N-CSR 1 ncsr.txt OMB APPROVAL OMB Number: 3235-0570 Expires: January 31, 2017 Estimated average burden hours per response.....20.6 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-22014 Pioneer Diversified High Income Trust (Exact name of registrant as specified in charter) 60 State Street, Boston, MA 02109 (Address of principal executive offices) (ZIP code) Terrence J. Cullen, Pioneer Investment Management, Inc., 60 State Street, Boston, MA 02109 (Name and address of agent for service) Registrant's telephone number, including area code: (617) 742-7825 Date of fiscal year end: April 30 Date of reporting period: May 1, 2015 through April 30, 2016 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. Pioneer Diversified High Income Trust -------------------------------------------------------------------------------- Annual Report | April 30, 2016 -------------------------------------------------------------------------------- Ticker Symbol: HNW [LOGO] PIONEER Investments(R) visit us: us.pioneerinvestments.com Table of Contents President's Letter 2 Portfolio Management Discussion 4 Portfolio Summary 11 Prices and Distributions 12 Performance Update 13 Schedule of Investments 14 Financial Statements 46 Financial Highlights 50 Notes to Financial Statements 52 Report of Independent Registered Public Accounting Firm 67 Trustees, Officers and Service Providers 69
Pioneer Diversified High Income Trust | Annual Report | 4/30/16 1 President's Letter Dear Shareowner, Global financial markets began 2016 on shaky footing, delivering the kind of volatility that challenged investors in 2015. US equities fell by 10% through the first six weeks of the year, only to recover the losses by the end of the first quarter. Fixed-income markets were also acutely affected, with concerns about falling oil prices and a weak global economy leading to a sell-off in credit-sensitive sectors, especially high-yield bonds, as investors fled to the perceived safety of government bonds. Like equities, credit markets recovered much of their lost ground by the end of the first quarter. Midway through the first quarter, market sentiment shifted, as expectations grew that major central banks would extend their accommodative monetary policies in the hopes of driving economic growth. The US Federal Reserve (the Fed) backed off plans to raise interest rates four times in 2016, and the European Central Bank announced a more comprehensive asset-purchasing program in the hopes of encouraging lending, and boosting both inflation and economic growth. The Bank of Japan also followed a monetary easing path, announcing negative interest rates in January. As 2016 moves along, we continue to see central bank policies as generally supportive of the US economy - for which we maintain an expectation of modest growth this year - against an overall global economic backdrop that remains unsettled and points towards generally lower growth. Economies around the world in both developed and emerging markets are experiencing deep structural changes. Current challenges include incomplete debt deleveraging in both emerging and developed markets, where debt levels continue to grow, the transition of many emerging markets economies from export/investment-driven models to more domestic demand-driven models, and aging populations, which are reducing productivity and limiting economic growth potential (primarily in the developed markets but also in emerging markets such as China). Geopolitical instability on many fronts, the rising risk of policy mistakes, and market liquidity issues combine to increase the possibility of sharp swings in asset values. Meanwhile, in the US, as always in a presidential election year, the political rhetoric of 2016 has the potential to impact domestic sectors such as health care. Throughout Pioneer's history, we have believed in the importance of active management. During periods of market volatility, we view the value of active management as even more compelling. Our experienced and tenured investment teams focus on identifying value across global markets using proprietary research, careful risk management, and a long-term perspective. We believe our shareowners can benefit from the experience and tenure of our investment teams as well as the insights generated from our extensive research process. 2 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 As always, and particularly during times of market uncertainty, we encourage you to work with your financial advisor to develop an overall investment plan that addresses both your short- and long-term goals, and to implement such a plan in a disciplined manner. We greatly appreciate the trust you have placed in us and look forward to continuing to serve you in the future. Sincerely, /s/ Lisa M. Jones Lisa M. Jones President and CEO Pioneer Investment Management USA Inc. April 30, 2016 Any information in this shareowner report regarding market or economic trends or the factors influencing the Fund's historical or future performance are statements of opinion as of the date of this report. Past performance is no guarantee of future results. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 3 Portfolio Management Discussion | 4/30/16 Worries about slowing global economic trends as well as weakening prices for oil and other commodities created a difficult environment for the more credit- sensitive sectors in the bond markets during most of the 12-month period ended April 30, 2016. However, signs of some economic progress on the domestic front led to a recovery in the credit-sensitive sectors over the final 10 weeks of the period. In the following interview, Andrew Feltus, Charles Melchreit, Jonathan Sharkey and Chin Liu discuss the factors that affected the performance of Pioneer Diversified High Income Trust during the 12-month period. Mr. Feltus, Director of High Yield and Bank Loans, a senior vice president and a portfolio manager at Pioneer; Mr. Melchreit, Director of Investment-Grade Management, a senior vice president and a portfolio manager at Pioneer; Mr. Sharkey, a senior vice president and a portfolio manager at Pioneer; and Mr. Liu, a vice president and a portfolio manager at Pioneer, are responsible for the day-to-day management of the Trust. Note: Mr. Liu became a portfolio manager on the Trust in September 2015. Q How did the Trust perform during the 12-month period ended April 30, 2016? A Pioneer Diversified High Income Trust returned -0.29% at net asset value and -1.26% at market price during the 12-month period ended April 30, 2016. During the same 12-month period, the Trust's custom benchmark returned 0.69%. The custom benchmark is based on equal weights of the Bank of America Merrill Lynch (BofA ML) Global High Yield and Emerging Markets Plus (GHY and EMP) Index, which returned 1.50% at net asset value during the 12-month period, and the Credit Suisse (CS) Leveraged Loan Index, which returned -0.13%. Unlike the Trust, the custom benchmark does not use leverage. While the use of leverage increases investment opportunity, it also increases investment risk. During the same 12-month period, the average return (at market price) of the 31 closed end funds in Lipper's High Yield Closed End Funds Category (which may or may not be leveraged) was -3.71%, and the average return (at market price) of the 22 closed end funds in Lipper's Loan Participation Closed End Funds Category (which may or may not be leveraged) was -3.82%. The shares of the Trust were selling at a 6.2% discount to net asset value at the end of the period on April 30, 2016. On April 30, 2016, the 30-day SEC yield on the Trust's shares was 9.03%*. * The 30-day SEC yield is a standardized formula that is based on the hypothetical annualized earning power (investment income only) of the Trust's portfolio securities during the period indicated. 4 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 Q How would you describe the investment environment in the fixed-income markets during the 12-month period ended April 30, 2016? A The performance of higher-yielding, credit-sensitive bonds was disappointing for most of the Trust's fiscal year, although such securities recovered, somewhat, over the final weeks of the period as investors grew more hopeful about global economic conditions. During the early months of the 12-month period, a confluence of factors combined to dampen investors' optimism about the health of the world economy. Among the concerns vexing the markets were weakening prices for oil and other basic commodities, evidence of slowing economic growth in China, and a resurgent debt crisis in Greece that had the potential to threaten the wider European economy. The high-yield bond sectors strongly felt the effects of the market turmoil during that timeframe, with US high-yield corporate bonds and emerging markets debt, in particular, struggling due to the fallout from declining prices of oil, metals, and basic commodities. Meanwhile, although major central banks such as the European Central Bank (ECB) and the Bank of Japan adopted more accommodative monetary policies, the influential US Federal Reserve System (the Fed) appeared to signal its intent to become less accommodative and to start raising short-term interest rates in the United States as early as September 2015. The Fed, though, ended up delaying its anticipated rate hike and kept things unchanged in September, while advising the financial markets that it would look closely at a wide range of economic and market trends before tightening monetary policy. By the time Fed did raise rates by 0.25% in December 2015, market participants had already become more comfortable with its interest-rate posture. The downward move in high-yield and emerging markets bond prices finally appeared to bottom in February 2016, and the asset classes regained some of the ground they had lost earlier in the period. Several factors contributed to the bounce-back in the credit-sensitive sectors, including the Fed's cautious policy regarding interest rates, additional monetary easing from the ECB, the willingness of the Chinese government to adopt more aggressive, pro-growth policies, and a long-awaited rally in global oil and commodities prices. Securities that are highly sensitive to commodity prices, including energy industry and mining bonds, were the hardest hit during the market downturn early in the period, but they recovered sharply over the latter months as commodity prices rose and investors gravitated toward the very attractive valuations of those assets relative to their risks. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 5 In other areas of the market, floating-rate bank loans experienced modest losses, on a total return basis, during the full 12-month period, while the performance of insurance-linked securities (ILS) essentially was flat over the Trust's fiscal year. Q How did you manage the Trust's portfolio in that environment during the 12-month period ended April 30, 2016? A During the period, we kept the Trust's portfolio well diversified** among the four main asset classes in which we typically invest: corporate bonds, emerging markets debt, floating-rate bank loans, and ILS. Fixed-rate investments, principally high-yield corporates and emerging markets debt, accounted for about 53% of the Trust's total investment portfolio as of period end, with the remaining 47% of the Trust's total investment portfolio allocated to floating-rate securities, mainly bank loans and ILS. With regard to specific asset classes, nearly 66% of the Trust's total investment portfolio was held in corporate bonds and notes as of April 30, 2016, while senior secured bank loans, at 22% of the Trust's total investment portfolio, represented the portfolio's second-largest asset allocation. Within the allocation to corporate bonds and notes was a 19% position in insurance-linked securities, which included quota-share instruments and event-linked securities. Finally, we kept the duration of the Trust's portfolio on the short side (roughly 2.5 years) in anticipation that interest rates will eventually start to rise. (Duration is a measure of the sensitivity of the price, or the value of principal, of a fixed-income investment to a change in interest rates, expressed as a number of years.) Q What were the primary reasons for the Trust's underperformance of its customized benchmark during the 12-month period ended April 30, 2016? A The main reason for the Trust's underperformance of its benchmark during the period was the use of leverage, or borrowed funds. While the investments in the Trust's portfolio generated close to a flat return over the 12-month period, the interest cost of the leverage reduced the Trust's total return. In addition, the portfolio's moderate allocation to high-yield energy bonds was another drag on the Trust's benchmark-relative returns during a period in which energy issues, especially lower-rated debt, performed poorly. Individual portfolio holdings in energy that hurt the Trust's benchmark-relative performance during the period included bonds issued by Penn Virginia, an oil and gas company; refiner MidStates Oil Refining; Noble Energy, an oil and gas drilling firm; and Williams Companies, a pipeline enterprise. The bonds of Noble Energy and ** Diversification does not assure a profit nor protect against loss. 6 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 Williams were investment-grade securities when we added them to the Trust's portfolio, but each suffered downgrades to high-yield status during the 12-month period. Other detractors from the Trust's benchmark-relative returns during the period included positions in securities of European banking institutions, which struggled for two primary reasons. First, investors were worried that European banks might begin issuing a large supply of new, subordinated debt; and second, the forthcoming "Brexit" referendum in June, when citizens of the United Kingdom will decide whether to leave the European Economic Community, created much uncertainty and negatively affected the performance of the portfolio's European bank-related holdings. Q Which of your strategies or individual investments made positive contributions to the Trust's benchmark-relative returns during the 12-month period ended April 30, 2016? A The Trust's overall allocation to ILS proved to have the most significant positive influence on benchmark-relative performance during the period, as the property-and-casualty industry experienced relatively few significant losses from natural events such as hurricanes and earthquakes. The exception to the general "low claims" trend within ILS was the portfolio's investment in a MultiCat Mexico bond, a catastrophe bond sponsored by SwissRe. The bond suffered a 50% loss of principal from the landfall of Hurricane Patricia on Mexico's West Coast in October 2015. Investments in floating-rate bank loans also contributed positively to the Trust's benchmark-relative performance during the period, even though bank loans, in general, were relatively flat over the full 12 months due to technical market issues. A decline in the issuance of collateralized loan obligations (CLOs), which are major investors in bank loans, was the most notable of those technical issues in the bank-loan market over the period. Q How did the level of leverage in the Trust change over the 12-month period ended April 30, 2016? A The Trust employs leverage through a credit agreement (See Note 9 to the Financial Statements). At the end of the 12-month period on April 30, 2016, 29.1% of the Trust's total managed assets were financed by leverage (or borrowed funds), compared with 29.5% of the Trust's total managed assets financed by leverage at the start of the period on May 1, 2015. During the 12-month period, the Trust reduced borrowing under the revolving credit facility by a total of $7 million to $57 million as of April 30, 2016. Due to the overall decline in prices of high yield securities during the period, a reduction in the overall borrowing on the credit line was necessary in order to maintain the Pioneer Diversified High Income Trust | Annual Report | 4/30/16 7 asset coverage requirements specified by the credit agreement. The percentage of the Trust's managed assets financed by leverage decreased during the period due to the reduction of borrowings and a decrease in the values of securities in which the Trust had invested. Q Did the Trust have any investments in derivative securities during the 12-month period ended April 30, 2016? If so, did those investments have any effect on the Trust's performance? A During the period, the Trust did invest in some currency forward transactions in an attempt to hedge the effects of currency fluctuations on the value of the portfolio's investments in securities denominated in foreign currencies. The exposure did not have a material impact on the Trust's benchmark-relative results. Q What were the major factors affecting the Trust's distribution during the 12-month period ended April 30, 2016? A The Trust's distribution was lowered in February 2016 because of a reduced amount of current income realized by the portfolio's investments. Over the full 12 months, in a low-interest-rate environment, the rates available on newer bond investments tended to be lower than the rates offered by older investments that had either reached maturity or been called away by their issuers. Q What is your investment outlook? A We believe the US economy should be able to grow at a moderate pace of 2.0% to 2.5% in 2016, despite getting off to a slow start in the first quarter, when gross domestic product (GDP) struggled to reach 1%. While poor sales figures and a slowdown in capital spending - both of which are tied to weakness in the energy markets - played a role in the first quarter's disappointing GDP figures, we still see persuasive evidence that the domestic economy is strengthening, as employment growth has been solid overall and household formation and new-home construction figures have been encouraging. While we foresee more growth on the domestic scene, global economic trends remain mixed. The recovery in Europe is proceeding at a slow pace, and we are concerned about the threatened exit of Britain from the European Economic Community, which we mentioned earlier. Meanwhile, the Chinese economy continues to be a major concern, particularly amid speculation about the excessive use of leverage. However, we are becoming more encouraged about growth prospects in selected emerging markets, especially if oil and other commodity prices did in fact bottom out earlier this year. 8 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 If, as we expect, the domestic economy shows continued improvement, we think a cautious Fed may further tighten monetary policy, perhaps raising short-term interest rates once or twice more in 2016. Therefore, we intend to maintain the Trust's short-duration stance. We believe a slow-growth environment should be good for the credit- sensitive markets. Corporate balance sheets continue to look solid and borrowing costs are not burdensome. Moreover, we do not see any noticeable signs of increases in debt, or leverage, in the economy, either by corporations or individual households. When it comes to investing in corporate bonds, we feel that security selection will be important, especially as we see some corporations taking shareholder-friendly actions, such as initiating mergers and increasing dividends. While high-yield corporate bond prices are not as compelling as they were in February of this year, prior to the market rally, they remain attractive. Yield spreads, which measure the differences between the yields of high-yield and high-quality bonds (typically Treasuries) with similar maturities, remain wider than long-term averages, and most sectors within high yield (other than energy, and metals and mining) are seeing improved performance. In addition, prices remain low relative to current high-yield default rates. Overall, we do not anticipate a robust rally in high-yield bonds, but we do see opportunities for continued performance improvement. Please refer to the Schedule of Investments on pages 14-45 for a full listing of Trust securities. All investments are subject to risk, including the possible loss of principal. In the past several years, financial markets have experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. These conditions may continue, recur, worsen or spread. Investments in high-yield or lower-rated securities are subject to greater-than- average risk. The Trust may invest in securities of issuers that are in default or that are in bankruptcy. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. When interest rates rise, the prices of debt securities in the Trust will generally fall. Conversely, when interest rates fall the prices of debt securities in the Trust generally will rise. Investments in the Trust are subject to possible loss due to the financial failure of the issuers of the underlying securities and the issuers' inability to meet their debt obligations. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 9 Interest rates in the U.S. recently have been historically low, so the Trust faces a heightened risk that interest rates may rise. A general rise in interest rates may cause investors to move out of fixed income securities on a large scale, which could adversely affect the price and liquidity of fixed income securities. The Trust may invest a significant amount of its total assets in illiquid securities. Illiquid securities may be difficult to dispose of at a price reflective of their value at the times when the Trust believes it is desirable to do so and the market price of illiquid securities is generally more volatile than that of more liquid securities. Illiquid securities also are more difficult to value, and investment of the Trust's assets in illiquid securities may restrict the Trust's ability to take advantage of market opportunities. The Trust is authorized to borrow from banks and issue debt securities, which are forms of leverage. Leverage creates significant risks, including the risk that the Trust's incremental income or capital appreciation for investments purchased with the proceeds of leverage will not be sufficient to cover the cost of the leverage, which may adversely affect the return for shareholders. The Trust is required to maintain certain regulatory and other asset coverage requirements in connection with its use of leverage. In order to maintain required asset coverage levels, the Trust may be required to reduce the amount of leverage employed by the Trust, alter the composition of its investment portfolio or take other actions at what might be inopportune times in the market. Such actions could reduce the net earnings or returns to shareowners over time, which is likely to result in a decrease in the market value of the Trust's shares. Certain securities in which the Trust invests, including floating rate loans, once sold, may not settle for an extended period (for example, several weeks or even longer). The Trust will not receive its sale proceeds until that time, which may constrain the Trust's ability to meet its obligations. Insurance-linked securities may include event-linked bonds (also known as insurance-linked bonds or catastrophe bonds). The return of principal and the payment of interest on event-linked bonds are contingent on the non-occurrence of a predefined "trigger" event that leads to physical or economic loss, such as a hurricane or an aerospace catastrophe. Risks of investing in the Trust are discussed in greater detail in the Trust's original offering prospectus and in shareowner reports issued from time to time. These risks may increase share price volatility. Any information in this shareholder report regarding market or economic trends or the factors influencing the Fund's historical or future performance are statements of opinion as of the date of this report. Past performance is no guarantee of future results. 10 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 Portfolio Summary | 4/30/16 Portfolio Diversification* -------------------------------------------------------------------------------- (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Corporate Bonds & Notes 66.1% Senior Secured Floating Rate Loan Interests 21.5% Collateralized Mortgage Obligations 2.7% U.S. Government And Agency Obligations 2.1% Convertible Bonds & Notes 1.7% Sovereign Debt Obligations 1.4% Preferred Stocks 1.1% Treasury Bills 1.0% Asset Backed Securities 1.0% Commercial Paper 0.8% Convertible Preferred Stocks 0.3% Common Stocks 0.3%
* Includes investments in Insurance Linked Securities totaling 19.4% of total investment portfolio. 10 Largest Holdings -------------------------------------------------------------------------------- (As a percentage of total long-term holdings)**
1. Fixed Income Trust Series 2013-A, 0.0%, 10/15/97 (144A) 2.75% ---------------------------------------------------------------------------------------------- 2. Gullane Segregated Account (Kane SAC, Ltd.), Variable Rate Notes, 11/30/20 1.39 ---------------------------------------------------------------------------------------------- 3. U.S. Treasury Notes, 0.303%, 10/31/16 1.35 ---------------------------------------------------------------------------------------------- 4. Gleneagles Segregated Account (Kane SAC, Ltd.), Variable Rate Notes, 11/30/20 1.29 ---------------------------------------------------------------------------------------------- 5. Pangaea Re Segregated Account (Kane SAC, Ltd.), Series 2016-1, Variable Rate Notes, 2/1/20 1.06 ---------------------------------------------------------------------------------------------- 6. Lahinch Segregated Account (Kane SAC, Ltd.), Variable Rate Notes, 6/15/16 1.06 ---------------------------------------------------------------------------------------------- 7. PI-6 Segregated Account (Kane SAC, Ltd.), Series C, Variable Rate Notes, 7/7/16 1.05 ---------------------------------------------------------------------------------------------- 8. Queen Street X Re, Ltd., 5.948%, 6/8/18 (144A) (Cat Bond) 1.04 ---------------------------------------------------------------------------------------------- 9. Gator Re, Ltd., 6.468%, 1/9/17 (144A) (Cat Bond) 1.01 ---------------------------------------------------------------------------------------------- 10. Tar Heel Re, Ltd., Series 2013-1, Class A, 8.698%, 5/9/16 (144A) (Cat Bond) 0.92 ----------------------------------------------------------------------------------------------
** This list excludes temporary cash investments and derivative instruments. The portfolio is actively managed, and current holdings may be different. The holdings listed should not be considered recommendations to buy or sell any security listed. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 11 Prices and Distributions | 4/30/16 Market Value per Common Share --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 4/30/16 4/30/15 -------------------------------------------------------------------------------- Market Value $15.60 $17.42 -------------------------------------------------------------------------------- (Discount) (6.2)% (5.6)% --------------------------------------------------------------------------------
Net Asset Value per Common Share --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 4/30/16 4/30/15 -------------------------------------------------------------------------------- Net Asset Value $16.63 $18.39 --------------------------------------------------------------------------------
Distributions per Common Share --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- Net Investment Short-Term Long-Term Income Capital Gains Capital Gains -------------------------------------------------------------------------------- 5/1/15 - 4/30/16 $1.50 $ -- $ -- --------------------------------------------------------------------------------
Yields --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 4/30/16 4/30/15 -------------------------------------------------------------------------------- 30-Day SEC Yield 9.03% 6.38% --------------------------------------------------------------------------------
The data shown above represents past performance, which is no guarantee of future results. 12 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 Performance Update | 4/30/16 Investment Returns -------------------------------------------------------------------------------- The mountain chart on the right shows the change in market value, plus reinvested dividends and distributions, of a $10,000 investment made in common shares of Pioneer Diversified High Income Trust during the periods shown, compared to that of the combined (50%/50%) Bank of America Merrill Lynch Global High Yield and Emerging Markets Plus Index (BofA ML Global HY and EMP Index) and the Credit Suisse (CS) Leveraged Loan Index.
Average Annual Total Returns (As of April 30, 2016) -------------------------------------------------------------------------------- 50% BofA ML Global HY and Net EMP Index/ Asset 50% CS Value Market Leveraged Period (NAV) Price Loan Index -------------------------------------------------------------------------------- Life of Trust (5/30/2007) 7.18% 5.87% 5.28% 5 years 5.70 3.45 4.41 1 year -0.29 -1.26 0.69 --------------------------------------------------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL] Value of $10,000 Investment
Pioneer Diversified 50% BofA ML Global HY and EMP Index High Income Trust 50% CS Leveraged Loan Index 5/07 $10,000 $10,000 4/08 $ 8,933 $10,923 4/09 $ 6,868 $ 9,335 4/10 $11,899 $12,718 4/11 $14,034 $14,049 4/12 $14,224 $14,599 4/13 $17,065 $16,289 4/14 $18,280 $17,159 4/15 $16,836 $17,312 4/16 $16,624 $17,436
Call 1-800-225-6292 or visit us.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. Performance data shown represents past performance. Past performance is no guarantee of future results. Investment return and market price will fluctuate, and your shares may trade below NAV due to such factors as interest rate changes and the perceived credit quality of borrowers. Total investment return does not reflect broker sales charges or commissions. All performance is for common shares of the Trust. Shares of closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering and, once issued, shares of closed-end funds are bought and sold in the open market through a stock exchange and frequently trade at prices lower than their NAV. NAV per common share is total assets less total liabilities, which include preferred shares or borrowings, as applicable, divided by the number of common shares outstanding. When NAV is lower than market price, dividends are assumed to be reinvested at the greater of NAV or 95% of the market price. When NAV is higher, dividends are assumed to be reinvested at prices obtained through open-market purchases under the Trust's dividend reinvestment plan. The performance table and graph do not reflect the deduction of fees and taxes that a shareowner would pay on Trust distributions or the sale of Trust shares. Had these fees and taxes been reflected, performance would have been lower. The BofA ML Global High Yield and Emerging Markets Plus Index is an unmanaged index that tracks the performance of the below- and border-line investment-grade global debt markets denominated in the major developed market currencies. The Index includes sovereign issuers rated BBB1 and lower along with corporate issues rated BB1 and lower. There are no restrictions on issuer country of domicile. The CS Leveraged Loan Index is unmanaged and is designed to mirror the investible universe of the U.S. dollar-denominated leveraged loan market. The CS Leveraged Loan Index consists of tradable term loans with at least one year to maturity and rated BBB or lower. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Trust returns, do not reflect any fees, expenses or sales charges. The indices do not use leverage. It is not possible to invest directly in an index. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 13 Schedule of Investments | 4/30/16
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ ASSET BACKED SECURITIES -- 1.4% of Net Assets 250,000 American Credit Acceptance Receivables Trust, Series 2014-2, Class D, 4.96%, 5/10/21 (144A) $ 252,866 200,000 Ascentium Equipment Receivables LLC, Series 2015-1A, Class E, 5.92%, 6/12/23 (144A) 198,533 299,996 Axis Equipment Finance Receivables III LLC, Series 2015-1A, Class E, 5.27%, 5/20/20 (144A) 286,543 80,239 Continental Airlines Pass Through Trust, Series 1998-1, Class B, 6.748%, 3/15/17 82,245 290,000(a) GMAT Trust, Series 2013-1A, Class M, 5.0%, 11/25/43 (144A) 278,812 418,932(b) GMAT Trust, Series 2015-1A, Class A1, 4.25%, 9/25/20 (144A) 424,002 400,000(c) NCF Dealer Floorplan Master Trust, Series 2016-1A, Class C, 8.935%, 3/21/22 (144A) 394,834 ------------------------------------------------------------------------------------------------------ TOTAL ASSET BACKED SECURITIES (Cost $1,906,187) $ 1,917,835 ------------------------------------------------------------------------------------------------------ COLLATERALIZED MORTGAGE OBLIGATIONS -- 3.8% of Net Assets 375,000(c) BAMLL Commercial Mortgage Securities Trust, Series 2014-INLD, Class F, 2.965%, 12/15/29 (144A) $ 335,895 143,050(a) Bear Stearns Commercial Mortgage Securities Trust, Series 2005-PWR7, Class B, 5.214%, 2/11/41 142,991 260,000(c) CFCRE Mortgage Trust, Series 2015-RUM, Class E, 5.033%, 7/15/30 (144A) 253,406 500,000(a) Citigroup Commercial Mortgage Trust, Series 2014-GC23, Class E, 3.208%, 7/10/47 (144A) 293,556 500,000(a) COBALT CMBS Commercial Mortgage Trust, Series 2007-C3, Class C, 5.956%, 5/15/46 446,688 300,000(a) COMM Mortgage Trust, Series 2007-C9, Class H, 6.006%, 12/10/49 (144A) 281,644 250,000(a) COMM Mortgage Trust, Series 2012-CR2, Class E, 5.017%, 8/15/45 (144A) 237,879 500,000(c) CSMC Trust, Series 2015-SAND, Class F, 5.13%, 8/15/30 (144A) 463,902 115,766(c) EQTY Mezzanine Trust, Series 2014-INMZ, Class M, 4.75%, 5/8/31 (144A) 108,401 170,000(c) EQTY Mortgage Trust, Series 2014-INNS, Class E, 3.889%, 5/8/31 (144A) 162,601 64,743 Global Mortgage Securitization, Ltd., Series 2004-A, Class B1, 5.25%, 11/25/32 (144A) 50,903 126,339 Global Mortgage Securitization, Ltd., Series 2005-A, Class B3, 5.25%, 4/25/32 (144A) 84,614 127,257 Homeowner Assistance Program Reverse Mortgage Loan Trust, Series 2013-RM1, Class A, 4.0%, 5/26/53 (144A) 125,667
The accompanying notes are an integral part of these financial statements. 14 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ COLLATERALIZED MORTGAGE OBLIGATIONS -- (continued) 150,000 JP Morgan Chase Commercial Mortgage Securities Trust, Series 2006-CB16, Class AJ, 5.623%, 5/12/45 $ 145,859 550,000(c) JP Morgan Chase Commercial Mortgage Securities Trust, Series 2014-INN, Class E, 4.033%, 6/15/29 (144A) 532,397 489,343(a) LB-UBS Commercial Mortgage Trust, Series 2006-C1, Class AJ, 5.276%, 2/15/41 488,050 600,000 ML-CFC Commercial Mortgage Trust, Series 2006-4, Class AJ, 5.239%, 12/12/49 596,638 500,000(a) Morgan Stanley Capital I Trust, Series 2007-T25, Class AJ, 5.574%, 11/12/49 492,488 ------------------------------------------------------------------------------------------------------ TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $5,374,917) $ 5,243,579 ------------------------------------------------------------------------------------------------------ SENIOR SECURED FLOATING RATE LOAN INTERESTS -- 30.2% of Net Assets*(c) AUTOMOBILES & COMPONENTS -- 2.5% Auto Parts & Equipment -- 1.7% 493,734 Crowne Group LLC, First Lien Initial Term Loan, 6.0%, 9/30/20 $ 476,454 349,113 Electrical Components International, Inc., Term Loan, 5.75%, 5/28/21 349,766 184,585 Federal-Mogul Corp., Tranche C Term Loan, 4.75%, 4/15/21 176,740 161,698 Key Safety Systems, Inc., Initial Term Loan, 4.75%, 8/29/21 162,001 252,064 MPG Holdco I, Inc., Initial Term Loan, 3.75%, 10/20/21 250,984 178,647 TI Group Automotive Systems LLC, Initial US Term Loan, 4.5%, 6/30/22 178,647 788,667 Tower Automotive Holdings USA LLC, Refinancing Term Loan, 4.0%, 4/23/20 788,667 ------------- $ 2,383,259 ------------------------------------------------------------------------------------------------------ Automobile Manufacturers -- 0.6% 839,209 Chrysler Group LLC, Term Loan B, 3.5%, 5/24/17 $ 840,330 ------------------------------------------------------------------------------------------------------ Tires & Rubber -- 0.2% 287,500 Goodyear Tire & Rubber Co., Second Lien Term Loan, 3.75%, 4/30/19 $ 288,488 ------------- Total Automobiles & Components $ 3,512,077 ------------------------------------------------------------------------------------------------------ CAPITAL GOODS -- 4.4% Aerospace & Defense -- 0.3% 121,632 TASC, Inc., First Lien Term Loan, 7.0%, 5/22/20 $ 121,277 228,422 Vencore, Inc., (fka SI Organization, Inc.), Initial First Lien Term Loan, 5.75%, 11/23/19 228,707
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 15 Schedule of Investments | 4/30/16 (continued)
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Aerospace & Defense -- (continued) 157,600 WP CPP Holdings LLC, Second Lien Term Loan B-1, 8.75%, 4/30/21 $ 137,112 ------------- $ 487,096 ------------------------------------------------------------------------------------------------------ Building Products -- 1.3% 911,001 Builders FirstSource, Inc., Term Loan B, 6.0%, 7/29/22 $ 911,429 498,750 Quanex Building Products Corp., Initial Term Loan, 6.25%, 11/2/22 500,620 392,673 Unifrax Holding Co., New Term B Dollar Loan, 4.25%, 11/28/18 373,040 ------------- $ 1,785,089 ------------------------------------------------------------------------------------------------------ Construction Machinery & Heavy Trucks -- 0.3% 389,025 Navistar, Inc., Tranche B Term Loan, 6.5%, 8/7/20 $ 369,898 ------------------------------------------------------------------------------------------------------ Electrical Components & Equipment -- 0.4% 515,520 WireCo WorldGroup, Inc., Term Loan, 6.0%, 2/15/17 $ 510,042 ------------------------------------------------------------------------------------------------------ Industrial Conglomerates -- 1.0% 493,192 Doosan Infracore International, Inc. (Doosan Holdings Europe, Ltd.), Tranche B Term Loan, 4.5%, 5/28/21 $ 487,335 100,419 Faenza Acquisition GmbH (CeramTec Acquisition Corp.), Dollar Term B-3 Loan, 4.25%, 8/30/20 100,482 329,533 Faenza Acquisition GmbH (CeramTec Acquisition Corp.), Initial Dollar Term B-1 Loan, 4.25%, 8/30/20 329,739 35,029 Faenza Acquisition GmbH (CeramTec Acquisition Corp.), Initial Dollar Term B-2 Loan, 4.25%, 8/30/20 35,051 399,694 Filtration Group Corp., Initial Second Lien Term Loan, 8.25%, 11/22/21 393,199 10,605 Kleopatra Holdings 2 SCA, Initial German Borrower Dollar Term Loan, 5.0%, 4/28/20 10,632 24,816 Kleopatra Holdings 2 SCA, Initial US Borrower Dollar Term Loan, 5.0%, 4/28/20 24,878 ------------- $ 1,381,316 ------------------------------------------------------------------------------------------------------ Industrial Machinery -- 0.7% 497,500 NN, Inc., Initial Term Loan, 5.75%, 10/19/22 $ 495,013 472,574 Xerium Technologies, Inc., New Term Loan, 6.25%, 5/17/19 461,941 ------------- $ 956,954 ------------------------------------------------------------------------------------------------------ Trading Companies & Distributors -- 0.4% 292,920 AWAS Finance Luxembourg 2012 SA, Term Loan, 3.5%, 7/16/18 $ 293,836 284,593 WESCO Distribution, Inc., Tranche B-1 Loan, 3.75%, 12/12/19 285,482 ------------- $ 579,318 ------------- Total Capital Goods $ 6,069,713 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 16 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ COMMERCIAL & PROFESSIONAL SERVICES -- 0.5% Environmental & Facilities Services -- 0.3% 500,000 Granite Acquisition, Inc., Second Lien Term B Loan, 8.25%, 12/19/22 $ 392,500 ------------------------------------------------------------------------------------------------------ Security & Alarm Services -- 0.2% 120,230 Monitronics International, Inc., 2013 Term Loan B, 4.25%, 3/23/18 $ 115,421 126,931 Protection One, Inc., 2012 Term Loan, 5.0%, 7/1/21 127,301 ------------- $ 242,722 ------------- Total Commercial & Professional Services $ 635,222 ------------------------------------------------------------------------------------------------------ CONSUMER DURABLES & APPAREL -- 0.1% Leisure Products -- 0.1% 164,514 Bombardier Recreational Products, Inc., Term B Loan, 3.75%, 1/30/19 $ 164,056 ------------- Total Consumer Durables & Apparel $ 164,056 ------------------------------------------------------------------------------------------------------ CONSUMER SERVICES -- 1.5% Casinos & Gaming -- 0.2% 296,250 Scientific Games International, Inc., Initial Term B-2 Loan, 6.0%, 10/1/21 $ 292,640 ------------------------------------------------------------------------------------------------------ Leisure Facilities -- 0.1% 130,463 Fitness International LLC, Term B Loan, 7.0%, 7/1/20 $ 128,180 ------------------------------------------------------------------------------------------------------ Restaurants -- 0.7% 380,419 Landry's, Inc. (fka Landry's Restaurants, Inc.), Term Loan B, 4.0%, 4/24/18 $ 381,251 529,800 NPC International, Inc., Term Loan, 4.75%, 12/28/18 527,151 ------------- $ 908,402 ------------------------------------------------------------------------------------------------------ Specialized Consumer Services -- 0.5% 746,250 KC MergerSub, Inc., First Lien Initial Term Loan, 6.0%, 8/12/22 $ 742,519 ------------- Total Consumer Services $ 2,071,741 ------------------------------------------------------------------------------------------------------ DIVERSIFIED FINANCIALS -- 0.3% Consumer Finance -- 0.1% 214,076 Trans Union LLC, Term B-2 Loan, 3.5%, 4/9/21 $ 213,474 ------------------------------------------------------------------------------------------------------ Specialized Finance -- 0.2% 247,500 DBRS, Ltd., Initial Term Loan, 6.25%, 3/4/22 $ 245,489 ------------- Total Diversified Financials $ 458,963 ------------------------------------------------------------------------------------------------------ ENERGY -- 0.8% Coal & Consumable Fuels -- 0.1% 352,500 PT Bumi Resources Tbk, Term Loan, 18.0%, 11/4/16 $ 70,500 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 17 Schedule of Investments | 4/30/16 (continued)
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Integrated Oil & Gas -- 0.3% 479,321 TerraForm AP Acquisition Holdings LLC, Term Loan, 5.0%, 6/27/22 $ 421,802 ------------------------------------------------------------------------------------------------------ Oil & Gas Drilling -- 0.2% 444,680 Jonah Energy LLC, Initial Second Lien Term Loan, 7.5%, 5/12/21 $ 307,941 ------------------------------------------------------------------------------------------------------ Oil & Gas Equipment & Services -- 0.2% 541,453 FR Dixie Acquisition Corp., Term Loan, 5.75%, 12/18/20 $ 257,190 ------------- Total Energy $ 1,057,433 ------------------------------------------------------------------------------------------------------ FOOD & STAPLES RETAILING -- 0.3% Food Distributors -- 0.3% 395,442 AdvancePierre Foods, Inc., Second Lien Term Loan, 9.5%, 10/10/17 $ 395,195 ------------- Total Food & Staples Retailing $ 395,195 ------------------------------------------------------------------------------------------------------ FOOD, BEVERAGE & TOBACCO -- 0.3% Packaged Foods & Meats -- 0.3% 475,105 Dole Food Co., Inc., Tranche B Term Loan, 4.5%, 11/1/18 $ 475,105 ------------- Total Food, Beverage & Tobacco $ 475,105 ------------------------------------------------------------------------------------------------------ HEALTH CARE EQUIPMENT & SERVICES -- 3.4% Health Care Equipment -- 0.5% 500,000 Concentra, Inc., Initial Second Lien Term Loan, 9.0%, 6/1/23 $ 490,150 234,725 Kinetic Concepts, Inc., Dollar E-1 Term Loan, 4.5%, 5/4/18 234,931 ------------- $ 725,081 ------------------------------------------------------------------------------------------------------ Health Care Facilities -- 1.5% 233,397 CHS/Community Health Systems, Inc., Incremental 2018 Term F Loan, 3.79%, 12/31/18 $ 232,577 246,916 CHS/Community Health Systems, Inc., Incremental 2019 Term G Loan, 3.75%, 12/31/19 243,572 454,316 CHS/Community Health Systems, Inc., Incremental 2021 Term H Loan, 4.0%, 1/27/21 448,239 193,530 HCA, Inc., Tranche B-6 Term Loan, 3.685%, 3/17/23 195,103 316,125 Kindred Healthcare, Inc., Incremental Term Loan, 4.25%, 4/9/21 315,335 296,947 Steward Health Care System LLC, Term Loan, 6.75%, 4/10/20 292,492 400,304 Surgical Care Affiliates, Inc., Initial Term Loan, 4.25%, 3/17/22 400,805 ------------- $ 2,128,123 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 18 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Health Care Services -- 0.9% 343,156 Bioscrip, Inc., Initial Term B Loan, 6.5%, 7/31/20 $ 315,703 205,893 Bioscrip, Inc., Term Loan, 6.5%, 7/31/20 189,422 348,250 HC Group Holdings III, Inc., Initial First Lien Term Loan, 6.0%, 4/7/22 348,830 200,900 National Mentor Holdings, Inc., Tranche B Term Loan, 4.25%, 1/31/21 200,712 262,348 Valitas Health Services, Inc., Term Loan B, 6.0%, 6/2/17 158,721 ------------- $ 1,213,388 ------------------------------------------------------------------------------------------------------ Health Care Supplies -- 0.2% 231,234 Alere, Inc., Term Loan B, 4.25%, 6/20/22 $ 230,385 ------------------------------------------------------------------------------------------------------ Health Care Technology -- 0.3% 235,840 IMS Health, Inc., Tranche B-1 Dollar Term Loan, 3.5%, 3/17/21 $ 236,380 375,258(d) Medical Card System, Inc., Term Loan, 1.5%, 5/31/19 243,918 ------------- $ 480,298 ------------- Total Health Care Equipment & Services $ 4,777,275 ------------------------------------------------------------------------------------------------------ HOUSEHOLD & PERSONAL PRODUCTS -- 0.6% Household Products -- 0.3% 306,431 Dollar Tree, Inc., Term B-1 Loan, 3.5%, 7/6/22 $ 307,799 185,688 SRAM LLC, First Lien Term Loan, 4.012%, 4/10/20 163,406 ------------- $ 471,205 ------------------------------------------------------------------------------------------------------ Personal Products -- 0.3% 100,000 Atrium Innovations, Inc., Second Lien Term Loan, 7.75%, 8/13/21 $ 83,000 207,004 NBTY, Inc., B-2 Term Loan, 3.753%, 10/1/17 207,289 127,867 NBTY, Inc., Term Loan B, 4.0%, 5/5/23 128,426 ------------- $ 418,715 ------------- Total Household & Personal Products $ 889,920 ------------------------------------------------------------------------------------------------------ INSURANCE -- 2.6% Life & Health Insurance -- 0.4% 467,347 Integro, Ltd., Initial Term Loan, 6.75%, 10/31/22 $ 450,990 31,481 Integro, Ltd., Term Loan, 6.75%, 10/31/22 30,380 ------------- $ 481,370 ------------------------------------------------------------------------------------------------------ Multi-Line Insurance -- 0.1% 166,909 Alliant Holdings I LLC, Term Loan B, 4.5%, 8/12/22 $ 165,761 ------------------------------------------------------------------------------------------------------ Property & Casualty Insurance -- 2.1% 742,305 Confie Seguros Holding II Co., First Lien Term Loan B, 5.75%, 11/9/18 $ 731,634 593,765 Confie Seguros Holding II Co., Second Lien Term Loan, 10.25%, 5/8/19 562,592
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 19 Schedule of Investments | 4/30/16 (continued)
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Property & Casualty Insurance -- (continued) 742,500 Hyperion Insurance Group, Ltd., Initial Term B Loan, 5.5%, 4/29/22 $ 738,169 933,969 USI, Inc., Initial Term Loan, 4.25%, 12/27/19 923,754 ------------- $ 2,956,149 ------------- Total Insurance $ 3,603,280 ------------------------------------------------------------------------------------------------------ MATERIALS -- 2.0% Diversified Chemicals -- 0.2% 273,625 Univar USA, Inc., Initial Dollar Term Loan, 4.25%, 7/1/22 $ 270,661 ------------------------------------------------------------------------------------------------------ Diversified Metals & Mining -- 0.0%+ 75,256(e)(f) PT Bakrie & Brothers Tbk, Facility Term Loan B, 8.15%, 11/25/14 $ 15,051 ------------------------------------------------------------------------------------------------------ Metal & Glass Containers -- 0.8% 389,223 Tank Holding Corp., Initial Term Loan, 5.25%, 3/16/22 $ 371,708 744,375 Tekni-Plex, Inc., USD Term Loan, 4.5%, 6/1/22 738,172 ------------- $ 1,109,880 ------------------------------------------------------------------------------------------------------ Paper Packaging -- 0.3% 488,214 Caraustar Industries, Inc., Incremental Term Loan, 8.0%, 5/1/19 $ 487,197 ------------------------------------------------------------------------------------------------------ Paper Products -- 0.3% 287,111 Appvion, Inc., Term Commitment, 6.25%, 6/28/19 $ 274,550 78,935 Exopack Holdings SA, USD Term Loan, 4.5%, 5/8/19 78,343 ------------- $ 352,893 ------------------------------------------------------------------------------------------------------ Specialty Chemicals -- 0.4% 23,810 Chemtura Corp., New Term Loan, 3.5%, 8/29/16 $ 23,899 497,500 Macdermid, Inc. (Platform Specialty Products Corp.), Term Loan B3, 5.5%, 6/7/20 489,299 ------------- $ 513,198 ------------- Total Materials $ 2,748,880 ------------------------------------------------------------------------------------------------------ MEDIA -- 2.9% Advertising -- 0.6% 940,853 Affinion Group, Inc., Tranche B Term Loan, 6.75%, 4/30/18 $ 831,186 ------------------------------------------------------------------------------------------------------ Broadcasting -- 0.9% 270,000 Hubbard Radio LLC, Term Loan, 4.25%, 5/27/22 $ 263,475 300,000 Learfield Communications, Inc., Initial Second Lien Term Loan, 8.75%, 10/8/21 298,781 295,500 MediArena Acquisition BV (fka AP NMT Acquisition BV), First Lien Dollar Term B Loan, 6.75%, 8/13/21 253,637
The accompanying notes are an integral part of these financial statements. 20 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Broadcasting -- (continued) 457,383 Univision Communications, Inc., Replacement First Lien Term Loan, 4.0%, 3/1/20 $ 457,873 ------------- $ 1,273,766 ------------------------------------------------------------------------------------------------------ Movies & Entertainment -- 0.0%+ 29,497 Cinedigm Digital Funding I LLC, Term Loan, 3.75%, 2/28/18 $ 29,275 ------------------------------------------------------------------------------------------------------ Publishing -- 1.4% 510,947 Cengage Learning Acquisitions, Inc., Term Loan, 7.0%, 3/31/20 $ 508,903 322,563 Houghton Mifflin Holdings, Inc., Term Loan, 4.0%, 5/28/21 316,515 92,871 Lee Enterprises, Inc., First Lien Term Loan, 7.25%, 3/31/19 92,694 928,625 McGraw-Hill School Education Holdings LLC, Term B Loan, 6.25%, 12/18/19 930,076 ------------- $ 1,848,188 ------------- Total Media $ 3,982,415 ------------------------------------------------------------------------------------------------------ PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES -- 1.9% Biotechnology -- 0.5% 719,757 Lantheus Medical Imaging, Inc., Term Loan, 7.0%, 6/30/22 $ 644,182 ------------------------------------------------------------------------------------------------------ Life Sciences Tools & Services -- 1.0% 995,000 Albany Molecular Research, Inc., Term Loan B, 5.75%, 7/16/21 $ 998,731 425,594 Catalent Pharma Solutions, Inc., Dollar Term Loan, 4.25%, 5/20/21 428,154 ------------- $ 1,426,885 ------------------------------------------------------------------------------------------------------ Pharmaceuticals -- 0.4% 548,625 Concordia Healthcare Corp., Initial Dollar Term Loan, 5.25%, 10/21/21 $ 545,539 ------------- Total Pharmaceuticals, Biotechnology & Life Sciences $ 2,616,606 ------------------------------------------------------------------------------------------------------ REAL ESTATE -- 0.9% Retail REITs -- 0.6% 275,297 DTZ U.S. Borrower LLC, First Lien Initial Term Loan, 4.25%, 11/4/21 $ 275,526 500,000 DTZ U.S. Borrower LLC, Second Lien Initial Term Loan, 9.25%, 11/4/22 501,875 ------------- $ 777,401 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 21 Schedule of Investments | 4/30/16 (continued)
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Specialized REIT -- 0.3% 498,744 Communications Sales & Leasing, Inc. (CSL Capital, LLC), Term Loan, 5.0%, 10/24/22 $ 490,431 ------------- Total Real Estate $ 1,267,832 ------------------------------------------------------------------------------------------------------ RETAILING -- 0.7% Automotive Retail -- 0.5% 638,750 CWGS Group LLC, Term Loan, 5.75%, 2/20/20 $ 637,952 ------------------------------------------------------------------------------------------------------ Computer & Electronics Retail -- 0.1% 42,088(d)(g) Targus Group International, Inc., Tranche A-2 Term Loan, 15.0% (15.0% PIK 0% cash), 12/31/19 $ 42,088 126,263(d)(g) Targus Group International, Inc., Tranche A-2/B Term Loan, 14.0% (14.0% PIK 0% cash), 12/31/19 126,263 ------------- $ 168,351 ------------------------------------------------------------------------------------------------------ Specialty Stores -- 0.1% 156,899 Petsmart, Inc., Tranche B-1 Loan, 4.25%, 3/11/22 $ 156,587 ------------- Total Retailing $ 962,890 ------------------------------------------------------------------------------------------------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 0.3% Semiconductor Equipment -- 0.3% 411,904 VAT Lux II S.a.r.l., Term Loan, 4.25%, 2/11/21 $ 404,181 ------------- Total Semiconductors & Semiconductor Equipment $ 404,181 ------------------------------------------------------------------------------------------------------ SOFTWARE & SERVICES -- 1.7% Application Software -- 0.9% 495,067 Epiq Systems, Inc., Term Loan, 4.5%, 8/27/20 $ 493,829 210,670 Expert Global Solutions, Inc., Advance First Lien Term Loan B, 8.5%, 4/3/18 206,983 500,000 Vertafore, Inc., Second Lien Term Loan, 9.75%, 10/27/17 501,625 ------------- $ 1,202,437 ------------------------------------------------------------------------------------------------------ IT Consulting & Other Services -- 0.8% 245,625 Evergreen Skills Lux S.a.r.l., First Lien Initial Term Loan, 5.75%, 4/28/21 $ 216,150 621,875 Sitel Worldwide Corp., First Lien Term B-1 Loan, 6.5%, 9/18/21 619,543 270,000 TaxACT, Inc. (H.D. Vest, Inc.), Initial Term Loan, 7.0%, 1/3/23 272,363 ------------- $ 1,108,056 ------------- Total Software & Services $ 2,310,493 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 22 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ TECHNOLOGY HARDWARE & EQUIPMENT -- 0.4% Communications Equipment -- 0.1% 64,644 CommScope, Inc., Tranche 4 Term Loan, 3.313%, 1/14/18 $ 64,623 ------------------------------------------------------------------------------------------------------ Electronic Components -- 0.3% 455,400 Mirion Technologies (Finance) LLC (Mirion Technologies, Inc.), First Lien Initial Term Loan, 5.75%, 3/31/22 $ 452,364 ------------- Total Technology Hardware & Equipment $ 516,987 ------------------------------------------------------------------------------------------------------ TELECOMMUNICATION SERVICES -- 0.8% Integrated Telecommunication Services -- 0.6% 495,000 GCI Holdings, Inc., Term B Loan, 4.0%, 2/2/22 $ 496,547 351,471 Securus Technologies Holdings, Inc., Term Loan B2, 5.25%, 4/30/20 335,728 ------------- $ 832,275 ------------------------------------------------------------------------------------------------------ Wireless Telecommunication Services -- 0.2% 282,407 Syniverse Holdings, Inc., Initial Term Loan, 4.0%, 4/23/19 $ 228,749 126,139 Syniverse Holdings, Inc., Tranche B Term Loan, 4.0%, 4/23/19 102,173 ------------- $ 330,922 ------------- Total Telecommunication Services $ 1,163,197 ------------------------------------------------------------------------------------------------------ TRANSPORTATION -- 1.0% Marine -- 0.7% 622,129 Commercial Barge Line Co., Initial First Lien Term Loan, 9.75%, 11/12/20 $ 544,363 471,045 Navios Maritime Partners LP, Term Loan, 5.25%, 6/27/18 416,875 ------------- $ 961,238 ------------------------------------------------------------------------------------------------------ Trucking -- 0.3% 494,937 YRC Worldwide, Inc., Initial Term Loan, 8.0%, 2/13/19 $ 445,443 ------------- Total Transportation $ 1,406,681 ------------------------------------------------------------------------------------------------------ UTILITIES -- 0.3% Electric Utilities -- 0.3% 413,537 APLH Holdings Limited Partnership, Term Loan, 6.0%, 4/13/23 $ 412,503 ------------- Total Utilities $ 412,503 ------------------------------------------------------------------------------------------------------ TOTAL SENIOR SECURED FLOATING RATE LOAN INTERESTS (Cost $43,455,404) $ 41,902,645 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 23 Schedule of Investments | 4/30/16 (continued)
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ CORPORATE BONDS & NOTES -- 92.8% of Net Assets AUTOMOBILES & COMPONENTS -- 0.3% Auto Parts & Equipment -- 0.3% 454,000 International Automotive Components Group SA, 9.125%, 6/1/18 (144A) $ 407,465 ------------- Total Automobiles & Components $ 407,465 ------------------------------------------------------------------------------------------------------ BANKS -- 4.6% Diversified Banks -- 4.6% 525,000 Banco de Galicia y Buenos Aires, 8.75%, 5/4/18 (144A) $ 541,406 400,000(a) Banco Macro SA, 9.75%, 12/18/36 402,000 200,000(a)(h) Banco Santander SA, 6.375% 183,498 325,000(a)(h) Bank of America Corp., 6.25% 326,219 680,000 Banque Ouest Africaine de Developpement, 5.5%, 5/6/21 (144A) 680,816 950,000(a)(h) BNP Paribas SA, 7.625% (144A) 971,375 1,000,000(a)(h) Credit Agricole SA, 7.875% (144A) 960,512 350,000(a)(h) ING Groep NV, 6.5% 322,219 200,000(a)(h) Royal Bank of Scotland Group Plc, 7.5% 186,500 500,000(a)(h) Royal Bank of Scotland Group Plc, 8.0% 479,219 200,000 Sberbank of Russia Via SB Capital SA, 5.25%, 5/23/23 (144A) 193,750 245,000 Trade & Development Bank of Mongolia LLC, 9.375%, 5/19/20 (144A) 227,732 750,000 UBS AG / Stamford CT, 7.625%, 8/17/22 863,437 ------------- Total Banks $ 6,338,683 ------------------------------------------------------------------------------------------------------ CAPITAL GOODS -- 3.6% Aerospace & Defense -- 1.0% 400,000 ADS Tactical, Inc., 11.0%, 4/1/18 (144A) $ 411,000 680,000 DynCorp International, Inc., 10.375%, 7/1/17 574,600 435,000 LMI Aerospace, Inc., 7.375%, 7/15/19 419,775 ------------- $ 1,405,375 ------------------------------------------------------------------------------------------------------ Agricultural & Farm Machinery -- 0.3% 475,000 Titan International, Inc., 6.875%, 10/1/20 $ 410,875 ------------------------------------------------------------------------------------------------------ Building Products -- 0.2% 300,000 USG Corp., 7.875%, 3/30/20 (144A) $ 312,750 ------------------------------------------------------------------------------------------------------ Construction & Engineering -- 0.0%+ 200,000(e) Empresas ICA SAB de CV, 8.9%, 2/4/21 (144A) $ 48,000 ------------------------------------------------------------------------------------------------------ Construction Machinery & Heavy Trucks -- 0.3% 360,000 Meritor, Inc., 6.75%, 6/15/21 $ 340,200 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 24 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Industrial Conglomerates -- 0.4% 455,000 JB Poindexter & Co., Inc., 9.0%, 4/1/22 (144A) $ 478,888 ------------------------------------------------------------------------------------------------------ Industrial Machinery -- 0.9% 560,000 Apex Tool Group LLC, 7.0%, 2/1/21 (144A) $ 504,000 450,000 Cleaver-Brooks, Inc., 8.75%, 12/15/19 (144A) 441,000 229,061(d)(g) Liberty Tire Recycling LLC, 11.0% (11.0% PIK 0.0% cash), 3/31/21 (144A) 169,505 150,000 Xerium Technologies, Inc., 8.875%, 6/15/18 132,375 ------------- $ 1,246,880 ------------------------------------------------------------------------------------------------------ Trading Companies & Distributors -- 0.5% 150,000 H&E Equipment Services, Inc., 7.0%, 9/1/22 $ 151,500 544,000 TRAC Intermodal LLC / TRAC Intermodal Corp., 11.0%, 8/15/19 588,880 ------------- $ 740,380 ------------- Total Capital Goods $ 4,983,348 ------------------------------------------------------------------------------------------------------ COMMERCIAL & PROFESSIONAL SERVICES -- 1.1% Commercial Printing -- 0.2% 340,000 Cenveo Corp., 6.0%, 8/1/19 (144A) $ 263,500 ------------------------------------------------------------------------------------------------------ Diversified Support Services -- 0.9% 280,000 Broadspectrum, Ltd., 8.375%, 5/15/20 (144A) $ 303,800 950,000 NANA Development Corp., 9.5%, 3/15/19 (144A) 819,375 260,000 TMS International Corp., 7.625%, 10/15/21 (144A) 182,000 ------------- $ 1,305,175 ------------- Total Commercial & Professional Services $ 1,568,675 ------------------------------------------------------------------------------------------------------ CONSUMER DURABLES & APPAREL -- 1.6% Home Furnishings -- 0.4% 535,000 Tempur Sealy International, Inc., 6.875%, 12/15/20 $ 563,756 ------------------------------------------------------------------------------------------------------ Homebuilding -- 0.7% 350,000 Brookfield Residential Properties, Inc., 6.375%, 5/15/25 (144A) $ 315,000 250,000 KB Home, 7.0%, 12/15/21 255,000 340,000 KB Home, 7.625%, 5/15/23 346,800 ------------- $ 916,800 ------------------------------------------------------------------------------------------------------ Leisure Products -- 0.5% 695,000 Icon Health & Fitness, Inc., 11.875%, 10/15/16 (144A) $ 672,413 ------------- Total Consumer Durables & Apparel $ 2,152,969 ------------------------------------------------------------------------------------------------------ CONSUMER SERVICES -- 3.1% Casinos & Gaming -- 1.0% 832,066(e)(g) Mashantucket Western Pequot Tribe, 6.5%, (5.5% PIK 1.0% cash), 7/1/36 $ 4,160 365,000 MGM Resorts International, 6.0%, 3/15/23 379,144
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 25 Schedule of Investments | 4/30/16 (continued)
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Casinos & Gaming -- (continued) 100,000 Scientific Games International, Inc., 6.25%, 9/1/20 $ 64,250 1,200,000 Scientific Games International, Inc., 10.0%, 12/1/22 991,800 ------------- $ 1,439,354 ------------------------------------------------------------------------------------------------------ Hotels, Resorts & Cruise Lines -- 0.4% 245,000 Viking Cruises, Ltd., 6.25%, 5/15/25 (144A) $ 196,000 325,000 Viking Cruises, Ltd., 8.5%, 10/15/22 (144A) 305,500 ------------- $ 501,500 ------------------------------------------------------------------------------------------------------ Leisure Facilities -- 0.5% EUR 566,487 Cirsa Funding Luxembourg SA, 8.75%, 5/15/18 (144A) $ 651,928 ------------------------------------------------------------------------------------------------------ Specialized Consumer Services -- 1.2% 1,153,000 Constellis Holdings LLC / Constellis Finance Corp., 9.75%, 5/15/20 (144A) $ 1,043,465 290,000 Prime Security Services Borrower LLC / Prime Finance, Inc., 9.25%, 5/15/23 (144A) 300,875 315,000 StoneMor Partners LP / Cornerstone Family Services of WV, 7.875%, 6/1/21 315,000 ------------- $ 1,659,340 ------------- Total Consumer Services $ 4,252,122 ------------------------------------------------------------------------------------------------------ DIVERSIFIED FINANCIALS -- 1.8% Consumer Finance -- 0.7% 445,000 Jefferies Finance LLC / JFIN Co-Issuer Corp., 7.375%, 4/1/20 (144A) $ 410,512 203,374 Tarjeta Naranja SA, 9.0%, 1/28/17 (144A) 206,730 440,000 TMX Finance LLC / TitleMax Finance Corp., 8.5%, 9/15/18 (144A) 343,200 ------------- $ 960,442 ------------------------------------------------------------------------------------------------------ Investment Banking & Brokerage -- 0.1% 240,000(a)(h) Goldman Sachs Capital II, 4.0% $ 172,944 ------------------------------------------------------------------------------------------------------ Specialized Finance -- 1.0% 750,000(c) Bosphorus, Ltd., 3.735%, 8/17/18 (144A) $ 748,500 175,000 Nationstar Mortgage LLC / Nationstar Capital Corp., 6.5%, 7/1/21 153,563 580,000 Nationstar Mortgage LLC / Nationstar Capital Corp., 6.5%, 6/1/22 497,350 ------------- $ 1,399,413 ------------- Total Diversified Financials $ 2,532,799 ------------------------------------------------------------------------------------------------------ ENERGY -- 8.5% Integrated Oil & Gas -- 0.2% MXN 540,000 Petroleos Mexicanos, 7.19%, 9/12/24 (144A) $ 27,627
The accompanying notes are an integral part of these financial statements. 26 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Integrated Oil & Gas -- (continued) 325,000 YPF SA, 8.875%, 12/19/18 (144A) $ 348,872 ------------- $ 376,499 ------------------------------------------------------------------------------------------------------ Oil & Gas Drilling -- 0.5% 160,000 Drill Rigs Holdings, Inc., 6.5%, 10/1/17 (144A) $ 99,600 442,000 Rowan Cos., Inc., 5.4%, 12/1/42 289,510 62,000 Rowan Cos., Inc., 5.85%, 1/15/44 42,315 320,000 Shelf Drill Holdings, Ltd., 8.625%, 11/1/18 (144A) 227,200 ------------- $ 658,625 ------------------------------------------------------------------------------------------------------ Oil & Gas Equipment & Services -- 0.6% 330,000(c) FTS International, Inc., 8.134%, 6/15/20 (144A) $ 240,900 425,000 McDermott International, Inc., 8.0%, 5/1/21 (144A) 352,750 310,000 Weatherford International, Ltd., 5.95%, 4/15/42 229,400 ------------- $ 823,050 ------------------------------------------------------------------------------------------------------ Oil & Gas Exploration & Production -- 3.5% 100,000 Comstock Resources, Inc., 9.5%, 6/15/20 $ 14,000 360,000 GeoPark Latin America, Ltd., Agencia en Chile, 7.5%, 2/11/20 (144A) 255,600 570,000 Gulfport Energy Corp., 7.75%, 11/1/20 575,700 402,000 Halcon Resources Corp., 12.0%, 2/15/22 (144A) 286,425 600,000 Midstates Petroleum Co., Inc., 9.25%, 6/1/21 9,000 450,000 Novatek OAO via Novatek Finance, Ltd., 4.422%, 12/13/22 (144A) 429,840 355,000 Oasis Petroleum, Inc., 7.25%, 2/1/19 337,250 535,000 PDC Energy, Inc., 7.75%, 10/15/22 553,725 506,000 PetroQuest Energy, Inc., 10.0%, 2/15/21 (144A) 323,840 240,000(e) Quicksilver Resources, Inc., 7.125%, 4/1/16 24 375,000 Rice Energy, Inc., 6.25%, 5/1/22 371,250 870,000 Sanchez Energy Corp., 7.75%, 6/15/21 715,575 150,000 Whiting Petroleum Corp., 5.0%, 3/15/19 132,750 480,000 Whiting Petroleum Corp., 5.75%, 3/15/21 399,600 300,000 WPX Energy, Inc., 7.5%, 8/1/20 285,750 150,000 WPX Energy, Inc., 8.25%, 8/1/23 141,000 ------------- $ 4,831,329 ------------------------------------------------------------------------------------------------------ Oil & Gas Refining & Marketing -- 1.6% 669,000 Calumet Specialty Products Partners LP / Calumet Finance Corp., 6.5%, 4/15/21 $ 461,610 118,000 EnLink Midstream Partners LP, 5.05%, 4/1/45 88,688 344,000 EnLink Midstream Partners LP, 5.6%, 4/1/44 261,975 925,000 Sunoco LP / Sunoco Finance Corp., 6.375%, 4/1/23 (144A) 938,875
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 27 Schedule of Investments | 4/30/16 (continued)
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Oil & Gas Refining & Marketing -- (continued) 520,000 Western Refining Logistics LP / WNRL Finance Corp., 7.5%, 2/15/23 $ 497,900 ------------- $ 2,249,048 ------------------------------------------------------------------------------------------------------ Oil & Gas Storage & Transportation -- 2.1% 220,000 Blue Racer Midstream LLC / Blue Racer Finance Corp., 6.125%, 11/15/22 (144A) $ 194,700 450,000(c) Energy Transfer Partners LP, 3.654%, 11/1/66 265,500 950,000 Genesis Energy LP / Genesis Energy Finance Corp., 6.75%, 8/1/22 912,047 480,000 Global Partners LP / GLP Finance Corp., 7.0%, 6/15/23 403,498 170,000 PBF Logistics LP / PBF Logistics Finance Corp., 6.875%, 5/15/23 164,475 1,175,000 Williams Cos., Inc., 5.75%, 6/24/44 916,500 ------------- $ 2,856,720 ------------- Total Energy $ 11,795,271 ------------------------------------------------------------------------------------------------------ FOOD & STAPLES RETAILING -- 0.3% Food Retail -- 0.3% 200,000 C&S Group Enterprises LLC, 5.375%, 7/15/22 (144A) $ 192,000 260,000 Tops Holding LLC / Tops Markets II Corp., 8.0%, 6/15/22 (144A) 232,700 ------------- Total Food & Staples Retailing $ 424,700 ------------------------------------------------------------------------------------------------------ FOOD, BEVERAGE & TOBACCO -- 9.2% Agricultural Products -- 0.8% 900,000 Pinnacle Operating Corp., 9.0%, 11/15/20 (144A) $ 765,000 520,000 Southern States Cooperative, Inc., 10.0%, 8/15/21 (144A) 327,600 225,000(e) Tonon Luxembourg SA, 10.5%, 5/14/24 (144A) 94,725 ------------- $ 1,187,325 ------------------------------------------------------------------------------------------------------ Packaged Foods & Meats -- 7.1% 225,000 Agrokor DD, 8.875%, 2/1/20 (144A) $ 239,625 EUR 200,000 Agrokor DD, 9.875%, 5/1/19 (144A) 241,250 650,000 Bertin SA / Bertin Finance, Ltd., 10.25%, 10/5/16 (144A) 665,340 500,000(e) CFG Investment SAC, 9.75%, 7/30/19 (144A) 335,000 1,100,000 FAGE Dairy Industry SA / FAGE USA Dairy Industry, Inc., 9.875%, 2/1/20 (144A) 1,142,625 900,000 JBS Investments GmbH, 7.25%, 4/3/24 (144A) 870,750 515,000 Marfrig Holding Europe BV, 6.875%, 6/24/19 (144A) 509,850 800,000 Marfrig Holding Europe BV, 8.375%, 5/9/18 (144A) 824,000 700,000 Marfrig Holding Europe BV, 11.25%, 9/20/21 (144A) 672,000
The accompanying notes are an integral part of these financial statements. 28 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Packaged Foods & Meats -- (continued) 475,000 Marfrig Overseas, Ltd., 9.5%, 5/4/20 (144A) $ 486,875 700,000 MHP SA, 8.25%, 4/2/20 (144A) 626,500 1,600,000 Minerva Luxembourg SA, 7.75%, 1/31/23 (144A) 1,626,000 200,000 Minerva Luxembourg SA, 12.25%, 2/10/22 (144A) 209,750 600,000 Pesquera Exalmar SAA, 7.375%, 1/31/20 (144A) 445,500 640,000 Post Holdings, Inc., 6.75%, 12/1/21 (144A) 670,803 200,000 Post Holdings, Inc., 7.75%, 3/15/24 (144A) 217,500 ------------- $ 9,783,368 ------------------------------------------------------------------------------------------------------ Soft Drinks -- 0.3% 355,000 Cott Beverages, Inc., 5.375%, 7/1/22 $ 364,763 ------------------------------------------------------------------------------------------------------ Tobacco -- 1.0% 1,645,000 Alliance One International, Inc., 9.875%, 7/15/21 $ 1,369,462 ------------- Total Food, Beverage & Tobacco $ 12,704,918 ------------------------------------------------------------------------------------------------------ HEALTH CARE EQUIPMENT & SERVICES -- 1.7% Health Care Facilities -- 1.0% 700,000 Kindred Healthcare, Inc., 6.375%, 4/15/22 $ 640,500 475,000 Universal Hospital Services, Inc., 7.625%, 8/15/20 443,555 285,000 Vizient, Inc., 10.375%, 3/1/24 (144A) 307,800 ------------- $ 1,391,855 ------------------------------------------------------------------------------------------------------ Health Care Services -- 0.5% 425,000 BioScrip, Inc., 8.875%, 2/15/21 $ 361,250 235,000 RegionalCare Hospital Partners Holdings, Inc., 8.25%, 5/1/23 (144A) 244,400 ------------- $ 605,650 ------------------------------------------------------------------------------------------------------ Health Care Technology -- 0.2% 275,000 Change Healthcare Holdings, Inc., 11.0%, 12/31/19 $ 292,703 ------------- Total Health Care Equipment & Services $ 2,290,208 ------------------------------------------------------------------------------------------------------ HOUSEHOLD & PERSONAL PRODUCTS -- 0.8% Household Products -- 0.6% EUR 350,000(c) Hydra Dutch Holdings 2BV, 5.251%, 4/15/19 (144A) $ 380,900 460,000 Springs Industries, Inc., 6.25%, 6/1/21 468,050 ------------- $ 848,950 ------------------------------------------------------------------------------------------------------ Personal Products -- 0.2% 345,000 Monitronics International, Inc., 9.125%, 4/1/20 $ 294,112 ------------- Total Household & Personal Products $ 1,143,062 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 29 Schedule of Investments | 4/30/16 (continued)
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ INSURANCE -- 31.1% Insurance Brokers -- 0.0%+ GBP 10,489(c) Towergate Finance Plc, 8.5%, 3/2/20 (144A) $ 15,552 ------------------------------------------------------------------------------------------------------ Life & Health Insurance -- 0.0%+ GBP 59,442 TIG FINCO Plc, 8.75%, 4/2/20 (144A) $ 70,334 ------------------------------------------------------------------------------------------------------ Property & Casualty Insurance -- 3.6% 6,000,000(b)(d) Fixed Income Trust, Series 2013-A, 0.0%, 10/15/97 (144A) $ 5,247,802 80,000(a)(h) White Mountains Insurance Group, Ltd., 7.506% (144A) 78,600 ------------- $ 5,326,402 ------------------------------------------------------------------------------------------------------ Reinsurance -- 27.5% 500,000(c) Akibare Re, Ltd., 3.239%, 4/7/20 (144A) (Cat Bond) $ 504,000 695,760(i)(j) Altair Re III, Ltd. (Willis Securities, Inc.), Variable Rate Notes, 6/30/17 113,200 500,000(c) Aozora Re, Ltd., 2.953%, 4/7/20 (144A) (Cat Bond) 501,300 1,000,000(c) Bosphorus Re, Ltd., 2.5%, 5/3/16 (144A) (Cat Bond) 1,000,000 800,000(i)(j) Carnousite Segregated Account (Kane SAC, Ltd.), Variable Rate Notes, 2/19/16 16,320 1,000,000(i)(j) Carnousite Segregated Account (Kane SAC, Ltd.), Variable Rate Notes, 11/30/20 1,020,100 750,000(c) Citrus Re, Ltd., 7.5%, 2/25/19 (Cat Bond) (144A) 755,775 EUR 1,000,000(i)(j) Dundonald Segregated Account (Kane SAC, Ltd.), Variable Rate Notes, 1/17/17 1,047,538 1,750,000(c) East Lane Re VI, Ltd., 2.75%, 3/14/18 (144A) (Cat Bond) 1,722,700 250,000(c) Galileo Re, Ltd., 9.0%, 1/8/19 (144A) (Cat Bond) 252,300 250,000(c) Galileo Re, Ltd., 13.5%, 1/8/19 (144A) (Cat Bond) 252,375 2,000,000(c) Gator Re, Ltd., 6.27%, 1/9/17 (144A) (Cat Bond) 1,937,400 2,400,000(i)(j) Gleneagles Segregated Account (Kane SAC, Ltd.), Variable Rate Notes, 11/30/20 2,469,120 2,500,000(i)(j) Gullane Segregated Account (Kane SAC, Ltd.), Variable Rate Notes, 11/30/20 2,648,500 1,500,000(c) Ibis Re II, Ltd., 4.0%, 6/28/16 (144A) (Cat Bond) 1,500,300 2,000,000(i)(j) Lahinch Segregated Account (Kane SAC, Ltd.), Variable Rate Notes, 6/15/16 2,021,400 1,000,000(i)(j) Lahinch Segregated Account (Kane SAC, Ltd.), Variable Rate Notes, 5/10/21 962,730 1,750,000(c) Longpoint Re, Ltd. III, 4.2%, 5/18/16 (144A) (Cat Bond) 1,746,850 1,450,000(i)(j) Lorenz Re, Ltd. (Prime, Ltd.), Variable Rate Notes, 3/31/18 101,500 1,000,000(c) Merna Reinsurance V, Ltd., 2.0%, 4/7/17 (144A) (Cat Bond) 996,100 750,000(c) MetroCat Re, Ltd., 4.5%, 8/5/16 (144A) (Cat Bond) 750,450
The accompanying notes are an integral part of these financial statements. 30 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Reinsurance -- (continued) 3,000,000(i)(j) Pangaea Re Segregated Account (Kane SAC, Ltd.), Series 2015-1, Variable Rate Notes, 2/1/19 $ 89,700 2,000,000(i)(j) Pangaea Re Segregated Account (Kane SAC, Ltd.), Series 2016-1, Variable Rate Notes, 2/1/20 2,026,200 2,004,948(i)(j) PI-6 Segregated Account (Kane SAC, Ltd.), Series C, Variable Rate Notes, 7/7/16 2,010,161 1,000,000(c) Queen Street VIII Re, Ltd., 6.5%, 6/8/16 (144A) (Cat Bond) 1,002,100 500,000(c) Queen Street IX Re, Ltd., 5.5%, 6/8/17 (144A) (Cat Bond) 499,250 2,000,000(c) Queen Street X Re, Ltd., 5.75%, 6/8/18 (144A) (Cat Bond) 1,996,600 1,000,000(c) Residential Reinsurance 2012, Ltd., 22.0%, 6/6/16 (144A) (Cat Bond) 1,009,600 1,000,000(i)(j) Silverton Re, Ltd. (Aon Benfield Securities, Inc.), Variable Rate Notes, 9/16/16 (144A) 4,600 1,000,000(i)(j) Silverton Re, Ltd. (Aon Benfield Securities, Inc.), Variable Rate Notes, 9/18/17 (144A) 41,200 1,000,000(i)(j) Silverton Re, Ltd. (Aon Benfield Securities, Inc.), Variable Rate Notes, 9/17/18 (144A) 1,040,900 1,000,000(i)(j) St. Andrews Segregated Account (Kane SAC, Ltd.), Variable Rate Notes, 1/22/16 19,700 1,000,000(i)(j) St. Andrews Segregated Account (Kane SAC, Ltd.), Variable Rate Notes, 2/1/18 1,026,700 1,750,000(c) Tar Heel Re, Ltd., Series 2013-1, Class A, 8.5%, 5/9/16 (144A) (Cat Bond) 1,749,825 JPY 150,799,195(i)(j) Tralee Segregated Account (Kane SAC, Ltd.), Variable Rate Notes, 7/20/17 1,409,993 500,000(c) Vitality Re VI, Ltd., 2.1%, 1/8/18 (144A) (Cat Bond) 498,750 1,000,000(c) Vitality Re VII, Ltd., 2.65%, 1/7/20 (144A) (Cat Bond) 999,700 ------------- $ 37,744,937 ------------- Total Insurance $ 43,157,225 ------------------------------------------------------------------------------------------------------ MATERIALS -- 8.5% Commodity Chemicals -- 0.8% 300,000 Basell Finance Co., BV, 8.1%, 3/15/27 (144A) $ 389,891 175,000 Hexion US Finance Corp., 6.625%, 4/15/20 146,563 600,000 Rain CII Carbon LLC / CII Carbon Corp., 8.0%, 12/1/18 (144A) 516,000 ------------- $ 1,052,454 ------------------------------------------------------------------------------------------------------ Construction Materials -- 0.5% 389,000 Cemex Espana Luxembourg, 9.875%, 4/30/19 (144A) $ 408,936 215,000 Cemex SAB de CV, 7.75%, 4/16/26 (144A) 228,975 ------------- $ 637,911 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 31 Schedule of Investments | 4/30/16 (continued)
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Diversified Chemicals -- 0.5% 55,000 Blue Cube Spinco, Inc., 9.75%, 10/15/23 (144A) $ 62,769 55,000 Blue Cube Spinco, Inc., 10.0%, 10/15/25 (144A) 63,387 660,000 Evolution Escrow Issuer LLC, 7.5%, 3/15/22 (144A) 547,800 ------------- $ 673,956 ------------------------------------------------------------------------------------------------------ Diversified Metals & Mining -- 1.0% 109,000 Boart Longyear Management Pty, Ltd., 10.0%, 10/1/18 (144A) $ 66,762 300,000 FMG Resources August 2006 Pty, Ltd., 9.75%, 3/1/22 (144A) 315,390 428,716 Mirabela Nickel, Ltd., 9.5%, 6/24/19 158,625 180,000 Prince Mineral Holding Corp., 11.5%, 12/15/19 (144A) 157,050 750,000 Vedanta Resources Plc, 9.5%, 7/18/18 (144A) 699,375 ------------- $ 1,397,202 ------------------------------------------------------------------------------------------------------ Gold -- 0.0%+ 85,000 IAMGOLD Corp., 6.75%, 10/1/20 (144A) $ 68,595 ------------------------------------------------------------------------------------------------------ Metal & Glass Containers -- 0.6% 272,594(g) Ardagh Finance Holdings SA, 8.625%, (8.625% PIK 0.0% cash), 6/15/19 (144A) $ 280,772 320,000 Ardagh Packaging Finance Plc / Ardagh Holdings USA, Inc., 7.25%, 5/15/24 (144A) 320,000 EUR 150,000 Horizon Holdings I SASU, 7.25%, 8/1/23 (144A) 183,144 ------------- $ 783,916 ------------------------------------------------------------------------------------------------------ Paper Packaging -- 2.3% 580,000 Coveris Holding Corp., 10.0%, 6/1/18 (144A) $ 578,550 500,000 Reynolds Group Issuer, Inc., 9.0%, 4/15/19 507,500 475,000 Reynolds Group Issuer, Inc., 9.875%, 8/15/19 491,031 EUR 1,365,000 SIG Combibloc Holdings SCA, 7.75%, 2/15/23 (144A) 1,676,384 ------------- $ 3,253,465 ------------------------------------------------------------------------------------------------------ Paper Products -- 1.2% 675,000 Appvion, Inc., 9.0%, 6/1/20 (144A) $ 332,438 500,000 Mercer International, Inc., 7.0%, 12/1/19 505,000 840,000 Resolute Forest Products, Inc., 5.875%, 5/15/23 632,100 255,000 Unifrax I LLC / Unifrax Holding Co., 7.5%, 2/15/19 (144A) 202,087 ------------- $ 1,671,625 ------------------------------------------------------------------------------------------------------ Specialty Chemicals -- 0.3% 410,000 A Schulman, Inc., 6.875%, 6/1/23 (144A) $ 411,025 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 32 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Steel -- 1.3% 200,000 Allegheny Technologies, Inc., 9.375%, 6/1/19 $ 193,000 250,000 Evraz Group SA, 9.5%, 4/24/18 (144A) 269,140 190,000 JMC Steel Group, Inc., 8.25%, 3/15/18 (144A) 182,400 499,000 Optima Specialty Steel, Inc., 12.5%, 12/15/16 (144A) 414,170 850,000 Ryerson, Inc., 9.0%, 10/15/17 783,063 ------------- $ 1,841,773 ------------- Total Materials $ 11,791,922 ------------------------------------------------------------------------------------------------------ MEDIA -- 1.8% Broadcasting -- 0.1% 400,000 Intelsat Luxembourg SA, 7.75%, 6/1/21 $ 132,000 ------------------------------------------------------------------------------------------------------ Movies & Entertainment -- 0.8% 600,000 Gibson Brands, Inc., 8.875%, 8/1/18 (144A) $ 333,000 225,000 Regal Entertainment Group, 5.75%, 2/1/25 227,812 625,000 WMG Acquisition Corp., 6.75%, 4/15/22 (144A) 618,750 ------------- $ 1,179,562 ------------------------------------------------------------------------------------------------------ Publishing -- 0.9% 855,000 Gannett Co., Inc., 6.375%, 10/15/23 $ 923,400 250,000 Trader Corp., 9.875%, 8/15/18 (144A) 259,375 ------------- $ 1,182,775 ------------- Total Media $ 2,494,337 ------------------------------------------------------------------------------------------------------ PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES -- 1.3% Biotechnology -- 0.2% 300,000 ConvaTec Healthcare E SA, 10.5%, 12/15/18 (144A) $ 307,500 ------------------------------------------------------------------------------------------------------ Pharmaceuticals -- 1.1% 208,000 DPx Holdings BV, 7.5%, 2/1/22 (144A) $ 210,600 650,000 Endo Finance LLC / Endo, Ltd. / Endo Finco, Inc., 6.0%, 7/15/23 (144A) 637,813 EUR 450,000 VRX Escrow Corp., 4.5%, 5/15/23 409,660 235,000 VRX Escrow Corp., 5.875%, 5/15/23 (144A) 196,812 ------------- $ 1,454,885 ------------- Total Pharmaceuticals, Biotechnology & Life Sciences $ 1,762,385 ------------------------------------------------------------------------------------------------------ REAL ESTATE -- 1.0% Specialized REIT -- 1.0% 1,520,000 Communications Sales & Leasing, Inc. / CSL Capital LLC, 8.25%, 10/15/23 $ 1,440,200 ------------- Total Real Estate $ 1,440,200 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 33 Schedule of Investments | 4/30/16 (continued)
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ RETAILING -- 1.7% Automotive Retail -- 0.7% 1,100,000 DriveTime Automotive Group, Inc. / DT Acceptance Corp., 8.0%, 6/1/21 (144A) $ 990,000 ------------------------------------------------------------------------------------------------------ Computer & Electronics Retail -- 0.1% 235,000 Rent-A-Center, Inc., 6.625%, 11/15/20 $ 208,562 ------------------------------------------------------------------------------------------------------ Department Stores -- 0.8% 300,000 Argos Merger Sub, Inc., 7.125%, 3/15/23 (144A) $ 306,750 535,000 Grupo Famsa SAB de CV, 7.25%, 6/1/20 (144A) 492,200 350,000 Neiman Marcus Group, Ltd., LLC, 8.0%, 10/15/21 (144A) 304,500 ------------- $ 1,103,450 ------------------------------------------------------------------------------------------------------ Specialty Stores -- 0.1% 85,000 Outerwall, Inc., 6.0%, 3/15/19 $ 75,863 ------------- Total Retailing $ 2,377,875 ------------------------------------------------------------------------------------------------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 0.2% Semiconductors -- 0.2% 165,000 Advanced Micro Devices, Inc., 7.0%, 7/1/24 $ 124,162 240,000 Advanced Micro Devices, Inc., 7.5%, 8/15/22 186,000 ------------- Total Semiconductors & Semiconductor Equipment $ 310,162 ------------------------------------------------------------------------------------------------------ SOFTWARE & SERVICES -- 0.1% Data Processing & Outsourced Services -- 0.1% 225,000 NeuStar, Inc., 4.5%, 1/15/23 $ 184,500 ------------- Total Software & Services $ 184,500 ------------------------------------------------------------------------------------------------------ TECHNOLOGY HARDWARE & EQUIPMENT -- 0.8% Communications Equipment -- 0.2% 280,000 CommScope Technologies Finance LLC, 6.0%, 6/15/25 (144A) $ 287,000 ------------------------------------------------------------------------------------------------------ Electronic Equipment & Instruments -- 0.2% 315,000 Zebra Technologies Corp., 7.25%, 10/15/22 $ 341,019 ------------------------------------------------------------------------------------------------------ Technology Hardware, Storage & Peripherals -- 0.4% 485,000 Diebold, Inc., 8.5%, 4/15/24 (144A) $ 491,062 ------------- Total Technology Hardware & Equipment $ 1,119,081 ------------------------------------------------------------------------------------------------------ TELECOMMUNICATION SERVICES -- 3.7% Integrated Telecommunication Services -- 2.0% 1,165,000 Frontier Communications Corp., 8.75%, 4/15/22 $ 1,150,438 290,000 Frontier Communications Corp., 11.0%, 9/15/25 (144A) 292,900 750,000 GCI, Inc., 6.875%, 4/15/25 757,500 600,000 Windstream Corp., 7.5%, 6/1/22 492,000 ------------- $ 2,692,838 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 34 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ Wireless Telecommunication Services -- 1.7% 250,000 Altice Finco SA, 8.125%, 1/15/24 (144A) $ 243,750 300,000 Altice SA, 7.75%, 5/15/22 (144A) 299,250 750,000 Digicel, Ltd., 6.0%, 4/15/21 (144A) 686,250 200,000 Mobile Telesystems OJSC via MTS International Funding, Ltd., 5.0%, 5/30/23 (144A) 199,750 340,000 Sprint Corp., 7.125%, 6/15/24 255,000 275,000 Sprint Corp., 7.25%, 9/15/21 222,062 250,000 Unison Ground Lease Funding LLC, 5.78%, 3/15/20 (144A) 242,250 RUB 14,100,000 VimpelCom Holdings BV, 9.0%, 2/13/18 (144A) 211,522 ------------- $ 2,359,834 ------------- Total Telecommunication Services $ 5,052,672 ------------------------------------------------------------------------------------------------------ TRANSPORTATION -- 2.8% Airlines -- 0.8% 155,000 Intrepid Aviation Group Holdings LLC / Intrepid Finance Co., 6.875%, 2/15/19 (144A) $ 141,050 450,000 Intrepid Aviation Group Holdings LLC / Intrepid Finance Co., 8.25%, 7/15/17 (144A) 432,000 500,000 TAM Capital 3, Inc., 8.375%, 6/3/21 (144A) 456,875 ------------- $ 1,029,925 ------------------------------------------------------------------------------------------------------ Airport Services -- 0.3% 441,560 Aeropuertos Argentina 2000 SA, 10.75%, 12/1/20 (144A) $ 476,973 ------------------------------------------------------------------------------------------------------ Highways & Railtracks -- 0.2% MXN 4,500,000 Red de Carreteras de Occidente SAPIB de CV, 9.0%, 6/10/28 (144A) $ 261,391 ------------------------------------------------------------------------------------------------------ Marine -- 0.3% 500,000 Far East Capital, Ltd., SA, 8.0%, 5/2/18 $ 192,500 375,000 Navios South American Logistics, Inc. / Navios Logistics Finance US, Inc., 7.25%, 5/1/22 (144A) 225,938 ------------- $ 418,438 ------------------------------------------------------------------------------------------------------ Railroads -- 0.6% 390,039(g) AAF Holdings LLC / AAF Finance Co., 12.0%, (12.75% PIK 12.0% cash), 7/1/19 (144A) $ 384,188 485,000 Florida East Coast Holdings Corp., 6.75%, 5/1/19 (144A) 489,850 ------------- $ 874,038 ------------------------------------------------------------------------------------------------------ Trucking -- 0.6% 1,325,000 Jack Cooper Holdings Corp., 9.25%, 6/1/20 (144A) $ 834,750 ------------- Total Transportation $ 3,895,515 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 35 Schedule of Investments | 4/30/16 (continued)
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ UTILITIES -- 3.2% Electric Utilities -- 1.1% 375,000 ContourGlobal Power Holdings SA, 7.125%, 6/1/19 (144A) $ 371,250 460,000(a) Enel S.p.A., 8.75%, 9/24/73 (144A) 530,725 355,000 PPL Energy Supply LLC, 4.625%, 7/15/19 (144A) 330,150 410,000 PPL Energy Supply LLC, 6.5%, 6/1/25 (144A) 363,908 ------------- $ 1,596,033 ------------------------------------------------------------------------------------------------------ Gas Utilities -- 0.5% 230,000 DCP Midstream Operating LP, 5.6%, 4/1/44 $ 185,150 492,450 Transportadora de Gas del Sur SA, 9.625%, 5/14/20 (144A) 509,686 ------------- $ 694,836 ------------------------------------------------------------------------------------------------------ Independent Power Producers & Energy Traders -- 1.6% 560,000 NRG Energy, Inc., 6.25%, 5/1/24 $ 546,000 1,065,000 Terraform Global Operating LLC, 9.75%, 8/15/22 (144A) 943,856 200,000 TerraForm Power Operating LLC, 5.875%, 2/1/23 (144A) 174,500 585,000 TerraForm Power Operating LLC, 6.125%, 6/15/25 (144A) 503,100 ------------- $ 2,167,456 ------------- Total Utilities $ 4,458,325 ------------------------------------------------------------------------------------------------------ TOTAL CORPORATE BONDS & NOTES (Cost $132,520,364) $ 128,638,419 ------------------------------------------------------------------------------------------------------ CONVERTIBLE BONDS & NOTES -- 2.5% of Net Assets HEALTH CARE EQUIPMENT & SERVICES -- 1.1% Health Care Equipment -- 1.1% 1,040,000(b) Hologic, Inc., 2.0%, 12/15/37 $ 1,526,850 ------------- Total Health Care Equipment & Services $ 1,526,850 ------------------------------------------------------------------------------------------------------ MATERIALS -- 1.2% Diversified Chemicals -- 1.1% 1,900,000(k) Hercules, Inc., 6.5%, 6/30/29 $ 1,560,299 ------------------------------------------------------------------------------------------------------ Diversified Metals & Mining -- 0.1% 100,000 Vedanta Resources Jersey, Ltd., 5.5%, 7/13/16 $ 99,700 ------------- Total Materials $ 1,659,999 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 36 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------ Principal Amount USD ($) Value ------------------------------------------------------------------------------------------------------ PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES -- 0.2% Biotechnology -- 0.2% 250,000 Corsicanto, Ltd., 3.5%, 1/15/32 $ 232,188 ------------- Total Pharmaceuticals, Biotechnology & Life Sciences $ 232,188 ------------------------------------------------------------------------------------------------------ TOTAL CONVERTIBLE BONDS & NOTES (Cost $2,524,576) $ 3,419,037 ------------------------------------------------------------------------------------------------------ U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 2.9% of Net Assets 2,575,000(c) U.S. Treasury Notes, 0.303%, 10/31/16 $ 2,574,997 1,450,000(c) U.S. Treasury Notes, 0.319%, 4/30/16 1,450,000 ------------- $ 4,024,997 ------------------------------------------------------------------------------------------------------ TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS (Cost $4,024,688) $ 4,024,997 ------------------------------------------------------------------------------------------------------ SOVEREIGN DEBT OBLIGATIONS -- 2.0% of Net Assets Argentina -- 0.7% 282,400 Province of Salta Argentina, 9.5%, 3/16/22 (144A) $ 287,342 360,000 Provincia de Buenos Aires, 9.125%, 3/16/24 (144A) 383,400 230,000 Provincia de Buenos Aires, 9.95%, 6/9/21 (144A) 250,700 ------------- $ 921,442 ------------------------------------------------------------------------------------------------------ Ireland -- 0.3% 450,000 Vnesheconombank Via VEB Finance Plc, 6.902%, 7/9/20 (144A) $ 472,500 ------------------------------------------------------------------------------------------------------ Kenya -- 0.3% 500,000 Kenya Government International Bond, 6.875%, 6/24/24 (144A) $ 470,050 ------------------------------------------------------------------------------------------------------ Mexico -- 0.5% MXN 8,870,000 Mexican Bonos, 7.75%, 11/13/42 $ 596,661 MXN 326,901 Mexican Udibonos, 3.5%, 12/14/17 19,610 ------------- $ 616,271 ------------------------------------------------------------------------------------------------------ Zambia -- 0.2% 300,000 Zambia Government International Bond, 5.375%, 9/20/22 (144A) $ 223,086 ------------------------------------------------------------------------------------------------------ TOTAL SOVEREIGN DEBT OBLIGATIONS (Cost $2,738,186) $ 2,703,349 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 37 Schedule of Investments | 4/30/16 (continued)
------------------------------------------------------------------------------------------------------ Shares Value ------------------------------------------------------------------------------------------------------ COMMON STOCKS -- 0.3% of Net Assets CAPITAL GOODS -- 0.0%+ Industrial Machinery -- 0.0%+ 10,289(d)(f) Liberty Tire Recycling LLC $ 103 ------------- Total Capital Goods $ 103 ------------------------------------------------------------------------------------------------------ CONSUMER DURABLES & APPAREL -- 0.0%+ Homebuilding -- 0.0%+ MXN 89,094(f) Desarrolladora Homex SAB de CV $ 17,599 ------------- Total Consumer Durables & Apparel $ 17,599 ------------------------------------------------------------------------------------------------------ ENERGY -- 0.0%+ Oil & Gas Exploration & Production -- 0.0%+ 15,000(f) PetroQuest Energy, Inc. $ 11,867 ------------- Total Energy $ 11,867 ------------------------------------------------------------------------------------------------------ INSURANCE -- 0.0%+ Insurance Brokers -- 0.0%+ GBP 10,233(d)(f) TopCo., Ltd. $ 149 GBP 475(d)(f) Towergate Finance Plc 7 ------------- $ 156 ------------- Total Insurance $ 156 ------------------------------------------------------------------------------------------------------ RETAILING -- 0.1% Computer & Electronics Retail -- 0.1% 42,088(d)(f) Targus Cayman SubCo., Ltd. $ 147,308 ------------- Total Retailing $ 147,308 ------------------------------------------------------------------------------------------------------ TRANSPORTATION -- 0.2% Air Freight & Logistics -- 0.2% 943(f) CEVA Holdings LLC $ 330,159 ------------- Total Transportation $ 330,159 ------------------------------------------------------------------------------------------------------ TOTAL COMMON STOCKS (Cost $1,102,066) $ 507,192 ------------------------------------------------------------------------------------------------------ CONVERTIBLE PREFERRED STOCKS -- 0.4% of Net Assets DIVERSIFIED FINANCIALS -- 0.4% Other Diversified Financial Services -- 0.4% 470 Bank of America Corp., 7.25% $ 553,801 ------------- Total Diversified Financials $ 553,801 ------------------------------------------------------------------------------------------------------ ENERGY -- 0.0%+ Oil & Gas Exploration & Production -- 0.0%+ 200 Halcon Resources Corp., 5.75% $ 8,000 ------------- Total Energy $ 8,000 ------------------------------------------------------------------------------------------------------ TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $524,900) $ 561,801 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 38 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------ Shares Value ------------------------------------------------------------------------------------------------------ PREFERRED STOCKS -- 1.6% of Net Assets BANKS -- 0.4% Diversified Banks -- 0.4% 500(a) AgStar Financial Services ACA, 6.75% (144A) $ 556,219 ------------- Total Banks $ 556,219 ------------------------------------------------------------------------------------------------------ DIVERSIFIED FINANCIALS -- 0.8% Other Diversified Financial Services -- 0.8% 40,675(a) GMAC Capital Trust I, 6.402% $ 1,019,722 ------------- Total Diversified Financials $ 1,019,722 ------------------------------------------------------------------------------------------------------ INSURANCE -- 0.4% Insurance Brokers -- 0.4% GBP 452,745(d)(f) Towergate Finance Plc, Class B $ 548,937 ------------------------------------------------------------------------------------------------------ Reinsurance -- 0.0%+ 15,000(f)(i) Lorenz Re, Ltd. (Aon Benefield Securities, Inc.), Variable Rate Notes $ 37,500 ------------- Total Insurance $ 586,437 ------------------------------------------------------------------------------------------------------ TOTAL PREFERRED STOCKS (Cost $2,106,323) $ 2,162,378 ------------------------------------------------------------------------------------------------------ WARRANT -- 0.0%+ INSURANCE -- 0.0%+ Insurance Brokers GBP 136(d)(f)(r) Towergate Finance Plc $ -- ------------------------------------------------------------------------------------------------------ TOTAL WARRANT (Cost $--) $ -- ------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------ Principal Amount USD ($) ------------------------------------------------------------------------------------------------------ TEMPORARY CASH INVESTMENTS -- 2.4% of Net Assets COMMERCIAL PAPER -- 1.0% 490,000 Barclays Bank Plc, 0.35%, 5/2/16 $ 489,988 490,000 BNP Paribas SA, 0.29%, 5/2/16 489,985 490,000 Total SA, 0.33%, 5/2/16 489,986 ------------- $ 1,469,959 ------------------------------------------------------------------------------------------------------ TREASURY BILL -- 1.4% 1,920,000(l) U.S. Treasury Bill, 6/2/16 $ 1,919,754 ------------------------------------------------------------------------------------------------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $3,389,722) $ 3,389,713 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 39 Schedule of Investments | 4/30/16 (continued)
------------------------------------------------------------------------------------------------------ Number Strike Expiration of Contracts Description Counterparty Price Date Value ------------------------------------------------------------------------------------------------------ CALL OPTIONS PURCHASED -- 0.0%+ MXN 18,332(m) Desarrolladora Homex Bank of New York SAB de CV Mellon Corp. $ --(q) 10/23/22 $ -- MXN 18,332(n) Desarrolladora Homex Bank of New York SAB de CV Mellon Corp. --(q) 10/23/22 -- ------- $ -- ------------------------------------------------------------------------------------------------------ TOTAL CALL OPTIONS PURCHASED (Premiums paid $0) $ -- ------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------ Principal Amount USD ($) ------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS IN SECURITIES -- 140.3% (Cost -- $199,667,333) (o)(p) $ 194,470,945 ------------------------------------------------------------------------------------------------------ OTHER ASSETS AND LIABILITIES -- (40.3)% $ (55,901,208) ------------------------------------------------------------------------------------------------------ NET ASSETS APPLICABLE TO COMMON SHAREOWNERS -- 100.0% $ 138,569,737 ======================================================================================================
REIT Real Estate Investment Trust. (144A) Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At April 30, 2016, the value of these securities amounted to $85,168,626, or 61.5% of total net assets applicable to common shareowners. (Cat Bond) Catastrophe or Event-linked bond. At April 30, 2016, the value of these securities amounted to $19,675,375, or 14.2% of total net assets applicable to common shareowners. See Notes to Financial Statement -- Note 1F. + Amount rounds to less than 0.1%. * Senior secured floating rate loan interests in which the Trust invests generally pay interest at rates that are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates are generally (i) the lending rate offered by one or more major European banks, such as LIBOR (London InterBank Offered Rate), (ii) the prime rate offered by one or more major United States banks, (iii) the rate of a certificate of deposit or (iv) other base lending rates used by commercial lenders. The interest rate shown is the rate accruing at April 30, 2016. (a) The interest rate is subject to change periodically. The interest rate shown is the rate at April 30, 2016. (b) Debt obligation initially issued at one coupon which converts to a higher coupon at a specific date. The rate shown is the rate at April 30, 2016. See Notes to Financial Statements -- Note 1A. (c) Floating rate note. The rate shown is the coupon rate at April 30, 2016. (d) Security is valued using fair value methods (other than prices supplied by independent pricing services). (e) Security is in default. (f) Non-income producing. (g) Payment in Kind (PIK) security which may pay interest in the form of additional principal amount. (h) Security is perpetual in nature and has no stated maturity date. (i) Structured reinsurance investment. At April 30, 2016, the value of these securities amounted to $18,107,062, or 13.1% of total net assets applicable to common shareowners. See Notes to Financial Statements -- Note 1F. The accompanying notes are an integral part of these financial statements. 40 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 (j) Rate to be determined. (k) Security is priced as a unit. (l) Security issued with a zero coupon. Income is recognized through accretion of discount. (m) Option does not become effective until underlying company's outstanding common shares reach a market capitalization of MXN 12.5 Billion. (n) Option does not become effective until underlying company's outstanding common shares reach a market capitalization of MXN 15.5 Billion. (o) At April 30, 2016, the net unrealized depreciation on investments based on cost for federal tax purposes of $201,769,237 was as follows:
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 6,933,617 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (14,231,909) ------------ Net unrealized depreciation $ (7,298,292) ============
For financial reporting purposes net unrealized depreciation on investments was $5,196,388 and cost of investments aggregated $199,667,333. (p) Distributions of Investments by country of issue, as a percentage of total investments in securities, is as follows:
United States 62.4% Bermuda 13.6 Cayman Islands 4.6 Luxembourg 4.0 Ireland 2.5 Netherlands 1.9 Argentina 1.8 Canada 1.3 France 1.1 Other (individually less than 1%) 6.8 ----- 100.0% =====
(q) Strike price is 1 Mexican Peso (MXN). (r) Towergate B Preferred warrants are exercisable into 136 Tig FinCo A shares. Purchases and sales of securities (excluding temporary cash investments) for the year ended April 30, 2016 were as follows:
-------------------------------------------------------------------------------- Purchases Sales -------------------------------------------------------------------------------- Long-Term U.S. Government $ -- $ 5,924,600 Other Long-Term Securities $70,955,593 $67,940,646
Principal amounts are denominated in U.S. dollars unless otherwise noted. EUR -- Euro GBP -- Great British Pound JPY -- Japanese Yen MXN -- Mexican Peso RUB -- Russian Ruble Various inputs are used in determining the value of the Trust's investments. These inputs are summarized in the three broad levels below. Level 1 - quoted prices in active markets for identical securities. Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). See Notes to Financial Statements -- Note 1A. Level 3 - significant unobservable inputs (including the Trust's own assumptions in determining fair value of investments). See Noted to Financial Statements -- Note 1A. The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 41 Schedule of Investments | 4/30/16 (continued) The following is a summary of the inputs used as of April 30, 2016, in valuing the Trust's investments.
------------------------------------------------------------------------------------------- Level 1 Level 2 Level 3 Total ------------------------------------------------------------------------------------------- Asset Backed Securities $ -- $ 1,917,835 $ -- $ 1,917,835 Collateralized Mortgage Obligations -- 5,243,579 -- 5,243,579 Senior Secured Floating Rate Loan Interests Health Care Equipment & Services Health Care Technology -- 236,380 243,918 480,298 Retailing Computer & Electronics Retail -- -- 168,351 168,351 All Other Senior Secured Floating Rate Loan Interests -- 41,253,996 -- 41,253,996 Corporate Bonds & Notes Capital Goods Industrial Machinery -- 1,077,375 169,505 1,246,880 Insurance Property & Casualty Insurance -- 78,600 5,247,802 5,326,402 Reinsurance -- 19,675,375 18,069,562 37,744,937 All Other Corporate Bonds & Notes -- 84,320,200 -- 84,320,200 Convertible Bonds & Notes -- 3,419,037 -- 3,419,037 U.S. Government and Agency Obligations -- 4,024,997 -- 4,024,997 Sovereign Debt Obligation -- 2,703,349 -- 2,703,349 Common Stocks Capital Goods Industrial Machinery -- -- 103 103 Insurance Insurance Brokers -- -- 156 156 Retailing Computer & Electronics Retail -- -- 147,308 147,308 Transportation Air Freight & Logistics -- 330,159 -- 330,159 All Other Common Stocks 29,466 -- -- 29,466 Convertible Preferred Stocks Energy Oil & Gas Exploration & Production -- 8,000 -- 8,000 All Other Convertible Preferred Stocks 553,801 -- -- 553,801 Preferred Stocks Banks Diversified Banks -- 556,219 -- 556,219 Insurance Insurance Brokers -- -- 548,937 548,937 Reinsurance -- -- 37,500 37,500 All Other Preferred Stocks 1,019,722 -- -- 1,019,722 Warrant -- -- --* --* Commercial Paper -- 1,469,959 -- 1,469,959 Treasury Bill -- 1,919,754 -- 1,919,754 Call Options Purchased -- --* -- --* ------------------------------------------------------------------------------------------- Total Investments in Securities $1,602,989 $168,234,814 $ 24,633,142 $194,470,945 ===========================================================================================
* Includes securities that are valued at $0. The accompanying notes are an integral part of these financial statements. 42 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------- Level 1 Level 2 Level 3 Total ------------------------------------------------------------------------------------- Other Financial Instruments Unrealized appreciation on forward foreign currency contracts $ -- $ 75 $ -- $ 75 Unrealized depreciation on forward foreign currency contracts -- (150,172) -- (150,172) -------------------------------------------------------------------------------------- Total Other Financial Instruments $ -- $ (150,097) $ -- $ (150,097) ======================================================================================
The following is a summary of the fair valuation of certain of the Trust's assets and liabilities as of April 30, 2016:
-------------------------------------------------------------------------------------- Level 1 Level 2 Level 3 Total -------------------------------------------------------------------------------------- Assets: Foreign currencies, at value $ -- $ 325 $ -- $ 325 Liabilities: Credit agreement -- (57,000,000) -- (57,000,000) -------------------------------------------------------------------------------------- Total $ -- $ (56,999,675) $ -- $ (56,999,675) ======================================================================================
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 43 Schedule of Investments | 4/30/16 (continued) The following is a reconciliation of assets valued using significant unobservable inputs (Level 3):
------------------------------------------------------------------------------------------------------------------------------------ Transfers Change in in and Transfers Balance Realized unrealized Accrued out of in and Balance as of gain appreciation discounts/ Level 3 out of as of 4/30/15 (loss)(1) (depreciation)(2) Purchases Sales premiums categories Level 3* 4/30/16 ------------------------------------------------------------------------------------------------------------------------------------ Collateralized Mortgage Obligations $ 165,062 $ -- $ -- $ -- $ -- $ -- $ -- $(165,062) $ -- Senior Secured Floating Rate Loan Interests Health Care Equipment & Services Health Care Technology -- -- (86,468) 325,560 -- 4,826 -- -- 243,918 Retailing Computer & Electronics Retail -- -- -- 168,351 -- -- -- -- 168,351 Corporate Bonds & Notes Capital Goods Industrial Machinery 239,330 4,677 (43,433) 22,061 (56,000) 2,870 -- -- 169,505 Insurance Insurance Brokers 16,096 -- -- -- -- -- -- (16,096) -- Life & Health Insurance 500,600 -- -- -- -- -- -- (500,600) -- Property & Casualty Insurance 4,354,042 -- 893,760 -- -- -- -- -- 5,247,802 Reinsurance 22,537,165 (246,576) (6,726,234) 13,051,068 (11,774,073) 208,412 1,019,800 -- 18,069,562 Common Stocks Capital Goods Industrial Machinery 103 -- -- -- -- -- -- -- 103 Insurance Insurance Brokers 2,540 -- (4,928) 2,544 -- -- -- -- 156 Reinsurance 1,019,800 -- -- -- -- -- (1,019,800) -- -- Retailing Computer & Electronics Retail -- -- -- 147,308 -- -- -- -- 147,308
The accompanying notes are an integral part of these financial statements. 44 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
------------------------------------------------------------------------------------------------------------------------------------ Transfers Change in in and Transfers Balance Realized unrealized Accrued out of in and Balance as of gain appreciation discounts/ Level 3 out of as of 4/30/15 (loss)(1) (depreciation)(2) Purchases Sales premiums categories Level 3* 4/30/16 ------------------------------------------------------------------------------------------------------------------------------------ Preferred Stocks Insurance Insurance Brokers $ 671,036 $ -- $ (794,425) $ 672,326 $ -- $ -- $ -- $ -- $ 548,937 Reinsurance 941,821 5,471 (824,198) -- (85,594) -- -- -- 37,500 Warrants Insurance Insurance Brokers --** -- -- -- -- -- -- -- --** ------------------------------------------------------------------------------------------------------------------------------------ Total $30,447,595 $(236,428) $ (7,585,926) $14,389,218 $(11,915,667) $216,108 $ -- $ (681,758) $24,633,142 ====================================================================================================================================
(1) Realized gain (loss) on these securities is included in the realized gain (loss) from investments in the Statement of Operations. (2) Unrealized appreciation (depreciation) on these securities is included in the change in unrealized appreciation (depreciation) from investments in the Statement of Operations. * Transfers are calculated on the beginning of period value. For the year ended April 30, 2016, there were no transfers between Levels 1 and 2. For the year ended April 30, 2016, securities with aggregate market value of $681,758 transferred from Level 3 to Level 2 as there were observable inputs available to determine their value. ** Includes securities that are valued at $0. Net change in unrealized depreciation of Level 3 investments still held and considered Level 3 at April 30, 2016: $(5,269,754). The following table presents additional information about valuation techniques and inputs used for investments categorized as Level 3 at April 30, 2016. These amounts exclude valuations provided by a broker.
------------------------------------------------------------------------------------------------------------------------ Fair Value Valuation Unobservable Asset Type 4/30/16 Technique (s) Input Value/Range ------------------------------------------------------------------------------------------------------------------------ Senior Secured Floating Rate Loan Market Interests $ 412,269 Comparables EBITDA Multiples(1) 4x-5x ------------------------------------------------------------------------------------------------------------------------ Corporate Bonds Market EBITDA Multiples(1) 5.5x-6x & Notes $5,417,307 Comparables Yield Premium(2) 1.05% ------------------------------------------------------------------------------------------------------------------------ Common Stocks $ 147,567 Market Comparables EBITDA Multiples(1) 4x-6x ------------------------------------------------------------------------------------------------------------------------ Preferred Stocks $ 548,937 Market Comparables EBITDA Multiples(1) 5.5x-6x ------------------------------------------------------------------------------------------------------------------------
(1) An increase in this unobservable input would result in a higher fair value measurement, while a decrease would result in a lower fair value measurement. (2) An increase in this unobservable input would result in a lower fair value measurement, while a decrease would result in a higher fair value measurement. The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 45 Statement of Assets and Liabilities | 4/30/16
ASSETS: Investments in securities, at value (cost $199,667,333) $194,470,945 Foreign currencies, at value (cost $316) 325 Receivables -- Investment securities sold 1,380,254 Interest 2,417,017 Dividends 8,519 Unrealized appreciation on forward foreign currency contracts 75 ------------------------------------------------------------------------------------- Total assets $198,277,135 ------------------------------------------------------------------------------------- LIABILITIES: Due to custodian $ 394,439 Payables -- Credit agreement 57,000,000 Investment securities purchased 1,837,355 Trustees' fees 529 Administration fee 83,193 Unrealized depreciation on forward foreign currency contracts 150,172 Due to affiliates 133,429 Accrued expenses 108,281 ------------------------------------------------------------------------------------- Total liabilities $ 59,707,398 ------------------------------------------------------------------------------------- NET ASSETS APPLICABLE TO SHAREOWNERS: Paid-in capital $194,412,035 Distributions in excess of net investment income (632,828) Accumulated net realized loss on investments and foreign currency transactions (49,866,524) Net unrealized depreciation on investments (5,196,388) Net unrealized depreciation on forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (146,558) ------------------------------------------------------------------------------------- Net assets applicable to shareowners $138,569,737 ------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE: No par value (unlimited number of shares authorized) Based on $138,569,737/8,332,790 shares $ 16.63 =====================================================================================
The accompanying notes are an integral part of these financial statements. 46 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 Statement of Operations For the Year Ended 4/30/16
INVESTMENT INCOME: Interest $ 15,351,798 Dividends 225,046 Loan facility and other income 109,347 -------------------------------------------------------------------------------------------- Total investment income $ 15,686,191 -------------------------------------------------------------------------------------------- EXPENSES: Management fees $ 1,729,061 Administrative expense 118,651 Transfer agent fees 4,270 Shareholder communications expense 11,696 Custodian fees 43,074 Professional fees 83,098 Printing expense 15,204 Trustees' fees 7,600 Pricing fees 33,871 Interest expense 712,815 Miscellaneous 42,449 -------------------------------------------------------------------------------------------- Total expenses $ 2,801,789 -------------------------------------------------------------------------------------------- Net investment income $ 12,884,402 -------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) on: Investments $ (10,383,167) Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (418,826) $ (10,801,993) -------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) on: Investments $ (4,432,031) Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 142,606 $ (4,289,425) -------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments and foreign currency transactions $ (15,091,418) -------------------------------------------------------------------------------------------- Net decrease in net assets resulting from operations $ (2,207,016) ============================================================================================
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 47 Statements of Changes in Net Assets
---------------------------------------------------------------------------------------------- Year Ended Year Ended 4/30/16 4/30/15 ---------------------------------------------------------------------------------------------- FROM OPERATIONS: Net investment income (loss) $ 12,884,402 $ 15,171,206 Net realized gain (loss) on investments and foreign currency transactions (10,801,993) (7,185,833) Change in net unrealized appreciation (depreciation) on investments and foreign currency transactions (4,289,425) (6,329,324) ---------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ (2,207,016) $ 1,656,049 ---------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income and previously undistributed net investment income ($1.50 and $1.83 per share, respectively) $ (12,499,185) $ (15,241,784) ---------------------------------------------------------------------------------------------- Total distributions to shareowners $ (12,499,185) $ (15,241,784) ---------------------------------------------------------------------------------------------- FROM TRUST SHARE TRANSACTIONS: Reinvestment of distributions $ -- $ 250,324 ---------------------------------------------------------------------------------------------- Net increase in net assets from Trust share transactions $ -- $ 250,324 ---------------------------------------------------------------------------------------------- Net decrease in net assets $ (14,706,201) $ (13,335,411) NET ASSETS APPLICABLE TO SHAREOWNERS: Beginning of year $ 153,275,938 $ 166,611,349 ---------------------------------------------------------------------------------------------- End of year $ 138,569,737 $ 153,275,938 ---------------------------------------------------------------------------------------------- Distributions in excess of net investment income $ (632,828) $ (470,263) ==============================================================================================
The accompanying notes are an integral part of these financial statements. 48 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 Statement of Cash Flows For the Year Ended 4/30/16
Cash Flows From Operating Activities: Net decrease in net assets resulting from operations $ (2,207,016) ------------------------------------------------------------------------------------------------ Adjustments to reconcile net decrease in net assets resulting from operations to net cash and foreign currencies from operating activities: Inflation indexed bond income $ (456) Purchases of investment securities (79,848,157) Proceeds from disposition and maturity of investment securities 87,254,279 Net purchases of temporary cash investments (1,934,722) Net accretion and amortization of discount/premium on investment securities (580,017) Change in unrealized depreciation on investments 4,432,031 Change in unrealized appreciation on forward foreign currency contracts and foreign currency (137,695) Net realized loss on investments 10,383,167 Decrease in interest receivable 346,293 Increase in dividends receivable (8,519) Decrease in due to affiliates (17,926) Increase in trustees' fees payable 155 Increase in administration fees payable 12,755 Decrease in accrued expenses payable (12,796) Decrease in interest expense payable (5,862) ------------------------------------------------------------------------------------------------ Net cash and foreign currencies from operating activities $ 17,675,514 ------------------------------------------------------------------------------------------------ Cash Flows Used in Financing Activities: Decrease in due to custodian $ (924,493) Payments on borrowings (7,000,000) Distributions to shareholders (12,499,185) ------------------------------------------------------------------------------------------------ Net cash and foreign currencies used in financing activities $ (20,423,678) ------------------------------------------------------------------------------------------------ Effect of Foreign Exchange Fluctuations on Cash: Effect of foreign exchange fluctuations on cash $ 20,756 ------------------------------------------------------------------------------------------------ Cash and Foreign Currencies: Beginning of the year $ 2,727,733 ------------------------------------------------------------------------------------------------ End of the year $ 325 ================================================================================================ Cash Flow Information: Cash paid for interest $ 718,677 ------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 49 Financial Highlights
---------------------------------------------------------------------------------------------------------------------------- Year Year Year Year Year Ended Ended Ended Ended Ended 4/30/12 4/30/16 4/30/15 4/30/14 4/30/13 (Consolidated) ---------------------------------------------------------------------------------------------------------------------------- Per Share Operating Performance Net asset value, beginning of period $ 18.39 $ 20.03 $ 20.70 $ 19.51 $ 21.01 ---------------------------------------------------------------------------------------------------------------------------- Increase (decrease) from investment operations: (a) Net investment income $ 1.55 $ 1.82 $ 1.98 $ 2.24 $ 2.10 Net realized and unrealized gain (loss) on investments and foreign currency transactions (1.81) (1.63) (0.36) 0.99 (1.64) ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) from investment operations $ (0.26) $ 0.19 $ 1.62 $ 3.23 $ 0.46 ---------------------------------------------------------------------------------------------------------------------------- Distributions to shareowners from: Net investment income and previously undistributed net investment income $ (1.50) $ (1.83)* $ (2.29)* $ (2.04) $ (1.96) ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net asset value $ (1.76) $ (1.64) $ (0.67) $ 1.19 $ (1.50) ---------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period (b) $ 16.63 $ 18.39 $ 20.03 $ 20.70 $ 19.51 ---------------------------------------------------------------------------------------------------------------------------- Market value, end of period (b) $ 15.60 $ 17.42 $ 20.85 $ 21.82 $ 20.13 ============================================================================================================================ Total return at market value (c) (1.26)% (7.90)% 7.12% 19.98% 1.35% Ratios to average net assets of shareowners: Total expenses plus interest expense (d)(e) 1.99% 1.85% 1.86% 1.97% 2.04% Net investment income available to shareowners 9.11% 9.52% 9.88% 11.26% 10.75% Portfolio turnover 36% 48% 38% 34% 24% Net assets of shareowners, end of period (in thousands) $138,570 $153,276 $166,611 $171,646 $ 161,146
The accompanying notes are an integral part of these financial statements. 50 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
---------------------------------------------------------------------------------------------------------------------------- Year Year Year Year Year Ended Ended Ended Ended Ended 4/30/12 4/30/16 4/30/15 4/30/14 4/30/13 (Consolidated) ---------------------------------------------------------------------------------------------------------------------------- Total amount of debt outstanding (in thousands) $57,000 $64,000 $67,000 $69,000 $ 69,000 Asset coverage per indebtedness (in thousands) $ 3,431 $ 3,395 $ 3,487 $ 3,488 $ 3,335 ============================================================================================================================
* The amount of distributions made to shareowners during the period were in excess of the net investment income earned by the Trust during the period. The Trust has accumulated undistributed net investment income which is part of the Trust's NAV. A portion of the accumulated net investment income was distributed to shareowners during the period. A decrease in distributions may have a negative effect on the market value of the Trust's shares. (a) The per common share data presented above is based upon the average common shares outstanding for the periods presented. (b) Net asset value and market value are published in Barron's on Saturday, The Wall Street Journal on Monday and The New York Times on Monday and Saturday. (c) Total investment return is calculated assuming a purchase of common shares at the current market value on the first day and a sale at the current market value on the last day of the periods reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Trust's dividend reinvestment plan. Total investment return does not reflect brokerage commissions. Past performance is not a guarantee of future results. (d) Expense ratios do not reflect the effect of distribution payments to preferred shareowners. (e) Includes interest expense of 0.50%, 0.43%, 0.45%, 0.48% and 0.56%, respectively. The accompanying notes are an integral part of these financial statements. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 51 Notes to Financial Statements | 4/30/16 1. Organization and Significant Accounting Policies Pioneer Diversified High Income Trust (the Trust) was organized as a Delaware statutory trust on January 30, 2007. Prior to commencing operations on May 30, 2007, the Trust had no operations other than matters relating to its organization and registration as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. The investment objective of the Trust is to seek a high level of current income and the Trust may, as a secondary objective, also seek capital appreciation to the extent that it is consistent with its investment objective. The Trust's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses and gain or loss on investments during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements: A. Security Valuation The net asset value of the Trust is computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. Fixed income securities are valued by using prices supplied by independent pricing services, which consider such factors as market prices, market events, quotations from one or more brokers, Treasury spreads, yields, maturities and ratings, or may use a pricing matrix or other fair value methods or techniques to provide an estimated value of the security or instrument. A pricing matrix is a means of valuing a debt security on the basis of current market prices for other debt securities, historical trading patterns in the market for fixed income securities and/or other factors. Valuations may be supplemented by dealers and other sources, as required. Non-U.S. debt securities that are listed on an exchange will be valued at the bid price obtained from an independent third party pricing service. Loan interests are valued in accordance with guidelines established by the Board of Trustees at the mean between the last available bid and asked prices from one or more brokers or dealers as obtained from Loan Pricing Corporation, an independent third party pricing service. If price information is not available from Loan Pricing Corporation, or if the price information is 52 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 deemed to be unreliable, price information will be obtained from an alternative loan interest pricing service. If no reliable price quotes are available from either the primary or alternative pricing service, broker quotes will be solicited. Event-linked bonds or catastrophe bonds are valued at the bid price obtained from an independent third party pricing service. Other insurance linked securities (including sidecars, collateralized reinsurance and industry loss warranties) may be valued at the bid price obtained from an independent pricing service, or through a third party using a pricing matrix, insurance industry valuation models, or other fair value methods or techniques to provide an estimated value of the instrument. Equity securities that have traded on an exchange are valued by using the last sale price on the principal exchange where they are traded. Equity securities that have not traded on the date of valuation, or securities for which sale prices are not available, generally are valued using the mean between the last bid and asked prices or, if both last bid and asked prices are not available, at the last quoted bid price. Last sale and bid and asked prices are provided by independent third party pricing services. In the case of equity securities not traded on an exchange, prices are typically determined by independent third party pricing services using a variety of techniques and methods. Foreign securities are valued in U.S. dollars based on foreign currency exchange rate quotations supplied by a third party pricing service. Trading in non-U.S. equity securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Trust's shares are determined as of such times. The Trust may use a fair value model developed by an independent pricing service to value non-U.S. equity securities. Option contracts are generally valued at the mean between the last bid and ask prices on the principal exchange where they are traded. Over-the-counter ("OTC") options and options on swaps ("swaptions") are valued using prices supplied by independent pricing services, which consider such factors as market prices, market events, quotations from one or more brokers, Treasury spreads, yields, maturities and ratings, or may use a pricing matrix or other fair value methods or techniques to provide an estimated value of the security or instrument. Forward foreign currency exchange contracts are valued daily using the foreign exchange rate or, for longer term forward contract positions, the spot currency rate, in each case provided by a third party pricing service. Contracts whose forward settlement date falls between two quoted days are valued by interpolation. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 53 Shares of open-end registered investment companies (including money market mutual funds) are valued at such funds' net asset value. Repurchase agreements are valued at par. Cash may include overnight time deposits at approved financial institutions. Securities or loan interests for which independent pricing services are unable to supply prices or for which market prices and/or quotations are not readily available or are considered to be unreliable are valued by a fair valuation team comprised of certain personnel of Pioneer Investment Management, Inc. (PIM), the Trust's investment adviser, pursuant to procedures adopted by the Trust's Board of Trustees. PIM's fair valuation team uses fair value methods approved by the Valuation Committee of the Board of Trustees. PIM's fair valuation team is responsible for monitoring developments that may impact fair valued securities and for discussing and assessing fair values on an ongoing basis, and at least quarterly, with the Valuation Committee of the Board of Trustees. Inputs used when applying fair value methods to value a security may include credit ratings, the financial condition of the company, current market conditions and comparable securities. The Trust may use fair value methods if it is determined that a significant event has occurred after the close of the exchange or market on which the security trades and prior to the determination of the Trust's net asset value. Examples of a significant event might include political or economic news, corporate restructurings, natural disasters, terrorist activity or trading halts. Thus, the valuation of the Trust's securities may differ significantly from exchange prices and such differences could be material. At April 30, 2016, eleven securities were valued using fair value methods (in addition to securities valued using prices supplied by independent pricing services or broker-dealers) representing 4.7% of net assets. The value of these fair valued securities are $6,526,080. B. Investment Income and Transactions Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Trust becomes aware of the ex-dividend date in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on an accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. 54 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 Discounts and premiums on purchase prices of debt securities are accreted or amortized, respectively, daily, into interest income on an effective yield to maturity basis with a corresponding increase or decrease in the cost basis of the security. Premiums and discounts related to certain mortgage-backed securities are amortized or accreted in proportion to the monthly paydowns. Security transactions are recorded as of trade date. Gains and losses on sales of investments are calculated on the identified cost method for both financial reporting and federal income tax purposes. C. Foreign Currency Translation The books and records of the Trust are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions, if any, represent, among other things, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the Statement of Operations from the effects of changes in the market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Trust may enter into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date. All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized appreciation or depreciation are recorded in the Trust's financial statements. The Trust records realized gains and losses at the time a contract is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contracts and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar (see Note 4). E. Federal Income Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. As of April 30, 2016, the Trust did not accrue any interest or penalties with respect to uncertain tax positions, which if applicable, would be recorded as an Pioneer Diversified High Income Trust | Annual Report | 4/30/16 55 income tax expense in the Statement of Operations. Tax returns filed within the prior three years remain subject to examination by federal and state tax authorities. The amount and character of income and capital gain distributions to shareowners are determined in accordance with federal income tax rules, which may differ from U.S. generally accepted accounting principles. Distributions in excess of net investment income or net realized gains are temporary overdistributions for financial statement and tax purposes. Capital accounts within the financial statements are adjusted for permanent book/tax differences to reflect tax character, but are not adjusted for temporary differences. At April 30, 2016, the Trust reclassified $231,745 to increase paid-in capital, $547,782 to increase distributions in excess of net investment income and $779,527 to decrease accumulated net realized loss on investments to reflect permanent book/tax differences. These adjustments have no impact on the net assets or results of operations. At April 30, 2016, the Trust was permitted to carry forward $1,827,578 of short-term capital losses and $17,140,030 of long-term capital losses without limitation. Additionally, at April 30, 2016, the Trust had a net capital loss carry forward of $23,611,429 of which the following amounts will expire between 2017 and 2019 if not utilized: $413,150 in 2017, $21,948,862 in 2018, and $1,249,417 in 2019. Since unlimited losses are required to be used first, loss carry forwards that are subject to expiration may be more likely to expire unused. The Trust has elected to defer $377,261 of short-term capital losses and $6,909,119 of long-term capital losses recognized between November 1, 2015 and April 30, 2016 to its fiscal year ending April 30, 2017. The tax character of distributions paid to shareowners during the years ended April 30, 2016 and April 30, 2015 were as follows:
--------------------------------------------------------------------------- 2016 2015 --------------------------------------------------------------------------- Distributions paid from: Ordinary income $12,499,185 $15,241,784 --------------------------------------------------------------------------- Total $12,499,185 $15,241,784 ===========================================================================
56 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 The following shows the components of distributable earnings (losses) on a federal income tax basis at April 30, 2016:
--------------------------------------------------------------------------- 2016 --------------------------------------------------------------------------- Distributable earnings: Undistributed ordinary income $ 1,317,872 Capital loss carryforward (42,579,037) Late year loss deferrals (7,286,380) Unrealized depreciation (7,294,753) --------------------------------------------------------------------------- Total $(55,842,298) ===========================================================================
The difference between book-basis and tax-basis unrealized depreciation is primarily attributable to the realization for tax purposes of unrealized gains on investments in passive foreign investment companies, the book/tax differences in the accrual of income on securities in default, the difference between book and tax amortization methods and discounts on fixed income securities and book/tax temporary differences. F. Insurance Linked Securities (ILS) The Trust invests in event-linked bonds. Event-linked bonds are floating rate debt obligations for which the return of principal and the payment of interest are contingent on the non-occurrence of a pre-defined "trigger" event, such as a hurricane or an earthquake of a specific magnitude. The trigger event's magnitude may be based on losses to a company or industry, industry indexes or readings of scientific instruments, or may be based on specified actual losses. If a trigger event, as defined within the terms of an event-linked bond occurs, the Trust may lose a portion or all of its accrued interest and/or principal invested in such event-linked bond. The Trust is entitled to receive principal and interest payments so long as no trigger event occurs of the description and magnitude specified by the instrument. In addition to the specified trigger events, event-linked bonds may expose the Trust to other risks, including but not limited to issuer (credit) default, adverse regulatory or jurisdictional interpretations and adverse tax consequences. The Trust's investments in ILS may include special purpose vehicles ("SPVs") or similar instruments structured to comprise a portion of a reinsurer's catastrophe-oriented business, known as quota share instruments (sometimes referred to as reinsurance sidecars), or to provide reinsurance relating to specific risks to insurance or reinsurance companies through a collateralized instrument, known as collateralized reinsurance. Structured reinsurance investments also may include industry loss warranties ("ILWs"). A traditional ILW takes the form of a bilateral reinsurance contract, but there are also products that take the form of derivatives, collateralized structures, or exchange traded instruments. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 57 Structured reinsurance investments, including quota share instruments, collateralized reinsurance investments and ILWs, generally are subject to the same risks as event-linked bonds. In addition, where the instruments are based on the performance of underlying reinsurance contracts, the Trust has limited transparency into the individual underlying contracts and therefore must rely upon the risk assessment and sound underwriting practices of the issuer. Accordingly, it may be more difficult for PIM to fully evaluate the underlying risk profile of the Trust's structured reinsurance investments and therefore the Trust's assets are placed at greater risk of loss than if PIM had more complete information. Structured reinsurance instruments generally will be considered illiquid securities by the Trust. These securities may be difficult to purchase, sell or unwind. Illiquid securities also may be difficult to value. If the Trust is forced to sell an illiquid asset, the Trust may be forced to sell at a loss. G. Purchased Options The Trust may purchase put and call options to seek increase total return. Purchased call and put options entitle the Trust to buy and sell a specified number of shares or units of a particular security, currency or index at a specified price at a specific date or within a specific period of time. Upon the purchase of a call or put option, the premium paid by the Trust is included in the Statement of Assets and Liabilities as an investment. All premiums are marked-to-market daily, and any unrealized gains or losses are recorded in the Trust's financial statements. As the purchaser of an index option, the Trust has the right to receive a cash payment equal to any depreciation in the value of the index below the strike price of the option (in the case of a put) or equal to any appreciation in the value of the index over the strike price of the option (in the case of a call) as of the valuation date of the option. Premiums paid for purchased calls and put options which have expired are treated as realized losses on investments in the Statement of Operations. Upon the exercise or closing of a purchased put option, the premium is offset against the proceeds on the sale of the underlying security or financial instrument in order to determine the realized gain or loss on investments. Upon the exercise or closing of a purchased call option, the premium is added to the cost of the security or financial instrument. The risk associated with purchasing options is limited to the premium originally paid. The average value of purchased options open for the year ended April 30, 2016 was $0. Purchased option contracts outstanding at period end are listed within the Schedule of Investments. 58 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 H. Risks Information regarding the Trust's principal risks is contained in the Trust's original offering prospectus, with additional information included in the Trust's shareowner reports issued from time to time. Please refer to those documents when considering the Trust's principal risks. At times, the Trust's investments may represent industries or industry sectors that are interrelated or have common risks, making the Trust more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. The value of securities held by the Trust may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political or regulatory conditions, inflation, changes in interest rates, lack of liquidity in the bond markets or adverse investor sentiment. In the past several years, financial markets have experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. These conditions may continue, recur, worsen or spread. The Trust invests in below investment grade (high yield) debt securities, floating rate loans and event-linked bonds sometimes referred to as "catastrophe" bonds or "insurance-linked" bonds. The Trust may invest in securities and other obligations of any credit quality, including those that are rated below investment grade, or are unrated but are determined by the investment adviser to be of equivalent credit quality. Below investment grade securities are commonly referred to as "junk bonds" and are considered speculative with respect to the issuer's capacity to pay interest and repay principal. Below investment grade securities, including floating rate loans, involve greater risk of loss, are subject to greater price volatility, and are less liquid and more difficult to value, especially during periods of economic uncertainty or change, than higher rated debt securities. Certain securities in which the Trust invests, including floating rate loans, once sold, may not settle for an extended period (for example, several weeks or even longer). The Trust will not receive its sale proceeds until that time, which may constrain the Trust's ability to meet its obligations. The trust may invest in securities of issuers that are in default or that are in bankruptcy. The value of collateral, if any, securing a floating rate loan can decline or may be insufficient to meet the issuer's obligations or may be difficult to liquidate. No active trading market may exist for many floating rate loans, and many loans are subject to restrictions on resale. Any secondary market may be subject to irregular trading activity and extended settlement periods. The Trust's investments in certain foreign markets or countries with limited developing markets may Pioneer Diversified High Income Trust | Annual Report | 4/30/16 59 subject the Trust to a greater degree of risk than in a developed market. These risks include disruptive political or economic conditions and the possible imposition of adverse governmental laws or currency exchange restrictions. Interest rates in the U.S. recently have been historically low, so the Trust faces a heightened risk that interest rates may rise. A general rise in interest rates may cause investors to move out of fixed income securities on a large scale, which could adversely affect the price and liquidity of fixed income securities. I. Automatic Dividend Reinvestment Plan All shareowners whose shares are registered in their own names automatically participate in the Automatic Dividend Reinvestment Plan (the Plan), under which participants receive all dividends and capital gain distributions (collectively, dividends) in full and fractional shares of the Trust in lieu of cash. Shareowners may elect not to participate in the Plan. Shareowners not participating in the Plan receive all dividends and capital gain distributions in cash. Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by notifying American Stock Transfer & Trust Company, the agent for shareowners in administering the Plan (the Plan Agent), in writing prior to any dividend record date; otherwise such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution. If a shareowner's shares are held in the name of a brokerage firm, bank or other nominee, the shareowner can ask the firm or nominee to participate in the Plan on the shareowner's behalf. If the firm or nominee does not offer the Plan, dividends will be paid in cash to the shareowner of record. A firm or nominee may reinvest a shareowner's cash dividends in shares of the Trust on terms that differ from the terms of the Plan. Whenever the Trust declares a dividend on shares payable in cash, participants in the Plan will receive the equivalent in shares acquired by the Plan Agent either (i) through receipt of additional unissued but authorized shares from the Trust or (ii) by purchase of outstanding shares on the New York Stock Exchange or elsewhere. If, on the payment date for any dividend, the net asset value per share is equal to or less than the market price per share plus estimated brokerage trading fees (market premium), the Plan Agent will invest the dividend amount in newly issued shares. The number of newly issued shares to be credited to each account will be determined by dividing the dollar amount of the dividend by the net asset value per share on the date the shares are issued, provided that the maximum discount from the then current market price per share on the date of issuance does not exceed 5%. If, on the payment date for any dividend, the net asset value per share is greater 60 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 than the market value (market discount), the Plan Agent will invest the dividend amount in shares acquired in open-market purchases. There are no brokerage charges with respect to newly issued shares. However, each participant will pay a pro rata share of brokerage trading fees incurred with respect to the Plan Agent's open-market purchases. Participating in the Plan does not relieve shareowners from any federal, state or local taxes which may be due on dividends paid in any taxable year. Shareowners holding Plan shares in a brokerage account may be able to transfer the shares to another broker and continue to participate in the Plan. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredit S.p.A. (UniCredit), manages the Trust's portfolio. Management fees payable under the Trust's Advisory Agreement with PIM are calculated daily at the annual rate of 0.85% of the Trust's average daily managed assets. "Managed assets" means (a) the total assets of the Trust, including any form of investment leverage, minus (b) all accrued liabilities incurred in the normal course of operations, which shall not include any liabilities or obligations attributable to investment leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing through a credit facility or the issuance of debt securities), (ii) the issuance of preferred stock or other similar preference securities, and/or (iii) any other means. For the year ended April 30, 2016, the net management fee was 0.85% of the Trust's average daily managed assets, which was equivalent to 1.22% of the Trust's average daily net assets. In addition, under PIM's management and administration agreements, certain other services and costs are paid by PIM and reimbursed by the Trust. At April 30, 2016, $216,622 was payable to PIM related to management costs, administrative costs and certain other services is included in "Due to affiliates" and "Administration fee" on the Statement of Assets and Liabilities. 3. Transfer Agent Prior to November 2, 2015, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredit, through a sub-transfer agency agreement with American Stock Transfer & Trust Company (AST), provided substantially all transfer agent and shareowner services related to the Trust's shares at negotiated rates. Effective November 2, 2015, AST serves as the transfer agent with respect to the Trust's shares. The Trust pays AST an annual fee, as is agreed to from time to time by the Trust and AST, for providing such services. In addition, the Trust reimbursed the transfer agent for out-of-pocket expenses incurred by the transfer agent related to shareowner communications activities such as proxy and statement mailings and outgoing calls. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 61 4. Forward Foreign Currency Contracts During the year ended April 30, 2016, the Trust had entered into various forward foreign currency contracts that obligate the Trust to deliver or take delivery of currencies at specified future maturity dates. Alternatively, prior to the settlement date of a forward foreign currency contract, the Trust may close out such contract by entering into an offsetting contract. The average value of contracts open during the year ended April 30, 2016 was $(7,268,582). Open foreign currency contracts at April 30, 2016, were as follows:
-------------------------------------------------------------------------------------------------- In Currency Currency Exchange Settlement Unrealized Sold Deliver Purchased for Counterparty Date Appreciation -------------------------------------------------------------------------------------------------- GBP 119,117 USD 174,116 JP Morgan 7/05/16 $ 75 (British Chase Bank NA Pound Sterling) -------------------------------------------------------------------------------------------------- Total $ 75 ================================================================================================== -------------------------------------------------------------------------------------------------- In Currency Currency Exchange Settlement Unrealized Sold Deliver Purchased for Counterparty Date Depreciation -------------------------------------------------------------------------------------------------- GBP (British 119,339 USD 165,551 JP Morgan 5/03/16 $ (8,779) Pound Chase Bank NA Sterling) USD 174,083 GBP (British 119,117 JP Morgan 5/03/16 (77) Pound Chase Bank NA Sterling) RUB 6,775,000 USD 100,237 Goldman Sachs 5/13/16 (4,263) (Russian International Ruble) JPY 149,575,028 USD 1,335,791 JP Morgan 5/25/16 (66,550) (Japanese Chase Bank NA Yen) MXN 19,629 USD 1,119 Citibank NA 6/02/16 (18) (Mexican Peso) MXN 9,891,256 USD 557,619 JP Morgan 6/02/16 (15,296) (Mexican Chase Bank NA Peso) EUR (Euro) 3,903,542 USD 4,426,912 JP Morgan 7/28/16 (55,189) Chase Bank NA -------------------------------------------------------------------------------------------------- Total $ (150,172) ==================================================================================================
5. Assets and Liabilities Offsetting The Trust has entered into an International Swaps and Derivatives Association, Inc. Master Agreement ("ISDA Master Agreement") or similar agreement with substantially all its derivative counterparties. An ISDA Master Agreement is a bilateral agreement between the Trust and a counterparty that governs the trading of certain OTC derivatives and typically contains, among other things, 62 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 close-out and set-off provisions which apply upon the occurrence of event of a default and/or termination event as defined under the relevant ISDA Master Agreement. The ISDA Master Agreement may also give a party the right to terminate all transactions traded under such agreement if, among other things, there is deterioration in the credit quality of the other party. Upon an event of default or a termination of the ISDA Master Agreement, the non-defaulting party has the right to close out all transactions under such agreement and to net amounts owed under each transaction to determine one net amount payable by one party to the other. The right to close out and net payments across all transactions under the ISDA Master Agreement could result in a reduction of the Trust's credit risk to its counterparty equal to any amounts payable by the Trust under the applicable transactions, if any. However, the Trust's right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific ISDA counterparty is subject. The collateral requirements for derivatives transactions under an ISDA Master Agreement are governed by a credit support annex to the ISDA Master Agreement. Collateral requirements are generally determined at the close of business each day and are typically based on changes in market values for each transaction under an ISDA Master Agreement and netted into one amount for such agreement. Generally, the amount of collateral due from or to a counterparty is subject to threshold (a "minimum transfer amount") before a transfer is required, which may vary by counterparty. Collateral pledged for the benefit of the Trust and/or counterparty is held in segregated accounts by the Trust's custodian and cannot be sold, re-pledged, assigned or otherwise used while pledged. Cash that has been segregated to cover the Trust's collateral obligations, if any, will be reported separately in the Statement of Assets and Liabilities as "Restricted Cash." Securities pledged by the Trust as collateral, if any, are identified as such in the Schedule of Investments. Financial instruments subject to an enforceable master netting agreement such as an ISDA Master Agreement have not been offset on the Statement of Assets and Liabilities. The following charts show gross assets and liabilities of the Trust as of April 30, 2016:
------------------------------------------------------------------------------------------ Derivative Assets Subject to Derivatives Non-Cash Cash Net Amount Master Netting Available Collateral Collateral of Derivative Counterparty Agreement for Offset Received (a) Received (a) Assets (b) ------------------------------------------------------------------------------------------ JP Morgan Chase $75 $(75) $-- $-- $-- Bank NA ------------------------------------------------------------------------------------------ Total $75 $(75) $-- $-- $-- ==========================================================================================
Pioneer Diversified High Income Trust | Annual Report | 4/30/16 63
----------------------------------------------------------------------------------------------------- Derivative Liabilities Subject to Derivatives Non-Cash Cash Net Amount Master Netting Available for Collateral Collateral of Derivative Counterparty Agreement Offset Pledged (a) Pledged (a) Liabilities (c) ----------------------------------------------------------------------------------------------------- Citibank NA $ 18 $ -- $ -- $ -- $ 18 Goldman Sachs 4,263 -- -- -- 4,263 International JP Morgan Chase 145,891 (75) -- -- 145,816 Bank NA ----------------------------------------------------------------------------------------------------- Total $ 150,172 $(75) $ -- $ -- $ 150,097 =====================================================================================================
(a) The amount presented here may be less than the total amount of collateral received/pledged as the net amount of derivative assets and liabilities cannot be less than $0. (b) Represents the net amount due from the counterparty in the event of default. (c) Represents the net amount payable to the counterparty in the event of default. 6. Additional Disclosures about Derivative Instruments and Hedging Activities The Trust's use of derivatives subjects it to the following risks: Interest rate risk relates to the fluctuations in the value of interest-bearing securities due to changes in the prevailing levels of market interest rates. Credit risk relates to the ability of the issuer of a financial instrument to make further principal or interest payments on an obligation or commitment that it has to the Trust. Foreign exchange rate risk relates to fluctuations in the value of an asset or liability due to changes in currency exchange rates. Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. Commodity risk relates to the risk that the value of a commodity or commodity index will fluctuate based on increases or decreases in the commodities market and factors specific to a particular industry or commodity. 64 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 The fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) by risk exposure at April 30, 2016 was as follows:
----------------------------------------------------------------------------------------------- Statement of Assets and Liabilities Interest Credit Foreign Equity Commodity Rate Risk Risk Exchange Risk Risk Risk ----------------------------------------------------------------------------------------------- Assets: Unrealized appreciation on forward foreign currency contracts $-- $-- $ 75 $-- $-- ----------------------------------------------------------------------------------------------- Total Value $-- $-- $ 75 $-- $-- =============================================================================================== Liabilities: Unrealized depreciation on forward foreign currency contracts $-- $-- $ 150,172 $-- $-- ----------------------------------------------------------------------------------------------- Total Value $-- $-- $ 150,172 $-- $-- ===============================================================================================
The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations by risk exposure at April 30, 2016 was as follows:
----------------------------------------------------------------------------------------------- Statement of Operations Interest Credit Foreign Equity Commodity Rate Risk Risk Exchange Risk Risk Risk ----------------------------------------------------------------------------------------------- Net realized gain (loss): Forward foreign currency contracts* $-- $-- $(250,138) $-- $-- ----------------------------------------------------------------------------------------------- Total Value $-- $-- $(250,138) $-- $-- =============================================================================================== Change in net unrealized appreciation (depreciation) on: Forward foreign currency contracts* $-- $-- $ 116,939 $-- $-- ----------------------------------------------------------------------------------------------- Total Value $-- $-- $ 116,939 $-- $-- ===============================================================================================
* Included in the amount shown on the Statement of Operations as forward foreign currency contracts and other assets and liabilities denominated in foreign currencies. 7. Bridge Loan Commitments Bridge loans are designed to provide temporary or "bridge" financing to a borrower pending the sale of identified assets or the arrangement of longer-term loans or the issuance and sale of debt obligations. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 65 As of April 30, 2016, the Trust had two bridge loan commitments of $393,116, which could be extended at the option of the borrower, pursuant to the following loan agreements:
-------------------------------------------------------------------------------- Unrealized Appreciation Borrower Par Cost Value (Depreciation) -------------------------------------------------------------------------------- CCO Holdings $338,080 $338,080 $338,080 $ -- Charter Communications 55,036 55,036 55,036 -- -------------------------------------------------------------------------------- Total $393,116 $393,116 $393,116 $ -- ================================================================================
8. Trust Shares Transactions in shares of beneficial interest for the year ended April 30, 2016 and the year ended April 30, 2015 were as follows:
-------------------------------------------------------------------------------- 4/30/16 4/30/15 -------------------------------------------------------------------------------- Shares outstanding at beginning of period 8,332,790 8,320,167 Reinvestment of distributions -- 12,623 -------------------------------------------------------------------------------- Shares outstanding at end of period 8,332,790 8,332,790 ================================================================================
9. Credit Agreement Effective January 29, 2016, the Trust extended the maturity of its existing Revolving Credit Facility (the Credit Agreement) with the Bank of Scotia. There is a $70 million borrowing limit. At April 30, 2016, the Trust had a borrowing outstanding under the credit agreement totaling $57,000,000. The interest rate charged at April 30, 2016 was 1.31%. During the year ended April 30, 2016, the average daily balance was $61,918,256 at an average interest rate of 1.15%. With respect to the credit agreement, interest expense of $712,815 is included in the Statement of Operations. The Trust is required to maintain 300% asset coverage with respect to amounts outstanding under the credit agreement. Asset coverage is calculated by subtracting the Trust's total liabilities not including any bank loans and senior securities, from the Trust's total assets and dividing such amount by the principal amount of the borrowing outstanding. 10. Subsequent Event A monthly dividend was declared on May 3, 2016 from undistributed and accumulated net investment income of $0.1150 per share payable May 31, 2016, to shareowners of record on May 18, 2016. 66 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 Report of Independent Registered Public Accounting Firm To the Board of Trustees and the Shareowners of Pioneer Diversified High Income Trust: -------------------------------------------------------------------------------- We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Pioneer Diversified High Income Trust (the "Trust"), as of April 30, 2016, and the related statements of operations and cash flows for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the years ended April 30, 2014, 2013, and 2012 were audited by other auditors. Those auditors expressed an unqualified opinion on those financial highlights in their report dated June 25, 2014. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of April 30, 2016, by correspondence with the custodian, brokers and agent banks; where replies were not received from brokers and agent banks, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Pioneer Diversified High Income Trust as of April 30, 2016, and the results of its operations and its cash flows for the year then ended and the changes in its net assets and the financial highlights for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP Boston, Massachusetts June 22, 2016 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 67 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 has not been approved by the shareowners. During the period, there have been no changes in the principal risk factors associated with investment in the Trust. There were no changes in the persons who are primarily responsible for the day-to-day management of the Trust's portfolio. Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Trust may purchase, from time to time, its shares in the open market. PIM, the Trust's investment adviser, is currently an indirect, wholly owned subsidiary of UniCredit. On November 11, 2015, UniCredit announced that it signed a binding master agreement with Banco Santander and affiliates of Warburg Pincus and General Atlantic (the "Private Equity Firms") with respect to Pioneer Investments ("Pioneer") and Santander Asset Management ("SAM") (the "Transaction"). The Transaction, as previously announced by UniCredit, will establish a holding company, with the name Pioneer Investments, to be owned by UniCredit (50%) and the Private Equity Firms (50% between them). The holding company will control Pioneer's U.S. operations, including PIM. The holding company also will own 66.7% of Pioneer's and SAM's combined operations outside the U.S., while Banco Santander will own directly the remaining 33.3% stake. The closing of the Transaction is expected to happen in 2016, subject to certain regulatory and other approvals. Under the Investment Company Act of 1940, completion of the Transaction will cause the Trust's current investment advisory agreement with PIM to terminate. Accordingly, the Trust's Board of Trustees will be asked to approve a new investment advisory agreement. If approved by the Board, the Trust's new investment advisory agreement will be submitted to the shareholders of the Trust for their approval. 68 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 Trustees, Officers and Service Providers Investment Adviser Pioneer Investment Management, Inc. Custodian and Sub-Administrator Brown Brothers Harriman & Co. Independent Registered Public Accounting Firm Deloitte & Touche LLP Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Morgan, Lewis & Bockius LLP Shareowner Services and Transfer Agent American Stock Transfer & Trust Company Proxy Voting Policies and Procedures of the Fund are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at us.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at www.sec.gov. Trustees and Officers The Trust's Trustees and officers are listed below, together with their principal occupations during at least the past five years. Trustees who are interested persons of the Trust within the meaning of the 1940 Act are referred to as Interested Trustees. Trustees who are not interested persons of the Trust are referred to as Independent Trustees. Each of the Trustees serves as a trustee of each of the 50 U.S. registered investment portfolios for which Pioneer serves as investment adviser (the "Pioneer Funds"). The address for all Trustees and all officers of the Trust is 60 State Street, Boston, Massachusetts 02109. The Statement of Additional Information of the Fund includes additional information about the Trustees and is available, without charge, upon request, by calling 1-800-225-6292. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 69 Independent Trustees
---------------------------------------------------------------------------------------------------------------------------------- Name, Age and Term of Office and Other Directorships Position Held With the Trust Length of Service Principal Occupation Held by Trustee ---------------------------------------------------------------------------------------------------------------------------------- Thomas J. Perna (66) Class II Trustee Private investor (2004 - 2008 and 2013 - Director, Broadridge Chairman of the Board since 2007. Term present); Chairman (2008 - 2013) and Chief Financial Solutions, Inc. and Trustee expires in 2018. Executive Officer (2008 - 2012), (investor communications Quadriserv, Inc. (technology products for and securities processing securities lending industry); and Senior provider for financial Executive Vice President, The Bank of New services industry) (2009 York (financial and securities services) - present); Director, (1986 - 2004) Quadriserv, Inc. (2005 - 2013); and Commissioner, New Jersey State Civil Service Commission (2011 - present) ---------------------------------------------------------------------------------------------------------------------------------- David R. Bock (72) Class III Trustee since Managing Partner, Federal City Capital Director of New York Trustee 2007. Term expires in Advisors (corporate advisory services Mortgage Trust 2016. company) (1997 - 2004 and 2008 - present); (publicly-traded mortgage Interim Chief Executive Officer, Oxford REIT) (2004 - 2009, 2012 Analytica, Inc. (privately-held research - present); Director of and consulting company) (2010); Executive The Swiss Helvetia Fund, Vice President and Chief Financial Officer, Inc. (closed-end fund) I-trax, Inc. (publicly traded health care (2010 - present); services company) (2004 - 2007); and Director of Oxford Executive Vice President and Chief Analytica, Inc. (2008 - Financial Officer, Pedestal Inc. present); and Director of (internet-based mortgage trading company) Enterprise Community (2000 - 2002); Private consultant Investment, Inc. (1995-1997), Managing Director, Lehman (privately-held Brothers (investment banking firm) affordable housing finance (1992-1995); and Executive, The World Bank company) (1985 - 2010) (1979-1992) ---------------------------------------------------------------------------------------------------------------------------------- Benjamin M. Friedman (71) Class I Trustee since William Joseph Maier Professor of Political Trustee, Mellon Trustee 2008. Term expires in Economy, Harvard University (1972 - Institutional Funds 2017. present) Investment Trust and Mellon Institutional Funds Master Portfolio (oversaw 17 portfolios in fund complex) (1989-2008) ----------------------------------------------------------------------------------------------------------------------------------
70 Pioneer Diversified High Income Trust | Annual Report | 4/30/16
---------------------------------------------------------------------------------------------------------------------------------- Name, Age and Term of Office and Other Directorships Position Held With the Trust Length of Service Principal Occupation Held by Trustee ---------------------------------------------------------------------------------------------------------------------------------- Margaret B.W. Graham (68) Class I Trustee since Founding Director, Vice President and None Trustee 2007. Term expires in Corporate Secretary, The Winthrop Group, 2017. Inc. (consulting firm) (1982 - present); Desautels Faculty of Management, McGill University (1999 - present); and Manager of Research Operations and Organizational Learning, Xerox PARC, Xerox's advance research center (1990-1994) ---------------------------------------------------------------------------------------------------------------------------------- Lorraine H. Monchak (60) Class III Trustee since Chief Investment Officer, 1199 SEIU Funds Trustee of Pioneer Trustee 2015. Term expires in (healthcare workers union pension funds) closed-end investment 2016. (2001 - present); Vice President - companies (5 portfolios) International Investments Group, American (Sept. 2015 - present) International Group, Inc. (insurance company) (1993 - 2001); Vice President Corporate Finance and Treasury Group, Citibank, N.A.(1980 - 1986 and 1990 - 1993); Vice President - Asset/Liability Management Group, Federal Farm Funding Corporation (government-sponsored issuer of debt securities) (1988 - 1990); Mortgage Strategies Group, Shearson Lehman Hutton, Inc. (investment bank) (1987 - 1988); and Mortgage Strategies Group, Drexel Burnham Lambert, Ltd. (investment bank) (1986 - 1987) ---------------------------------------------------------------------------------------------------------------------------------- Marguerite A. Piret (67) Class II Trustee President and Chief Executive Officer, Director of New America Trustee since 2007. Term Newbury, Piret & Company, Inc. (investment High Income Fund, Inc. expires in 2018. banking firm) (1981 - present) (closed-end investment company) (2004 - present); and Member, Board of Governors, Investment Company Institute (2000 - 2006) ---------------------------------------------------------------------------------------------------------------------------------- Fred J. Ricciardi (69) Class II Trustee Consultant (investment company services) None Trustee since 2014. Term (2012 - present); Executive Vice President, expires in 2018. BNY Mellon (financial and investment company services) (1969 - 2012); Director, BNY International Financing Corp. (financial services) (2002 - 2012); and Director, Mellon Overseas Investment Corp. (financial services) (2009 - 2012) ----------------------------------------------------------------------------------------------------------------------------------
Pioneer Diversified High Income Trust | Annual Report | 4/30/16 71 Interested Trustees
---------------------------------------------------------------------------------------------------------------------------------- Name, Age and Term of Office and Other Directorships Position Held With the Trust Length of Service Principal Occupation Held by Trustee ---------------------------------------------------------------------------------------------------------------------------------- Lisa M. Jones (54)* Class III Trustee since Chair, Director, CEO and President of Trustee of Pioneer Trustee, President and 2015.Term expires in Pioneer Investment Management-USA (since closed-end investment Chief Executive Officer 2016. September 2014); Chair, Director, CEO and companies (5 portfolios) President of Pioneer Investment Management, (Sept. 2015 - present) Inc. (since September 2014); Chair, Director, CEO and President of Pioneer Funds Distributor, Inc. (since September 2014); Chair, Director, CEO and President of Pioneer Institutional Asset Management, Inc. (since September 2014); and Chair, Director, and CEO of Pioneer Investment Management Shareholder Services, Inc. (since September 2014); Managing Director, Morgan Stanley Investment Management (2010 - 2013); and Director of Institutional Business, CEO of International, Eaton Vance Management (2005 - 2010) ---------------------------------------------------------------------------------------------------------------------------------- Kenneth J. Taubes (58)* Class I Trustee Director and Executive Vice President None Trustee since 2014. Term (since 2008) and Chief Investment Officer, expires in 2017. U.S. (since 2010) of PIM-USA; Executive Vice President of Pioneer (since 2008); Executive Vice President of Pioneer Institutional Asset Management, Inc. (since 2009); and Portfolio Manager of Pioneer (since 1999) ----------------------------------------------------------------------------------------------------------------------------------
* Ms. Jones and Mr. Taubes are Interested Trustee because they are officers or directors of the Trust's investment adviser and certain of its affiliates. 72 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 Trust Officers
---------------------------------------------------------------------------------------------------------------------------------- Name, Age and Term of Office and Other Directorships Position Held With the Trust Length of Service Principal Occupation Held by Officer ---------------------------------------------------------------------------------------------------------------------------------- Christopher J. Kelley (51) Since 2007. Serves at Vice President and Associate General None Secretary and Chief Legal the discretion of the Counsel of Pioneer since January 2008; Officer Board. Secretary and Chief Legal Officer of all of the Pioneer Funds since June 2010; Assistant Secretary of all of the Pioneer Funds from September 2003 to May 2010; and Vice President and Senior Counsel of Pioneer from July 2002 to December 2007 ---------------------------------------------------------------------------------------------------------------------------------- Carol B. Hannigan (55) Since 2010. Serves at Fund Governance Director of Pioneer since None Assistant Secretary the discretion of the December 2006 and Assistant Secretary of Board. all the Pioneer Funds since June 2010; Manager - Fund Governance of Pioneer from December 2003 to November 2006; and Senior Paralegal of Pioneer from January 2000 to November 2003 ---------------------------------------------------------------------------------------------------------------------------------- Thomas Reyes (53) Since 2010. Serves at Senior Counsel of Pioneer since May 2013 None Assistant Secretary the discretion of the and Assistant Secretary of all the Pioneer Board. Funds since June 2010; and Counsel of Pioneer from June 2007 to May 2013 ---------------------------------------------------------------------------------------------------------------------------------- Mark E. Bradley (56) Since 2008. Serves at Vice President - Fund Treasury of Pioneer; None Treasurer and Chief Financial the discretion of the Treasurer of all of the Pioneer Funds since and Accounting Officer Board. March 2008; Deputy Treasurer of Pioneer from March 2004 to February 2008; and Assistant Treasurer of all of the Pioneer Funds from March 2004 to February 2008 ---------------------------------------------------------------------------------------------------------------------------------- Luis I. Presutti (51) Since 2007. Serves at Director - Fund Treasury of Pioneer; and None Assistant Treasurer the discretion of the Assistant Treasurer of all of the Pioneer Board. Funds ----------------------------------------------------------------------------------------------------------------------------------
Pioneer Diversified High Income Trust | Annual Report | 4/30/16 73 Trust Officers (continued)
---------------------------------------------------------------------------------------------------------------------------------- Name, Age and Term of Office and Other Directorships Position Held With the Trust Length of Service Principal Occupation Held by Officer ---------------------------------------------------------------------------------------------------------------------------------- Gary Sullivan (58) Since 2007. Serves at Fund Accounting Manager - Fund Treasury of None Assistant Treasurer the discretion of the Pioneer; and Assistant Treasurer of all of Board. the Pioneer Funds ---------------------------------------------------------------------------------------------------------------------------------- David F. Johnson (36) Since 2009. Serves at Fund Administration Manager - Fund Treasury None Assistant Treasurer the discretion of the of Pioneer since November 2008; Assistant Board. Treasurer of all of the Pioneer Funds since January 2009; and Client Service Manager - Institutional Investor Services at State Street Bank from March 2003 to March 2007 ---------------------------------------------------------------------------------------------------------------------------------- Jean M. Bradley (63) Since 2010. Serves at Chief Compliance Officer of Pioneer and of None Chief Compliance Officer the discretion of the all the Pioneer Funds since March 2010; Board. Chief Compliance Officer of Pioneer Institutional Asset Management, Inc. since January 2012; Chief Compliance Officer of Vanderbilt Capital Advisors, LLC since July 2012: Director of Adviser and Portfolio Compliance at Pioneer since October 2005; and Senior Compliance Officer for Columbia Management Advisers, Inc. from October 2003 to October 2005 ---------------------------------------------------------------------------------------------------------------------------------- Kelly O'Donnell (45) Since 2007. Serves at Director - Transfer Agency Compliance of None Anti-Money Laundering Officer the discretion of the Pioneer and Anti-Money Laundering Officer of Board. all the Pioneer Funds since 2006 ----------------------------------------------------------------------------------------------------------------------------------
74 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 This page for your notes. Pioneer Diversified High Income Trust | Annual Report | 4/30/16 75 This page for your notes. 76 Pioneer Diversified High Income Trust | Annual Report | 4/30/16 How to Contact Pioneer We are pleased to offer a variety of convenient ways for you to contact us for assistance or information. You can call American Stock Transfer & Trust Company (AST) for: -------------------------------------------------------------------------------- Account Information 1-800-710-0935 Or write to AST: -------------------------------------------------------------------------------- For Write to General inquiries, lost dividend checks, American Stock change of address, lost stock certificates, Transfer & Trust stock transfer Operations Center 6201 15th Ave. Brooklyn, NY 11219 Dividend reinvestment plan (DRIP) American Stock Transfer & Trust Wall Street Station P.O. Box 922 New York, NY 10269-0560 Website www.amstock.com For additional information, please contact your investment advisor or visit our web site us.pioneerinvestments.com. The Trust files a complete schedule of investments with the Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. [LOGO] PIONEER Investments(R) Pioneer Investment Management, Inc. 60 State Street Boston, MA 02109 us.pioneerinvestments.com Securities offered through Pioneer Funds Distributor, Inc. 60 State Street, Boston, MA 02109 Underwriter of Pioneer Mutual Funds, Member SIPC (C) 2016 Pioneer Investments 21909-08-0616 ITEM 2. CODE OF ETHICS. (a) Disclose whether, as of the end of the period covered by the report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, explain why it has not done so. The registrant has adopted, as of the end of the period covered by this report, a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer and controller. (b) For purposes of this Item, the term "code of ethics" means written standards that are reasonably designed to deter wrongdoing and to promote: (1) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (2) Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant; (3) Compliance with applicable governmental laws, rules, and regulations; (4) The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and (5) Accountability for adherence to the code. (c) The registrant must briefly describe the nature of any amendment, during the period covered by the report, to a provision of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item. The registrant must file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless the registrant has elected to satisfy paragraph (f) of this Item by posting its code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by undertaking to provide its code of ethics to any person without charge, upon request, pursuant to paragraph (f)(3) of this Item. The registrant has made no amendments to the code of ethics during the period covered by this report. (d) If the registrant has, during the period covered by the report, granted a waiver, including an implicit waiver, from a provision of the code of ethics to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this Item, the registrant must briefly describe the nature of the waiver, the name of the person to whom the waiver was granted, and the date of the waiver. Not applicable. (e) If the registrant intends to satisfy the disclosure requirement under paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from, a provision of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item by posting such information on its Internet website, disclose the registrant's Internet address and such intention. Not applicable. (f) The registrant must: (1) File with the Commission, pursuant to Item 12(a)(1), a copy of its code of ethics that applies to the registrant's principal executive officer,principal financial officer, principal accounting officer or controller, or persons performing similar functions, as an exhibit to its annual report on this Form N-CSR (see attachment); (2) Post the text of such code of ethics on its Internet website and disclose, in its most recent report on this Form N-CSR, its Internet address and the fact that it has posted such code of ethics on its Internet website; or (3) Undertake in its most recent report on this Form N-CSR to provide to any person without charge, upon request, a copy of such code of ethics and explain the manner in which such request may be made. See Item 10(2) ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a) (1) Disclose that the registrant's board of trustees has determined that the registrant either: (i) Has at least one audit committee financial expert serving on its audit committee; or (ii) Does not have an audit committee financial expert serving on its audit committee. The registrant's Board of Trustees has determined that the registrant has at least one audit committee financial expert. (2) If the registrant provides the disclosure required by paragraph (a)(1)(i) of this Item, it must disclose the name of the audit committee financial expert and whether that person is "independent." In order to be considered "independent" for purposes of this Item, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of trustees, or any other board committee: (i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or (ii) Be an "interested person" of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)). Ms. Marguerite A. Piret, an independent trustee, is such an audit committee financial expert. (3) If the registrant provides the disclosure required by paragraph (a)(1) (ii) of this Item, it must explain why it does not have an audit committee financial expert. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. The audit fees for the Trust were $53,954 payable to Deloitte & Touche LLP for the year ended April 30, 2016 and $51,063 for the year ended April 30, 2015. (b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. There were no audit-related services in 2016 or 2015. (c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category. The tax fees for the Trust were $9,904 payable to Deloitte & Touche LLP for the year ended April 30, 2016 and $9,876 for the year ended April 30, 2015. (d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. There were no other fees in 2015 or 2014. (e) (1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. PIONEER FUNDS APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES PROVIDED BY THE INDEPENDENT AUDITOR SECTION I - POLICY PURPOSE AND APPLICABILITY The Pioneer Funds recognize the importance of maintaining the independence of their outside auditors. Maintaining independence is a shared responsibility involving Pioneer Investment Management, Inc ("PIM"), the audit committee and the independent auditors. The Funds recognize that a Fund's independent auditors: 1) possess knowledge of the Funds, 2) are able to incorporate certain services into the scope of the audit, thereby avoiding redundant work, cost and disruption of Fund personnel and processes, and 3) have expertise that has value to the Funds. As a result, there are situations where it is desirable to use the Fund's independent auditors for services in addition to the annual audit and where the potential for conflicts of interests are minimal. Consequently, this policy, which is intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and procedures to be followed by the Funds when retaining the independent audit firm to perform audit, audit-related tax and other services under those circumstances, while also maintaining independence. Approval of a service in accordance with this policy for a Fund shall also constitute approval for any other Fund whose pre-approval is required pursuant to Rule 210.2-01(c)(7)(ii). In addition to the procedures set forth in this policy, any non-audit services that may be provided consistently with Rule 210.2-01 may be approved by the Audit Committee itself and any pre-approval that may be waived in accordance with Rule 210.2-01(c)(7)(i)(C) is hereby waived. Selection of a Fund's independent auditors and their compensation shall be determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY ---------------- -------------------------------- ------------------------------------------------- SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES CATEGORY ---------------- -------------------------------- ------------------------------------------------- I. AUDIT Services that are directly o Accounting research assistance SERVICES related to performing the o SEC consultation, registration independent audit of the Funds statements, and reporting o Tax accrual related matters o Implementation of new accounting standards o Compliance letters (e.g. rating agency letters) o Regulatory reviews and assistance regarding financial matters o Semi-annual reviews (if requested) o Comfort letters for closed end offerings ---------------- -------------------------------- ------------------------------------------------- II. Services which are not o AICPA attest and agreed-upon procedures AUDIT-RELATED prohibited under Rule o Technology control assessments SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments and are related extensions of o Enterprise security architecture the audit services support the assessment audit, or use the knowledge/expertise gained from the audit procedures as a foundation to complete the project. In most cases, if the Audit-Related Services are not performed by the Audit firm, the scope of the Audit Services would likely increase. The Services are typically well-defined and governed by accounting professional standards (AICPA, SEC, etc.) ---------------- -------------------------------- ------------------------------------------------- ------------------------------------- ------------------------------------ AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE REPORTING POLICY ------------------------------------- ------------------------------------ o "One-time" pre-approval o A summary of all such for the audit period for all services and related fees pre-approved specific service reported at each regularly subcategories. Approval of the scheduled Audit Committee independent auditors as meeting. auditors for a Fund shall constitute pre approval for these services. ------------------------------------- ------------------------------------ o "One-time" pre-approval o A summary of all such for the fund fiscal year within services and related fees a specified dollar limit (including comparison to for all pre-approved specified dollar limits) specific service subcategories reported quarterly. o Specific approval is needed to exceed the pre-approved dollar limit for these services (see general Audit Committee approval policy below for details on obtaining specific approvals) o Specific approval is needed to use the Fund's auditors for Audit-Related Services not denoted as "pre-approved", or to add a specific service subcategory as "pre-approved" ------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED ----------------------- --------------------------- ----------------------------------------------- SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES DESCRIPTION ----------------------- --------------------------- ----------------------------------------------- III. TAX SERVICES Services which are not o Tax planning and support prohibited by the Rule, o Tax controversy assistance if an officer of the Fund o Tax compliance, tax returns, excise determines that using the tax returns and support Fund's auditor to provide o Tax opinions these services creates significant synergy in the form of efficiency, minimized disruption, or the ability to maintain a desired level of confidentiality. ----------------------- --------------------------- ----------------------------------------------- ------------------------------------- ------------------------- AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE REPORTING POLICY ------------------------------------- ------------------------- ------------------------------------- ------------------------- o "One-time" pre-approval o A summary of for the fund fiscal year all such services and within a specified dollar limit related fees (including comparison to specified dollar limits) reported quarterly. o Specific approval is needed to exceed the pre-approved dollar limits for these services (see general Audit Committee approval policy below for details on obtaining specific approvals) o Specific approval is needed to use the Fund's auditors for tax services not denoted as pre-approved, or to add a specific service subcategory as "pre-approved" ------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED ----------------------- --------------------------- ----------------------------------------------- SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES DESCRIPTION ----------------------- --------------------------- ----------------------------------------------- IV. OTHER SERVICES Services which are not o Business Risk Management support prohibited by the Rule, o Other control and regulatory A. SYNERGISTIC, if an officer of the Fund compliance projects UNIQUE QUALIFICATIONS determines that using the Fund's auditor to provide these services creates significant synergy in the form of efficiency, minimized disruption, the ability to maintain a desired level of confidentiality, or where the Fund's auditors posses unique or superior qualifications to provide these services, resulting in superior value and results for the Fund. ----------------------- --------------------------- ----------------------------------------------- --------------------------------------- ------------------------ AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE REPORTING POLICY ------------------------------------- -------------------------- o "One-time" pre-approval o A summary of for the fund fiscal year within all such services and a specified dollar limit related fees (including comparison to specified dollar limits) reported quarterly. o Specific approval is needed to exceed the pre-approved dollar limits for these services (see general Audit Committee approval policy below for details on obtaining specific approvals) o Specific approval is needed to use the Fund's auditors for "Synergistic" or "Unique Qualifications" Other Services not denoted as pre-approved to the left, or to add a specific service subcategory as "pre-approved" ------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED ----------------------- ------------------------- ----------------------------------------------- SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES DESCRIPTION ----------------------- ------------------------- ----------------------------------------------- PROHIBITED SERVICES Services which result 1. Bookkeeping or other services in the auditors losing related to the accounting records or independence status financial statements of the audit under the Rule. client* 2. Financial information systems design and implementation* 3. Appraisal or valuation services, fairness* opinions, or contribution-in-kind reports 4. Actuarial services (i.e., setting actuarial reserves versus actuarial audit work)* 5. Internal audit outsourcing services* 6. Management functions or human resources 7. Broker or dealer, investment advisor, or investment banking services 8. Legal services and expert services unrelated to the audit 9. Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible ----------------------- ------------------------- ----------------------------------------------- ------------------------------------------- ------------------------------ AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE REPORTING POLICY ------------------------------------------- ------------------------------ o These services are not to be o A summary of all performed with the exception of the(*) services and related services that may be permitted fees reported at each if they would not be subject to audit regularly scheduled procedures at the audit client (as Audit Committee meeting defined in rule 2-01(f)(4)) level will serve as continual the firm providing the service. confirmation that has not provided any restricted services. ------------------------------------------- ------------------------------
-------------------------------------------------------------------------------- GENERAL AUDIT COMMITTEE APPROVAL POLICY: o For all projects, the officers of the Funds and the Fund's auditors will each make an assessment to determine that any proposed projects will not impair independence. o Potential services will be classified into the four non-restricted service categories and the "Approval of Audit, Audit-Related, Tax and Other Services" Policy above will be applied. Any services outside the specific pre-approved service subcategories set forth above must be specifically approved by the Audit Committee. o At least quarterly, the Audit Committee shall review a report summarizing the services by service category, including fees, provided by the Audit firm as set forth in the above policy. -------------------------------------------------------------------------------- (2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. Non-Audit Services Beginning with non-audit service contracts entered into on or after May 6, 2003, the effective date of the new SEC pre-approval rules, the Trust's audit committee is required to pre-approve services to affiliates defined by SEC rules to the extent that the services are determined to have a direct impact on the operations or financial reporting of the Trust. For the years ended April 30 2016 and 2015, there were no services provided to an affiliate that required the Trust's audit committee pre-approval. (f) If greater than 50 percent, disclose the percentage of hours expended on the principal accountants engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. N/A (g) Disclose the aggregate non-audit fees billed by the registrants accountant for services rendered to the registrant, and rendered to the registrants investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant. The aggregate non-audit fees for the Trust were $9,904 payable to Deloitte & Touche LLP for the year ended April 30, 2016 and $9,876 for the year ended April 30, 2015. (h) Disclose whether the registrants audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrants investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. The Fund's audit committee of the Board of Trustees has considered whether the provision of non-audit services that were rendered to the Affiliates (as defined) that were not pre- approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS (a) If the registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act (17 CFR 240.10A-3), state whether or not the registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)). If the registrant has such a committee, however designated, identify each committee member. If the entire board of directors is acting as the registrant's audit committee as specified in Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)), so state. N/A (b) If applicable, provide the disclosure required by Rule 10A-3(d) under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption from the listing standards for audit committees. N/A ITEM 6. SCHEDULE OF INVESTMENTS. File Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period as set forth in 210.1212 of Regulation S-X [17 CFR 210.12-12], unless the schedule is included as part of the report to shareholders filed under Item 1 of this Form. Included in Item 1 ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. A closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders, on the one hand, and those of the company's investment adviser; principal underwriter; or any affiliated person (as defined in Section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules thereunder) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company's investment adviser, or any other third party, that the company uses, or that are used on the company's behalf, to determine how to vote proxies relating to portfolio securities. Proxy Voting Policies and Procedures of Pioneer Investment Management, Inc. VERSION DATED July, 2004 Overview Pioneer Investment Management, Inc. ("Pioneer") is a fiduciary that owes each of its client's duties of care and loyalty with respect to all services undertaken on the client's behalf, including proxy voting. When Pioneer has been delegated proxy-voting authority for a client, the duty of care requires Pioneer to monitor corporate events and to vote the proxies. To satisfy its duty of loyalty, Pioneer must place its client's interests ahead of its own and must cast proxy votes in a manner consistent with the best interest of its clients. Pioneer will vote all proxies presented in a timely manner. The Proxy Voting Policies and Procedures are designed to complement Pioneer's investment policies and procedures regarding its general responsibility to monitor the performance and/or corporate events of companies that are issuers of securities held in accounts managed by Pioneer. Pioneer's Proxy Voting Policies summarize Pioneer's position on a number of issues solicited by companies held by Pioneer's clients. The policies are guidelines that provide a general indication on how Pioneer would vote but do not include all potential voting scenarios. Pioneer's Proxy Voting Procedures detail monitoring of voting, exception votes, and review of conflicts of interest and ensure that case-by-case votes are handled within the context of the overall guidelines (i.e. best interest of client). The overriding goal is that all proxies for US and non-US companies that are received promptly will be voted in accordance with Pioneer's policies or specific client instructions. All shares in a company held by Pioneer-managed accounts will be voted alike, unless a client has given us specific voting instructions on an issue or has not delegated authority to us or the Proxy Voting Oversight Group determines that the circumstances justify a different approach. Pioneer does not delegate the authority to vote proxies relating to its clients to any of its affiliates, which include other subsidiaries of UniCredito. Any questions about these policies and procedures should be directed to the Proxy Coordinator. 1 Proxy Voting Procedures Proxy Voting Service Pioneer has engaged an independent proxy voting service to assist in the voting of proxies. The proxy voting service works with custodians to ensure that all proxy materials are received by the custodians and are processed in a timely fashion. To the extent applicable, the proxy voting service votes all proxies in accordance with the proxy voting policies established by Pioneer. The proxy voting service will refer proxy questions to the Proxy Coordinator (described below) for instructions under circumstances where: (1) the application of the proxy voting guidelines is unclear; (2) a particular proxy question is not covered by the guidelines; or (3) the guidelines call for specific instructions on a case-by-case basis. The proxy voting service is also requested to call to the Proxy Coordinator's attention specific proxy questions that, while governed by a guideline, appear to involve unusual or controversial issues. Pioneer reserves the right to attend a meeting in person and may do so when it determines that the company or the matters to be voted on at the meeting are strategically important to its clients. Proxy Coordinator Pioneer's Director of Investment Operations (the "Proxy Coordinator") coordinates the voting, procedures and reporting of proxies on behalf of Pioneer's clients. The Proxy Coordinator will deal directly with the proxy voting service and, in the case of proxy questions referred by the proxy voting service, will solicit voting recommendations and instructions from the Director of Portfolio Management US or, to the extent applicable, investment sub-advisers. The Proxy Coordinator is responsible for ensuring that these questions and referrals are responded to in a timely fashion and for transmitting appropriate voting instructions to the proxy voting service. The Proxy Coordinator is responsible for verifying with the Compliance Department whether Pioneer's voting power is subject to any limitations or guidelines issued by the client (or in the case of an employee benefit plan, the plan's trustee or other fiduciaries). Referral Items From time to time, the proxy voting service will refer proxy questions to the Proxy Coordinator that are described by Pioneer's policy as to be voted on a case-by-case basis, that are not covered by Pioneer's guidelines or where Pioneer's guidelines may be unclear with respect to the matter to be voted on. Under such certain circumstances, the Proxy Coordinator will seek a written voting recommendation from the Director of Portfolio Management US. Any such recommendation will include: (i) the manner in which the proxies should be voted; (ii) the rationale underlying any such decision; and (iii) the disclosure of any contacts or communications made between Pioneer and any outside parties concerning the proxy proposal prior to the time that the voting instructions are provided. In addition, the Proxy Coordinator will ask the Compliance Department to review the question for any actual or apparent conflicts of interest as described below under "Conflicts of 2 Interest." The Compliance Department will provide a "Conflicts of Interest Report," applying the criteria set forth below under "Conflicts of Interest," to the Proxy Coordinator summarizing the results of its review. In the absence of a conflict of interest, the Proxy Coordinator will vote in accordance with the recommendation of the Director of Portfolio Management US. If the matter presents a conflict of interest for Pioneer, then the Proxy Coordinator will refer the matter to the Proxy Voting Oversight Group for a decision. In general, when a conflict of interest is present, Pioneer will vote according to the recommendation of the Director of Portfolio Management US where such recommendation would go against Pioneer's interest or where the conflict is deemed to be immaterial. Pioneer will vote according to the recommendation of its proxy voting service when the conflict is deemed to be material and the Pioneer's internal vote recommendation would favor Pioneer's interest, unless a client specifically requests Pioneer to do otherwise. When making the final determination as to how to vote a proxy, the Proxy Voting Oversight Group will review the report from the Director of Portfolio Management US and the Conflicts of Interest Report issued by the Compliance Department. Conflicts of Interest A conflict of interest occurs when Pioneer's interests interfere, or appear to interfere with the interests of Pioneer's clients. Occasionally, Pioneer may have a conflict that can affect how its votes proxies. The conflict may be actual or perceived and may exist when the matter to be voted on concerns: o An affiliate of Pioneer, such as another company belonging to the UniCredito Italiano S.p.A. banking group (a "UniCredito Affiliate"); o An issuer of a security for which Pioneer acts as a sponsor, advisor, manager, custodian, distributor, underwriter, broker, or other similar capacity (including those securities specifically declared by PGAM to present a conflict of interest for Pioneer); o An issuer of a security for which UniCredito has informed Pioneer that a UniCredito Affiliate acts as a sponsor, advisor, manager, custodian, distributor, underwriter, broker, or other similar capacity; or o A person with whom Pioneer (or any of its affiliates) has an existing, material contract or business relationship that was not entered into in the ordinary course of Pioneer's business. o Pioneer will abstain from voting with respect to companies directly or indirectly owned by UniCredito Italiano Group, unless otherwise directed by a client. In addition, Pioneer will inform PGAM Global Compliance and the PGAM Independent Directors before exercising such rights. Any associate involved in the proxy voting process with knowledge of any apparent or actual conflict of interest must disclose such conflict to the Proxy Coordinator and the Compliance Department. The Compliance Department will review each item referred to Pioneer to determine whether an actual or potential conflict of interest with Pioneer exists in connection with the proposal(s) to be voted upon. The review will be conducted by comparing the apparent parties affected by the proxy proposal being 3 voted upon against the Compliance Department's internal list of interested persons and, for any matches found, evaluating the anticipated magnitude and possible probability of any conflict of interest being present. For each referral item, the determination regarding the presence or absence of any actual or potential conflict of interest will be documented in a Conflicts of Interest Report to the Proxy Coordinator. Securities Lending In conjunction with industry standards Proxies are not available to be voted when the shares are out on loan through either Pioneer's lending program or a client's managed security lending program. However, Pioneer will reserve the right to recall lent securities so that they may be voted according to the Pioneer's instructions. If a portfolio manager would like to vote a block of previously lent shares, the Proxy Coordinator will work with the portfolio manager and Investment Operations to recall the security, to the extent possible, to facilitate the vote on the entire block of shares. Share-Blocking "Share-blocking" is a market practice whereby shares are sent to a custodian (which may be different than the account custodian) for record keeping and voting at the general meeting. The shares are unavailable for sale or delivery until the end of the blocking period (typically the day after general meeting date). Pioneer will vote in those countries with "share-blocking." In the event a manager would like to sell a security with "share-blocking", the Proxy Coordinator will work with the Portfolio Manager and Investment Operations Department to recall the shares (as allowable within the market time-frame and practices) and/or communicate with executing brokerage firm. A list of countries with "share-blocking" is available from the Investment Operations Department upon request. Record Keeping The Proxy Coordinator shall ensure that Pioneer's proxy voting service: o Retains a copy of the proxy statement received (unless the proxy statement is available from the SEC's Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system); o Retains a record of the vote cast; o Prepares Form N-PX for filing on behalf of each client that is a registered investment company; and o Is able to promptly provide Pioneer with a copy of the voting record upon its request. 4 The Proxy Coordinator shall ensure that for those votes that may require additional documentation (i.e. conflicts of interest, exception votes and case-by-case votes) the following records are maintained: o A record memorializing the basis for each referral vote cast; o A copy of any document created by Pioneer that was material in making the decision on how to vote the subject proxy; and o A copy of any conflict notice, conflict consent or any other written communication (including emails or other electronic communications) to or from the client (or in the case of an employee benefit plan, the plan's trustee or other fiduciaries) regarding the subject proxy vote cast by, or the vote recommendation of, Pioneer. o Pioneer shall maintain the above records in the client's file for a period not less than ten (10) years. Disclosure Pioneer shall take reasonable measures to inform its clients of the process or procedures clients must follow to obtain information regarding how Pioneer voted with respect to assets held in their accounts. In addition, Pioneer shall describe to clients its proxy voting policies and procedures and will furnish a copy of its proxy voting policies and procedures upon request. This information may be provided to clients through Pioneer's Form ADV (Part II) disclosure, by separate notice to the client, or through Pioneer's website. Proxy Voting Oversight Group The members of the Proxy Voting Oversight Group are Pioneer's: Director of Portfolio Management US, Head of Investment Operations, and Director of Compliance. Other members of Pioneer will be invited to attend meetings and otherwise participate as necessary. The Head of Investment Operations will chair the Proxy Voting Oversight Group. The Proxy Voting Oversight Group is responsible for developing, evaluating, and changing (when necessary) Pioneer's Proxy Voting Policies and Procedures. The group meets at least annually to evaluate and review these policies and procedures and the services of its third-party proxy voting service. In addition, the Proxy Voting Oversight Group will meet as necessary to vote on referral items and address other business as necessary. Amendments Pioneer may not amend its Proxy Voting Policies And Procedures without the prior approval of the Proxy Voting Oversight Group and its corporate parent, Pioneer Global Asset Management S.p.A 5 Proxy Voting Policies Pioneer's sole concern in voting proxies is the economic effect of the proposal on the value of portfolio holdings, considering both the short- and long-term impact. In many instances, Pioneer believes that supporting the company's strategy and voting "for" management's proposals builds portfolio value. In other cases, however, proposals set forth by management may have a negative effect on that value, while some shareholder proposals may hold the best prospects for enhancing it. Pioneer monitors developments in the proxy-voting arena and will revise this policy as needed. All proxies that are received promptly will be voted in accordance with the specific policies listed below. All shares in a company held by Pioneer-managed accounts will be voted alike, unless a client has given us specific voting instructions on an issue or has not delegated authority to us. Proxy voting issues will be reviewed by Pioneer's Proxy Voting Oversight Group, which consists of the Director of Portfolio Management US, the Director of Investment Operations (the Proxy Coordinator), and the Director of Compliance. Pioneer has established Proxy Voting Procedures for identifying and reviewing conflicts of interest that may arise in the voting of proxies. Clients may request, at any time, a report on proxy votes for securities held in their portfolios and Pioneer is happy to discuss our proxy votes with company management. Pioneer retains a proxy voting service to provide research on proxy issues and to process proxy votes. Administrative While administrative items appear infrequently in U.S. issuer proxies, they are quite common in non-U.S. proxies. We will generally support these and similar management proposals: o Corporate name change. o A change of corporate headquarters. o Stock exchange listing. o Establishment of time and place of annual meeting. o Adjournment or postponement of annual meeting. o Acceptance/approval of financial statements. o Approval of dividend payments, dividend reinvestment plans and other dividend-related proposals. o Approval of minutes and other formalities. 6 o Authorization of the transferring of reserves and allocation of income. o Amendments to authorized signatories. o Approval of accounting method changes or change in fiscal year-end. o Acceptance of labor agreements. o Appointment of internal auditors. Pioneer will vote on a case-by-case basis on other routine business; however, Pioneer will oppose any routine business proposal if insufficient information is presented in advance to allow Pioneer to judge the merit of the proposal. Pioneer has also instructed its proxy voting service to inform Pioneer of its analysis of any administrative items inconsistent, in its view, with supporting the value of Pioneer portfolio holdings so that Pioneer may consider and vote on those items on a case-by-case basis. Auditors We normally vote for proposals to: o Ratify the auditors. We will consider a vote against if we are concerned about the auditors' independence or their past work for the company. Specifically, we will oppose the ratification of auditors and withhold votes from audit committee members if non-audit fees paid by the company to the auditing firm exceed the sum of audit fees plus audit-related fees plus permissible tax fees according to the disclosure categories proposed by the Securities and Exchange Commission. o Restore shareholder rights to ratify the auditors. We will normally oppose proposals that require companies to: o Seek bids from other auditors. o Rotate auditing firms, except where the rotation is statutorily required or where rotation would demonstrably strengthen financial disclosure. o Indemnify auditors. o Prohibit auditors from engaging in non-audit services for the company. Board of Directors On issues related to the board of directors, Pioneer normally supports management. We will, however, consider a vote against management in instances where corporate performance has been very poor or where the board appears to lack independence. 7 General Board Issues Pioneer will vote for: o Audit, compensation and nominating committees composed of independent directors exclusively. o Indemnification for directors for actions taken in good faith in accordance with the business judgment rule. We will vote against proposals for broader indemnification. o Changes in board size that appear to have a legitimate business purpose and are not primarily for anti-takeover reasons. o Election of an honorary director. We will vote against: o Minimum stock ownership by directors. o Term limits for directors. Companies benefit from experienced directors, and shareholder control is better achieved through annual votes. o Requirements for union or special interest representation on the board. o Requirements to provide two candidates for each board seat. We will vote on a case-by case basis on these issues: o Separate chairman and CEO positions. We will consider voting with shareholders on these issues in cases of poor corporate performance. Elections of Directors In uncontested elections of directors we will vote against: o Individual directors with absenteeism above 25% without valid reason. We support proposals that require disclosure of director attendance. o Insider directors and affiliated outsiders who sit on the audit, compensation, stock option or nominating committees. For the purposes of our policy, we accept the definition of affiliated directors provided by our proxy voting service. We will also vote against: o Directors who have failed to act on a takeover offer where the majority of shareholders have tendered their shares. o Directors who appear to lack independence or are associated with very poor corporate performance. 8 We will vote on a case-by case basis on these issues: o Re-election of directors who have implemented or renewed a dead-hand or modified dead-hand poison pill (a "dead-hand poison pill" is a shareholder rights plan that may be altered only by incumbent or "dead " directors. These plans prevent a potential acquirer from disabling a poison pill by obtaining control of the board through a proxy vote). o Contested election of directors. o Prior to phase-in required by SEC, we would consider supporting election of a majority of independent directors in cases of poor performance. o Mandatory retirement policies. o Directors who have ignored a shareholder proposal that has been approved by shareholders for two consecutive years. Takeover-Related Measures Pioneer is generally opposed to proposals that may discourage takeover attempts. We believe that the potential for a takeover helps ensure that corporate performance remains high. Pioneer will vote for: o Cumulative voting. o Increase ability for shareholders to call special meetings. o Increase ability for shareholders to act by written consent. o Restrictions on the ability to make greenmail payments. o Submitting rights plans to shareholder vote. o Rescinding shareholder rights plans ("poison pills"). o Opting out of the following state takeover statutes: o Control share acquisition statutes, which deny large holders voting rights on holdings over a specified threshold. o Control share cash-out provisions, which require large holders to acquire shares from other holders. o Freeze-out provisions, which impose a waiting period on large holders before they can attempt to gain control. o Stakeholder laws, which permit directors to consider interests of non-shareholder constituencies. 9 o Disgorgement provisions, which require acquirers to disgorge profits on purchases made before gaining control. o Fair price provisions. o Authorization of shareholder rights plans. o Labor protection provisions. o Mandatory classified boards. We will vote on a case-by-case basis on the following issues: o Fair price provisions. We will vote against provisions requiring supermajority votes to approve takeovers. We will also consider voting against proposals that require a supermajority vote to repeal or amend the provision. Finally, we will consider the mechanism used to determine the fair price; we are generally opposed to complicated formulas or requirements to pay a premium. o Opting out of state takeover statutes regarding fair price provisions. We will use the criteria used for fair price provisions in general to determine our vote on this issue. o Proposals that allow shareholders to nominate directors. We will vote against: o Classified boards, except in the case of closed-end mutual funds. o Limiting shareholder ability to remove or appoint directors. We will support proposals to restore shareholder authority in this area. We will review on a case-by-case basis proposals that authorize the board to make interim appointments. o Classes of shares with unequal voting rights. o Supermajority vote requirements. o Severance packages ("golden" and "tin" parachutes). We will support proposals to put these packages to shareholder vote. o Reimbursement of dissident proxy solicitation expenses. While we ordinarily support measures that encourage takeover bids, we believe that management should have full control over corporate funds. o Extension of advance notice requirements for shareholder proposals. o Granting board authority normally retained by shareholders (e.g., amend charter, set board size). o Shareholder rights plans ("poison pills"). These plans generally allow shareholders to buy additional shares at a below-market price in the event of a change in control and may deter some bids. 10 Capital Structure Managements need considerable flexibility in determining the company's financial structure, and Pioneer normally supports managements' proposals in this area. We will, however, reject proposals that impose high barriers to potential takeovers. Pioneer will vote for: o Changes in par value. o Reverse splits, if accompanied by a reduction in number of shares. o Share repurchase programs, if all shareholders may participate on equal terms. o Bond issuance. o Increases in "ordinary" preferred stock. o Proposals to have blank-check common stock placements (other than shares issued in the normal course of business) submitted for shareholder approval. o Cancellation of company treasury shares. We will vote on a case-by-case basis on the following issues: o Reverse splits not accompanied by a reduction in number of shares, considering the risk of delisting. o Increase in authorized common stock. We will make a determination considering, among other factors: o Number of shares currently available for issuance; o Size of requested increase (we would normally approve increases of up to 100% of current authorization); o Proposed use of the additional shares; and o Potential consequences of a failure to increase the number of shares outstanding (e.g., delisting or bankruptcy). o Blank-check preferred. We will normally oppose issuance of a new class of blank-check preferred, but may approve an increase in a class already outstanding if the company has demonstrated that it uses this flexibility appropriately. o Proposals to submit private placements to shareholder vote. o Other financing plans. We will vote against preemptive rights that we believe limit a company's financing flexibility. 11 Compensation Pioneer supports compensation plans that link pay to shareholder returns and believes that management has the best understanding of the level of compensation needed to attract and retain qualified people. At the same time, stock-related compensation plans have a significant economic impact and a direct effect on the balance sheet. Therefore, while we do not want to micromanage a company's compensation programs, we will place limits on the potential dilution these plans may impose. Pioneer will vote for: o 401(k) benefit plans. o Employee stock ownership plans (ESOPs), as long as shares allocated to ESOPs are less than 5% of outstanding shares. Larger blocks of stock in ESOPs can serve as a takeover defense. We will support proposals to submit ESOPs to shareholder vote. o Various issues related to the Omnibus Budget and Reconciliation Act of 1993 (OBRA), including: o Amendments to performance plans to conform with OBRA; o Caps on annual grants or amendments of administrative features; o Adding performance goals; and o Cash or cash-and-stock bonus plans. o Establish a process to link pay, including stock-option grants, to performance, leaving specifics of implementation to the company. o Require that option repricings be submitted to shareholders. o Require the expensing of stock-option awards. o Require reporting of executive retirement benefits (deferred compensation, split-dollar life insurance, SERPs, and pension benefits). o Employee stock purchase plans where the purchase price is equal to at least 85% of the market price, where the offering period is no greater than 27 months and where potential dilution (as defined below) is no greater than 10%. 12 We will vote on a case-by-case basis on the following issues: o Executive and director stock-related compensation plans. We will consider the following factors when reviewing these plans: o The program must be of a reasonable size. We will approve plans where the combined employee and director plans together would generate less than 15% dilution. We will reject plans with 15% or more potential dilution. Dilution = (A + B + C) / (A + B + C + D), where A = Shares reserved for plan/amendment, B = Shares available under continuing plans, C = Shares granted but unexercised and D = Shares outstanding. o The plan must not: o Explicitly permit unlimited option repricing authority or that have repriced in the past without shareholder approval. o Be a self-replenishing "evergreen" plan, plans that grant discount options and tax offset payments. o We are generally in favor of proposals that increase participation beyond executives. o We generally support proposals asking companies to adopt rigorous vesting provisions for stock option plans such as those that vest incrementally over, at least, a three- or four-year period with a pro rata portion of the shares becoming exercisable on an annual basis following grant date. o We generally support proposals asking companies to disclose their window period policies for stock transactions. Window period policies ensure that employees do not exercise options based on insider information contemporaneous with quarterly earnings releases and other material corporate announcements. o We generally support proposals asking companies to adopt stock holding periods for their executives. o All other employee stock purchase plans. o All other compensation-related proposals, including deferred compensation plans, employment agreements, loan guarantee programs and retirement plans. o All other proposals regarding stock compensation plans, including extending the life of a plan, changing vesting restrictions, repricing options, lengthening exercise periods or accelerating distribution of awards and pyramiding and cashless exercise programs. 13 We will vote against: o Pensions for non-employee directors. We believe these retirement plans reduce director objectivity. o Elimination of stock option plans. We will vote on a case-by case basis on these issues: o Limits on executive and director pay. o Stock in lieu of cash compensation for directors. Corporate Governance Pioneer will vote for: o Confidential Voting. o Equal access provisions, which allow shareholders to contribute their opinion to proxy materials. o Proposals requiring directors to disclose their ownership of shares in the company. We will vote on a case-by-case basis on the following issues: o Change in the state of incorporation. We will support reincorporations supported by valid business reasons. We will oppose those that appear to be solely for the purpose of strengthening takeover defenses. o Bundled proposals. We will evaluate the overall impact of the proposal. o Adopting or amending the charter, bylaws or articles of association. o Shareholder appraisal rights, which allow shareholders to demand judicial review of an acquisition price. We will vote against: o Shareholder advisory committees. While management should solicit shareholder input, we prefer to leave the method of doing so to management's discretion. o Limitations on stock ownership or voting rights. o Reduction in share ownership disclosure guidelines. 14 Mergers and Restructurings Pioneer will vote on the following and similar issues on a case-by-case basis: o Mergers and acquisitions. o Corporate restructurings, including spin-offs, liquidations, asset sales, joint ventures, conversions to holding company and conversions to self-managed REIT structure. o Debt restructurings. o Conversion of securities. o Issuance of shares to facilitate a merger. o Private placements, warrants, convertible debentures. o Proposals requiring management to inform shareholders of merger opportunities. We will normally vote against shareholder proposals requiring that the company be put up for sale. Mutual Funds Many of our portfolios may invest in shares of closed-end mutual funds or exchange-traded funds. The non-corporate structure of these investments raises several unique proxy voting issues. Pioneer will vote for: o Establishment of new classes or series of shares. o Establishment of a master-feeder structure. Pioneer will vote on a case-by-case on: o Changes in investment policy. We will normally support changes that do not affect the investment objective or overall risk level of the fund. We will examine more fundamental changes on a case-by-case basis. o Approval of new or amended advisory contracts. o Changes from closed-end to open-end format. o Authorization for, or increase in, preferred shares. o Disposition of assets, termination, liquidation, or mergers. o Classified boards of closed-end mutual funds, but will typically support such proposals. 15 Social Issues Pioneer will abstain on stockholder proposals calling for greater disclosure of corporate activities with regard to social issues. "Social Issues" may generally be described as shareholder proposals for a company to: o Conduct studies regarding certain issues of public concern and interest; o Study the feasibility of the company taking certain actions with regard to such issues; or o Take specific action, including ceasing certain behavior and adopting company standards and principles, in relation to issues of public concern and interest. We believe these issues are important and should receive management attention. Pioneer will vote against proposals calling for substantial changes in the company's business or activities. We will also normally vote against proposals with regard to contributions, believing that management should control the routine disbursement of funds. 16 ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. (a) If the registrant is a closed-end management investment company that is filing an annual report on this Form N-CSR,provide the following information: (1) State the name, title, and length of service of the person or persons employed by or associated with the registrant or an investment adviser of the registrant who are primarily responsible for the day-to-day management of the registrant's portfolio ("Portfolio Manager"). Also state each Portfolio Manager's business experience during the past 5 years. ADDITIONAL INFORMATION ABOUT THE PORTFOLIO MANAGERS OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS The table below indicates, for the portfolio managers of the fund, information about the accounts other than the fund over which the portfolio manager has day-to-day investment responsibility. All information on the number of accounts and total assets in the table is as of April 30, 2016. For purposes of the table, "Other Pooled Investment Vehicles" may include investment partnerships, undertakings for collective investments in transferable securities ("UCITS") and other non-U.S. investment funds and group trusts, and "Other Accounts" may include separate accounts for institutions or individuals, insurance company general or separate accounts, pension funds and other similar institutional accounts but generally do not include the portfolio manager's personal investment accounts or those which the manager may be deemed to own beneficially under the code of ethics. Certain funds and other accounts managed by the portfolio manager may have substantially similar investment strategies.
NUMBER OF ASSETS ACCOUNTS MANAGED MANAGED FOR FOR WHICH WHICH ADVISORY ADVISORY NUMBER OF FEE IS FEE IS NAME OF ACCOUNTS TOTAL ASSETS PERFORMANCE- PERFORMANCE- PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED MANAGED (000'S) BASED BASED (000'S) ------------------- ---------------------------------- ----------- ----------------- ---------------- -------------- Charles Melchreit Other Registered Investment Companies 11 $16,746,143 N/A N/A Other Pooled Investment Vehicles 4 $ 5,452,601 N/A N/A Other Accounts 8 $ 1,690,178 N/A N/A ------------------- ---------------------------------- -- ----------- ---------------- ---------- Andrew Feltus Other Registered Investment Companies 12 $10,689,735 N/A N/A Other Pooled Investment Vehicles 7 $ 9,130,579 3 $6,114,075 Other Accounts 6 $ 1,493,019 N/A N/A ------------------- ---------------------------------- -- ----------- ---------------- ---------- Jonathan Sharkey Other Registered Investment Companies 3 $ 3,689,871 N/A N/A Other Pooled Investment Vehicles 0 $ 0 N/A N/A Other Accounts 0 $ 0 N/A N/A ------------------- ---------------------------------- -- ----------- ---------------- ----------
POTENTIAL CONFLICTS OF INTEREST When a portfolio manager is responsible for the management of more than one account, the potential arises for the portfolio manager to favor one account over another. The principal types of potential conflicts of interest that may arise are discussed below. For the reasons outlined below, Pioneer does not believe that any material conflicts are likely to arise out of a portfolio manager's responsibility for the management of the fund as well as one or more other accounts. Although Pioneer has adopted procedures that it believes are reasonably designed to detect and prevent violations of the federal securities laws and to mitigate the potential for conflicts of interest to affect its portfolio management decisions, there can be no assurance that all conflicts will be identified or that all procedures will be effective in mitigating the potential for such risks. Generally, the risks of such conflicts of interest are increased to the extent that a portfolio manager has a financial incentive to favor one account over another. Pioneer has structured its compensation arrangements in a manner that is intended to limit such potential for conflicts of interest. See "Compensation of Portfolio Managers" below. o A portfolio manager could favor one account over another in allocating new investment opportunities that have limited supply, such as initial public offerings and private placements. If, for example, an initial 0 public offering that was expected to appreciate in value significantly shortly after the offering was allocated to a single account, that account may be expected to have better investment performance than other accounts that did not receive an allocation of the initial public offering. Generally, investments for which there is limited availability are allocated based upon a range of factors including available cash and consistency with the accounts' investment objectives and policies. This allocation methodology necessarily involves some subjective elements but is intended over time to treat each client in an equitable and fair manner. Generally, the investment opportunity is allocated among participating accounts on a pro rata basis. Although Pioneer believes that its practices are reasonably designed to treat each client in an equitable and fair manner, there may be instances where a fund may not participate, or may participate to a lesser degree than other clients, in the allocation of an investment opportunity. o A portfolio manager could favor one account over another in the order in which trades for the accounts are placed. If a portfolio manager determines to purchase a security for more than one account in an aggregate amount that may influence the market price of the security, accounts that purchased or sold the security first may receive a more favorable price than accounts that made subsequent transactions. The less liquid the market for the security or the greater the percentage that the proposed aggregate purchases or sales represent of average daily trading volume, the greater the potential for accounts that make subsequent purchases or sales to receive a less favorable price. When a portfolio manager intends to trade the same security on the same day for more than one account, the trades typically are "bunched," which means that the trades for the individual accounts are aggregated and each account receives the same price. There are some types of accounts as to which bunching may not be possible for contractual reasons (such as directed brokerage arrangements). Circumstances may also arise where the trader believes that bunching the orders may not result in the best possible price. Where those accounts or circumstances are involved, Pioneer will place the order in a manner intended to result in as favorable a price as possible for such client. o A portfolio manager could favor an account if the portfolio manager's compensation is tied to the performance of that account to a greater degree than other accounts managed by the portfolio manager. If, for example, the portfolio manager receives a bonus based upon the performance of certain accounts relative to a benchmark while other accounts are disregarded for this purpose, the portfolio manager will have a financial incentive to seek to have the accounts that determine the portfolio manager's bonus achieve the best possible performance to the possible detriment of other accounts. Similarly, if Pioneer receives a performance-based advisory fee, the portfolio manager may favor that account, whether or not the performance of that account directly determines the portfolio manager's compensation. o A portfolio manager could favor an account if the portfolio manager has a beneficial interest in the account, in order to benefit a large client or to compensate a client that had poor returns. For example, if the portfolio manager held an interest in an investment partnership that was one of the accounts managed by the portfolio manager, the portfolio manager would have an economic incentive to favor the account in which the portfolio manager held an interest. o If the different accounts have materially and potentially conflicting investment objectives or strategies, a conflict of interest could arise. For example, if a portfolio manager purchases a security for one account and sells the same security for another account, such trading pattern may disadvantage either the account that is long or short. In making portfolio manager assignments, Pioneer seeks to avoid such potentially conflicting situations. However, where a portfolio manager is responsible for accounts with differing investment objectives and policies, it is possible that the portfolio manager will conclude that it is in the best interest of one account to sell a portfolio security while another account continues to hold or increase the holding in such security. COMPENSATION OF PORTFOLIO MANAGERS Pioneer has adopted a system of compensation for portfolio managers that seeks to align the financial interests of the portfolio managers with those of shareholders of the accounts (including Pioneer funds) the portfolio managers manage, as well as with the financial performance of Pioneer. The compensation 1 program for all Pioneer portfolio managers includes a base salary (determined by the rank and tenure of the employee) and an annual bonus program, as well as customary benefits that are offered generally to all full-time employees. Base compensation is fixed and normally reevaluated on an annual basis. Pioneer seeks to set base compensation at market rates, taking into account the experience and responsibilities of the portfolio manager. The bonus plan is intended to provide a competitive level of annual bonus compensation that is tied to the portfolio manager achieving superior investment performance and align the interests of the investment professional with those of shareholders, as well as with the financial performance of Pioneer. Any bonus under the plan is completely discretionary, with a maximum annual bonus that may be in excess of base salary. The annual bonus is based upon a combination of the following factors: o QUANTITATIVE INVESTMENT PERFORMANCE. The quantitative investment performance calculation is based on pre-tax investment performance of all of the accounts managed by the portfolio manager (which includes the fund and any other accounts managed by the portfolio manager) over a one-year period (20% weighting) and four-year period (80% weighting), measured for periods ending on December 31. The accounts, which include the fund, are ranked against a group of mutual funds with similar investment objectives and investment focus (60%) and a broad-based securities market index measuring the performance of the same type of securities in which the accounts invest (40%), which, in the case of the fund, is the Merrill Lynch Global High Yield and Emerging Markets Index and the CSFB Leveraged Loan Index. As a result of these two benchmarks, the performance of the portfolio manager for compensation purposes is measured against the criteria that are relevant to the portfolio manager's competitive universe. o QUALITATIVE PERFORMANCE. The qualitative performance component with respect to all of the accounts managed by the portfolio manager includes objectives, such as effectiveness in the areas of teamwork, leadership, communications and marketing, that are mutually established and evaluated by each portfolio manager and management. o PIONEER RESULTS AND BUSINESS LINE RESULTS. Pioneer's financial performance, as well as the investment performance of its investment management group, affect a portfolio manager's actual bonus by a leverage factor of plus or minus (+/-) a predetermined percentage. The quantitative and qualitative performance components comprise 80% and 20%, respectively, of the overall bonus calculation (on a pre-adjustment basis). A portion of the annual bonus is deferred for a specified period and may be invested in one or more Pioneer funds. Certain portfolio managers participate in other programs designed to reward and retain key contributors. Senior executives or other key employees are granted performance units based on the stock price performance of UniCredit and the financial performance of Pioneer Global Asset Management S.p.A., which are affiliates of Pioneer. Portfolio managers also may participate in a deferred compensation program, whereby deferred amounts are invested in one or more Pioneer funds. SHARE OWNERSHIP BY PORTFOLIO MANAGERS The following table indicates as of April 30, 2016 the value, within the indicated range, of shares beneficially owned by the portfolio managers of the fund.
BENEFICIAL OWNERSHIP NAME OF PORTFOLIO MANAGER OF THE FUND* --------------------------- --------------------- Charles Melchreit A --------------------------- --------------------- Andrew Feltus E --------------------------- --------------------- Jonathan Sharkey B --------------------------- ---------------------
* Key to Dollar Ranges 2 A. None B. $1 - $10,000 C. $10,001 - $50,000 D. $50,001 - $100,000 E. $100,001 - $500,000 F. $500,001 - $1,000,000 G. Over $1,000,000
3 - The significant investment strategies for Pioneer Diversified High Income Trust (a closed-end fund) and certain other similarly managed accounts with investment objectives of a high level of current income, with a potential for capital appreciation as a secondary objective. The fund invests in a unique blend of higher yielding asset classes, including global high yield bonds, leveraged bank loans and event-linked bonds (cat bonds). Under normal market conditions, the fund invests at least 80% of its managed assets (net assets plus borrowings or other leverage for investment purposes) in diversified portfolio of below investment grade (high yield) debt securities, loans and preferred stocks. The fund allocates its investments principally among three sectors of the fixed income securities markets: (i) below investment grade debt securities and preferred stocks of U.S. and non-U.S. issuers, including governmental and corporate issuers in emerging markets ("global high yield debt securities"), (ii) floating rate loans and (iii) "event-linked" bonds, which sometimes are referred to as "insurance-linked" or "catastrophe" bonds. PIM believes that this actively managed, diversified portfolio of asset classes - global high yield debt securities, floating rate loans and event-linked bonds - may provide investors with a range of potential benefits across various market cycles and under various market conditions. These benefits include, among others, the potential to provide investors with a relatively high level of current income without undue risk as a result of the low correlation among these asset classes, reduced volatility due to limited exposure to interest rate and duration risk, as well as a favorable risk return profile. Specifically, the floating rate feature of both floating rate loans and event-linked bonds serves to reduce sensitivity to changes in prevailing interest rates. In addition, the introduction of event-linked bonds to the diversified portfolio enhances these benefits by reducing volatility, while providing the potential for above average returns. Moreover, the fund's investments in event-linked bonds offer investors access to a unique asset class that otherwise may be unavailable to them. The fund does not have a policy of maintaining a specific average credit quality or a targeted maturity range for its portfolio. The fund may invest any portion of its assets in securities and other instruments of non-U.S. issuers, including emerging market issuers, and may engage in certain strategic transactions. PIM is responsible for managing the fund's overall investment program, including allocating the fund's investments among the different asset classes and managing the fund's investments in global high income debt securities and floating rate loans. PIM considers both broad economic and issuer specific factors in selecting a portfolio designed to achieve the fund's investment objectives. PIM selects individual securities based upon the terms of the securities (such as yields compared to U.S. Treasuries or comparable issues), liquidity and rating, sector and issuer diversification. PIM also employs due diligence and fundamental quantitative and qualitative research to assess an issuer's credit quality, taking into account financial condition and profitability, future capital needs, potential for change in rating, industry outlook, the competitive environment and management ability. PIM may sell a portfolio security when it believes the security no longer will contribute to meeting the fund's investment objectives. PIM makes that determination based on the same criteria it uses to select portfolio securities. In making these portfolio decisions, PIM relies on the knowledge, experience and judgment of its staff and the staff of its affiliates who have access to a wide variety of research. The fund may use financial leverage on an ongoing basis for investment purposes by borrowing from banks through a revolving credit facility. Leverage creates special risks not associated with unleveraged funds having a similar investment objectives and policies. These include the possibility of higher volatility of both the net asset value of the fund and the value of assets serving as asset coverage for the preferred shares. 4 ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. (a) If the registrant is a closed-end management investment company, in the following tabular format, provide the information specified in paragraph (b) of this Item with respect to any purchase made by or on behalf of the registrant or any affiliated purchaser, as defined in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares or other units of any class of the registrant's equity securities that is registered by the registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. 781). During the period covered by this report, there were no purchases made by or on behalf of the registrant or any affiliated purchaser as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934 (the Exchange Act), of shares of the registrants equity securities that are registered by the registrant pursuant to Section 12 of the Exchange Act. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Describe any material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-R(17 CFR 229.407)(as required by Item 22(b)(15)) of Schedule 14A (17 CFR 240.14a-101), or this Item. There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant's board of directors since the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-R of Schedule 14(A) in its definitive proxy statement, or this item. ITEM 11. CONTROLS AND PROCEDURES. (a) Disclose the conclusions of the registrant's principal executive and principal financials officers, or persons performing similar functions, regarding the effectiveness of the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c))) as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act (17 CFR 270.30(a)-3(b) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)). The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures are effective based on the evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. (b) Disclose any change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17CFR 270.30a-3(d)) that occured during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. There were no significant changes in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. The registrant's principal executive officer and principal financial officer, however, voluntarily are reporting the following information: In August of 2006 the registrant's investment adviser enhanced its internal procedures for reporting performance information required to be included in prospectuses. Those enhancements involved additional internal controls over the appropriateness of performance data generated for this purpose. Such enhancements were made following an internal review which identified prospectuses relating to certain classes of shares of a limited number of registrants where, inadvertently, performance information not reflecting the deduction of applicable sales charges was included. Those prospectuses were revised, and the revised prospectuses were distributed to shareholders. ITEM 12. EXHIBITS. (a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. (2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)) , exactly as set forth below: Filed herewith. SIGNATURES [See General Instruction F] Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Pioneer Diversified High Income Trust By (Signature and Title)* /s/ Lisa M. Jones Lisa M. Jones, President & Chief Executive Officer Date June 28, 2016 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Lisa M. Jones Lisa M. Jones, President & Chief Executive Officer Date June 28, 2016 By (Signature and Title)* /s/ Mark E. Bradley Mark E. Bradley, Treasurer & Chief Accounting & Financial Officer Date June 28, 2016 * Print the name and title of each signing officer under his or her signature.