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, 2016 through April 30, 2017
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
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Annual Report | April 30, 2017
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Ticker Symbol: HNW
[LOGO] PIONEER
Investments(R)
visit us: us.pioneerinvestments.com
Table of Contents
President's Letter 2
Portfolio Management Discussion 4
Portfolio Summary 11
Prices and Distributions 12
Performance Update 13
Schedule of Investments 14
Financial Statements 49
Financial Highlights 53
Notes to Financial Statements 55
Report of Independent Registered Public Accounting Firm 70
Approval of New and Interim Management Agreements 72
Trustees, Officers and Service Providers 80
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 1
President's Letter
After an overall strong year for leading market indices in 2016, U.S. markets
continued to generate positive returns over the first calendar quarter of 2017,
with so-called "risk" assets, such as equities and credit-sensitive bonds,
posting solid gains. In the first quarter, U.S. equities, as measured by the
Standard & Poor's 500 Index, returned slightly more than 6%, while high-yield
securities dominated bond market performance.
The transfer of power in Washington, D.C. in January had little or no effect on
the markets in the first quarter, as the post-election momentum we witnessed
late in the fourth quarter of 2016 slowed only when oil prices slumped in March,
due to both higher-than-expected inventories and concerns over whether OPEC
(Organization of Petroleum Exporting Countries) would continue its supply cuts
in June. Not even the Federal Reserve System's (the Fed's) highly anticipated
rate hike during the month of March, its second in three months, nor Britain's
trigger of Article 50 to begin the "Brexit" process caused any dramatic sell-off
of risk assets.
While U.S. gross domestic product (GDP) did slow in the first quarter, the
expectation is for GDP to accelerate in the second quarter, with a strong
consumer leading the way. Pioneer believes the U.S. economy may lead all
developed nations in 2017, with GDP growth in excess of 2% for the year.
President Trump has proposed decidedly pro-business policies, such as lower
taxes, higher infrastructure spending, and less regulation, though we believe
the economy may realize the benefits of those policies, if enacted, more so in
2018 than in 2017. Conversely, the effects of the President's potentially
restrictive trade policies could offset some of the benefits of the pro-growth
fiscal policies.
Even so, we believe solid domestic employment figures should continue to support
consumption and the housing market, and that stronger corporate profits and
increased government spending may contribute to economic growth in 2018 and
beyond. Increasing global Purchasing Manager Indices (PMIs) suggest that growth
in global economies is also improving. (PMIs are used to measure the economic
health of the manufacturing sector.)
There are, as always, some risks to our outlook. First, the market already has
priced in a good deal of the Trump economic reform platform, and that could lead
to near-term disappointment if Congressional follow-through does not happen this
year. The future of the Affordable Care Act is another potential concern. The
first attempt to repeal/replace it failed, but any new proposed
2 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
legislation will undoubtedly have an effect on the health care sector, one of
the largest segments of the U.S. economy. Geopolitical risks, of course, remain
a potential headwind, given ongoing strife in the Middle East and renewed
tensions on the Korean Peninsula.
While our current outlook is generally optimistic, conditions can and often do
change, and while passive investment strategies may have a place in one's
overall portfolio, it is our view that all investment decisions are active
choices.
Throughout Pioneer's history, we have believed in the importance of active
management. The active decisions to invest in equities or fixed-income
securities are made by a team of experienced investment professionals focusing
on identifying value across global markets using proprietary research, careful
risk management, and a long-term perspective. We believe our shareowners can
benefit from the experience and tenure of our investment teams as well as the
insights generated from our extensive research process.
As always, and particularly during times of market uncertainty, we encourage you
to work with your financial advisor to develop an overall investment plan that
addresses both your short- and long-term goals, and to implement such a plan in
a disciplined manner.
We greatly appreciate the trust you have placed in us and look forward to
continuing to serve you in the future.
Sincerely,
/s/ Lisa M. Jones
Lisa M. Jones
President and CEO
Pioneer Investment Management USA Inc.
April 30, 2017
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. Past performance is no
guarantee of future results.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 3
Portfolio Management Discussion | 4/30/17
Lower-quality, higher-yielding debt produced solid results over the 12-month
period ended April 30, 2017, as global economic conditions appeared to brighten
and investor confidence grew. In the following interview, Andrew Feltus, Charles
Melchreit, Jonathan Sharkey, and Chin Liu discuss the factors that affected the
performance of Pioneer Diversified High Income Trust during the 12-month period.
Mr. Feltus, Director of High Yield and Bank Loans, a senior vice president and a
portfolio manager at Pioneer; Mr. Melchreit, Director of Investment-Grade
Management, a senior vice president and a portfolio manager at Pioneer; Mr.
Sharkey, a senior vice president and a portfolio manager at Pioneer; and Mr.
Liu, a vice president and a portfolio manager at Pioneer, are responsible for
the day-to-day management of the Trust.
Q How did the Trust perform during the 12 months ended April 30, 2017?
A Pioneer Diversified High Income Trust returned 16.20% at net asset value
and 17.01% at market price during the 12-month period ended April 30, 2017.
During the same 12-month period, the Trust's custom benchmark returned
8.44%. The custom benchmark is based on equal weights of the Bank of
America Merrill Lynch (BofA ML) Global High Yield and Emerging Markets Plus
(GHY and EMP) Index and the Standard & Poor's/Loan Syndications & Trading
Association (S&P/LSTA) Leveraged Loan Index. 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 30 closed end funds in Lipper's High Yield Closed End Funds Category
(which may or may not be leveraged) was 21.01%, and the average return (at
market price) of the 22 closed end funds in Lipper's Loan Participation
Closed End Funds Category (which may or may not be leveraged) was 22.06%.
The shares of the Trust were selling at a 5.5% discount to net asset value
at the end of the period on April 30, 2017. Comparatively, the shares of
the Trust were selling at a 6.2% discount to net asset value on April 30,
2016, the end of the Trust's previous annual reporting period.
On April 30, 2017, the 30-day SEC yield on the Trust's shares was 9.56%*.
* 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 | 4/30/17
Q How would you describe the investment environment in the fixed-income
markets during the 12-month period ended April 30, 2017?
A Higher-yielding investments performed strongly over the 12-month period.
The surge in high-yield bond prices reflected persistent market confidence
in the prospects for sustained economic growth in the United States and
overseas, and was only briefly interrupted by unforeseen events, such as
the so-called "Brexit" vote in June 2016 by the British electorate to exit
the European Union. Even monetary tightening by the U.S. Federal Reserve
System (the Fed), which hiked the Federal funds rate twice during the
period - once in December 2016 and again in March 2017 - did not cause any
interruptions in general market trends. In the United States, despite a
disappointing gross domestic product (GDP) growth report for the first
calendar quarter of 2017, economic indicators were strong, especially the
employment situation, as new-job creation brought the nation's unemployment
rate down to 4.4% by the period's end. Europe's economy also continued to
gain ground during the period, despite the very brief market sell-off
driven by the Brexit vote, while Japan's economy strengthened and China's
economy responded positively after the Chinese government took steps to
encourage business lending. Renewed growth in China combined with rising
commodity prices also helped lift the emerging markets, especially in the
latter months of the period. Emerging markets corporate bonds, in
particular, performed well over the 12 months.
Q What factors affected the Trust's performance relative to its customized
benchmark during the 12-month period ended April 30, 2017?
A The Trust's heavy exposure to the U.S. high-yield corporate bond market as
well as good security selection results within that group were the main
drivers of the Trust's benchmark-relative performance. In addition, the
Trust's non-benchmark positions in floating-rate bank loans and insurance-
linked securities also aided benchmark-relative returns, despite noteworthy
property damage claims resulting from Hurricane Matthew in the United
States and wildfires in Alberta, Canada.
In addition to strong results from the Trust's portfolio of investments,
the Trust's use of leverage, or borrowed funds, also contributed to
benchmark-relative returns during the period. The use of leverage
increases risk and has the effect of amplifying the size of market swings
on the portfolio. Just as the use of leverage can exaggerate negative
results during market downturns when prices of high-yield bonds decline,
leverage can also enhance gains when high-yield and emerging markets bond
prices rise, as they did during the 12-month period.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 5
Over the course of the 12 months, we eventually reduced the allocation to
insurance-linked securities in the Trust's portfolio, as we saw less
relative value in the asset class. We used the opportunity to increase the
portfolio's exposure to bank loans. Like catastrophe bonds, bank loans have
floating-rate features that can be advantageous in a rising interest-rate
environment. As of period end, senior secured floating-rate loans
represented more than 28% of the Trust's total investment portfolio, while
insurance-linked securities represented nearly 15% of the Trust's total
investment portfolio.
Q What were some of the individual holdings that had noteworthy effects on
the Trust's benchmark-relative results, either positively or negatively,
during the 12-month period ended April 30, 2017?
A Among the portfolio's U.S. high-yield bond holdings, Scientific Games, a
producer of gambling equipment for casinos, delivered standout results for
the Trust during the period, while Jack Cooper Holdings, a transportation
firm that ships new vehicles from manufacturing plants to dealerships,
detracted from benchmark-relative results as the company's profit margins
shrank. Among the loan holdings in the Trust's portfolio, leading
contributors to benchmark-relative returns during the period included loans
of Dixie Electric, a leader in the oil and natural gas services industry,
facilitating upstream, midstream, and downstream operations in the most
prolific energy-producing regions of the U.S., and Jonah Energy, a
privately held natural gas production company.
Holdings that detracted from the Trust's benchmark-relative performance
during the period included a loan to Concordia Health, a diversified
pharmaceutical company that experienced soft earnings in its operations in
the United States and the United Kingdom. Among insurance-linked holdings,
while nearly all of the portfolio's positions worked out well for the
Trust's benchmark-relative performance, one notable exception was a bond of
Gator Re, which was affected by an increase in tornado activity in the U.S.
Q How did the level of leverage in the Trust change over the 12-month period
ended April 30, 2017?
A The Trust employs leverage through a credit agreement. (See Note 8 to the
Financial Statements.)
At the end of the 12-month period on April 30, 2017, 27.9% of the Trust's
total managed assets were financed by leverage (or borrowed funds),
compared with 29.1% of the Trust's total managed assets financed by
leverage at the start of the period on May 1, 2016. The absolute amount of
funds borrowed by the Trust did not change. The reduction in the percentage
of leveraged funds was the result of appreciation in the value of the
Trust's holdings.
6 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
Q Were there any changes in the Trust's dividend** distributions during the
12-month period ended April 30, 2017?
A No, the Trust's dividend distributions remained relatively consistent
during the period. However, the Trust has drawn on accumulated net
investment income in paying the Trust's distributions in recent periods,
and these reserves may be depleted over time.
Q Did the Trust invest in any derivative securities during the 12-month
period ended April 30, 2017? If so, did the use of derivatives have a
material impact on benchmark-relative performance?
A We used some forward foreign currency contracts during the period to help
manage the Trust's exposures to different currencies. The contracts had a
very minor, negative effect on the Trust's benchmark-relative results.
Q What is your investment outlook?
A The economic fundamentals underpinning high-yield investments appear to be
strong, and improving. We anticipate that both the domestic and global
economies will continue to expand, adding to corporate profitability and
enabling companies to improve their earnings and strengthen their balance
sheets. That, in turn, should increase the probability that corporate bond
default rates will decline further.
We think there is good potential for U.S. economic growth to accelerate in
the coming months, especially if President Trump should secure
Congressional approval of his economic agenda, which includes proposed
reductions in both personal and corporate income tax rates and a boost in
infrastructure spending. We believe Japan's economy should continue to
improve, and we anticipate that growth trends in China and Europe should
remain steady. An improving global economic outlook characterized by
healthy corporate profits and low bond default rates also bodes well for
the emerging markets.
As high-yield investments have outperformed other fixed-income securities,
credit spreads have tightened. (Credit spreads are commonly defined as the
differences in yield between Treasuries and other types of fixed-income
securities with similar maturities.) We think high-yield bonds are fairly
valued at the present time, and so there may be less potential for price
appreciation after the recent market rallies. As a consequence, we have
become more cautious and started to reduce the overall credit risk in the
Trust's portfolio.
** Dividends are not guaranteed.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 7
We have a positive outlook for bank-loan investments. We continue to
believe that bank loans can create solid opportunities for income-oriented
investors, despite recent increases in loan prices, which have resulted in
more than three-quarters of the loans in the S&P/LSTA Index selling at
above par (face value). Re-pricings in the loan market remain a concern,
however, as many issuers continue to call away their older, higher-coupon
loans and refinance them into lower-cost loans. We believe the
credit-quality of the loan asset class is good, as defaults rates remain
well below historical averages. We think overall default rates should stay
relatively low, although we anticipate there may be some defaults in the
retail loan sector as online sellers continue to take business from
traditional "brick-and-mortar" retailers.
We plan to maintain exposure in the Trust's portfolio to insurance-linked
securities. As noted earlier, like bank loans, insurance-linked securities
offer the advantage of floating-rate income, which can be advantageous in a
rising interest-rate environment. Within the Trust's allocation to
insurance-linked securities, our approach is to be well diversified***
across different types of risk exposures and geographical areas. Our
objective remains to have the portfolio's holdings of insurance-linked
securities produce strong, risk-adjusted returns for the Trust's
shareholders, with performance that is largely separate from the returns of
most other asset classes, including bonds and bank loans.
*** Diversification does not assure a profit nor protect against loss.
8 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
Please refer to the Schedule of Investments on pages 14-48 for a full listing of
Trust securities.
All investments are subject to risk, including the possible loss of principal.
In the past several years, financial markets have experienced increased
volatility, depressed valuations, decreased liquidity and heightened
uncertainty. These conditions may continue, recur, worsen or spread.
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.
Interest rates in the U.S. recently have been historically low, so the Trust
faces a heightened risk that interest rates may rise. A general rise in interest
rates may cause investors to move out of fixed income securities on a large
scale, which could adversely affect the price and liquidity of fixed income
securities.
The Trust may invest a significant amount of its total assets in illiquid
securities. Illiquid securities may be difficult to dispose of at a 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.
The Trust is required to maintain certain regulatory and other asset coverage
requirements in connection with its use of leverage. In order to maintain
required asset coverage levels, the Trust may be required to reduce the amount
of leverage employed by the Trust, alter the composition of its investment
portfolio or take other actions at what might be inopportune times in the
market. Such actions could reduce the net earnings or returns to shareowners
over time, which is likely to result in a decrease in the market value of the
Trust's shares.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 9
Certain securities in which the Trust invests, including floating rate loans,
once sold, may not settle for an extended period (for example, several weeks or
even longer). The Trust will not receive its sale proceeds until that time,
which may constrain the Trust's ability to meet its obligations.
Insurance-linked securities may include event-linked bonds (also known as
insurance-linked bonds or catastrophe bonds). The return of principal and the
payment of interest on event-linked bonds are contingent on the non-occurrence
of a predefined "trigger" event that leads to physical or economic loss, such as
a hurricane or an aerospace catastrophe.
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.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of opinion as of the date of this report. Past performance is no
guarantee of future results.
10 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
Portfolio Summary | 4/30/17
Portfolio Diversification*
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(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Corporate Bonds & Notes 61.9%
Senior Secured Floating Rate Loan Interests 28.4%
Commercial Mortgage-Backed Securities 2.4%
U.S. Government And Agency Obligation 2.3%
Sovereign Debt Obligations 1.6%
Convertible Bond 0.9%
Preferred Stocks 0.7%
Asset Backed Securities 0.7%
Convertible Preferred Stock 0.4%
Collateralized Mortgage Obligations 0.3%
Treasury Bill 0.2%
Common Stocks 0.1%
Tax Exempt Obligation 0.1%
Call Options Purchased 0.0%+
Warrant 0.0%+
* Includes investments in Insurance Linked Securities totaling 14.8% of total
investment portfolio.
+ Amount rounds to less than 0.1%.
10 Largest Holdings
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(As a percentage of total long-term holdings)**
1. Fixed Income Trust Series 2013-A, 0.0%, 10/15/97 (144A) 2.72%
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2. U.S. Treasury Notes, 1.012%, 4/30/18 2.32
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3. Gullane Segregated Account (Artex SAC, Ltd.), Variable Rate Notes, 11/30/21 1.18
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4. Pangaea Re Segregated Account (Artex SAC, Ltd.), Series 2017-1, Variable
Rate Notes, 11/30/21 0.95
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5. Queen Street X Re, Ltd., 6.547%, 6/8/18 (144A) (Cat Bond) 0.93
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6. Hercules LLC, 6.5%, 6/30/29 0.86
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7. East Lane Re VI, Ltd., 3.447%, 3/14/18 (144A) (Cat Bond) 0.81
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8. Minerva Luxembourg SA, 7.75%, 1/31/23 (144A) 0.78
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9. Communications Sales & Leasing, Inc. / CSL Capital LLC, 8.25%, 10/15/23 0.75
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10. SIG Combibloc Holdings SCA, 7.75%, 2/15/23 (144A) 0.74
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** 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.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 11
Prices and Distributions | 4/30/17
Market Value per Share^
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4/30/17 4/30/16
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Market Value $16.70 $15.60
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(Discount) (5.5)% (6.2)%
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Net Asset Value per Share^
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4/30/17 4/30/16
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Net Asset Value $17.68 $16.63
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Distributions per Share*
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Net Investment Short-Term Long-Term
Income Capital Gains Capital Gains
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5/1/16 - 4/30/17 $1.44 $-- $--
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Yields
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4/30/17 4/30/16
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30-Day SEC Yield 9.56% 9.03%
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The data shown above represents past performance, which is no guarantee of
future results.
^ 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. Net asset value and market value are published daily on the
Trust's website at us.pioneerinvestments.com.
* The amount of distributions made to shareowners during the period was in
excess of the net investment income earned by the Trust during the period.
The Trust has accumulated undistributed net investment income which is part
of the Trust's NAV. A portion of this accumulated net investment income was
distributed to shareowners during the period. A decrease in distributions
may have a negative effect on the market value of the Trust's shares.
12 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
Performance Update | 4/30/17
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 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 S&P/LSTA
Leveraged Loan Index.
Average Annual Total Returns
(As of April 30, 2017)
--------------------------------------------------------------------------------
50% BofA
ML Global
High Yield &
Net EMP Index/
Asset 50% S&P/
Value Market LSTA Leveraged
Period (NAV) Price Loan Index
--------------------------------------------------------------------------------
Life of Trust
(5/30/2007) 8.05% 6.94% 5.72%
5 years 8.35 6.46 5.17
1 year 16.20 17.01 8.44
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[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
50% BofA ML Global High Yield & EMP
Pioneer Diversified Index/50% S&P/LSTA Leveraged Loan
High Income Trust Index
4/07 $10,000 $10,000
4/08 $ 8,933 $ 9,947
4/09 $ 6,868 $ 8,593
4/10 $11,899 $11,822
4/11 $14,034 $13,026
4/12 $14,224 $13,545
4/13 $17,065 $15,079
4/14 $18,280 $15,835
4/15 $16,836 $15,964
4/16 $16,624 $16,071
4/17 $19,452 $17,428
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.
Shares of 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 bought and sold in the open market through a stock exchange and frequently
trade at prices lower than their NAV. NAV per share is total assets less total
liabilities, which include preferred shares or borrowings, as applicable,
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 through open-market purchases 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 or the sale of Trust shares.
Had these fees and taxes been reflected, performance would have been lower.
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 S&P/LSTA Leveraged Loan Index provides broad and comprehensive
total return metrics of the U.S. universe of syndicated term loans. Note:
Effective November 1, 2016, the Trust's composite benchmark changed from 50%
BofA ML Global High Yield & EMP Index/50% CS Leveraged Loan Index, to 50% BofA
ML Global High Yield & EMP Index/50% S&P/LSTA Leveraged Loan Index. The change
was implemented to achieve a better style fit and to maintain consistency with
Pioneer Floating Rate Trust (PHD), which began to utilize the S&P/LSTA Leveraged
Loan Index as its benchmark effective October 1, 2016.
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.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 13
Schedule of Investments | 4/30/17
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Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
ASSET BACKED SECURITIES -- 1.0% of
Net Assets
250,000 American Credit Acceptance Receivables Trust,
Series 2014-2, Class D, 4.96%, 5/10/21 (144A) $ 251,399
299,996 Axis Equipment Finance Receivables III LLC,
Series 2015-1A, Class E, 5.27%, 5/20/20 (144A) 288,953
400,000(a) NCF Dealer Floorplan Master Trust, Series 2016-1A,
Class C, 9.478%, 3/21/22 (144A) 401,859
500,000 VB-S1 Issuer LLC, Series 2016-1A, Class F,
6.901%, 6/15/46 (144A) 509,556
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TOTAL ASSET BACKED SECURITIES
(Cost $1,437,996) $ 1,451,767
----------------------------------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS --
0.4% of Net Assets
46,711 Global Mortgage Securitization, Ltd., Series 2004-A,
Class B1, 5.25%, 11/25/32 (144A) $ 29,674
94,977 Global Mortgage Securitization, Ltd., Series 2005-A,
Class B3, 5.25%, 4/25/32 (144A) 54,978
290,000(b) GMAT Trust, Series 2013-1A, Class M, 5.0%,
11/25/43 (144A) 270,051
248,463(c) GMAT Trust, Series 2015-1A, Class A1, 4.25%,
9/25/20 (144A) 249,095
----------------------------------------------------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $659,180) $ 603,798
----------------------------------------------------------------------------------------------------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES -- 3.5% of Net Assets
375,000(a) BAMLL Commercial Mortgage Securities Trust,
Series 2014-INLD, Class F, 3.299%, 12/15/29 (144A) $ 366,291
200,000(b) BAMLL Commercial Mortgage Securities Trust,
Series 2016-FR14, Class C, 1.407%, 2/27/48 (144A) 168,688
500,000(b) Banc of America Commercial Mortgage Trust,
Series 2007-4, Class D, 6.103%, 2/10/51 (144A) 494,161
124,956(b) Bear Stearns Commercial Mortgage Securities Trust,
Series 2005-PWR7, Class B, 5.214%, 2/11/41 124,771
260,000(a) CFCRE Mortgage Trust, Series 2015-RUM, Class E,
5.594%, 7/15/30 (144A) 254,496
500,000(b) Citigroup Commercial Mortgage Trust, Series 2014-GC23,
Class E, 3.208%, 7/10/47 (144A) 326,548
500,000(b) COBALT CMBS Commercial Mortgage Trust,
Series 2007-C3, Class C, 5.99%, 5/15/46 354,913
300,000(b) COMM Mortgage Trust, Series 2007-C9, Class H,
5.979%, 12/10/49 (144A) 297,516
250,000(a) COMM Mortgage Trust, Series 2014-FL5, Class D,
4.994%, 10/15/31 (144A) 231,190
366,979(a) EQTY Mezzanine Trust, Series 2014-INMZ, Class M,
5.739%, 5/8/31 (144A) 368,102
The accompanying notes are an integral part of these financial statements.
14 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES -- (continued)
170,000(a) EQTY Mortgage Trust, Series 2014-INNS, Class E,
4.439%, 5/8/31 (144A) $ 170,412
80,115 Homeowner Assistance Program Reverse Mortgage
Loan Trust, Series 2013-RM1, Class A, 4.0%,
5/26/53 (144A) 79,714
400,000 JP Morgan Chase Commercial Mortgage Securities Trust,
Series 2014-FRR1, Class B702, 4.234%,
4/27/44 (144A) 388,344
550,000(a) JP Morgan Chase Commercial Mortgage Securities Trust,
Series 2014-INN, Class E, 4.594%, 6/15/29 (144A) 550,000
395,422(b) LB-UBS Commercial Mortgage Trust, Series 2006-C1,
Class AJ, 5.276%, 2/15/41 395,592
346,716(b) Morgan Stanley Capital I Trust, Series 2007-T25, Class AJ,
5.574%, 11/12/49 350,184
250,000 Wells Fargo Commercial Mortgage Trust, Series 2016-BNK1,
Class D, 3.0%, 8/15/49 (144A) 207,377
----------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES
(Cost $5,182,496) $ 5,128,299
----------------------------------------------------------------------------------------------------------
SENIOR SECURED FLOATING RATE LOAN
INTERESTS -- 41.6% of Net Assets* (a)
AUTOMOBILES & COMPONENTS -- 1.4%
Auto Parts & Equipment -- 1.2%
235,000 American Axle & Manufacturing, Inc., Tranche B Term
Loan, 3.24%, 4/6/24 $ 234,324
344,277 Electrical Components International, Inc., Term Loan,
5.897%, 5/28/21 347,074
182,707 Federal-Mogul Corp., Tranche C Term Loan, 4.75%,
4/15/21 182,726
176,852 TI Group Automotive Systems LLC, Initial US Term Loan,
3.743%, 6/30/22 178,178
779,419 Tower Automotive Holdings USA LLC, Initial Term Loan,
3.75%, 3/7/24 778,769
------------
$ 1,721,071
----------------------------------------------------------------------------------------------------------
Automobile Manufacturers -- 0.1%
154,621 Inteva Products LLC, Term B Loan, 9.75%, 9/8/21 $ 155,104
----------------------------------------------------------------------------------------------------------
Tires & Rubber -- 0.1%
191,667 Goodyear Tire & Rubber Co., Second Lien Term Loan,
2.99%, 4/30/19 $ 193,983
------------
Total Automobiles & Components $ 2,070,158
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 15
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
CAPITAL GOODS -- 5.3%
Aerospace & Defense -- 1.7%
401,237 Accudyne Industries Borrower SCA/Accudyne Industries
LLC, Refinancing Term Loan, 4.147%, 12/13/19 $ 400,067
997,500(f) ADS Tactical, Inc., Term Loan, 8.482%, 12/31/22 997,500
297,733 DAE Aviation Holdings, Inc., Initial Term Loan, 5.25%,
7/7/22 299,640
461,428 DynCorp International, Inc., Term Loan B2, 7.75%, 7/7/20 463,158
226,621 Vencore, Inc. (fka SI Organization, Inc.), First Lien Initial
Term Loan, 5.897%, 11/23/19 230,197
157,600 WP CPP Holdings LLC, Second Lien Term Loan B-1,
8.922%, 4/30/21 143,416
------------
$ 2,533,978
----------------------------------------------------------------------------------------------------------
Building Products -- 0.9%
776,839 Builders FirstSource, Inc., Refinancing Term Loan,
4.069%, 2/29/24 $ 775,674
300,000(d) Summit Materials LLC, Restatement Effective Date Term
Loan, 7/18/22 303,375
250,000 Unifrax I LLC, Initial Dollar Term Loan, 4.9%, 4/4/24 251,145
------------
$ 1,330,194
----------------------------------------------------------------------------------------------------------
Construction Machinery & Heavy Trucks -- 0.9%
500,000 Commercial Vehicle Group, Inc., Term Loan B, 7.158%,
3/30/23 $ 503,750
395,580 Doosan Infracore International, Inc. (Doosan Holdings
Europe, Ltd.), Tranche B Term Loan, 4.5%, 5/28/21 400,772
385,125 Navistar, Inc., Tranche B Term Loan, 5.0%, 8/7/20 390,581
------------
$ 1,295,103
----------------------------------------------------------------------------------------------------------
Electrical Components & Equipment -- 0.3%
416,492 Wireco WorldGroup, Inc., First Lien Initial Term Loan,
6.5%, 9/29/23 $ 421,264
----------------------------------------------------------------------------------------------------------
Industrial Conglomerates -- 0.6%
597,249 DTI Holdco, Inc., Initial Term Loan, 6.25%, 10/2/23 $ 588,664
250,000(d) Filtration Group Corp., First Lien Term Loan, 11/23/20 252,344
------------
$ 841,008
----------------------------------------------------------------------------------------------------------
Industrial Machinery -- 0.4%
188,575 Blount International, Inc., Initial Term Loan,
6.0%, 4/12/23 $ 189,636
492,389 NN, Inc., Tranche B Term Loan, 5.243%, 10/19/22 492,158
------------
$ 681,794
----------------------------------------------------------------------------------------------------------
Trading Companies & Distributors -- 0.5%
500,000(d) Beacon Roofing Supply, Inc., Initial Term Loan, 10/1/22 $ 503,958
The accompanying notes are an integral part of these financial statements.
16 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Trading Companies & Distributors -- (continued)
186,879 WESCO Distribution, Inc., Tranche B-1 Loan, 3.778%,
12/12/19 $ 187,638
------------
$ 691,596
------------
Total Capital Goods $ 7,794,937
----------------------------------------------------------------------------------------------------------
COMMERCIAL & PROFESSIONAL SERVICES -- 1.0%
Environmental & Facilities Services -- 0.9%
500,000 Granite Acquisition, Inc., Second Lien Term B Loan,
8.397%, 12/19/22 $ 496,250
249,551 Infiltrator Water Technologies LLC, Term B-1 Loan,
4.647%, 5/27/22 251,891
547,250 Safway Group Holding LLC, Initial Term Loan,
5.75%, 8/21/23 553,178
------------
$ 1,301,319
----------------------------------------------------------------------------------------------------------
Security & Alarm Services -- 0.1%
126,297 Prime Security Services Borrower LLC, First Lien 2016-2
Refinancing Term B-1 Loan, 4.25%, 5/2/22 $ 127,730
------------
Total Commercial & Professional Services $ 1,429,049
----------------------------------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 1.2%
Home Furnishings -- 0.4%
550,000 Serta Simmons Holdings LLC, Second Lien Term Loan,
9.038%, 11/8/24 $ 558,594
----------------------------------------------------------------------------------------------------------
Housewares & Specialties -- 0.3%
500,000 World Kitchen LLC, US Term Loan, 7.25%, 3/4/19 $ 501,250
----------------------------------------------------------------------------------------------------------
Leisure Products -- 0.5%
350,000 Bass Pro Group LLC, Initial Term Loan, 6.147%,
12/15/23 $ 341,578
363,691 Bombardier Recreational Products, Inc., Term B Loan,
4.04%, 6/30/23 366,159
------------
$ 707,737
------------
Total Consumer Durables & Apparel $ 1,767,581
----------------------------------------------------------------------------------------------------------
CONSUMER SERVICES -- 3.1%
Casinos & Gaming -- 0.5%
200,000 CityCenter Holdings LLC, Term B Loan, 3.74389%,
4/18/24 $ 200,550
250,000 Eldorado Resorts, Inc., Term Loan, 5.25%, 4/17/24 250,313
309,190 Scientific Games International, Inc., Initial Term B-3
Loan, 4.994%, 10/1/21 314,021
------------
$ 764,884
----------------------------------------------------------------------------------------------------------
Education Services -- 0.6%
314,053 Cengage Learning Acquisitions, Inc., 2016 Refinancing
Term Loan, 5.25%, 6/7/23 $ 302,669
478,124 Laureate Education, Inc., Series 2021 Extended Term
Loan, 8.509%, 3/17/21 482,681
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 17
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Education Services -- (continued)
125,000 Laureate Education, Inc., Series 2024 Term Loan,
7.5%, 4/26/24 $ 125,156
------------
$ 910,506
----------------------------------------------------------------------------------------------------------
Leisure Facilities -- 0.2%
326,880 Fitness International LLC, Term B Loan, 5.397%, 7/1/20 $ 331,511
----------------------------------------------------------------------------------------------------------
Restaurants -- 0.4%
349,272 1011778 BC Unlimited Liability Co. (New Red Finance,
Inc.) (aka Burger King/Tim Hortons), Term B-3 Loan,
3.309%, 2/16/24 $ 349,890
243,479 Landry's, Inc. (fka Landry's Restaurants, Inc.), Term
Loan B, 3.733%, 10/4/23 244,218
------------
$ 594,108
----------------------------------------------------------------------------------------------------------
Specialized Consumer Services -- 1.4%
750,000 Constellis Group, Inc., Term Loan B, 6.155%, 4/19/24 $ 743,438
533,875(d) Creative Artists Agency LLC, Refinancing Term Loan,
2/15/24 540,882
738,788 KinderCare Education LLC, Term Loan, 4.917%, 8/12/22 743,944
------------
$ 2,028,264
------------
Total Consumer Services $ 4,629,273
----------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 1.8%
Consumer Finance -- 0.2%
211,895 Trans Union LLC, Term B-2 Loan, 3.493%, 4/9/23 $ 214,040
----------------------------------------------------------------------------------------------------------
Diversified Capital Markets -- 0.2%
250,000 Freedom Mortgage Corp., Initial Term Loan, 6.862%,
2/23/22 $ 254,219
----------------------------------------------------------------------------------------------------------
Investment Banking & Brokerage -- 0.3%
250,000 Duff & Phelps Corp., Initial Term Loan, 4.897%, 4/23/20 $ 252,156
200,000 LPL Holdings, Inc., Initial Term Loan, 3.92%, 3/11/24 201,250
------------
$ 453,406
----------------------------------------------------------------------------------------------------------
Other Diversified Financial Services -- 0.6%
268,549 AWAS Finance Luxembourg 2012 SA, Term Loan,
3.91%, 7/16/18 $ 269,556
635,000 Summit Midstream Partners Holdings LLC, Term Loan
Credit Facility, 7.022%, 5/13/22 648,494
------------
$ 918,050
----------------------------------------------------------------------------------------------------------
Specialized Finance -- 0.5%
245,000 DBRS, Ltd., Initial Term Loan, 6.304%, 3/4/22 $ 237,650
500,000(d) MHVC Acquisition Corp., First Lien Initial Term Loan,
4/29/24 503,750
------------
$ 741,400
------------
Total Diversified Financials $ 2,581,115
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
18 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
ENERGY -- 2.3%
Integrated Oil & Gas -- 0.3%
498,114(d) ExGen Renewables I LLC, Term Loan, 2/8/21 $ 501,071
----------------------------------------------------------------------------------------------------------
Oil & Gas Drilling -- 0.6%
250,000 Gavilan Resources LLC, Second Lien Initial Term Loan,
7.0%, 3/1/24 $ 249,450
744,680 Jonah Energy LLC, Second Lien Initial Term Loan, 7.5%,
5/12/21 710,239
------------
$ 959,689
----------------------------------------------------------------------------------------------------------
Oil & Gas Equipment & Services -- 0.3%
535,914 FR Dixie Acquisition Corp., Term Loan, 5.804%,
12/18/20 $ 393,897
----------------------------------------------------------------------------------------------------------
Oil & Gas Exploration & Production -- 0.6%
250,000 California Resources Corp., Term Loan, 11.375%,
12/31/21 $ 274,375
550,000 Chesapeake Energy Corp., Term Loan Class A, 8.553%,
8/23/21 595,146
------------
$ 869,521
----------------------------------------------------------------------------------------------------------
Oil & Gas Storage & Transportation -- 0.5%
686,550 Gulf Finance LLC, Tranche B Term Loan, 6.25%, 8/25/23 $ 687,408
------------
Total Energy $ 3,411,586
----------------------------------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 0.9%
Packaged Foods & Meats -- 0.9%
497,500 Amplify Snack Brands, Inc., Term Loan, 6.5%, 9/2/23 $ 489,830
471,260 Dole Food Co., Inc., Tranche B Term Loan, 4.15%,
4/6/24 473,701
349,123 Give and Go Prepared Foods Corp., First Lien Term
Loan, 6.647%, 7/29/23 352,323
------------
Total Food, Beverage & Tobacco $ 1,315,854
----------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 3.9%
Health Care Facilities -- 1.1%
237,518 CHS/Community Health Systems, Inc., Incremental
2019 Term G Loan, 3.75%, 12/31/19 $ 236,903
437,027 CHS/Community Health Systems, Inc., Incremental
2021 Term H Loan, 4.0%, 1/27/21 434,750
192,079 HCA Inc., Tranche B-9 Term Loan, 2.993%, 3/17/23 193,093
312,910 Kindred Healthcare, Inc., Incremental Term Loan,
4.688%, 4/9/21 313,742
496,250 Prospect Medical Holdings, Inc., Term Loan, 7.063%,
6/30/22 504,624
------------
$ 1,683,112
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 19
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Health Care Services -- 1.7%
328,840(e) Bioscrip, Inc., Initial Term B Loan, 9.25% (2.75% PIK
6.5% cash), 7/31/20 $ 326,168
197,304(e) Bioscrip, Inc., Term Loan, 9.25% (2.75% PIK 6.5%
cash), 7/31/20 195,701
250,000(d) ExamWorks Group, Inc. (fka Gold Merger Co., Inc.),
Term B-1 Loan, 7/27/23 252,656
200,000 Genoa Healthcare Co., LLC, Second Lien Initial Term
Loan, 9.147%, 10/28/24 202,000
344,750 HC Group Holdings III, Inc., First Lien Initial Term Loan,
6.0%, 4/7/22 340,441
249,375 Inventiv Group Holdings, Inc., Initial Term Loan, 4.804%,
11/9/23 251,187
198,850 National Mentor Holdings, Inc., Tranche B Term Loan,
4.397%, 1/31/21 199,782
199,497(d) nThrive, Inc. (fka Precyse Acquisition Corp.), First Lien
Initial Term Loan, 10/20/22 201,243
99,243 NVA Holdings, Inc., First Lien Term B-2 Loan, 4.647%,
8/14/21 100,267
414,286 NVA Holdings, Inc., Second Lien Term Loan, 8.147%,
8/14/22 418,601
------------
$ 2,488,046
----------------------------------------------------------------------------------------------------------
Health Care Supplies -- 0.6%
228,904 Alere, Inc., Term Loan B, 4.25%, 6/20/22 $ 229,691
185,000 Kinetic Concepts, Inc., Dollar Term Loan, 4.397%, 2/2/24 185,559
500,000 Sterigenics-Nordion Holdings LLC, Incremental Term
Loan, 4.15%, 5/15/22 498,125
------------
$ 913,375
----------------------------------------------------------------------------------------------------------
Health Care Technology -- 0.5%
250,000(d) Change Healthcare Holdings, Inc. (fka Emdeon Inc.),
Closing Date Term Loan, 3/1/24 $ 251,005
375,258(f) Medical Card System, Inc., Term Loan, 1.5%, 5/31/19 243,918
169,575 Quintiles IMS, Inc., Term B-1 Dollar Loan, 3.051%, 3/7/24 171,341
------------
$ 666,264
------------
Total Health Care Equipment & Services $ 5,750,797
----------------------------------------------------------------------------------------------------------
HOUSEHOLD & PERSONAL PRODUCTS -- 0.9%
Household Products -- 0.5%
248,063 Redbox Automated Retail LLC, First Lien Term B Loan,
8.5%, 9/27/21 $ 248,889
400,000(d) WKI Holding Co., Inc. (World Kitchen LLC), Term Loan B,
4/25/24 402,000
------------
$ 650,889
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
20 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Personal Products -- 0.4%
249,364 Atrium Innovations, Inc., First Lien Initial Tranche B-1
Term Loan, 4.647%, 2/15/21 $ 250,922
126,910 Nature's Bounty Co. (aka NBTY Inc.), Dollar Term B-1
Loan, 4.647%, 5/5/23 127,624
248,750 Revlon Consumer Products Corp., Initial Term B Loan,
4.493%, 9/7/23 249,666
------------
$ 628,212
------------
Total Household & Personal Products $ 1,279,101
----------------------------------------------------------------------------------------------------------
INSURANCE -- 2.2%
Life & Health Insurance -- 0.3%
493,892 Integro, Ltd., Initial Term Loan, 6.75%, 10/31/22 $ 495,127
----------------------------------------------------------------------------------------------------------
Multi-Line Insurance -- 0.1%
165,228 Alliant Holdings I LLC, Term Loan B, 4.417%, 8/12/22 $ 166,231
----------------------------------------------------------------------------------------------------------
Property & Casualty Insurance -- 1.8%
300,000 Acrisure LLC, First Lien Term B Loan, 5.897%, 11/22/23 $ 304,781
593,765 Confie Seguros Holding II Co., Second Lien Term Loan,
10.25%, 5/8/19 592,529
510,892 Confie Seguros Holding II Co., Term B Loan, 5.75%,
4/19/22 512,594
689,587 USI, Inc., Initial Term Loan, 4.25%, 12/27/19 691,096
500,000(d) USI, Inc., Term Loan, 4/5/24 498,282
------------
$ 2,599,282
------------
Total Insurance $ 3,260,640
----------------------------------------------------------------------------------------------------------
MATERIALS -- 5.4%
Construction Materials -- 0.7%
119,250 84 Lumber Co., Initial Term Loan, 6.75%, 10/25/23 $ 120,741
498,747 American Bath Group LLC, First Lien Replacement Term
Loan, 6.397%, 9/30/23 503,422
90,696 CeramTec Service GmbH (CeramTec Acquisition Corp.),
Dollar Term B-3 Loan, 3.804%, 8/30/20 91,660
297,122 CeramTec Service GmbH (CeramTec Acquisition Corp.),
Initial Dollar Term B-1 Loan, 3.804%, 8/30/20 300,279
34,670 CeramTec Service GmbH (CeramTec Acquisition Corp.),
Initial Dollar Term B-2 Loan, 3.804%, 8/30/20 35,039
------------
$ 1,051,141
----------------------------------------------------------------------------------------------------------
Diversified Chemicals -- 0.6%
312,926(d) Allnex (Luxembourg) & Cy SCA (fka AI Chem & Cy SCA),
Tranche B-2 Term Loan, 9/13/23 $ 313,708
235,999(d) Allnex (Luxembourg) & Cy SCA (fka AI Chem & Cy SCA),
Tranche B-3 Term Loan, 9/13/23 236,589
270,884 Univar USA, Inc., Term B-2 Loan, 3.743%, 7/1/22 271,967
------------
$ 822,264
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 21
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Diversified Metals & Mining -- 0.3%
497,500 Global Brass and Copper, Inc., Initial Term Loan, 5.25%,
7/18/23 $ 504,651
72,335(g)(h) PT Bakrie & Brothers Tbk, Facility Term Loan B, 8.15%,
9/28/17 7,595
------------
$ 512,246
----------------------------------------------------------------------------------------------------------
Forest Products -- 0.2%
248,750 Expera Specialty Solutions LLC, Term Loan B, 5.75%,
11/3/23 $ 250,149
----------------------------------------------------------------------------------------------------------
Metal & Glass Containers -- 1.3%
600,000(d) Albea Beauty Holdings SA, Facility B, 4/22/24 $ 601,500
10,499 Kleopatra Holdings 2 SCA, Initial German Borrower
Dollar Term Loan, 4.397%, 4/28/20 10,603
24,568 Kleopatra Holdings 2 SCA, Initial US Dollar Term Loan,
4.397%, 4/28/20 24,810
497,979 Tank Holding Corp., Initial Term Loan, 5.25%, 3/16/22 500,053
736,875 Tekni-Plex, Inc., USD Term Loan, 4.5%, 6/1/22 739,178
------------
$ 1,876,144
----------------------------------------------------------------------------------------------------------
Paper Packaging -- 0.4%
647,472 Caraustar Industries, Inc., Refinancing Term Loan,
6.647%, 3/14/22 $ 653,542
----------------------------------------------------------------------------------------------------------
Paper Products -- 0.6%
287,111 Appvion, Inc., Term Commitment, 7.75%, 6/28/19 $ 280,292
226,974 Exopack Holdings SA, USD Term Loan, 4.647%, 5/8/19 227,967
170,064 Ranpak Corp., Second Lien Initial Term Loan, 8.25%,
10/3/22 167,513
199,491 Ranpak Corp., Tranche B-1 USD Term Loan, 4.25%,
10/1/21 199,990
------------
$ 875,762
----------------------------------------------------------------------------------------------------------
Specialty Chemicals -- 1.0%
290,407 Macdermid, Inc. (Platform Specialty Products Corp.),
Tranche B-5 Term Loan, 4.5%, 6/7/20 $ 293,077
648,250 Omnova Solutions, Inc., Term B-2 Loan, 5.25%, 8/25/23 657,164
450,000(d) Tronox Pigments (Netherlands) BV, New Term Loan,
3/19/20 452,921
------------
$ 1,403,162
----------------------------------------------------------------------------------------------------------
Steel -- 0.3%
496,256 Zekelman Industries, Inc. (fka JMC Steel Group, Inc.),
Term Loan, 4.906%, 6/14/21 $ 502,770
------------
Total Materials $ 7,947,180
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
22 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
MEDIA -- 2.6%
Advertising -- 0.8%
931,253 Affinion Group, Inc., Tranche B Term Loan, 6.75%,
4/30/18 $ 931,170
248,750 CB Poly Investments LLC, First Lien Closing Date Term
Loan, 6.25%, 8/16/23 250,616
------------
$ 1,181,786
----------------------------------------------------------------------------------------------------------
Broadcasting -- 0.9%
164,188 A-L Parent LLC (aka Learfield Communications).,
First Lien Initial Term Loan, 4.25%, 12/1/23 $ 165,727
200,000(d) CSC Holdings LLC (fka CSC Holdings Inc. (Cablevision)),
March 2017 Refinancing Term Loan, 7/15/25 200,141
235,833 Hubbard Radio LLC, Term Loan, 4.25%, 5/27/22 237,012
292,500 MediArena Acquisition BV (fka AP NMT Acquisition BV),
First Lien Dollar Term B Loan, 6.898%, 8/13/21 260,142
452,523 Univision Communications Inc., First Lien 2017
Replacement Repriced Term Loan, 3.75%, 3/15/24 449,915
------------
$ 1,312,937
----------------------------------------------------------------------------------------------------------
Publishing -- 0.9%
319,313 Houghton Mifflin Holdings, Inc., Term Loan, 4.0%,
5/28/21 $ 296,162
46,068 Lee Enterprises, Inc., First Lien Term Loan, 7.25%,
3/31/19 46,299
918,063 McGraw-Hill Global Education Holdings LLC, First Lien
Term B Loan, 5.0%, 5/4/22 909,226
------------
$ 1,251,687
------------
Total Media $ 3,746,410
----------------------------------------------------------------------------------------------------------
PHARMACEUTICALS, BIOTECHNOLOGY & LIFE
SCIENCES -- 1.5%
Life Sciences Tools & Services -- 0.9%
985,000 Albany Molecular Research, Inc., Term Loan B, 5.906%,
7/16/21 $ 991,772
366,949 Catalent Pharma Solutions, Inc. (fka Cardinal Health
409, Inc.), Dollar Term Loan, 3.75%, 5/20/21 371,689
------------
$ 1,363,461
----------------------------------------------------------------------------------------------------------
Pharmaceuticals -- 0.6%
176,271 Concordia Healthcare Corp., Initial Dollar Term Loan,
5.25%, 10/21/21 $ 119,864
500,000 Horizon Pharma, Inc., Term Loan B, 4.75%, 3/22/24 503,750
250,000(d) VRX Escrow Corp., Series F Tranche B Term Loan, 4/1/22 251,589
------------
$ 875,203
------------
Total Pharmaceuticals, Biotechnology & Life Sciences $ 2,238,664
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 23
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
REAL ESTATE -- 0.6%
Retail REITs -- 0.2%
272,523 DTZ US Borrower LLC, First Lien Initial Term Loan,
4.25%, 11/4/21 $ 274,345
42,553 DTZ US Borrower LLC, Second Lien Initial Term Loan,
9.422%, 11/4/22 42,700
------------
$ 317,045
----------------------------------------------------------------------------------------------------------
Specialized REIT -- 0.4%
493,753 Communications Sales & Leasing, Inc. (CSL Capital
LLC), Shortfall Term Loan, 4.0%, 10/24/22 $ 494,800
------------
Total Real Estate $ 811,845
----------------------------------------------------------------------------------------------------------
RETAILING -- 0.5%
Automotive Retail -- 0.4%
637,014 CWGS Group LLC, Term Loan, 4.736%, 11/8/23 $ 642,269
----------------------------------------------------------------------------------------------------------
Specialty Stores -- 0.1%
155,314 PetSmart, Inc., Tranche B-2 Loan, 4.02%, 3/11/22 $ 143,375
------------
Total Retailing $ 785,644
----------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 0.5%
Semiconductors -- 0.5%
496,173 M/A-COM Technology Solutions Holdings, Inc., Initial
Term Loan, 3.989%, 5/7/21 $ 503,616
250,000(d) Micron Technology, Inc., Term Loan, 4/26/22 252,813
------------
Total Semiconductors & Semiconductor Equipment $ 756,429
----------------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 2.6%
Application Software -- 0.5%
249,392 Greeneden US Holdings I LLC, Tranche B-1 Dollar Term
Loan, 5.158%, 12/1/23 $ 251,636
500,000 STG-Fairway Acquisitions, Inc., First Lien Term Loan,
6.397%, 6/30/22 442,500
------------
$ 694,136
----------------------------------------------------------------------------------------------------------
Home Entertainment Software -- 0.0%+
52,000(d) MA FinanceCo., LLC (aka Micro Focus International Plc),
Term Loan B3, 4/19/24 $ 52,260
----------------------------------------------------------------------------------------------------------
Internet Software & Services -- 0.6%
246,875 Avast Holding BV, Initial Refinancing Dollar Term Loan,
4.397%, 9/30/23 $ 249,498
165,000(d) Blucora, Inc., Term Loan B, 4/19/24 165,413
The accompanying notes are an integral part of these financial statements.
24 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Internet Software & Services -- (continued)
249,375 Rackspace Hosting, Inc., First Lien Term Loan B,
4.535%, 11/3/23 $ 251,427
250,000(d) Zayo Group LLC (Zayo Capital, Inc.), 2017 Incremental
Refinancing B-2 Term Loan, 1/19/24 251,934
------------
$ 918,272
----------------------------------------------------------------------------------------------------------
IT Consulting & Other Services -- 1.3%
185,173 Evergreen Skills Lux S.a.r.l., First Lien Initial Term Loan,
5.75%, 4/28/21 $ 173,947
350,000 Go Daddy Operating Co., LLC (GD Finance Co., Inc.),
Initial Term Loan, 3.493%, 2/15/24 351,575
300,000 Rocket Software, Inc., Second Lien Term Loan, 10.647%,
10/14/24 304,782
615,625 Sitel Worldwide Corp., First Lien Term B-1 Loan, 6.688%,
9/18/21 614,663
147,000 TaxACT, Inc. (H.D. Vest, Inc.), Initial Term Loan, 7.0%,
1/3/23 147,551
250,000(d) Tempo Acquisition LLC,Term Loan B, 4/19/24 250,625
------------
$ 1,843,143
----------------------------------------------------------------------------------------------------------
Systems Software -- 0.2%
348,000(d) Seattle Spinco, Inc. (aka Micro Focus International Plc),
Term Loan B, 4/19/24 $ 349,740
------------
Total Software & Services $ 3,857,551
----------------------------------------------------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 0.3%
Electronic Components -- 0.3%
450,800 Mirion Technologies (Finance) LLC (Mirion Technologies,
Inc.), First Lien Initial Term Loan, 5.897%, 3/31/22 $ 452,021
------------
Total Technology Hardware & Equipment $ 452,021
----------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 0.9%
Integrated Telecommunication Services -- 0.7%
489,746 GCI Holdings, Inc., New Term B Loan, 3.993%, 2/2/22 $ 494,031
486,811 Level 3 Financing, Inc., Tranche B 2024 Term Loan,
3.241%, 2/22/24 489,002
------------
$ 983,033
----------------------------------------------------------------------------------------------------------
Wireless Telecommunication Services -- 0.2%
350,000(d) Sprint Communications, Inc., Initial Term Loan, 2/2/24 $ 350,692
------------
Total Telecommunication Services $ 1,333,725
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 25
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 1.0%
Marine -- 0.7%
591,023 Commercial Barge Line Co., Initial Term Loan, 9.75%,
11/12/20 $ 539,308
500,000 Navios Maritime Partners LP (Navios Partners Finance
(US) Inc.), Initial Term Loan, 6.13%, 9/14/20 496,459
------------
$ 1,035,767
----------------------------------------------------------------------------------------------------------
Trucking -- 0.3%
472,113 YRC Worldwide, Inc., Initial Term Loan, 8.5%, 2/13/19 $ 464,677
------------
Total Transportation $ 1,500,444
----------------------------------------------------------------------------------------------------------
UTILITIES -- 1.7%
Electric Utilities -- 1.0%
613,246 APLH Holdings, Ltd., Partnership, Term Loan, 5.25%,
4/13/23 $ 618,356
324,188 Talen Energy Supply LLC, Term B-1 Loan, 5.027%,
7/6/23 322,837
500,000(d) TPF II Power LLC (TPF II Convert Midco LLC), Term
Loan, 10/2/23 504,220
------------
$ 1,445,413
----------------------------------------------------------------------------------------------------------
Independent Power Producers & Energy Traders -- 0.7%
500,000 Dynegy, Inc., Tranche C-1 Term Loan, 4.25%, 2/7/24 $ 500,470
609,214 TerraForm AP Acquisition Holdings LLC, Term Loan,
5.647%, 6/27/22 618,352
------------
$ 1,118,822
------------
Total Utilities $ 2,564,235
----------------------------------------------------------------------------------------------------------
TOTAL SENIOR SECURED FLOATING RATE LOAN INTERESTS
(Cost $61,071,020) $ 61,284,239
----------------------------------------------------------------------------------------------------------
CORPORATE BONDS & NOTES --
90.7% of Net Assets
AUTOMOBILES & COMPONENTS -- 0.7%
Auto Parts & Equipment -- 0.7%
EUR 165,000(e) IHO Verwaltungs GmbH, 3.25% (4.0% PIK 0.0% cash),
9/15/23 (144A) $ 187,011
EUR 395,000(e) IHO Verwaltungs GmbH, 3.75% (4.5% PIK 0.0% cash),
9/15/26 (144A) 446,721
454,000 International Automotive Components Group SA,
9.125%, 6/1/18 (144A) 441,515
------------
Total Automobiles & Components $ 1,075,247
----------------------------------------------------------------------------------------------------------
BANKS -- 5.6%
Diversified Banks -- 5.3%
200,000 Access Bank Plc, 10.5%, 10/19/21 (144A) $ 212,372
300,000(b) Banco de Galicia y Buenos Aires, 8.25%, 7/19/26 (144A) 328,029
The accompanying notes are an integral part of these financial statements.
26 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Diversified Banks -- (continued)
525,000 Banco de Galicia y Buenos Aires, 8.75%, 5/4/18 (144A) $ 521,671
200,000(b)(i) Banco Santander SA, 6.375% 203,750
680,000 Banque Ouest Africaine de Developpement, 5.5%,
5/6/21 (144A) 722,609
950,000(b)(i) BNP Paribas SA, 7.625% (144A) 1,031,985
1,000,000(b)(i) Credit Agricole SA, 7.875% (144A) 1,069,820
240,000(b)(i) Goldman Sachs Capital II, 4.0% 204,000
350,000(b)(i) ING Groep NV, 6.5% 359,187
225,000(b)(i) Intesa Sanpaolo S.p.A., 7.7% (144A) 221,906
250,000(b)(i) Royal Bank of Scotland Group Plc, 8.0% 259,375
400,000(b)(i) Royal Bank of Scotland Group Plc, 8.625% 431,800
200,000 Sberbank of Russia Via SB Capital SA, 5.25%,
5/23/23 (144A) 206,500
460,000(b)(i) Societe Generale SA, 7.375% (144A) 486,450
245,000 Trade & Development Bank of Mongolia LLC, 9.375%,
5/19/20 (144A) 263,799
344,000(b) Turkiye Vakiflar Bankasi TAO, 8.0%, 11/1/27 (144A) 357,571
750,000 UBS AG / Stamford CT, 7.625%, 8/17/22 875,625
------------
$ 7,756,449
----------------------------------------------------------------------------------------------------------
Thrifts & Mortgage Finance -- 0.3%
450,000 Vnesheconombank Via VEB Finance Plc, 6.902%,
7/9/20 (144A) $ 493,841
------------
Total Banks $ 8,250,290
----------------------------------------------------------------------------------------------------------
CAPITAL GOODS -- 2.3%
Aerospace & Defense -- 0.2%
250,000 Triumph Group, Inc., 4.875%, 4/1/21 $ 245,000
----------------------------------------------------------------------------------------------------------
Agricultural & Farm Machinery -- 0.3%
475,000 Titan International, Inc., 6.875%, 10/1/20 $ 488,063
----------------------------------------------------------------------------------------------------------
Construction & Engineering -- 0.3%
455,000 Tutor Perini Corp., 6.875%, 5/1/25 (144A) $ 477,750
----------------------------------------------------------------------------------------------------------
Construction Machinery & Heavy Trucks -- 0.2%
360,000 Meritor, Inc., 6.75%, 6/15/21 $ 373,500
----------------------------------------------------------------------------------------------------------
Industrial Conglomerates -- 0.4%
455,000 JB Poindexter & Co., Inc., 9.0%, 4/1/22 (144A) $ 476,612
155,000 Park-Ohio Industries, Inc., 6.625%, 4/15/27 (144A) 158,875
------------
$ 635,487
----------------------------------------------------------------------------------------------------------
Industrial Machinery -- 0.7%
560,000 Apex Tool Group LLC, 7.0%, 2/1/21 (144A) $ 518,000
450,000 Cleaver-Brooks, Inc., 8.75%, 12/15/19 (144A) 464,625
------------
$ 982,625
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 27
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Trading Companies & Distributors -- 0.2%
150,000 H&E Equipment Services, Inc., 7.0%, 9/1/22 $ 156,840
73,000 TRAC Intermodal LLC / TRAC Intermodal Corp.,
11.0%, 8/15/19 77,190
------------
$ 234,030
------------
Total Capital Goods $ 3,436,455
----------------------------------------------------------------------------------------------------------
COMMERCIAL & PROFESSIONAL SERVICES -- 1.1%
Commercial Printing -- 0.2%
340,000 Cenveo Corp., 6.0%, 8/1/19 (144A) $ 277,100
----------------------------------------------------------------------------------------------------------
Diversified Support Services -- 0.7%
EUR 475,000 Boing Group Financing Plc, 6.625%, 7/15/19 (144A) $ 523,662
280,000 Broadspectrum, Ltd., 8.375%, 5/15/20 (144A) 292,180
260,000 TMS International Corp., 7.625%, 10/15/21 (144A) 261,950
------------
$ 1,077,792
----------------------------------------------------------------------------------------------------------
Security & Alarm Services -- 0.2%
290,000 Prime Security Services Borrower LLC / Prime Finance,
Inc., 9.25%, 5/15/23 (144A) $ 316,825
------------
Total Commercial & Professional Services $ 1,671,717
----------------------------------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 0.8%
Homebuilding -- 0.8%
135,000 Beazer Homes USA, Inc., 8.75%, 3/15/22 $ 150,187
350,000 Brookfield Residential Properties, Inc., 6.375%,
5/15/25 (144A) 364,875
250,000 KB Home, 7.0%, 12/15/21 279,375
340,000 KB Home, 7.625%, 5/15/23 376,550
------------
Total Consumer Durables & Apparel $ 1,170,987
----------------------------------------------------------------------------------------------------------
CONSUMER SERVICES -- 4.3%
Casinos & Gaming -- 1.7%
EUR 750,000 Intralot Capital Luxembourg SA, 6.75%, 9/15/21 (144A) $ 861,329
882,412(e)(g) Mashantucket Western Pequot Tribe, 6.5% (5.5%
PIK 1.0% cash), 7/1/36 10,765
365,000 MGM Resorts International, 6.0%, 3/15/23 398,763
100,000 Scientific Games International, Inc., 6.25%, 9/1/20 96,250
1,050,000 Scientific Games International, Inc., 10.0%, 12/1/22 1,139,250
------------
$ 2,506,357
----------------------------------------------------------------------------------------------------------
Hotels, Resorts & Cruise Lines -- 0.9%
320,000 Hilton Grand Vacations Borrower LLC / Hilton Grand
Vacations Borrower, Inc., 6.125%, 12/1/24 (144A) $ 340,800
250,000 Silversea Cruise Finance Ltd., 7.25%, 2/1/25 (144A) 265,000
245,000 Viking Cruises, Ltd., 6.25%, 5/15/25 (144A) 235,812
525,000 Viking Cruises, Ltd., 8.5%, 10/15/22 (144A) 548,625
------------
$ 1,390,237
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
28 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Restaurants -- 0.4%
495,000 Landry's, Inc., 6.75%, 10/15/24 (144A) $ 518,513
----------------------------------------------------------------------------------------------------------
Specialized Consumer Services -- 1.3%
1,153,000 Constellis Holdings LLC / Constellis Finance Corp.,
9.75%, 5/15/20 (144A) $ 1,240,397
160,000 Monitronics International, Inc., 9.125%, 4/1/20 155,200
540,000 StoneMor Partners LP / Cornerstone Family Services
of WV, 7.875%, 6/1/21 534,951
------------
$ 1,930,548
------------
Total Consumer Services $ 6,345,655
----------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 1.9%
Consumer Finance -- 1.3%
600,000 Credito Real SAB de CV SOFOM ER, 7.25%,
7/20/23 (144A) $ 626,250
445,000 Jefferies Finance LLC / JFIN Co-Issuer Corp., 7.375%,
4/1/20 (144A) 455,012
345,000 Navient Corp., 6.625%, 7/26/21 365,269
440,000 TMX Finance LLC / TitleMax Finance Corp., 8.5%,
9/15/18 (144A) 413,600
------------
$ 1,860,131
----------------------------------------------------------------------------------------------------------
Specialized Finance -- 0.5%
175,000 Nationstar Mortgage LLC / Nationstar Capital Corp.,
6.5%, 7/1/21 $ 177,625
580,000 Nationstar Mortgage LLC / Nationstar Capital Corp.,
6.5%, 6/1/22 582,900
------------
$ 760,525
----------------------------------------------------------------------------------------------------------
Supranational -- 0.1%
IDR 2,730,000,000 European Investment Bank, 7.2%, 7/9/19 (144A) $ 205,974
------------
Total Diversified Financials $ 2,826,630
----------------------------------------------------------------------------------------------------------
ENERGY -- 12.7%
Integrated Oil & Gas -- 1.1%
145,000 Ascent Resources Utica Holdings LLC / ARU Finance
Corp., 10.0%, 4/1/22 (144A) $ 149,894
410,000 Petrobras Global Finance BV, 6.25%, 3/17/24 424,145
650,000 Petrobras Global Finance BV, 7.375%, 1/17/27 698,945
MXN 540,000 Petroleos Mexicanos, 7.19%, 9/12/24 (144A) 25,261
325,000 YPF SA, 8.875%, 12/19/18 (144A) 351,748
------------
$ 1,649,993
----------------------------------------------------------------------------------------------------------
Oil & Gas Drilling -- 0.6%
442,000 Rowan Cos., Inc., 5.4%, 12/1/42 $ 333,710
62,000 Rowan Cos., Inc., 5.85%, 1/15/44 48,670
289,904 Shelf Drilling Holdings Ltd., 9.5%, 11/2/20 (144A) 288,455
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 29
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Oil & Gas Drilling -- (continued)
160,000 Trinidad Drilling, Ltd., 6.625%, 2/15/25 (144A) $ 161,200
------------
$ 832,035
----------------------------------------------------------------------------------------------------------
Oil & Gas Equipment & Services -- 1.0%
540,000 Archrock Partners LP / Archrock Partners Finance Corp.,
6.0%, 10/1/22 $ 538,650
425,000 McDermott International, Inc., 8.0%, 5/1/21 (144A) 442,212
310,000 Weatherford International, Ltd., 5.95%, 4/15/42 271,250
105,000 Weatherford International, Ltd., 8.25%, 6/15/23 113,794
------------
$ 1,365,906
----------------------------------------------------------------------------------------------------------
Oil & Gas Exploration & Production -- 5.5%
300,000 Alta Mesa Holdings LP / Alta Mesa Finance Services
Corp., 7.875%, 12/15/24 (144A) $ 315,000
200,000 California Resources Corp., 8.0%, 12/15/22 (144A) 153,000
200,000 Chesapeake Energy Corp., 8.0%, 1/15/25 (144A) 197,750
250,000 Extraction Oil & Gas Holdings LLC / Extraction Finance
Corp., 7.875%, 7/15/21 (144A) 261,875
360,000 GeoPark Latin America, Ltd., Agencia en Chile, 7.5%,
2/11/20 (144A) 361,800
410,000 Great Western Petroleum LLC / Great Western Finance,
Inc., 9.0%, 9/30/21 (144A) 424,350
740,000 Gulfport Energy Corp., 6.0%, 10/15/24 (144A) 728,900
450,000 Gulfport Energy Corp., 6.375%, 5/15/25 (144A) 448,312
275,000 Halcon Resources Corp., 6.75%, 2/15/25 (144A) 264,000
402,000 Halcon Resources Corp., 12.0%, 2/15/22 (144A) 467,827
420,000 MEG Energy Corp., 6.5%, 1/15/25 (144A) 414,750
450,000 Novatek OAO via Novatek Finance Ltd., 4.422%,
12/13/22 (144A) 460,157
390,000 Oasis Petroleum, Inc., 6.875%, 3/15/22 394,875
470,000 PDC Energy, Inc., 7.75%, 10/15/22 493,500
523,457(e) PetroQuest Energy, Inc., 10.0% (9.0% PIK 1.0% cash),
2/15/21 (144A) 382,124
375,000 Rice Energy, Inc., 6.25%, 5/1/22 392,111
870,000 Sanchez Energy Corp., 7.75%, 6/15/21 841,725
150,000 Whiting Petroleum Corp., 5.0%, 3/15/19 151,500
480,000 Whiting Petroleum Corp., 5.75%, 3/15/21 477,600
300,000 WPX Energy, Inc., 7.5%, 8/1/20 318,000
150,000 WPX Energy, Inc., 8.25%, 8/1/23 167,250
------------
$ 8,116,406
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
30 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Oil & Gas Refining & Marketing -- 0.5%
669,000 Calumet Specialty Products Partners LP / Calumet
Finance Corp., 6.5%, 4/15/21 $ 565,305
200,000 PBF Holding Co., LLC / PBF Finance Corp., 7.0%,
11/15/23 203,000
------------
$ 768,305
----------------------------------------------------------------------------------------------------------
Oil & Gas Storage & Transportation -- 4.0%
220,000 Blue Racer Midstream LLC / Blue Racer Finance Corp.,
6.125%, 11/15/22 (144A) $ 225,500
200,000 Cheniere Corpus Christi Holdings LLC, 7.0%, 6/30/24
(144A) 223,476
230,000 DCP Midstream Operating LP, 5.6%, 4/1/44 219,650
450,000(a) Energy Transfer Partners LP, 4.187%, 11/1/66 385,312
118,000 EnLink Midstream Partners LP, 5.05%, 4/1/45 111,714
344,000 EnLink Midstream Partners LP, 5.6%, 4/1/44 350,048
950,000 Genesis Energy LP / Genesis Energy Finance Corp.,
6.75%, 8/1/22 977,312
480,000 Global Partners LP / GLP Finance Corp., 7.0%, 6/15/23 475,200
170,000 PBF Logistics LP / PBF Logistics Finance Corp.,
6.875%, 5/15/23 174,250
925,000 Sunoco LP / Sunoco Finance Corp., 6.375%, 4/1/23
(144A) 985,125
520,000 Western Refining Logistics LP / WNRL Finance Corp.,
7.5%, 2/15/23 561,600
1,175,000 Williams Cos., Inc., 5.75%, 6/24/44 1,216,125
------------
$ 5,905,312
------------
Total Energy $ 18,637,957
----------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING -- 0.3%
Food Retail -- 0.3%
200,000 C&S Group Enterprises LLC, 5.375%, 7/15/22 (144A) $ 197,500
260,000 Tops Holding LLC / Tops Markets II Corp., 8.0%,
6/15/22 (144A) 227,500
------------
Total Food & Staples Retailing $ 425,000
----------------------------------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 7.1%
Agricultural Products -- 0.5%
900,000 Pinnacle Operating Corp., 9.0%, 11/15/20 (144A) $ 693,000
225,000(g) Tonon Luxembourg SA, 10.5%, 5/14/24 (144A) 101,250
------------
$ 794,250
----------------------------------------------------------------------------------------------------------
Packaged Foods & Meats -- 5.6%
500,000(g) CFG Investment SAC, 9.75%, 7/30/19 (144A) $ 432,500
900,000 JBS Investments GmbH, 7.25%, 4/3/24 (144A) 941,625
515,000 Marfrig Holding Europe BV, 6.875%, 6/24/19 (144A) 534,802
975,000 Marfrig Holding Europe BV, 8.0%, 6/8/23 (144A) 1,034,709
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 31
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Packaged Foods & Meats -- (continued)
800,000 Marfrig Holding Europe BV, 8.375%, 5/9/18 (144A) $ 832,000
700,000 Marfrig Holding Europe BV, 11.25%, 9/20/21 (144A) 700,875
700,000 MHP SA, 8.25%, 4/2/20 (144A) 728,000
580,000 Minerva Luxembourg SA, 6.5%, 9/20/26 (144A) 575,644
1,600,000 Minerva Luxembourg SA, 7.75%, 1/31/23 (144A) 1,682,000
600,000 Pesquera Exalmar SAA, 7.375%, 1/31/20 (144A) 513,000
200,000 Post Holdings, Inc., 7.75%, 3/15/24 (144A) 222,250
------------
$ 8,197,405
----------------------------------------------------------------------------------------------------------
Soft Drinks -- 0.2%
355,000 Cott Beverages, Inc., 5.375%, 7/1/22 $ 367,869
----------------------------------------------------------------------------------------------------------
Tobacco -- 0.8%
160,000 Alliance One International, Inc., 8.5%, 4/15/21 (144A) $ 166,000
1,150,000 Alliance One International, Inc., 9.875%, 7/15/21 993,025
------------
$ 1,159,025
------------
Total Food, Beverage & Tobacco $ 10,518,549
----------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 1.8%
Health Care Facilities -- 1.5%
700,000 Kindred Healthcare, Inc., 6.375%, 4/15/22 $ 676,375
445,000 RegionalCare Hospital Partners Holdings, Inc., 8.25%,
5/1/23 (144A) 473,424
455,000 Team Health Holdings, Inc., 6.375%, 2/1/25 (144A) 444,194
630,000 Universal Hospital Services, Inc., 7.625%, 8/15/20 638,663
------------
$ 2,232,656
----------------------------------------------------------------------------------------------------------
Health Care Services -- 0.3%
425,000 BioScrip, Inc., 8.875%, 2/15/21 $ 359,125
------------
Total Health Care Equipment & Services $ 2,591,781
----------------------------------------------------------------------------------------------------------
HOUSEHOLD & PERSONAL PRODUCTS -- 0.3%
Household Products -- 0.3%
460,000 Springs Industries, Inc., 6.25%, 6/1/21 $ 474,375
------------
Total Household & Personal Products $ 474,375
----------------------------------------------------------------------------------------------------------
INSURANCE -- 26.2%
Insurance Brokers -- 0.0%+
GBP 10,489(a) Towergate Finance Plc, 8.5%, 3/2/20 (144A) $ 13,882
----------------------------------------------------------------------------------------------------------
Property & Casualty Insurance -- 4.4%
6,000,000(c)(f) Fixed Income Trust Series 2013-A, 0.0%,
10/15/97 (144A) $ 5,865,558
EUR 250,000(a) Horse Capital I DAC, 6.25%, 6/15/20 (144A) 273,926
EUR 250,000(a) Horse Capital I DAC, 12.0%, 6/15/20 (144A) 273,953
80,000(b)(i) Sirius International Group, Ltd., 7.506% (144A) 81,600
The accompanying notes are an integral part of these financial statements.
32 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Property & Casualty Insurance -- (continued)
GBP 59,442 TIG FINCO Plc, 8.75%, 4/2/20 (144A) $ 74,814
------------
$ 6,569,851
----------------------------------------------------------------------------------------------------------
Reinsurance -- 21.8%
300,000(a) Aozora Re, Ltd., 3.43%, 4/7/21 (144A) (Cat Bond) $ 299,880
500,000(a) Aozora Re, Ltd., 3.459%, 4/7/20 (144A) (Cat Bond) 509,700
750,000(a) Bosphorus Re, Ltd., 4.341%, 8/17/18 (144A)
(Cat Bond) 762,075
400,000(a) Caelus Re V, Ltd., Series C, 1.379%,
6/5/20 (144A) (Cat Bond) 400,000
375,000(a) Caelus Re V, Ltd., Series D, 1.379%,
6/5/20 (144A) (Cat Bond) 375,000
800,000(j)(k) Carnoustie Segregated Account (Artex SAC, Ltd.),
Variable Rate Notes, 12/31/17 16,320
1,000,000(j)(k) Carnoustie Segregated Account (Artex SAC, Ltd.),
Variable Rate Notes, 11/30/20 108,200
1,000,000(j)(k) Carnoustie Segregated Account (Artex SAC, Ltd.),
Variable Rate Notes, 11/30/21 1,012,700
750,000(a) Citrus Re, Ltd., 8.292%, 2/25/19 (144A) (Cat Bond) 768,675
650,000(j)(k) Cyprus Segregated Account (Artex SAC, Ltd.),
Variable Rate Notes, 7/10/17 578,370
1,750,000(a) East Lane Re VI, Ltd., 3.447%, 3/14/18 (144A)
(Cat Bond) 1,754,375
1,000,000(j)(k) Eden Re II, Ltd., Variable Rate Notes, 3/22/21 (144A) 1,026,300
250,000(a) Galilei Re, Ltd., 9.012%, 1/8/21 (144A) (Cat Bond) 247,725
250,000(a) Galilei Re, Ltd., 14.228%, 1/8/20 (144A) (Cat Bond) 248,475
250,000(a) Galilei Re, Ltd., 14.262%, 1/8/21 (144A) (Cat Bond) 249,700
250,000(a) Galileo Re, Ltd., 9.517%, 1/8/19 (144A) (Cat Bond) 250,425
250,000(a) Galileo Re, Ltd., 14.037%, 1/8/19 (144A) (Cat Bond) 251,100
157,500(a) Gator Re, Ltd., 1.297%, 5/9/17 (144A) (Cat Bond) 197
2,400,000(j)(k) Gleneagles Segregated Account (Artex SAC, Ltd.),
Variable Rate Notes, 11/30/20 403,680
1,500,000(j)(k) Gleneagles Segregated Account (Artex SAC, Ltd.),
Variable Rate Notes, 11/30/21 1,521,300
2,500,000(j)(k) Gullane Segregated Account (Artex SAC, Ltd.),
Variable Rate Notes, 11/30/20 104,750
2,500,000(j)(k) Gullane Segregated Account (Artex SAC, Ltd.),
Variable Rate Notes, 11/30/21 2,542,750
750,000(a) Integrity Re, Ltd., Series A, 0.5%, 6/10/20 (144A)
(Cat Bond) 750,000
500,000(a) Integrity Re, Ltd., Series C, 0.5%, 6/10/20 (144A)
(Cat Bond) 499,515
500,000(a) Kilimanjaro II Re, Ltd., 8.617%, 4/20/21 (144A)
(Cat Bond) 503,600
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 33
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Reinsurance -- (continued)
500,000(a) Kilimanjaro II Re, Ltd., 11.117%, 4/20/21 (144A)
(Cat Bond) $ 502,400
1,000,000(j)(k) Lahinch Segregated Account (Artex SAC, Ltd.), Variable
Rate Notes, 5/10/21 17,800
1,450,000(j)(k) Lorenz Re, Ltd. (Prime, Ltd.), Variable Rate Notes,
3/31/18 8,410
1,000,000(j)(k) Lorenz Re 2017, Ltd. (Prime, Ltd.), Variable Rate Notes,
3/31/20 1,006,000
500,000(a) Merna Re, Ltd., 2.792%, 4/8/20 (144A) (Cat Bond) 500,000
500,000(a) Nakama Re, Ltd., 3.246%, 10/13/21 (144A) (Cat Bond) 508,200
3,000,000(j)(k) Pangaea Re Segregated Account (Artex SAC, Ltd.),
Series 2015-1, Variable Rate Notes, 2/1/19 13,500
2,000,000(j)(k) Pangaea Re Segregated Account (Artex SAC, Ltd.),
Series 2016-1, Variable Rate Notes, 2/1/20 278,000
2,000,000(j)(k) Pangaea Re Segregated Account (Artex SAC, Ltd.),
Series 2017-1, Variable Rate Notes, 11/30/21 2,055,000
400,000(a) Pelican IV Re, Ltd., 3.68%, 5/5/20 (144A) (Cat Bond) 399,720
1,600,000(j)(k) Portrush 2016 Segregated Account (Artex SAC, Ltd.),
Variable Rate Notes, 6/15/17 365,280
500,000(a) Queen Street IX Re, Ltd., 6.297%, 6/8/17 (144A)
(Cat Bond) 500,350
2,000,000(a) Queen Street X Re, Ltd., 6.547%, 6/8/18 (144A)
(Cat Bond) 2,010,000
500,000(l) Residential Reinsurance 2016 Ltd., 12/6/17 (144A)
(Cat Bond) 470,700
700,000(j)(k) Resilience Re, Ltd., Variable Rate Notes, 1/8/18 664,300
1,000,000(j)(k) Resilience Re, Ltd., Variable Rate Notes, 6/2/17 1,001,800
AUD 300,000(j)(k) Rewire Securities LLC, Variable Rate Notes, 7/10/17 198,233
1,250,000(j)(k) Shenandoah Re, Ltd., Variable Rate Notes, 7/7/17 1,237,125
1,000,000(j)(k) Silverton Re, Ltd. (Aon Benfield Securities, Inc.),
Variable Rate Notes, 9/18/17 (144A) 2,000
1,000,000(j)(k) Silverton Re, Ltd. (Aon Benfield Securities, Inc.),
Variable Rate Notes, 9/17/18 (144A) 48,800
1,000,000(j)(k) Silverton Re, Ltd. (Aon Benfield Securities, Inc.),
Variable Rate Notes, 9/16/19 (144A) 1,037,800
1,000,000(j)(k) St. Andrews Segregated Account (Artex SAC, Ltd.),
Variable Rate Notes, 12/31/17 19,700
1,000,000(j)(k) St. Andrews Segregated Account (Artex SAC, Ltd.),
Variable Rate Notes, 2/1/18 140,600
1,000,000(j)(k) St. Andrews Segregated Account (Artex SAC, Ltd.),
Variable Rate Notes, 2/1/19 1,019,000
JPY 150,799,195(j)(k) Tralee Segregated Account (Artex SAC, Ltd.), Variable
Rate Notes, 7/20/17 1,347,838
500,000(a) Vitality Re VI, Ltd., 2.897%, 1/8/18 (144A) (Cat Bond) 500,100
The accompanying notes are an integral part of these financial statements.
34 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Reinsurance -- (continued)
1,000,000(a) Vitality Re VII, Ltd., 3.447%, 1/7/20 (144A) (Cat Bond) $ 1,019,500
------------
$ 32,056,968
------------
Total Insurance $ 38,640,701
----------------------------------------------------------------------------------------------------------
MATERIALS -- 7.0%
Commodity Chemicals -- 1.0%
300,000 Basell Finance Co., BV, 8.1%, 3/15/27 (144A) $ 401,381
175,000 Hexion US Finance Corp., 6.625%, 4/15/20 165,375
336,000 Rain CII Carbon LLC / CII Carbon Corp., 7.25%, 4/1/25
(144A) 336,840
545,000 Rain CII Carbon LLC / CII Carbon Corp., 8.0%, 12/1/18
(144A) 545,000
------------
$ 1,448,596
----------------------------------------------------------------------------------------------------------
Construction Materials -- 0.2%
215,000 Cemex SAB de CV, 7.75%, 4/16/26 (144A) $ 245,100
----------------------------------------------------------------------------------------------------------
Copper -- 0.3%
465,000 Freeport-McMoRan, Inc., 3.55%, 3/1/22 $ 437,100
----------------------------------------------------------------------------------------------------------
Diversified Chemicals -- 1.1%
55,000 Blue Cube Spinco, Inc., 9.75%, 10/15/23 $ 66,550
55,000 Blue Cube Spinco, Inc., 10.0%, 10/15/25 67,787
200,000 CVR Partners LP / CVR Nitrogen Finance Corp.,
9.25%, 6/15/23 (144A) 204,250
500,000 Evolution Escrow Issuer LLC, 7.5%, 3/15/22 (144A) 522,500
825,000 Koks OAO Via Koks Finance Ltd., 7.5%, 5/4/22 (144A) 828,878
------------
$ 1,689,965
----------------------------------------------------------------------------------------------------------
Diversified Metals & Mining -- 1.6%
109,000 Boart Longyear Management Pty, Ltd., 10.0%, 10/1/18
(144A) $ 84,475
300,000 FMG Resources August 2006 Pty, Ltd., 9.75%, 3/1/22
(144A) 345,187
200,000 Hudbay Minerals, Inc., 7.25%, 1/15/23 (144A) 212,750
180,000 Prince Mineral Holding Corp., 11.5%, 12/15/19 (144A) 185,400
70,000 Teck Resources, Ltd., 8.5%, 6/1/24 (144A) 81,112
160,000 Vale Overseas, Ltd., 6.25%, 8/10/26 174,848
375,000 Vedanta Resources Plc, 6.375%, 7/30/22 (144A) 380,063
750,000 Vedanta Resources Plc, 9.5%, 7/18/18 (144A) 820,350
------------
$ 2,284,185
----------------------------------------------------------------------------------------------------------
Forest Products -- 0.2%
390,000 Eldorado International Finance GmbH, 8.625%,
6/16/21 (144A) $ 337,545
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 35
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Metal & Glass Containers -- 0.4%
100,000(e) ARD Finance SA, 7.125% (7.875% PIK 0.0% cash),
9/15/23 (144A) $ 103,750
320,000 Ardagh Packaging Finance Plc / Ardagh Holdings USA,
Inc., 7.25%, 5/15/24 (144A) 348,400
EUR 150,000 Horizon Holdings I SASU, 7.25%, 8/1/23 (144A) 174,582
------------
$ 626,732
----------------------------------------------------------------------------------------------------------
Paper Packaging -- 1.1%
EUR 1,365,000 SIG Combibloc Holdings SCA, 7.75%, 2/15/23 (144A) $ 1,594,598
----------------------------------------------------------------------------------------------------------
Paper Products -- 0.4%
675,000 Appvion, Inc., 9.0%, 6/1/20 (144A) $ 391,500
207,000 Resolute Forest Products, Inc., 5.875%, 5/15/23 197,167
------------
$ 588,667
----------------------------------------------------------------------------------------------------------
Specialty Chemicals -- 0.5%
410,000 A Schulman, Inc., 6.875%, 6/1/23 $ 432,550
150,000 Koppers, Inc., 6.0%, 2/15/25 (144A) 157,125
160,000 Tronox Finance LLC, 6.375%, 8/15/20 162,600
------------
$ 752,275
----------------------------------------------------------------------------------------------------------
Steel -- 0.2%
250,000 Evraz Group SA, 9.5%, 4/24/18 (144A) $ 266,875
------------
Total Materials $ 10,271,638
----------------------------------------------------------------------------------------------------------
MEDIA -- 1.8%
Advertising -- 0.2%
270,000 MDC Partners, Inc., 6.5%, 5/1/24 (144A) $ 263,250
----------------------------------------------------------------------------------------------------------
Broadcasting -- 0.2%
315,000 CSC Holdings LLC, 5.5%, 4/15/27 (144A) $ 325,631
----------------------------------------------------------------------------------------------------------
Cable & Satellite -- 0.2%
220,000 DISH DBS Corp., 7.75%, 7/1/26 $ 257,675
78,000 Intelsat Connect Finance SA, 12.5%, 4/1/22 (144A) 68,640
------------
$ 326,315
----------------------------------------------------------------------------------------------------------
Movies & Entertainment -- 0.6%
600,000 Gibson Brands, Inc., 8.875%, 8/1/18 (144A) $ 540,750
225,000 Regal Entertainment Group, 5.75%, 2/1/25 234,000
------------
$ 774,750
----------------------------------------------------------------------------------------------------------
Publishing -- 0.6%
855,000 Gannett Co., Inc., 6.375%, 10/15/23 $ 908,438
------------
Total Media $ 2,598,384
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
36 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
PHARMACEUTICALS, BIOTECHNOLOGY & LIFE
SCIENCES -- 1.6%
Pharmaceuticals -- 1.6%
208,000 DPx Holdings BV, 7.5%, 2/1/22 (144A) $ 220,220
650,000 Endo Finance LLC / Endo, Ltd. / Endo Finco, Inc.,
6.0%, 7/15/23 (144A) 569,563
240,000 Endo Finance LLC / Endo, Ltd. / Endo Finco, Inc.,
6.0%, 2/1/25 (144A) 202,680
225,000 Horizon Pharma, Inc., 6.625%, 5/1/23 222,469
70,000 Horizon Pharma, Inc. / Horizon Pharma USA, Inc.,
8.75%, 11/1/24 (144A) 72,888
EUR 345,000 VRX Escrow Corp., 4.5%, 5/15/23 (144A) 264,168
EUR 450,000 VRX Escrow Corp., 4.5%, 5/15/23 344,567
430,000 VRX Escrow Corp., 7.0%, 3/15/24 (144A) 438,600
------------
Total Pharmaceuticals, Biotechnology & Life Sciences $ 2,335,155
----------------------------------------------------------------------------------------------------------
REAL ESTATE -- 1.1%
Specialized REIT -- 1.1%
1,520,000 Communications Sales & Leasing, Inc. / CSL Capital
LLC, 8.25%, 10/15/23 $ 1,622,129
------------
Total Real Estate $ 1,622,129
----------------------------------------------------------------------------------------------------------
RETAILING -- 0.8%
Department Stores -- 0.8%
655,000 Grupo Kaltex SA de CV, 8.875%, 4/11/22 (144A) $ 650,415
350,000 Neiman Marcus Group, Ltd., LLC, 8.0%, 10/15/21 (144A) 204,750
300,000 PetSmart, Inc., 7.125%, 3/15/23 (144A) 274,125
------------
Total Retailing $ 1,129,290
----------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT -- 0.2%
Semiconductors -- 0.2%
200,000 Micron Technology, Inc., 5.5%, 2/1/25 $ 209,000
150,000 Micron Technology, Inc., 5.625%, 1/15/26 (144A) 158,625
------------
Total Semiconductors & Semiconductor Equipment $ 367,625
----------------------------------------------------------------------------------------------------------
SOFTWARE & SERVICES -- 0.6%
IT Consulting & Other Services -- 0.6%
130,000 Diamond 1 Finance Corp. / Diamond 2 Finance Corp.,
7.125%, 6/15/24 (144A) $ 143,694
635,000 Rackspace Hosting, Inc., 8.625%, 11/15/24 (144A) 672,306
------------
Total Software & Services $ 816,000
----------------------------------------------------------------------------------------------------------
TECHNOLOGY HARDWARE & EQUIPMENT -- 0.9%
Communications Equipment -- 0.2%
280,000 CommScope Technologies Finance LLC, 6.0%,
6/15/25 (144A) $ 298,550
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 37
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 0.3%
315,000 Zebra Technologies Corp., 7.25%, 10/15/22 $ 340,594
----------------------------------------------------------------------------------------------------------
Technology Hardware, Storage & Peripherals -- 0.4%
560,000 Diebold Nixdorf, Inc., 8.5%, 4/15/24 $ 624,400
------------
Total Technology Hardware & Equipment $ 1,263,544
----------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 4.2%
Integrated Telecommunication Services -- 2.1%
300,000 Cincinnati Bell, Inc., 7.0%, 7/15/24 (144A) $ 317,550
1,165,000 Frontier Communications Corp., 8.75%, 4/15/22 1,123,864
290,000 Frontier Communications Corp., 11.0%, 9/15/25 279,487
750,000 GCI, Inc., 6.875%, 4/15/25 806,250
600,000 Windstream Corp., 7.5%, 6/1/22 583,500
------------
$ 3,110,651
----------------------------------------------------------------------------------------------------------
Wireless Telecommunication Services -- 2.1%
250,000 Altice Finco SA, 8.125%, 1/15/24 (144A) $ 270,000
300,000 Altice SA, 7.75%, 5/15/22 (144A) 318,789
225,000 Digicel Group, Ltd., 8.25%, 9/30/20 (144A) 205,875
750,000 Digicel, Ltd., 6.0%, 4/15/21 (144A) 712,500
200,000 Mobile Telesystems OJSC via MTS International Funding,
Ltd., 5.0%, 5/30/23 (144A) 207,770
340,000 Sprint Corp., 7.125%, 6/15/24 370,814
485,000 Sprint Corp., 7.25%, 9/15/21 530,469
250,000 Unison Ground Lease Funding LLC, 5.78%, 3/15/20
(144A) 247,332
RUB 14,100,000 VimpelCom Holdings BV, 9.0%, 2/13/18 (144A) 247,240
------------
$ 3,110,789
------------
Total Telecommunication Services $ 6,221,440
----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 2.5%
Airlines -- 1.0%
155,000 Intrepid Aviation Group Holdings LLC / Intrepid Finance
Co., 6.875%, 2/15/19 (144A) $ 148,025
450,000 Intrepid Aviation Group Holdings LLC / Intrepid Finance
Co., 8.25%, 7/15/17 (144A) 448,875
300,000 Latam Finance Ltd., 6.875%, 4/11/24 (144A) 304,800
500,000 TAM Capital 3, Inc., 8.375%, 6/3/21 (144A) 518,125
------------
$ 1,419,825
----------------------------------------------------------------------------------------------------------
Airport Services -- 0.2%
200,000 Aeropuertos Dominicanos Siglo XXI SA, 6.75%,
3/30/29 (144A) $ 214,176
----------------------------------------------------------------------------------------------------------
Highways & Railtracks -- 0.3%
MXN 4,500,000 Red de Carreteras de Occidente SAPIB de CV, 9.0%,
6/10/28 (144A) $ 229,549
The accompanying notes are an integral part of these financial statements.
38 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
Highways & Railtracks -- (continued)
260,000 Rumo Luxembourg S.a.r.l., 7.375%, 2/9/24 (144A) $ 270,920
------------
$ 500,469
----------------------------------------------------------------------------------------------------------
Marine -- 0.4%
300,000(g) Far East Capital, Ltd., SA, 8.0%, 5/2/18 $ 198,000
375,000 Navios South American Logistics, Inc. / Navios Logistics
Finance US, Inc., 7.25%, 5/1/22 (144A) 370,312
------------
$ 568,312
----------------------------------------------------------------------------------------------------------
Railroads -- 0.6%
415,299(e) AAF Holdings LLC / AAF Finance Co., 12.0% (12.75%
PIK 12.0% cash), 7/1/19 (144A) $ 435,026
485,000 Florida East Coast Holdings Corp., 6.75%, 5/1/19
(144A) 498,580
------------
$ 933,606
------------
Total Transportation $ 3,636,388
----------------------------------------------------------------------------------------------------------
UTILITIES -- 4.9%
Electric Utilities -- 1.9%
575,000 Centrais Eletricas Brasileiras SA, 5.75%, 10/27/21 $ 588,800
460,000(b) Enel S.p.A, 8.75%, 9/24/73 (144A) 538,200
225,000 Stoneway Capital Corp., 10.0%, 3/1/27 (144A) 236,250
1,840,000 Talen Energy Supply LLC, 6.5%, 6/1/25 1,462,800
------------
$ 2,826,050
----------------------------------------------------------------------------------------------------------
Gas Utilities -- 0.9%
465,000 Ferrellgas LP / Ferrellgas Finance Corp., 6.75%,
6/15/23 $ 448,725
400,000 Ferrellgas LP / Ferrellgas Finance Corp., 8.625%,
6/15/20 (144A) 388,500
492,450 Transportadora de Gas del Sur SA, 9.625%, 5/14/20
(144A) 530,650
------------
$ 1,367,875
----------------------------------------------------------------------------------------------------------
Independent Power Producers & Energy Traders -- 2.1%
570,000 NRG Energy, Inc., 6.625%, 1/15/27 $ 564,300
320,000 NRG Energy, Inc., 7.25%, 5/15/26 327,200
236,050 NSG Holdings LLC / NSG Holdings, Inc., 7.75%,
12/15/25 (144A) 253,754
1,065,000 TerraForm Global Operating LLC, 9.75%, 8/15/22 (144A) 1,182,150
125,000(c) TerraForm Power Operating LLC, 6.375%, 2/1/23 (144A) 129,219
585,000(c) TerraForm Power Operating LLC, 6.625%, 6/15/25 (144A) 618,637
------------
$ 3,075,260
------------
Total Utilities $ 7,269,185
----------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS & NOTES
(Cost $126,375,716) $133,596,122
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 39
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
----------------------------------------------------------------------------------------------------------
CONVERTIBLE BOND -- 1.2% of
Net Assets
MATERIALS -- 1.2%
Diversified Chemicals -- 1.2%
1,900,000(m) Hercules LLC, 6.5%, 6/30/29 $ 1,843,000
------------
Total Materials $ 1,843,000
----------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BOND
(Cost $1,232,746) $ 1,843,000
----------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATION --
3.4% of Net Assets
5,000,000(a) U.S. Treasury Notes, 1.012%, 4/30/18 $ 5,008,920
----------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATION
(Cost $5,001,029) $ 5,008,920
----------------------------------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS -- 2.4% of
Net Assets
Argentina -- 2.0%
235,182 Province of Salta Argentina, 9.5%, 3/16/22 (144A) $ 249,881
360,000 Provincia de Buenos Aires, 9.125%, 3/16/24 (144A) 408,780
230,000 Provincia de Buenos Aires, 9.95%, 6/9/21 (144A) 265,696
820,000 Provincia de Entre Rios Argentina, 8.75%, 2/8/25 (144A) 837,778
1,135,000 Provincia del Chubut Argentina, 7.75%, 7/26/26 (144A) 1,142,298
------------
$ 2,904,433
----------------------------------------------------------------------------------------------------------
Kenya -- 0.3%
500,000 Kenya Government International Bond, 6.875%,
6/24/24 (144A) $ 506,350
----------------------------------------------------------------------------------------------------------
Mexico -- 0.1%
MXN 970,000 Mexican Bonos, 7.75%, 11/13/42 $ 52,282
MXN 344,881 Mexican Udibonos, 3.5%, 12/14/17 18,303
------------
$ 70,585
----------------------------------------------------------------------------------------------------------
TOTAL SOVEREIGN DEBT OBLIGATIONS
(Cost $3,269,366) $ 3,481,368
----------------------------------------------------------------------------------------------------------
TAX EXEMPT OBLIGATION -- 0.2% of Net Assets (n)
Mississippi -- 0.2%
250,000(b) Mississippi Business Finance Corp., Chevron USA,
Inc., Project, Series G, 0.87%, 12/1/30 $ 250,000
----------------------------------------------------------------------------------------------------------
TOTAL TAX EXEMPT OBLIGATION
(Cost $250,000) $ 250,000
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
40 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
-----------------------------------------------------------------------------------------------------------
Shares Value
-----------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 0.2% of Net Assets
CAPITAL GOODS -- 0.0%+
Industrial Machinery -- 0.0%+
10,289(f)(h) Liberty Tire Recycling LLC $ 103
------------
Total Capital Goods $ 103
----------------------------------------------------------------------------------------------------------
CONSUMER DURABLES & APPAREL -- 0.0%+
Homebuilding -- 0.0%+
89,094(h) Desarrolladora Homex SAB de CV $ 8,605
------------
Total Consumer Durables & Apparel $ 8,605
----------------------------------------------------------------------------------------------------------
ENERGY -- 0.0%+
Oil & Gas Exploration & Production -- 0.0%+
273(h) Midstates Petroleum Co., Inc. $ 5,067
11,059(h) PetroQuest Energy, Inc. 25,989
------------
Total Energy $ 31,056
----------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SERVICES -- 0.0%+
Health Care Technology -- 0.0%+
69,875(f)(h) Medical Card System, Inc. $ 699
------------
Total Health Care Equipment & Services $ 699
----------------------------------------------------------------------------------------------------------
RETAILING -- 0.0%+
Computer & Electronics Retail -- 0.0%+
42,088(f)(h) Targus Cayman SubCo., Ltd. $ 40,825
------------
Total Retailing $ 40,825
----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 0.2%
Air Freight & Logistics -- 0.2%
943(h) CEVA Holdings LLC $ 204,793
------------
Total Transportation $ 204,793
----------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $1,137,301) $ 286,081
----------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK -- 0.6% of
Net Assets
BANKS -- 0.6%
Diversified Banks -- 0.6%
770(i) Bank of America Corp., 7.25% $ 934,333
------------
Total Banks $ 934,333
----------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCK
(Cost $739,352) $ 934,333
----------------------------------------------------------------------------------------------------------
PREFERRED STOCKS -- 1.1% of Net Assets
BANKS -- 0.4%
Diversified Banks -- 0.4%
500(b)(i) AgStar Financial Services ACA, 6.75% (144A) $ 535,437
------------
Total Banks $ 535,437
----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 41
Schedule of Investments | 4/30/17 (continued)
----------------------------------------------------------------------------------------------------------
Shares Value
----------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 0.7%
Other Diversified Financial Services -- 0.7%
40,675(b) GMAC Capital Trust I, 6.824%, 2/15/40 $ 1,035,586
------------
Total Diversified Financials $ 1,035,586
----------------------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $1,433,997) $ 1,571,023
----------------------------------------------------------------------------------------------------------
WARRANT -- 0.0%+ of Net Assets
ENERGY -- 0.0%+
Oil & Gas Exploration & Production -- 0.0%+
1,934(h)(o) Midstates Petroleum Co., Inc., Expires 4/21/20 $ --
------------
Total Energy $ --
----------------------------------------------------------------------------------------------------------
TOTAL WARRANT
(Cost $--) $ --
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
Principal
Amount
USD ($)
----------------------------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENT -- 0.3% of
Net Assets
TREASURY BILL -- 0.3%
500,000(l) U.S. Treasury Bill, 5/11/17 $ 499,908
----------------------------------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $499,894) $ 499,908
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
Number of Strike Expiration
Contracts Description Counterparty Price Date
----------------------------------------------------------------------------------------------------------
CALL OPTIONS PURCHASED -- 0.0%+
18,332(p) Desarrolladora Bank of New York $--(r) 10/23/22 $ --
Homex Mellon Corp.
SAB de CV
18,332(q) Desarrolladora Bank of New York --(r) 10/23/22 --
Homex Mellon Corp.
SAB de CV $ --
----------------------------------------------------------------------------------------------------------
TOTAL CALL OPTIONS PURCHASED
(Premium paid $0) $ --
----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES -- 146.6%
(Cost -- $208,290,093) (s)(t) $215,938,858
----------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (46.6)% $(68,629,490)
----------------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $147,309,368
==========================================================================================================
REIT Real Estate Investment Trust.
(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, 2017, the value of these securities
amounted to $91,732,544, or 62.3% of net assets.
The accompanying notes are an integral part of these financial statements.
42 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
(Cat Bond) Catastrophe or Event-linked bond. At April 30, 2017, the value of
these securities amounted to $14,281,412, or 9.7% of net assets.
See Notes to Financial Statements -- Note 1F.
+ Amount rounds to less than 0.1%.
* 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 rate plus a premium.
These base lending rates are generally (i) the lending rate offered
by one or more major European banks, such as LIBOR (London InterBank
Offered Rate), (ii) the prime rate offered by one or more major
United States banks, (iii) the 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, 2017.
(a) Floating rate note. The rate shown is the coupon rate at April 30,
2017.
(b) The interest rate is subject to change periodically. The interest
rate shown is the rate at April 30, 2017.
(c) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specific date. The rate shown is the rate at
April 30, 2017.
(d) This term loan will settle after April 30, 2017, at which time the
interest rate will be determined.
(e) Payment in Kind (PIK) security which may pay interest in the form of
additional principal amount.
(f) Security is valued using fair value methods (other than prices
supplied by independent pricing services). See Notes to Financial
Statements -- Note 1A.
(g) Security is in default.
(h) Non-income producing.
(i) Security is perpetual in nature and has no stated maturity date.
(j) Structured reinsurance investment. At April 30, 2017, the value of
these securities amounted to $17,775,556, or 12.1% of net assets.
See Notes to Financial Statement -- Note 1F.
(k) Rate to be determined.
(l) Security issued with a zero coupon. Income is recognized through
accretion of discount.
(m) Security is priced as a unit.
(n) Consists of Revenue Bonds unless otherwise indicated.
(o) Midstates Petroleum warrants are exercisable into 1,934 shares.
(p) Option does not become effective until underlying company's
outstanding common shares reach a market capitalization of MXN 12.5
Billion.
(q) Option does not become effective until underlying company's
outstanding common shares reach a market capitalization of MXN 15.5
Billion.
(r) Strike price is 1 Mexican Peso (MXN).
(s) At April 30, 2017, the net unrealized appreciation on investments
based on cost for federal tax purposes of $210,551,694 was as
follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost $12,082,978
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (6,695,814)
------------
Net unrealized appreciation $ 5,387,164
============
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 43
Schedule of Investments | 4/30/17 (continued)
(t) Distributions of Investments by country of issue, as a percentage of
long-term holdings based on country of domicile, is as follows:
United States 64.4%
Bermuda 11.6
Luxembourg 3.5
Netherlands 2.9
Ireland 2.9
Cayman Islands 2.7
Argentina 2.3
France 1.3
Canada 1.0
Other (individually less than 1%) 7.4
------
100.0%
======
Purchases and sales of securities (excluding temporary cash investments) for the
year ended April 30, 2017 were as follows:
--------------------------------------------------------------------------------
Purchases Sales
--------------------------------------------------------------------------------
Long-Term U.S. Government $ 12,336,712 $11,365,707
Other Long-Term Securities $111,762,918 $99,964,885
The Trust is permitted to engage in purchase and sale transactions ("cross
trades") with certain funds and accounts for which Pioneer Investment
Management, Inc. (PIM) serves as the investment adviser, as set forth in Rule
17a-7 under the Investment Company Act of 1940, pursuant to procedures adopted
by the Board of Trustees. Under these procedures, cross trades are effected at
current market prices. During the year ended April 30, 2017, the Trust engaged
in purchases and sales pursuant to these procedures amounting to $0 and
$208,342, respectively resulting in a gain of $7,750.
Principal amounts are denominated in U.S. dollars unless otherwise noted.
AUD -- Australian Dollar
EUR -- Euro
GBP -- Great British Pound
IDR -- Indonesian Rupiah
JPY -- Japanese Yen
MXN -- Mexican Peso
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.
The accompanying notes are an integral part of these financial statements.
44 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
The following is a summary of the inputs used as of April 30, 2017, in valuing
the Trust's investments.
---------------------------------------------------------------------------------------------
Level 1 Level 2 Level 3 Total
---------------------------------------------------------------------------------------------
Asset Backed Securities $ -- $ 1,451,767 $ -- $ 1,451,767
Collateralized Mortgage Obligations -- 603,798 -- 603,798
Commercial Mortgage-Backed
Securities -- 5,128,299 -- 5,128,299
Senior Secured Floating
Rate Loan Interests
Capital Goods
Aerospace & Defense -- 1,536,478 997,500 2,533,978
Health Care Equipment
& Services
Health Care Technology -- 422,346 243,918 666,264
All Other Senior Secured Floating
Rate Loan Interests -- 58,083,997 -- 58,083,997
Corporate Bonds & Notes
Insurance
Property & Casualty
Insurance -- 704,293 5,865,558 6,569,851
Reinsurance -- 14,281,412 17,775,556 32,056,968
All Other Corporate
Bonds & Notes -- 94,969,303 -- 94,969,303
Convertible Bond -- 1,843,000 -- 1,843,000
U.S. Government and
Agency Obligation -- 5,008,920 -- 5,008,920
Sovereign Debt Obligations -- 3,481,368 -- 3,481,368
Tax Exempt Obligation -- 250,000 -- 250,000
Common Stocks
Capital Goods
Industrial Machinery -- -- 103 103
Health Care Equipment
& Services
Health Care Technology -- -- 699 699
Retailing
Computer & Electronics
Retail -- -- 40,825 40,825
Transportation
Air Freight & Logistics -- 204,793 -- 204,793
All Other Common Stocks 39,661 -- -- 39,661
Convertible Preferred Stock 934,333 -- -- 934,333
Preferred Stocks
Banks
Diversified Banks -- 535,437 -- 535,437
All Other Preferred Stocks 1,035,586 -- -- 1,035,586
Warrant -- --* -- --*
Treasury Bill -- 499,908 -- 499,908
Call Options Purchased -- --* -- --*
---------------------------------------------------------------------------------------------
Total Investments in Securities $2,009,580 $189,005,119 $ 24,924,159 $215,938,858
=============================================================================================
* Includes securities that are valued $0.
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 45
Schedule of Investments | 4/30/17 (continued)
--------------------------------------------------------------------------------
Level 1 Level 2 Level 3 Total
--------------------------------------------------------------------------------
Other Financial Instruments
Unrealized appreciation
on forward foreign
currency contracts $ -- $27,604 $ -- $27,604
Unrealized depreciation
on forward foreign
currency contracts -- (6,049) -- (6,049)
--------------------------------------------------------------------------------
Total Other Financial Instruments $ -- $21,555 $ -- $21,555
================================================================================
The following is a reconciliation of assets valued using significant
unobservable inputs (Level 3):
----------------------------------------------------------------------------------------------------------------------------------
Change in Transfers
Balance Realized unrealized Accrued in and Balance
as of gain appreciation discounts/ out of as of
4/30/16 (loss)(1) (depreciation)(2) Purchases Sales premiums Level 3* 4/30/17
----------------------------------------------------------------------------------------------------------------------------------
Senior Secured
Floating Rate
Loan Interests
Capital Goods
Aerospace &
Defense $ -- $ 24 $ 9,365 $ 990,000 $ (2,500) $ 611 $ -- $ 997,500
Health Care
Equipment &
Services
Health Care
Technology 243,918 -- (14,559) -- -- 14,559 -- 243,918
Retailing
Computer &
Electronics
Retail 168,351 (38,081) (2,666) 30,863 (158,467) -- -- --
Corporate Bonds
& Notes
Capital Goods
Industrial
Machinery 169,505 (66,689) 43,904 12,598 (160,099) 781 -- --
Insurance
Property
& Casualty
Insurance 5,247,802 -- 595,550 -- -- 22,206 -- 5,865,558
Reinsurance 18,069,562 (46,286) 768,369 15,990,387 (17,016,618) 10,142 -- 17,775,556
The accompanying notes are an integral part of these financial statements.
46 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
------------------------------------------------------------------------------------------------------------------------------------
Change in Transfers
Balance Realized unrealized Accrued in and Balance
as of gain appreciation discounts/ out of as of
4/30/16 (loss)(1) (depreciation)(2) Purchases Sales premiums Level 3* 4/30/17
------------------------------------------------------------------------------------------------------------------------------------
Common Stocks
Capital Goods
Industrial
Machinery $ 103 $ -- $ -- $ -- $ -- $ -- $ -- $ 103
Health Care
Equipment
& Services
Health Care
Technology -- -- -- 699 -- -- -- 699
Insurance
Insurance
Brokers 156 7,090 2,388 -- (9,634) -- -- --
Retailing
Computer &
Electronics
Retail 147,308 -- (106,483) -- -- -- -- 40,825
Preferred Stocks
Insurance
Insurance
Brokers 548,937 (246,334) 123,389 -- (425,992) -- -- --
Reinsurance 37,500 -- (37,500) -- -- -- -- --
Warrant
Insurance
Insurance
Brokers --** -- -- -- --** -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total $24,633,142 $ (390,276) $ 1,381,757 $ 17,024,547 $(17,773,310) $ 48,299 $ -- $24,924,159
====================================================================================================================================
(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 appreciation (depreciation) from investments in
the Statement of Operations.
* Transfers are calculated on the beginning of period value. For the year
ended April 30, 2017, there were no transfers between Levels 1, 2 and 3.
** Includes securities that are valued at $0.
Net change in unrealized depreciation of Level 3 investments still held and
considered Level 3 at April 30, 2017: $1,429,426.
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 47
Schedule of Investments | 4/30/17 (continued)
The following table presents additional information about valuation techniques
and inputs used for investments categorized as Level 3 at April 30, 2017. These
amounts exclude valuations provided by a broker.
---------------------------------------------------------------------------------------------------------
Fair Value Valuation Unobservable Value/
Asset Type 4/30/17 Technique (s) Input Range
---------------------------------------------------------------------------------------------------------
Senior Secured
Floating Rate EBITDA Multiples(1) 4.7x
Loan Interests $1,241,418 Market Comparables Yield Comparables 6.54%-9.03%
---------------------------------------------------------------------------------------------------------
Corporate Bonds
& Notes $5,865,558 Market Comparables Yield Premiums(2) 1.05%
---------------------------------------------------------------------------------------------------------
Common Stocks $ 41,627 Market Comparables EBITDA Multiples(1) 4x-6x
---------------------------------------------------------------------------------------------------------
(1) An increase in this unobservable input would result in a higher fair value
measurement, while a decrease would result in a lower fair value
measurement.
(2) An increase in this unobservable input would result in a lower fair value
measurement, while a decrease would result in a higher fair value
measurement.
The accompanying notes are an integral part of these financial statements.
48 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
Statement of Assets and Liabilities | 4/30/17
ASSETS:
Investments in securities, at value (cost $208,290,093) $215,938,858
Foreign currencies, at value (cost $13,192) 14,137
Receivables --
Investment securities sold 136,887
Interest 2,141,903
Dividends 13,956
Unrealized appreciation on forward foreign currency contracts 27,604
Prepaid expenses 52
--------------------------------------------------------------------------------------
Total assets $218,273,397
======================================================================================
LIABILITIES:
Due to custodian $ 658,881
Payables --
Credit agreement 57,000,000
Investment securities purchased 13,026,530
Trustees' fees 618
Administration fee 83,767
Unrealized depreciation on forward foreign currency contracts 6,049
Due to affiliates 141,558
Accrued expenses and other liabilities 46,626
--------------------------------------------------------------------------------------
Total liabilities $ 70,964,029
======================================================================================
NET ASSETS:
Paid-in capital $193,998,881
Distributions in excess of net investment income (1,231,618)
Accumulated net realized loss on investments and foreign
currency transactions (53,131,386)
Net unrealized appreciation on investments 7,648,765
Net unrealized appreciation on forward foreign currency contracts and
other assets and liabilities denominated in foreign currencies 24,726
--------------------------------------------------------------------------------------
Net assets $147,309,368
======================================================================================
NET ASSET VALUE PER SHARE:
No par value (unlimited number of shares authorized)
Based on $147,309,368 / 8,332,790 shares $ 17.68
======================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 49
Statement of Operations
For the Year Ended 4/30/17
INVESTMENT INCOME:
Interest $ 13,386,731
Dividends 140,742
Loan facility and other income 290,271
----------------------------------------------------------------------------------------------------
Total investment income $ 13,817,744
====================================================================================================
EXPENSES:
Management fees $ 1,703,009
Administrative expense 116,589
Transfer agent fees 14,271
Shareholder communications expense 11,403
Custodian fees 38,773
Professional fees 105,311
Printing expense 13,676
Trustees' fees 7,521
Pricing fees 33,994
Interest expense 892,656
Miscellaneous 102,298
----------------------------------------------------------------------------------------------------
Total expenses $ 3,039,501
----------------------------------------------------------------------------------------------------
Net investment income $ 10,778,243
====================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on:
Investments $ (3,357,052)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 326,219 $ (3,030,833)
----------------------------------------------------------------------------------------------------
Change in net unrealized appreciation on:
Investments $ 12,845,153
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 171,284 $ 13,016,437
----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and
foreign currency transactions $ 9,985,604
----------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 20,763,847
====================================================================================================
The accompanying notes are an integral part of these financial statements.
50 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
Statements of Changes in Net Assets
-------------------------------------------------------------------------------------
Year Year
Ended Ended
4/30/17 4/30/16
-------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income (loss) $ 10,778,243 $ 12,884,402
Net realized gain (loss) on investments and foreign
currency transactions (3,030,833) (10,801,993)
Change in net unrealized appreciation (depreciation)
on investments and foreign currency transactions 13,016,437 (4,289,425)
-------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations $ 20,763,847 $ (2,207,016)
-------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income and previously undistributed
net investment income ($1.44 and $1.50 per
share, respectively) $ (12,024,216) $ (12,499,185)
-------------------------------------------------------------------------------------
Total distributions to shareowners $ (12,024,216) $ (12,499,185)
-------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 8,739,631 $ (14,706,201)
NET ASSETS:
Beginning of year $ 138,569,737 $ 153,275,938
-------------------------------------------------------------------------------------
End of year $ 147,309,368 $ 138,569,737
-------------------------------------------------------------------------------------
Distributions in excess of net investment income $ (1,231,618) $ (632,828)
=====================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 51
Statement of Cash Flows
For the Year Ended 4/30/17
Cash Flows From Operating Activities:
Net increase in net assets resulting from operations $ 20,763,847
-------------------------------------------------------------------------------------------------
Adjustments to reconcile net increase in net assets resulting from operations to
net cash and foreign currencies from operating activities:
Purchases of investment securities $ (120,004,281)
Proceeds from disposition and maturity of investment securities 118,397,586
Net proceeds from temporary cash investments 2,889,828
Net accretion and amortization of discount/premium on investment securities (830,403)
Change in unrealized appreciation on investments (12,845,153)
Change in unrealized appreciation on forward foreign currency contracts
and foreign currency (172,588)
Net realized loss on investments 3,357,052
Decrease in interest receivable 275,114
Increase in dividends receivable (5,437)
Increase in prepaid expenses (52)
Increase in due to affiliates 8,129
Increase in trustees' fees payable 89
Increase in administration fees payable 574
Decrease in accrued expenses payable (61,655)
-------------------------------------------------------------------------------------------------
Net cash and foreign currencies from operating activities $ 11,772,650
-------------------------------------------------------------------------------------------------
Cash Flows Used in Financing Activities:
Increase in due to custodian $ 264,442
Distributions to shareowners (12,024,216)
-------------------------------------------------------------------------------------------------
Net cash and foreign currencies used in financing activities $ (11,759,774)
-------------------------------------------------------------------------------------------------
Effect of Foreign Exchange Fluctuations on Cash:
Effect of foreign exchange fluctuations on cash $ 936
-------------------------------------------------------------------------------------------------
Cash and Foreign Currencies:
Beginning of the year $ 325
-------------------------------------------------------------------------------------------------
End of the year $ 14,137
=================================================================================================
Cash Flow Information:
Cash paid for interest $ 892,656
-------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
52 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
Financial Highlights
---------------------------------------------------------------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
4/30/17 4/30/16 4/30/15 4/30/14 4/30/13
---------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance
Net asset value, beginning of period $ 16.63 $ 18.39 $ 20.03 $ 20.70 $ 19.51
---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations: (a)
Net investment income $ 1.29 $ 1.55 $ 1.82 $ 1.98 $ 2.24
Net realized and unrealized gain (loss) on investments and foreign
currency transactions 1.20 (1.81) (1.63) (0.36) 0.99
---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ 2.49 $ (0.26) $ 0.19 $ 1.62 $ 3.23
---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareowners from:
Net investment income and previously undistributed net
investment income $ (1.44)* $ (1.50) $ (1.83)* $ (2.29)* $ (2.04)
---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ 1.05 $ (1.76) $ (1.64) $ (0.67) $ 1.19
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.68 $ 16.63 $ 18.39 $ 20.03 $ 20.70
---------------------------------------------------------------------------------------------------------------------------------
Market value, end of period $ 16.70 $ 15.60 $ 17.42 $ 20.85 $ 21.82
=================================================================================================================================
Total return at net asset value (b) 16.20% (1.01)% 1.21% 8.47% 17.38%
Total return at market value (b) 17.01% (1.26)% (7.90)% 7.12% 19.98%
Ratios to average net assets of shareowners:
Total expenses plus interest expense (c) 2.12% 1.99% 1.85% 1.86% 1.97%
Net investment income available to shareowners 7.52% 9.11% 9.52% 9.88% 11.26%
Portfolio turnover 58% 36% 48% 38% 34%
Net assets, end of period (in thousands) $147,309 $138,570 $153,276 $166,611 $171,646
=================================================================================================================================
The accompanying notes are an integral part of these financial statements.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 53
Financial Highlights (continued)
---------------------------------------------------------------------------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
4/30/17 4/30/16 4/30/15 4/30/14 4/30/13
---------------------------------------------------------------------------------------------------------------------------------
Total amount of debt outstanding (in thousands) $57,000 $57,000 $64,000 $67,000 $69,000
Asset coverage per indebtedness (in thousands) $ 3,584 $ 3,431 $ 3,395 $ 3,487 $ 3,488
=================================================================================================================================
* The amount of distributions made to shareowners during the year were in
excess of the net investment income earned by the Trust during the year.
The Trust has accumulated undistributed net investment income which is part
of the Trust's NAV. A portion of the accumulated net investment income was
distributed to shareowners during the period.
(a) The per common share data presented above is based upon the average common
shares outstanding for the periods presented.
(b) Total investment return is calculated assuming a purchase of common shares
at the current net asset value or market value on the first day and a sale
at the current net asset value or 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.
(c) Includes interest expense of 0.62%, 0.50%, 0.43%, 0.45% and 0.48%,
respectively.
The accompanying notes are an integral part of these financial statements.
54 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
Notes to Financial Statements | 4/30/17
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 (U.S. GAAP) that require the management
of the Trust to 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 period. Actual
results could differ from those estimates.
The Trust is an investment company and follows investment company accounting and
reporting guidance under U.S. GAAP. The following is a summary of significant
accounting policies followed by the Trust in the preparation of its financial
statements:
A. Security Valuation
The net asset value of the Trust is computed once daily, on each day the
New York Stock Exchange (NYSE) is open, as of the close of regular trading
on the NYSE.
Fixed income securities are valued by using 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, or may use a pricing matrix or other fair value
methods or techniques to provide an estimated value of the security or
instrument. A pricing matrix is a means of valuing a debt security on the
basis of current market prices for other debt securities, historical
trading patterns in the market for fixed income securities and/or other
factors. Non-U.S. debt securities that are listed on an exchange will be
valued at the bid price obtained from an independent third party pricing
service. When independent third party pricing services are unable to supply
prices, or when prices or market quotations are considered to be
unreliable, the value of that security may be determined using quotations
from one or more broker-dealers.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 55
Loan interests are valued in accordance with guidelines established by the
Board of Trustees at the mean between the last available bid and asked
prices from one or more brokers or dealers as obtained from Loan Pricing
Corporation, an independent third party 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.
Event-linked bonds or catastrophe bonds are valued at the bid price
obtained from an independent third party pricing service. Other insurance
linked securities (including sidecars, collateralized reinsurance and
industry loss warranties) may be valued at the bid price obtained from an
independent pricing service, or through a third party using a pricing
matrix, insurance industry valuation models, or other fair value methods or
techniques to provide an estimated value of the instrument.
Equity securities that have traded on an exchange are valued by using 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 asked prices or, if both last bid and asked prices
are not available, at the last quoted bid price. Last sale and bid and
asked prices are provided by independent third party pricing services. In
the case of equity securities not traded on an exchange, prices are
typically determined by independent third party pricing services using a
variety of techniques and methods.
The value of foreign securities is translated in U.S. dollars based on
foreign currency exchange rate quotations supplied by a third party pricing
source. Trading in non-U.S. equity securities is substantially completed
each day at various times prior to the close of the NYSE. The values of
such securities used in computing the net asset value of the Trust's shares
are determined as of such times. The Trust may use a fair value model
developed by an independent pricing service to value non-U.S. equity
securities.
Option contracts are generally valued at the mean between the last bid and
ask prices on the principal exchange where they are traded.
Over-the-counter ("OTC") options and options on swaps ("swaptions") are
valued using 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, or may
use a pricing matrix or other fair value methods or techniques to provide
an estimated value of the security or instrument.
56 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
Forward foreign currency exchange contracts are valued daily using the
foreign exchange rate or, for longer term forward contract positions, the
spot currency rate, in each case provided by a third party pricing service.
Contracts whose forward settlement date falls between two quoted days are
valued by interpolation.
Shares of open-end registered investment companies (including money market
mutual funds) are valued at such funds' net asset value. Repurchase
agreements are valued at par. Cash may include overnight time deposits at
approved financial institutions.
Securities or loan interests for which independent pricing services or
broker-dealers 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 and wholly owned indirect subsidiary of UniCredit S.p.A.
(UniCredit), 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 fair valuation team is
responsible for monitoring developments that may impact fair valued
securities and for discussing and assessing fair values 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, 2017, six securities were valued using fair value methods (in
addition to securities valued using prices supplied by independent pricing
services, broker-dealers or using a third party insurance pricing model)
representing 4.9% of net assets. The value of these fair valued securities
are $7,148,603.
B. Investment Income and Transactions
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
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 57
data in the exercise of reasonable diligence. 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.
Discounts and premiums on purchase prices of 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.
Security transactions are recorded as of trade date. Gains and losses on
sales of investments are calculated on the identified cost method for both
financial reporting and federal income tax purposes.
C. 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 price of those securities but are
included with the net realized and unrealized gain or loss on investments.
D. 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 4).
E. 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 net taxable income and net realized capital gains, if any, to
its shareowners. Therefore, no federal income tax provision is required. As
of
58 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
April 30, 2017, the Trust did not accrue any interest or penalties with
respect to uncertain tax positions, which if applicable, would be recorded
as an 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.
The amount and character of income and capital gain distributions to
shareowners are determined in accordance with federal income tax rules,
which may differ from U.S. GAAP. Distributions in excess of net investment
income or net realized gains are temporary overdistributions 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, 2017, the Trust reclassified $413,154 to decrease paid-in
capital, $647,183 to decrease distributions in excess of net investment
income and $234,029 to increase accumulated net realized loss on
investments to reflect permanent book/tax differences. These adjustments
have no impact on the net assets or results of operations.
At April 30, 2017, the Trust was permitted to carry forward $1,824,081 of
short-term capital losses and $25,450,534 of long-term capital losses
without limitation. Additionally, at April 30, 2017, the Trust had a net
capital loss carry forward of $23,198,279 of which the following amounts
will expire between 2018 and 2019 if not utilized: $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 $2,656,724 of long-term capital losses
recognized between November 1, 2016 and April 30, 2017, to its fiscal year
ending April 30, 2018.
The tax character of distributions paid to shareowners during the years
ended April 30, 2017 and April 30, 2016 were as follows:
---------------------------------------------------------------------------
2017 2016
---------------------------------------------------------------------------
Distributions paid from:
Ordinary income $12,024,216 $12,499,185
---------------------------------------------------------------------------
Total $12,024,216 $12,499,185
===========================================================================
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 59
The following shows the components of distributable earnings (losses) on a
federal income tax basis at April 30, 2017:
---------------------------------------------------------------------------
2017
---------------------------------------------------------------------------
Distributable earnings:
Undistributed ordinary income $ 1,049,770
Capital loss carryforward (50,472,894)
Late year loss deferrals (2,656,724)
Other book/tax temporary differences (2,283,156)
Unrealized appreciation 7,673,491
---------------------------------------------------------------------------
Total $(46,689,513)
===========================================================================
The difference between book-basis and tax-basis unrealized depreciation is
primarily attributable to 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 and discounts on fixed
income securities.
F. Insurance-Linked Securities (ILS)
The Trust invests in event-linked bonds. Event-linked bonds are floating
rate debt obligations for which the return of principal and the payment of
interest are contingent on the non-occurrence of a pre-defined "trigger"
event, such as a hurricane or an earthquake of a specific magnitude. The
trigger event's magnitude may be based on losses to a company or industry,
industry indexes or readings of scientific instruments, or may be based on
specified actual losses. If a trigger event occurs, as defined within the
terms of an event-linked bond, the Trust may lose a portion or all of its
accrued interest and/or principal invested in such event-linked bond. The
Trust is entitled to receive principal and interest payments so long as no
trigger event occurs of the description and magnitude specified by the
instrument. In addition to the specified 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 ILS may include special purpose vehicles
("SPVs") or similar instruments structured to comprise a portion of a
reinsurer's catastrophe-oriented business, known as quota share instruments
(sometimes referred to as reinsurance sidecars), or to provide reinsurance
relating to specific risks to insurance or reinsurance companies through a
collateralized instrument, known as collateralized reinsurance. Structured
reinsurance investments also may include industry loss warranties ("ILWs").
A traditional ILW takes the form of a bilateral reinsurance contract, but
there are also products that take the form of derivatives, collateralized
structures, or exchange traded instruments.
60 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
Structured reinsurance investments, including quota share instruments,
collateralized reinsurance investments and ILWs, generally are subject to
the same risks as event-linked bonds. In addition, where the instruments
are based on the performance of underlying reinsurance contracts, the Trust
has limited transparency into the individual underlying contracts and
therefore must rely upon the risk assessment and sound underwriting
practices of the issuer. Accordingly, it may be more difficult for PIM to
fully evaluate the underlying risk profile of the Trust's structured
reinsurance investments and therefore the Trust's assets are placed at
greater risk of loss than if PIM had more complete information. Structured
reinsurance instruments generally will be considered illiquid securities by
the Trust. These securities may be difficult to purchase, sell or unwind.
Illiquid securities also may be difficult to value. If the Trust is forced
to sell an illiquid asset, the Trust may be forced to sell at a loss.
G. 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 open during the year ended
April 30, 2017 was $0. Purchased option contracts outstanding at period end
are listed within the Schedule of Investments.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 61
H. 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 value of securities held by the Trust may go up or down, sometimes
rapidly or unpredictably, due to general market conditions, such as real or
perceived adverse economic, political or regulatory conditions, inflation,
changes in interest rates, lack of liquidity in the bond markets or adverse
investor sentiment. In the past several years, financial markets have
experienced increased volatility, depressed valuations, decreased liquidity
and heightened uncertainty. These conditions may continue, recur, worsen or
spread.
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. Certain securities in which the Trust invests,
including floating rate loans, once sold, may not settle for an extended
period (for example, several weeks or even longer). The Trust will not
receive its sale proceeds until that time, which may constrain the Trust's
ability to meet its obligations. 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 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. The Trust's investments in certain foreign markets or countries
with limited developing markets may subject the Trust to a greater degree
of risk than in a developed market. These risks include disruptive
political or economic conditions and the possible
62 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
imposition of adverse governmental laws or currency exchange restrictions.
The Trust may invest up to 50% of its total assets in illiquid securities.
Illiquid securities are securities that cannot be disposed of by the Trust
within seven days in the ordinary course of business at approximately the
amounts which the Trust values the securities.
Interest rates in the U.S. recently have been historically low, so the
Trust faces a heightened risk that interest rates may rise. A general rise
in interest rates may cause investors to move out of fixed income
securities on a large scale, which could adversely affect the price and
liquidity of fixed income securities.
I. Automatic Dividend Reinvestment Plan
All 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 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 Plan, dividends will be paid in cash to the shareowner of record. A
firm or nominee may reinvest a shareowner's cash dividends in shares of the
Trust on terms that differ from the terms of the Plan.
Whenever the Trust declares a dividend on shares payable in cash,
participants in the Plan will receive the equivalent in shares acquired by
the Plan Agent either (i) through receipt of additional unissued but
authorized shares from the Trust or (ii) by purchase of outstanding shares
on the New York Stock Exchange or elsewhere. If, on the payment date for
any dividend, the net asset value per 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
shares. The number of newly issued shares to be credited to each account
will be determined by dividing the dollar amount of the dividend by the net
asset value per 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 share is greater
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 63
than the market value (market discount), the Plan Agent will invest the
dividend amount in shares acquired in open-market purchases. There are no
brokerage charges with respect to newly issued 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 be able to transfer the
shares to another broker and continue to participate in the Plan.
2. Management Agreement
PIM manages the Trust's portfolio. Management fees 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, 2017, the net management fee
was 0.85% of the Trust's average daily managed assets, which was equivalent to
1.19% 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,
2017, $225,325 was payable to PIM related to management costs, administrative
costs and certain other services is included in "Due to affiliates" and
"Administration fee" on the Statement of Assets and Liabilities.
3. Transfer Agent
American Stock Transfer & Trust Company (AST) serves as the transfer agent with
respect to the Trust's shares. The Trust pays AST an annual fee, as is agreed to
from time to time by the Trust and AST, for providing such services.
In addition, the Trust reimbursed the transfer agent for out-of-pocket expenses
incurred by the transfer agent related to shareowner communications activities
such as proxy and statement mailings and outgoing calls.
64 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
4. Forward Foreign Currency Contracts
During the year ended April 30, 2017, the Trust had entered into various 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, 2017 was
$(6,414,984).
Open foreign currency contracts at April 30, 2017, were as follows:
----------------------------------------------------------------------------------------------
In
Currency Currency Exchange Settlement Unrealized
Sold Deliver Purchased for Counterparty Date Appreciation
----------------------------------------------------------------------------------------------
KRW 1,518,990,000 USD 1,364,464 Bank of New York 6/30/17 $27,604
----------------------------------------------------------------------------------------------
Total $27,604
==============================================================================================
----------------------------------------------------------------------------------------------
In
Currency Currency Exchange Settlement Unrealized
Sold Deliver Purchased for Counterparty Date Depreciation
----------------------------------------------------------------------------------------------
EUR 4,391,161 USD 4,801,120 Goldman Sachs 7/31/17 $(6,049)
International
----------------------------------------------------------------------------------------------
Total $(6,049)
==============================================================================================
EUR Euro
KRW Korean Won
5. Assets and Liabilities Offsetting
The Trust has entered into an International Swaps and Derivatives Association,
Inc. Master Agreement ("ISDA Master Agreement") or similar agreement with
substantially all its derivative counterparties. An ISDA Master Agreement is a
bilateral agreement between the Trust and a counterparty that governs the
trading of certain OTC derivatives and typically contains, among other things,
close-out and set-off provisions which apply upon the occurrence of event of a
default and/or termination event as defined under the relevant ISDA Master
Agreement. The ISDA Master Agreement may also give a party the right to
terminate all transactions traded under such agreement if, among other things,
there is deterioration in the credit quality of the other party. Upon an event
of default or a termination of the ISDA Master Agreement, the non-defaulting
party has the right to close out all transactions under such agreement and to
net amounts owed under each transaction to determine one net amount payable by
one party to the other. The right to close out and net payments across all
transactions under the ISDA Master Agreement could result in a reduction of the
Trust's credit risk to its counterparty equal to any amounts payable by the
Trust under the applicable transactions, if any. However, the
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 65
Trust's right to setoff may be restricted or prohibited by the bankruptcy or
insolvency laws of the particular jurisdiction to which a specific ISDA
counterparty is subject.
The collateral requirements for derivatives transactions under an ISDA Master
Agreement are governed by a credit support annex to the ISDA Master Agreement.
Collateral requirements are generally determined at the close of business each
day and are typically based on changes in market values for each transaction
under an ISDA Master Agreement and netted into one amount for such agreement.
Generally, the amount of collateral due from or to a counterparty is subject to
threshold (a "minimum transfer amount") before a transfer is required, which may
vary by counterparty. Collateral pledged for the benefit of the Trust and/or
counterparty is held in segregated accounts by the Trust's custodian and cannot
be sold, re-pledged, assigned or otherwise used while pledged. Cash that has
been segregated to cover the Trust's collateral obligations, if any, will be
reported separately in the Statement of Assets and Liabilities as "Restricted
Cash". Securities pledged by the Trust as collateral, if any, are identified as
such in the Schedule of Investments.
Financial instruments subject to an enforceable master netting agreement such as
an ISDA Master Agreement have not been offset on the Statement of Assets and
Liabilities. The following charts show gross assets and liabilities of the Trust
as of April 30, 2017:
----------------------------------------------------------------------------------------------------
Derivative
Assets
Subject to Derivatives Non-Cash Cash Net Amount
Master Netting Available Collateral Collateral of Derivative
Counterparty Agreement for Offset Received (a) Received (a) Assets (b)
----------------------------------------------------------------------------------------------------
Bank of New York $27,604 $-- $-- $-- $27,604
----------------------------------------------------------------------------------------------------
Total $27,604 $-- $-- $-- $27,604
====================================================================================================
-----------------------------------------------------------------------------------------------------
Derivative
Liabilities
Subject to Derivatives Non-Cash Cash Net Amount
Master Netting Available Collateral Collateral of Derivative
Counterparty Agreement for Offset Pledged (a) Pledged (a) Liabilities (c)
-----------------------------------------------------------------------------------------------------
Goldman Sachs $(6,049) $-- $-- $-- $(6,049)
International
-----------------------------------------------------------------------------------------------------
Total $(6,049) $-- $-- $-- $(6,049)
=====================================================================================================
(a) The amount presented here may be less than the total amount of collateral
received/pledged as the net amount of derivative assets and liabilities
cannot be less than $0.
(b) Represents the net amount due from the counterparty in the event of
default.
(c) Represents the net amount payable to the counterparty in the event of
default.
66 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
6. Additional Disclosures about Derivative Instruments and Hedging Activities
The Trust's use of derivatives subjects it to the following risks:
Interest rate risk relates to the fluctuations in the value of interest-bearing
securities due to changes in the prevailing levels of market interest rates.
Credit risk relates to the ability of the issuer of a financial instrument to
make further principal or interest payments on an obligation or commitment that
it has to the Trust.
Foreign exchange rate risk relates to fluctuations in the value of an asset or
liability due to changes in currency exchange rates.
Equity risk relates to the fluctuations in the value of financial instruments as
a result of changes in market prices (other than those arising from interest
rate risk or foreign exchange risk), whether caused by factors specific to an
individual investment, its issuer, or all factors affecting all instruments
traded in a market or market segment.
Commodity risk relates to the risk that the value of a commodity or commodity
index will fluctuate based on increases or decreases in the commodities market
and factors specific to a particular industry or commodity.
The fair value of open derivative instruments (not considered to be hedging
instruments for accounting disclosure purposes) by risk exposure at April 30,
2017 was as follows:
--------------------------------------------------------------------------------------------
Statement of Assets and Liabilities
Interest Credit Foreign Equity Commodity
Rate Risk Risk Exchange Risk Risk Risk
--------------------------------------------------------------------------------------------
Assets:
Unrealized
appreciation on
forward foreign
currency contracts $-- $-- $27,604 $-- $--
--------------------------------------------------------------------------------------------
Total Value $-- $-- $27,604 $-- $--
============================================================================================
Liabilities:
Unrealized
depreciation on
forward foreign
currency contracts $-- $-- $6,049 $-- $--
--------------------------------------------------------------------------------------------
Total Value $-- $-- $6,049 $-- $--
============================================================================================
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 67
The effect of derivative instruments (not considered to be hedging instruments
for accounting disclosure purposes) on the Statement of Operations by risk
exposure at April 30, 2017 was as follows:
-----------------------------------------------------------------------------------------------
Statement of Operations
Interest Credit Foreign Equity Commodity
Rate Risk Risk Exchange Risk Risk Risk
-----------------------------------------------------------------------------------------------
Net realized
gain (loss):
Forward foreign
currency contracts* $-- $-- $402,931 $-- $--
-----------------------------------------------------------------------------------------------
Total Value $-- $-- $402,931 $-- $--
===============================================================================================
Change in net
unrealized
appreciation
(depreciation) on:
Forward foreign
currency contracts* $-- $-- $171,652 $-- $--
-----------------------------------------------------------------------------------------------
Total Value $-- $-- $171,652 $-- $--
===============================================================================================
* Included in the amount shown on the Statement of Operations as forward
foreign currency contracts and other assets and liabilities denominated in
foreign currencies.
7. Trust Shares
Transactions in shares of beneficial interest for the year ended April 30, 2017
and the year ended April 30, 2016 were as follows:
--------------------------------------------------------------------------------
4/30/17 4/30/16
--------------------------------------------------------------------------------
Shares outstanding at beginning of year 8,332,790 8,332,790
--------------------------------------------------------------------------------
Shares outstanding at end of year 8,332,790 8,332,790
================================================================================
8. Credit Agreement
Effective January 27, 2017, the Trust extended the maturity of its existing
Revolving Credit Facility (the Credit Agreement) with the Bank of Scotia to
January 27, 2020. There is a $70 million borrowing limit.
At April 30, 2017, the Trust had a borrowing outstanding under the credit
agreement totaling $57,000,000. The interest rate charged at April 30, 2017 was
1.60%. During the year ended April 30, 2017, the average daily balance was
$57,000,000 at an average interest rate of 1.57%. Interest expense of $892,656
in connection with the credit agreement is included in the Statement of
Operations.
68 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
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 borrowing outstanding.
9. Subsequent Events
A monthly dividend was declared on May 3, 2017 from undistributed and
accumulated net investment income of $0.1150 per share payable May 31, 2017, to
shareowners of record on May 17, 2017.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 69
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, including
the schedule of investments, of Pioneer Diversified High Income Trust (the
"Trust"), as of April 30, 2017, 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 three 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. The financial highlights for the years
ended April 30, 2014, and 2013, were audited by other auditors. Those auditors
expressed an unqualified opinion on those financial highlights in their report
dated June 25, 2014.
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. The Trust
is not required to have, nor were we engaged to perform, an audit of its
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, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of April 30, 2017, by correspondence with the custodian,
brokers and agent banks; where replies were not received from brokers and agent
banks, we performed other auditing procedures. 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 as of April 30, 2017, and the results of
its operations and its cash flows for the year then ended, the changes in its
net assets for each of the two years in the period then ended and the financial
highlights for each of the three years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
June 19, 2017
70 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
ADDITIONAL INFORMATION
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 shares
in the open market.
Pioneer Investment Management, Inc. (the "Adviser"), the Trust's investment
adviser, is currently an indirect, wholly owned subsidiary of UniCredit S.p.A.
("UniCredit"). On December 12, 2016, UniCredit announced that it has entered
into a binding agreement for the sale of its Pioneer Investments business, which
includes the Adviser, to Amundi (the "Transaction"). Amundi is headquartered in
Paris, France, and, as of September 30, 2016, had more than $1.1 trillion in
assets under management worldwide. The closing of the Transaction is expected to
happen in 2017, subject to certain regulatory and antitrust approvals, and other
conditions.
Under the Investment Company Act of 1940, the closing of the Transaction will
cause the Trust's current investment advisory agreement with the Adviser to
terminate. Accordingly, the Trust's Board of Trustees has approved a new
investment advisory agreement for the Trust, which has been submitted to the
shareholders of the Trust for their approval.
Change in Independent Registered Public Accounting Firm
Deloitte & Touche LLP, the Trust's independent registered public accounting
firm, has informed the Board that it will no longer be independent with respect
to the Trust upon the completion of the Transaction and, accordingly, that it
intends to resign as the Trust's independent registered public accounting firm
upon the completion of the Transaction. The Board will engage a new independent
registered public accounting firm for the Trust upon the completion of the
Transaction.
During the periods that Deloitte & Touche LLP has served as the Trust's
independent registered public accounting firm, including the Trust's two most
recent fiscal years, Deloitte & Touche LLP's reports on the Trust's financial
statements 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. Further, there have been no disagreements with Deloitte & Touche LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Deloitte & Touche LLP, would have caused Deloitte & Touche 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 of the kind described in Item 304(a)(1)(v) of Regulation S-K
under the Securities Exchange Act of 1934.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 71
Approval of New and Interim Management Agreements
Pioneer Investment Management, Inc. (PIM) serves as the investment adviser to
Pioneer Diversified High Income Trust (the Trust) pursuant to an investment
management agreement between PIM and the Trust.
PIM is the principal U.S. asset management business of Pioneer Investments, a
group of companies owned by Pioneer Global Asset Management S.p.A. ("PGAM").
PGAM is a wholly-owned subsidiary of UniCredit S.p.A. ("UniCredit"). UniCredit
and PGAM have entered into a binding agreement to sell Pioneer Investments,
including PIM, to Amundi (the "Transaction"). Upon the consummation of the
transaction, PIM will become an indirect wholly-owned subsidiary of Amundi and
Amundi's wholly-owned subsidiary, Amundi USA, Inc. The closing of the
Transaction is expected to happen in 2017.
Under the Investment Company Act of 1940, the Trust's current investment
management agreement (the "Current Management Agreement") will terminate
automatically upon the consummation of the Transaction. In order for PIM to
continue to manage the Trust after the consummation of the Transaction, the
Trustees and shareholders of the Trust must approve a new investment management
agreement for the Trust (the "New Management Agreement"). As discussed below,
the Board of Trustees of the Trust approved the New Management Agreement at a
meeting held on March 6-7, 2017. The New Management Agreement has been submitted
to the shareholders of the Trust for their approval at a meeting to be held on
June 13, 2017. If the shareholders of the Trust do not approve the New
Management Agreement and the Transaction is completed, an interim investment
management agreement between PIM and the Trust (the "Interim Management
Agreement") will take effect upon the closing of the Transaction. The Board of
Trustees of the Trust also approved the Interim Management Agreement at the
March 6-7, 2017 meeting.
Board Evaluation of the New and Interim Management Agreements
The Board evaluated the Transaction and the New Management Agreement and Interim
Management Agreement for the Trust. In connection with their evaluation of the
Transaction and the New Management Agreement for the Trust, the Trustees
requested such information as they deemed reasonably necessary, including: (a)
the structure of the Transaction and the strategy underlying the Transaction;
(b) the anticipated benefits of the Transaction to the Trust and its
shareholders; (c) the post-Transaction plans for PIM, including Amundi's plans
for integration of Pioneer Investments and PIM with its existing asset
management businesses and plans for the future development of PIM; (d) the
effect of the Transaction on the ongoing services provided to
72 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
the Trust, including the need to select a new independent registered public
accounting firm for the Trust, and any plans to modify the operations of the
Trust; (e) the stability and continuity of PIM's management and key employees,
including compensation and benefits to PIM's key employees, and retention plans
and incentive plan structure; (f) the post-Transaction indebtedness and
financial resources of PIM; (g) Amundi's legal and operational structure, its
principal shareholders and senior management, its investment management, risk
management, administrative, legal and compliance functions; (h) certain
regulatory matters relating to Amundi's affiliates; and (i) Amundi's commitment
to the United States, including the role of PIM in the larger Amundi business.
The Trustees also requested and obtained the following information in connection
with their evaluation of the Transaction and the New Management Agreement for
the Trust: (i) memoranda provided by Fund counsel that summarized the legal
standards and other considerations that are relevant to the Trustees in their
deliberations regarding the New Management Agreement; (ii) the qualifications of
the investment management teams for the Trust, as well as the level of
investment by the Trust's portfolio managers in the Trust; (iii) the Trust's
management fees and total expense ratios, the financial statements of PIM and
its pre- and post-Transaction parent companies, profitability analyses from PIM,
and analyses from PIM as to possible economies of scale; (iv) the profitability
of the institutional business of PIM and PIM's affiliate, Pioneer Institutional
Asset Management, Inc. ("PIAM") as compared to that of PIM's fund management
business; and (v) the differences between the fees and expenses of the Trust and
the fees and expenses of PIM's and PIAM's institutional accounts, as well as the
different services provided by Adviser to the Trust and by PIM and PIAM to the
institutional accounts. In addition, the Trustees considered the information
provided at regularly scheduled meetings throughout the year regarding the
Trust's performance and risk attributes, including through meetings with
investment management personnel, and took into account other information related
to the Trust provided to the Trustees at regularly scheduled meetings. The
Trustees also considered information they had received in their review of the
continuance of the Current Management Agreement for the Trust in September 2016.
At meetings held on January 9, 2017 and January 10, 2017, the Trustees met with
representatives of Amundi and PGAM, including separate meetings of the Trustees
who are not "interested persons" of the Fund Complex ("Independent Trustees")
and counsel with representatives of Amundi and PGAM, and subsequently with
representatives of Amundi. In those meetings, they received an extensive
presentation from the representatives of Amundi, including the chief executive
officer of Amundi, describing Amundi's background and history, its global asset
management activities, the growth of
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 73
its business, and its status as the largest asset management firm in Europe and
one of the largest globally; its capital structure and financial resources,
including information as to the financing of the Transaction; its principal
investors, including its majority investor Credit Agricole S.A., and Credit
Agricole's long-term commitment to the asset management business; the philosophy
and strategy underlying the Transaction and the complementarity of Amundi's and
Pioneer Investments' respective asset management businesses; Amundi's various
operating and investment committees and how they would likely interact with PIM;
the proposed integration process, including the progress to date and the
establishment of various integration work streams; Amundi's plans for management
of PIM; Amundi's philosophy as to compensation of key employees and its general
intentions with respect to incentive plans for key employees of PIM; Amundi's
preliminary plans to achieve cost and other synergies; and opportunities to
further develop the business of PIM and PIAM, including in the area of
institutional asset management, and how that would benefit shareholders of the
Pioneer Funds.
In those meetings, the representatives of Amundi confirmed their intention that
the Chief Executive Officer and Chief Investment Officer of PIM would remain in
their current positions, and confirmed that they do not currently foresee major
changes in the day-to-day investment management operations of PIM with respect
to the Trust as a direct result of the Transaction. They discussed incentive
arrangements for key personnel that would continue after the closing of the
Transaction and their plans to establish a new long-term incentive plan
following the closing. They also generally discussed ways in which PIM could
potentially draw on the expanded global resources of Amundi post-Transaction. At
those meetings, the Independent Trustees identified certain areas to which they
requested further information, including as to trading and execution of
securities transactions, research and portfolio management and potential changes
in investment process, particularly where asset classes managed by PIM would
overlap with asset classes managed by Amundi, the continued availability of
resources currently at Pioneer Investments or elsewhere within Amundi to assist
in management of certain Funds, and any anticipated significant changes in
operations. The Independent Trustees considered the uncertainty as to whether
the Trust's independent registered public accounting firm could continue to act
in that capacity after the closing of the Transaction. The Independent Trustees
also met with counsel to review the information they had received to date and to
discuss next steps.
Subsequently, the Trustees received further information from Amundi, including
written responses to questions raised by the Independent Trustees, and received
from PIM the information requested of it. The Independent Trustees reviewed the
information provided with counsel at telephonic meetings held on February 16,
2017 and February 27, 2017. The Trustees held
74 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
a special in-person Board meeting on March 6-7, 2017 for further consideration
of the New Management Agreements, the Interim Management Agreements and the
Transaction. The Trustees met again with senior executives of Amundi at the
March 6-7, 2017 meeting.
At the March 6-7, 2017 meeting, based on their evaluation of the information
provided by PIM and Amundi, the Trustees including the Independent Trustees
voting separately, approved the New Management Agreement and the Interim
Management Agreement for the Trust. In considering the New Management Agreement
for the Trust, the Trustees considered various factors that they determined were
relevant, including the factors described below. The Trustees did not identify
any single factor as the controlling factor in their determinations. The
Trustees considered the same factors with respect to the Interim Management
Agreement for the Trust.
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 and that are expected to be provided by PIM to
the Trust following the consummation of the Transaction. The Trustees reviewed
the terms of the New Management Agreement, and noted that such terms are
substantially similar to the terms of the Current Management Agreement, except
for different execution dates, effective dates and termination dates. The
Trustees 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 management services to the Trust. They also reviewed the
amount of non-investment resources and personnel of PIM that are 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 Fund
officers) and other resources that are necessary for the Trust's business
management and operations and that PIM would continue to provide those
investment management and research services and resources to the Trust following
the consummation of the Transaction. The Trustees also considered that, as
administrator, PIM would continue to be responsible for the administration of
the Trust's business and other affairs. The Trustees considered the fees to be
paid to PIM for the provision of administration services.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 75
The Trustees considered that Deloitte & Touche LLP has informed the Board that
it will no longer be independent with respect to the Trust upon the completion
of the Transaction and, accordingly, that it will be necessary for the Board to
engage a new independent registered public accounting firm for the Trust.
The Trustees considered that the Transaction is not expected to have a material
adverse impact on the nature, scope and overall quality of services provided to
the Trust and its shareholders, including investment management, risk
management, administrative, compliance, legal and other services, as a result of
the Transaction.
In that regard, the Trustees considered that Amundi is one of the largest asset
managers globally, and that PIM may have access to additional research and
portfolio management capabilities as a result of the Transaction and that PIM,
as part of Amundi, is expected to have an enhanced global presence that may
contribute to an increase in the overall scale and resources of PIM.
Furthermore, in considering whether the Transaction would be expected to have a
material adverse impact on the nature, scope and overall quality of services
provided to the Trust and its shareholders, the Trustees considered the
statements by representatives of Amundi that they expect the Chief Executive
Officer and Chief Investment Officer of PIM to remain in their current positions
and that they do not currently foresee major changes in the day-to-day
investment management operations of PIM as a direct result of the Transaction,
or the risk management, legal or compliance services provided by PIM, with
respect to the Trust. They further considered the current incentive arrangements
for key personnel of PIM that would continue after the closing of the
Transaction. They also noted Amundi's stated intention to establish a new
long-term incentive plan following the closing.
The Trustees also took into account their experience in evaluating the proposed
combination of Pioneer Investments and Santander Asset Management, which was
announced in September, 2014 and abandoned in July, 2016. In light of, among
other things, this experience, the Trustees determined that they were not able
to identify any realistic alternatives to approving the New Management Agreement
that would provide the level of services to the Trust and its shareholders that
are expected to be provided by PIM after the closing of the Transaction.
Based on these considerations, the Trustees concluded that the nature, extent
and quality of services that PIM would continue to provide to the Trust under
the New Management Agreement would be satisfactory and consistent with the terms
of the New Management Agreement.
76 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
Performance of the Trust
In considering the Trust's performance, the Trustees regularly reviewed and
discussed throughout the year data prepared by PIM and information comparing the
Trust's performance with the performance of its peer group of funds, as
classified by each of Morningstar, Inc. (Morningstar) and Lipper, and the
performance of the Trust's benchmark index. They also discussed the Trust's
performance with PIM on a regular basis.
The Trustees' regular reviews and discussions were factored into the Trustees'
deliberations concerning the approval of the New Management Agreement.
Management Fee and Expenses
The Trustees noted that the stated management fees to be paid by the Trust are
identical under the Current Management Agreement and the New Management
Agreement. The Trustees considered information showing the fees and expenses of
the Trust in comparison to the management fees and expense ratios of its peer
group of funds as classified by Morningstar and also to 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. In all quintile rankings referred to below, first quintile is most
favorable to the Trust's shareowners. To the extent applicable, the Trustees
also considered the impact of transfer agency, sub-transfer agency, and other
non-management fee expenses on the expense ratios of the Trust. The Trustees
noted that they separately review the Trust's transfer agency, sub-transfer
agency and intermediary arrangements and that the results of the most recent
such review were considered in the consideration of the Trust's expense ratio.
The Trustees considered that the Fund's management fee (based on managed assets)
as of September 30, 2016 was in the second quintile relative to the management
fees paid by other funds in its Strategic Insight peer group for the comparable
period. The Trustees considered that the expense ratio (based on managed assets)
of the Fund's common shares as of September 30, 2016 was in the second quintile
relative to its Strategic Insight peer group for the comparable period.
The Trustees reviewed management fees charged by PIM and PIAM to institutional
and other clients, including publicly offered European funds sponsored by PIM's
affiliates, 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 PIM's and
PIAM's costs in providing services to the other clients and considered the
differences in management fees and profit margins for fund and
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 77
non-fund services. In evaluating the fees associated with PIM's and PIAM's
client accounts, the Trustees took into account the respective demands,
resources and complexity associated with the Trust and other 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 both the
Current Management Agreement and the New Management Agreement, PIM would perform
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 risks associated with PIM's management of the
Trust and PIM's and PIAM'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 to be provided
by PIM.
Profitability
The Trustees considered information provided by PIM regarding the profitability
of PIM with respect to the advisory services provided by PIM to the Trust,
including the methodology used by PIM in allocating certain of its costs to the
management of the Trust. The Trustees also considered PIM's profit margin in
connection with the overall operation of the Trust. They further reviewed the
financial results, including the profit margins, realized by PIM and PIAM 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 PIM's views relating to economies of scale in connection
with the Pioneer Funds as fund assets grow and the extent to which any such
economies of scale are shared with the Trust and Fund shareholders. The Trustees
recognize that economies of scale are difficult to identify and quantify, and
that, among other factors that may be relevant, are the following: fee levels,
expense subsidization, investment by PIM in research and analytical capabilities
and PIM's commitment and resource allocation to the Trust. The Trustees noted
that profitability also may be an indicator of the availability of any economies
of scale, although profitability may vary for other reasons including due to
reductions in expenses. The Trustees concluded that economies of scale, if any,
were being appropriately shared with the Trust.
78 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
Other Benefits
The Trustees considered the other benefits that PIM enjoys from its relationship
with the Trust. The Trustees considered the character and amount of fees paid or
to be paid by the Trust, other than under the Current Management Agreement or
the New Management 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. To the extent applicable, the Trustees
also considered the benefits to the Trust and to PIM and its affiliates from the
use of "soft" commission dollars generated by the Trust to pay for research and
brokerage services.
The Trustees considered that following the completion of the Transaction, PIM
will be the principal U.S. asset management business of Amundi, and that
Amundi's worldwide asset management business will manage over $1.38 trillion in
assets (including the Pioneer Funds). This may create opportunities for PIM,
PIAM and Amundi that derive from PIM's relationships with the Trust, including
Amundi's ability to market the services of PIM globally. The Trustees noted that
PIM may have access to additional research capabilities as a result of the
Transaction and Amundi's enhanced global presence that may contribute to an
increase of the overall scale of PIM. The Trustees considered that PIM and the
Trust are expected to receive reciprocal intangible benefits from the
relationship, including mutual brand recognition and, for the Trust, direct and
indirect access to the resources of a large global asset manager. The Trustees
concluded that any such benefits received by PIM as a result of its relationship
with the Trust were reasonable.
Conclusion
After consideration of the factors described above as well as other factors, the
Trustees, including the Independent Trustees, concluded that the New Management
Agreement and the Interim Management Agreement for the Trust, including the fees
payable thereunder, were fair and reasonable and voted to approve the New
Management Agreement and the Interim Management Agreement, and to recommend that
shareholders approve the New Management Agreement.
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 79
Trustees, Officers and Service Providers
Investment Adviser
Pioneer Investment Management, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Morgan, Lewis & Bockius LLP
Shareowner Services and Transfer Agent
American Stock Transfer & Trust Company
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 46 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.
80 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
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 (66) Class II Trustee Private investor (2004 - 2008 and 2013 - Director, Broadridge Financial
Chairman of the Board since 2007. Term present); Chairman (2008 - 2013) and Chief Solutions, Inc. (investor
and Trustee expires in 2018. Executive Officer (2008 - 2012), Quadriserv, communications and securities
Inc. (technology products for securities lending processing provider for
industry); and Senior Executive Vice President, financial services industry)
The Bank of New York (financial and securities (2009 - present); Director,
services) (1986 - 2004) Quadriserv, Inc. (2005 - 2013);
and Commissioner, New Jersey
State Civil Service Commission
(2011 - 2015)
------------------------------------------------------------------------------------------------------------------------------------
David R. Bock (73) Class III Trustee Managing Partner, Federal City Capital Advisors Director of New York Mortgage
Trustee since 2007. Term (corporate advisory services company) (1997 - Trust (publicly-traded mortgage
expires in 2019. 2004 and 2008 - present); Interim Chief REIT) (2004 - 2009, 2012 -
Executive Officer, Oxford Analytica, Inc. present); Director of The Swiss
(privately-held research and consulting company) Helvetia Fund, Inc. (closed-end
(2010); Executive Vice President and Chief fund) (2010 - present);
Financial Officer, I-trax, Inc. (publicly traded Director of Oxford Analytica,
health care services company) (2004 - 2007); and Inc. (2008 - present); and
Executive Vice President and Chief Financial Director of Enterprise
Officer, Pedestal Inc. (internet-based mortgage Community Investment, Inc.
trading company) (2000 - 2002); Private (privately-held affordable
consultant (1995-1997), Managing Director, housing finance company) (1985
Lehman Brothers (investment banking firm) - 2010)
(1992-1995); and Executive, The World Bank
(1979-1992)
------------------------------------------------------------------------------------------------------------------------------------
Benjamin M. Friedman (72) Class I Trustee William Joseph Maier Professor of Political Trustee, Mellon Institutional
Trustee since 2008. Term Economy, Harvard University (1972 - present) Funds Investment Trust and
expires in 2017. Mellon Institutional Funds
Master Portfolio (oversaw 17
portfolios in fund complex)
(1989-2008)
------------------------------------------------------------------------------------------------------------------------------------
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 81
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 (69) Class I Trustee Founding Director, Vice President and Corporate None
Trustee since 2007. Term Secretary, The Winthrop Group, Inc. (consulting
expires in 2017. 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)
------------------------------------------------------------------------------------------------------------------------------------
Lorraine H. Monchak (61) Class III Trustee Chief Investment Officer, 1199 SEIU Funds None
Trustee since 2015. Term (healthcare workers union pension funds) (2001 -
expires in 2019. present); Vice President - International
Investments Group, American International Group,
Inc. (insurance company) (1993 - 2001); Vice
President Corporate Finance and Treasury Group,
Citibank, N.A. (1980 - 1986 and 1990 - 1993);
Vice President - Asset/Liability Management
Group, Federal Farm Funding Corporation
(government-sponsored issuer of debt securities)
(1988 - 1990); Mortgage Strategies Group,
Shearson Lehman Hutton, Inc. (investment bank)
(1987 - 1988); and Mortgage Strategies Group,
Drexel Burnham Lambert, Ltd. (investment bank)
(1986 - 1987)
------------------------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (68) Class II Trustee President and Chief Executive Officer, Newbury Director of New America High
Trustee since 2007. Term Piret Company (investment banking firm) (1981 - Income Fund, Inc. (closed-end
expires in 2018. present) investment company) (2004 -
present); and Member, Board of
Governors, Investment Company
Institute (2000 - 2006)
------------------------------------------------------------------------------------------------------------------------------------
Fred J. Ricciardi (70) Class II Trustee Consultant (investment company services) (2012 - None
Trustee since 2014. Term present); Executive Vice President, BNY Mellon
expires in 2018. (financial and investment company services)
(1969 - 2012); Director, BNY International
Financing Corp. (financial services) (2002 -
2012); and Director, Mellon Overseas Investment
Corp. (financial services) (2009 - 2012)
------------------------------------------------------------------------------------------------------------------------------------
82 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
Interested Trustees
------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Term of Office and Other Directorships
Position Held With the Trust Length of Service Principal Occupation Held by Trustee
------------------------------------------------------------------------------------------------------------------------------------
Lisa M. Jones (55)* Class III Trustee Chair, Director, CEO and President of Pioneer None
Trustee, President and since 2015. Term Investment Management-USA (PIM-USA) (since
Chief Executive Officer expires in 2019. September 2014); Chair, Director, CEO and
President of Pioneer Investment Management, Inc.
(since September 2014); Chair, Director, CEO and
President of Pioneer Funds Distributor, Inc.
(since September 2014); Chair, Director, CEO and
President of Pioneer Institutional Asset
Management, Inc. (since September 2014); and
Chair, Director, and CEO of Pioneer Investment
Management Shareholder Services, Inc. (since
September 2014); Managing Director, Morgan
Stanley Investment Management (2010 - 2013); and
Director of Institutional Business, CEO of
International, Eaton Vance Management (2005 -
2010)
------------------------------------------------------------------------------------------------------------------------------------
Kenneth J. Taubes (59)* Class I Trustee Director and Executive Vice President (since None
Trustee since 2014. Term 2008) and Chief Investment Officer, U.S. (since
expires in 2017. 2010) of PIM-USA; Executive Vice President of
Pioneer (since 2008); Executive Vice President of
Pioneer Institutional Asset Management, Inc.
(since 2009); and Portfolio Manager of Pioneer
(since 1999)
------------------------------------------------------------------------------------------------------------------------------------
* Ms. Jones 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 | 4/30/17 83
Trust Officers
------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Term of Office and Other Directorships
Position Held With the Trust Length of Service Principal Occupation Held by Officer
------------------------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley Since 2007. Serves Vice President and Associate General Counsel of None
(52) at the discretion Pioneer since January 2008; Secretary and Chief
Secretary and of the Board. Legal Officer of all of the Pioneer Funds since
Chief Legal Officer 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 (56) Since 2010. Serves Fund Governance Director of Pioneer since None
Assistant Secretary at the discretion December 2006 and Assistant Secretary of all the
of the Board. 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 (54) Since 2010. Serves Senior Counsel of Pioneer since May 2013 and None
Assistant Secretary at the discretion Assistant Secretary of all the Pioneer Funds
of the Board. since June 2010; and Counsel of Pioneer from June
2007 to May 2013
------------------------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (57) Since 2008. Serves Vice President - Fund Treasury of Pioneer; None
Treasurer and Chief at the discretion Treasurer of all of the Pioneer Funds since March
Financial of the Board. 2008; Deputy Treasurer of Pioneer from March 2004
and Accounting Officer to February 2008; and Assistant Treasurer of all
of the Pioneer Funds from March 2004 to February
2008
------------------------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (52) Since 2007. Serves Director - Fund Treasury of Pioneer; and None
Assistant Treasurer at the discretion Assistant Treasurer of all of the Pioneer Funds
of the Board.
------------------------------------------------------------------------------------------------------------------------------------
Gary Sullivan (59) Since 2007. Serves Fund Accounting Manager - Fund Treasury of None
Assistant Treasurer at the discretion Pioneer; and Assistant Treasurer of all of the
of the Board. Pioneer Funds
------------------------------------------------------------------------------------------------------------------------------------
84 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
------------------------------------------------------------------------------------------------------------------------------------
Name, Age and Term of Office and Other Directorships
Position Held With the Trust Length of Service Principal Occupation Held by Officer
------------------------------------------------------------------------------------------------------------------------------------
David F. Johnson (37) Since 2009. Serves Fund Administration Manager - Fund Treasury of None
Assistant Treasurer at the discretion Pioneer since November 2008; Assistant Treasurer
of the Board. 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 (64) Since 2010. Serves Chief Compliance Officer of Pioneer and of all the None
Chief Compliance Officer at the discretion Pioneer Funds since March 2010; Chief Compliance
of the Board. Officer of Pioneer Institutional Asset Management,
Inc. since January 2012; Chief Compliance Officer
of Vanderbilt Capital Advisors, LLC since July
2012: 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 (46) Since 2007. Serves Director - Transfer Agency Compliance of Pioneer None
Anti-Money Laundering at the discretion and Anti-Money Laundering Officer of all the
Officer of the Board. Pioneer Funds since 2006
------------------------------------------------------------------------------------------------------------------------------------
Pioneer Diversified High Income Trust | Annual Report | 4/30/17 85
This page is for your notes.
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Pioneer Diversified High Income Trust | Annual Report | 4/30/17 87
This page is for your notes.
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Pioneer Diversified High Income Trust | Annual Report | 4/30/17 91
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92 Pioneer Diversified High Income Trust | Annual Report | 4/30/17
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) 2017 Pioneer Investments 21909-09-0617
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.
The audit fees for the Trust were $53,954
payable to Deloitte & Touche LLP for the year ended
April 30, 2017 and $51,063 for the year ended April 30, 2016.
(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 services in 2017 or 2016.
(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.
The tax fees for the Trust were $9,904
payable to Deloitte & Touche LLP for the year ended
April 30, 2017 and $9,876 for the year ended April 30, 2016.
(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 other fees in 2017 or 2016.
(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 2017 and 2016, 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 were $9,904
payable to Deloitte & Touche LLP for the year ended
April 30, 2017 and $9,876 for the year ended April 30, 2016.
(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 Fund's audit committee of the Board of Trustees
has considered whether the provision of non-audit
services that were rendered to the Affiliates (as
defined) that were not pre- approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is
compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the 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
3
voted upon against the Compliance Department's internal list of interested
persons and, for any matches found, evaluating the anticipated magnitude
and possible probability of any conflict of interest being present. For
each referral item, the determination regarding the presence or absence of
any actual or potential conflict of interest will be documented in a
Conflicts of Interest Report to the Proxy Coordinator.
Securities Lending
In conjunction with industry standards Proxies are not available to be
voted when the shares are out on loan through either Pioneer's lending
program or a client's managed security lending program. However, Pioneer
will reserve the right to recall lent securities so that they may be voted
according to the Pioneer's instructions. If a portfolio manager would like
to vote a block of previously lent shares, the Proxy Coordinator will work
with the portfolio manager and Investment Operations to recall the
security, to the extent possible, to facilitate the vote on the entire
block of shares.
Share-Blocking
"Share-blocking" is a market practice whereby shares are sent to a
custodian (which may be different than the account custodian) for record
keeping and voting at the general meeting. The shares are unavailable for
sale or delivery until the end of the blocking period (typically the day
after general meeting date).
Pioneer will vote in those countries with "share-blocking." In the event a
manager would like to sell a security with "share-blocking", the Proxy
Coordinator will work with the Portfolio Manager and Investment Operations
Department to recall the shares (as allowable within the market time-frame
and practices) and/or communicate with executing brokerage firm. A list of
countries with "share-blocking" is available from the Investment Operations
Department upon request.
Record Keeping
The Proxy Coordinator shall ensure that Pioneer's proxy voting service:
o Retains a copy of the proxy statement received (unless the proxy
statement is available from the SEC's Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system);
o Retains a record of the vote cast;
o Prepares Form N-PX for filing on behalf of each client that is a
registered investment company; and
o Is able to promptly provide Pioneer with a copy of the voting
record upon its request.
4
The Proxy Coordinator shall ensure that for those votes that may require
additional documentation (i.e. conflicts of interest, exception votes and
case-by-case votes) the following records are maintained:
o A record memorializing the basis for each referral vote cast;
o A copy of any document created by Pioneer that was material in
making the decision on how to vote the subject proxy; and
o A copy of any conflict notice, conflict consent or any other
written communication (including emails or other electronic
communications) to or from the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries)
regarding the subject proxy vote cast by, or the vote
recommendation of, Pioneer.
o Pioneer shall maintain the above records in the client's file for a
period not less than ten (10) years.
Disclosure
Pioneer shall take reasonable measures to inform its clients of the process
or procedures clients must follow to obtain information regarding how
Pioneer voted with respect to assets held in their accounts. In addition,
Pioneer shall describe to clients its proxy voting policies and procedures
and will furnish a copy of its proxy voting policies and procedures upon
request. This information may be provided to clients through Pioneer's Form
ADV (Part II) disclosure, by separate notice to the client, or through
Pioneer's website.
Proxy Voting Oversight Group
The members of the Proxy Voting Oversight Group are Pioneer's: Director of
Portfolio Management US, Head of Investment Operations, and Director of
Compliance. Other members of Pioneer will be invited to attend meetings and
otherwise participate as necessary. The Head of Investment Operations will
chair the Proxy Voting Oversight Group.
The Proxy Voting Oversight Group is responsible for developing, evaluating,
and changing (when necessary) Pioneer's Proxy Voting Policies and
Procedures. The group meets at least annually to evaluate and review these
policies and procedures and the services of its third-party proxy voting
service. In addition, the Proxy Voting Oversight Group will meet as
necessary to vote on referral items and address other business as
necessary.
Amendments
Pioneer may not amend its Proxy Voting Policies And Procedures without the
prior approval of the Proxy Voting Oversight Group and its corporate
parent, Pioneer Global Asset Management S.p.A
5
Proxy Voting Policies
Pioneer's sole concern in voting proxies is the economic effect of the
proposal on the value of portfolio holdings, considering both the short-
and long-term impact. In many instances, Pioneer believes that supporting
the company's strategy and voting "for" management's proposals builds
portfolio value. In other cases, however, proposals set forth by management
may have a negative effect on that value, while some shareholder proposals
may hold the best prospects for enhancing it. Pioneer monitors developments
in the proxy-voting arena and will revise this policy as needed.
All proxies that are received promptly will be voted in accordance with the
specific policies listed below. All shares in a company held by
Pioneer-managed accounts will be voted alike, unless a client has given us
specific voting instructions on an issue or has not delegated authority to
us. Proxy voting issues will be reviewed by Pioneer's Proxy Voting
Oversight Group, which consists of the Director of Portfolio Management US,
the Director of Investment Operations (the Proxy Coordinator), and the
Director of Compliance.
Pioneer has established Proxy Voting Procedures for identifying and
reviewing conflicts of interest that may arise in the voting of proxies.
Clients may request, at any time, a report on proxy votes for securities
held in their portfolios and Pioneer is happy to discuss our proxy votes
with company management. Pioneer retains a proxy voting service to provide
research on proxy issues and to process proxy votes.
Administrative
While administrative items appear infrequently in U.S. issuer proxies, they
are quite common in non-U.S. proxies.
We will generally support these and similar management proposals:
o Corporate name change.
o A change of corporate headquarters.
o Stock exchange listing.
o Establishment of time and place of annual meeting.
o Adjournment or postponement of annual meeting.
o Acceptance/approval of financial statements.
o Approval of dividend payments, dividend reinvestment plans and other
dividend-related proposals.
o Approval of minutes and other formalities.
6
o Authorization of the transferring of reserves and allocation of
income.
o Amendments to authorized signatories.
o Approval of accounting method changes or change in fiscal year-end.
o Acceptance of labor agreements.
o Appointment of internal auditors.
Pioneer will vote on a case-by-case basis on other routine business;
however, Pioneer will oppose any routine business proposal if insufficient
information is presented in advance to allow Pioneer to judge the merit of
the proposal. Pioneer has also instructed its proxy voting service to
inform Pioneer of its analysis of any administrative items inconsistent, in
its view, with supporting the value of Pioneer portfolio holdings so that
Pioneer may consider and vote on those items on a case-by-case basis.
Auditors
We normally vote for proposals to:
o Ratify the auditors. We will consider a vote against if we are
concerned about the auditors' independence or their past work for
the company. Specifically, we will oppose the ratification of
auditors and withhold votes from audit committee members if
non-audit fees paid by the company to the auditing firm exceed the
sum of audit fees plus audit-related fees plus permissible tax
fees according to the disclosure categories proposed by the
Securities and Exchange Commission.
o Restore shareholder rights to ratify the auditors.
We will normally oppose proposals that require companies to:
o Seek bids from other auditors.
o Rotate auditing firms, except where the rotation is statutorily
required or where rotation would demonstrably strengthen financial
disclosure.
o Indemnify auditors.
o Prohibit auditors from engaging in non-audit services for the
company.
Board of Directors
On issues related to the board of directors, Pioneer normally supports
management. We will, however, consider a vote against management in
instances where corporate performance has been very poor or where the board
appears to lack independence.
7
General Board Issues
Pioneer will vote for:
o Audit, compensation and nominating committees composed of
independent directors exclusively.
o Indemnification for directors for actions taken in good faith in
accordance with the business judgment rule. We will vote against
proposals for broader indemnification.
o Changes in board size that appear to have a legitimate business
purpose and are not primarily for anti-takeover reasons.
o Election of an honorary director.
We will vote against:
o Minimum stock ownership by directors.
o Term limits for directors. Companies benefit from experienced
directors, and shareholder control is better achieved through
annual votes.
o Requirements for union or special interest representation on the
board.
o Requirements to provide two candidates for each board seat.
We will vote on a case-by case basis on these issues:
o Separate chairman and CEO positions. We will consider voting with
shareholders on these issues in cases of poor corporate
performance.
Elections of Directors
In uncontested elections of directors we will vote against:
o Individual directors with absenteeism above 25% without valid
reason. We support proposals that require disclosure of director
attendance.
o Insider directors and affiliated outsiders who sit on the audit,
compensation, stock option or nominating committees. For the
purposes of our policy, we accept the definition of affiliated
directors provided by our proxy voting service.
We will also vote against:
o Directors who have failed to act on a takeover offer where the
majority of shareholders have tendered their shares.
o Directors who appear to lack independence or are associated with
very poor corporate performance.
8
We will vote on a case-by case basis on these issues:
o Re-election of directors who have implemented or renewed a
dead-hand or modified dead-hand poison pill (a "dead-hand poison
pill" is a shareholder rights plan that may be altered only by
incumbent or "dead " directors. These plans prevent a potential
acquirer from disabling a poison pill by obtaining control of the
board through a proxy vote).
o Contested election of directors.
o Prior to phase-in required by SEC, we would consider supporting
election of a majority of independent directors in cases of poor
performance.
o Mandatory retirement policies.
o Directors who have ignored a shareholder proposal that has been
approved by shareholders for two consecutive years.
Takeover-Related Measures
Pioneer is generally opposed to proposals that may discourage takeover
attempts. We believe that the potential for a takeover helps ensure that
corporate performance remains high.
Pioneer will vote for:
o Cumulative voting.
o Increase ability for shareholders to call special meetings.
o Increase ability for shareholders to act by written consent.
o Restrictions on the ability to make greenmail payments.
o Submitting rights plans to shareholder vote.
o Rescinding shareholder rights plans ("poison pills").
o Opting out of the following state takeover statutes:
o Control share acquisition statutes, which deny large holders voting
rights on holdings over a specified threshold.
o Control share cash-out provisions, which require large holders to
acquire shares from other holders.
o Freeze-out provisions, which impose a waiting period on large
holders before they can attempt to gain control.
o Stakeholder laws, which permit directors to consider interests of
non-shareholder constituencies.
9
o Disgorgement provisions, which require acquirers to disgorge profits
on purchases made before gaining control.
o Fair price provisions.
o Authorization of shareholder rights plans.
o Labor protection provisions.
o Mandatory classified boards.
We will vote on a case-by-case basis on the following issues:
o Fair price provisions. We will vote against provisions requiring
supermajority votes to approve takeovers. We will also consider
voting against proposals that require a supermajority vote to
repeal or amend the provision. Finally, we will consider the
mechanism used to determine the fair price; we are generally
opposed to complicated formulas or requirements to pay a premium.
o Opting out of state takeover statutes regarding fair price
provisions. We will use the criteria used for fair price
provisions in general to determine our vote on this issue.
o Proposals that allow shareholders to nominate directors.
We will vote against:
o Classified boards, except in the case of closed-end mutual funds.
o Limiting shareholder ability to remove or appoint directors. We
will support proposals to restore shareholder authority in this
area. We will review on a case-by-case basis proposals that
authorize the board to make interim appointments.
o Classes of shares with unequal voting rights.
o Supermajority vote requirements.
o Severance packages ("golden" and "tin" parachutes). We will support
proposals to put these packages to shareholder vote.
o Reimbursement of dissident proxy solicitation expenses. While we
ordinarily support measures that encourage takeover bids, we
believe that management should have full control over corporate
funds.
o Extension of advance notice requirements for shareholder proposals.
o Granting board authority normally retained by shareholders (e.g.,
amend charter, set board size).
o Shareholder rights plans ("poison pills"). These plans generally
allow shareholders to buy additional shares at a below-market
price in the event of a change in control and may deter some bids.
10
Capital Structure
Managements need considerable flexibility in determining the company's
financial structure, and Pioneer normally supports managements' proposals
in this area. We will, however, reject proposals that impose high barriers
to potential takeovers.
Pioneer will vote for:
o Changes in par value.
o Reverse splits, if accompanied by a reduction in number of shares.
o Share repurchase programs, if all shareholders may participate on
equal terms.
o Bond issuance.
o Increases in "ordinary" preferred stock.
o Proposals to have blank-check common stock placements (other than
shares issued in the normal course of business) submitted for
shareholder approval.
o Cancellation of company treasury shares.
We will vote on a case-by-case basis on the following issues:
o Reverse splits not accompanied by a reduction in number of shares,
considering the risk of delisting.
o Increase in authorized common stock. We will make a determination
considering, among other factors:
o Number of shares currently available for issuance;
o Size of requested increase (we would normally approve increases of up to
100% of current authorization);
o Proposed use of the additional shares; and
o Potential consequences of a failure to increase the number of shares
outstanding (e.g., delisting or bankruptcy).
o Blank-check preferred. We will normally oppose issuance of a new
class of blank-check preferred, but may approve an increase in a
class already outstanding if the company has demonstrated that it
uses this flexibility appropriately.
o Proposals to submit private placements to shareholder vote.
o Other financing plans.
We will vote against preemptive rights that we believe limit a company's
financing flexibility.
11
Compensation
Pioneer supports compensation plans that link pay to shareholder returns
and believes that management has the best understanding of the level of
compensation needed to attract and retain qualified people. At the same
time, stock-related compensation plans have a significant economic impact
and a direct effect on the balance sheet. Therefore, while we do not want
to micromanage a company's compensation programs, we will place limits on
the potential dilution these plans may impose.
Pioneer will vote for:
o 401(k) benefit plans.
o Employee stock ownership plans (ESOPs), as long as shares
allocated to ESOPs are less than 5% of outstanding shares. Larger
blocks of stock in ESOPs can serve as a takeover defense. We will
support proposals to submit ESOPs to shareholder vote.
o Various issues related to the Omnibus Budget and Reconciliation Act
of 1993 (OBRA), including:
o Amendments to performance plans to conform with OBRA;
o Caps on annual grants or amendments of administrative features;
o Adding performance goals; and
o Cash or cash-and-stock bonus plans.
o Establish a process to link pay, including stock-option grants, to
performance, leaving specifics of implementation to the company.
o Require that option repricings be submitted to shareholders.
o Require the expensing of stock-option awards.
o Require reporting of executive retirement benefits (deferred
compensation, split-dollar life insurance, SERPs, and pension
benefits).
o Employee stock purchase plans where the purchase price is equal to
at least 85% of the market price, where the offering period is no
greater than 27 months and where potential dilution (as defined
below) is no greater than 10%.
12
We will vote on a case-by-case basis on the following issues:
o Executive and director stock-related compensation plans. We will
consider the following factors when reviewing these plans:
o The program must be of a reasonable size. We will approve plans
where the combined employee and director plans together would
generate less than 15% dilution. We will reject plans with 15% or
more potential dilution.
Dilution = (A + B + C) / (A + B + C + D), where
A = Shares reserved for plan/amendment,
B = Shares available under continuing plans,
C = Shares granted but unexercised and
D = Shares outstanding.
o The plan must not:
o Explicitly permit unlimited option repricing authority or that
have repriced in the past without shareholder approval.
o Be a self-replenishing "evergreen" plan, plans that grant
discount options and tax offset payments.
o We are generally in favor of proposals that increase participation beyond
executives.
o We generally support proposals asking companies to adopt rigorous
vesting provisions for stock option plans such as those that vest
incrementally over, at least, a three- or four-year period with a pro
rata portion of the shares becoming exercisable on an annual basis
following grant date.
o We generally support proposals asking companies to disclose their
window period policies for stock transactions. Window period policies
ensure that employees do not exercise options based on insider
information contemporaneous with quarterly earnings releases and other
material corporate announcements.
o We generally support proposals asking companies to adopt stock holding
periods for their executives.
o All other employee stock purchase plans.
o All other compensation-related proposals, including deferred
compensation plans, employment agreements, loan guarantee programs
and retirement plans.
o All other proposals regarding stock compensation plans, including
extending the life of a plan, changing vesting restrictions,
repricing options, lengthening exercise periods or accelerating
distribution of awards and pyramiding and cashless exercise
programs.
13
We will vote against:
o Pensions for non-employee directors. We believe these retirement
plans reduce director objectivity.
o Elimination of stock option plans.
We will vote on a case-by case basis on these issues:
o Limits on executive and director pay.
o Stock in lieu of cash compensation for directors.
Corporate Governance
Pioneer will vote for:
o Confidential Voting.
o Equal access provisions, which allow shareholders to contribute
their opinion to proxy materials.
o Proposals requiring directors to disclose their ownership of shares
in the company.
We will vote on a case-by-case basis on the following issues:
o Change in the state of incorporation. We will support
reincorporations supported by valid business reasons. We will
oppose those that appear to be solely for the purpose of
strengthening takeover defenses.
o Bundled proposals. We will evaluate the overall impact of the
proposal.
o Adopting or amending the charter, bylaws or articles of association.
o Shareholder appraisal rights, which allow shareholders to demand
judicial review of an acquisition price.
We will vote against:
o Shareholder advisory committees. While management should solicit
shareholder input, we prefer to leave the method of doing so to
management's discretion.
o Limitations on stock ownership or voting rights.
o Reduction in share ownership disclosure guidelines.
14
Mergers and Restructurings
Pioneer will vote on the following and similar issues on a case-by-case
basis:
o Mergers and acquisitions.
o Corporate restructurings, including spin-offs, liquidations, asset
sales, joint ventures, conversions to holding company and
conversions to self-managed REIT structure.
o Debt restructurings.
o Conversion of securities.
o Issuance of shares to facilitate a merger.
o Private placements, warrants, convertible debentures.
o Proposals requiring management to inform shareholders of merger
opportunities.
We will normally vote against shareholder proposals requiring that the
company be put up for sale.
Mutual Funds
Many of our portfolios may invest in shares of closed-end mutual funds or
exchange-traded funds. The non-corporate structure of these investments
raises several unique proxy voting issues.
Pioneer will vote for:
o Establishment of new classes or series of shares.
o Establishment of a master-feeder structure.
Pioneer will vote on a case-by-case on:
o Changes in investment policy. We will normally support changes
that do not affect the investment objective or overall risk level
of the fund. We will examine more fundamental changes on a
case-by-case basis.
o Approval of new or amended advisory contracts.
o Changes from closed-end to open-end format.
o Authorization for, or increase in, preferred shares.
o Disposition of assets, termination, liquidation, or mergers.
o Classified boards of closed-end mutual funds, but will typically
support such proposals.
15
Social Issues
Pioneer will abstain on stockholder proposals calling for greater
disclosure of corporate activities with regard to social issues. "Social
Issues" may generally be described as shareholder proposals for a company
to:
o Conduct studies regarding certain issues of public concern and
interest;
o Study the feasibility of the company taking certain actions with
regard to such issues; or
o Take specific action, including ceasing certain behavior and
adopting company standards and principles, in relation to issues
of public concern and interest.
We believe these issues are important and should receive management
attention.
Pioneer will vote against proposals calling for substantial changes in the
company's business or activities. We will also normally vote against
proposals with regard to contributions, believing that management should
control the routine disbursement of funds.
16
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrant's portfolio ("Portfolio Manager"). Also state each Portfolio
Manager's business experience during the past 5 years.
ADDITIONAL INFORMATION ABOUT THE PORTFOLIO MANAGERS
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
The table below indicates, for 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, 2017. 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
Companies 10 $15,880,652 N/A N/A
Other Pooled Investment Vehicles 7 $ 5,941,015 1 $3,855,424
Other Accounts 8 $ 1,794,639 N/A N/A
------------------- ---------------------------------- -- ----------- ---------------- ----------
Andrew Feltus Other Registered
Investment Companies 10 $ 8,725,989 N/A N/A
Other Pooled Investment Vehicles 6 $10,473,496 3 $7,507,909
Other Accounts 6 1,496,475 N/A N/A
------------------- ---------------------------------- -- ----------- ---------------- ----------
Jonathan Sharkey Other Registered Investment
Companies 3 $ 4,563,755 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 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
0
public offering that was expected to appreciate in value significantly shortly
after the offering was allocated to a single account, that account may be
expected to have better investment performance than other accounts that did
not receive an allocation of the initial public offering. Generally,
investments for which there is limited availability are allocated based upon a
range of factors including available cash and consistency with the accounts'
investment objectives and policies. This allocation methodology necessarily
involves some subjective elements but is intended over time to treat each
client in an equitable and fair manner. Generally, the investment opportunity
is allocated among participating accounts on a pro rata basis. Although
Pioneer believes that its practices are reasonably designed to treat each
client in an equitable and fair manner, there may be instances where a fund
may not participate, or may participate to a lesser degree than other clients,
in the allocation of an investment opportunity.
o A portfolio manager could favor one account over another in the order in
which trades for the accounts are placed. If a portfolio manager determines
to purchase a security for more than one account in an aggregate amount that
may influence the market price of the security, accounts that purchased or
sold the security first may receive a more favorable price than accounts
that made subsequent transactions. The less liquid the market for the
security or the greater the percentage that the proposed aggregate purchases
or sales represent of average daily trading volume, the greater the
potential for accounts that make subsequent purchases or sales to receive a
less favorable price. When a portfolio manager intends to trade the same
security on the same day for more than one account, the trades typically are
"bunched," which means that the trades for the individual accounts are
aggregated and each account receives the same price. There are some types of
accounts as to which bunching may not be possible for contractual reasons
(such as directed brokerage arrangements). Circumstances may also arise
where the trader believes that bunching the orders may not result in the
best possible price. Where those accounts or circumstances are involved,
Pioneer will place the order in a manner intended to result in as favorable
a price as possible for such client.
o A portfolio manager could favor an account if the portfolio manager's
compensation is tied to the performance of that account to a greater degree
than other accounts managed by the portfolio manager. If, for example, the
portfolio manager receives a bonus based upon the performance of certain
accounts relative to a benchmark while other accounts are disregarded for
this purpose, the portfolio manager will have a financial incentive to seek
to have the accounts that determine the portfolio manager's bonus achieve
the best possible performance to the possible detriment of other accounts.
Similarly, if Pioneer receives a performance-based advisory fee, the
portfolio manager may favor that account, whether or not the performance of
that account directly determines the portfolio manager's compensation.
o A portfolio manager could favor an account if the portfolio manager has a
beneficial interest in the account, in order to benefit a large client or to
compensate a client that had poor returns. For example, if the portfolio
manager held an interest in an investment partnership that was one of the
accounts managed by the portfolio manager, the portfolio manager would have
an economic incentive to favor the account in which the portfolio manager
held an interest.
o If the different accounts have materially and potentially conflicting
investment objectives or strategies, a conflict of interest could arise. For
example, if a portfolio manager purchases a security for one account and
sells the same security for another account, such trading pattern may
disadvantage either the account that is long or short. In making portfolio
manager assignments, Pioneer seeks to avoid such potentially conflicting
situations. However, where a portfolio manager is responsible for accounts
with differing investment objectives and policies, it is possible that the
portfolio manager will conclude that it is in the best interest of one
account to sell a portfolio security while another account continues to hold
or increase the holding in such security.
COMPENSATION OF PORTFOLIO MANAGERS
Pioneer has adopted a system of compensation for portfolio managers that seeks
to align the financial interests of the portfolio managers with those of
shareholders of the accounts (including Pioneer funds) the portfolio managers
manage, as well as with the financial performance of Pioneer. The compensation
1
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, 2017 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 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).
During the period covered by this report, there were no purchases
made by or on behalf of the registrant or any affiliated purchaser
as defined in Rule 10b-18(a)(3) under the Securities Exchange Act
of 1934 (the Exchange Act), of shares of the registrants equity
securities that are registered by the registrant pursuant to
Section 12 of the Exchange Act.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the 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/ Lisa M. Jones
Lisa M. Jones, President & Chief Executive Officer
Date June 27, 2017
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/ Lisa M. Jones
Lisa M. Jones, President & Chief Executive Officer
Date June 27, 2017
By (Signature and Title)* /s/ Mark E. Bradley
Mark E. Bradley, Treasurer & Chief Accounting & Financial Officer
Date June 27, 2017
* Print the name and title of each signing officer under his or her signature.