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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
Date of reporting period: May 1, 2004 through October 31, 2005
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
Semiannual
Report
10/31/05
[LOGO] PIONEER
Investments(R)
Table of Contents
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Letter to Shareowners 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 5
Schedule of Investments 8
Financial Statements 17
Notes to Financial Statements 21
Results of Shareowner Meeting 29
Trustees, Officers and Service Providers 30
Pioneer Municipal High Income Trust
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LETTER TO SHAREOWNERS 10/31/05
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Dear Shareowner,
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Questions about the economic outlook moved from theoretical to real when
Hurricanes Katrina and Rita wreaked devastation on people and property across
much of the Gulf Coast. Before the storms struck, the economy had been motoring
forward, with strong profit growth and good jobs numbers being reported across
a range of sectors. Despite 12 straight hikes by the Federal Reserve Board,
interest rates were at tolerable levels, and businesses and households were
managing to live with rising energy costs. The Fed raised rates again on
November 1, 2005, suggesting continued concern that inflationary fires are
merely banked, not extinguished. The stimulative effect of massive recovery
spending may have been a factor in the Fed's decision. Damage to many Gulf area
facilities may also keep oil and gasoline supplies tight and restrain GDP
growth for a time. By late in the third quarter, energy prices had backed off
peak levels, but remained high enough to prompt worries over their impact on
consumers and the economy in general.
Consumers are key to the economy's direction. The national savings rate stands
near zero, leaving households with little financial slack to continue absorbing
punishing prices at the pump and in their heating and utility bills; confidence
understandably sagged after the storms. However, U.S. consumers are notably
resilient. If conditions in the job market rebound from storm-induced
disruptions, their behavior seems unlikely to change very much.
Barring surprises, the hurricanes have not undercut our favorable expectations
for the rest of the year. We believe carefully selected, high-quality stocks
and bonds still show potential for solid results even in a slower-growth
environment. With that in mind, our global investment experts are well
positioned to seek attractive opportunities around the world.
Another Fund Group Joins the Pioneer Family
Pioneer Investment Management recently completed the acquisition of AmSouth
Bancorporation's mutual fund management business. This transaction, our fifth
in two years, adds seven new funds to our lineup and expands assets under
management by over $5 billion. Transactions such as these increase our ability
to offer competitively priced products to our shareowners through the services
of their financial advisors.
Respectfully,
/s/ Osbert M. Hood
Osbert M. Hood, President
Pioneer Investment Management, Inc.
Any information in this shareowner report regarding market or economic trends
or the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of 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.
Please consider the fund's investment objectives, risks, charges and expenses.
Contact your advisor or Pioneer investments for a prospectus containing this
information. Please read the information carefully.
1
Pioneer Municipal High Income Trust
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PORTFOLIO SUMMARY 10/31/05
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Portfolio Diversification
--------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Utilities Revenue 0.2%
Housing Revenue 1.1%
Gaming Revenue 1.3%
Transportation Revenue 1.5%
General Obligation 2.1%
Facilities Revenue 3.9%
Development Revenue 5.5%
Power Revenue 6.3%
Education Revenue 6.9%
Pollution Control Revenue 7.1%
Tobacco Revenue 11.1%
Insured 11.9%
Airport Revenue 16.3%
Health Revenue 24.8%
Portfolio Maturity
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(Effective life as a percentage of long-term holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
10+ years 14.9%
8-10 years 8.9%
6-8 years 18.2%
3-6 years 44.8%
1-3 years 5.4%
0-1 years 7.8%
Quality Distribution
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(As a percentage of holdings; based on S&P ratings.)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
AAA 17.6%
AA 4.9%
A 2.7%
BBB 26.0%
BB & Lower 48.8%
The portfolio is actively managed and current holdings may be different.
2
Pioneer Municipal High Income Trust
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PERFORMANCE UPDATE 10/31/05
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Share Prices and Distributions
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Market Value
per Common Share 10/31/05 4/30/05
$14.38 $14.33
Net Asset Value
per Common Share 10/31/05 4/30/05
$14.82 $15.62
Distributions
per Common Share Income Short-Term Long-Term
(5/1/05 - 10/31/05) Dividends Capital Gains Capital Gains
$0.48 $ - $ -
10 Largest Holdings
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(As a percentage of long-term holdings)
1. Greenville County School District, 5.5%, 12/1/28 3.86%
2. Allegheny County Hospital Development Authority Revenue,
9.25%, 11/15/30 3.53
3. Tobacco Settlement Financing Corp., 6.75%, 6/1/39 2.75
4. New Jersey Economic Development Authority Revenue,
6.25%, 9/15/29 2.60
5. Massachusetts State Development Finance Agency,
9.449%, 10/1/39 2.53
6. Metropolitan Pier & Exposition Authority Dedicated State Tax
Revenue, 0.0%, 6/15/22 2.44
7. Oklahoma Development Finance Authority Revenue,
5.625%, 8/15/29 2.09
8. Golden State Tobacco Securitization Corp., 7.875%, 6/1/42 2.06
9. Minneapolis/St. Paul Metropolitan Airports, 7.0%, 4/1/25 2.05
10. Johnson City Health & Educational Facilities Board Hospital
Revenue, 7.5%, 7/1/33 1.96
This list excludes temporary cash and derivative instruments. The portfolio is
actively managed, and current holdings may be different.
3
Pioneer Municipal High Income Trust
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PERFORMANCE UPDATE 10/31/05
-----------------------------------------------------------------------------
Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in common shares of Pioneer Municipal High Income Trust,
compared to that of the Lehman Brothers Municipal Bond Index and Lehman
Brothers Non-Investment Grade Municipal Bond Index.
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of a $10,000 Investment
7/03 10000 10000 10000
10/03 10097 10319 10535
10486 10941 11574
10/05 11261 11219 12663
Cumulative Annual Total Returns
(As of October 31, 2005)
Net Asset Market
Period Value (NAV) Price
Life-of-Trust
(7/21/03) 21.49% 12.61%
1 Year 6.66 7.21
----------------------------------
Call 1-800-225-6292 or visit www.pioneerfunds.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
Performance data shown represents past performance. Past performance is no
guarantee of future results. Investment return and market price will
fluctuate, and your shares may trade below net asset value ("NAV"), due to
such factors as interest rate changes, and the perceived credit quality of
borrowers.
Total investment return does not reflect broker sales charges or
commissions. All performance is for common shares of the Trust.
Closed-end funds, unlike open-end funds, are not continuously offered.
There is a one-time public offering and once issued, shares of closed-end
funds are sold in the open market through a stock exchange and frequently
trade at prices lower than their NAV. NAV is total assets less total
liabilities, which includes preferred shares, divided by the number of
common shares outstanding.
When NAV is lower than market price, dividends are assumed to be reinvested
at the greater of NAV or 95% of the market price. When NAV is higher,
dividends are assumed to be reinvested at market price.
The performance table and graph do not reflect the deduction of fees and
taxes that a shareowner would pay on Trust distributions or the redemption
of Trust shares.
Index comparison begins July 31, 2003. The Lehman Brothers Municipal Bond
Index is a broad measure of the municipal bond market. 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 an Index.
4
Pioneer Municipal High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 10/31/05
--------------------------------------------------------------------------------
In an environment of rising interest rates, surging energy prices and
devastation in the Gulf of Mexico caused by hurricane Katrina, shareowners in
Pioneer Municipal High Income Trust continued to earn a relatively high level
of income over the six-month period ended October 31, 2005. In the following
interview, David Eurkus, a member of the management team for Pioneer Municipal
High Income Trust, reviews the factors that affected the Trust's performance
over the six months.
Q: What was the investment environment like during the six-month period ended
October 31, 2005?
A: Despite rising interest rates and record high oil prices, the economy
continued to grow at a moderate rate. The Federal Reserve hiked interest
rates five times during the last six months, each time by a quarter
point. On October 31, 2005, the federal funds rate, the rate banks charge
for overnight loans, stood at 4.00%, up from 2.75% on April 30, 2005. In
the wake of the Fed's actions, yields on investment-grade municipal bonds
(those rated BBB or better) rose across the maturity spectrum, with
yields on shorter-term securities moving higher than those on longer-term
securities. Yields on lower-quality bonds (those rated BB or lower)
declined slightly.
Q: How did the Trust perform in this environment?
A: For the period, Pioneer Municipal High Income Trust produced a total return
of -2.03% at net asset value and 3.62% at market price. As of October 31,
2005, the Trust was selling at a discount of market price to net asset
value of 2.97%. The Lehman Brothers Municipal Bond Index, which tracks
the performance only of investment-grade bonds, returned 0.59%. The
Lehman Brothers Non-Investment Grade Municipal Bond Index returned 2.12%
for the same period. At the end of the period, the Trust held 105 issues
in various states and the District of Columbia. On October 31, 2005, the
Trust's 30-day SEC yield was 6.65%. On October 31, 2005, the average
credit quality of the Trust was BBB.
Call 1-800-225-6292 or visit www.pioneerfunds.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
5
Pioneer Municipal High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 10/31/05 (continued)
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Q: Why did the Trust underperform during the period?
A: Below investment-grade bonds, those rated BB and lower, accounted for about
49% of net assets. While most of the lower-quality bonds in the Trust
performed well, some airline bonds, such as Delta and Northwest,
detracted from results. Both of these companies voluntarily declared
bankruptcy in the face of rising costs, especially those associated with
pension benefits and the run-up in the price of jet fuel. While our
position in airline bonds disappointed over the six-month reporting
period, such bonds had been strong contributors to performance for more
than a year.
Q: What contributed to performance?
A: The Trust was fully invested in a variety of economic sectors, and its
holdings in the health care, education, public power and energy areas
were positive for performance.
Tobacco bonds (11.1% of the portfolio holdings) gave performance the
biggest boost. These bonds are backed by tobacco companies' payments to
states as part of the Master Settlement Agreement in which states agreed
to drop their lawsuits against tobacco companies in return for a series of
payments. Health care bonds, which accounted 24.8% of the portfolio
holdings, turned in the next best performance.
Despite rising short-term interest rates, our leveraging strategy was also
helpful and enabled the Trust to continue to provide a relatively high
level of income. We leveraged a portion of the Trust more than a year ago
when interest rates were at historically low levels. Low interest rates
provided us with an opportunity to borrow funds at low rates and invest
those funds in high-yield bonds. Over the six-month reporting period, the
Trust continued to benefit from the income that the high-yield bonds
generated.
Q: What is your outlook?
A: We believe economic growth will continue at a moderate pace. While some
sectors, such as energy, appear to be inflationary, we do not expect core
inflation to rise substantially over the near term. Nevertheless, we
expect the Federal Reserve to continue its policy of raising rates at a
measured pace. We plan to keep the Trust well diversified among economic
sectors and to have a mix of investment-grade and below investment-grade
bonds in the portfolio.
6
Pioneer Municipal High Income Trust
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Investments in high yield or lower-rated securities are subject to
greater-than-average risk. When interest rates rise, the prices of fixed income
securities in the Trust will generally fall. Conversely, when interest rates
fall the prices of fixed income securities in the Trust will generally rise.
Investments in the Trust are subject to possible loss due to the financial
failure of underlying securities and their inability to meet their debt
obligations. These risks may increase share price volatility.
Any information in this shareowner report regarding market or economic trends
or the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
7
Pioneer Municipal High Income Trust
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SCHEDULE OF INVESTMENTS 10/31/05 (unaudited)
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S&P/Moody's
Principal Ratings
Amount (unaudited) Value
TAX EXEMPT OBLIGATIONS - 126.6% of Net Assets
Alabama - 2.1%
$ 5,000,000 AAA/Aaa Birmingham Alabama General Obligation,
5.0%, 12/1/32 $ 5,113,500
1,500,000 BBB/NR Camden Alabama Industrial Development Board,
6.125%, 12/1/24 1,652,055
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$ 6,765,555
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Arizona - 6.5%
5,000,000 B+/Ba1 Apache County Industrial Development Authority,
5.85%, 3/1/28 $ 5,000,850
5,000,000 B+/Ba1 Apache County Industrial Development Authority,
5.875%, 3/1/33 5,000,950
11,630,000 D/NR Gila County Industrial Development Authority,
5.55%, 1/1/27* 6,559,320
3,000,000 NR/NR Maricopa County Industrial Development Authority,
7.875%, 4/1/27 3,117,780
1,000,000 NR/Baa3 Pima County Industrial Development Authority,
7.25%, 7/1/31 1,078,550
500,000 NR/Baa2 Yavapai County Industrial Development Authority,
6.0%, 8/1/33 531,425
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$ 21,288,875
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California - 11.4%
7,270,000 A/A2 California State General Obligation, 5.25%, 2/1/28 $ 7,593,878
5,150,000 BBB/Baa3 Golden State Tobacco Securitization Corp.,
7.8%, 6/1/42 6,260,958
7,000,000 BBB/Baa3 Golden State Tobacco Securitization Corp.,
7.875%, 6/1/42 8,543,570
4,000,000 AAA/Aaa Palm Desert Financing Authority Tax Allocation
Revenue, 5.0%, 4/1/30 4,097,800
3,000,000 AAA/Aaa San Diego Unified School District, 5.0%, 7/1/25 3,185,430
2,500,000 AAA/Aaa University of California Revenue, 5.0%, 5/15/25 2,591,900
5,000,000 B+/NR Valley Health System Hospital Revenue,
6.5%, 5/15/25 5,003,250
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$ 37,276,786
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8 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
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S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Connecticut - 4.3%
$ 2,000,000 NR/NR Bridgeport Senior Living Facility Revenue,
7.25%, 4/1/35 $ 1,958,600
2,205,000 BB+/Ba1 Connecticut State Health & Educational Facilities
Authority Revenue, 5.375%, 7/1/17 2,177,592
4,800,000 BB+/Ba1 Connecticut State Health & Educational Facilities
Authority Revenue, 5.5%, 7/1/27 4,646,208
5,000,000 BB+/NR Mohegan Tribe Indians Gaming Authority,
6.25%, 1/1/31 (144A) 5,346,900
-------------
$ 14,129,300
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District of Columbia - 3.8%
5,000,000 BBB/Baa3 District of Columbia Tobacco Settlement Financing
Corp., 6.5%, 5/15/33 $ 5,783,550
6,000,000 BBB/Baa3 District of Columbia Tobacco Settlement Financing
Corp., 6.75%, 5/15/40 6,593,820
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$ 12,377,370
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Florida - 3.1%
2,000,000 NR/NR Beacon Lakes Community Development,
6.9%, 5/1/35 $ 2,098,160
4,140,000 D/C Hillsborough County Aviation Authority Revenue,
6.8%, 1/1/24* 910,800
1,650,000 BBB-/Baa2 Polk County Industrial Development Revenue,
5.85%, 12/1/30 1,698,362
5,000,000 NR/Baa2 Tallahassee Health Facilities Revenue,
6.375%, 12/1/30 5,335,000
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$ 10,042,322
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Georgia - 0.6%
1,325,000 NR/NR Brunswick & Glynn County Development Authority
Revenue, 7.25%, 1/1/35 $ 1,385,022
450,000 D/C Fulton County Development Authority Revenue,
5.3%, 5/1/13* 72,000
3,400,000 D/C Fulton County Development Authority Revenue,
6.85%, 11/1/07* 544,000
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$ 2,001,022
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Idaho - 1.6%
5,000,000 BBB-/Baa3 Power County Industrial Development Corp.,
6.45%, 8/1/32 $ 5,236,950
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The accompanying notes are an integral part of these financial statements. 9
Pioneer Municipal High Income Trust
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SCHEDULE OF INVESTMENTS 10/31/05 (unaudited) (continued)
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S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Illinois - 3.8%
$ 1,000,000 NR/NR Centerpoint Intermodal Center, 8.0%,
6/15/23 (144A) $ 962,780
1,500,000 NR/NR Illinois Health Facilities Authority Revenue,
6.9%, 11/15/33 1,606,050
16,880,000(a) AAA/Aaa Metropolitan Pier & Exposition Authority Dedicated
State Tax Revenue, 0.0%, 6/15/22 10,110,614
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$ 12,679,444
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Indiana - 1.7%
1,000,000 BBB+/Baa1 Indiana State Development Finance Authority
Revenue, 5.6%, 12/1/32 $ 1,032,290
4,300,000 BBB-/Ba3 Indiana State Development Finance Authority
Revenue, 5.75%, 10/1/11 4,453,209
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$ 5,485,499
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Massachusetts - 10.2%
2,335,000 AAA/Aaa Massachusetts Health & Educational Facilities
Authority Revenue, 5.0%, 7/15/35 $ 2,396,574
7,050,000 AAA/Aaa Massachusetts Health & Educational Facilities
Authority Revenue, 5.125%, 7/15/37 7,306,268
1,000,000 AA/Aa3 Massachusetts Health & Educational Facilities
Authority Revenue, 5.25%, 10/15/33 1,041,290
3,500,000 BBB/Baa3 Massachusetts Health & Educational Facilities
Authority Revenue, 6.25%, 7/1/22 3,741,605
5,000,000 BBB-/NR Massachusetts Health & Educational Facilities
Authority Revenue, 6.75%, 10/1/33 5,416,500
75,000 BB/NR Massachusetts State Development Finance
Agency, 5.25%, 10/1/18 70,503
9,810,000(b) NR/Aaa Massachusetts State Development Finance
Agency, RIB, 9.449%, 10/1/39 (144A) 10,486,596
3,055,000 AA-/Aa3 Massachusetts State Housing Finance Agency,
5.25%, 12/1/33 3,112,220
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$ 33,571,556
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10 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
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S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Michigan - 4.1%
$ 1,500,000 BBB-/NR John Tolfree Health System Corp., 6.0%, 9/15/23 $ 1,512,450
2,000,000 BB-/Ba3 Michigan State Hospital Finance Authority
Revenue, 5.5%, 8/15/23 1,914,540
4,010,000 BBB-/Ba1 Michigan State Hospital Finance Authority
Revenue, 6.0%, 2/1/24 4,011,724
2,000,000+ NR/NR Michigan State Hospital Finance Authority
Revenue, 6.4%, 1/1/15 2,050,960
7,690,000 NR/NR Wayne Charter County Michigan Special Airport
Facilities Revenue, 6.75%, 12/1/15* 4,094,925
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$ 13,584,599
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Minnesota - 3.1%
1,675,000 BB/NR Duluth Economic Development Authority Health
Care Facilities Revenue, 7.25%, 6/15/32 $ 1,791,446
13,260,000 NR/NR Minneapolis/St. Paul Metropolitan Airports,
7.0%, 4/1/25* 8,486,400
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$ 10,277,846
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Mississippi - 0.9%
3,000,000 BBB-/Ba1 Mississippi Business Finance Corp. Pollution
Control Revenue, 5.9%, 5/1/22 $ 3,055,500
-------------
Missouri - 1.4%
5,500,000 NR/B3 St. Louis Industrial Development Authority
Revenue, 7.25%, 12/15/35 $ 4,687,210
-------------
Nevada - 1.5%
1,000,000 BBB-/Baa2 Clark County Industrial Development Revenue,
5.45%, 3/1/38 $ 1,054,880
1,850,000 B-/NR Clark County Industrial Development Revenue,
5.5%, 10/1/30 1,814,498
2,000,000 NR/NR Nevada State Department of Business & Industry,
7.25%, 1/1/23 2,081,960
-------------
$ 4,951,338
-------------
New Hampshire - 1.0%
3,000,000 AAA/Aaa Manchester School Facilities Revenue,
5.125%, 6/1/28 $ 3,126,060
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The accompanying notes are an integral part of these financial statements. 11
Pioneer Municipal High Income Trust
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SCHEDULE OF INVESTMENTS 10/31/05 (unaudited) (continued)
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
New Jersey - 9.2%
$ 2,000,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.25%, 9/15/19 $ 1,698,500
13,350,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.25%, 9/15/29 10,793,075
1,000,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.4%, 9/15/23 842,850
6,150,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 7.0%, 11/15/30 5,297,856
10,000,000 BBB/Baa3 Tobacco Settlement Financing Corp.,
6.75%, 6/1/39 11,397,200
-------------
$ 30,029,481
-------------
New Mexico - 1.6%
3,700,000++ NR/NR New Mexico Hospital Equipment Loan Council,
6.4%, 6/1/16 $ 3,836,345
1,350,000 BBB-/NR Santa Fe Educational Facilities Revenue,
5.75%, 10/1/28 1,358,343
-------------
$ 5,194,688
-------------
New York - 6.2%
2,000,000 A/NR New York City Industrial Development Agency,
5.375%, 6/1/23 $ 2,063,440
6,225,000 CCC/Caa2 New York City Industrial Development Agency,
6.9%, 8/1/24 4,584,962
5,000,000 AAA/Aaa New York City Trust Cultural Resources Revenue,
5.125%, 7/1/31 5,172,150
2,000,000 NR/NR Suffolk County Industrial Development Agency,
7.25%, 1/1/30 1,995,180
6,000,000 AAA/Aaa Triborough Bridge & Tunnel Authority Revenue,
5.25%, 11/15/30 6,354,540
-------------
$ 20,170,272
-------------
North Carolina - 1.2%
4,600,000 NR/NR Charlotte North Carolina Special Facilities
Revenue, 7.75%, 2/1/28 $ 3,945,190
-------------
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
Oklahoma - 6.4%
$ 3,000,000+ AAA/Aaa Oklahoma Development Finance Authority
Revenue, 5.625%, 8/15/19 $ 3,254,970
8,000,000+ AAA/Aaa Oklahoma Development Finance Authority
Revenue, 5.625%, 8/15/29 8,679,920
4,100,000 B-/Caa2 Tulsa Municipal Airport Revenue, 5.65%, 12/1/35 3,862,733
1,225,000 B-/Caa2 Tulsa Municipal Airport Revenue, 6.25%, 6/1/20 1,047,449
4,350,000 B-/Caa2 Tulsa Municipal Airport Revenue, 7.35%, 12/1/11 4,265,219
-------------
$ 21,110,291
-------------
Oregon - 4.4%
1,000,000 NR/NR Klamath Falls Electric Revenue, 5.75%, 1/1/13 $ 893,640
7,000,000 NR/NR Klamath Falls Electric Revenue, 6.0%, 1/1/25 5,953,080
7,500,000 NR/NR Western Generation Agency Cogeneration Project
Revenue, 7.125%, 1/1/21 7,613,250
-------------
$ 14,459,970
-------------
Pennsylvania - 6.0%
1,550,000 NR/Baa1 Allegheny County Hospital Development Authority
Revenue, 5.125%, 5/1/25 $ 1,456,318
12,300,000 B/B1 Allegheny County Hospital Development Authority
Revenue, 9.25%, 11/15/30 14,629,989
1,000,000 BB-/NR Columbia County Hospital Authority Health Care
Revenue, 5.9%, 6/1/29 898,800
1,000,000 BBB/Ba2 Hazleton Health Services Authority Hospital
Revenue, 5.625%, 7/1/17 941,570
1,280,000 NR/B2 Langhorne Manor Borough Higher Education &
Health Authority Revenue, 7.35%, 7/1/22 1,280,013
500,000 BBB+/NR Pennsylvania Higher Educational Facilities Authority
Revenue, 5.4%, 7/15/36 517,305
-------------
$ 19,723,995
-------------
Rhode Island - 1.3%
4,000,000 NR/NR Central Falls Detention Facilities Revenue,
7.25%, 7/15/35 $ 4,147,200
-------------
South Carolina - 8.3%
4,250,000 BBB/Baa2 Georgetown County Environmental Improvement
Revenue, 5.95%, 3/15/14 $ 4,613,927
15,000,000 AA-/Aa3 Greenville County School District, 5.5%, 12/1/28 16,027,950
5,850,000 BBB+/Baa1 South Carolina Jobs Economic Development
Authority Revenue, 6.375%, 8/1/34 6,463,431
-------------
$ 27,105,308
-------------
The accompanying notes are an integral part of these financial statements. 13
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/05 (unaudited) (continued)
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Tennessee - 3.9%
$ 7,000,000 BBB+/Baa2 Johnson City Health & Educational Facilities Board
Hospital Revenue, 7.5%, 7/1/33 $ 8,154,020
4,480,000 NR/Baa3 Knox County Health Educational & Housing
Facilities Board Hospital Revenue,
6.375%, 4/15/22 4,711,392
-------------
$ 12,865,412
-------------
Texas - 7.5%
7,500,000 CCC/Caa2 Alliance Airport Authority Special Facilities
Revenue, 7.5%, 12/1/29 $ 5,649,075
1,345,000 NR/Ba1 Bexar County Housing Finance Corp.,
8.0%, 12/1/36 1,375,289
1,000,000 CCC/Caa2 Dallas-Fort Worth International Airport Revenue,
6.0%, 11/1/14 758,860
5,000,000 CCC/Caa2 Dallas-Fort Worth International Airport Revenue,
6.15%, 5/1/29 4,629,600
20,800,000 D/C Dallas-Fort Worth International Airport Revenue,
7.125%, 11/1/26* 3,432,000
4,000,000 NR/NR Decatur Hospital Authority Revenue, 7.0%, 9/1/25 4,299,120
1,000,000 BB/NR Georgetown Health Facilities Development Corp.,
6.25%, 8/15/29 1,035,150
3,750,000 B-/Caa2 Houston Airport System Special Facilities Revenue,
5.7%, 7/15/29 2,745,637
500,000 BBB-/Baa2 Sabine River Authority Pollution Control Revenue,
6.15%, 8/1/22 544,710
-------------
$ 24,469,441
-------------
Vermont - 0.5%
1,500,000 A-/A3 Vermont Educational & Health Buildings Financing
Agency Revenue, 6.0%, 10/1/28 $ 1,662,300
-------------
Virginia - 1.6%
1,000,000 BBB/Baa3 Peninsula Ports Authority, 6.0%, 4/1/33 $ 1,068,110
4,000,000 BB-/Ba3 Pocahontas Parkway Association of Virginia Toll
Road Revenue, 5.5%, 8/15/28 4,119,080
-------------
$ 5,187,190
-------------
14 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
Washington - 5.9%
$ 4,710,000 AAA/Aaa Spokane Public Facilities District Hotel/Motel
Tax & Sales, 5.75%, 12/1/27 $ 5,243,360
7,025,000 BBB/Baa3 Tobacco Settlement Authority Washington,
6.625%, 6/1/32 7,663,713
14,315,000 AAA/Aaa Washington State General Obligation,
0.0%, 6/1/22 6,404,960
-------------
$ 19,312,033
-------------
Wyoming - 1.5%
5,000,000 BBB-/Baa3 Sweetwater County Solid Waste Disposal Revenue,
6.9%, 9/1/24 $ 5,046,000
-------------
TOTAL TAX-EXEMPT OBLIGATIONS
(Cost $393,222,981) $ 414,966,003
-------------
Shares
TAX-EXEMPT MONEY MARKET MUTUAL
FUND - 0.0% of Net Assets
65,887 BlackRock Provident Institutional Municipal Fund $ 65,887
-------------
TOTAL TAX-EXEMPT MONEY MARKET
MUTUAL FUND
(Cost $65,887) $ 65,887
-------------
TOTAL INVESTMENTS IN SECURITIES - 126.6%
(Cost $393,288,868) (c) (d) $ 415,031,890
-------------
OTHER ASSETS AND LIABILITIES - 4.2% $ 13,759,754
-------------
PREFERRED SHARES AT
REDEMPTION VALUE - (30.8)% $(101,000,000)
-------------
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS - 100.0% $ 327,791,644
==============
The accompanying notes are an integral part of these financial statements. 15
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/05 (unaudited) (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
October 31, 2005 the value of these securities amounted to $16,796,276 or
5.1% of net assets applicable to common shareowners.
* Security is in default and is non-income producing.
+ Prerefunded bonds have been collateralized by U.S. Treasury securities
which are held in escrow to pay interest and principal on the tax exempt
issue and to retire the bonds in full at the earliest refunding date.
++ Prerefunded bonds have been collateralized by cash sufficient to pay
interest and principal on the tax exempt issue and to retire the bonds in
full at the earliest refunding date.
(a) Debt obligation initially issued at one coupon which converts to a higher
coupon at a specific date. The rate shown is the rate at period end.
(b) The interest rate is subject to change periodically and inversely based
upon revailing market rates. The interest rate shown was the rate at
October 31, 2005.
(c) The concentration of investments by type of obligation/market sector is
as follows:
Insured 11.9%
General Obligation 2.1
Revenue Bonds:
Health Revenue 24.8
Airport Revenue 16.3
Tobacco Revenue 11.1
Pollution Control Revenue 7.1
Education Revenue 6.9
Power Revenue 6.3
Development Revenue 5.5
Facilities Revenue 3.9
Transportation Revenue 1.5
Gaming Revenue 1.3
Housing Revenue 1.1
Utilities Revenue 0.2
-----
100.0%
======
(d) At October 31, 2005, the net unrealized gain on investments based on cost
for federal income tax purposes of $392,037,990 was as follows:
Aggregate gross unrealized gain for all investments in which there is an excess
of value over tax cost $38,788,146
Aggregate gross unrealized loss for all investments in which there is an excess
of tax cost over value (15,794,246)
------------
Net unrealized gain $22,993,900
============
For financial reporting purposes net unrealized gain on investments was
$21,743,022 and cost of investments aggregated $393,288,868
RIB Residual Interest Bonds
Purchases and sales of securities (excluding temporary cash investments) for
the period ended October 31, 2005, aggregated $24,938,788 and $25,889,669,
respectively.
16 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
-------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 10/31/05
-------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value (cost $393,288,868) $415,031,890
Receivables -
Investment securities sold 6,640,648
Interest 7,469,387
Unrealized appreciation on interest rate swaps 1,321,730
Prepaid expenses and other assets 82,141
------------
Total assets $430,545,796
------------
LIABILITIES:
Due to custodian $ 1,361,001
Due to affiliate 219,978
Administration fee payable 25,684
Accrued expenses 147,489
------------
Total liabilities $ 1,754,152
------------
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 $315,162,552
Distributions in excess of net investment income (484,726)
Accumulated net realized loss on investments and interest
rate swaps (9,950,934)
Net unrealized gain on investments 21,743,022
Net unrealized gain on interest rate swaps 1,321,730
------------
Net assets applicable to common shareowners $327,791,644
============
NET ASSET VALUE PER SHARE:
No par value, (unlimited number of shares authorized)
Based on $327,791,644/22,120,893 common shares $ 14.82
============
The accompanying notes are an integral part of these financial statements. 17
Pioneer Municipal High Income Trust
-------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
-------------------------------------------------------------------------------
For the Six Months Ended 10/31/05
INVESTMENT INCOME:
Interest $ 12,898,176
-------------
EXPENSES:
Management fees $ 1,347,189
Administration fees and reimbursement 174,464
Transfer agent fees and expenses 25,353
Auction agent fees 134,934
Custodian fees 6,556
Registration fees 11,876
Professional fees 29,468
Printing expense 9,744
Trustees' fees 6,904
Pricing fees 8,484
Insurance fees 9,602
Miscellaneous 7,347
------------
Total expenses $ 1,771,921
-------------
Net investment income $ 11,126,255
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND INTEREST RATE SWAPS:
Net realized loss from:
Investments $ (7,762,604)
Interest rate swaps (32,619) $ (7,795,223)
------------ -------------
Change in net unrealized gain on:
Investments $ (9,783,813)
Interest rate swaps 504,423 $ (9,279,390)
------------ -------------
Net loss on investments and interest
rate swaps $ (17,074,613)
-------------
DIVIDENDS TO PREFERRED SHAREOWNERS
FROM NET INVESTMENT INCOME: $ (1,196,555)
-------------
Net decrease in net assets appilcable
to common shareowners resulting
from operations $ (7,144,913)
==============
18 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
-----------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
-----------------------------------------------------------------------------
For the Six Months Ended 10/31/05 and the Year Ended 4/30/05
Six Months
Ended
10/31/05 Year Ended
(unaudited) 4/30/05
FROM OPERATIONS:
Net investment income $ 11,126,255 $ 25,177,837
Net realized gain (loss) on investments and interest
rate swaps (7,795,223) 258,653
Change in net unrealized gain on investments and
interest rate swaps (9,279,390) 20,621,102
Dividends and distributions to preferred
shareowners from:
Net investment income (1,196,555) (1,444,764)
Net realized gains - (90,681)
------------- -------------
Net increase (decrease) in net assets
applicable to common shareowners
resulting from operations $ (7,144,913) $ 44,522,147
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON
SHAREOWNERS FROM:
Net investment income ($0.48 and $1.07
per share, respectively) $ (10,618,029) $ (23,669,356)
Net realized gains ($0.00 and $0.09
per share, respectively) - (2,011,719)
------------- -------------
Total distributions to common shareowners $ (10,618,029) $ (25,681,075)
------------- -------------
FROM TRUST SHARE TRANSACTIONS:
Changes in (estimated) common share
offering expenses $ - $ 123,849
------------- -------------
Net increase in net assets applicable to
common shareowners resulting from Trust
share transactions $ - $ 123,849
------------- -------------
Net increase (decrease) in net assets
applicable to common shareowners $ (17,762,942) $ 18,964,921
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS:
Beginning of period 345,554,586 326,589,665
------------- -------------
End of period (including undistributed net
investment income (loss) of $(484,726) and
$203,603, respectively) $ 327,791,644 $ 345,554,586
============= =============
The accompanying notes are an integral part of these financial statements. 19
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Six Months
Ended 7/21/03(b)
10/31/05 Year Ended to
(unaudited) 4/30/05 4/30/04
Per Common Share Operating Performance
Net asset value, beginning of period $ 15.62 $ 14.76 $ 14.33(c)
-------- -------- ---------
Increase (decrease) from investment operations: (a)
Net investment income (d) $ 0.50 $ 1.14 $ 0.80
Net realized and unrealized gain (loss) on investments
and interest rate swaps (0.77) 0.95 0.46
Dividends and distributions to preferred shareowners from:
Net investment income (0.05) (0.07) (0.02)
Net realized gains - 0.00(d) -
-------- -------- ---------
Net increase (decrease) from investment operations $ (0.32) $ 2.02 $ 1.24
Dividends and distributions to common shareowners from:
Net investment income (0.48) (1.07) (0.72)
Net realized gains - (0.09) -
Changes in (estimated) with respect to issuance of:
Common shares - 0.00(d) (0.03)
Preferred shares - - (0.06)
-------- -------- ---------
Net increase (decrease) in net asset value $ (0.80) $ 0.86 $ 0.43
-------- -------- ---------
Net asset value, end of period(e) $ 14.82 $ 15.62 $ 14.76
======== ======== =========
Market value, end of period(e) $ 14.38 $ 14.33 $ 13.70
-------- -------- ---------
Total return(f) 3.62% 13.34% (4.11)%
Ratios to average net assets of common shareowners
Net expenses(g) 1.02%(h) 1.04% 0.95%(h)
Net investment income before preferred share dividends(h) 6.41%(h) 7.60% 6.91%(h)
Preferred share dividends 0.69%(h) 0.43% 0.21% (h)
Net investment income available to common shareowners 5.72%(h) 7.17% 6.70% (h)
Portfolio turnover 6% 25% 54%
Net assets of common shareowners, end of period (in thousands) $327,792 $345,555 $326,590
Preferred shares outstanding (in thousands) $101,000 $101,000 $101,000
Asset coverage per preferred share, end of period $106,137 $110,533 $105,839
Average market value per preferred share $25,000 $25,000 $ 25,000
Liquidation value per preferred share $25,000 $25,000 $ 25,000
Ratios to average net assets of common shareowners before
reimbursement of organization expenses and expense reductions
Net expenses(h) 1.02%(h) 1.04% 0.96% (h)
Net investment income before preferred share dividends(h) 6.41%(h) 7.60% 6.90% (h)
Preferred share dividends 0.69%(h) 0.43% 0.21% (h)
Net investment income available to common shareowners 5.72%(h) 7.17% 6.69% (h)
(a) The per share data presented above is based upon the average common shares
outstanding for the periods presented.
(b) Trust shares were first publicly offered on July 18, 2003.
(c) Net asset value immediately after the closing of the first public offering
was $14.30.
(d) Amount is less than $0.01 per share.
(e) Net asset value and market value are published in Barron's on Saturday, The
Wall Street Journal on Monday and The New York Times on Monday and Saturday.
(f) Total investment return is calculated assuming a purchase of common shares
at the current market value on the first day and a sale at the current
market value on the last day of the periods reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions. Total
investment return less than a full period is not annualized. Past
performance is not a guarantee of future results.
(g) Ratios do not reflect the effect of dividend payments to preferred
shareowners.
(h) Annualized.
The information above represents the operating performance data for a share
of common stock outstanding, total investment return, ratios to average net
assets of common shareowners and other supplemental data for the periods
indicated. This information has been determined based upon financial
information provided in the financial statements and market value data for
the Trust's common shares.
20 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/05
--------------------------------------------------------------------------------
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.
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 investment 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 U.S.
generally accepted accounting principles that require the management of the
Trust to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses and gains and losses on investments during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Trust
in the preparation of its financial statements, which are consistent with those
policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Securities are valued
at 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.
21
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/05 (continued)
--------------------------------------------------------------------------------
As of October 31, 2005, there were no securities fair valued. Temporary
cash investments are valued at amortized cost.
Discount and premium on debt 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.
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 amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the source of the Trust's distributions may
be shown in the accompanying financial statements as either from or in
excess of net investment income or net realized gain on investment
transactions, or from paid in-capital, depending on the type of book/tax
differences that may exist.
The tax character of current year distributions will be determined at the
end of the fiscal year. The tax character of distributions paid to common
and preferred shareowners during the year ended April 30, 2005 was as
follows:
------------------------------------------
2005
------------------------------------------
Distributions paid from:
Tax exempt income $25,094,466
Ordinary income 1,196,946
Net long-term capital gains 925,108
-----------
Total $27,216,520
===========
------------------------------------------
22
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The following shows the components of distributable earnings on a
federal income tax basis at April 30, 2005.
------------------------------------------------------------
2005
------------------------------------------------------------
Undistributed tax-exempt income $ 1,074,362
Dividend payable - common shares (1,769,671)
Unrealized appreciation 33,243,038
Post-October loss deferred (2,155,695)
------------
Total $ 30,392,034
============
------------------------------------------------------------
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, tax
deferral of losses on wash sales and other book/tax differences.
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 (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.
23
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/05 (continued)
--------------------------------------------------------------------------------
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. At October 31, 2005, $219,978 was payable to PIM related to
management fees.
In addition, under PIM's management and administration agreements, certain
other services and costs are paid by PIM and reimbursed by the Trust. For the
six months ended October 31, 2005, the Trust recorded $17,218 in reimbursements
and is included in "Administration fees and reimbursement" on the Statement of
Operations.
The Trust has retained Princeton Administrators, L.P., ("Princeton") an
affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, to provide
certain administrative services to the Trust on its behalf. The Trust pays
Princeton 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.
24
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 expense, the cost
of defending or prosecuting any claim or litigation to which the Trust is a
party, (together with any amount in judgment or settlement), indemnification
expenses 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 for this purpose. As of
October 31, 2005, 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 which are paid by the Trust. 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 to common shareowners. 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 of the net interest
payments between the parties on a daily basis, with the net amount recorded
within the unrealized appreciation/
25
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/05 (continued)
--------------------------------------------------------------------------------
depreciation of interest rate swaps on the Statement of Assets and Liabilities.
Once the interim payments are settled in cash, at the pre-determined dates
specified in the agreement, the net amount is recorded as realized gain or loss
from interest rate swaps on 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" the market value of the swap based on values
obtained from dealer quotations. 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, at October 31, 2005 the
Trust does not anticipate non-performance by any counterparty. Risk may also
arise with regard to market movements in the value of the swap arrangement that
do not exactly offset the changes in the related dividend requirement or
interest expense on the Trust's leverage.
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 October 31, 2005 were as
follows:
---------------------------------------------------------------------------------------
Notional
Termination Amount Fixed Floating Unrealized
Counterparty Date (000) Rate Rate Appreciation
---------------------------------------------------------------------------------------
UBS AG April 5, 2009 $50,000 2.665% 1 month BMA $1,321,730
---------------------------------------------------------------------------------------
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 October 31, 2005, PIM owned 6,981 shares.
26
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Transactions in common shares of beneficial interest for the six months ended
October 31, 2005 and the year ended April 30, 2005 were as follows:
--------------------------------------------------------------------------------
10/2005 4/2005
--------------------------------------------------------------------------------
Shares outstanding at beginning
of period 22,120,893 22,120,893
Reinvestment of distributions - -
---------- ----------
Shares outstanding at end of period 22,120,893 22,120,893
========== ==========
--------------------------------------------------------------------------------
The Trust may classify or reclassify any unissued common shares of beneficial
interest into one or more series of preferred shares of beneficial interest. As
of October 31, 2005, there were 4,040 APS as follows: Series A-2,000 and Series
B-2,040.
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
1.78% to 2.80% during the six months ended October 31, 2005.
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
27
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/05 (continued)
--------------------------------------------------------------------------------
to (a) adopt any plan of reorganization that would adversely affect the
preferred shares and (b) take any action requiring a vote of security holders,
including, among other things, changes in the Trust's subclassification as a
closed-end management investment company or changes in its fundamental
investment restrictions.
6. Subsequent Events
Subsequent to October 31, 2005, the Board of Trustees of the Trust declared a
dividend from undistributed net investment income of $0.08 per common share
payable November 30, 2005, to shareowners of record on November 15, 2005.
For the period November 1, 2005 to November 30, 2005, dividends declared on
preferred stock totaled $251,144 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.
28
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
RESULTS OF SHAREOWNER MEETING
--------------------------------------------------------------------------------
On August 16, 2005, Pioneer Municipal High Income Trust held its annual meeting
of shareowners to elect three Class I Trustees. All three Trustees were
elected. Here are the detailed results of the votes.
Proposal 1 - To elect Class II Trustees.
-----------------------------------------------------
Nominee Affirmative Withheld
-----------------------------------------------------
Margaret B.W. Graham 22,145,070 390,510
Osbert M. Hood 22,148,571 387,009
John Winthrop 22,139,000 396,580
-----------------------------------------------------
29
Pioneer Municipal High Income Trust
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TRUSTEES, OFFICERS AND SERVICE PROVIDERS
--------------------------------------------------------------------------------
Trustees
John F. Cogan, Jr., Chairman
David R. Bock
Mary K. Bush
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive
Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Shareowner Services and Sub-Transfer Agent
Mellon Investor Services LLC
Preferred Share Auction/Transfer Agent and Registrar
Deutsche Bank Trust Company Americas
Sub-Administrator
Princeton Administrators, L.P.
Proxy Voting Policies and Procedures of the Trust are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Trust voted proxies relating to portfolio securities during
the most recent 12 months ended June 30, is publicly available to shareowners
at www.pioneerfunds.com. This information is also available on our web site at
www.pioneerfunds.com and on the Securities and Exchange Commission's web site
at http://www.sec.gov.
30
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HOW TO CONTACT PIONEER
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We are pleased to offer a variety of convenient ways for you to contact Mellon
for assistance or information.
You can call Mellon Investor Services LLC for:
Account Information 1-800-710-0935
Telecommunications Device for the Deaf (TDD) 1-800-231-5469
Or write to Mellon Investor Services LLC:
For Write to
General inquiries, lost dividend checks P.O. Box 3315
South Hackensack, NJ
07606-1915
Change of address, account consolidation P.O. Box 3316
South Hackensack, NJ
07606-1916
Lost stock certificates P.O. Box 3317
South Hackensack, NJ
07606-1917
Stock transfer P.O. Box 3312
South Hackensack, NJ
07606-1912
Dividend reinvestment plan (DRIP) P.O. Box 3338
South Hackensack, NJ
07606-1938
For additional information, please contact your investment advisor or visit
our web site www.pioneerfunds.com.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, DC.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
N/A
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
N/A
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
N/A
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
N/A
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER TrustS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Trusts recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Trusts recognize that a Trust's independent auditors: 1) possess
knowledge of the Trusts, 2) are able to incorporate certain services
into the scope of the audit, thereby avoiding redundant work, cost and
disruption of Trust personnel and processes, and 3) have expertise that
has value to the Trusts. As a result, there are situations where it is
desirable to use the Trust'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 Trusts 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 Trust shall also
constitute approval for any other Trust 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 Trust'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 Trusts 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 Trust shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the Trust 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 Trust'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 Trust o Tax compliance, tax returns, excise
determines that using the tax returns and support
Trust'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 Trust 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 Trust'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 Trust compliance projects
UNIQUE QUALIFICATIONS determines that using the
Trust'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 Trust's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Trust.
----------------------- --------------------------- -----------------------------------------------
--------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the Trust 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 Trust's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
----------------------- ------------------------- -----------------------------------------------
------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
------------------------------------------- ------------------------------
--------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Trusts and the Trust's auditors will
each make an assessment to determine that any proposed projects will not
impair independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
--------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
N/A
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
N/A
(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 independent auditor, Ernst &
Young LLP ("E&Y"), has advised the Audit
Committee of the Trust's Board of Trustees that
E&Ys Spanish affiliate (E&Y Spain) performed
certain non-audit work for Pioneer Global
Investments Limited ("PGIL"), an affiliate of the
Trusts investment adviser. The services involved
the receipt and disbursement of monies transferred
to E&Y Spain by PGIL in payment of individual
payroll and related income tax withholdings due on
returns prepared by E&Y Spain for certain PGIL
employees located in Spain from February 2001 to
October 2005. E&Y became auditors of the Trust in
May 2002. These payroll and tax services were
discontinued in November 2005. The annual fee
received by E&Y Spain for all such services totaled
approximately 9,000 Euro per year. E&Y has informed
the Audit Committee that based on its internal
reviews and the de minimus nature of the services
provided and fees received, E&Y does not believe
its independence with respect to the Trust has been
impaired or that it is disqualified from acting as
independent auditors to the Trust.
N/A
Item 5. Audit Committee of Listed Registrants
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrants audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
The registrant has a separately-designated standing audit
committe eestablished in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption
from the listing standards for audit committees.
N/A
Item 6. Schedule of Investments.
File Schedule I Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.12-
12 of Regulation S-X [17 CFR 210.12-12], unless the schedule is
included as part of the report to shareholders filed under Item
1 of this Form.
Included in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Proxy Voting Policies and Procedures of
Pioneer Investment Management, Inc.
VERSION DATED July, 2004
Overview
Pioneer Investment Management, Inc. ("Pioneer") is a fiduciary that owes
each of its client's duties of care and loyalty with respect to all
services undertaken on the client's behalf, including proxy voting. When
Pioneer has been delegated proxy-voting authority for a client, the duty of
care requires Pioneer to monitor corporate events and to vote the proxies.
To satisfy its duty of loyalty, Pioneer must place its client's interests
ahead of its own and must cast proxy votes in a manner consistent with the
best interest of its clients. Pioneer will vote all proxies presented in a
timely manner.
The Proxy Voting Policies and Procedures are designed to complement
Pioneer's investment policies and procedures regarding its general
responsibility to monitor the performance and/or corporate events of
companies that are issuers of securities held in accounts managed by
Pioneer. Pioneer's Proxy Voting Policies summarize Pioneer's position on a
number of issues solicited by companies held by Pioneer's clients. The
policies are guidelines that provide a general indication on how Pioneer
would vote but do not include all potential voting scenarios.
Pioneer's Proxy Voting Procedures detail monitoring of voting, exception
votes, and review of conflicts of interest and ensure that case-by-case
votes are handled within the context of the overall guidelines (i.e. best
interest of client). The overriding goal is that all proxies for US and
non-US companies that are received promptly will be voted in accordance
with Pioneer's policies or specific client instructions. All shares in a
company held by Pioneer-managed accounts will be voted alike, unless a
client has given us specific voting instructions on an issue or has not
delegated authority to us or the Proxy Voting Oversight Group determines
that the circumstances justify a different approach.
Pioneer does not delegate the authority to vote proxies relating to its
clients to any of its affiliates, which include other subsidiaries of
UniCredito.
Any questions about these policies and procedures should be directed to the
Proxy Coordinator.
1
Proxy Voting Procedures
Proxy Voting Service
Pioneer has engaged an independent proxy voting service to assist in the
voting of proxies. The proxy voting service works with custodians to ensure
that all proxy materials are received by the custodians and are processed
in a timely fashion. To the extent applicable, the proxy voting service
votes all proxies in accordance with the proxy voting policies established
by Pioneer. The proxy voting service will refer proxy questions to the
Proxy Coordinator (described below) for instructions under circumstances
where: (1) the application of the proxy voting guidelines is unclear; (2) a
particular proxy question is not covered by the guidelines; or (3) the
guidelines call for specific instructions on a case-by-case basis. The
proxy voting service is also requested to call to the Proxy Coordinator's
attention specific proxy questions that, while governed by a guideline,
appear to involve unusual or controversial issues. Pioneer reserves the
right to attend a meeting in person and may do so when it determines that
the company or the matters to be voted on at the meeting are strategically
important to its clients.
Proxy Coordinator
Pioneer's Director of Investment Operations (the "Proxy Coordinator")
coordinates the voting, procedures and reporting of proxies on behalf of
Pioneer's clients. The Proxy Coordinator will deal directly with the proxy
voting service and, in the case of proxy questions referred by the proxy
voting service, will solicit voting recommendations and instructions from
the Director of Portfolio Management US or, to the extent applicable,
investment sub-advisers. The Proxy Coordinator is responsible for ensuring
that these questions and referrals are responded to in a timely fashion and
for transmitting appropriate voting instructions to the proxy voting
service. The Proxy Coordinator is responsible for verifying with the
Compliance Department whether Pioneer's voting power is subject to any
limitations or guidelines issued by the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries).
Referral Items
From time to time, the proxy voting service will refer proxy questions to
the Proxy Coordinator that are described by Pioneer's policy as to be voted
on a case-by-case basis, that are not covered by Pioneer's guidelines or
where Pioneer's guidelines may be unclear with respect to the matter to be
voted on. Under such certain circumstances, the Proxy Coordinator will seek
a written voting recommendation from the Director of Portfolio Management
US. Any such recommendation will include: (i) the manner in which the
proxies should be voted; (ii) the rationale underlying any such decision;
and (iii) the disclosure of any contacts or communications made between
Pioneer and any outside parties concerning the proxy proposal prior to the
time that the voting instructions are provided. In addition, the Proxy
Coordinator will ask the Compliance Department to review the question for
any actual or apparent conflicts of interest as described below under
"Conflicts of
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Interest." The Compliance Department will provide a "Conflicts of Interest
Report," applying the criteria set forth below under "Conflicts of
Interest," to the Proxy Coordinator summarizing the results of its review.
In the absence of a conflict of interest, the Proxy Coordinator will vote
in accordance with the recommendation of the Director of Portfolio
Management US.
If the matter presents a conflict of interest for Pioneer, then the Proxy
Coordinator will refer the matter to the Proxy Voting Oversight Group for a
decision. In general, when a conflict of interest is present, Pioneer will
vote according to the recommendation of the Director of Portfolio
Management US where such recommendation would go against Pioneer's interest
or where the conflict is deemed to be immaterial. Pioneer will vote
according to the recommendation of its proxy voting service when the
conflict is deemed to be material and the Pioneer's internal vote
recommendation would favor Pioneer's interest, unless a client specifically
requests Pioneer to do otherwise. When making the final determination as to
how to vote a proxy, the Proxy Voting Oversight Group will review the
report from the Director of Portfolio Management US and the Conflicts of
Interest Report issued by the Compliance Department.
Conflicts of Interest
A conflict of interest occurs when Pioneer's interests interfere, or appear
to interfere with the interests of Pioneer's clients. Occasionally, Pioneer
may have a conflict that can affect how its votes proxies. The conflict may
be actual or perceived and may exist when the matter to be voted on
concerns:
o An affiliate of Pioneer, such as another company belonging to
the UniCredito Italiano S.p.A. banking group (a "UniCredito
Affiliate");
o An issuer of a security for which Pioneer acts as a sponsor,
advisor, manager, custodian, distributor, underwriter, broker, or
other similar capacity (including those securities specifically
declared by PGAM to present a conflict of interest for Pioneer);
o An issuer of a security for which UniCredito has informed Pioneer
that a UniCredito Affiliate acts as a sponsor, advisor, manager,
custodian, distributor, underwriter, broker, or other similar
capacity; or
o A person with whom Pioneer (or any of its affiliates) has an
existing, material contract or business relationship that was not
entered into in the ordinary course of Pioneer's business.
o Pioneer will abstain from voting with respect to companies
directly or indirectly owned by UniCredito Italiano Group, unless
otherwise directed by a client. In addition, Pioneer will inform
PGAM Global Compliance and the PGAM Independent Directors before
exercising such rights.
Any associate involved in the proxy voting process with knowledge of any
apparent or actual conflict of interest must disclose such conflict to the
Proxy Coordinator and the Compliance Department. The Compliance Department
will review each item referred to Pioneer to determine whether an actual or
potential conflict of interest with Pioneer exists in connection with the
proposal(s) to be voted upon. The review will be conducted by comparing the
apparent parties affected by the proxy proposal being
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voted upon against the Compliance Department's internal list of interested
persons and, for any matches found, evaluating the anticipated magnitude
and possible probability of any conflict of interest being present. For
each referral item, the determination regarding the presence or absence of
any actual or potential conflict of interest will be documented in a
Conflicts of Interest Report to the Proxy Coordinator.
Securities Lending
In conjunction with industry standards Proxies are not available to be
voted when the shares are out on loan through either Pioneer's lending
program or a client's managed security lending program. However, Pioneer
will reserve the right to recall lent securities so that they may be voted
according to the Pioneer's instructions. If a portfolio manager would like
to vote a block of previously lent shares, the Proxy Coordinator will work
with the portfolio manager and Investment Operations to recall the
security, to the extent possible, to facilitate the vote on the entire
block of shares.
Share-Blocking
"Share-blocking" is a market practice whereby shares are sent to a
custodian (which may be different than the account custodian) for record
keeping and voting at the general meeting. The shares are unavailable for
sale or delivery until the end of the blocking period (typically the day
after general meeting date).
Pioneer will vote in those countries with "share-blocking." In the event a
manager would like to sell a security with "share-blocking", the Proxy
Coordinator will work with the Portfolio Manager and Investment Operations
Department to recall the shares (as allowable within the market time-frame
and practices) and/or communicate with executing brokerage firm. A list of
countries with "share-blocking" is available from the Investment Operations
Department upon request.
Record Keeping
The Proxy Coordinator shall ensure that Pioneer's proxy voting service:
o Retains a copy of the proxy statement received (unless the proxy
statement is available from the SEC's Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system);
o Retains a record of the vote cast;
o Prepares Form N-PX for filing on behalf of each client that is a
registered investment company; and
o Is able to promptly provide Pioneer with a copy of the voting
record upon its request.
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The Proxy Coordinator shall ensure that for those votes that may require
additional documentation (i.e. conflicts of interest, exception votes and
case-by-case votes) the following records are maintained:
o A record memorializing the basis for each referral vote cast;
o A copy of any document created by Pioneer that was material in
making the decision on how to vote the subject proxy; and
o A copy of any conflict notice, conflict consent or any other
written communication (including emails or other electronic
communications) to or from the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries)
regarding the subject proxy vote cast by, or the vote
recommendation of, Pioneer.
o Pioneer shall maintain the above records in the client's file for a
period not less than ten (10) years.
Disclosure
Pioneer shall take reasonable measures to inform its clients of the process
or procedures clients must follow to obtain information regarding how
Pioneer voted with respect to assets held in their accounts. In addition,
Pioneer shall describe to clients its proxy voting policies and procedures
and will furnish a copy of its proxy voting policies and procedures upon
request. This information may be provided to clients through Pioneer's Form
ADV (Part II) disclosure, by separate notice to the client, or through
Pioneer's website.
Proxy Voting Oversight Group
The members of the Proxy Voting Oversight Group are Pioneer's: Director of
Portfolio Management US, Head of Investment Operations, and Director of
Compliance. Other members of Pioneer will be invited to attend meetings and
otherwise participate as necessary. The Head of Investment Operations will
chair the Proxy Voting Oversight Group.
The Proxy Voting Oversight Group is responsible for developing, evaluating,
and changing (when necessary) Pioneer's Proxy Voting Policies and
Procedures. The group meets at least annually to evaluate and review these
policies and procedures and the services of its third-party proxy voting
service. In addition, the Proxy Voting Oversight Group will meet as
necessary to vote on referral items and address other business as
necessary.
Amendments
Pioneer may not amend its Proxy Voting Policies And Procedures without the
prior approval of the Proxy Voting Oversight Group and its corporate
parent, Pioneer Global Asset Management S.p.A
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Proxy Voting Policies
Pioneer's sole concern in voting proxies is the economic effect of the
proposal on the value of portfolio holdings, considering both the short-
and long-term impact. In many instances, Pioneer believes that supporting
the company's strategy and voting "for" management's proposals builds
portfolio value. In other cases, however, proposals set forth by management
may have a negative effect on that value, while some shareholder proposals
may hold the best prospects for enhancing it. Pioneer monitors developments
in the proxy-voting arena and will revise this policy as needed.
All proxies that are received promptly will be voted in accordance with the
specific policies listed below. All shares in a company held by
Pioneer-managed accounts will be voted alike, unless a client has given us
specific voting instructions on an issue or has not delegated authority to
us. Proxy voting issues will be reviewed by Pioneer's Proxy Voting
Oversight Group, which consists of the Director of Portfolio Management US,
the Director of Investment Operations (the Proxy Coordinator), and the
Director of Compliance.
Pioneer has established Proxy Voting Procedures for identifying and
reviewing conflicts of interest that may arise in the voting of proxies.
Clients may request, at any time, a report on proxy votes for securities
held in their portfolios and Pioneer is happy to discuss our proxy votes
with company management. Pioneer retains a proxy voting service to provide
research on proxy issues and to process proxy votes.
Administrative
While administrative items appear infrequently in U.S. issuer proxies, they
are quite common in non-U.S. proxies.
We will generally support these and similar management proposals:
o Corporate name change.
o A change of corporate headquarters.
o Stock exchange listing.
o Establishment of time and place of annual meeting.
o Adjournment or postponement of annual meeting.
o Acceptance/approval of financial statements.
o Approval of dividend payments, dividend reinvestment plans and other
dividend-related proposals.
o Approval of minutes and other formalities.
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o Authorization of the transferring of reserves and allocation of
income.
o Amendments to authorized signatories.
o Approval of accounting method changes or change in fiscal year-end.
o Acceptance of labor agreements.
o Appointment of internal auditors.
Pioneer will vote on a case-by-case basis on other routine business;
however, Pioneer will oppose any routine business proposal if insufficient
information is presented in advance to allow Pioneer to judge the merit of
the proposal. Pioneer has also instructed its proxy voting service to
inform Pioneer of its analysis of any administrative items inconsistent, in
its view, with supporting the value of Pioneer portfolio holdings so that
Pioneer may consider and vote on those items on a case-by-case basis.
Auditors
We normally vote for proposals to:
o Ratify the auditors. We will consider a vote against if we are
concerned about the auditors' independence or their past work for
the company. Specifically, we will oppose the ratification of
auditors and withhold votes from audit committee members if
non-audit fees paid by the company to the auditing firm exceed the
sum of audit fees plus audit-related fees plus permissible tax
fees according to the disclosure categories proposed by the
Securities and Exchange Commission.
o Restore shareholder rights to ratify the auditors.
We will normally oppose proposals that require companies to:
o Seek bids from other auditors.
o Rotate auditing firms, except where the rotation is statutorily
required or where rotation would demonstrably strengthen financial
disclosure.
o Indemnify auditors.
o Prohibit auditors from engaging in non-audit services for the
company.
Board of Directors
On issues related to the board of directors, Pioneer normally supports
management. We will, however, consider a vote against management in
instances where corporate performance has been very poor or where the board
appears to lack independence.
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General Board Issues
Pioneer will vote for:
o Audit, compensation and nominating committees composed of
independent directors exclusively.
o Indemnification for directors for actions taken in good faith in
accordance with the business judgment rule. We will vote against
proposals for broader indemnification.
o Changes in board size that appear to have a legitimate business
purpose and are not primarily for anti-takeover reasons.
o Election of an honorary director.
We will vote against:
o Minimum stock ownership by directors.
o Term limits for directors. Companies benefit from experienced
directors, and shareholder control is better achieved through
annual votes.
o Requirements for union or special interest representation on the
board.
o Requirements to provide two candidates for each board seat.
We will vote on a case-by case basis on these issues:
o Separate chairman and CEO positions. We will consider voting with
shareholders on these issues in cases of poor corporate
performance.
Elections of Directors
In uncontested elections of directors we will vote against:
o Individual directors with absenteeism above 25% without valid
reason. We support proposals that require disclosure of director
attendance.
o Insider directors and affiliated outsiders who sit on the audit,
compensation, stock option or nominating committees. For the
purposes of our policy, we accept the definition of affiliated
directors provided by our proxy voting service.
We will also vote against:
o Directors who have failed to act on a takeover offer where the
majority of shareholders have tendered their shares.
o Directors who appear to lack independence or are associated with
very poor corporate performance.
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We will vote on a case-by case basis on these issues:
o Re-election of directors who have implemented or renewed a
dead-hand or modified dead-hand poison pill (a "dead-hand poison
pill" is a shareholder rights plan that may be altered only by
incumbent or "dead " directors. These plans prevent a potential
acquirer from disabling a poison pill by obtaining control of the
board through a proxy vote).
o Contested election of directors.
o Prior to phase-in required by SEC, we would consider supporting
election of a majority of independent directors in cases of poor
performance.
o Mandatory retirement policies.
o Directors who have ignored a shareholder proposal that has been
approved by shareholders for two consecutive years.
Takeover-Related Measures
Pioneer is generally opposed to proposals that may discourage takeover
attempts. We believe that the potential for a takeover helps ensure that
corporate performance remains high.
Pioneer will vote for:
o Cumulative voting.
o Increase ability for shareholders to call special meetings.
o Increase ability for shareholders to act by written consent.
o Restrictions on the ability to make greenmail payments.
o Submitting rights plans to shareholder vote.
o Rescinding shareholder rights plans ("poison pills").
o Opting out of the following state takeover statutes:
o Control share acquisition statutes, which deny large holders voting
rights on holdings over a specified threshold.
o Control share cash-out provisions, which require large holders to
acquire shares from other holders.
o Freeze-out provisions, which impose a waiting period on large
holders before they can attempt to gain control.
o Stakeholder laws, which permit directors to consider interests of
non-shareholder constituencies.
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o Disgorgement provisions, which require acquirers to disgorge profits
on purchases made before gaining control.
o Fair price provisions.
o Authorization of shareholder rights plans.
o Labor protection provisions.
o Mandatory classified boards.
We will vote on a case-by-case basis on the following issues:
o Fair price provisions. We will vote against provisions requiring
supermajority votes to approve takeovers. We will also consider
voting against proposals that require a supermajority vote to
repeal or amend the provision. Finally, we will consider the
mechanism used to determine the fair price; we are generally
opposed to complicated formulas or requirements to pay a premium.
o Opting out of state takeover statutes regarding fair price
provisions. We will use the criteria used for fair price
provisions in general to determine our vote on this issue.
o Proposals that allow shareholders to nominate directors.
We will vote against:
o Classified boards, except in the case of closed-end mutual funds.
o Limiting shareholder ability to remove or appoint directors. We
will support proposals to restore shareholder authority in this
area. We will review on a case-by-case basis proposals that
authorize the board to make interim appointments.
o Classes of shares with unequal voting rights.
o Supermajority vote requirements.
o Severance packages ("golden" and "tin" parachutes). We will support
proposals to put these packages to shareholder vote.
o Reimbursement of dissident proxy solicitation expenses. While we
ordinarily support measures that encourage takeover bids, we
believe that management should have full control over corporate
funds.
o Extension of advance notice requirements for shareholder proposals.
o Granting board authority normally retained by shareholders (e.g.,
amend charter, set board size).
o Shareholder rights plans ("poison pills"). These plans generally
allow shareholders to buy additional shares at a below-market
price in the event of a change in control and may deter some bids.
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Capital Structure
Managements need considerable flexibility in determining the company's
financial structure, and Pioneer normally supports managements' proposals
in this area. We will, however, reject proposals that impose high barriers
to potential takeovers.
Pioneer will vote for:
o Changes in par value.
o Reverse splits, if accompanied by a reduction in number of shares.
o Share repurchase programs, if all shareholders may participate on
equal terms.
o Bond issuance.
o Increases in "ordinary" preferred stock.
o Proposals to have blank-check common stock placements (other than
shares issued in the normal course of business) submitted for
shareholder approval.
o Cancellation of company treasury shares.
We will vote on a case-by-case basis on the following issues:
o Reverse splits not accompanied by a reduction in number of shares,
considering the risk of delisting.
o Increase in authorized common stock. We will make a determination
considering, among other factors:
o Number of shares currently available for issuance;
o Size of requested increase (we would normally approve increases of up to
100% of current authorization);
o Proposed use of the additional shares; and
o Potential consequences of a failure to increase the number of shares
outstanding (e.g., delisting or bankruptcy).
o Blank-check preferred. We will normally oppose issuance of a new
class of blank-check preferred, but may approve an increase in a
class already outstanding if the company has demonstrated that it
uses this flexibility appropriately.
o Proposals to submit private placements to shareholder vote.
o Other financing plans.
We will vote against preemptive rights that we believe limit a company's
financing flexibility.
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Compensation
Pioneer supports compensation plans that link pay to shareholder returns
and believes that management has the best understanding of the level of
compensation needed to attract and retain qualified people. At the same
time, stock-related compensation plans have a significant economic impact
and a direct effect on the balance sheet. Therefore, while we do not want
to micromanage a company's compensation programs, we will place limits on
the potential dilution these plans may impose.
Pioneer will vote for:
o 401(k) benefit plans.
o Employee stock ownership plans (ESOPs), as long as shares
allocated to ESOPs are less than 5% of outstanding shares. Larger
blocks of stock in ESOPs can serve as a takeover defense. We will
support proposals to submit ESOPs to shareholder vote.
o Various issues related to the Omnibus Budget and Reconciliation Act
of 1993 (OBRA), including:
o Amendments to performance plans to conform with OBRA;
o Caps on annual grants or amendments of administrative features;
o Adding performance goals; and
o Cash or cash-and-stock bonus plans.
o Establish a process to link pay, including stock-option grants, to
performance, leaving specifics of implementation to the company.
o Require that option repricings be submitted to shareholders.
o Require the expensing of stock-option awards.
o Require reporting of executive retirement benefits (deferred
compensation, split-dollar life insurance, SERPs, and pension
benefits).
o Employee stock purchase plans where the purchase price is equal to
at least 85% of the market price, where the offering period is no
greater than 27 months and where potential dilution (as defined
below) is no greater than 10%.
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We will vote on a case-by-case basis on the following issues:
o Executive and director stock-related compensation plans. We will
consider the following factors when reviewing these plans:
o The program must be of a reasonable size. We will approve plans
where the combined employee and director plans together would
generate less than 15% dilution. We will reject plans with 15% or
more potential dilution.
Dilution = (A + B + C) / (A + B + C + D), where
A = Shares reserved for plan/amendment,
B = Shares available under continuing plans,
C = Shares granted but unexercised and
D = Shares outstanding.
o The plan must not:
o Explicitly permit unlimited option repricing authority or that
have repriced in the past without shareholder approval.
o Be a self-replenishing "evergreen" plan, plans that grant
discount options and tax offset payments.
o We are generally in favor of proposals that increase participation beyond
executives.
o We generally support proposals asking companies to adopt rigorous
vesting provisions for stock option plans such as those that vest
incrementally over, at least, a three- or four-year period with a pro
rata portion of the shares becoming exercisable on an annual basis
following grant date.
o We generally support proposals asking companies to disclose their
window period policies for stock transactions. Window period policies
ensure that employees do not exercise options based on insider
information contemporaneous with quarterly earnings releases and other
material corporate announcements.
o We generally support proposals asking companies to adopt stock holding
periods for their executives.
o All other employee stock purchase plans.
o All other compensation-related proposals, including deferred
compensation plans, employment agreements, loan guarantee programs
and retirement plans.
o All other proposals regarding stock compensation plans, including
extending the life of a plan, changing vesting restrictions,
repricing options, lengthening exercise periods or accelerating
distribution of awards and pyramiding and cashless exercise
programs.
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We will vote against:
o Pensions for non-employee directors. We believe these retirement
plans reduce director objectivity.
o Elimination of stock option plans.
We will vote on a case-by case basis on these issues:
o Limits on executive and director pay.
o Stock in lieu of cash compensation for directors.
Corporate Governance
Pioneer will vote for:
o Confidential Voting.
o Equal access provisions, which allow shareholders to contribute
their opinion to proxy materials.
o Proposals requiring directors to disclose their ownership of shares
in the company.
We will vote on a case-by-case basis on the following issues:
o Change in the state of incorporation. We will support
reincorporations supported by valid business reasons. We will
oppose those that appear to be solely for the purpose of
strengthening takeover defenses.
o Bundled proposals. We will evaluate the overall impact of the
proposal.
o Adopting or amending the charter, bylaws or articles of association.
o Shareholder appraisal rights, which allow shareholders to demand
judicial review of an acquisition price.
We will vote against:
o Shareholder advisory committees. While management should solicit
shareholder input, we prefer to leave the method of doing so to
management's discretion.
o Limitations on stock ownership or voting rights.
o Reduction in share ownership disclosure guidelines.
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Mergers and Restructurings
Pioneer will vote on the following and similar issues on a case-by-case
basis:
o Mergers and acquisitions.
o Corporate restructurings, including spin-offs, liquidations, asset
sales, joint ventures, conversions to holding company and
conversions to self-managed REIT structure.
o Debt restructurings.
o Conversion of securities.
o Issuance of shares to facilitate a merger.
o Private placements, warrants, convertible debentures.
o Proposals requiring management to inform shareholders of merger
opportunities.
We will normally vote against shareholder proposals requiring that the
company be put up for sale.
Mutual Funds
Many of our portfolios may invest in shares of closed-end mutual funds or
exchange-traded funds. The non-corporate structure of these investments
raises several unique proxy voting issues.
Pioneer will vote for:
o Establishment of new classes or series of shares.
o Establishment of a master-feeder structure.
Pioneer will vote on a case-by-case on:
o Changes in investment policy. We will normally support changes
that do not affect the investment objective or overall risk level
of the fund. We will examine more fundamental changes on a
case-by-case basis.
o Approval of new or amended advisory contracts.
o Changes from closed-end to open-end format.
o Authorization for, or increase in, preferred shares.
o Disposition of assets, termination, liquidation, or mergers.
o Classified boards of closed-end mutual funds, but will typically
support such proposals.
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Social Issues
Pioneer will abstain on stockholder proposals calling for greater
disclosure of corporate activities with regard to social issues. "Social
Issues" may generally be described as shareholder proposals for a company
to:
o Conduct studies regarding certain issues of public concern and
interest;
o Study the feasibility of the company taking certain actions with
regard to such issues; or
o Take specific action, including ceasing certain behavior and
adopting company standards and principles, in relation to issues
of public concern and interest.
We believe these issues are important and should receive management
attention.
Pioneer will vote against proposals calling for substantial changes in the
company's business or activities. We will also normally vote against
proposals with regard to contributions, believing that management should
control the routine disbursement of funds.
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Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrants portfolio (Portfolio Manager). Also state each Portfolio
Managers business experience during the past 5 years.
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
During the period covered by this report, there were no purchases
made by or on behalf of the registrant or any affiliated purchaser
as defined in Rule 10b-18(a)(3) under the Securities Exchange Act
of 1934 (the Exchange Act), of shares of the registrants equity
securities that are registered by the registrant pursuant to
Section 12 of the Exchange Act.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in
its definitive proxy statement, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer and principal financial
officer have concluded, that the registrant's disclosure controls and
procedures are effective based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Municipal High Income Trust
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date December 29, 2005
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 December 29, 2005
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date December 29, 2005
* Print the name and title of each signing officer under his or her signature.