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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21448
Pioneer Municipal and Equity Income Trust
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: November 30
Date of reporting period: December 1, 2006 through November 30, 2007
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
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PIONEER
-------
MUNICIPAL
AND EQUITY
INCOME
TRUST*
PBF
Ticker Symbol
Annual
Report
11/30/07
[LOGO]PIONEER
Investments(R)
*Effective November 7, 2007, Pioneer Tax Advantaged Balanced Trust was renamed
Pioneer Municipal and Equity Income Trust
Table of Contents
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Letter to Shareowners 2
Portfolio Summary 4
Prices and Distributions 5
Performance Update 6
Portfolio Management Discussion 7
Schedule of Investments 13
Financial Statements 29
Notes to Financial Statements 34
Report of Independent Registered Public Accounting Firm 48
Results of Shareowner Meeting 49
Approval of Investment Advisory Agreement 51
Trustees, Officers and Service Providers 55
President's
Dear Shareowner,
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In November 2007, Pioneer Tax Advantaged Balanced Trust changed its name to
Pioneer Municipal and Equity Income Trust, to more clearly reflect its unique
investment strategy and tax benefits. The Board of Trustees believes the new
name better suggests the composition of the Trust's underlying portfolio, which
combines municipal bonds with qualified dividend-producing equity securities. In
addition, the new name may also better indicate the tax advantages provided by
the Trust's investment approach.
As a shareowner in Pioneer Municipal and Equity Income Trust, you are
participating in an innovative investment strategy that has generated an
increasing stream of tax-advantaged income. The Trust invests in a combination
of municipal bonds and qualified dividend-paying equity securities to generate
monthly distributions that have been subject to an average effective regular
federal income tax rate of less than 10%. The November distribution and
month-end market price, for example, represented a market price distribution
rate of 10.01%, which represents a 13.97% market price distribution rate on a
tax-equivalent basis.
The Trust's late 2007 market value performance was partially the result of a
series of actions taken by the Trust's Trustees to increase shareowner value. In
June, and again in October, the Trustees approved increases in the Trust's
monthly distribution stream totaling 72.9%, compared to the distribution rate
paid in June 2007. In part, these increases were achieved through a new level
distribution policy that allows the Trust to pay a higher monthly distribution
by supplementing earned income from the portfolio with a return of capital. (A
return of capital is a distribution that is not derived from income or capital
gains earnings from the Trust.) This new policy is designed to provide
shareowners with relatively high monthly distributions.
The Trust also has applied with the Securities and Exchange Commission for an
exemptive order that would allow it to include long-term capital gains in its
monthly distributions to shareholders. If approved, the Trust may be able to
further increase monthly distributions. Currently, funds may distribute
long-term capital gains only once a year, with limited exceptions.
In October, the Trustees approved another measure intended to increase the
Trust's net asset value and liquidity in the Trust's shares - a share repurchase
program. Under this plan, the Trust may purchase up to 10% of its outstanding
common shares through November 30, 2008, and 10% of its outstanding common
shares annually thereafter.
2
Letter
Together, these steps are designed to help increase the value and liquidity of
your investment. Thus far, the measures have worked well for the Trust, paving
the way for a higher monthly distribution level and improved stock market
performance, as the discount of the Trust's share price to net asset value has
narrowed from of 13.4% on November 30, 2006 to 9.5% one year later. This
narrowing demonstrates enhanced market value to shareowners.
We appreciate your interest in Pioneer Municipal and Equity Income Trust. As
always, we encourage you to work closely with your financial advisor to find the
mix of stocks, bonds and money market assets that is best aligned to your
particular risk tolerance and investment objective.
Respectfully,
/s/Daniel K. Kingsbury
Daniel K. Kingsbury
President and CEO
Pioneer Investment Management USA Inc.
There can be no assurance as to whether or when the Securities and Exchange
Commission would grant the exemptive order or as to the conditions to which any
order would be subject.
The Trust's tax-equivalent distribution rate is based on the blended effective
tax rate applicable to the Trust's income distributions as of September 30,
2007, assuming the recipient is taxed at the maximum 35% federal personal income
tax rate. A portion of the Trust's distributions may be subject to the
alternative minimum tax, which would reduce the tax-oriented benefits of the
Trust to an investor who is subject to that tax.
Any information in this shareowner report regarding market or economic trends or
the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized. Please consider the Trust's
investment objectives, risks, charges and expenses. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read
the information carefully.
3
Pioneer Municipal and Equity Income Trust
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PORTFOLIO SUMMARY 11/30/07
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Portfolio Maturity
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(As a percentage of total debt holdings)
[THE FOLLOWING DATA IS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
0-1 Year 3.3%
1-3 Years 4.3%
3-6 Years 43.7%
6-8 Years 7.4%
8-10 Years 1.4%
10+ Years 39.9%
Portfolio Diversification
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(As a percentage of total investment portfolio)
[THE FOLLOWING DATA IS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Tax-Exempt Obligations 53.6%
Common Stocks 27.1%
Non-Convertible Preferred Stocks 15.9%
Convertible Preferred Stocks 2.2%
Temporary Cash Investment 1.2%
The portfolio is actively managed, and current holdings may be different.
10 Largest Holdings
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(As a percentage of total long-term holdings)*
1. Verizon Communications, Inc. 2.96%
2. Loews Corp. - Carolina Group 2.59
3. Merck & Co., Inc. 2.16
4. Georgia Municipal Electric Authority Power Revenue, RIB,
7.497%, 1/1/20 (144A) 1.97
5. Altria Group, Inc. 1.75
6. Atmos Energy Corp. 1.74
7. Windstream Corp. 1.72
8. Bristol-Myers Squibb Co. 1.64
9. Golden State Tobacco Securitization Corp., RIB, 6.828%,
6/1/45 (144A) 1.48
10. Garden State Preservation Trust, RIB, 10.703%, 11/1/22 (144A) 1.44
* This list excludes temporary cash 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.
4
Pioneer Municipal and Equity Income Trust
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PRICES AND DISTRIBUTIONS
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Share Prices and Distributions
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Market Price 11/30/07 11/30/06
per Common Share $13.41 $14.00
Net Asset Value
per Common Share $14.82 $16.17
Market Discount 9.5% 13.4%
Net
Distributions Investment Short-Term Long-Term
per Common Share Income Capital Gains Capital Gains
(12/1/06 - 11/30/07) $0.8539 $ - $0.0951
Yields
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11/30/07 11/30/06
Distribution
Yield at Market Price 6.37% 4.77%
Distribution Yield at
Net Asset Value 5.76% 4.13%
30-Day SEC Yield 11.35% 7.05%
The performance data quoted represents past performance, which is no guarantee
of future results.
Note: Under generally accepted accounting principles ("GAAP"), the Trust records
----
income and expense ratably during its fiscal year. The Trust made distributions
during its latest fiscal year that were in excess of its income net of its
expenses. As required by GAAP, at year end the Trust converts its earnings
accounts on its statement of assets and liabilities to tax basis under federal
income tax rules. Under those federal tax rules, the $2,324,009 ($0.08 per
share) of expenses incurred by the Trust during the fiscal year that is
allocated to the production of tax-exempt income is disallowed as a deduction in
computing earnings available for distribution. As a result of the foregoing,
$2,324,009 of distributions made during the fiscal year ended November 30, 2007
are taxable as ordinary income though on a pure economic basis, since the Trust
actually incurred those expenses, $2,324,009 of capital was distributed by the
Trust during the year. Under GAAP, due to the conversion of the Trust's capital
accounts to tax basis at November 30, 2007, no return of capital is reported in
the accompanying financial statements.
5
Pioneer Municipal and Equity Income Trust
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PERFORMANCE UPDATE 11/30/07
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Investment Returns
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The mountain chart on the right shows the change in market value, including
reinvestment of dividends and distributions, of a $10,000 investment made in
common shares of Pioneer Municipal and Equity Income Trust, compared to that of
the Lehman Brothers Municipal Bond Index and the S&P 500 Index.
Cumulative Total Returns
(As of November 30, 2007)
Net
Asset
Value Market
Period (NAV) Price
Life-of-Trust
(1/30/04) 29.83% 12.23%
1 Year -2.12 2.30
[THE FOLLOWING DATA IS REPRESENTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer Municipal and Lehman Brothers Standard & Poor's
Equity Income Trust Municipal Bond Index 500 Index
1/04 10,000 10,000 10,000
11/04 8,374 10,263 10,529
11/05 9,008 10,662 11,418
11/06 10,970 11,314 13,041
11/07 11,223 11,621 14,048
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
Performance data shown represents past performance. Past performance is no
guarantee of future results. Investment return and market price will fluctuate,
and your shares may trade below net asset value ("NAV"), due to such factors as
interest rate changes, and the perceived credit quality of borrowers.
Total investment return does not reflect broker sales charges or commissions.
All performance is for common shares of the Trust.
Closed-end funds, unlike open-end funds, are not continuously offered. There is
a one-time public offering and once issued, shares of closed-end funds are sold
in the open market through a stock exchange and frequently trade at prices lower
than their NAV. NAV is total assets less total liabilities, which includes
preferred shares, divided by the number of common shares outstanding.
When NAV is lower than market price, dividends are assumed to be reinvested at
the greater of NAV or 95% of the market price. When NAV is higher, dividends are
assumed to be reinvested at prices obtained under the Trust's dividend
reinvestment plan.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Trust distributions or the redemption of Trust
shares.
Index comparisons begin January 31, 2004. The Lehman Brothers Municipal Bond
Index is a broad measure of the municipal bond market. The Standard & Poor's 500
Stock Index (the S&P 500) is a commonly used measure of the broad U.S. stock
market. Index returns are calculated monthly, assume reinvestment of dividends
and, unlike Trust returns, do not reflect any fees, expenses or charges. You
cannot invest directly in an index.
6
Pioneer Municipal and Equity Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 11/30/07
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During the fiscal year ended November 30, 2007, the Trustees voted to change the
name of Pioneer Tax Advantaged Balance Trust to Pioneer Municipal and Equity
Income Trust, a name that the Trustees believe better reflects the composition
of the Trust's underlying portfolio, which combines municipal bonds and
qualified dividend-producing equity securities. In June 2007, the Trustees
adopted a level-distribution policy, which may include a return of capital
component. In the following interview, David Eurkus, who is responsible for the
Trust's fixed-income investments, and Walter Hunnewell, Jr., who is responsible
for the Trust's equity investments, discuss the Trust's investment strategy and
outlook.
Q: How did the Trust perform over the 12 months ended November 30, 2007?
A: For the 12-month period ended November 30, 2007, Pioneer Municipal and
Equity Income Trust returned -2.12% at net asset value and 2.30% at market
price. As of November 30, 2007, the Trust was selling at a discount of
market price to net asset value of 9.5%. For the same 12-month period, the
Lehman Brothers Municipal Bond Index returned 2.71%, and the S&P 500 Index
returned 7.72%.
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Q: What was the investment environment like for fixed-income and equity
securities during the 12-month period ended November 30, 2007?
A: The major event of the year was the mid-summer turmoil in the fixed-income
markets, which was triggered by concerns that weakness in the financial
sector, which resulted from write-downs of subprime mortgage debt, would
spread to the wider economy. In that environment, market participants
generally gravitated toward the safest investments and both bonds and
stocks declined.
7
Pioneer Municipal and Equity Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 11/30/07 (continued)
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When it appeared that the loss of confidence in debt collateral could
result in a credit crunch, the Federal Reserve ("Fed") stepped in and
lowered short-term interest rates on two occasions during the fiscal year
for a total of three-quarters of a percentage point. (The Fed also trimmed
interest rates by one-quarter percentage point on December 11.) The central
bank's actions had a calming effect on the financial markets, and
fixed-income and equity prices stabilized. While the financial markets were
volatile for the remainder of the fiscal year, both bonds and stocks ended
the period with positive returns.
Q: What were the principal strategies used in managing the Trust during the
12-month period ended November 30, 2007?
A: We continued to focus on providing tax-favored income from a mix of about
55% municipal bonds and 45% qualified dividend income (QDI) dividend-paying
equity securities during the period. The emphasis of the fixed-income
portion of the Trust remained on sectors that underpin the economy, with
the largest positions being in bonds related to the health care sector and
other various revenue bonds on which the payment of interest and principal
depends on revenues generated from the particular asset that the bond was
issued to finance. About 22% of the Trust's fixed-income investments were
insured as of November 30, 2007, which means that the interest and
principal of those AAA-rated securities are guaranteed by private insurance
companies. Below investment-grade bonds accounted for almost 19% of the
Trust's fixed-income assets as of November 30, 2007. On November 30, 2007,
the Trust had 124 fixed-income issues in 38 states, territories and the
District of Columbia. The average credit quality of the fixed-income
holdings was A as of November 30, 2007, compared with A- on May 31, 2007.
In the equity portion of the Trust, the focus continued to be on higher QDI
dividend-paying common and preferred equities. At period-end, the split
between preferred and common stocks was 40%/60%. Financial companies, which
typically pay healthy dividends, accounted for 36% of the equity portion of
the Trust. Moreover, approximately three-quarters of the Trust's preferred
equities were in the financials sector and, while diversified across many
different securities, these holdings, which trade like fixed-income
securities, reacted to the late summer tumult in the credit
8
Pioneer Municipal and Equity Income Trust
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markets. Where appropriate, we made some changes to the preferred holdings
to strengthen the Trust's portfolio; but our view is that the credit
markets dislocation will eventually pass, and the value of the Trust's
high-quality, preferred holdings will be recognized. The Trust's common
equity holdings in the financial sector have always de-emphasized large,
diversified financial institutions. Nonetheless, the nation-wide weakness
in real estate values had an adverse effect on many of the Trust's bank
holdings, such as KeyCorp, National City, and most notably Washington
Mutual. We sold National City late in the period and Washington Mutual
shortly after fiscal year end. The utilities sector, at 16% of equities on
November 30, 2007, was the next-largest weighting after financials.
Telecommunications services (15%), consumer staples (13%) and health care
(8%) rounded out the top-five equity sector concentrations at period-end.
Among the changes in common equities during the period, we sold Great
Plains Energy out of concern for risks related to that company's future
capital expenditures. We purchased Diamond Offshore Drilling, a mid- and
deep-water oil drilling company with a good historical record of returning
cash to shareholders. Another addition was B&G Foods, which manufactures an
offering of food products, all with strong regional brand identification.
Near period-end we added a convertible preferred of Avery Dennison, a
leading manufacturer of pressure-sensitive and office product materials.
On November 30, 2007, 28.9% of the Trust was leveraged, which means that
the Trust borrowed and invested those funds in high-yielding securities.
Short-term rates declined over the fiscal period. However, a rise in
short-term rates in the future would add to the Trust's borrowing costs,
and the ability to sustain present dividend levels could be affected.
Should short-term rates continue to decline, the cost of borrowing would go
down, providing the Trust with a modest amount of additional income.
Q: What affected the Trust's performance during the 12-month period ended
November 30, 2007?
A: Remaining fully invested in municipal securities contributed to the Trust's
tax-free income and principal appreciation during the period. However, the
performance of below investment-grade bonds during the period held back
results, as investors sought high quality securities above everything else
in response to the
9
Pioneer Municipal and Equity Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 11/30/07 (continued)
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market volatility created by the subprime mortgage debacle. A reduction in
investor demand for municipal securities was also a factor in the Trust's
underperformance during the period.
In the equity portion of the Trust, some of the strongest contributions to
absolute performance during the period came from more defensive names in
consumer staples, health care and telecommunications. As tobacco litigation
risks receded, Carolina Group, the tobacco tracking stock of Lowes, and
Altria Group posted total returns of 46% and 27%, respectively, for the
period. In health care, Merck added substantially to performance because of
good results in the vaccine area, and Bristol-Myers Squibb did well after
weathering a patent challenge. In telecommunications, AT&T and Verizon
helped boost return.
Detractors from returns during the period centered on the Trust's financial
holdings. Washington Mutual (-53%) did poorly due to market fears of its
subprime mortgage exposure. As noted, the stock was sold shortly after
period-end. Preferred holdings Scottish Re Group (-45%) and SLM Holdings
(-17%) also held back results, due to concerns with subprime exposure in
the companies' investment portfolios and private equity deals in an
unfavorable debt market. Both stocks remained in the portfolio at November
30, 2007 because we believe they have the potential to do well in the
future and continue to pay their dividends. In the utility sector, Atmos
Energy (-17%) lost ground compared to other utility stocks during the
period because of its lack of exposure to unregulated power generation. The
Trust continued to hold the stock at November 30, 2007 for its dividend and
because we believe the company has attractive opportunities in its natural
gas pipeline businesses.
Q: What is your outlook?
A: We expect to see further weakness in the economy and believe that the Fed
is likely to continue lowering short-term interest rates well into 2008. A
decline in rates would likely enhance the value of the fixed-income
securities in the portfolio and would make equities more attractive to
investors. In the equity markets, we plan to maintain our focus on
preferred and common stocks that emphasize dividend yield. As has always
been the case, we will seek diversification and the potential for long-term
capital return.
10
Pioneer Municipal and Equity Income Trust
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Our view is that when the economy moderates, the credit market concerns
that have depressed the Trust's preferred holdings should ease, and we
should see some price appreciation. When investing in common equities, we
will continue to seek opportunities that strengthen the portfolio and that
have the potential to benefit from improving economic growth over the long
term.
Information regarding the Trust's principal investment risks is contained
in the Trust's prospectus. Please refer to those documents when considering
the Trust's risks.
There can be no assurance as to the portion of the Trust's dividends that
will be tax-exempt or tax-qualified.
A portion of income may be subject to state, federal, and/or alternative
minimum tax. Capital gains, if any, are subject to a capital gains tax.
When interest rates rise, the prices of fixed-income securities in the
Trust will generally fall. Conversely, when interest rates fall the prices
of fixed-income securities in the Trust will generally rise. By
concentrating in municipal securities, the portfolio is more susceptible to
adverse economic, political or regulatory developments than is a portfolio
that invests more broadly. Investments in the Trust are subject to possible
loss due to the financial failure of underlying securities and their
inability to meet their debt obligations.
The Trust may invest in derivative securities, which may include futures
and options. These types of instruments can increase price fluctuation.
The Trust currently uses leverage through the issuance of preferred shares.
The Trust is also authorized to borrow from banks and to issue debt
securities, which are other forms of leverage. Leverage creates significant
risks, including the risk that the Trust's income or capital appreciation
will not be sufficient to cover the cost of leverage, which may adversely
affect the return of the holders of common shares.
11
Pioneer Municipal and Equity Income Trust
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PORTFOLIO MANAGEMENT DISCUSSION 11/30/07 (continued)
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Any information in this shareowner report regarding market or economic trends or
the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
the market forecasts discussed will be realized.
12
Pioneer Municipal and Equity Income Trust
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SCHEDULE OF INVESTMENTS 11/30/07
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S&P/Moody's
Principal Ratings
Amount (unaudited) Value
TAX EXEMPT OBLIGATIONS - 75.8% of Net Assets
Alabama - 1.4%
$ 5,000,000 NR/NR Huntsville-Redstone Village Special Care
Facilities Financing Authority, 5.5%, 1/1/43 $ 4,475,400
1,500,000 NR/NR Sylacauga Health Care Authority Revenue,
6.0%, 8/1/35 1,477,950
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$ 5,953,350
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Arizona - 1.0%
1,000,000 BBB/Baa1 Maricopa County Hospital Revenue,
5.0%, 4/1/35 $ 939,040
470,000+ NR/Baa3 Pima County Industrial Development Authority,
6.375%, 7/1/31 537,750
530,000 NR/Baa3 Pima County Industrial Development Authority,
6.375%, 7/1/31 547,008
989,000 NR/Baa3 Pima County Industrial Development Authority,
6.75%, 7/1/31 1,023,160
1,000,000+ NR/NR Pima County Industrial Development Authority,
7.5%, 7/1/34 1,199,670
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$ 4,246,628
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California - 5.2%
1,000,000 A/A2 California Health Facilities Authority Revenue,
5.25%, 7/1/23 $ 1,030,230
9,000,000 BBB/Baa3 Golden State Tobacco Securitization Corp.,
5.125%, 6/1/47 7,602,390
4,000,000+ AAA/Aaa Golden State Tobacco Securitization Corp.,
6.75%, 6/1/39 4,650,360
9,655,000(a) NR/A3 Golden State Tobacco Securitization Corp.,
RIB, 6.828%, 6/1/45 (144A) 8,815,787
------------
$ 22,098,767
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Colorado - 0.7%
3,000,000 NR/NR Colorado Educational & Cultural Facilities
Authority Revenue, 5.5%, 6/1/37 (144A) $ 2,837,190
------------
Connecticut - 0.3%
1,500,000 BB/NR Mohegan Tribe Indians Gaming Authority,
5.25%, 1/1/33 (144A) $ 1,374,930
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District of Columbia - 1.0%
4,000,000 BBB/Baa3 District of Columbia Tobacco Settlement
Financing Corp., 6.75%, 5/15/40 $ 4,093,760
------------
The accompanying notes are an integral part of these financial statements. 13
Pioneer Municipal and Equity Income Trust
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SCHEDULE OF INVESTMENTS 11/30/07 (continued)
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S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Florida - 4.1%
$ 1,105,000 A+/A1 Highlands County Health Facilities Authority
Revenue, 5.0%, 11/15/24 $ 1,119,453
5,000,000+ NR/A1 Highlands County Health Facilities Authority
Revenue, 6.0%, 11/15/25 5,581,250
2,000,000 BB/NR Lee County Industrial Development Authority
Revenue, 5.375%, 6/15/37 1,787,520
585,000 NR/NR Madison County First Mortgage Revenue,
6.0%, 7/1/25 576,477
2,025,000 BB+/NR Miami Beach Health Facilities Authority
Revenue, 5.375%, 11/15/28 1,815,129
500,000 BB+/Ba1 Miami Beach Health Facilities Authority
Revenue, 6.7%, 11/15/19 523,105
1,400,000 NR/NR Orange County Health Facilities Authority
Revenue, 5.5%, 7/1/38 1,300,530
3,970,000(a) NR/Aaa Tampa-Hillsborough County Expressway
Authority Revenue, RIB, 7.653%,
7/1/23 (144A) 4,670,268
------------
$ 17,373,732
------------
Georgia - 4.1%
9,580,000(a) NR/Aaa Georgia Municipal Electric Authority Power
Revenue, RIB, 7.497%, 1/1/20 (144A) $ 11,720,938
2,500,000+ AAA/NR Milledgeville-Baldwin County Development
Authority Revenue, 5.5%, 9/1/24 2,822,850
2,500,000+ AAA/NR Milledgeville-Baldwin County Development
Authority Revenue, 5.625%, 9/1/30 2,841,525
------------
$ 17,385,313
------------
Illinois - 4.1%
3,000,000 AAA/Aaa Chicago Illinois General Obligation,
5.0%, 1/1/28 $ 3,104,790
4,580,000 NR/A3 Illinois Development Finance Authority
Revenue, 5.25%, 10/1/24 4,669,173
5,000,000 AA+/Aaa Illinois Educational Facilities Authority
Revenue, 5.0%, 12/1/38 5,135,500
2,000,000 AA+/Aa2 Illinois Finance Authority Revenue,
5.5%, 8/15/43 2,091,400
2,055,000(a) NR/Aa2 Illinois Finance Authority Revenue, RIB,
9.313%, 8/15/43 (144A) 2,374,306
------------
$ 17,375,169
------------
14 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal and Equity Income Trust
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S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Indiana - 2.7%
$5,000,000 A+/A2 Indiana Health & Educational Facilites
Financing Authority Hospital Revenue,
5.0%, 2/15/39 $ 4,831,100
4,135,000 BBB+/Ba1 Indiana State Development Finance Authority
Revenue, 5.75%, 10/1/11 4,189,913
2,570,000 NR/NR Vigo County Hospital Authority Revenue,
5.8%, 9/1/47 (144A) 2,369,129
------------
$ 11,390,142
------------
Iowa - 0.9%
4,000,000 NR/NR Iowa Financing Authority Senior Housing
Revenue, 5.625%, 12/1/45 $ 3,670,880
------------
Kansas - 0.6%
750,000 NR/NR Manhattan Health Care Facilities Revenue,
5.125%, 5/15/37 $ 689,768
2,000,000 NR/NR Manhattan Health Care Facilities Revenue,
5.125%, 5/15/42 1,818,920
------------
$ 2,508,688
------------
Louisiana - 3.1%
5,000,000 NR/A3 Louisiana Public Facilities Authority Revenue,
5.5%, 5/15/47 $ 4,978,250
8,335,000 BBB/Baa3 Tobacco Settlement Financing Corp.,
5.875%, 5/15/39 8,062,446
------------
$ 13,040,696
------------
Maryland - 1.8%
3,000,000 BBB-/Baa3 Frederick County Educational Facilities
Revenue, 5.625%, 9/1/38 $ 3,045,270
1,000,000 NR/NR Maryland State Economic Development
Revenue, Series A, 5.0%, 12/1/16 978,740
660,000 NR/NR Maryland State Economic Development
Revenue, Series B, 5.0%, 12/1/16 645,968
1,000,000 NR/NR Maryland State Economic Development
Revenue, 5.0%, 12/1/31 889,930
2,000,000 A/A2 Maryland State Health & Higher Educational
Facilities Authority Revenue,
5.125%, 7/1/34 2,013,800
------------
$ 7,573,708
------------
The accompanying notes are an integral part of these financial statements. 15
Pioneer Municipal and Equity Income Trust
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SCHEDULE OF INVESTMENTS 11/30/07 (continued)
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Massachusetts - 4.2%
$4,500,000 AA/NR Massachusetts Health & Educational Facilities
Authority Revenue, 4.625%, 8/15/28 $ 4,083,705
2,000,000 AA+/Aa1 Massachusetts Health & Educational Facilities
Authority Revenue, 5.0%, 7/1/33 2,055,500
1,550,000 BBB-/Baa3 Massachusetts Health & Educational Facilities
Authority Revenue, 5.25%, 7/15/18 1,556,309
1,600,000 BBB/NR Massachusetts Health & Educational Facilities
Authority Revenue, 5.45%, 11/15/23 1,614,976
2,120,000 BBB/Baa3 Massachusetts Health & Educational Facilities
Authority Revenue, 5.625%, 7/1/20 2,148,896
900,000 BBB/Baa3 Massachusetts Health & Educational Facilities
Authority Revenue, 6.25%, 7/1/22 947,061
2,750,000 BBB/Baa2 Massachusetts Health & Educational Facilities
Authority Revenue, 6.625%, 7/1/32 2,871,523
500,000 BBB-/NR Massachusetts State Development Finance
Agency, 5.5%, 1/1/35 488,280
1,100,000 BBB/Baa2 Massachusetts State Development Finance
Agency, 5.625%, 10/1/24 1,129,700
1,000,000 BBB/Baa2 Massachusetts State Development Finance
Agency, 5.7%, 10/1/34 1,013,910
------------
$ 17,909,860
------------
Michigan - 2.9%
5,000,000 BB/NR Macomb County Hospital Finance Authority
Revenue, 5.875%, 11/15/34 $ 4,851,900
1,595,000 NR/NR Meridian Economic Development Corporate
Ltd. Obligation Revenue, 5.25%, 7/1/26 1,447,048
3,340,000 NR/NR Michigan Public Educational Facilities Authority
Revenue, 5.875%, 6/1/37 3,147,416
2,000,000 NR/NR Michigan State Hospital Finance Authority
Revenue, 5.25%, 11/15/25 1,934,500
1,000,000 NR/NR Michigan State Hospital Finance Authority
Revenue, 5.5%, 11/15/35 961,380
------------
$ 12,342,244
------------
Minnesota - 1.3%
2,000,000 A-/NR Duluth Economic Development Authority
Health Care Facilities Revenue,
5.25%, 2/15/28 $ 2,019,880
1,500,000 A-/NR Duluth Economic Development Authority
Health Care Facilities Revenue,
5.25%, 2/15/33 1,506,180
16 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Minnesota - (continued)
$ 1,000,000 NR/NR North Oaks Senior Housing Revenue,
6.0%, 10/1/33 $ 1,007,650
1,000,000 NR/NR North Oaks Senior Housing Revenue,
6.5%, 10/1/47 1,030,610
------------
$ 5,564,320
------------
Missouri - 0.4%
1,720,000 AA/Aa3 Missouri State Health & Educational Authority
Health Facilities Revenue, 5.25%, 8/15/28 $ 1,721,789
------------
Montana - 0.2%
1,000,000 NR/A3 Montana Finance Authority Hospital Facilities
Revenue, 5.0%, 6/1/24 $ 1,012,730
------------
Nebraska - 1.3%
4,980,000(a) NR/Aaa Nebraska Public Power District Revenue, RIB,
7.645%, 1/1/41 (144A) $ 5,407,931
------------
Nevada - 0.4%
1,500,000 A/A2 Henderson Nevada Health Care Facilities
Revenue, 5.625%, 7/1/24 $ 1,571,685
------------
New Hampshire - 0.6%
1,700,000+ NR/NR New Hampshire Business Finance Authority
Revenue, 6.05%, 9/1/29 $ 1,772,403
1,000,000 A+/A2 New Hampshire Health & Education Facilities
Authority Revenue, 5.75%, 10/1/31 1,035,500
------------
$ 2,807,903
------------
New Jersey - 5.7%
1,250,000 BBB/Baa3 Camden County Improvement Authority
Revenue, 5.75%, 2/15/34 $ 1,277,050
5,920,000(a) NR/Aaa Garden State Preservation Trust, RIB,
10.703%, 11/1/22 (144A) 8,550,730
710,000 NR/NR New Jersey Economic Development Authority
Revenue, 5.75%, 1/1/25 709,957
1,000,000 NR/NR New Jersey Economic Development Authority
Revenue, 5.875%, 1/1/37 980,140
1,000,000 BB/Ba2 New Jersey Health Care Facilities Financing
Authority Revenue, 5.125%, 7/1/14 949,270
5,000,000 BBB/Baa1 New Jersey Health Care Facilities Financing
Authority Revenue, 5.375%, 7/1/33 4,941,500
3,500,000 NR/NR New Jersey Health Care Facilities Financing
Authority Revenue, 7.25%, 7/1/27 3,555,965
The accompanying notes are an integral part of these financial statements. 17
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 11/30/07 (continued)
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
New Jersey - (continued)
$ 3,000,000+ AAA/Aaa Tobacco Settlement Financing Corp.,
6.25%, 6/1/43 $ 3,426,120
------------
$ 24,390,732
------------
New Mexico - 0.6%
1,000,000 AA/NR Dona Ana County PILT Revenue,
5.25%, 12/1/25 $ 1,009,320
1,500,000 NR/A3 Farmington New Mexico Hospital Revenue,
5.0%, 6/1/23 1,511,580
------------
$ 2,520,900
------------
New York - 4.3%
2,000,000 NR/NR Dutchess County Industrial Development
Agency Revenue, 7.5%, 3/1/29 $ 2,150,000
1,000,000 NR/Aa1 New York City Industrial Development Agency,
5.0%, 7/1/27 1,038,000
1,000,000 NR/Aa1 New York City Industrial Development Agency,
5.25%, 7/1/24 1,063,380
5,000,000 AA-/A1 Port Authority of New York & New Jersey
Revenue, 5.0%, 9/1/38 5,115,750
1,000,000 NR/NR Suffolk County Industrial Development
Agency Civic Facilities Revenue, 5.5%,
1/1/37 (144A) 898,750
4,900,000 AAA/Aaa Triborough Bridge & Tunnel Authority,
5.25%, 11/15/30 5,142,305
3,000,000 NR/NR Ulster County Industrial Development Agency
Civic Facility Revenue, 6.0%, 9/15/27 2,945,190
------------
$ 18,353,375
------------
North Carolina - 0.7%
1,000,000 AA/Aa3 North Carolina Capital Facilities Finance
Agency Student Revenue, 5.0%, 6/1/27 $ 990,170
1,000,000 AA/Aa3 North Carolina Capital Facilities Finance
Agency Student Revenue, 5.0%, 6/1/32 964,420
1,000,000 NR/NR North Carolina Medical Care Commission
Health Care Facilities Revenue,
5.0%, 11/1/23 994,530
------------
$ 2,949,120
------------
18 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Ohio - 1.7%
$ 3,000,000+ AAA/Aaa Columbus City School District, 5.0%, 12/1/32 $ 3,287,100
1,500,000 NR/NR Cuyahoga County Health Care & Independent
Living Facilities Revenue, 6.0%, 5/15/37 1,455,630
1,500,000 NR/NR Cuyahoga County Health Care & Independent
Living Facilities Revenue, 6.0%, 5/15/42 1,438,980
1,000,000 AAA/Aaa Hamilton County Hospital Facilities Revenue,
5.125%, 5/15/28 1,024,540
------------
$ 7,206,250
------------
Oregon - 0.7%
2,935,000 NR/Aaa Oregon State Housing & Community
Services Department Multi-Family
Revenue, 6.0%, 7/1/31 $ 2,969,251
------------
Pennsylvania - 2.9%
5,000,000+ AAA/Aaa Pennsylvania State Turnpike Commission Oil
Franchise Tax Revenue, 5.0%, 12/1/31 $ 5,436,750
2,315,000+ A/NR Sayre Health Care Facilities Authority
Revenue, 5.875%, 12/1/31 2,555,297
685,000 A/NR Sayre Health Care Facilities Authority
Revenue, 5.875%, 12/1/31 717,832
280,000 B-/NR Scranton-Lackawanna Health and Welfare
Authority Hospital Revenue, 5.9%, 7/1/08 280,846
700,000 B-/NR Scranton-Lackawanna Health and Welfare
Authority Hospital Revenue, 6.0%, 7/1/09 706,160
460,000 B-/NR Scranton-Lackawanna Health and Welfare
Authority Hospital Revenue, 6.05%, 7/1/10 464,043
2,165,000 AA+/Aaa Swarthmore Borough Authority College
Revenue, 5.0%, 9/15/31 2,222,762
------------
$ 12,383,690
------------
Puerto Rico - 1.2%
5,000,000 BBB-/Baa3 Puerto Rico Public Buildings Authority
Revenue, 5.25%, 7/1/33 $ 5,038,500
------------
Rhode Island - 1.1%
1,640,000 BBB/Baa3 Tobacco Settlement Financing Corp.,
6.125%, 6/1/32 $ 1,667,732
3,100,000 BBB/Baa3 Tobacco Settlement Financing Corp.,
6.25%, 6/1/42 3,112,028
------------
$ 4,779,760
------------
The accompanying notes are an integral part of these financial statements. 19
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 11/30/07 (continued)
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
South Carolina - 4.1%
$ 6,000,000 A-/A3 Berkeley County School District Installment
Lease, 5.0%, 12/1/28 $ 6,068,160
5,000,000 AAA/Aaa Florence County Hospital Revenue,
5.25%, 11/1/34 5,142,800
3,500,000+ A+/A2 Lexington County Health Services District, Inc.,
Hospital Revenue, 5.5%, 11/1/32 3,869,250
2,500,000 A-/A3 South Carolina Jobs Economic Development
Authority Revenue, 5.5%, 11/15/23 2,583,025
------------
$ 17,663,235
------------
Tennessee - 0.6%
2,500,000 NR/Ba2 Knox County Health Educational & Housing
Facilities Board Hospital Revenue,
6.5%, 4/15/31 $ 2,548,450
------------
Texas - 5.1%
1,552,000 NR/Aaa Houston Housing Financing Corp.,
6.25%, 9/20/31 $ 1,643,335
2,885,000(a) NR/Aaa Houston Utility System Revenue, RIB,
8.453%, 5/15/24 (144A) 3,491,542
2,750,000 AAA/Aaa Lower Colorado River Authority,
5.0%, 5/15/31 2,818,310
1,711,000 NR/Aaa Panhandle Regional Housing Finance Corp.,
6.6%, 7/20/31 1,846,751
3,000,000 BBB/Baa2 Richardson Hospital Authority, 6.0%, 12/1/34 3,109,890
1,000,000 BBB/NR Seguin Higher Education Facilities Corp.
Revenue, 5.0%, 9/1/23 993,460
1,500,000 NR/Baa3 Texas State Student Housing Revenue,
6.5%, 9/1/34 1,565,460
3,000,000 NR/NR Willacy County Local Government Corp.
Revenue, 6.0%, 9/1/10 3,054,870
3,000,000 NR/NR Willacy County Local Government Corp.
Revenue, 6.875%, 9/1/28 3,160,860
------------
$ 21,684,478
------------
Vermont - 0.3%
1,295,000 AA/Aa3 Vermont Educational & Health Buildings
Financing Agency Revenue, 5.0%, 7/1/24 $ 1,284,860
------------
20 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Virginia - 1.3%
$1,500,000 NR/A3 Prince William County Industrial Development
Hospital Revenue, 5.2%, 10/1/26 $ 1,529,865
3,925,000 NR/A3 Prince William County Industrial Development
Hospital Revenue, 5.35%, 10/1/36 3,992,000
------------
$ 5,521,865
------------
Washington - 2.4%
3,000,000 AAA/Aaa King County Washington Sewer Revenue,
5.0%, 1/1/35 $ 3,080,700
7,000,000 BBB/Baa3 Tobacco Settlement Authority Revenue,
6.625%, 6/1/32 7,153,230
------------
$ 10,233,930
------------
Wisconsin - 0.8%
3,500,000 BBB+/NR Wisconsin State Health & Educational
Facilities Authority Revenue,
5.6%, 2/15/29 $ 3,518,970
------------
TOTAL TAX-EXEMPT OBLIGATIONS
(Cost $315,754,086) (b) $322,308,781
------------
Shares
COMMON STOCKS - 38.3% of Net Assets
Energy - 1.3%
Oil & Gas Drilling - 0.5%
19,566 Diamond Offshore Drilling, Inc. $ 2,278,069
------------
Oil & Gas Storage & Transportation - 0.8%
142,876 Spectra Energy Corp. $ 3,520,465
------------
Total Energy $ 5,798,534
------------
Materials - 0.9%
Diversified Chemicals - 0.4%
94,000 Olin Corp. $ 1,968,360
------------
Diversified Metals & Mining - 0.5%
56,012 Compass Minerals International, Inc. $ 2,056,761
------------
Total Materials $ 4,025,121
------------
Commercial Services & Supplies - 0.7%
Commercial Printing - 0.7%
79,034 R.R. Donnelley & Sons Co. $ 2,897,386
------------
Total Commercial Services & Supplies $ 2,897,386
------------
The accompanying notes are an integral part of these financial statements. 21
Pioneer Municipal and Equity Income Trust
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SCHEDULE OF INVESTMENTS 11/30/07 (continued)
--------------------------------------------------------------------------------
Shares Value
Consumer Durables & Apparel - 0.2%
Home Furnishings - 0.2%
50,000 Bassett Furniture Industries, Inc. $ 445,000
31,486 Kimball International, Inc. 420,023
------------
Total Consumer Durables & Apparel $ 865,023
------------
Media - 1.0%
Movies & Entertainment - 1.0%
206,487 Regal Entertainment Group $ 4,086,378
------------
Publishing - 0.0%
9,905 Idearc, Inc. $ 187,403
------------
Total Media $ 4,273,781
------------
Food, Beverage & Tobacco - 8.2%
Packaged Foods & Meats - 1.7%
357,000 B&G Foods, Inc. $ 3,816,330
92,828 Kraft Foods, Inc. 3,207,207
------------
$ 7,023,537
------------
Tobacco - 6.5%
134,140 Altria Group, Inc. $ 10,403,898
172,872 Loews Corp. - Carolina Group 15,376,964
29,704 Reynolds American, Inc. 2,079,874
------------
$ 27,860,736
------------
Total Food, Beverage & Tobacco $ 34,884,273
------------
Pharmaceuticals, Biotechnology & Life Sciences - 5.3%
Pharmaceuticals - 5.3%
329,758 Bristol-Myers Squibb Co. $ 9,770,730
216,536 Merck & Co., Inc. 12,853,577
------------
Total Pharmaceuticals, Biotechnology &
Life Sciences $ 22,624,307
------------
Banks - 2.7%
Diversified Banks - 0.3%
28,642 Wachovia Corp. $ 1,231,606
------------
Regional Banks - 0.9%
81,550 KeyCorp $ 2,148,027
67,800 Regions Financial Corp. 1,791,954
------------
$ 3,939,981
------------
22 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shares Value
Thrifts & Mortgage Finance - 1.5%
222,700 TrustCo Bank Corp., NY $ 2,367,301
204,886 Washington Mutual, Inc. 3,995,277
------------
$ 6,362,578
------------
Total Banks $ 11,534,165
------------
Diversified Financials - 0.5%
Other Diversified Financial Services - 0.5%
42,500 Bank of America Corp. $ 1,960,525
------------
Total Diversified Financials $ 1,960,525
------------
Telecommunication Services - 10.0%
Integrated Telecommunication Services - 10.0%
204,553 AT&T, Inc. $ 7,815,970
529,946 Citizens Communications Co. 6,878,699
406,745 Verizon Communications, Inc. 17,575,451
790,184 Windstream Corp. 10,232,883
------------
Total Telecommunication Services $ 42,503,003
------------
Utilities - 7.5%
Electric Utilities - 0.8%
138,400 Empire District Electric Co. $ 3,188,736
------------
Gas Utilities - 3.1%
81,249 AGL Resources, Inc. $ 3,012,713
395,466 Atmos Energy Corp. 10,357,255
------------
$ 13,369,968
------------
Multi-Utilities - 3.6%
100,000 Consolidated Edison, Inc. $ 4,845,000
285,753 Duke Energy Corp. 5,655,052
134,112 NSTAR 4,693,920
------------
$ 15,193,972
------------
Total Utilities $ 31,752,676
------------
TOTAL COMMON STOCKS
(Cost $137,323,387) $163,118,794
------------
NON-CONVERTIBLE PREFERRED STOCKS - 22.5% of Net Assets
Energy - 1.0%
Oil & Gas Exploration & Production - 1.0%
49,300 Apache Corp., Series B, 5.68% $ 4,249,044
------------
Total Energy $ 4,249,044
------------
The accompanying notes are an integral part of these financial statements. 23
Pioneer Municipal and Equity Income Trust
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SCHEDULE OF INVESTMENTS 11/30/07 (continued)
--------------------------------------------------------------------------------
Shares Value
Automobiles & Components - 1.1%
Automobile Manufacturers - 1.1%
126,542 Ford Motor Co. Capital Trust II, 6.5% $ 4,439,716
------------
Total Automobiles & Components $ 4,439,716
------------
Banks - 5.7%
Diversified Banks - 3.1%
105,000 Bank One Capital VI, 7.2% $ 2,548,361
120,000 Barclays Bank Plc, Series 2, 6.625% 2,647,200
120,000 HSBC Holdings Plc, Series A, 6.2%, 2,500,800
170,579 Royal Bank of Scotland Group Plc,
Series Q, 6.75% 3,722,034
71,000 Wachovia Preferred Funding Corp., Series A, 7.25% 1,767,900
------------
$ 13,186,295
------------
Thrifts & Mortgage Finance - 2.6%
56,980 Countrywide Capital V, 7.0% $ 812,383
171,677 Fannie Mae, Series N, 6.75% 4,034,409
57,000 Freddie Mac, 5.81% 2,422,500
39,000 Freddie Mac, Series F, 5.0% 1,384,500
58,000 Freddie Mac, Series K, 5.79% 2,604,200
------------
$ 11,257,992
------------
Total Banks $ 24,444,287
------------
Diversified Financials - 5.9%
Other Diversified Financial Services - 2.2%
49,000 ABN Amro Capital Fund Trust VII, 6.08% $ 968,240
120,000 Bank of America Corp., Series D, 6.204% 2,653,200
120,000 Deustche Bank Capital Funding Trust VIII, 6.375% 2,531,256
150,000 JPMorgan Chase Capital Trust XVI, 6.35% 3,316,500
------------
$ 9,469,196
------------
Consumer Finance - 0.8%
18,000 MBNA Capital, Series D, 8.125% $ 441,779
71,300 SLM Holdings Corp., Series A, 6.97% 2,994,600
------------
$ 3,436,379
------------
Investment Banking & Brokerage - 2.9%
57,000 Bear Stearns Companies, Inc., Series F, 5.72% $ 2,317,050
40,000 Bear Stearns Companies, Inc., Series G, 5.49% 1,500,000
100,000 Lehman Brothers Holdings, Inc., 6.5% 2,230,000
19,000 Lehman Brothers Holdings, Inc., Series C, 5.94% 836,000
50,800 Lehman Brothers Holdings, Inc., Series D, 5.67% 2,082,800
24 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shares Value
Investment Banking & Brokerage - (continued)
65,000 Merrill Lynch Preferred Capital Trust IV, 7.12% $ 1,460,993
87,000 Merrill Lynch Preferred Capital Trust V, 7.28% 2,029,710
------------
$ 12,456,553
------------
Total Diversified Financials $ 25,362,128
------------
Insurance - 2.9%
Life & Health Insurance - 0.4%
159,000 Scottish Re Group, Ltd., 7.25% $ 1,828,500
------------
Property & Casualty Insurance - 1.8%
160,000 ACE, Ltd., Series C, 7.8% $ 3,929,600
161,000 Berkley W.R. Capital Trust II, 6.75% 3,446,663
------------
$ 7,376,263
------------
Reinsurance - 0.7%
158,000 RenaissanceRE Holdings, Ltd., Series D, 6.6% $ 3,039,920
------------
Total Insurance $ 12,244,683
------------
Real Estate - 2.6%
Diversification Real Estate Investment Trust - 0.8%
32,440 PS Business Parks, Inc., Series I, 6.875% $ 660,803
13,000 PS Business Parks, Inc., Series L, 7.6% 289,510
119,200 PS Business Parks, Inc., Series P, 6.7% 2,378,040
------------
$ 3,328,353
------------
Industrial Real Estate Investment Trust - 0.2%
40,000 Prologis Trust, Series G, 6.75% $ 879,200
------------
Office Real Estate Investment Trust - 0.2%
15,000 Brandywine Realty Trust, Series C, 7.5% $ 336,750
34,500 Brandywine Realty Trust, Series D, 7.375% 759,000
------------
$ 1,095,750
------------
Retail Real Estate Investment Trust - 0.8%
94,000 Regency Centers Corp., Series C, 7.45% $ 2,090,560
53,500 Regency Centers Corp., Series E, 6.7% 1,136,340
------------
$ 3,226,900
------------
Specialized Real Estate Investment Trust - 0.6%
118,000 Public Storage, Inc., Series L, 6.75% $ 2,507,500
------------
Total Real Estate $ 11,037,703
------------
The accompanying notes are an integral part of these financial statements. 25
Pioneer Municipal and Equity Income Trust
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SCHEDULE OF INVESTMENTS 11/30/07 (continued)
--------------------------------------------------------------------------------
Shares Value
Utilities - 3.3%
Electric Utilities - 2.9%
98,000 Alabama Power Co., 5.3% $ 2,141,300
113,000 Alabama Power Co., 5.83% 2,683,750
78,000 Interstate Power and Light Co., Series B, 8.375% 2,290,860
40,000 Mississippi Power Co., 5.25% 944,800
7,700 PPL Electric Utilities Corp., 4.5% 627,550
73,000 Southern California Edison Co., 4.32% 1,423,500
94,000 Virginia Power Capital Trust II, 7.375% 2,272,890
------------
$ 12,384,650
------------
Gas Utilities - 0.4%
62,000 Southern Union Co., Series C, 7.55% $ 1,541,940
------------
Total Utilities $ 13,926,590
------------
TOTAL NON-CONVERTIBLE PREFERRED STOCKS
(Cost $111,661,764) $ 95,704,151
------------
CONVERTIBLE PREFERRED STOCKS - 3.0% of Net Assets
Capital Goods - 0.5%
Aerospace & Defense - 0.5%
15,000 Northrop Grumman Corp., 7.0% $ 2,169,000
------------
Total Capital Goods $ 2,169,000
------------
Commercial Services & Supplies - 0.7%
Office Services & Supplies - 0.7%
60,000 Avery Dennison Corp., 7.875% $ 3,078,000
------------
Total Commercial Services & Supplies $ 3,078,000
------------
Diversified Financials - 1.6%
Other Diversified Financial Services - 1.6%
161,000 Lazard, Ltd., 6.625% $ 6,720,140
------------
Total Diversified Financials $ 6,720,140
------------
Insurance - 0.2%
Property & Casualty Insurance - 0.2%
47,919 XL Capital, Ltd., Class A, 7.0% $ 1,026,425
------------
Total Insurance $ 1,026,425
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $10,175,221) $ 12,993,565
------------
26 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shares Value
TAX-EXEMPT MONEY MARKET MUTUAL FUND - 1.7%
of Net Assets
7,113,990 BlackRock Liquidity Funds MuniFund Portfolio $ 7,113,990
-------------
TOTAL TAX-EXEMPT MONEY MARKET MUTUAL FUND
(Cost $7,113,990) $ 7,113,990
-------------
TOTAL INVESTMENTS IN SECURITIES - 141.3%
(Cost $582,028,448) (c) $ 601,239,281
-------------
OTHER ASSETS AND LIABILITIES - 0.1% $ 503,046
-------------
PREFERRED SHARES AT REDEMPTION VALUE,
INCLUDING DIVIDENDS PAYABLE - (41.4%) $(176,384,031)
-------------
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS - 100.0% $ 425,358,296
=============
Portfolio Abbreviations
RIB Residual Interest Bonds
(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
November 30, 2007, the value of these securities amounted $52,511,501, or
12.3% of total net assets.
NR Security not rated by S&P or Moody's.
+ Prerefunded bonds have been collateralized by U.S. Treasury securities or
U.S. Government Agencies, which are held in escrow to pay interest and
principal on the tax exempt issue and to retire the bonds in full at the
earliest refunding date.
(a) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate at
November 30, 2007.
(b) The concentration of tax-exempt investments by type of obligation/market
sector is as follows:
Insured:
FSA 6.3%
MBIA 5.9
FGIC 4.2
Radian 3.2
AMBAC 2.5
----
22.1%
General Obligation 3.3
Revenue Bonds:
Health Revenue 30.2
Tobacco Revenue 14.8
Development Revenue 9.5
Education Revenue 7.4
Housing Revenue 3.7
Facilities Revenue 3.0
Other Revenue 2.2
School District Revenue 1.8
Transportation Revenue 1.6
Gaming Revenue 0.4
-----
100.0%
=====
The accompanying notes are an integral part of these financial statements. 27
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 11/30/07 (continued)
--------------------------------------------------------------------------------
(c) At November 30, 2007, the net unrealized gain on investments based on cost
for federal income tax purposes of $581,819,322 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost $47,258,820
Aggregate gross unrealized loss for all investments in which there is an
excess of tax cost over value (27,838,861)
-----------
Net unrealized gain $19,419,959
===========
For financial reporting purposes net unrealized gain on investments
was $19,210,833 and cost of investments aggregated $582,028,448.
Purchases and sales of securities (excluding temporary cash investments) for the
year ended November 30, 2007, aggregated $148,315,923 and $145,026,135,
respectively.
28 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 11/30/07
--------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value (cost $582,028,448) $601,239,281
Receivables -
Investment securities sold 90,000
Dividends and interest 7,006,515
Other 947,330
Unrealized appreciation on interest rate swaps 88,363
Prepaid expenses 21,525
------------
Total assets $609,393,014
------------
LIABILITIES:
Payables -
Investment securities purchased $ 3,045,180
Due to custodian 4,107,437
Due to affiliates 304,839
Administration fee payable 31,248
Accrued expenses 161,983
------------
Total liabilities $ 7,650,687
------------
PREFERRED SHARES AT REDEMPTION VALUE:
$25,000 liquidation value per share applicable to 7,050
shares, including dividends payable of $134,031 $176,384,031
------------
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Paid-in capital $406,036,048
Undistributed net investment income 23,052
Net unrealized gain on investments 19,210,833
Net unrealized gain on interest rate swaps 88,363
------------
Net assets applicable to common shareowners $425,358,296
============
NET ASSET VALUE PER SHARE:
No par value, (unlimited number of shares authorized)
Based on $425,358,296/28,706,981 common shares $ 14.82
============
The accompanying notes are an integral part of these financial statements. 29
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Year Ended 11/30/07
INVESTMENT INCOME:
Dividends $ 14,388,781
Interest 19,302,540
------------
$ 33,691,321
------------
EXPENSES:
Management fees $ 3,798,435
Administration fees 500,710
Transfer agent fees and expenses 429,195
Auction agent fees 467,680
Custodian fees 37,368
Registration fees 25,362
Professional fees 363,264
Printing expense 56,861
Trustees' fees 24,305
Pricing fees 19,552
Insurance fees 12,844
Miscellaneous 18,681
------------
Total expenses $ 5,754,257
Less fees paid indirectly (523)
------------
Net expenses $ 5,753,734
------------
Net investment income $ 27,937,587
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND INTEREST RATE SWAPS:
Net realized gain from:
Investments $ 3,226,543
Interest rate swaps 856,816 $ 4,083,359
------------ ------------
Change in net unrealized gain from:
Investments $(33,872,244)
Interest rate swaps (1,161,729) $(35,033,973)
------------ ------------
Net loss on investments and interest rate swaps $(30,950,614)
------------
DIVIDENDS AND DISTRIBUTIONS TO PREFERRED
SHAREOWNERS FROM:
Net investment income $ (7,768,522)
Net realized gains (908,387)
------------
Total distributions $ (8,676,909)
------------
Net decrease in net assets applicable to common
shareowners resulting from operations $(11,689,936)
============
30 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
For the Year Ended 11/30/07 and 11/30/06, respectively
Year Year
Ended Ended
11/30/07 11/30/06
FROM OPERATIONS:
Net investment income $ 27,937,587 $ 27,998,168
Net realized gain on investments and interest
rate swaps 4,083,359 688,474
Change in net unrealized gain on investments
and interest rate swaps (35,033,973) 44,563,306
Dividends and distributions to preferred
shareowners from:
Net investment income (7,768,522) (7,360,344)
Net realized gains (908,387) (571,728)
------------- -------------
Net increase (decrease) in net assets
applicable to common shareowners $ (11,689,936) $ 65,317,876
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON
SHAREOWNERS:
Net investment income
($0.85 and $0.67 per share, respectively) $ (24,511,851) $ (19,187,745)
Net realized gains
($0.10 and $0.08 per share, respectively) (2,731,074) (2,315,448)
------------- -------------
Total distributions to common shareowners $ (27,242,925) $ (21,503,193)
------------- -------------
Net increase (decrease) in net assets applicable
to common shareowners $ (38,932,861) $ 43,814,683
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS:
Beginning of year 464,291,157 420,476,474
------------- -------------
End of year $ 425,358,296 $ 464,291,157
============= =============
Undistributed net investment income $ 23,052 $ 1,185,061
============= =============
The accompanying notes are an integral part of these financial statements. 31
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Year Year Year 1/30/04(b)
Ended Ended Ended to
11/30/07 11/30/06 11/30/05 11/30/04
Per Common Share Operating Performance
Net asset value, beginning of period $ 16.17 $ 14.65 $ 14.55 $ 14.33(c)
-------- -------- -------- ---------
Increase (decrease) from investment operations:(a)
Net investment income $ 0.97 $ 0.98 $ 0.95 $ 0.66
Net realized and unrealized gain (loss) on investments
and interest rate swaps (1.07) 1.57 0.13 0.27
Dividends and distributions to preferred shareowners from:
Net Investment income (0.27) (0.26) (0.19) (0.06)
Net realized gain (0.03) (0.02) -(d) -
-------- -------- -------- ---------
Net increase (decrease) from investment operations $ (0.40) $ 2.27 $ 0.89 $ 0.87
Dividends and distributions to common shareowners from:
Net investment income (0.85) (0.67) (0.79) (0.55)
Net realized gain (0.10) (0.08) - -
Capital charge with respect to issuance of:
Common shares - - - (0.03)
Preferred shares - - - (0.07)
-------- -------- -------- ---------
Net increase (decrease) in net asset value $ (1.35) $ 1.52 $ 0.10 $ 0.22
-------- -------- -------- ---------
Net asset value, end of period(e) $ 14.82 $ 16.17 $ 14.65 $ 14.55
======== ======== ======== ========
Market value, end of period(e) $ 13.41 $ 14.00 $ 12.18 $ 12.74
======== ======== ======== ========
Total return(f) 2.30% 21.79% 1.51% (11.26)%
Ratios to average net assets of common shareowners
Net expenses(g) 1.26% 1.12% 1.12% 1.04%(h)
Net investment income before preferred share dividends 6.12% 6.43% 6.32% 5.69%(h)
Preferred share dividends 1.70% 1.69% 1.28% 0.55%(h)
Net investment income available to common shareowners 4.25% 4.74% 5.04% 5.14%(h)
Portfolio turnover 23% 16% 27% 63%
Net assets of common shareowners, end of period
(in thousands) $425,358 $464,291 $420,476 $417,789
Preferred shares outstanding (in thousands) $176,250 $176,250 $176,250 $176,250
Asset coverage per preferred share, end of period $ 85,354 $ 90,870 $ 84,651 $ 84,264
Average market value per preferred share $ 25,000 $ 25,000 $ 25,000 $ 25,000
Liquidation value, including dividends payable, per
preferred share $ 25,019 $ 25,015 $25,009 $ 25,003
Ratios to average net assets of common shareowners
before reimbursement of waivers and reimbursement
of expenses
Net expenses(g) 1.26% 1.12% 1.12% 1.05%(h)
Net investment income before preferred share dividends 6.12% 6.43% 6.32% 5.68%(h)
Preferred share dividends 1.70% 1.69% 1.28% 0.55%(h)
Net investment income available to common shareowners 4.25% 4.74% 5.04% 5.13%(h)
32 The accompanying notes are an integral part of these financial statements.
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
(a) The per common share data presented above is based upon the average common
shares outstanding for the periods presented.
(b) Trust shares were first publicly offered on January 28, 2004.
(c) Net asset value immediately after the closing of the first public offering
was $14.30.
(d) Amount is less than $0.01 per common share.
(e) Net asset value and market value are published in Barron's on Saturday, The
Wall Street Journal on Monday and The New York Times on Monday and
Saturday.
(f) Total investment return is calculated assuming a purchase of common shares
at the current market value on the first day and a sale at the current
market value on the last day of the periods reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions. Total
investment return less than a full period is not annualized. Past
performance is not a guarantee of future results.
(g) Expense ratios do not reflect the effect of dividend payments to preferred
shareowners.
(h) Annualized.
The information above represents the audited operating performance data for a
common share outstanding, total investment return, ratios to average net assets
of common shareowners and other supplemental data for the periods indicated.
This information has been determined based upon financial information provided
in the financial statements and market value data for the Trust's common shares.
The accompanying notes are an integral part of these financial statements. 33
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/07
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Municipal and Equity Income Trust (the Trust) is organized as a Delaware
statutory trust and registered as a diversified, closed-end management
investment company under the Investment Company Act of 1940. The Trust changed
its name from Pioneer Tax Advantaged Balanced Trust effective November 7, 2007.
The Trust's investment objective is to provide a high level of total after-tax
return, including attractive tax-advantaged income.
The Trust's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Trust to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, and the reported amounts of income,
expenses and gains and losses on investments during the reporting year. Actual
results could differ from those estimates.
The Trust may invest in municipal securities with a broad range of maturities
and credit ratings, including both investment grade and below investment grade
municipal securities. By concentrating in municipal securities, the portfolio is
more susceptible to adverse economic, political or regulatory developments than
is a portfolio that invests more broadly. Investments in the Trust are subject
to possible loss due to the financial failure of underlying securities and their
inability to meet their debt obligations. The Trust may also invest in common
stocks and preferred securities that pay tax-qualified dividends. In addition,
the Trust may invest in other securities, including debt instruments, real
estate investment trusts ("REITs") and equity securities, that generate income
taxable at ordinary income rates, rather than long-term capital gain rates.
There can be no assurance as to the portion of the Trust's dividends that will
be tax-exempt or tax-qualified.
A portion of income may be subject to state, federal, and/or alternative minimum
tax. Capital gains, if any, are subject to a capital gains tax. When interest
rates rise, the prices of fixed-income securities in the Trust will generally
fall. Conversely, when interest rates fall the prices of fixed-income securities
in the Trust will generally rise.
The Trust may invest in derivative securities, which may include futures and
options. These types of instruments can increase price fluctuation.
34
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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. Please refer to those documents when considering the
Trust's risks. At times, the Trust's investments may represent industries or
industry sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries and sectors.
The following is a summary of significant accounting policies followed by the
Trust in preparation of its financial statements, which are consistent with
those policies generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Debt securities are
valued at prices supplied by independent pricing services, which consider
such factors as Treasury spreads, yields, maturities and ratings.
Valuations may be supplemented by dealers and other sources, as required.
Equity securities are valued at the last sale price on the principal
exchange where they are traded. The values of interest rate swaps are
determined by obtaining dealer quotations. Securities for which market
quotations are not readily available are valued at their fair values as
determined by, or under the direction of, the Board of Trustees. The Trust
may also use the fair value of a security, including a non U.S. security,
when the closing market price on the principal exchange where the security
is traded no longer accurately reflects the value of the security as of the
close of the exchange. At November 30, 2007, there were no securities fair
valued. Temporary cash investments are valued at cost which approximates
market value.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Trust becomes aware of the ex-dividend
data in the exercise of reasonable diligence. Discount and premium on debt
securities are accreted or amortized, respectively, daily, on an effective
yield to maturity basis and are included in interest income. Interest
income, including income on interest bearing cash accounts, is recorded on
an accrual basis.
35
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/07 (continued)
--------------------------------------------------------------------------------
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Federal Income Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the source of the Trust's distributions may be
shown in the accompanying financial statements as either from or in excess
of net investment income or net realized gain on investment transactions,
or from paid-in capital, depending on the type of book/tax differences that
may exist.
At November 30, 2007, the Trust reclassified $3,180,777 to decrease
distribution in excess of net investment income, $856,768 to decrease net
realized gain on investments and $2,324,009 to decrease paid-in capital.
The reclassification has no impact on the net asset value of the Trust and
presents the Trust's capital accounts on a tax basis.
The tax character of current year distributions paid to common and
preferred shareowners for the years ended November 30, 2007 and November
30, 2006 were as follows:
2007 2006
----------- -----------
Distributions paid from:
Tax-Exempt income $15,264,954 $13,521,779
Ordinary income* 17,015,419 13,026,310
Long-term capital gain 3,639,461 2,887,176
----------- -----------
$35,919,834 $29,435,265
=========== ===========
* Included in the Trust's distributions from 2007 ordinary income is
$2,324,009 ($0.08 per common share) in excess of investment company taxable
income, which, in accordance with applicable U.S. tax law, is taxable to
shareowners as ordinary income distributions.
36
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The following shows the components of distributable earnings on a federal
income tax basis at November 30, 2007.
2007
-----------
Undistributed ordinary income $ -
Undistributed long-term gains -
Dividends payable (134,031)
Unrealized appreciation 19,456,279
-----------
Total $19,322,248
===========
The difference between book basis and tax basis unrealized appreciation is
primarily attributable to the difference between book and tax amortization
methods for premiums and discounts on fixed income securities and the
accounting treatment for swap agreements.
C. Automatic Dividend Reinvestment Plan
All common shareowners automatically participate in the Automatic Dividend
Reinvestment Plan (the "Plan"), under which participants receive all
dividends and capital gain distributions (collectively, "dividends") in
full and fractional common shares of the Trust in lieu of cash. Shareowners
may elect not to participate in the Plan. Shareowners not participating in
the Plan receive all dividends and capital gain distributions in cash.
Participation in the Plan is completely voluntary and may be terminated or
resumed at any time 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.
Whenever the Trust declares a dividend on common shares payable in cash,
participants in the Plan will receive the equivalent in common shares
acquired by the Plan Agent either (i) through receipt of additional
unissued but authorized common shares from the Trust or (ii) by purchase of
outstanding common shares on the New York Stock Exchange or elsewhere. If,
on the payment date for any dividend, the net asset value per common share
is equal to or less than the market price per share plus estimated
brokerage trading fees ("market premium"), the Plan Agent will invest the
37
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/07 (continued)
--------------------------------------------------------------------------------
dividend amount in newly issued common shares. The number of newly issued
common shares to be credited to each account will be determined by dividing
the dollar amount of the dividend by the net asset value per common share
on the date the shares are issued, provided that the maximum discount from
the then current market price per share on the date of issuance does not
exceed 5%. If, on the payment date for any dividend, the net asset value
per common share is greater than the market value ("market discount"), the
Plan Agent will invest the dividend amount in common shares acquired in
open-market purchases. There are no brokerage charges with respect to newly
issued common shares. However, each participant will pay a pro rata share
of brokerage trading fees incurred with respect to the Plan Agent's
open-market purchases. Participating in the Plan does not relieve
shareowners from any federal, state or local taxes which may be due on
dividends paid in any taxable year. Shareowners holding Plan shares in a
brokerage account may not be able to transfer the shares to another broker
and continue to participate in the Plan.
2. Management Agreement
Pioneer Investment Management, Inc. ("PIM"), a wholly owned indirect subsidiary
of UniCredito Italiano S.p.A. ("UniCredito Italiano"), manages the Trust's
portfolio. Management fees payable under the Trust's Management Agreement with
PIM are calculated daily at the annual rate of 0.60% of the Trust's average
daily managed assets. "Managed assets" is the average daily value of the Trust's
total assets minus the sum of the Trust's liabilities, which liabilities exclude
debt related to leverage, short-term debt and the aggregate liquidation
preference of any outstanding preferred shares.
Also, PIM agreed for the first three years of the Trust's investment operations
(January 28, 2004 - February 1, 2007) to limit the Trust's total annual
expenses, excluding offering costs for common and preferred shares, interest
expense, the cost of defending or prosecuting any claim or litigation to which
the Trust is a party (together with any amount in judgment or settlement),
indemnification expenses or taxes incurred due to the failure of the Trust to
qualify as a regulated investment company under the Code or any other
non-recurring or non-operating expenses, to 0.80% of the Trust's average daily
managed assets. The dividend on any preferred shares was not an expense for this
purpose. For the year ended November 30, 2007, the Trust's
38
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
expenses were not reduced under such arrangements. For the year ended, November
30, 2007, the net management fee was equivalent to 0.60% of the Trust's average
daily managed assets, which was equivalent to 0.83% of the Trust's average daily
net assets attributable to common shareowners. As of February 2, 2007, this
expense limitation is no longer in effect.
In addition, under PIM's management and administration agreements, certain other
services and costs are paid by PIM and reimbursed by the Trust. Included in "Due
to affiliates" reflected on the Statement of Assets and Liabilities is $304,839
in management costs, administrative costs and certain other fees payable to PIM
at November 30, 2007.
The Trust has retained Princeton Administrators, LLC, ("Princeton") to provide
certain administrative services to the Trust on its behalf. The Trust pays
Princeton a monthly fee at an annual rate of 0.07% of the average daily value of
the Trust's managed assets up to $500 million and 0.03% for average daily
managed assets in excess of $500 million, subject to a minimum monthly fee of
$10,000.
3. Transfer Agents
Pioneer Investment Management Shareholder Services, Inc. ("PIMSS"), a wholly
owned indirect subsidiary of UniCredito Italiano, through a sub-transfer agency
agreement with American Stock Transfer & Trust Company, provides substantially
all transfer agent and shareowner services related to the Trust's common shares
at negotiated rates. Deutsche Bank Trust Company Americas ("Deutsche Bank") is
the transfer agent, registrar, dividend paying agent and redemption agent with
respect to the Trust's Auction Market Preferred Shares ("AMPS"). The Trust pays
Deutsche Bank an annual fee, as is agreed to from time to time by the Trust and
Deutsche Bank, for providing such services.
4. Expense Offset Arrangements
The Trust has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Trust's custodian expenses. For the year ended November 30, 2007, the Trust
expenses were reduced by $523 under such arrangements.
39
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/07 (continued)
--------------------------------------------------------------------------------
5. Interest Rate Swaps
The Trust may enter into interest rate swap transactions to attempt to protect
itself from increasing dividend or interest expense on its leverage resulting
from increasing short-term interest rates. The cost of leverage may rise with an
increase in interest rates, generally having the effect of lower yields and
potentially lower dividends to common shareowners. Interest rate swaps can be
used to "lock in" the cost of leverage and reduce the negative impact that
rising short-term interest rates would have on the Trust's leveraging costs.
An interest rate swap is an agreement between two parties, which involves
exchanging a floating rate and fixed rate interest payments for a specified
period of time. Interest rate swaps involve the accrual of the net interest
payments between the parties on a daily basis, with the net amount recorded
within the unrealized appreciation/ depreciation of interest rate swaps on the
Statement of Assets and Liabilities. Once the interim payments are settled in
cash, at the pre-determined dates specified in the agreement, the net amount is
recorded as realized gain or loss from interest rate swaps on the Statement of
Operations. During the term of the swap, changes in the value of the swap are
recognized as unrealized gains and losses by "marking-to market" the market
value of the swap based on values obtained from dealer quotations. When the swap
is terminated, the Trust will record a realized gain or loss equal to the
difference, if any, between the proceeds from (or cost of) closing the contract
and the cost basis of the contract. The Trust is exposed to credit risk in the
event of non-performance by the other party to the interest rate swap. However,
at November 30, 2007 the Trust does not anticipate non-performance by any
counterparty. Risk may also arise with regard to market movements in the value
of the swap arrangement that do not exactly offset the changes in the related
dividend requirement or interest expense on the Trust's leverage.
Under the terms of the agreement entered into by the Trust, the Trust receives a
floating rate of interest and pays a fixed rate of interest for the term.
Details of the swap agreement outstanding as of November 30, 2007 were as
follows:
Termination Notional Unrealized
Counterparty Date Amount (000) Fixed Rate Floating Rate Appreciation
-----------------------------------------------------------------------------------------
UBS AG Sept. 1, 2009 $106,000 2.855% 1 month BMA $88,363
40
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
6. Trust Shares
There are an unlimited number of common shares of beneficial interest
authorized. Of the 28,706,981 common shares of beneficial interest outstanding
at November 30, 2007, PIM owned 6,981 shares.
During the year ended November 30, 2007 and year ended November 30, 2006, there
were no share transactions by the Trust. All reinvested distributions were
satisfied with previously issued shares purchased in the open market by the Plan
Agent and credited to shareowner accounts.
The Trust may classify and reclassify any unissued common shares of beneficial
interest into one or more series of preferred shares of beneficial interest. As
of November 30, 2007, there were 7,050 AMPS as follows: Series T7-2,350, Series
F7-2,350 and Series TH28-2,350.
Dividends on Series T7 and Series F7 are cumulative at a rate which is reset
every seven days based on the results of an auction. Dividends on Series TH28
are also cumulative at a rate reset every 28 days based on the results of an
auction. Dividend rates ranged from 4.00% to 6.20% during the year ended
November 30, 2007.
The Trust may not declare dividends or make other distributions on its common
shares or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
preferred shares would be less than 200%.
The AMPS are redeemable at the option of the Trust, in whole or in part, on any
dividend payment date at $25,000 per share plus any accumulated or unpaid
dividends, whether or not declared. The AMPS are also subject to mandatory
redemption at $25,000 per share plus any accumulated or unpaid dividends,
whether or not declared, if certain requirements relating to the composition of
the assets and liabilities of the Trust as set forth in the Agreement and
Declaration of Trust are not satisfied.
The holders of AMPS have voting rights equal to the holders of the Trust's
common shares (one vote per share) and will vote together with holders of the
common shares as a single class. However, holders of AMPS are also entitled to
elect two of the Trust's Trustees. In addition, the Investment Company Act of
1940, as amended, requires that along with approval by shareowners that might
otherwise be required, the approval of the holders of a majority of any
outstanding
41
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/07 (continued)
--------------------------------------------------------------------------------
preferred shares, voting separately as a class, would be required to (a) adopt
any plan of reorganization that would adversely affect the preferred shares and
(b) take any action requiring a vote of security holders, including, among other
things, changes in the Trust's subclassification as a closed-end investment
company or changes in its fundamental investment restrictions.
7. New Pronouncements
On July 13, 2006, the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing the Trust's tax returns to determine whether the tax
positions have a "more-likely-than-not" probability of being sustained by the
applicable tax authority. Tax positions deemed to not meet the
more-likely-than-not threshold would be recorded as a tax benefit or expense in
the reporting period in which they are realized. Adoption of FIN 48 is required
for fiscal years beginning after December 15, 2006 and is to be applied to all
open tax years as of no later than May 31, 2008. At this time, management is
evaluating the implications of FIN 48 and any impact in the financial statements
has not yet been determined.
In September 2006, Statement of Financial Accounting Standards No. 157 Fair
Value Measurements ("SFAS 157") was issued and is effective for fiscal years
beginning after November 15, 2007. SFAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. At this time, management is currently evaluating the implications
of SFAS 157, and its impact on the Trust's financial statement disclosures, if
any, has not yet been determined.
8. Distributions
On June 19, 2007, the Trustees of the Trust voted to adopt a level distribution
policy. The Trust's level distribution policy is meant to provide investors with
a relatively stable monthly distribution out of a combination of current net
investment income, short-term gains and paid-in capital beginning with the July
2007 payment. The Trust has applied to the Securities and Exchange Commission
for exemptive
42
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
relief to allow the Trust to include long-term capital gains in its monthly
distributions.
The exact amount of the monthly distributions may be adjusted from time to time
by the Trustees to reflect current conditions. However, under the Investment
Company Act of 1940, the Trust is required to estimate and indicate the source
of each monthly distribution to its shareowners. This estimated source is likely
to vary from month to month because it may be materially affected by changes in
the cumulative level and composition of the Trust's actual earnings from its
investment activities and the level of expenses.
Shareowners should understand that distributions from paid-in capital (i.e.,
return of capital) are not from earnings of the Trust. Such return of capital
components of the Trust's monthly distributions do not necessarily reflect the
Trust's investment performance and should not be confused with "yield" or
"income" of the Trust. At December 31 each year the Trust will determine what
portion, if any, of the previously reported distributions from paid-in capital
need to be re-characterized for tax purposes as taxable ordinary income and
reportable to shareowners and the IRS on Form 1099 DIV.
In January 2008, shareowners will receive a Form 1099 DIV, which will show the
amount and composition of all 2007 distributions paid to them from the Trust.
That form will provide shareowners with information as to the appropriate tax
treatment of each component.
Subsequent to November 30, 2007, the Board of Trustees of the Trust declared a
dividend from undistributed net investment income of $0.112 per common share
payable December 20, 2007 to common shareowners of record on December 12, 2007.
Subsequent to November 30, 2007, dividends declared and paid on preferred shares
totaled $856,810 in aggregate for the three outstanding preferred share series
through January 18, 2008.
43
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/07 (continued)
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (unaudited)
During the 12 month period ended November 30, 2007, (i) there were no material
changes in the Trust's investment objective or fundamental policies that were
not approved by the shareowners, except that in connection with the Trust's name
change, the Board of Trustees approved the adoption by the Trust in accordance
with Rule 35d-1 under the Investment Company Act of 1940, as amended, of (a) a
new non-fundamental policy that at least 80% of the Trust's assets will be
invested in municipal securities and equity securities, and (b) a new
fundamental policy that the Trust will attempt to invest its assets so that the
income derived from municipal securities that it distributes will be exempt from
regular federal income tax, except when investing for "defensive purposes"; (ii)
there were no changes in the Trust's charter or By-Laws that would delay or
prevent a change in control of the Trust which have not been approved by the
shareowners and; (iii) there were no changes in the principal risk factors
associated with investment in the Trust. Day-to-day management of the Trust's
portfolio of municipal securities is the responsibility of David Eurkus. Mr.
Eurkus is supported by the fixed-income team. Members of this team manage other
Pioneer funds investing primarily in fixed-income securities. Mr. Eurkus joined
Pioneer as a senior vice president in January 2000 and has been an investment
professional since 1969. Day-to-day management of the Trust's portfolio of
equity securities is the responsibility of Walter Hunnewell, Jr. Mr. Hunnewell
is supported by the domestic equity team. Members of this team manage other
Pioneer funds investing primarily in U.S. equity securities. Mr. Hunnewell, a
vice president, joined Pioneer in August 2001 and has been an investment
professional since 1985. The portfolio managers and each team also may draw upon
the research and investment management expertise of the global research teams,
which provide quantitative and fundamental research on companies and include
members from Pioneer's affiliate, Pioneer Investment Management Limited (PIML).
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Trust may purchase, from time to time, its common
shares in the open market.
CEO CERTIFICATION DISCLOSURE (unaudited)
The Trust's Chief Executive Officer has submitted to the New York Stock Exchange
the annual CEO certification as required by Section
44
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
303A.12(a) of the NYSE Listed Company Manual. In addition, the Trust has filed
with the Securities and Exchange Commission the certification of its Chief
Executive Officer and Chief Financial Officer required by Section 302 of the
Sarbanes-Oxley Act.
IMPORTANT TAX INFORMATION (unaudited)
The following information is provided with respect to the distributions paid by
Pioneer Municipal and Equity Income Trust during the taxable year ended November
30, 2007:
COMMON SHAREHOLDERS
Qualified Dividends
Dividend Received Long-Term
Tax-Exempt Income for Deduction for Capital
Payable Date(s) Income Individuals + Corporations + Gains
--------------------------------------------------------------------------------
December, 2006 46.33% 79.63% 70.32% None
January 2007 33.09% 60.72% 54.16% 13.12%
February 2007 -
June 2007 55.22% 100% 89.64% None
July 2007 -
October 2007 46.47% 81.04% 63.44% None
November 2007 5.13% 15.86% 11.66% 74.59%
PREFERRED SHAREHOLDERS (Classes T, TH & F)
Qualified Dividends
Dividend Received Long-Term
Tax-Exempt Income for Deduction for Capital
Payable Date(s) Income Individuals + Corporations + Gains
--------------------------------------------------------------------------------
December, 2006 33.09% 60.72% 54.16% None
January - June 2007 55.22% 100% 89.64% None
July 2007 -
November 2007 31.21% 65.70% 48.46% 20.70%
+ Expressed as a percentage of the ordinary income distributions paid.
The Trust hereby designates the percentage indicated or the allowable amount by
law.
45
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/07 (continued)
--------------------------------------------------------------------------------
The following summarizes the per share long-term capital distributions paid by
the Trust during the year:
COMMON SHAREHOLDERS
Long-Term
Payable Date Capital Gains
-------------- --------------
1/12/2007 $0.011562
11/30/2007 $0.083536
PREFERRED SHAREOWNERS
Payable Long-Term
Series Date Capital Gains
-------- ------------ --------------
T 1/10/2007 $16.11
T 8/22/2007 $ 0.67
T 8/29/2007 $ 8.87
T 9/05/2007 $ 9.13
T 9/12/2007 $ 9.03
T 9/19/2007 $ 8.83
T 9/26/2007 $ 8.65
T 10/03/2007 $ 7.66
T 10/10/2007 $ 8.04
T 10/17/2007 $ 7.71
T 10/24/2007 $ 6.27
T 10/31/2007 $ 6.98
T 11/07/2007 $ 6.41
T 11/14/2007 $ 6.31
T 11/21/2007 $ 7.38
T 11/28/2007 $ 7.90
H 2/16/2007 $16.46
H 8/31/2007 $ 9.71
H 9/28/2007 $36.90
H 10/26/2007 $37.86
H 11/23/2007 $31.60
46
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PREFERRED SHAREOWNERS (continued)
Payable Long-Term
Series Date Capital Gains
----------------------------------------
F 1/08/2007 $16.31
F 8/27/2007 $ 7.17
F 9/04/2007 $ 9.92
F 9/10/2007 $ 7.84
F 9/17/2007 $ 8.83
F 9/24/2007 $ 8.83
F 10/01/2007 $ 8.82
F 10/09/2007 $ 9.92
F 10/15/2007 $ 6.88
F 10/22/2007 $ 7.43
F 10/29/2007 $ 7.28
F 11/05/2007 $ 7.22
F 11/13/2007 $ 8.15
F 11/19/2007 $ 5.76
F 11/26/2007 $ 7.73
47
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
To the Board of Trustees and Shareowners of
Pioneer Municipal and Equity Income Trust:
We have audited the accompanying statement of assets and liabilities of Pioneer
Municipal and Equity Income Trust (formerly "Pioneer Tax Advantaged Balanced
Trust") (the "Trust"), including the schedule of investments, as of November 30,
2007, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Trust's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of November 30, 2007, by correspondence with the custodian
and brokers or by other appropriate auditing procedures when replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Municipal and Equity Income Trust at November 30, 2007, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and financial highlights for each of
the periods indicated therein, in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
January 23, 2008
48
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
RESULTS OF SHAREOWNER MEETING (unaudited)
--------------------------------------------------------------------------------
On June 8, 2007, Pioneer Municipal and Equity Income Trust (formerly, Pioneer
Tax Advantaged Balanced Trust) held its annual meeting of shareholders.
Proposal 1 - Election of Class III Trustees
The Trust's Board of Trustees nominated David R. Bock, Stephen K. West and John
F. Cogan, Jr. as Class III Trustees. A shareholder of record nominated Arthur
D. Lipson, Robert Ferguson and Matthew Crouse as Class III Trustees. Another
shareholder of record nominated Ralph W. Bradshaw, Andrew A. Strauss and Glen
Wilcox, Sr. as Class III Trustees.
As shown below, owners of the common shares and the preferred shares, voting as
a single class, elected Arthur D. Lipson and Robert Ferguson as Class III
Trustees to serve for a term expiring on the date on which the annual meeting of
shareholders is held in 2010.
Nominee Affirmative Withheld
------------------------------------------------
David R. Bock* 6,684,183 243,749
Stephen K. West* 6,681,816 246,116
Arthur D. Lipson* 8,632,980 92,712
Robert Ferguson* 8,631,465 94,227
Ralph W. Bradshaw* 80,388 0
Andrew A. Strauss* 80,388 0
John F. Cogan, Jr.** 1,599 17
Matthew S. Crouse** 53 0
Glen Wilcox, Sr.** 0 0
* Designated as trustees to be elected by holders of common and preferred
shares, voting together as a single class.
** Designated as the trustee to be elected by holders of preferred shares
voting separately.
The election of the Trustee designated to be elected by the holders of the
Trust's preferred shares was adjourned until July 19, 2007 due to a lack of a
quorum. There was also no quorum present at the adjourned annual meeting of
shareholders. In light of the limited prospects of obtaining quorum, and the
costs associated with the continued solicitation of proxies from holders of
preferred shares,
49
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
RESULTS OF SHAREOWNER MEETING (continued)
--------------------------------------------------------------------------------
it was determined that the annual meeting would be adjourned indefinitely as to
the remaining proposal. Accordingly, John F. Cogan, Jr. will continue to serve
as a Class III Trustee until the next annual meeting of shareholders.
Proposal 2A - To adopt a managed distribution policy
A shareowner of record submitted Proposal 2A. The Trust's shareowners did not
approve Proposal 2A as shown below.
For Against Abstain
------------------------------------
5,031,797 7,421,100 3,281,112
Proposal 2B - To change the Trust's investment objective to seek capital
appreciation with current income as a secondary objective
A shareowner of record submitted Proposal 2B. The Trust's shareowners did not
approve Proposal 2B as shown below.
For Against Abstain
------------------------------------
3,832,935 8,631,523 3,269,552
50
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
--------------------------------------------------------------------------------
Pioneer Investment Management, Inc. ("PIM") serves as the Trust's investment
adviser pursuant to an investment advisory agreement between PIM and the Trust.
The Trustees of the Trust, as required by law, determine annually whether to
continue the investment advisory agreement for the Trust.
In connection with their most recent consideration of the investment advisory
agreement for the Trust, the Trustees received and reviewed a substantial amount
of information provided by PIM in response to requests of the independent
Trustees and their independent legal counsel. The independent Trustees met on a
number of occasions with PIM and also separately with their independent legal
counsel to evaluate and discuss the information provided to them by PIM. At a
meeting held on September 17, 2007, based on their evaluation of the information
provided by PIM and the sub-adviser, the majority of the Trustees, including the
majority of the independent Trustees voting separately, approved the
continuation of the investment advisory agreement for another year.
In considering the continuation of the investment advisory agreement, the
Trustees considered various factors that they determined were relevant,
including the factors described below. The Trustees did not identify any single
factor as the controlling factor in determining to approve the continuation of
the agreements.
Nature, Extent and Quality of Services Provided
In considering the nature, extent and quality of the services provided by PIM
under the investment advisory agreement, the Trustees considered that PIM was
responsible for the management of the Trust's operations. The Trustees reviewed
the terms of the investment advisory agreement and reviewed information provided
by PIM relating to its operations and personnel. They considered that PIM
provides day-to-day management of the Trust's portfolio of investments,
including making purchases and sales of portfolio securities consistent with the
Trust's investment objectives and policies. The Trustees reviewed each portfolio
manager's experience and qualifications, as well as PIM's investment approach
and research process. The Board considered PIM's resources and personnel,
focusing in particular on investment management, legal and compliance resources
and personnel.
The Trustees also considered that, as administrator, PIM is responsible for the
administration of the Trust's business and other affairs. It was noted that PIM
supervises and monitors the performance of the Trust's
51
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
APPROVAL OF INVESTMENT ADVISORY AGREEMENT (continued)
--------------------------------------------------------------------------------
service providers and provides the Trust with personnel (including officers) as
are necessary for the Trust's operations. The Trustees considered the fees paid
to PIM for the provision of such services.
Taking all of the foregoing into account, the majority of the Trustees concluded
that the nature, extent and quality of services provided to the Trust by PIM are
sufficient for renewal of the investment advisory agreement.
Performance of the Trust
The Trustees reviewed the Trust's investment performance, based on total return,
as well as the Trust's performance compared to the performance of both a peer
group of funds as classified by Morningstar, Inc. (Morningstar) and an index
approved by the independent Trustees for this purpose. The Trust's performance,
based upon total return, was in the second quintile of its Morningstar category
peer group for the 12 months ended June 30, 2007 and its three year annualized
total return as of June 30, 2007 was also in the second quintile of its
Morningstar category peer group. The Trustees noted that the yield (gross of
expenses) to the Trust's common shareowners exceeded the yield (at June 30,
2007) of the Lehman Municipal Bond Index and the Standard & Poor's Stock 500
Index for the twelve months ended June 30, 2007. The Trustees noted the
challenge of selecting a comparable peer group for performance purposes. (In all
quintile rankings referred to throughout this disclosure, first quintile is most
favorable to the Trust's shareowners. Thus, highest relative performance would
be first quintile and lowest relative expenses would also be first quintile.)
The majority of Trustees concluded that the performance of the Trust was
sufficient for renewal of the investment advisory agreement.
Management Fees and Expenses
The Trustees considered PIM's fee under the investment advisory agreement
relative to the management fees charged by a peer group of funds selected by the
independent Trustees for this purpose using data provided by Strategic Insight
Mutual Trust Research and Consulting, LLC (Strategic Insight). The Trust's
management fee for the 12 months ended June 30, 2007 was in the first quintile,
according to Strategic Insight, relative to the management fees paid by the
other funds in the peer group for the comparable period. The Trustees also
considered the Trust's expense ratio for the 12 months ended June 30, 2007 and
expense ratios for the comparable period of the Strategic Insight peer group.
The Trust's expense ratio for the 12 months ended
52
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
June 30, 2007 was in the first quintile, according to Strategic Insight,
relative to the total expense ratios of the other funds in the peer group for
the comparable period. The Trustees noted the challenge of selecting a
comparable peer group for expense comparison purposes. The majority of the
Trustees concluded that the advisory fee, within the overall context of their
deliberations, was reasonable.
Profitability
The Trustees reviewed information concerning the costs of the services provided
to the Trust by PIM, and the profitability to PIM of its advisory and
administrative relationship with Trust, along with a description of the
methodology used by PIM in preparing the profitability information.
The Trustees recognized that PIM should be entitled to earn a reasonable level
of profit for the services provided to the Trust, and that it is difficult to
make comparisons of profitability from fund advisory and administration
contracts. The majority of the Trustees concluded that, taking all of the
foregoing into account, they were satisfied that PIM's level of profitability on
a pre-tax basis for both advisory services and all services provided to the
Trust was not excessive.
Economies of Scale
The Trustees considered the extent to which PIM may realize economies of scale
or other efficiencies in managing and supporting the Trust. Since the Trust is a
closed-end fund and its size is relatively stable at an asset level that was
anticipated when the management fee was initially set, the majority of the
Trustees concluded that economies of scale were not a relevant consideration.
Other Benefits
The Trustees also considered the character and amount of fees paid by the Trust,
other than under the investment advisory agreement, for services provided by PIM
and its affiliates. The Trustees further considered the revenues and
profitability of PIM's businesses other than the fund business. The Trustees
also considered the intangible benefits that accrue to PIM and its affiliates by
virtue of its relationship with the Trust and the Pioneer funds as a group. The
majority of the Trustees concluded that the other benefits to PIM from its
relationship with the Trust were acceptable.
53
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
APPROVAL OF INVESTMENT ADVISORY AGREEMENT (continued)
--------------------------------------------------------------------------------
Conclusion
After consideration of the factors described above as well as other factors, the
majority of Trustees, including a majority of the independent Trustees,
concluded that the investment advisory agreement between PIM and the Trust,
including the fees payable thereunder, were fair and reasonable and voted to
approve the proposed continuation of the investment advisory agreement for the
Trust.
54
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
--------------------------------------------------------------------------------
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Legal Counsel
Bingham McCutchen LLP
Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Shareowner Services and Sub-Transfer Agent
American Stock Transfer & Trust Company
Preferred Share Auction/Transfer Agent and Registrar
Deutsche Bank Trust Company Americas
Sub-Administrator
Princeton Administrators, LLC
Trustees and Officers
The Board of Trustees provides broad supervision over the Trust's affairs. The
officers of the Trust are responsible for the Trust's operations. The Trustees
and officers are listed below, together with their principal occupations during
the past five years. Trustees who are interested persons of the Trust within
the meaning of the 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 (except Mr. Kingsbury, Mr. Ferguson and Mr.
Lipson) serves as a Trustee of each of the 76 U.S. registered investment
portfolios for which Pioneer serves as investment adviser (the "Pioneer
Funds"). Mr. Kingsbury serves as Trustee of 33 of the 76 Pioneer Funds. Mr.
Ferguson and Mr. Lipson each serve as Trustee of only this fund. The address
for all Trustees (except Mr. Ferguson and Mr. Lipson, whose addresses are
listed under their names) and all officers of the Trust is 60 State Street,
Boston, Massachusetts 02109.
Proxy Voting Policies and Procedures of the Trust are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Trust voted proxies relating to portfolio securities during
the most recent 12 months ended June 30, 2007 is publicly available to
shareowners at pioneerinvestments.com. This information is also available on the
Securities and Exchange Commission's web site at http://www.sec.gov.
55
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
INTERESTED TRUSTEES
--------------------------------------------------------------------------------
Position Held Length of Service
Name and Age With the Trust and Term of Office
John F. Cogan, Jr. (81)* Chairman of the Class III Trustee since
Board, Trustee and 2004. Term expires
President in 2010. Elected by
Preferred Shares only.
--------------------------------------------------------------------------------
Daniel K. Kingsbury (49)* Trustee and Executive Class I Trustee since
Vice President 2007. Term expires
in 2008.
--------------------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Trustee
John F. Cogan, Jr. (81)* Deputy Chairman and a Director of Pioneer Global Asset None
Management S.p.A. ("PGAM"); Non-Executive Chairman
and a Director of Pioneer Investment Management USA
Inc. ("PIM-USA"); Chairman and a Director of Pioneer;
Chairman and Director of Pioneer Institutional Asset
Management, Inc. (since 2006); Director of Pioneer
Alternative Investment Management Limited (Dublin);
President and a Director of Pioneer Alternative Investment
Management (Bermuda) Limited and affiliated funds; Direc-
tor of PIOGLOBAL Real Estate Investment Fund (Russia)
(until June 2006); Director of Nano-C, Inc. (since 2003);
Director of Cole Management Inc. (since 2004); Director
of Fiduciary Counseling, Inc.; President and Director of
Pioneer Funds Distributor, Inc. ("PFD") (until May 2006);
President of all of the Pioneer Funds; and Of Counsel,
Wilmer Cutler Pickering Hale and Dorr LLP
-----------------------------------------------------------------------------------------------------------------
Daniel K. Kingsbury (49)* Director, CEO and President of Pioneer Investment None
Management USA Inc., Pioneer Investment Management,
Inc. and Pioneer Institutional Asset Management, Inc.
(since March 2007); Executive Vice President of all of the
Pioneer Funds (since March 2007); Director of Pioneer
Global Asset Management S.p.A. (since March 2007);
Head of New Markets Division, Pioneer Global Asset
Management S.p.A. (2000 - 2007)
-----------------------------------------------------------------------------------------------------------------
56
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
--------------------------------------------------------------------------------
Position Held Length of Service
Name, Age and Address With the Trust and Term of Office
Mary K. Bush (59) Trustee Class II Trustee since
2003. Term expires in 2009.
--------------------------------------------------------------------------------
Robert Ferguson (51) Trustee Class III Trustee since
Benchmark Plus Partners 2007. Term expires
820 A Street in 2010.
Suite 700
Tacoma, WA 98402
--------------------------------------------------------------------------------
Margaret B.W. Graham (60) Trustee Class I Trustee since
2003. Term expires in 2008.
--------------------------------------------------------------------------------
Other Directorships Held
Name, Age and Address Principal Occupation During Past Five Years by this Trustee
Mary K. Bush (59) President, Bush International, LLC (international financial Director of Brady Corpora-
advisory firm) tion (industrial identifica-
tion and specialty coated
material products
manufacturer); Director
of Briggs & Stratton Co.
(engine manufacturer);
Director of UAL Corpora-
tion (airline holding
company); Director of
Mantech International
Corporation (national
security, defense, and
intelligence technology
firm): and Member, Board
of Governors, Investment
Company Institute
-----------------------------------------------------------------------------------------------------------------------
Robert Ferguson (51) Principal, Benchmark Plus Management, L.L.C., (invest- None
Benchmark Plus Partners ment advisor) (2003 - present); President, Paradigm
820 A Street Partners NW, Inc. (investment advisor) (1998 - present)
Suite 700
Tacoma, WA 98402
-----------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (60) Founding Director, Vice-President and Corporate Secretary, None
The Winthrop Group, Inc. (consulting firm); and Desautels
Faculty of Management, McGill University
-----------------------------------------------------------------------------------------------------------------------
57
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
Position Held Length of Service
Name, Age and Address With the Trust and Term of Office
Arthur D. Lipson (65) Trustee Class III Trustee since
Western Investment LLC 2007. Term expires
7050 South Union Park Center in 2010.
Suite 590
Midvale, UT 84047
--------------------------------------------------------------------------------
Thomas J. Perna (57) Trustee Class II Trustee since
2006. Term expires in 2009.
--------------------------------------------------------------------------------
Marguerite A. Piret (59) Trustee Class II Trustee since
2003. Term expires in 2009.
Elected by Preferred Shares
only.
--------------------------------------------------------------------------------
John Winthrop (71) Trustee Class I Trustee since
2003. Term expires in 2008.
--------------------------------------------------------------------------------
Other Directorships Held
Name, Age and Address Principal Occupation During Past Five Years by this Trustee
Arthur D. Lipson (65) Manager, Western Investment LLC (investment manage- None
Western Investment LLC ment) (1995 - present)
7050 South Union Park Center
Suite 590
Midvale, UT 84047
-------------------------------------------------------------------------------------------------------------------
Thomas J. Perna (57) Private investor (2004 - present); and Senior Executive Director of Quadriserv
Vice President, The Bank of New York (financial and Inc. (technology products
securities services) (1986 - 2004) for securities lending
industry)
-------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (59) President and Chief Executive Officer, Newbury, Piret & Director of New America
Company, Inc. (investment banking firm) High Income Fund, Inc.
(closed-end investment
company)
-------------------------------------------------------------------------------------------------------------------
John Winthrop (71) President, John Winthrop & Co., Inc. (private invest- None
ment firm)
-------------------------------------------------------------------------------------------------------------------
58
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
FUND OFFICERS
--------------------------------------------------------------------------------
Position Held Length of Service
Name and Age With the Trust and Term of Office
Dorothy E. Bourassa (59) Secretary Since 2003. Serves
at the discretion of
the Board
--------------------------------------------------------------------------------
Christopher J. Kelley (42) Assistant Secretary Since 2003. Serves
at the discretion of
the Board
--------------------------------------------------------------------------------
Vincent Nave (62) Treasurer Since 2003. Serves
at the discretion of
the Board
--------------------------------------------------------------------------------
Mark E. Bradley (48) Assistant Treasurer Since 2004. Serves
at the discretion of
the Board
--------------------------------------------------------------------------------
Luis I. Presutti (42) Assistant Treasurer Since 2003. Serves
at the discretion of
the Board
--------------------------------------------------------------------------------
Gary Sullivan (49) Assistant Treasurer Since 2003. Serves
at the discretion of
the Board
--------------------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Officer
Dorothy E. Bourassa (59) Secretary of PIM-USA; Senior Vice President - Legal of None
Pioneer; Secretary/Clerk of most of PIM-USA's subsidiar-
ies; and Secretary of all of the Pioneer Funds since
September 2003 (Assistant Secretary from November
2000 to September 2003)
-------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (42) Vice President and Senior Counsel of Pioneer since July None
2002 and Assistant Secretary of all of the Pioneer Funds
since September 2003; Vice President and Senior Counsel
of BISYS Fund Services, Inc. (April 2001 to June 2002);
Senior Vice President and Deputy General Counsel of
Funds Distributor, Inc. (July 2000 to April 2001)
-------------------------------------------------------------------------------------------------------------------
Vincent Nave (62) Vice President - Fund Accounting, Administration and None
Controllership Services of Pioneer; and Treasurer of
all of the Pioneer Funds
-------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (48) Deputy Treasurer of Pioneer since 2004 and Assistant None
Treasurer of all of the Pioneer Funds since
November 2004; Treasurer and Senior Vice President,
CDC IXIS Asset Management Services from 2002 to
2003
-------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (42) Assistant Vice President - Fund Accounting, Administration None
and Controllership Services of Pioneer; and Assistant
Treasurer of all of the Pioneer Funds
-------------------------------------------------------------------------------------------------------------------
Gary Sullivan (49) Fund Accounting Manager - Fund Accounting, Administra- None
tion and Controllership Services of Pioneer; and Assistant
Treasurer of all of the Pioneer Funds
-------------------------------------------------------------------------------------------------------------------
59
Pioneer Municipal and Equity Income Trust
--------------------------------------------------------------------------------
FUND OFFICERS
--------------------------------------------------------------------------------
Other
Directorships
Position Held Length of Service Principal Occupation Held by
Name and Age With the Trust and Term of Office During Past Five Years this Officer
Katherine Kim Sullivan (33) Assistant Treasurer Since 2003. Serves Fund Administration Manager - Fund None
at the discretion of Accounting, Administration and
the Board Controllership Services since June 2003
and Assistant Treasurer of all of the
Pioneer Funds since September 2003;
Assistant Vice President - Mutual Fund
Operations of State Street Corporation
from June 2002 to June 2003 (formerly
Deutsche Bank Asset Management)
------------------------------------------------------------------------------------------------------------------------------------
Teri W. Anderholm (48) Chief Compliance Since January 2007. Chief Compliance Officer of Pioneer None
Officer Serves at the discre- since December 2006 and of all the
tion of the Board Pioneer Funds since January 2007; Vice
President and Compliance Officer, MFS
Investment Management (August 2005 to
December 2006); Consultant, Fidelity
Investments (February 2005 to July
2005); Independent Consultant (July 1997
to February 2005)
------------------------------------------------------------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are
officers or directors of the fund's investment adviser and certain of its
affiliates.
The outstanding capital stock of PFD, Pioneer and PIMSS is indirectly wholly
owned by UniCredito Italiano S.p.A. ("UniCredito Italiano"), one of the largest
banking groups in Italy. Pioneer, the Trust's investment adviser, provides
investment management and financial services to mutual funds, institutional and
other clients.
60
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HOW TO CONTACT PIONEER
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We are pleased to offer a variety of convenient ways for you to contact 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 Company
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 www.pioneerinvestments.com.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
The Trust's Chief Executive Officer is required by the New York Stock Exchange's
Listing Standards to file annually with the Exchange a certification that he is
not aware of any violation by the Trust of the Exchange's Corporate Governance
Standards applicable to the Trust. The Trust has filed such certification.
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit Fees
Fees for audit services provided to the Trust, including fees
associated with the annual filing of its Form N-1A, totaled
approximately $39,635 in 2007 and $38,110 in 2006.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
Audit-Related Fees
Audit-related Fees for the Trust's audit related services totaled
approximately $9,285 in 2007 and $8,925 in 2006.
These services included issuance of agreed upon procedures
report to the rating agencies.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
Tax Fees
Fees for tax compliance services, primarily for tax returns,
totaled approximately $7,820 and $7,515 in 2007 and 2006,
respectively.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
All Other Fees
There were no fees for other services provided to the Trust
during the fiscal years ended November 30, 2007 and 2006.
(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 November 30, 2007 and 2006, there were no services provided
to an affiliate that required the Trust's audit committee
pre-approval.
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The aggregate non-audit fees for the Trust and affiliates, as
previously defined, totaled approximately $17,105 in 2007 and
$16,440 in 2006.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Trust's audit committee of the Board of Trustees has
considered whether the provision of non-audit services that
were rendered to the Affiliates (as defined) that were not pre-
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal
accountant's independence.
Item 5. Audit Committee of Listed Registrants
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrants audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
The registrant has a separately-designated standing audit
committe eestablished in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption
from the listing standards for audit committees.
N/A
Item 6. Schedule of Investments.
File Schedule I Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.12-
12 of Regulation S-X [17 CFR 210.12-12], unless the schedule is
included as part of the report to shareholders filed under Item
1 of this Form.
Included in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Proxy Voting Policies and Procedures of
Pioneer Investment Management, Inc.
VERSION DATED July, 2004
Overview
Pioneer Investment Management, Inc. ("Pioneer") is a fiduciary that owes
each of its client's duties of care and loyalty with respect to all
services undertaken on the client's behalf, including proxy voting. When
Pioneer has been delegated proxy-voting authority for a client, the duty of
care requires Pioneer to monitor corporate events and to vote the proxies.
To satisfy its duty of loyalty, Pioneer must place its client's interests
ahead of its own and must cast proxy votes in a manner consistent with the
best interest of its clients. Pioneer will vote all proxies presented in a
timely manner.
The Proxy Voting Policies and Procedures are designed to complement
Pioneer's investment policies and procedures regarding its general
responsibility to monitor the performance and/or corporate events of
companies that are issuers of securities held in accounts managed by
Pioneer. Pioneer's Proxy Voting Policies summarize Pioneer's position on a
number of issues solicited by companies held by Pioneer's clients. The
policies are guidelines that provide a general indication on how Pioneer
would vote but do not include all potential voting scenarios.
Pioneer's Proxy Voting Procedures detail monitoring of voting, exception
votes, and review of conflicts of interest and ensure that case-by-case
votes are handled within the context of the overall guidelines (i.e. best
interest of client). The overriding goal is that all proxies for US and
non-US companies that are received promptly will be voted in accordance
with Pioneer's policies or specific client instructions. All shares in a
company held by Pioneer-managed accounts will be voted alike, unless a
client has given us specific voting instructions on an issue or has not
delegated authority to us or the Proxy Voting Oversight Group determines
that the circumstances justify a different approach.
Pioneer does not delegate the authority to vote proxies relating to its
clients to any of its affiliates, which include other subsidiaries of
UniCredito.
Any questions about these policies and procedures should be directed to the
Proxy Coordinator.
1
Proxy Voting Procedures
Proxy Voting Service
Pioneer has engaged an independent proxy voting service to assist in the
voting of proxies. The proxy voting service works with custodians to ensure
that all proxy materials are received by the custodians and are processed
in a timely fashion. To the extent applicable, the proxy voting service
votes all proxies in accordance with the proxy voting policies established
by Pioneer. The proxy voting service will refer proxy questions to the
Proxy Coordinator (described below) for instructions under circumstances
where: (1) the application of the proxy voting guidelines is unclear; (2) a
particular proxy question is not covered by the guidelines; or (3) the
guidelines call for specific instructions on a case-by-case basis. The
proxy voting service is also requested to call to the Proxy Coordinator's
attention specific proxy questions that, while governed by a guideline,
appear to involve unusual or controversial issues. Pioneer reserves the
right to attend a meeting in person and may do so when it determines that
the company or the matters to be voted on at the meeting are strategically
important to its clients.
Proxy Coordinator
Pioneer's Director of Investment Operations (the "Proxy Coordinator")
coordinates the voting, procedures and reporting of proxies on behalf of
Pioneer's clients. The Proxy Coordinator will deal directly with the proxy
voting service and, in the case of proxy questions referred by the proxy
voting service, will solicit voting recommendations and instructions from
the Director of Portfolio Management US or, to the extent applicable,
investment sub-advisers. The Proxy Coordinator is responsible for ensuring
that these questions and referrals are responded to in a timely fashion and
for transmitting appropriate voting instructions to the proxy voting
service. The Proxy Coordinator is responsible for verifying with the
Compliance Department whether Pioneer's voting power is subject to any
limitations or guidelines issued by the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries).
Referral Items
From time to time, the proxy voting service will refer proxy questions to
the Proxy Coordinator that are described by Pioneer's policy as to be voted
on a case-by-case basis, that are not covered by Pioneer's guidelines or
where Pioneer's guidelines may be unclear with respect to the matter to be
voted on. Under such certain circumstances, the Proxy Coordinator will seek
a written voting recommendation from the Director of Portfolio Management
US. Any such recommendation will include: (i) the manner in which the
proxies should be voted; (ii) the rationale underlying any such decision;
and (iii) the disclosure of any contacts or communications made between
Pioneer and any outside parties concerning the proxy proposal prior to the
time that the voting instructions are provided. In addition, the Proxy
Coordinator will ask the Compliance Department to review the question for
any actual or apparent conflicts of interest as described below under
"Conflicts of
2
Interest." The Compliance Department will provide a "Conflicts of Interest
Report," applying the criteria set forth below under "Conflicts of
Interest," to the Proxy Coordinator summarizing the results of its review.
In the absence of a conflict of interest, the Proxy Coordinator will vote
in accordance with the recommendation of the Director of Portfolio
Management US.
If the matter presents a conflict of interest for Pioneer, then the Proxy
Coordinator will refer the matter to the Proxy Voting Oversight Group for a
decision. In general, when a conflict of interest is present, Pioneer will
vote according to the recommendation of the Director of Portfolio
Management US where such recommendation would go against Pioneer's interest
or where the conflict is deemed to be immaterial. Pioneer will vote
according to the recommendation of its proxy voting service when the
conflict is deemed to be material and the Pioneer's internal vote
recommendation would favor Pioneer's interest, unless a client specifically
requests Pioneer to do otherwise. When making the final determination as to
how to vote a proxy, the Proxy Voting Oversight Group will review the
report from the Director of Portfolio Management US and the Conflicts of
Interest Report issued by the Compliance Department.
Conflicts of Interest
A conflict of interest occurs when Pioneer's interests interfere, or appear
to interfere with the interests of Pioneer's clients. Occasionally, Pioneer
may have a conflict that can affect how its votes proxies. The conflict may
be actual or perceived and may exist when the matter to be voted on
concerns:
o An affiliate of Pioneer, such as another company belonging to
the UniCredito Italiano S.p.A. banking group (a "UniCredito
Affiliate");
o An issuer of a security for which Pioneer acts as a sponsor,
advisor, manager, custodian, distributor, underwriter, broker, or
other similar capacity (including those securities specifically
declared by PGAM to present a conflict of interest for Pioneer);
o An issuer of a security for which UniCredito has informed Pioneer
that a UniCredito Affiliate acts as a sponsor, advisor, manager,
custodian, distributor, underwriter, broker, or other similar
capacity; or
o A person with whom Pioneer (or any of its affiliates) has an
existing, material contract or business relationship that was not
entered into in the ordinary course of Pioneer's business.
o Pioneer will abstain from voting with respect to companies
directly or indirectly owned by UniCredito Italiano Group, unless
otherwise directed by a client. In addition, Pioneer will inform
PGAM Global Compliance and the PGAM Independent Directors before
exercising such rights.
Any associate involved in the proxy voting process with knowledge of any
apparent or actual conflict of interest must disclose such conflict to the
Proxy Coordinator and the Compliance Department. The Compliance Department
will review each item referred to Pioneer to determine whether an actual or
potential conflict of interest with Pioneer exists in connection with the
proposal(s) to be voted upon. The review will be conducted by comparing the
apparent parties affected by the proxy proposal being
3
voted upon against the Compliance Department's internal list of interested
persons and, for any matches found, evaluating the anticipated magnitude
and possible probability of any conflict of interest being present. For
each referral item, the determination regarding the presence or absence of
any actual or potential conflict of interest will be documented in a
Conflicts of Interest Report to the Proxy Coordinator.
Securities Lending
In conjunction with industry standards Proxies are not available to be
voted when the shares are out on loan through either Pioneer's lending
program or a client's managed security lending program. However, Pioneer
will reserve the right to recall lent securities so that they may be voted
according to the Pioneer's instructions. If a portfolio manager would like
to vote a block of previously lent shares, the Proxy Coordinator will work
with the portfolio manager and Investment Operations to recall the
security, to the extent possible, to facilitate the vote on the entire
block of shares.
Share-Blocking
"Share-blocking" is a market practice whereby shares are sent to a
custodian (which may be different than the account custodian) for record
keeping and voting at the general meeting. The shares are unavailable for
sale or delivery until the end of the blocking period (typically the day
after general meeting date).
Pioneer will vote in those countries with "share-blocking." In the event a
manager would like to sell a security with "share-blocking", the Proxy
Coordinator will work with the Portfolio Manager and Investment Operations
Department to recall the shares (as allowable within the market time-frame
and practices) and/or communicate with executing brokerage firm. A list of
countries with "share-blocking" is available from the Investment Operations
Department upon request.
Record Keeping
The Proxy Coordinator shall ensure that Pioneer's proxy voting service:
o Retains a copy of the proxy statement received (unless the proxy
statement is available from the SEC's Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system);
o Retains a record of the vote cast;
o Prepares Form N-PX for filing on behalf of each client that is a
registered investment company; and
o Is able to promptly provide Pioneer with a copy of the voting
record upon its request.
4
The Proxy Coordinator shall ensure that for those votes that may require
additional documentation (i.e. conflicts of interest, exception votes and
case-by-case votes) the following records are maintained:
o A record memorializing the basis for each referral vote cast;
o A copy of any document created by Pioneer that was material in
making the decision on how to vote the subject proxy; and
o A copy of any conflict notice, conflict consent or any other
written communication (including emails or other electronic
communications) to or from the client (or in the case of an
employee benefit plan, the plan's trustee or other fiduciaries)
regarding the subject proxy vote cast by, or the vote
recommendation of, Pioneer.
o Pioneer shall maintain the above records in the client's file for a
period not less than ten (10) years.
Disclosure
Pioneer shall take reasonable measures to inform its clients of the process
or procedures clients must follow to obtain information regarding how
Pioneer voted with respect to assets held in their accounts. In addition,
Pioneer shall describe to clients its proxy voting policies and procedures
and will furnish a copy of its proxy voting policies and procedures upon
request. This information may be provided to clients through Pioneer's Form
ADV (Part II) disclosure, by separate notice to the client, or through
Pioneer's website.
Proxy Voting Oversight Group
The members of the Proxy Voting Oversight Group are Pioneer's: Director of
Portfolio Management US, Head of Investment Operations, and Director of
Compliance. Other members of Pioneer will be invited to attend meetings and
otherwise participate as necessary. The Head of Investment Operations will
chair the Proxy Voting Oversight Group.
The Proxy Voting Oversight Group is responsible for developing, evaluating,
and changing (when necessary) Pioneer's Proxy Voting Policies and
Procedures. The group meets at least annually to evaluate and review these
policies and procedures and the services of its third-party proxy voting
service. In addition, the Proxy Voting Oversight Group will meet as
necessary to vote on referral items and address other business as
necessary.
Amendments
Pioneer may not amend its Proxy Voting Policies And Procedures without the
prior approval of the Proxy Voting Oversight Group and its corporate
parent, Pioneer Global Asset Management S.p.A
5
Proxy Voting Policies
Pioneer's sole concern in voting proxies is the economic effect of the
proposal on the value of portfolio holdings, considering both the short-
and long-term impact. In many instances, Pioneer believes that supporting
the company's strategy and voting "for" management's proposals builds
portfolio value. In other cases, however, proposals set forth by management
may have a negative effect on that value, while some shareholder proposals
may hold the best prospects for enhancing it. Pioneer monitors developments
in the proxy-voting arena and will revise this policy as needed.
All proxies that are received promptly will be voted in accordance with the
specific policies listed below. All shares in a company held by
Pioneer-managed accounts will be voted alike, unless a client has given us
specific voting instructions on an issue or has not delegated authority to
us. Proxy voting issues will be reviewed by Pioneer's Proxy Voting
Oversight Group, which consists of the Director of Portfolio Management US,
the Director of Investment Operations (the Proxy Coordinator), and the
Director of Compliance.
Pioneer has established Proxy Voting Procedures for identifying and
reviewing conflicts of interest that may arise in the voting of proxies.
Clients may request, at any time, a report on proxy votes for securities
held in their portfolios and Pioneer is happy to discuss our proxy votes
with company management. Pioneer retains a proxy voting service to provide
research on proxy issues and to process proxy votes.
Administrative
While administrative items appear infrequently in U.S. issuer proxies, they
are quite common in non-U.S. proxies.
We will generally support these and similar management proposals:
o Corporate name change.
o A change of corporate headquarters.
o Stock exchange listing.
o Establishment of time and place of annual meeting.
o Adjournment or postponement of annual meeting.
o Acceptance/approval of financial statements.
o Approval of dividend payments, dividend reinvestment plans and other
dividend-related proposals.
o Approval of minutes and other formalities.
6
o Authorization of the transferring of reserves and allocation of
income.
o Amendments to authorized signatories.
o Approval of accounting method changes or change in fiscal year-end.
o Acceptance of labor agreements.
o Appointment of internal auditors.
Pioneer will vote on a case-by-case basis on other routine business;
however, Pioneer will oppose any routine business proposal if insufficient
information is presented in advance to allow Pioneer to judge the merit of
the proposal. Pioneer has also instructed its proxy voting service to
inform Pioneer of its analysis of any administrative items inconsistent, in
its view, with supporting the value of Pioneer portfolio holdings so that
Pioneer may consider and vote on those items on a case-by-case basis.
Auditors
We normally vote for proposals to:
o Ratify the auditors. We will consider a vote against if we are
concerned about the auditors' independence or their past work for
the company. Specifically, we will oppose the ratification of
auditors and withhold votes from audit committee members if
non-audit fees paid by the company to the auditing firm exceed the
sum of audit fees plus audit-related fees plus permissible tax
fees according to the disclosure categories proposed by the
Securities and Exchange Commission.
o Restore shareholder rights to ratify the auditors.
We will normally oppose proposals that require companies to:
o Seek bids from other auditors.
o Rotate auditing firms, except where the rotation is statutorily
required or where rotation would demonstrably strengthen financial
disclosure.
o Indemnify auditors.
o Prohibit auditors from engaging in non-audit services for the
company.
Board of Directors
On issues related to the board of directors, Pioneer normally supports
management. We will, however, consider a vote against management in
instances where corporate performance has been very poor or where the board
appears to lack independence.
7
General Board Issues
Pioneer will vote for:
o Audit, compensation and nominating committees composed of
independent directors exclusively.
o Indemnification for directors for actions taken in good faith in
accordance with the business judgment rule. We will vote against
proposals for broader indemnification.
o Changes in board size that appear to have a legitimate business
purpose and are not primarily for anti-takeover reasons.
o Election of an honorary director.
We will vote against:
o Minimum stock ownership by directors.
o Term limits for directors. Companies benefit from experienced
directors, and shareholder control is better achieved through
annual votes.
o Requirements for union or special interest representation on the
board.
o Requirements to provide two candidates for each board seat.
We will vote on a case-by case basis on these issues:
o Separate chairman and CEO positions. We will consider voting with
shareholders on these issues in cases of poor corporate
performance.
Elections of Directors
In uncontested elections of directors we will vote against:
o Individual directors with absenteeism above 25% without valid
reason. We support proposals that require disclosure of director
attendance.
o Insider directors and affiliated outsiders who sit on the audit,
compensation, stock option or nominating committees. For the
purposes of our policy, we accept the definition of affiliated
directors provided by our proxy voting service.
We will also vote against:
o Directors who have failed to act on a takeover offer where the
majority of shareholders have tendered their shares.
o Directors who appear to lack independence or are associated with
very poor corporate performance.
8
We will vote on a case-by case basis on these issues:
o Re-election of directors who have implemented or renewed a
dead-hand or modified dead-hand poison pill (a "dead-hand poison
pill" is a shareholder rights plan that may be altered only by
incumbent or "dead " directors. These plans prevent a potential
acquirer from disabling a poison pill by obtaining control of the
board through a proxy vote).
o Contested election of directors.
o Prior to phase-in required by SEC, we would consider supporting
election of a majority of independent directors in cases of poor
performance.
o Mandatory retirement policies.
o Directors who have ignored a shareholder proposal that has been
approved by shareholders for two consecutive years.
Takeover-Related Measures
Pioneer is generally opposed to proposals that may discourage takeover
attempts. We believe that the potential for a takeover helps ensure that
corporate performance remains high.
Pioneer will vote for:
o Cumulative voting.
o Increase ability for shareholders to call special meetings.
o Increase ability for shareholders to act by written consent.
o Restrictions on the ability to make greenmail payments.
o Submitting rights plans to shareholder vote.
o Rescinding shareholder rights plans ("poison pills").
o Opting out of the following state takeover statutes:
o Control share acquisition statutes, which deny large holders voting
rights on holdings over a specified threshold.
o Control share cash-out provisions, which require large holders to
acquire shares from other holders.
o Freeze-out provisions, which impose a waiting period on large
holders before they can attempt to gain control.
o Stakeholder laws, which permit directors to consider interests of
non-shareholder constituencies.
9
o Disgorgement provisions, which require acquirers to disgorge profits
on purchases made before gaining control.
o Fair price provisions.
o Authorization of shareholder rights plans.
o Labor protection provisions.
o Mandatory classified boards.
We will vote on a case-by-case basis on the following issues:
o Fair price provisions. We will vote against provisions requiring
supermajority votes to approve takeovers. We will also consider
voting against proposals that require a supermajority vote to
repeal or amend the provision. Finally, we will consider the
mechanism used to determine the fair price; we are generally
opposed to complicated formulas or requirements to pay a premium.
o Opting out of state takeover statutes regarding fair price
provisions. We will use the criteria used for fair price
provisions in general to determine our vote on this issue.
o Proposals that allow shareholders to nominate directors.
We will vote against:
o Classified boards, except in the case of closed-end mutual funds.
o Limiting shareholder ability to remove or appoint directors. We
will support proposals to restore shareholder authority in this
area. We will review on a case-by-case basis proposals that
authorize the board to make interim appointments.
o Classes of shares with unequal voting rights.
o Supermajority vote requirements.
o Severance packages ("golden" and "tin" parachutes). We will support
proposals to put these packages to shareholder vote.
o Reimbursement of dissident proxy solicitation expenses. While we
ordinarily support measures that encourage takeover bids, we
believe that management should have full control over corporate
funds.
o Extension of advance notice requirements for shareholder proposals.
o Granting board authority normally retained by shareholders (e.g.,
amend charter, set board size).
o Shareholder rights plans ("poison pills"). These plans generally
allow shareholders to buy additional shares at a below-market
price in the event of a change in control and may deter some bids.
10
Capital Structure
Managements need considerable flexibility in determining the company's
financial structure, and Pioneer normally supports managements' proposals
in this area. We will, however, reject proposals that impose high barriers
to potential takeovers.
Pioneer will vote for:
o Changes in par value.
o Reverse splits, if accompanied by a reduction in number of shares.
o Share repurchase programs, if all shareholders may participate on
equal terms.
o Bond issuance.
o Increases in "ordinary" preferred stock.
o Proposals to have blank-check common stock placements (other than
shares issued in the normal course of business) submitted for
shareholder approval.
o Cancellation of company treasury shares.
We will vote on a case-by-case basis on the following issues:
o Reverse splits not accompanied by a reduction in number of shares,
considering the risk of delisting.
o Increase in authorized common stock. We will make a determination
considering, among other factors:
o Number of shares currently available for issuance;
o Size of requested increase (we would normally approve increases of up to
100% of current authorization);
o Proposed use of the additional shares; and
o Potential consequences of a failure to increase the number of shares
outstanding (e.g., delisting or bankruptcy).
o Blank-check preferred. We will normally oppose issuance of a new
class of blank-check preferred, but may approve an increase in a
class already outstanding if the company has demonstrated that it
uses this flexibility appropriately.
o Proposals to submit private placements to shareholder vote.
o Other financing plans.
We will vote against preemptive rights that we believe limit a company's
financing flexibility.
11
Compensation
Pioneer supports compensation plans that link pay to shareholder returns
and believes that management has the best understanding of the level of
compensation needed to attract and retain qualified people. At the same
time, stock-related compensation plans have a significant economic impact
and a direct effect on the balance sheet. Therefore, while we do not want
to micromanage a company's compensation programs, we will place limits on
the potential dilution these plans may impose.
Pioneer will vote for:
o 401(k) benefit plans.
o Employee stock ownership plans (ESOPs), as long as shares
allocated to ESOPs are less than 5% of outstanding shares. Larger
blocks of stock in ESOPs can serve as a takeover defense. We will
support proposals to submit ESOPs to shareholder vote.
o Various issues related to the Omnibus Budget and Reconciliation Act
of 1993 (OBRA), including:
o Amendments to performance plans to conform with OBRA;
o Caps on annual grants or amendments of administrative features;
o Adding performance goals; and
o Cash or cash-and-stock bonus plans.
o Establish a process to link pay, including stock-option grants, to
performance, leaving specifics of implementation to the company.
o Require that option repricings be submitted to shareholders.
o Require the expensing of stock-option awards.
o Require reporting of executive retirement benefits (deferred
compensation, split-dollar life insurance, SERPs, and pension
benefits).
o Employee stock purchase plans where the purchase price is equal to
at least 85% of the market price, where the offering period is no
greater than 27 months and where potential dilution (as defined
below) is no greater than 10%.
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We will vote on a case-by-case basis on the following issues:
o Executive and director stock-related compensation plans. We will
consider the following factors when reviewing these plans:
o The program must be of a reasonable size. We will approve plans
where the combined employee and director plans together would
generate less than 15% dilution. We will reject plans with 15% or
more potential dilution.
Dilution = (A + B + C) / (A + B + C + D), where
A = Shares reserved for plan/amendment,
B = Shares available under continuing plans,
C = Shares granted but unexercised and
D = Shares outstanding.
o The plan must not:
o Explicitly permit unlimited option repricing authority or that
have repriced in the past without shareholder approval.
o Be a self-replenishing "evergreen" plan, plans that grant
discount options and tax offset payments.
o We are generally in favor of proposals that increase participation beyond
executives.
o We generally support proposals asking companies to adopt rigorous
vesting provisions for stock option plans such as those that vest
incrementally over, at least, a three- or four-year period with a pro
rata portion of the shares becoming exercisable on an annual basis
following grant date.
o We generally support proposals asking companies to disclose their
window period policies for stock transactions. Window period policies
ensure that employees do not exercise options based on insider
information contemporaneous with quarterly earnings releases and other
material corporate announcements.
o We generally support proposals asking companies to adopt stock holding
periods for their executives.
o All other employee stock purchase plans.
o All other compensation-related proposals, including deferred
compensation plans, employment agreements, loan guarantee programs
and retirement plans.
o All other proposals regarding stock compensation plans, including
extending the life of a plan, changing vesting restrictions,
repricing options, lengthening exercise periods or accelerating
distribution of awards and pyramiding and cashless exercise
programs.
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 registrants portfolio (Portfolio Manager). Also state each Portfolio
Managers business experience during the past 5 years.
PORTFOLIO MANAGEMENT
Additional Information About the Portfolio Managers
Other Accounts Managed by the Portfolio Managers. The table below indicates, for
each portfolio manager of the fund, information about the accounts other than
the fund over which the portfolio manager has day-to-day investment
responsibility. All information on the number of accounts and total assets in
the table is as of November 30, 2007. For purposes of the table, "Other Pooled
Investment Vehicles" may include investment partnerships, undertakings for
collective investments in transferable securities ("UCITS") and other non-U.S.
investment funds and group trusts, and "Other Accounts" may include separate
accounts for institutions or individuals, insurance company general or separate
accounts, pension funds and other similar institutional accounts but generally
do not include the portfolio manager's personal investment accounts or those
which the manager may be deemed to own beneficially under the code of ethics.
Certain funds and other accounts managed by the portfolio manager may have
substantially similar investment strategies.
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
Name of Portfolio Type of Account Number of Total Assets Number of Assets Managed
Manager Accounts Managed Managed Accounts Managed for which
for which Advisory Fee is
Advisory Fee is Performance-Based
Performance-Based
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
David Eurkus Other Registered 6 $2,170,298,000 N/A N/A
Investment
Companies
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Pooled 0 $0 N/A N/A
Investment Vehicles
-------------------- ----------------- ------------------- ------------------ -------------------
-------------------- ----------------- ------------------- ------------------ -------------------
Other Accounts 1 $6,181,000 N/A N/A
--------------------- -------------------- ----------------- ------------------- ------------------ -------------------
--------------------- -------------------- ---------------- -------------------- ------------------- ------------------
Name of Portfolio Type of Account Number of Total Assets Number of Assets Managed
Manager Accounts Managed Accounts Managed for which
Managed for which Advisory Fee is
Advisory Fee is Performance-Based
Performance-Based
--------------------- -------------------- ---------------- -------------------- ------------------- ------------------
--------------------- -------------------- ---------------- -------------------- ------------------- ------------------
Walter Hunnewell Jr. Other Registered 11 $10,977,132,000 1 $7,779,119,000
Investment
Companies
-------------------- ---------------- -------------------- ------------------- ------------------
-------------------- ---------------- -------------------- ------------------- ------------------
Other Pooled 4 $2,172,351,000 N/A N/A
Investment Vehicles
-------------------- ---------------- -------------------- ------------------- ------------------
-------------------- ---------------- -------------------- ------------------- ------------------
Other Accounts 4 $256,191,000 N/A N/A
--------------------- -------------------- ---------------- -------------------- ------------------- ------------------
--------------------- -------------------- ---------------- -------------------- ------------------- ------------------
Name of Portfolio Type of Account Number of Total Assets Number of Assets Managed
Manager Accounts Managed Accounts Managed for which
Managed for which Advisory Fee is
Advisory Fee is Performance-Based
Performance-Based
--------------------- -------------------- ---------------- -------------------- ------------------- ------------------
--------------------- -------------------- ---------------- -------------------- ------------------- ------------------
John Carey Other Registered 11 $10,977,132,000 1 $7,779,119,000
Investment
Companies
-------------------- ---------------- -------------------- ------------------- ------------------
-------------------- ---------------- -------------------- ------------------- ------------------
Other Pooled 4 $2,172,351,000 N/A N/A
Investment Vehicles
-------------------- ---------------- -------------------- ------------------- ------------------
-------------------- ---------------- -------------------- ------------------- ------------------
Other Accounts 4 $256,191,000 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. The funds investment subadviser also
has adopted certain compliance procedures which are designed to address these
types of conflicts. However, there is no guarantee that such procedures will
detect each situation in which a conflict might arise. See "Compensation of
Portfolio Managers" below.
o A portfolio manager could favor one account over another in allocating
new investment opportunities that have limited supply, such as initial
public offerings and private placements. If, for example, an initial
public offering 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 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 Lehman Brothers Municipal Bond Index and
the Standard & Poor's 500 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 may participate in other programs designed to reward
and retain key contributors. Senior executives or other key employees may be
granted performance units based on the stock price performance of UniCredito
Italiano 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
November 30, 2007 the value, within the indicated range, of shares beneficially
owned by the portfolio managers of the fund.
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Name of Portfolio Manager Beneficial Ownership of the Fund*
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David Eurkus A
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Walter Hunnewell Jr. A
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John Carey E
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*Key to Dollar Ranges
A. None
B. $1 - $10,000
C. $10,001 - $50,000
D. $50,001 - $100,000
E. $100,001 - $500,000
F. $500,001 - $1,000,000
G. Over $1,000,000
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
During the period covered by this report, there were no purchases
made by or on behalf of the registrant or any affiliated purchaser
as defined in Rule 10b-18(a)(3) under the Securities Exchange Act
of 1934 (the Exchange Act), of shares of the registrants equity
securities that are registered by the registrant pursuant to
Section 12 of the Exchange Act.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in
its definitive proxy statement, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer
and principal financial officer have
concluded that the registrant's disclosure
controls and procedures are effective based
on their evaluation of these controls and
procedures as of a date within 90 days of the
filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the
registrant's internal 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.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Municipal and Equity Income Trust
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date January 29, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date January 29, 2008
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date January 29, 2008
* Print the name and title of each signing officer under his or her signature.