Statement of Assets and Liabilities |
3/31/21
ASSETS:
|
|
Investments in unaffiliated issuers, at value (cost $371,278,855)
|
$ 393,659,068
|
Cash
|
13,721,537
|
Foreign currencies, at value (cost $83,420)
|
83,595
|
Receivables —
|
|
Investment securities sold
|
367,404
|
Interest
|
6,678,977
|
Other assets
|
4,805
|
Total assets
|
$ 414,515,386
|
LIABILITIES:
|
|
Payables —
|
|
Credit agreement
|
$ 123,000,000
|
Investment securities purchased
|
11,176,951
|
Interest expense
|
38
|
Trustees’ fees
|
117
|
Written options outstanding (net premiums received $(51,773))
|
22,054
|
Net unrealized depreciation on forward foreign currency exchange contracts
|
172,588
|
Due to affiliates
|
191,539
|
Accrued expenses
|
86,951
|
Total liabilities
|
$ 134,650,238
|
NET ASSETS:
|
|
Paid-in capital
|
$ 371,917,702
|
Distributable earnings (loss)
|
(92,052,554)
|
Net assets
|
$ 279,865,148
|
NET ASSET VALUE PER SHARE:
|
|
No par value
|
|
Based on $279,865,148 /29,231,771 shares
|
$ 9.57
|
The accompanying notes are an integral part of these financial statements.
40 Pioneer High Income Trust | Annual Report | 3/31/21
Statement of Operations
FOR THE YEAR ENDED 3/31/21
INVESTMENT INCOME:
|
|
|
Interest from unaffiliated issuers
|
$ 26,684,098
|
|
Dividends from unaffiliated issuers
|
863,923
|
|
Total investment income
|
|
$ 27,548,021
|
EXPENSES:
|
|
|
Management fees
|
$ 2,196,196
|
|
Administrative expense
|
64,969
|
|
Transfer agent fees
|
14,000
|
|
Shareowner communications expense
|
31,241
|
|
Custodian fees
|
14,818
|
|
Professional fees
|
165,436
|
|
Printing expense
|
26,566
|
|
Pricing fees
|
18,121
|
|
Trustees’ fees
|
12,908
|
|
Insurance expense
|
2,247
|
|
Interest expense
|
1,367,636
|
|
Miscellaneous
|
208,615
|
|
Total expenses
|
|
$ 4,122,753
|
Net investment income
|
|
$ 23,425,268
|
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
|
|
Net realized gain (loss) on:
|
|
|
Investments in unaffiliated issuers
|
$(17,711,591)
|
|
Written options
|
147,396
|
|
Forward foreign currency exchange contracts
|
222,169
|
|
Swap contracts
|
(1,307,858)
|
|
Other assets and liabilities denominated in
|
|
|
foreign currencies
|
39,834
|
$(18,610,050)
|
Change in net unrealized appreciation (depreciation) on:
|
|
|
Investments in unaffiliated issuers
|
$ 86,538,868
|
|
Written options
|
(9,193)
|
|
Forward foreign currency exchange contracts
|
(59,890)
|
|
Swap contracts
|
1,109,983
|
|
Unfunded loan commitments
|
11,697
|
|
Other assets and liabilities denominated in
|
|
|
foreign currencies
|
5,616
|
$ 87,597,081
|
Net realized and unrealized gain (loss) on investments
|
|
$ 68,987,031
|
Net increase in net assets resulting from operations
|
|
$ 92,412,299
|
The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust | Annual Report | 3/31/21 41
Statements of Changes in Net Assets
|
Year
|
Year
|
|
Ended
|
Ended
|
|
3/31/21
|
3/31/20
|
FROM OPERATIONS:
|
|
|
Net investment income (loss)
|
$ 23,425,268
|
$ 23,595,916
|
Net realized gain (loss) on investments
|
(18,610,050)
|
(9,406,642)
|
Change in net unrealized appreciation (depreciation)
|
|
|
on investments
|
87,597,081
|
(68,206,549)
|
Net increase (decrease) in net assets resulting
|
|
|
from operations
|
$ 92,412,299
|
$ (54,017,275)
|
DISTRIBUTIONS TO SHAREOWNERS:
|
|
|
($0.84 and $0.81 per share, respectively)
|
$ (24,408,529)
|
$ (23,677,735)
|
Total distributions to shareowners
|
$ (24,408,529)
|
$ (23,677,735)
|
Net increase (decrease) in net assets
|
$ 68,003,770
|
$ (77,695,010)
|
NET ASSETS:
|
|
|
Beginning of year
|
$211,861,378
|
$289,556,388
|
End of year
|
$279,865,148
|
$211,861,378
|
The accompanying notes are an integral part of these financial statements.
42 Pioneer High Income Trust | Annual Report | 3/31/21
Statement of Cash Flows
FOR THE YEAR ENDED 3/31/21
Cash Flows From Operating Activities:
|
|
Net increase in net assets resulting from operations
|
$ 92,412,299
|
Adjustments to reconcile net increase in net assets resulting from operations
|
|
to net cash, restricted cash and foreign currencies from operating activities:
|
|
Purchases of investment securities
|
$(198,606,331)
|
Proceeds from disposition and maturity of investment securities
|
187,309,147
|
Net (accretion) and amortization of discount/premium on investment securities
|
(382,048)
|
Change in unrealized appreciation on investments in unaffiliated issuers
|
(86,538,868)
|
Change in unrealized appreciation on unfunded loan commitments
|
(11,697)
|
Change in unrealized appreciation on swap contracts
|
(1,109,983)
|
Change in unrealized depreciation on forward foreign currency exchange contracts
|
59,890
|
Change in unrealized appreciation on other assets and liabilities denominated
|
|
in foreign currencies
|
(175)
|
Change in unrealized depreciation on written options
|
9,193
|
Net realized loss on investments
|
17,711,591
|
Net premiums paid on swap contracts
|
(155,224)
|
Swap collateral received
|
1,146,203
|
Decrease in interest receivable
|
257,338
|
Decrease in due to the Adviser
|
1,900
|
Increase in other assets
|
(4,613)
|
Increase in due to affiliates
|
191,359
|
Decrease in trustees’ fees payable
|
(592)
|
Increase in accrued expenses payable
|
10,432
|
Proceeds from sale of written options
|
71,157
|
Realized gains on written options
|
(147,396)
|
Increase in cash due to broker
|
176,836
|
Change in variation margin for centrally cleared swap contracts
|
(2,401)
|
Net cash, restricted cash and foreign currencies from operating activities
|
$ 12,398,017
|
Cash Flows Used in Financing Activities:
|
|
Borrowings received
|
$ 25,000,000
|
Borrowing repaid
|
(1,000,000)
|
Distributions to shareowners
|
(24,408,529)
|
Increase in interest expense payable
|
38
|
Net cash, restricted cash and foreign currencies used in financing activities
|
$ (408,491)
|
Effect of Foreign Exchange Fluctuations on Cash:
|
|
Effect of foreign exchange fluctuations on cash
|
$ 175
|
Cash, restricted cash and foreign currencies:
|
|
Beginning of the year*
|
$ 1,815,431
|
End of the year*
|
$ 13,805,132
|
Cash Flow Information:
|
|
Cash paid for interest
|
$ 367,598
|
|
* The following table provides a reconciliation of cash, restricted cash and foreign currencies reported within the Statement of Assets and Liabilities that sum to the total of the same such amounts shown in the Statement of Cash Flows:
|
|
Year Ended
|
Year Ended
|
|
3/31/21
|
3/31/20
|
Cash
|
$13,721,537
|
$ 1,815,431
|
Foreign currencies, at value
|
83,595
|
—
|
Swaps collateral
|
—
|
1,146,203
|
Due from broker for swaps
|
—
|
176,836
|
Total cash, restricted cash and foreign currencies
|
|
|
shown in the Statement of Cash Flows
|
$13,805,132
|
$3,138,470
|
The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust | Annual Report | 3/31/21 43
Financial Highlights
|
|
|
|
|
|
|
Year
|
Year
|
Year
|
Year
|
Year
|
|
Ended
|
Ended
|
Ended
|
Ended
|
Ended
|
|
3/31/21
|
3/31/20
|
3/31/19
|
3/31/18
|
3/31/17*
|
Per Share Operating Performance
|
|
|
|
|
|
Net asset value, beginning of period
|
$ 7.25
|
$ 9.91
|
$ 10.52
|
$ 10.70
|
$ 9.34
|
Increase (decrease) from investment operations: (a)
|
|
|
|
|
|
Net investment income
|
$ 0.80
|
$ 0.81
|
$ 0.80
|
$ 0.85
|
$ 0.95
|
Net realized and unrealized gain (loss) on investments
|
2.36
|
(2.66)
|
(0.62)
|
(0.25)
|
1.38
|
Net increase (decrease) from investment operations
|
$ 3.16
|
$ (1.85)
|
$ 0.18
|
$ 0.60
|
$ 2.33
|
Distributions to shareowners from:
|
|
|
|
|
|
Net investment income and previously undistributed net
|
|
|
|
|
|
investment income
|
$ (0.84)**
|
$ (0.81)
|
$ (0.79)
|
$ (0.78)
|
$ (0.97)**
|
Net increase (decrease) in net asset value
|
$ 2.32
|
$ (2.66)
|
$ (0.61)
|
$ (0.18)
|
$ 1.36
|
Net asset value, end of period
|
$ 9.57
|
$ 7.25
|
$ 9.91
|
$ 10.52
|
$ 10.70
|
Market value, end of period
|
$ 9.37
|
$ 6.42
|
$ 8.95
|
$ 9.39
|
$ 9.87
|
Total return at net asset value (b)
|
46.08%
|
(19.93)%
|
2.79%
|
6.38%
|
26.13%
|
Total return at market value (b)
|
61.52%
|
(21.49)%
|
4.00%
|
2.94%
|
8.23%
|
Ratios to average net assets of shareowners:
|
|
|
|
|
|
Total expenses plus interest expense (c)
|
1.60%
|
2.35%
|
2.41%
|
2.14%
|
2.10%
|
Net investment income available to shareowners
|
9.10%
|
8.17%
|
7.93%
|
7.88%
|
9.36%
|
Portfolio turnover rate
|
50%
|
36%
|
33%
|
29%
|
48%
|
Net assets, end of period (in thousands)
|
$279,865
|
$211,861
|
$289,556
|
$307,410
|
$312,757
|
The accompanying notes are an integral part of these financial statements.
44 Pioneer High Income Trust | Annual Report | 3/31/21
|
|
Year
|
Year
|
Year
|
Year
|
Year
|
|
|
Ended
|
Ended
|
Ended
|
Ended
|
Ended
|
|
|
3/31/21
|
3/31/20
|
3/31/19
|
3/31/18
|
3/31/17*
|
Total amount of debt outstanding (in thousands)
|
$123,000
|
$ 99,000
|
$125,000
|
$125,000
|
$125,000
|
Asset coverage per $1,000 of indebtedness
|
$ 3,275
|
$ 3,140
|
$ 3,316
|
$ 3,459
|
$ 3,502
|
*
|
The Trust was audited by an independent registered public accounting firm other than Ernst & Young LLP.
|
**
|
The amount of distributions made to shareowners during the period was in excess of the net investment income earned by the Trust during the period. The Trust has accumulated undistributed net investment
income which is part of the Trust’s NAV. A portion of this accumulated net investment income was distributed to shareowners during the period. A decrease in distributions may have a negative effect on the market value of the Trust’s shares.
|
(a)
|
The per-share data presented above is based upon the average common shares outstanding for the periods presented.
|
(b)
|
Total investment return is calculated assuming a purchase of common shares at the current net asset value or market value on the first day and a sale at the current net asset value or market value on the last
day of the periods reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Trust’s dividend reinvestment plan. Total investment return does not reflect
brokerage commissions. Past performance is not a guarantee of future results.
|
(c)
|
Includes interest expense of 0.53%, 1.37%, 1.42%, 1.05%, and 1.11%, respectively.
|
The accompanying notes are an integral part of these financial statements.
Pioneer High Income Trust | Annual Report | 3/31/21 45
Notes to Financial Statements |
3/31/21
1. Organization and Significant Accounting Policies
Pioneer High Income Trust (the “Trust”) was organized as a Delaware statutory trust on January 30, 2002. Prior to commencing operations on April 26, 2002, the Trust had no operations other than matters relating to its
organization and registration as a closed-end management investment company under the Investment Company Act of 1940, as amended. The investment objective of the Trust is to provide a high level of current income and the Trust may, as a secondary
objective, also seek capital appreciation to the extent that it is consistent with its investment objective.
Amundi Asset Management US, Inc., an indirect, wholly owned subsidiary of Amundi and Amundi’s wholly owned subsidiary, Amundi USA, Inc., serves as the Trust’s investment adviser (the “Adviser”). Prior to January 1,
2021, the Adviser was named Amundi Pioneer Asset Management, Inc.
In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2018-13 “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”)
which modifies disclosure requirements for fair value measurements, principally for Level 3 securities and transfers between levels of the fair value hierarchy. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and for
interim periods within those fiscal years. The Trust has adopted ASU 2018-13 for the year ended March 31, 2021. The impact to the Trust’s adoption was limited to changes in the Trust’s disclosures regarding fair value, primarily those disclosures
related to transfers between levels of the fair value hierarchy and disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value investments, when applicable.
In March 2020, FASB issued an Accounting Standard Update, ASU 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides
optional, temporary relief with respect to the financial reporting of contracts subject to certain types of modifications due to the planned discontinuation of the London Interbank Offered Rate (“LIBOR”) and other LIBOR-based reference rates at the
end of 2021. The temporary relief provided by ASU 2020-04 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU
2020-04 on the Trust’s investments, derivatives, debt and other contracts, if applicable, that will undergo reference rate-related modifications as a result of the reference rate reform.
46 Pioneer High Income Trust | Annual Report | 3/31/21
The Trust is an investment company and follows investment company accounting and reporting guidance under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). U.S. GAAP requires the management of the Trust to
make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses and gain or loss on
investments during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements:
A. Security Valuation
The net asset value of the Trust is computed once daily, on each day the New York Stock Exchange (“NYSE”) is open, as of the close of regular trading on the NYSE.
Fixed-income securities are valued by using prices supplied by independent pricing services, which consider such factors as market prices, market events, quotations from one or more brokers,
Treasury spreads, yields, maturities and ratings, or may use a pricing matrix or other fair value methods or techniques to provide an estimated value of the security or instrument. A pricing matrix is a means of valuing a debt security on the basis
of current market prices for other debt securities, historical trading patterns in the market for fixed-income securities and/or other factors. Non-U.S. debt securities that are listed on an exchange will be valued at the bid price obtained from an
independent third party pricing service. When independent third party pricing services are unable to supply prices, or when prices or market quotations are considered to be unreliable, the value of that security may be determined using quotations
from one or more broker-dealers.
Loan interests are valued in accordance with guidelines established by the Board of Trustees at the mean between the last available bid and asked prices from one or more brokers or dealers as
obtained from Loan Pricing Corporation, an independent third party pricing service. If price information is not available from Loan Pricing Corporation, or if the price information is deemed to be unreliable, price information will be obtained from
an alternative pricing service. If no reliable price quotes are available from either the primary or alternative pricing service, broker quotes will be solicited.
Event-linked bonds are valued at the bid price obtained from an independent third party pricing service. Other insurance-linked securities (including reinsurance sidecars, collateralized reinsurance
and industry loss warranties) may be valued at the bid price obtained from an independent
Pioneer High Income Trust | Annual Report | 3/31/21 47
pricing service, or through a third party using a pricing matrix, insurance industry valuation models, or other fair value methods or techniques to provide an estimated value of the instrument.
Equity securities that have traded on an exchange are valued by using the last sale price on the principal exchange where they are traded. Equity securities that have not traded on the date of
valuation, or securities for which sale prices are not available, generally are valued using the mean between the last bid and asked prices or, if both last bid and asked prices are not available, at the last quoted bid price. Last sale and bid and
asked prices are provided by independent third party pricing services. In the case of equity securities not traded on an exchange, prices are typically determined by independent third party pricing services using a variety of techniques and
methods.
The value of foreign securities is translated into U.S. dollars based on foreign currency exchange rate quotations supplied by a third party pricing source. Trading in non-U.S. equity securities is
substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Trust’s shares are determined as of such times. The Trust may use a fair value model
developed by an independent pricing service to value non-U.S. equity securities.
Options contracts are generally valued at the mean between the last bid and ask prices on the principal exchange where they are traded. Over-the-counter (“OTC”) options and options on swaps
(“swaptions”) are valued using prices supplied by independent pricing services, which consider such factors as market prices, market events, quotations from one or more brokers, Treasury spreads, yields, maturities and ratings, or may use a pricing
matrix or other fair value methods or techniques to provide an estimated value of the security or instrument.
Forward foreign currency exchange contracts are valued daily using the foreign exchange rate or, for longer term forward contract positions, the spot currency rate and the forward points on a daily
basis, in each case provided by a third party pricing service. Contracts whose forward settlement date falls between two quoted days are valued by interpolation.
Swap contracts, including interest rate swaps, caps and floors (other than centrally cleared swap contracts), are valued at the dealer quotations obtained from reputable International Swap Dealers
Association members. Centrally cleared swaps are valued at the daily settlement price provided by the central clearing counterparty.
48 Pioneer High Income Trust | Annual Report | 3/31/21
Securities or loan interests for which independent pricing services or broker-dealers are unable to supply prices or for which market prices and/or quotations are not readily available or are
considered to be unreliable are valued by a fair valuation team comprised of certain personnel of the Adviser pursuant to procedures adopted by the Trust’s Board of Trustees. The Adviser’s fair valuation team uses fair value methods approved by the
Valuation Committee of the Board of Trustees. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities and for discussing and assessing fair values on an ongoing basis, and at least
quarterly, with the Valuation Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may include credit ratings, the financial condition of the company, current market conditions and comparable securities. The Trust
may use fair value methods if it is determined that a significant event has occurred after the close of the exchange or market on which the security trades and prior to the determination of the Trust’s net asset value. Examples of a significant
event might include political or economic news, corporate restructurings, natural disasters, terrorist activity or trading halts. Thus, the valuation of the Trust’s securities may differ significantly from exchange prices, and such differences
could be material.
At March 31, 2021, five securities were valued using fair value methods (in addition to securities valued using prices supplied by independent pricing services, broker-dealers or using a third party
insurance pricing model) representing 0.25% of net assets. The value of these fair valued securities was $709,234.
B. Investment Income and Transactions
Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Trust becomes aware
of the ex-dividend data in the exercise of reasonable diligence.
Interest income, including interest on income-bearing cash accounts, is recorded on the accrual basis. Dividend and interest income are reported net of unrecoverable foreign taxes withheld at the
applicable country rates and net of income accrued on defaulted securities.
Interest and dividend income payable by delivery of additional shares is reclassified as PIK (payment-in-kind) income upon receipt and is included in interest and dividend income, respectively.
Pioneer High Income Trust | Annual Report | 3/31/21 49
Principal amounts of mortgage-backed securities are adjusted for monthly paydowns. Premiums and discounts related to certain mortgage-backed securities are amortized or accreted in proportion to the
monthly paydowns. All discounts/premiums on purchase prices of debt securities are accreted/amortized for financial reporting purposes over the life of the respective securities, and such accretion/amortization is included in interest income.
Security transactions are recorded as of trade date. Gains and losses on sales of investments are calculated on the identified cost method for both financial reporting and federal income tax
purposes.
C. Foreign Currency Translation
The books and records of the Trust are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates.
Net realized gains and losses on foreign currency transactions, if any, represent, among other things, the net realized gains and losses on foreign currency exchange contracts, disposition of
foreign currencies and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated on the Statement of Operations
from the effects of changes in the market prices of those securities, but are included with the net realized and unrealized gain or loss on investments.
D. Federal Income Taxes
It is the Trust’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net taxable income and net realized
capital gains, if any, to its shareowners. Therefore, no provision for federal income taxes is required. As of March 31, 2021, the Trust did not accrue any interest or penalties with respect to uncertain tax positions, which, if applicable, would
be recorded as an income tax expense on the Statement of Operations. Tax returns filed within the prior three years remain subject to examination by federal and state tax authorities.
The amount and character of income and capital gain distributions to shareowners are determined in accordance with federal income tax rules, which may differ from U.S. GAAP. Distributions in excess
of net investment income or net realized gains are temporary over distributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax
50 Pioneer High Income Trust | Annual Report | 3/31/21
purposes. Capital accounts within the financial statements are adjusted for permanent book/tax differences to reflect tax character, but are not adjusted for temporary differences.
At March 31, 2021, the Trust was permitted to carry forward indefinitely $13,801,111 of short-term losses and $102,085,011 of long-term losses under the Regulated Investment Company Modernization
Act of 2010 without limitation.
The tax character of distributions paid during the years ended March 31, 2021 and March 31, 2020, were as follows:
|
2021
|
2020
|
Distributions paid from:
|
|
|
Ordinary income
|
$24,408,529
|
$23,677,735
|
Total
|
$24,408,529
|
$23,677,735
|
The following shows the components of distributable earnings (losses) on a federal income tax basis at March 31, 2021:
|
2021
|
Distributable earnings/(losses):
|
|
Undistributed ordinary income
|
$ 1,891,197
|
Capital loss carryforward
|
(115,886,122)
|
Unrealized appreciation
|
21,942,371
|
Total
|
$ (92,052,554)
|
The difference between book basis and tax basis unrealized depreciation is primarily attributable to the realization for tax purposes of unrealized gains on investments in passive foreign investment
companies, the book/tax differences in the accrual of income on securities in default, the difference between book and tax amortization methods and discounts on fixed income securities.
E. Risks
The value of securities held by the Trust may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political or regulatory
conditions, recessions, the spread of infectious illness or other public health issues, inflation, changes in interest rates, lack of liquidity in the bond markets or adverse investor sentiment. In the past several years, financial markets have
experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. These conditions may continue, recur, worsen or spread. A general rise in interest rates could adversely affect the price and liquidity of
fixed-income securities.
Pioneer High Income Trust | Annual Report | 3/31/21 51
At times, the Trust’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Trust more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors. The Trust’s investments in foreign markets and countries with limited developing markets may subject the Trust to a greater degree of risk than investments in a developed market.
These risks include disruptive political or economic conditions and the imposition of adverse governmental laws or currency exchange restrictions.
The Trust invests in below-investment-grade (high-yield) debt securities and preferred stocks. Some of these high-yield securities may be convertible into equity securities of the issuer. Debt
securities rated below-investment-grade are commonly referred to as “junk bonds” and are considered speculative. These securities involve greater risk of loss, are subject to greater price volatility, and are less liquid, especially during periods
of economic uncertainty or change, than higher rated debt securities.
Certain securities in which the Trust invests, including floating rate loans, once sold, may not settle for an extended period (for example, several weeks or even longer). The Trust will not receive
its sale proceeds until that time, which may constrain the Trust’s ability to meet its obligations. The Trust may invest in securities of issuers that are in default or that are in bankruptcy. The value of collateral, if any, securing a floating
rate loan can decline or may be insufficient to meet the issuer’s obligations or may be difficult to liquidate. No active trading market may exist for many floating rate loans, and many loans are subject to restrictions on resale. Any secondary
market may be subject to irregular trading activity and extended settlement periods. The Trust’s investments in certain foreign markets or countries with limited developing markets may subject the Trust to a greater degree of risk than in a
developed market. These risks include disruptive political or economic conditions and the possible imposition of adverse governmental laws or currency exchange restrictions.
The Fund’s investments, payment obligations and financing terms may be based on floating rates, such as LIBOR (London Interbank Offered Rate). Plans are underway to phase out the use of LIBOR. The
UK Financial Conduct Authority (“FCA”) and LIBOR’s administrator, ICE Benchmark Administration (“IBA”), have announced that most LIBOR rates will no longer be published after the end of 2021 and a majority of U.S. dollar LIBOR rates will no longer
be published after June 30, 2023. It is possible that the FCA may compel the IBA to publish a subset of LIBOR settings after these dates on a “synthetic” basis, but any such publications would
52 Pioneer High Income Trust | Annual Report | 3/31/21
be considered non-representative of the underlying markets. There remains uncertainty regarding the nature of any replacement rate and the impact of the transition from LIBOR on the fund, issuers of
instruments in which the fund invests, and financial markets generally.
The Trust may invest up to 50% of its total assets in illiquid securities. Illiquid securities are securities that the Trust reasonably expects cannot be sold or disposed of in current market
conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the securities.
With the increased use of technologies such as the Internet to conduct business, the Trust is susceptible to operational, information security and related risks. While the Trust’s Adviser has
established business continuity plans in the event of, and risk management systems to prevent, limit or mitigate, such cyber-attacks, there are inherent limitations in such plans and systems, including the possibility that certain risks have not
been identified. Furthermore, the Trust cannot control the cybersecurity plans and systems put in place by service providers to the Trust such as Brown Brothers Harriman & Co., the Trust’s custodian and accounting agent, and American Stock
Transfer & Trust Company, the Trust’s transfer agent. In addition, many beneficial owners of Trust shares hold them through accounts at broker-dealers, retirement platforms and other financial market participants over which neither the Trust
nor the Adviser exercises control. Each of these may in turn rely on service providers to them, which are also subject to the risk of cyber-attacks. Cybersecurity failures or breaches at the Adviser or the Trust’s service providers or
intermediaries have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Trust’s ability to calculate its net asset value, impediments to trading, the inability of Trust
shareowners to effect share purchases, or sales or receive distributions, loss of or unauthorized access to private shareowner information and violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, or
additional compliance costs. Such costs and losses may not be covered under any insurance. In addition, maintaining vigilance against cyber-attacks may involve substantial costs over time, and system enhancements may themselves be subject to
cyber-attacks.
COVID-19
The respiratory illness COVID-19 caused by a novel coronavirus has resulted in a global pandemic and major disruption to economies and markets around the world, including the United States. Global
financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments has been
Pioneer High Income Trust | Annual Report | 3/31/21 53
greatly reduced for periods of time. Some interest rates are very low and in some cases yields are negative. Some sectors of the economy and individual issuers have experienced particularly large
losses. These circumstances may continue for an extended period of time, and may continue to affect adversely the value and liquidity of the Trust’s investments. The ultimate economic fallout from the pandemic, and the long-term impact on
economies, markets, industries and individual issuers, are not known. Governments and central banks, including the Federal Reserve in the U.S., have taken extraordinary and unprecedented actions to support local and global economies and the
financial markets. These actions have resulted in significant expansion of public debt, including in the U.S. The impact of these measures, and whether they will be effective to mitigate the economic and market disruption, will not be known for
some time. The consequences of high public debt, including its future impact on the economy and securities markets, likewise may not be known for some time.
F. Restricted Securities
Restricted Securities are subject to legal or contractual restrictions on resale. Restricted securities generally are resold in transactions exempt from registration under the Securities Act of
1933. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933.
Disposal of restricted investments may involve negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. Restricted investments held by the Trust at March 31,
2021 are listed in the Schedule of Investments.
G.Insurance-Linked Securities (“ILS”)
The Trust invests in ILS. The Trust could lose a portion or all of the principal it has invested in an ILS, and the right to additional interest or dividend payments with respect to the security,
upon the occurrence of one or more trigger events, as defined within the terms of an insurance-linked security. Trigger events, generally, are hurricanes, earthquakes, or other natural events of a specific size or magnitude that occur in a
designated geographic region during a specified time period, and/or that involve losses or other metrics that exceed a specific amount. There is no way to accurately predict whether a trigger event will occur, and accordingly, ILS carry significant
risk. The Trust is entitled to receive principal, and interest and/or dividend payments so long as no trigger event occurs of the description and magnitude specified by the instrument. In addition to the
54 Pioneer High Income Trust | Annual Report | 3/31/21
specified trigger events, ILS may expose the Trust to other risks, including but not limited to issuer (credit) default, adverse regulatory or jurisdictional interpretations and adverse tax
consequences.
The Trust’s investments in ILS may include event-linked bonds. ILS also may include special purpose vehicles (“SPVs”) or similar instruments structured to comprise a portion of a reinsurer’s
catastrophe-oriented business, known as quota share instruments (sometimes referred to as reinsurance sidecars), or to provide reinsurance relating to specific risks to insurance or reinsurance companies through a collateralized instrument, known
as collateralized reinsurance. Structured reinsurance investments also may include industry loss warranties (“ILWs”). A traditional ILW takes the form of a bilateral reinsurance contract, but there are also products that take the form of
derivatives, collateralized structures, or exchange-traded instruments.
Where the ILS are based on the performance of underlying reinsurance contracts, the Trust has limited transparency into the individual underlying contracts, and therefore must rely upon the risk
assessment and sound underwriting practices of the issuer. Accordingly, it may be more difficult for the Adviser to fully evaluate the underlying risk profile of the Trust’s structured reinsurance investments, and therefore the Trust’s assets are
placed at greater risk of loss than if the Adviser had more complete information. Structured reinsurance instruments generally will be considered illiquid securities by the Trust. These securities may be difficult to purchase, sell or unwind.
Illiquid securities also may be difficult to value. If the Trust is forced to sell an illiquid asset, the Trust may be forced to sell at a loss.
H. Purchased Options
The Trust may purchase put and call options to seek to increase total return. Purchased call and put options entitle the Trust to buy and sell a specified number of shares or units of a particular
security, currency or index at a specified price at a specific date or within a specific period of time. Upon the purchase of a call or put option, the premium paid by the Trust is included on the Statement of Assets and Liabilities as an
investment. All premiums are marked-to-market daily, and any unrealized appreciation or depreciation is recorded on the Trust’s Statement of Operations. As the purchaser of an index option, the Trust has the right to receive a cash payment equal to
any depreciation in the value of the index below the strike price of the option (in the case of a put) or equal to any appreciation in the value of the index over the strike price of the option (in the case of a call) as of the valuation date of
the option. Premiums paid for purchased call and put options which have expired are treated as realized losses on investments on the Statement of Operations. Upon the exercise or
Pioneer High Income Trust | Annual Report | 3/31/21 55
closing of a purchased put option, the premium is offset against the proceeds on the sale of the underlying security or financial instrument in order to determine the realized gain or loss on
investments. Upon the exercise or closing of a purchased call option, the premium is added to the cost of the security or financial instrument. The risk associated with purchasing options is limited to the premium originally paid.
The average market value of purchased options contracts open during the year ended March 31, 2021, was $49,295. Open purchased options at March 31, 2021, are listed in the Schedule of Investments.
I. Option Writing
The Trust may write put and covered call options to seek to increase total return. When an option is written, the Trust receives a premium and becomes obligated to purchase or sell the underlying
security at a fixed price, upon the exercise of the option. When the Trust writes an option, an amount equal to the premium received by the Trust is recorded as “Written options outstanding” on the Statement of Assets and Liabilities and is
subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Trust on the expiration date as realized gains from investments on the Statement of Operations. The
difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain on the Statement of Operations, or, if the premium is less than the amount paid for
the closing purchase transaction, as a realized loss on the Statement of Operations. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Trust has realized a gain
or loss. The Trust as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
The average market value of written options for the year ended March 31, 2021, was $(104,860). Open written options contracts at March 31, 2021, are listed in the Schedule of Investments.
J. Forward Foreign Currency Exchange Contracts
The Trust may enter into forward foreign currency exchange contracts (“contracts”) for the purchase or sale of a specific foreign currency at a fixed price on a future date. All contracts are
marked-to-market daily at the applicable exchange rates, and any resulting unrealized appreciation or depreciation is recorded in the Trust’s financial statements. The Trust records realized gains and losses at the time a contract is offset by
entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of
56 Pioneer High Income Trust | Annual Report | 3/31/21
counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar (see Note 5).
During the year ended March 31, 2021, the Trust had entered into various forward foreign currency exchange contracts that obligated the Trust to deliver or take delivery of currencies at specified
future maturity dates. Alternatively, prior to the settlement date of a forward foreign currency exchange contract, the Trust may close out such contract by entering into an offsetting contract.
The average market value of forward foreign currency exchange contracts open during the year ended March 31, 2021, was $4,937,422. Open forward foreign currency exchange contracts outstanding at
March 31, 2021, are listed in the Schedule of Investments.
K. Credit Default Swap Contracts
A credit default swap is a contract between a buyer of protection and a seller of protection against a pre-defined credit event or an underlying reference obligation, which may be a single security
or a basket or index of securities. The Trust may buy or sell credit default swap contracts to seek to increase the Trust’s income, or to attempt to hedge the risk of default on portfolio securities. A credit default swap index is used to hedge
risk or take a position on a basket of credit entities or indices.
As a seller of protection, the Trust would be required to pay the notional (or other agreed-upon) value of the referenced debt obligation to the counterparty in the event of a default by a U.S. or
foreign corporate issuer of a debt obligation, which would likely result in a loss to the Trust. In return, the Trust would receive from the counterparty a periodic stream of payments during the term of the contract, provided that no event of
default occurred. The maximum exposure of loss to the seller would be the notional value of the credit default swaps outstanding. If no default occurs, the Trust would keep the stream of payments and would have no payment obligation. The Trust may
also buy credit default swap contracts in order to hedge against the risk of default of debt securities, in which case the Trust would function as the counterparty referenced above.
As a buyer of protection, the Trust makes an upfront or periodic payment to the protection seller in exchange for the right to receive a contingent payment. An upfront payment made by the Trust, as
the protection buyer, is recorded within the “Swap contracts, at value” line item on the Statement of Assets and Liabilities. Periodic payments received or paid by the Trust are recorded as realized gains or losses on the Statement of Operations.
Pioneer High Income Trust | Annual Report | 3/31/21 57
Credit default swap contracts are marked-to-market daily using valuations supplied by independent sources, and the change in value, if any, is recorded within the “Swap contracts, at value” line
item on the Statement of Assets and Liabilities. Payments received or made as a result of a credit event or upon termination of the contract are recognized, net of the appropriate amount of the upfront payment, as realized gains or losses on the
Statement of Operations.
Credit default swap contracts involving the sale of protection may involve greater risks than if the Trust had invested in the referenced debt instrument directly. Credit default swap contracts are
subject to general market risk, liquidity risk, counterparty risk and credit risk. If the Trust is a protection buyer and no credit event occurs, it will lose its investment. If the Trust is a protection seller and a credit event occurs, the value
of the referenced debt instrument received by the Trust, together with the periodic payments received, may be less than the amount the Trust pays to the protection buyer, resulting in a loss to the Trust. In addition, obligations under sell
protection credit default swaps may be partially offset by net amounts received from settlement of buy protection credit default swaps entered into by the Trust for the same reference obligation with the same counterparty.
Certain swap contracts that are cleared through a central clearinghouse are referred to as centrally cleared swaps. All payments made or received by the Trust are pursuant to a centrally cleared
swap contract with the central clearing party rather than the original counterparty. Upon entering into a centrally cleared swap contract, the Trust is required to make an initial margin deposit, either in cash or in securities. The daily change in
value on open centrally cleared contracts is recorded as “Variation margin for centrally cleared swap contracts” on the Statement of Assets and Liabilities. Cash received from or paid to the broker related to previous margin movement is held in a
segregated account at the broker and is recorded as either “Due from broker for swaps” or “Due to broker for swaps” on the Statement of Assets and Liabilities. The amount of cash deposited with a broker as collateral at March 31, 2021, is recorded
as “Swaps collateral” on the Statement of Assets and Liabilities.
The average market value of credit default swap contracts open during the year ended March 31, 2021, was $(465,222). There were no open credit default swap contracts at March 31, 2021.
L. Interest Rate Swap Contracts
The Trust may enter into interest rate swaps to attempt to hedge against interest rate fluctuations or to enhance its income. Pursuant to the interest rate swap contract, the Trust negotiates with a
counterparty to exchange a
58 Pioneer High Income Trust | Annual Report | 3/31/21
periodic stream of payments based on a benchmark interest rate. One cash flow stream will typically be a floating rate payment based upon the specified floating benchmark interest rate while the
other is typically a fixed interest rate. Payment flows are usually netted against each other, with the difference being paid by one party to the other on a monthly basis.
Periodic payments received or paid by the Trust are recorded as realized gains or losses on the Statement of Operations. Interest rate swap contracts are marked-to-market daily using valuations
supplied by independent sources and the change in value, if any, is recorded within “Swap contracts, at value” line item on the Statement of Assets and Liabilities. Interest rate swap contracts are subject to counterparty risk and movements in
interest rates. Certain swap contracts that are cleared through a central clearinghouse are referred to as centrally cleared swaps. All payments made or received by the Trust are pursuant to centrally cleared swap contracts with the central
clearing party rather than the original counterparty. Upon entering into a centrally cleared swap contract, the Trust is required to make an initial margin deposit, either in cash or in securities. The daily change in value on open centrally
cleared swap contracts is recorded as variation margin for centrally cleared swaps on the Statement of Assets and Liabilities.
The average market value of interest swap contracts open during year ended March 31, 2021, was $(49,006). There were no open interest rate swap contracts at March 31, 2021.
M. Automatic Dividend Reinvestment Plan
All shareowners whose shares are registered in their own names automatically participate in the Automatic Dividend Reinvestment Plan (the “Plan”), under which participants receive all dividends and
capital gain distributions (collectively, dividends) in full and fractional shares of the Trust in lieu of cash. Shareowners may elect not to participate in the Plan. Shareowners not participating in the Plan receive all dividends and capital gain
distributions in cash. Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by notifying American Stock Transfer & Trust Company, the agent for shareowners in administering the Plan (the
“Plan Agent”), in writing prior to any dividend record date; otherwise such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution.
If a shareowner’s shares are held in the name of a brokerage firm, bank or other nominee, the shareowner can ask the firm or nominee to participate in the Plan on the shareowner’s behalf. If the
firm or nominee does not
Pioneer High Income Trust | Annual Report | 3/31/21 59
offer the Plan, dividends will be paid in cash to the shareowner of record. A firm or nominee may reinvest a shareowner’s cash dividends in shares of the Trust on terms that differ from the terms of
the Plan.
Whenever the Trust declares a dividend on shares payable in cash, participants in the Plan will receive the equivalent in shares acquired by the Plan Agent either (i) through receipt of additional
unissued but authorized shares from the Trust or (ii) by purchase of outstanding shares on the New York Stock Exchange or elsewhere. If, on the payment date for any dividend, the net asset value per share is equal to or less than the market price
per share plus estimated brokerage trading fees (market premium), the Plan Agent will invest the dividend amount in newly issued shares. The number of newly issued shares to be credited to each account will be determined by dividing the dollar
amount of the dividend by the net asset value per share on the date the shares are issued, provided that the maximum discount from the then current market price per share on the date of issuance does not exceed 5%. If, on the payment date for any
dividend, the net asset value per share is greater than the market value (market discount), the Plan Agent will invest the dividend amount in shares acquired in open-market purchases. There are no brokerage charges with respect to newly issued
shares. However, each participant will pay a pro rata share of brokerage trading fees incurred with respect to the Plan Agent’s open-market purchases. Participating in the Plan does not relieve shareowners from any federal, state or local taxes
which may be due on dividends paid in any taxable year. Shareowners holding Plan shares in a brokerage account may be able to transfer the shares to another broker and continue to participate in the Plan.
N. Statement of Cash Flows
Information on financial transactions which have been settled through the receipt or disbursement of cash or restricted cash is presented in the Statement of Cash Flows. Cash as presented in the
Trust’s Statement of Assets and Liabilities includes cash on hand at the Trust’s custodian bank and does not include any short-term investments. As of and for the year ended March 31, 2021, the Trust had no restricted cash presented on the
Statement of Assets and Liabilities.
2. Management Agreement
The Adviser manages the Trust’s portfolio. Management fees are calculated daily and paid monthly under the Trust’s Advisory Agreement with the Adviser and are calculated daily at the annual rate of 0.60% of the
Trust’s average daily managed assets. “Managed assets” means (a) the total assets of the Trust, including any form of investment leverage, minus (b) all accrued liabilities incurred in the normal course of operations, which shall
60 Pioneer High Income Trust | Annual Report | 3/31/21
not include any liabilities or obligations attributable to investment leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing through a credit facility or the issuance of debt
securities), (ii) the issuance of preferred stock or other similar preference securities, and/or (iii) any other means. For the year ended March 31, 2021, the net management fee was 0.60% of the Trust’s average daily managed assets, which was
equivalent to 0.85% of the Trust’s average daily net assets.
In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Trust as administrative
reimbursements. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $191,539 in management fees, administrative costs and certain other reimbursements payable to the Adviser at March 31, 2021.
3. Compensation of Trustees and Officers
The Trust pays an annual fee to its Trustees. The Adviser reimburses the Trust for fees paid to the Interested Trustees. The Trust does not pay any salary or other compensation to its officers. For the year ended
March 31, 2021, the Trust paid $12,908 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At March 31, 2021, the Trust had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $117.
4. Transfer Agent
American Stock Transfer & Trust Company (“AST”) serves as the transfer agent with respect to the Trust’s shares. The Trust pays AST an annual fee, as is agreed to from time to time by the Trust and AST, for
providing such services.
In addition, the Trust reimbursed the transfer agent for out-of-pocket expenses incurred by the transfer agent related to shareowner communications activities such as proxy and statement mailings, and outgoing phone
calls.
5. Master Netting Agreements
The Trust has entered into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with substantially all its derivative counterparties. An ISDA Master
Agreement is a bilateral agreement between the Trust and a counterparty that governs the trading of certain Over the Counter (“OTC”) derivatives and typically contains, among other things, close-out and set-off provisions which apply upon the
occurrence of an event of default and/or a termination event as defined under the relevant ISDA Master
Pioneer High Income Trust | Annual Report | 3/31/21 61
Agreement. The ISDA Master Agreement may also give a party the right to terminate all transactions traded under such agreement if, among other things, there is deterioration in the credit quality of the other party.
Upon an event of default or a termination of the ISDA Master Agreement, the non-defaulting party has the right to close-out all transactions under such agreement and to net amounts owed under each transaction to
determine one net amount payable by one party to the other. The right to close out and net payments across all transactions under the ISDA Master Agreement could result in a reduction of the Trust’s credit risk to its counterparty equal to any
amounts payable by the Trust under the applicable transactions, if any. However, the Trust’s right to set-off may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which each specific ISDA Master
Agreement of each counterparty is subject.
The collateral requirements for derivatives transactions under an ISDA Master Agreement are governed by a credit support annex to the ISDA Master Agreement. Collateral requirements are generally determined at the
close of business each day and are typically based on changes in market values for each transaction under an ISDA Master Agreement and netted into one amount for such agreement. Generally, the amount of collateral due from or to a counterparty is
subject to threshold (a “minimum transfer amount”) before a transfer is required, which may vary by counterparty. Collateral pledged for the benefit of the Trust and/or counterparty is held in segregated accounts by the Trust’s custodian and cannot
be sold, re-pledged, assigned or otherwise used while pledged. Cash that has been segregated to cover the Trust’s collateral obligations, if any, will be reported separately on the Statement of Assets and Liabilities as “Swaps collateral”.
Securities pledged by the Trust as collateral, if any, are identified as such in the Schedule of Investments.
Financial instruments subject to an enforceable master netting agreement, such as an ISDA Master Agreement, have been offset on the Statement of Assets and Liabilities. The following charts show gross assets and
liabilities of the Trust as of March 31, 2021.
62 Pioneer High Income Trust | Annual Report | 3/31/21
|
Derivative
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Subject to
|
Derivatives
|
Non-Cash
|
Cash
|
Net Amount
|
|
Master Netting
|
Available
|
Collateral
|
Collateral
|
of Derivative
|
Counterparty
|
Agreement
|
for Offset
|
Received (a)
|
Received (a)
|
Assets (b)
|
Bank of America NA
|
$ 302
|
$ (302)
|
$ —
|
$ —
|
$ —
|
Bank of New York
|
|
|
|
|
|
Mellon Corp.
|
—
|
—
|
—
|
—
|
—
|
HSBC Bank USA NA
|
36,787
|
(36,787)
|
—
|
—
|
—
|
JPMorgan Chase Bank N.A.
|
38,609
|
(12,219)
|
—
|
—
|
26,390
|
Morgan Stanley & Co.
|
—
|
—
|
—
|
—
|
—
|
State Street Bank &
|
|
|
|
|
|
Trust Co.
|
57,520
|
(51,326)
|
—
|
—
|
6,194
|
Total
|
$133,218
|
$(100,634)
|
$ —
|
$ —
|
$ 32,584
|
|
|
Derivative
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Subject to
|
Derivatives
|
Non-Cash
|
Cash Net
|
Amount
|
|
Master Netting
|
Available
|
Collateral
|
Collateral
|
of Derivative
|
Counterparty
|
Agreement
|
for Offset
|
Pledged (a)
|
Pledged (a)
|
Liabilities (c)
|
Bank of America NA
|
$ 9,835
|
$ (302)
|
$ —
|
$ —
|
$ 9,533
|
Bank of New York
|
|
|
|
|
|
Mellon Corp.
|
30,942
|
—
|
—
|
—
|
30,942
|
HSBC Bank USA NA
|
164,394
|
(36,787)
|
—
|
—
|
127,607
|
JPMorgan Chase Bank N.A.
|
12,219
|
(12,219)
|
—
|
—
|
—
|
Morgan Stanley & Co.
|
20,233
|
—
|
—
|
—
|
20,233
|
State Street Bank &
|
|
|
|
|
|
Trust Co.
|
51,326
|
(51,326)
|
—
|
—
|
—
|
Total
|
$288,949
|
$(100,634)
|
$ —
|
$ —
|
$188,315
|
(a)
|
The amount presented here may be less than the total amount of collateral received/pledged as the net amount of derivative assets and liabilities cannot be less than $0.
|
(b)
|
Represents the net amount due from the counterparty in the event of default.
|
(c)
|
Represents the net amount payable to the counterparty in the event of default.
|
6. Additional Disclosures about Derivative Instruments and Hedging Activities
The Trust’s use of derivatives may enhance or mitigate the Trust’s exposure to the following risks:
Interest rate risk relates to the fluctuations in the value of interest-bearing securities due to changes in the prevailing levels of market interest rates.
Credit risk relates to the ability of the issuer of a financial instrument to make further principal or interest payments on an obligation or commitment that it has to the Trust.
Foreign exchange rate risk relates to fluctuations in the value of an asset or liability due to changes in currency exchange rates.
Pioneer High Income Trust | Annual Report | 3/31/21 63
Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange rate risk), whether caused by
factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment.
Commodity risk relates to the risk that the value of a commodity or commodity index will fluctuate based on increases or decreases in the commodities market and factors specific to a particular industry or commodity.
The fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) by risk exposure at March 31, 2021, was as follows:
Statement of
|
|
|
Foreign
|
|
|
Assets and
|
Interest
|
Credit
|
Exchange
|
Equity
|
Commodity
|
Liabilities
|
Rate Risk
|
Risk
|
Rate Risk
|
Risk
|
Risk
|
Assets:
|
|
|
|
|
|
Options purchased*
|
$ —
|
$ —
|
$ 38,911
|
$ —
|
$ —
|
Total Value
|
$ —
|
$ —
|
$ 38,911
|
$ —
|
$ —
|
|
Liabilities:
|
|
|
|
|
|
Written options
|
|
|
|
|
|
outstanding
|
$ —
|
$ —
|
$ 22,054
|
$ —
|
$ —
|
Net unrealized
|
|
|
|
|
|
depreciation on
|
|
|
|
|
|
forward foreign
|
|
|
|
|
|
currency exchange
|
|
|
|
|
|
contracts
|
—
|
—
|
172,588
|
—
|
—
|
Total Value
|
$ —
|
$ —
|
$194,642
|
$ —
|
$ —
|
*
|
Reflects the market value of purchased option contracts (see Note 1H). These amounts are included in Investment in unaffiliated issuers, at value, on the Statement of Assets and Liabilities.
|
64 Pioneer High Income Trust | Annual Report | 3/31/21
The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations by risk exposure at March 31, 2021, was as follows:
|
|
|
Foreign
|
|
|
Statement of
|
Interest
|
Credit
|
Exchange
|
Equity
|
Commodity
|
Operations
|
Rate Risk
|
Risk
|
Rate Risk
|
Risk
|
Risk
|
Net realized gain
|
|
|
|
|
|
(loss) on:
|
|
|
|
|
|
Options purchased*
|
$ —
|
$ —
|
$(147,396)
|
$ —
|
$ —
|
Written options
|
—
|
—
|
147,396
|
—
|
—
|
Forward foreign
|
|
|
|
|
|
currency exchange
|
|
|
|
|
|
contracts
|
—
|
—
|
222,169
|
—
|
—
|
Swap contracts
|
(219,415)
|
(1,088,443)
|
—
|
—
|
—
|
Total Value
|
$(219,415)
|
$(1,088,443)
|
$ 222,169
|
$ —
|
$ —
|
Change in net
|
|
|
|
|
|
unrealized
|
|
|
|
|
|
appreciation
|
|
|
|
|
|
(depreciation) on:
|
|
|
|
|
|
Options purchased**
|
$ —
|
$ —
|
$ (10,101)
|
$ —
|
$ —
|
Written options
|
—
|
—
|
(9,193)
|
—
|
—
|
Forward foreign
|
|
|
|
|
|
currency exchange
|
|
|
|
|
|
contracts
|
—
|
—
|
(59,890)
|
—
|
—
|
Swap contracts
|
185,305
|
924,678
|
—
|
—
|
—
|
Total Value
|
$185,305
|
$ 924,678
|
$ (79,184)
|
$ —
|
$ —
|
*
|
Reflects the net realized gain (loss) on purchased option contracts (see Note 1H). These amounts are included in Net realized gain (loss) on investments in unaffiliated issuers, on the Statement of Operations.
|
**
|
Reflects the change in net unrealized appreciation (depreciation) on purchased option contracts (see Note 1H). These amounts are included in change in net unrealized appreciation (depreciation) on Investments in unaffiliated issuers, on
the Statement of Operations.
|
7. Trust Shares
There are an unlimited number of shares of beneficial interest authorized.
Transactions in shares of beneficial interest for the year ended March 31, 2021 and the year ended March 31, 2020 were as follows:
|
3/31/21
|
3/31/20
|
Shares outstanding at beginning of period
|
29,231,771
|
29,231,771
|
Shares outstanding at end of period
|
29,231,771
|
29,231,771
|
8. Unfunded Loan Commitments
The Trust may enter into unfunded loan commitments. Unfunded loan commitments may be partially or wholly unfunded. During the contractual period, the Trust is obliged to provide funding to the borrower upon demand. A
fee is earned by the Trust on the unfunded commitment and is
Pioneer High Income Trust | Annual Report | 3/31/21 65
recorded as interest income on the Statement of Operations. Unfunded loan commitments are fair valued in accordance with the valuation policy described in Footnote 1A and unrealized appreciation or depreciation, if
any, is recorded on the Statement of Assets and Liabilities.
9. Credit Agreement
The Trust has entered into a Revolving Credit Facility (the “Credit Agreement”) agreement with Sumitomo Mitsui Banking Corporation. Loan under the credit agreement are offered at a daily rate equal to the U.S. one
month LIBOR rate plus 1.10%. There is no fixed borrowing limit.
At March 31, 2021, the Trust had a borrowing outstanding under the credit agreement totaling $123,000,000. The interest rate charged at March 31, 2021 was 1.13%. During the year ended March 31, 2021, the average daily
balance was $108,836,565 at an average interest rate of 1.30%. Interest expense of $1,367,636 in connection with the credit agreement is included in the Statement of Operations.
The Trust is required to fully collateralize its outstanding loan balance as determined by Sumitomo Mitsui. Pledged assets are held in a segregated account and are denoted on the Schedule of Investments.
The Trust is required to maintain 300% asset coverage with respect to amounts outstanding under the Credit Agreement. Asset coverage is calculated by subtracting the Trust’s total liabilities not including any bank
loans and senior securities, from the Trust’s total assets and dividing such amount by the principal amount of the borrowing outstanding.
10. Subsequent Events
A monthly dividend was declared on April 6, 2021 from undistributed and accumulated net investment income of $0.0725 per share payable April 30, 2021, to shareowners of record on April 19, 2021.
Redomiciling
On April 21, 2021, Pioneer High Income Trust redomiciled from a Delaware statutory trust to a Maryland corporation and was renamed Pioneer High Income Fund, Inc. The Fund, previously organized as a Delaware statutory
trust, redomiciled to a Maryland corporation (the “redomiciling”). The redomiciling was effected through a statutory merger of the predecessor Delaware statutory trust (the “Predecessor Entity”) with and into a newly-established Maryland
corporation formed for the purpose of effecting the redomiciling (the “Successor Entity”) pursuant to the terms of an Agreement and Plan of Merger entered into by and between the Predecessor Entity and the Successor Entity (the “Merger”). Upon
effectiveness of the Merger, (i) the Successor Entity became the successor in interest to the
66 Pioneer High Income Trust | Annual Report | 3/31/21
Fund, (ii) each outstanding share of common stock of the Predecessor Entity was automatically converted into one share of common stock of the Successor Entity, and (iii) the shareholders of the Predecessor Entity
became stockholders of the Successor Entity. Neither the Fund nor its stockholders realized gain (loss) as a direct result of the Merger. Accordingly, the Merger had no effect on the Fund’s operations.
In connection with the redomiciling, the Fund’s name changed from Pioneer High Income Trust to Pioneer High Income Fund, Inc. The Fund’s ticker symbol on the New York Stock Exchange did not change.
The redomiciling did not result in any change to the investment adviser, investment objective and strategies, portfolio management team, policies and procedures or the members of the Board overseeing the Fund.
Following the Fund’s redomiciling, the rights of shareholders are governed by Maryland General Corporation Law and the Articles of Incorporation and Bylaws of the Successor Entity. In addition, the Fund is subject to
the Maryland Control Share Acquisition Act (the “Control Share Act”) following the redomiciling.
The Control Share Act generally provides that any holder of “control shares” acquired in a “control share acquisition” may not exercise voting rights with respect to the “control shares,” except to the extent approved
by a vote of two-thirds of all the votes entitled to be cast on the matter. Generally, “control shares” are shares that, when aggregated with shares already owned by an acquiring person, would entitle the acquiring person to exercise 10% or more,
33 1/3% or more, or a majority of the total voting power of shares entitled to vote in the election of directors. The Control Share Act provides that a “control share acquisition” does not include the acquisition of shares in a merger,
consolidation or share exchange. Therefore, a shareholder of the Fund that acquired shares of the Successor Entity as a result of the Merger will be able to exercise voting rights as to those shares even if the number of such shares acquired by the
shareholder in the Merger exceeds one or more of the thresholds of the Control Share Act.
The above description of the Control Share Act is only a high-level summary and does not purport to be complete. Investors should refer to the actual provisions of the Control Share Act and the Fund’s Bylaws for more
information, including definitions of key terms, various exclusions and exemptions from the statute’s scope, and the procedures by which stockholders may approve the reinstatement of voting rights to holders of “control shares.”
Pioneer High Income Trust | Annual Report | 3/31/21 67
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and the Shareholders of Pioneer High Income Trust:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of Pioneer High Income Trust (the “Trust”), including the schedule of investments, as of March 31, 2021, and the related statements of operations
and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the four years in the period then ended and the related notes (collectively
referred to as the “financial statements”). The financial highlights for the period ended March 31, 2017 were audited by another independent registered public accounting firm whose report, dated May 26, 2017, expressed an unqualified opinion on
those financial highlights. In our opinion, the financial statements present fairly, in all material respects, the financial position of Pioneer High Income Trust at March 31, 2021, the results of its operations and its cash flows for the year then
ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the four years in the period then ended in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting, 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.
68 Pioneer High Income Trust | Annual Report | 3/31/21
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of March 31, 2021, by correspondence with the custodian and brokers or by
other appropriate auditing procedures where replies from brokers were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Amundi Pioneer investment companies since 2017.
Boston, Massachusetts
May 27, 2021
Pioneer High Income Trust | Annual Report | 3/31/21 69
Additional Information (unaudited)
Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Trust may purchase, from time to time, its shares in the open market.
The percentages of the Trust’s ordinary income distributions that are exempt from nonresident alien (NRA) tax withholding resulting from qualified interest income was 64.95%.
70 Pioneer High Income Trust | Annual Report | 3/31/21
INVESTMENT OBJECTIVES
, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS
CHANGES OCCURRING DURING MOST RECENT FISCAL YEAR
The following information in this annual report is a summary of certain changes during the most recent fiscal year. This information may not reflect all of the changes that have occurred since you purchased shares of
the Trust. The following principal risk disclosure has been added with respect to the Trust:
Recent events. The respiratory illness COVID-19 caused by a novel coronavirus has resulted in a global pandemic and major disruption to economies and markets around the world,
including the United States. Global financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments has been greatly reduced for periods of time. Some
interest rates are very low and in some cases yields are negative. Some sectors of the economy and individual issuers have experienced particularly large losses. These circumstances may continue for an extended period of time, and may continue to
affect adversely the value and liquidity of the Trust’s investments. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. Governments and central banks,
including the Federal Reserve in the U.S., have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. These actions have resulted in significant expansion of public debt, including in the
U.S. The impact of these measures, and whether they will be effective to mitigate the economic and market disruption, may not be known for some time. The consequences of high public debt, including its future impact on the economy and securities
markets, likewise may not be known for some time.
LIBOR risk. LIBOR (London Interbank Offered Rate) is used extensively in the U.S. and globally as a “benchmark” or “reference rate” for various commercial and financial
contracts, including corporate and municipal bonds, bank loans, asset-backed and mortgage-related securities, and interest rate swaps and other derivatives. In 2017, the head of the UK Financial Conduct Authority (“FCA”) announced a desire to phase
out the use of LIBOR by the end of 2021. The FCA and LIBOR’s administrator, ICE Benchmark Administration (“IBA”), have announced that most LIBOR rates will no longer be published after the end of 2021 and a majority of U.S. dollar LIBOR rates will
no longer by published after June 30, 2023. It is
Pioneer High Income Trust | Annual Report | 3/31/21 71
possible that the FCA may compel the IBA to publish a subset of LIBOR settings after these dates on a “synthetic” basis, but any such publications would be considered non-representative of the underlying market.
Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Based on the recommendations of the New York Federal Reserve’s Alternative Reference Rate Committee (comprised of major
derivative market participants and their regulators), the U.S. Federal Reserve began publishing a Secured Overnight Funding Rate (“SOFR”) that is intended to replace U.S. Dollar LIBOR. Proposals for alternative reference rates for other currencies
have also been announced or have already begun publication, such as SONIA in the United Kingdom. Markets are slowly developing in response to these new rates, and transition planning is at a relatively early stage. Neither the effect of the
transition process nor its ultimate success is known. The transition process may lead to increased volatility and illiquidity in markets that currently rely on LIBOR to determine interest rates. The effect of any changes to —or discontinuation
of—LIBOR on the portfolio will vary depending on, among other things, provisions in individual contracts and whether, how, and when industry participants develop and adopt new reference rates and alternative reference rates for both legacy and new
products and instruments. Because the usefulness of LIBOR as a benchmark may deteriorate during the transition period, these effects could materialize prior to the end of 2021.
Anti-takeover provisions. The Fund’s Articles of Incorporation and Bylaws include provisions that could limit the ability of other entities or persons to acquire control of the
Fund or convert the Fund to open-end status. The Fund’s Bylaws also contain a provision providing that the Board of Directors has adopted a resolution to opt in the Fund to the provisions of the Maryland Control Share Acquisition Act (“MCSAA”).
Such a provision may discourage third parties from seeking to obtain control of the Fund, which could have an adverse impact on the market price of the Fund’s shares. There can be no assurance, however, that such a provision will be sufficient to
deter activist investors that seek to cause the Fund to take actions that may not be aligned with the interests of long-term shareholders.
INVESTMENT OBJECTIVES
The Trust’s investment objective is a high level of current income. The Trust may, as a secondary objective, also seek capital appreciation to the extent consistent with its investment objective. The Trust’s
investment objective is a fundamental policy and may not be changed without the approval of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Trust. The Trust makes no assurance that it will realize its objective.
72 Pioneer High Income Trust | Annual Report | 3/31/21
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Trust invests at least 80% of its assets (net assets plus borrowing for investment purposes) in below investment grade (“high yield”) debt securities, loans and preferred stocks.
This is a non-fundamental policy and may be changed by the Board of Directors of the Trust provided that shareholders are provided with at least 60 days prior written notice of any change as required by the rules under the 1940 Act.
The Trust may invest in insurance-linked securities.
The Trust may invest in securities and other obligations of any credit quality, including those that are rated below investment grade, or are unrated but are determined by the Adviser to be of equivalent credit
quality.
The Trust may invest in securities of issuers that are in default or that are in bankruptcy.
The Adviser considers both broad economic and issuer specific factors in selecting a portfolio designed to achieve the Trust’s investment objective. In assessing the appropriate maturity, rating, sector and country
weightings of the Trust’s portfolio, the Adviser considers a variety of factors that are expected to influence economic activity and interest rates. These factors include fundamental economic indicators, such as the rates of economic growth and
inflation, Federal Reserve monetary policy and the relative value of the U.S. dollar compared to other currencies. Once the Adviser determines the preferable portfolio characteristics, the Adviser selects individual securities based upon the terms
of the securities (such as yields compared to U.S. Treasuries or comparable issues), liquidity and rating, sector and issuer diversification. the Adviser also employs due diligence and fundamental research to assess an issuer’s credit quality,
taking into account financial condition and profitability, future capital needs, potential for change in rating, industry outlook, the competitive environment and management ability.
The Adviser’s analysis of issuers may include, among other things, historic and current financial conditions, current and anticipated cash flow and borrowing requirements, value of assets in relation to historical
costs, strength of management, responsiveness to business conditions, credit standing, and current and anticipated results of operations. While the Adviser considers as one factor in its credit analysis the ratings assigned by the rating services,
the Adviser performs its own independent credit analysis of issuers and, consequently, the Trust may invest, without limit, in unrated securities. As a result, the Trust’s ability to achieve its
Pioneer High Income Trust | Annual Report | 3/31/21 73
investment objective may depend to a greater extent on the Adviser’s own credit analysis than investment companies which invest in higher rated securities.
In making these portfolio decisions, the Adviser relies on the knowledge, experience and judgment of its staff who have access to a wide variety of research. The Trust may continue to hold securities that are
downgraded after the Trust purchases them and will sell such securities only if, in the adviser’s judgment, it is advantageous to sell such securities.
High Yield Securities. The high yield securities in which the Trust invests are rated Ba or lower by Moody’s or BB or lower by Standard & Poor’s or are unrated but
determined by the Adviser to be of comparable quality. Debt securities rated below investment grade are commonly referred to as “junk bonds” and are considered speculative with respect to the issuer’s capacity to pay interest and repay principal.
Below investment grade debt securities involve greater risk of loss, are subject to greater price volatility and are less liquid, especially during periods of economic uncertainty or change, than higher rated debt securities. An investment in the
Trust may be speculative in that it involves a high degree of risk and should not constitute a complete investment program. For purposes of the Trust’s credit quality policies, if a security receives different ratings from nationally recognized
securities rating organizations, the Trust will use the rating chosen by the portfolio manager as most representative of the security’s credit quality. The Trust’s high yield securities may have fixed or variable principal payments and all types of
interest rate and dividend payment and reset terms, including fixed rate, adjustable rate, zero coupon, contingent, deferred, payment in kind and auction rate features. The Trust invests in high yield securities with a broad range of maturities.
Convertible Securities. The Trust’s investment in fixed income securities may include bonds and preferred stocks that are convertible into the equity securities of the issuer
or a related company. The Trust will not invest more that 50% of its total in convertible securities. Depending upon the relationship of the conversion price to the market value of the underlying securities, convertible securities may trade more
like equity securities than debt instruments. Consistent with its objective and other investment policies, the Trust may also invest a portion of its assets in equity securities, including common stocks, depositary receipts, warrants, rights and
other equity interests.
Loans. The Trust may invest a portion of its assets in loan participations and other direct claims against a borrower. The Trust considers corporate loans to be high yield debt
instruments if the issuer has outstanding debt securities rated below investment grade or has no rated securities, and
74 Pioneer High Income Trust | Annual Report | 3/31/21
includes corporate loans in determining whether at least 80% of its assets are invested in high yield debt instruments. The corporate loans in which the Trust invests primarily consist of direct obligations of a
borrower and may include debtor in possession financings pursuant to Chapter 11 of the U.S. Bankruptcy Code, obligations of a borrower issued in connection with a restructuring pursuant to Chapter 11 of the U.S. Bankruptcy Code, leveraged buy-out
loans, leveraged recapitalization loans, receivables purchase facilities, and privately placed notes. The Trust may invest in a corporate loan at origination as a co-lender or by acquiring in the secondary market participations in, assignments of
or novations of a corporate loan. By purchasing a participation, the Trust acquires some or all of the interest of a bank or other lending institution in a loan to a corporate or government borrower. The participations typically will result in the
Trust having a contractual relationship only with the lender, not the borrower. The Trust will have the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the participation and only
upon receipt by the lender of the payments from the borrower. Many such loans are secured, although some may be unsecured. Such loans may be in default at the time of purchase. Loans that are fully secured offer the Trust more protection than an
unsecured loan in the event of non-payment of scheduled interest or principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the corporate borrower’s obligation, or that the collateral can be
liquidated. Direct debt instruments may involve a risk of loss in case of default or insolvency of the borrower and may offer less legal protection to the Trust in the event of fraud or misrepresentation. In addition, loan participations involve a
risk of insolvency of the lending bank or other financial intermediary. The markets in loans are not regulated by federal securities laws or the Securities and Exchange Commission (SEC).
As in the case of other high yield investments, such corporate loans may be rated in the lower rating categories of the established rating services (Ba or lower by Moody’s or BB or lower by Standard & Poor’s), or
may be unrated investments considered by the Adviser to be of comparable quality. As in the case of other high yield investments, such corporate loans can be expected to provide higher yields than lower yielding, higher rated fixed income
securities, but may be subject to greater risk of loss of principal and income. There are, however, some significant differences between corporate loans and high yield bonds. Corporate loan obligations are frequently secured by pledges of liens and
security interests in the assets of the borrower, and the holders of corporate loans are frequently the beneficiaries of debt service subordination provisions imposed on the borrower’s bondholders. These arrangements are designed to give corporate
loan investors preferential treatment over high yield investors in the event of a
Pioneer High Income Trust | Annual Report | 3/31/21 75
deterioration in the credit quality of the issuer. Even when these arrangements exist, however, there can be no assurance that the borrowers of the corporate loans will repay principal and/or pay interest in full.
Corporate loans generally bear interest at rates set at a margin above a generally recognized base lending rate that may fluctuate on a day-to-day basis, in the case of the prime rate of a U.S. bank, or which may be adjusted on set dates, typically
30 days but generally not more than one year, in the case of the London Interbank Offered Rate (LIBOR). Consequently, the value of corporate loans held by the Trust may be expected to fluctuate significantly less than the value of other fixed rate
high yield instruments as a result of changes in the interest rate environment. On the other hand, the secondary dealer market for certain corporate loans may not be as well developed as the secondary dealer market for high yield bonds and,
therefore, presents increased market risk relating to liquidity and pricing concerns.
Distressed Securities. The Trust may invest up to 10% of its total assets in distressed securities, including corporate loans, which are the subject of bankruptcy proceedings
or otherwise in default as to the repayment of principal and/or payment of interest at the time of acquisition by the Trust or are rated in the lower rating categories (Ca or lower by Moody’s or CC or lower by Standard & Poor’s) or which are
unrated investments considered by the Adviser to be of comparable quality. Investment in distressed securities is speculative and involves significant risk. Distressed securities frequently do not produce income while they are outstanding and may
require the Trust to bear certain extraordinary expenses in order to protect and recover its investment. Therefore, to the extent the Trust seeks capital appreciation through investment in distressed securities, the Trust’s ability to achieve
current income for its shareholders may be diminished. The Trust also will be subject to significant uncertainty as to when and in what manner and for what value the obligations evidenced by the distressed securities will eventually be satisfied
(e.g., through a liquidation of the obligor’s assets, an exchange offer or plan of reorganization involving the distressed securities or a payment of some amount in satisfaction of the obligation). In addition, even if an exchange offer is made or
a plan of reorganization is adopted with respect to distressed securities held by the Trust, there can be no assurance that the securities or other assets received by the Trust in connection with such exchange offer or plan of reorganization will
not have a lower value or income potential than may have been anticipated when the investment was made. Moreover, any securities received by the Trust upon completion of an exchange offer or plan of reorganization may be restricted as to resale. As
a result of the
76 Pioneer High Income Trust | Annual Report | 3/31/21
Trust’s participation in negotiations with respect to any exchange offer or plan of reorganization with respect to an issuer of distressed securities, the Trust may be restricted from disposing of such securities.
Preferred Shares. The Trust may invest in preferred shares. Preferred shares are equity securities, but they have many characteristics of fixed income securities, such as a
fixed dividend payment rate and/or a liquidity preference over the issuer’s common shares. However, because preferred shares are equity securities, they may be more susceptible to risks traditionally associated with equity investments than the
Trust’s fixed income securities.
Non-U.S. Investments. While the Trust primarily invests in securities of U.S. issuers, the Trust may invest up to 25% of its total assets in securities of corporate and
governmental issuers located outside the United States, including debt and equity securities of corporate issuers and debt securities of government issuers in developed and emerging markets. Non-U.S. securities may be issued by non-U.S.
governments, banks or corporations, or private issuers, and certain supranational organizations, such as the World Bank and the European Union. The Trust considers emerging market issuers to include issuers organized under the laws of an emerging
market country, issuers with a principal office in an emerging market country, issuers that derive at least 50% of their gross revenues or profits from goods or services produced in emerging market countries or sales made in emerging market
countries, or issuers that have at least 50% of their assets in emerging market countries and emerging market governmental issuers. Emerging markets generally will include, but not be limited to, countries included in the Morgan Stanley Capital
International (MSCI) Emerging + Frontier Markets Index.
Illiquid Securities. The Trust may invest in bonds, corporate loans, convertible securities, preferred stocks and other securities that lack a secondary trading market or are
otherwise considered illiquid. Liquidity of a security relates to the ability to easily dispose of the security and the price to be obtained upon disposition of the security, which may be less than would be obtained for a comparable more liquid
security. The Trust may invest up to 50% of its total assets in investments that are not readily marketable, and it may also invest in securities that are subject to contractual restrictions on resale. Such investments may affect the Trust’s
ability to realize the net asset value in the event of a voluntary or involuntary liquidation of its assets.
Structured Securities. The Trust may invest in structured securities. The value of the principal and/or interest on such securities is determined by reference to changes in the
value of specific currencies, interest rates,
Pioneer High Income Trust | Annual Report | 3/31/21 77
commodities, indices or other financial indicators (Reference) or the relative change in two or more References. The interest rate or the principal amount payable upon maturity or redemption may be increased or
decreased depending upon changes in the Reference. The terms of the structured securities may provide in certain circumstances that no principal is due at maturity and, therefore, may result in a loss of the Trust’s investment. Changes in the
interest rate or principal payable at maturity may be a multiple of the changes in the value of the Reference. Consequently, structured securities may entail a greater degree of market risk than other types of fixed income securities.
Mortgage-Backed Securities. The Trust may invest in mortgage-backed and asset-backed securities. Mortgage-backed securities may be issued by private issuers, by
government-sponsored entities such as the Federal National Mortgage Association (“FNMA”) or Federal Home Loan Mortgage Corporation (“FHLMC”) or by agencies to the U.S. government such as the Government National Mortgage Corporation (“GNMA”).
Mortgage-backed securities represent direct or indirect participation in, or are collateralized by and payable from, mortgage loans secured by real property. The Trust’s investments in mortgage-related securities may include mortgage derivatives
and structured securities.
The Trust may invest in mortgage pass-through certificates and multiple-class pass-through securities, and mortgage derivative securities such as real estate mortgage investment conduits (REMIC) pass-through
certificates, collateralized mortgage obligations (CMOs) and stripped mortgage-backed securities (SMBS), interest only mortgage-backed securities and principal only mortgage-backed securities and other types of mortgage-backed securities that may
be available in the future. A mortgage-backed security is an obligation of the issuer backed by a mortgage or pool of mortgages or a direct interest in an underlying pool of mortgages. Some mortgage-backed securities, such as CMOs, make payments of
both principal and interest at a variety of intervals; others make semiannual interest payments at a predetermined rate and repay principal at maturity (like a typical bond). Mortgage-backed securities are based on different types of mortgages
including those on commercial real estate or residential properties. Mortgage-backed securities often have stated maturities of up to thirty years when they are issued, depending upon the length of the mortgages underlying the securities. In
practice, however, unscheduled or early payments of principal and interest on the underlying mortgages may make the securities’ effective maturity shorter than this, and the prevailing interest rates may be higher or lower than the current yield of
the Trust’s portfolio at the time the Trust receives the payments for reinvestment. Mortgage-backed securities may have less potential for capital appreciation
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than comparable fixed income securities, due to the likelihood of increased prepayments of mortgages as interest rates decline. If the Trust buys mortgage-backed securities at a premium, mortgage foreclosures and
prepayments of principal by mortgagors (which may be made at any time without penalty) may result in some loss of the Trust’s principal investment to the extent of the premium paid. The value of mortgage-backed securities may also change due to
shifts in the market’s perception of issuers. In addition, regulatory or tax changes may adversely affect the mortgage securities markets as a whole. Non-governmental mortgage-backed securities may offer higher yields than those issued by
government entities but also may be subject to greater price changes than governmental issues.
Asset-Backed Securities. The Trust may invest in asset-backed securities. Asset-backed securities represent participations in, or are secured by and payable from, assets such
as installment sales or loan contracts, leases, credit card receivables and other categories of receivables. The Trust’s investments in asset-backed securities may include derivative and structured securities. The Trust may invest in asset-backed
securities issued by special entities, such as trusts, that are backed by a pool of financial assets. The Trust may invest in collateralized debt obligations (CDOs), which include collateralized bond obligations (CBOs), collateralized loan
obligations (CLOs) and other similarly structured securities. A CDO is a trust backed by a pool of fixed income securities. The trust typically is split into two or more portions, called tranches, which vary in credit quality, yield, credit support
and right to repayment of principal and interest. Lower tranches pay higher interest rates but represent lower degrees of credit quality and are more sensitive to the rate of defaults in the pool of obligations. Certain CDOs may use derivatives,
such as credit default swaps, to create synthetic exposure to assets rather than holding such assets directly.
REITs. REITs primarily invest in income producing real estate or real estate related loans or interests. REITs are generally classified as equity REITs, mortgage REITs or a
combination of equity and mortgage REITs. Equity REITs invest the majority of their assets directly in real property and derive income primarily from the collection of rents. Equity REITs can also realize capital gains by selling properties that
have appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages and derive income from the collection of interest payments. REITs are not taxed on income distributed to shareholders provided they comply with
the applicable requirements of the Internal Revenue Code of 1986, as amended (the Internal Revenue Code). The Trust will in some cases indirectly bear its proportionate share of any management and other expenses paid by REITs
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in which it invests in addition to the expenses paid by the Trust. Debt securities issued by REITs are, for the most part, general and unsecured obligations and are subject to risks associated with REITs.
U.S. Government Securities. U.S. government securities in which the Trust invests include debt obligations of varying maturities issued by the U.S. Treasury or issued or
guaranteed by an agency or instrumentality of the U.S. government, including the Federal Housing Administration, Federal Financing Bank, Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration, Government
National Mortgage Association (GNMA), General Services Administration, Central Bank for Cooperatives, Federal Farm Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage Association (FNMA),
Maritime Administration, Tennessee Valley Authority, District of Columbia Armory Board, Student Loan Marketing Association, Resolution Trust Corporation and various institutions that previously were or currently are part of the Farm Credit System
(which has been undergoing reorganization since 1987). Some U.S. government securities, such as U.S. Treasury bills, Treasury notes and Treasury bonds, which differ only in their interest rates, maturities and times of issuance, are supported by
the full faith and credit of the United States. Others are supported by: (i) the right of the issuer to borrow from the U.S. Treasury, such as securities of the Federal Home Loan Banks; (ii) the discretionary authority of the U.S. government to
purchase the agency’s obligations, such as securities of the FNMA; or (iii) only the credit of the issuer. No assurance can be given that the U.S. government will provide financial support in the future to U.S. government agencies, authorities or
instrumentalities that are not supported by the full faith and credit of the United States. Securities guaranteed as to principal and interest by the U.S. government, its agencies, authorities or instrumentalities include: (i) securities for which
the payment of principal and interest is backed by an irrevocable letter of credit issued by the U.S. government or any of its agencies, authorities or instrumentalities; and (ii) participations in loans made to non-U.S. governments or other
entities that are so guaranteed. The secondary market for certain of these participations is limited and, therefore, may be regarded as illiquid.
Zero Coupon Securities. The Trust may invest in zero coupon securities. Zero coupon securities are debt instruments that do not pay interest during the life of the security but
are issued at a discount from the amount the investor will receive when the issuer repays the amount borrowed (the face value). The discount approximates the total amount of interest that would be paid at an assumed interest rate.
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Investments in Equity Securities. Consistent with its objective, the Trust may invest in equity securities. Equity securities, such as common stock, generally represent an
ownership interest in a company. While equity securities have historically generated higher average returns than fixed income securities, equity securities have also experienced significantly more volatility in those returns. An adverse event, such
as an unfavorable earnings report, may depress the value of a particular equity security held by the Trust. Also, the price of equity securities, particularly common stocks, are sensitive to general movements in the stock market. A drop in the
stock market may depress the price of equity securities held by the Trust.
Other Investment Companies. The Trust may invest in the securities of other investment companies to the extent that such investments are consistent with the Trust’s investment
objectives and principal investment strategies and permissible under the 1940 Act. Subject to the limitations on investment in other investment companies, the Trust may invest in “ETFs.”
Other Investments. Normally, the Trust will invest substantially all of its assets to meet its investment objectives. The Trust may invest the remainder of its assets in
securities with remaining maturities of less than one year or cash equivalents, or it may hold cash. For temporary defensive purposes, the Trust may depart from its principal investment strategies and invest part or all of its assets in securities
with remaining maturities of less than one year or cash equivalents, or it may hold cash. During such periods, the Trust may not be able to achieve its investment objectives.
Derivatives. The Trust may, but is not required to, use futures and options on securities, indices and currencies, forward foreign currency exchange contracts, swaps,
credit-linked notes and other derivatives. The Trust also may enter into credit default swaps, which can be used to acquire or to transfer the credit risk of a security or index of securities without buying or selling the security or securities
comprising the relevant index. A derivative is a security or instrument whose value is determined by reference to the value or the change in value of one or more securities, currencies, indices or other financial instruments. The Trust may use
derivatives for a variety of purposes, including:
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In an attempt to hedge against adverse changes in the market prices of securities, interest rates or currency exchange rates
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As a substitute for purchasing or selling securities
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To attempt to increase the Trust’s return as a non-hedging strategy that may be considered speculative
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To manage portfolio characteristics (for example, the duration or credit quality of the Trust’s portfolio)
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As a cash flow management technique
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The Trust may choose not to make use of derivatives for a variety of reasons, and any use may be limited by applicable law and regulations.
Mortgage Dollar Rolls. The Trust may enter into mortgage dollar roll transactions to earn additional income. In these transactions, the Trust sells a U.S. agency
mortgage-backed security and simultaneously agrees to repurchase at a future date another U.S. agency mortgage-backed security with the same interest rate and maturity date, but generally backed by a different pool of mortgages. The Trust loses the
right to receive interest and principal payments on the security it sold. However, the Trust benefits from the interest earned on investing the proceeds of the sale and may receive a fee or a lower repurchase price. The benefits from these
transactions depend upon the Adviser’s ability to forecast mortgage prepayment patterns on different mortgage pools. The Trust may lose money if, during the period between the time it agrees to the forward purchase of the mortgage securities and
the settlement date, these securities decline in value due to market conditions or prepayments on the underlying mortgages.
Insurance-Linked Securities. The Trust may invest in insurance-linked securities (ILS). The Trust could lose a portion or all of the principal it has invested in an ILS, and
the right to additional interest or dividend payments with respect to the security, upon the occurrence of one or more trigger events, as defined within the terms of an insurance-linked security. Trigger events, generally, are hurricanes,
earthquakes, or other natural events of a specific size or magnitude that occur in a designated geographic region during a specified time period, and/or that involve losses or other metrics that exceed a specific amount. There is no way to
accurately predict whether a trigger event will occur, and accordingly, ILS carry significant risk. The Trust is entitled to receive principal and interest and/or dividend payments so long as no trigger event occurs of the description and magnitude
specified by the instrument. In addition to the specified trigger events, ILS may expose the Trust to other risks, including but not limited to issuer (credit) default, adverse regulatory or jurisdictional interpretations and adverse tax
consequences.
The Trust’s investments in ILS may include event-linked bonds. ILS also may include securities issued by special purpose vehicles (“SPVs”) or similar instruments structured to comprise a portion of a reinsurer’s
catastrophe-oriented business, known as quota share instruments (sometimes referred to as reinsurance sidecars), or to provide reinsurance relating to specific risks
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to insurance or reinsurance companies through a collateralized instrument, known as collateralized reinsurance. Structured reinsurance investments also may include industry loss warranties (“ILWs”). A traditional ILW
takes the form of a bilateral reinsurance contract, but there are also products that take the form of derivatives, collateralized structures, or exchange-traded instruments. The Trust may invest in interests in pooled entities that invest primarily
in ILS.
Where the ILS are based on the performance of underlying reinsurance contracts, the Trust has limited transparency into the individual underlying contracts, and therefore must rely upon the risk assessment and sound
underwriting practices of the issuer. Accordingly, it may be more difficult for the Adviser to fully evaluate the underlying risk profile of the Trust’s structured reinsurance investments, and therefore the Trust’s assets are placed at greater risk
of loss than if the Adviser had more complete information. Structured reinsurance instruments generally will be considered illiquid securities by the Trust.
Other Debt Securities. The Trust may invest in other debt securities. Other debt securities in which the Trust may invest include: securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities and custodial receipts therefor; securities issued or guaranteed by a foreign government or any of its political subdivisions, authorities, agencies or instrumentalities or by international or
supranational entities; corporate debt securities, including notes, bonds and debentures; certificates of deposit and bankers’ acceptances issued or guaranteed by, or time deposits maintained at, banks (including U.S. or foreign branches of U.S.
banks or U.S. or foreign branches of foreign banks) having total assets of more than $1 billion; commercial paper; and mortgage related securities. These securities may be of any maturity. The value of debt securities can be expected to vary
inversely with interest rates.
Money Market Instruments. Money market instruments include short-term U.S. government securities, U.S. dollar-denominated, high quality commercial paper (unsecured promissory
notes issued by corporations to finance their short-term credit needs), certificates of deposit, bankers’ acceptances and repurchase agreements relating to any of the foregoing. U.S. government securities include Treasury notes, bonds and bills,
which are direct obligations of the U.S. government backed by the full faith and credit of the United States and securities issued by agencies and instrumentalities of the U.S. government, which may be guaranteed by the U.S. Treasury, may be
supported by the issuer’s right to borrow from the U.S. Treasury or may be backed only by the credit of the federal agency or instrumentality itself.
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Repurchase Agreements. In a repurchase agreement, the Trust purchases securities from a broker/dealer or a bank, called the counterparty, upon the agreement of the counterparty
to repurchase the securities from the Trust at a later date, and at a specified price, which is typically higher than the purchase price paid by the Trust. The securities purchased serve as the Trust’s collateral for the obligation of the
counterparty to repurchase the securities. If the counterparty does not repurchase the securities, the Trust is entitled to sell the securities, but the Trust may not be able to sell them for the price at which they were purchased, thus causing a
loss. Additionally, if the counterparty becomes insolvent, there is some risk that the Trust will not have a right to the securities, or the immediate right to sell the securities.
PRINCIPAL RISKS
General. The Trust is a closed-end management investment company designed primarily as a long-term investment and not as a trading tool. The Trust is not a complete investment
program and should be considered only as an addition to an investor’s existing portfolio of investments. Because the Trust may invest substantially in high yield debt securities, an investment in the Trust’s shares is speculative in that it
involves a high degree of risk. Due to uncertainty inherent in all investments, there can be no assurance that the Trust will achieve its investment objective. Instruments in which the Trust invests may only have limited liquidity, or may be
illiquid.
Market risk. The market prices of securities held by the Trust may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or
perceived adverse economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the bond markets, the spread of infectious illness or other public health issues, or adverse
investor sentiment. In the past decade, financial markets throughout the world have experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. Governmental and non-governmental issuers have defaulted on,
or been forced to restructure, their debts. These conditions may continue, recur, worsen or spread. Events that have contributed to these market conditions include, but are not limited to, major cybersecurity events; geopolitical events (including
wars and terror attacks); measures to address budget deficits; downgrading of sovereign debt; changes in oil and commodity prices; dramatic changes in currency exchange rates; global pandemics; and public sentiment. U.S. and non-U.S. governments
and central banks have provided significant support to financial markets, including by keeping interest rates at historically low levels. U.S. Federal
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Reserve or other U.S. or non-U.S. governmental or central bank actions, including interest rate increases or decreases, or contrary actions by different governments, could negatively affect financial markets
generally, increase market volatility and reduce the value and liquidity of securities in which the Trust invests. Policy and legislative changes in the U.S. and in other countries are affecting many aspects of financial regulation, and these and
other events affecting global markets, such as the United Kingdom’s exit from the European Union (or Brexit), may in some instances contribute to decreased liquidity and increased volatility in the financial markets. The impact of these changes on
the markets, and the practical implications for market participants, may not be fully known for some time. Economies and financial markets throughout the world are increasingly interconnected. Economic, financial or political events, trading and
tariff arrangements, terrorism, natural disasters, infectious illness or public health issues, and other circumstances in one country or region could have profound impacts on global economies or markets. As a result, whether or not the Trust
invests in securities of issuers located in or with significant exposure to the countries directly affected, the value and liquidity of the Trust’s investments may be negatively affected. The Trust may experience a substantial or complete loss on
any individual security or derivative position.
Recent events. The respiratory illness COVID-19 caused by a novel coronavirus has resulted in a global pandemic and major disruption to economies and markets around the world,
including the United States. Global financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments has been greatly reduced for periods of time. Some
interest rates are very low and in some cases yields are negative. Some sectors of the economy and individual issuers have experienced particularly large losses. These circumstances may continue for an extended period of time, and may continue to
affect adversely the value and liquidity of the Trust’s investments. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. Governments and central banks,
including the Federal Reserve in the U.S., have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. These actions have resulted in significant expansion of public debt, including in the
U.S. The impact of these measures, and whether they will be effective to mitigate the economic and market disruption, may not be known for some time. The consequences of high public debt, including its future impact on the economy and securities
markets, likewise may not be known for some time.
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LIBOR risk. LIBOR (London Interbank Offered Rate) is used extensively in the U.S. and globally as a “benchmark” or “reference rate” for various commercial and financial
contracts, including corporate and municipal bonds, bank loans, asset-backed and mortgage-related securities, and interest rate swaps and other derivatives. In 2017, the head of the UK Financial Conduct Authority (“FCA”) announced a desire to phase
out the use of LIBOR by the end of 2021. The FCA and LIBOR’s administrator, ICE Benchmark Administration (“IBA”), have announced that most LIBOR rates will no longer be published after the end of 2021 and a majority of U.S. dollar LIBOR rates will
no longer by published after June 30, 2023. It is possible that the FCA may compel the IBA to publish a subset of LIBOR settings after these dates on a “synthetic” basis, but any such publications would be considered non-representative of the
underlying market. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Based on the recommendations of the New York Federal Reserve’s Alternative Reference Rate Committee
(comprised of major derivative market participants and their regulators), the U.S. Federal Reserve began publishing a Secured Overnight Funding Rate (“SOFR”) that is intended to replace U.S. Dollar LIBOR. Proposals for alternative reference rates
for other currencies have also been announced or have already begun publication, such as SONIA in the United Kingdom. Markets are slowly developing in response to these new rates, and transition planning is at a relatively early stage. Neither the
effect of the transition process nor its ultimate success is known. The transition process may lead to increased volatility and illiquidity in markets that currently rely on LIBOR to determine interest rates. The effect of any changes to —or
discontinuation of—LIBOR on the portfolio will vary depending on, among other things, provisions in individual contracts and whether, how, and when industry participants develop and adopt new reference rates and alternative reference rates for both
legacy and new products and instruments. Because the usefulness of LIBOR as a benchmark may deteriorate during the transition period, these effects could materialize prior to the end of 2021.
High yield or “junk” bond risk. Debt securities that are below investment grade, called “junk bonds,” are speculative, have a higher risk of default or are already in default,
tend to be less liquid and are more difficult to value than higher grade securities. Junk bonds tend to be volatile and more susceptible to adverse events and negative sentiments. These risks are more pronounced for securities that are already in
default.
Interest rate risk. Interest rates may go up, causing the value of the Trust’s investments to decline (this risk generally will be greater for securities with longer maturities
or durations). For example, if interest rates increase by 1%, the value of a Trust’s portfolio with a portfolio duration of ten years
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would be expected to decrease by 10%, all other things being equal. The maturity of a security may be significantly longer than its effective duration. A security’s maturity and other features may be more relevant
than its effective duration in determining the security’s sensitivity to other factors affecting the issuer or markets generally, such as changes in credit quality or in the yield premium that the market may establish for certain types of
securities.
Rising interest rates can lead to increased default rates, as issuers of floating rate securities find themselves faced with higher payments. Unlike fixed rate securities, floating rate securities generally will not
increase in value if interest rates decline. Changes in interest rates also will affect the amount of interest income the Trust earns on its floating rate investments
Credit risk. If an issuer or guarantor of a security held by the Trust or a counterparty to a financial contract with the Trust defaults on its obligation to pay principal
and/or interest, has its credit rating downgraded or is perceived to be less creditworthy, or the credit quality or value of any underlying assets declines, the value of your investment will typically decline.
Prepayment or call risk. Many issuers have a right to prepay their securities. If interest rates fall, an issuer may exercise this right. If this happens, the Trust will not
benefit from the rise in market price that normally accompanies a decline in interest rates, and will be forced to reinvest prepayment proceeds at a time when yields on securities available in the market are lower than the yield on the prepaid
security. The Trust also may lose any premium it paid on the security.
Extension risk. During periods of rising interest rates, the average life of certain types of securities may be extended because of slower than expected principal payments.
This may lock in a below market interest rate, increase the security’s duration and reduce the value of the security.
Risk of illiquid investments. Certain securities and derivatives held by the Trust may be impossible or difficult to purchase, sell or unwind. Illiquid securities and
derivatives also may be difficult to value. Liquidity risk may be magnified in a rising interest rate environment. If the Trust is forced to sell an illiquid asset or unwind a derivatives position, the Trust may suffer a substantial loss or may not
be able to sell at all.
Portfolio selection risk. The adviser’s judgment about the quality, relative yield, relative value or market trends affecting a particular sector or region, market segment,
security or about interest rates generally may prove to be incorrect, or there may be imperfections, errors or limitations in the models, tools and information used by the adviser.
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Reinvestment risk. Income from the Trust’s portfolio will decline if the Trust invests the proceeds, repayment or sale of loans or other obligations into lower yielding
instruments with a lower spread over the base lending rate. A decline in income could affect the common shares’ distribution rate and their overall return.
Risks of investing in floating rate loans. Floating rate loans and similar investments may be illiquid or less liquid than other investments and difficult to value. Market
quotations for these securities may be volatile and/or subject to large spreads between bid and ask prices. No active trading market may exist for many floating rate loans, and many loans are subject to restrictions on resale. Any secondary market
may be subject to irregular trading activity and extended trade settlement periods. An economic downturn generally leads to a higher non-payment rate, and a loan may lose significant value before a default occurs.
When the Trust invests in a loan participation, the Trust does not have a direct claim against the borrower and must rely upon an intermediate participant to enforce any rights against the borrower. As a result, the
Trust is subject to the risk that an intermediate participant between the Trust and the borrower will fail to meet its obligations to the Trust, in addition to the risk that the issuer of the loan will default on its obligations. Also the Trust may
be regarded as the creditor of the agent lender (rather than the borrower), subjecting the Trust to the creditworthiness of the lender as well as the borrower.
There is less readily available, reliable information about most senior loans than is the case for many other types of securities. Although the features of senior loans, including being secured by collateral and
having priority over other obligations of the issuer, reduce some of the risks of investment in below investment grade securities, the loans are subject to significant risks. the Adviser believes, based on its experience, that senior floating rate
loans generally have more favorable loss recovery rates than most other types of below investment grade obligations. However, there can be no assurance that the Trust’s actual loss recovery experience will be consistent with the Adviser’s prior
experience or that the senior loans in which the Trust invests will achieve any specific loss recovery rate.
Some of the loans in which the Trust may invest may be “covenant lite.” Covenant lite loans contain fewer maintenance covenants, or no maintenance covenants at all, than traditional loans and may not include terms
that allow the lender to monitor the financial performance of the borrower and declare a default if certain criteria are breached. This may expose the Trust to greater credit risk associated with the borrower and
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reduce the Trust’s ability to restructure a problematic loan and mitigate potential loss. As a result the Trust’s exposure to losses on such investments may be increased, especially during a downturn in the credit
cycle.
Second lien loans generally are subject to similar risks as those associated with senior loans. Because second lien loans are subordinated or unsecured and thus lower in priority on payment to senior loans, they are
subject to the additional risk that the cash flow of the borrower and property securing the loan or debt, if any, may be insufficient to meet scheduled payments after giving effect to the senior secured obligations of the borrower. This risk is
generally higher for subordinated unsecured loans or debt, which are not backed by a security interest in any specific collateral. Second lien loans generally have greater price volatility than senior loans and may be less liquid.
Certain floating rate loans and other corporate debt securities involve refinancings, recapitalizations, mergers and acquisitions, and other financings for general corporate purposes. Other loans are incurred in
restructuring or “work-out” scenarios, including debtor-in-possession facilities in bankruptcy. Loans in restructuring or similar scenarios may be especially vulnerable to the inherent uncertainties in restructuring processes. In addition, the
highly leveraged capital structure of the borrowers in any of these transactions, whether acquisition financing or restructuring, may make the loans especially vulnerable to adverse economic or market conditions and the risk of default.
Because affiliates of the Adviser may participate in the primary and secondary market for senior loans, limitations under applicable law may restrict the Trust’s ability to participate in a restructuring of a senior
loan or to acquire some senior loans, or affect the timing or price of such acquisition. Loans may not be considered “securities,” and purchasers, such as the Trust, therefore may not be entitled to rely on the anti-fraud protections afforded by
federal securities laws.
Collateral risk. The value of collateral, if any, securing a floating rate loan can decline, and may be insufficient to meet the issuer’s obligations or may be difficult to
liquidate. In addition, the Trust’s access to collateral may be limited by bankruptcy or other insolvency laws. These laws may be less developed and more cumbersome with respect to the Trust’s non-U.S. floating rate investments. Floating rate loans
may not be fully collateralized or may be uncollateralized. Uncollateralized loans involve a greater risk of loss. In the event of a default, the Trust may have difficulty collecting on any collateral and would not have the ability to collect on
any collateral for an uncollateralized loan. In addition, the lender’s security interest or their enforcement of their security interest under the loan agreement may be
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found by a court to be invalid or the collateral may be used to pay other outstanding obligations of the borrower. Further, the Trust’s access to collateral, if any, may be limited by bankruptcy law. To the extent
that a loan is collateralized by stock of the borrower or its affiliates, this stock may lose all or substantially all of its value in the event of bankruptcy of the borrower. Loans that are obligations of a holding company are subject to the risk
that, in a bankruptcy of a subsidiary operating company, creditors of the subsidiary may recover from the subsidiary’s assets before the lenders to the holding company would receive any amount on account of the holding company’s interest in the
subsidiary.
Risk of disadvantaged access to confidential information. The issuer of a floating rate loan may offer to provide material, non-public information about the issuer to
investors, such as the Trust. Normally, the Adviser will seek to avoid receiving this type of information about the issuer of a loan either held by, or considered for investment by, the Trust. the Adviser’s decision not to receive the information
may place it at a disadvantage, relative to other loan investors, in assessing a loan or the loan’s issuer. For example, in instances where holders of floating rate loans are asked to grant amendments, waivers or consents, the Adviser’s inability
to assess the impact of these actions may adversely affect the value of the portfolio. For this and other reasons, it is possible that the Adviser’s decision not to receive material, non-public information under normal circumstances could adversely
affect the Trust’s investment performance.
Risks of subordinated securities. A holder of securities that are subordinated or “junior” to more senior securities of an issuer is entitled to payment after holders of more
senior securities of the issuer. Subordinated securities are more likely to suffer a credit loss than non-subordinated securities of the same issuer, any loss incurred by the subordinated securities is likely to be proportionately greater, and any
recovery of interest or principal may take more time. As a result, even a perceived decline in creditworthiness of the issuer is likely to have a greater impact on subordinated securities than more senior securities.
Issuer risk. The value of corporate income-producing securities may decline for a number of reasons which directly relate to the issuer, such as management performance,
financial leverage and reduced demand for the issuer’s goods and services.
U.S. Treasury obligations risk. The market value of direct obligations of the U.S. Treasury may vary due to changes in interest rates. In addition, changes to the financial
condition or credit rating of the U.S. government may cause the value of the Trust’s investments in obligations issued by the U.S. Treasury to decline.
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U.S. government agency obligations risk. The Trust invests in obligations issued by agencies and instrumentalities of the U.S. government. Government-sponsored entities such as
FNMA, FHLMC and the FHLBs, although chartered or sponsored by Congress, are not funded by congressional appropriations and the debt and mortgage-backed securities issued by them are neither guaranteed nor issued by the U.S. government. The maximum
potential liability of the issuers of some U.S. government obligations may greatly exceed their current resources, including any legal right to support from the U.S. government. Such debt and mortgage-backed securities are subject to the risk of
default on the payment of interest and/or principal, similar to debt of private issuers. Although the U.S. government has provided financial support to FNMA and FHLMC in the past, there can be no assurance that it will support these or other
government-sponsored entities in the future.
Mortgage-related and asset-backed securities risk. The value of mortgage-related and asset-backed securities will be influenced by factors affecting the assets underlying such
securities. As a result, during periods of declining asset value, difficult or frozen credit markets, swings in interest rates, or deteriorating economic conditions, mortgage-related and asset-backed securities may decline in value, face valuation
difficulties, become more volatile and/or become illiquid. Mortgage-backed securities tend to be more sensitive to changes in interest rate than other types of debt securities. These securities are also subject to prepayment and extension risks.
Some of these securities may receive little or no collateral protection from the underlying assets and are thus subject to the risk of default. The risk of such defaults is generally higher in the case of mortgage-backed investments offered by
non-governmental issuers and those that include so-called “sub-prime” mortgages. The structure of some of these securities may be complex and there may be less available information than for other types of debt securities. Upon the occurrence of
certain triggering events or defaults, the Trust may become the holder of underlying assets at a time when those assets may be difficult to sell or may be sold only at a loss.
Risks of investing in collateralized debt obligations. Investment in a collateralized debt obligation (CDO) is subject to the credit, subordination, interest rate, valuation,
prepayment, extension and other risks of the obligations underlying the CDO and the tranche of the CDO in which the Trust invests. CDOs are subject to liquidity risk. Synthetic CDOs are also subject to the risks of investing in derivatives, such as
credit default swaps, and leverage risk.
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Risks of instruments that allow for balloon payments or negative amortization payments. Certain debt instruments allow for balloon payments or negative amortization payments.
Such instruments permit the borrower to avoid paying currently a portion of the interest accruing on the instrument. While these features make the debt instrument more affordable to the borrower in the near term, they increase the risk that the
borrower will be unable to make the resulting higher payment or payments that become due at the maturity of the loan.
Risks of investing in insurance-linked securities. The Trust could lose a portion or all of the principal it has invested in an insurance-linked security, and the right to
additional interest and/or dividend payments with respect to the security, upon the occurrence of one or more trigger events, as defined within the terms of an insurance-linked security. Trigger events may include natural or other perils of a
specific size or magnitude that occur in a designated geographic region during a specified time period, and/or that involve losses or other metrics that exceed a specific amount. There is no way to accurately predict whether a trigger event will
occur and, accordingly, insurance-linked securities carry significant risk. In addition to the specified trigger events, insurance-linked securities may expose the Trust to other risks, including but not limited to issuer (credit) default, adverse
regulatory or jurisdictional interpretations and adverse tax consequences. Certain insurance-linked securities may have limited liquidity, or may be illiquid. The Trust has limited transparency into the individual contracts underlying certain
insurance-linked securities, which may make the risk assessment of such securities more difficult. Certain insurance-linked securities may be difficult to value.
Risks of investments in real estate related securities. Investments in real estate securities are affected by economic conditions, interest rates, governmental actions and
other factors. In addition, investing in REITs involves unique risks. They are significantly affected by the market for real estate and are dependent upon management skills and cash flow. REITs may have lower trading volumes and may be subject to
more abrupt or erratic price movements than the overall securities markets. Mortgage REITs are particularly subject to interest rate and credit risks. In addition to its own expenses, the trust will indirectly bear its proportionate share of any
management and other expenses paid by REITs in which it invests. Many real estate companies, including REITs, utilize leverage.
Risks of zero coupon bonds, payment in kind, deferred and contingent payment securities. These securities may be more speculative and may fluctuate more in value than securities
which pay income periodically and in cash. In addition, although the Trust receives no periodic cash payments on
92 Pioneer High Income Trust | Annual Report | 3/31/21
such securities, the Trust is deemed for tax purposes to receive income from such securities, which applicable tax rules require the Trust to distribute to shareholders. Such distributions may be taxable when
distributed to shareholders
Risks of non-U.S. investments. Investing in non-U.S. issuers, or in U.S. issuers that have significant exposure to foreign markets, may involve unique risks compared to
investing in securities of U.S. issuers. These risks are more pronounced for issuers in emerging markets or to the extent that the Trust invests significantly in one region or country. These risks may include different financial reporting practices
and regulatory standards, less liquid trading markets, extreme price volatility, currency risks, changes in economic, political, regulatory and social conditions, terrorism, sustained economic downturns, financial instability, reduction of
government or central bank support, inadequate accounting standards, tariffs, tax disputes or other tax burdens, and investment and repatriation restrictions. Lack of information and less market regulation also may affect the value of these
securities. Withholding and other non-U.S. taxes may decrease the Trust’s return. Non-U.S. issuers may be located in parts of the world that have historically been prone to natural disasters. Emerging market economies tend to be less diversified
than those of more developed countries. They typically have fewer medical and economic resources than more developed countries and thus they may be less able to control or mitigate the effects of a pandemic. Investing in depositary receipts is
subject to many of the same risks as investing directly in non-U.S. issuers. Depositary receipts may involve higher expenses and may trade at a discount (or premium) to the underlying security. A number of countries in the European Union (EU) have
experienced, and may continue to experience, severe economic and financial difficulties. In addition, the United Kingdom has withdrawn from the EU (commonly known as “Brexit”). Other countries may seek to withdraw from the EU and/or abandon the
euro, the common currency of the EU. The range and potential implications of possible political, regulatory, economic, and market outcomes of Brexit cannot be fully known but could be significant, potentially resulting in increased volatility,
illiquidity and potentially lower economic growth in the affected markets, which will adversely affect the Trust’s investments. If one or more stockholders of a supranational entity such as the World Bank fail to make necessary additional capital
contributions, the entity may be unable to pay interest or repay principal on its debt securities.
Currency risk. The Trust could experience losses based on changes in the exchange rate between non-U.S. currencies and the U.S. dollar or as a result of currency conversion
costs. Currency exchange rates can be volatile, and
Pioneer High Income Trust | Annual Report | 3/31/21 93
are affected by factors such as general economic conditions, the actions of the U.S. and foreign governments or central banks, the imposition of currency controls and speculation.
Risks of convertible securities. The market values of convertible securities tend to decline as interest rates increase and, conversely, to increase as interest rates decline.
A downturn in equity markets may cause the price of convertible securities to decrease relative to other fixed income securities.
Preferred stocks risk. Preferred stocks may pay fixed or adjustable rates of return. Preferred stocks are subject to issuer-specific and market risks applicable generally to
equity securities. In addition, a company’s preferred stocks generally pay dividends only after the company makes required payments to holders of its bonds and other debt. Thus, the value of preferred stocks will usually react more strongly than
bonds and other debt to actual or perceived changes in the company’s financial condition or prospects. The market value of preferred stocks generally decreases when interest rates rise. Preferred stocks of smaller companies may be more vulnerable
to adverse developments than preferred stocks of larger companies.
Risks of investment in other funds. Investing in other investment companies, including exchange-traded funds (ETFs) and closed-end funds, subjects the Trust to the risks of
investing in the underlying securities or assets held by those funds. When investing in another fund, the Trust will bear a pro rata portion of the underlying fund’s expenses, including management fees, in addition to its own expenses. ETFs and
closed-end funds are bought and sold based on market prices and can trade at a premium or a discount to the ETF’s or closed-end fund’s net asset value.
Derivatives risk. Using swaps, forward foreign currency exchange contracts, bond and interest rate futures and other derivatives can increase Trust losses and reduce
opportunities for gains when market prices, interest rates or the derivative instruments themselves behave in a way not anticipated by the Trust. Using derivatives may increase the volatility of the Trust’s net asset value and may not provide the
result intended. Derivatives may have a leveraging effect on the Trust. Some derivatives have the potential for unlimited loss, regardless of the size of the Trust’s initial investment. Derivatives are generally subject to the risks applicable to
the assets, rates, indices or other indicators underlying the derivative. Changes in a derivative’s value may not correlate well with the referenced asset or metric. The Trust also may have to sell assets at inopportune times to satisfy its
obligations. Derivatives may be difficult to sell, unwind or value, and the counterparty may default on its obligations to the Trust. Use of derivatives may have different tax consequences for the Trust than an investment in the underlying
security, and such differences may affect the
94 Pioneer High Income Trust | Annual Report | 3/31/21
amount, timing and character of income distributed to shareholders. The U.S. government and foreign governments are in the process of adopting and implementing regulations governing derivatives markets, including
mandatory clearing of certain derivatives, margin and reporting requirements. The ultimate impact of the regulations remains unclear. Additional regulation of derivatives may make them more costly, limit their availability or utility, otherwise
adversely affect their performance or disrupt markets.
Credit default swap risk. Credit default swap contracts, a type of derivative instrument, involve special risks and may result in losses to the Trust. Credit default swaps may
in some cases be illiquid, and they increase credit risk since the Trust has exposure to the issuer of the referenced obligation and either the counterparty to the credit default swap or, if it is a cleared transaction, the brokerage firm through
which the trade was cleared and the clearing organization that is the counterparty to that trade.
Structured securities risk. Structured securities may behave in ways not anticipated by the Trust, or they may not receive the tax, accounting or regulatory treatment
anticipated by the Trust.
Forward foreign currency transactions risk. The Trust may not fully benefit from or may lose money on forward foreign currency transactions if changes in currency rates do not
occur as anticipated or do not correspond accurately to changes in the value of the Trust’s holdings, or if the counterparty defaults. Such transactions may also prevent the Trust from realizing profits on favorable movements in exchange rates.
Risk of counterparty default is greater for counterparties located in emerging markets.
Leveraging risk. The value of your investment may be more volatile and other risks tend to be compounded if the Trust borrows or uses derivatives or other investments, such as
ETFs, that have embedded leverage. Leverage generally magnifies the effect of any increase or decrease in the value of the Trust’s underlying assets and creates a risk of loss of value on a larger pool of assets than the Trust would otherwise have,
potentially resulting in the loss of all assets. Engaging in such transactions may cause the Trust to liquidate positions when it may not be advantageous to do so to satisfy its obligations or meet segregation requirements.
The Trust may use financial leverage on an ongoing basis for investment purposes by borrowing from banks through a revolving credit facility. The fees and expenses attributed to leverage, including any increase in the
management fees, will be borne by holders of common shares. Since the
Pioneer High Income Trust | Annual Report | 3/31/21 95
Adviser’s fee is based on a percentage of the Trust’s managed assets, its fee will be higher if the Trust is leveraged, and the Adviser will thus have an incentive to leverage the Trust.
Repurchase agreement risk. In the event that the other party to a repurchase agreement defaults on its obligations, the Trust may encounter delay and incur costs before being
able to sell the security. Such a delay may involve loss of interest or a decline in price of the security. In addition, if the Trust is characterized by a court as an unsecured creditor, it would be at risk of losing some or all of the principal
and interest involved in the transaction.
Market segment risk. To the extent the Trust emphasizes, from time to time, investments in a market segment, the Trust will be subject to a greater degree to the risks
particular to that segment, and may experience greater market fluctuation than a fund without the same focus.
Industries in the financial segment, such as banks, insurance companies and broker-dealers, may be sensitive to changes in interest rates and general economic activity and are generally subject to extensive government
regulation.
Valuation risk. The sales price the Trust could receive for any particular portfolio investment may differ from the Trust’s valuation of the investment, particularly for
illiquid securities and securities that trade in thin or volatile markets or that are valued using a fair value methodology. These differences may increase significantly and affect Trust investments more broadly during periods of market volatility.
The Trust’s ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third party service providers.
Cybersecurity risk. Cybersecurity failures by and breaches of the Trust’s adviser, transfer agent, custodian, Trust accounting agent or other service providers may disrupt
Trust operations, interfere with the Trust’s ability to calculate its NAV, prevent Trust shareholders from purchasing or redeeming shares or receiving distributions, cause loss of or unauthorized access to private shareholder information, and
result in financial losses to the Trust and its shareholders, regulatory fines, penalties, reputational damage, or additional compliance costs.
Cash management risk. The value of the investments held by the Trust for cash management or temporary defensive purposes may be affected by market risks, changing interest
rates and by changes in credit ratings of the investments. To the extent that the Trust has any uninvested cash, the Trust would be subject to credit risk with respect to the depository institution holding the cash. If the Trust holds cash
uninvested, the Trust
96 Pioneer High Income Trust | Annual Report | 3/31/21
will not earn income on the cash and the Trust’s yield will go down. During such periods, it may be more difficult for the Trust to achieve its investment objective.
Anti-takeover provisions. The Trust’s Articles of Incorporation and Bylaws include provisions that could limit the ability of other entities or persons to acquire control of
the Trust or convert the Trust to open-end status. The Fund’s Bylaws also contain a provision providing that the Board of Directors has adopted a resolution to opt in the Fund to the provisions of the Maryland Control Share Acquisition Act
(“MCSAA”). Such a provision may discourage third parties from seeking to obtain control of the Fund, which could have an adverse impact on the market price of the Fund’s shares. There can be no assurance, however, that such a provision will be
sufficient to deter activist investors that seek to cause the Fund to take actions that may not be aligned with the interests of long-term shareholders.
Please note that there are many other factors that could adversely affect your investment and that could prevent the Trust from achieving its goals. An investment in the Trust is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
INVESTMENT RESTRICTIONS
The following are the Trust’s fundamental investment restrictions. These restrictions, along with the Trust’s investment objectives, may not be changed without the approval of the holders of a majority of the Trust’s
outstanding voting securities (which for this purpose and under the 1940 Act means the lesser of (i) 67% of the common shares represented at a meeting at which more than 50% of the outstanding common shares are represented or (ii) more than 50% of
the outstanding common shares).
The Trust may not:
(1)
|
Issue senior securities, other than as permitted by the 1940 Act and the rules and interpretive positions of the SEC thereunder.
|
(2)
|
Borrow money, other than as permitted by the 1940 Act and the rules and interpretive positions of the SEC thereunder.
|
(3)
|
Invest in real estate, except that the Trust may invest in securities of issuers that invest in real estate or interests therein, securities that are secured by real estate or interests therein, securities of real estate investment
trusts and mortgage-backed securities.
|
Pioneer High Income Trust | Annual Report | 3/31/21 97
(4)
|
Make loans, except by the purchase of debt obligations, loans or direct claim against a borrower, by entering into repurchase agreements or through the lending of portfolio securities.
|
(5)
|
Invest in commodities or commodity contracts, except that the Trust may invest in currency instruments and contracts and financial instruments and contracts that might be deemed to be commodities and commodity contracts.
|
(6)
|
Act as an underwriter, except as it may be deemed to be an underwriter in a sale of restricted securities held in its portfolio.
|
(7)
|
With respect to 75% of its total assets, purchase securities of an issuer (other than the U.S. government, its agencies or instrumentalities), if (a) such purchase would cause more than 5% of the Trust’s total assets, taken at market
value, to be invested in the securities of such issuer, or (b) such purchase would at the time result in more than 10% of the outstanding voting securities of such issuer being held by the Trust.
|
(8)
|
Concentrate its investments in securities of companies in any particular industry.
|
All other investment policies of the Trust are considered non-fundamental and may be changed by the Board of Directors without prior approval of the Trust’s outstanding voting shares.
98 Pioneer High Income Trust | Annual Report | 3/31/21
The following table is furnished in response to requirements of the Securities and Exchange Commission. It is designed to illustrate the effects of leverage on common share total return, assuming investment portfolio
total returns (consisting of income and changes in the value of investments held in the Trust’s portfolio) of -10%, -5%, 0%, 5% and 10%. The table below reflects the Trust’s borrowings under a credit agreement as a percentage of the Trust’s total
assets (which includes the amounts of leverage obtained through such borrowings), the annual rate of interest on the borrowings as of March 31, 2021, and the annual return that the Trust’s portfolio must experience (net of expenses) in order to
cover such costs. The information below does not reflect the Trust’s use of certain other forms of economic leverage achieved through the use of other instruments or transactions not considered to be senior securities under the 1940 Act, such as
covered credit default swaps or other derivative instruments.
The assumed investment portfolio returns in the table below are hypothetical figures and are not necessarily indicative of the investment portfolio returns experienced or expected to be experienced by the Trust. Your
actual returns may be greater or less than those appearing below. In addition, actual borrowing expenses associated with borrowings by the Trust may vary frequently and may be significantly higher or lower than the rate used for the example below
Borrowings under Credit Agreement as a percentage of total managed assets
|
|
(including assets attributable to borrowings)
|
30.5%
|
Annual effective interest rate payable by Trust on borrowings
|
1.30%
|
Annual return Trust portfolio must experience (net of expenses) to cover interest
|
|
rate on borrowings
|
0.40%
|
Common share total return for (10.00)% assumed portfolio total return
|
(14.97)%
|
Common share total return for (5.00)% assumed portfolio total return
|
(7.77)%
|
Common share total return for 0.00% assumed portfolio total return
|
(0.57)%
|
Common share total return for 5.00% assumed portfolio total return
|
6.63%
|
Common share total return for 10.00% assumed portfolio total return
|
13.82%
|
Common share total return is composed of two elements - investment income net of the Trust’s expenses, including any interest/dividends on assets resulting from leverage, and gains or losses on the value of the
securities the Trust owns. As required by Securities and Exchange Commission rules, the table assumes that the Trust is more likely to suffer capital losses than to enjoy capital appreciation. For example, to assume a total return of 0%, the Trust
must assume that the income it receives on its investments is entirely offset by losses in the value of those investments.
Pioneer High Income Trust | Annual Report | 3/31/21 99
This table reflects hypothetical performance of the Trust’s portfolio and not the performance of the Trust’s common shares, the value of which will be determined by market forces and other factors.
Should the Trust elect to add additional leverage to its portfolio, the potential benefits of leveraging the Trust’s shares cannot be fully achieved until the proceeds resulting from the use of leverage have been
received by the Trust and invested in accordance with the Trust’s investment objective and principal investment strategies. The Trust’s willingness to use additional leverage, and the extent to which leverage is used at any time, will depend on
many factors, including, among other things, the Adviser’s assessment of the yield curve environment, interest rate trends, market conditions and other factors.
100 Pioneer High Income Trust | Annual Report | 3/31/21