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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21321
Pioneer Municipal High Income Trust
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: April 30, 2004
Date of reporting period: November 1, 2003 through April 30, 2004
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. schedule of investments.
PIONEER
-----------------------
MUNICIPAL
HIGH
INCOME
TRUST
Semiannual
Report
10/31/04
[LOGO] PIONEER
Investments(R)
Table of Contents
-----------------------------------------------
Letter to Shareowners 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 4
Schedule of Investments 7
Financial Statements 16
Notes to Financial Statements 20
Trustees, Officers and Service Providers 28
Pioneer Municipal High Income Trust
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LETTER TO SHAREOWNERS 10/31/04
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Dear Shareowner,
--------------------------------------------------------------------------------
High energy prices and rising interest rates caused concern among investors
during the third quarter of 2004. As oil prices touched $50 per barrel for the
first time, many consumers, faced with high priced gasoline and anticipating a
winter of hefty heating bills, responded by holding back on spending. Consumers
account for the bulk of the nation's economic activity, and retail sales over
the summer were erratic. Beyond soaring energy costs, which have the effect of
a tax increase on individuals and businesses, the slack job creation data of
the last few months also undermined confidence in the economic outlook. The
markets in general fell during the third quarter. Continued unsettled
conditions in Iraq and the ever present specter of terrorism also weighed on
investors' minds. Overseas, global markets were fairly stable, after stumbling
earlier in the year.
But the fuzzy economic picture was good news for bond investors. Despite three
hikes in short-term interest rates, the first increases in four years, bond
prices rose and yields fell over the period. Longer-term Treasury securities
were the strongest performers, with corporate bonds, including high-yield
issues, also delivering favorable returns. Lower long-term rates were also
beneficial to the housing and mortgage industries. Behind the rally in bonds
lies investor skepticism about the strength and durability of the current
economic recovery. A slowing recovery leading to an easing of inflationary
pressures may convince the Federal Reserve Board to slow the pace of future rate
increases. Less inflation would also mean better real returns for bond holders.
Pioneer believes that the economy will continue to expand in 2005, but at a more
measured tempo. After an extended period of cutting costs and bolstering balance
sheets, many corporations are financially stronger than they have been in some
time. And although short-term interest rates have risen, they are still
relatively low and do not appear to be a barrier for companies needing to borrow
for expansion. Equity valuations now appear better aligned with earnings
prospects than was the case a year ago, when prices ran ahead of profit
expectations. Therefore, steady but moderate expansion in corporate profits has
the potential to drive stock prices higher.
As always, thank you for your investment in Pioneer Municipal High Income Trust.
Respectfully,
/s/ Osbert M. Hood
Osbert M. Hood, President
Pioneer Investment Management, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
1
Pioneer Municipal High Income Trust
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PORTFOLIO SUMMARY 10/31/04
--------------------------------------------------------------------------------
Portfolio Diversification
--------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[The following table was depicted as a pie chart in the printed material.]
Health 25.0%
Insured 14.7%
Airport 14.5%
Tobacco 9.9%
Pollution Control 8.8%
Education 6.7%
Development 6.3%
Power 3.9%
Facilities 2.8%
Other 2.0%
General Obligation 1.8%
Transportation 1.6%
Housing 1.5%
Utilities 0.3%
Water 0.2%
Portfolio Maturity
--------------------------------------------------------------------------------
(Effective life as a percentage of long-term holdings)
[The following table was depicted as a pie chart in the printed material.]
0-1 years 4.1%
1-3 years 4.8%
3-6 years 21.0%
6-8 years 32.5%
8-10 years 10.8%
10+ years 26.8%
Quality Distribution
--------------------------------------------------------------------------------
(As a percentage of holdings)
[The following table was depicted as a pie chart in the printed material.]
AAA 20.4%
AA 5.9%
A 3.0%
BBB 27.1%
BB & Lower 42.7%
Cash Equivalents 0.9%
10 Largest Holdings
--------------------------------------------------------------------------------
(As a percentage of long-term holdings)*
1. Greenville County School District, 5.5%, 12/1/28 3.75%
2. Allegheny County Hospital Development Authority Revenue,
9.25%, 11/15/30 3.35
3. Minneapolis/St. Paul Metropolitan Airports, 7.0%, 4/1/25 2.62
4. Tobacco Settlement Financing Corp., 6.75%, 6/1/39 2.49
5. Birmingham Alabama General Obligation, 5.0%, 12/1/32 2.42
6. Metropolitan Pier & Exposition Authority Dedicated State Tax
Revenue, 0.0%, 6/15/22 2.33
7. Gila County Industrial Development Authority, 5.55%, 1/1/27 2.29
8. Oklahoma Development Finance Authority Revenue,
5.625%, 8/15/29 2.14
9. New Jersey Economic Development Authority Revenue,
6.25%, 9/15/29 2.01
10. Johnson City Health & Educational Facilities Board Hospital
Revenue, 7.5%, 7/1/33 1.94
*This list excludes money market and derivative instruments. The portfolio is
actively managed, and current holdings may be different.
2
Pioneer Municipal High Income Trust
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PERFORMANCE UPDATE 10/31/04
--------------------------------------------------------------------------------
Share Prices and Distributions
--------------------------------------------------------------------------------
Market Value
per Common Share 10/31/04 4/30/04
$14.45 $13.70
Net Asset Value
per Common Share 10/31/04 4/30/04
$14.97 $14.76
Distributions
per Common Share Income Short-Term Long-Term
(5/1/04 - 10/31/04) Dividends Capital Gains Capital Gains
$0.54 $ - $ -
Investment Returns
--------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000
investment made in common shares of Pioneer Municipal High Income Trust,
compared to that of the Lehman Brothers Municipal Bond Index and Lehman
Brothers Non-Investment Grade Municipal Bond Index.
------------------------------------------
Cumulative Total Returns
(As of October 31, 2004)
Net Asset Market
Period Value Price
Life-of-Trust
(7/17/03) 13.91% 5.04%
1 Year 9.91% 4.03%
------------------------------------------
[The following table was depicted as a mountain chart in the printed material.]
Value of $10,000 Investment+
Lehman
Brothers
Pioneer Lehman Non-Investment
Municipal Brothers Grade
High Income Municipal Municipal
Trust Bond Index Bond Index
----------- ---------- --------------
7/31/2003 $10,000 $10,000 $10,000
4/30/2004 $11,020 $10,441 $11,014
10/31/2004 $11,598 $10,504 $11,574
Call 1-800-225-6292 or visit www.pioneerfunds.com for the most recent month-end
performance results. Current performance may be lower or higher than the
performance data quoted.
Performance data shown represents past performance. Past performance is no
guarantee of future results. Investment return and market price will fluctuate,
and your shares may trade below net asset value ("NAV"), due to such factors as
interest rate changes, and the perceived credit quality of borrowers.
Total investment return does not reflect broker sales charges or commissions.
All performance is for common shares of the Trust.
Closed end funds, unlike open-end funds, are not continuously offered. Once
issued, shares of closed-end funds are sold in the open market through a stock
exchange and frequently trade at prices lower than their NAV. NAV is total
assets less total liabilities, which includes preferred shares, divided by the
number of common shares outstanding.
When NAV is lower than market price, dividends are assumed to be reinvested at
the greater of NAV or 95% of the market price. When NAV is higher, dividends are
assumed to be reinvested at market price.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Trust distributions or the redemption of Trust
shares.
Index comparison begins July 31, 2003. The Lehman Brothers Municipal Bond Index
is a widely recognized, unmanaged measure of approximately 15,000 municipal
bonds. Bonds in the Index have a minimum credit rating of BBB, were part of at
least a $50 million issuance made within the past five years and have a maturity
of at least two years. Lehman Brothers Non-Investment Grade Municipal Bond Index
totals over $26 billion in market value and maintains over 1300 securities.
Municipal bonds in this index have the following requirements: maturities of one
year or greater, sub investment grade (below Baa or non-rated), fixed coupon
rate, dated date greater than 12-31-90, deal size over $20 million, maturity
size of at least $3 trillion. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Trust returns, do not reflect any fees,
expenses or sales charges. You cannot invest directly in the Index.
3
Pioneer Municipal High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 10/31/04
--------------------------------------------------------------------------------
Municipal bonds continued to deliver relatively strong results during the
six-month period ended October 31, 2004. In the following interview, David
Eurkus, a member of the Trust's management team, reviews the Trust's investment
process, strategy and outlook.
Q: How did the Trust perform during the six-month period ended October 31,
2004?
A: For the period, Pioneer Municipal High Income Trust returned 5.33% at net
asset value and 9.54% at market price. As of October 31, 2004, the Trust
was selling at a discount of market price to net asset value of 3.47%. The
Lehman Brothers Municipal Bond Index returned 4.79% and the Lehman Brothers
Non-Investment Grade Municipal Bond Index returned 5.09%. At the end of the
period, the Trust held 111 issues in 32 states, including District of
Columbia. On October 31, 2004, the Trust's 30-day SEC yield was 7.32%. The
performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate,
and shares, when sold, may be worth more or less than their original cost.
Q: What was the environment like during the period?
A: After several months of robust economic growth, a number of reports
associated with the economy indicated that the rapid pace of growth had
shifted to a slower but steady rate. Despite a slight pullback in the
economic expansion, the Federal Reserve maintained a tighter monetary
policy. During the period, the Fed boosted the federal funds rate on three
occasions, each time by 0.25%. (The federal funds rate is the rate banks
charge each other for overnight loans.)
Higher interest rates tend to have a negative impact on most types of
bonds, because as rates rise, bond prices decline. However, high-yield
securities, like those in the portfolio, are less affected by rising
interest rates. This is because interest rates go up when the economy is
recovering, and a stronger economy leads to better corporate profits. When
a company's profits rise, its bonds become more valuable because its credit
quality improves.
4
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Q: The Trust outperformed both the Lehman Brothers Municipal Bond Index and
the Lehman Brothers Non-Investment Grade Municipal Bond Index. What
strategies benefited performance?
A: The Trust remained fully invested in a broad pool of revenue bonds that are
backed by revenue from essential services, such as hospitals and health
care, transportation, public power and education. Smaller positions in a
variety of other sectors accounted for about 23.1% of net assets.
Keeping with our mandate of providing a relatively high level of income, we
sought securities in both the investment-grade and below investment-grade
areas of the market. This approach allowed us to provide a substantial
amount of tax-free income. At the end of the period, 56.4% of the portfolio
was in investment-grade bonds, those rated BBB or better, 42.7% was in
below investment-grade bonds, rated BB or lower, and 0.9% was in cash. When
selecting below-investment grade securities, we emphasized the debt of
companies whose businesses were poised to improve as the economy
strengthened. This lower quality debt accounted for the biggest
contribution to performance. Overall, the average credit quality of the
Trust was BBB+.
Historically low interest rates enabled the Trust to borrow funds to invest
in below investment-grade and investment-grade bonds, and then use the
leverage to invest in higher-yielding bonds. This strategy generated
additional income to the Trust. At the end of the six months on October 31,
2004, about 23% of the Trust was leveraged, giving a boost to performance
as high-yield bonds gained in value.
Q: What detracted from performance?
A: Investments in the air transportation sector detracted the most. Rising oil
prices had a big impact on this sector, as the cost of jet fuel
substantially increased the airlines' operating costs. In addition,
widespread publicity about potential bankruptcies for some high profile
airlines pulled down the whole sector.
5
Pioneer Municipal High Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 10/31/04 (continued)
--------------------------------------------------------------------------------
Q: What is your outlook over the next several months?
A: As we move into 2005, we are optimistic in our outlook. We think the
economy will continue to grow at a slower pace with no substantial increase
in inflation. We also expect corporate earnings to remain relatively
strong, although they may pull back from the high levels of the past year.
This backdrop should be supportive of the bonds in the Trust. We expect to
keep the Trust well diversified in a combination of below investment-grade
and investment-grade bonds in a variety of economic sectors.
Investments in high yield or lower-rated securities are subject to
greater-than-average risk. When interest rates rise, the prices of fixed income
securities in the Trust will generally fall. Conversely, when interest rates
fall the prices of fixed income securities in the Trust will generally rise.
When concentrating on one issuer, the portfolio is sensitive to changes in the
value of these securities. Investments in the Trust are subject to possible loss
due to the financial failure of underlying securities and their inability to
meet their debt obligations.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
6
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/04 (unaudited)
--------------------------------------------------------------------------------
S&P/
Principal Moody's
Amount Ratings Value
TAX EXEMPT OBLIGATIONS - 127.6% of Net Assets
Alabama - 3.6%
$10,000,000 AAA/Aaa Birmingham Alabama General Obligation,
5.0%, 12/1/32 $ 10,213,700
1,500,000 BBB/NR Camden Alabama Industrial Development Board,
6.125%, 12/1/24 1,617,420
------------
$ 11,831,120
------------
Arizona - 7.3%
5,000,000 B+/Ba3 Apache County Industrial Development Authority,
5.85%, 3/1/28 $ 4,968,700
5,000,000 B+/Ba3 Apache County Industrial Development Authority,
5.875%, 3/1/33 4,962,000
11,630,000 B-/Ca Gila County Industrial Development Authority,
5.55%, 1/1/27 9,664,181
3,000,000 NR/NR Maricopa County Industrial Development Authority,
7.875%, 4/1/27 3,093,510
1,000,000 NR/Baa3 Pima County Industrial Development Authority,
7.25%, 7/1/31 1,068,880
500,000 NR/Baa2 Yavapai County Industrial Development Authority,
6.0%, 8/1/33 523,860
------------
$ 24,281,131
------------
California - 11.3%
7,270,000 A/A3 California State General Obligation,
5.25%, 2/1/28 $ 7,636,335
5,150,000 BBB/Baa3 Golden State Tobacco Securitization Corp.,
7.8%, 6/1/42 5,528,886
7,000,000 BBB/Baa3 Golden State Tobacco Securitization Corp.,
7.875%, 6/1/42 7,548,870
4,000,000 AAA/Aaa Palm Desert Financing Authority Tax Allocation
Revenue, 5.0%, 4/1/30 4,102,360
3,000,000 AAA/Aaa San Diego Unified School District, 5.0%, 7/1/25 3,122,040
2,500,000 AAA/Aaa University of California Revenue, 5.0%, 5/15/25 2,611,250
7,000,000 B+/NR Valley Health System Hospital Revenue,
6.5%, 5/15/25 6,776,560
------------
$ 37,326,301
------------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/04 (unaudited) (continued)
--------------------------------------------------------------------------------
S&P/
Principal Moody's
Amount Ratings Value
Connecticut - 1.8%
$ 2,205,000 BB/Ba1 Connecticut State Health & Educational Facilities
Authority Revenue, 5.375%, 7/1/17 $ 2,038,522
4,400,000 BB/Ba1 Connecticut State Health & Educational Facilities
Authority Revenue, 5.5%, 7/1/27 3,819,640
-----------
$ 5,858,162
-----------
District of Columbia - 3.6%
5,000,000 BBB/Baa3 District of Columbia Tobacco Settlement Financing
Corp., 6.5%, 5/15/33 $ 4,710,300
7,325,000 BBB/Baa3 District of Columbia Tobacco Settlement Financing
Corp., 6.75%, 5/15/40 7,104,371
-----------
$11,814,671
-----------
Florida - 4.4%
2,000,000 NR/NR Beacon Lakes Community Development,
6.9%, 5/1/35 $ 2,097,960
2,300,000 CC/C Hillsborough County Aviation Authority Revenue,
6.8%, 1/1/24 920,000
1,650,000 BBB-/Baa2 Polk County Industrial Development Revenue,
5.85%, 12/1/30 1,670,196
2,000,000 NR/NR Seminole Tribe Convention-A, 8.95%, 10/1/33 2,324,960
1,900,000 NR/NR Seminole Tribe Convention-A, 10.0%, 10/1/33 2,340,249
5,000,000 NR/Baa2 Tallahassee Health Facilities Revenue,
6.375%, 12/1/30 5,083,950
-----------
$14,437,315
-----------
Georgia - 0.4%
1,325,000 NR/NR Brunswick & Glynn County Development Authority
Revenue, 7.25%, 1/1/35 $ 1,313,419
-----------
Idaho - 1.6%
5,000,000 BB+/Ba3 Power County Industrial Development Corp.,
6.45%, 8/1/32 $ 5,125,950
-----------
Illinois - 4.0%
1,000,000 NR/NR Centerpoint Intermodal Center, 8.0%,
6/15/23 (144A) $ 974,690
2,790,000 CC/C Chicago Illinois O'Hare International Airport,
6.45%, 5/1/18 920,700
1,500,000 NR/NR Illinois Health Facilities Authority Revenue,
6.9%, 11/15/33 1,509,630
16,880,000 (a) AAA/Aaa Metropolitan Pier & Exposition Authority Dedicated
State Tax Revenue, 0.0%, 6/15/22 9,850,324
-----------
$13,255,344
-----------
8 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S&P/
Principal Moody's
Amount Ratings Value
Indiana - 1.6%
$1,000,000 BBB+/Baa1 Indiana State Development Finance Authority
Revenue, 5.6%, 12/1/32 $ 1,018,530
4,300,000 CCC+/Caa2 Indiana State Development Finance Authority
Revenue, 5.75%, 10/1/11 4,297,592
-----------
$ 5,316,122
-----------
Kentucky - 2.0%
7,050,000 CC/Ca Kenton County Airport Revenue, 7.5%, 2/1/12 $ 5,217,353
1,965,000 CC/Ca Kenton County Airport Revenue, 7.5%, 2/1/20 1,375,500
-----------
$ 6,592,853
-----------
Massachusetts - 10.6%
1,300,000 NR/Aaa Ashland Massachusetts General Obligation,
5.25%, 5/15/17 $ 1,464,905
1,305,000 NR/Aaa Ashland Massachusetts General Obligation,
5.25%, 5/15/21 1,439,467
2,435,000 AAA/Aaa Massachusetts Health & Educational Facilities
Authority Revenue, 5.0%, 7/15/35 2,494,487
7,050,000 AAA/Aaa Massachusetts Health & Educational Facilities
Authority Revenue, 5.125%, 7/15/37 7,299,993
1,000,000 AA/NR Massachusetts Health & Educational Facilities
Authority Revenue, 5.25%, 10/15/33 1,044,950
3,500,000 BBB/Baa3 Massachusetts Health & Educational Facilities
Authority Revenue, 6.25%, 7/1/22 3,708,495
5,000,000 BBB-/NR Massachusetts Health & Educational Facilities
Authority Revenue, 6.75%, 10/1/33 5,259,400
75,000 BB/NR Massachusetts State Development Finance
Agency, 5.25%, 10/1/18 64,882
5,000,000 AAA/Aaa Massachusetts State Development Finance
Agency, 5.75%, 1/1/42 5,898,100
1,075,000 NR/A2 Massachusetts State Development Finance
Agency, 6.0%, 8/1/17 1,290,484
5,055,000 AA-/Aa3 Massachusetts State Housing Finance
Agency, 5.25%, 12/1/33 5,121,018
-----------
$35,086,181
-----------
The accompanying notes are an integral part of these financial statements. 9
Pioneer Municipal High Income Trust
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SCHEDULE OF INVESTMENTS 10/31/04 (unaudited) (continued)
--------------------------------------------------------------------------------
S&P/
Principal Moody's
Amount Ratings Value
Michigan - 4.1%
$ 1,500,000 BBB-/NR John Tolfree Health System Corp., 6.0%, 9/15/23 $ 1,453,485
4,010,000 BBB-/Ba1 Michigan State Hospital Finance Authority
Revenue, 6.0%, 2/1/24 3,872,938
2,000,000 NR/NR Michigan State Hospital Finance Authority
Revenue, 6.4%, 1/1/15 1,981,240
7,690,000 NR/NR Wayne Charter County Michigan Special Airport
Facilities Revenue, 6.75%, 12/1/15 6,340,405
-----------
$13,648,068
-----------
Minnesota - 4.3%
1,675,000 BB/NR Duluth Economic Development Authority Health
Care Facilities Revenue, 7.25%, 6/15/32 $ 1,757,913
13,260,000 NR/NR Minneapolis/St. Paul Metropolitan Airports,
7.0%, 4/1/25 11,067,989
1,430,000 BB/Ba2 St. Paul Housing & Redevelopment Authority,
6.625%, 11/1/17 1,444,786
-----------
$14,270,688
-----------
Mississippi - 0.9%
3,000,000 BBB/Ba1 Mississippi Business Finance Corp. Pollution
Control Revenue, 5.9%, 5/1/22 $ 3,031,110
-----------
Missouri - 1.4%
5,500,000 NR/B3 St. Louis Industrial Development Authority
Revenue, 7.25%, 12/15/35 $ 4,478,155
-----------
Nevada - 1.5%
1,000,000 BBB-/Baa2 Clark County Industrial Development Revenue,
5.45%, 3/1/38 $ 1,057,540
1,850,000 B-/NR Clark County Industrial Development Revenue,
5.5%, 10/1/30 1,775,944
2,000,000 NR/NR Nevada State Department of Business & Industry,
7.25%, 1/1/23 1,996,700
-----------
$ 4,830,184
-----------
New Hampshire - 0.9%
3,000,000 AAA/Aaa Manchester School Facilities Revenue,
5.125%, 6/1/28 $ 3,133,530
-----------
10 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S&P/
Principal Moody's
Amount Ratings Value
New Jersey - 7.9%
$ 2,000,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.25%, 9/15/19 $ 1,555,340
11,700,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.25%, 9/15/29 8,473,608
1,000,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 6.4%, 9/15/23 777,020
6,150,000 B/Caa2 New Jersey Economic Development Authority
Revenue, 7.0%, 11/15/30 4,855,118
10,750,000 BBB/Baa3 Tobacco Settlement Financing Corp.,
6.75%, 6/1/39 10,523,928
-----------
$26,185,014
-----------
New Mexico - 1.6%
3,700,000 + NR/NR New Mexico Hospital Equipment Loan Council,
6.4%, 6/1/16 $ 4,008,025
1,350,000 (b) BBB-/NR Santa Fe Educational Facilities Revenue,
5.75%, 10/1/28 1,332,653
-----------
$ 5,340,678
-----------
New York - 5.8%
2,000,000 A/NR New York City Industrial Development Agency,
5.375%, 6/1/23 $ 2,068,120
5,625,000 CCC/Caa2 New York City Industrial Development Agency,
6.9%, 8/1/24 3,546,338
5,000,000 AAA/Aaa New York City Trust Cultural Resources Revenue,
5.125%, 7/1/31 5,193,950
2,000,000 NR/NR Suffolk County Industrial Development Agency,
7.25%, 1/1/30 1,970,160
6,000,000 AAA/Aaa Triborough Bridge & Tunnel Authority Revenue,
5.25%, 11/15/30 6,363,240
-----------
$19,141,808
-----------
North Carolina - 1.5%
2,000,000 AA+/Aa2 Charlotte North Carolina Certificates of
Participation, 5.0%, 6/1/33 $ 2,044,760
4,600,000 (c) NR/NR Charlotte North Carolina Special Facilities
Revenue, 7.75%, 2/1/28 1,932,000
1,000,000 AA+/Aa2 Charlotte North Carolina Storm Weather Fee
Revenue, 5.0%, 6/1/34 1,031,010
-----------
$ 5,007,770
-----------
The accompanying notes are an integral part of these financial statements. 11
Pioneer Municipal High Income Trust
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SCHEDULE OF INVESTMENTS 10/31/04 (unaudited) (continued)
--------------------------------------------------------------------------------
S&P/
Principal Moody's
Amount Ratings Value
Oklahoma - 5.2%
$ 3,000,000 ++ AAA/Aaa Oklahoma Development Finance Authority
Revenue, 5.625%, 8/15/19 $ 3,398,100
8,000,000 ++ AAA/Aaa Oklahoma Development Finance Authority
Revenue, 5.625%, 8/15/29 9,027,040
4,100,000 B-/Caa2 Tulsa Municipal Airport Revenue, 5.65%, 12/1/35 3,791,475
1,225,000 B-/Caa2 Tulsa Municipal Airport Revenue, 6.25%, 6/1/20 953,993
-----------
$17,170,608
-----------
Oregon - 4.7%
1,000,000 NR/NR Klamath Falls Electric Revenue, 5.75%, 1/1/13 $ 1,013,790
7,000,000 NR/NR Klamath Falls Electric Revenue, 6.0%, 1/1/25 6,946,730
7,500,000 NR/NR Western Generation Agency Cogeneration Project
Revenue, 7.125%, 1/1/21 7,638,300
-----------
$15,598,820
-----------
Pennsylvania - 9.6%
1,550,000 NR/Baa1 Allegheny County Hospital Development Authority
Revenue, 5.125%, 5/1/25 $ 1,385,669
12,300,000 B/B1 Allegheny County Hospital Development Authority
Revenue, 9.25%, 11/15/30 14,168,493
2,500,000 BBB-/Baa2 Beaver County Industrial Development Authority,
7.625%, 5/1/25 2,614,900
1,000,000 BB-/NR Columbia County Hospital Authority Health Care
Revenue, 5.9%, 6/1/29 800,770
5,000,000 BBB/Baa3 Delaware County Industrial Development Authority
Revenue, 6.1%, 7/1/13 5,351,850
1,000,000 BBB/Ba2 Hazleton Health Services Authority Hospital
Revenue, 5.625%, 7/1/17 848,950
1,280,000 NR/B2 Langhorne Manor Borough Higher Education &
Health Authority Revenue, 7.35%, 7/1/22 1,261,171
500,000 BBB+/NR Pennsylvania Higher Educational Facilities Authority
Revenue, 5.4%, 7/15/36 513,945
5,000,000 BBB-/Baa2 Philadelphia Hospitals & Higher Education
Facilities Authority Revenue, 6.5%, 11/15/22 5,000,600
-----------
$31,946,348
-----------
12 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S&P/
Principal Moody's
Amount Ratings Value
South Carolina - 8.1%
$ 4,250,000 BBB/Baa2 Georgetown County Environmental Improvement
Revenue, 5.95%, 3/15/14 $ 4,786,265
15,000,000 AA-/A1 Greenville County School District, 5.5%, 12/1/28 15,834,750
5,850,000 BBB/Baa2 South Carolina Jobs Economic Development
Authority Revenue, 6.375%, 8/1/34 6,247,391
-----------
$26,868,406
-----------
Tennessee - 3.8%
7,000,000 BBB+/Baa2 Johnson City Health & Educational Facilities Board
Hospital Revenue, 7.5%, 7/1/33 $ 8,212,400
4,480,000 NR/Baa3 Knox County Health Educational & Housing Facili-
ties Board Hospital Revenue, 6.375%, 4/15/22 4,527,622
-----------
$12,740,022
-----------
Texas - 5.2%
7,500,000 CCC/Caa2 Alliance Airport Authority Special Facilities
Revenue, 7.5%, 12/1/29 $ 4,799,925
1,345,000 NR/Baa3 Bexar County Housing Finance Corp.,
8.0%, 12/1/36 1,402,082
5,500,000 CC/Ca Dallas-Fort Worth International Airport Revenue,
7.125%, 11/1/26 1,815,000
2,800,000 CC/Ca Dallas-Fort Worth International Airport Revenue,
7.6%, 11/1/11 924,000
750,000 CC/Ca Dallas-Fort Worth International Airport Revenue,
7.625%, 11/1/21 247,500
4,000,000 NR/NR Decatur Hospital Authority Revenue, 7.0%, 9/1/25 4,050,480
1,000,000 BB/NR Georgetown Health Facilities Development Corp.,
6.25%, 8/15/29 959,090
3,750,000 B-/Caa2 Houston Airport System Special Facilities Revenue,
5.7%, 7/15/29 2,503,725
500,000 BBB/Baa2 Sabine River Authority Pollution Control Revenue,
6.15%, 8/1/22 541,715
-----------
$17,243,517
-----------
Vermont - 0.5%
1,500,000 A-/A3 Vermont Educational & Health Buildings Financing
Agency Revenue, 6.0%, 10/1/28 $ 1,677,225
-----------
Virginia - 1.4%
1,000,000 BBB/Baa3 Peninsula Ports Authority, 6.0%, 4/1/33 $ 1,038,720
4,000,000 BB/NR Pocahontas Parkway Association of Virginia Toll
Road Revenue, 5.5%, 8/15/28 3,630,560
-----------
$ 4,669,280
-----------
The accompanying notes are an integral part of these financial statements. 13
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/04 (unaudited) (continued)
--------------------------------------------------------------------------------
S&P/
Principal Moody's
Amount Ratings Value
Washington - 5.5%
$ 4,710,000 AAA/Aaa Spokane Public Facilities District Hotel/Motel Tax
& Sales, 5.75%, 12/1/27 $ 5,294,699
7,025,000 BBB/Baa3 Tobacco Settlement Authority Washington, 6.625%,
6/1/32 6,754,116
14,315,000 AAA/Aaa Washington State General Obligation, 0.0%,
6/1/22 6,119,949
--------------
$ 18,168,764
--------------
Wyoming - 1.5%
5,000,000 BB+/Ba3 Sweetwater County Solid Waste Disposal Revenue,
6.9%, 9/1/24 $ 5,081,050
--------------
TOTAL TAX-EXEMPT OBLIGATIONS
(Cost $409,040,749) $ 422,469,614
--------------
Shares TAX-EXEMPT MONEY MARKET MUTUAL FUND - 1.1%
of Net Assets
3,775,289 BlackRock Provident Institutional Municipal Fund $ 3,775,289
--------------
TOTAL TAX-EXEMPT MONEY MARKET MUTUAL FUND
(Cost $3,775,289) $ 3,775,289
--------------
TOTAL INVESTMENTS IN SECURITIES - 128.7%
(Cost $412,816,038) (d) (e) $ 426,244,903
--------------
OTHER ASSETS AND LIABILITIES - 1.8% $ 5,821,711
--------------
PREFERRED SHARES AT
REDEMPTION VALUE - (30.5)% $ (101,000,000)
--------------
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS - 100.0% $ 331,066,614
==============
14 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NR: Security not rated by S&P or Moody's.
(144A) Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At
October 31, 2004 the value of these securities amounted to $974,690 or
0.3% of net assets applicable to common shareholders.
+ Prerefunded bonds have been collaterized by cash sufficient to pay
interest and principal on the tax exempt issue and to retire the bonds in
full at the earliest refunding date.
++ Prerefunded bonds have been collaterized by U.S. Treasury securities
which are held in escrow to pay interest and principal on the tax exempt
issue and to retire the bonds in full at the earliest refunding date.
(a) Indicates a security that has a zero coupon that remains in effect until
a predetermined date at which time the stated coupon rate becomes
effective until final maturity.
(b) This security, or portion thereof, has been purchased on a "when issue"
basis.
(c) Security is in default and is non-incoming producing.
(d) The concentration of investments by type of obligation/market sector is
as follows:
Insured 14.7%
General Obligation 1.8
Revenue Bonds:
Health Revenue 25.0
Airport Revenue 14.5
Tobacco Revenue 9.9
Pollution Control Revenue 8.8
Education Revenue 6.7
Development Revenue 6.3
Power Revenue 3.9
Facilities Revenue 2.8
Other 2.0
Transportation Revenue 1.6
Housing Revenue 1.5
Utilities Revenue 0.3
Water Revenue 0.2
-----
100.0%
=====
(e) At October 31, 2004, the net unrealized gain on investments based on cost
for federal income tax purposes of $412,149,345 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost $ 29,502,769
Aggregate gross unrealized loss for all investments in which there is an (15,407,211)
excess of tax cost over value -------------
$ 14,095,558
Net unrealized gain =============
For financial reporting purposes net unrealized gain on investments was
$13,428,865 and cost of investments aggregated $412,816,038
Purchases and sales of securities (excluding temporary cash investments) for the
six months ended October 31, 2004, aggregated $68,121,396 and $68,745,116,
respectively.
The accompanying notes are an integral part of these financial statements. 15
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 10/31/04 (unaudited)
--------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value (cost $412,816,038) $426,244,903
Receivables -
Investment securities sold 79,513
Interest 8,742,063
Prepaid expenses 23,600
------------
Total assets $435,090,079
------------
LIABILITIES:
Payables -
Investment securities purchased $ 2,621,727
Net interest rate swaps payable 37,123
Unrealized depreciation on interest rate swaps 25,050
Due to affiliates 218,576
Administration fee payable 25,481
Accrued expenses 95,508
------------
Total liabilities $ 3,023,465
------------
PREFERRED SHARES AT REDEMPTION VALUE:
$25,000 liquidation value per share applicable to
4,040 shares $101,000,000
------------
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Paid-in capital $315,162,552
Undistributed net investment income 987,377
Accumulated net realized gain on investments and
interest rate swaps 1,512,870
Net unrealized gain on investments 13,428,865
Net unrealized loss on interest rate swaps (25,050)
------------
Net assets applicable to common shareowners $331,066,614
============
NET ASSET VALUE PER SHARE:
No par value, (unlimited number of shares authorized)
Based on $331,066,614/22,120,893 common shares $ 14.97
============
16 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (unaudited)
--------------------------------------------------------------------------------
For the Six Months Ended 10/31/04
INVESTMENT INCOME:
Interest $14,200,881
-----------
EXPENSES:
Management fees $ 1,279,170
Administration fees 149,237
Transfer agent fees and expenses 24,582
Auction agent fees 134,533
Custodian fees 10,005
Registration fees 11,241
Professional fees 28,701
Printing expense 8,661
Trustees' fees 4,581
Miscellaneous 16,440
------------
Total expenses $ 1,667,151
-----------
Net investment income $12,533,730
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND INTEREST RATE SWAPS:
Net realized gain (loss) from:
Investments $ 3,042,821
Interest rate swaps (358,894) $ 2,683,927
------------ -----------
Change in net unrealized gain (loss) on:
Investments $ 2,842,625
Interest rate swaps (1,161,850) $ 1,680,775
------------ -----------
Net gain on investments and interest rate swaps $ 4,364,702
-----------
DISTRIBUTIONS TO PREFERRED SHAREOWNERS FROM
NET INVESTMENT INCOME $ (600,050)
-----------
Net increase in net assets applicable to common
shareowners resulting from operations $16,298,382
===========
The accompanying notes are an integral part of these financial statements. 17
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (unaudited)
--------------------------------------------------------------------------------
For the Six Months Ended 10/31/04 and the Period Ended 4/30/04
Six Months 7/21/03
Ended (Commencement of
10/31/04 Operations) to
(unaudited) 4/30/04
FROM OPERATIONS:
Net investment income $ 12,533,730 $ 17,506,653
Net realized gain (loss) on investments and
interest rate swaps 2,683,927 (1,231,658)
Net unrealized gain on investments and
interest rate swaps 1,680,775 11,723,040
Distributions to preferred shareowners from
net investment income (600,050) (539,580)
------------ ------------
Net increase in net assets applicable to
common shareowners $ 16,298,382 $ 27,458,455
------------------------------------------------- ------------ ------------
DISTRIBUTIONS TO COMMON SHAREOWNERS:
Net investment income
($0.54 and $0.72 per share, respectively) $(11,945,282) $(15,907,493)
------------ ------------
Total dividends to common shareowners $(11,945,282) $(15,907,493)
------------ ------------
FROM TRUST SHARE TRANSACTIONS:
Net proceeds from the issuance of
common shares $ - $293,662,500
Net proceeds from underwriters'
over-allotment option exercised - 21,487,500
Reinvestment of distributions - 1,673,643
Changes in estimated common share
offering expenses 123,849 (660,000)
Changes in estimated preferred share
offering expenses - (1,224,943)
------------------------------------------------- ------------ ------------
Net increase in net assets applicable to
common shareowners resulting from
Trust share transactions $ 123,849 $314,938,700
------------------------------------------------- ------------ ------------
Net increase in net assets applicable to
common shareowners $ 4,476,949 $326,489,662
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS:
Beginning of period 326,589,665 100,003
------------ ------------
End of period (including undistributed net
investment income of $987,377 and
$998,979, respectively) $331,066,614 $326,589,665
============ ============
18 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Six Months
Ended
10/31/04 July 21, 2003 to
(unaudited) April 30, 2004 (b)
Per Common Share Operating Performance (a)
Net asset value, beginning of period $ 14.76 $ 14.33+
-------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.57 $ 0.80
Net realized and unrealized gain on investments
and interest rate swaps 0.21 0.46
Distributions to preferred shareowners from net
investment income (0.03) (0.02)
-------- --------
Net increase from investment operations $ 0.75 $ 1.24
Distributions to common shareowners:
Net investment income (0.54) (0.72)
Changes in (estimated) with respect to issuance of:
Common shares -* (0.03)
Preferred shares - (0.06)
-------- --------
Net increase in net asset value $ 0.21 $ 0.43
======== ========
Net asset value, end of period** $ 14.97 $ 14.76
-------- --------
Market value, end of period** $ 14.45 $ 13.70
-------- --------
Total return++ 9.54% (4.11)%
Ratios to average net assets of common shareowners
Net Expenses+++ 1.03%*** 0.95%***
Net investment income before preferred share dividends 7.72%*** 6.91%***
Preferred share dividends 0.37%*** 0.21%***
Net investment income available to common shareowners 7.35%*** 6.70%***
Portfolio turnover 17% 54%
Net assets of common shareowners, end of period
(in thousands) $331,067 $326,590
Preferred shares outstanding (in thousands) $101,000 $101,000
Asset coverage per preferred share, end of period $106,947 $105,839
Average market value per preferred share $ 25,000 $ 25,000
Liquidation value per preferred share $ 25,000 $ 25,000
Ratios to average net assets of common shareowners before
reimbursement of organization expenses
Net Expenses+++ 1.03%*** 0.96%***
Net investment income before preferred share dividends 7.72%*** 6.90%***
Preferred share dividends 0.37%*** 0.21%***
Net investment income available to common shareowners 7.35%*** 6.69%***
(a) The per common share data presented above is based upon the average common
shares outstanding for the periods presented.
(b) Trust shares were first publicly offered on July 18, 2003.
* Amount is less than $0.01 per share.
** 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.
*** Annualized.
+ Net asset value immediately after the closing of the first public offering
was $14.30.
++ Total investment return is calculated assuming a purchase of common shares
at the current market value on the first day and a sale at the current
market value on the last day of the periods reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions. Total
investment return less than a full period is not annualized. Past
performance is not a guarantee of future results.
+++ Ratios do not reflect the effect of dividend payments to preferred
shareowners.
The information above represents the operating performance data for a share of
common stock outstanding, total investment return, ratios to average net assets
of common shareowners and other supplemental data for the periods indicated.
This information has been determined based upon financial information provided
in the financial statements and market value data for the Trust's common shares.
The accompanying notes are an integral part of these financial statements. 19
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/04 (unaudited)
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Municipal High Income Trust (the "Trust") was organized as a Delaware
statutory trust on March 13, 2003. Prior to commencing operations on July 21,
2003, the Trust had no operations other than matters relating to its
organization and registration as a diversified, closed-end management investment
company under the Investment Company Act of 1940, as amended, and the sale and
issuance to Pioneer Investment Management, Inc. ("PIM"), the Trust's investment
adviser, a wholly owned indirect subsidiary of UniCredito Italiano S.p.A.
(UniCredito Italiano), of 6,981 shares of beneficial interest at an aggregate
purchase price of $100,003. PIM has agreed to reimburse the amount by which the
aggregate of all the Trust's organizational expenses and offering costs for
common shares (other than the sales load) exceeds $0.03 per share of common
share offering. The investment objective of the Trust is to seek a high level of
current income exempt from regular federal income tax and the Trust may seek
capital appreciation to the extent that it is consistent with its primary
investment objective.
The Trust may invest in municipal securities with a broad range of maturities
and credit ratings, including both investment grade and below investment grade
municipal securities.
The Trust invests in below investment grade (high yield) municipal securities.
Debt securities rated below investment grade are commonly referred to as "junk
bonds" and are considered speculative. These securities involve greater risk of
loss, are subject to greater price volatility, and are less liquid, especially
during periods of economic uncertainty or change, than higher rated debt
securities.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses and gains and losses on
investments during the reporting period. Actual results could differ from those
estimates. The following is
20
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
a summary of significant accounting policies consistently followed by the Trust
in preparation of its financial statements, which are consistent with those
generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Securities are valued
at prices supplied by independent pricing services, which consider such
factors as Treasury spreads, yields, maturities and ratings. Valuations may
be supplemented by dealers and other sources, as required. The values of
interest rate swaps are determined by obtaining dealer quotations.
Securities for which market quotations are not readily available are valued
at their fair values as determined by, or under the direction of, the Board
of Trustees. As of October 31, 2004, there were no securities fair valued.
Discount and premium on fixed income securities are accreted or amortized
daily, respectively, on an effective yield to maturity basis and are
included in interest income. Interest income is recorded on an accrual
basis. Temporary cash investments are valued at amortized cost.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Federal Income Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of the Trust's distributions may be
shown in the accompanying financial statements as either from or in excess
of net investment income or net realized gain on investment transactions,
or from paid in-capital, depending on the type of book/tax differences that
may exist.
21
Pioneer Municipal High Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/04 (unaudited) (continued)
--------------------------------------------------------------------------------
At April 30, 2004, the Trust had a capital loss carryforward of $1,170,962
which will expire in 2012 if not utilized.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The tax character of distributions paid
to common and preferred shareowners during the period ended April 30, 2004
was as follows:
-----------------------------------------------------------------------------
2004
Distributions paid from:
Tax exempt income $16,447,073
Long-term capital gain -
-----------
Total $16,447,073
-----------
-----------------------------------------------------------------------------
The following shows components of distributable earnings on a fed eral
income tax basis at April 30, 2004.
-----------------------------------------------------------------------------
2004
Undistributed tax-exempt income $ 431,774
Capital loss carryforward (1,170,962)
Unrealized appreciation 12,290,150
-----------
Total $11,550,962
-----------
-----------------------------------------------------------------------------
The difference between book basis and tax basis unrealized appreciation is
primarily attributable to the difference between book and tax amortization
methods for premiums and discounts on fixed income securities and the tax
deferral of losses on wash sales.
C. Automatic Dividend Reinvestment Plan
All common shareowners automatically participate in the Automatic Dividend
Reinvestment Plan (the "Plan"), under which participants receive all
dividends and capital gain distributions (collectively, "dividends") in
full and fractional common shares of the Trust in lieu of cash. Shareowners
may elect not to participate in the Plan. Shareowners not participating in
the Plan receive all dividends and capital gain distributions in cash.
Participation in the Plan is completely voluntary and may be terminated or
resumed at any time by
22
Pioneer Municipal High Income Trust
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
notifying Mellon Investor Services LLC, the agent for shareowners in
administering the Plan (the "Plan Agent"), prior to any dividend record
date; otherwise such termination or resumption will be effective with
respect to any subsequently declared dividend or other distribution.
Whenever the Trust declares a dividend on common shares payable in cash,
participants in the Plan will receive the equivalent in common shares
acquired by the Plan Agent either (i) through receipt of additional
unissued but authorized common shares from the Trust or (ii) by purchase of
outstanding common shares on the New York Stock Exchange or elsewhere. If,
on the payment date for any dividend the net asset value per common share
is equal to or less than the market price per share plus estimated
brokerage trading fees ("market premium"), the Plan Agent will invest the
dividend amount in newly issued common shares. The number of newly issued
common shares to be credited to each account will be determined by dividing
the dollar amount of the dividend by the net asset value per common share
on the date the shares are issued, provided that the maximum discount from
the then current market price per share on the date of issuance does not
exceed 5%. If, on the payment date for any dividend, the net asset value
per common share is greater than the market value ("market discount"), the
Plan Agent will invest the dividend amount in common shares acquired in
open-market purchases. There are no brokerage charges with respect to newly
issued common shares. However, each participant will pay a pro rata share
of brokerage trading fees incurred with respect to the Plan Agent's
open-market purchases. Participating in the Plan does not relieve
shareowners from any federal, state or local taxes which may be due on
dividends paid in any taxable year. Shareowners holding Plan shares in a
brokerage account may not be able to transfer the shares to another broker
and continue to participate in the Plan.
2. Management Agreement
PIM manages the Trust's portfolio. Management fees are calculated daily at the
annual rate of 0.60% of the Trust's average daily managed assets. "Managed
assets" is the average daily value of the Trust's total assets minus the sum of
the Trust's liabilities, which liabilities exclude debt related to leverage,
short-term debt and the aggregate liquidation preference of any outstanding
preferred shares.
23
Pioneer Municipal High Income Trust
-----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/04 (unaudited) (continued)
-----------------------------------------------------------------------------
In addition, under PIM's management and administration agreements, certain other
services and costs are paid by the Trust. PIM has retained Princeton
Administrators, L.P., an affiliate of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, to provide certain administrative services to the Trust on its
behalf. The Trust pays Princeton Administrators, L.P. a monthly fee at an annual
rate of 0.07% of the average weekly value of the Trust's managed assets, subject
to a minimum monthly fee of $10,000.
Also, PIM has agreed for the first three years of the Trust's investment
operations to limit the Trust's total annual expenses (excluding organizational
and offering costs for common and preferred shares, interest expenses, the cost
of defending or prosecuting any claim or litigation to which the Trust is a
party, (together with any amount in judgment or settlement), indemnification
expenses or taxes incurred due to the failure of the Trust to qualify as a
regulated investment company under the Code or any other non-recurring or
non-operating expenses) to 0.80% of the Trust's average daily managed assets.
The dividend on any preferred shares is not an expense. Under this agreement,
PIM may subsequently recover reimbursed expenses (within three years of being
incurred) from the Trust if the Trust's total expenses are less than 0.80% of
average daily managed assets. As of October 31, 2004, the Trust's expenses were
not reduced under such arrangements.
3. Transfer Agents
Pioneer Investment Management Shareholder Services, Inc. ("PIMSS"), a wholly
owned indirect subsidiary of UniCredito Italiano, through a sub-transfer agency
agreement with Mellon Investor Services LLC, provides substantially all transfer
agent and shareowner services related to the Trust's common shares at negotiated
rates. Deutsche Bank Trust Company Americas is the transfer agent, registrar,
dividend paying agent and redemption agent with respect to the Trust's Auction
Preferred Shares (APS). The Trust pays Deutsche Bank Trust Company Americas an
annual fee, as is agreed to from time to time by the Trust and Deutsche Bank
Trust Company Americas, for providing such services.
24
Pioneer Municipal High Income Trust
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
4. Interest Rate Swaps
The Trust may enter into interest rate swap transactions to attempt to protect
itself from increasing dividend or interest expense on its leverage resulting
from increasing short-term interest rates. The cost of leverage may rise with an
increase in interest rates, generally having the effect of lower yields and
potentially lower dividends. Interest rate swaps can be used to "lock in" the
cost of leverage and reduce the negative impact that rising short-term interest
rates would have on the Trust's leveraging costs.
An interest rate swap is an agreement between two parties, which involves
exchanging a floating rate and fixed rate interest payments for a specified
period of time. Interest rate swaps involve the accrual and exchange of net
interest payments between the parties. For financial reporting purposes, the
Trust records the net receivable or payable for the net interest expected to be
received or paid as net realized gains or losses from interest rate swaps in the
Statement of Operations. During the term of the swap, changes in the value of
the swap are recognized as unrealized gains and losses by "marking-to market" to
reflect the market value of the swap. When the swap is terminated, the Trust
will record a realized gain or loss equal to the difference, if any, between the
proceeds from (or cost of) closing the contract and the cost basis of the
contract. The Trust is exposed to credit risk in the event of non-performance by
the other party to the interest rate swap. However, the Trust does not
anticipate non-performance by any counterparty.
Under the terms of the agreement entered into by the Trust, the Trust receives
a floating rate of interest and pays a fixed rate of interest for the term.
Details of the swap agreement outstanding as of October 31, 2004 were as
follows:
------------------------------------------------------------------------------------
Termination Notional Fixed Unrealized
Counterparty Date Amount (000) Rate Floating Rate Depreciation
-------------- --------------- -------------- -------- --------------- -------------
UBS AG April 5, 2009 $50,000 2.665% 1 month BMA $ (25,050)
------------------------------------------------------------------------------------
5. Trust Shares
There are an unlimited number of common shares of beneficial interest
authorized. Of the 22,120,893 common shares of beneficial interest outstanding
at October 31, 2004, PIM owned 6,981 shares.
25
Pioneer Municipal High Income Trust
-------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/04 (unaudited) (continued)
-------------------------------------------------------------------------------
Transactions in common shares of beneficial interest for the six months ended
October 31, 2004 and the period from July 21, 2003 (commencement of investment
operations) to April 30, 2004 were as follows:
-----------------------------------------------------------------------------
9/04 4/04
Shares issued in connection with
initial public offering - 20,500,000
Shares issued from underwriters'
over-allotment option exercised 1,500,000
Reinvestment of distributions - 113,912
- ----------
Net increase in shares outstanding - 22,113,912
Shares outstanding at beginning
of period - 6,981
- ----------
Shares outstanding at end of period 22,120,893 22,120,893
---------- ----------
-----------------------------------------------------------------------------
The Trust may classify or reclassify any unissued common shares of beneficial
interest into one or more series of preferred shares of beneficial interest. As
of October 31, 2004, there were 4,040 Auction Preferred Shares ("APS") as
follows: Series A-2,000 and Series B-2,040.
Dividends on Series A and Series B APS are cumulative at a rate which is reset
every seven days based on the results of an auction. Dividend rates ranged from
0.96% to 1.55% during the six months ended October 31, 2004.
The Trust may not declare dividends or make other distributions on its common
shares or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
preferred shares would be less than 200%.
The APS are redeemable at the option of the Trust, in whole or in part, on any
dividend payment date at $25,000 per share plus any accumulated or unpaid
dividends, whether or not declared. The APS are also subject to mandatory
redemption at $25,000 per share plus any accumulated or unpaid dividends,
whether or not declared, if certain requirements relating to the composition of
the assets and liabilities of the Trust as set forth in the Agreement and
Declaration of Trust are not satisfied.
26
Pioneer Municipal High Income Trust
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The holders of APS have voting rights equal to the holders of the Trust's common
shares (one vote per share) and will vote together with holders of the common
shares as a single class. However, holders of APS are also entitled to elect two
of the Trust's Trustees. In addition, the Investment Company Act of 1940, as
amended, requires that along with approval by shareowners that might otherwise
be required, the approval of the holders of a majority of any outstanding
preferred shares, voting separately as a class would be required to (a) adopt
any plan of reorganization that would adversely affect the preferred shares and
(b) take any action requiring a vote of security holders, including, among other
things, changes in the Trust's subclassification as a closed-end management
investment company or changes in its fundamental investment restrictions.
6. Subsequent Events
Subsequent to October 31, 2004 the Board of Trustees of the Trust declared a
dividend from undistributed net investment income of $0.09 per common share
payable November 30, 2004, to shareowners of record on November 15, 2004.
For the period November 1, 2004 to November 30, 2004, dividends declared on
preferred stock totaled $139,354 in aggregate for the two outstanding preferred
share series.
ADDITIONAL INFORMATION (unaudited)
During the period, there have been no material changes in the Trust's investment
objective or fundamental policies that have not been approved by the
shareowners. There have been no changes in the Trust's charter or By-Laws that
would delay or prevent a change in control of the Trust which have not been
approved by the shareowners. There have been no changes in the principal risk
factors associated with investment in the Trust. There have been no changes in
the persons who are primarily responsible for the day-to-day management of the
Trust's portfolio.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Trust may purchase, from time to time, its common
shares in the open market.
27
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TRUSTEES, OFFICERS AND SERVICE PROVIDERS
-----------------------------------------------------------------------------
Officers Trustees
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
Mary K. Bush Osbert M. Hood, Executive
Richard H. Egdahl, M.D. Vice President
Margaret B.W. Graham Vincent Nave, Treasurer
Osbert M. Hood Dorothy E. Bourassa, Secretary
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Shareowner Services and Sub-Transfer Agent
Mellon Investor Services LLC
Preferred Share Auction/Transfer Agent and Registrar
Deutsche Bank Trust Company Americas
Sub-Administrator
Princeton Administrators, L.P.
Proxy Voting Policies and Procedures of the Trust are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Trust voted proxies relating to portfolio securities during
the most recent 6-month period ended October 31, 2004 is publicly available to
shareowners at www.pioneerfunds.com. This information is also available on the
Securities and Exchange Commission's web site at http://www.sec.gov.
28
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HOW TO CONTACT PIONEER
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We are pleased to offer a variety of convenient ways for you to contact Mellon
for assistance or information.
You can call Mellon Investor Services LLC for:
Account Information 1-800-710-0935
Telecommunications Device for the Deaf (TDD) 1-800-231-5469
Or write to Mellon Investor Services LLC:
For Write to
General inquiries, lost dividend checks P.O. Box 3315
South Hackensack, NJ
07606-1915
Change of address, account consolidation P.O. Box 3316
South Hackensack, NJ
07606-1916
Lost stock certificates P.O. Box 3317
South Hackensack, NJ
07606-1917
Stock transfer P.O. Box 3312
South Hackensack, NJ
07606-1912
Dividend reinvestment plan (DRIP) P.O. Box 3338
South Hackensack, NJ
07606-1938
Please consider the Trust's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the Trust and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
[LOGO] PIONEER
Investments(R)
Pioneer Investment Management, Inc.
60 State Street
Boston, MA 02109
www.pioneerfunds.com
16550-00-1204
(C) 2004 Pioneer Funds Distributor, Inc.
Underwriter of Pioneer mutual funds
Member SIPC
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
N/A
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
N/A
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
N/A
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
N/A
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognizes 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 recognizes 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.
N/A
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The Fund's independent auditor, Ernst & Young
LLP ("E&Y"), recently has advised the Securities
and Exchange Commission, the Public Company
Accounting Oversight Board, and the Audit
Committee of the Fund's Board of Trustees that
certain non-audit work performed by E&Y's China
affiliate has raised questions regarding E&Y's
independence with respect to its performance of
audit services for the Fund. In July 2004, E&Y
became aware that member firms in China ("E&Y
China") provided certain tax services to offices of
UniCredito Italiano, S.p.A. ("UCI"), a member of
the Fund's Investment Company Complex. The
services included receipt and disbursement of
monies transferred to E&Y China by UCI in
payment of individual expatriate income taxes due
on returns prepared by E&Y China for certain UCI
employees located in China from October 1998 to
May 2003. E&Y became auditors of the Fund in
May 2002. These expatriate tax services were
discontinued in May 2003. The fees received by
E&Y China for all such services totaled $N/A.
The Fund's Audit Committee and E&Y have
discussed the matter, including the nature of the
services provided, the personnel involved in
providing the services and the fees received by
E&Y for performing the services. The Committee
continues to review the facts and circumstances
surrounding the matter, including the issue of
whether the monies transferred for employees' taxes
were de facto monies due the employees for tax
payments rather than monies belonging to UCI.
E&Y has informed the Audit Committee that based
on its internal reviews and the de minimis nature of
the services provided and fees received, it does not
believe its independence with respect to the Fund
has been impaired.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
N/A
ITEMS 5-6. [RESERVED]
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.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer and principal financial
officer have concluded, that the registrant's disclosure controls and
procedures are effective based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Municipal High Income Trust
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date December 28, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date December 28, 2004
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date December 28, 2004
* Print the name and title of each signing officer under his or her signature.