OMB APPROVAL
OMB Number: 3235-0570
Expires: September 30, 2007
Estimated average burden
hours per response.....19.4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21321
Pioneer Municipal High Income Trust
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: April 30
Date of reporting period: May 1, 2005 through April 30, 2006
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PIONEER
-----------------
MUNICIPAL
HIGH
INCOME
TRUST
Annual
Report
4/30/06
[Logo] PIONEER
Investments(R)
Table of Contents
--------------------------------------------------------------------------------
Letter to Shareowners 2
Portfolio Summary 4
Prices and Distributions 5
Performance Update 6
Portfolio Management Discussion 7
Schedule of Investments 11
Financial Statements 20
Notes to Financial Statements 24
Report of Independent Registered Public Accounting Firm 33
Factors Considered by the Independent Trustees in Approving
the Management Contract 34
Trustees, Officers and Service Providers 39
President's
Dear Shareowner,
--------------------------------------------------------------------------------
The six and 12 months ending April 30, 2006, have been characterized by strong
global growth, rising commodity and stock prices, and rising interest rates.
While markets reversed in May (U.S. Treasury bond yields, stock markets, and
commodity prices all turned down), we believe the basic fundamental pattern of
strong global economic growth remains intact.
According to the International Monetary Fund, global economic growth in 2004-5
was the fastest of any two-year period in more than 30 years, and 2006 growth is
projected to match 2005 levels. Growth has been broad-based, with Europe, Japan,
and emerging market economies all showing strength. The result has been rising
prices across a broad range of commodities, rising corporate profits, and rising
interest rates. These have been the basic ingredients of the equity bull market
and relatively weak bond market over the six months ending April 30, 2006.
The bond markets' concern has been that strong economic growth would spark
inflation - we have already seen commodity prices rise, and U.S. labor costs are
threatening to rise as the economy reaches full employment. In this environment,
strong economic growth may lead to inflation and higher interest rates, while
slowing economic growth is welcomed by the markets.
While first quarter economic growth was strong, it looks as if the slowdown in
the U.S. economy that we have been anticipating for the second half of the year
may be starting to unfold. The U.S. unemployment rate reached a five-year low of
4.6 percent in May, but employment growth slowed to only 75,000 new jobs, the
smallest increase since the Katrina-distorted result of October 2005. The
housing market is cooling, as is non-essential consumer spending.
The U.S. Federal Reserve ("Fed") has not yet paused in its program of measured
increases in short-term interest rates, and it appears likely that the Fed will
raise rates again at the end of June. Global stock markets declined in May after
the Fed warned that the central bank remains determined to keep inflation low.
Fed vigilance against inflation and resolve to hike interest rates as necessary
to keep inflation pressures well-contained puts short-term pressure on markets,
but is investor-friendly over the intermediate-to-longer term. By restraining
2
Letter
inflation, the Fed may limit upward pressure on longer-maturity bond yields and
downward pressure on stocks' price/earnings ratios.
In summary, we believe a desirable moderate slowing of U.S. economic growth
appears likely, with beneficial impacts on inflation and interest rates, while
global growth prospects remain strong. We think security market valuations
remain reasonable. However, there are no guarantees in investing. We know from a
long-view of history that sudden shifts in investor sentiment can occur with
little warning. This unpredictability reinforces the importance of Pioneer's
message that investors should remain diversified, take a long-term view, and
base investment decisions on economic and market fundamentals, rather than on
emotion. Our investment philosophy and approach continue to be based on the use
of fundamental research to identify a range of opportunities that offer an
attractive balance of risk and reward to help Trust shareowners work toward
their long-term goals.
Respectfully,
/s/ Osbert M. Hood
Osbert M. Hood, President
Pioneer Investment Management, Inc.
Any information in this shareowner report regarding market or economic trends or
the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
3
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
PORTFOLIO SUMMARY 4/30/06
--------------------------------------------------------------------------------
Portfolio Diversification
--------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
Health Revenue 24.7%
Airport Revenue 16.7%
Insured 12.1%
Tobacco Revenue 10.6%
Education Revenue 6.9%
Power Revenue 6.0%
Pollution Control Revenue 4.6%
Development Revenue 4.0%
General Obligation 3.8%
Facilities Revenue 3.1%
Transportation Revenue 2.7%
Utilities Revenue 1.3%
Gaming Revenue 1.2%
Housing Revenue 1.1%
School District Revenue 0.6%
Other Revenue 0.6%
Portfolio Maturity
--------------------------------------------------------------------------------
(Effective duration as a percentage of long-term holdings)
0-1 years 7.5%
1-3 years 8.5%
3-6 years 43.4%
6-8 years 6.8%
8-10 years 9.7%
10+ years 24.1%
Effective duration with leverage: 9.49 years
Effective duration without leverage: 7.47 years
Quality Distribution
--------------------------------------------------------------------------------
(As a dollar-weighted percentage of holdings; based on S&P ratings.)
AAA 16.1%
AA 2.7%
A 2.6%
BBB 22.7%
BB 5.1%
B 15.5%
CCC 4.4%
Not Rated 30.9%
The portfolio is actively managed and current holdings may be different.
4
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
PRICES AND DISTRIBUTIONS
Share Prices and Distributions
--------------------------------------------------------------------------------
Market Value
per Common Share 4/30/06 4/30/05
$13.22 $14.33
Net Asset Value
per Common Share 4/30/06 4/30/05
$15.15 $15.62
Distributions
per Common Share Income Short-Term Long-Term
(5/1/05 - 4/30/06) Dividends Capital Gains Capital Gains
$0.8920 $ - $ -
10 Largest Holdings
--------------------------------------------------------------------------------
(As a percentage of long-term holdings)
--------------------------------------------------------------------------------
1 Allegheny County Hospital Development Authority Revenue,
9.25%, 11/15/30 3.40%
2 New Jersey Economic Development Authority Revenue,
6.25%, 9/15/29 3.03
3 Tobacco Settlement Financing Corp., 6.75%, 6/1/39 2.58
4 Massachusetts State Development Finance Agency, RIB,
7.034%, 10/1/39 (144A) 2.46
5 Metropolitan Pier & Exposition Authority Dedicated State Tax
Revenue, 0.0%, 6/15/22 2.40
6 Minneapolis/St. Paul Metropolitan Airports, 7.0%, 4/1/25 2.07
7 Oklahoma Development Finance Authority Revenue,
5.625%, 8/15/29 1.98
8 Golden State Tobacco Securitization Corp., 7.875%, 6/1/42 1.94
9 New York State Dormitory Authority Revenue, RIB,
7.328%, 7/1/24 (144A) 1.93
10 Johnson City Health & Educational Facilities Board Hospital
Revenue, 7.5%, 7/1/33 1.88
This list excludes temporary cash and derivative instruments. The portfolio is
actively managed, and current holdings may be different.
5
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
PERFORMANCE UPDATE 4/30/06
Investment Returns
--------------------------------------------------------------------------------
The mountain chart on the right shows the change in market value, including
reinvestment of dividends and distributions, of a $10,000 investment made
in common shares of Pioneer Municipal High Income Trust, compared to that
of the Lehman Brothers Municipal Bond Index and Lehman Brothers
Non-Investment Grade Municipal Bond Index.
[The following table was depicted as a mountain chart in the printed material.]
Lehman Brothers
Non-Investment
Pioneer Municipal Lehman Brothers Grade~Municipal
High Income Trust Municipal Bond Index Bond Index
----------------- -------------------- ---------------
7/03 10,000 10,000 10,000
4/04 11,023 10,441 11,014
4/05 12,598 11,153 12,399
4/06 10,666 11,394 13,324
Cumulative Annual Total Returns
(As of April 30, 2006)
Net Asset Market
Period Value (NAV) Price
Life-of-Trust
(7/21/03) 27.95% 6.66%
1 Year 3.19 -1.85
--------------------------------
Call 1-800-225-6292 or visit 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 is total assets less total
liabilities, which includes preferred shares, divided by the number of
common shares outstanding.
When NAV is lower than market price, dividends are assumed to be reinvested
at the greater of NAV or 95% of the market price. When NAV is higher,
dividends are assumed to be reinvested at market price.
The performance table and graph do not reflect the deduction of fees and
taxes that a shareowner would pay on Trust distributions or the redemption
of Trust shares.
Index comparison begins July 31, 2003. The Lehman Brothers Municipal Bond
Index is a broad measure of the municipal bond market. Lehman Brothers
Non-Investment Grade Municipal Bond Index totals over $26 billion in market
value and maintains over 1300 securities. Municipal bonds in this index
have the following requirements: maturities of one year or greater, sub
investment grade (below Baa or non-rated), fixed coupon rate, issued after
12-31-90, deal size over $20 million, maturity size of at least $3 million.
Index returns are calculated monthly, assume reinvestment of dividends and,
unlike Trust returns, do not reflect any fees, expenses or sales charges.
You cannot invest directly in an Index.
6
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 4/30/06
--------------------------------------------------------------------------------
During the fiscal period ended April 30, 2006, strong economic growth, improved
business fundamentals of some distressed municipal credits and robust investor
demand for tax-free income were instrumental in boosting the performance of
municipal bonds over their taxable counterparts. Lower-quality bonds led the
municipal market during the 12 months. Investors in Pioneer Municipal High
Income Trust participated in this outperformance, as the Trust had a substantial
position in lower-quality credits, some of which saw positive changes in their
business prospects. In the following interview, David Eurkus, a member of the
management team for Pioneer Municipal High Income Trust, discusses some of the
factors that had an impact on the municipal bond market and the Trust.
Q: What was the investment environment like during the period?
A: The main focus in the bond market during the 12-month period ended April
30, 2006 was the Federal Reserve's ("Fed") tighter monetary policy. The Fed
boosted the Federal funds target rate, the rate banks charge for overnight
loans, to 4.50% from 2.75%. The Fed's actions resulted in a flattening of
the yield curve with short-term and long-term rates at roughly the same
level for a few months. (The yield curve shows the relationship between
bond yields and maturity lengths.) By period-end, the yield curve had a
more positive slope, with longer-term yields above shorter-term yields.
Despite rising interest rates, the economy grew at a steady pace, with both
business and consumer spending at relatively high levels. The strong
economy continued to fuel concerns about higher inflation, and the Fed
raised interest rates to 5.00% on May 10, 2006, just after the close of the
fiscal period.
Q: How did the Trust perform in this environment?
A: For the period, Pioneer Municipal High Income Trust earned a total return
of 3.19% at net asset value and -1.85% at market price. As of April 30,
2006, the Trust was selling at a discount of market price to net asset
value of 12.74%. The Lehman Brothers Municipal Bond Index, which tracks the
performance of investment-grade bonds, returned 2.16%. The Lehman Brothers
Non-Investment Grade Municipal Bond Index returned 7.46% for the same
period. While the Trust invested in municipal securities with a broad range
of maturities and credit ratings, it maintained a dollar-weighted average
portfolio credit quality rating of BBB. The Trust held 107
7
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 4/30/06 (continued)
--------------------------------------------------------------------------------
issues in various states and the District of Columbia. On April 30, 2006,
the Trust's 30-day SEC yield based on market price was 7.67%.
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.
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 net asset value ("NAV"). NAV is total
assets less total liabilities, which includes Preferred shares, divided by
the number of common shares outstanding.
The performance data quoted represent past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Q: What contributed to the Trust's performance?
A: We kept the Trust diversified among sectors that generally perform well
during a period of economic expansion. These sectors included
transportation, public power, housing, education and water and sewer. We
invested most of the assets in revenue bonds, whose interest and principal
depend on revenues that are derived from the particular asset that the bond
is financing. For example, a bond issued by an electric utility would be
backed by the revenues the utility collects from its customers.
We also had a mix of investment-grade and below investment-grade bonds. The
below-investment grade bonds, which have higher yields, made the biggest
contribution to return. Many of these securities are long-term holdings
that were issued by entities that were in significant financial difficulty
at the time of purchase. As a result, we bought many of the bonds at
substantial discounts to par. This was particularly true of airline/airport
bonds (13.8% of net assets). For example, Delta and Northwest Airlines
voluntarily declared bankruptcy; and early in the period, these bonds
detracted from results. We liquidated all Delta bonds, which effectively
removed a non-income producing asset from the portfolio, which we could
then replace with another income-producing asset. Northwest remains a
position in the portfolio because we
8
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
believe back interest will be paid once they exit voluntary bankruptcy. The
bond's value has appreciated substantially since the initial Chapter 11
filing.
The Trust's health/hospital bonds (32% of net assets) and special revenue
bonds, called tobacco bonds (14% of net assets), were also factors in the
Trust's outperformance. Tobacco bonds have been a core long-term holding in
the Trust. They are backed by tobacco companies' payments to states as part
of the Master Settlement Agreement, in which states agreed to drop their
lawsuits against tobacco companies in return for a series of payments.
On April 30, 2006, 23% of the Trust was leveraged. We began leveraging the
portfolio when interest rates were at historically low levels. Lower
short-term rates provided an opportunity to borrow funds at attractive
rates and invest those funds in higher-yielding bonds, which, in turn,
boosted the Trust's returns. As short-term interest rates rose, the cost of
leveraging also rose and reduced the overall effectiveness of leveraging
the Trust, resulting in modest dividend cuts.
Q: What is your outlook?
A: We do not plan to make any significant changes to the Trust. We intend to
keep the portfolio fully invested in a variety of sectors and maintain a
mix of both investment-grade and below investment-grade bonds. While
economic growth was robust in the first four months of 2006, we believe it
could slow in the coming months, as higher oil prices and interest rates
take their toll on business profits and consumer spending. Higher interest
rates have also begun to affect the availability of new municipal bonds, as
municipalities and other entities are reluctant to issue higher-yielding
new debt. We view this supply/demand dynamic as positive for the Trust. As
supply has tightened, demand for tax-free income has remained strong,
potentially boosting the value of the bonds in the portfolio.
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.
A portion of income may be subject to state, federal, and/or alternative
minimum tax. Capital gains, if any, are subject to a capital gains tax. When
interest rates rise, the prices of fixed-income securities in the Trust will
generally fall. Conversely, when interest rates fall the prices of fixed-income
securities in the Trust
9
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 4/30/06 (continued)
--------------------------------------------------------------------------------
will generally rise. By concentrating in municipal securities, the portfolio is
more susceptible to adverse economic, political or regulatory developments than
is a portfolio that invests more broadly.
Investments in the Trust are subject to possible loss due to the financial
failure of underlying securities and their inability to meet their debt
obligations.
The Trust may use leverage through the issuance of preferred shares with an
aggregate liquidation preference of up to 25% of the Trust's total assets after
such issuance. Leverage creates significant risks, including the risk that the
Trust's income or capital appreciation will not be sufficient to cover the cost
of leverage, which may adversely affect the return for the holders of common
shares.
Risks of investing in the Trust are discussed in greater detail in the Trust's
registration statement on Form N-2 relating to its common shares.
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.
10
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/06
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
TAX EXEMPT OBLIGATIONS - 128.2% of Net Assets
Alabama - 0.5%
$ 1,500,000 BBB/NR Camden Alabama Industrial Development Board,
6.125%, 12/1/24 $ 1,649,340
------------
Arizona - 6.6%
5,000,000 B+/Ba1 Apache County Industrial Development Authority,
5.85%, 3/1/28 $ 5,001,900
5,000,000 B+/Ba1 Apache County Industrial Development Authority,
5.875%, 3/1/33 5,002,000
7,000,000(a) NR/Aaa Downtown Phoenix Hotel Corp., RIB, 6.917%,
7/1/40 (144A) 7,331,380
3,000,000+ NR/NR Maricopa County Industrial Development Authority,
7.875%, 4/1/27 3,159,990
1,000,000 NR/Baa3 Pima County Industrial Development Authority,
7.25%, 7/1/31 1,074,780
500,000 NR/Baa2 Yavapai County Industrial Development Authority,
6.0%, 8/1/33 528,520
------------
$ 22,098,570
------------
California - 9.8%
7,270,000 A/A2 California State General Obligation,
5.25%, 2/1/28 $ 7,581,083
5,150,000 BBB/Baa3 Golden State Tobacco Securitization Corp.,
7.8%, 6/1/42 6,106,509
7,000,000 BBB/Baa3 Golden State Tobacco Securitization Corp.,
7.875%, 6/1/42 8,331,470
3,000,000 AAA/Aaa San Diego Unified School District, 5.0%, 7/1/25 3,138,810
2,500,000 AAA/Aaa University of California Revenue, 5.0%, 5/15/25 2,577,700
5,000,000 B+/NR Valley Health System Hospital Revenue,
6.5%, 5/15/25 5,004,500
------------
$ 32,740,072
------------
Connecticut - 4.2%
2,000,000 NR/NR Bridgeport Senior Living Facility Revenue,
7.25%, 4/1/35 $ 1,684,840
2,205,000 BB+/Ba1 Connecticut State Health & Educational Facilities
Authority Revenue, 5.375%, 7/1/17 2,212,144
4,800,000 BB+/Ba1 Connecticut State Health & Educational Facilities
Authority Revenue, 5.5%, 7/1/27 4,728,768
5,000,000 BB+/NR Mohegan Tribe Indians Gaming Authority,
6.25%, 1/1/31 (144A) 5,329,200
------------
$ 13,954,952
------------
The accompanying notes are an integral part of these financial statements. 11
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/06 (continued)
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
District of Columbia - 3.6%
$ 5,000,000 BBB/Baa3 District of Columbia Tobacco Settlement Financing
Corp., 6.5%, 5/15/33 $ 5,668,600
6,000,000 BBB/Baa3 District of Columbia Tobacco Settlement Financing
Corp., 6.75%, 5/15/40 6,470,940
------------
$ 12,139,540
------------
Delaware - 0.3%
500,000 NR/NR Sussex County Delaware Revenue, 5.9%, 1/1/26 $ 508,800
600,000 NR/NR Sussex County Delaware Revenue, 6.0%, 1/1/35 611,400
------------
$ 1,120,200
------------
Florida - 2.7%
2,000,000 NR/NR Beacon Lakes Community Development,
6.9%, 5/1/35 $ 2,171,040
1,650,000 BBB-/Baa2 Polk County Industrial Development Revenue,
5.85%, 12/1/30 1,682,885
5,000,000 NR/Baa2 Tallahassee Health Facilities Revenue,
6.375%, 12/1/30 5,303,900
------------
$ 9,157,825
------------
Georgia - 2.0%
4,240,000(a) NR/Aaa Atlanta Georgia Water & Waste Revenue, RIB,
7.072%, 11/1/43 (144A) $ 4,481,002
2,325,000 NR/NR Brunswick & Glynn County Development Authority
Revenue, 7.25%, 1/1/35 2,349,668
------------
$ 6,830,670
------------
Idaho - 1.6%
5,000,000 BBB-/Baa3 Power County Industrial Development Corp.,
6.45%, 8/1/32 $ 5,337,600
------------
Illinois - 3.9%
1,000,000 NR/NR Centerpoint Intermodal Center, 8.0%,
6/15/23 (144A) $ 1,007,930
1,500,000 NR/NR Illinois Health Facilities Authority Revenue,
6.9%, 11/15/33 1,620,840
16,880,000(b) AAA/Aaa Metropolitan Pier & Exposition Authority Dedicated
State Tax Revenue, 0.0%, 6/15/22 10,315,706
------------
$ 12,944,476
------------
12 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Indiana - 1.6%
$ 1,000,000 BBB+/Baa1 Indiana State Development Finance Authority
Revenue, 5.6%, 12/1/32 $ 1,030,380
4,300,000 BBB-/Ba1 Indiana State Development Finance Authority
Revenue, 5.75%, 10/1/11 4,442,115
------------
$ 5,472,495
------------
Massachusetts - 11.3%
5,000,000 AAA/Aa2 Massachusetts Bay Transportation Authority,
5.0%, 7/1/31 $ 5,334,850
2,335,000 AAA/Aaa Massachusetts Health & Educational Facilities
Authority Revenue, 5.0%, 7/15/35 2,394,029
7,050,000 AAA/Aaa Massachusetts Health & Educational Facilities
Authority Revenue, 5.125%, 7/15/37 7,299,429
3,500,000 BBB/Baa3 Massachusetts Health & Educational Facilities
Authority Revenue, 6.25%, 7/1/22 3,734,360
5,000,000 BBB-/NR Massachusetts Health & Educational Facilities
Authority Revenue, 6.75%, 10/1/33 5,392,300
75,000 BB/NR Massachusetts State Development Finance
Agency, 5.25%, 10/1/18 69,191
9,810,000(a) NR/Aaa Massachusetts State Development Finance
Agency, RIB, 7.034%, 10/1/39 (144A) 10,554,775
3,055,000 AA-/Aa3 Massachusetts State Housing Finance Agency,
5.25%, 12/1/33 3,098,167
------------
$ 37,877,101
------------
Michigan - 3.5%
1,500,000 BBB-/NR John Tolfree Health System Corp., 6.0%, 9/15/23 $ 1,520,010
2,000,000 BB-/Ba3 Michigan State Hospital Finance Authority
Revenue, 5.5%, 8/15/23 1,920,080
4,010,000 BBB-/Ba1 Michigan State Hospital Finance Authority
Revenue, 6.0%, 2/1/24 4,010,682
7,720,000(c) NR/NR Wayne Charter County Michigan Special Airport
Facilities Revenue, 6.75%, 12/1/15 4,246,463
------------
$ 11,697,235
------------
Minnesota - 3.2%
1,675,000 BB/NR Duluth Economic Development Authority Health
Care Facilities Revenue, 7.25%, 6/15/32 $ 1,789,737
13,260,000(c) NR/NR Minneapolis/St. Paul Metropolitan Airports,
7.0%, 4/1/25 8,884,067
------------
$ 10,673,804
------------
The accompanying notes are an integral part of these financial statements. 13
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/06 (continued)
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Mississippi - 0.9%
$ 3,000,000 BBB-/Ba1 Mississippi Business Finance Corp. Pollution
Control Revenue, 5.9%, 5/1/22 $ 3,025,620
------------
Missouri - 1.3%
5,500,000 NR/Caa2 St. Louis Industrial Development Authority
Revenue, 7.25%, 12/15/35 $ 4,399,780
------------
Montana - 0.5%
1,600,000 NR/NR Two Rivers Authority, Inc. Correctional
Facility Improvement Revenue, 7.375%,
11/1/27 (144A) $ 1,556,864
------------
Nevada - 1.5%
1,000,000 BBB-/Baa2 Clark County Industrial Development Revenue,
5.45%, 3/1/38 $ 1,043,380
1,850,000 B-/NR Clark County Industrial Development Revenue,
5.5%, 10/1/30 1,807,635
2,000,000 NR/NR Nevada State Department of Business & Industry,
7.25%, 1/1/23 2,079,400
------------
$ 4,930,415
------------
New Hampshire - 0.9%
3,000,000 AAA/Aaa Manchester School Facilities Revenue,
5.125%, 6/1/28 $ 3,118,920
------------
New Jersey - 9.9%
2,000,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.25%, 9/15/19 $ 1,967,840
13,350,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.25%, 9/15/29 13,012,913
1,000,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.4%, 9/15/23 991,430
6,150,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 7.0%, 11/15/30 6,231,180
10,000,000 BBB/Baa3 Tobacco Settlement Financing Corp.,
6.75%, 6/1/39 11,096,500
------------
$ 33,299,863
------------
New Mexico - 1.6%
3,700,000++ NR/NR New Mexico Hospital Equipment Loan Council,
6.4%, 6/1/16 $ 3,781,178
1,350,000 BBB-/NR Santa Fe Educational Facilities Revenue,
5.75%, 10/1/28 1,406,619
------------
$ 5,187,797
------------
14 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
New York - 8.8%
$ 2,000,000 A/NR New York City Industrial Development Agency,
5.375%, 6/1/23 $ 2,058,540
6,225,000 CCC/Caa2 New York City Industrial Development Agency,
6.9%, 8/1/24 5,785,951
5,000,000 AAA/Aaa New York City Trust Cultural Resources Revenue,
5.125%, 7/1/31 5,161,100
7,040,000(a) NR/Aaa New York State Dormitory Authority Revenue, RIB,
7.328%, 7/1/24 (144A) 8,272,211
2,000,000 NR/NR Suffolk County Industrial Development Agency,
7.25%, 1/1/30 2,045,280
6,000,000 AAA/Aaa Triborough Bridge & Tunnel Authority Revenue,
5.25%, 11/15/30 6,316,500
------------
$ 29,639,582
------------
North Carolina - 2.3%
3,375,000 NR/NR Charlotte North Carolina Special Facilities
Revenue, 5.6%, 7/1/27 $ 3,050,899
4,600,000 NR/NR Charlotte North Carolina Special Facilities
Revenue, 7.75%, 2/1/28 4,810,910
------------
$ 7,861,809
------------
Oklahoma - 6.4%
3,000,000+ AAA/Aaa Oklahoma Development Finance Authority
Revenue, 5.625%, 8/15/19 $ 3,190,650
8,000,000+ AAA/Aaa Oklahoma Development Finance Authority
Revenue, 5.625%, 8/15/29 8,508,400
4,100,000 B-/Caa2 Tulsa Municipal Airport Revenue, 5.65%, 12/1/35 4,031,161
1,225,000 B-/Caa2 Tulsa Municipal Airport Revenue, 6.25%, 6/1/20 1,197,033
4,350,000 B-/Caa2 Tulsa Municipal Airport Revenue, 7.35%, 12/1/11 4,352,132
------------
$ 21,279,376
------------
Oregon - 4.2%
1,000,000 NR/NR Klamath Falls Electric Revenue, 5.75%,
1/1/13 (144A) $ 891,170
7,000,000 NR/NR Klamath Falls Electric Revenue, 6.0%,
1/1/25 (144A) 5,678,400
7,500,000 NR/NR Western Generation Agency Cogeneration Project
Revenue, 7.125%, 1/1/21 7,553,850
------------
$ 14,123,420
------------
The accompanying notes are an integral part of these financial statements. 15
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/06 (continued)
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Pennsylvania - 5.9%
$1,550,000 NR/Baa1 Allegheny County Hospital Development Authority
Revenue, 5.125%, 5/1/25 $ 1,450,769
12,300,000 B+/Ba3 Allegheny County Hospital Development Authority
Revenue, 9.25%, 11/15/30 14,626,545
1,000,000 BB-/NR Columbia County Hospital Authority Health Care
Revenue, 5.9%, 6/1/29 879,620
1,000,000 BBB/Ba2 Hazleton Health Services Authority Hospital
Revenue, 5.625%, 7/1/17 945,560
1,280,000 NR/B2 Langhorne Manor Borough Higher Education &
Health Authority Revenue, 7.35%, 7/1/22 1,280,077
500,000 BBB+/NR Pennsylvania Higher Educational Facilities Authority
Revenue, 5.4%, 7/15/36 516,780
------------
$ 19,699,351
------------
Rhode Island - 1.3%
4,000,000 NR/NR Central Falls Detention Facilities Revenue,
7.25%, 7/15/35 $ 4,368,200
------------
South Carolina - 4.6%
3,000,000 AA-/Aa3 Greenville County School District, 5.0%, 12/1/23 $ 3,102,150
5,000,000+ AA-/Aa3 Greenville County School District, 5.5%, 12/1/28 5,482,200
5,185,000+ BBB+/Baa1 South Carolina Jobs Economic Development
Authority Revenue, 6.375%, 8/1/34 5,924,640
665,000 BBB+/Baa1 South Carolina Jobs Economic Development
Authority Revenue, 6.375%, 8/1/34 737,518
------------
$ 15,246,508
------------
Tennessee - 3.8%
7,000,000 BBB+/Baa2 Johnson City Health & Educational Facilities Board
Hospital Revenue, 7.5%, 7/1/33 $ 8,086,190
4,480,000 NR/Baa3 Knox County Health Educational & Housing
Facilities Board Hospital Revenue,
6.375%, 4/15/22 4,719,994
------------
$ 12,806,184
------------
16 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Texas - 11.7%
$ 7,500,000 CCC/Caa2 Alliance Airport Authority Special Facilities
Revenue, 7.5%, 12/1/29 $ 7,250,325
1,345,000 NR/Ba1 Bexar County Housing Finance Corp.,
8.0%, 12/1/36 1,370,811
1,000,000 CCC/Caa2 Dallas-Fort Worth International Airport Revenue,
6.0%, 11/1/14 889,110
5,000,000 CCC/Caa2 Dallas-Fort Worth International Airport Revenue,
6.15%, 5/1/29 4,918,500
4,000,000 NR/NR Decatur Hospital Authority Revenue, 7.0%, 9/1/25 4,318,960
1,000,000+ BB/NR Georgetown Health Facilities Development Corp.,
6.25%, 8/15/29 1,090,000
3,750,000 B-/Caa2 Houston Airport System Special Facilities Revenue,
5.7%, 7/15/29 3,236,287
5,340,000 NR/NR Lubbock Health Facilities Development Corp.,
6.625%, 7/1/36 5,249,754
2,450,000(a) NR/NR Northside Independent School District, RIB,
7.484%, 6/15/33 (144A) 2,702,791
500,000 BBB-/Baa2 Sabine River Authority Pollution Control Revenue,
6.15%, 8/1/22 543,495
7,040,000(a) NR/Aa1 Texas State, RIB, 7.002%, 4/1/30 (144A) 7,692,608
------------
$ 39,262,641
------------
Vermont - 0.5%
1,500,000 A-/A3 Vermont Educational & Health Buildings Financing
Agency Revenue, 6.0%, 10/1/28 $ 1,656,750
------------
Virginia - 1.5%
1,000,000 BBB/Baa2 Peninsula Ports Authority, 6.0%, 4/1/33 $ 1,066,070
4,000,000 BB-/Ba3 Pocahontas Parkway Association of Virginia Toll
Road Revenue, 5.5%, 8/15/28 4,074,600
------------
$ 5,140,670
------------
Washington - 5.8%
4,710,000 AAA/Aaa Spokane Public Facilities District Hotel/Motel Tax
& Sales, 5.75%, 12/1/27 $ 5,177,609
7,025,000 BBB/Baa3 Tobacco Settlement Authority Revenue,
6.625%, 6/1/32 7,674,180
14,315,000 AAA/Aaa Washington State General Obligation,
0.0%, 6/1/22 6,558,417
------------
$ 19,410,206
------------
TOTAL TAX-EXEMPT OBLIGATIONS
(Cost $396,235,158) $429,707,836
------------
The accompanying notes are an integral part of these financial statements. 17
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 4/30/06 (continued)
--------------------------------------------------------------------------------
Shares Value
TAX-EXEMPT MONEY MARKET MUTUAL
FUND - 0.0% of Net Assets
6,536 BlackRock Provident Institutional Municipal Fund $ 6,536
-------------
TOTAL TAX-EXEMPT MONEY MARKET
MUTUAL FUND
(Cost $6,536) $ 6,536
-------------
TOTAL INVESTMENTS IN SECURITIES - 128.2%
(Cost $396,241,694) (d) (e) $ 429,714,372
-------------
OTHER ASSETS AND LIABILITIES - 1.9% $ 6,452,852
-------------
PREFERRED SHARES AT REDEMPTION VALUE,
INCLUDING DIVIDENDS PAYABLE - (30.1)% $(101,046,023)
-------------
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS - 100.0% $ 335,121,201
=============
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, 2006 the value of these securities amounted to $55,498,331 or 16.6%
of net assets applicable to common shareowners.
+ Prerefunded bonds have been collateralized by U.S. Treasury securities
which are held in escrow to pay interest and principal on the tax exempt
issue and to retire the bonds in full at the earliest refunding date.
++ Prerefunded bonds have been collateralized by cash sufficient to pay
interest and principal on the tax exempt issue and to retire the bonds in
full at the earliest refunding date.
(a) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown was the rate at
April 30, 2006.
(b) Debt obligation initially issued at one coupon which converts to a higher
coupon at a specific date. The rate shown was the rate at period end.
(c) Security is in default and is non-income producing.
18 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(d) The concentration of investments by type of obligation/market sector is as
follows:
Insured 12.1%
General Obligation 3.8
Revenue Bonds:
Health Revenue 24.7
Airport Revenue 16.7
Tobacco Revenue 10.6
Education Revenue 6.9
Power Revenue 6.0
Pollution Control Revenue 4.6
Development Revenue 4.0
Facilities Revenue 3.1
Transportation Revenue 2.7
Utilities Revenue 1.3
Gaming Revenue 1.2
Housing Revenue 1.1
School District Revenue 0.6
Other Revenue 0.6
-----
100.0%
=====
(e) At April 30, 2006, the net unrealized gain on investments based on cost for
federal income tax purposes of $394,854,987 was as follows:
Aggregate gross unrealized gain for all investments in which there is an excess of
value over tax cost $44,992,880
Aggregate gross unrealized loss for all investments in which there is an excess of
tax cost over value (10,133,495)
-----------
Net unrealized gain $34,859,385
===========
For financial reporting purposes net unrealized gain on investments was
$33,472,678 and cost of investments aggregated $396,241,694
RIB Residual Interest Bonds
Purchases and sales of securities (excluding temporary cash investments) for
the period ended April 30, 2006, aggregated $89,913,667 and $84,620,516,
respectively.
The accompanying notes are an integral part of these financial statements. 19
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 4/30/06
--------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value (cost $396,241,694) $429,714,372
Receivables -
Interest 7,853,561
Unrealized appreciation on interest rate swaps 1,361,145
Prepaid expenses 30,402
------------
Total assets $438,959,480
------------
LIABILITIES:
Dividends payable to common shareowners $ 1,415,737
Due to custodian 1,053,250
Due to affiliate 215,230
Administration fee payable 25,104
Accrued expenses 82,935
------------
Total liabilities $ 2,792,256
------------
PREFERRED SHARES AT REDEMPTION VALUE:
$25,000 liquidation value per share applicable to 4,040
shares, including dividends payable of $46,023 $101,046,023
------------
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Paid-in capital $315,162,552
Distributions in excess of net investment income (37,943)
Accumulated net realized loss on investments and interest
rate swaps (14,837,231)
Net unrealized gain on investments 33,472,678
Net unrealized gain on interest rate swaps 1,361,145
------------
Net assets applicable to common shareowners $335,121,201
============
NET ASSET VALUE PER SHARE:
No par value, (unlimited number of shares authorized)
Based on $335,121,201/22,120,893 common shares $ 15.15
============
20 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Year Ended 4/30/06
INVESTMENT INCOME:
Interest $ 25,998,110
-------------
EXPENSES:
Management fees $ 2,638,673
Administration fees and reimbursement 342,187
Transfer agent fees and expenses 52,316
Auction agent fees 267,788
Custodian fees 30,089
Registration fees 23,750
Professional fees 56,882
Printing expense 23,336
Trustees' fees 13,155
Pricing fees 16,971
Insurance fees 14,792
Miscellaneous 14,242
-------------
Total expenses $ 3,494,181
Less fees paid indirectly (38)
-------------
Net expenses $ 3,494,143
-------------
Net investment income $ 22,503,967
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND INTEREST RATE SWAPS:
Net realized gain (loss) from:
Investments $ (13,037,515)
Interest rate swaps 47,240 $ (12,990,275)
------------- -------------
Change in net unrealized gain from:
Investments $ 1,945,843
Interest rate swaps 543,838 $ 2,489,681
------------- -------------
Net loss on investments and interest
rate swaps (10,500,594)
-------------
DISTRIBUTIONS TO PREFERRED SHAREOWNERS
FROM NET INVESTMENT INCOME: $ (2,704,921)
-------------
Net increase in net assets applicable
to common shareowners resulting
from operations $ 9,298,452
=============
The accompanying notes are an integral part of these financial statements. 21
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
For the Years Ended 4/30/06 and 4/30/05
Year Ended Year Ended
4/30/06 4/30/05
FROM OPERATIONS:
Net investment income $ 22,503,967 $ 25,177,837
Net realized gain (loss) on investments and interest
rate swaps (12,990,275) 258,653
Change in net unrealized gain on investments and
interest rate swaps 2,489,681 20,621,102
Dividends and distributions to preferred
shareowners from:
Net investment income (2,704,921) (1,444,764)
Net realized gains - (90,681)
------------- -------------
Net increase in net assets applicable to
common shareowners $ 9,298,452 $ 44,522,147
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON
SHAREOWNERS FROM:
Net investment income
($0.89 and $1.07 per share, respectively) $ (19,731,837) $ (23,669,356)
Net realized gains
($0.00 and $0.09 per share, respectively) - (2,011,719)
------------- -------------
Total distributions to common shareowners $ (19,731,837) $ (25,681,075)
------------- -------------
FROM TRUST SHARE TRANSACTIONS:
Changes in estimated common share offering costs
previously charged to paid-in capital $ - $ 123,849
------------- -------------
Net increase in net assets applicable to
common shareowners resulting from Trust
share transactions $ - $ 123,849
------------- -------------
Net increase (decrease) in net assets
applicable to common shareowners $ (10,433,385) $ 18,964,921
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS:
Beginning of year 345,554,586 326,589,665
------------- -------------
End of year (including undistributed (distributions in
excess of) net investment income of ($37,943)
and $203,603, respectively) $ 335,121,201 $ 345,554,586
============= =============
22 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
7/21/03(b)
Year Ended Year Ended to
4/30/06 4/30/05 4/30/04
Per Common Share Operating Performance
Net asset value, beginning of period $ 15.62 $ 14.76 $ 14.33(c)
-------- --------- ---------
Increase (decrease) from investment operations (a)
Net investment income $ 1.02 $ 1.14 $ 0.80
Net realized and unrealized gain (loss) on investments
and interest rate swaps (0.48) 0.95 0.46
Dividends and distributions to preferred shareowners from:
Net investment income (0.12) (0.07) (0.02)
Net realized gains - -(d) -
-------- --------- ---------
Net increase (decrease) from investment operations $ 0.42 $ 2.02 $ 1.24
Dividends and distributions to common shareowners from:
Net investment income (0.89) (1.07) (0.72)
Net realized gains - (0.09) -
Capital change with respect to issuance of:
Common shares - -(d) (0.03)
Preferred shares - - (0.06)
-------- --------- ---------
Net increase (decrease) in net asset value $ (0.47) $ 0.86 $ 0.43
-------- --------- ---------
Net asset value, end of period(e) $ 15.15 $ 15.62 $ 14.76
-------- --------- ---------
Market value, end of period(e) $ 13.22 $ 14.33 $ 13.70
-------- --------- ---------
Total return(f) (1.85)% 13.34% (4.11)%
Ratios to average net assets of common shareowners
Net expenses(g) 1.03% 1.04% 0.95%(h)
Net investment income before preferred share dividends 6.64% 7.60% 6.91%(h)
Preferred share dividends 0.80% 0.43% 0.21%(h)
Net investment income available to common shareowners 5.84% 7.17% 6.70%(h)
Portfolio turnover 20% 25% 54%
Net assets of common shareowners, end of period (in thousands) $335,121 $345,555 $ 326,590
Preferred shares outstanding (in thousands) $101,000 $101,000 $ 101,000
Asset coverage per preferred share, end of period $107,962 $110,533 $ 105,839
Average market value per preferred share $ 25,000 $ 25,000 $ 25,000
Liquidation value, including dividends payable, per preferred share $ 25,011 $ 25,000 $ 25,000
Ratios to average net assets of common shareowners before
reimbursement of organization expenses and expense reductions
Net expenses(g) 1.04% 0.96% (h)
Net investment income before preferred share dividends 7.60% 6.90%(h)
Preferred share dividends 0.43% 0.21% (h)
Net investment income available to common shareowners 7.17% 6.69% (h)
(a) The per common share data presented above is based upon the average common
shares outstanding for the periods presented.
(b) Trust shares were first publicly offered on July 18, 2003.
(c) Net asset value immediately after the closing of the first public offering
was $14.30.
(d) Amount is less than $0.01 per share.
(e) Net asset value and market value are published in Barron's on Saturday, The
Wall Street Journal on Monday and The New York Times on Monday and
Saturday.
(f) Total investment return is calculated assuming a purchase of common shares
at the current market value on the first day and a sale at the current
market value on the last day of the periods reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect shareowner brokerage commissions.
Total investment return less than a full period is not annualized. Past
performance is not a guarantee of future results.
(g) Expense ratios do not reflect the effect of dividend payments to preferred
shareowners.
(h) Annualized.
The information above represents the audited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets of common shareowners and other supplemental data for the periods
indicated. This information has been determined based upon financial information
provided in the financial statements and market value data for the Trust's
common shares.
The accompanying notes are an integral part of these financial statements. 23
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/06
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Municipal High Income Trust (the "Trust") was organized as a Delaware
statutory trust on March 13, 2003. Prior to commencing operations on July 21,
2003, the Trust had no operations other than matters relating to its
organization and registration as a diversified, closed-end management investment
company under the Investment Company Act of 1940, as amended.
The Trust may invest in municipal securities with a broad range of maturities
and credit ratings, including both investment grade and below investment grade
municipal securities.
The Trust invests in below investment grade (high-yield) municipal securities.
Debt securities rated below investment grade are commonly referred to as "junk
bonds" and are considered speculative. These securities involve greater risk of
loss, are subject to greater price volatility, and are less liquid, especially
during periods of economic uncertainty or change, than higher rated debt
securities.
The Trust's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Trust to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, and the reported amounts of income,
expenses and gains and losses on investments during the reporting period.
Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements, which are consistent with
those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Securities are valued
at prices supplied by independent pricing services, which consider such
factors as Treasury spreads, yields, maturities and ratings. Valuations may
be supplemented by dealers and other sources, as required. The values of
interest rate swaps are determined by obtaining dealer quotations.
Securities for which market quotations are not readily available are valued
at their fair values as determined by, or under the direction of, the Board
of Trustees.
24
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
At April 30, 2006, there were no securities fair valued. Temporary cash
investments are valued at amortized cost.
Discount and premium on debt securities are accreted or amortized,
respectively, daily on an effective yield to maturity basis and are
included in interest income. Interest income, including interest bearing
cash accounts, is recorded on an accrual basis.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
Information regarding the Trust's principal risks is contained in the
Trust's original offering prospectus. 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.
B. Federal Income Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the source of the Trust's distributions may be
shown in the accompanying financial statements as either from or in excess
of net investment income or net realized gain on investment transactions,
or from paid in-capital, depending on the type of book/tax differences that
may exist.
At April 30, 2006 the Trust reclassified $308,755 to decrease undistributed
net investment income and to decrease accumulated net realized loss on
investments. The reclassification has no impact on the net asset value of
the Trust and presents the Trust's capital accounts on a tax basis.
25
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/06 (continued)
--------------------------------------------------------------------------------
At April 30, 2006, the Trust had a capital loss carryforward of $9,706,870
which will expire in 2014 if not utilized.
The tax character of distributions paid to common and preferred shareowners
during the year ended April 30, 2006 and April 30, 2005 was as follows:
--------------------------------------------------------------------------------
2006 2005
--------------------------------------------------------------------------------
Distributions paid from:
Tax exempt income $22,436,758 $25,094,466
Ordinary income - 1,196,946
Net long-term capital gains - 925,108
----------- -----------
Total $22,436,758 $27,216,520
----------- -----------
--------------------------------------------------------------------------------
The following shows the components of distributable earnings on a federal
income tax basis at April 30, 2006.
--------------------------------------------------------------------------------
2006
--------------------------------------------------------------------------------
Undistributed tax-exempt income $ 491,874
Undistributed ordinary income 149,127
Capital loss carryforward (9,706,870)
Dividend payable (1,461,760)
Unrealized appreciation 35,616,623
Post-October loss deferred (5,130,345)
-----------
Total $19,958,649
-----------
--------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is
primarily attributable to the difference between book and tax amortization
methods for premiums and discounts on fixed income securities, tax deferral
of losses on wash sales and accrual of income on defaulted bond interest.
C. Automatic Dividend Reinvestment Plan
All common shareowners automatically participate in the Automatic Dividend
Reinvestment Plan (the "Plan"), under which participants receive all
dividends and capital gain distributions (collectively, "dividends") in
full and fractional common shares of the Trust in
26
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
lieu of cash. Shareowners may elect not to participate in the Plan.
Shareowners not participating in the Plan receive all dividends and capital
gain distributions in cash. Participation in the Plan is completely
voluntary and may be terminated or resumed at any time without penalty by
notifying Mellon Investor Services LLC, the agent for shareowners in
administering the Plan (the "Plan Agent"), in writing prior to any dividend
record date; otherwise such termination or resumption will be effective
with respect to any subsequently declared dividend or other distribution.
Whenever the Trust declares a dividend on common shares payable in cash,
participants in the Plan will receive the equivalent in common shares
acquired by the Plan Agent either (i) through receipt of additional
unissued but authorized common shares from the Trust or (ii) by purchase of
outstanding common shares on the New York Stock Exchange or elsewhere. If,
on the payment date for any dividend the net asset value per common share
is equal to or less than the market price per share plus estimated
brokerage trading fees ("market premium"), the Plan Agent will invest the
dividend amount in newly issued common shares. The number of newly issued
common shares to be credited to each account will be determined by dividing
the dollar amount of the dividend by the net asset value per common share
on the date the shares are issued, provided that the maximum discount from
the then current market price per share on the date of issuance does not
exceed 5%. If, on the payment date for any dividend, the net asset value
per common share is greater than the market value ("market discount"), the
Plan Agent will invest the dividend amount in common shares acquired in
open-market purchases. There are no brokerage charges with respect to newly
issued common shares. However, each participant will pay a pro rata share
of brokerage trading fees incurred with respect to the Plan Agent's
open-market purchases. Participating in the Plan does not relieve
shareowners from any federal, state or local taxes which may be due on
dividends paid in any taxable year. Shareowners holding Plan shares in a
brokerage account may not be able to transfer the shares to another broker
and continue to participate in the Plan.
27
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/06 (continued)
--------------------------------------------------------------------------------
2. Management Agreement
Pioneer Investment Management, Inc. ("PIM"), a wholly owned indirect subsidiary
of Unicredito Italiano S.p.A. ("Unicredito Italiano"), manages the Trust's
portfolio. Management fees are calculated daily at the annual rate of 0.60% of
the Trust's average daily managed assets. "Managed assets" is the average daily
value of the Trust's total assets minus the sum of the Trust's liabilities,
which liabilities exclude debt related to leverage, short-term debt and the
aggregate liquidation preference of any outstanding preferred shares. At April
30, 2006, $215,230 was payable to PIM related to management fees.
In addition, under PIM's management and administration agreements, certain
other services and costs are paid by PIM and reimbursed by the Trust. For the
year ended April 30, 2006, the Trust recorded $34,331 in reimbursements, which
is included in "Administration fees and reimbursement" on the Statement of
Operations.
The Trust has retained Princeton Administrators, L.P., ("Princeton") to provide
certain administrative services to the Trust on its behalf. The Trust pays
Princeton a monthly fee at an annual rate of 0.07% of the average weekly value
of the Trust's managed assets, subject to a minimum monthly fee of $10,000.
Also, PIM has agreed for the first three years of the Trust's investment
operations to limit the Trust's total annual expenses [excluding organizational
and offering costs for common and preferred shares, interest expense, the cost
of defending or prosecuting any claim or litigation to which the Trust is a
party, (together with any amount in judgment or settlement), indemnification
expenses or taxes incurred due to the failure of the Trust to qualify as a
regulated investment company under the Code or any other non-recurring or
non-operating expenses] to 0.80% of the Trust's average daily managed assets.
The dividend on any preferred shares is not an expense for this purpose. As of
April 30, 2006, the Trust's expenses were not reduced under such arrangements.
3. Transfer Agents
Pioneer Investment Management Shareholder Services, Inc. ("PIMSS"), a wholly
owned indirect subsidiary of UniCredito Italiano, through a sub-transfer agency
agreement with Mellon Investor Services LLC, provides substantially all transfer
agent and shareowner
28
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
services related to the Trust's common shares at negotiated rates. Deutsche Bank
Trust Company Americas is the transfer agent, registrar, dividend paying agent
and redemption agent with respect to the Trust's Auction Preferred Shares
("APS"). The Trust pays Deutsche Bank Trust Company Americas an annual fee, as
is agreed to from time to time by the Trust and Deutsche Bank Trust Company
Americas, for providing such services.
4. 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, 2006 the Trust
expenses were reduced by $38 under such arrangement.
5. Interest Rate Swaps
The Trust may enter into interest rate swap transactions to attempt to protect
itself from increasing dividend or interest expense on its leverage resulting
from increasing short-term interest rates. The cost of leverage may rise with an
increase in interest rates, generally having the effect of lower yields and
potentially lower dividends to common shareowners. Interest rate swaps can be
used to "lock in" the cost of leverage and reduce the negative impact that
rising short-term interest rates would have on the Trust's leveraging costs.
An interest rate swap is an agreement between two parties, which involves
exchanging a floating rate and fixed rate interest payments for a specified
period of time. Interest rate swaps involve the accrual of the net interest
payments between the parties on a daily basis, with the net amount recorded
within the unrealized appreciation/ depreciation of interest rate swaps on the
Statement of Assets and Liabilities. Once the interim payments are settled in
cash, at the pre-determined dates specified in the agreement, the net amount is
recorded as realized gain or loss from interest rate swaps on the Statement of
Operations. During the term of the swap, changes in the value of the swap are
recognized as unrealized gains and losses by "marking-to-market" the value of
the swap based on values obtained from dealer quotations. When the swap is
terminated, the Trust will record a realized gain or loss equal to the
difference, if any, between
29
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/06 (continued)
--------------------------------------------------------------------------------
the proceeds from (or cost of) closing the contract and the cost basis of the
contract. The Trust is exposed to credit risk in the event of non-performance by
the other party to the interest rate swap. However, at April 30, 2006 the Trust
does not anticipate non-performance by any counterparty. Risk may also arise
with regard to market movements in the value of the swap arrangement that do not
exactly offset the changes in the related dividend requirement or interest
expense on the Trust's leverage.
Under the terms of the agreement entered into by the Trust, the Trust receives
a floating rate of interest and pays a fixed rate of interest for the term.
Details of the swap agreement outstanding as of April 30, 2006 were as follows:
----------------------------------------------------------------------------------------
Notional
Termination Amount Fixed Floating Unrealized
Counterparty Date (000) Rate Rate Appreciation
----------------------------------------------------------------------------------------
UBS AG April 5, 2009 $50,000 2.665% 1 month BMA $1,361,145
----------------------------------------------------------------------------------------
6. Trust Shares
There are an unlimited number of common shares of beneficial interest
authorized. Of the 22,120,893 common shares of beneficial interest outstanding
at April 30, 2006, PIM owned 6,981 shares.
During the years ended April 30, 2006 and April 30, 2005, there were no share
transactions by the Trust. All reinvested distributions were satisfied with
previously issued shares purchased in the open market by the Plan Agent and
credited to shareowner accounts.
The Trust may classify or reclassify any unissued common shares of beneficial
interest into one or more series of preferred shares of beneficial interest. As
of April 30, 2006, there were 4,040 APS as follows: Series A-2,000 and Series
B-2,040.
Dividends on Series A and Series B are cumulative at a rate which is reset
every seven days based on the results of an auction. Dividend rates ranged from
1.78% to 3.70% during the year ended April 30, 2006.
The Trust may not declare dividends or make other distributions on its common
shares or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
preferred shares would be less than 200%.
30
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The APS are redeemable at the option of the Trust, in whole or in part, on any
dividend payment date at $25,000 per share plus any accumulated or unpaid
dividends, whether or not declared. The APS are also subject to mandatory
redemption at $25,000 per share plus any accumulated or unpaid dividends,
whether or not declared, if certain requirements relating to the composition of
the assets and liabilities of the Trust as set forth in the Agreement and
Declaration of Trust are not satisfied.
The holders of APS have voting rights equal to the holders of the Trust's
common shares (one vote per share) and will vote together with holders of the
common shares as a single class. However, holders of APS are also entitled to
elect two of the Trust's Trustees. In addition, the Investment Company Act of
1940, as amended, requires that along with approval by shareowners that might
otherwise be required, the approval of the holders of a majority of any
outstanding preferred shares, voting separately as a class, would be required
to (a) adopt any plan of reorganization that would adversely affect the
preferred shares and (b) take any action requiring a vote of security holders,
including, among other things, changes in the Trust's subclassification as a
closed-end management investment company or changes in its fundamental
investment restrictions.
7. Subsequent Events
Subsequent to April 30, 2006, the Board of Trustees of the Trust declared a
dividend from undistributed net investment income of $0.064 per common share
payable May 31, 2006, to shareowners of record on May 16, 2006.
For the period May 1, 2006 to May 31, 2006, dividends declared on preferred
stock totaled $340,686 in aggregate for the two outstanding preferred share
series.
31
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 4/30/06 (continued)
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (unaudited)
During the period, there were no material changes in the Trust's investment
objective or fundamental policies that were not approved by the shareowners.
There were no changes in the Trust's charter or By-Laws that would delay or
prevent a change in control of the Trust which have not been approved by the
shareowners. There were no changes in the principal risk factors associated
with investment in the Trust. There were no changes in the persons who are
primarily responsible for the day-to-day management of the Trust's portfolio.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Trust may purchase, from time to time, its common
shares in the open market.
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.
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by Pioneer Municipal High
Income Trust during the taxable year ended April 30, 2006 qualify as tax-exempt
interest dividends for federal income tax purposes.
32
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
To the Board of Trustees and the Shareowners of
Pioneer Municipal High Income Trust:
We have audited the accompanying statement of assets and liabilities of Pioneer
Municipal High Income Trust (the "Trust"), including the schedule of
investments, as of April 30, 2006, and the related statement of operations 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, 2006, by correspondence with
the custodian and brokers. 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 Municipal High Income Trust at April 30, 2006, the results of its
operations 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.
Ernst & Young LLP
Boston, Massachusetts
June 2, 2006
33
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT
--------------------------------------------------------------------------------
The Investment Company Act of 1940 requires that both the Board of Trustees and
a majority of the Independent Trustees (collectively "the Trustees") voting
separately annually approve the Trust's management contract (the "Management
Contract"). The Trustees have determined that the terms of the Management
Contract are fair and reasonable and that renewal of the contract will enable
the Trust to receive quality investment advisory services at a cost deemed
reasonable and in the best interests of the Trust and its shareowners. In
making such determinations, the Independent Trustees relied upon the assistance
of counsel to the Independent Trustees and counsel to the Trust.
Throughout the year, the Independent Trustees regularly met in executive
sessions separately from the Interested Trustees of the Trust and any officers
of Pioneer Investment Management, Inc., the Trust's adviser (the "Investment
Adviser"), or its affiliates. While the Trustees, including the Independent
Trustees, act on all major matters relating to the Trust, a significant portion
of the activities of the Board of Trustees (including certain of those
described herein) is conducted through committees, the members of which are
comprised exclusively of Independent Trustees. Such committee meetings are
attended by officers of the Trust or the Investment Adviser to the extent
requested by the members of the committee.
In evaluating the Management Contract, the Trustees conducted a review that was
specifically focused upon the renewal of the Management Contract and also
relied upon their knowledge, resulting from their meetings throughout the year,
of the Investment Adviser, its services and the Trust. Both in meetings
specifically dedicated to renewal of the Management Contract and at other
meetings during the course of the year, the Trustees, including the Independent
Trustees, received materials relating to the Investment Adviser's investment
and management services under the Management Contract. These materials included
(i) information on the investment performance of the Trust, a peer group of
funds and an index, in each case selected by the Independent Trustees for this
purpose, (ii) the general investment outlook in the markets in which the Trust
invests, (iii) the procedures employed to determine the value of each of the
Trust's assets, (iv) the Investment Adviser's management of the relationships
with the Trust's unaffiliated service providers, (v) the record of compliance
with the Trust's investment policies and restrictions and with the Trust's Code
of Ethics and the structure and responsibilities of the Investment Adviser's
compliance department, (vi) the nature, cost and
34
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
character of non-investment management services provided by the Investment
Adviser and its affiliates, (vii) the disclosures included in the Trust's
reports to shareowners, (viii) analyses of the benefits and costs of the use of
leverage through the issuance of the Trust's preferred shares and sensitivity
analyses based on changes in interest rates and (ix) the discount or premium of
the market price of the Trust's common stock relative to its net asset value
and measures that are or could be taken to address any discount.
Specifically in connection with the Independent Trustees' review of the
Management Contract, the Independent Trustees requested and the Investment
Adviser provided additional information in order to evaluate the quality of the
Investment Adviser's services and the reasonableness of the fees under the
Management Contract. Among other items, this information included data or
analyses of (1) investment performance for one year period for the Trust and a
peer group selected by the Independent Trustees for this purpose, (2)
management and other fees incurred by a peer group of funds selected by the
Independent Trustees for this purpose, (3) the advisory fees of other
comparable portfolios managed by the Investment Adviser, (4) expense ratios for
the Trust and a peer group of funds selected by the Independent Trustees for
this purpose, (5) the overall organization of the Investment Adviser, (6) the
Investment Adviser's financial results and condition, including its and certain
of its affiliates' profitability from services per formed for the Trust, (7)
administrative reimbursements paid to the Investment Adviser or affiliates, (8)
investment management staffing, and (9) operating expenses paid to third
parties.
The following summarizes factors considered by the Trustees in connection with
reviewing the information described above and their renewal of the Trust's
Management Contract. The Trustees did not identify any single factor as
all-important or controlling, and the summary does not detail all the matters
that were considered.
A. Ancillary Benefits to Shareowners. The Trustees considered the benefits to
shareowners of investing in a closed-end fund that is part of an
established group of open and closed-end funds. The Trustees also noted
that the relationship of the market price relative to the Trust's net
assets attributed to its common shares was at least comparable to other
closed-end funds with similar investment approaches.
35
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
--------------------------------------------------------------------------------
B. Compliance and Investment Performance. The Trustees determined that the
Investment Adviser had policies and systems reasonably designed to achieve
compliance with the Trust's investment objectives and regulatory
requirements. The Trustees also reviewed the Trust's investment
performance, based on total return, as well as the Trust's performance
compared to both the performance of a peer group and the results of an
index, in each case selected by the Independent Trustees for this purpose.
The Trust's performance, on the basis of total return, was in the fifth
quintile for the 12 months ended June 30, 2005. (In all quintile rankings
referred to throughout this discussion first quintile is most favorable to
the Trust's shareowners. Thus, highest relative performance would be first
quintile and lowest relative expenses also would be first quintile.) The
Trustees also considered the yield (gross of expense) to the Trust's common
shareowners relative to the yield (at June 30, 2005) of the Lehman
Municipal Bond Index. The Trustees concluded that the performance of the
Trust supported the continuation of the Management Contract.
C. The Investment Adviser's Personnel and Methods. The Trustees reviewed the
background of members of the team responsible for the daily management of
the Trust and the Trust's investment objective and discipline. The
Independent Trustees also have had discussions with senior management of
the Investment Adviser responsible for investment operations and the senior
management of the Investment Adviser's fixed income group. Among other
things, the Trustees considered the number, education and experience of the
Investment Adviser's investment staff and their use of technology and
emphasis on analytics in view of the risk profile of securities in which
the Trust invests. The Trustees concluded that the Investment Adviser had
the quality and depth of personnel and the well-developed methods essential
to per forming its duties under the Management Contract.
D. Nature and Quality of Other Services. The Trustees considered the nature,
quality, cost and extent of other services provided to shareowners of the
Trust, including administrative and shareowner services performed by the
Investment Adviser under the Management Contract. The Trustees also
considered the reasonableness of the arrangements for reimbursement of the
Investment Adviser's out-of-pocket costs and expenses, including overhead,
for certain administrative services that the Investment
36
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Adviser is not required to provide under the Management Contract. The
Trustees also considered the nature and extent of the other services
provided by the Investment Adviser's affiliates under other contracts and
its supervision of third party service providers. Based on these
considerations, the Trustees concluded that the nature, quality, cost and
extent of such services are satisfactory and reliable and serve the
shareowners of the Trust well.
E. Management Fee and Expenses. The Trustees considered the Investment
Adviser's fee under the Management Contract relative to the management fees
charged by a peer group of funds selected by the Independent Trustees for
this purpose using data provided by an independent third party. The Trust's
management fee for the 12 months ended June 30, 2005 was in the third
quintile relative to the management fees paid by the other funds in that
peer group for the comparable period. The Trustees determined that the fee
under the Management Contract was reasonable and fair in light of both the
overall nature and quality of services provided by the Investment Adviser
and the fees charged by the funds in the peer group. The Trustees also
considered the Trust's expense ratio for the 12 months ended June 30, 2005
and expense ratios for the comparable period of a peer group of funds
selected by the Independent Trustees for this purpose. The Trust's expense
ratio (after giving effect to expense limitations) was in the first
quintile of the applicable peer group for the most recent fiscal year of
the peer group. The Trustees concluded that the Trust's expense ratio was
capped at a level that was reasonable relative to comparable funds.
F. Profitability. The Trustees considered the level of the Investment
Adviser's profits with respect to the management of the Pioneer funds,
including details with respect to the Trust. This consideration included a
review of the Investment Adviser's methodology in allocating certain of its
costs to the management of each fund. The Trustees also considered the
financial results realized by the Investment Adviser in connection with the
operation of the Trust. They further considered the profits realized by the
Investment Adviser and its affiliates from non-fund businesses that may
benefit from or be related to the Trust's business. The Trustees considered
the Investment Adviser's profit margins in comparison with the limited
available industry data. The Trustees concluded that the Investment
Adviser's profits from management
37
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
--------------------------------------------------------------------------------
of the Pioneer funds, including the financial results derived from the
Trust, bear a reasonable relationship to the services rendered and are fair
for the management of the Trust.
G. Economies of Scale. The Trustees considered whether the Trust had
appropriately benefited from any economies of scale, and whether there was
potential for realization of any further economies of scale. Since the
Trust is a closed-end fund and its size is relatively stable at an asset
level that was anticipated when the management fee was initially set, the
Trustees concluded that economies of scale were not a relevant
consideration.
H. Other Benefits to the Investment Adviser. The Trustees also considered the
character and amount of fees paid by the Trust, other than under the
Management Contract, for services provided by the Investment Adviser and
affiliates. The Trustees further considered the revenues and profitability
of the Investment Adviser's businesses other than the fund business,
including the Investment Adviser's institutional investment advisory
business. The Trustees considered the intangible benefits that accrue to
the Investment Adviser and its affiliates by virtue of its relationship
with the Trust and the Pioneer funds as a group. The Trustees concluded
that all these types of benefits accruing to the Investment Adviser were
reasonable in the context of the overall relationship between the
Investment Adviser and the Trust.
Conclusion. The Trustees, in light of the Investment Adviser's overall
performance, considered it appropriate to continue to retain the management
services of the Investment Adviser. Based on their evaluation of all material
factors deemed relevant and the advice of independent counsel, the Trustees
concluded that the Management Contract with the Trust is fair and reasonable
and voted to approve the continuation of the Management Contract for another
year.
38
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
--------------------------------------------------------------------------------
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Shareowner Services and Sub-Transfer Agent
Mellon Investor Services LLC
Preferred Share Auction/Transfer Agent and Registrar
Deutsche Bank Trust Company Americas
Sub-Administrator
Princeton Administrators, L.P.
Trustees and Officers
The Trust's Board of Trustees provides broad supervision over the Trust's
affairs. The officers of the Trust are responsible for the Trust's operations.
The Trust's Trustees and officers are listed below, together with their
principal occupations during the past five years. Trustees who are interested
persons of the Trust within the meaning of the Investment Company Act of 1940
are referred to as Interested Trustees. Trustees who are not interested persons
of the Trust are referred to as Independent Trustees. Each of the Trustees
(except Mr. Hood and Mr. West) serve as a Trustee of the 91 U.S. registered
investment portfolios for which Pioneer Investment Management, Inc. ("Pioneer")
serves as investment adviser (the "Pioneer Funds"). Mr. Hood and Mr. West serve
as Trustees for 35 of the 91 Pioneer Funds. The address for all Interested
Trustees and all officers of the Trust is 60 State Street, Boston,
Massachusetts 02109.
The Trust's statement of additional information provides more detailed
information regarding the Trust's Trustees and is available upon request,
without charge, by calling 1-800-225-6292.
39
--------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
--------------------------------------------------------------------------------
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 pioneerinvestments.com and on the SEC's web site at
http://www.sec.gov.
40
--------------------------------------------------------------------------------
Pioneer Municipal High Income Trust
-------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
-------------------------------------------------------------------------------------------------------------------------------
Positions Held Length of Service
Name and Age With the Fund and Term of Office
John F. Cogan, Jr. (79)* Chairman of Class I Trustee since
the Board, Trustee 2003. Term expires
and President in 2007. Elected by
Preferred Shares
*Mr. Cogan is an Interested Trustee because he is an officer or director of Pioneer and certain of its affiliates.
-------------------------------------------------------------------------------------------------------------------------------
Osbert M. Hood (53)** Trustee and Class II Trustee since
Executive Vice 2003. Term expires
President in 2008.
**Mr. Hood is an Interested Trustee because he is an officer or director of Pioneer and certain of its affiliates.
-------------------------------------------------------------------------------------------------------------------------------
Pioneer Municipal High Income Trust
-------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
-------------------------------------------------------------------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Trustee
John F. Cogan, Jr. (79)* Deputy Chairman and a Director of Pioneer Global Asset Chairman and Director
Management S.p.A. ("PGAM"); Non-Executive Chairman of ICI Mutual Insurance
and a Director of Pioneer Investment Management USA Company; Director
Inc. ("PIM-USA"); Chairman and a Director of Pioneer; of Harbor Global
Director of Pioneer Alternative Investment Management Company, Ltd.
Limited (Dublin); President and a Director of Pioneer
Alternative Investment Management (Burmuda) Limited
and affiliated funds; Director of PIOGLOBAL Real Estate
Investment Fund (Russia); Director of Nano-C, Inc.
(since 2003); Director of Cole Investment Corporation
(since 2004); Director of Fiduciary Counseling Inc.;
President and Director of Pioneer Funds Distributor, Inc.
("PFD"); President of all of the Pioneer Funds; and of
Counsel, Wilmer Cutler Pickering Hale and Dorr LLP
(counsel to PIM-USA and the Pioneer Funds).
-------------------------------------------------------------------------------------------------------------------------------
Osbert M. Hood (53)** President and Chief Executive Officer, PIM-USA since None
May 2003 (Director since January 2001); President
and Director of Pioneer since May 2003; Chairman
and Director of Pioneer Investment Management
Shareholder Services, Inc. ("PIMSS") since May 2003;
Executive Vice President of all of the Pioneer Funds
since June 2003; Executive Vice President and Chief
Operating Officer of PIM-USA, November 2000 to May 2003.
-------------------------------------------------------------------------------------------------------------------------------
41
Pioneer Municipal High Income Trust
-------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
-------------------------------------------------------------------------------
Positions Held Length of Service
Name, Age and Address With the Fund and Term of Office
David R. Bock **(62) Trustee Class I Trustee since
3050 K. Street NW, 2005. Term expires
Washington, DC 20007 in 2007.
**Mr. Bock became a Trustee of the Fund on January 1, 2005.
-------------------------------------------------------------------------------
Mary K. Bush (58) Trustee Class III Trustee
3509 Woodbine Street, since 2003. Term
Chevy Chase, MD 20815 expires in 2006.
-------------------------------------------------------------------------------
Margaret B.W. Graham (58) Trustee Class II Trustee since
1001 Sherbrooke Street 2003. Term expires
West, Montreal, Quebec, in 2008.
Canada H3A 1G5
-------------------------------------------------------------------------------
Thomas J. Perna (55) Trustee Class III Trustee
89 Robbins Avenue, since February 2006.
Berkeley Heights, NJ 07922 Term expires in
2006.
-------------------------------------------------------------------------------
Pioneer Municipal High Income Trust
-------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
-------------------------------------------------------------------------------------------------------------------------------
Other Directorships Held
Name, Age and Address Principal Occupation During Past Five Years by this Trustee
David R. Bock **(62) Senior Vice President and Chief Financial Officer, I-trax, Director of The Enterprise
3050 K. Street NW, Inc. (publicly traded health care services company) Social Investment
Washington, DC 20007 (2001 - present); Managing Partner, Federal City Company (privately-held
Capital Advisors (boutique merchant bank) (2002 affordable housing
to 2004); Executive Vice President and Chief Financial finance company);
Officer, Pedestal Inc. (internet-based mortgage trading Director of New York
company) (2000 - 2002). Mortgage Trust (publicly
traded mortgage REIT)
**Mr. Bock became a Trustee of the Fund on January 1, 2005.
-------------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (58) President, Bush International (international financial Director of Brady
3509 Woodbine Street, advisory firm). Corporation (industrial
Chevy Chase, MD 20815 identification and
specialty coated material
products manufacturer),
Mortgage Guaranty
Insurance Corporation,
and Briggs & Stratton,
Inc. (engine manufacturer)
-------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (58) Founding Director, The Winthrop Group, Inc. (consulting None
1001 Sherbrooke Street firm); Desautels, Faculty of Management, McGill
West, Montreal, Quebec, University.
Canada H3A 1G5
-------------------------------------------------------------------------------------------------------------------------------
Thomas J. Perna (55) Private investor (2004 - present); Senior Executive Vice Director of Quadriserv Inc.
89 Robbins Avenue, President, The Bank of New York (financial and (technology products for
Berkeley Heights, NJ 07922 securities services) (1986 - 2004). securities lending
industry)
-------------------------------------------------------------------------------------------------------------------------------
42
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Positions Held Length of Service
Name, Age and Address With the Fund and Term of Office
Marguerite A. Piret (57) Trustee Class III Trustee
One Boston Place, 28th Floor, since 2003. Term
Boston, MA 02108 expires in 2006.
Elected by Preferred
Shares only.
--------------------------------------------------------------------------------
Stephen K. West (77) Trustee Class I Trustee since
125 Broad Street, 2003. Term expires
New York, NY 10004 in 2007.
--------------------------------------------------------------------------------
John Winthrop (69) Trustee Class II Trustee since
One North Adgers Wharf, 2003. Term expires
Charleston, SC 29401 in 2008.
--------------------------------------------------------------------------------
Pioneer Municipal High Income Trust
Other Directorships Held
Name, Age and Address Principal Occupation During Past Five Years by this Trustee
Marguerite A. Piret (57) President and Chief Executive Officer, Newbury, Piret & Director of New America
One Boston Place, 28th Floor, Company, Inc. (investment banking firm). High Income Fund, Inc.
Boston, MA 02108 (closed-end investment
company)
-------------------------------------------------------------------------------------------------------------------------
Stephen K. West (77) Senior Counsel, Sullivan & Cromwell (law firm). Director, The Swiss
125 Broad Street, Helvetia Fund, Inc.
New York, NY 10004 (closed-end investment
company)
-------------------------------------------------------------------------------------------------------------------------
John Winthrop (69) President, John Winthrop & Co., Inc. None
One North Adgers Wharf, (private investment firm).
Charleston, SC 29401
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
FUND OFFICERS
-------------------------------------------------------------------------------------------------------------------------------
Dorothy E. Bourassa (58) Secretary Since 2003. Serves Secretary of PIM-USA; Senior Vice President - Legal None
at the discretion of of Pioneer; and Secretary/Clerk of most of PIM-USA's
the Board. subsidiaries; Secretary of all of the Pioneer Funds since
September 2003 (Assistant Secretary from November
2000 to September 2003).
-------------------------------------------------------------------------------------------------------------------------------
43
Pioneer Municipal High Income Trust
FUND OFFICERS
Positions Held Length of Service
Name and Age With the Fund and Term of Office
Christopher J. Kelley (41) Assistant Secretary Since 2003. Serves
at the discretion of
the Board.
--------------------------------------------------------------------------------
David C. Phelan (48) Assistant Secretary Since 2003. Serves
at the discretion of
the Board.
--------------------------------------------------------------------------------
Vincent Nave (60) Treasurer Since 2003. Serves
at the discretion of
the Board.
--------------------------------------------------------------------------------
Mark E. Bradley (46) Assistant Treasurer Since 2003. Serves
at the discretion
of the Board.
--------------------------------------------------------------------------------
Luis I. Presutti (41) Assistant Treasurer Since November,
2000. Serves
at the discretion
of the Board.
--------------------------------------------------------------------------------
Gary Sullivan (48) Assistant Treasurer Since May, 2003.
Serves at the
discretion of
the Board.
--------------------------------------------------------------------------------
Pioneer Municipal High Income Trust
-------------------------------------------------------------------------------------------------------------------
FUND OFFICERS
-------------------------------------------------------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Officer
Christopher J. Kelley (41) Vice President and Senior Counsel of Pioneer since July None
2002; Vice President and Senior Counsel of BISYS
Fund Services, Inc. (April 2001 to June 2002);
Assistant Secretary of all Pioneer Funds since
September 2003.
-------------------------------------------------------------------------------------------------------------------
David C. Phelan (48) Partner, Wilmer Cutler Pickering Hale and Dorr LLP; None
Assistant Secretary of all Pioneer Funds since
September 2003.
-------------------------------------------------------------------------------------------------------------------
Vincent Nave (60) Vice President - Fund Accounting, Administration None
and Custody Services of Pioneer; and Treasurer of all
of the Pioneer Funds.
-------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (46) Deputy Treasurer of Pioneer since 2004; Treasurer None
and Senior Vice President, CDC IXIS Asset
Management Services from 2002 to 2003; Assistant
Treasurer and Vice President, MFS Investment
Management from 1997 to 2002; and Assistant
Treasurer of all of the Pioneer Funds since
November 2004.
-------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (41) Assistant Vice President - Fund Accounting, None
Administration and Custody Services of Pioneer; and
Assistant Treasurer of all of the Pioneer Funds.
-------------------------------------------------------------------------------------------------------------------
Gary Sullivan (48) Fund Accounting Manager - Fund Accounting, None
Administration and Custody Services of Pioneer; and
Assistant Treasurer of all of the Pioneer Funds since
May 2002.
-------------------------------------------------------------------------------------------------------------------
44
Pioneer Municipal High Income Trust
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Positions Held
Name and Age With the Fund
Katherine Kim Sullivan (32) Assistant Treasurer
-------------------------------------------------------------------------------------------------------------------
Terrence J. Cullen (45) Chief Compliance
Officer
-------------------------------------------------------------------------------------------------------------------
Pioneer Municipal High Income Trust
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Length of Service
Name and Age and Term of Office
Katherine Kim Sullivan (32) Since 2003. Serves
at the discretion of
the Board.
-------------------------------------------------------------------------------------------------------------------
Terrence J. Cullen (45) Since March 2006.
Serves at the
discretion of
the Board.
-------------------------------------------------------------------------------------------------------------------
The outstanding capital stock of PFD, PIM and PIMSS is indirectly wholly owned
by UniCredito Italiano S.p.A. ("UniCredito Italiano"), one of the largest
banking groups in Italy. PIM, the Trust's investment adviser, provides
investment management and financial services to mutual funds, institutional and
other clients.
45
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
This page for your notes.
46
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
This page for your notes.
47
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
This page for your notes.
48
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
This page for your notes.
49
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
This page for your notes.
50
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
This page for your notes.
51
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
This page for your notes.
52
--------------------------------------------------------------------------------
HOW TO CONTACT PIONEER
--------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact Mellon
for assistance or information.
You can call Mellon Investor Services LLC for:
Account Information 1-800-710-0935
Telecommunications Device for the Deaf (TDD) 1-800-231-5469
Or write to Mellon Investor Services LLC:
For Write to
General inquiries, lost dividend checks P.O. Box 3315
South Hackensack, NJ
07606-1915
Change of address, account consolidation P.O. Box 3316
South Hackensack, NJ
07606-1916
Lost stock certificates P.O. Box 3317
South Hackensack, NJ
07606-1917
Stock transfer P.O. Box 3312
South Hackensack, NJ
07606-1912
Dividend reinvestment plan (DRIP) P.O. Box 3338
South Hackensack, NJ
07606-1938
For additional information, please contact your investment advisor or visit our
web site 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. Shareholders may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
The Trust's Chief Executive Officer is required by the New York Stock Exchange's
Listing Standards to file annually with the Exchange a certification that he is
not aware of any violation by the Trust of the Exchange's Corporate Governance
Standards applicable to the Trust. The Trust has filed such certification.
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 totaled
approximately $26,335 in 2006 and $22,900 in 2005.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
Audit-Related Fees
Fees for the Trust's audit-related services totaled
approximately $8,500 in 2006 and $8,000 in 2005,
which were related to the issuance of agreed upon
procedures report to the rating agencies.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
Tax Fees
Fees for tax compliance services, primarily for tax
returns, totaled approximately $6,800 and $6,000 for
2006 and 2005, 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.
Other Fees
There were no other services provided to the Trust
during the fiscal years ended April 30, 2006 and 2005.
(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, 2006 and 2005, 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
$15,300 in 2006 and $15,100 in 2005. These fees
include services provided prior to May 6, 2003, the
effective date of the pre-approval process.
(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 independent auditor, Ernst &
Young LLP ("E&Y"), has advised the Audit
Committee of the Fund's Board of Trustees that
E&Ys Spanish affiliate (E&Y Spain) performed
certain non-audit work for Pioneer Global
Investments Limited ("PGIL"), an affiliate of the
Funds investment adviser. The services involved
the receipt and disbursement of monies transferred
to E&Y Spain by PGIL in payment of individual
payroll and related income tax withholdings due on
returns prepared by E&Y Spain for certain PGIL
employees located in Spain from February 2001 to
October 2005. E&Y became auditors of the Fund in
May 2002. These payroll and tax services were
discontinued in November 2005. The annual fee
received by E&Y Spain for all such services totaled
approximately 9,000 Euro per year. E&Y has informed
the Audit Committee that based on its internal
reviews and the de minimus nature of the services
provided and fees received, E&Y does not believe
its independence with respect to the Fund has been
impaired or that it is disqualified from acting as
independent auditors to the Fund.
The Trust's audit committee of the Board of Trustees
has considered whether the provision of non-audit
services that were rendered to the Affiliates (as
defined) that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is
compatible with maintaining the principal accountant's
independence.
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.
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.
(a)(1)
As of the date of this report, day-to-day management of the fund's portfolio is
the responsibility of David Eurkus. Mr. Eurkus is supported by the fixed income
team. Members of this team manage other Pioneer funds investing primarily in
fixed income securities. The portfolio manager and the team also may draw upon
the research and investment management expertise of Pioneer's affiliate, Pioneer
Investment Management Limited. Mr. Eurkus joined Pioneer as a senior vice
president in January 2000 and has been an investment professional since 1969.
From 1998 to 2000, Mr. Eurkus was a senior vice president of fixed income
investing for the Private Client Group at Brown Brothers Harriman. Prior to that
he was a senior vice president at Putnam Investments.
(a)(2)
Other Accounts Managed by the Portfolio Manager. The table below indicates, for
the 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, 2006. 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 Accounts Assets Managed
Manager Accounts Managed Managed for which for which
Managed Advisory Fee is Advisory Fee is
Performance-Based Performance-Based
-----------------------------------------------------------------------------------------------------------------------
David Eurkus Other Registered 5 $1,951,522,000 N/A N/A
Investment
Companies
-------------------------------------------------------------------------------------------------
Other Pooled 0 $0 N/A N/A
Investment
Vehicles
-------------------------------------------------------------------------------------------------
Other Accounts 0 $0 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 interests 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 interests. 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.
(a)(3)
Compensation of Portfolio Managers. Pioneer has adopted a system of compensation
for portfolio managers and seeks to align the financial interests of the
portfolio managers with both those of shareholders of the accounts the portfolio
managers manage, through incentive payments based in part on the relative
investment performance of those funds, and also Pioneer through incentive
payments based in part on Pioneer's financial performance. Pioneer's
compensation arrangements with its portfolio managers are determined on the
basis of the portfolio manager's overall services to Pioneer and its affiliates
and not on the basis of specific funds or accounts managed by the portfolio
manager. 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 aligns the financial incentives of Pioneer and the investment
professional. 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 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 are the
Lehman Brothers Municipal Bond Index and the Lehman Brothers Non-
Investment Grade Municipal Bond Index. As a result of these
benchmarks, the performance of the portfolio manager for
compensation purposes is measured against 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.
Certain portfolio managers participate in an incentive plan whereby senior
executives or other key employees are granted options in stock of Pioneer Global
Asset Management S.p.A., an affiliate of Pioneer, at the then fair value of the
underlying stock. These options are generally exercisable within three years.
(a)(4)
Share Ownership by Portfolio Manager. The following table indicates as of April
31, 2006 the value, within the indicated range, of shares beneficially owned by
the portfolio manager of the fund.
--------------------------------------------------------------------------------
Name of Portfolio Manager Beneficial Ownership of the Fund*
--------------------------------------------------------------------------------
David Eurkus A
--------------------------------------------------------------------------------
*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
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
During the period covered by this report, there were no purchases
made by or on behalf of the registrant or any affiliated purchaser
as defined in Rule 10b-18(a)(3) under the Securities Exchange Act
of 1934 (the Exchange Act), of shares of the registrants equity
securities that are registered by the registrant pursuant to
Section 12 of the Exchange Act.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in
its definitive proxy statement, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer and principal financial
officer have concluded, that the registrant's disclosure controls and
procedures are effective based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Municipal High Income Trust
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date June 30, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date June 30, 2006
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date June 30, 2006
* Print the name and title of each signing officer under his or her signature.