as previously defined, totaled approximately $17,105 in 2008.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Fund's audit committee of the Board of Trustees has
considered whether the provision of non-audit services that
were rendered to the Affiliates (as defined) that were not pre-
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal
accountant's independence.
Item 5. Audit Committee of Listed Registrants
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrants audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
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 I Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.12-
12 of Regulation S-X [17 CFR 210.12-12], unless the schedule is
included as part of the report to shareholders filed under Item
1 of this Form.
Included in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Proxy Voting Policies and Procedures of
Pioneer Investment Management, Inc.
VERSION DATED July, 2004
Overview
Pioneer Investment Management, Inc. ("Pioneer") is a fiduciary that owes
each of its client's duties of care and loyalty with respect to all
services undertaken on the client's behalf, including proxy voting. When
Pioneer has been delegated proxy-voting authority for a client, the duty of
care requires Pioneer to monitor corporate events and to vote the proxies.
To satisfy its duty of loyalty, Pioneer must place its client's interests
ahead of its own and must cast proxy votes in a manner consistent with the
best interest of its clients. Pioneer will vote all proxies presented in a
timely manner.
The Proxy Voting Policies and Procedures are designed to complement
Pioneer's investment policies and procedures regarding its general
responsibility to monitor the performance and/or corporate events of
companies that are issuers of securities held in accounts managed by
Pioneer. Pioneer's Proxy Voting Policies summarize Pioneer's position on a
number of issues solicited by companies held by Pioneer's clients. The
policies are guidelines that provide a general indication on how Pioneer
would vote but do not include all potential voting scenarios.
Pioneer's Proxy Voting Procedures detail monitoring of voting, exception
votes, and review of conflicts of interest and ensure that case-by-case
votes are handled within the context of the overall guidelines (i.e. best
interest of client). The overriding goal is that all proxies for US and
non-US companies that are received promptly will be voted in accordance
with Pioneer's policies or specific client instructions. All shares in a
company held by Pioneer-managed accounts will be voted alike, unless a
client has given us specific voting instructions on an issue or has not
delegated authority to us or the Proxy Voting Oversight Group determines
that the circumstances justify a different approach.
Pioneer does not delegate the authority to vote proxies relating to its
clients to any of its affiliates, which include other subsidiaries of
UniCredito.
Any questions about these policies and procedures should be directed to the
Proxy Coordinator.
1
Proxy Voting Procedures
Proxy Voting Service
Pioneer has engaged an independent proxy voting service to assist in the
voting of proxies. The proxy voting service works with custodians to ensure
that all proxy materials are received by the custodians and are processed
in a timely fashion. To the extent applicable, the proxy voting service
votes all proxies in accordance with the proxy voting policies established
by Pioneer. The proxy voting service will refer proxy questions to the
Proxy Coordinator (described below) for instructions under circumstances
where: (1) the application of the proxy voting guidelines is unclear; (2) a
particular proxy question is not covered by the guidelines; or (3) the
guidelines call for specific instructions on a case-by-case basis. The
proxy voting service is also requested to call to the Proxy Coordinator's
attention specific proxy questions that, while governed by a guideline,
appear to involve unusual or controversial issues. Pioneer reserves the
right to attend a meeting in person and may do so when it determines that
the company or the matters to be voted on at the meeting are strategically
important to its clients.
Proxy Coordinator
Pioneer's Director of Investment Operations (the "Proxy Coordinator")
coordinates the voting, procedures and reporting of proxies on behalf of
Pioneer's clients. The Proxy Coordinator will deal directly with the proxy
voting service and, in the case of proxy questions referred by the proxy
voting service, will solicit voting recommendations and instructions from
the Director of Portfolio Management US or, to the extent applicable,
investment sub-advisers. The Proxy Coordinator is responsible for ensuring
that these questions and referrals are responded to in a timely fashion and
for transmitting appropriate voting instructions to the proxy voting
service. The Proxy Coordinator is responsible for verifying with the
Compliance Department whether Pioneer's voting power is subject to any
limitations or guidelines issued by the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries).
Referral Items
From time to time, the proxy voting service will refer proxy questions to
the Proxy Coordinator that are described by Pioneer's policy as to be voted
on a case-by-case basis, that are not covered by Pioneer's guidelines or
where Pioneer's guidelines may be unclear with respect to the matter to be
voted on. Under such certain circumstances, the Proxy Coordinator will seek
a written voting recommendation from the Director of Portfolio Management
US. Any such recommendation will include: (i) the manner in which the
proxies should be voted; (ii) the rationale underlying any such decision;
and (iii) the disclosure of any contacts or communications made between
Pioneer and any outside parties concerning the proxy proposal prior to the
time that the voting instructions are provided. In addition, the Proxy
Coordinator will ask the Compliance Department to review the question for
any actual or apparent conflicts of interest as described below under
"Conflicts of
2
Interest." The Compliance Department will provide a "Conflicts of Interest
Report," applying the criteria set forth below under "Conflicts of
Interest," to the Proxy Coordinator summarizing the results of its review.
In the absence of a conflict of interest, the Proxy Coordinator will vote
in accordance with the recommendation of the Director of Portfolio
Management US.
If the matter presents a conflict of interest for Pioneer, then the Proxy
Coordinator will refer the matter to the Proxy Voting Oversight Group for a
decision. In general, when a conflict of interest is present, Pioneer will
vote according to the recommendation of the Director of Portfolio
Management US where such recommendation would go against Pioneer's interest
or where the conflict is deemed to be immaterial. Pioneer will vote
according to the recommendation of its proxy voting service when the
conflict is deemed to be material and the Pioneer's internal vote
recommendation would favor Pioneer's interest, unless a client specifically
requests Pioneer to do otherwise. When making the final determination as to
how to vote a proxy, the Proxy Voting Oversight Group will review the
report from the Director of Portfolio Management US and the Conflicts of
Interest Report issued by the Compliance Department.
Conflicts of Interest
A conflict of interest occurs when Pioneer's interests interfere, or appear
to interfere with the interests of Pioneer's clients. Occasionally, Pioneer
may have a conflict that can affect how its votes proxies. The conflict may
be actual or perceived and may exist when the matter to be voted on
concerns:
o An affiliate of Pioneer, such as another company belonging to
the UniCredito Italiano S.p.A. banking group (a "UniCredito
Affiliate");
o An issuer of a security for which Pioneer acts as a sponsor,
advisor, manager, custodian, distributor, underwriter, broker, or
other similar capacity (including those securities specifically
declared by PGAM to present a conflict of interest for Pioneer);
o An issuer of a security for which UniCredito has informed Pioneer
that a UniCredito Affiliate acts as a sponsor, advisor, manager,
custodian, distributor, underwriter, broker, or other similar
capacity; or
o A person with whom Pioneer (or any of its affiliates) has an
existing, material contract or business relationship that was not
entered into in the ordinary course of Pioneer's business.
o Pioneer will abstain from voting with respect to companies
directly or indirectly owned by UniCredito Italiano Group, unless
otherwise directed by a client. In addition, Pioneer will inform
PGAM Global Compliance and the PGAM Independent Directors before
exercising such rights.
Any associate involved in the proxy voting process with knowledge of any
apparent or actual conflict of interest must disclose such conflict to the
Proxy Coordinator and the Compliance Department. The Compliance Department
will review each item referred to Pioneer to determine whether an actual or
potential conflict of interest with Pioneer exists in connection with the
proposal(s) to be voted upon. The review will be conducted by comparing the
apparent parties affected by the proxy proposal being
3
voted upon against the Compliance Department's internal list of interested
persons and, for any matches found, evaluating the anticipated magnitude
and possible probability of any conflict of interest being present. For
each referral item, the determination regarding the presence or absence of
any actual or potential conflict of interest will be documented in a
Conflicts of Interest Report to the Proxy Coordinator.
Securities Lending
In conjunction with industry standards Proxies are not available to be
voted when the shares are out on loan through either Pioneer's lending
program or a client's managed security lending program. However, Pioneer
will reserve the right to recall lent securities so that they may be voted
according to the Pioneer's instructions. If a portfolio manager would like
to vote a block of previously lent shares, the Proxy Coordinator will work
with the portfolio manager and Investment Operations to recall the
security, to the extent possible, to facilitate the vote on the entire
block of shares.
Share-Blocking
"Share-blocking" is a market practice whereby shares are sent to a
custodian (which may be different than the account custodian) for record
keeping and voting at the general meeting. The shares are unavailable for
sale or delivery until the end of the blocking period (typically the day
after general meeting date).
Pioneer will vote in those countries with "share-blocking." In the event a
manager would like to sell a security with "share-blocking", the Proxy
Coordinator will work with the Portfolio Manager and Investment Operations
Department to recall the shares (as allowable within the market time-frame
and practices) and/or communicate with executing brokerage firm. A list of
countries with "share-blocking" is available from the Investment Operations
Department upon request.
Record Keeping
The Proxy Coordinator shall ensure that Pioneer's proxy voting service:
o Retains a copy of the proxy statement received (unless the proxy
statement is available from the SEC's Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system);
o Retains a record of the vote cast;
o Prepares Form N-PX for filing on behalf of each client that is a
registered investment company; and
o Is able to promptly provide Pioneer with a copy of the voting
record upon its request.
4
The Proxy Coordinator shall ensure that for those votes that may require
additional documentation (i.e. conflicts of interest, exception votes and
case-by-case votes) the following records are maintained:
o A record memorializing the basis for each referral vote cast;
o A copy of any document created by Pioneer that was material in
making the decision on how to vote the subject proxy; and
o A copy of any conflict notice, conflict consent or any other
written communication (including emails or other electronic
communications) to or from the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries)
regarding the subject proxy vote cast by, or the vote
recommendation of, Pioneer.
o Pioneer shall maintain the above records in the client's file for a
period not less than ten (10) years.
Disclosure
Pioneer shall take reasonable measures to inform its clients of the process
or procedures clients must follow to obtain information regarding how
Pioneer voted with respect to assets held in their accounts. In addition,
Pioneer shall describe to clients its proxy voting policies and procedures
and will furnish a copy of its proxy voting policies and procedures upon
request. This information may be provided to clients through Pioneer's Form
ADV (Part II) disclosure, by separate notice to the client, or through
Pioneer's website.
Proxy Voting Oversight Group
The members of the Proxy Voting Oversight Group are Pioneer's: Director of
Portfolio Management US, Head of Investment Operations, and Director of
Compliance. Other members of Pioneer will be invited to attend meetings and
otherwise participate as necessary. The Head of Investment Operations will
chair the Proxy Voting Oversight Group.
The Proxy Voting Oversight Group is responsible for developing, evaluating,
and changing (when necessary) Pioneer's Proxy Voting Policies and
Procedures. The group meets at least annually to evaluate and review these
policies and procedures and the services of its third-party proxy voting
service. In addition, the Proxy Voting Oversight Group will meet as
necessary to vote on referral items and address other business as
necessary.
Amendments
Pioneer may not amend its Proxy Voting Policies And Procedures without the
prior approval of the Proxy Voting Oversight Group and its corporate
parent, Pioneer Global Asset Management S.p.A
5
Proxy Voting Policies
Pioneer's sole concern in voting proxies is the economic effect of the
proposal on the value of portfolio holdings, considering both the short-
and long-term impact. In many instances, Pioneer believes that supporting
the company's strategy and voting "for" management's proposals builds
portfolio value. In other cases, however, proposals set forth by management
may have a negative effect on that value, while some shareholder proposals
may hold the best prospects for enhancing it. Pioneer monitors developments
in the proxy-voting arena and will revise this policy as needed.
All proxies that are received promptly will be voted in accordance with the
specific policies listed below. All shares in a company held by
Pioneer-managed accounts will be voted alike, unless a client has given us
specific voting instructions on an issue or has not delegated authority to
us. Proxy voting issues will be reviewed by Pioneer's Proxy Voting
Oversight Group, which consists of the Director of Portfolio Management US,
the Director of Investment Operations (the Proxy Coordinator), and the
Director of Compliance.
Pioneer has established Proxy Voting Procedures for identifying and
reviewing conflicts of interest that may arise in the voting of proxies.
Clients may request, at any time, a report on proxy votes for securities
held in their portfolios and Pioneer is happy to discuss our proxy votes
with company management. Pioneer retains a proxy voting service to provide
research on proxy issues and to process proxy votes.
Administrative
While administrative items appear infrequently in U.S. issuer proxies, they
are quite common in non-U.S. proxies.
We will generally support these and similar management proposals:
o Corporate name change.
o A change of corporate headquarters.
o Stock exchange listing.
o Establishment of time and place of annual meeting.
o Adjournment or postponement of annual meeting.
o Acceptance/approval of financial statements.
o Approval of dividend payments, dividend reinvestment plans and other
dividend-related proposals.
o Approval of minutes and other formalities.
6
o Authorization of the transferring of reserves and allocation of
income.
o Amendments to authorized signatories.
o Approval of accounting method changes or change in fiscal year-end.
o Acceptance of labor agreements.
o Appointment of internal auditors.
Pioneer will vote on a case-by-case basis on other routine business;
however, Pioneer will oppose any routine business proposal if insufficient
information is presented in advance to allow Pioneer to judge the merit of
the proposal. Pioneer has also instructed its proxy voting service to
inform Pioneer of its analysis of any administrative items inconsistent, in
its view, with supporting the value of Pioneer portfolio holdings so that
Pioneer may consider and vote on those items on a case-by-case basis.
Auditors
We normally vote for proposals to:
o Ratify the auditors. We will consider a vote against if we are
concerned about the auditors' independence or their past work for
the company. Specifically, we will oppose the ratification of
auditors and withhold votes from audit committee members if
non-audit fees paid by the company to the auditing firm exceed the
sum of audit fees plus audit-related fees plus permissible tax
fees according to the disclosure categories proposed by the
Securities and Exchange Commission.
o Restore shareholder rights to ratify the auditors.
We will normally oppose proposals that require companies to:
o Seek bids from other auditors.
o Rotate auditing firms, except where the rotation is statutorily
required or where rotation would demonstrably strengthen financial
disclosure.
o Indemnify auditors.
o Prohibit auditors from engaging in non-audit services for the
company.
Board of Directors
On issues related to the board of directors, Pioneer normally supports
management. We will, however, consider a vote against management in
instances where corporate performance has been very poor or where the board
appears to lack independence.
7
General Board Issues
Pioneer will vote for:
o Audit, compensation and nominating committees composed of
independent directors exclusively.
o Indemnification for directors for actions taken in good faith in
accordance with the business judgment rule. We will vote against
proposals for broader indemnification.
o Changes in board size that appear to have a legitimate business
purpose and are not primarily for anti-takeover reasons.
o Election of an honorary director.
We will vote against:
o Minimum stock ownership by directors.
o Term limits for directors. Companies benefit from experienced
directors, and shareholder control is better achieved through
annual votes.
o Requirements for union or special interest representation on the
board.
o Requirements to provide two candidates for each board seat.
We will vote on a case-by case basis on these issues:
o Separate chairman and CEO positions. We will consider voting with
shareholders on these issues in cases of poor corporate
performance.
Elections of Directors
In uncontested elections of directors we will vote against:
o Individual directors with absenteeism above 25% without valid
reason. We support proposals that require disclosure of director
attendance.
o Insider directors and affiliated outsiders who sit on the audit,
compensation, stock option or nominating committees. For the
purposes of our policy, we accept the definition of affiliated
directors provided by our proxy voting service.
We will also vote against:
o Directors who have failed to act on a takeover offer where the
majority of shareholders have tendered their shares.
o Directors who appear to lack independence or are associated with
very poor corporate performance.
8
We will vote on a case-by case basis on these issues:
o Re-election of directors who have implemented or renewed a
dead-hand or modified dead-hand poison pill (a "dead-hand poison
pill" is a shareholder rights plan that may be altered only by
incumbent or "dead " directors. These plans prevent a potential
acquirer from disabling a poison pill by obtaining control of the
board through a proxy vote).
o Contested election of directors.
o Prior to phase-in required by SEC, we would consider supporting
election of a majority of independent directors in cases of poor
performance.
o Mandatory retirement policies.
o Directors who have ignored a shareholder proposal that has been
approved by shareholders for two consecutive years.
Takeover-Related Measures
Pioneer is generally opposed to proposals that may discourage takeover
attempts. We believe that the potential for a takeover helps ensure that
corporate performance remains high.
Pioneer will vote for:
o Cumulative voting.
o Increase ability for shareholders to call special meetings.
o Increase ability for shareholders to act by written consent.
o Restrictions on the ability to make greenmail payments.
o Submitting rights plans to shareholder vote.
o Rescinding shareholder rights plans ("poison pills").
o Opting out of the following state takeover statutes:
o Control share acquisition statutes, which deny large holders voting
rights on holdings over a specified threshold.
o Control share cash-out provisions, which require large holders to
acquire shares from other holders.
o Freeze-out provisions, which impose a waiting period on large
holders before they can attempt to gain control.
o Stakeholder laws, which permit directors to consider interests of
non-shareholder constituencies.
9
o Disgorgement provisions, which require acquirers to disgorge profits
on purchases made before gaining control.
o Fair price provisions.
o Authorization of shareholder rights plans.
o Labor protection provisions.
o Mandatory classified boards.
We will vote on a case-by-case basis on the following issues:
o Fair price provisions. We will vote against provisions requiring
supermajority votes to approve takeovers. We will also consider
voting against proposals that require a supermajority vote to
repeal or amend the provision. Finally, we will consider the
mechanism used to determine the fair price; we are generally
opposed to complicated formulas or requirements to pay a premium.
o Opting out of state takeover statutes regarding fair price
provisions. We will use the criteria used for fair price
provisions in general to determine our vote on this issue.
o Proposals that allow shareholders to nominate directors.
We will vote against:
o Classified boards, except in the case of closed-end mutual funds.
o Limiting shareholder ability to remove or appoint directors. We
will support proposals to restore shareholder authority in this
area. We will review on a case-by-case basis proposals that
authorize the board to make interim appointments.
o Classes of shares with unequal voting rights.
o Supermajority vote requirements.
o Severance packages ("golden" and "tin" parachutes). We will support
proposals to put these packages to shareholder vote.
o Reimbursement of dissident proxy solicitation expenses. While we
ordinarily support measures that encourage takeover bids, we
believe that management should have full control over corporate
funds.
o Extension of advance notice requirements for shareholder proposals.
o Granting board authority normally retained by shareholders (e.g.,
amend charter, set board size).
o Shareholder rights plans ("poison pills"). These plans generally
allow shareholders to buy additional shares at a below-market
price in the event of a change in control and may deter some bids.
10
Capital Structure
Managements need considerable flexibility in determining the company's
financial structure, and Pioneer normally supports managements' proposals
in this area. We will, however, reject proposals that impose high barriers
to potential takeovers.
Pioneer will vote for:
o Changes in par value.
o Reverse splits, if accompanied by a reduction in number of shares.
o Share repurchase programs, if all shareholders may participate on
equal terms.
o Bond issuance.
o Increases in "ordinary" preferred stock.
o Proposals to have blank-check common stock placements (other than
shares issued in the normal course of business) submitted for
shareholder approval.
o Cancellation of company treasury shares.
We will vote on a case-by-case basis on the following issues:
o Reverse splits not accompanied by a reduction in number of shares,
considering the risk of delisting.
o Increase in authorized common stock. We will make a determination
considering, among other factors:
o Number of shares currently available for issuance;
o Size of requested increase (we would normally approve increases of up to
100% of current authorization);
o Proposed use of the additional shares; and
o Potential consequences of a failure to increase the number of shares
outstanding (e.g., delisting or bankruptcy).
o Blank-check preferred. We will normally oppose issuance of a new
class of blank-check preferred, but may approve an increase in a
class already outstanding if the company has demonstrated that it
uses this flexibility appropriately.
o Proposals to submit private placements to shareholder vote.
o Other financing plans.
We will vote against preemptive rights that we believe limit a company's
financing flexibility.
11
Compensation
Pioneer supports compensation plans that link pay to shareholder returns
and believes that management has the best understanding of the level of
compensation needed to attract and retain qualified people. At the same
time, stock-related compensation plans have a significant economic impact
and a direct effect on the balance sheet. Therefore, while we do not want
to micromanage a company's compensation programs, we will place limits on
the potential dilution these plans may impose.
Pioneer will vote for:
o 401(k) benefit plans.
o Employee stock ownership plans (ESOPs), as long as shares
allocated to ESOPs are less than 5% of outstanding shares. Larger
blocks of stock in ESOPs can serve as a takeover defense. We will
support proposals to submit ESOPs to shareholder vote.
o Various issues related to the Omnibus Budget and Reconciliation Act
of 1993 (OBRA), including:
o Amendments to performance plans to conform with OBRA;
o Caps on annual grants or amendments of administrative features;
o Adding performance goals; and
o Cash or cash-and-stock bonus plans.
o Establish a process to link pay, including stock-option grants, to
performance, leaving specifics of implementation to the company.
o Require that option repricings be submitted to shareholders.
o Require the expensing of stock-option awards.
o Require reporting of executive retirement benefits (deferred
compensation, split-dollar life insurance, SERPs, and pension
benefits).
o Employee stock purchase plans where the purchase price is equal to
at least 85% of the market price, where the offering period is no
greater than 27 months and where potential dilution (as defined
below) is no greater than 10%.
12
We will vote on a case-by-case basis on the following issues:
o Executive and director stock-related compensation plans. We will
consider the following factors when reviewing these plans:
o The program must be of a reasonable size. We will approve plans
where the combined employee and director plans together would
generate less than 15% dilution. We will reject plans with 15% or
more potential dilution.
Dilution = (A + B + C) / (A + B + C + D), where
A = Shares reserved for plan/amendment,
B = Shares available under continuing plans,
C = Shares granted but unexercised and
D = Shares outstanding.
o The plan must not:
o Explicitly permit unlimited option repricing authority or that
have repriced in the past without shareholder approval.
o Be a self-replenishing "evergreen" plan, plans that grant
discount options and tax offset payments.
o We are generally in favor of proposals that increase participation beyond
executives.
o We generally support proposals asking companies to adopt rigorous
vesting provisions for stock option plans such as those that vest
incrementally over, at least, a three- or four-year period with a pro
rata portion of the shares becoming exercisable on an annual basis
following grant date.
o We generally support proposals asking companies to disclose their
window period policies for stock transactions. Window period policies
ensure that employees do not exercise options based on insider
information contemporaneous with quarterly earnings releases and other
material corporate announcements.
o We generally support proposals asking companies to adopt stock holding
periods for their executives.
o All other employee stock purchase plans.
o All other compensation-related proposals, including deferred
compensation plans, employment agreements, loan guarantee programs
and retirement plans.
o All other proposals regarding stock compensation plans, including
extending the life of a plan, changing vesting restrictions,
repricing options, lengthening exercise periods or accelerating
distribution of awards and pyramiding and cashless exercise
programs.
13
We will vote against:
o Pensions for non-employee directors. We believe these retirement
plans reduce director objectivity.
o Elimination of stock option plans.
We will vote on a case-by case basis on these issues:
o Limits on executive and director pay.
o Stock in lieu of cash compensation for directors.
Corporate Governance
Pioneer will vote for:
o Confidential Voting.
o Equal access provisions, which allow shareholders to contribute
their opinion to proxy materials.
o Proposals requiring directors to disclose their ownership of shares
in the company.
We will vote on a case-by-case basis on the following issues:
o Change in the state of incorporation. We will support
reincorporations supported by valid business reasons. We will
oppose those that appear to be solely for the purpose of
strengthening takeover defenses.
o Bundled proposals. We will evaluate the overall impact of the
proposal.
o Adopting or amending the charter, bylaws or articles of association.
o Shareholder appraisal rights, which allow shareholders to demand
judicial review of an acquisition price.
We will vote against:
o Shareholder advisory committees. While management should solicit
shareholder input, we prefer to leave the method of doing so to
management's discretion.
o Limitations on stock ownership or voting rights.
o Reduction in share ownership disclosure guidelines.
14
Mergers and Restructurings
Pioneer will vote on the following and similar issues on a case-by-case
basis:
o Mergers and acquisitions.
o Corporate restructurings, including spin-offs, liquidations, asset
sales, joint ventures, conversions to holding company and
conversions to self-managed REIT structure.
o Debt restructurings.
o Conversion of securities.
o Issuance of shares to facilitate a merger.
o Private placements, warrants, convertible debentures.
o Proposals requiring management to inform shareholders of merger
opportunities.
We will normally vote against shareholder proposals requiring that the
company be put up for sale.
Mutual Funds
Many of our portfolios may invest in shares of closed-end mutual funds or
exchange-traded funds. The non-corporate structure of these investments
raises several unique proxy voting issues.
Pioneer will vote for:
o Establishment of new classes or series of shares.
o Establishment of a master-feeder structure.
Pioneer will vote on a case-by-case on:
o Changes in investment policy. We will normally support changes
that do not affect the investment objective or overall risk level
of the fund. We will examine more fundamental changes on a
case-by-case basis.
o Approval of new or amended advisory contracts.
o Changes from closed-end to open-end format.
o Authorization for, or increase in, preferred shares.
o Disposition of assets, termination, liquidation, or mergers.
o Classified boards of closed-end mutual funds, but will typically
support such proposals.
15
Social Issues
Pioneer will abstain on stockholder proposals calling for greater
disclosure of corporate activities with regard to social issues. "Social
Issues" may generally be described as shareholder proposals for a company
to:
o Conduct studies regarding certain issues of public concern and
interest;
o Study the feasibility of the company taking certain actions with
regard to such issues; or
o Take specific action, including ceasing certain behavior and
adopting company standards and principles, in relation to issues
of public concern and interest.
We believe these issues are important and should receive management
attention.
Pioneer will vote against proposals calling for substantial changes in the
company's business or activities. We will also normally vote against
proposals with regard to contributions, believing that management should
control the routine disbursement of funds.
16
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrants portfolio (Portfolio Manager). Also state each Portfolio
Managers business experience during the past 5 years.
Pioneer Diversified High Income Trust
Day-to-day management of the Fund's portfolio is the responsibility of Charles
Melchreit, Andrew Feltus and Jonathan Sharkey. The portfolio managers are
supported by the Adviser's fixed income team. Members of this team manage other
Pioneer funds investing primarily in fixed income securities. The portfolio
managers and the team also may draw upon the research and investment management
expertise of the global research team, which provides fundamental research on
companies and includes members from Pioneer's affiliate, Pioneer Investment
Management Limited.
Mr. Melchreit is primarily responsible for the overall asset allocation
decision-making process for the Fund and for overseeing Montpelier Capital
Advisors, Ltd.'s investments in event-linked bonds. Mr. Melchreit, a vice
president, joined Pioneer in 2006. From 2003 to 2004, Mr. Melchreit was a
managing director at Cigna Investment Management. Prior thereto, he was a senior
vice president and portfolio manager at Aeltus Investment Management. Mr.
Melchreit received an MS degree in Statistics from placePlaceNameYale
PlaceTypeUniversity in 2005.
Mr. Feltus is primarily responsible for the Fund's investments in global high
yield debt securities. Mr. Feltus, a vice president, joined Pioneer in 1994 and
has been an investment professional for more than 10 years.
Mr. Sharkey is primarily responsible for the Fund's investments in floating rate
loans. Mr. Sharkey, a vice president, joined Pioneer in August 2006. From March
2004 to August 2006, Mr. Sharkey was employed by Putnam Investments as a
corporate bond and leveraged loan analyst. Prior to that, he was a principal and
leveraged loan analyst at Cypress Tree Investments. Management of the Fund's
investments in event-linked bonds is the responsibility.
9. PORTFOLIO MANAGEMENT
Additional Information About the Portfolio Managers
Other Accounts Managed by the Portfolio Managers. The table below indicates, for
each portfolio manager of the fund, information about the accounts other than
the fund over which the portfolio manager has day-to-day investment
responsibility. All information on the number of accounts and total assets in
the table is as of April 30, 2008. For purposes of the table, "Other Pooled
Investment Vehicles" may include investment partnerships, undertakings for
collective investments in transferable securities ("UCITS") and other non-U.S.
investment funds and group trusts, and "Other Accounts" may include separate
accounts for institutions or individuals, insurance company general or separate
accounts, pension funds and other similar institutional accounts but generally
do not include the portfolio manager's personal investment accounts or those
which the manager may be deemed to own beneficially under the code of ethics.
Certain funds and other accounts managed by the portfolio manager may have
substantially similar investment strategies
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Name of Portfolio Type of Account Number of Total Assets Number of Assets Managed
Manager Accounts Managed Managed Accounts Managed for which
for which Advisory Fee is
Advisory Fee is Performance-Based
Performance-Based
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Andrew Feltus Other Registered 7 $6,740,524,000 N/A N/A
Investment
Companies
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Pooled 4 $736,122,000 N/A N/A
Investment Vehicles
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Accounts 3 $542,739,000 N/A N/A
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Name of Portfolio Type of Account Number of Total Assets Number of Assets Managed
Manager Accounts Managed Managed Accounts Managed for which
for which Advisory Fee is
Advisory Fee is Performance-Based
Performance-Based
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Jonathan Sharkey Other Registered 1 $35,329,000 N/A N/A
Investment
Companies
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Pooled 0 $0 N/A N/A
Investment Vehicles
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Accounts 1 $50,042,000 N/A N/A
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Name of Portfolio Type of Account Number of Total Assets Number of Assets Managed
Manager Accounts Managed Managed Accounts Managed for which
for which Advisory Fee is
Advisory Fee is Performance-Based
Performance-Based
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Charles Melchreit Other Registered 3 $392,758,000 N/A N/A
Investment
Companies
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Pooled 2 $347,127,000 N/A N/A
Investment Vehicles
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Accounts 3 $711,620,000 N/A N/A
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Potential Conflicts of Interest. When a portfolio manager is responsible for the
management of more than one account, the potential arises for the portfolio
manager to favor one account over another. The principal types of potential
conflicts of interest that may arise are discussed below. For the reasons
outlined below, Pioneer does not believe that any material conflicts are likely
to arise out of a portfolio manager's responsibility for the management of the
fund as well as one or more other accounts. Although Pioneer has adopted
procedures that it believes are reasonably designed to detect and prevent
violations of the federal securities laws and to mitigate the potential for
conflicts of interest to affect its portfolio management decisions, there can be
no assurance that all conflicts will be identified or that all procedures will
be effective in mitigating the potential for such risks. Generally, the risks of
such conflicts of interest are increased to the extent that a portfolio manager
has a financial incentive to favor one account over another. Pioneer has
structured its compensation arrangements in a manner that is intended to limit
such potential for conflicts of interest. The funds investment subadviser also
has adopted certain compliance procedures which are designed to address these
types of conflicts. However, there is no guarantee that such procedures will
detect each situation in which a conflict might arise. See "Compensation of
Portfolio Managers" below.
o A portfolio manager could favor one account over another in allocating
new investment opportunities that have limited supply, such as initial
public offerings and private placements. If, for example, an initial
public offering that was expected to appreciate in value significantly
shortly after the offering was allocated to a single account, that
account may be expected to have better investment performance than other
accounts that did not receive an allocation of the initial public
offering. Generally, investments for which there is limited availability
are allocated based upon a range of factors including available cash and
consistency with the accounts' investment objectives and policies. This
allocation methodology necessarily involves some subjective elements but
is intended over time to treat each client in an equitable and fair
manner. Generally, the investment opportunity is allocated among
participating accounts on a pro rata basis. Although Pioneer believes
that its practices are reasonably designed to treat each client in an
equitable and fair manner, there may be instances where a fund may not
participate, or may participate to a lesser degree than other clients,
in the allocation of an investment opportunity.
o A portfolio manager could favor one account over another in the order in
which trades for the accounts are placed. If a portfolio manager
determines to purchase a security for more than one account in an
aggregate amount that may influence the market price of the security,
accounts that purchased or sold the security first may receive a more
favorable price than accounts that made subsequent transactions. The
less liquid the market for the security or the greater the percentage
that the proposed aggregate purchases or sales represent of average
daily trading volume, the greater the potential for accounts that make
subsequent purchases or sales to receive a less favorable price. When a
portfolio manager intends to trade the same security on the same day for
more than one account, the trades typically are "bunched," which means
that the trades for the individual accounts are aggregated and each
account receives the same price. There are some types of accounts as to
which bunching may not be possible for contractual reasons (such as
directed brokerage arrangements). Circumstances may also arise where the
trader believes that bunching the orders may not result in the best
possible price. Where those accounts or circumstances are involved,
Pioneer will place the order in a manner intended to result in as
favorable a price as possible for such client.
o A portfolio manager could favor an account if the portfolio manager's
compensation is tied to the performance of that account to a greater
degree than other accounts managed by the portfolio manager. If, for
example, the portfolio manager receives a bonus based upon the
performance of certain accounts relative to a benchmark while other
accounts are disregarded for this purpose, the portfolio manager will
have a financial incentive to seek to have the accounts that determine
the portfolio manager's bonus achieve the best possible performance to
the possible detriment of other accounts. Similarly, if Pioneer receives
a performance-based advisory fee, the portfolio manager may favor that
account, whether or not the performance of that account directly
determines the portfolio manager's compensation.
o A portfolio manager could favor an account if the portfolio manager has
a beneficial interest in the account, in order to benefit a large client
or to compensate a client that had poor returns. For example, if the
portfolio manager held an interest in an investment partnership that was
one of the accounts managed by the portfolio manager, the portfolio
manager would have an economic incentive to favor the account in which
the portfolio manager held an interest.
o If the different accounts have materially and potentially conflicting
investment objectives or strategies, a conflict of interest could arise.
For example, if a portfolio manager purchases a security for one account
and sells the same security for another account, such trading pattern
may disadvantage either the account that is long or short. In making
portfolio manager assignments, Pioneer seeks to avoid such potentially
conflicting situations. However, where a portfolio manager is
responsible for accounts with differing investment objectives and
policies, it is possible that the portfolio manager will conclude that
it is in the best interest of one account to sell a portfolio security
while another account continues to hold or increase the holding in such
security.
Compensation of Portfolio Managers. Pioneer has adopted a system of compensation
for portfolio managers that seeks to align the financial interests of the
portfolio managers with those of shareholders of the accounts (including Pioneer
funds) the portfolio managers manage, as well as with the financial performance
of Pioneer. The compensation program for all Pioneer portfolio managers includes
a base salary (determined by the rank and tenure of the employee) and an annual
bonus program, as well as customary benefits that are offered generally to all
full-time employees. Base compensation is fixed and normally reevaluated on an
annual basis. Pioneer seeks to set base compensation at market rates, taking
into account the experience and responsibilities of the portfolio manager. The
bonus plan is intended to provide a competitive level of annual bonus
compensation that is tied to the portfolio manager achieving superior investment
performance and align the interests of the investment professional with those of
shareholders, as well as with the financial performance of Pioneer. Any bonus
under the plan is completely discretionary, with a maximum annual bonus that may
be in excess of base salary. The annual bonus is based upon a combination of the
following factors:
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 Pioneer Results and Business Line Results. Pioneer's financial
performance, as well as the investment performance of its investment
management group, affect a portfolio manager's actual bonus by a
leverage factor of plus or minus (+/-) a predetermined percentage.
The quantitative and qualitative performance components comprise 80% and 20%,
respectively, of the overall bonus calculation (on a pre-adjustment basis). A
portion of the annual bonus is deferred for a specified period and may be
invested in one or more Pioneer funds.
Certain portfolio managers may participate in other programs designed to reward
and retain key contributors. Senior executives or other key employees may be
granted performance units based on the stock price performance of UniCredito
Italiano and the financial performance of Pioneer Global Asset Management
S.p.A., which are affiliates of Pioneer. Portfolio managers also may participate
in a deferred compensation program, whereby deferred amounts are invested in one
or more Pioneer funds.
Share Ownership by Portfolio Managers. The following table indicates as of April
30, 2007 the value, within the indicated range, of shares beneficially owned by
the portfolio managers of the fund.
--------------------------------------- -----------------------------------------------------------------
Name of Portfolio Manager Beneficial Ownership of the Fund*
--------------------------------------- -----------------------------------------------------------------
--------------------------------------- -----------------------------------------------------------------
Andrew Feltus E
--------------------------------------- -----------------------------------------------------------------
--------------------------------------- -----------------------------------------------------------------
Jonathan Sharkey A
--------------------------------------- -----------------------------------------------------------------
--------------------------------------- -----------------------------------------------------------------
Charles Melchreit A
--------------------------------------- -----------------------------------------------------------------
*Key to Ranges
A. None B. $1 - $10,000 C. $10,001 - $50,000 D. $50,001 - $100,000
E. $100,001 - $500,000 F. $500,001 - $1,000,000 G. Over $1,000,000
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
During the period covered by this report, there were no purchases
made by or on behalf of the registrant or any affiliated purchaser
as defined in Rule 10b-18(a)(3) under the Securities Exchange Act
of 1934 (the Exchange Act), of shares of the registrants equity
securities that are registered by the registrant pursuant to
Section 12 of the Exchange Act.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in
its definitive proxy statement, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer
and principal financial officer have
concluded that the registrant's disclosure
controls and procedures are effective based
on their evaluation of these controls and
procedures as of a date within 90 days of the
filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the
registrant's internal control over financial
reporting that occurred during the second
fiscal quarter of the period covered by this
report that have materially affected, or are
reasonably likely to materially affect, the
registrant's internal control over financial
reporting.
The registrant's principal executive officer and principal financial
officer, however, voluntarily are reporting the following information:
In August of 2006 the registrant's investment adviser
enhanced its internal procedures for reporting performance
information required to be included in prospectuses.
Those enhancements involved additional internal controls
over the appropriateness of performance data
generated for this purpose. Such enhancements were made
following an internal review which identified
prospectuses relating to certain classes of shares of
a limited number of registrants where, inadvertently,
performance information not reflecting the deduction of
applicable sales charges was included. Those prospectuses
were revised, and the revised prospectuses were distributed to
shareholders.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Diversified High Income Trust
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date June 27, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date June 27, 2008
By (Signature and Title)* /s/ Mark Bradley
Mark Bradley, Treasurer
Date June 27, 2008
* Print the name and title of each signing officer under his or her signature.