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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22014
Pioneer Diversified High Income Trust
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Terrence J. Cullen, 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, 2009 through April 30, 2010
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 Diversified
High Income Trust
--------------------------------------------------------------------------------
Annual Report | April 30, 2010
--------------------------------------------------------------------------------
Ticker Symbol: HNW
[LOGO] PIONEER
Investments(R)
visit us: pioneerinvestments.com
Table of Contents
Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 8
Prices and Distributions 9
Performance Update 10
Schedule of Investments 11
Financial Statements 39
Financial Highlights 43
Notes to Financial Statements 44
Report of Independent Registered Public Accounting Firm 53
Additional Information 54
Approval of Investment Advisory Agreement 56
Trustees, Officers and Service Providers 60
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 1
President's Letter
Dear Shareowner,
Stock and bond markets around the globe have begun to recover over the past
year from one of their most tumultuous periods in history. This is a welcome
relief, and we are generally optimistic about the prospects for the economy
going forward. Still, challenges remain. Unemployment is high; consumer demand
and loan growth are weak; and housing has not returned to normal.
At Pioneer, we have long advocated the benefits of investing for the long term.
This strategy has generally performed well for many investors. Those who
remained invested in the market during the downturn have most likely seen their
portfolios start to recover over the past year, as the Dow Jones Industrial
Average climbed back from the depressed levels we saw in early 2009. Many bond
investors have similarly seen a strong rebound, with a broad-based recovery
occurring across many different fixed-income asset classes. The riskiest asset
classes, such as high-yield bonds, outperformed other fixed-income asset
classes during most of 2009.
At Pioneer, we are not changing the approach to investing that we have used for
more than 80 years. We remain focused on company fundamentals and risk
management. Our investment process is based on careful research into individual
companies, quantitative analysis, and active portfolio management. This
three-pillared process, which we apply to each of our portfolios, is supported
by an integrated team approach and is designed to carefully balance risk and
reward. While we see potential opportunities for making money in many corners
of the markets around the globe, it takes research and experience to separate
solid investment opportunities from speculation.
Following this difficult period, many investors are rethinking their approach
to investing and risk management. Some are questioning whether the basic
investment principles they were taught in the past are still useful in today's
markets. Complicating matters is that financial markets remain unpredictable.
Our advice, as always, is to work closely with a trusted financial advisor to
discuss your goals and work together to develop an investment strategy that
meets your individual needs. There is no single best strategy that works for
every investor.
2 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
We invite you to learn more about Pioneer and our time-tested approach to
investing by consulting with your financial advisor or visiting us online at
www.pioneerinvestments.com. We greatly appreciate your trust in us and we thank
you for investing with Pioneer.
Sincerely,
/s/ Daniel K. Kingsbury
Daniel K. Kingsbury
President and CEO
Pioneer Investment Management USA Inc.
Any information in this shareowner report regarding market or economic trends
or the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of 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.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 3
Portfolio Management Discussion | 4/30/10
Mounting evidence of strengthening economies, both domestic and foreign, led to
a strong recovery in the prices of credit-sensitive securities during the 12
months ending April 30, 2010. Corporate high-yield bonds, bank loans and other
securities carrying credit risk rebounded from depressed levels over the
12-month period as investors grew more confident in an economic recovery. In
the following discussion, Andrew Feltus and Jonathan Sharkey discuss the
factors that influenced the performance of Pioneer Diversified High Income
Trust during the 12-month period ended April 30, 2010. Mr. Feltus and Mr.
Sharkey are members of Pioneer's fixed-income team and leaders of the
investment team responsible for the daily management of the Trust.
Q How did the Trust perform during the 12 months ended April 30, 2010?
A Pioneer Diversified High Income Trust performed very well, producing a total
return of 62.09% at net asset value and 73.25% at market price, while the
Trust's customized benchmark returned 36.26%. The Trust's customized
benchmark is based on a 50% weighting of the Bank of America/Merrill Lynch
Global High Yield and Emerging Markets Plus Index (BofA ML GHY-EMP Index),
which gained 40.25% over the 12 month-period, and a 50% weighting of the CSFB
Leveraged Loan Index, which gained 32.26%. On April 30, 2010, the Trust's
distribution rate was 9.38%, based on the most recent monthly dividend and
the market closing price on April 30, 2010, and its 30-day SEC yield was
9.21%. As of April 30, 2010, the Trust was selling at a premium of market
price to net asset value of 1.4%.
Q What were the principal factors that contributed to the Trust's performance
over the 12 months ended April 30, 2010?
A As confidence in an economic resurgence returned to the capital markets,
domestic high-yield bonds and floating-rate bank loans sharply recovered in
price, delivering robust returns to investors. A rally that began in March of
2009 continued throughout the 12 months ended April 30, 2010, with only brief
interruptions in momentum, as investors sought out opportunities to gain
higher yields in securities that had been selling at depressed prices. The
economy, as reflected by gross domestic product (GDP), began growing again
and corporate profits began rising. Even unemployment, typically a lagging
indicator of economic progress, appeared to begin to improve in the final
months of the 12-month period.
Throughout the 12 months, the Trust placed heavy emphasis on domestic
high-yield bonds and bank loans, which comprised 34.7% and 24.9% of the
Trust's total investment portfolio, respectively, as of April 30, 2010.
4 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
The Trust had an additional 19.2% of its total investment portfolio in
international high-yield and emerging market debt, and a small, but growing
allocation to non-government agency mortgage-backed securities. For
diversification, the Trust also had 14.9% of its total investment portfolio
invested in floating-rate, catastrophe-linked insurance bonds.
The strong returns achieved by the Trust's investments were amplified by
the Trust's increased use of borrowed funds, or leverage. Improved
conditions in the credit markets allowed the Trust to refinance its debt
and enter a new loan agreement that effectively reduced the cost of
borrowing. The Trust was able to redeploy the borrowed funds into the
rising market. Leverage represented approximately 29% of the Trust's total
assets.
Q How did the Trust's investment strategy affect performance over the 12 months
ended April 30, 2010?
A High-yield corporate bonds and emerging market debt produced particularly
strong returns during the period, and the Trust's positioning in both sectors
contributed substantially to the solid returns. Floating-rate bank loans,
while trailing the high-yield sector, also delivered healthy returns.
Relative to the BofA ML GHY-EMP Index, the Trust was substantially
underweighted in Europe and in investments denominated in the euro currency;
that positioning helped when government debt problems in Europe, most notably
in Greece, pressured European investments. While 17% of the BofA ML GHY-EMP
Index was represented by the euro bloc, the Trust had just 3.7% of its total
investment portfolio allocated to the euro bloc and other European
currencies, and part of that was invested in Norwegian currency, which proved
more resilient than the euro.
During the 12-month period, we began adding to the Trust's investments in
catastrophe-linked, re-insurance bonds. While those bonds underperformed
high-yield corporates and bank loans, they offered the Trust
diversification protection and the advantages of floating-rate yields,
which should offer the potential for higher income when interest rates
eventually start rising. We also began adding non-agency mortgage-backed
securities to the Trust's portfolio, as they appeared to be selling at
attractive relative values and also offered the advantages of floating
rates. At the end of the period, more than 50% of the Trust's total
investment portfolio was held in floating-rate securities.
Q What types of individual investments most influenced the Trust's performance
results during the 12 months ended April 30, 2010?
A Security selection in the Trust's investments in both high-yield bonds and
bank loans was very good. Among bonds of capital goods companies, two
standouts were: Lear, a manufacturer of components for the automotive
industry that was reorganized after filing for bankruptcy; and Commercial
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 5
Vehicle Group, a manufacturer of parts for the truck industry. In the
materials sector, Noranda, a U.S. aluminum producer, did very well. Among
the Trust's bond holdings in the financial sector, there were excellent
results from investments in securities of Wells Fargo, PNC Financial, and
investment bank Goldman Sachs. In the emerging markets, bond holdings of
Minerva and Grupo Bertin, two Brazilian beef companies, appreciated
significantly, supported by improving conditions in emerging markets,
rising commodity prices and the appreciation in value of Brazil's currency.
One disappointing investment for the Trust was Pegasystems, a software
producer for the travel business that is undergoing a restructuring after
defaulting on its bond in January of 2010. While almost all other
high-yield bond investments performed positively, the Trust's investments
in securities from the health care and utilities sectors -- two less
cyclical groups -- tended to underperform the overall market.
Among the Trust's bank loan holdings, a notable strong performer was the
senior debt of Ceva Logistics, as the company strengthened its balance
sheet. Two loans to an aviation service company, DAE Aviation & Standard
Aero, also fared quite well. The firm benefited when the demand for
aircraft maintenance services increased as the global economy recovered.
One disappointing loan investment for the Trust, however, was the debt of
Calpine, the giant energy company. The loan declined slightly in value
after the company announced it would not be paying down its debt, contrary
to market expectations.
Q What is your investment outlook?
A We believe the economic recovery will continue to advance in 2010, which
should lead to growing corporate profits, which in turn should support the
performance of both high-yield corporate bonds and floating-rate bank loans.
At this point, it is difficult to anticipate the investment environment in
2011, however, as the market will be reacting to anticipated tax increases
included as embodied in the phase-in of national health care reform
legislation, as well as tighter monetary policy in China and tighter fiscal
policy in Europe. In the near term, economic fundamentals look healthy. In
the high-yield market, bond prices still appear attractive, especially after
a market pullback shortly after the end of the Trust's 12-month reporting
period.
Looking forward, we expect that as the economy continues to recover,
interest rates will start rising. We plan to position the Trust's portfolio
for this eventuality by increasing investments in floating-rate securities,
including bank loans, event-linked insurance bonds, and non-government
agency mortgage-backed securities -- all of which have the ability to
increase the Trust's income as yields rise.
6 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
In general, we do not anticipate a repeat of the robust returns delivered
in the past year. As we look to the future, we think fundamental analysis
and individual security selection should be increasingly important elements
in achieving good performance. We think this type of market plays to
Pioneer's long-term strengths in credit research and analysis.
Please refer to the Schedule of Investments on pages 11-38 for a full listing
of Trust securities.
Investments in high-yield or lower-rated securities are subject to
greater-than-average risk. The Trust may invest in securities of issuers that
are in default or that are in bankruptcy.
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
When interest rates rise, the prices of debt securities in the Trust will
generally fall. Conversely, when interest rates fall the prices of debt
securities in the Trust generally will rise. Investments in the Trust are
subject to possible loss due to the financial failure of the issuers of the
underlying securities and their inability to meet their debt obligations.
The Trust may invest significantly in illiquid securities. Illiquid securities
may be difficult to dispose of at a fair price at the times when the Trust
believes it is desirable to do so and their market price is generally more
volatile than that of more liquid securities. Illiquid securities also are more
difficult to value, and investment of the Trust's assets in illiquid securities
may restrict the Trust's ability to take advantage of market opportunities.
The Trust is authorized to borrow from banks and issue debt securities, which
are forms of leverage. Leverage creates significant risks, including the risk
that the Trust's income or capital appreciation will not be sufficient to cover
the cost of leverage, which may adversely affect the return for the holders of
common shares.
Risks of investing in the Trust are discussed in greater detail in the Trust's
original offering prospectus and in shareowner reports from time to time.
Past performance is no guarantee of future results, and there is no guarantee
that market forecasts discussed will be realized.
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.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 7
Portfolio Summary | 4/30/10
Portfolio Diversification
--------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Corporate Bonds & Notes 62.4%
(Catastrophe-linked Bonds 14.9%)
Floating Rate Loan Interests 24.9%
Temporary Cash Investments 5.9%
Convertible Bonds & Notes 2.5%
Asset Backed Securities 2.1%
Collateralized Mortgage Obligations 0.8%
Common Stock 0.8%
Sovereign Debt Obligations 0.4%
Convertible Preferred Stock 0.2%
Rights/Warrants* 0.0%
* Amount is less than 0.1%.
Portfolio Quality
--------------------------------------------------------------------------------
(As a percentage of total investment portfolio; based on S&P ratings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
A & Higher 1.8%
BBB 1.5%
BB 28.0%
B 38.1%
CCC & Lower 13.0%
Not Rated 11.7%
Cash Equivalents 5.9%
The portfolio is actively managed, and current holdings may be different.
10 Largest Holdings
--------------------------------------------------------------------------------
(As a percentage of long-term holdings)*
1. Muteki, Ltd., 4.65%, 5/24/11 (144A) 1.08%
2. Atlas Reinsurance Plc, 10.885%, 1/10/11 (144A) 0.90
3. Residential Reinsurance 2008, Ltd., 11.752%, 6/6/11 (144A) 0.88
4. Green Valley, Ltd., 4.24%, 1/10/11 (144A) 0.88
5. SunGard Data Systems, Inc., Tranche A U.S. Term Loan, 2.001%, 2/28/14 0.83
6. Blue Fin, Ltd., 4.695%, 4/10/12 (144A) 0.83
7. Calpine Corp., First Priority Term Loan, 3.165%, 3/29/14 0.83
8. Alliance One International, Inc., 10.0%, 7/15/16 (144A) 0.83
9. U.S.I. Holdings Corp., Tranche B Term Loan, 3.05%, 5/5/14 0.80
10. Fhu-Jin, Ltd., 4.244%, 8/10/11 (144A) 0.76
* This list excludes temporary cash and derivative investments. The portfolio
is actively managed, and current holdings may be different. The holdings
listed should not be considered recommendations to buy or sell any security
listed.
8 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
Prices and Distributions | 4/30/10
Market Value per Common Share
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--------------------------------------------------------------------------------
4/30/10 4/30/09
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$ 20.46 $ 13.23
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Net Asset Value per Common Share
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4/30/10 4/30/09
--------------------------------------------------------------------------------
$ 20.17 $ 13.94
--------------------------------------------------------------------------------
Distributions per Common Share: 5/1/09-4/30/10
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Net
Investment Tax Return Short-Term Long-Term
Income of Capital Capital Gains Capital Gains
------------------------------------------------------------------------------------
$ 1.686 $ 0.324 $ -- $ --
------------------------------------------------------------------------------------
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 9
Performance Update | 4/30/10
Investment Returns
--------------------------------------------------------------------------------
The mountain chart on the right shows the change in market value, plus
reinvested dividends and distributions, of a $10,000 investment made in common
shares of Pioneer Diversified High Income Trust, compared to that of the
combined (50%/50%) Bank of America/Merrill Lynch Global High Yield and Emerging
Market Plus Index and CSFB Leveraged Loan Index.
Cumulative Total Returns
(As of April 30, 2010)
--------------------------------------------------------------------------------
Net Asset Market
Period Value Price
--------------------------------------------------------------------------------
Life-of-Trust
(5/30/07) 22.83% 18.99%
1 Year 62.09 73.25
--------------------------------------------------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer Diversified 50% BofA/ML Global HY and EM Plus Index
High Income Trust 50% CSFB Leveraged Loan Index
5/07 10,000 10,000
4/08 10,061 9,879
4/09 7,577 8,422
4/10 11,899 11,487
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
Performance data shown represents past performance. Past performance is no
guarantee of future results. Investment return and market price will fluctuate,
and your shares may trade below net asset value (NAV) due to such factors as
interest rate changes and the perceived credit quality of borrowers.
Total investment return does not reflect broker sales charges or commissions.
All performance is for common shares of the Trust.
Closed-end funds, unlike open-end funds, are not continuously offered. There is
a one-time public offering and, once issued, shares of closed-end funds are sold
in the open market through a stock exchange and frequently trade at prices lower
than their NAV. NAV per common share is total assets less total liabilities,
which includes bank borrowing, divided by the number of common shares
outstanding.
When NAV is lower than market price, dividends are assumed to be reinvested at
the greater of NAV or 95% of the market price. When NAV is higher, dividends are
assumed to be reinvested at prices obtained under the Trust's dividend
reinvestment plan.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Trust distributions.
The Bank of America/Merrill Lynch Global High Yield and Emerging Markets Plus
Index tracks the performance of the below- and border-line investment-grade
global debt markets denominated in the major developed market currencies. The
Index includes sovereign issuers rated BBB1 and lower along with corporate
issues rated BB1 and lower. There are no restrictions on issuer country of
domicile. The CSFB Leveraged Loan Index is designed to mirror the investible
universe of the U.S. dollar-denominated leveraged loan market. The CSFB
Leveraged Loan Index consists of tradable term loans with at least one year to
maturity and rated BBB or lower.
Index returns are calculated monthly, assume reinvestment of dividends and,
unlike Trust returns, do not reflect any fees, expenses or sales charges. The
indices are not leveraged. You cannot invest directly in an index.
10 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
Schedule of Investments | 4/30/10
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Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
--------------------------------------------------------------------------------------------------
ASSET BACKED SECURITIES -- 3.0% of Net Assets
CONSUMER SERVICES -- 0.3%
Restaurants -- 0.3%
100,000 BB+/Baa3 DB Master Finance LLC, 5.779%, 6/20/31 (144A) $ 98,008
500,000 BB-/Ba3 DB Master Finance LLC, 8.285%, 6/20/31 (144A) 459,100
------------
Total Consumer Services $ 557,108
--------------------------------------------------------------------------------------------------
BANKS -- 2.1%
Thrifts & Mortgage Finance -- 2.1%
246,741(a) AA+/Aa1 Ace Securities Corp., 1.162%, 12/25/34 $ 189,093
1,387,846(a) AAA/Aaa Bayview Financial Acquisition Trust, 0.85%, 5/28/44 1,218,115
807,330(a) AAA/Aaa Bayview Financial Acquisition Trust, 0.85%, 8/28/44 727,442
200,000(a) A/B3 Carrington Mortgage Loan Trust, 0.363%, 10/25/36 161,525
699,000(a) BBB+/Caa2 Carrington Mortgage Loan Trust, 0.463%, 2/25/37 396,095
531,697(a) B/NR Countrywide Asset-Backed Certificates, 0.713%,
3/25/47 (144A) 233,151
250,000(a) B-/Ba2 GSAMP Trust, 0.393%, 1/25/37 214,489
128,531(a) A/A2 GSAMP Trust, 0.693%, 3/25/35 125,770
630,691(a) CC/Caa2 Lehman XS Trust, 0.613%, 12/25/35 184,334
------------
Total Banks $ 3,450,014
--------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 0.6%
Consumer Finance -- 0.1%
242,512(a) B-/B3 Novastar Home Equity Loan, 0.363%, 3/25/37 $ 231,214
--------------------------------------------------------------------------------------------------
Other Diversified Financial Services -- 0.4%
1,214,101(a) B-/Caa1 Aircraft Finance Trust, 0.734%, 5/15/24 (144A) $ 558,486
147,159(a) B-/Ba3 Aircraft Finance Trust, 0.754%, 5/15/24 (144A) 110,370
------------
$ 668,856
--------------------------------------------------------------------------------------------------
Specialized Finance -- 0.1%
150,000 BBB-/Baa3 Dominos Pizza Master Issuer LLC, 5.261%,
4/25/37 (144A) $ 138,866
------------
Total Diversified Financials $ 1,038,936
--------------------------------------------------------------------------------------------------
TOTAL ASSET BACKED SECURITIES
(Cost $5,268,817) $ 5,046,058
--------------------------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 1.2% of Net Assets
BANKS -- 1.2%
Thrifts & Mortgage Finance -- 1.2%
315,632(a) CCC/Caa2 Countrywide Alternative Loan Trust, 5.5%, 11/25/35 $ 241,010
266,565(a) CCC/B3 Countrywide Home Loans, 0.613%, 3/25/35 72,577
540,176(a) CC/Ca Downey Savings and Loan Association Mortgage Loan
Trust, 0.626%, 10/19/45 203,479
364,569(a) D/Ca Downey Savings and Loan Association Mortgage Loan
Trust, 0.676%, 10/19/45 56,086
1,181,824(a) AAA/A3 Impac CMB Trust, 1.023%, 1/25/35 861,521
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 11
Schedule of Investments | 4/30/10 (continued)
-------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-------------------------------------------------------------------------------------------------------
Thrifts & Mortgage Finance -- (continued)
144,187(a) D/Caa2 Impac Secured Assets CMN Owner Trust,
0.353%, 11/25/36 $ 126,492
706,397(a) CC/Ca Luminent Mortgage Trust, 0.523%, 7/25/36 65,508
410,174(a) AAA/Aa1 WaMu Mortgage Pass-Through Certificates,
0.493%, 4/25/45 343,623
------------
Total Banks $ 1,970,296
-------------------------------------------------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $2,717,420) $ 1,970,296
-------------------------------------------------------------------------------------------------------
CORPORATE BONDS & NOTES -- 90.9% of Net Assets
ENERGY -- 9.1%
Coal & Consumable Fuels -- 1.6%
850,000(m) BB/Ba3 Bumi Capital Pte, Ltd., 12.0%, 11/10/16 (144A) $ 938,230
738,000 BB-/B1 Drummond Co., Inc., 9.0%, 10/15/14 (144A) 773,055
420,000 NR/B2 Indo Integrated Energy II BV, 9.75%, 11/5/16 (144A) 449,400
505,000 BB-/B2 Massey Energy Co., 6.875%, 12/15/13 489,850
------------
$ 2,650,535
-------------------------------------------------------------------------------------------------------
Oil & Gas Drilling -- 0.4%
NOK 1,500,000 NR/NR Petrolia Drilling ASA, 12.0%, 6/20/12 (144A) $ 134,629
500,000 B/B3 Pioneer Drilling Co., 9.875%, 3/15/18 (144A) 515,000
------------
$ 649,629
-------------------------------------------------------------------------------------------------------
Oil & Gas Equipment & Services -- 1.4%
520,000 B+/B1 Expro Finance Luxembourg SCA, 8.5%,
12/15/16 (144A) $ 533,000
65,067(b) NR/NR Nexus 1 Pte., Ltd., 10.5%, 3/7/12 (144A) 651
1,120,000 CCC/NR Oceanografia SA de CV, 11.25%, 7/15/15 (144A) 708,400
600,000(a) NR/NR Sevan Marine ASA, 3.619%, 5/14/13 (144A) 513,000
NOK 3,000,000(a) NR/NR Sevan Marine ASA, 7.92%, 10/24/12 (144A) 457,232
154,800 NR/NR Skeie Drilling & Production ASA, 11.25%,
3/8/13 (144A) 130,032
------------
$ 2,342,315
-------------------------------------------------------------------------------------------------------
Oil & Gas Exploration & Production -- 3.9%
505,000 B+/B2 Berry Petroleum Co., 10.25%, 6/1/14 $ 559,287
125,000 BB/Ba3 Chesapeake Energy Corp., 9.5%, 2/15/15 137,031
374,000 BB/B1 Denbury Resources, Inc., 8.25%, 2/15/20 401,115
970,000 BB-/B2 Hilcorp Energy I LP, 9.0%, 6/1/16 (144A) 999,100
685,000 B/B3 Linn Energy LLC, 11.75%, 5/15/17 (144A) 780,900
NOK 2,500,000 NR/NR Norwegian Energy Co. AS, 12.9%, 11/20/14 442,414
NOK 3,000,000(a) NR/NR PA Resources AB, 9.82%, 3/9/11 492,794
650,000 B+/NR Pacific Rubiales Energy Corp., 8.75%,
11/10/16 (144A) 716,625
225,000 B/Caa1 PetroQuest Energy, Inc., 10.375%, 5/15/12 230,625
240,000 B-/B3 Quicksilver Resources, Inc., 7.125%, 4/1/16 232,200
The accompanying notes are an integral part of these financial statements.
12 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
------------------------------------------------------------------------------------------------------
Oil & Gas Exploration & Production -- (continued)
472,000 B+/Caa1 Rosetta Resources, Inc., 9.5%, 4/15/18 (144A) $ 483,800
335,000 B+/B3 SandRidge Energy, Inc., 8.0%, 6/1/18 (144A) 329,138
670,000(c) B+/B3 SandRidge Energy, Inc., 8.625%, 4/1/15 671,675
------------
$ 6,476,704
------------------------------------------------------------------------------------------------------
Oil & Gas Refining & Marketing -- 0.8%
1,310,000 B/B2 Petroplus Finance, Ltd., 9.375%, 9/15/19 (144A) $ 1,251,050
------------------------------------------------------------------------------------------------------
Oil & Gas Storage & Transportation -- 1.0%
500,000 B+/B1 Holly Energy Partners LP, 6.25%, 3/1/15 $ 475,000
1,245,000(a) BB/Ba1 Southern Union Co., 7.2%, 11/1/66 1,164,075
------------
$ 1,639,075
------------
Total Energy $ 15,009,308
------------------------------------------------------------------------------------------------------
MATERIALS -- 10.7%
Aluminum -- 0.9%
600,000(b) NR/NR Asia Aluminum Holdings, Ltd., 8.0%,
12/23/11 (144A) $ 77,250
300,000 CCC+/B3 CII Carbon LLC, 11.125%, 11/15/15 (144A) 306,750
1,282,402(a)(c) CCC/Caa1 Noranda Aluminum Acquisition Corp.,
5.274%, 5/15/15 1,102,866
------------
$ 1,486,866
------------------------------------------------------------------------------------------------------
Commodity Chemicals -- 0.2%
300,000 NR/NR Montell Finance Co. BV, 8.1%, 3/15/27 (144A) $ 291,000
------------------------------------------------------------------------------------------------------
Construction Materials -- 0.6%
865,000 CCC+/B3 AGY Holding Corp., 11.0%, 11/15/14 $ 761,200
300,000(a)(d) B-/NR C8 Capital SPV, Ltd., 6.64% (144A) 218,832
------------
$ 980,032
------------------------------------------------------------------------------------------------------
Diversified Chemicals -- 0.9%
EURO 1,275,000 CCC-/Caa3 Ineos Group Holdings Plc, 7.875%, 2/15/16 (144A) $ 1,419,812
------------------------------------------------------------------------------------------------------
Diversified Metals & Mining -- 1.8%
343,608(c) NR/NR Blaze Recycling & Metals LLC, 13.0%, 7/16/12 $ 278,752
195,000 B/B2 FMG Finance Pty., Ltd., 10.625%, 9/1/16 (144A) 229,125
750,000 NR/Ba3 Prime Dig Pte, Ltd., 11.75%, 11/3/14 (144A) 821,250
745,000 BBB/Baa3 Teck Resources, Ltd., 10.25%, 5/15/16 897,725
750,000 BB/Ba2 Vedanta Resources Plc, 9.5%, 7/18/18 (144A) 821,250
------------
$ 3,048,102
------------------------------------------------------------------------------------------------------
Forest Products -- 0.5%
732,000(m) BB/Ba2 Sino-Forest Corp., 10.25%, 7/28/14 (144A) $ 808,860
------------------------------------------------------------------------------------------------------
Metal & Glass Containers -- 0.9%
1,145,000 CCC+/B2 AEP Industries, Inc., 7.875%, 3/15/13 $ 1,139,275
EURO 255,000 NR/NR Ardagh Glass Finance Plc, 9.25%, 7/1/16 (144A) 376,356
------------
$ 1,515,631
------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 13
Schedule of Investments | 4/30/10 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Paper Packaging -- 1.5%
750,103(c)(e) NR/NR Corporacion Durango SAB de CV, 6.0%, 8/27/16 $ 596,332
700,000 CCC+/Caa1 Graham Packaging Co., Inc., 9.875%, 10/15/14 729,750
500,000(m) B-/B3 Graphic Packaging International, Inc., 9.5%, 8/15/13 513,750
750,000 B/NR U.S. Corrugated, Inc., 10.0%, 6/1/13 660,000
------------
$ 2,499,832
----------------------------------------------------------------------------------------------------------
Paper Products -- 1.2%
500,000 B+/B1 Appleton Papers, Inc., 10.5%, 6/15/15 (144A) $ 507,500
425,000 B+/B1 Cellu Tissue Holdings, Inc., 11.5%, 6/1/14 474,938
260,000 BB/Ba3 Clearwater Paper Corp., 10.625%, 6/15/16 (144A) 288,925
600,000 B-/B3 Exopack Holding Corp., 11.25%, 2/1/14 631,500
------------
$ 1,902,863
----------------------------------------------------------------------------------------------------------
Precious Metals & Minerals -- 0.3%
500,000(m) B+/Ba3 ALROSA Finance SA, 8.875%, 11/17/14 (144A) $ 540,000
----------------------------------------------------------------------------------------------------------
Steel -- 1.9%
1,245,000 CCC+/Caa2 Algoma Acquisition Corp., 9.875%, 6/15/15 (144A) $ 1,188,975
450,000 B+/B3 Essar Steel Algoma, Inc., 9.375%, 3/15/15 (144A) 461,250
250,000 B/B2 Evraz Group SA, 8.875%, 4/24/13 (144A) 261,250
250,000 B/B2 Evraz Group SA, 9.5%, 4/24/18 (144A) 265,000
920,000 CCC+/Caa1 Ryerson, Inc., 12.0%, 11/1/15 994,750
EURO 50,000 CC/Ca Zlomrex International Finance SA, 8.5%,
2/1/14 (144A) 34,571
------------
$ 3,205,796
------------
Total Materials $ 17,698,794
----------------------------------------------------------------------------------------------------------
CAPITAL GOODS -- 6.6%
Aerospace & Defense -- 0.8%
750,000 B-/NR Aeroflex, Inc., 11.75%, 2/15/15 $ 820,312
405,000 BB/Ba3 DigitalGlobe, Inc., 10.5%, 5/1/14 (144A) 443,475
90,000 B/B1 GeoEye, Inc., 9.625%, 10/1/15 (144A) 93,713
------------
$ 1,357,500
----------------------------------------------------------------------------------------------------------
Building Products -- 0.3%
EURO 200,000(a)(d) B-/NR C10 - EUR Capital SPV, Ltd., 6.277% $ 186,150
365,000 BB/B1 USG Corp., 9.75%, 8/1/14 (144A) 394,200
------------
$ 580,350
----------------------------------------------------------------------------------------------------------
Construction & Engineering -- 0.5%
350,000 BB-/Ba3 Dycom Industries, Inc., 8.125%, 10/15/15 $ 337,750
500,000 B/B2 Esco Corp., 8.625%, 12/15/13 (144A) 517,500
------------
$ 855,250
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
14 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Construction & Farm Machinery & Heavy Trucks -- 1.7%
720,000 BB-/Caa1 American Railcar Industries, Inc., 7.5%, 3/1/14 $ 702,000
770,000 CCC/Caa3 Commercial Vehicle Group, Inc., 8.0%, 7/1/13 637,175
950,000 CCC/Caa2 Greenbrier Companies, Inc., 8.375%, 5/15/15 902,500
189,000 BB-/Caa1 Manitowoc Co., Inc., 9.5%, 2/15/18 198,450
300,000 B-/B2 Titan International, Inc., 8.0%, 1/15/12 303,000
------------
$ 2,743,125
----------------------------------------------------------------------------------------------------------
Industrial Conglomerates -- 0.7%
500,000 B-/NR Cia Latinoamericana de Infraestructura & Servicios SA,
9.75%, 5/10/12 $ 435,000
500,000(b) NR/NR Indalex Holding Corp., 11.5%, 2/1/14 5,625
740,000 CCC+/Caa1 Park-Ohio Industries, Inc., 8.375%, 11/15/14 684,500
------------
$ 1,125,125
----------------------------------------------------------------------------------------------------------
Industrial Machinery -- 1.2%
1,220,000 B-/NR Industrias Metalurgicas Pescarmona SA, 11.25%,
10/22/14 (144A) $ 1,152,900
875,000 B-/B3 Mueller Water Products, Inc., 7.375%, 6/1/17 796,250
------------
$ 1,949,150
----------------------------------------------------------------------------------------------------------
Trading Companies & Distributors -- 1.4%
150,000 B/B3 Avis Budget Car Rental LLC/Avis Budget Finance, Inc.,
9.625%, 3/15/18 (144A) $ 162,000
1,090,000 B-/B3 Intcomex, Inc., 13.25%, 12/15/14 (144A) 1,103,625
1,000,000 B/B1 Wesco Distribution, Inc., 7.5%, 10/15/17 990,000
------------
$ 2,255,625
------------
Total Capital Goods $ 10,866,125
----------------------------------------------------------------------------------------------------------
COMMERCIAL & PROFESSIONAL SERVICES -- 0.4%
Diversified Support Services -- 0.2%
400(f) NR/B3 MSX International, Ltd., UK, 12.5%, 4/1/12 (144A) $ 336,000
----------------------------------------------------------------------------------------------------------
Environmental & Facilities Services -- 0.2%
700,000(b) D/NR Aleris International, Inc., 10.0%, 12/15/16 $ 3,500
210,000 B+/B2 Casella Waste Systems, Inc., 11.0%, 7/15/14 (144A) 227,850
EURO 107,128 CCC+/Caa1 New Reclamation Group Pty., Ltd., 8.125%,
2/1/13 (144A) 106,831
------------
$ 338,181
------------
Total Commercial & Professional Services $ 674,181
----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 0.9%
Air Freight & Logistics -- 0.6%
929,000(m) CCC/Caa1 CEVA Group PLC, 11.5%, 4/1/18 (144A) $ 992,628
----------------------------------------------------------------------------------------------------------
Airlines -- 0.2%
305,000 BB-/Ba2 Delta Air Lines, Inc., 9.5%, 9/15/14 (144A) $ 322,919
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 15
Schedule of Investments | 4/30/10 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Railroads -- 0.1%
240,000 B+/B2 Kansas City Southern de Mexico, 7.625%, 12/1/13 $ 246,600
------------
Total Transportation $ 1,562,147
----------------------------------------------------------------------------------------------------------
AUTOMOBILES & COMPONENTS -- 1.6%
Auto Parts & Equipment -- 1.4%
980,000(m) CCC+/Caa2 Allison Transmission, Inc., 11.0%, 11/1/15 (144A) $ 1,058,400
160,000 CCC/Caa1 Stanadyne Corp., 10.0%, 8/15/14 151,200
500,000(e) CCC-/Caa3 Stanadyne Corp., 12.0%, 2/15/15 395,000
700,000(m) CCC+/Caa2 Tenneco, Inc., 8.625%, 11/15/14 721,000
------------
$ 2,325,600
----------------------------------------------------------------------------------------------------------
Tires & Rubber -- 0.2%
235,000 B+/B1 Goodyear Tire & Rubber Co., 10.5%, 5/15/16 $ 261,731
------------
Total Automobiles & Components $ 2,587,331
----------------------------------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 1.3%
Homebuilding -- 0.7%
430,000 BB-/Ba3 Desarrolladora Homex SA de CV, 9.5%,
12/11/19 (144A) $ 461,132
695,000 B+/B1 Meritage Homes Corp., 6.25%, 3/15/15 668,937
------------
$ 1,130,069
----------------------------------------------------------------------------------------------------------
Housewares & Specialties -- 0.6%
1,000,000 CCC+/Caa1 Yankee Acquisition Corp., 9.75%, 2/15/17 $ 1,045,000
------------
Total Consumer Durables & Apparel $ 2,175,069
----------------------------------------------------------------------------------------------------------
CONSUMER SERVICES -- 2.6%
Casinos & Gaming -- 2.4%
500,000(b) NR/NR Buffalo Thunder Development Authority, 9.375%,
12/15/14 (144A) $ 83,750
EURO 1,155,000 B/B2 Codere Finance Luxembourg SA, 8.25%,
6/15/15 (144A) 1,537,660
395,000 B/B3 FireKeepers Development Authority, 13.875%,
5/1/15 (144A) 458,200
95,000 B/B3 Galaxy Entertainment Finance Co., Ltd., 9.875%,
12/15/12 (144A) 99,691
275,000(b) D/Ca Little Traverse Bay Bands of Odawa Indians, 10.25%,
2/15/14 (144A) 72,188
1,615,000(b) D/NR Mashantucket Western Pequot Tribe, 8.5%,
11/15/15 (144A) 403,750
EURO 500,000 B/B3 Peermont Global, Ltd., 7.75%, 4/30/14 (144A) 631,582
180,000 BB-/B1 Scientific Games International, Inc., 9.25%, 6/15/19 193,950
423,000 BB-/B1 Scientific Games International, Inc., 9.25%,
6/15/19 (144A) 455,783
585,000(b) D/NR Station Casinos, Inc., 6.625%, 3/15/18 5,119
------------
$ 3,941,673
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
16 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
---------------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
---------------------------------------------------------------------------------------------------------------
Specialized Consumer Services -- 0.2%
350,000 B-/B3 StoneMor Operating LLC/Cornerstone Family Services/
Osiris Holdings, 10.25%, 12/1/17 (144A) $ 365,750
------------
Total Consumer Services $ 4,307,423
---------------------------------------------------------------------------------------------------------------
MEDIA -- 3.9%
Advertising -- 1.0%
716,000 B+/B2 MDC Partners, Inc., 11.0%, 11/1/16 (144A) $ 784,020
800,000 B-/Caa2 Sitel LLC/Sitel Finance Corp., 11.5%, 4/1/18 (144A) 812,000
------------
$ 1,596,020
---------------------------------------------------------------------------------------------------------------
Broadcasting -- 2.6%
182,676(m) B/B2 CCH II LLC, 13.5%, 11/30/16 $ 221,038
840,000 B/B1 Hughes Network Systems LLC, 9.5%, 4/15/14 865,200
903,125(c) CCC+/Caa3 Intelsat Bermuda, Ltd., 11.5%, 2/4/17 952,797
500,000 B+/B3 Intelsat Subsidiary Holding Co., Ltd., 8.5%, 1/15/13 508,750
430,000 B-/Caa1 Telesat Canada, 12.5%, 11/1/17 501,487
1,379,155(c)(m) CCC/Caa2 Univision Communications, Inc., 9.75%,
3/15/15 (144A) 1,248,135
------------
$ 4,297,407
---------------------------------------------------------------------------------------------------------------
Publishing -- 0.3%
600,000 CCC+/Caa2 Cengage Learning Acquisitions, Inc., 10.5%,
1/15/15 (144A) $ 588,000
------------
Total Media $ 6,481,427
---------------------------------------------------------------------------------------------------------------
RETAILING -- 1.1%
Apparel Retail -- 0.1%
EURO 75,000(a) B+/B2 Edcon Holdings Pty., Ltd., 3.9%, 6/15/14 (144A) $ 78,532
EURO 74,000(a) CCC+/Caa1 Edcon Holdings Pty., Ltd., 6.15%, 6/15/15 (144A) 68,138
------------
$ 146,670
---------------------------------------------------------------------------------------------------------------
Internet Retail -- 0.5%
640,000 B/B1 Ticketmaster Entertainment, Inc., 10.75%, 7/28/16 $ 720,000
---------------------------------------------------------------------------------------------------------------
Specialty Stores -- 0.5%
800,000(m) B-/Caa1 Sally Holdings LLC, 10.5%, 11/15/16 $ 878,000
------------
Total Retailing $ 1,744,670
---------------------------------------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 4.9%
Agricultural Products -- 0.6%
950,000 B+/B3 Southern States Cooperative, Inc., 11.25%,
5/15/15 (144A) $ 942,875
---------------------------------------------------------------------------------------------------------------
Packaged Foods & Meats -- 3.0%
650,000 NR/B1 Bertin Ltda, 10.25%, 10/5/16 (144A) $ 715,000
491,000(m) NR/B2 Corporacion Pesquera Inca SAC, 9.0%,
2/10/17 (144A) 498,979
750,000 B-/B3 FAGE Dairy Industry SA/FAGE USA Dairy Industry, Inc.,
9.875%, 2/1/20 (144A) 707,084
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 17
Schedule of Investments | 4/30/10 (continued)
---------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
---------------------------------------------------------------------------------------------------------
Packaged Foods & Meats -- (continued)
209,088(m) NR/NR Independencia International, Ltd., 12.0%,
12/30/16 (144A) $ 114,998
475,000 B+/B1 Marfrig Overseas, Ltd., 9.5%, 5/4/20 (144A) 467,524
700,000 B+/B1 Marfrig Overseas, Ltd., 9.625%, 11/16/16 (144A) 721,000
1,175,000 B-/B3 Minerva Overseas, Ltd., 9.5%, 2/1/17 (144A) 1,198,500
275,000 B-/B3 Minerva Overseas II, Ltd., 10.875%,
11/15/19 (144A) 297,688
275,000(e) NR/B2 SA Fabrica de Produtos Alimenticios Vigor, 9.25%,
2/23/17 (144A) 276,144
------------
$ 4,996,917
---------------------------------------------------------------------------------------------------------
Tobacco -- 1.3%
250,000 B+/NR Alliance One International, Inc., 10.0%,
7/15/16 (144A) $ 265,000
1,765,000 B+/B2 Alliance One International, Inc., 10.0%,
7/15/16 (144A) 1,870,900
------------
$ 2,135,900
------------
Total Food, Beverage & Tobacco $ 8,075,692
---------------------------------------------------------------------------------------------------------
HOUSEHOLD & PERSONAL PRODUCTS -- 0.2%
Personal Products -- 0.2%
300,000 B-/B3 Revlon Consumer Products Corp., 9.75%,
11/15/15 (144A) $ 308,250
------------
Total Household & Personal Products $ 308,250
---------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 4.4%
Health Care Equipment & Services -- 0.5%
750,000 CCC+/Caa2 Accellent, Inc., 10.5%, 12/1/13 $ 755,625
---------------------------------------------------------------------------------------------------------
Health Care Services -- 2.3%
378,000 B-/B3 BioScrip, Inc., 10.25%, 10/1/15 (144A) $ 387,450
1,385,000(m) BB-/NR DASA Finance Corp., 8.75%, 5/29/18 (144A) 1,495,800
796,459(c) B-/B3 Surgical Care Affiliates, Inc., 8.875%,
7/15/15 (144A) 802,432
1,170,000(m) CCC+/Caa1 Surgical Care Affiliates, Inc., 10.0%, 7/15/17 (144A) 1,178,775
------------
$ 3,864,457
---------------------------------------------------------------------------------------------------------
Health Care Supplies -- 1.3%
750,000 B/Caa1 Bausch & Lomb, Inc., 9.875%, 11/1/15 $ 792,187
1,265,000(c) B-/B3 Biomet, Inc., 10.375%, 10/15/17 1,394,662
------------
$ 2,186,849
---------------------------------------------------------------------------------------------------------
Managed Health Care -- 0.3%
500,000 B-/Caa1 Multiplan, Inc., 10.375%, 4/15/16 (144A) $ 517,500
------------
Total Health Care Equipment & Services $ 7,324,431
---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
18 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
-------------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS & BIOTECHNOLOGY & LIFE SCIENCES -- 0.5%
Life Sciences Tools & Services -- 0.2%
131,406(c) B/Caa1 Catalent Pharma Solutions, Inc., 9.5%, 4/15/15 $ 133,377
290,000 B+/B3 PharmaNet Development Group, Inc., 10.875%,
4/15/17 (144A) 296,888
------------
$ 430,265
-------------------------------------------------------------------------------------------------------------
Pharmaceuticals -- 0.3%
250,000 B/B2 Phibro Animal Health Corp., 10.0%, 8/1/13 (144A) $ 258,438
200,000 CCC+/Caa1 Phibro Animal Health Corp., 13.0%, 8/1/14 (144A) 204,000
------------
$ 462,438
------------
Total Pharmaceuticals & Biotechnology &
Life Sciences $ 892,703
-------------------------------------------------------------------------------------------------------------
BANKS -- 2.1%
Diversified Banks -- 1.4%
250,000 NR/Ba1 ATF Capital BV, 9.25%, 2/21/14 (144A) $ 267,500
500,000(a) NR/B2 Banco Macro SA, 9.75%, 12/18/36 455,000
700,000 NR/Ba2 Banco Macro SA, 10.75%, 6/7/12 502,250
BRL 350,000 AAA/NR International Finance Corp., 9.25%, 3/15/13 197,149
200,000(b) D/NR JSC TemirBank, 9.5%, 5/21/14 (144A) 64,000
550,000 B+/Ba3 Russian Standard Finance SA, 7.5%, 10/7/10 (144A) 549,450
500,000(b) D/C TuranAlem Finance BV, 8.5%, 2/10/15 (144A) 251,250
------------
$ 2,286,599
-------------------------------------------------------------------------------------------------------------
Regional Banks -- 0.7%
600,000(a)(d) BBB/Baa3 PNC Financial Services Group, Inc., 8.25% $ 636,847
500,000(a)(d) A-/Ba1 Wells Fargo Capital XV, 9.75% 560,000
------------
$ 1,196,847
------------
Total Banks $ 3,483,446
-------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 5.4%
Asset Management & Custody Banks -- 0.6%
375,000 BB+/Baa3 Janus Capital Group, Inc., 6.5%, 6/15/12 $ 388,347
665,000 BB+/Baa3 Janus Capital Group, Inc., 6.95%, 6/15/17 677,470
------------
$ 1,065,817
-------------------------------------------------------------------------------------------------------------
Consumer Finance -- 0.2%
EURO 200,000 B+/B1 TVN Finance Corp II AB, 10.75%, 11/15/17 (144A) $ 295,727
-------------------------------------------------------------------------------------------------------------
Investment Banking & Brokerage -- 0.2%
450,000(a)(d) BBB/Baa2 Goldman Sachs Capital II, 5.793% $ 356,063
-------------------------------------------------------------------------------------------------------------
Other Diversified Financial Services -- 1.9%
EURO 500,000(a) BB-/NR ATLAS VI Capital, Ltd., 10.135%, 4/6/13 (144A) $ 685,033
1,000,000(a) B+/NR Ibis Re, Ltd., 9.407%, 5/3/13 (144A) 999,400
400,000(a) BB-/NR Ibis Re, Ltd., 10.507%, 5/10/12 (144A) 434,280
1,000,000(a) NR/B1 Redwood Capital XI, Ltd., 6.407%, 1/7/11 (144A) 1,001,800
------------
$ 3,120,513
-------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 19
Schedule of Investments | 4/30/10 (continued)
-----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-----------------------------------------------------------------------------------------------------------
Specialized Finance -- 2.5%
575,000 B-/Caa1 ACE Cash Express, Inc., 10.25%, 10/1/14 (144A) $ 477,250
500,000 BB/Baa3 Capital One Capital V, 10.25%, 8/15/39 600,000
1,000,000(a) B-/NR Montana Re, Ltd., 13.502%, 12/7/12 (144A) 1,003,500
425,000 B+/B2 National Money Mart Co., 10.375%,
12/15/16 (144A) 449,438
755,000(a) CCC+/Caa1 NCO Group, Inc., 5.125%, 11/15/13 668,175
900,000 CCC+/Caa2 NCO Group, Inc., 11.875%, 11/15/14 875,250
------------
$ 4,073,613
------------
Total Diversified Financials $ 8,911,733
-----------------------------------------------------------------------------------------------------------
INSURANCE -- 22.1%
Insurance Brokers -- 1.6%
250,000 CCC/Caa1 Alliant Holdings I, Inc., 11.0%, 5/1/15 (144A) $ 258,125
1,050,000 CCC+/Caa1 HUB International Holdings, Inc., 10.25%,
6/15/15 (144A) 1,023,750
827,000(a) CCC/B3 U.S.I. Holdings Corp., 4.125%, 11/15/14 (144A) 705,017
804,000 CCC/Caa1 U.S.I. Holdings Corp., 9.75%, 5/15/15 (144A) 773,850
------------
$ 2,760,742
-----------------------------------------------------------------------------------------------------------
Multi-Line Insurance -- 1.3%
1,000,000(a) BB/Baa3 Liberty Mutual Group, Inc., 7.0%, 3/15/37 (144A) $ 886,243
1,000,000(a) BB/Baa3 Liberty Mutual Group, Inc., 10.75%, 6/15/58 (144A) 1,165,000
65,000 BB-/NR Sul America Participacoes SA, 8.625%,
2/15/12 (144A) 69,225
------------
$ 2,120,468
-----------------------------------------------------------------------------------------------------------
Reinsurance -- 19.2%
1,500,000(a) BB+/NR AKIBARE, 3.201%, 5/22/12 (144A) $ 1,466,550
1,000,000(a) BB+/NR AKIBARE, 3.401%, 5/22/12 (144A) 975,900
EURO 1,500,000(a) B-/NR Atlas Reinsurance Plc, 10.885%, 1/10/11 (144A) 2,029,372
2,000,000(a) BB+/NR Blue Fin, Ltd., 4.695%, 4/10/12 (144A) 1,875,600
1,000,000(a) BB-/NR Blue Fin, Ltd., 13.804%, 4/16/12 (144A) 1,075,800
1,000,000(a) BB/NR Caelus Re, Ltd., 6.502%, 6/7/11 (144A) 991,000
1,750,000(a) B-/NR Carillon, Ltd., 15.507%, 1/10/11 (144A) 1,728,300
1,500,000(a) BB/NR East Lane Re, Ltd., 7.249%, 5/6/11 (144A) 1,486,800
1,750,000(a) BB+/NR Fhu-Jin, Ltd., 4.149%, 8/10/11 (144A) 1,730,750
1,000,000(a) BB+/NR Foundation Re III, Ltd., 5.806%, 2/3/14 (144A) 1,003,000
1,000,000(a) NR/B1 GlobeCat, Ltd., 6.292%, 1/2/13 (144A) 1,001,400
350,000(a) NR/B3 GlobeCat, Ltd., 9.542%, 1/2/13 (144A) 327,950
EURO 1,500,000(a) BB+/NR Green Valley, Ltd., 4.24%, 1/10/11 (144A) 1,986,890
600,000(a) BB+/NR Merna Reinsurance II, Ltd., 3.807%, 4/8/13 (144A) 599,520
250,000(a) B/NR MultiCat Mexico, Ltd., Series 2009-I Class A,
11.657%, 10/19/12 (144A) 263,500
250,000(a) B/NR MultiCat Mexico, Ltd., Series 2009-I Class B,
10.407%, 10/19/12 (144A) 250,275
The accompanying notes are an integral part of these financial statements.
20 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
---------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
---------------------------------------------------------------------------------------------------------
Reinsurance -- (continued)
250,000(a) B/NR MultiCat Mexico, Ltd., Series 2009-I Class C,
10.407%, 10/19/12 (144A) $ 250,275
250,000(a) BB-/NR MultiCat Mexico, Ltd., Series 2009-I Class D,
10.407%, 10/19/12 (144A) 246,750
2,500,000(a) NR/Ba2 Muteki, Ltd., 4.65%, 5/24/11 (144A) 2,453,500
500,000(a) BB/NR Mystic Re II, Ltd., 12.252%, 3/20/12 (144A) 543,600
1,000,000(a) NR/B1 Nelson Re, Ltd., 4.75%, 6/6/11 (144A) 976,500
1,000,000(a) BB+/NR Newton Re, Ltd., 4.932%, 12/24/10 (144A) 995,500
1,000,000(a) BB/NR Newton Re, Ltd., 7.232%, 12/24/10 (144A) 973,100
425,000(a) BB-/NR Residential Reinsurance 2008, Ltd., 7.002%,
6/6/11 (144A) 426,233
2,000,000(a) B-/NR Residential Reinsurance 2008, Ltd., 11.752%,
6/6/11 (144A) 1,994,400
1,000,000 NR/NR Successor X, Ltd., 0.0%, 12/9/10 (144A) 874,900
600,000 B-/NR Successor X, Ltd., 0.0%, 12/9/10 (144A) 543,600
500,000(a) B-/NR Successor X, Ltd., 9.907%, 4/4/13 (144A) 496,100
1,250,000(a) NR/NR Successor X, Ltd., 11.907%, 4/4/13 (144A) 1,239,250
500,000(a) NR/NR Successor X, Ltd., 16.907%, 4/4/13 (144A) 496,400
500,000(a)(b) D/NR Willow Re, Ltd., 0.0%, 6/16/10 (144A) 400,000
------------
$ 31,702,715
------------
Total Insurance $ 36,583,925
---------------------------------------------------------------------------------------------------------
REAL ESTATE -- 0.3%
Real Estate Operating Companies -- 0.3%
76,705 B-/NR Alto Palermo SA, 11.0%, 6/11/12 (144A) $ 41,229
410,000 B-/NR IRSA Inversiones y Representaciones SA, 8.5%,
2/2/17 (144A) 393,600
------------
Total Real Estate $ 434,829
---------------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 2.8%
Application Software -- 0.8%
1,390,000 CCC+/Caa2 Vangent, Inc., 9.625%, 2/15/15 $ 1,310,075
---------------------------------------------------------------------------------------------------------
Data Processing & Outsourced Services -- 0.8%
1,465,000(m) B-/Caa1 First Data Corp., 9.875%, 9/24/15 $ 1,340,475
---------------------------------------------------------------------------------------------------------
Internet Software & Services -- 0.6%
905,000(e) B-/B1 Terremark Worldwide, Inc., 12.0%, 6/15/17 (144A) $ 1,040,750
---------------------------------------------------------------------------------------------------------
IT Consulting & Other Services -- 0.3%
405,000 CCC/Caa1 Activant Solutions, Inc., 9.5%, 5/1/16 $ 389,813
---------------------------------------------------------------------------------------------------------
Systems Software -- 0.3%
684,999(c)(g) NR/NR Pegasus Solutions, Inc., 13.0%, 4/15/14 (144A) $ 513,749
------------
Total Software & Services $ 4,594,862
---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 21
Schedule of Investments | 4/30/10 (continued)
---------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
---------------------------------------------------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 0.8%
Computer Storage & Peripherals -- 0.3%
430,000 BB+/Baa3 Seagate Technology International, 10.0%,
5/1/14 (144A) $ 509,550
---------------------------------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 0.5%
250,000 B/B1 Da-Lite Screen Co., Inc., 9.5%, 5/15/11 $ 259,375
486,000 B/B1 Da-Lite Screen Co., Inc., 12.5%, 4/1/15 (144A) 486,000
------------
$ 745,375
------------
Total Technology Hardware & Equipment $ 1,254,925
---------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 6.6%
Alternative Carriers -- 0.6%
945,000 B/B2 Global Crossing, Ltd., 12.0%, 9/15/15 (144A) $ 1,060,762
---------------------------------------------------------------------------------------------------------
Integrated Telecommunication Services -- 3.0%
910,000 CCC+/B3 Broadview Networks Holdings, Inc., 11.375%, 9/1/12 $ 903,175
388,000 B-/B2 Cincinnati Bell, Inc., 8.75%, 3/15/18 392,850
1,250,000 BB-/B2 GCI, Inc., 7.25%, 2/15/14 1,253,125
750,000 B/B1 PAETEC Holding Corp., 8.875%, 6/30/17 771,562
1,010,000 CCC+/Caa1 PAETEC Holding Corp., 9.5%, 7/15/15 1,028,937
500,000 B+/Ba3 Windstream Corp., 8.625%, 8/1/16 511,875
------------
$ 4,861,524
---------------------------------------------------------------------------------------------------------
Wireless Telecommunication Services -- 3.0%
550,000 NR/NR Bakrie Telecom Tbk PT, 11.5%, 5/7/15 (144A) $ 550,000
365,000 B+/Ba2 Cricket Communications, Inc., 7.75%, 5/15/16 378,688
500,000(m) B-/B3 Cricket Communications, Inc., 9.375%, 11/1/14 516,875
300,000(m) NR/Caa1 Digicel Group, Ltd., 10.5%, 4/15/18 (144A) 320,250
750,000 BB-/B1 NII Capital Corp., 10.0%, 8/15/16 (144A) 832,500
790,000 BB+/Ba2 OJSC Vimpel Communications, 9.125%,
4/30/18 (144A) 899,612
1,330,000 B-/B2 True Move Co., Ltd., 10.375%, 8/1/14 (144A) 1,346,625
100,000 B-/B2 True Move Co., Ltd., 10.75%, 12/16/13 (144A) 102,000
------------
$ 4,946,550
------------
Total Telecommunication Services $ 10,868,836
---------------------------------------------------------------------------------------------------------
UTILITIES -- 2.6%
Electric Utilities -- 0.6%
750,000 B-/NR Cia de Transporte de Energia Electrica de Alta Tension
SA, 8.875%, 12/15/16 (144A) $ 682,500
500,000(m) CCC/Caa2 Texas Competitive Electric Holdings Co. LLC,
10.25%, 11/1/15 375,000
------------
$ 1,057,500
---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
22 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
-------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-------------------------------------------------------------------------------------------------------
Gas Utilities -- 1.0%
490,000 B+/B1 Inergy, L.P., 8.25%, 3/1/16 $ 509,600
1,135,000 B-/B2 Transportadora de Gas del Sur SA, 7.875%,
5/14/17 (144A) 1,083,925
------------
$ 1,593,525
-------------------------------------------------------------------------------------------------------
Independent Power Producers & Energy Traders -- 0.9%
500,000 BB-/Ba3 Intergen NV, 9.0%, 6/30/17 (144A) $ 522,500
346,000 BB-/Ba2 Listrindo Capital BV, 9.25%, 1/29/15 (144A) 370,379
500,000 NR/B2 Star Energy Geothermal (Wayang Windu), Ltd., 11.5%,
2/12/15 (144A) 541,685
------------
$ 1,434,564
-------------------------------------------------------------------------------------------------------
Multi-Utilities -- 0.1%
225,000 BB-/Ba2 PNM Resources, Inc., 9.25%, 5/15/15 $ 242,156
------------
Total Utilities $ 4,327,745
-------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS & NOTES
(Cost $149,795,208) $150,167,852
-------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS & NOTES -- 3.6% of Net Assets
MATERIALS -- 0.8%
Diversified Chemicals -- 0.8%
1,900(f) BB-/NR Hercules Inc, 6.5%, 6/30/29 $ 1,368,000
------------
Total Materials $ 1,368,000
-------------------------------------------------------------------------------------------------------
CAPITAL GOODS -- 0.2%
Electrical Components & Equipment -- 0.2%
150,000 NR/NR JA Solar Holdings Co., Ltd., 4.5%, 5/15/13 $ 130,687
200,000 NR/NR Suntech Power Holdings Co., Ltd., 3.0%, 3/15/13 173,500
------------
Total Capital Goods $ 304,187
-------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 0.5%
Marine -- 0.5%
990,000 CCC+/Caa2 Horizon Lines, Inc., 4.25%, 8/15/12 $ 883,575
------------
Total Transportation $ 883,575
-------------------------------------------------------------------------------------------------------
MEDIA -- 0.4%
Movies & Entertainment -- 0.4%
659,000 B-/NR Live Nation, Inc., 2.875%, 7/15/27 $ 607,104
------------
Total Media $ 607,104
-------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 0.8%
Health Care Equipment & Services -- 0.6%
1,040,000(e) BB-/NR Hologic, Inc., 2.0%, 12/15/37 $ 936,000
-------------------------------------------------------------------------------------------------------
Health Care Facilities -- 0.2%
405,000 B/NR LifePoint Hospitals, Inc., 3.5%, 5/15/14 $ 420,187
-------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 23
Schedule of Investments | 4/30/10 (continued)
-------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-------------------------------------------------------------------------------------------------------
Health Care Services -- 0.0%
50,000 B+/B3 Omnicare, Inc., 3.25%, 12/15/35 $ 42,813
------------
Total Health Care Equipment & Services $ 1,399,000
-------------------------------------------------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 0.2%
Communications Equipment -- 0.2%
450,000(b) NR/NR Nortel Networks Corp., 2.125%, 4/15/14 $ 346,500
------------
Total Technology Hardware & Equipment $ 346,500
-------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 0.7%
Wireless Telecommunication Services -- 0.7%
1,150,000 B-/NR NII Holdings, Inc., 3.125%, 6/15/12 $ 1,092,500
------------
Total Telecommunication Services $ 1,092,500
-------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS & NOTES
(Cost $5,035,524) $ 6,000,866
-------------------------------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS -- 0.6% of Net Assets
Brazil -- 0.6%
BRL 1,750,000 BBB-/Baa3 Brazilian Government International Bond,
10.25%, 1/10/28 $ 1,022,498
-------------------------------------------------------------------------------------------------------
TOTAL SOVEREIGN DEBT OBLIGATIONS
(Cost $947,551) $ 1,022,498
-------------------------------------------------------------------------------------------------------
FLOATING RATE LOAN INTERESTS -- 36.3% of Net Assets (h)
ENERGY -- 0.9%
Coal & Consumable Fuels -- 0.3%
500,000 B+/B1 PT Bukit Mutiara, Term Loan, 8.288%, 12/29/10 $ 495,000
-------------------------------------------------------------------------------------------------------
Integrated Oil & Gas -- 0.4%
450,000 NR/B2 Big West Oil, LLC, Term Loan, 4.50%, 5/15/14 $ 455,813
334,900 BB-/Ba3 Hudson Products Holdings, Inc., Term Loan,
8.0%, 8/24/15 309,782
------------
$ 765,595
-------------------------------------------------------------------------------------------------------
Oil & Gas Exploration & Production -- 0.2%
320,588 B/B3 Venoco, Inc., Second Lien Term Loan,
4.313%, 5/8/14 $ 308,166
------------
Total Energy $ 1,568,761
-------------------------------------------------------------------------------------------------------
MATERIALS -- 3.5%
Diversified Chemicals -- 0.8%
899,553 BB+/Ba1 Huntsman International LLC, New Dollar Term Loan B,
2.016% - 2.078%, 4/21/14 $ 867,975
115,000 B/B2 Ineos US Finance LLC, Facility Term Loan B-2,
7.5%, 12/16/13 115,036
115,000 B/B2 Ineos US Finance LLC, Facility Term Loan C-2,
8.0%, 12/16/14 115,036
250,000 BB/Ba2 Solutia Inc., Term Loan, 4.75%, 3/17/17 252,057
------------
$ 1,350,104
-------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
24 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
-------------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-------------------------------------------------------------------------------------------------------------
Forest Products -- 0.9%
1,500,000(c) NR/Ba3 Ainsworth Lumber Co., Ltd., Term Loan,
5.313%, 6/26/14 $ 1,455,000
-------------------------------------------------------------------------------------------------------------
Paper Packaging -- 0.6%
48,824 B+/B1 Graham Packaging Co. LP, Term Loan B, 2.5% -
2.563%, 10/7/11 $ 48,568
461,353 B+/B1 Graham Packaging Co. LP, Term Loan C,
6.75%, 4/5/14 465,858
438,525 B-/B3 Graphic Packaging International, Inc., Incremental
Term Loan, 3.041% -- 3.05%, 5/16/14 437,182
------------
$ 951,608
-------------------------------------------------------------------------------------------------------------
Paper Products -- 0.6%
967,453 BB+/NR Georgia-Pacific LLC, Term Loan B, 2.254% -
2.338%, 12/23/12 $ 963,220
-------------------------------------------------------------------------------------------------------------
Specialty Chemicals -- 0.1%
100,000 B/B2 Chemtura Corp., Facility Term Loan, 6.0%, 2/11/11 $ 100,750
-------------------------------------------------------------------------------------------------------------
Steel -- 0.5%
900,035(c)(g) B/B3 Niagara Corp., New Term Loan, 10.5%, 6/29/14 $ 891,034
------------
Total Materials $ 5,711,716
-------------------------------------------------------------------------------------------------------------
CAPITAL GOODS -- 3.6%
Aerospace & Defense -- 1.7%
731,144 B-/NR Aeroflex, Inc., Tranche B-2 Term Loan, 4.0%, 8/15/14 $ 717,892
605,843 BB-/B1 DAE Aviation Holdings, Inc., Tranche B-1 Term Loan,
4.09%, 7/31/14 580,599
249,328 BB/B1 Hunter Defense Technologies, Inc., Term Loan,
3.55%, 8/22/14 233,745
489,848 BB+/Ba3 Spirit Aerosystems, Inc., Term Loan B-1,
2.05%, 9/30/13 485,154
589,677 BB-/B1 Standard Aero, Ltd., Tranche B-2 Term Loan,
4.06% - 4.09%, 7/31/14 565,107
250,000 BB/Ba2 TASC, Inc., Tranche A Term Loan, 5.5%, 12/18/14 250,625
------------
$ 2,833,122
-------------------------------------------------------------------------------------------------------------
Construction & Engineering -- 0.7%
1,113,172 BB/Ba3 Goodman Global, Inc., Term Loan, 6.25%, 2/13/14 $ 1,118,506
-------------------------------------------------------------------------------------------------------------
Construction & Farm Machinery & Heavy Trucks -- 1.1%
1,000,000 BB-/Ba3 Accuride Corp., Advance U.S. Term Loan,
9.75%, 6/30/13 $ 1,005,417
250,000 BB/Ba2 Bucyrus International, Inc., Tranche C Dollar Term
Loan, 4.5%, 2/19/16 252,008
348,899 BB+/Ba2 Manitowoc Co., Inc., Term Loan B, 7.5%, 11/6/14 350,270
169,738 NR/B2 Oshkosh Truck Corp., Term Loan B, 6.25% -
6.26%, 12/6/13 170,852
------------
$ 1,778,547
-------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 25
Schedule of Investments | 4/30/10 (continued)
-------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-------------------------------------------------------------------------------------------------------
Industrial Machinery -- 0.1%
EURO 124,219 NR/NR SIG Euro Holding AG & Co. KGaA, European Term
Loan, 6.25%, 11/5/15 $ 166,302
------------
Total Capital Goods $ 5,896,477
-------------------------------------------------------------------------------------------------------
COMMERCIAL & PROFESSIONAL SERVICES -- 2.0%
Commercial Printing -- 0.1%
3,762 BB-/Ba3 Cenveo Corp., Delayed Draw Term Loan,
4.771%, 6/21/13 $ 3,775
131,762 BB-/Ba2 Cenveo Corp., Facility Term Loan C, 4.771%, 6/21/13 132,235
------------
$ 136,010
-------------------------------------------------------------------------------------------------------
Diversified Commercial & Professional Services -- 0.6%
672,425 BB+/B1 Asset Acceptance Capital Corp., Tranche B Term Loan,
3.5% - 5.5%, 6/12/13 $ 648,890
300,004 BB-/B2 Rental Service Corp., Second Lien Initial Term Loan,
3.8%, 11/30/13 292,204
------------
$ 941,094
-------------------------------------------------------------------------------------------------------
Environmental & Facilities Services -- 1.2%
811,004 B+/Ba3 Brickman Group Holdings, Inc., Tranche B Term Loan,
2.29%, 1/23/14 $ 794,784
124,063 B+/Ba2 Casella Waste Systems, Inc., Term Loan B,
7.0%, 4/9/14 125,148
1,215,625 BB-/Ba3 Synagro Technologies, Inc., First Lien Term Loan,
2.26% - 2.28%, 4/2/14 1,107,738
------------
$ 2,027,670
-------------------------------------------------------------------------------------------------------
Security & Alarm Services -- 0.1%
248,750 B+/B2 Protection One Alarm Monitoring, Inc., Tranche B-2
Term Loan, 6.25%, 3/31/14 $ 249,372
------------
Total Commercial & Professional Services $ 3,354,146
-------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 1.1%
Air Freight & Logistics -- 1.0%
439,482 NR/Ba2 Ceva Group Plc, Pre-Funded LC Loan,
3.10%, 11/4/13 $ 399,929
1,302,331 NR/Ba2 Ceva Group Plc, U.S. Term Loan, 3.263%, 11/4/13 1,185,122
------------
$ 1,585,051
-------------------------------------------------------------------------------------------------------
Airlines -- 0.1%
249,359 B+/Ba2 Delta Air Lines, Inc., Second Lien Term Loan,
3.548%, 4/30/14 $ 233,961
------------
Total Transportation $ 1,819,012
-------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
26 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
-----------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-----------------------------------------------------------------------------------------------------
AUTOMOBILES & COMPONENTS -- 1.2%
Auto Parts & Equipment -- 0.3%
142,002 B+/Ba3 Federal-Mogul Corp., Tranche B Term Loan, 2.188% -
2.198%, 12/29/14 $ 130,168
72,450 B+/Ba3 Federal-Mogul Corp., Tranche C Term Loan, 2.188% -
2.198%, 12/28/15 66,412
250,000 B+/B3 HHI Group Holdings, LLC, Term Loan, 10.5%, 3/30/15 254,141
------------
$ 450,721
-----------------------------------------------------------------------------------------------------
Automobile Manufacturers -- 0.3%
593,875 B-/Ba3 Ford Motor Co., Tranche B-1 Term Loan,
3.26% - 3.31%, 12/15/13 $ 574,481
-----------------------------------------------------------------------------------------------------
Tires & Rubber -- 0.6%
1,000,000 BB/Ba1 Goodyear Tire & Rubber Co., Second Lien Term Loan,
2.24%, 4/30/14 $ 958,000
------------
Total Automobiles & Components $ 1,983,202
-----------------------------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 0.3%
Leisure Products -- 0.3%
575,000 B+/B1 SRAM, LLC., Term Loan, 5.5%, 4/30/15 $ 571,406
------------
Total Consumer Durables & Apparel $ 571,406
-----------------------------------------------------------------------------------------------------
CONSUMER SERVICES -- 0.2%
Casinos & Gaming -- 0.1%
945,000(b) BB-/Caa1 Gateway Casinos & Entertainment, Inc., Advance
Second Lien Term Loan, 5.791%, 3/31/15 $ 242,550
-----------------------------------------------------------------------------------------------------
Hotels, Resorts & Cruise Lines -- 0.1%
166,740 BB/Ba2 Travelport LLC, Incremental Term Loan C,
7.79%, 8/23/13 $ 167,884
------------
Total Consumer Services $ 410,434
-----------------------------------------------------------------------------------------------------
MEDIA -- 3.6%
Advertising -- 0.6%
1,000,000 BB/Ba2 Affinion Group, Inc., Tranche B Term Loan,
5.0%, 7/10/15 $ 995,000
-----------------------------------------------------------------------------------------------------
Broadcasting -- 1.6%
626,834 NR/Baa3 Discovery Communications Holding LLC, Term Loan C,
5.25%, 5/14/14 $ 633,200
1,000,000 B+/Ba3 Insight Midwest Holdings LLC, Term Loan B,
2.25% - 2.29%, 4/7/14 979,219
418,326 BB/Ba2 TWCC Holding Corp., Replacement Term Loan,
5.0%, 9/14/15 422,875
675,000 B-/B2 Univision Communications, Inc., Initial Term Loan,
2.54%, 9/29/14 616,613
------------
$ 2,651,907
-----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 27
Schedule of Investments | 4/30/10 (continued)
------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
------------------------------------------------------------------------------------------------
Cable & Satellite -- 0.4%
153,617 B/Ba3 Knology, Inc., Term Loan, 2.528%, 6/30/12 $ 152,465
553,026 B-/B1 WideOpenWest Finance LLC, Series A New Term Loan,
6.751% - 8.75%, 6/28/14 557,088
------------
$ 709,553
------------------------------------------------------------------------------------------------
Movies & Entertainment -- 0.6%
250,000 NR/Ba1 Cinedigm Digital Funding I, LLC, Term Loan,
3.5%, 3/31/16 $ 250,000
722,786 B+/B1 Lodgenet Entertainment Corp., Closing Date Term
Loan, 2.3%, 4/4/14 693,875
------------
$ 943,875
------------------------------------------------------------------------------------------------
Publishing -- 0.4%
694,524 B+/B1 RH Donnelley, Inc., Term Loan, 9.25%, 10/24/14 $ 678,029
------------
Total Media $ 5,978,364
------------------------------------------------------------------------------------------------
RETAILING -- 0.4%
Catalog Retail -- 0.1%
102,941 BBB-/Ba2 QVC, Inc., Tranche 2-W Term Loan, 3.761%, 10/4/11 $ 103,003
------------------------------------------------------------------------------------------------
Specialty Stores -- 0.3%
550,000 B+/Ba3 Savers, Inc., Term Loan, 5.75%, 3/11/16 $ 553,437
------------
Total Retailing $ 656,440
------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING -- 0.6%
Drug Retail -- 0.6%
1,000,000 NR/B3 Rite Aid Corp., Tranche 4 Term Loan, 9.5%, 6/10/15 $ 1,045,833
------------
Total Food & Staples Retailing $ 1,045,833
------------------------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 0.2%
Packaged Foods & Meats -- 0.2%
250,000 BB-/B2 Pierre Foods, Inc., Term Loan, 7.0%, 3/3/16 $ 252,292
------------
Total Food, Beverage & Tobacco $ 252,292
------------------------------------------------------------------------------------------------
HOUSEHOLD & PERSONAL PRODUCTS -- 0.2%
Personal Products -- 0.2%
250,000 B+/Ba3 Revlon Consumer Products Corp., Term Loan,
6.0%, 3/11/15 $ 249,196
------------
Total Household & Personal Products $ 249,196
------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 4.0%
Health Care Facilities -- 1.9%
250,000 B/B1 Ardent Medical Services, Inc., Term Loan,
6.5%, 9/15/15 $ 247,438
49,830 BB/Ba3 Community Health Systems, Inc., Delayed Draw Term
Loan, 2.502%, 7/25/14 48,506
973,067 BB/Ba3 Community Health Systems, Inc., Term Loan,
2.502%, 7/25/14 947,218
The accompanying notes are an integral part of these financial statements.
28 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
------------------------------------------------------------------------------------------------
Health Care Facilities -- (continued)
708,589 B+/B3 Hanger Orthopedic Group, Inc., Tranche B Term Loan,
2.27%, 5/26/13 $ 700,027
82,579 B+/Ba2 HCA, Inc., Tranche B-1 Term Loan, 2.54%, 11/18/13 80,468
198,040 BB/Ba3 HCA, Inc., Tranche B-2 Term Loan, 3.54%, 3/31/17 197,009
162,256 B+/B1 Sun Healthcare Group, Inc., Synthetic LC Loan,
2.290%, 4/19/14 156,577
716,992 B+/B1 Sun Healthcare Group, Inc., Term Loan, 2.266% -
2.502%, 4/19/14 691,898
------------
$ 3,069,141
------------------------------------------------------------------------------------------------
Health Care Services -- 0.8%
519,683 BB-/B3 HealthSouth Corp., Tranche 1 Term Loan,
2.51% - 2.55%, 3/10/13 $ 511,563
427,721 BB-/B3 HealthSouth Corp., Tranche 2 Term Loan,
4.01% - 4.05%, 9/10/15 428,078
375,000 NR/B1 Prime Healthcare Services, Inc., Term Loan B,
6.25%, 4/28/15 367,500
------------
$ 1,307,141
------------------------------------------------------------------------------------------------
Health Care Supplies -- 1.0%
112,444 BB-/B1 Bausch & Lomb, Inc., Delayed Draw Term Loan,
3.54%, 4/24/15 $ 110,310
463,644 BB-/B1 Bausch & Lomb, Inc., Parent Term Loan,
3.54%, 4/24/15 454,844
486,250 B+/B2 IM US Holdings LLC, First Lien Term Loan,
2.28% - 2.29%, 6/26/14 478,592
600,000 B+/B2 IM US Holdings LLC, Second Lien Term Loan,
4.502%, 6/26/15 597,500
------------
$ 1,641,246
------------------------------------------------------------------------------------------------
Health Care Technology -- 0.1%
247,560 BB/Ba3 IMS Health, Inc., Tranche B Dollar Term Loan,
5.25%, 2/26/16 $ 249,479
------------------------------------------------------------------------------------------------
Managed Health Care -- 0.2%
400,000 NR/B1 MultiPlan, Inc., Incremental Term Loan D,
6.0%, 4/12/13 $ 401,125
------------
Total Health Care Equipment & Services $ 6,668,132
------------------------------------------------------------------------------------------------
PHARMACEUTICALS & BIOTECHNOLOGY & LIFE SCIENCES -- 1.8%
Biotechnology -- 0.6%
386,695 BB+/B1 Warner Chilcott Co. LLC, Term Loan A,
5.5%, 10/30/14 $ 387,721
177,979 BB+/B1 Warner Chilcott Co. LLC, Term Loan B-1,
5.75, 4/30/15 178,516
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 29
Schedule of Investments | 4/30/10 (continued)
-------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-------------------------------------------------------------------------------------------------
Biotechnology -- (continued)
296,367 BB+/B1 Warner Chilcott Co. LLC, Term Loan B-2,
5.75%, 4/30/15 $ 297,262
119,700 B+/Ba3 Warner Chilcott Co. LLC, Term Loan B-3,
5.75%, 4/30/15 120,024
------------
$ 983,523
-------------------------------------------------------------------------------------------------
Life Sciences Tools & Services -- 0.8%
1,344,837 BB-/Ba3 Catalent Pharma Solutions, Inc., Dollar Term Loan,
2.513%, 4/10/14 $ 1,282,638
-------------------------------------------------------------------------------------------------
Pharmaceuticals -- 0.4%
720,000 BB/Ba3 Mylan, Inc., U.S. Tranche B Term Loan,
3.563%, 10/2/14 $ 720,248
------------
Total Pharmaceuticals & Biotechnology &
Life Sciences $ 2,986,409
-------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 1.3%
Consumer Finance -- 0.0%
51,594 BB-/NR Dollar Financial Corp., Canadian Borrower Term Loan,
7.0%, 12/31/14 $ 50,046
37,937 BB-/NR Dollar Financial Corp., Delayed Draw Term Loan,
7.0%, 12/31/14 36,799
------------
$ 86,845
-------------------------------------------------------------------------------------------------
Other Diversified Financial Services -- 0.3%
433,116 BB/Ba2 Metavante Corp., Term Loan, 3.499%, 11/3/14 $ 436,726
-------------------------------------------------------------------------------------------------
Specialized Finance -- 1.0%
832,673 BB-/B3 Ace Cash Express, Inc., Term Loan, 3.29%, 10/5/13 $ 755,650
865,631 B+/Ba3 Collect Acquisition Corp., Advance Term Loan B,
7.5%, 5/15/13 856,253
------------
$ 1,611,903
------------
Total Diversified Financials $ 2,135,474
-------------------------------------------------------------------------------------------------
INSURANCE -- 3.4%
Insurance Brokers -- 2.4%
1,462,500 B-/B3 Alliant Holdings I, Inc., Term Loan, 3.29%, 8/17/14 $ 1,402,172
128,534 B/B3 HUB International, Ltd., Delay Draw Term Loan,
2.79%, 6/13/14 121,914
571,826 B/B3 HUB International, Ltd., Initial Term Loan,
2.79%, 6/13/14 542,377
99,500 B-/B3 U.S.I. Holdings Corp., Series C Term Loan,
7.0%, 5/5/14 97,510
1,945,000 B-/B2 U.S.I. Holdings Corp., Tranche B Term Loan,
3.05%, 5/5/14 1,816,144
------------
$ 3,980,117
-------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
30 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
----------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------
Multi-Line Insurance -- 1.0%
809,389 B-/B2 AmWins Group, Inc., Initial Term Loan, 2.76% -
2.78%, 6/8/13 $ 759,476
1,000,000 B-/B2 AmWins Group, Inc., Second Lien Initial Term Loan,
5.78%, 6/9/14 825,000
------------
$ 1,584,476
------------
Total Insurance $ 5,564,593
----------------------------------------------------------------------------------------------------
REAL ESTATE -- 0.2%
Real Estate Development -- 0.2%
250,000 BB-/Ba3 Ozburn-Hessey Holding Co. LLC, First Lien Term Loan,
7.5%, 4/8/16 $ 252,500
------------
Total Real Estate $ 252,500
----------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 3.4%
Application Software -- 0.6%
977,099 B+/B1 Nuance Communications, Inc., Term Loan,
2.28%, 3/29/13 $ 960,306
----------------------------------------------------------------------------------------------------
Data Processing & Outsourced Services -- 0.0%
29,752 NR/Ba1 Fidelity National Information Services, Inc., Tranche C
Term Loan, 4.506%, 1/18/12 $ 30,031
----------------------------------------------------------------------------------------------------
Internet Software & Services -- 0.3%
446,599 B+/B1 Web Service Co. LLC, Term Loan, 7.0%, 8/28/14 $ 446,041
----------------------------------------------------------------------------------------------------
IT Consulting & Other Services -- 1.7%
398,602 B+/B1 Activant Solutions, Inc., Term Loan, 2.313%, 5/2/13 $ 382,159
546,710 B+/B2 Keane International, Inc., Closing Date Term Loan,
2.51%, 6/4/13 520,741
42,654 B+/B2 Keane International, Inc., Synthetic LC Loan,
2.55%, 6/4/13 40,628
1,939,850 BB/Ba3 SunGard Data Systems, Inc., Tranche A U.S.Term Loan,
2.001%, 2/28/14 1,879,683
------------
$ 2,823,211
----------------------------------------------------------------------------------------------------
Systems Software -- 0.8%
1,354,712 BB-/Ba3 Vangent, Inc., Term Loan, 2.51% - 2.52%, 2/14/13 $ 1,320,845
------------
Total Software & Services $ 5,580,434
----------------------------------------------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 0.4%
Communications Equipment -- 0.1%
249,375 BB/Ba3 TowerCo Finance LLC, Term Loan, 6.0%, 11/24/14 $ 252,076
----------------------------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 0.3%
488,773 BB-/Ba3 Scitor Corp., Term Loan, 4.52%, 9/26/14 $ 483,886
------------
Total Technology Hardware & Equipment $ 735,962
----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 31
Schedule of Investments | 4/30/10 (continued)
-------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
-------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 0.5%
Semiconductor Equipment -- 0.5%
780,263 B-/NR Freescale Semiconductor, Inc., Extended Maturity Term
Loan, 4.499%, 12/1/16 $ 751,273
------------
Total Semiconductors & Semiconductor Equipment $ 751,273
-------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 1.9%
Integrated Telecommunication Services -- 0.6%
432,697 B+/B2 Telesat Canada, U.S. Term I Loan, 3.25%, 10/31/14 $ 426,567
37,167 B+/B2 Telesat Canada, U.S. Term II Loan, 3.25%, 10/31/14 36,640
250,000 BB-/Ba1 Wind Telecomunicazioni S.p.A., Facility Term Loan B-2,
3.658%, 5/24/13 248,000
250,000 BB-/Ba1 Wind Telecomunicazioni S.p.A., Facility Term Loan C-2,
4.658%, 5/26/14 248,000
------------
$ 959,207
-------------------------------------------------------------------------------------------------------
Wireless Telecommunication Services -- 1.3%
1,701,511 B+/Ba3 MetroPCS Wireless, Inc.,Tranche B Term Loan,
2.5% - 2.563%, 11/3/13 $ 1,666,663
580,808 BB-/Ba2 Stratos Global Corp., Facility Term Loan B,
5.0%, 2/13/12 577,541
------------
$ 2,244,204
------------
Total Telecommunication Services $ 3,203,411
-------------------------------------------------------------------------------------------------------
UTILITIES -- 1.6%
Electric Utilities -- 0.3%
660,088 B+/Ba3 Texas Competitive Electric Holdings Co. LLC, Initial
Tranche B-2 Term Loan, 3.751% -- 3.79%, 10/10/14 $ 542,922
-------------------------------------------------------------------------------------------------------
Independent Power Producers & Energy Traders -- 1.3%
1,937,762 BB-/B1 Calpine Corp., First Priority Term Loan,
3.165%, 3/29/14 $ 1,871,875
184,378 B+/B2 Mach Gen LLC, First Lien Synthetic LC Loan,
0.04%, 2/22/13 172,394
------------
$ 2,044,269
------------
Total Utilities $ 2,587,191
-------------------------------------------------------------------------------------------------------
TOTAL FLOATING RATE LOAN INTERESTS
(Cost $60,877,976) $ 59,962,658
-------------------------------------------------------------------------------------------------------
Shares
COMMON STOCKS -- 1.1% of Net Assets
ENERGY -- 0.0%
Oil & Gas Equipment & Services -- 0.0%
193,316(j) Skeie Drilling & Production ASA $ 31,100
------------
Total Energy $ 31,100
-------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
32 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
---------------------------------------------------------------------------------
Shares Value
---------------------------------------------------------------------------------
MATERIALS -- 0.5%
Commodity Chemicals -- 0.4%
19,670(j) Georgia Gulf Corp. $ 404,022
6,542(j) Lyondell Basell Industries (Class A) 145,887
5,905(j) Lyondell Basell Industries (Class B) 132,862
------------
$ 682,771
---------------------------------------------------------------------------------
Forest Products -- 0.0%
13,963(j) Ainsworth Lumber Co., Ltd. $ 62,036
---------------------------------------------------------------------------------
Steel -- 0.1%
15,083(g)(j) Niagara Corp. $ 117,044
------------
Total Materials $ 861,851
---------------------------------------------------------------------------------
AUTOMOBILES & COMPONENTS -- 0.6%
Auto Parts & Equipment -- 0.6%
10,904(j) Lear Corp. $ 885,187
------------
Total Automobiles & Components $ 885,187
---------------------------------------------------------------------------------
MEDIA -- 0.0%
Cable & Satellite -- 0.0%
213(j) Charter Communications, Inc. $ 8,073
------------
Total Media $ 8,073
---------------------------------------------------------------------------------
Software & Services -- 0.0%
Systems Software -- 0.0%
2,114(g)(j) Perseus Holding Corp. $ --
------------
Total Software & Services $ --
---------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $1,375,008) $ 1,786,211
---------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK -- 0.3% of Net Assets
DIVERSIFIED FINANCIALS -- 0.3%
Diversified Financial Services -- 0.3%
595 Bank of America Corp. $ 584,284
---------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCK
(Cost $490,737) $ 584,284
---------------------------------------------------------------------------------
PREFERRED STOCK -- 0.0% of Net Assets
SOFTWARE & SERVICES -- 0.0%
Systems Software -- 0.0%
1,110(g)(j) Perseus Holding Corp., 14.0% (144A) $ --
---------------------------------------------------------------------------------
TOTAL PREFERRED STOCK
(Cost $0) $ --
---------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 33
Schedule of Investments | 4/30/10 (continued)
--------------------------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------------------------
RIGHTS/WARRANTS -- 0.0% of Net Assets
REAL ESTATE -- 0.0%
Real Estate Development -- 0.0%
750,000(i)(j) Neo-China Group Holdings, Ltd., Expires
7/22/12 (144A) $ 14,490
--------------------------------------------------------------------------------------------------
TOTAL RIGHTS/WARRANTS
(Cost $17,012) $ 14,490
--------------------------------------------------------------------------------------------------
ESCROW HOLDINGS -- 0.0% of Net Assets
ENERGY -- 0.0%
Oil & Gas Refining & Marketing -- 0.0%
50,000(g)(j) Verasun Energy Corp. $ --
------------
Total Energy $ --
--------------------------------------------------------------------------------------------------
AUTOMOBILES & COMPONENTS -- 0.0%
Auto Parts & Equipment -- 0.0%
1,140,000(g)(j) Lear Corp. $ --
------------
Total Automobiles & Components $ --
--------------------------------------------------------------------------------------------------
TOTAL ESCROW HOLDINGS
(Cost $0) $ --
--------------------------------------------------------------------------------------------------
Principal
Amount
USD ($)
--------------------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 8.6% of Net Assets
Repurchase Agreements -- 2.4%
4,000,000 SG Americas Securities LLC, 0.2% dated 4/30/10,
repurchase price of $4,000,000 plus accrued
interest on 5/3/10 collateralized by the following:
$1,164,236 Federal National Mortgage Association,
5.0% - 6.0%, 9/1/36 - 2/1/40
$1,746,992 Federal National Mortgage Association
ARM, 3.651% - 5.018%, 7/1/35 - 7/1/39
$1,168,772 Freddie Mac Giant, 4.0%, 1/1/20 $ 4,000,000
------------
Total Repurchase Agreements $ 4,000,000
--------------------------------------------------------------------------------------------------
SECURITIES LENDING COLLATERAL -- 6.2%(k)
Certificates of Deposit:
240,613 Bank of Nova Scotia, 0.2%, 6/1/10 $ 240,613
266,164 Barclays, 0.30%, 7/23/10 266,164
266,166 BBVA NY, 0.265%, 6/1/10 266,166
80,949 BNP Paribas, 0.70%, 6/4/10 80,949
292,781 CBA Financial, 0.27%, 1/3/11 292,781
266,164 Deutschebank, 0.30%, 7/19/10 266,164
266,165 DnB NOR Bank ASA NY, 0.19%, 5/19/10 266,165
266,169 Rabobank Nederland NY, 0.19%, 7/6/10 266,169
266,165 Royal Bank of Canada, 0.26%, 1/21/11 266,165
266,165 Svenska NY, 0.265%, 7/19/10 266,165
159,710 Wachovia, 0.36%, 3/22/11 159,710
------------
$ 2,637,211
--------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
34 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
---------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
---------------------------------------------------------------------------------
Commercial Paper:
106,466 American Honda Finance, 0.28%, 4/5/11 $ 106,466
303,085 Bank of America, 0.85%, 5/12/10 303,085
35,218 Caterpillar Financial Services, 0.34%, 8/20/10 35,218
133,055 CBAPP, 0.20%, 6/7/10 133,055
106,455 Ciesco, 0.19%, 5/20/10 106,455
266,036 CLIPPR, 0.28%, 7/2/10 266,036
240,920 CME, Inc., 0.90%, 8/6/10 240,920
266,141 FASCO, 0.19%, 5/18/10 266,141
29,009 GE Capital Corp., 0.31%, 10/6/10 29,009
28,812 GE Capital Corp., 0.35%, 10/21/10 28,812
79,883 GE Capital Corp., 0.43%, 8/20/10 79,883
133,065 GE, 0.30%, 1/26/11 133,065
212,929 HNDAF, 0.17%, 5/4/10 212,929
319,394 INDFG, 0.20%, 5/3/10 319,394
26,616 INDFG, 0.21%, 5/4/10 26,616
29,682 John Deere Capital Corp., 0.33%, 7/16/10 29,682
225,203 JPMorgan Chase & Co., 0.57%, 9/24/10 225,203
109,088 Kithaw, 0.16%, 5/5/10 109,088
159,678 Kithaw, 0.20%, 5/24/10 159,678
106,400 NABPP, 0.28%, 7/19/10 106,400
106,461 Old LLC, 0.18%, 5/11/10 106,461
106,465 Ranger, 0.18%, 5/3/10 106,465
301,782 Santander, 0.30%, 7/23/10 301,782
266,028 SOCNAM, 0.28%, 7/6/10 266,028
79,847 SRCPP, 0.19%, 5/6/10 79,847
186,225 SRCPP, 0.26%, 7/7/11 186,225
51,730 STRAIT, 0.18%, 5/7/10 51,730
106,447 STRAIT, 0.20%, 6/2/10 106,447
133,076 TB LLC, 0.19%, 5/10/10 133,076
133,049 TB LLC, 0.23%, 6/9/10 133,049
266,165 Toyota Motor Credit Corp., 0.23%, 1/10/11 266,165
40,779 US Bancorp, 0.30%, 5/28/10 40,779
57,042 US Bancorp, 0.65%, 5/6/10 57,042
26,628 US Bancorp, 0.66%, 6/4/10 26,628
265,980 VARFUN, 0.29%, 7/26/10 265,980
75,019 Wal Mart Stores, Inc., 0.22%, 7/1/10 75,019
106,441 WFC, 0.33%, 12/2/10 106,441
266,117 WSTPAC, 0.25%, 5/27/10 266,117
------------
$ 5,492,416
---------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 35
Schedule of Investments | 4/30/10 (continued)
-------------------------------------------------------------------------
Principal
Amount
USD ($) Value
-------------------------------------------------------------------------
Tri-party Repurchase Agreements:
399,247 Barclays, 0.18%, 5/3/10 $ 399,247
816,960 Deutsche Bank, 0.02%, 5/3/10 816,960
798,494 RBS Securities, Inc., 0.01%, 5/3/10 798,494
------------
$ 2,014,701
------------
Total Securities Lending Collateral $ 10,144,328
-------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $14,144,328) $ 14,144,328
-------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES -- 145.6%
(Cost $240,669,581)(l) $240,699,541
-------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES - (45.6)% $(75,418,428)
-------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS -- 100.0% $165,281,113
=========================================================================
NR Security not rated by S&P or Moody's.
(144A) Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At
April 30, 2010, the fair value of these securities amounted to
$103,189,415 or 62.4% of total net assets applicable to common
shareowners.
(a) Floating rate note. The rate shown is the coupon rate at April 30,
2010.
(b) Security is in default and is non-income producing.
(c) Payment-in-Kind (PIK) security which may pay interest in additional
principal amount.
(d) Security is a perpetual bond and has no definite maturity date.
(e) Debt obligation initially issued at one coupon rate which converts to
another coupon rate at a specific date. The rate shown is the coupon
rate at April 30, 2010.
(f) Security is priced as a unit.
(g) Security is fair valued using fair value methods (other than prices
supplied by independent pricing services). (See Note 1A).
(h) Floating rate loan interests in which the Trust invests generally pay
interest at rates that are periodically redetermined by reference to a
base lending rate plus a premium. These base lending rates are
generally (i) the lending rate offered by one or more major European
banks, such as LIBOR (London InterBank Offered Rate), (ii) the prime
rate offered by one or more major United States banks, (iii) the
certificate of deposit (iv) other base lending rates used by commercial
lenders. The interest rate shown is the rate accruing at April 30,
2010.
(i) Indicates a security that has been deemed illiquid. The aggregate cost
of illiquid securities is $17,012. The aggregate fair value of $14,490
represents 0.0% of total net assets applicable to common shareowners.
(j) Non-income producing.
The accompanying notes are an integral part of these financial statements.
36 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
(k) Securities lending collateral is managed by Credit Suisse AG, New York
Branch.
(l) At April 30, 2010, the net unrealized loss on investments based on cost
for federal income tax purposes of $241,791,618 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost $11,286,359
Aggregate gross unrealized loss for all investments in which there is an
excess of tax cost over value (12,378,436)
-----------
Net unrealized loss $(1,092,077)
===========
For financial reporting purposes net unrealized gain was $29,960 and
cost of investments aggregated $240,669,581.
(m) At April 30, 2010, the following securities were out on loan:
-----------------------------------------------------------------------------------------
Principal
Amount
USD ($) Description Value
-----------------------------------------------------------------------------------------
970,000 Allison Transmission, Inc., 11.0%, 11/1/15 (144A) $1,047,600
495,000 ALROSA Finance SA, 8.875%, 11/17/14 (144A) 534,600
450,000 Bumi Capital Pte, Ltd., 12.0%, 11/10/16 (144A) 496,710
180,000 CCH II LLC, 13.5%, 11/30/16 217,800
348,000 CEVA Group PLC, 11.5%, 4/1/18 (144A) 371,835
380,000 Corporacion Pesquera Inca SAC, 9.0%, 2/10/17 (144A) 386,175
495,000 Cricket Communications, Inc., 9.375%, 11/1/14 513,562
874,000 DASA Finance Corp., 8.75%, 5/29/18 (144A) 943,920
200,000 Digicel Group, Ltd., 10.5%, 4/15/18 (144A) 213,500
1,441,000 First Data Corp., 9.875%, 9/24/15 1,318,515
137,000 Graphic Packaging International, Inc., 9.5%, 8/15/13 140,768
31,000 Independencia International, Ltd., 12.0%, 12/30/16 (144A) 17,050
563,400 Sally Holdings LLC, 10.5%, 11/15/16 618,331
247,000 Sino-Forest Corp., 10.25%, 7/28/14 (144A) 272,935
210,000 Surgical Care Affiliates, Inc., 10.0%, 7/15/17 (144A) 211,575
690,000 Tenneco, Inc., 8.625%, 11/15/14 710,700
495,000 Texas Competitive Electric Holdings Co. LLC, 10.25%, 11/1/15 371,250
1,365,092 Univision Communications, Inc., 9.75%, 3/15/15 (144A) 1,235,408
-----------------------------------------------------------------------------------------
$9,622,234
=========================================================================================
Glossary of Terms:
LC -- Letter of Credit
Note: Principal amounts are denominated in U.S. dollars unless otherwise
denoted.
BRL Brazilian Real
EURO Euro
NOK Norwegian Krone
Purchases and sales of securities (excluding temporary cash investments) for
the year ended April 30, 2010, aggregated $81,248,946 and $46,383,696,
respectively.
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 37
Schedule of Investments | 4/30/10 (continued)
Various inputs are used in determining the value of the Trust's investments.
These inputs are summarized in the three broad levels listed below.
Highest priority is given to Level 1 inputs and lowest priority is given to
Level 3.
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.)
Level 3 -- significant unobservable inputs (including the Trust's own
assumptions in determining fair value of investments)
The following is a summary of the inputs used as of April 30, 2010, in valuing
the Trust's investments:
-------------------------------------------------------------------------------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------------------------------------
Asset backed securities $ -- $ 5,046,058 $ -- $ 5,046,058
Collateralized mortgage obligations -- 1,970,296 -- 1,970,296
Corporate bonds & notes
(systems software) -- -- 513,749 513,749
Corporate bonds & notes (other
industries) -- 149,654,103 -- 149,654,103
Convertible bonds & notes -- 6,000,866 -- 6,000,866
Sovereign debt obligation -- 1,022,498 -- 1,022,498
Floating rate loan interests (steel) -- -- 891,034 891,034
Floating rate loan interests (other
industries) -- 59,071,624 -- 59,071,624
Common stock (steel) -- -- 117,044 117,044
Common stock (other industries) 1,669,167 -- -- 1,669,167
Convertible preferred stock 584,284 -- -- 584,284
Rights/Warrants -- 14,490 -- 14,490
Escrow holdings -- -- -- --
Temporary cash investments -- 14,144,328 -- 14,144,328
-------------------------------------------------------------------------------------------------------
Total $2,253,451 $236,924,263 $1,521,827 $240,699,541
=======================================================================================================
The following is a reconciliation of assets valued using significant
unobservable inputs (level 3):
-------------------------------------------------------------------------------------------------------------
Change in Transfer
Balance Realized unrealized Net in and Balance
as of gain appreciation purchases out of as of
4/30/09 (loss) (depreciation)1 (sales) Level 3* 4/30/10
-------------------------------------------------------------------------------------------------------------
Corporate bonds & notes
(systems software) $-- $-- $ (579,845) $1,093,594 $-- $ 513,749
Floating rate loan interests
(steel) -- -- (15) 891,049 -- 891,034
Common stock (steel) -- -- -- 117,044 -- 117,044
Escrow holdings -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
Ending balance $-- $-- $ (579,860) $2,101,687 $-- $1,521,827
=============================================================================================================
(1) Unrealized appreciation (depreciation) on these securities is included
in the change in unrealized gain (loss) from investments in the
Statement of Operations.
* Transfers are calculated beginning of period.
The accompanying notes are an integral part of these financial statements.
38 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
Statement of Assets and Liabilities | 4/30/10
ASSETS:
Investments in securities, at value (including securities loaned of
$9,622,234) (cost $240,669,581) $240,699,541
Cash 1,836,693
Foreign currencies, at value (cost $648,694) 679,111
Receivables --
Investment securities sold 1,068,434
Interest 3,613,365
Prepaid expenses and other assets 13,531
--------------------------------------------------------------------------------------
Total assets $247,910,675
--------------------------------------------------------------------------------------
LIABILITIES:
Payables --
Notes payable $ 67,000,000
Investment securities purchased 3,828,351
Upon return of securities loaned 10,144,328
Dividends to shareowners 1,311,235
Due to affiliates 160,247
Accrued interest expense 65,075
Accrued expenses and other liabilities 120,326
--------------------------------------------------------------------------------------
Total liabilities $ 82,629,562
--------------------------------------------------------------------------------------
NET ASSETS:
Paid-in capital $191,909,932
Distribution in excess of net investment income (1,765,037)
Accumulated net realized loss on investments and foreign currency
transactions (24,919,126)
Net unrealized gain on investments 29,960
Net unrealized gain on forward foreign currency contracts and other
assets and liabilities denominated in foreign currencies 25,384
--------------------------------------------------------------------------------------
Net assets $165,281,113
======================================================================================
NET ASSET VALUE PER SHARE:
No par value (unlimited number of shares authorized)
Based on $165,281,113/8,195,218 shares $ 20.17
======================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 39
Statement of Operations
For the Year Ended 4/30/10
INVESTMENT INCOME:
Interest (net of foreign taxes withheld $5,424) $ 17,410,869
Dividends 43,138
Facility and other fees 200,209
Income from securities loaned, net 18,194
---------------------------------------------------------------------------------------------------
Total investment income $17,672,410
---------------------------------------------------------------------------------------------------
EXPENSES:
Management fees $ 1,708,363
Administrative fees 200,149
Transfer agent fees and expenses 12,000
Shareowner communications expense 73,713
Bank loan fees and expenses 105,097
Custodian fees 35,603
Registration fees 17,500
Professional fees 106,535
Printing expenses 29,052
Trustees' fees 7,663
Pricing fees 14,409
Miscellaneous 52,431
---------------------------------------------------------------------------------------------------
Net operating expenses $ 2,362,515
---------------------------------------------------------------------------------------------------
Interest expense $ 1,218,945
---------------------------------------------------------------------------------------------------
Net operating expenses and interest expense $ 3,581,460
Less management fees waived and expenses reimbursed by
Pioneer Investment Management, Inc. (PIM) (320,918)
Less fees paid indirectly (5)
---------------------------------------------------------------------------------------------------
Net expenses $ 3,260,537
---------------------------------------------------------------------------------------------------
Net investment income $14,411,873
---------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ (9,818,300)
Forward foreign currency contracts and other assets and
liabilities denominated in foreign currencies 230,246 $(9,588,054)
---------------------------------------------------------------------------------------------------
Change in net unrealized gain (loss) from:
Investments $ 62,940,479
Unfunded corporate loans 1,191
Forward foreign currency contracts and other assets and
liabilities denominated in foreign currencies (343,947) $62,597,723
---------------------------------------------------------------------------------------------------
Net gain on investments and foreign currency transactions $53,009,669
---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $67,421,542
===================================================================================================
The accompanying notes are an integral part of these financial statements.
40 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
Statement of Changes in Net Assets
For the Years Ended 4/30/10 and 4/30/09, respectively
-------------------------------------------------------------------------------------------------------
Year Year
Ended Ended
4/30/10 4/30/09
-------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 14,411,873 $ 17,099,169
Net realized loss on investments, unfunded corporate loans, and
foreign currency transactions (9,588,054) (12,595,394)
Change in net unrealized gain (loss) on investments and foreign
currency transactions 62,597,723 (49,859,677)
-------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $ 67,421,542 $(45,355,902)
-------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREOWNERS FROM:
Net investment income ($1.686 and $2.469 per share,
respectively) $(13,800,249) $(20,135,595)
Tax return of capital ($0.324 and $0.045 per share, respectively) (2,651,977) (371,077)
-------------------------------------------------------------------------------------------------------
Total distributions to shareowners $(16,452,226) $(20,506,672)
-------------------------------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Reinvestment of distributions $ 499,351 $ 159,885
-------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Trust share
transactions $ 499,351 $ 159,885
-------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 51,468,667 $(65,702,689)
NET ASSETS:
Beginning of year 113,812,446 179,515,135
-------------------------------------------------------------------------------------------------------
End of year $165,281,113 $113,812,446
-------------------------------------------------------------------------------------------------------
Distribution in excess of net investment income $ (1,765,037) $ (2,535,262)
-------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 41
Statement of Cash Flows
For the Year Ended April 30, 2010
----------------------------------------------------------------------------------
Cash Flows Used in Operating Activities
Net investment income $ 14,411,873
----------------------------------------------------------------------------------
Adjustment to Reconcile Net Investment Income to Net Cash
and Foreign Currency used in Operating Activities
Purchase of investment securities $(1,000,389,499)
Proceeds from disposition of investment securities 971,796,212
Increase in receivable for investments sold (357,611)
Increase in interest receivable (290,473)
Decrease in commitment fees receivable 29
Increase in prepaid expenses and other assets (199)
Increase in accrued interest expense 16,445
Increase in payable for investments purchased 2,768,471
Decrease in accrued expenses and other liabilities (14,346)
Increase in due to affiliates 102,189
Decrease in unamortized facility fee (1,750)
Decrease in net unrealized appreciation on foreign currency
transactions (375,784)
Net realized gain from foreign currency transactions 230,246
Net amortization/(accretion) of premium/(discount) (1,376,650)
----------------------------------------------------------------------------------
Net adjustment to reconcile net investment income (27,892,720)
----------------------------------------------------------------------------------
Net cash and foreign currency used in operating activities $ (13,480,847)
----------------------------------------------------------------------------------
Cash Flows From Financing Activities
Increase in notes payable $ 29,000,000
Cash dividends paid to common shareowners (16,193,166)
----------------------------------------------------------------------------------
Net cash flow from financing activities $ 12,806,834
----------------------------------------------------------------------------------
Net decrease in cash and foreign currency $ (674,013)
----------------------------------------------------------------------------------
Cash and Foreign Currency
Beginning of the year $ 3,189,817
----------------------------------------------------------------------------------
End of the year $ 2,515,804
==================================================================================
Cash Flow Information
Cash paid for interest $ 1,202,500
----------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
42 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
Financial Highlights
--------------------------------------------------------------------------------------------------
Year Year 5/30/07 (b)
Ended Ended to
4/30/10 4/30/09 4/30/08
--------------------------------------------------------------------------------------------------
Per Share Operating Performance
Net asset value, beginning of period $ 13.94 $ 22.02 $ 23.88(c)
--------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:(a)
Net investment income $ 1.76 $ 2.10 $ 1.77
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 6.48 (7.67) (1.80)
--------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ 8.24 $ (5.57) $ (0.03)
Distributions from
Net investment income (1.69) (2.47) (1.78)
Tax return of capital (0.32) (0.04) -
Capital charge with respect to issuance of shares - - (0.05)
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ 6.23 $ (8.08) $ (1.86)
--------------------------------------------------------------------------------------------------
Net asset value, end of period(d) $ 20.17 $ 13.94 $ 22.02
--------------------------------------------------------------------------------------------------
Market value, end of period(d) $ 20.46 $ 13.23 $ 20.47
==================================================================================================
Total return at market value (e) 73.25% (23.11)% (10.67)%
Ratios to average net assets
Net operating expenses 1.39% 1.38% 0.99%(f)
Interest expense 0.83% 1.14% 0.33%(f)
Net expenses 2.22% 2.52% 1.32%(f)
Net investment income 9.84% 12.27% 8.48%(f)
Portfolio turnover 24% 25% 21%
Net assets, end of period (in thousands) $165,281 $113,812 $179,515
Ratios to average net assets before waivers and
reimbursements of expenses
Net operating expenses 1.61% 1.68% 1.29%(f)
Interest expense 0.83% 1.14% 0.33%(f)
Net expenses 2.44% 2.82% 1.62%(f)
Net investment income 9.62% 11.97% 8.18%(f)
--------------------------------------------------------------------------------------------------
(a) The per share data presented above is based upon the average shares
outstanding for the periods presented.
(b) Trust shares were first publicly offered on May 24, 2007 and commenced
operations on May 30, 2007.
(c) Net asset value immediately after the closing of the first public offering
was $23.83.
(d) Net asset value and market value are published in Barron's on Saturday, The
Wall Street Journal on Monday and The New York Times on Monday and
Saturday.
(e) Total investment return is calculated assuming a purchase of shares at the
current market value on the first day and a sale at the current market
value on the last day of the periods reported. Dividends and distributions,
if any, are assumed for purposes of this calculation to be reinvested at
prices obtained under the Trust's dividend reinvestment plan. Total
investment return does not reflect brokerage commissions. Total investment
returns less than a full period are not annualized. Past performance is not
a guarantee of future results.
(f) Annualized.
The information above represents the audited operating performance data for a
share of stock outstanding, total investment return, ratios to average net
assets 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 shares.
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 43
Notes to Financial Statements | 4/30/10
1. Organization and Significant Accounting Policies
Pioneer Diversified High Income Trust (the Trust) was organized as a Delaware
statutory trust on January 30, 2007. Prior to commencing operations on May 30,
2007, the Trust had no operations other than matters relating to its
organization and registration as a diversified, closed-end management investment
company under the Investment Company Act of 1940, as amended. The investment
objective of the Trust is to provide a high level of current income and, as a
secondary objective, the Trust may seek capital appreciation to the extent that
it is consistent with its investment objective.
Information regarding the Trust's principal risks is contained in the Trust's
original offering prospectus, with additional information included in the
Trust's shareowner reports from time to time. Please refer to those documents
when considering the Trust's risks. At times, the Trust's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
The Trust invests in below investment grade (high yield) debt securities,
floating rate loans and event-linked bonds sometimes referred to as
"catastrophe" bonds or "insurance-linked" bonds. The Trust may invest in
securities and other obligations of any credit quality, including those that are
rated below investment grade, or are unrated but are determined by the
investment adviser to be of equivalent credit quality. Below investment grade
securities are commonly referred to as "junk bonds" and are considered
speculative with respect to the issuer's capacity to pay interest and repay
principal. These securities involve greater risk of loss, are subject to greater
price volatility, and are less liquid, especially during periods of economic
uncertainty or change, than higher rated debt securities. The Trust may invest
in securities of issuers that are in default or that are in bankruptcy.
The Trust's investments in certain foreign markets or countries with limited
developing markets may subject the Trust to a greater degree of risk than in a
developed market. These risks include disruptive political or economic
conditions and the possible imposition of adverse governmental laws or currency
exchange restrictions.
The Trust'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
44 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
of income, expenses and gains and losses on investments during the reporting
period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Trust in preparation of its financial statements, which are consistent with
those generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. The net asset value of
the Trust is computed once daily, on each day the New York Stock Exchange
(NYSE) is open, as of the close of regular trading on the NYSE. Investments
in loan interests are valued in accordance with guidelines established by the
Board of Trustees at the mean between the last available bid and asked prices
from one or more brokers or dealers as obtained from Loan Pricing
Corporation. For the limited number of loan interests for which no reliable
price quotes are available, such loan interests will be valued by Loan
Pricing Corporation through the use of pricing matrices to determine
valuations. Fixed income securities with remaining maturity of more than
sixty days are valued at prices supplied by independent pricing services,
which consider such factors as market prices, market events, quotations from
one or more brokers, Treasury spreads, yields, maturities and ratings.
Valuations may be supplemented by dealers and other sources, as required.
Equity securities are valued at the last sale price on the principal exchange
where they are traded. Securities or loans for which market prices and/or
quotations are not readily available or are considered to be unreliable are
valued using fair value methods pursuant to procedures adopted by the Board
of Trustees.
The Trust may use the fair value methods if it is determined that a
significant event has occurred after the close of the exchange or market on
which the security trades and prior to the determination of the Trust's net
asset value. Thus, the valuation of the Trust's securities may differ from
exchange prices. At April 30, 2010, 7 securities were valued using fair value
methods (other than securities valued using prices supplied by independent
pricing services) representing 0.9% of net assets. Inputs used in the
valuation of a security using fair value methods include credit ratings, the
financial condition of the company, current market conditions and comparable
securities. Short-term income securities with remaining maturities of sixty
days or less generally are valued at amortized cost. Money market mutual
funds are valued at net asset value.
Discounts and premiums on debt securities are accreted or amortized,
respectively, daily, into interest income on an effective yield to maturity
basis with a corresponding increase or decrease in the cost basis of the
security. Premiums and discounts related to certain mortgage-backed
securities are amortized or accreted in proportion to the monthly paydowns.
Interest income, including income on interest bearing cash accounts, is
recorded on
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 45
an accrual basis, net of unrecoverable foreign taxes withheld at the
applicable country rates.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have passed
are recorded as soon as the Trust becomes aware of the ex-dividend data in
the exercise of reasonable diligence.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Foreign Currency Translation
The books and records of the Trust are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars using
current exchange rates.
Net realized gains and losses on foreign currency transactions, if any,
represent, among other things, the net realized gains and losses on foreign
currency contracts, disposition of foreign currencies and the difference
between the amount of income accrued and the U.S. dollars actually received.
Further, the effects of changes in foreign currency exchange rates on
investments are not segregated in the Statement of Operations from the
effects of changes in market prices of those securities but are included with
the net realized and unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Trust may enter into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date. All contracts are marked to market daily at the applicable
exchange rates, and any resulting unrealized gains or losses are recorded in
the Trust's financial statements. The Trust records realized gains and losses
at the time a portfolio hedge is offset by entry into a closing transaction
or extinguished by delivery of the currency. Risks may arise upon entering
into these contracts from the potential inability of counterparties to meet
the terms of the contracts and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar (see Note 5).
D. Federal Income Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required. Tax
years for the prior two fiscal years remain subject to examination by tax
authorities.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
46 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
income tax rules. Therefore, the sources of the Trust's distributions may be
shown in the accompanying financial statements as either from or in excess of
net investment income or net realized gain (loss) on investment and foreign
currency transactions, or from paid-in capital, depending on the type of
book/tax differences that may exist.
At April 30, 2010, the Trust reclassified $158,601 to decrease distributions
in excess of net investment income and to increase net realized loss on
investments to reflect permanent book/tax differences. The reclassification
has no impact on the net assets of the Trust and presents the Trust's capital
accounts on a tax basis.
At April 30, 2010, the Trust had a net capital loss carryforward of
$22,593,756 of which the following amounts will expire between 2016 and 2018
if not utilized: $231,744 in 2016, $413,150 in 2017 and $21,948,862 in 2018.
The Trust has elected to defer approximately $2,026,829 of capital losses
recognized between November 1, 2009 and April 30, 2010 to its fiscal year
ending April 30, 2011.
The tax character of distributions paid to shareowners during the years ended
April 30, 2010 and April 30, 2009 was as follows:
---------------------------------------------------------
2010 2009
---------------------------------------------------------
Distributions paid from:
Ordinary income $13,800,249 $20,135,595
Tax return of capital 2,651,977 371,077
---------------------------------------------------------
Total $16,452,226 $20,506,672
=========================================================
The following shows the components of distributable earnings (loss) on a
federal income tax basis at April 30, 2009.
-----------------------------------------------
-----------------------------------------------
Distributable earnings:
Capital loss carryforward $ (22,593,756)
Post-October loss deferred (2,026,829)
Dividends payable (1,311,235)
Unrealized depreciation (696,999)
-----------------------------------------------
Total $ (26,628,819)
===============================================
The difference between book-basis and tax-basis unrealized depreciation is
primarily attributable to the tax deferral of losses on wash sales, the
realization for tax purposes of unrealized gains on investments in passive
foreign investment companies, the book/tax differences in the accrual of
income on securities in default, the difference between book and tax
amortization
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 47
methods for premiums and discounts on fixed income securities and other
book/tax temporary differences.
E. Repurchase Agreements
With respect to repurchase agreements entered into by the Trust, the value of
the underlying securities (collateral), including accrued interest is
required to be equal to or in excess of the repurchase price. The collateral
for all repurchase agreements is held in safekeeping in the customer-only
account of the Trust's custodian or sub custodians of the Trust. The Trust's
investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible
for determining that the value of the collateral remains at least equal to
the repurchase price
F. Securities Lending
The Trust lends securities in its portfolio to certain broker-dealers or
other institutional investors. When entering into a securities loan
transaction, the Trust typically receives cash collateral from the borrower
equal to at least the fair value of the securities loaned, which is invested
in temporary investments. Credit Suisse AG, New York Branch, as the Trust's
securities lending agent, manages the Trust's securities lending collateral.
The income earned on the investment of collateral is shared with the borrower
and the lending agent in payment of any rebate due to the borrower with
respect to the securities loan, and in compensation for the lending agent's
services to the Trust. The Trust also continues to receive payments in lieu
of dividends or interest on the securities loaned. Gain or loss on the fair
value of the loaned securities that may occur during the term of the loan
will be for the account of the Trust. The amount of the collateral is
required to be adjusted daily to reflect any price fluctuation in the fair
value of the loaned securities. If the required fair value of the collateral
is less than the fair value of the loaned securities, the borrower is
required to deliver additional collateral for the account of the Trust prior
to the close of the next business day. The Trust has the right, under the
lending agreement, to terminate the loan and recover the securities from the
borrower with prior notice. The Trust is required to return the cash
collateral to the borrower and could suffer a loss if the fair value of the
collateral, as invested, has declined.
G. Automatic Dividend Reinvestment Plan
All common shareowners whose shares are registered in their own names
automatically participate in the Automatic Dividend Reinvestment Plan (the
Plan), under which participants receive all dividends and capital gain
distributions (collectively, dividends) in full and fractional 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
48 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
and may be terminated or resumed at any time without penalty by notifying
American Stock Transfer & Trust Company, the agent for shareowners in
administering the Plan (the Plan Agent), in writing prior to any dividend
record date; otherwise such termination or resumption will be effective with
respect to any subsequently declared dividend or other distribution.
If a shareowner's shares are held in the name of a brokerage firm, bank or
other nominee, the shareowner can ask the firm or nominee to participate in
the Plan on the shareowner's behalf. If the firm or nominee does not offer
the Plan, dividends will be paid in cash to the shareowner of record. A firm
or nominee may reinvest a shareowner's cash dividend in common shares of the
Trust on terms that differ from the terms of the Plan.
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 NYSE Amex or elsewhere. If, on the payment
date for any dividend, the net asset value per common share is equal to or
less than the market price per share plus estimated brokerage trading fees
(market premium), the Plan Agent will invest the dividend amount in newly
issued common shares. The number of newly issued common shares to be credited
to each account will be determined by dividing the dollar amount of the
dividend by the net asset value per common share on the date the shares are
issued, provided that the maximum discount from the then current market price
per share on the date of issuance does not exceed 5%. If, on the payment date
for any dividend, the net asset value per common share is greater than the
market value (market discount), the Plan Agent will invest the dividend
amount in common shares acquired in open-market purchases. There are no
brokerage charges with respect to newly issued common shares. However, each
participant will pay a pro rata share of brokerage trading fees incurred with
respect to the Plan Agent's open-market purchases. Participating in the Plan
does not relieve shareowners from any federal, state or local taxes which may
be due on dividends paid in any taxable year. Shareowners holding Plan shares
in a brokerage account may not be able to transfer the shares to another
broker and continue to participate in the Plan.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit S.p.A. (UniCredit) manages
the Trust's portfolio. Management fees payable under the Trust's Advisory
Agreement with PIM are calculated daily at the annual rate of 0.85% of the
Trust's average daily managed assets. "Managed assets" means (a) the total
assets of the Trust, including any form of investment leverage, minus (b) all
accrued liabilities incurred in the normal course of operations, which shall
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 49
not include any liabilities or obligations attributable to investment leverage
obtained through (i) indebtedness of any type (including, without limitation,
borrowing through a credit facility or the issuance of debt securities), (ii)
the issuance of preferred stock or other similar preference securities, and/or
(iii) any other means. For the year ended April 30, 2010, the net management fee
(excluding waivers and reimbursements) was equivalent to 0.85% of the Trust's
average daily managed assets, which was equivalent to 1.17% of the Trust's
average daily net assets.
In addition, under PIM's management and administration agreements, certain other
services and costs are paid by PIM and reimbursed by the Trust. At April 30,
2010, $160,247 was payable to PIM related to management costs, administrative
costs and certain other services and it is included in "Due to affiliates" on
the Statement of Assets and Liabilities.
PIM has retained Princeton Administrators, LLC (Princeton) to provide certain
administrative and accounting services to the Trust on its behalf. PIM pays
Princeton a monthly fee at an annual rate equal to 0.07% of the Trust's average
daily managed assets up to $500 million and 0.03% of average daily managed
assets in excess of $500 million, subject to a minimum monthly fee of $10,000.
Princeton receives no compensation directly from the Trust. Effective September
30, 2010, Princeton has notified PIM that it will resign as administrators of
the Trust.
PIM has entered into a Research Services Agreement with Montpelier Capital
Advisors, Ltd. (Montpelier). Under the research services agreement, Montpelier
will provide research services to PIM with regard to event-linked bonds. PIM
pays Montpelier a flat fee of $325,000 annually. Montpelier received no
compensation directly from the Trust.
Also, PIM had agreed for the first three years of the Trust's investment
operations to limit the Trust's total annual expenses, excluding offering costs
for common shares, interest expense, the cost of defending or prosecuting any
claim or litigation to which the Trust is a party (together with any amount in
judgment or settlement), indemnification expense or taxes incurred due to the
failure of the Trust to qualify as a regulated investment company under the Code
or any other non-recurring or non-operating expenses, to 0.90% of the Trust's
average daily managed assets in year one, 0.95% of the Trust's average daily
managed assets in year two and 1.00% of the Trust's average daily managed assets
in year three. This is a contractual limit and may not be terminated by the
adviser during the three year period which will terminate on May 30, 2010. For
the year ended April 30, 2010 the expense reduction under such arrangement was
$320,918.
50 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
3. Transfer Agents
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned
indirect subsidiary of UniCredit, through a sub-transfer agency agreement with
American Stock Transfer & Trust Company, provides substantially all transfer
agent and shareowner services related to the Trust at negotiated rates.
In addition, the Trust reimburses PIMSS for out-of-pocket expenses incurred by
PIMSS related to shareowner communications activities such as proxy and
statement mailings and outgoing phone calls.
4. Expense Offset Arrangements
The Trust has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Trust's custodian expenses. For the year ended April 30, 2010, the Trust
expenses were reduced by $5 under such arrangement.
5. Forward Foreign Currency Contracts
During the year ended April 30, 2010, the Trust had entered into various
contracts that obligate the Trust to deliver or take delivery of currencies at
specified future maturity dates. Alternatively, prior to the settlement date of
a forward foreign currency contract, the Trust may close out such contract by
entering into an offsetting hedge contract. The average number of contracts open
during the year ended April 30, 2010 was 2,421,667.
As of April 30, 2010, the Trust had no outstanding portfolio hedges and no
forward currency settlement contracts.
6. Loan Agreement
Effective February 6, 2010, the Trust amended an existing $80,000,000 Revolving
Credit Facility (the Credit Agreement) with the Bank of Nova Scotia.
At April 30, 2010, the Trust had a borrowing outstanding under the Credit
Agreement totaling $67,000,000. The interest rate charged at April 30, 2010 was
1.399%. During year ended April 30, 2010, the average daily balance was
$54,528,767 at a weighted average interest rate of 2.20%. With respect to the
loan, interest expense of $1,218,945 is included in the Statement of Operations.
The Trust is required to maintain 300% asset coverage with respect to amounts
outstanding under the Credit Agreement. Asset coverage is calculated by
subtracting the Trust's total liabilities, not including any bank loans and
senior securities, from the Trust's total assets and dividing such amount by the
principal amount of the borrowings outstanding. As of the date indicated below,
the Trust's debt outstanding and asset coverage were as follows:
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 51
-------------------------------------------
Total Asset coverage
Amount per $1,000 of
Date Outstanding Indebtedness
-------------------------------------------
4/30/10 $67,000,000 $3,467
7. Trust Shares
There are an unlimited number of common shares of beneficial interest
authorized.
Transactions in common shares of beneficial interest for the years ended April
30, 2010 and April 30, 2009 were as follows:
---------------------------------------------------------------------
2010 2009
---------------------------------------------------------------------
Shares outstanding at beginning of year 8,165,927 8,154,188
Reinvestment of distributions 29,291 11,739
---------------------------------------------------------------------
Shares outstanding at end of year 8,195,218 8,165,927
=====================================================================
8. Additional Disclosures about Derivative Instruments and Hedging Activities:
The effect of derivative instruments on the Statement of Operations for the
year ended April 30, 2010 was as follows:
---------------------------------------------------------------------------------------------------------
Derivatives Not Change in Net
Accounted for as Hedging Unrealized Gain
Instruments under or (Loss) on
Accounting Standards Location of Gain or Realized Gain or Derivatives
Codification (ASC) 815 (Loss) On Derivatives (Loss) on Derivatives Recognized
(formerly Statement 133) Recognized in Income Recognized in Income in Income
---------------------------------------------------------------------------------------------------------
Foreign Exchange Contracts Net realized gain (loss) on $114,721
forward foreign currency
contracts and other assets
and liabilities denominated
in foreign currencies
---------------------------------------------------------------------------------------------------------
Foreign Exchange Contracts Change in net unrealized $31,837
gain (loss) on forward
foreign currency contracts
and other assets and
liabilities denominated in
foreign currencies
---------------------------------------------------------------------------------------------------------
9. Subsequent Events
Subsequent to April 30, 2010, the Board of Trustees of the Trust declared a
dividend from undistributed net investment income of $0.16 per common share
payable May 28, 2010, to shareowners of record on May 14, 2010.
In preparing these financial statements, PIM has evaluated the impact of all
events and transactions for potential recognition or disclosure, and has
determined that other than disclosed above, there were no events requiring
recognition or disclosure in the financial statements.
52 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and the Shareowners of
Pioneer Diversified High Income Trust:
--------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of Pioneer
Diversified High Income Trust (the "Trust"), including the schedule of
investments, as of April 30, 2010, and the related statements of operations and
cash flows for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended and the financial highlights for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Trust's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of April 30, 2010, by correspondence with the custodian,
agent banks, and brokers or by other appropriate auditing procedures where
replies from brokers were not received. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Diversified High Income Trust at April 30, 2010, the results of its
operations and its cash flows for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for each of the periods indicated therein, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
June 22, 2010
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 53
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 that have not been
approved by the shareowners. During the period, there have been no changes in
the principal risk factors associated with investment in the Trust. There were
no changes in the persons who are primarily responsible for the day-to-day
management of the Trust's portfolio.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Trust may purchase, from time to time, its common
shares in the open market.
CEO CERTIFICATION DISCLOSURE (unaudited)
The Trust's Chief Executive Officer has submitted to the New York Stock Exchange
the annual CEO certification as required by Section 303A.12(a) of the NYSE
Listed Company Manual. In addition, the Trust has filed with the Securities and
Exchange Commission the certification of its Chief Executive Officer and Chief
Financial Officer required by Section 302 of the Sarbanes- Oxley Act.
Results of Shareholder Meeting (unaudited)
At the annual meeting of shareowners held on September 22, 2009, and adjourned
to October 8, 2009 with respect to Proposal 2, shareowners of Pioneer
Diversified High Income Trust were asked to consider the proposals described
below. A report of the total votes cast by the Trust's shareholders follows:
Proposal 1 -- To elect Class II Trustees.
------------------------------------------------
Nominee For Withheld
------------------------------------------------
Mary K. Bush 5,239,303 173,207
------------------------------------------------
Thomas J. Perna 5,270,819 141,691
------------------------------------------------
Marguerite A. Piret 5,251,980 160,530
------------------------------------------------
Proposal 2 -- To approve an Amended and Restated Management Agreement with
Pioneer Investment Management, Inc.
----------------------------------------------------------
Broker
For Against Abstain Non-Votes
----------------------------------------------------------
3,645,869 95,651 114,518 1,486,898
54 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
IMPORTANT TAX INFORMATION (unaudited)
The following information is provided with respect to the ordinary income
distributions paid by Pioneer Diversified High Income Trust during the fiscal
year ended April 30, 2010:
Interest-Related Dividends for Non-U.S. Residents 78.24%*
------------------
* Represents the portion of the taxable ordinary income dividends eligible for
exemption from U.S. withholding tax for nonresident aliens and foreign
corporations.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 55
Approval of Investment Advisory Agreement (unaudited)
Pioneer Investment Management, Inc. (PIM) serves as the investment adviser to
Pioneer Diversified High Income Trust (the Trust) pursuant to an investment
advisory agreement between PIM and the Trust. In order for PIM to remain the
investment adviser of the Trust, the Trustees of the Trust must determine
annually whether to renew the investment advisory agreement for the Trust.
The contract review process began in March 2009 as the Trustees of the Trust
agreed on, among other things, an overall approach and timeline for the process.
In July 2009, the Trustees approved the format of the contract review materials
and submitted their formal request to PIM to furnish information necessary to
evaluate the terms of the investment advisory agreement. The contract review
materials were provided to the Trustees in August 2009. After reviewing and
discussing the materials, the Trustees submitted a request for additional
information to PIM in September 2009, and materials were provided in response to
this request. Meetings of the independent Trustees of the Trust were held in
July, September, October, and November, 2009 to review and discuss the contract
review materials. In addition, the Trustees took into account the information
related to the Trust provided to the Trustees at each regularly scheduled
meeting.
At a meeting held on November 10, 2009, based on their evaluation of the
information provided by PIM and third parties, the Trustees of the Trust,
including the independent Trustees voting separately, unanimously approved the
renewal of the investment advisory agreement for another year. In considering
the renewal of the investment advisory agreement, the Trustees considered
various factors that they determined were relevant, including the factors
described below. The Trustees did not identify any single factor as the
controlling factor in determining to approve the renewal of the agreement.
Nature, Extent and Quality of Services
The Trustees considered the nature, extent and quality of the services that had
been provided by PIM to the Trust, taking into account the investment objective
and strategy of the Trust. The Trustees reviewed the terms of the investment
advisory agreement. The Trustees also reviewed PIM's investment approach for the
Trust, its research process and its process for trade execution. The Trustees
considered the resources of PIM and the personnel of PIM who provide investment
management services to the Trust. The Trustees considered the non-investment
resources and personnel of PIM involved in PIM's services to the Trust,
including PIM's compliance and legal resources and personnel. The Trustees also
considered the substantial attention and high priority given by PIM's senior
management to the Pioneer fund complex.
56 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
The Trustees considered that PIM supervises and monitors the performance of the
Trust's service providers and provides the Trust with personnel (including Trust
officers) and other resources that are necessary for the Trust's business
management and operations. The Trustees also considered that, as administrator,
PIM is responsible for the administration of the Trust's business and other
affairs. The Trustees considered the fees paid to PIM for the provision of
administration services.
Based on these considerations, the Trustees concluded that the nature, extent
and quality of services that had been provided by PIM to the Trust were
satisfactory and consistent with the terms of the investment advisory agreement.
Performance of the Trust
The Trustees considered the performance results of the Trust over various time
periods. They reviewed information comparing the Trust's performance with the
performance of its peer group of funds as classified by Morningstar, Inc.
(Morningstar), an independent provider of investment company data, and with the
performance of the Trust's benchmark index. The Trustees considered that the
Trust's annualized total return was in the second quintile of its Morningstar
category for the one year period ended June 30, 2009. (In all quintile rankings
referred to throughout this disclosure, first quintile is most favorable to the
Trust's shareowners. Thus, highest relative performance would be first quintile
and lowest relative expenses would also be first quintile.) The Trustees
considered that the Trust's yield (at market value) was better than the average
yield (at market value) of the funds in its peer group as of June 30, 2009. The
Trustees noted that the yield of the Trust also compared favorably to the
blended yield of the Trust's primary and secondary benchmarks as of June 30,
2009. The Trustees reviewed data provided by Pioneer showing how leverage had
benefited the Trust's common shareholders. The Trustees concluded that the
investment performance of the Trust was satisfactory.
Management Fee and Expenses
The Trustees considered information on the fees and expenses of the Trust in
comparison to the management fees and the expense ratios of a peer group of
funds selected on the basis of criteria determined by the independent Trustees
for this purpose using data provided by Strategic Insight Mutual Fund Research
and Consulting, LLC (Strategic Insight), an independent third party.
The Trustees considered that the Trust's management fee rate based on net assets
attributable to common shares for the twelve months ended June 30, 2009 was in
the fifth quintile relative to the management fees paid by other funds in its
Strategic Insight peer group for the comparable period. The Trustees noted that
the Trust has not issued preferred shares, but did have debt outstanding, and
considered the effect of leverage on the Trust's management fee relative to its
peers by reviewing the management fee ratios of the Trust and its peers based on
managed assets rather than net assets attributable to common
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 57
shares. The Trustees also noted that the Trust is a specialized fund, and that
additional skills and research are required in order to implement the Trust's
investment strategy.
The Trustees also considered that the Trust's expense ratio based on net assets
attributable to common shares for the twelve months ended June 30, 2009 was in
the fourth quintile relative to its Strategic Insight peer group for the
comparable period. The Trustees considered the effect of leverage on the Trust's
expense ratio relative to its peers by reviewing such expense ratios based on
managed assets rather than net assets attributable to common shares. The
Trustees noted the impact of the Trust's higher relative management fee on its
expense ratio. The Trustees also considered the impact of leverage on the
expense ratio of the Trust and its peers by reviewing such expense ratios
without giving effect to interest expense (but acknowledging that auction agent
fees were difficult to isolate and exclude).
The Trustees also reviewed management fees charged by PIM to its institutional
and other clients. In evaluating the fees associated with PIM's client accounts,
the Trustees took into account the respective demands, resources and complexity
associated with the Trust and client accounts. The Trustees noted that in some
instances the fee rates for those clients were lower than the management fee for
the Trust and considered that, under the investment advisory agreement with the
Trust, PIM performs additional services for the Trust that it does not provide
to those other clients or services that are broader in scope, including
oversight of the Trust's other service providers and activities related to
compliance and the extensive regulatory and tax regimes to which the Trust is
subject.
The Trustees concluded that the management fee payable by the Trust to PIM was
reasonable in relation to the nature and quality of the services provided by
PIM. The Trustees also concluded that the Trust's expense ratio was reasonable
taking into account the nature and quality of services provided by PIM.
Profitability
The Trustees considered information provided by PIM regarding the profitability
of PIM with respect to the advisory services provided by PIM to the Trust,
including the methodology used by PIM in allocating certain of its costs to the
management of the Trust. The Trustees also considered PIM's profit margin in
connection with the overall operation of the Trust. They further reviewed the
financial results realized by PIM and its affiliates from non-fund businesses.
The Trustees considered PIM's profit margins with respect to the Trust in
comparison to the limited industry data available and noted that the
profitability of any adviser was affected by numerous factors, including its
organizational structure and method for allocating expenses. The Trustees
concluded that PIM's profitability with respect to the management of the Trust
was not unreasonable.
58 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
Economies of Scale
The Trustees considered the extent to which PIM may realize economies of scale
or other efficiencies in managing and supporting the Trust. Since the Trust is a
closed-end fund that has not raised additional capital, the Trustees concluded
that economies of scale were not a relevant consideration in the renewal of the
investment advisory agreement.
Other Benefits
The Trustees considered the other benefits to PIM from its relationship with the
Trust. The Trustees considered the character and amount of fees paid by the
Trust, other than under the investment advisory agreement, for services provided
by PIM and its affiliates. The Trustees further considered the revenues and
profitability of PIM's businesses other than the fund business. The Trustees
considered the intangible benefits to PIM by virtue of its relationship with the
Trust and the other Pioneer funds. The Trustees concluded that the receipt of
these benefits was reasonable in the context of the overall relationship between
PIM and the Trust.
Conclusion
After consideration of the factors described above as well as other factors, the
Trustees, including all of the independent Trustees, concluded that the
investment advisory agreement between PIM and the Trust, including the fees
payable thereunder, was fair and reasonable and voted to approve the proposed
renewal of the investment advisory agreement for the Trust.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 59
Trustees, Officers and Service Providers
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Legal Counsel
Bingham McCutchen LLP
Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Shareowner Services and Sub-Transfer Agent
American Stock Transfer & Trust Company
Sub-Administrator
Princeton Administrators, LLC
Proxy Voting Policies and Procedures of the Trust are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Trust voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerinvestments.com. This information is also available on
the Securities and Exchange Commission's web site at http://www.sec.gov.
Trustees and Officers
The Board of Trustees provides broad supervision over the Trust's affairs. The
officers of the Trust are responsible for the Trust's operations. The Trustees
and officers are listed below, together with their principal occupations during
the past five years. Trustees who are interested persons of the Trust within
the meaning of the 1940 Act are referred to as Interested Trustees. Trustees
who are not interested persons of the Trust are referred to as Independent
Trustees. Each of the Trustees, except Mr. West, serves as a Trustee of each of
the 57 U.S. registered investment portfolios for which Pioneer serves as
investment adviser (the Pioneer Funds). Mr. West serves as a Trustee of 44 U.S.
registered investment portfolios for which Pioneer serves as investment
adviser. The address for all Trustees and all officers of the Trust is 60 State
Street, Boston, Massachusetts 02109.
60 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
Interested Trustees
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age With the Trust and Term of Office During Past Five Years Held by this Trustee
------------------------------------------------------------------------------------------------------------------------------------
John F. Cogan, Jr. (83)* Chairman of the Board, Class III Trustee since Non-Executive Chairman and a None
Trustee and President 2007. Term expires in Director of Pioneer Investment
2010. Elected by Pre- Management USA Inc. ("PIM-USA");
ferred Shares only. Chairman and a Director of
Pioneer; Chairman and Director of
Pioneer Institutional Asset
Management, Inc. (since 2006);
Director of Pioneer Alternative
Investment Management Limited
(Dublin); President and a Direc-
tor of Pioneer Alternative
Investment Management (Bermuda)
Limited and affiliated funds;
Deputy Chairman and a Director of
Pioneer Global Asset Management
S.p.A. ("PGAM") (until April
2010); Director of PIOGLOBAL Real
Estate Investment Fund (Russia)
(until June 2006); Director of
Nano-C, Inc. (since 2003);
Director of Cole Management Inc.
(since 2004); Director of
Fiduciary Counseling, Inc.;
President and Director of Pioneer
Funds Distributor, Inc. ("PFD")
(until May 2006); President of all
of the Pioneer Funds; and Of
Counsel, Wilmer Cutler Pickering
Hale and Dorr LLP
------------------------------------------------------------------------------------------------------------------------------------
Daniel K. Kingsbury (51)* Trustee and Executive Class I Trustee since Director, CEO and President of PIM
Vice President 2007. Term expires in USA (since February 2007);
2011. Director and President of Pioneer
and Pioneer Institutional Asset
Management, Inc. (since February
2007); Executive Vice Presi- dent
of all of the Pioneer Funds (since
March 2007); Director of PGAM
(2007 - 2010); Head of New Europe
Division, PGAM (2000 - 2005); Head
of New Markets Division, PGAM
(2005 - 2007)
------------------------------------------------------------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because each is an officer or director of the Trust's
investment adviser and certain of its affiliates.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 61
Independent Trustees
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age With the Trust and Term of Office During Past Five Years Held by this Trustee
------------------------------------------------------------------------------------------------------------------------------------
David R. Bock (66) Trustee Class III Trustee since Interim Chief Executive Officer, Director of
2007. Term expires in Oxford Analytica, Inc. (privately- Enterprise Community
2010. held research and consulting Investment, Inc.
company) (2010); Managing Partner, (privately-held
Federal City Capital Advisors affordable housing
(corporate advisory services finance company)
company) (1997 to 2004 and 2008 - (1985 - present);
present); Executive Vice President Director of Oxford
and Chief Financial Officer, Analytica, Inc.
I-trax, Inc. (publicly traded (2008 - present);
health care services company) Director of New York
(2004 - 2007); and Executive Vice Mortgage Trust
President and Chief Financial (publicly-traded
Officer, Pedestal Inc. mortgage REIT) (2004
(internet-based mortgage trading - 2009)
company (2000 - 2002)
------------------------------------------------------------------------------------------------------------------------------------
62 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age With the Trust and Term of Office During Past Five Years Held by this Trustee
------------------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (62) Trustee Class II Trustee since President, Bush International, LLC Director of Marriott
2007. Term expires in (international financial advisory International, Inc.
2012. firm) (1991 - present); Managing (2008 - present);
Director, Federal Housing Finance Director of Discover
Board (oversight of Federal Home Financial Services
Loan Bank system) (1989 - 1991); (credit card issuer
Vice President and Head of and electronic
International Finance, Federal payment services)
National Mortgage Association (2007 - present);
(1988 - 1989); U.S. Alternate Former Director of
Executive Director, International Briggs & Stratton
Monetary Fund (1984 - 1988); Co. (engine
Executive Assistant to Deputy manufacturer) (2004
Secretary of the U.S. Treasury, - 2009); Director of
U.S. Treasury Department (1982 - UAL Corporation
1984); Vice President and Team (airline holding
Leader in Corporate Banking, company) (2006 -
Bankers Trust Co. (1976 - 1982) present); Director
of ManTech
International
Corporation
(national security,
defense, and
intelligence
technology firm)
(2006 - present);
and Member, Board of
Governors,
Investment Company
Institute (2007 -
present); Former
Director of Brady
Corporation (2000 -
2007); Former
Director of Mortgage
Guaranty Insurance
Corporation (1991 -
2006); Former
Director of
Millennium
Chemicals, Inc.
(commodity
chemicals) (2002 -
2005); Former
Director, R.J.
Reynolds Tobacco
Holdings, Inc.
(tobacco) (1999 -
2005); Former
Director of Texaco,
Inc. (1997 - 2001)
------------------------------------------------------------------------------------------------------------------------------------
Pioneer Diversified High Income Trust | Annual Report | 4/30/10
63
Independent Trustees (continued)
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age With the Trust and Term of Office During Past Five Years Held by this Trustee
------------------------------------------------------------------------------------------------------------------------------------
Benjamin M. Friedman (65) Trustee Class I Trustee since William Joseph Maier Professor of Trustee, Mellon
2008. Term expires in Political Economy, Harvard Institutional Funds
2011. University (1972 - present) Investment Trust and
Mellon Institutional
Funds Master Portfolio
(oversaw 17 portfolios
in fund complex) (1989
- 2008)
------------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (62) Trustee Class I Trustee since Founding Director, Vice-President None
2007. Term expires in and Corporate Secretary, The
2011. Winthrop Group, Inc. (consulting
firm); and Desautels Faculty of
Management, McGill University (1999
- present); and Manager of Research
Operations and Organizational
Learning, Xerox PARC, Xerox's
Advance Research Center (1990 -
1994)
------------------------------------------------------------------------------------------------------------------------------------
Thomas J. Perna (59) Trustee Class II Trustee since Chairman and Chief Executive Director, Broadridge
2007. Term expires in Officer, Quadriserv, Inc. Financial Solutions,
2012. (technology products for securities Inc. (2009 - present);
lending industry) (2008 - present); Director, Quadriserv,
Private investor (2004 - 2008); and Inc. (2005 - present)
Senior Executive Vice President,
The Bank of New York (financial and
securities services) (1986 - 2004)
------------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (61) Trustee Class II Trustee since President and Chief Executive Director of New America
2007. Term expires in Officer, Newbury, Piret & Company, High Income Fund, Inc.
2012. Elected by Pre- Inc. (investment banking firm) (closed-end investment
ferred Shares only. (1981 - present) company) (2004 -
present); Member, Board
of Governors,
Investment Company
Institute (2000 - 2006)
------------------------------------------------------------------------------------------------------------------------------------
64 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age With the Trust and Term of Office During Past Five Years Held by this Trustee
------------------------------------------------------------------------------------------------------------------------------------
Stephen K. West (81) Trustee Class III Trustee since Senior Counsel, Sullivan & Cromwell Director, The Swiss
2007. Term expires in LLP (law firm) (1998 - present); Helvetia Fund, Inc.
2010. Partner, Sullivan & Cromwell LLP (closed-end investment
(prior to 1998) company); Director,
AMVESCAP, PLC
(investment manager)
(1997 - 2005)
------------------------------------------------------------------------------------------------------------------------------------
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 65
Trust Officers
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age With the Trust and Term of Office During Past Five Years Held by this Officers
------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Assistant Since 2007. Serves at Vice President and Associate None
Kelley (45) Secretary the discretion of the General Counsel of Pioneer since
Board. January 2008 and Assistant
Secretary of all of the Pioneer
Funds since September 2003; Vice
President and Senior Counsel of
Pioneer from July 2002 to December
2007
------------------------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (50) Treasurer Since 2008. Serves at Vice President - Fund Accounting, None
the discretion of the Administration and Controller-
Board. ship Services of Pioneer; and
Treasurer of all of the Pioneer
Funds since March 2008; Deputy
Treasurer of Pioneer from March
2004 to February 2008; Assistant
Treasurer of all of the Pioneer
Funds from March 2004 to February
2008
------------------------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (45) Assistant Since 2007. Serves at Assistant Vice President - Fund None
Treasurer the discretion of the Accounting, Administration and
Board. Controllership Services of
Pioneer; and Assistant Treasurer
of all of the Pioneer Funds
------------------------------------------------------------------------------------------------------------------------------------
Gary Sullivan (52) Assistant Since 2007. Serves at Fund Accounting Manager - Fund None
Treasurer the discretion of the Accounting, Administration and
Board. Controllership Services of
Pioneer; and Assistant Treasurer
of all of the Pioneer Funds
------------------------------------------------------------------------------------------------------------------------------------
David F. Johnson (30) Assistant Since 2009. Serves at Fund Administration Manager - Fund None
Treasurer the discretion of the Accounting, Administration and
Board. Controllership Services since
November 2008 and Assistant
Treasurer of all of the Pioneer
Funds since January 2009; Client
Service Manager - Institutional
Investor Services at State Street
Bank from March 2003 to March 2007
------------------------------------------------------------------------------------------------------------------------------------
66 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
------------------------------------------------------------------------------------------------------------------------------------
Position Held Length of Service Principal Occupation Other Directorships
Name and Age With the Trust and Term of Office During Past Five Years Held by this Officers
------------------------------------------------------------------------------------------------------------------------------------
Jean M. Bradley (57) Chief Compliance Since 2010. Serves at Chief Compliance Officer of None
Officer the discretion of the Pioneer and of all the Pioneer
Board. Funds since March 2010; Director
of Adviser and Portfolio
Compliance at Pioneer since
October 2005; Senior Compliance
Officer for Columbia Management
Advisers, Inc. from October 2003
to October 2005
------------------------------------------------------------------------------------------------------------------------------------
The outstanding capital stock of PFD, Pioneer and Pioneer Investment Management
Shareholder Services, Inc. (PIMSS) is indirectly wholly owned by UniCredit
S.p.A. (UniCredit), one of the largest banking groups in Italy. Pioneer, the
Trust's investment adviser, provides investment management and financial
services to mutual funds, institutional and other clients.
Pioneer Diversified High Income Trust | Annual Report | 4/30/10 67
This page for your notes.
68 Pioneer Diversified High Income Trust | Annual Report | 4/30/10
How to Contact Pioneer
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
You can call American Stock Transfer & Trust Company (AST) for:
--------------------------------------------------------------------------------
Account Information 1-800-710-0935
Or write to AST:
--------------------------------------------------------------------------------
For Write to
General inquiries, lost dividend checks, American Stock
change of address, lost stock certificates, Transfer & Trust
stock transfer Operations Center
6201 15th Ave.
Brooklyn, NY 11219
Dividend reinvestment plan (DRIP) American Stock
Transfer & Trust
Wall Street Station
P.O. Box 922
New York, NY 10269-0560
Website www.amstock.com
For additional information, please contact your investment advisor or visit our
web site www.pioneerinvestments.com.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form also may be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
The Trust has filed with the Securities and Exchange Commission the
certification of its Chief Executive Officer and Chief Financial Officer
required by Section 302 of the Sarbanes-Oxley Act.
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit Fees
Fees for audit services provided to the Trust, including fees
associated with the filings to update its Form N-2 and issuance
of comfort letters, totaled approximately $41,600 in 2010 and
$41,300 in 2009.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
Audit-Related Fees
There were no audit-related fees for 2010 and
2009.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
Tax Fees
Fees for tax compliance services, primarily for tax returns,
totaled approximately $8,290 and $8,290 for 2010 and 2009,
respectively.
(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.
All Other Fees
There were no other fees for 2010 and
2009.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognize that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
----------------------- --------------------------- -----------------------------------------------
------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- -------------------------
------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
----------------------- --------------------------- -----------------------------------------------
--------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
----------------------- ------------------------- -----------------------------------------------
------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
------------------------------------------- ------------------------------
--------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
--------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
Non-Audit Services
Beginning with non-audit service contracts entered into on or
after May 6, 2003, the effective date of the new SEC pre-
approval rules, the Trust's audit committee is required to pre-
approve services to affiliates defined by SEC rules to the
extent that the services are determined to have a direct impact
on the operations or financial reporting of the Trust. For the
years ended April 30, 2010 and 2009, there were no services
provided to an affiliate that required the Trust's audit
committee pre-approval.
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The aggregate non-audit fees for the Trust and affiliates, as
previously defined, totaled approximately $8,290 in 2010 and
$8,290 in 2009.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Fund's audit committee of the Board of Trustees has considered
whether the provision of non-audit services that were rendered to the
Affiliates (as defined) that were not pre- approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
Item 5. Audit Committee of Listed Registrants
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrants audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
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
2
Interest." The Compliance Department will provide a "Conflicts of Interest
Report," applying the criteria set forth below under "Conflicts of
Interest," to the Proxy Coordinator summarizing the results of its review.
In the absence of a conflict of interest, the Proxy Coordinator will vote
in accordance with the recommendation of the Director of Portfolio
Management US.
If the matter presents a conflict of interest for Pioneer, then the Proxy
Coordinator will refer the matter to the Proxy Voting Oversight Group for a
decision. In general, when a conflict of interest is present, Pioneer will
vote according to the recommendation of the Director of Portfolio
Management US where such recommendation would go against Pioneer's interest
or where the conflict is deemed to be immaterial. Pioneer will vote
according to the recommendation of its proxy voting service when the
conflict is deemed to be material and the Pioneer's internal vote
recommendation would favor Pioneer's interest, unless a client specifically
requests Pioneer to do otherwise. When making the final determination as to
how to vote a proxy, the Proxy Voting Oversight Group will review the
report from the Director of Portfolio Management US and the Conflicts of
Interest Report issued by the Compliance Department.
Conflicts of Interest
A conflict of interest occurs when Pioneer's interests interfere, or appear
to interfere with the interests of Pioneer's clients. Occasionally, Pioneer
may have a conflict that can affect how its votes proxies. The conflict may
be actual or perceived and may exist when the matter to be voted on
concerns:
o An affiliate of Pioneer, such as another company belonging to
the UniCredito Italiano S.p.A. banking group (a "UniCredito
Affiliate");
o An issuer of a security for which Pioneer acts as a sponsor,
advisor, manager, custodian, distributor, underwriter, broker, or
other similar capacity (including those securities specifically
declared by PGAM to present a conflict of interest for Pioneer);
o An issuer of a security for which UniCredito has informed Pioneer
that a UniCredito Affiliate acts as a sponsor, advisor, manager,
custodian, distributor, underwriter, broker, or other similar
capacity; or
o A person with whom Pioneer (or any of its affiliates) has an
existing, material contract or business relationship that was not
entered into in the ordinary course of Pioneer's business.
o Pioneer will abstain from voting with respect to companies
directly or indirectly owned by UniCredito Italiano Group, unless
otherwise directed by a client. In addition, Pioneer will inform
PGAM Global Compliance and the PGAM Independent Directors before
exercising such rights.
Any associate involved in the proxy voting process with knowledge of any
apparent or actual conflict of interest must disclose such conflict to the
Proxy Coordinator and the Compliance Department. The Compliance Department
will review each item referred to Pioneer to determine whether an actual or
potential conflict of interest with Pioneer exists in connection with the
proposal(s) to be voted upon. The review will be conducted by comparing the
apparent parties affected by the proxy proposal being
3
voted upon against the Compliance Department's internal list of interested
persons and, for any matches found, evaluating the anticipated magnitude
and possible probability of any conflict of interest being present. For
each referral item, the determination regarding the presence or absence of
any actual or potential conflict of interest will be documented in a
Conflicts of Interest Report to the Proxy Coordinator.
Securities Lending
In conjunction with industry standards Proxies are not available to be
voted when the shares are out on loan through either Pioneer's lending
program or a client's managed security lending program. However, Pioneer
will reserve the right to recall lent securities so that they may be voted
according to the Pioneer's instructions. If a portfolio manager would like
to vote a block of previously lent shares, the Proxy Coordinator will work
with the portfolio manager and Investment Operations to recall the
security, to the extent possible, to facilitate the vote on the entire
block of shares.
Share-Blocking
"Share-blocking" is a market practice whereby shares are sent to a
custodian (which may be different than the account custodian) for record
keeping and voting at the general meeting. The shares are unavailable for
sale or delivery until the end of the blocking period (typically the day
after general meeting date).
Pioneer will vote in those countries with "share-blocking." In the event a
manager would like to sell a security with "share-blocking", the Proxy
Coordinator will work with the Portfolio Manager and Investment Operations
Department to recall the shares (as allowable within the market time-frame
and practices) and/or communicate with executing brokerage firm. A list of
countries with "share-blocking" is available from the Investment Operations
Department upon request.
Record Keeping
The Proxy Coordinator shall ensure that Pioneer's proxy voting service:
o Retains a copy of the proxy statement received (unless the proxy
statement is available from the SEC's Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system);
o Retains a record of the vote cast;
o Prepares Form N-PX for filing on behalf of each client that is a
registered investment company; and
o Is able to promptly provide Pioneer with a copy of the voting
record upon its request.
4
The Proxy Coordinator shall ensure that for those votes that may require
additional documentation (i.e. conflicts of interest, exception votes and
case-by-case votes) the following records are maintained:
o A record memorializing the basis for each referral vote cast;
o A copy of any document created by Pioneer that was material in
making the decision on how to vote the subject proxy; and
o A copy of any conflict notice, conflict consent or any other
written communication (including emails or other electronic
communications) to or from the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries)
regarding the subject proxy vote cast by, or the vote
recommendation of, Pioneer.
o Pioneer shall maintain the above records in the client's file for a
period not less than ten (10) years.
Disclosure
Pioneer shall take reasonable measures to inform its clients of the process
or procedures clients must follow to obtain information regarding how
Pioneer voted with respect to assets held in their accounts. In addition,
Pioneer shall describe to clients its proxy voting policies and procedures
and will furnish a copy of its proxy voting policies and procedures upon
request. This information may be provided to clients through Pioneer's Form
ADV (Part II) disclosure, by separate notice to the client, or through
Pioneer's website.
Proxy Voting Oversight Group
The members of the Proxy Voting Oversight Group are Pioneer's: Director of
Portfolio Management US, Head of Investment Operations, and Director of
Compliance. Other members of Pioneer will be invited to attend meetings and
otherwise participate as necessary. The Head of Investment Operations will
chair the Proxy Voting Oversight Group.
The Proxy Voting Oversight Group is responsible for developing, evaluating,
and changing (when necessary) Pioneer's Proxy Voting Policies and
Procedures. The group meets at least annually to evaluate and review these
policies and procedures and the services of its third-party proxy voting
service. In addition, the Proxy Voting Oversight Group will meet as
necessary to vote on referral items and address other business as
necessary.
Amendments
Pioneer may not amend its Proxy Voting Policies And Procedures without the
prior approval of the Proxy Voting Oversight Group and its corporate
parent, Pioneer Global Asset Management S.p.A
5
Proxy Voting Policies
Pioneer's sole concern in voting proxies is the economic effect of the
proposal on the value of portfolio holdings, considering both the short-
and long-term impact. In many instances, Pioneer believes that supporting
the company's strategy and voting "for" management's proposals builds
portfolio value. In other cases, however, proposals set forth by management
may have a negative effect on that value, while some shareholder proposals
may hold the best prospects for enhancing it. Pioneer monitors developments
in the proxy-voting arena and will revise this policy as needed.
All proxies that are received promptly will be voted in accordance with the
specific policies listed below. All shares in a company held by
Pioneer-managed accounts will be voted alike, unless a client has given us
specific voting instructions on an issue or has not delegated authority to
us. Proxy voting issues will be reviewed by Pioneer's Proxy Voting
Oversight Group, which consists of the Director of Portfolio Management US,
the Director of Investment Operations (the Proxy Coordinator), and the
Director of Compliance.
Pioneer has established Proxy Voting Procedures for identifying and
reviewing conflicts of interest that may arise in the voting of proxies.
Clients may request, at any time, a report on proxy votes for securities
held in their portfolios and Pioneer is happy to discuss our proxy votes
with company management. Pioneer retains a proxy voting service to provide
research on proxy issues and to process proxy votes.
Administrative
While administrative items appear infrequently in U.S. issuer proxies, they
are quite common in non-U.S. proxies.
We will generally support these and similar management proposals:
o Corporate name change.
o A change of corporate headquarters.
o Stock exchange listing.
o Establishment of time and place of annual meeting.
o Adjournment or postponement of annual meeting.
o Acceptance/approval of financial statements.
o Approval of dividend payments, dividend reinvestment plans and other
dividend-related proposals.
o Approval of minutes and other formalities.
6
o Authorization of the transferring of reserves and allocation of
income.
o Amendments to authorized signatories.
o Approval of accounting method changes or change in fiscal year-end.
o Acceptance of labor agreements.
o Appointment of internal auditors.
Pioneer will vote on a case-by-case basis on other routine business;
however, Pioneer will oppose any routine business proposal if insufficient
information is presented in advance to allow Pioneer to judge the merit of
the proposal. Pioneer has also instructed its proxy voting service to
inform Pioneer of its analysis of any administrative items inconsistent, in
its view, with supporting the value of Pioneer portfolio holdings so that
Pioneer may consider and vote on those items on a case-by-case basis.
Auditors
We normally vote for proposals to:
o Ratify the auditors. We will consider a vote against if we are
concerned about the auditors' independence or their past work for
the company. Specifically, we will oppose the ratification of
auditors and withhold votes from audit committee members if
non-audit fees paid by the company to the auditing firm exceed the
sum of audit fees plus audit-related fees plus permissible tax
fees according to the disclosure categories proposed by the
Securities and Exchange Commission.
o Restore shareholder rights to ratify the auditors.
We will normally oppose proposals that require companies to:
o Seek bids from other auditors.
o Rotate auditing firms, except where the rotation is statutorily
required or where rotation would demonstrably strengthen financial
disclosure.
o Indemnify auditors.
o Prohibit auditors from engaging in non-audit services for the
company.
Board of Directors
On issues related to the board of directors, Pioneer normally supports
management. We will, however, consider a vote against management in
instances where corporate performance has been very poor or where the board
appears to lack independence.
7
General Board Issues
Pioneer will vote for:
o Audit, compensation and nominating committees composed of
independent directors exclusively.
o Indemnification for directors for actions taken in good faith in
accordance with the business judgment rule. We will vote against
proposals for broader indemnification.
o Changes in board size that appear to have a legitimate business
purpose and are not primarily for anti-takeover reasons.
o Election of an honorary director.
We will vote against:
o Minimum stock ownership by directors.
o Term limits for directors. Companies benefit from experienced
directors, and shareholder control is better achieved through
annual votes.
o Requirements for union or special interest representation on the
board.
o Requirements to provide two candidates for each board seat.
We will vote on a case-by case basis on these issues:
o Separate chairman and CEO positions. We will consider voting with
shareholders on these issues in cases of poor corporate
performance.
Elections of Directors
In uncontested elections of directors we will vote against:
o Individual directors with absenteeism above 25% without valid
reason. We support proposals that require disclosure of director
attendance.
o Insider directors and affiliated outsiders who sit on the audit,
compensation, stock option or nominating committees. For the
purposes of our policy, we accept the definition of affiliated
directors provided by our proxy voting service.
We will also vote against:
o Directors who have failed to act on a takeover offer where the
majority of shareholders have tendered their shares.
o Directors who appear to lack independence or are associated with
very poor corporate performance.
8
We will vote on a case-by case basis on these issues:
o Re-election of directors who have implemented or renewed a
dead-hand or modified dead-hand poison pill (a "dead-hand poison
pill" is a shareholder rights plan that may be altered only by
incumbent or "dead " directors. These plans prevent a potential
acquirer from disabling a poison pill by obtaining control of the
board through a proxy vote).
o Contested election of directors.
o Prior to phase-in required by SEC, we would consider supporting
election of a majority of independent directors in cases of poor
performance.
o Mandatory retirement policies.
o Directors who have ignored a shareholder proposal that has been
approved by shareholders for two consecutive years.
Takeover-Related Measures
Pioneer is generally opposed to proposals that may discourage takeover
attempts. We believe that the potential for a takeover helps ensure that
corporate performance remains high.
Pioneer will vote for:
o Cumulative voting.
o Increase ability for shareholders to call special meetings.
o Increase ability for shareholders to act by written consent.
o Restrictions on the ability to make greenmail payments.
o Submitting rights plans to shareholder vote.
o Rescinding shareholder rights plans ("poison pills").
o Opting out of the following state takeover statutes:
o Control share acquisition statutes, which deny large holders voting
rights on holdings over a specified threshold.
o Control share cash-out provisions, which require large holders to
acquire shares from other holders.
o Freeze-out provisions, which impose a waiting period on large
holders before they can attempt to gain control.
o Stakeholder laws, which permit directors to consider interests of
non-shareholder constituencies.
9
o Disgorgement provisions, which require acquirers to disgorge profits
on purchases made before gaining control.
o Fair price provisions.
o Authorization of shareholder rights plans.
o Labor protection provisions.
o Mandatory classified boards.
We will vote on a case-by-case basis on the following issues:
o Fair price provisions. We will vote against provisions requiring
supermajority votes to approve takeovers. We will also consider
voting against proposals that require a supermajority vote to
repeal or amend the provision. Finally, we will consider the
mechanism used to determine the fair price; we are generally
opposed to complicated formulas or requirements to pay a premium.
o Opting out of state takeover statutes regarding fair price
provisions. We will use the criteria used for fair price
provisions in general to determine our vote on this issue.
o Proposals that allow shareholders to nominate directors.
We will vote against:
o Classified boards, except in the case of closed-end mutual funds.
o Limiting shareholder ability to remove or appoint directors. We
will support proposals to restore shareholder authority in this
area. We will review on a case-by-case basis proposals that
authorize the board to make interim appointments.
o Classes of shares with unequal voting rights.
o Supermajority vote requirements.
o Severance packages ("golden" and "tin" parachutes). We will support
proposals to put these packages to shareholder vote.
o Reimbursement of dissident proxy solicitation expenses. While we
ordinarily support measures that encourage takeover bids, we
believe that management should have full control over corporate
funds.
o Extension of advance notice requirements for shareholder proposals.
o Granting board authority normally retained by shareholders (e.g.,
amend charter, set board size).
o Shareholder rights plans ("poison pills"). These plans generally
allow shareholders to buy additional shares at a below-market
price in the event of a change in control and may deter some bids.
10
Capital Structure
Managements need considerable flexibility in determining the company's
financial structure, and Pioneer normally supports managements' proposals
in this area. We will, however, reject proposals that impose high barriers
to potential takeovers.
Pioneer will vote for:
o Changes in par value.
o Reverse splits, if accompanied by a reduction in number of shares.
o Share repurchase programs, if all shareholders may participate on
equal terms.
o Bond issuance.
o Increases in "ordinary" preferred stock.
o Proposals to have blank-check common stock placements (other than
shares issued in the normal course of business) submitted for
shareholder approval.
o Cancellation of company treasury shares.
We will vote on a case-by-case basis on the following issues:
o Reverse splits not accompanied by a reduction in number of shares,
considering the risk of delisting.
o Increase in authorized common stock. We will make a determination
considering, among other factors:
o Number of shares currently available for issuance;
o Size of requested increase (we would normally approve increases of up to
100% of current authorization);
o Proposed use of the additional shares; and
o Potential consequences of a failure to increase the number of shares
outstanding (e.g., delisting or bankruptcy).
o Blank-check preferred. We will normally oppose issuance of a new
class of blank-check preferred, but may approve an increase in a
class already outstanding if the company has demonstrated that it
uses this flexibility appropriately.
o Proposals to submit private placements to shareholder vote.
o Other financing plans.
We will vote against preemptive rights that we believe limit a company's
financing flexibility.
11
Compensation
Pioneer supports compensation plans that link pay to shareholder returns
and believes that management has the best understanding of the level of
compensation needed to attract and retain qualified people. At the same
time, stock-related compensation plans have a significant economic impact
and a direct effect on the balance sheet. Therefore, while we do not want
to micromanage a company's compensation programs, we will place limits on
the potential dilution these plans may impose.
Pioneer will vote for:
o 401(k) benefit plans.
o Employee stock ownership plans (ESOPs), as long as shares
allocated to ESOPs are less than 5% of outstanding shares. Larger
blocks of stock in ESOPs can serve as a takeover defense. We will
support proposals to submit ESOPs to shareholder vote.
o Various issues related to the Omnibus Budget and Reconciliation Act
of 1993 (OBRA), including:
o Amendments to performance plans to conform with OBRA;
o Caps on annual grants or amendments of administrative features;
o Adding performance goals; and
o Cash or cash-and-stock bonus plans.
o Establish a process to link pay, including stock-option grants, to
performance, leaving specifics of implementation to the company.
o Require that option repricings be submitted to shareholders.
o Require the expensing of stock-option awards.
o Require reporting of executive retirement benefits (deferred
compensation, split-dollar life insurance, SERPs, and pension
benefits).
o Employee stock purchase plans where the purchase price is equal to
at least 85% of the market price, where the offering period is no
greater than 27 months and where potential dilution (as defined
below) is no greater than 10%.
12
We will vote on a case-by-case basis on the following issues:
o Executive and director stock-related compensation plans. We will
consider the following factors when reviewing these plans:
o The program must be of a reasonable size. We will approve plans
where the combined employee and director plans together would
generate less than 15% dilution. We will reject plans with 15% or
more potential dilution.
Dilution = (A + B + C) / (A + B + C + D), where
A = Shares reserved for plan/amendment,
B = Shares available under continuing plans,
C = Shares granted but unexercised and
D = Shares outstanding.
o The plan must not:
o Explicitly permit unlimited option repricing authority or that
have repriced in the past without shareholder approval.
o Be a self-replenishing "evergreen" plan, plans that grant
discount options and tax offset payments.
o We are generally in favor of proposals that increase participation beyond
executives.
o We generally support proposals asking companies to adopt rigorous
vesting provisions for stock option plans such as those that vest
incrementally over, at least, a three- or four-year period with a pro
rata portion of the shares becoming exercisable on an annual basis
following grant date.
o We generally support proposals asking companies to disclose their
window period policies for stock transactions. Window period policies
ensure that employees do not exercise options based on insider
information contemporaneous with quarterly earnings releases and other
material corporate announcements.
o We generally support proposals asking companies to adopt stock holding
periods for their executives.
o All other employee stock purchase plans.
o All other compensation-related proposals, including deferred
compensation plans, employment agreements, loan guarantee programs
and retirement plans.
o All other proposals regarding stock compensation plans, including
extending the life of a plan, changing vesting restrictions,
repricing options, lengthening exercise periods or accelerating
distribution of awards and pyramiding and cashless exercise
programs.
13
We will vote against:
o Pensions for non-employee directors. We believe these retirement
plans reduce director objectivity.
o Elimination of stock option plans.
We will vote on a case-by case basis on these issues:
o Limits on executive and director pay.
o Stock in lieu of cash compensation for directors.
Corporate Governance
Pioneer will vote for:
o Confidential Voting.
o Equal access provisions, which allow shareholders to contribute
their opinion to proxy materials.
o Proposals requiring directors to disclose their ownership of shares
in the company.
We will vote on a case-by-case basis on the following issues:
o Change in the state of incorporation. We will support
reincorporations supported by valid business reasons. We will
oppose those that appear to be solely for the purpose of
strengthening takeover defenses.
o Bundled proposals. We will evaluate the overall impact of the
proposal.
o Adopting or amending the charter, bylaws or articles of association.
o Shareholder appraisal rights, which allow shareholders to demand
judicial review of an acquisition price.
We will vote against:
o Shareholder advisory committees. While management should solicit
shareholder input, we prefer to leave the method of doing so to
management's discretion.
o Limitations on stock ownership or voting rights.
o Reduction in share ownership disclosure guidelines.
14
Mergers and Restructurings
Pioneer will vote on the following and similar issues on a case-by-case
basis:
o Mergers and acquisitions.
o Corporate restructurings, including spin-offs, liquidations, asset
sales, joint ventures, conversions to holding company and
conversions to self-managed REIT structure.
o Debt restructurings.
o Conversion of securities.
o Issuance of shares to facilitate a merger.
o Private placements, warrants, convertible debentures.
o Proposals requiring management to inform shareholders of merger
opportunities.
We will normally vote against shareholder proposals requiring that the
company be put up for sale.
Mutual Funds
Many of our portfolios may invest in shares of closed-end mutual funds or
exchange-traded funds. The non-corporate structure of these investments
raises several unique proxy voting issues.
Pioneer will vote for:
o Establishment of new classes or series of shares.
o Establishment of a master-feeder structure.
Pioneer will vote on a case-by-case on:
o Changes in investment policy. We will normally support changes
that do not affect the investment objective or overall risk level
of the fund. We will examine more fundamental changes on a
case-by-case basis.
o Approval of new or amended advisory contracts.
o Changes from closed-end to open-end format.
o Authorization for, or increase in, preferred shares.
o Disposition of assets, termination, liquidation, or mergers.
o Classified boards of closed-end mutual funds, but will typically
support such proposals.
15
Social Issues
Pioneer will abstain on stockholder proposals calling for greater
disclosure of corporate activities with regard to social issues. "Social
Issues" may generally be described as shareholder proposals for a company
to:
o Conduct studies regarding certain issues of public concern and
interest;
o Study the feasibility of the company taking certain actions with
regard to such issues; or
o Take specific action, including ceasing certain behavior and
adopting company standards and principles, in relation to issues
of public concern and interest.
We believe these issues are important and should receive management
attention.
Pioneer will vote against proposals calling for substantial changes in the
company's business or activities. We will also normally vote against
proposals with regard to contributions, believing that management should
control the routine disbursement of funds.
16
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrants portfolio (Portfolio Manager). Also state each Portfolio
Managers business experience during the past 5 years.
Additional Information About the Portfolio Managers
Other Accounts Managed by the Portfolio Managers. The table below indicates, for
each portfolio manager of the fund, information about the accounts other than
the fund over which the portfolio manager has day-to-day investment
responsibility. All information on the number of accounts and total assets in
the table is as of April 30, 2010. For purposes of the table, "Other Pooled
Investment Vehicles" may include investment partnerships, undertakings for
collective investments in transferable securities ("UCITS") and other non-U.S.
investment funds and group trusts, and "Other Accounts" may include separate
accounts for institutions or individuals, insurance company general or separate
accounts, pension funds and other similar institutional accounts but generally
do not include the portfolio manager's personal investment accounts or those
which the manager may be deemed to own beneficially under the code of ethics.
Certain funds and other accounts managed by the portfolio manager may have
substantially similar investment strategies
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Name of Portfolio Type of Account Number of Total Assets Number of Assets Managed
Manager Accounts Managed Managed Accounts Managed for which
for which Advisory Fee is
Advisory Fee is Performance-Based
Performance-Based
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Charles Melchreit Other Registered 3 $458,501,000 N/A N/A
Investment
Companies
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Pooled 2 $448,065,000 N/A N/A
Investment Vehicles
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Accounts 3 1,482,841,000 N/A N/A
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Name of Portfolio Type of Account Number of Total Assets Number of Assets Managed
Manager Accounts Managed Managed Accounts Managed for which
for which Advisory Fee is
Advisory Fee is Performance-Based
Performance-Based
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Andrew Feltus Other Registered 6 $6,180,262,000 N/A N/A
Investment
Companies
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Pooled 4 $1,599,924,000 N/A N/A
Investment Vehicles
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Accounts 1 $335,242,000 N/A N/A
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Name of Portfolio Type of Account Number of Total Assets Number of Assets Managed
Manager Accounts Managed Managed Accounts Managed for which
for which Advisory Fee is
Advisory Fee is Performance-Based
Performance-Based
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Jonathan Sharkey Other Registered 2 $522,857,000 N/A N/A
Investment
Companies
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Pooled 0 $0 N/A N/A
Investment Vehicles
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Accounts 1 $56,524,000 N/A N/A
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Potential Conflicts of Interest. When a portfolio manager is responsible for the
management of more than one account, the potential arises for the portfolio
manager to favor one account over another. The principal types of potential
conflicts of interest that may arise are discussed below. For the reasons
outlined below, Pioneer does not believe that any material conflicts are likely
to arise out of a portfolio manager's responsibility for the management of the
fund as well as one or more other accounts. Although Pioneer has adopted
procedures that it believes are reasonably designed to detect and prevent
violations of the federal securities laws and to mitigate the potential for
conflicts of interest to affect its portfolio management decisions, there can be
no assurance that all conflicts will be identified or that all procedures will
be effective in mitigating the potential for such risks. Generally, the risks of
such conflicts of interest are increased to the extent that a portfolio manager
has a financial incentive to favor one account over another. Pioneer has
structured its compensation arrangements in a manner that is intended to limit
such potential for conflicts of interest. The funds investment subadviser also
has adopted certain compliance procedures which are designed to address these
types of conflicts. However, there is no guarantee that such procedures will
detect each situation in which a conflict might arise. See "Compensation of
Portfolio Managers" below.
o A portfolio manager could favor one account over another in allocating
new investment opportunities that have limited supply, such as initial
public offerings and private placements. If, for example, an initial
public offering that was expected to appreciate in value significantly
shortly after the offering was allocated to a single account, that
account may be expected to have better investment performance than
other accounts that did not receive an allocation of the initial public
offering. Generally, investments for which there is limited
availability are allocated based upon a range of factors including
available cash and consistency with the accounts' investment objectives
and policies. This allocation methodology necessarily involves some
subjective elements but is intended over time to treat each client in
an equitable and fair manner. Generally, the investment opportunity is
allocated among participating accounts on a pro rata basis. Although
Pioneer believes that its practices are reasonably designed to treat
each client in an equitable and fair manner, there may be instances
where a fund may not participate, or may participate to a lesser degree
than other clients, in the allocation of an investment opportunity.
o A portfolio manager could favor one account over another in the order
in which trades for the accounts are placed. If a portfolio manager
determines to purchase a security for more than one account in an
aggregate amount that may influence the market price of the security,
accounts that purchased or sold the security first may receive a more
favorable price than accounts that made subsequent transactions. The
less liquid the market for the security or the greater the percentage
that the proposed aggregate purchases or sales represent of average
daily trading volume, the greater the potential for accounts that make
subsequent purchases or sales to receive a less favorable price. When a
portfolio manager intends to trade the same security on the same day
for more than one account, the trades typically are "bunched," which
means that the trades for the individual accounts are aggregated and
each account receives the same price. There are some types of accounts
as to which bunching may not be possible for contractual reasons (such
as directed brokerage arrangements). Circumstances may also arise where
the trader believes that bunching the orders may not result in the best
possible price. Where those accounts or circumstances are involved,
Pioneer will place the order in a manner intended to result in as
favorable a price as possible for such client.
o A portfolio manager could favor an account if the portfolio manager's
compensation is tied to the performance of that account to a greater
degree than other accounts managed by the portfolio manager. If, for
example, the portfolio manager receives a bonus based upon the
performance of certain accounts relative to a benchmark while other
accounts are disregarded for this purpose, the portfolio manager will
have a financial incentive to seek to have the accounts that determine
the portfolio manager's bonus achieve the best possible performance to
the possible detriment of other accounts. Similarly, if Pioneer receives
a performance-based advisory fee, the portfolio manager may favor that
account, whether or not the performance of that account directly
determines the portfolio manager's compensation.
o A portfolio manager could favor an account if the portfolio manager has
a beneficial interest in the account, in order to benefit a large client
or to compensate a client that had poor returns. For example, if the
portfolio manager held an interest in an investment partnership that was
one of the accounts managed by the portfolio manager, the portfolio
manager would have an economic incentive to favor the account in which
the portfolio manager held an interest.
o If the different accounts have materially and potentially conflicting
investment objectives or strategies, a conflict of interest could arise.
For example, if a portfolio manager purchases a security for one account
and sells the same security for another account, such trading pattern
may disadvantage either the account that is long or short. In making
portfolio manager assignments, Pioneer seeks to avoid such potentially
conflicting situations. However, where a portfolio manager is
responsible for accounts with differing investment objectives and
policies, it is possible that the portfolio manager will conclude that
it is in the best interest of one account to sell a portfolio security
while another account continues to hold or increase the holding in such
security.
Compensation of Portfolio Managers. Pioneer has adopted a system of compensation
for portfolio managers that seeks to align the financial interests of the
portfolio managers with those of shareholders of the accounts (including Pioneer
funds) the portfolio managers manage, as well as with the financial performance
of Pioneer. The compensation program for all Pioneer portfolio managers includes
a base salary (determined by the rank and tenure of the employee) and an annual
bonus program, as well as customary benefits that are offered generally to all
full-time employees. Base compensation is fixed and normally reevaluated on an
annual basis. Pioneer seeks to set base compensation at market rates, taking
into account the experience and responsibilities of the portfolio manager. The
bonus plan is intended to provide a competitive level of annual bonus
compensation that is tied to the portfolio manager achieving superior investment
performance and align the interests of the investment professional with those of
shareholders, as well as with the financial performance of Pioneer. Any bonus
under the plan is completely discretionary, with a maximum annual bonus that may
be in excess of base salary. The annual bonus is based upon a combination of the
following factors:
o Quantitative Investment Performance. The quantitative investment
performance calculation is based on pre-tax investment performance of
all of the accounts managed by the portfolio manager (which includes
the fund and any other accounts managed by the portfolio manager) over
a one-year period (20% weighting) and four-year period (80% weighting),
measured for periods ending on December 31. The accounts, which include
the fund, are ranked against a group of mutual funds with similar
investment objectives and investment focus (60%) and a broad-based
securities market index measuring the performance of the same type of
securities in which the accounts invest (40%), which, in the case of
the fund, is the Merrill Lynch Global High Yield and Emerging Markets
Index and the CSFB Leveraged Loan Index. As a result of these two
benchmarks, the performance of the portfolio manager for compensation
purposes is measured against the criteria that are relevant to the
portfolio manager's competitive universe.
o Qualitative Performance. The qualitative performance component with
respect to all of the accounts managed by the portfolio manager
includes objectives, such as effectiveness in the areas of teamwork,
leadership, communications and marketing, that are mutually established
and evaluated by each portfolio manager and management.
o Pioneer Results and Business Line Results. Pioneer's financial
performance, as well as the investment performance of its investment
management group, affect a portfolio manager's actual bonus by a
leverage factor of plus or minus (+/-) a predetermined percentage.
The quantitative and qualitative performance components comprise 80% and 20%,
respectively, of the overall bonus calculation (on a pre-adjustment basis). A
portion of the annual bonus is deferred for a specified period and may be
invested in one or more Pioneer funds.
Certain portfolio managers may participate in other programs designed to reward
and retain key contributors. Senior executives or other key employees may be
granted performance units based on the stock price performance of UniCredit and
the financial performance of Pioneer Global Asset Management S.p.A., which are
affiliates of Pioneer. Portfolio managers also may participate in a deferred
compensation program, whereby deferred amounts are invested in one or more
Pioneer funds.
Share Ownership by Portfolio Managers. The following table indicates as of April
30, 2010 the value, within the indicated range, of shares beneficially owned by
the portfolio managers of the fund.
--------------------------------------- ----------------------------------------
Name of Portfolio Manager Beneficial Ownership of the Fund*
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
Charles Melchreit A
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
Andrew Feltus D
--------------------------------------- ----------------------------------------
--------------------------------------- ----------------------------------------
Jonathan Sharkey B
--------------------------------------- ----------------------------------------
*Key to Dollar Ranges
A. None B. $1 - $10,000 C. $10,001 - $50,000 D. $50,001 - $100,000
E. $100,001 - $500,000 F. $500,001 - $1,000,000 G. Over $1,000,000
--------------------------------------------------------------------------------------------------------------------------
Interested Trustees:
--------------------------------------------------------------------------------------------------------------------------
------------------- ------------------ ------------------ ---------------------------------- -----------------------------
John F. Cogan, Chairman of the Class III Deputy Chairman and a Director None
Jr. (81)* Board, Trustee Trustee since of Pioneer Global Asset
and President 2007. Term Management S.p.A. ("PGAM");
expires in 2010. Non-Executive Chairman and a
Director of Pioneer Investment
Management USA Inc. ("PIM-USA");
Chairman and a Director of
Pioneer; Chairman and Director
of Pioneer Institutional Asset
Management, Inc. (since 2006);
Director of Pioneer Alternative
Investment Management Limited
(Dublin); President and a
Director of Pioneer Alternative
Investment Management (Bermuda)
Limited and affiliated funds;
Director of PIOGLOBAL Real
Estate Investment Fund (Russia)
(until June 2006); Director of
Nano-C, Inc. (since 2003);
Director of Cole Management Inc.
(since 2004); Director of
Fiduciary Counseling, Inc.;
President and Director of
Pioneer Funds Distributor, Inc.
("PFD") (until May 2006);
President of all of the Pioneer
Funds; and Of Counsel, Wilmer
Cutler Pickering Hale and Dorr
LLP
------------------- ------------------ ------------------ ---------------------------------- -----------------------------
------------------- ------------------ ------------------ ---------------------------------- -----------------------------
Daniel K. Trustee and Class I Trustee Director, CEO and President of None
Kingsbury (49)* Executive Vice since 2007. Term Pioneer Investment Management
President expires in 2011. USA Inc., Pioneer Investment
Management, Inc. and Pioneer
Institutional Asset Management,
Inc. (since March 2007);
Executive Vice President of all
of the Pioneer Funds (since
March 2007); Director of Pioneer
Global Asset Management S.p.A.
(since March 2007); Head of New
Markets Division, Pioneer Global
Asset Management S.p.A.
(2000-2007)
------------------- ------------------ ------------------ ---------------------------------- -----------------------------
--------------------------------------------------------------------------------------------------------------------------
Independent Trustees:
--------------------------------------------------------------------------------------------------------------------------
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
David R. Bock (63) Trustee Class III Executive Vice President and Director of The Enterprise
Trustee since Chief Financial Officer, I-trax, Social Investment Company
2007. Term Inc. (publicly traded health (privately-held affordable
expires in 2010. care services company) (2004 - housing finance company);
present); Partner, Federal City and Director of New York
Capital Advisors (boutique Mortgage Trust (publicly
merchant bank)(1997 to 2004); traded mortgage REIT)
and Executive Vice President and
Chief Financial Officer,
Pedestal Inc. (internet-based
mortgage trading company)
(2000-2002)
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
Mary K. Bush (59) Trustee Class II Trustee President, Bush International, Director of Brady
since 2007. Term LLC (international financial Corporation (industrial
expires in 2009. advisory firm) identification and
specialty coated material
products manufacturer);
Director of Briggs &
Stratton Co. (engine
manufacturer); Director of
UAL Corporation (airline
holding company); Director
of Mantech International
Corporation (national
security, defense, and
intelligence technology
firm): and Member, Board of
Governors, Investment
Company Institute
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
Benjamin M. Friedman Trustee Class I Trustee Professor, Trustee, Mellon
(64) since 2008. Term Harvard Institutional Funds
expires in 2011. University Investment Trust and Mellon
Institutional Funds Master
Portfolio (oversees 17
portfolios in fund complex)
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
Margaret B.W. Graham Trustee Class I Trustee Founding Director, None
(60) since 2007. Term Vice-President and Corporate
expires in 2011. Secretary, The Winthrop Group,
Inc. (consulting
firm); and Desautels
Faculty of Management,
McGill
University
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
Thomas J. Perna (57) Trustee Class II Trustee Private investor (2004 - Director of Quadriserv Inc.
since 2007. Term present); and Senior Executive (technology products for
expires in 2009. Vice President, The Bank of New securities lending
York (financial and securities industry)
services) (1986 - 2004)
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
Marguerite A. Piret Trustee Class II Trustee President and Chief Executive Director of New America
(59) since 2007. Term Officer, Newbury, Piret & High Income Fund, Inc.
expires in 2009. Company, Inc. (investment (closed-end investment
banking firm) company)
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
Stephen K. West (79) Trustee Class III Senior Counsel, Sullivan & Director, The Swiss
Trustee since Cromwell (law firm) Helvetia Fund, Inc.
2007. Term (closed-end investment
expires in 2010. company)
------------------------ ------------- ------------------ ---------------------------------- -----------------------------
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
During the period covered by this report, there were no purchases
made by or on behalf of the registrant or any affiliated purchaser
as defined in Rule 10b-18(a)(3) under the Securities Exchange Act
of 1934 (the Exchange Act), of shares of the registrants equity
securities that are registered by the registrant pursuant to
Section 12 of the Exchange Act.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in
its definitive proxy statement, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer
and principal financial officer have
concluded that the registrant's disclosure
controls and procedures are effective based
on their evaluation of these controls and
procedures as of a date within 90 days of the
filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the
registrant's internal control over financial
reporting that occurred during the second
fiscal quarter of the period covered by this
report that have materially affected, or are
reasonably likely to materially affect, the
registrant's internal control over financial
reporting.
The registrant's principal executive officer and principal financial
officer, however, voluntarily are reporting the following information:
In August of 2006 the registrant's investment adviser
enhanced its internal procedures for reporting performance
information required to be included in prospectuses.
Those enhancements involved additional internal controls
over the appropriateness of performance data
generated for this purpose. Such enhancements were made
following an internal review which identified
prospectuses relating to certain classes of shares of
a limited number of registrants where, inadvertently,
performance information not reflecting the deduction of
applicable sales charges was included. Those prospectuses
were revised, and the revised prospectuses were distributed to
shareholders.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Diversified High Income Trust
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date June 28, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date June 28, 2010
By (Signature and Title)* /s/ Mark Bradley
Mark Bradley, Treasurer
Date June 28, 2010
* Print the name and title of each signing officer under his or her signature.