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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 811-21321
Pioneer Municipal 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, 2004
Date of reporting period: May 1, 2003 through April 30, 2004
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
PIONEER
----------
MUNICIPAL
HIGH
INCOME
TRUST
Annual
Report
4/30/04
[LOGO] Pioneer
Investments
Table of Contents
---------------------------------------------------------------
Letter to Shareowners 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 15
Notes to Financial Statements 19
Report of Independent Registered Public Accounting Firm 27
The Pioneer Family of Mutual Funds 28
Trustees, Officers and Service Providers 29
Pioneer Municipal High Income Trust
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LETTER TO SHAREOWNERS 4/30/04
--------------------------------------------------------------------------------
Dear Shareowner,
--------------------------------------------------------------------------------
Last year's stock market rally carried over into early 2004 but ran out of
steam as investors reassessed the dramatic rise in stock valuations. The
technology-rich NASDAQ Composite Index, having risen the fastest, was the first
to feel pressure; the Dow Jones Industrial Average and Standard & Poor's 500
soon gave up some gains as well. Heading into April, these major indicators
were little changed from year-end levels but well ahead of where they stood a
year ago.
In general terms, smaller companies outperformed large companies and emerging
markets outpaced developed countries, as both benefited from weakness in the
U.S. dollar. Corporate bonds, here and overseas, recorded strong gains. U.S.
Treasury issues also performed well, as the Federal Reserve Board signaled that
it was in no hurry to raise interest rates, given the mixed economic data it
was seeing.
Those mixed economic reports were also responsible for the stock market's
sluggishness. While corporate profits expanded at a healthy rate, unemployment
remained high and consumer confidence dropped sharply in February. Increased
productivity, a company's ability to produce more goods or services for each
hour worked, was a major factor in the disappointing pace of job creation.
However, jobs data improved markedly in March when the government reported U.S.
employers added over 300,000 jobs, the largest figure in years; at the same
time, January and February numbers were revised upward. Payroll expansion
reached into most sectors, while employment held steady in manufacturing after
a long period of declines. The markets reacted positively to the jobs report.
We believe that renewed hiring means companies are optimistic about the outlook
for profits in the months ahead. In fact, many businesses are building up
inventories in expectation of increased product demand.
The key drivers of the expansion, low interest rates and reduced federal income
taxes, remain in place. Consequently, we think the U.S. economy retains
impressive growth potential through the rest of this year. An expanding economy
could have implications for the way your portfolio is balanced, so an
appointment with your professional financial advisor may well be in order.
More growth choices from Pioneer
When you talk to your adviser, ask to hear about the Pioneer Oak Ridge and
Pioneer Papp Funds. These six additions to our product lineup are designed to
broaden your opportunities to pursue growth. Please consider each fund's
investment objectives, risks, charges and expenses carefully before investing.
The prospectus contains this and other information about each fund and should
be read carefully before you invest or send money. To obtain a prospectus and
for other information on any Pioneer fund, call 1-800-225-6292 or visit our
website at www.pioneerfunds.com.
Respectfully,
/s/ Osbert M. Hood
Osbert M. Hood, President
Pioneer Investment Management, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
1
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
PORTFOLIO SUMMARY 4/30/04
--------------------------------------------------------------------------------
Portfolio Diversification
--------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Health 25.2%
Airport 18.8%
Insured 14.7%
Tobacco 9.7%
Pollution Control 7.2%
Education 6.9%
Power 5.3%
Development 4.1%
Other 1.8%
Facilities 1.7%
General Obligation 1.7%
Transportation 1.5%
Housing 1.2%
Utilities 0.2%
Portfolio Maturity
--------------------------------------------------------------------------------
(Effective life as a percentage of long-term holdings)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
10+ years 40.5%
8-10 years 9.0%
6-8 years 28.5%
3-6 years 14.1%
1-3 years 5.4%
0-1 years 2.5%
Quality Distribution
--------------------------------------------------------------------------------
(As a percentage of long-term holdings)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
AAA 15.9%
AA 7.0%
A 3.2%
BBB 30.1%
BB & Lower 43.2%
Cash Equivalents 0.6%
10 Largest Holdings
--------------------------------------------------------------------------------
(As a percentage of long-term holdings).*
1. Greenville County School District, 5.5%, 12/1/28 3.68%
--------------------------------------------------------------------------------
2. Allegheny County Hospital Development Authority Revenue,
9.25%, 11/15/30 3.30
--------------------------------------------------------------------------------
3. Minneapolis/St. Paul Metropolitan Airports, 7.0%, 4/1/25 2.90
--------------------------------------------------------------------------------
4. Tobacco Settlement Financing Corp., 6.75%, 6/1/39 2.42
--------------------------------------------------------------------------------
5. Birmingham Alabama General Obligation, 5.0%, 12/1/32 2.39
--------------------------------------------------------------------------------
6. New Jersey Economic Development Authority Revenue,
6.25%, 9/15/29 2.20
--------------------------------------------------------------------------------
7. Metropolitan Pier & Exposition Authority Dedicated State Tax
Revenue, 0.0%, 6/15/22 2.11
--------------------------------------------------------------------------------
8. Texas State Turnpike Authority Revenue, 0.0%, 8/15/16 2.09
--------------------------------------------------------------------------------
9. Johnson City Health & Educational Facilities Board Hospital
Revenue, 7.5%, 7/1/33 1.89
--------------------------------------------------------------------------------
10. Western Generation Agency Cogeneration Project Revenue,
7.125%, 1/1/21 1.82
--------------------------------------------------------------------------------
*This list excludes money market and derivative investments. Trust holdings
will vary for other periods.
2
Pioneer Municipal High Income Trust
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PERFORMANCE UPDATE 4/30/04
--------------------------------------------------------------------------------
Share Prices and Distributions
--------------------------------------------------------------------------------
Market Value
per Common Share 4/30/04 7/21/03
$13.70 $15.00
Net Asset Value
per Common Share 4/30/04 7/21/03
$14.76 $14.33
Distributions per Share Income Short-Term Long-Term
(7/21/03 - 4/30/04) Dividends Capital Gains Capital Gains
$0.72 $ - $ -
Investment Returns
--------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in common shares of Pioneer Municipal High Income Trust at
public offering price, compared to that of the Lehman Brothers Municipal Bond
Index and Lehman Brothers Non-Investment Grade Municipal Bond Index.
Cumulative Total Returns
(As of April 30, 2004)
Net Asset Market
Period Value Price*
Life-of-Trust
(7/21/03) 8.14% -4.11%
* When net asset value (NAV) is lower than market price, dividends are assumed
to be reinvested at the greater of NAV or 95% of the market price. When NAV
is higher, dividends are assumed to be reinvested at market price.
--------------------------------------------------------------------------------
[DATA BELOW IS REPRESENTED BY A MOUNTAIN CHART IN THE ORIGINAL REPORT]
7/03 4/04
------ -------
Pioneer Municipal High Income Trust* 10,000 $ 9,589
Lehman Brothers Municipal Bond Index 10,000 $10,441
Lehman Brothers Non-Investment Grade Municipal Bond Index 10,000 $11,014
Performance data shown represents past performance. Past performance does not
guarantee future results. Investment return and principal value fluctuate,
and shares, when redeemed, may be worth more or less than their original
cost. Current performance may be lower or higher than the performance shown.
For performance data that is current to the most recent month-end, please
call 1-800-225-6292 or visit our website www.pioneerfunds.com.
+ Index comparison begins July 31, 2003. The Lehman Brothers Municipal Bond
Index is a widely recognized, unmanaged measure of approximately 15,000
municipal bonds. Bonds in the Index have a minimum credit rating of BBB, were
part of at least a $50 million issuance made within the past five years and
have a maturity of at least two years. Lehman Brothers Non-Investment Grade
Municipal Bond Index totals over $26 billion in market value and maintains
over 1300 securities. Municipal bonds in this index have the following
requirements: maturities of one year or greater, sub investment grade (below
Baa or non-rated), fixed coupon rate, dated date greater than 12-31-90, deal
size over $20 million, maturity size of at least $3 trillion. Index returns
are calculated monthly, assume reinvestment of dividends and, unlike Trust
returns, do not reflect any fees, expenses or sales charges. You cannot
invest directly in the Index.
The performance table and graph do not reflect the deduction of taxes that a
shareowner would pay on Trust distributions or the redemption of Trust
shares.
3
Pioneer Municipal High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 4/30/04
--------------------------------------------------------------------------------
This annual report covers the period from the Trust's inception on July 21,
2003, through April 30, 2004. In this time frame, investors in Pioneer
Municipal High Income Trust were rewarded with a relatively high amount of
tax-free income as well as a substantial amount of price appreciation. In the
following interview, David Eurkus, a member of the Trust's management team,
reviews the Trust's investment process, strategy and outlook.
Q: How did the Trust perform from inception on July 21, 2003 through April 30,
2004?
A: Since inception, Pioneer Municipal High Income Trust returned 8.14% at net
asset value and -4.11% at market price. As of April 30, 2004, the Trust
was selling at a discount of market price to net asset value of 7.2%. From
July 31, 2003, through April 30, 2004, the Lehman Brothers Municipal Bond
Index returned 4.41% and the Lehman Brothers Non-Investment Grade
Municipal Bond Index returned 8.92%. At the end of the period, the Trust
held 106 issues in 31 states. On April 30, 2004, the Trust's 30-day SEC
yield was 7.83%.
Q: What strategies do you use in managing the Trust?
A: We use a top down/bottom-up approach. We consider macroeconomic factors,
such as the strength of the economy, the potential for a change in the
level of inflation and Federal Reserve monetary policy. On a micro level,
we analyze yields compared to U.S. Treasuries or corporate issuers; we
look at the strengths of specific economic sectors and review each
issuer's credit rating and liquidity. Our extensive research has resulted
in the construction of a diversified portfolio of securities with varying
maturities and credit quality from a number of sectors and issuers. At the
end of the period, 56.2% of the Trust's assets were invested in
investment-grade securities - those rated BBB or higher; 43.2% were in
securities rated below investment grade; and 0.6% of the Trust's assets
were in cash equivalents. Overall, the average quality of the Trust was
Baa/BBB.
We allocated a portion of the Trust's assets to economically sensitive
market sectors, areas in which the underlying credit quality of
fixed-income securities tends to improve during periods of economic
recovery. These included hospital/health care (25.2% of assets),
transportation (20.0% of assets) and power/energy (5.3% of assets). Over
the past few months, we added to the Trust's position in education bonds
(3.3% of assets). The educa-
4
Pioneer High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
tion sector has seen increased bond issuance, as applications to secondary
schools and colleges continue to rise. We took advantage of the Trust's
ability to invest in below investment-grade securities, emphasizing
sectors whose business prospects would benefit from a stronger economy.
Such securities had discounted prices and historically high yields.
Q: During the period, the investment environment changed dramatically. How did
this change affect the Trust?
A: From July 2003 through February 2004, economic growth was fairly modest.
Inflation was low, interest rates continued to decline and bond prices
rose. Against this backdrop, the Trust benefited from the capital
appreciation that rising bond prices provided and from a relatively high
monthly income stream.
In March, economic statistics began to indicate that the economy was
stronger than had been expected. Job growth was robust, inflation began to
accelerate and investors assumed that the Federal Reserve would raise
interest rates sooner rather than later. In this environment, market
interest rates moved substantially higher, triggering a rapid and
significant decline in the market value of both taxable and tax-free
bonds. While the Trust suffered from the general downturn in bond values,
its combination of investment-grade and below investment-grade securities
allowed it to continue to provide shareholders with an attractive level of
tax-free income.
Q: What is your outlook over the next six months?
A: We are optimistic about the economy and the Trust. We expect the positive
trend in GDP growth to continue; and while the Federal Reserve may boost
rates, we do not anticipate a significant increase in the near term. We
believe the Trust's diversification among economic sectors and geographic
regions and its mix of investment-grade quality and higher-yielding bonds
have the potential to continue to generate increased income as well as
capital appreciation even in a rising interest-rate environment.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
5
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/04
--------------------------------------------------------------------------------
S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
TAX EXEMPT OBLIGATIONS - 127.5% OF NET ASSETS
Alabama - 3.5%
$10,000,000 AAA/Aaa Birmingham Alabama General Obligation, 5.0%,
12/1/32 $ 9,970,900
1,500,000 BBB/NR Camden Alabama Industrial Development Board,
6.125%, 12/1/24 1,574,745
------------
$ 11,545,645
------------
Arizona - 5.8%
5,000,000 B+/Ba3 Apache County Industrial Development Authority,
5.85%, 3/1/28 $ 4,694,500
5,000,000 B+/Ba3 Apache County Industrial Development Authority,
5.875%, 3/1/33 4,687,150
3,000,000 NR/NR Maricopa County Industrial Development Authority,
7.875%, 4/1/27 3,079,890
5,880,000 AA/Aa2 Salt River Project Agriculture Improvement and
Power District Electric System Revenue, 5.0%,
1/1/31 5,883,704
500,000 NR/Baa2 Yavapai County Industrial Development Authority,
6.0%, 8/1/33 505,605
------------
$ 18,850,849
------------
California - 13.0%
7,270,000 BBB/Baa1 California State General Obligation, 5.25%,
2/1/28 $ 7,176,072
5,150,000 BBB/Baa3 Golden State Tobacco Securitization Corp.,
7.8%, 6/1/42 5,440,820
7,000,000 BBB/Baa3 Golden State Tobacco Securitization Corp.,
7.875%, 6/1/42 7,430,150
6,500,000 B-/Caa2 Los Angeles Regional Airports Improvement Corp.
Lease Revenue, 7.5%, 12/1/24 5,537,220
6,000,000 AAA/Aaa Palm Desert Financing Authority Tax Allocation
Revenue, 5.0%, 4/1/30 5,965,260
3,000,000 AAA/Aaa San Diego Unified School District, 5.0%, 7/1/25 3,012,420
2,500,000 AAA/Aaa University of California Revenue, 5.0%, 5/15/25 2,514,400
7,000,000 B+/NR Valley Health System Hospital Revenue, 6.5%,
5/15/25 5,376,840
------------
$ 42,453,182
------------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
Connecticut - 1.6%
$2,205,000 BB/Ba1 Connecticut State Health & Educational Facilities
Authority Revenue, 5.375%, 7/1/17 $ 1,827,416
4,400,000 BB/Ba1 Connecticut State Health & Educational Facilities
Authority Revenue, 5.5%, 7/1/27 3,373,832
------------
$ 5,201,248
------------
District of Columbia - 3.5%
5,000,000 BBB/Baa3 District of Columbia Tobacco Settlement Financing
Corp., 6.5%, 5/15/33 $ 4,559,100
7,325,000 BBB/Baa3 District of Columbia Tobacco Settlement Financing
Corp., 6.75%, 5/15/40 6,814,447
------------
$ 11,373,547
------------
Florida - 4.5%
2,000,000 NR/NR Beacon Lakes Community Development, 6.9%,
5/1/35 $ 2,025,900
2,300,000 CCC/Caa3 Hillsborough County Aviation Authority Revenue,
6.8%, 1/1/24 1,629,044
1,650,000 BBB-/Baa2 Polk County Industrial Development Revenue,
5.85%, 12/1/30 1,623,451
2,000,000 NR/NR Seminole Tribe Convention-A, 8.95%, 10/1/33 2,334,220
1,900,000 NR/NR Seminole Tribe Convention-A, 10.0%, 10/1/33 2,345,189
5,000,000 NR/Baa2 Tallahassee Health Facilities Revenue, 6.375%,
12/1/30 4,856,450
------------
$ 14,814,254
------------
Idaho - 1.5%
5,000,000 BB+/Ba3 Power County Industrial Development Corp.,
6.45%, 8/1/32 $ 5,010,800
------------
Illinois - 4.0%
1,000,000 NR/NR Centerpoint Intermodal Center, 8.0%, 6/15/23
(144A) $ 980,040
2,790,000 CCC/Caa3 Chicago Illinois O'Hare International Airport,
6.45%, 5/1/18 1,781,778
1,500,000 NR/NR Illinois Health Facilities Authority Revenue, 6.9%,
11/15/33 1,485,000
16,880,000 (a) AAA/Aaa Metropolitan Pier & Exposition Authority Dedicated
State Tax Revenue, 0.0%, 6/15/22 8,772,198
------------
$ 13,019,016
------------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/04 (continued)
--------------------------------------------------------------------------------
S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
Indiana - 1.6%
$2,000,000 CCC/Caa3 East Chicago Industrial Pollution Control Revenue,
7.125%, 6/1/07 $ 1,788,800
4,000,000 CCC/Caa3 Indiana State Development Finance Authority
Revenue, 5.75%, 10/1/11 3,331,840
-----------
$ 5,120,640
-----------
Kentucky - 2.5%
7,050,000 CCC/Caa2 Kenton County Airport Revenue, 7.5%, 2/1/12 $ 6,438,060
1,965,000 CCC/Caa2 Kenton County Airport Revenue, 7.5%, 2/1/20 1,714,482
-----------
$ 8,152,542
-----------
Massachusetts - 6.0%
2,435,000 AAA/Aaa Massachusetts Health & Educational Facilities
Authority Revenue, 5.0%, 7/15/35 $ 2,447,102
1,000,000 AA/NR Massachusetts Health & Educational Facilities
Authority Revenue, 5.25%, 10/15/33 1,001,570
2,640,000 BBB/Baa3 Massachusetts Health & Educational Facilities
Authority Revenue, 5.75%, 7/1/28 2,454,566
3,500,000 BBB/Baa3 Massachusetts Health & Educational Facilities
Authority Revenue, 6.25%, 7/1/22 3,590,440
5,000,000 BBB-/NR Massachusetts Health & Educational Facilities
Authority Revenue, 6.75%, 10/1/33 5,094,400
75,000 BB/NR Massachusetts State Development Finance
Agency, 5.25%, 10/1/18 62,838
5,055,000 AA-/Aa3 Massachusetts State Housing Finance Agency,
5.25%, 12/1/33 4,980,085
-----------
$19,631,001
-----------
Michigan - 4.8%
2,000,000 NR/Ba2 Garden City Hospital Finance Authority, 5.75%,
9/1/17 $ 1,630,600
1,500,000 BBB-/NR John Tolfree Health System Corp., 6.0%, 9/15/23 1,418,205
4,010,000 BBB-/Baa3 Michigan State Hospital Finance Authority
Revenue, 6.0%, 2/1/24 3,935,454
2,000,000 NR/NR Michigan State Hospital Finance Authority
Revenue, 6.4%, 1/1/15 1,934,460
7,690,000 NR/NR Wayne Charter County Special Airport Facilities
Revenue, 6.75%, 12/1/15 6,896,546
-----------
$15,815,265
-----------
8 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
Minnesota - 4.2%
$13,260,000 NR/NR Minneapolis/St. Paul Metropolitan Airports, 7.0%,
4/1/25 $12,059,440
1,500,000 BB/Ba2 St. Paul Housing & Redevelopment Authority,
6.625%, 11/1/17 1,516,635
-----------
$13,576,075
-----------
Mississippi - 0.9%
3,000,000 BBB-/Ba1 Mississippi Business Finance Corp. Pollution
Control Revenue, 5.9%, 5/1/22 $ 3,014,670
-----------
Missouri - 1.6%
5,500,000 NR/Ba3 St. Louis Industrial Development Authority
Revenue, 7.25%, 12/15/35 $ 5,085,795
-----------
Nevada - 1.4%
1,000,000 BBB-/Baa2 Clark County Industrial Development Revenue,
5.45%, 3/1/38 $ 1,054,770
1,850,000 B+/NR Clark County Industrial Development Revenue,
5.5%, 10/1/30 1,576,644
2,000,000 NR/NR Nevada State Department of Business & Industry,
7.25%, 1/1/23 1,956,960
-----------
$ 4,588,374
-----------
New Jersey - 9.2%
3,000,000 AAA/Aaa New Jersey Economic Development Authority
Revenue, 5.25%, 6/15/19 $ 3,189,780
2,000,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.25%, 9/15/19 1,642,760
11,700,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.25%, 9/15/29 9,145,422
1,000,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.4%, 9/15/23 811,760
6,150,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 7.0%, 11/15/30 5,268,767
10,750,000 BBB/Baa3 Tobacco Settlement Financing Corp., 6.75%,
6/1/39 10,068,665
-----------
$30,127,154
-----------
The accompanying notes are an integral part of these financial statements. 9
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/04 (continued)
--------------------------------------------------------------------------------
S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
New Mexico - 1.2%
$3,700,000 NR/B1 New Mexico Hospital Equipment Loan Council,
6.4%, 6/1/16 $ 3,743,216
-----------
New York - 3.3%
5,625,000 CCC/Caa2 New York City Industrial Development Agency,
6.9%, 8/1/24 $ 3,878,044
5,000,000 AAA/Aaa New York City Trust Cultural Resources Revenue,
5.125%, 7/1/31 5,064,550
2,000,000 NR/NR Suffolk County Industrial Development Agency,
7.25%, 1/1/30 1,878,440
-----------
$10,821,034
-----------
North Carolina - 1.5%
2,000,000 AA+/Aa2 Charlotte North Carolina Certificates of
Participation, 5.0%, 6/1/33 $ 1,975,740
4,600,000 NR/NR Charlotte North Carolina Special Facilities
Revenue, 7.75%, 2/1/28 2,938,250
-----------
$ 4,913,990
-----------
Oklahoma - 4.2%
3,000,000 B-/B1 Oklahoma Development Finance Authority
Revenue, 5.625%, 8/15/19 $ 2,491,710
8,000,000 B-/B1 Oklahoma Development Finance Authority
Revenue, 5.625%, 8/15/29 6,324,720
4,100,000 B-/Caa2 Tulsa Municipal Airport Revenue, 5.65%, 12/1/35 3,771,139
1,225,000 B-/Caa2 Tulsa Municipal Airport Revenue, 6.25%, 6/1/20 1,045,182
-----------
$13,632,751
-----------
Oregon - 4.7%
1,000,000 NR/NR Klamath Falls Electric Revenue, 5.75%, 1/1/13 $ 1,001,720
7,000,000 NR/NR Klamath Falls Electric Revenue, 6.0%, 1/1/25 6,787,480
7,500,000 NR/NR Western Generation Agency Cogeneration Project
Revenue, 7.125%, 1/1/21 7,592,475
-----------
$15,381,675
-----------
10 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
Pennsylvania - 10.0%
$ 1,550,000 NR/Baa1 Allegheny County Hospital Development Authority
Revenue, 5.125%, 5/1/25 $ 1,331,419
12,300,000 B/B2 Allegheny County Hospital Development Authority
Revenue, 9.25%, 11/15/30 13,730,859
2,500,000 BBB-/Baa2 Beaver County Industrial Development Authority,
7.625%, 5/1/25 2,673,825
1,000,000 BB-/NR Columbia County Hospital Authority Health Care
Revenue, 5.9%, 6/1/29 786,600
5,000,000 BBB/Baa3 Delaware County Industrial Development Authority
Revenue, 6.1%, 7/1/13 5,294,750
1,280,000 NR/B2 Langhorne Manor Borough Higher Education &
Health Authority Revenue, 7.35%, 7/1/22 1,238,784
2,500,000 BBB+/NR Pennsylvania Higher Educational Facilities Authority
Revenue, 5.4%, 7/15/36 2,458,900
5,000,000 BBB-/Baa2 Philadelphia Hospitals & Higher Education
Facilities Authority Revenue, 6.5%, 11/15/22 5,002,200
-----------
$32,517,337
-----------
South Carolina - 8.4%
15,000,000 AA-/A1 Greenville County School District, 5.5%, 12/1/28 $15,326,550
1,900,000 BBB/Baa2 South Carolina Jobs Economic Development
Authority Revenue, 6.25%, 8/1/31 1,949,951
5,850,000 BBB/Baa2 South Carolina Jobs Economic Development
Authority Revenue, 6.375%, 8/1/34 6,053,288
4,405,000 BB-/NR South Carolina Jobs Economic Development
Authority Revenue, 6.625%, 4/1/36 4,185,279
-----------
$27,515,068
-----------
Tennessee - 3.8%
7,000,000 BBB+/Baa2 Johnson City Health & Educational Facilities Board
Hospital Revenue, 7.5%, 7/1/33 $ 7,867,090
4,480,000 NR/Baa2 Knox County Health Educational & Housing
Facilities Board Hospital Revenue, 6.375%,
4/15/22 4,604,320
-----------
$12,471,410
-----------
The accompanying notes are an integral part of these financial statements. 11
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/04 (continued)
--------------------------------------------------------------------------------
S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
Texas - 9.9%
$ 6,500,000 CCC/Caa2 Alliance Airport Authority Special Facilities
Revenue, 7.0%, 12/1/11 $ 5,420,805
5,500,000 CCC/Caa2 Dallas-Fort Worth International Airport Revenue,
7.125%, 11/1/26 3,470,775
2,800,000 CCC/Caa2 Dallas-Fort Worth International Airport Revenue,
7.6%, 11/1/11 2,183,972
750,000 CCC/Caa2 Dallas-Fort Worth International Airport Revenue,
7.625%, 11/1/21 507,825
1,000,000 BB/NR Georgetown Health Facilities Development Corp.,
6.25%, 8/15/29 934,690
3,750,000 B-/Caa2 Houston Airport System Special Facilities Revenue,
5.7%, 7/15/29 2,656,800
5,000,000 BBB-/NR Lufkin Health Facilities Development Corp. 5.7%,
2/15/28 4,552,650
500,000 BBB/Baa2 Sabine River Authority Pollution Control Revenue,
6.15%, 8/1/22 519,200
15,865,000 AAA/Aaa Texas State Turnpike Authority Revenue, 0.0%,
8/15/16 8,697,986
3,000,000 AAA/Aaa University of Texas Revenues, 5.25%, 8/15/18 3,261,540
-----------
$32,206,243
-----------
Vermont - 0.5%
1,500,000 A-/A3 Vermont Educational & Health Buildings Financing
Agency Revenue, 6.0%, 10/1/28 $ 1,634,220
-----------
Virginia - 2.5%
1,000,000 BBB/Baa3 Peninsula Ports Authority, 6.0%, 4/1/33 $ 1,024,720
4,000,000 BB/NR Pocahontas Parkway Association of Virginia Toll
Road Revenue, 5.5%, 8/15/28 3,295,520
3,940,000 AAA/Aaa University of Virginia Revenue, 5.0%, 6/1/33 3,959,818
-----------
$ 8,280,058
-----------
Washington - 5.2%
4,710,000 AAA/Aaa Spokane Public Facilities District Hotel/Motel Tax
& Sales, 5.75%, 12/1/27 $ 5,101,542
7,025,000 BBB/Baa3 Tobacco Settlement Authority Washington, 6.625%,
6/1/32 6,500,724
14,315,000 AAA/Aaa Washington State General Obligation, 0.0%, 6/1/22 5,460,886
-----------
$17,063,152
-----------
12 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S&P/
Moody's
Principal Ratings
Amount (unaudited) Value
Wisconsin - 1.2%
$3,750,000 BBB+/NR Wisconsin State Health & Educational Facilities
Authority Revenue, 6.4%, 4/15/33 $ 3,932,588
-------------
Wyoming - 1.5%
5,000,000 BB+/Ba3 Sweetwater County Solid Waste Disposal Revenue,
6.9%, 9/1/24 $ 5,046,400
-------------
TOTAL TAX-EXEMPT OBLIGATIONS
(Cost $405,952,959) $ 416,539,199
-------------
Shares TAX-EXEMPT MONEY MARKET MUTUAL FUND - 0.8%
OF NET ASSETS
2,669,457 BlackRock Provident Institutional Municipal Fund $ 2,669,457
-------------
TOTAL TAX-EXEMPT MONEY MARKET MUTUAL FUND
(Cost $2,669,457) $ 2,669,457
-------------
TOTAL INVESTMENTS IN SECURITIES - 128.3%
(Cost $408,622,416) (b) (c) (d) $ 419,208,656
-------------
Other Assets in Excess of Liabilities - 2.6% $ 8,381,009
-------------
Preferred Shares at Redemption Value - (30.9)% $(101,000,000)
-------------
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS - 100.0% $ 326,589,665
=============
The accompanying notes are an integral part of these financial statements. 13
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/04 (continued)
--------------------------------------------------------------------------------
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, 2004 the value of these securities amounted to $980,400 or 0.3% of
net assets applicable to common shareholders.
(a) Indicates a security that has a zero coupon that remains in effect until
a predetermined date at which time the stated coupon rate becomes
effective until final maturity.
(b) The concentration of investments by type of obligation/market sector is
as follows:
Insured 14.7%
General Obligation 1.7
Revenue Bonds:
Health Revenue 25.2
Airport Revenue 18.8
Tobacco Revenue 9.7
Pollution Control Revenue 7.2
Education Revenue 6.9
Power Revenue 5.3
Development Revenue 4.1
Other 1.8
Facilities Revenue 1.7
Transportation Revenue 1.5
Housing Revenue 1.2
Utilities Revenue 0.2
----
100.0%
=====
(c) At April 30, 2004, the net unrealized gain on investments
based on cost for federal income tax purposes of $408,055,306
was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $17,062,718
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (5,909,368)
-----------
Net unrealized gain $11,153,350
===========
For financial reporting purposes net unrealized gain on investments was
$10,586,240 and cost of investments aggregated $408,622,416.
(d) As of April 30, 2004, the Trust had a capital loss carryforward of
$1,170,962 which will expire in 2012 if not utilized.
Purchases and sales of securities (excluding temporary cash investments) for the
period ended April 30, 2004, aggregated $617,237,817 and $211,209,853,
respectively.
14 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 4/30/04
--------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value (cost $408,622,416) $419,208,656
Receivables -
Interest 8,553,845
Unrealized appreciation on interest rate swaps 1,136,800
Prepaid expenses 23,600
------------
Total assets $428,922,901
------------
LIABILITIES:
Payables -
Offering costs payable - common $ 125,049
Offering costs payable - preferred 8,181
Due to custodian 857,134
Net interest rate swaps payable 59,042
Due to affiliates 212,352
Administration fee payable 24,815
Accrued expenses 46,663
------------
Total liabilities $ 1,333,236
------------
PREFERRED SHARES AT REDEMPTION VALUE:
$25,000 liquidation value per share applicable to
4,040 shares $101,000,000
------------
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Paid-in capital $315,038,703
Accumulated net investment income 998,979
Accumulated net realized loss on investments (1,171,057)
Net unrealized gain on investments 10,586,240
Net unrealized gain on interest rate swaps 1,136,800
------------
Net assets applicable to common shareowners $326,589,665
------------
NET ASSET VALUE PER SHARE:
No par value, (unlimited number of shares authorized)
Based on $326,589,665/22,120,893 common shares $ 14.76
============
The accompanying notes are an integral part of these financial statements. 15
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the period 7/21/03 (commencement of operations) to 4/30/04
INVESTMENT INCOME:
Interest $19,910,926
-----------
EXPENSES:
Management fees $ 1,866,718
Administration fees 217,549
Transfer agent fees 36,442
Auction agent fees 149,820
Custodian fees 18,141
Registration fees 29,516
Organization costs 40,000
Professional fees 54,183
Printing fees 13,967
Trustees' fees 6,504
Miscellaneous 11,433
-----------
Total expenses $ 2,444,273
-----------
Reimbursement of organization costs $ (40,000)
-----------
Net expenses $ 2,404,273
-----------
Net investment income $17,506,653
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND INTEREST RATE SWAPS:
Net realized loss from:
Investments $(1,172,616)
Interest rate swaps (59,042) $(1,231,658)
----------- -----------
Net unrealized gain on:
Investments $10,586,240
Interest rate swaps 1,136,800 $11,723,040
----------- -----------
Net gain on investments and interest rate swaps $10,491,382
-----------
DISTRIBUTIONS TO PREFERRED SHAREOWNERS FROM NET
INVESTMENT INCOME $ (539,580)
-----------
Net increase in net assets applicable to common
shareowners resulting from operations $27,458,455
===========
16 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
For the period 7/21/03 (commencement of operations) to 4/30/04
7/21/03
to
4/30/04
FROM OPERATIONS:
Net investment income $ 17,506,653
Net realized loss on investments and interest rate swaps (1,231,658)
Net unrealized gain on investments and interest rate swaps 11,723,040
Distributions to preferred shareowners from net investment income (539,580)
------------
Net increase in net assets applicable to common shareowners $ 27,458,455
------------
DISTRIBUTIONS TO COMMON SHAREOWNERS:
Net investment income ($0.72 per share) $(15,907,493)
------------
Total dividends to common shareowners $(15,907,493)
------------
FROM TRUST SHARE TRANSACTIONS:
Net proceeds from the issuance of common shares $293,662,500
Net proceeds from underwriters' over-allotment option exercised 21,487,500
Reinvestment of distributions 1,673,643
Common share offering expenses charged to paid-in capital (660,000)
Preferred share offering expenses charged to paid-in capital (1,224,943)
------------
Net increase in net assets applicable to common shareowners
resulting from Trust share transactions $314,938,700
------------
Net increase in net assets applicable to common shareowners $326,489,662
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Beginning of period 100,003
------------
End of period (including accumulated net investment
income of $998,979) $326,589,665
============
The accompanying notes are an integral part of these financial statements. 17
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 4/30/04
--------------------------------------------------------------------------------
July 21, 2003 to
April 30, 2004 (a)(b)
Per Common Share Operating Performance
Net asset value, beginning of period $ 14.33+
--------
Increase (decrease) from investment operations:
Net investment income $ 0.80
Net realized and unrealized gain on investments 0.46
Distributions to preferred shareowners from net investment income (0.02)
--------
Net increase from investment operations $ 1.24
Distributions to common shareowners:
Net investment income (0.72)
Capital charge with respect to issuance of:
Common shares (0.03)
Preferred shares (0.06)
--------
Net increase in net asset value $ 0.43
--------
Net asset value, end of period* $ 14.76
========
Market value, end of period* $ 13.70
========
Total return++ (4.11)%
Ratios to average net assets of common shareowners
Net expenses+++ 0.95%**
Net investment income before preferred share dividends+++ 6.91%**
Preferred share dividends 0.21%**
Net investment income available to common shareowners 6.70%**
Portfolio turnover 54%
Net assets of common shareowners, end of period (in thousands) $326,590
Preferred shares outstanding (in thousands) $101,000
Asset coverage per preferred share, end of period $105,839
Average market value per preferred share $ 25,000
Liquidation value per preferred share $ 25,000
Ratios to average net assets of common shareowners before
reimbursement of organization expenses
Net expenses+++ 0.96%**
Net investment income before preferred share dividends+++ 6.90%**
Preferred share dividends 0.21%**
Net investment income available to common shareowners 6.69%**
(a) The per common share data presented above is based upon the average common
shares outstanding for the period presented.
(b) Trust shares were first publicly offered on July 18, 2003.
* Net asset value and market value are published in Barron's on Saturday, The
Wall Street Journal on Monday and The New York Times on Monday and
Saturday.
** Annualized.
+ Net asset value immediately after the closing of the first public offering
was $14.30.
++ Total investment return is calculated assuming a purchase of common shares
at the current market value on the first day and a sale at the current
market value on the last day of the 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.
+++ Ratios do not reflect the effect of dividend payments to preferred
shareowners.
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.
18 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/04
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Municipal High Income Trust (the "Trust") was organized as a Delaware
statutory trust on March 13, 2003. Prior to commencing operations on July 21,
2003, the Trust had no operations other than matters relating to its
organization and registration as a diversified, closed-end management
investment company under the Investment Company Act of 1940, as amended, and
the sale and issuance to Pioneer Investment Management, Inc. (PIM), the Trust's
investment adviser, a wholly owned indirect subsidiary of UniCredito Italiano
S.p.A. (UniCredito Italiano), of 6,981 shares of beneficial interest at an
aggregate purchase price of $100,003. PIM has agreed to reimburse the amount by
which the aggregate of all the Trust's organizational expenses and offering
costs for common shares (other than the sales load) exceeds $0.03 per share of
common share offering. The investment objective of the Trust is to seek a high
level of current income exempt from regular federal income tax and the Trust
may seek capital appreciation to the extent that it is consistent with its
primary investment objective.
The Trust may invest in municipal securities with a broad range of maturities
and credit ratings, including both investment grade and below investment grade
municipal securities.
The Trust invests in below grade (high yield) municipal securities. Debt
securities rated below investment grade are commonly referred to as "junk
bonds" and are considered speculative. These securities involve greater risk of
loss, are subject to greater price volatility, and are less liquid, especially
during periods of economic uncertainty or change, than higher rated debt
securities.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income and expenses and gains and
losses on investments during the reporting period. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies
19
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/04 (continued)
--------------------------------------------------------------------------------
consistently followed by the Trust, which are in conformity with those
generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Securities are valued
at prices supplied by independent pricing services, which consider such
factors as Treasury spreads, yields, maturities and ratings. Valuations
may be supplemented by dealers and other sources, as required. The values
of interest rate swaps are determined by obtaining dealer quotations.
Securities for which market quotations are not readily available are
valued at their fair values as determined by, or under the direction of,
the Board of Trustees. As of April 30, 2004, there were no securities fair
valued. Discount and premium on fixed income securities are accreted or
amortized daily, respectively, on an effective yield to maturity basis and
are included in interest income. Interest income is recorded on an accrual
basis. Temporary cash investments are valued at amortized cost.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Federal Income Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of the Trust's distributions may
be shown in the accompanying financial statements as either from or in
excess of net investment income or net realized gain on investment
transactions, or from paid in-capital, depending on the type of book/tax
differences that may exist.
At April 30, 2004, the Trust reclassified $60,601 to decrease accumulated
net investment income and to decrease 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.
20
--------------------------------------------------------------------------------
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
The tax character of distributions paid to common and preferred
shareowners during the period ended April 30, 2004 was as follows:
-------------------------------------------------------------------------------
2004
Distributions paid from:
Tax exempt income $16,447,073
Long-term capital gain -
-----------
Total $16,447,073
===========
--------------------------------------------------------------------------------
The following shows components of distributable earnings on a federal
income tax basis at April 30, 2004.
-------------------------------------------------------------------------------
2004
Undistributed tax-exempt income $ 431,774
Capital loss carryforward (1,170,962)
Unrealized appreciation 12,290,150
-----------
Total $11,550,962
===========
--------------------------------------------------------------------------------
The difference between book basis and tax basis unrealized appreciation is
primarily attributable to the difference between book and tax amortization
methods for premiums and discounts on fixed income securities and the tax
deferral of losses on wash sales.
C. Automatic Dividend Reinvestment Plan
All common shareowners automatically participate in the Automatic Dividend
Reinvestment Plan (the "Plan"), under which participants receive all
dividends and capital gain distributions (collectively, "dividends") in
full and fractional common shares of the Trust in lieu of cash.
Shareowners may elect not to participate in the Plan. Shareowners not
participating in the Plan receive all dividends and capital gain
distributions in cash. Participation in the Plan is completely voluntary
and may be terminated or resumed at any time by notifying Mellon Investor
Services LLC, the agent for shareowners in administering the Plan (the
"Plan Agent"), prior to any dividend record date; otherwise such
termination or resumption will be effective with respect to any
subsequently declared dividend or other distribution. Whenever the Trust
declares a dividend on common shares payable in cash, participants in the
Plan will receive the equivalent in common shares acquired by the Plan
Agent either
21
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/04 (continued)
--------------------------------------------------------------------------------
(i) through receipt of additional unissued but authorized common shares
from the Trust or (ii) by purchase of outstanding common shares on the New
York Stock Exchange or elsewhere. If, on the payment date for any dividend
the net asset value per common share is equal to or less than the market
price per share plus estimated brokerage trading fees ("market premium"),
the Plan Agent will invest the dividend amount in newly issued common
shares. The number of newly issued common shares to be credited to each
account will be determined by dividing the dollar amount of the dividend
by the net asset value per common share on the date the shares are issued,
provided that the maximum discount from the then current market price per
share on the date of issuance does not exceed 5%. If, on the payment date
for any dividend, the net asset value per common share is greater than the
market value ("market discount"), the Plan Agent will invest the dividend
amount in common shares acquired in open-market purchases. There are no
brokerage charges with respect to newly issued common shares. However,
each participant will pay a pro rata share of brokerage trading fees
incurred with respect to the Plan Agent's open-market purchases.
Participating in the Plan does not relieve shareowners from any federal,
state or local taxes which may be due on dividends paid in any taxable
year. Shareowners holding Plan shares in a brokerage account may not be
able to transfer the shares to another broker and continue to participate
in the Plan.
2. Management Agreement
PIM manages the Trust's portfolio. Management fees are calculated daily at the
annual rate of 0.60% 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.
In addition, under PIM's management and administration agreements, certain
other services and costs are paid by the Trust. PIM has retained Princeton
Administrators, L.P., an affiliate of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, to provide certain administrative services to the Trust on its
behalf. The Trust pays Princeton Administrators, L.P. a monthly fee at an
annual rate of 0.07% of the average weekly value of the Trust's managed assets,
subject to a minimum monthly fee of $10,000.
22
Pioneer Municipal High Income 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 organizational
and offering costs for common and preferred shares, interest expenses, 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 0.80% of the Trust's average daily managed assets.
The dividend on any preferred shares is not an expense. Under this agreement,
PIM may subsequently recover reimbursed expenses (within three years of being
incurred) from the Trust if the Trust's total expenses are less than 0.80% of
average daily managed assets. As of April 30, 2004, the Trust's expenses were
not reduced under such arrangements.
3. Transfer Agents
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano, through a sub-transfer agency
agreement with Mellon Investor Services LLC, provides substantially all
transfer agent and shareowner services related to the Trust's common shares at
negotiated rates. Deutsche Bank Trust Company Americas is the transfer agent,
registrar, dividend paying agent and redemption agent with respect to the
Trust's Auction Preferred Shares (APS). The Trust pays Deutsche Bank Trust
Company Americas an annual fee, as is agreed to from time to time by the Trust
and Deutsche Bank Trust Company Americas, for providing such services.
4. Interest Rate Swaps
The Trust may enter into interest rate swap transactions to attempt to protect
itself from increasing dividend or interest expense on its leverage resulting
from increasing short-term interest rates. The cost of leverage may rise with
an increase in interest rates, generally having the effect of lower yields and
potentially lower dividends. Interest rate swaps can be used to "lock in" the
cost of leverage and reduce the negative impact that rising short-term interest
rates would have on the Trust's leveraging costs.
An interest rate swap is an agreement between two parties, which involves
exchanging a floating rate and fixed rate interest payments for a specified
period of time. Interest rate swaps involve the accrual
23
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/04 (continued)
--------------------------------------------------------------------------------
and exchange of net interest payments between the parties. For financial
reporting purposes, the Trust records the net receivable or payable for the net
interest expected to be received or paid as net realized gains or losses from
Interest Rate Swaps in the Statement of Operations. During the term of the
swap, changes in the value of the swap are recognized as unrealized gains and
losses by "marking-to market" to reflect the market value of the swap. When the
swap is terminated, the Trust will record a realized gain or loss equal to the
difference, if any, between the proceeds from (or cost of) closing the contract
and the cost basis of the contract. The Trust is exposed to credit risk in the
event of non-performance by the other party to the interest rate swap. However,
the Trust does not anticipate non-performance by any counterparty.
Under the terms of the agreement entered into by the Trust, the Trust receives
a floating rate of interest and pays a fixed rate of interest for the term.
Details of the swap agreement outstanding as of April 30, 2004 were as follows:
--------------------------------------------------------------------------------
Termination Notional Fixed Unrealized
Counterparty Date Amount (000) Rate Floating Rate Appreciation
-------------- --------------- -------------- -------- --------------- -------------
UBS AG April 5, 2009 $50,000 2.665% 1 month BMA $1,136,800
--------------------------------------------------------------------------------
5. Trust Shares
There are an unlimited number of common shares of beneficial interest
authorized. Of the 22,120,893 common shares of beneficial interest outstanding
at April 30, 2004, PIM owned 6,981 shares.
Transactions in common shares of beneficial interest for the period July 21,
2003 (commencement of investment operations) to April 30, 2004 were as follows:
--------------------------------------------------------------------------------
Shares issued in connection with initial public offering 20,500,000
Shares issued from underwriters' over-allotment option
exercised 1,500,000
Reinvestment of distributions 113,912
----------
Net increase in shares outstanding 22,113,912
Shares outstanding at beginning of period 6,981
----------
Shares outstanding at end of period 22,120,893
==========
--------------------------------------------------------------------------------
24
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Offering costs of $660,000 incurred in connection with the Trust's offering of
common shares have been charged to paid-in capital.
The Trust may classify or reclassify any unissued common shares of beneficial
interest into one or more series of preferred shares of beneficial interest. On
October 2, 2003, the Trust reclassified and issued 4,040 shares of common
shares into two series of APS as follows: Series A-2,000 and Series B-2,040.
Offering costs of $214,943 and underwriting discounts of $1,010,000 have been
charged to paid-in capital.
Dividends on Series A and Series B APS are cumulative at a rate which is reset
every seven days based on the results of an auction. Dividend rates ranged from
0.45% to 1.25% during the period ended April 30, 2004.
The Trust may not declare dividends or make other distributions on its common
shares or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
preferred shares would be less than 200%.
The APS are redeemable at the option of the Trust, in whole or in part, on any
dividend payment date at $25,000 per share plus any accumulated or unpaid
dividends, whether or not declared. The APS are also subject to mandatory
redemption at $25,000 per share plus any accumulated or unpaid dividends,
whether or not declared, if certain requirements relating to the composition of
the assets and liabilities of the Trust as set forth in the Agreement and
Declaration of Trust are not satisfied.
The holders of APS have voting rights equal to the holders of the Trust's
common shares (one vote per share) and will vote together with holders of the
common shares as a single class. However, holders of APS are also entitled to
elect two of the Trust's Trustees. In addition, the Investment Company Act of
1940, as amended, requires that along with approval by shareowners that might
otherwise be required, the approval of the holders of a majority of any
outstanding preferred shares, voting separately as a class would be required to
(a) adopt any plan of reorganization that would adversely affect the preferred
shares and (b) take any action requiring a vote of security holders, including,
among other things, changes in the Trust's subclassification as a closed-end
management investment company or changes in its fundamental investment
restrictions.
25
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/04 (continued)
--------------------------------------------------------------------------------
6. Subsequent Events
Subsequent to April 30, 2004 the Board of Trustees of the Trust declared a
dividend from undistributed net investment income of $0.09 per common share
payable May 28, 2004, to shareowners of record on May 17, 2004.
For the period May 1, 2004 to May 31, 2004, dividends declared on preferred
stock totaled $82,766 in aggregate for the two outstanding preferred share
series.
ADDITIONAL INFORMATION (unaudited)
During the period, there have been no material changes in the Trust's
investment objective or fundamental policies that have not been approved by the
shareowners. There have been no changes in the Trust's charter or By-Laws that
would delay or prevent a change in control of the Trust which have not been
approved by the shareowners. There have been no changes in the principal risk
factors associated with investment in the Trust. There have been no changes in
the persons who are primarily responsible for the day-to-day management of the
Trust's portfolio.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Trust may purchase, from time to time, its common
shares in the open market.
26
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
To the Board of Trustees and Shareowners
of Pioneer Municipal High Income Trust:
We have audited the statement of assets and liabilities, including the schedule
of investments, of Pioneer Municipal High Income Trust (the "Trust") as of
April 30, 2004, and the related statements of operations and changes in net
assets, and the financial highlights for the period from July 21, 2003
(commencement of operations) to April 30, 2004. 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. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements and financial
highlights. Our procedures included confirmation of securities owned as of
April 30, 2004, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
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 Municipal High Income Trust at April 30, 2004, and the results of its
operations, the changes in its net assets and the financial highlights for the
period from July 21, 2003 (commencement of operations) to April 30, 2004, in
conformity with U.S. generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
June 4, 2004
27
--------------------------------------------------------------------------------
THE PIONEER FAMILY OF MUTUAL FUNDS
--------------------------------------------------------------------------------
Please consider a fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about a fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, contact your
advisor, call 1-800-225-6292 or visit our web site at www.pioneerfunds.com.
U.S. Equity International/Global Equity
Pioneer Fund Pioneer Emerging Markets Fund
Pioneer Balanced Fund Pioneer Europe Select Fund
Pioneer Equity Income Fund Pioneer Europe Fund
Pioneer Growth Shares Pioneer International Equity Fund
Pioneer Mid Cap Growth Fund Pioneer International Value Fund
Pioneer Mid Cap Value Fund
Pioneer Oak Ridge Large Cap
Growth Fund Fixed Income
Pioneer Oak Ridge Small Cap Pioneer America Income Trust
Growth Fund Pioneer Bond Fund
Pioneer Papp America-Pacific Pioneer Global High Yield Fund
Rim Fund Pioneer High Yield Fund
Pioneer Papp Small and Mid Cap Pioneer Strategic Income Fund
Growth Fund Pioneer Tax Free Income Fund
Pioneer Papp Stock Fund
Pioneer Papp Strategic
Growth Fund Money Market
Pioneer Real Estate Shares Pioneer Cash Reserves Fund**
Pioneer Research Fund*
Pioneer Small Cap Value Fund
Pioneer Small Company Fund
Pioneer Value Fund
* Name change effective December 11, 2003. Formerly known as Pioneer
Tax-Managed Fund.
** An investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Fund.
28
--------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
--------------------------------------------------------------------------------
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Shareowner Services and Sub-Transfer Agent
Mellon Investor Services LLC
Preferred Share Auction/Transfer Agent and Registrar
Deutsche Bank Trust Company Americas
Sub-Administrator
Princeton Administrators, L.P.
Trustees and Officers
The Trust's Board of Trustees provides broad supervision over the Trust's
affairs. The officers of the Trust are responsible for the Fund's operations.
The Trust's Trustees and officers are listed below, together with their
principal occupations during the past five years. Trustees who are interested
persons of the Trust within the meaning of the Investment Company Act of 1940
are referred to as Interested Trustees. Trustees who are not interested persons
of the Trust are referred to as Independent Trustees. Each of the Trustees
serves as a trustee of each of the 60 U.S. registered investment portfolios for
which Pioneer Investment Management, Inc. ("Pioneer") serves as investment
adviser (the "Pioneer Funds"). The address for all Interested Trustees and all
officers of the Trust is 60 State Street, Boston, Massachusetts 02109.
The Trust's statement of additional information provides more detailed
information regarding the Trust's Trustees and is available upon request,
without charge, by calling 1-800-225-6292.
Proxy Voting Policies and Procedures of the Trust are available without charge,
upon request, by calling our toll free number (1-800-225-6292). This
information is also available at pioneerfunds.com.
29
--------------------------------------------------------------------------------
INTERESTED TRUSTEES
--------------------------------------------------------------------------------
Name and Age Positions Held With the Trust Term of Office and Length of Service
John F. Cogan, Jr. (77)* Chairman of the Board, Since July, 2003.
Trustee and President Term expires in 2004
* Mr. Cogan is an Interested Trustee because he is an officer or director of
Pioneer and certain of its affiliates.
====================================================================================================
Osbert M. Hood (51)** Trustee and Since July, 2003.
Executive Vice President Term expires in 2005
** Mr. Hood is an Interested Trustee because he is an officer or director of
Pioneer and certain of its affiliates.
--------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
--------------------------------------------------------------------------------
Name, Age and Address Positions Held With the Trust Term of Office and Length of Service
Mary K. Bush (56) Trustee Since July, 2003.
3509 Woodbine Street, Term expires in 2006
Chevy Chase, MD 20815
====================================================================================================
Richard H. Egdahl, M.D. (77) Trustee Since July, 2003.
Boston University Healthcare Term expires in 2004
Entrepreneurship Program,
53 Bay State Road,
Boston, MA 02215
====================================================================================================
30
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal Occupation During Past Five Years Other Directorships Held by this Trustee
Deputy Chairman and a Director of Pioneer Global Asset Director of Harbor Global Company,
Management S.p.A. ("PGAM"); Non-Executive Chairman Ltd.
and a Director of Pioneer Investment Management USA
Inc. ("PIM-USA"); Chairman and a Director of Pioneer;
Director of Pioneer Alternative Investment Management
Limited (Dublin); President and a Director of Pioneer
Alternative Investment Management (Bermuda) Limited
and affiliated funds; President and Director of Pioneer
Funds Distributor, Inc. ("PFD"); President of all of the
Pioneer Funds; and Of Counsel (since 2000, partner
prior to 2000), Hale and Dorr LLP (counsel to PIM-USA
and the Pioneer Funds)
====================================================================================================
President and Chief Executive Officer, PIM-USA since None
May, 2003 (Director since January, 2001); President
and Director of Pioneer since May, 2003; Chairman
and Director of Pioneer Investment Management
Shareholder Services, Inc. ("PIMSS") since May, 2003;
Executive Vice President of all of the Pioneer Funds
since June, 2003; Executive Vice President and Chief
Operating Officer of PIM-USA, November 2000 to May
2003; Executive Vice President, Chief Financial Officer
and Treasurer, John Hancock Advisers, L.L.C., Boston,
MA, November 1999 to November 2000; Senior Vice
President and Chief Financial Officer, John Hancock
Advisers, L.L.C., April 1997 to November 1999
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal Occupation During Past Five Years Other Directorships Held by this Trustee
President, Bush International (international financial Director of Brady Corporation
advisory firm) (industrial identification and
specialty coated material products
manufacturer), Millennium Chemicals,
Inc. (commodity chemicals), Mortgage
Guaranty Insurance Corporation, and
R.J. Reynolds Tobacco Holdings, Inc.
(tobacco)
====================================================================================================
Alexander Graham Bell Professor of Health Care None
Entrepreneurship, Boston University; Professor
of Management, Boston University School of
Management; Professor of Public Health, Boston
University School of Public Health; Professor of Surgery,
Boston University School of Medicine; and University
Professor, Boston University
====================================================================================================
31
--------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
--------------------------------------------------------------------------------
Name, Age and Address Positions Held With the Trust Term of Office and Length of Service
Margaret B.W. Graham (57) Trustee Since July, 2003.
1001 Sherbrooke Street West, Term expires in 2005
Montreal, Quebec, Canada
H3A 1G5
====================================================================================================
Marguerite A. Piret (56) Trustee Since July, 2003.
One Boston Place, 28th Floor, Term expires in 2006
Boston, MA 02108
====================================================================================================
Stephen K. West (75) Trustee Since July, 2003.
125 Broad Street, Term expires in 2004
New York, NY 10004
====================================================================================================
John Winthrop (67) Trustee Since July, 2003.
One North Adgers Wharf, Term expires in 2005
Charleston, SC 29401
--------------------------------------------------------------------------------
TRUST OFFICERS
--------------------------------------------------------------------------------
Name and Age Positions Held With the Trust Term of Office and Length of Service
Dorothy E. Bourassa (56) Secretary Since July, 2003.
Serves at the discretion of board.
====================================================================================================
Christopher J. Kelley (39 ) Assistant Secretary Since July, 2003.
Serves at the discretion of board.
====================================================================================================
David C. Phelan (46) Assistant Secretary Since July, 2003.
Serves at the discretion of board.
====================================================================================================
Vincent Nave (59) Treasurer Since July, 2003.
Serves at the discretion of board.
====================================================================================================
Luis I. Presutti (39) Assistant Treasurer Since July, 2003.
Serves at the discretion of board.
====================================================================================================
32
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other Directorships Held by this
Principal Occupation During Past Five Years Trustee
Founding Director, The Winthrop Group, Inc. None
(consulting firm); Professor of Management,
Faculty of Management, McGill University
====================================================================================================
President and Chief Executive Officer, Newbury, Piret & None
Company, Inc. (investment banking firm)
====================================================================================================
Senior Counsel, Sullivan & Cromwell (law firm) Director, The Swiss Helvetia Fund,
Inc. (closed-end investment
company) and AMVESCAP PLC
(investment managers)
====================================================================================================
President, John Winthrop & Co., Inc. None
(private investment firm)
====================================================================================================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other Directorships Held by this
Principal Occupation During Past Five Years Officer
Secretary of PIM-USA; Senior Vice President-Legal of None
Pioneer; and Secretary/Clerk of most of PIM-USA's
subsidiaries since October 2000; Secretary of all of the
Pioneer Funds since September 2003 (Assistant
Secretary from November 2000 to September 2003);
and Senior Counsel, Assistant Vice President and Director of
Compliance of PIM-USA from April 1998 through
October 2000
====================================================================================================
Assistant Vice President and Senior Counsel of Pioneer since None
July 2002; Vice President and Senior Counsel of BISYS Fund
Services, Inc. (April 2001 to June 2002); Senior Vice
President and Deputy General Counsel of Funds Distributor,
Inc. (July 2000 to April 2001; Vice President and Associate
General Counsel from July 1996 to July 2000); Assistant
Secretary of all of the Pioneer Funds since September 2003
====================================================================================================
Partner, Hale and Dorr LLP; Assistant Secretary of all of None
Pioneer Funds since September 2003
====================================================================================================
Vice President-Fund Accounting, Administration and Custody None
Services of Pioneer (Manager from September 1996 to
February 1999); and Treasurer of all of the Pioneer Funds
(Assistant Treasurer from June 1999 to November 2000)
====================================================================================================
Assistant Vice President-Fund Accounting, Administration None
and Custody Services of Pioneer (Fund Accounting Manager
from 1994 to 1999); and Assistant Treasurer of all of the
Pioneer Funds since November 2000
====================================================================================================
33
--------------------------------------------------------------------------------
TRUST OFFICERS
--------------------------------------------------------------------------------
Name and Age Positions Held With the Trust Term of Office and Length of Service
Gary Sullivan (46) Assistant Treasurer Since July, 2003.
Serves at the discretion of board.
====================================================================================================
Katherine Kim Sullivan (30) Assistant Treasurer Since July, 2003.
Serves at the discretion of board.
====================================================================================================
34
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other Directorships Held by this
Principal Occupation During Past Five Years Officer
Fund Accounting Manager-Fund Accounting, Administration None
and Custody Services of Pioneer; and Assistant Treasurer
of all of the Pioneer Funds since May 2002
==================================================================================================
Fund Administration Manager-Fund Accounting, None
Administration and Custody Services since June 2003;
Assistant Vice President-Mutual Fund Operations of
State Street Corporation from June 2002 to June 2003
(formerly Deutsche Bank Asset Management); Pioneer
Fund Accounting, Administration and Custody Services
(Fund Accounting Manager from August 1999 to May 2002,
Fund Accounting Supervisor from 1997 to July 1999);
Assistant Treasurer of all of the Pioneer Funds since
September 2003
==================================================================================================
35
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--------------------------------------------------------------------------------
This page for your notes.
36
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--------------------------------------------------------------------------------
This page for your notes.
37
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HOW TO CONTACT PIONEER
--------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact Mellon
for assistance or information.
You can call Mellon Investor Services LLC for:
Account Information 1-800-288-9541
Telecommunications Device for the Deaf (TDD) 1-800-231-5469
Or write to Mellon Investor Services LLC:
For Write to
General inquiries, lost dividend checks P.O. Box 3315
South Hackensack, NJ
07606-1915
Change of address, account consolidation P.O. Box 3316
South Hackensack, NJ
07606-1916
Lost stock certificates P.O. Box 3317
South Hackensack, NJ
07606-1917
Stock transfer P.O. Box 3312
South Hackensack, NJ
07606-1912
Dividend reinvestment plan (DRIP) P.O. Box 3338
South Hackensack, NJ
07606-1938
Please consider the Trust's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the Trust and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
[LOGO] Pioneer
Investments(R)
Pioneer Investment Management, Inc.
60 State Street
Boston, Massachusetts 02109
www.pioneerfunds.com
15418-00-0604
(C)2004 Pioneer Funds Distributor, Inc.
Underwriter of Pioneer mutual funds, Member SIPC
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit Fees
Fees for audit services provided to the Trust, including fees
associated with the initial and annual filings of its Form N-1A
and issuance of comfort letters, totaled approximately $59,000
in 2004.
(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 $22,500 in 2004, which were related to the
review of the Trust's semi-annual financial statements and 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 $3,600 for 2004.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
Other Fees
There were no other services provided to the Trust during the
fiscal year ended April 30, 2004.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognizes the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognizes that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
----------------------- --------------------------- -----------------------------------------------
------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- -------------------------
------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
----------------------- --------------------------- -----------------------------------------------
--------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
----------------------- ------------------------- -----------------------------------------------
------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
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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.
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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.
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(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
N/A
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The aggregate non-audit fees for the Trust and affiliates, as
previously defined, totaled approximately $26,100 in 2004.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Trust's audit committee of the Board of Trustees has
considered whether the provision of non-audit services that
were rendered to the Affiliates (as defined) that were not pre-
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Not applicable, Fund does not invest in voting securities
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our evaluation of
these controls and procedures as of a date within 90 days prior to the filing
date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the registrant's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
Filed herewith.
(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 Municipal High Income Trust
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date June 30, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date June 30, 2004
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date June 30, 2004
* Print the name and title of each signing officer under his or her signature.