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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22014
Pioneer Diversified High Income Trust
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Terrence J. Cullen, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: April 30
Date of reporting period: May 1, 2013 through April 30, 2014
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 STOCKHOLDERS.
Pioneer Diversified
High Income Trust
--------------------------------------------------------------------------------
Annual Report | April 30, 2014
--------------------------------------------------------------------------------
Ticker Symbol: HNW
[LOGO] PIONEER
Investments(R)
visit us: us.pioneerinvestments.com
Table of Contents
Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 10
Prices and Distributions 11
Performance Update 12
Schedule of Investments 13
Financial Statements 45
Financial Highlights 49
Notes to Financial Statements 51
Report of Independent Registered Public Accounting Firm 64
Approval of Investment Advisory Agreement 66
Trustees, Officers and Service Providers 70
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 1
President's Letter
Dear Shareowner,
A few months into 2014, we still expect U.S. economic growth for the year to be
in the 2.5% to 3% range, despite some weaker economic data releases during the
winter months driven in large part by harsh weather across much of the
continental U.S. While unemployment remains high, employment has been rising
steadily. Consumer incomes, savings, wealth, and debt-servicing capacity have
been solid buttresses for the recovering housing and auto industries. Industrial
activity is growing only moderately, but current corporate profits are generally
solid and balance sheets appear able to support needed capital spending and
dividend* payouts. A modestly improving European economy and continuing economic
improvement in Japan appear likely to result in improving global growth in 2014,
further supporting the U.S. economy. In addition, we feel that continuing slack
in labor markets and capacity utilization offer the potential for continuing
growth without bottlenecks and rising inflation.
After observing the strengthening economic trends, the Federal Reserve System
(the Fed) has begun scaling back its QE (quantitative easing) program, but
short-term interest rates remain near zero, and while Fed Chair Janet Yellen has
suggested that rates may be raised roughly six months after the QE program is
fully tapered, that would still place the potential rate hike sometime in 2015.
There are certainly risks and uncertainties still facing the global economy as
2014 moves along. The European economy, while improving, remains weak, the
Japanese economy faced a tax hike this spring, and a number of emerging market
countries are experiencing difficulties. There are also geopolitical worries
abroad, such as Russia's aggressive move against the Ukraine, and more potential
political fights at home, especially during a mid-term election year. While most
of the widely recognized risks we have outlined may already be "priced into" the
market, we believe investors should continue to expect market volatility.
At Pioneer, we have long advocated the benefits of staying diversified and
investing for the long term. And while diversification does not assure a profit
or protect against loss in a declining market, we believe there are still
opportunities for prudent investors to earn attractive returns. Our advice, as
always, is to work closely with a trusted financial advisor to discuss your
goals and work together to develop an investment strategy that meets your
individual needs, keeping in mind that there is no single best strategy that
works for every investor.
* Dividends are not guaranteed.
2 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
Pioneer's investment teams have, since 1928, sought out attractive opportunities
in equity and bond markets, using in-depth research to identify undervalued
individual securities, and using thoughtful risk management to construct
portfolios which seek to balance potential risks and rewards in an ever-changing
world.
We encourage you to learn more about Pioneer and our time-tested approach to
investing by consulting with your financial advisor or visiting us online at
us.pioneerinvestments.com. We greatly appreciate your trust in us, and we thank
you for investing with Pioneer.
Sincerely,
/s/ Daniel K. Kingsbury
Daniel K. Kingsbury
President and CEO
Pioneer Investment Management USA, Inc.
Any information in this shareowner report regarding market or economic trends or
the factors influencing the Trust's historical or future performance are
statements of opinion as of the date of this report. These statements should not
be relied upon for any other purposes. Past performance is no guarantee of
future results, and there is no guarantee that market forecasts discussed will
be realized.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 3
Portfolio Management Discussion | 4/30/14
Despite bouts of volatility, particularly in the late spring and summer of 2013,
most credit-sensitive sectors generated solid, positive returns over the
12-month period ended April 30, 2014. In the following interview, Andrew Feltus,
Charles Melchreit and Jonathan Sharkey discuss the factors that affected the
performance of Pioneer Diversified High Income Trust during the 12-month period.
Mr. Feltus, a senior vice president and portfolio manager at Pioneer, Mr.
Melchreit, a senior vice president and portfolio manager at Pioneer, and Mr.
Sharkey, a senior vice president and portfolio manager at Pioneer, all are
members of Pioneer's Fixed-Income Team and are responsible for the day-to-day
management of the Trust.
Q How did the Trust perform during the 12-month period ended April 30, 2014?
A Pioneer Diversified High Income Trust returned 8.47% at net asset value and
7.12% at market price during the 12-month period ended April 30, 2014.
During the same 12-month period, the Trust's custom benchmark returned 5.32%
at net asset value. The custom benchmark is based on equal weightings of the
Bank of America Merrill Lynch (BofA ML) Global High Yield and Emerging
Markets Plus (GHY and EMP) Index, which returned 6.13% at net asset value
during the 12-month period, and the Credit Suisse (CS) Leveraged Loan Index,
which returned 4.50% at net asset value. Unlike the Trust, the custom
benchmark does not use leverage. While the use of leverage increases
investment opportunity, it also increases investment risk. During the same
12-month period, the average return (at market price) of the 33 closed-end
funds in Lipper's High Current Yield Closed End Funds category (which may or
may not be leveraged) was 4.93%, and the average return (at market price) of
the 20 closed-end funds in Lipper's Loan Participation Closed End Funds
category (which may or may not be leveraged) was -4.20%.
The shares of the Trust were selling at a 4.1% premium to net asset value at
the end of the period on April 30, 2014.
On April 30, 2014, the 30-day SEC yield on the Trust's shares was 7.03%*.
Q How would you describe the investment environment for fixed-income assets
during the 12-month period ended April 30, 2014?
A The backdrop for investing in high-yield bonds and other credit-sensitive
securities was challenging during the first part of the Trust's fiscal year,
particularly during the spring and early summer of 2013. The most
* The 30-day SEC yield is a standardized formula that is based on the
hypothetical annualized earning power (investment income only) of the
Trust's portfolio securities during the period indicated.
4 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
immediate cause of volatility in the bond markets was investors' reaction in
May 2013 to then-U.S. Federal Reserve System (Fed) Chair Ben Bernanke's
suggestion that the Fed might begin tapering its quantitative easing (QE)
bond-buying program, which had been a key part of the Fed's accommodative
monetary policies that had helped to keep interest rates low and provided a
measure of support to overall economic growth. The suggestion raised fears
of rising interest rates, which became a self-fulfilling prophecy and led to
a sell-off of the fixed-income markets in the second calendar quarter of
2013. Investors also began to worry about the vitality of the domestic
economic recovery as new-job creation continued to be weak and corporate
profit gains appeared to slow. In that environment, fixed-income
investments in general produced lackluster returns, with credit-sensitive
securities particularly hard hit on worries about potentially slowing
economic growth.
At the same time, Mr. Bernanke's comments had a significant impact on
emerging markets, causing a flight of capital out of those developing
economies that were less financially liquid and most dependent on the flow
of money from the United States. Emerging markets such as India, Indonesia
and, to a lesser extent, the Philippines, were especially hurt by the
outflows. However, even more liquid emerging markets, like Mexico, were
affected. Commodity-producing emerging markets also felt the effects of
slowing growth trends in China as that nation began transitioning to a more
consumer-driven economy less dependent on giant infrastructure and building
projects.
Heading into the fall of 2013, the market for credit-sensitive securities
recovered as more evidence accumulated that the U.S. economy was gathering
strength. Improving employment and housing trends were some of the
encouraging economic signs, and inflation, meanwhile, remained in check.
Investors also began to anticipate that any monetary tightening by the Fed -
based on follow-up statements made by Mr. Bernanke after his "tapering"
comments in May 2013 - would be done gradually and in response to new
evidence of economic strengthening. Moreover, the transition of leadership
at the Fed in early 2014 from Mr. Bernanke to new Chair Janet Yellen
appeared to signal confirmation of a gradual evolution of monetary policy
rather than an abrupt change. The Fed ended up delaying its official
announcement regarding the tapering of QE until December of 2013, and began
reducing its monthly bond purchases in 2014, with the eventual goal being to
fully conclude the QE program by the end of the current calendar year.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 5
Meanwhile, worries about the economic consequences of partisan political
wrangling in Washington abated as a late-2013 bipartisan agreement
establishing top-line Federal spending levels for the next two fiscal years
seemed to, temporarily at least, put an end to the constant bickering
between Democrats and Republicans over the nation's fiscal course, and that
news also buoyed market sentiment. In addition, investors were encouraged
that fiscal policy would be less of a factor holding back the economy's
growth potential, as spending cuts at the Federal level ("sequestration")
were slated to be eased as part of the bipartisan budget agreement. Finally,
the threat that American military forces might be drawn into battle over
control of Syria also declined over the second half of the Trust's fiscal
year, although new worries emerged very late in the period over Russia's
aggressive moves against the Ukraine.
As the markets grew calmer during the second half of the 12-month period,
high-yield and investment-grade corporate bonds as well as most other
credit-sensitive securities tended to perform well, while U.S. Treasuries
and government agency debt came under pressure when market interest rates
for most maturities increased. Yield spreads (the differences in yields
between credit-sensitive debt and Treasuries of similar maturity) tightened
and the credit sectors outperformed Treasuries. Floating-rate securities,
including bank loans and insurance-linked (catastrophe) securities sponsored
by insurance companies, tended to hold up relatively well during the period
as the prospect of higher future interest rates garnered additional investor
interest. Bank loans, in particular, performed well during the summer of
2013. The performance of insurance-linked securities, meanwhile, benefited
from a relatively mild hurricane season in 2013.
Q How did you position the Trust's portfolio during the 12-month period ended
April 30, 2014, and how did the positioning affect the Trust's performance?
A Consistent with our long-term investment strategy, we kept the Trust's
portfolio well diversified** during the period, with an emphasis on the
credit sectors, especially high-yield bonds. The positioning helped the
Trust's performance significantly, as high-yield bonds in particular snapped
back to outperform other similar asset classes late in 2013 and into 2014.
Insurance-linked securities, as noted previously, also fared well, helped by
both the benign storm season and an inflow of investor capital into the
asset class. Floating-rate bank loans performed positively overall while
adding stability to the Trust's portfolio during the highly volatile period
in mid-2013, although those securities underperformed high-yield and
** Diversification does not assure a profit nor prevent loss.
6 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
insurance-linked securities over the full 12-month period. Emerging markets
bonds - both sovereigns and corporates - recovered very well after problems
early in the period and ended up producing positive performance over the
full 12 months. Those securities, however, also lagged the returns produced
by domestic high-yield corporates. The Trust's currency positioning exerted
a slight drag on results, as part of the portfolio's exposure to emerging
markets currencies was unhedged and was, therefore, negatively affected by
declining performance of emerging markets currencies.
At the end of the period, on April 30, 2014, U.S. high-yield corporate bonds
represented the largest position in the Trust's total investment portfolio.
Insurance-linked securities represented the next-highest allocation. Other
significant allocations in the Trust's portfolio at period end included
floating-rate bank loans, and emerging markets debt.
Q Which individual investments had notable effects on the Trust's performance
during the 12-month period ended April 30, 2014?
A Securities that made significant positive contributions to the Trust's
returns during the 12-month period included portfolio positions in a U.S.
high-yield bond issued by Pegasus Solutions, an information technology
company that operates an electronic reservations and processing system for
the hotel and hospitality industry; and an insurance-linked security issued
by Residential Re. Among the more disappointing holdings in the portfolio
during the period were high-yield bonds issued by Codere, a Spanish casino
company, and by NII Holdings, which operates a wireless telecommunication
services company in Latin America.
Q Did the use of derivatives affect the Trust's performance during the
12-month period ended April 30, 2014?
A We did use currency forward contracts to reduce the potential risks to the
Trust's portfolio created by volatility in the relative values of different
currencies. The tactic had a slight negative influence on the Trust's
performance during the 12-month period.
Q How did the level of leverage in the Trust change during the 12-month period
ended April 30, 2014?
A During the period, the value of securities held by the Trust decreased. As a
result, the dollar amount of leverage employed by the Trust was reduced from
$69 million to $67 million in order to meet asset coverage requirements for
its borrowings (see Note 7). The percentage of the Trust's total managed
assets financed by leverage at the end of the 12-month period (28.7%) was
the same as at the beginning of the period.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 7
Q What is your investment outlook?
A We retain a positive view on the economic growth outlook in general, and
that should continue to support healthy corporate earnings as well as the
performance of credit-sensitive securities, especially corporate high-yield
bonds. In an expanding economy, the default rates for high-yield bonds
should remain low by historical standards, which should support their
prices. However, price appreciation has caused the yield advantages of high-
yield bonds over other fixed-income assets to tighten, and so we think most
of the future returns from this asset class are likely to derive from their
higher yields rather than from any further significant price increases.
It is significant to point out that the Trust retains a sizable allocation
to floating-rate securities, notably insurance-linked securities and bank
loans. We believe the floating-rate characteristics of such securities
should help them to perform well if market interest rates rise sooner than
expected, or if the Fed does in fact begin increasing short-term rates,
which is a real possibility sometime in 2015.
Looking ahead, we intend to keep the Trust's portfolio well diversified
across the various fixed-income sectors in an attempt to take advantage of
opportunities in different areas of the market, including in high-yield
corporate bonds, emerging markets debt, insurance-linked securities and
floating-rate bank loans.
8 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
Please refer to the Schedule of Investments on pages 13-44 for a full
listing of Trust securities.
Investments in high-yield or lower-rated securities are subject to
greater-than-average risk. The Trust may invest in securities of issuers
that are in default or that are in bankruptcy.
Investing in foreign and/or emerging markets securities involves risks
relating to interest rates, currency exchange rates, economic, and political
conditions.
When interest rates rise, the prices of debt securities in the Trust will
generally fall. Conversely, when interest rates fall the prices of debt
securities in the Trust generally will rise. Investments in the Trust are
subject to possible loss due to the financial failure of the issuers of the
underlying securities and the issuers' inability to meet their debt
obligations.
The Trust may invest a significant amount of its total assets in illiquid
securities. Illiquid securities may be difficult to dispose of at a fair
price reflective of their value at the times when the Trust believes it is
desirable to do so and the market price of illiquid securities is generally
more volatile than that of more liquid securities. Illiquid securities also
are more difficult to value, and investment of the Trust's assets in
illiquid securities may restrict the Trust's ability to take advantage of
market opportunities.
The Trust is authorized to borrow from banks and issue debt securities,
which are forms of leverage. Leverage creates significant risks, including
the risk that the Trust's incremental income or capital appreciation for
investments purchased with the proceeds of leverage will not be sufficient
to cover the cost of the leverage, which may adversely affect the return for
shareholders.
Risks of investing in the Trust are discussed in greater detail in the
Trust's original offering prospectus and in shareowner reports issued from
time to time.
These risks may increase share price volatility.
Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
Any information in this shareowner report regarding market or economic
trends or the factors influencing the Trust's historical or future
performance are statements of opinion as of the date of this report. These
statements should not be relied upon for any other purposes.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 9
Portfolio Summary | 4/30/14
Portfolio Diversification
--------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Corporate Bonds & Notes 72.9%
Senior Secured Floating Rate Loan Interests 15.8%
Preferred Stocks 3.7%
Collateralized Mortgage Obligations 1.8%
Convertible Bonds & Notes 1.8%
Asset Backed Securities 1.5%
Sovereign Debt Obligations 1.3%
Common Stocks 0.6%
Convertible Preferred Stocks 0.3%
Comercial Mortgage-Backed Securities 0.3%
Right/Warrant 0.0%*
* Amount is less than 0.1%
Portfolio Quality
--------------------------------------------------------------------------------
(As a percentage of total investment portfolio; based on Standard & Poor's
ratings (S&P))
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
A 0.3%
BBB 3.6%
BB 17.9%
B 45.7%
CCC 13.9%
CC 0.7%
D 0.2%
NR 17.7%
Bond ratings are ordered highest to lowest in portfolio. Based on Standard &
Poor's measures, AAA (highest possible rating) through BBB are considered
investment grade; BB or lower ratings are considered non-investment grade. Cash
equivalents and some bonds may not be rated.
10 Largest Holdings
--------------------------------------------------------------------------------
(As a percentage of total long-term holdings)*
1. Fixed Income Trust Series 2013-A, 0.00%, 10/15/97 (144A) 1.55%
--------------------------------------------------------------------------------
2. Altair Re II, Ltd., 0.00% 1.11
--------------------------------------------------------------------------------
3. Lion I Re, Ltd., 1.722%, 4/28/17 (144A) 0.90
--------------------------------------------------------------------------------
4. Kane SAC, Ltd., 0.00%, 7/18/16 0.89
--------------------------------------------------------------------------------
5. Queen Street IV Capital, Ltd., 7.52%, 4/9/15 (144A) 0.89
--------------------------------------------------------------------------------
6. Kizuna II Re, Ltd., 2.27%, 4/6/18 (144A) 0.88
--------------------------------------------------------------------------------
7. Gator Re, Ltd., 6.52%, 1/9/17 (144A) 0.87
--------------------------------------------------------------------------------
8. Kane SAC, Ltd., 0.00%, 7/7/16 0.86
--------------------------------------------------------------------------------
9. AMC Entertainment, Inc., 9.75%, 12/1/20 0.85
--------------------------------------------------------------------------------
10. Townsquare Radio LLC / Townsquare Radio, Inc., 9%, 4/1/19 (144A) 0.79
--------------------------------------------------------------------------------
* This list excludes temporary cash investments and derivative instruments.
The portfolio is actively managed, and current holdings may be different.
The holdings listed should not be considered recommendations to buy or sell
any security listed.
10 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
Prices and Distributions | 4/30/14
Market Value per Common Share
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--------------------------------------------------------------------------------
4/30/14 4/30/13
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Market Value $20.85 $21.82
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Premium 4.1% 5.4%
--------------------------------------------------------------------------------
Net Asset Value per Common Share
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4/30/14 4/30/13
--------------------------------------------------------------------------------
Net Asset Value $20.03 $20.70
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Distributions per Common Share
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net Investment Short-Term Long-Term
Income Capital Gains Capital Gains
--------------------------------------------------------------------------------
5/1/13 - 4/30/14 $2.29 $ -- $ --
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The data shown above represents past performance, which is no guarantee of
future results.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 11
Performance Update | 4/30/14
Investment Returns
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The mountain chart on the right shows the change in market value, plus
reinvested dividends and distributions, of a $10,000 investment made in common
shares of Pioneer Diversified High Income Trust during the periods shown,
compared to that of the combined (50%/50%) Bank of America Merrill Lynch Global
High Yield and Emerging Markets Plus Index (BofA ML Global HY and EMP Index) and
the Credit Suisse (CS) Leveraged Loan Index.
Average Annual Total Returns
(As of April 30, 2014)
--------------------------------------------------------------------------------
50% BofA ML
Global HY and
Net EMP Index;
Asset 50% CS
Value Market Leveraged
Period (NAV) Price Loan Index (NAV)
--------------------------------------------------------------------------------
Life-of-Trust
(5/30/07) 9.20% 9.10% 6.50%
5 Years 19.39 21.61 12.93
1 Year 8.47 7.12 5.32
--------------------------------------------------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Market Value of $10,000 Investment
Pioneer Diversified 50% BofA ML Global HY and EMP Index
High Income Trust 50% CS Leveraged Loan Index
5/31/2007 $ 10,000
4/30/2008 $ 9,879
4/30/2009 $ 8,422
4/30/2010 $ 11,487
4/30/2011 $ 12,708
4/30/2012 $ 13,210
4/30/2013 $ 14,786
4/30/2014 $ 15,587
Call 1-800-225-6292 or visit us.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 NAV due to such factors as interest rate changes
and the perceived credit quality of borrowers.
Total investment return does not reflect broker sales charges or commissions.
All performance is for common shares of the Trust.
Closed-end funds, unlike open-end funds, are not continuously offered. There is
a one-time public offering and, once issued, shares of closed-end funds are sold
in the open market through a stock exchange and frequently trade at prices lower
than their NAV. NAV per common share is total assets less total liabilities,
which includes bank borrowing, divided by the number of common shares
outstanding.
When NAV is lower than market price, dividends are assumed to be reinvested at
the greater of NAV or 95% of the market price. When NAV is higher, dividends are
assumed to be reinvested at prices obtained under the Trust's dividend
reinvestment plan.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Trust distributions.
The BofA ML Global High Yield and Emerging Markets Plus Index is an unmanaged
index that tracks the performance of the below-and border-line investment-grade
global debt markets denominated in the major developed market currencies. The
Index includes sovereign issuers rated BBB1 and lower along with corporate
issues rated BB1 and lower. There are no restrictions on issuer country of
domicile. The CS Leveraged Loan Index is unmanaged and is designed to mirror the
investible universe of the U.S. dollar-denominated leveraged loan market. The
CS Leveraged Loan Index consists of tradable term loans with at least one year
to maturity and rated BBB or lower.
Index returns are calculated monthly, assume reinvestment of dividends and,
unlike Trust returns, do not reflect any fees, expenses or sales charges. The
indices do not use leverage. It is not possible to invest directly in an index.
12 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
Schedule of Investments | 4/30/14
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
ASSET BACKED SECURITIES -- 2.0%
of Net Assets
786,688(a) CCC-/Caa3 Aircraft Finance Trust, Series 1999-1A,
Class A1, 0.632%, 5/15/24 (144A) $ 334,342
100,000 BB/NR CarNow Auto Receivables Trust, Series
2012-1A, Class D, 6.9%, 11/15/16 (144A) 100,844
81,268 BB+/Ba2 Continental Airlines Pass Through Trust,
Series 1998-1, Class B, 6.748%, 3/15/17 86,144
250,000 BBB/Ba2 Delta Air Lines Pass Through Trust, Series
2010-1, Class B, 6.375%, 1/2/16 (144A) 268,125
290,000(b) NR/NR GMAT Trust, Series 2013-1A, Class M,
5.0%, 11/25/43 (144A) 277,717
69,838(a) B-/Caa1 GSAMP Trust, Series 2006-HE8, Class A2B,
0.282%, 1/25/37 66,918
895,869 NR/NR Monty Parent Issuer LLC, Series 2013-LTR,
4.25%, 11/20/28 897,308
940,000 NR/Ba2 Nations Equipment Finance Funding I LLC,
Series 2013-1A, Class C, 5.5%, 5/20/21 (144A) 952,408
120,508 BB/NR Westgate Resorts LLC, Series 2012-2A, Class C,
9.0%, 1/20/25 (144A) 124,462
307,320 NR/NR Westgate Resorts LLC, Series 2012-BA, Class A,
9.5%, 2/20/25 (144A) 312,852
----------------------------------------------------------------------------------------------------------
TOTAL ASSET BACKED SECURITIES
(Cost $3,411,010) $ 3,421,120
----------------------------------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 2.6% of Net Assets
275,000(c) NR/NR CAM Mortgage Trust, Series 2014-1,
Class M, 5.5%, 12/15/53 (144A) $ 274,409
644,376(a) CCC/Caa2 Carrington Mortgage Loan Trust, Series
2007-FRE1, Class A2, 0.352%, 2/25/37 581,867
200,000(b) B-/B3 Credit Suisse First Boston Mortgage
Securities Corp., Series 2004-C4, Class E,
5.135%, 10/15/39 (144A) 179,693
101,389 NR/NR Extended Stay America Trust, Series 2013-ESHM,
Class M, 7.625%, 12/5/19 (144A) 101,603
117,844 B-/Ba3 Global Mortgage Securitization, Ltd., Series
2004-A, Class B1, 5.25%, 11/25/32 (144A) 113,244
196,671 CCC/Caa3 Global Mortgage Securitization, Ltd., Series
2005-A, Class B3, 5.25%, 4/25/32 153,278
375,000(a) NR/Ba2 GS Mortgage Securities Corp. II, Series 2013-KYO,
Class E, 3.753%, 11/8/29 (144A) 378,462
203,797 NR/NR Homeowner Assistance Program Reverse
Mortgage Loan Trust, Series 2013-RM1,
Class A, 4.0%, 5/26/53 (144A) 199,415
780,863(a) B/Ba3 Impac CMB Trust, Series 2004-9, Class 1A1,
0.912%, 1/25/35 703,967
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 13
Schedule of Investments | 4/30/14 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- (continued)
150,000 B/B3 JPMorgan Chase Commercial Mortgage Securities
Trust, Series 2006-CB16, Class AJ,
5.623%, 5/12/45 $ 152,158
150,000(a) BB/NR JPMorgan Chase Commercial Mortgage Securities
Trust, Series 2013-FL3, Class E, 3.11%,
4/15/28 (144A) 149,987
300,000(b) NR/B1 LB-UBS Commercial Mortgage Trust, Series 2005-
C2, Class C, 5.388%, 4/15/40 303,834
556,571(b) BB/NR LB-UBS Commercial Mortgage Trust, Series 2006-
C1, Class AJ, 5.276%, 2/15/41 570,378
400,000(b) B-/B1 Wachovia Bank Commercial Mortgage Trust,
Series 2007-C34, Class AJ, 6.164%, 5/15/46 $ 415,970
----------------------------------------------------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $4,235,552) $ 4,278,265
----------------------------------------------------------------------------------------------------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES -- 0.4% of Net Assets
150,000(b) NR/Ba1 Bear Stearns Commercial Mortgage Securities
Trust, Series 2005-PWR7, Class B,
5.214%, 2/11/41 $ 151,588
250,000(b) NR/Baa3 COMM 2012-CCRE2 Mortgage Trust, Series
2012-CR2, Class E, 5.02%, 8/15/45 (144A) 245,580
200,000(a) BB-/NR COMM 2013-FL3 Mortgage Trust, Series
2013-FL3, Class RGC2, 4.5%, 10/13/28 (144A) 200,297
150,600(a) NR/Ba1 JPMorgan Chase Commercial Mortgage
Securities Corp., Series 2006-FL2A, Class G,
0.512%, 11/15/18 (144A) 145,329
----------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL MORTGAGE-BACKED
SECURITIES
(Cost $688,952) $ 742,794
----------------------------------------------------------------------------------------------------------
SENIOR SECURED FLOATING RATE LOAN
INTERESTS -- 21.8% of Net Assets*(a)
AUTOMOBILES & COMPONENTS -- 2.4%
Auto Parts & Equipment -- 1.2%
118,388 BBB-/Ba1 Federal-Mogul Corp., Tranche B Term Loan,
4.0%, 4/3/18 $ 117,925
69,485 B/B1 Federal-Mogul Corp., Tranche C Term Loan,
4.75%, 4/2/21 69,051
243,245 B+/B1 MetalDyne LLC, USD Term Loan, 4.25%, 12/18/18 244,036
280,034 B+/B1 TI Group Automotive Systems LLC, Additional
Term Loan, 5.5%, 3/28/19 281,697
210,253 BB/Ba2 Tomkins LLC, Term Loan B-2, 3.75%, 9/29/16 210,450
970,231 B+/B2 Tower Automotive Holdings USA, LLC,
Refinancing Term Loan, 4.0%, 4/23/20 968,411
The accompanying notes are an integral part of these financial statements.
14 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Auto Parts & Equipment -- (continued)
140,288 B/Ba3 UCI International, Inc., (United Components),
Term Loan, 5.5%, 7/26/17 $ 140,901
----------------
$ 2,032,471
----------------------------------------------------------------------------------------------------------
Automobile Manufacturers -- 0.9%
1,458,750 BB+/Ba1 Chrysler Group LLC, Term Loan B,
3.5%, 5/24/17 $ 1,458,750
----------------------------------------------------------------------------------------------------------
Tires & Rubber -- 0.3%
575,000 BB/Ba1 Goodyear Tire & Rubber Co., Second Lien Term
Loan, 4.75%, 4/30/19 $ 576,797
----------------
Total Automobiles & Components $ 4,068,018
----------------------------------------------------------------------------------------------------------
CAPITAL GOODS -- 2.5%
Aerospace & Defense -- 1.2%
824,732 B-/B3 DAE Aviation Holdings, Inc., Tranche B-1 Loan,
5.0%, 11/2/18 $ 837,103
373,879 B/B2 DAE Aviation Holdings, Inc., Tranche B-2 Loan,
5.0%, 11/2/18 379,604
180,593 B-/Caa1 Hunter Defense Technologies, Inc., Term Loan,
3.49%, 8/22/14 171,563
320,357 B/B3 TASC, Inc., New Tranche B Term Loan,
4.5%, 12/18/15 315,284
320,000 NR/NR WP CPP Holdings LLC, Second Lien Term
Loan B-1, 8.75%, 4/30/21 325,067
----------------
$ 2,028,621
----------------------------------------------------------------------------------------------------------
Construction & Farm Machinery &
Heavy Trucks -- 0.5%
390,000 B/Ba3 Navistar, Inc., Tranche B, Term Loan, 5.75%,
8/17/17 $ 395,687
456,158 B+/B2 Waupaca Foundry, Inc., Term Loan, 4.0%,
6/29/17 456,158
----------------
$ 851,845
----------------------------------------------------------------------------------------------------------
Electrical Components & Equipment -- 0.4%
556,525 BB+/Ba2 WireCo WorldGroup, Inc., Term Loan, 6.0%,
2/15/17 $ 561,047
----------------------------------------------------------------------------------------------------------
Trading Companies & Distributors -- 0.4%
409,912 BBB/Ba2 AWAS Finance Luxembourg 2012 SA, Term
Loan, 3.5%, 7/16/18 $ 410,937
284,593 B+/Ba3 WESCO Distribution, Inc., Tranche B-1 Loan,
3.75%, 12/12/19 284,591
----------------
$ 695,528
----------------
Total Capital Goods $ 4,137,041
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 15
Schedule of Investments | 4/30/14 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
COMMERCIAL & PROFESSIONAL
SERVICES -- 0.2%
Commercial Printing -- 0.1%
121,556 NR/Caa3 Cenveo Corp., Term Loan B, 6.25%, 2/13/17 $ 121,859
----------------------------------------------------------------------------------------------------------
Security & Alarm Services -- 0.1%
204,266 B+/B1 Protection One, Inc., 2012 Term Loan, 4.25%,
3/21/19 $ 204,181
----------------
Total Commercial & Professional Services $ 326,040
----------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY -- 1.1%
Automobiles & Components -- 0.4%
695,625 B+/B2 CWGS Group LLC, Term Loan, 5.75%, 2/20/20 $ 700,842
----------------------------------------------------------------------------------------------------------
Education Services -- 0.6%
947,625 B+/B2 McGraw-Hill School Education Holdings LLC,
Term B Loan, 6.25%, 12/18/19 $ 956,114
----------------------------------------------------------------------------------------------------------
Publishing -- 0.1%
175,500 B-/B3 Lee Enterprises, Inc., First Lien Term Loan,
7.25%, 3/21/19 $ 176,816
----------------
Total Consumer Discretionary $ 1,833,772
----------------------------------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 0.1%
Textiles -- 0.1%
109,444 NR/NR Klockner Pentaplast of America, Inc.,
Term Loan B-1, 4.75%, 12/21/16 $ 110,493
----------------
Total Consumer Durables & Apparel $ 110,493
----------------------------------------------------------------------------------------------------------
CONSUMER SERVICES -- 1.1%
Hotels, Resorts & Cruise Lines -- 0.5%
735,271 BB-/B2 Seven Sea Cruises S. DE R.L., Term B2
Loan, 3.75%, 12/21/18 $ 733,433
----------------------------------------------------------------------------------------------------------
Restaurants -- 0.6%
515,892 B+/Ba3 Landry's, Inc., (fka Landry's Restaurants, Inc.),
Term Loan B, 4.0%, 4/24/18 $ 517,021
543,900 B/Ba3 NPC International, Inc., Term Loan,
4.0%, 12/28/18 544,580
----------------
$ 1,061,601
----------------
Total Consumer Services $ 1,795,034
----------------------------------------------------------------------------------------------------------
CONSUMER STAPLES -- 0.1%
Personal Products -- 0.1%
100,000 CCC+/Caa2 Altrium Innovations, Inc., Second Lien Term Loan,
7.75%, 7/29/21 $ 100,562
----------------
Total Consumer Staples $ 100,562
----------------------------------------------------------------------------------------------------------
ENERGY -- 1.0%
Coal & Consumable Fuels -- 0.2%
352,500 NR/NR PT Bumi Resources Tbk, Term Loan,
18.153%, 8/15/14 $ 288,610
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
16 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Oil & Gas Exploration & Production -- 0.8%
685,000 B-/B2 Fieldwood Energy LLC, Closing Date Second
Lien Term Loan, 8.375%, 9/30/20 $ 708,290
650,000 CCC+/B3 Samson Investment Co., Second Lien Term
Loan, 5.0%, 9/25/18 651,422
----------------
$ 1,359,712
----------------
Total Energy $ 1,648,322
----------------------------------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 0.7%
Packaged Foods & Meats -- 0.7%
153,871 B/B2 Del Monte Corp., Initial Term Loan, 3.5%,
2/21/20 $ 152,832
940,000 B-/NR New HB Acquisition LLC, Term B Loan, 6.75%,
4/9/20 977,600
----------------
Total Food, Beverage & Tobacco $ 1,130,432
----------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 3.6%
Health Care Equipment & Services -- 0.4%
366,000 CCC+/Caa2 Accellent, Inc., Initial Second Lien Term Loan,
7.5%, 2/21/22 $ 365,085
239,528 BB-/Ba3 Kinetic Concepts, Inc., Dollar E-1 Term Loan,
4.0%, 5/4/18 239,870
----------------
$ 604,955
----------------------------------------------------------------------------------------------------------
Health Care Facilities -- 0.9%
713,685 BB/Ba2 CHS/Community Health Systems, Inc., Term B
Loan, 4.25%, 1/27/21 $ 716,805
267,771 BB/Ba2 CHS/Community Health Systems, Inc., Term D
Loan, 3.483%, 1/25/17 268,321
82,166 BB/Ba3 HCA, Inc., Tranche B-4 Term Loan, 2.984%,
5/1/18 82,174
197,050 BB/NR HCA, Inc., Tranche B-5 Term Loan, 2.9%, 3/31/17 197,085
321,756 B+/B1 Kindred Healthcare, Inc., Incremental Term Loan,
4.0%, 3/26/21 319,745
----------------
$ 1,584,130
----------------------------------------------------------------------------------------------------------
Health Care Services -- 1.9%
377,708 B+/B3 AccentCare, Inc., Term Loan, 6.5%, 12/22/16 $ 236,068
208,835 B/B2 Bioscrip, Inc., Delayed Term Loan, 6.5%, 7/31/20 210,314
348,058 B/B2 Bioscrip, Inc., Initial Term B Loan, 6.5%, 7/31/20 350,233
718,000 B/B2 Gentiva Health Services, Inc., Initial Term Loan B,
6.5%, 10/18/19 711,493
341,123 B-/B2 Inventiv Health, Inc., Consolidated Term Loan,
7.5%, 8/4/16 342,402
205,000 B/B1 National Mentor Holdings, Inc., Tranche B Term
Loan, 4.75%, 1/31/21 205,641
461,513 B/NR Surgical Care Affiliates LLC, Class C Term Loan,
4.0%, 6/29/18 462,378
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 17
Schedule of Investments | 4/30/14 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Health Care Services -- (continued)
283,225 B/B2 Valitas Health Services, Inc., Term Loan B,
6.0%, 6/2/17 $ 276,499
486,250(d) NR/B3 Virtual Radiologic Corp., Term Loan B, 7.25%,
12/22/16 296,613
----------------
$ 3,091,641
----------------------------------------------------------------------------------------------------------
Health Care Supplies -- 0.1%
237,675 B+/NR Alere, Inc., Term Loan B, 5.5%, 6/30/17 $ 237,853
----------------------------------------------------------------------------------------------------------
Health Care Technology -- 0.3%
240,653 BB-/Ba3 IMS Health, Inc., Tranche B-1 Dollar Term Loan,
3.5%, 3/5/21 $ 239,788
342,486 CCC/Caa3 Medical Card System, Inc., Term Loan,
0.0%, 9/17/15 329,643
----------------
$ 569,431
----------------
Total Health Care Equipment & Services $ 6,088,010
----------------------------------------------------------------------------------------------------------
HOUSEHOLD & PERSONAL PRODUCTS -- 0.8%
Household Products -- 0.4%
418,985 BB-/B1 SRAM LLC, First Lien Term Loan, 4.0%, 4/10/20 $ 415,318
214,904 B-/B2 Wash MultiFamily Laundry Systems LLC, U.S.
Term Loan, 4.5%, 2/21/19 214,366
----------------
$ 629,684
----------------------------------------------------------------------------------------------------------
Personal Products -- 0.2%
215,357 BB-/NR NBTY, Inc., B-2 Term Loan, 3.5%, 10/1/17 $ 215,492
208,828 NR/Ba2 Revlon Consumer Products Corp., Replacement
Term Loan, 3.25%, 11/20/17 208,741
----------------
$ 424,233
----------------------------------------------------------------------------------------------------------
Security & Alarm Services -- 0.2%
269,522 B/Ba3 Monitronics International, Inc., 2013 Term
Loan B, 4.25%, 3/23/18 $ 270,112
----------------
Total Household & Personal Products $ 1,324,029
----------------------------------------------------------------------------------------------------------
INDUSTRIALS -- 0.2%
Industrial Conglomerates -- 0.2%
355,000 B-/Caa1 Filtration Group Co., Initial Second Lien Term
Loan, 8.25%, 11/22/21 $ 363,210
----------------
Total Industrials $ 363,210
----------------------------------------------------------------------------------------------------------
INSURANCE -- 1.0%
Multi-Line Insurance -- 0.3%
565,941 B/B1 Alliant Holdings I LLC, Initial Term Loan,
4.25%, 12/20/19 $ 566,464
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
18 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Property & Casualty Insurance -- 0.7%
593,765 CCC/Caa2 Confie Seguros Holding II Co., Second Lien Term
Loan, 10.25%, 5/8/19 $ 598,961
449,330 NR/B1 USI, Inc., Initial Term Loan, 4.25%, 12/27/19 448,206
----------------
$ 1,047,167
----------------
Total Insurance $ 1,613,631
----------------------------------------------------------------------------------------------------------
MATERIALS -- 0.9%
Commodity Chemicals -- 0.1%
196,024 BB-/B1 Taminco Global Chemical Corp., Initial Tranche
B-3 Dollar Term Loan, 3.25%, 2/15/19 $ 194,737
----------------------------------------------------------------------------------------------------------
Diversified Chemicals -- 0.2%
298,646 B+/B3 Univar, Inc., Term Loan B, 5.0%, 6/30/17 $ 298,540
----------------------------------------------------------------------------------------------------------
Diversified Metals & Mining -- 0.0%+
57,668(e) NR/NR PT Bakrie & Brothers Tbk, Facility Term Loan B,
0.0%, 1/20/13 $ 23,067
----------------------------------------------------------------------------------------------------------
Metal & Glass Containers -- 0.3%
457,859 B/B1 Tank Holding Corp., Initial Term Loan, 5.5%,
7/9/19 $ 457,096
----------------------------------------------------------------------------------------------------------
Paper Products -- 0.0%+
99,750 B/B1 Exopack Holdings SA, USD Term Loan, 5.25%,
5/8/19 $ 100,872
----------------------------------------------------------------------------------------------------------
Specialty Chemicals -- 0.3%
123,694 BB+/Ba1 Chemtura Corp., New Term Loan, 3.5%, 8/29/16 $ 124,029
340,750 BB+/Ba2 Huntsman International LLC, Extended Term B
Loan, 2.697%, 4/19/17 340,409
----------------
$ 464,438
----------------
Total Materials $ 1,538,750
----------------------------------------------------------------------------------------------------------
MEDIA -- 1.4%
Advertising -- 0.6%
960,054 B/B1 Affinion Group, Inc., Tranche B Term Loan,
6.75%, 10/9/16 $ 963,655
----------------------------------------------------------------------------------------------------------
Broadcasting -- 0.5%
315,000 CCC+/Caa2 Learfield Communications, Inc., Initial Second
Lien Term Loan, 8.75%, 10/8/21 $ 321,300
467,009 B+/B2 Univision Communications, Inc., Replacement
First-Lien Term Loan, 4.0%, 3/1/20 465,299
----------------
$ 786,599
----------------------------------------------------------------------------------------------------------
Cable & Telecommunications -- 0.2%
341,777 B/B1 WideOpenWest Finance LLC, Term Loan B,
4.75%, 4/1/19 $ 342,898
----------------------------------------------------------------------------------------------------------
Movies & Entertainment -- 0.0%+
93,786 NR/Baa3 Cinedigm Digital Funding I LLC, Term Loan,
3.75%, 2/28/18 $ 93,903
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 19
Schedule of Investments | 4/30/14 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Publishing -- 0.1%
204,000 B/B2 Cengage Learning Acquisitions, Inc., Term Loan,
7.0%, 3/6/20 $ 207,137
----------------
Total Media $ 2,394,192
----------------------------------------------------------------------------------------------------------
PHARMACEUTICALS, BIOTECHNOLOGY &
LIFE SCIENCES -- 0.8%
Life Sciences Tools & Services -- 0.8%
1,290,093 BB-/B3 Catalent Pharma, Inc., Dollar Term Loan,
3.65%, 9/15/16 $ 1,292,350
----------------
Total Pharmaceuticals, Biotechnology &
Life Sciences $ 1,292,350
----------------------------------------------------------------------------------------------------------
RETAILING -- 0.4%
Computer & Electronics Retail -- 0.4%
830,369 B/B2 Targus Group International, Inc., Term Loan,
12.0%, 5/24/16 $ 701,662
----------------
Total Retailing $ 701,662
----------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 0.3%
Semiconductor Equipment -- 0.3%
561,549 BB-/B1 Aeroflex, Inc., Tranche B-1 Term Loan,
4.5%, 11/9/19 $ 564,090
----------------
Total Semiconductors & Semiconductor
Equipment $ 564,090
----------------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 1.9%
Application Software -- 1.5%
612,680 B-/B1 Expert Global Solutions, Inc., Advance First Lien
Term Loan B, 8.5%, 4/3/18 $ 585,875
426,300 NR/NR Houghton Mifflin Holdings, Inc., Term Loan,
4.25%, 5/22/18 428,165
938,168 BB+/NR Nuance Communications, Inc., Term Loan C,
2.91%, 8/7/19 926,636
500,000 CCC+/Caa1 Vertafore, Inc., Second Lien Term Loan,
9.75%, 10/29/17 508,906
----------------
$ 2,449,582
----------------------------------------------------------------------------------------------------------
IT Consulting & Other Services -- 0.4%
772,637 BB/Ba3 SunGuard Data Systems, Inc., Tranche C Term
Loan, 3.903%, 2/28/17 $ 773,873
----------------
Total Software & Services $ 3,223,455
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
20 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 0.4%
Communications Equipment -- 0.1%
85,966 BB+/Ba2 CommScope, Inc., Tranche 3 Term Loan,
2.733%, 1/21/17 $ 86,020
128,949 BB+/Ba2 CommScope, Inc., Tranche 4 Term Loan, 3.25%,
1/14/18 129,243
----------------
$ 215,263
----------------------------------------------------------------------------------------------------------
Electronic Components -- 0.3%
477,897 B/B2 Scitor Corp., Term Loan, 5.0%, 2/15/17 $ 470,529
----------------
Total Technology Hardware & Equipment $ 685,792
----------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 0.5%
Integrated Telecommunication Services -- 0.5%
782,433 BB/Ba3 West Corp., Term B-8 Loan, 3.25%, 6/30/18 $ 773,814
----------------
Total Telecommunication Services $ 773,814
----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 0.1%
Air Freight & Logistics -- 0.1%
193,538 B-/B2 Ozburn-Hessey Holding Co., LLC, Term Loan,
6.75%, 5/23/19 $ 194,142
----------------
Total Transportation $ 194,142
----------------------------------------------------------------------------------------------------------
UTILITIES -- 0.3%
Electric Utilities -- 0.3%
636,183 CC/Caa3 Texas Competitive Electric Holdings Co., LLC,
2017 Term Loan, 4.737%, 10/10/17 $ 482,108
----------------
Total Utilities $ 482,108
----------------------------------------------------------------------------------------------------------
TOTAL SENIOR SECURED FLOATING
RATE LOAN INTERESTS
(Cost $36,585,489) $ 36,388,949
----------------------------------------------------------------------------------------------------------
CORPORATE BONDS & NOTES --
101.1% of Net Assets
AUTOMOBILES & COMPONENTS -- 0.6%
Auto Parts & Equipment -- 0.6%
350,000 B/Caa1 International Automotive Components Group SA,
9.125%, 6/1/18 (144A) $ 371,875
275,000 B/B3 Pittsburgh Glass Works LLC, 8.0%,
11/15/18 (144A) 299,750
290,000 B+/B2 Stackpole International Intermediate Co. SA /
Stackpole International Powder, 7.75%,
10/15/21 (144A) 310,300
----------------
Total Automobiles & Components $ 981,925
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 21
Schedule of Investments | 4/30/14 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
BANKS -- 1.5%
Diversified Banks -- 1.2%
525,000 CCC+/Caa1 Banco de Galicia y Buenos Aires, 8.75%,
5/4/18 (144A) $ 519,750
400,000(b) NR/Ca Banco Macro SA, 9.75%, 12/18/36 357,932
200,000 NR/Ba1 Turkiye IS Bankasi AS, 6.0%, 10/24/22
(144A) 194,200
750,000 BBB/NR UBS AG / Stamford CT, 7.625%, 8/17/22 891,202
----------------
$ 1,963,084
----------------------------------------------------------------------------------------------------------
Regional Banks -- 0.3%
600,000(b)(f) BBB/Baa3 PNC Financial Services Group, Inc., 4.454% $ 600,000
----------------
Total Banks $ 2,563,084
----------------------------------------------------------------------------------------------------------
CAPITAL GOODS -- 6.3%
Aerospace & Defense -- 0.8%
400,000 B-/Caa1 ADS Tactical, Inc., 11.0%, 4/1/18 (144A) $ 394,000
870,000 B-/B2 DynCorp International, Inc., 10.375%,
7/1/17 920,025
----------------
$ 1,314,025
----------------------------------------------------------------------------------------------------------
Building Products -- 0.4%
300,000 BB/B2 USG Corp., 7.875%, 3/30/20 (144A) $ 334,500
365,000 BB/B2 USG Corp., 9.75%, 8/1/14 (144A) 371,388
----------------
$ 705,888
----------------------------------------------------------------------------------------------------------
Construction & Engineering -- 1.2%
900,000 B/B2 Empresas ICA S.A.B. de CV, 8.9%, 2/4/21
(144A) $ 918,000
1,000,000 BB-/B1 OAS Investments GMBH, 8.25%, 10/19/19
(144A) 1,023,750
----------------
$ 1,941,750
----------------------------------------------------------------------------------------------------------
Construction & Farm Machinery & Heavy
Trucks -- 1.0%
360,000 B-/B3 Meritor, Inc., 6.75%, 6/15/21 $ 380,700
660,000 CCC-/B3 Navistar International Corp., 8.25%,
11/1/21 671,550
160,000 CCC-/Caa2 Stanadyne Holdings, Inc., 10.0%, 8/15/14 160,400
500,000(c) CC/Ca Stanadyne Holdings, Inc., 12.0%, 2/15/15 501,250
----------------
$ 1,713,900
----------------------------------------------------------------------------------------------------------
Electrical Components & Equipment -- 0.5%
750,000 B-/B3 WireCo WorldGroup, Inc., 9.5%, 5/15/17 $ 766,875
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
22 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Industrial Conglomerates -- 0.3%
455,000 B+/B2 JB Poindexter & Co., Inc., 9.0%, 4/1/22
(144A) $ 499,362
----------------------------------------------------------------------------------------------------------
Industrial Machinery -- 1.4%
450,000 B/B2 Cleaver-Brooks, Inc., 8.75%, 12/15/19
(144A) $ 498,375
335,000 B-/Caa2 Liberty Tire Recycling, 11.0%, 10/1/16
(144A) 324,950
875,000 B/Caa1 Mueller Water Products, Inc., 7.375%,
6/1/17 888,125
665,000 CCC+/NR WPE International Cooperatief UA,
10.375%, 9/30/20 (144A) 420,612
150,000 B/B3 Xerium Technologies, Inc., 8.875%,
6/15/18 160,500
----------------
$ 2,292,562
----------------------------------------------------------------------------------------------------------
Trading Companies & Distributors -- 0.7%
1,090,000 B-/B3 TRAC Intermodal LLC / TRAC Intermodal
Corp., 11.0%, 8/15/19 $ 1,246,688
----------------
Total Capital Goods $ 10,481,050
----------------------------------------------------------------------------------------------------------
COMMERCIAL & PROFESSIONAL
SERVICES -- 0.7%
Diversified Support Services -- 0.7%
950,000 B/Caa2 NANA Development Corp., 9.5%, 3/15/19
(144A) $ 964,250
260,000 B-/B3 TMS International Corp., 7.625%,
10/15/21 (144A) 277,550
----------------
$ 1,241,800
----------------------------------------------------------------------------------------------------------
Environmental & Facilities Services -- 0.0%+
700,000(d)(e) NR/WR Old AII, Inc., 10.0%, 12/15/16 $ 7
----------------
Total Commercial & Professional Services $ 1,241,807
----------------------------------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 1.5%
Home Furnishings -- 0.3%
535,000 B+/B3 Tempur Sealy International, Inc., 6.875%,
12/15/20 $ 583,150
----------------------------------------------------------------------------------------------------------
Homebuilding -- 0.1%
605,000(d)(e) NR/C Desarrolladora Homex SAB de CV, 9.5%,
12/11/19 (144A) $ 66,550
500,000(d)(e) NR/Ca Urbi Desarrollos Urbanos SAB de CV,
9.75%, 2/3/22 (144A) 56,250
----------------
$ 122,800
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 23
Schedule of Investments | 4/30/14 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Leisure Products -- 1.1%
EUR 275,000 CCC+/Caa2 Heckler & Koch GmbH, 9.5%, 5/15/18
(144A) $ 403,892
1,000,000 CCC+/Caa1 Icon Health & Fitness, Inc., 11.875%,
10/15/16 (144A) 975,000
375,000(g) CCC+/Caa2 PC Nextco Holdings LLC / PC Nextco
Finance, Inc., 8.75% (0.0% PIK,8.75% cash), 387,187
8/15/19 (144A) ----------------
$ 1,766,079
----------------
Total Consumer Durables & Apparel $ 2,472,029
----------------------------------------------------------------------------------------------------------
CONSUMER SERVICES -- 3.9%
Business Services -- 0.8%
750,000 B/B2 Sitel LLC / Sitel Finance Corp., 11.0%,
8/1/17 (144A) $ 804,375
500,000 B-/Caa2 Sitel LLC / Sitel Finance Corp., 11.5%,
4/1/18 473,750
----------------
$ 1,278,125
----------------------------------------------------------------------------------------------------------
Casinos & Gaming -- 0.4%
732,290(g) NR/NR Mashantucket Western Pequot Tribe, 6.5%,
(5.5% PIK, 1.0% cash), 7/1/36 $ 109,844
450,000 B/B2 Scientific Games International, Inc., 9.25%,
6/15/19 473,625
----------------
$ 583,469
----------------------------------------------------------------------------------------------------------
Hotels, Resorts & Cruise Lines -- 0.9%
720,000(g) B-/B3 MISA Investments, Ltd., 8.625% (0.0% PIK,
8.625% cash), 8/15/18 (144A) $ 739,800
400,000 B-/B2 Seven Seas Cruises S de RL LLC, 9.125%,
5/15/19 440,000
325,000 B+/B3 Viking Cruises, Ltd., 8.5%, 10/15/22
(144A) 367,250
----------------
$ 1,547,050
----------------------------------------------------------------------------------------------------------
Leisure Facilities -- 0.7%
EUR 800,000 B+/B3 Cirsa Funding Luxembourg SA, 8.75%,
5/15/18 (144A) $ 1,154,150
----------------------------------------------------------------------------------------------------------
Restaurants -- 0.9%
1,235,000(c) B-/Caa1 Burger King Capital Holdings LLC, 0.0%,
4/15/19 (144A) $ 1,133,112
400,000 B/B3 Burger King Corp., 9.875%, 10/15/18 434,000
----------------
$ 1,567,112
----------------------------------------------------------------------------------------------------------
Specialized Consumer Services -- 0.2%
315,000 B-/B3 StoneMor Partners LP / Cornerstone Family
Services of WV, 7.875%, 6/1/21 (144A) $ 326,813
----------------
Total Consumer Services $ 6,456,719
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
24 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
CONSUMER STAPLES -- 1.0%
Food Distributors -- 0.6%
900,000 BB/NR JBS Investments GmbH, 7.25%, 4/3/24
(144A) $ 912,375
----------------------------------------------------------------------------------------------------------
Packaged Foods & Meats -- 0.4%
640,000 B/B1 Post Holdings, Inc., 6.75%, 12/1/21
(144A) $ 670,400
----------------
Total Consumer Staples $ 1,582,775
----------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 2.1%
Asset Management & Custody Banks -- 0.4%
590,000 BBB-/Baa3 Janus Capital Group, Inc., 6.7%, 6/15/17 $ 667,037
----------------------------------------------------------------------------------------------------------
Consumer Finance -- 0.9%
445,000 B/B1 Jefferies Finance LLC / JFIN Co-Issuer Corp.,
7.375%, 4/1/20 (144A) $ 466,137
610,000 NR/NR Tarjeta Naranja SA, 9.0%, 1/28/17 (144A) 608,493
440,000 B/B3 TMX Finance LLC / TitleMax Finance Corp.,
8.5%, 9/15/18 (144A) 468,600
----------------
$ 1,543,230
----------------------------------------------------------------------------------------------------------
Investment Banking & Brokerage -- 0.2%
450,000(b)(f) BB+/Ba2 Goldman Sachs Capital II, 4.0% $ 346,500
----------------------------------------------------------------------------------------------------------
Multi-Sector Holdings -- 0.3%
600,000 B/B3 Constellation Enterprises LLC, 10.625%,
2/1/16 (144A) $ 504,000
----------------------------------------------------------------------------------------------------------
Specialized Finance -- 0.3%
425,000 B/B2 National Money Mart Co., 10.375%,
12/15/16 $ 447,313
----------------
Total Diversified Financials $ 3,508,080
----------------------------------------------------------------------------------------------------------
ENERGY -- 16.1%
Coal & Consumable Fuels -- 1.0%
650,000 CC/Ca Bumi Capital Pte, Ltd., 12.0%, 11/10/16
(144A) $ 302,250
400,000(e) D/WR James River Coal Co., 7.875%, 4/1/19 46,000
400,000 CCC+/Caa2 Mongolian Mining Corp., 8.875%, 3/29/17
(144A) 240,000
300,000 B-/Caa1 Murray Energy Corp., 8.625%, 6/15/21
(144A) 325,500
715,000 B-/Caa1 Penn Virginia Corp., 8.5%, 5/1/20 793,650
----------------
$ 1,707,400
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 25
Schedule of Investments | 4/30/14 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Integrated Oil & Gas -- 0.3%
150,000 B-/B3 Jones Energy Holdings LLC / Jones Energy
Finance Corp., 6.75%, 4/1/22 (144A) $ 155,625
325,000 NR/Caa1 YPF SA, 8.875%, 12/19/18 (144A) 338,406
----------------
$ 494,031
----------------------------------------------------------------------------------------------------------
Oil & Gas Drilling -- 1.8%
645,000 B/B3 Hercules Offshore, Inc., 8.75%, 7/15/21
(144A) $ 694,987
730,000 CCC+/(P)Caa1 Ocean Rig UDW, Inc., 7.25%, 4/1/19
(144A) 697,150
1,000,000 CCC+/Caa1 Ocean Rig UDW, Inc., 9.5%, 4/27/16
(144A) 1,051,250
190,000 B+/B2 Pioneer Energy Services Corp., 9.875%,
3/15/18 200,213
320,000 B+/B1 Shelf Drill Holdings, Ltd., 8.625%, 11/1/18
(144A) 344,800
----------------
$ 2,988,400
----------------------------------------------------------------------------------------------------------
Oil & Gas Equipment & Services -- 1.4%
448,000 B/B1 Expro Finance Luxembourg SCA, 8.5%,
12/15/16 (144A) $ 468,160
690,000 B/Caa1 Forbes Energy Services, Ltd., 9.0%,
6/15/19 705,525
395,000 B-/B2 FTS International, Inc., 6.25%, 5/1/22
(144A) 399,937
425,000 BB/B1 McDermott International, Inc., 8.0%,
5/1/21 (144A) 428,188
330,000 B/B3 Seitel, Inc., 9.5%, 4/15/19 343,200
----------------
$ 2,345,010
----------------------------------------------------------------------------------------------------------
Oil & Gas Exploration & Production -- 11.2%
520,000 CCC+/B3 Athlon Holdings LP / Athlon Finance Corp.,
7.375%, 4/15/21 (144A) $ 561,600
505,000 BB-/B1 Berry Petroleum Co., 10.25%, 6/1/14 507,525
100,000 B-/B3 Comstock Resources, Inc., 7.75%, 4/1/19 107,000
500,000 B-/B3 Comstock Resources, Inc., 9.5%, 6/15/20 571,250
515,000 B+/B3 Energy XXI Gulf Coast, Inc., 7.5%,
12/15/21 (144A) 544,612
600,000 B/B2 EP Energy LLC / EP Energy Finance, Inc.,
9.375%, 5/1/20 691,500
920,000 CCC/Caa1 Forest Oil Corp., 7.5%, 9/15/20 795,800
360,000 B/NR GeoPark Latin America, Ltd., Agencia en
Chile, 7.5%, 2/11/20 (144A) 378,000
570,000 B-/B3 Gulfport Energy Corp., 7.75%, 11/1/20 618,450
165,000 CCC+/Caa1 Halcon Resources Corp., 9.25%, 2/15/22
(144A) 173,250
The accompanying notes are an integral part of these financial statements.
26 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Oil & Gas Exploration &
Production -- (continued)
890,000 CCC+/Caa1 Halcon Resources Corp., 9.75%, 7/15/20 $ 952,300
680,000 B-/Caa1 Lightstream Resources, Ltd., 8.625%,
2/1/20 (144A) 694,450
630,000 B-/Caa1 Memorial Production Partners LP /
Memorial Production Finance Corp.,
7.625%, 5/1/21 663,863
600,000 CCC+/Caa1 Midstates Petroleum Co., Inc., 9.25%,
6/1/21 613,500
455,000 CCC+/Caa1 Midstates Petroleum Co., Inc., 10.75%,
10/1/20 490,831
350,000 B+/NR MIE Holdings Corp., 7.5%, 4/25/19 (144A) 352,187
800,000 B+/NR MIE Holdings Corp., 9.75%, 5/12/16
(144A) 837,000
200,000 NR/NR National JSC Naftogaz of Ukraine, 9.5%,
9/30/14 180,750
1,440,000 B-/Caa1 Northern Oil & Gas, Inc., 8.0%, 6/1/20 1,530,000
535,000 B-/B3 PDC Energy, Inc., 7.75%, 10/15/22 587,163
750,000 B/Caa1 PetroQuest Energy, Inc., 10.0%, 9/1/17 798,750
480,000 B-/Caa1 QR Energy LP / QRE Finance Corp., 9.25%,
8/1/20 513,600
240,000 CCC-/Caa3 Quicksilver Resources, Inc., 7.125%,
4/1/16 222,000
700,000 B-/B3 Resolute Energy Corp., 8.5%, 5/1/20 731,500
375,000 CCC+/B3 Rice Energy, Inc., 6.25%, 5/1/22 (144A) 375,469
870,000 B-/B3 RKI Exploration & Production LLC / RKI
Finance Corp., 8.5%, 8/1/21 (144A) 943,950
472,000 BB-/B2 Rosetta Resources, Inc., 9.5%, 4/15/18 494,420
700,000 CCC+/B3 Samson Investment Co., 10.75%, 2/15/20
(144A) 738,500
1,170,000 B-/B3 Sanchez Energy Corp., 7.75%, 6/15/21
(144A) 1,251,900
335,000 CCC+/Caa1 Talos Production LLC / Talos Production
Finance, Inc., 9.75%, 2/15/18 (144A) 352,588
CAD 315,000 B/NR Trilogy Energy Corp., 7.25%, 12/13/19
(144A) 303,507
----------------
$ 18,577,215
----------------------------------------------------------------------------------------------------------
Oil & Gas Refining & Marketing -- 0.2%
300,000 B+/B2 Calumet Specialty Products Partners LP /
Calumet Finance Corp., 6.5%, 4/15/21
(144A) $ 299,250
----------------------------------------------------------------------------------------------------------
Oil & Gas Storage & Transportation -- 0.2%
450,000(a) BB/Ba1 Energy Transfer Partners LP, 3.243%,
11/1/66 $ 414,000
----------------
Total Energy $ 26,825,306
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 27
Schedule of Investments | 4/30/14 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 7.7%
Agricultural Products -- 1.2%
900,000 CCC+/Caa1 Pinnacle Operating Corp., 9.0%, 11/15/20
(144A) $ 967,500
520,000 B/B2 Southern States Cooperative, Inc., 10.0%,
8/15/21 (144A) 522,600
500,000 B/NR Tonon Bioenergia SA, 9.25%, 1/24/20
(144A) 452,500
----------------
$ 1,942,600
----------------------------------------------------------------------------------------------------------
Packaged Foods & Meats -- 5.5%
225,000 B/B2 Agrokor DD, 8.875%, 2/1/20 (144A) $ 249,469
EUR 200,000 B/B2 Agrokor DD, 9.875%, 5/1/19 (144A) 314,894
650,000 BB/Ba3 Bertin SA / Bertin Finance, Ltd., 10.25%,
10/5/16 (144A) 732,062
500,000 B+/B2 CFG Investment SAC, 9.75%, 7/30/19
(144A) 489,375
297,000 B/B1 Chiquita Brands International, Inc. /
Chiquita Brands LLC, 7.875%, 2/1/21 331,155
491,000 B+/B2 Corporacion Pesquera Inca SAC, 9.0%,
2/10/17 (144A) 509,413
1,100,000 B/B3 FAGE Dairy Industry SA / FAGE USA Dairy
Industry, Inc., 9.875%, 2/1/20 (144A) 1,188,000
224,421(d)(e) NR/NR Independencia International, Ltd., 12.0%,
12/30/16 (144A) 561
800,000 B/B2 Marfrig Holding Europe BV, 8.375%,
5/9/18 (144A) 804,000
700,000 B/B2 Marfrig Holding Europe BV, 11.25%,
9/20/21 (144A) 756,000
475,000 B/B2 Marfrig Overseas, Ltd., 9.5%, 5/4/20
(144A) 483,313
700,000 CCC/NR MHP SA, 8.25%, 4/2/20 (144A) 574,000
1,600,000 BB-/B1 Minerva Luxembourg SA, 7.75%, 1/31/23
(144A) 1,646,000
200,000 BB-/B1 Minerva Luxembourg SA, 12.25%, 2/10/22
(144A) 227,000
600,000 B+/B2 Pesquera Exalmar SAA, 7.375%, 1/31/20
(144A) 552,750
300,000 BB/B3 Pilgrim's Pride Corp., 7.875%, 12/15/18 321,375
----------------
$ 9,179,367
----------------------------------------------------------------------------------------------------------
Tobacco -- 1.0%
1,645,000 B-/Caa1 Alliance One International, Inc., 9.875%,
7/15/21 $ 1,661,450
----------------
Total Food, Beverage & Tobacco $ 12,783,417
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
28 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 2.4%
Health Care Equipment & Services -- 0.6%
831,000 B+/B2 Physio-Control International, Inc., 9.875%,
1/15/19 (144A) $ 924,488
----------------------------------------------------------------------------------------------------------
Health Care Facilities -- 0.8%
500,000 B-/B3 Kindred Healthcare, Inc., 6.375%, 4/15/22
(144A) $ 506,250
600,000 B-/B3 Kindred Healthcare, Inc., 8.25%, 6/1/19 642,000
200,000 CCC+/Caa1 United Surgical Partners International,
9.0%, 4/1/20 223,250
----------------
$ 1,371,500
----------------------------------------------------------------------------------------------------------
Health Care Services -- 0.5%
425,000 CCC+/Caa2 BioScrip, Inc., 8.875%, 2/15/21 (144A) $ 442,000
426,000 CCC+/Caa2 Gentiva Health Services, Inc., 11.5%,
9/1/18 445,170
----------------
$ 887,170
----------------------------------------------------------------------------------------------------------
Health Care Supplies -- 0.3%
500,000 B-/Caa2 Immucor, Inc., 11.125%, 8/15/19 $ 565,000
----------------------------------------------------------------------------------------------------------
Health Care Technology -- 0.2%
275,000 CCC+/Caa1 Emdeon, Inc., 11.0%, 12/31/19 $ 317,625
----------------
Total Health Care Equipment & Services $ 4,065,783
----------------------------------------------------------------------------------------------------------
HOUSEHOLD & PERSONAL PRODUCTS -- 0.5%
Household Products -- 0.3%
EUR 350,000(a) (P)B/(P)B2 Hydra Dutch Holdings 2BV, 5.82%,
4/15/19 (144A) $ 480,679
----------------------------------------------------------------------------------------------------------
Personal Products -- 0.2%
345,000 CCC+/Caa1 Monitronics International, Inc., 9.125%,
4/1/20 $ 366,994
----------------
Total Household & Personal Products $ 847,673
----------------------------------------------------------------------------------------------------------
INDUSTRIALS -- 0.2%
Industrial Machinery -- 0.2%
250,000 B-/Caa1 BC Mountain LLC / BC Mountain Finance,
Inc., 7.0%, 2/1/21 (144A) $ 243,125
----------------
Total Industrials $ 243,125
----------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 0.3%
Internet Software & Services -- 0.3%
440,130(g) NR/NR First Data Holdings, Inc., 14.5%
(14.5% PIK, 0.0% cash), 9/24/19 (144A) $ 424,175
----------------
Total Information Technology $ 424,175
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 29
Schedule of Investments | 4/30/14 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
INSURANCE -- 28.9%
Insurance Brokers -- 0.5%
GBP 475,000 NR/Caa2 Towergate Finance Plc, 10.5%, 2/15/19
(144A) $ 842,239
----------------------------------------------------------------------------------------------------------
Multi-Line Insurance -- 0.6%
1,000,000(b) BB/Baa3 Liberty Mutual Group, Inc., 7.0%, 3/15/37
(144A) $ 1,065,000
----------------------------------------------------------------------------------------------------------
Property & Casualty Insurance -- 2.2%
6,000,000(c)(d)(h) BBB/NR Fixed Income Trust Series 2013-A, 0.0%,
10/15/97 (144A) $ 3,588,313
80,000(b)(f) BB+/Ba2 White Mountains Insurance Group, Ltd.,
7.506%, 5/29/49 (144A) 84,274
----------------
$ 3,672,587
----------------------------------------------------------------------------------------------------------
Reinsurance -- 25.6%
EUR 750,000(a) BB/NR ATLAS Reinsurance VII, 3.65%, 1/7/16
(144A) $ 1,069,011
1,000,000(a) BB+/NR Bosphorus 1 Re, Ltd., 2.52%, 5/3/16
(144A) 999,500
750,000(a) NR/NR Combine Re, Ltd., 17.77%, 1/7/15 (144A) 798,900
500,000(a) BB-/NR Compass Re, Ltd., 10.27%, 1/8/15 (144A) 510,450
500,000(a) B+/NR Compass Re, Ltd., 11.27%, 1/8/15 (144A) 511,900
1,750,000(a) BB+/NR East Lane Re VI, Ltd., 2.77%, 3/14/18
(144A) 1,761,550
1,000,000(a) BB+/NR Foundation Re III, Ltd., 5.02%, 2/25/15 1,012,900
2,000,000(a) NR/NR Gator Re, Ltd., 6.52%, 1/9/17 (144A) 2,010,800
1,300,000(a) B-/NR Ibis Re II, Ltd., 13.52%, 2/5/15 (144A) 1,340,040
2,004,948(d) NR/NR Kane SAC, Ltd., 0.0%, 7/7/16 1,993,520
2,006,000(d) NR/NR Kane SAC, Ltd., 0.0%, 7/18/16 2,054,946
1,000,000(a) BB-/NR Kilimanjaro Re, Ltd., 4.52%, 4/30/18
(144A) 1,003,000
1,000,000(a) BB-/NR Kilimanjaro Re, Ltd., 4.77%, 4/30/18
(144A) 1,002,700
2,000,000(a) NR/NR Kizuna II Re, Ltd., 2.27%, 4/6/18 (144A) 2,022,600
EUR 1,500,000(a) NR/NR Lion I Re, Ltd., 1.722%, 4/28/17 (144A) 2,077,679
250,000(a) NR/NR Loma Reinsurance, Ltd., 12.02%, 1/8/18
(144A) 257,300
500,000(a) NR/NR Loma Reinsurance, Ltd., 17.02%, 1/8/18
(144A) 509,200
1,000,000(a) NR/NR Merna Reinsurance V, Ltd., 2.02%, 4/7/17
(144A) 1,002,600
1,750,000(a) BB-/NR MetroCat Re, Ltd., 4.52%, 8/5/16 (144A) 1,801,800
975,000(a) B-/NR Mythen Re, Ltd., 11.779%, 11/10/16
(144A) 1,035,158
The accompanying notes are an integral part of these financial statements.
30 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Reinsurance -- (continued)
500,000(a) B+/NR Mythen Re, Ltd. Series 2012-2 Class A,
8.549%, 1/5/17 (144A) $ 530,400
1,250,000(a) NR/NR Pelican Re, Ltd., 6.02%, 5/15/17 (144A) 1,300,000
2,000,000(a) BB-/NR Queen Street IV Capital, Ltd., 7.52%,
4/9/15 (144A) 2,052,200
500,000(a) B/NR Queen Street VII Re, Ltd., 8.62%, 4/8/16
(144A) 530,650
1,250,000(a) B-/NR Residential Reinsurance 2011, Ltd.,
12.02%, 6/6/15 (144A) 1,311,500
250,000(a) NR/NR Residential Reinsurance 2012, Ltd.,
12.77%, 12/6/16 (144A) 272,650
1,250,000(a) NR/NR Residential Reinsurance 2012, Ltd.,
19.02%, 12/6/16 (144A) 1,384,875
1,000,000(a) NR/NR Residential Reinsurance 2012, Ltd.,
22.02%, 6/6/16 (144A) 1,188,300
500,000(a) NR/NR Residential Reinsurance 2013, Ltd.,
20.02%, 12/6/17 (144A) 502,700
1,500,000(d)(i) NR/NR Sector Re V, Ltd., 0.0%, 3/30/19 (144A) 1,500,000
1,005,999(d)(i) NR/NR Sector Re V, Ltd., 0.0%, 12/1/17 (144A) 1,026,800
1,630(d)(i) NR/NR Sector Re V, Ltd., 0.0%, 3/1/18 (144A) 414,700
1,000,000(d)(i) NR/NR Silverton RE, Ltd., 0.0%, 9/16/16 (144A) 1,056,600
500,000(a) NR/B2 Successor X, Ltd., 11.02%, 1/27/15
(144A) 510,750
1,500,000(a) B-/NR Successor X, Ltd., 11.27%, 11/10/15
(144A) 1,594,500
500,000(a) NR/NR Successor X, Ltd., 16.27%, 11/10/15
(144A) 513,250
1,000,000(a) NR/NR Successor X, Ltd., 16.52%, 1/27/15
(144A) 1,043,700
1,000,000(a) B+/NR Tar Heel Re, Ltd., 8.52%, 5/9/16 (144A) 1,068,100
----------------
$ 42,577,229
----------------
Total Insurance $ 48,157,055
----------------------------------------------------------------------------------------------------------
MATERIALS -- 11.1%
Commodity Chemicals -- 0.5%
300,000 BBB/WR Basell Finance Co. BV, 8.1%, 3/15/27
(144A) $ 397,667
EUR 250,000 CCC+/B3 KP Germany Erste GmbH, 11.625%,
7/15/17 (144A) 395,352
----------------
$ 793,019
----------------------------------------------------------------------------------------------------------
Construction Materials -- 0.4%
389,000 B+/NR Cemex Espana Luxembourg, 9.875%,
4/30/19 (144A) $ 445,016
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 31
Schedule of Investments | 4/30/14 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Construction Materials -- (continued)
300,000(f) BB/NR Magnesita Finance, Ltd., 8.625%, 4/29/49
(144A) $ 289,125
----------------
$ 734,141
----------------------------------------------------------------------------------------------------------
Diversified Metals & Mining -- 1.7%
590,000 CCC+/Caa2 Boart Longyear Management Pty, Ltd.,
7.0%, 4/1/21 (144A) $ 448,400
330,000 B/B2 Boart Longyear Management Pty, Ltd.,
10.0%, 10/1/18 (144A) 344,850
300,000(e) D/WR Midwest Vanadium Pty, Ltd., 11.5%,
2/15/18 (144A) 159,000
150,000(d)(g)(h) NR/NR Mirabela Nickel, Ltd., 3.5% (0.0% PIK,
3.5% cash), 6/30/14 (144A) 146,250
650,000(d)(e) NR/WR Mirabela Nickel, Ltd., 8.75%, 4/15/18
(144A) 156,000
550,000 CCC+/B3 Molycorp, Inc., 10.0%, 6/1/20 540,375
180,000 B/Caa1 Prince Mineral Holding Corp., 11.5%,
12/15/19 (144A) 202,050
750,000 BB/Ba3 Vedanta Resources Plc, 9.5%, 7/18/18
(144A) 842,850
----------------
$ 2,839,775
----------------------------------------------------------------------------------------------------------
Metal & Glass Containers -- 0.7%
625,015(g) CCC+/Caa2 Ardagh Finance SA, 11.125% (11.125% PIK,
0.0% cash), 6/1/18 (144A) $ 687,516
EUR 250,000 CCC+/Caa1 Ardagh Glass Finance Plc, 8.75%, 2/1/20
(144A) 371,943
175,000 CCC+/Caa1 BWAY Holdings Co., 10.0%, 6/15/18 184,625
----------------
$ 1,244,084
----------------------------------------------------------------------------------------------------------
Paper Packaging -- 1.7%
606,510(c) NR/NR Bio Pappel SAB de CV, 10.0%, 8/27/16 $ 617,882
580,000 B-/NR Exopack Holding Corp., 10.0%, 6/1/18
(144A) 623,500
500,000 B-/Caa1 Pretium Packaging LLC / Pretium Finance,
Inc., 11.5%, 4/1/16 534,375
500,000 CCC+/Caa2 Reynolds Group Issuer, Inc., 9.0%, 4/15/19 533,750
475,000 CCC+/Caa2 Reynolds Group Issuer, Inc., 9.875%,
8/15/19 527,250
----------------
$ 2,836,757
----------------------------------------------------------------------------------------------------------
Paper Products -- 1.8%
675,000 CCC+/B2 Appvion, Inc., 9.0%, 6/1/20 (144A) $ 685,125
186,000 B+/B1 Grupo Papelero Scribe SA de CV, 8.875%,
4/7/20 (144A) 181,350
The accompanying notes are an integral part of these financial statements.
32 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Paper Products -- (continued)
344,000 B/B3 Mercer International, Inc., 9.5%, 12/1/17 $ 371,520
840,000 BB-/Ba3 Resolute Forest Products, Inc., 5.875%,
5/15/23 (144A) 816,900
545,000 BB/Ba2 Sappi Papier Holding GmbH, 8.375%,
6/15/19 (144A) 603,588
255,000 B-/Caa1 Unifrax I LLC / Unifrax Holding Co., 7.5%,
2/15/19 (144A) 269,025
----------------
$ 2,927,508
----------------------------------------------------------------------------------------------------------
Precious Metals & Minerals -- 0.3%
500,000 BB-/Ba3 ALROSA Finance SA, 8.875%, 11/17/14
(144A) $ 511,250
----------------------------------------------------------------------------------------------------------
Steel -- 4.0%
750,000 B-/Caa1 AM Castle & Co., 12.75%, 12/15/16 $ 838,125
250,000 B+/B3 APERAM, 7.375%, 4/1/16 (144A) 257,500
450,000 B/B3 Essar Steel Algoma, Inc., 9.375%, 3/15/15
(144A) 447,750
950,000 CCC/Caa2 Essar Steel Algoma, Inc., 9.875%, 6/15/15
(144A) 546,250
250,000 B+/B1 Evraz Group SA, 9.5%, 4/24/18 (144A) 243,750
900,000 CCC+/Caa2 Ferrexpo Finance Plc, 7.875%, 4/7/16
(144A) 805,500
900,000 NR/Caa2 Metinvest BV, 8.75%, 2/14/18 (144A) 776,403
600,000 NR/Caa2 Metinvest BV, 10.25%, 5/20/15 (144A) 567,120
585,000 B/B2 Optima Specialty Steel, Inc., 12.5%,
12/15/16 (144A) 631,800
677,000 B-/B3 Permian Holdings, Inc., 10.5%, 1/15/18
(144A) 683,770
750,000 CCC+/NR Ryerson, Inc., 9.0%, 10/15/17 805,313
----------------
$ 6,603,281
----------------
Total Materials $ 18,489,815
----------------------------------------------------------------------------------------------------------
MEDIA -- 5.2%
Broadcasting -- 2.3%
400,000 B-/Caa2 Intelsat Luxembourg SA, 7.75%, 6/1/21 $ 417,000
EUR 150,000 B+/B1 Nara Cable Funding II, Ltd., 8.5%, 3/1/20
(144A) 248,656
200,000 B+/B1 Nara Cable Funding, Ltd., 8.875%,
12/1/18 (144A) 216,000
1,655,000 B/B3 Townsquare Radio LLC / Townsquare
Radio, Inc., 9.0%, 4/1/19 (144A) 1,824,637
990,000 CCC+/Caa2 Truven Health Analytics, Inc., 10.625%,
6/1/20 1,113,750
----------------
$ 3,820,043
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 33
Schedule of Investments | 4/30/14 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Cable -- 0.2%
EUR 200,000 B+/B1 Nara Cable Funding, Ltd., 8.875%,
12/1/18 (144A) $ 299,691
----------------------------------------------------------------------------------------------------------
Movies & Entertainment -- 2.0%
1,710,000 B-/B3 AMC Entertainment, Inc., 9.75%, 12/1/20 $ 1,966,500
600,000 B-/B2 Gibson Brands, Inc., 8.875%, 8/1/18
(144A) 636,750
200,000 CCC+/Caa1 Production Resource Group, Inc., 8.875%,
5/1/19 159,500
625,000 B/Caa1 WMG Acquisition Corp., 6.75%, 4/15/22
(144A) 629,687
----------------
$ 3,392,437
----------------------------------------------------------------------------------------------------------
Publishing -- 0.7%
855,000 BB/Ba1 Gannett Co., Inc., 6.375%, 10/15/23
(144A) $ 906,300
245,000 B-/B3 Interactive Data Corp., 10.25%, 8/1/18 262,763
----------------
$ 1,169,063
----------------
Total Media $ 8,681,234
----------------------------------------------------------------------------------------------------------
PHARMACEUTICALS, BIOTECHNOLOGY &
LIFE SCIENCES -- 0.8%
Biotechnology -- 0.8%
300,000 B/B3 ConvaTec Healthcare E SA, 10.5%,
12/15/18 (144A) $ 330,000
1,043,000 B-/Caa2 Lantheus Medical Imaging, Inc., 9.75%,
5/15/17 1,037,785
----------------
Total Pharmaceuticals, Biotechnology &
Life Sciences $ 1,367,785
----------------------------------------------------------------------------------------------------------
REAL ESTATE -- 0.4%
Diversified REIT's -- 0.1%
200,000 B/Ba3 CNL Lifestyle Properties, Inc., 7.25%,
4/15/19 $ 210,000
----------------------------------------------------------------------------------------------------------
Real Estate Operating Companies -- 0.3%
410,000 CCC+/NR IRSA Inversiones y Representaciones SA,
8.5%, 2/2/17 (144A) $ 407,950
----------------
Total Real Estate $ 617,950
----------------------------------------------------------------------------------------------------------
RETAILING -- 0.6%
Department Stores -- 0.6%
625,000 B/NR Grupo Famsa SAB de CV, 7.25%, 6/1/20
(144A) $ 634,375
350,000 CCC+/Caa2 Neiman Marcus Group, Inc., 8.0%,
10/15/21 (144A) 383,250
----------------
Total Retailing $ 1,017,625
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
34 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 0.4%
Semiconductors -- 0.4%
210,000 B/B2 Advanced Micro Devices, Inc., 6.75%,
3/1/19 (144A) $ 217,875
500,000 B/B2 Advanced Micro Devices, Inc., 7.5%,
8/15/22 520,000
----------------
Total Semiconductors & Semiconductor
Equipment $ 737,875
----------------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 1.4%
Application Software -- 0.3%
415,000 B-/B3 Interface Security Systems Holdings, Inc. /
Interface Security Systems LLC, 9.25%,
1/15/18 (144A) $ 423,300
----------------------------------------------------------------------------------------------------------
Data Processing & Outsourced
Services -- 0.5%
404,000 B-/Caa1 First Data Corp., 8.25%, 1/15/21 (144A) $ 435,310
250,000 B-/Caa1 First Data Corp., 10.625%, 6/15/21 283,437
225,000 BB-/Ba3 NeuStar, Inc., 4.5%, 1/15/23 195,750
----------------
$ 914,497
----------------------------------------------------------------------------------------------------------
Systems Software -- 0.6%
1,064,473(d) NR/NR Pegasus Solutions, Inc., 13.0%, 4/15/14
(144A) $ 936,295
----------------
Total Software & Services $ 2,274,092
----------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 2.3%
Integrated Telecommunication Services -- 0.7%
388,000 CCC+/Caa1 Cincinnati Bell, Inc., 8.75%, 3/15/18 $ 407,400
300,000 BB-/Ba2 Frontier Communications Corp., 8.75%,
4/15/22 342,000
350,000 NR/WR PAETEC Holding Corp., 9.875%, 12/1/18 381,500
----------------
$ 1,130,900
----------------------------------------------------------------------------------------------------------
Wireless Telecommunication Services -- 1.6%
250,000 B-/B3 Altice Finco SA, 8.125%, 1/15/24 (144A) $ 270,000
300,000 (P)B/(P)B3 Altice SA, 7.75%, 5/15/22 (144A) 312,750
750,000 CC/Caa2 NII Capital Corp., 10.0%, 8/15/16 281,250
250,000 NR/NR Unison Ground Lease Funding LLC, 5.78%,
3/15/20 (144A) 240,392
1,115,000 BB/Ba3 Vimpel Communications Via VIP Finance
Ireland, Ltd. OJSC, 9.125%, 4/30/18
(144A) 1,194,444
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 35
Schedule of Investments | 4/30/14 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Wireless Telecommunication
Services -- (continued)
RUB 14,400,000 BB/Ba3 VimpelCom Holdings BV, 9.0%, 2/13/18
(144A) $ 378,118
----------------
$ 2,676,954
----------------
Total Telecommunication Services $ 3,807,854
----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 3.1%
Airlines -- 0.9%
1,000,000 B-/NR Gol Finance, 9.25%, 7/20/20 (144A) $ 995,000
500,000 BB-/NR TAM Capital 3, Inc., 8.375%, 6/3/21
(144A) 538,125
----------------
$ 1,533,125
----------------------------------------------------------------------------------------------------------
Airport Services -- 0.4%
577,680 CCC+/Caa1 Aeropuertos Argentina 2000 SA, 10.75%,
12/1/20 (144A) $ 578,402
----------------------------------------------------------------------------------------------------------
Highways & Railtracks -- 0.2%
MXN 4,500,000 BBB/NR Red de Carreteras de Occidente SAPIB de CV,
9.0%, 6/10/28 (144A) $ 317,722
----------------------------------------------------------------------------------------------------------
Marine -- 0.4%
500,000 B+/NR Far East Capital, Ltd. SA, 8.0%, 5/2/18
(144A) $ 352,500
375,000 B+/(P)B2 Navios South American Logistics, Inc. /
Navios Logistics Finance US, Inc., 7.25%,
5/1/22 (144A) 375,937
----------------
$ 728,437
----------------------------------------------------------------------------------------------------------
Railroads -- 0.3%
485,000 B/B3 Florida East Coast Holdings Corp., 6.75%,
5/1/19 (144A) $ 498,338
----------------------------------------------------------------------------------------------------------
Trucking -- 0.9%
1,000,000 B-/B2 Jack Cooper Holdings Corp., 9.25%, 6/1/20
(144A) $ 1,105,000
425,000 B+/B1 Swift Services Holdings, Inc., 10.0%,
11/15/18 463,781
----------------
$ 1,568,781
----------------
Total Transportation $ 5,224,805
----------------------------------------------------------------------------------------------------------
UTILITIES -- 2.1%
Electric Utilities -- 1.4%
750,000 CCC/NR Cia de Energia Electrica en Alta Tension
Transener SA, 9.75%, 8/15/21 (144A) $ 508,125
625,000 NR/Caa2 DTEK Finance Plc, 7.875%, 4/4/18 (144A) 508,419
419,000 NR/Caa3 Empresa Distrbuidora Y Comercializadora
Norte, 9.75%, 10/25/22 (144A) 314,250
The accompanying notes are an integral part of these financial statements.
36 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
Electric Utilities -- (continued)
460,000(b) BB+/Ba1 Enel SpA, 8.75%, 9/24/73 (144A) $ 530,150
225,000 BBB-/Baa3 PNM Resources, Inc., 9.25%, 5/15/15 244,127
240,000 D/Caa3 Texas Competitive Electric Holdings Co.,
LLC / TCEH Finance, Inc., 11.5%, 10/1/20
(144A) 192,000
----------------
$ 2,297,071
----------------------------------------------------------------------------------------------------------
Gas Utilities -- 0.7%
1,156,600 CCC+/Caa1 Transportadora de Gas del Sur SA, 9.625%,
5/14/20 (144A) $ 1,163,829
----------------
Total Utilities $ 3,460,900
----------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS & NOTES
(Cost $164,352,061) $ 168,313,938
----------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS & NOTES --
2.5% of Net Assets
DIVERSIFIED FINANCIALS -- 0.1%
Asset Management & Custody Banks -- 0.1%
120,000 BBB/NR Apollo Investment Corp., 5.75%, 1/15/16 $ 126,975
----------------
Total Diversified Financials $ 126,975
----------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 0.7%
Health Care Equipment & Services -- 0.7%
1,040,000(c) B+/NR Hologic, Inc., 2.0%, 12/15/37 $ 1,170,650
----------------------------------------------------------------------------------------------------------
Health Care Services -- 0.0%+
15,000 B+/B2 Omnicare, Inc., 3.25%, 12/15/35 $ 15,750
----------------
Total Health Care Equipment & Services $ 1,186,400
----------------------------------------------------------------------------------------------------------
MATERIALS -- 1.1%
Diversified Chemicals -- 1.0%
1,900,000(j) B+/NR Hercules, Inc., 6.5%, 6/30/29 $ 1,630,437
----------------------------------------------------------------------------------------------------------
Diversified Metals & Mining -- 0.1%
100,000 BB/NR Vedanta Resources Jersey, Ltd., 5.5%,
7/13/16 $ 100,900
----------------
Total Materials $ 1,731,337
----------------------------------------------------------------------------------------------------------
MEDIA -- 0.4%
Movies & Entertainment -- 0.4%
659,000 B/NR Live Nation Entertainment, Inc., 2.875%,
7/15/27 $ 667,238
----------------
Total Media $ 667,238
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 37
Schedule of Investments | 4/30/14 (continued)
----------------------------------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
----------------------------------------------------------------------------------------------------------
PHARMACEUTICALS, BIOTECHNOLOGY
& LIFE SCIENCES -- 0.1%
Biotechnology -- 0.1%
250,000 NR/NR Corsicanto, Ltd., 3.5%, 1/15/32 $ 180,312
----------------
Total Pharmaceuticals, Biotechnology
& Life Sciences $ 180,312
----------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 0.1%
Semiconductors -- 0.1%
250,000 NR/NR ReneSola, Ltd., 4.125%, 3/15/18 (144A) $ 197,344
----------------
Total Semiconductors & Semiconductor
Equipment $ 197,344
----------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS & NOTES
(Cost $3,316,864) $ 4,089,606
----------------------------------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS --
1.8% of Net Assets
Argentina -- 0.2%
376,480 CCC+/NR Province of Salta Argentina, 9.5%, 3/16/22
(144A) $ 374,221
----------------------------------------------------------------------------------------------------------
Brazil -- 0.2%
BRL 750,000 BBB-/Baa2 Brazilian Government International Bond,
10.25%, 1/10/28 $ 357,999
----------------------------------------------------------------------------------------------------------
Ghana -- 0.5%
GHS 600,000 NR/NR Ghana Government Bond, 19.24%, 5/30/16 $ 193,529
GHS 300,000 NR/NR Ghana Government Bond, 21.0%, 10/26/15 100,966
GHS 150,000 NR/NR Ghana Government Bond, 26.0%, 6/5/17 54,040
500,000 B/B1 Republic of Ghana, 7.875%, 8/7/23
(144A) 462,500
----------------
$ 811,035
----------------------------------------------------------------------------------------------------------
Mexico -- 0.5%
MXN 500,000 A/A3 Mexican Bonos, 7.5%, 6/3/27 $ 41,476
MXN 8,870,000 A/A3 Mexican Bonos, 7.75%, 11/13/42 714,085
MXN 308,964 A/A3 Mexican Udibonos, 3.5%, 12/14/17 25,403
----------------
$ 780,964
----------------------------------------------------------------------------------------------------------
Nigeria -- 0.3%
NGN 79,000,000 NR/NR Nigeria Government Bond, 16.0%, 6/29/19 $ 544,616
----------------------------------------------------------------------------------------------------------
Ukraine -- 0.1%
100,000 CCC/Caa3 Ukraine Government International Bond,
6.75%, 11/14/17 (144A) $ 84,250
----------------------------------------------------------------------------------------------------------
TOTAL SOVEREIGN DEBT OBLIGATIONS
(Cost $3,276,543) $ 2,953,085
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
38 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
----------------------------------------------------------------------------------------------------------
Shares Value
----------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 0.8% of Net Assets
DIVERSIFIED FINANCIALS -- 0.0%+
Other Diversified Financial Services -- 0.0%+
731(k) BTA Bank JSC (G.D.R.) (144A) $ 402
----------------
Total Diversified Financials $ 402
----------------------------------------------------------------------------------------------------------
ENERGY -- 0.0%+
Oil & Gas Exploration & Production -- 0.0%+
808(k) Halcon Resources Corp. $ 4,460
----------------
Total Energy $ 4,460
----------------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 0.0%+
Systems Software -- 0.0%+
2,114(d)(k) Perseus Holding Corp. (144A) $ 3,171
----------------
Total Software & Services $ 3,171
----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 0.8%
Air Freight & Logistics -- 0.7%
943(k) CEVA Holdings LLC $ 1,193,287
----------------------------------------------------------------------------------------------------------
Marine -- 0.1%
247,509(d)(k) Horizon Lines, Inc., Class A $ 172,031
----------------
Total Transportation $ 1,365,318
----------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $1,558,707) $ 1,373,351
----------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS --
0.4% of Net Assets
DIVERSIFIED FINANCIALS -- 0.3%
Other Diversified Financial Services -- 0.3%
470(f) Bank of America Corp., 7.25% $ 534,977
----------------
Total Diversified Financials $ 534,977
----------------------------------------------------------------------------------------------------------
ENERGY -- 0.1%
Oil & Gas Exploration & Production -- 0.1%
200(f)(k) Halcon Resources Corp., 5.75% $ 191,425
----------------
Total Energy $ 191,425
----------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $524,900) $ 726,402
----------------------------------------------------------------------------------------------------------
PREFERRED STOCKS -- 5.2% of
Net Assets
BANKS -- 0.3%
Diversified Banks -- 0.3%
500(b)(f) AgStar Financial Services ACA, 6.75% (144A) $ 506,219
----------------
Total Banks $ 506,219
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 39
Schedule of Investments | 4/30/14 (continued)
-----------------------------------------------------------------------------------------------------------
Shares Value
-----------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 0.7%
Other Diversified Financial Services -- 0.7%
40,675(b) GMAC Capital Trust I, 8.125% $ 1,118,156
-----------------
Total Diversified Financials $ 1,118,156
-----------------------------------------------------------------------------------------------------------
INSURANCE -- 4.1%
Reinsurance -- 4.1%
673,438(d)(k) Altair Re $ 812,166
2,500,000(d)(k) Altair Re II, Ltd. 2,558,250
15,000(d)(k) Lorenz Re, Ltd. 1,813,200
1,500,000(d)(k) Pangaea Re 1,668,615
-----------------
$ 6,852,231
-----------------
Total Insurance $ 6,852,231
-----------------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 0.1%
Data Processing & Outsourced Services -- 0.1%
1,110(d)(k) Perseus Holding Corp., 14.0% (144A) $ 91,020
-----------------
Total Software & Services $ 91,020
-----------------------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $7,598,684) $ 8,567,626
-----------------------------------------------------------------------------------------------------------
RIGHT/WARRANT -- 0.0%+ of Net Assets
AUTOMOBILES & COMPONENTS -- 0.0%+
Auto Parts & Equipment -- 0.0%+
86(k) Lear Corp., Expires 11/9/14 $ 14,193
-----------------
Total Automobiles & Components $ 14,193
-----------------------------------------------------------------------------------------------------------
TOTAL RIGHT/WARRANT
(Cost $4,645) $ 14,193
-----------------------------------------------------------------------------------------------------------
PURCHASED PUT OPTION -- 0.0%+
672,138 U.S. Dollar versus Turkish Lira $ 11,837
-----------------------------------------------------------------------------------------------------------
TOTAL PURCHASED PUT OPTION
(Cost $11,073) $ 11,837
-----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES -- 138.6%
(Cost -- $225,564,480) (l) (m) $ 230,881,166
-----------------------------------------------------------------------------------------------------------
WRITTEN CALL OPTION -- (0.0)%+
(672,138) U.S. Dollar versus Turkish Lira $ (4,052)
-----------------------------------------------------------------------------------------------------------
TOTAL WRITTEN CALL OPTION
(Premiums Received $(11,073)) $ (4,052)
-----------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (38.6)% $ (64,265,765)
-----------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
COMMON SHAREOWNERS -- 100.0% $ 166,611,349
===========================================================================================================
The accompanying notes are an integral part of these financial statements.
40 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
+ Amount rounds less than 0.1%.
NR Security not rated by S&P or Moody's.
WR Rating withdrawn by either 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, 2014, the value of these securities amounted to $126,123,428, or
75.7% of total net assets applicable to common shareowners.
* Senior secured floating rate loan interests in which the Trust invests
generally pay interest at rates that are periodically redetermined by
reference to a base lending plus a premium. These base lending rates are
generally (i) the lending rate offered by one or more major European
banks, such as LIBOR (London InterBank Offered Rate), (ii) the prime
rate offered by one or more major United States banks, (iii) the rate of
a certificate of deposit or (iv) other base lending rates used by
commercial lenders. The interest rate shown is the rate accruing at
April 30, 2014.
(a) Floating rate note. The interest rate shown is the coupon rate at April
30, 2014.
(b) The interest rate is subject to change periodically. The interest shown
is the rate at April 30, 2014.
(c) Debt obligation initially issued at one coupon rate which converts to a
higher coupon rate at a specific date. The rate interest shown is the
rate at April 30, 2014.
(d) Indicates a security that has been deemed illiquid. As of April 30, 2014
the aggregate cost of illiquid securities in the Trust's portfolio was
$20,499,662. As of that date, the aggregate value of illiquid securities
in the Trust's portfolio of $20,411,858 represented 12.3% of total net
assets applicable to common shareowners.
(e) Security is in default and is non-income producing.
(f) Security is perpetual in nature and has no stated maturity date.
(g) Payment in Kind (PIK) security which may pay interest in the form of
additional principal amount.
(h) Security is valued using fair value methods (other than prices supplied
by independent pricing services). See Notes to Financial Statements --
Note 1A.
(i) Security issued with a zero coupon. Income is recognized through
accretion of discount.
(j) Security is priced as a unit.
(k) Non-income producing.
(l) At April 30, 2014, the net unrealized appreciation on investments based
on cost for federal tax purposes of $227,905,114 was as follows:
Aggregate gross unrealized appreciation for all investments in which
there is an excess of value over tax cost $13,387,706
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value (10,411,654)
-----------
Net unrealized appreciation $ 2,976,052
===========
For financial reporting purposes net unrealized appreciation on investments was
$5,316,686 and cost of investments aggregated $225,564,480.
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 41
Schedule of Investments | 4/30/14 (continued)
(m) Distributions of Investments by country of issue, as a percentage of
total investments in securities, is as follows:
United States 60.8%
Cayman Islands 7.6
Bermuda 7.5
Luxembourg 3.5
Ireland 3.3
Argentina 2.2
Netherlands 2.0
United Kingdom 1.6
Canada 1.6
Mexico 1.5
Brazil 1.2
Austria 1.1
Other (individually less than 1%) 6.1
-----
100.0%
=====
Purchases and sales of securities (excluding temporary cash investments) for the
year ended April 30, 2014 aggregated $88,337,086 and $91,177,671, respectively.
Glossary of Terms:
(G.D.R.) Global Depositary Receipt
Principal amounts are denominated in U.S. dollars unless otherwise noted.
BRL -- Brazilian Real
CAD -- Canadian Dollar
EUR -- Euro
GBP -- Great British Pound
GHS -- Ghanaian Cedis
MXN -- Mexican Peso
NGN -- Nigeria Naira
RUB -- Russian Ruble
Various inputs are used in determining the value of the Trust's investments.
These inputs are summarized in the three broad levels below.
Level 1 -- quoted prices in active markets for identical securities.
Level 2 -- other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds credit
risks, etc.). See Notes to Financial Statements -- Note 1A.
Level 3 -- significant unobservable inputs (including the Trust's own
assumptions in determining fair value of investments). See Notes
to Financial Statements -- Note 1A.
Generally, equity securities are categorized as Level 1, fixed income securities
and senior loans are categorized as Level 2, and securities valued using fair
value methods (other than prices supplied by independent pricing services or
broker-dealers) as Level 3. See Notes to Financial Statements -- Note 1A.
The accompanying notes are an integral part of these financial statements.
42 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
The following is a summary of the inputs used as of April 30, 2014, in valuing
the Trust's investments.
-------------------------------------------------------------------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------------------------------------------------------------
Asset Backed Securities $ -- $ 3,421,120 $ -- $ 3,421,120
Collateralized Mortgage Obligations -- 4,278,265 -- 4,278,265
Commercial Mortgage-Backed
Securities -- 742,794 -- 742,794
Senior Secured Floating Rate
Loan Interests -- 36,388,949 -- 36,388,949
Corporate Bonds & Notes
Materials
Diversified Metals & Mining -- 2,693,525 146,250 2,839,775
Insurance
Reinsurance -- 34,530,663 8,046,566 42,577,229
Property & Casualty Insurance -- 84,274 3,588,313 3,672,587
All Other Corporate Bonds
& Notes -- 119,224,347 -- 119,224,347
Convertible Bonds & Notes -- 4,089,606 -- 4,089,606
Sovereign Debt Obligations -- 2,953,085 -- 2,953,085
Common Stocks
Transportation
Air Freight & Logistics -- 1,193,287 -- 1,193,287
Software & Services
Systems Software -- 3,171 -- 3,171
All Other Common Stocks 176,893 -- -- 176,893
Convertible Preferred Stocks
Energy
Oil & Gas Exploration
& Production -- 191,425 -- 191,425
All Other Convertible
Preferred Stocks 534,977 -- -- 534,977
Preferred Stocks
Insurance
Reinsurance -- -- 6,852,231 6,852,231
Banks
Diversified Banks -- 506,219 -- 506,219
Software & Services
Data Processing & Outsourced
Services -- 91,020 -- 91,020
All Other Preferred Stocks 1,118,156 -- -- 1,118,156
Right/Warrant 14,193 -- -- 14,193
Purchased Options -- 11,837 -- 11,837
-------------------------------------------------------------------------------------------
Total Investments in Securities $2,350,438 $209,897,368 $18,633,360 $230,881,166
===========================================================================================
Other Financial Instruments
Net depreciation on Forward
Foreign Currency
Contracts $ -- $ (38,577) $ -- $ (38,577)
Written Options -- (4,052) -- (4,052)
-------------------------------------------------------------------------------------------
Total Other Financial Instruments $ -- $ (42,629) $ -- $ (42,629)
===========================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 43
Schedule of Investments | 4/30/14 (continued)
The following is a reconciliation of assets valued using significant
unobservable inputs (Level 3):
------------------------------------------------------------------------------------------------------------------------------------
Change in
Balance Realized Unrealized Accrued Transfers Transfers Balance
as of gain appreciation discounts/ in to out of as of
4/30/13 (loss)(1) (depreciation)(2) Purchases Sales premiums Level 3* Level 3* 4/30/14
------------------------------------------------------------------------------------------------------------------------------------
Corporate Bonds
& Notes
Materials
Diversified
Metals &
Mining $ -- $ -- $ (3,750) $ 150,000 $ -- $ -- $ -- $ -- $ 146,250
Insurance
Reinsurance 2,588,700 7,629 424,085 7,528,448 (2,500,000) (2,295) -- -- 8,046,566
Property &
Casualty
Insurance 3,754,107 -- (165,795) -- -- -- -- -- 3,588,313
Preferred Stocks
Insurance
Reinsurance 3,509,600 -- 677,943 3,991,250 (1,326,562) -- -- -- 6,852,231
------------------------------------------------------------------------------------------------------------------------------------
Total $9,852,407 $7,629 $ 932,483 $11,669,698 $ (3,826,562) $ (2,295) $ -- $ -- $18,633,360
====================================================================================================================================
* Transfers are calculated on the beginning of period value.
(1) Realized gain (loss) on these securities is included in the realized gain
(loss) from investments in the Statement of Operations.
(2) Unrealized appreciation (depreciation) on these securities is included in
the change in unrealized gain (loss) from investments in the Statement of
Operations.
Net change in unrealized appreciation of Level 3 investments still held and
considered Level 3 at 4/30/14: $1,033,528.
The following table presents additional information about valuation techniques
and inputs used for investments that were measured at fair value and categorized
as Level 3 at April 30, 2014:
Fair Value Valuation Unobservable Value/
4/30/14 Technique(s) Input Range
==================================================================================================
Corporate Bonds & Notes $8,192,816 Broker Proprietary $0.9750-254.42
Quote Broker Model per bond
--------------------------------------------------------------------------------------------------
Corporate Bonds & Notes** $3,588,313 Market Yield premium 1.05%
Comparables
--------------------------------------------------------------------------------------------------
Preferred Stocks $6,852,231 Broker Proprietary $1.023-120.88
Quote Broker Model per share
--------------------------------------------------------------------------------------------------
** The significant unobservable input used in the fair value measurement of
corporate bonds and notes is yield premium. Significant increases
(decreases) in this input could result in a significantly higher (lower)
fair value measurement.
The accompanying notes are an integral part of these financial statements.
44 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
Statement of Assets and Liabilities | 4/30/14
ASSETS:
Investments in securities, at value (cost $225,564,480) $230,881,166
Receivables --
Investment securities sold 3,315,725
Interest receivable 3,503,712
Reinvestment of distributions 40,953
Other assets 61,700
----------------------------------------------------------------------------------
Total assets $237,803,256
----------------------------------------------------------------------------------
LIABILITIES:
Payables --
Outstanding borrowing $ 67,000,000
Investment securities purchased 300,843
Written Options (premiums received $11,073) 4,052
Due to affiliates 163,080
Administration fee payable 58,179
Net unrealized depreciation on forward foreign currency contracts 38,577
Interest payable 3,071
Due to custodian (cost $172,131) 3,504,842
Accrued expenses 119,263
----------------------------------------------------------------------------------
Total liabilities $ 71,191,907
----------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Paid-in capital $194,393,456
Distributions in excess of net investment income (1,667,878)
Accumulated net realized loss on investment and foreign
currency transactions (31,390,022)
Net unrealized appreciation on investments 5,316,686
Net unrealized appreciation on written options 7,021
Net unrealized depreciation on forward foreign currency
contracts and other assets and liabilities denominated
in foreign currencies (47,904)
----------------------------------------------------------------------------------
Net assets applicable to common shareowners $166,611,349
----------------------------------------------------------------------------------
NET ASSET VALUE PER COMMON SHARE:
No par value (unlimited number of shares authorized)
Based on $166,611,349 /8,320,167 common shares $ 20.03
==================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 45
Statement of Operations
For the Year Ended 4/30/14
INVESTMENT INCOME:
Interest $ 19,027,498
Dividends 164,062
Facility and other fees 365,916
---------------------------------------------------------------------------------------
Total Investment income $ 19,557,476
---------------------------------------------------------------------------------------
EXPENSES:
Management fees $ 1,998,581
Administrative reimbursements 122,953
Transfer agent fees and expenses 8,784
Shareowner communication expense 12,168
Custodian fees 43,329
Professional fees 65,090
Printing expenses 13,500
Trustees' fees 6,604
Pricing fees 29,090
Miscellaneous 49,693
---------------------------------------------------------------------------------------
Net operating expenses $ 2,349,792
---------------------------------------------------------------------------------------
Interest expense $ 743,785
---------------------------------------------------------------------------------------
Net operating expenses and interest expense $ 3,093,577
---------------------------------------------------------------------------------------
Net investment income $ 16,463,899
---------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
WRITTEN OPTIONS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized loss on:
Investments $ (3,551,259)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (461,161) $ (4,012,420)
---------------------------------------------------------------------------------------
Change in net unrealized appreciation on:
Investments $ 891,313
Written options 7,021
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 59,756 $ 958,090
---------------------------------------------------------------------------------------
Net loss on investments $ (3,054,330)
---------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 13,409,569
=======================================================================================
The accompanying notes are an integral part of these financial statements.
46 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
Statements of Changes in Net Assets
------------------------------------------------------------------------------------------------
Year Ended Year Ended
4/30/14 4/30/13
------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 16,463,899 $ 18,526,936
Net realized gain (loss) on investments and foreign
currency transactions (4,012,420) 334,053
Change in unrealized appreciation (depreciation) on investments,
written options and foreign currency transactions 958,090 7,932,614
------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 13,409,569 $ 26,793,603
------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREOWNERS:
Net investment income ($2.29 and $2.04 per
share, respectively) $ (19,031,655) $ (16,884,599)
------------------------------------------------------------------------------------------------
Total distributions to common shareowners $ (19,031,655) $ (16,884,599)
------------------------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Reinvestment of distributions $ 587,349 $ 591,527
------------------------------------------------------------------------------------------------
Net increase in net assets from Trust
share transactions $ 587,349 $ 591,527
------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ (5,034,737) $ 10,500,531
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Beginning of year 171,646,086 161,145,555
------------------------------------------------------------------------------------------------
End of year $ 166,611,349 $ 171,646,086
------------------------------------------------------------------------------------------------
Undistributed (distributions in excess of) net investment income $ (1,610,823) $ 956,803
================================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 47
Statement of Cash Flows
For the Year Ended April 30, 2014
Cash Flows From Operating Activities
Net increase in net assets resulting from operations $ 13,409,569
----------------------------------------------------------------------------------------------
Adjustments to reconcile Net Increase in net assets resulting from operations
to Net Cash and Foreign Currency provided by Operating Activities
Purchase of investment securities $ (367,939,670)
Proceeds from disposition of investment securities 374,807,526
Net accretion and amortization of discount/premium on corporate
debt obligations and short term investments (869,053)
Premiums received from written options 11,073
Increase in receivable for investments sold (1,705,965)
Decrease in interest receivable 565,196
Decrease in reinvestment of distributions 2,639
Decrease in prepaid expenses 11
Decrease in other assets 7,459
Decrease in interest payable (629)
Decrease in administration fee payable (1,242)
Decrease in payable for investment securities purchased (3,225,173)
Decrease in due to affiliates (21,127)
Decrease in accrued expenses (15,866)
Increase in due to custodian 2,124,579
Change in unrealized appreciation of investments (891,313)
Change in unrealized appreciation of written options (7,021)
Change in unrealized appreciation of forward foreign currency contracts (78,410)
Net realized loss from investments 3,551,259
----------------------------------------------------------------------------------------------
Net cash and foreign currency provided by operating activities $ 19,723,842
----------------------------------------------------------------------------------------------
Cash flows Used Financing Activities:
Reinvestment of distributions $ 587,349
Decrease in notes payable (2,000,000)
Cash dividends paid to common shareholders (19,031,655)
----------------------------------------------------------------------------------------------
Net cash flow used in financing activities $ (20,444,306)
----------------------------------------------------------------------------------------------
Cash and Foreign Currency
Beginning of the year $ 720,464
----------------------------------------------------------------------------------------------
End of year $ --
==============================================================================================
Cash Flow Information
Cash paid for interest $ 744,414
----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
48 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
Financial Highlights
---------------------------------------------------------------------------------------------------------------------------
Year Year
Year Year Ended Ended Year
Ended Ended 4/30/12 4/30/11 Ended
4/30/14 4/30/13 (Consolidated) (Consolidated) 4/30/10
---------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance
Net asset value, beginning of year $ 20.70 $ 19.51 $ 21.01 $ 20.17 $ 13.94
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:(a)
Net investment income $ 1.98 $ 2.24 $ 2.10 $ 2.03 $ 1.76
Net realized and unrealized gain (loss) on investments,
written options and foreign currency transactions (0.36) 0.99 (1.64) 0.73 6.48
---------------------------------------------------------------------------------------------------------------------------
Net increase from investment operations $ 1.62 $ 3.23 $ 0.46 $ 2.76 $ 8.24
---------------------------------------------------------------------------------------------------------------------------
Distributions to common shareowners from:
Net investment income (2.29) (2.04) (1.96) (1.92) (1.69)
Tax return of capital -- -- -- -- (0.32)
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ (0.67) $ 1.19 $ (1.50) $ 0.84 $ 6.23
---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year(b) $ 20.03 $ 20.70 $ 19.51 $ 21.01 $ 20.17
---------------------------------------------------------------------------------------------------------------------------
Market value, end of year(b) $ 20.85 $ 21.82 $ 20.13 $ 21.95 $ 20.46
===========================================================================================================================
Total return at market value(c) 7.12% 19.98% 1.35% 17.95% 73.25%
Ratios to average net assets
Total expenses plus interest expense(d) 1.86% 1.97% 2.04% 2.20% 2.22%
Net investment income 9.88% 11.26% 10.75% 10.02% 9.84%
Portfolio turnover 38% 34% 24% 30% 24%
Net assets, end of year (in thousands) $166,611 $171,646 $161,146 $172,882 $165,281
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 49
Financial Highlights (continued)
---------------------------------------------------------------------------------------------------------------------------
Year Year
Year Year Ended Ended Year
Ended Ended 4/30/12 4/30/11 Ended
4/30/14 4/30/13 (Consolidated) (Consolidated) 4/30/10
---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets before waivers and
reimbursements of expenses
Net operating expenses 1.41% 1.49% 1.48% 1.64% 1.61%
Total operating expenses plus interest expense(d) 1.86% 1.97% 2.04% 2.22% 2.44%
Net investment income 9.88% 11.26% 10.75% 10.00% 9.62%
===========================================================================================================================
(a) The per common share data presented above is based upon the average common
shares outstanding for the periods presented.
(b) 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.
(c) Total investment return is calculated assuming a purchase of common shares
at the current market value on the first day and a sale at the current
market value on the last day of the periods reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions. Past
performance is not a guarantee of future results.
(d) Includes interest expense of 0.45%, 0.48%, 0.56%, 0.58% and 0.83%,
respectively.
The information above represents the audited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for the periods indicated. This
information has been determined based upon financial information provided in the
financial statements and market value data for the Trust's common shares.
The accompanying notes are an integral part of these financial statements.
50 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
Notes to Financial Statements | 4/30/14
1. Organization and Significant Accounting Policies
Pioneer Diversified High Income Trust (the Trust) was organized as a Delaware
statutory trust on January 30, 2007. Prior to commencing operations on May 30,
2007, the Trust had no operations other than matters relating to its
organization and registration as a diversified, closed-end management investment
company under the Investment Company Act of 1940, as amended. The investment
objective of the Trust is to seek a high level of current income and the Trust
may, as a secondary objective, also seek capital appreciation to the extent that
it is consistent with its investment objective.
The Trust's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Trust to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses and gain or loss on investments during the reporting
year. 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. Senior floating rate
loan interests (senior loans) are valued in accordance with guidelines
established by the Board of Trustees at the mean between the last available
bid and asked prices from one or more brokers or dealers as obtained from
Loan Pricing Corporation, an independent pricing service. If price
information is not available from Loan Pricing Corporation or if the price
information is deemed to be unreliable, price information will be obtained
from an alternative loan interest pricing service. If no reliable price
quotes are available from either the primary or alternative pricing service
broker quotes will be solicited. Fixed-income securities with remaining
maturities of more than sixty days are valued at prices supplied by
independent pricing services, which consider such factors as market prices,
market events, quotations from one or more brokers, Treasury spreads,
yields, maturities and ratings. Valuations may be supplemented by dealers
and other sources, as required. Equity securities that have traded on an
exchange are valued at the last sale price on the principal exchange where
they are traded. Equity securities that have not traded on the date of
valuation or securities for which sale prices are not available, generally
are valued using the mean between the last bid and
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 51
asked prices. Short-term fixed income securities with remaining maturities
of sixty days or less generally are valued at amortized cost. Shares of
money market mutual funds are valued at such funds' net asset value.
Trading in foreign securities is substantially completed each day at various
times prior to the close of the New York Stock Exchange (NYSE). The values
of such securities used in computing the net asset value of the Trust's
shares are determined as of such times.
Securities and loan interests for which independent pricing services are
unable to supply prices or for which market prices and/or quotations are not
readily available or are considered to be unreliable are valued by a fair
valuation team comprised of certain personnel of Pioneer Investment
Management, Inc. (PIM), the Trust's investment adviser, pursuant to
procedures adopted by the Trust's Board of Trustees. PIM's fair valuation
team uses fair value methods approved by the Valuation Committee of the
Board of Trustees. PIM's valuation team is responsible for monitoring
developments that may impact fair valued securities and for discussing and
assessing fair value on an ongoing basis, and at least quarterly, with the
Valuation Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may include
credit ratings, the financial condition of the company, current market
conditions and comparable securities. The Trust may use fair value methods
if it is determined that a significant event has occurred after the close of
the exchange or market on which the security trades and prior to the
determination of the Trust's net asset value. Examples of a significant
event might include political or economic news, corporate restructurings,
natural disasters, terrorist activity or trading halts. Thus, the valuation
of the Trust's securities may differ significantly from exchange prices and
such differences could be material.
At April 30, 2014, two securities were valued using fair value methods (in
addition to securities valued using prices supplied by independent pricing
services or broker-dealers) representing 2.2% of net assets applicable to
common shareowners. The value of these fair valued securities are
$3,734,563.
Discounts and premiums on debt securities are accreted or amortized,
respectively, daily, into interest income on an effective yield to maturity
basis with a corresponding increase or decrease in the cost basis of the
security. Premiums and discounts related to certain mortgage-backed
securities are amortized or accreted in proportion to the monthly paydowns.
Interest income, including interest on income bearing cash accounts, is
recorded on an accrual basis, net of unrecoverable foreign taxes withheld at
the applicable country rates.
52 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have passed
are recorded as soon as the Trust becomes aware of the ex-dividend data in
the exercise of reasonable diligence.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Foreign Currency Translation
The books and records of the Trust are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars using
current exchange rates.
Net realized gains and losses on foreign currency transactions, if any,
represent, among other things, the net realized gains and losses on foreign
currency contracts, disposition of foreign currencies and the difference
between the amount of income accrued and the U.S. dollars actually received.
Further, the effects of changes in foreign currency exchange rates on
investments are not segregated in the Statement of Operations from the
effects of changes in the market prices of those securities but are included
with the net realized and unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Trust may enter into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date. All contracts are marked to market daily at the applicable
exchange rates, and any resulting unrealized appreciation or depreciation
are recorded in the Trust's financial statements. The Trust records realized
gains and losses at the time a contract is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contracts and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar
(see Note 5).
D. Federal Income Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required. As of
April 30, 2014, the Trust did not accrue any interest or penalties with
respect to uncertain tax positions, which if applicable, would be recorded
as income tax expense in the Statement of Operations. Tax returns filed
within the prior three years remain subject to examination by federal and
state tax authorities.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 53
The amount and character of income and capital gain distributions to
shareowners are determined in accordance with federal income tax rules,
which differ from U.S. generally accepted accounting principles.
Distributions in excess of net investment income or net realized gains are
temporary overdistributions for financial statement purposes resulting from
differences in the recognition or classification of income or distributions
for financial statement and tax purposes. Capital accounts within the
financial statements are adjusted for permanent book/tax differences to
reflect tax character, but are not adjusted for temporary differences. At
April 30, 2014, the Trust reclassified $56,925 to decrease Distributions in
excess of net investment income, $56,926 to increase accumulated net
realized loss on investments and foreign currency transactions and $1 to
decrease Paid-in capital to reflect permanent book/tax differences. These
adjustments have no impact on the net assets or results of operations.
At April 30, 2014, the Trust was permitted to carry forward $4,901,516 of
long term and $708,926 of short term losses without limitation.
Additionally, at April 30, 2014, the Trust had a net capital loss carry
forward of $23,843,173 of which the following amounts will expire between
2016 and 2019 if not utilized: $231,744 in 2016, $413,150 in 2017,
$21,948,862 in 2018, and $1,249,417 in 2019. Since unlimited losses are
required to be used first, loss carry forwards that are subject to
expiration may be more likely to expire unused.
The Trust has elected to defer $1,642,624 of capital losses recognized
between November 1, 2013 and April 30, 2014 to its fiscal year ending April
30, 2015.
The tax character of current year distributions payable to common and
preferred shareowners will be determined at the end of the current taxable
year. The tax character of distributions paid during the year ended April
30, 2014 was as follows:
----------------------------------------------------------------------------
2014 2013
----------------------------------------------------------------------------
Distributions paid from:
Ordinary income 19,031,655 $16,884,599
----------------------------------------------------------------------------
Total 19,031,655 $16,884,599
============================================================================
54 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
The following shows the components of distributable earnings (losses) on a
federal income tax basis at April 30, 2014:
----------------------------------------------------------------------------
2014
----------------------------------------------------------------------------
Distributable earnings:
Undistributed ordinary income $ 755,799
Capital loss carryforward (29,453,615)
Post-October loss deferred (1,642,624)
Unrealized appreciation 2,558,333
----------------------------------------------------------------------------
Total $ (27,782,107)
============================================================================
The difference between book-basis and tax-basis unrealized appreciation is
primarily attributable to the tax deferral of losses on wash sales, the
realization for tax purposes of unrealized gains on investments in passive
foreign investment companies, the book/tax differences in the accrual of
income on securities in default, the difference between book and tax
amortization methods for premiums and discounts on fixed income securities
and other temporary book/tax differences.
E. Risks
Information regarding the Trust's principal risks is contained in the
Trust's original offering prospectus, with additional information included
in the Trust's shareowner reports issued from time to time. Please refer to
those documents when considering the Trust's principal risks. At times, the
Trust's investments may represent industries or industry sectors that are
interrelated or have common risks, making the Trust more susceptible to any
economic, political, or regulatory developments or other risks affecting
those industries and sectors.
The Trust invests in below investment grade (high yield) debt securities,
floating rate loans and event-linked bonds sometimes referred to as
"catastrophe" bonds or "insurance-linked" bonds. The Trust may invest in
securities and other obligations of any credit quality, including those that
are rated below investment grade, or are unrated but are determined by the
investment adviser to be of equivalent credit quality. Below investment
grade securities are commonly referred to as "junk bonds" and are considered
speculative with respect to the issuer's capacity to pay interest and repay
principal. Below investment grade securities, including floating rate loans,
involve greater risk of loss, are subject to greater price volatility, and
are less liquid and more difficult to value, especially during periods of
economic uncertainty or change, than higher rated debt securities. The trust
may invest in securities of issuers that are in default or that are in
bankruptcy. The value of collateral, if any, securing a floating rate loan
can decline or may be insufficient to meet the issuer's obligations or may
be difficult to liquidate. No
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 55
active trading market may exist for many floating rate loans, and many loans
are subject to restrictions on resale. Any secondary market may be subject
to irregular trading activity and extended settlement periods. Additionally,
the Trust may invest in "event-linked" bonds, which sometimes are referred
to as "insurance-linked" or "catastrophe" bonds. The return of principal and
the payment of interest on event-linked bonds are contingent on the
nonoccurrence of a pre-defined "trigger" event, such as hurricane or an
earthquake of a specific magnitude. In addition to the specific trigger
events, event-linked bonds may expose the Trust to other risks, including
but not limited to issuer (credit) default, adverse regulatory or
jurisdictional interpretations and adverse tax consequences. The Trust's
investments in certain foreign markets or countries with limited developing
markets may subject the Trust to a greater degree of risk than would
investments in a developed market. These risks include disruptive political
or economic conditions and the possible imposition of adverse governmental
laws or currency exchange restrictions.
F. Repurchase Agreements
With respect to repurchase agreements entered into by the Trust, the value
of the underlying securities (collateral), including accrued interest, is
required to be equal to or in excess of the repurchase price. The collateral
for all repurchase agreements is held in safekeeping in the customer-only
account of the Trust's custodian or a sub-custodian of the Trust. PIM is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
G. Automatic Dividend Reinvestment Plan
All common shareowners whose shares are registered in their own names
automatically participate in the Automatic Dividend Reinvestment Plan (the
Plan), under which participants receive all dividends and capital gain
distributions (collectively, dividends) in full and fractional common shares
of the Trust in lieu of cash. Shareowners may elect not to participate in
the Plan. Shareowners not participating in the Plan receive all dividends
and capital gain distributions in cash. Participation in the Plan is
completely voluntary and may be terminated or resumed at any time without
penalty by notifying American Stock Transfer & Trust Company, the agent for
shareowners in administering the Plan (the Plan Agent), in writing prior to
any dividend record date; otherwise such termination or resumption will be
effective with respect to any subsequently declared dividend or other
distribution.
If a shareowner's shares are held in the name of a brokerage firm, bank or
other nominee, the shareowner can ask the firm or nominee to participate in
the Plan on the shareowner's behalf. If the firm or nominee does not offer
the
56 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
Plan, dividends will be paid in cash to the shareowner of record. A firm or
nominee may reinvest a shareowner's cash dividends in common shares of the
Trust on terms that differ from the terms of the Plan.
Whenever the Trust declares a dividend on common shares payable in cash,
participants in the Plan will receive the equivalent in common shares
acquired by the Plan Agent either (i) through receipt of additional unissued
but authorized common shares from the Trust or (ii) by purchase of
outstanding common shares on the 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.
H. Option Writing
The Trust may write put and covered call options to seek to increase total
return. When an option is written, the Trust receives a premium and becomes
obligated to purchase or sell the underlying security at a fixed price, upon
the exercise of the option. When the Trust writes an option, an amount equal
to the premium received by the Trust is recorded as a liability and is
subsequently adjusted to the current value of the option written. Premiums
received from writing options that expire unexercised are treated by the
Trust on the expiration date as realized gains from investments. The
difference between the premium and the amount paid on effecting a closing
purchase transaction, including brokerage commissions, is also treated as a
realized gain, or, if the premium is less than the amount paid for the
closing purchase transaction, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the
underlying security in determining whether the
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 57
Trust has realized a gain or loss. The Trust as a writer of an option bears
the market risk of an unfavorable change in the price of the security
underlying the written option.
The average value of option contracts open for the year ended April 30, 2014
was $10,888. Written call and put option contracts outstanding at period end
are listed at the end of the Trust's schedule of investments.
The Trust held one written call option contract that was open at April 30,
2014. If the call option was exercised at April 30, 2014, the maximum amount
the Fund would have been required to pay was $4,052.
Transactions in written call options for the year ended April 30, 2014 are
summarized as follows:
----------------------------------------------------------------------------
Number of Contracts Premiums Received
----------------------------------------------------------------------------
Options open at beginning of year -- $ --
Options written 672,138 11,073
Options terminated in closing transactions -- --
Options expired -- --
----------------------------------------------------------------------------
Options open at end of year 672,138 $ 11,073
============================================================================
I. Purchased Options
The Trust may purchase put and call options to seek increase total return.
Purchased call and put options entitle the Trust to buy and sell a specified
number of shares or units of a particular security, currency or index at a
specified price at a specific date or within a specific period of time. Upon
the purchase of a call or put option, the premium paid by the Trust is
included in the Statement of Assets and Liabilities as an investment. All
premiums are marked-to-market daily, and any unrealized gains or losses are
recorded in the Trust's financial statements. As the purchaser of an index
option, the Trust has the right to receive a cash payment equal to any
depreciation in the value of the index below the strike price of the option
(in the case of a put) or equal to any appreciation in the value of the
index over the strike price of the option (in the case of a call) as of the
valuation date of the option. Premiums paid for purchased calls and put
options which have expired are treated as realized losses on investments in
the Statement of Operations. Upon the exercise or closing of a purchased put
option, the premium is offset against the proceeds on the sale of the
underlying security or financial instrument in order to determine the
realized gain or loss on investments. Upon the exercise or closing of a
purchased call option, the premium is added to the cost of the security or
financial instrument. The risk associated with purchasing options is limited
to the premium originally paid. The average value of purchased options
during the year ended April 30, 2014 was $7,953. Purchased option contracts
outstanding at year end are listed at the end of the Trust's schedule of
investments.
58 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredit S.p.A. (UniCredit), manages
the Trust's portfolio. Management fees payable under the Trust's Advisory
Agreement with PIM are calculated daily at the annual rate of 0.85% of the
Trust's average daily managed assets. "Managed assets" means (a) the total
assets of the Trust, including any form of investment leverage, minus (b) all
accrued liabilities incurred in the normal course of operations, which shall not
include any liabilities or obligations attributable to investment leverage
obtained through (i) indebtedness of any type (including, without limitation,
borrowing through a credit facility or the issuance of debt securities), (ii)
the issuance of preferred stock or other similar preference securities, and/or
(iii) any other means. For the year ended April 30, 2014, the net management fee
was 0.85% of the Trust's average daily managed assets, which was equivalent to
1.20% of the Trust's average daily net assets.
In addition, under PIM's management and administration agreements, certain other
services and costs are paid by PIM and reimbursed by the Trust. At April 30,
2014 $221,259 was payable to PIM related to management costs, administrative
costs and certain other services and is included in "Due to affiliates" and
"Administration fee payable" on the Statement of Assets and Liabilities.
3. Transfer Agents
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned
indirect subsidiary of UniCredit, through a sub-transfer agency agreement with
American Stock Transfer & Trust Company, provides substantially all transfer
agent and shareowner services related to the Trust at negotiated rates. In
addition, the Trust reimburses PIMSS for out-of-pocket expenses incurred by
PIMSS related to shareowner communications activities such as proxy and
statement mailings and outgoing calls.
4. Expense Offset Arrangement
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, 2014, the Trust
expenses were not reduced under such arrangement.
5. Forward Foreign Currency Contracts
At April 30, 2014, the Trust had entered forward foreign currency contracts that
obligate the Trust to deliver or take delivery of currencies at specified future
maturity dates. Alternatively, prior to the settlement date of a forward foreign
currency contract, the Trust may close out such contract by entering into an
offsetting contract. The average value of contracts open during the year ended
April 30, 2014 was $9,066,309.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 59
Open foreign currency contracts at April 30, 2014 were as follows:
--------------------------------------------------------------------------------
Net Net
Contracts In Unrealized
to Receive/ Exchange Settlement Appreciation/
Currency (Deliver) For US$ Date US$ Value (Depreciation)
--------------------------------------------------------------------------------
BRL 550,000 $ 228,890 6/6/14 $ 243,773 $ 14,883
EUR 350,000 483,853 6/11/14 485,472 1,619
EUR (5,079,308) (7,022,606) 6/11/14 (7,045,318) (22,712)
EUR (1,383,642) (1,909,057) 4/24/15 (1,919,233) (10,176)
GBP (459,062) (748,210) 5/6/14 (775,194) (26,984)
PHP 46,000,000 1,027,015 5/13/14 1,031,808 4,793
--------------------------------------------------------------------------------
Total $(38,577)
================================================================================
6. Assets and Liabilities Offsetting
Financial instruments subject to an enforceable master netting agreement have
been offset on the Statement of Assets and Liabilities. The following charts
show gross assets and liabilities as of April 30, 2014.
Assets:
-------------------------------------------------------------------------------------------
Gross
Amounts Net Gross Amounts Not Offset
Offset Amounts of in the Statement of
in the Assets Assets and Liabilities
Gross Statement Presented In -------------------------
Amounts of of Assets the Statement Cash
Recognized and of Assets and Financial Collateral Net
Description Assets Liabilities Liabilities Instruments Received Amount
-------------------------------------------------------------------------------------------
Forward
Foreign
Currency
Contracts $ 21,295 $ (21,295) $ -- $ -- $ -- $ 21,295
-------------------------------------------------------------------------------------------
$ 21,295 $ (21,295) $ -- $ -- $ -- $ 21,295
===========================================================================================
Liabilities:
--------------------------------------------------------------------------------------------
Gross
Amounts Net Gross Amounts Not Offset
Offset Amounts of in the Statement of
in the Assets Assets and Liabilities
Gross Statement Presented In -------------------------
Amounts of of Assets the Statement Cash
Recognized and of Assets and Financial Collateral Net
Description Liabilities Liabilities Liabilities Instruments Received Amount
--------------------------------------------------------------------------------------------
Forward
Foreign
Currency
Contracts $ 59,872 $ (21,295) $ 38,577 $ -- $ -- $ 38,577
--------------------------------------------------------------------------------------------
Written Options $ 4,052 $ -- 4,052 $ -- $ -- $ 4,052
--------------------------------------------------------------------------------------------
$ 63,924 $ (21,295) $ 42,629 $ -- $ -- $ 42,629
============================================================================================
60 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
7. Loan Agreement
Effective January 31, 2014, the Trust extended the maturity of its existing
Revolving Credit Facility (the Credit Agreement) with the Bank of Nova Scotia;
the amount of the facility remains at $75 million.
At April 30, 2014, the Trust had a borrowing outstanding under the Credit
Agreement totaling $67,000,000. The interest rate charged at April 30, 2014 was
1.00%. During the year ended April 30, 2014, the average daily balance was
$67,816,667 at a weighted average interest rate of 1.06%. With respect to the
loan, interest expense of $743,785 is included in the Statement of Operations.
The Trust is required to maintain 300% asset coverage with respect to amounts
outstanding under the Credit Agreement. Asset coverage is calculated by
subtracting the Trust's total liabilities, not including any bank loans and
senior securities, from the Trust's total assets and dividing such amount by the
principal amount of the borrowings outstanding. As of the date indicated below,
the Trust's debt outstanding and asset coverage were as follows:
--------------------------------------------------------------------------------
Total Amount Asset coverage
of Debt Per $1,000 of
Date Outstanding Indebtedness
--------------------------------------------------------------------------------
April 30, 2014 $67,000,000 $3,487
================================================================================
8. Trust Shares
There are an unlimited number of common shares of beneficial interest
authorized.
Transactions in common shares of beneficial interest for the year ended April
30, 2014 and April 30, 2013 were as follows:
--------------------------------------------------------------------------------
4/30/14 4/30/13
--------------------------------------------------------------------------------
Shares outstanding at beginning of year 8,290,790 8,261,236
Reinvestment of distributions 29,377 29,554
--------------------------------------------------------------------------------
Shares outstanding at end of year 8,320,167 8,290,790
================================================================================
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 61
9. Additional Disclosures about Derivative Instruments and Hedging Activities:
Values of derivative instruments as of April 30, 2014 were as follows:
-------------------------------------------------------------------------------------------
Derivatives Not
Accounted for as Asset Derivatives 2014 Liabilities Derivatives 2014
Hedging Instruments ---------------------------------------------------------------
Under Accounting Statement of Assets Statement of Assets
Standards Codification and Liabilities and Liabilities
(ASC) 815 Location Value Location Value
-------------------------------------------------------------------------------------------
Forward foreign Net unrealized Net unrealized
currency contracts appreciation on depreciation on
forward foreign forward foreign
currency contracts $ -- currency contracts $(38,577)
Written options Net unrealized Net unrealized
appreciation on depreciation on
written options $ -- written options $ (4,052)
-------------------------------------------------------------------------------------------
Total $ -- $(42,629)
-------------------------------------------------------------------------------------------
The effect of derivative instruments on the Statement of Operations for the year
ended April 30, 2014 was as follows:
---------------------------------------------------------------------------------------------------
Change in
Derivatives Not Realized Unrealized
Accounted for as Gain or Appreciation or
Hedging Instruments (Loss) on (Depreciation)
Under Accounting Location of Gain or (Loss) Derivatives on Derivatives
Standards Codification on Derivatives Recognized Recognized Recognized
(ASC) 815 in Income in Income in Income
---------------------------------------------------------------------------------------------------
Forward foreign Net realized gain (loss) on
currency contracts forward foreign currency
contracts and other assets
and liabilities denominated
in foreign currencies $(472,920)
---------------------------------------------------------------------------------------------------
Forward foreign Change in net unrealized
currency contracts appreciation (depreciation) on
forward foreign currency
contracts and other assets
and liabilities denominated in
foreign currencies $78,410
---------------------------------------------------------------------------------------------------
Written options Change in unrealized appreciation
(depreciation) on written options $ 7,021
---------------------------------------------------------------------------------------------------
Purchased options Change in unrealized appreciation
(depreciation) on purchased options $ 764
---------------------------------------------------------------------------------------------------
62 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
10. Subsequent Events
The Board of Trustees of the Trust declared on May 5, 2014 a monthly dividend
from undistributed net investment income of $0.16 per common share payable May
30, 2014, to shareowners of record on May 19, 2014.
Change in Independent Registered Public Accounting Firm
The Board of Trustees of the Trust, with the approval and recommendation of the
Audit Committee, appointed Deloitte & Touche LLP to serve as the Trust's
independent registered public accounting firm for the fiscal year ending April
30, 2015. Deloitte & Touche LLP replaces Ernst & Young LLP, which resigned as
the Trust's independent registered public accounting firm, effective upon
completion of the audit of the Trust's financial statements for the fiscal year
ended April 30, 2014.
During the periods that Ernst & Young LLP served as the Trust's independent
registered public accounting firm, including the Trust's two most recent fiscal
years, Ernst & Young LLP's reports on the financial statements of the Trust have
not contained an adverse opinion or disclaimer of opinion and have not been
qualified or modified as to uncertainty, audit scope or accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to the satisfaction of Ernst & Young LLP would have
caused Ernst & Young LLP to make reference to the subject matter of the
disagreement in connection with its report on the financial statements. In
addition, there have been no reportable events to the kind described in Item
304(a)(i)(v) of Regulation S-K under the Securities and Exchange Act of 1934.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 63
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and the Shareowners of
Pioneer Diversified High Income Trust:
--------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of Pioneer
Diversified High Income Trust (the "Trust"), including the schedule of
investments, as of April 30, 2014, and the related statements of operations and
cash flows for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended and the financial highlights for
each of the five years in the period then ended. 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, 2014, by correspondence with the custodian and
brokers or by other appropriate auditing procedures where replies from brokers
were not received. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Diversified High Income Trust at April 30, 2014, the results of its
operations and cash flows for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
June 25, 2014
64 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
ADDITIONAL INFORMATION (unaudited)
During the year, there have been no material changes in the Trust's investment
objective or fundamental policies that have not been approved by the share-
owners. There have been no changes in the Trust's charter or By-Laws that would
delay or prevent a change in control of the Trust which has not been approved by
the shareowners. During the period, there have been no changes in the principal
risk factors associated with investment in the Trust. There were no changes in
the persons who are primarily responsible for the day-to-day management of the
Trust's portfolio.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Trust may purchase, from time to time, its common
shares in the open market.
IMPORTANT TAX INFORMATION (unaudited)
Interest-Related Dividends for Non-U.S. Residents 59.47%*
* Represents the portion of the taxable ordinary income dividends eligible for
tax exemption from U.S. withholding tax for non-resident aliens and foreign
corporations.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 65
Approval of Investment Advisory Agreement
Pioneer Investment Management, Inc. (PIM) serves as the investment adviser to
Pioneer Diversified High Income Trust (the Trust) pursuant to an investment
advisory agreement between PIM and the Trust. In order for PIM to remain the
investment adviser of the Trust, the Trustees of the Trust must determine
annually whether to renew the investment advisory agreement for the Trust.
The contract review process began in March 2013 as the Trustees of the Trust
agreed on, among other things, an overall approach and timeline for the process.
In July 2013, the Trustees approved the format of the contract review materials
and submitted their formal request to PIM to furnish information necessary to
evaluate the terms of the investment advisory agreement. The contract review
materials were provided to the Trustees in July 2013 and September 2013. After
reviewing and discussing the materials, the Trustees submitted a request for
additional information to PIM, and materials were provided in response to this
request. Meetings of the Independent Trustees of the Trust were held in July,
September, and November, 2013 to review and discuss the contract review
materials. In addition, the Trustees took into account the information related
to the Trust provided to the Trustees at regularly scheduled meetings.
At a meeting held on November 12, 2013, based on their evaluation of the
information provided by PIM and third parties, the Trustees of the Trust,
including the Independent Trustees voting separately, unanimously approved the
renewal of the investment advisory agreement for another year. In considering
the renewal of the investment advisory agreement, the Trustees considered
various factors that they determined were relevant, including the factors
described below. In all quintile rankings referred to throughout this
disclosure, first quintile is most favorable to the Trust's shareowners. Thus,
highest relative performance would be first quintile and lowest relative
expenses would also be first quintile. The Trustees did not identify any single
factor as the controlling factor in determining to approve the renewal of the
agreement.
Nature, Extent and Quality of Services
The Trustees considered the nature, extent and quality of the services that had
been provided by PIM to the Trust, taking into account the investment objective
and strategy of the Trust. The Trustees reviewed the terms of the investment
advisory agreement. The Trustees also reviewed PIM's investment approach for the
Trust and its research process. The Trustees considered the resources of PIM and
the personnel of PIM who provide investment
66 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
management services to the Trust. They also reviewed the amount of non-Trust
assets managed by the portfolio managers of the Trust. The Trustees considered
the non-investment resources and personnel of PIM involved in PIM's services to
the Trust, including PIM's compliance and legal resources and personnel. The
Trustees noted the substantial attention and high priority given by PIM's senior
management to the Pioneer fund complex.
The Trustees considered that PIM supervises and monitors the performance of the
Trust's service providers and provides the Trust with personnel (including Trust
officers) and other resources that are necessary for the Trust's business
management and operations. The Trustees also considered that, as administrator,
PIM is responsible for the administration of the Trust's business and other
affairs. The Trustees considered the fees paid to PIM for the provision of
administration services.
Based on these considerations, the Trustees concluded that the nature, extent
and quality of services that had been provided by PIM to the Trust were
satisfactory and consistent with the terms of the investment advisory agreement.
Performance of the Trust
The Trustees review the Trust's performance on a regular basis, based on
analysis and data prepared by PIM for this purpose and discuss performance
issues with PIM on an ongoing basis. For purposes of their contract renewal
deliberations, the Trustees considered the performance results of the Trust over
various time periods. They reviewed information comparing the Trust's
performance with the performance of its peer group of funds as classified by
Morningstar, Inc. (Morningstar), an independent provider of investment company
data, and with the performance of the Trust's benchmark index. The Trustees
considered that the Trust's annualized total return was in the second quintile
of its Morningstar category for the one year period ended June 30, 2013, in the
third quintile of its Morningstar category for the five year period ended June
30, 2013, and in the fourth quintile of its Morningstar category for the three
year period ended June 30, 2013. The Trustees also considered that the Trust's
yield (for the twelve months ended June 30, 2013) exceeded the yield of the
Trust's benchmark index for the same period. The Trustees also reviewed data
provided by PIM showing how leverage had benefited the Trust's common
shareholders. The Trustees noted the discussions held throughout the year
regarding the Trust's performance and confirmed that those discussions were
factored into the Trustees' deliberations concerning the renewal of the advisory
agreement. They indicated that they were satisfied with the discussions with PIM
with respect to the Trust's performance.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 67
Management Fee and Expenses
The Trustees considered information showing the fees and expenses of the Trust
in comparison to the management fees and the expense ratios of a peer group of
funds selected on the basis of criteria determined by the Independent Trustees
for this purpose using data provided by Strategic Insight Mutual Fund Research
and Consulting, LLC (Strategic Insight), an independent third party.
The Trustees considered that the Trust's management fee (based on managed
assets) for the twelve months ended June 30, 2013 was in the fourth quintile
relative to the management fees paid by other funds in its Strategic Insight
peer group for the comparable period. The Trustees also considered that the
Trust's expense ratio (based on managed assets) for the twelve months ended June
30, 2013 was in the fifth quintile relative to its Strategic Insight peer group
for the comparable period. The Trustees noted the investment management
expertise and resources required to implement the Trust's complex investment
strategy given the multiple asset classes in which the Trust invests. The
Trustees also considered that the Trust did not have a clear cut peer group,
noting that other funds in the peer group invested primarily in traditional high
yield bonds.
The Trustees reviewed management fees charged by PIM and PIM's affiliate,
Pioneer Institutional Asset Management, Inc. (together with PIM, "Pioneer") to
institutional and other clients, including publicly offered European funds
sponsored by affiliates of Pioneer, unaffiliated U.S. registered investment
companies (in a sub-advisory capacity), and unaffiliated foreign and domestic
separate accounts. The Trustees also considered PIM's costs in providing
services to the Trust and Pioneer's costs in providing services to the other
clients and considered the differences in management fees and profit margins for
Trust and non-Trust services. In evaluating the fees associated with Pioneer's
client accounts, the Trustees took into account the respective demands,
resources and complexity associated with the Trust and client accounts. The
Trustees noted that, in some instances, the fee rates for those clients were
lower than the management fee for the Trust and considered that, under the
investment advisory agreement with the Trust, PIM performs additional services
for the Trust that it does not provide to those other clients or services that
are broader in scope, including oversight of the Trust's other service providers
and activities related to compliance and the extensive regulatory and tax
regimes to which the Trust is subject. The Trustees also considered the
different entrepreneurial risks associated with PIM's management of the Trust
and Pioneer's management of the other client accounts. The Trustees concluded
that the management fee payable by the Trust to PIM was reasonable in relation
to the nature and quality of the services provided by PIM.
68 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
Profitability
The Trustees considered information provided by PIM regarding the profitability
of PIM with respect to the advisory services provided by PIM to the Trust,
including the methodology used by PIM in allocating certain of its costs to the
management of the Trust. The Trustees also considered PIM's profit margin in
connection with the overall operation of the Trust. They further reviewed the
financial results realized by PIM and its affiliates from non-fund businesses.
The Trustees considered PIM's profit margins with respect to the Trust in
comparison to the limited industry data available and noted that the
profitability of any adviser was affected by numerous factors, including its
organizational structure and method for allocating expenses. The Trustees
concluded that PIM's profitability with respect to the management of the Trust
was not unreasonable.
Economies of Scale
The Trustees considered the extent to which PIM may realize economies of scale
or other efficiencies in managing and supporting the Trust. Since the Trust is a
closed-end fund that has not raised additional capital, the Trustees concluded
that economies of scale were not a relevant consideration in the renewal of the
investment advisory agreement.
Other Benefits
The Trustees considered the other benefits to PIM from its relationship with the
Trust. The Trustees considered the character and amount of fees paid by the
Trust, other than under the investment advisory agreement, for services provided
by PIM and its affiliates. The Trustees further considered the revenues and
profitability of PIM's businesses other than the fund business. The Trustees
considered the intangible benefits to PIM by virtue of its relationship with the
Trust and the other Pioneer funds. The Trustees concluded that the receipt of
these benefits was reasonable in the context of the overall relationship between
PIM and the Trust.
Conclusion
After consideration of the factors described above as well as other factors, the
Trustees, including all of the Independent Trustees, concluded that the
investment advisory agreement between PIM and the Trust, including the fees
payable thereunder, was fair and reasonable and voted to approve the proposed
renewal of the investment advisory agreement for the Trust.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 69
Trustees, Officers and Service Providers
Investment Adviser
Pioneer Investment Management, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during the
most recent 12-month period ended June 30 is publicly available to shareowners
at us.pioneerinvestments.com. This information is also available on the
Securities and Exchange Commission's web site at www.sec.gov.
Trustees and Officers
The Trust's Trustees and officers are listed below, together with their
principal occupations during at least the past five years. Trustees who are
interested persons of the Trust within the meaning of the 1940 Act are referred
to as Interested Trustees. Trustees who are not interested persons of the Trust
are referred to as Independent Trustees. Each of the Trustees serves as a
Trustee of each of the 55 U.S. registered investment portfolios for which
Pioneer serves as investment adviser (the "Pioneer Funds"). The address for all
Trustees and all officers of the Trust is 60 State Street, Boston, Massachusetts
02109.
The Statement of Additional Information of the Fund includes additional
information about the Trustees and is available, without charge, upon request,
by calling 1-800-225-6292.
70 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
Independent Trustees
------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Term of Office and Other Directorships
Position Held with the Trust Length of Service Principal Occupation Held by Trustee
------------------------------------------------------------------------------------------------------------------------------------
Thomas J. Perna (63) Class II Trustee since 2007. Private investor (2004-2008 and Director, Broadridge Financial
Chairman of the Board Term expires in 2015. 2013-present); Chairman (2008 - 2013) Solutions, Inc. (investor
and Trustee and Chief Executive Officer (2008 - communications and securities
2012), Quadriserv, Inc. (technology processing provider for
products for securities lending financial services industry)
industry); and Senior Executive Vice (2009 - present); Director,
President, The Bank of New York Quadriserv, Inc. (2005 -
(financial and securities services) 2013); and Commissioner, New
(1986 - 2004) Jersey State Civil Service
Commission (2011 - present)
------------------------------------------------------------------------------------------------------------------------------------
David R. Bock (70) Class III Trustee since 2007. Managing Partner, Federal City Capital Director of Enterprise
Trustee Term expires in 2016. Advisors (corporate advisory services Community Investment, Inc.
company) (1997 - 2004 and 2008 - (privately held affordable
present); Interim Chief Executive housing finance company) (1985
Officer, Oxford Analytica, Inc. - 2010); Director of Oxford
(privately held research and Analytica, Inc. (2008 -
consulting company) (2010); Executive present); Director of The
Vice President and Chief Financial Swiss Helvetia Fund, Inc.
Officer, I-trax, Inc. (publicly traded (closed-end fund) (2010 -
health care services company) (2004 - present); and Director of New
2007); and Executive Vice President York Mortgage Trust (publicly
and Chief Financial Officer, Pedestal traded mortgage REIT) (2004 -
Inc. (internet-based mortgage trading 2009, 2012 - present)
company) (2000 - 2002)
------------------------------------------------------------------------------------------------------------------------------------
Benjamin M. Friedman (69) Class I Trustee since 2008. William Joseph Maier Professor of Trustee, Mellon Institutional
Trustee Term expires in 2014. Political Economy, Harvard University Funds Investment Trust and
(1972 - present) Mellon Institutional Funds
Master Portfolio (oversaw 17
portfolios in fund complex)
(1989-2008)
------------------------------------------------------------------------------------------------------------------------------------
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 71
Independent Trustees (continued)
------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Term of Office and Other Directorships
Position Held with the Trust Length of Service Principal Occupation Held by Trustee
------------------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (66) Class I Trustee since 2007. Founding Director, Vice President and None
Trustee Term expires in 2014. Corporate Secretary, The Winthrop
Group, Inc. (consulting firm) (1982 -
present); Desautels Faculty of
Management, McGill University (1999 -
present); and Manager of Research
Operations and Organizational
Learning, Xerox PARC, Xerox's advance
research center (1990-1994)
------------------------------------------------------------------------------------------------------------------------------------
Marc O. Mayer (56)+ Class I Trustee since 2014. Founding Partner and Chief Executive Trustee, Alliance Bernstein
Trustee Term expires in 2014. Officer, Alignment Financial Services Mutual Funds (oversaw 92 funds
(investment management) (2013- in fund complex) (2003-2008);
present); Chief Executive Officer and Board of Overseers, Columbia
Director, GMO LLC (investment Business School (2010-
management) (2009-2011); Executive present); and Director, Alpha
Vice President, Alliance Bernstein LP Parity LLC (hedge fund)
(investment management) (2000-2009); (2013-present)
and Executive Vice President and
Director, Sanford C. Bernstein & Co.,
LLC (investment management)
(1989-2000)
------------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (65) Class II Trustee since 2007. President and Chief Executive Officer, Director of New America High
Trustee Term expires in 2015. Newbury, Piret & Company, Inc. Income Fund, Inc. (closed-end
(investment banking firm) (1981 - investment company) (2004 -
present) present); and member, Board of
Governors, Investment Company
Institute (2000 - 2006)
------------------------------------------------------------------------------------------------------------------------------------
+ Mr. Mayer resigned as a Trustee of the Trust effective May 18, 2014.
72 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
Interested Trustees
------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Term of Office and Other Directorships
Position Held with the Trust Length of Service Principal Occupation Held by Trustee
------------------------------------------------------------------------------------------------------------------------------------
Daniel K. Kingsbury (55)* Class III Trustee since 2013; Chairman (2013 - present), Director, None
Trustee, President, and Class I Trustee from CEO and President of PIM-USA (since
Chief Executive Offficer 2007-2013. February 2007); Chairman (2013 -
Term expires in 2016. present), Director and President of
Pioneer and Pioneer Institutional
Asset Management, Inc. (since
February 2007); Executive Vice
President of all of the Pioneer Funds
(2007 - 2013); Director of PGAM (2007
- 2010); Head of New Europe Division,
PGAM (2000 - 2005); and Head of New
Markets Division, PGAM (2005 - 2007)
------------------------------------------------------------------------------------------------------------------------------------
Kenneth J. Taubes (55)* Class II Trustee since 2014. Director and Executive Vice President None
Trustee Term expires in 2014. (since 2008) and Chief Investment
Officer, U.S. (since 2010), of
PIM-USA; Executive Vice President of
Pioneer (since 2008); Executive Vice
President of Pioneer Institutional
Asset Management, Inc. (since 2009);
Portfolio Manager of Pioneer (since
1999)
------------------------------------------------------------------------------------------------------------------------------------
* Mr. Kingsbury and Mr. Taubes are Interested Trustees because they are
officers or directors of the Trust's investment adviser and certain of its
affiliates.
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 73
Trust Officers
------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Term of Office and Other Directorships
Position Held with the Trust Length of Service Principal Occupation Held by Officer
------------------------------------------------------------------------------------------------------------------------------------
Mark D. Goodwin (49) Since 2014. Serves at the Executive Vice President and Chief None
Executive Vice President discretion of the Board. Operating Officer of Pioneer since
2005 and Executive Vice President of
all the Pioneer funds since 2014
------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (49) Since 2007. Serves at the Vice President and Associate General None
Secretary and Chief discretion of the Board. Counsel of Pioneer since January
Legal Officer 2008; Secretary and Chief Legal
Officer of all of the Pioneer Funds
since June 2010; Assistant Secretary
of all of the Pioneer Funds from
September 2003 to May 2010; and Vice
President and Senior Counsel of
Pioneer from July 2002 to December
2007
------------------------------------------------------------------------------------------------------------------------------------
Carol B. Hannigan (53) Since 2010. Serves at the Fund Governance Director of Pioneer None
Assistant Secretary discretion of the Board. since December 2006 and Assistant
Secretary of all the Pioneer Funds
since June 2010; Manager - Fund
Governance of Pioneer from December
2003 to November 2006; and Senior
Paralegal of Pioneer from January
2000 to November 2003
------------------------------------------------------------------------------------------------------------------------------------
Thomas Reyes (51) Since 2010. Serves at the Senior Counsel of Pioneer since May None
Assistant Secretary discretion of the Board. 2013 and Assistant Secretary of all
the Pioneer Funds since June 2010;
Counsel of Pioneer from June 2007 to
May 2013
------------------------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (54) Since 2008. Serves at the Vice President - Fund Treasury of None
Treasurer and Chief discretion of the Board. Pioneer; Treasurer of all of the
Financial and Accounting Pioneer Funds since March 2008;
Officer of the Fund Deputy Treasurer of Pioneer from
March 2004 to February 2008; and
Assistant Treasurer of all of the
Pioneer Funds from March 2004 to
February 2008
------------------------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (48) Since 2007. Serves at the Director - Fund Treasury of Pioneer; None
Assistant Treasurer discretion of the Board. and Assistant Treasurer of all of the
Pioneer Funds
------------------------------------------------------------------------------------------------------------------------------------
74 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Term of Office and Other Directorships
Position Held with the Trust Length of Service Principal Occupation Held by Trustee
------------------------------------------------------------------------------------------------------------------------------------
Gary Sullivan (55) Since 2007. Serves at the Fund Accounting Manager - Fund None
Assistant Treasurer discretion of the Board. Treasury of Pioneer; and Assistant
Treasurer of all of the Pioneer Funds
------------------------------------------------------------------------------------------------------------------------------------
David F. Johnson (34) Since 2009. Serves at the Fund Administration Manager - Fund None
Assistant Treasurer discretion of the Board. Treasury of Pioneer since November
2008; Assistant Treasurer of all of
the Pioneer Funds since January 2009;
and Client Service Manager -
Institutional Investor Services at
State Street Bank from March 2003 to
March 2007
------------------------------------------------------------------------------------------------------------------------------------
Jean M. Bradley (61) Since 2010. Serves at the Chief Compliance Officer of Pioneer None
Chief Compliance Officer discretion of the Board. and of all the Pioneer Funds since
March 2010; Director of Adviser and
Portfolio Compliance at Pioneer since
October 2005; and Senior Compliance
Officer for Columbia Management
Advisers, Inc. from October 2003 to
October 2005
------------------------------------------------------------------------------------------------------------------------------------
Kelly O'Donnell (43) Since 2007. Serves at the Director - Transfer Agency Compliance None
Anti-Money Laundering discretion of the Board. of Pioneer and Anti-Money Laundering
Officer Officer of all the Pioneer funds since
2006
------------------------------------------------------------------------------------------------------------------------------------
Pioneer Diversified High Income Trust | Annual Report | 4/30/14 75
This page for your notes.
76 Pioneer Diversified High Income Trust | Annual Report | 4/30/14
How to Contact Pioneer
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
You can call American Stock Transfer & Trust Company (AST) for:
--------------------------------------------------------------------------------
Account Information 1-800-710-0935
Or write to AST:
--------------------------------------------------------------------------------
For Write to
General inquiries, lost dividend checks, American Stock
change of address, lost stock certificates, Transfer & Trust
stock transfer Operations Center
6201 15(th) Ave.
Brooklyn, NY 11219
Dividend reinvestment plan (DRIP) American Stock
Transfer & Trust
Wall Street Station
P.O. Box 922
New York, NY 10269-0560
Website www.amstock.com
For additional information, please contact your investment advisor or visit our
web site us.pioneerinvestments.com.
The Trust files a complete schedule of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at 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.
[LOGO] PIONEER
Investments(R)
Pioneer Investment Management, Inc.
60 State Street
Boston, MA 02109
us.pioneerinvestments.com
Securities offered through Pioneer Funds Distributor, Inc.
60 State Street, Boston, MA 02109
Underwriter of Pioneer Mutual Funds, Member SIPC
(C) 2014 Pioneer Investments 21909-06-0614
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 12(a)(1), 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 (see attachment);
(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.
Fees for audit services provided to the Trust, including
fees associated with the filings to update its Form N-2
and issuance of comfort letters, totaled approximately
$42,076 in 2013 and $38,581 in 2014.
(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.
There were no audit-related or other fees for 2013
and 2014.
(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.
Fees for tax compliance services, primarily for tax
returns, totaled approximately $8,290 and $8,131 for
2013 and 2014, 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.
There were no audit-related or other fees for 2013
and 2014.
(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, 2013 and 2014, 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 accountants 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 registrants accountant
for services rendered to the registrant, and rendered to the registrants
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The aggregate non-audit fees for the Trust and
affiliates, as previously defined, totaled approximately
$8,290 in 2013 and $8,131 in 2014.
(h) Disclose whether the registrants audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrants investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Trust's audit committee of the Board of Trustees
has considered whether the provision of non-audit
services that were rendered to the Affiliates (as
defined) that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is
compatible with maintaining the principal accountant's
independence.
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 registrant's audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
N/A
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption
from the listing standards for audit committees.
N/A
ITEM 6. SCHEDULE OF INVESTMENTS.
File Schedule of Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.1212
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
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voted upon against the Compliance Department's internal list of interested
persons and, for any matches found, evaluating the anticipated magnitude
and possible probability of any conflict of interest being present. For
each referral item, the determination regarding the presence or absence of
any actual or potential conflict of interest will be documented in a
Conflicts of Interest Report to the Proxy Coordinator.
Securities Lending
In conjunction with industry standards Proxies are not available to be
voted when the shares are out on loan through either Pioneer's lending
program or a client's managed security lending program. However, Pioneer
will reserve the right to recall lent securities so that they may be voted
according to the Pioneer's instructions. If a portfolio manager would like
to vote a block of previously lent shares, the Proxy Coordinator will work
with the portfolio manager and Investment Operations to recall the
security, to the extent possible, to facilitate the vote on the entire
block of shares.
Share-Blocking
"Share-blocking" is a market practice whereby shares are sent to a
custodian (which may be different than the account custodian) for record
keeping and voting at the general meeting. The shares are unavailable for
sale or delivery until the end of the blocking period (typically the day
after general meeting date).
Pioneer will vote in those countries with "share-blocking." In the event a
manager would like to sell a security with "share-blocking", the Proxy
Coordinator will work with the Portfolio Manager and Investment Operations
Department to recall the shares (as allowable within the market time-frame
and practices) and/or communicate with executing brokerage firm. A list of
countries with "share-blocking" is available from the Investment Operations
Department upon request.
Record Keeping
The Proxy Coordinator shall ensure that Pioneer's proxy voting service:
o Retains a copy of the proxy statement received (unless the proxy
statement is available from the SEC's Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system);
o Retains a record of the vote cast;
o Prepares Form N-PX for filing on behalf of each client that is a
registered investment company; and
o Is able to promptly provide Pioneer with a copy of the voting
record upon its request.
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The Proxy Coordinator shall ensure that for those votes that may require
additional documentation (i.e. conflicts of interest, exception votes and
case-by-case votes) the following records are maintained:
o A record memorializing the basis for each referral vote cast;
o A copy of any document created by Pioneer that was material in
making the decision on how to vote the subject proxy; and
o A copy of any conflict notice, conflict consent or any other
written communication (including emails or other electronic
communications) to or from the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries)
regarding the subject proxy vote cast by, or the vote
recommendation of, Pioneer.
o Pioneer shall maintain the above records in the client's file for a
period not less than ten (10) years.
Disclosure
Pioneer shall take reasonable measures to inform its clients of the process
or procedures clients must follow to obtain information regarding how
Pioneer voted with respect to assets held in their accounts. In addition,
Pioneer shall describe to clients its proxy voting policies and procedures
and will furnish a copy of its proxy voting policies and procedures upon
request. This information may be provided to clients through Pioneer's Form
ADV (Part II) disclosure, by separate notice to the client, or through
Pioneer's website.
Proxy Voting Oversight Group
The members of the Proxy Voting Oversight Group are Pioneer's: Director of
Portfolio Management US, Head of Investment Operations, and Director of
Compliance. Other members of Pioneer will be invited to attend meetings and
otherwise participate as necessary. The Head of Investment Operations will
chair the Proxy Voting Oversight Group.
The Proxy Voting Oversight Group is responsible for developing, evaluating,
and changing (when necessary) Pioneer's Proxy Voting Policies and
Procedures. The group meets at least annually to evaluate and review these
policies and procedures and the services of its third-party proxy voting
service. In addition, the Proxy Voting Oversight Group will meet as
necessary to vote on referral items and address other business as
necessary.
Amendments
Pioneer may not amend its Proxy Voting Policies And Procedures without the
prior approval of the Proxy Voting Oversight Group and its corporate
parent, Pioneer Global Asset Management S.p.A
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Proxy Voting Policies
Pioneer's sole concern in voting proxies is the economic effect of the
proposal on the value of portfolio holdings, considering both the short-
and long-term impact. In many instances, Pioneer believes that supporting
the company's strategy and voting "for" management's proposals builds
portfolio value. In other cases, however, proposals set forth by management
may have a negative effect on that value, while some shareholder proposals
may hold the best prospects for enhancing it. Pioneer monitors developments
in the proxy-voting arena and will revise this policy as needed.
All proxies that are received promptly will be voted in accordance with the
specific policies listed below. All shares in a company held by
Pioneer-managed accounts will be voted alike, unless a client has given us
specific voting instructions on an issue or has not delegated authority to
us. Proxy voting issues will be reviewed by Pioneer's Proxy Voting
Oversight Group, which consists of the Director of Portfolio Management US,
the Director of Investment Operations (the Proxy Coordinator), and the
Director of Compliance.
Pioneer has established Proxy Voting Procedures for identifying and
reviewing conflicts of interest that may arise in the voting of proxies.
Clients may request, at any time, a report on proxy votes for securities
held in their portfolios and Pioneer is happy to discuss our proxy votes
with company management. Pioneer retains a proxy voting service to provide
research on proxy issues and to process proxy votes.
Administrative
While administrative items appear infrequently in U.S. issuer proxies, they
are quite common in non-U.S. proxies.
We will generally support these and similar management proposals:
o Corporate name change.
o A change of corporate headquarters.
o Stock exchange listing.
o Establishment of time and place of annual meeting.
o Adjournment or postponement of annual meeting.
o Acceptance/approval of financial statements.
o Approval of dividend payments, dividend reinvestment plans and other
dividend-related proposals.
o Approval of minutes and other formalities.
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o Authorization of the transferring of reserves and allocation of
income.
o Amendments to authorized signatories.
o Approval of accounting method changes or change in fiscal year-end.
o Acceptance of labor agreements.
o Appointment of internal auditors.
Pioneer will vote on a case-by-case basis on other routine business;
however, Pioneer will oppose any routine business proposal if insufficient
information is presented in advance to allow Pioneer to judge the merit of
the proposal. Pioneer has also instructed its proxy voting service to
inform Pioneer of its analysis of any administrative items inconsistent, in
its view, with supporting the value of Pioneer portfolio holdings so that
Pioneer may consider and vote on those items on a case-by-case basis.
Auditors
We normally vote for proposals to:
o Ratify the auditors. We will consider a vote against if we are
concerned about the auditors' independence or their past work for
the company. Specifically, we will oppose the ratification of
auditors and withhold votes from audit committee members if
non-audit fees paid by the company to the auditing firm exceed the
sum of audit fees plus audit-related fees plus permissible tax
fees according to the disclosure categories proposed by the
Securities and Exchange Commission.
o Restore shareholder rights to ratify the auditors.
We will normally oppose proposals that require companies to:
o Seek bids from other auditors.
o Rotate auditing firms, except where the rotation is statutorily
required or where rotation would demonstrably strengthen financial
disclosure.
o Indemnify auditors.
o Prohibit auditors from engaging in non-audit services for the
company.
Board of Directors
On issues related to the board of directors, Pioneer normally supports
management. We will, however, consider a vote against management in
instances where corporate performance has been very poor or where the board
appears to lack independence.
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General Board Issues
Pioneer will vote for:
o Audit, compensation and nominating committees composed of
independent directors exclusively.
o Indemnification for directors for actions taken in good faith in
accordance with the business judgment rule. We will vote against
proposals for broader indemnification.
o Changes in board size that appear to have a legitimate business
purpose and are not primarily for anti-takeover reasons.
o Election of an honorary director.
We will vote against:
o Minimum stock ownership by directors.
o Term limits for directors. Companies benefit from experienced
directors, and shareholder control is better achieved through
annual votes.
o Requirements for union or special interest representation on the
board.
o Requirements to provide two candidates for each board seat.
We will vote on a case-by case basis on these issues:
o Separate chairman and CEO positions. We will consider voting with
shareholders on these issues in cases of poor corporate
performance.
Elections of Directors
In uncontested elections of directors we will vote against:
o Individual directors with absenteeism above 25% without valid
reason. We support proposals that require disclosure of director
attendance.
o Insider directors and affiliated outsiders who sit on the audit,
compensation, stock option or nominating committees. For the
purposes of our policy, we accept the definition of affiliated
directors provided by our proxy voting service.
We will also vote against:
o Directors who have failed to act on a takeover offer where the
majority of shareholders have tendered their shares.
o Directors who appear to lack independence or are associated with
very poor corporate performance.
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We will vote on a case-by case basis on these issues:
o Re-election of directors who have implemented or renewed a
dead-hand or modified dead-hand poison pill (a "dead-hand poison
pill" is a shareholder rights plan that may be altered only by
incumbent or "dead " directors. These plans prevent a potential
acquirer from disabling a poison pill by obtaining control of the
board through a proxy vote).
o Contested election of directors.
o Prior to phase-in required by SEC, we would consider supporting
election of a majority of independent directors in cases of poor
performance.
o Mandatory retirement policies.
o Directors who have ignored a shareholder proposal that has been
approved by shareholders for two consecutive years.
Takeover-Related Measures
Pioneer is generally opposed to proposals that may discourage takeover
attempts. We believe that the potential for a takeover helps ensure that
corporate performance remains high.
Pioneer will vote for:
o Cumulative voting.
o Increase ability for shareholders to call special meetings.
o Increase ability for shareholders to act by written consent.
o Restrictions on the ability to make greenmail payments.
o Submitting rights plans to shareholder vote.
o Rescinding shareholder rights plans ("poison pills").
o Opting out of the following state takeover statutes:
o Control share acquisition statutes, which deny large holders voting
rights on holdings over a specified threshold.
o Control share cash-out provisions, which require large holders to
acquire shares from other holders.
o Freeze-out provisions, which impose a waiting period on large
holders before they can attempt to gain control.
o Stakeholder laws, which permit directors to consider interests of
non-shareholder constituencies.
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o Disgorgement provisions, which require acquirers to disgorge profits
on purchases made before gaining control.
o Fair price provisions.
o Authorization of shareholder rights plans.
o Labor protection provisions.
o Mandatory classified boards.
We will vote on a case-by-case basis on the following issues:
o Fair price provisions. We will vote against provisions requiring
supermajority votes to approve takeovers. We will also consider
voting against proposals that require a supermajority vote to
repeal or amend the provision. Finally, we will consider the
mechanism used to determine the fair price; we are generally
opposed to complicated formulas or requirements to pay a premium.
o Opting out of state takeover statutes regarding fair price
provisions. We will use the criteria used for fair price
provisions in general to determine our vote on this issue.
o Proposals that allow shareholders to nominate directors.
We will vote against:
o Classified boards, except in the case of closed-end mutual funds.
o Limiting shareholder ability to remove or appoint directors. We
will support proposals to restore shareholder authority in this
area. We will review on a case-by-case basis proposals that
authorize the board to make interim appointments.
o Classes of shares with unequal voting rights.
o Supermajority vote requirements.
o Severance packages ("golden" and "tin" parachutes). We will support
proposals to put these packages to shareholder vote.
o Reimbursement of dissident proxy solicitation expenses. While we
ordinarily support measures that encourage takeover bids, we
believe that management should have full control over corporate
funds.
o Extension of advance notice requirements for shareholder proposals.
o Granting board authority normally retained by shareholders (e.g.,
amend charter, set board size).
o Shareholder rights plans ("poison pills"). These plans generally
allow shareholders to buy additional shares at a below-market
price in the event of a change in control and may deter some bids.
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Capital Structure
Managements need considerable flexibility in determining the company's
financial structure, and Pioneer normally supports managements' proposals
in this area. We will, however, reject proposals that impose high barriers
to potential takeovers.
Pioneer will vote for:
o Changes in par value.
o Reverse splits, if accompanied by a reduction in number of shares.
o Share repurchase programs, if all shareholders may participate on
equal terms.
o Bond issuance.
o Increases in "ordinary" preferred stock.
o Proposals to have blank-check common stock placements (other than
shares issued in the normal course of business) submitted for
shareholder approval.
o Cancellation of company treasury shares.
We will vote on a case-by-case basis on the following issues:
o Reverse splits not accompanied by a reduction in number of shares,
considering the risk of delisting.
o Increase in authorized common stock. We will make a determination
considering, among other factors:
o Number of shares currently available for issuance;
o Size of requested increase (we would normally approve increases of up to
100% of current authorization);
o Proposed use of the additional shares; and
o Potential consequences of a failure to increase the number of shares
outstanding (e.g., delisting or bankruptcy).
o Blank-check preferred. We will normally oppose issuance of a new
class of blank-check preferred, but may approve an increase in a
class already outstanding if the company has demonstrated that it
uses this flexibility appropriately.
o Proposals to submit private placements to shareholder vote.
o Other financing plans.
We will vote against preemptive rights that we believe limit a company's
financing flexibility.
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Compensation
Pioneer supports compensation plans that link pay to shareholder returns
and believes that management has the best understanding of the level of
compensation needed to attract and retain qualified people. At the same
time, stock-related compensation plans have a significant economic impact
and a direct effect on the balance sheet. Therefore, while we do not want
to micromanage a company's compensation programs, we will place limits on
the potential dilution these plans may impose.
Pioneer will vote for:
o 401(k) benefit plans.
o Employee stock ownership plans (ESOPs), as long as shares
allocated to ESOPs are less than 5% of outstanding shares. Larger
blocks of stock in ESOPs can serve as a takeover defense. We will
support proposals to submit ESOPs to shareholder vote.
o Various issues related to the Omnibus Budget and Reconciliation Act
of 1993 (OBRA), including:
o Amendments to performance plans to conform with OBRA;
o Caps on annual grants or amendments of administrative features;
o Adding performance goals; and
o Cash or cash-and-stock bonus plans.
o Establish a process to link pay, including stock-option grants, to
performance, leaving specifics of implementation to the company.
o Require that option repricings be submitted to shareholders.
o Require the expensing of stock-option awards.
o Require reporting of executive retirement benefits (deferred
compensation, split-dollar life insurance, SERPs, and pension
benefits).
o Employee stock purchase plans where the purchase price is equal to
at least 85% of the market price, where the offering period is no
greater than 27 months and where potential dilution (as defined
below) is no greater than 10%.
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We will vote on a case-by-case basis on the following issues:
o Executive and director stock-related compensation plans. We will
consider the following factors when reviewing these plans:
o The program must be of a reasonable size. We will approve plans
where the combined employee and director plans together would
generate less than 15% dilution. We will reject plans with 15% or
more potential dilution.
Dilution = (A + B + C) / (A + B + C + D), where
A = Shares reserved for plan/amendment,
B = Shares available under continuing plans,
C = Shares granted but unexercised and
D = Shares outstanding.
o The plan must not:
o Explicitly permit unlimited option repricing authority or that
have repriced in the past without shareholder approval.
o Be a self-replenishing "evergreen" plan, plans that grant
discount options and tax offset payments.
o We are generally in favor of proposals that increase participation beyond
executives.
o We generally support proposals asking companies to adopt rigorous
vesting provisions for stock option plans such as those that vest
incrementally over, at least, a three- or four-year period with a pro
rata portion of the shares becoming exercisable on an annual basis
following grant date.
o We generally support proposals asking companies to disclose their
window period policies for stock transactions. Window period policies
ensure that employees do not exercise options based on insider
information contemporaneous with quarterly earnings releases and other
material corporate announcements.
o We generally support proposals asking companies to adopt stock holding
periods for their executives.
o All other employee stock purchase plans.
o All other compensation-related proposals, including deferred
compensation plans, employment agreements, loan guarantee programs
and retirement plans.
o All other proposals regarding stock compensation plans, including
extending the life of a plan, changing vesting restrictions,
repricing options, lengthening exercise periods or accelerating
distribution of awards and pyramiding and cashless exercise
programs.
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We will vote against:
o Pensions for non-employee directors. We believe these retirement
plans reduce director objectivity.
o Elimination of stock option plans.
We will vote on a case-by case basis on these issues:
o Limits on executive and director pay.
o Stock in lieu of cash compensation for directors.
Corporate Governance
Pioneer will vote for:
o Confidential Voting.
o Equal access provisions, which allow shareholders to contribute
their opinion to proxy materials.
o Proposals requiring directors to disclose their ownership of shares
in the company.
We will vote on a case-by-case basis on the following issues:
o Change in the state of incorporation. We will support
reincorporations supported by valid business reasons. We will
oppose those that appear to be solely for the purpose of
strengthening takeover defenses.
o Bundled proposals. We will evaluate the overall impact of the
proposal.
o Adopting or amending the charter, bylaws or articles of association.
o Shareholder appraisal rights, which allow shareholders to demand
judicial review of an acquisition price.
We will vote against:
o Shareholder advisory committees. While management should solicit
shareholder input, we prefer to leave the method of doing so to
management's discretion.
o Limitations on stock ownership or voting rights.
o Reduction in share ownership disclosure guidelines.
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.
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ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrant's portfolio ("Portfolio Manager"). Also state each Portfolio
Manager's business experience during the past 5 years.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrant's equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781).
ADDITIONAL INFORMATION ABOUT THE PORTFOLIO MANAGERS
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
The table below indicates, for the portfolio managers 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, 2014. 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.
NUMBER OF ASSETS
ACCOUNTS MANAGED
MANAGED FOR FOR WHICH
WHICH ADVISORY ADVISORY
NUMBER OF FEE IS FEE IS
NAME OF ACCOUNTS TOTAL ASSETS PERFORMANCE- PERFORMANCE-
PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED MANAGED (000'S) BASED BASED (000'S)
------------------- ---------------------------------- ----------- ----------------- ---------------- --------------
Charles Melchreit Other Registered Investment $13,707,661
Companies 11 N/A N/A
$ 5,330,609
Other Pooled Investment Vehicles 4 N/A N/A
$ 2,162,236
-------------------
Other Accounts 9 N/A N/A
---------------------------------- -- ----------- ---------------- ---------
Andrew Feltus Other Registered $13,661,991
Investment Companies 12 N/A N/A
11,486,126 6,695,363
Other Pooled Investment Vehicles 7 1
2,461,217
-------------------
Other Accounts 7 N/A N/A
---------------------------------- -- ----------- ---------------- ---------
Jonathan Sharkey Other Registered Investment $ 3,429,835
Companies 3 N/A N/A
Other Pooled Investment Vehicles 0 $ 0 N/A N/A
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 interest
are increased to the extent that a portfolio manager
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has a financial incentive to favor one account over another. Pioneer has
structured its compensation arrangements in a manner that is intended to limit
such potential for conflicts of interest. 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.
1
COMPENSATION OF PORTFOLIO MANAGERS
Pioneer has adopted a system of compensation for portfolio managers that seeks
to align the financial interests of the portfolio managers with those of
shareholders of the accounts (including Pioneer funds) the portfolio managers
manage, as well as with the financial performance of Pioneer. The compensation
program for all Pioneer portfolio managers includes a base salary (determined
by the rank and tenure of the employee) and an annual bonus program, as well as
customary benefits that are offered generally to all full-time employees. Base
compensation is fixed and normally reevaluated on an annual basis. Pioneer
seeks to set base compensation at market rates, taking into account the
experience and responsibilities of the portfolio manager. The bonus plan is
intended to provide a competitive level of annual bonus compensation that is
tied to the portfolio manager achieving superior investment performance and
align the interests of the investment professional with those of shareholders,
as well as with the financial performance of Pioneer. Any bonus under the plan
is completely discretionary, with a maximum annual bonus that may be in excess
of base salary. The annual bonus is based upon a combination of the following
factors:
o QUANTITATIVE INVESTMENT PERFORMANCE. The quantitative investment performance
calculation is based on pre-tax investment performance of all of the
accounts managed by the portfolio manager (which includes the fund and any
other accounts managed by the portfolio manager) over a one-year period (20%
weighting) and four-year period (80% weighting), measured for periods ending
on December 31. The accounts, which include the fund, are ranked against a
group of mutual funds with similar investment objectives and investment
focus (60%) and a broad-based securities market index measuring the
performance of the same type of securities in which the accounts invest
(40%), which, in the case of the fund, is the Merrill Lynch Global High
Yield and Emerging Markets Index and the CSFB Leveraged Loan Index. As a
result of these two benchmarks, the performance of the portfolio manager for
compensation purposes is measured against the criteria that are relevant to
the portfolio manager's competitive universe.
o QUALITATIVE PERFORMANCE. The qualitative performance component with respect
to all of the accounts managed by the portfolio manager includes objectives,
such as effectiveness in the areas of teamwork, leadership, communications
and marketing, that are mutually established and evaluated by each portfolio
manager and management.
o PIONEER RESULTS AND BUSINESS LINE RESULTS. Pioneer's financial performance,
as well as the investment performance of its investment management group,
affect a portfolio manager's actual bonus by a leverage factor of plus or
minus (+/-) a predetermined percentage.
The quantitative and qualitative performance components comprise 80% and 20%,
respectively, of the overall bonus calculation (on a pre-adjustment basis). A
portion of the annual bonus is deferred for a specified period and may be
invested in one or more Pioneer funds.
Certain portfolio managers participate in other programs designed to reward and
retain key contributors. Senior executives or other key employees are granted
performance units based on the stock price performance of UniCredit and the
financial performance of Pioneer Global Asset Management S.p.A., which are
affiliates of Pioneer. Portfolio managers also may participate in a deferred
compensation program, whereby deferred amounts are invested in one or more
Pioneer funds.
SHARE OWNERSHIP BY PORTFOLIO MANAGERS
The following table indicates as of April 30, 2014 the value, within the
indicated range, of shares beneficially owned by the portfolio managers of the
fund.
BENEFICIAL OWNERSHIP
NAME OF PORTFOLIO MANAGER OF THE FUND*
--------------------------- ---------------------
Charles Melchreit A
--------------------------- ---------------------
Andrew Feltus E
--------------------------- ---------------------
Jonathan Sharkey B
--------------------------- ---------------------
* Key to Dollar Ranges
2
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
3
- The significant investment strategies for Pioneer Diversified High Income
Trust (a closed-end fund) and certain other similarly managed accounts
with investment objectives of a high level of current income, with a
potential for capital appreciation as a secondary objective. The fund
invests in a unique blend of higher yielding asset classes, including
global high yield bonds, leveraged bank loans and event-linked bonds (cat
bonds).
Under normal market conditions, the fund invests at least 80% of its managed
assets (net assets plus borrowings or other leverage for investment purposes)
in diversified portfolio of below investment grade (high yield) debt
securities, loans and preferred stocks. The fund allocates its investments
principally among three sectors of the fixed income securities markets: (i)
below investment grade debt securities and preferred stocks of U.S. and
non-U.S. issuers, including governmental and corporate issuers in emerging
markets ("global high yield debt securities"), (ii) floating rate loans and
(iii) "event-linked" bonds, which sometimes are referred to as
"insurance-linked" or "catastrophe" bonds.
PIM believes that this actively managed, diversified portfolio of asset classes
- global high yield debt securities, floating rate loans and event-linked bonds
- may provide investors with a range of potential benefits across various
market cycles and under various market conditions. These benefits include,
among others, the potential to provide investors with a relatively high level
of current income without undue risk as a result of the low correlation among
these asset classes, reduced volatility due to limited exposure to interest
rate and duration risk, as well as a favorable risk return profile.
Specifically, the floating rate feature of both floating rate loans and
event-linked bonds serves to reduce sensitivity to changes in prevailing
interest rates. In addition, the introduction of event-linked bonds to the
diversified portfolio enhances these benefits by reducing volatility, while
providing the potential for above average returns. Moreover, the fund's
investments in event-linked bonds offer investors access to a unique asset
class that otherwise may be unavailable to them.
The fund does not have a policy of maintaining a specific average credit
quality or a targeted maturity range for its portfolio. The fund may invest any
portion of its assets in securities and other instruments of non-U.S. issuers,
including emerging market issuers, and may engage in certain strategic
transactions.
PIM is responsible for managing the fund's overall investment program,
including allocating the fund's investments among the different asset classes
and managing the fund's investments in global high income debt securities and
floating rate loans. PIM considers both broad economic and issuer specific
factors in selecting a portfolio designed to achieve the fund's investment
objectives. PIM selects individual securities based upon the terms of the
securities (such as yields compared to U.S. Treasuries or comparable issues),
liquidity and rating, sector and issuer diversification. PIM also employs due
diligence and fundamental quantitative and qualitative research to assess an
issuer's credit quality, taking into account financial condition and
profitability, future capital needs, potential for change in rating, industry
outlook, the competitive environment and management ability. PIM may sell a
portfolio security when it believes the security no longer will contribute to
meeting the fund's investment objectives. PIM makes that determination based on
the same criteria it uses to select portfolio securities. In making these
portfolio decisions, PIM relies on the knowledge, experience and judgment of
its staff and the staff of its affiliates who have access to a wide variety of
research.
The fund may use financial leverage on an ongoing basis for investment purposes
by borrowing from banks through a revolving credit facility. Leverage creates
special risks not associated with unleveraged funds having a similar investment
objectives and policies. These include the possibility of higher volatility of
both the net asset value of the fund and the value of assets serving as asset
coverage for the preferred shares.
4
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 registrant's board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 407(c)(2)(iv) of
Regulation S-R(17 CFR 229.407)(as required by Item 22(b)(15))
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 registrant's board of
directors since the registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-R 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 and
principal financials officers, or persons performing similar functions,
regarding the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR
270.30a-3(c))) as of a date within 90 days of the filing date of the report
that includes the disclosure required by this paragraph,
based on the evaluation of these controls and procedures required by Rule
30a-3(b) under the Act (17 CFR 270.30(a)-3(b) and Rules 13a-15(b) or 15d-15(b)
under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)).
The registrant's principal executive officer
and principal financial officer have
concluded that the registrant's disclosure
controls and procedures are effective based
on the evaluation of these controls and
procedures as of a date within 90 days of the
filing date of this report.
(b) Disclose any change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act (17CFR 270.30a-3(d)) that
occured during the second fiscal quarter of the period covered by this report
that has materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting.
There were no significant changes in the
registrant's internal control over financial
reporting that occurred during the second
fiscal quarter of the period covered by this
report that have materially affected, or are
reasonably likely to materially affect, the
registrant's internal control over financial
reporting.
The registrant's principal executive officer and principal financial
officer, however, voluntarily are reporting the following information:
In August of 2006 the registrant's investment adviser
enhanced its internal procedures for reporting performance
information required to be included in prospectuses.
Those enhancements involved additional internal controls
over the appropriateness of performance data
generated for this purpose. Such enhancements were made
following an internal review which identified
prospectuses relating to certain classes of shares of
a limited number of registrants where, inadvertently,
performance information not reflecting the deduction of
applicable sales charges was included. Those prospectuses
were revised, and the revised prospectuses were distributed to
shareholders.
ITEM 12. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(1) 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.
(2) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2(a) under the Act
(17 CFR 270.30a-2(a)) , exactly as set forth below:
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Diversified High Income Trust
By (Signature and Title)* /s/ Daniel K. Kingsbury
Daniel K. Kingsbury, President
Date June 27, 2014
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/ Daniel K. Kingsbury
Daniel K. Kingsbury, President
Date June 27, 2014
By (Signature and Title)* /s/ Mark Bradley
Mark Bradley, Treasurer & Chief Accounting & Financial Officer
Date June 27, 2014
* Print the name and title of each signing officer under his or her signature.