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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21654
Pioneer Floating Rate Trust
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: November 30
Date of reporting period: December 1, 2004 through November 30, 2005
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
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PIONEER
-------
FLOATING
RATE
TRUST
Annual
Report
11/30/05
[Logo] PIONEER
Investments(R)
Table of Contents
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Letter to Shareowners 1
Portfolio Summary 2
Prices and Distributions 3
Performance Update 4
Portfolio Management Discussion 5
Schedule of Investments 9
Financial Statements 26
Financial Highlights 29
Notes to Financial Statements 30
Report of Independent Registered Public Accounting Firm 40
Factors Considered by the Independent Trustees in Approving
the Management Contract 45
Trustees, Officers and Service Providers 51
Pioneer Floating Rate Trust
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LETTER TO SHAREOWNERS 11/30/05
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Dear Shareowner,
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The economy remains strong. Third quarter profits, coming in well above 10%
year-over-year, were surprising in light of the serious economic challenges that
developed over the last three months. The vexing economic questions that arose
from 2005's disastrous hurricane season began to resolve themselves by late
fall, allowing prices for oil and gasoline to retreat from their storm-induced
peaks, as Gulf Coast facilities began to come back on line. The Federal Reserve
Board continued to raise interest rates, and business activity remained strong,
despite storm-related dislocations.
Even with moderating energy prices, businesses and households in colder areas of
the country face uncomfortably large bills for heat and utilities for the coming
winter while ravaged energy production facilities are refurbished. The national
savings rate stands near zero, leaving many households ill prepared for hefty
gasoline and heating costs.
However, costly energy and higher interest rates have not slowed the economy to
date. American consumers, whose outlays are key to the economy's direction, are
notably resilient. Consumer confidence rebounded in November after a
post-hurricane lag, according to the University of Michigan. Furthermore, hiring
trends are fairly positive and recent readings of leading economic indicators by
the Conference Board have shown an upward bias.
The U.S. has enjoyed ten straight quarters of expansion at an annualized rate of
3% or better. Barring surprises, we expect continued, though possibly slower,
growth in the period ahead. For appropriate investors, carefully selected
high-quality equity and bond mutual funds still have the potential to deliver
solid results even in a slow-growth environment. With that in mind, our global
investment experts are well positioned to seek attractive opportunities around
the world.
Investing for income with Pioneer
Pioneer offers a diverse range of products with different risk/reward profiles
designed to help investors pursue a variety of goals. If income is important to
you, Pioneer's broad selection of bond funds and equity products that have a
meaningful income component and may improve your overall allocation. Our variety
of income funds are actively managed using a value-oriented, total return
investment philosophy that seeks enhanced return potential and lower volatility
through diversification. Your financial advisor can help you select among
Pioneer's fixed-income choices.
Respectfully,
/s/ Osbert M. Hood
Osbert M. Hood, President
Pioneer Investment Management, Inc.
Any information in this shareowner report regarding market or economic trends or
the factors influencing the Trust's historical or future performance are
statements of the opinion of Trust management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
Please consider a trust's investment objective, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about each fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, contact your
financial advisor, call 1-800-225-6292 or visit our web site at
www.pioneerfunds.com.
1
Pioneer Floating Rate Trust
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PORTFOLIO SUMMARY 11/30/05
Portfolio Diversification
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(As a percentage of total investment portfolio)
Senior Secured Loans 92.0%
Corporate Bonds 4.2%
Temporary Cash Investment 3.7%
Warrants 0.1%
Portfolio Quality
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(As a percentage of total investment portfolio; based on S&P ratings)
BBB 1.3%
BB 8.5%
B 60.4%
CCC 10.9%
D 1.3%
NR 13.9%
Cash Equivalents 3.7%
The portfolio is actively managed, and current holdings may be different.
10 Largest Holdings
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(As a percentage of long-term holdings)
1. Home Interiors & Gifts, Inc., Initial Term Loan, 9.09%, 3/31/11 2.08%
2. Charter Communications Operating, LLC, Tranche B Term Loan,
7.42%-7.50%, 4/7/11 1.75
3. Blockbuster, Inc., Tranche B Term Loan, 6.58%-7.54%, 8/20/11 1.64
4. NTL Investment Holdings, Ltd., Sub-Tranche B2 Loan, 7.14%, 4/14/12 1.33
5. Merisant Co., Tranche B Term Loan, 7.49%, 1/11/10 1.18
6. ALM Media Holdings, Inc., First Lien Term Loan, 6.52%, 3/5/10 1.13
7. Reliant Energy, Inc., Term Loan, 6.09%-6.92%, 4/30/10 1.10
8. Loy Yang Power Projects Pty, Ltd., Second Lien Term Loan, 5.0%, 5/12/15 1.08
9. Iesy Hessen GmbH & Co. KG, Term Loan, 5.38%, 6/24/14 1.05
10. SunGard Data Systems, Inc. (Solar Capital Corp), U.S. Term Loan,
6.68%-6.81%, 2/11/13 1.04
This list excludes temporary cash and derivative investments. The portfolio is
actively managed, and current holdings may be different.
2
Pioneer Floating Rate Trust
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PRICES AND DISTRIBUTIONS
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Share Prices and Distributions
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Market Value
per Common Share 11/30/05 12/23/04
$17.14 $20.00
Net Asset Value
per Common Share 11/30/05 12/23/04
$19.08 $19.06
Distributions Net
per Common Share Investment Short-Term Long-Term
(12/23/04 - 11/30/05) Income Capital Gains Capital Gains
$0.9198 $ - $ -
3
Pioneer Floating Rate Trust
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PERFORMANCE UPDATE 11/30/05
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in common shares of Pioneer Floating Rate Trust, compared to
that of the CSFB Leveraged Loan Index.
Cumulative Total Returns
(As of November 30, 2005)
Net Asset Market
Period Value (NAV) Price
Life-of-Trust
(12/23/04) 5.40% -9.76%
4-Dec 10000 10000
5-Nov 9023 10516
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Call 1-800-225-6292 or visit www.pioneerfunds.com for the most recent month-end
performance results. Current performance may be lower or higher than the
performance data quoted.
Performance data shown represents past performance. Past performance is no
guarantee of future results. Investment return and market price will fluctuate,
and your shares may trade below Net Asset Value "NAV", due to such factors as
interest rate changes, and the perceived credit quality of borrowers.
Total investment return does not reflect broker sales charges or commissions.
All performance is for common shares of the Trust.
Closed-end funds, unlike open-end funds, are not continuously offered. There is
a one-time public offering and, once issued, shares of closed-end funds are sold
in the open market through a stock exchange and frequently trade at prices lower
than their NAV. NAV is total assets less total liabilities, which includes
preferred shares, divided by the number of common shares outstanding.
When NAV is lower than market price, dividends are assumed to be reinvested at
the greater of NAV or 95% of the market price. When NAV is higher, dividends are
assumed to be reinvested at market price.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Trust distributions or the redemption of Trust
shares.
Index comparison begins on 12/31/04. The CSFB Leveraged Loan Index is designed
to mirror the investable universe of the $US-denominated leveraged loan market.
As of March 30, 2001, the Index included $148 billion in tradable term loans.
Index returns are calculated monthly, assume reinvestment of dividends and,
unlike Trust returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in an Index.
4
Pioneer Floating Rate Trust
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PORTFOLIO MANAGEMENT DISCUSSION 11/30/05
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This annual report for Pioneer Floating Rate Trust covers the period since the
Trust's inception on December 23, 2004 through November 30, 2005. In the report,
portfolio managers Mark Okada and Joseph Dougherty of Highland Capital
Management discuss the investment process, strategy and outlook.
Q: How did the Trust perform during the period?
A: Since inception on December 23, 2004 through November 30, 2005, Pioneer
Floating Rate Trust posted a total return of 5.40% at net asset value and
-9.76% at market price, after underwriting fees of 4.50%. The Trust's
benchmark, the Credit Suisse First Boston (CSFB) Leveraged Loan Index,
returned 5.16% since the beginning of 2005. The Trust slightly
underperformed the benchmark due to the costs associated with the issuance
of the preferred shares. At the end of November, the Trust was selling at a
discount of market price to net asset value of -10.17%.
From the end of December 2004 through November 2005, the federal funds
target rate rose 175 basis points to 4.00%. (A basis point is 0.01%.)
During this same period the yield on the three-month London Interbank
Offered Rate (LIBOR) rose from 2.56% to 4.42%. LIBOR is the rate of
interest at which banks borrow funds from other banks, in marketable size,
in the London Interbank market.
Call 1-800-225-6292 or visit www.pioneerfunds.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Q: What were the principal strategies used in managing the Trust?
A: Our strategies are driven by our philosophy that fundamental research and a
disciplined buy/sell process can produce strong long-term results. Because
we have one of the largest investment teams in the senior secured loan
market, we are able to monitor closely every asset in the Trust as well as
keep an eye on assets that we may want to add in the future. Our large
investment team allows us to focus on middle-market and upper middle-market
companies. This widespread emphasis has resulted in a diversified port-
5
Pioneer Floating Rate Trust
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PORTFOLIO MANAGEMENT DISCUSSION 11/30/05 (continued)
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folio, and we continue to seek investment opportunities in senior secured
loans that might not be widely syndicated to the market.
In managing the Trust, we stay fully invested, using excess cash to buy new
issue loans. Our large size provides us with an opportunity to obtain
better allocations in the new issue market. Staying fully invested helps us
earn a rate that is higher than LIBOR, instead of earning only the interest
rate currently paid on cash balances.
We also take advantage of second liens and select bonds to enhance the
yield on the Trust. We understand the risk inherent in second liens and
closely monitor these investments. From a risk/reward perspective, we
believe we can increase the Trust's yield without taking on too much added
risk.
Q: What was the investment environment like for senior loans during the
period?
A: The leveraged-loan markets were strong performers during the 12 months
ended November 30, 2005. Supply was greater than in 2004, as leveraged loan
volume, according to Standard & Poor's/ Leveraged Commentary & Data,
increased from approximately $246 million to approximately $282 million.
The 12-month dollar-denominated default rate was up slightly to 1.65% on
September 30, 2005, versus 1.39% on June 30, 2005, according to the Altman
High Yield Bond Default and Return Report. This default rate is well below
the historical average of about 2.50%, according to Credit Suisse First
Boston.
Spreads on loans, as tracked by the CSFB Leveraged Loan Index, tightened
during the fiscal year from 293 basis points to 258 basis points. However,
the tightening in spreads was offset by a significant increase in LIBOR.
From November 30, 2004 through November 30, 2005, the three-month LIBOR
rose from 2.41% to 4.42%. As a result, the weighted average coupon on
leveraged loans, as tracked by the CSFB Leveraged Loan index, rose from
5.11% to 6.81% for the same period.
Q: How is the Trust currently positioned?
A: Approximately 96.0% of the Trust is invested in loans and about 4.0% is in
bonds. About 11.5% is in second lien loans. The Trust is well diversified
with approximately 199 borrowers represented in the portfolio. Examples of
some of our core positions include: Home Interiors & Gifts, a manufacturer
and distributor of home
6
Pioneer Floating Rate Trust
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decorative accessories; Charter Communications Operating, which offers
cable television programming, Internet access, broadband cable services,
and telephone services; and Blockbuster, which rents, sells and trades
entertainment-related merchandise. The cable, utilities and retail
industries account for some of the larger industries in the portfolio. We
believe these industries offer attractive risk/return prospects.
Q: In September the monthly dividend rose to $0.115 per share. What's behind
the increase?
A: Two factors were instrumental in boosting the dividend. First, we were able
to increase the Trust's weighted-average spread from approximately 327
basis points at the beginning of June to approximately 368 basis points at
the end of November. Second, as noted above, LIBOR rose during the period.
Q: What is your outlook?
A: We think the leveraged loan market will continue to perform well in 2006.
The Federal Reserve raised rates to 4.00% in November, which we believe
continues to be accommodative. (On December 13, 2005, the Fed raised the
target rate another 25 basis points to 4.25%.) While we believe defaults
may rise slightly, they should remain below the historical average. Loan
volume reached a record $23 billion during November 2005, according to
Standard and Poor's loan statistics, and is expected to remain strong at
least over the short term. Our view is that the economy is improving, and
we do not expect any Fed easing in the near future. Information regarding
the Trust's principal investment risks is contained in the Trust's
prospectus(es). Please refer to those documents when considering the
Trust's risks.
Investments in high yield or lower-rated securities are subject to
greater-than-average risk. The Trust may invest in securities of issuers
that are in default or that are in bankruptcy.
When interest rates rise, the prices of fixed-income securities in the
Trust will generally fall. Conversely, when interest rates fall the prices
of fixed-income securities in the Trust will generally rise. The floating
rate feature of the Trust means that the Trust will not experience capital
appreciation in a declining interest rate environment. Investments in the
Trust are subject to
7
Pioneer Floating Rate Trust
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PORTFOLIO MANAGEMENT DISCUSSION 11/30/05 (continued)
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possible loss due to the financial failure of issuers of underlying
securities and their inability to meet their debt obligations.
The Trust may invest in derivative securities, which may include futures
and options. These types of instruments can increase price fluctuation.
The Trust is not limited in the percentage of its assets that may be
invested in Senior Loans and other securities deemed to be illiquid.
Illiquid securities may be difficult to dispose of at a fair price at the
times when the trust believes it is desirable to do so and their market
price is generally more volatile than that of more liquid securities.
Illiquid securities are also more difficult to value and investment of the
Trust's assets in illiquid securities may restrict the Trust's ability to
take advantage of market opportunities.
The Trust may use leverage through the issuance of preferred shares with an
aggregate liquidation preference of up to 33 1/3% of the Trust's total
assets after such issuance. Leverage creates significant risks, including
the risk that the Trust's income or capital appreciation will not be
sufficient to cover the cost of leverage, which may adversely affect the
return for the holders of common shares.
The Trust is not diversified, which means that it can invest a higher
percentage of its assets in any one issuer than a diversified fund. Being
non-diversified may magnify the Trust's losses from adverse events
affecting a particular issuer.
Any information in this shareowner report regarding market or economic
trends or the factors influencing the Trust's historical or future
performance are statements of the opinion of Trust management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
8
Pioneer Floating Rate Trust
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SCHEDULE OF INVESTMENTS 11/30/05
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Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
SENIOR SECURED FLOATING RATE LOAN
INTERESTS - 139.8% of Net Assets*
Aerospace & Defense - 5.4%
3,473,750 B-/B2 American Airlines, Inc., Term Loan,
8.12% - 8.67%, 12/17/10 $ 3,523,251
4,000,000 B-/B3 DeCrane Aircraft Holdings, Inc., First Lien Term
Loan, 8.42413%, 3/31/08 4,030,000
4,975,000 B+/B2 DynCorp International, LLC (Di Finance),
Term Loan, 6.6875% - 6.8125%, 2/11/11 4,995,731
1,452,632 B+/B1 Hunter Defense Holdings, Inc., Term Loan B,
7.1875% - 9.0%, 3/10/11 1,461,711
2,970,000 D/Caa1 Northwest Airlines Corp., Tranche B
Term Loan, 10.57%, 11/23/10 (a) 3,021,233
4,937,550 NR/Ba2 United Airlines, Inc., DIP New Tranche B
Term Loan, 8.62%, 3/31/06 4,994,125
3,000,000 B+/Ba3 Vought Aircraft Industries, Inc., Tranche B
Letter of Credit Deposit Loan,
5.84%, 12/22/10 3,028,437
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$ 25,054,488
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Broadcasting - 1.8%
2,500,000 B/B2 Enterprise NewsMedia, LLC, Term Loan,
7.20%, 6/30/12 $ 2,503,437
982,556 NR/B1 NEP Supershooters, L.P., First Lien Term A Loan,
8.02% - 8.26%, 2/3/11 994,838
1,488,750 NR/B1 NEP Supershooters, L.P., First Lien Term B Loan,
7.52%, 1/31/11 1,507,359
EURO 500,000 BB/NR TDF SA, Facility Term Loan B,
4.416%, 3/11/13 597,093
EURO 500,000 BB/NR TDF SA, Facility Term Loan D,
5.791%, 3/11/15 599,793
1,995,000 B-/B1 Young Broadcasting, Inc., Term Loan,
6.3125% - 6.5625%, 11/3/12 2,011,209
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$ 8,213,729
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The accompanying notes are an integral part of these financial statements. 9
Pioneer Floating Rate Trust
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SCHEDULE OF INVESTMENTS 11/30/05 (continued)
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Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Cable - 13.6%
2,994,976 NR/Ba2 Adelphia Communications, Tranche B DIP Term
Loan, 6.3125%, 3/31/06 $ 3,009,951
6,500,000 NR/Ba2 Century Cable Holdings, LLC, Discretionary
Term Loan, 9.0%, 12/31/09 6,392,750
2,000,000 NR/Ba2 Century Cable Holdings, LLC, Term Loan,
9.0%, 6/30/09 1,968,928
11,832,709 CCC+/B2 Charter Communications Operating, LLC,
Tranche B Term Loan,
7.42% - 7.50%, 4/7/11 11,868,301
EURO 3,000,000 NR/NR Iesy Hessen GmbH & Co. KG, Term Loan B,
4.883%, 2/14/13 3,548,189
EURO 6,000,000 NR/NR Iesy Hessen GmbH & Co. KG, Term Loan C,
5.383%, 6/24/14 7,130,642
705,963 B-/B3 Knology, Inc., First Lien Term Loan,
9.52038% - 9.74313%, 6/29/10 723,612
4,020,686 B-/Caa2 Knology, Inc., Second Lien Term Loan,
13.68%, 6/29/11 4,141,307
9,000,000 B+/B1 NTL Investment Holdings, Ltd., Sub-Tranche
B2 Loan, 7.14%, 4/14/12 9,045,747
5,000,000 NR/NR Olympus Cable Holdings, LLC, Term Loan A,
8.25%, 6/30/10 4,916,965
1,133,333 BB-/B1 Telewest Communications Networks, Ltd.,
Facility Term Loan B, 6.1511%, 11/30/12 1,133,206
866,667 BB-/B1 Telewest Communications Networks, Ltd.,
Facility Term Loan C, 6.9011%, 11/30/13 869,017
2,000,000 B/B1 UPC Broadband Holding B.V., Facility Loan H2,
6.5544%, 9/30/12 2,018,572
1,989,924 CCC+/B2 WideOpenWest Finance, LLC, Additional Term
Loan B, 7.03% - 7.41%, 6/22/11 2,007,336
4,421,363 CCC+/B2 WideOpenWest Finance, LLC, Term Loan B,
6.77% - 7.31%, 6/22/11 4,460,050
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$ 63,234,573
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10 The accompanying notes are an integral part of these financial statements.
Pioneer Floating Rate Trust
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Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Chemicals - 2.4%
83,333 B+/NR Basell BV, Facility USD Term Loan B4,
2.5%, 8/1/13 $ 84,047
83,333 B+/NR Basell BV, Facility USD Term Loan C4,
3.0%, 8/1/14 84,349
416,667 B+/Ba3 Basell USA, Inc., Facility Term Loan B2,
2.5%, 8/1/13 424,023
416,667 B+/Ba3 Basell USA, Inc., Facility Term Loan C2,
3.0%, 8/1/14 424,023
3,220,241 B+/B1 Celanese Holdings, LLC (BCP Caylux), Term
Loan B, 6.3125%, 4/6/11 3,249,223
1,946,243 BB-/Ba3 Huntsman International, LLC, Term Dollar
Loan B, 5.89%, 8/16/12 1,956,583
852,294 BB/Ba3 Invista Canada Co., Tranche B-2 Term Loan,
6.3125%, 4/29/11 866,677
1,983,379 BB/Ba3 Invista S.a.r.l., Tranche B-1 Term Loan,
6.3125%, 4/29/11 2,016,849
1,990,000 B+/B1 PQ Corp., Term Loan,
6.0625% - 6.3125%, 2/11/12 2,005,548
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$ 11,111,322
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Consumer - Durables - 0.5%
1,000,000 B+/B3 Fender Musical Instruments Corp., Second
Lien Term Loan, 8.72%, 9/30/12 $ 1,007,500
1,259,259 B/B1 Playpower, Inc., Dollar Term Loan,
7.08%, 12/18/09 1,276,574
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$ 2,284,074
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Consumer - Non-Durables - 4.8%
1,985,000 B/B2 American Safety Razor Co., Tranche B Loan,
7.15%, 2/28/12 $ 2,014,775
2,727,000 B-/B2 Camelbak Products, LLC, First Lien Term Loan,
7.29% - 7.38%, 8/4/11 2,703,139
1,000,000 B-/B3 Camelbak Products, LLC, Second Lien Term
Loan, 10.54%, 2/4/12 993,750
4,219,375 B/B3 CEI Holdings, Inc. (Cosmetic Essence), First
Lien Term Loan, 6.62% - 8.25%, 12/3/10 4,113,891
2,823,529 B+/Ba2 Eastman Kodak Co., Term B-1 Advance Loan,
6.32% - 6.61%, 10/18/12 2,820,884
900,000 BB/Ba1 Herbalife International, Inc., Term Loan,
5.88% - 5.97%, 12/21/10 907,032
The accompanying notes are an integral part of these financial statements. 11
Pioneer Floating Rate Trust
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SCHEDULE OF INVESTMENTS 11/30/05 (continued)
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Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Consumer - Non-Durables (continued)
2,000,000 B/B3 MD Beauty, Inc., Second Lien Term Loan,
12.5%, 2/18/13 $ 2,010,000
997,500 BB-/Ba3 Mega Bloks, Inc., Facility Term Loan B,
5.625% - 7.75%, 7/31/12 1,004,981
1,975,800 B+/B1 Polaroid Corp., Term Loan, 10.81%, 4/27/11 1,980,740
1,750,000 B-/B3 Revlon Consumer Products Corp., Term Loan,
9.92% - 10.33%, 7/9/10 1,805,508
1,900,000 NR/B1 Visant Corp., Tranche C Term Loan,
5.94% - 6.18813%, 10/4/11 1,928,796
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$ 22,283,496
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Diversified Media - 3.3%
7,711,250 CCC/B3 ALM Media Holdings, Inc., First Lien Term
Loan, 6.52038%, 3/5/10 $ 7,717,673
5,000,000 B/Ba3 MGM Holdings II, Inc./LOC Acquisition Co.,
Tranche B Term Loan, 5.74%, 4/8/12 5,037,215
2,000,000 B/B3 New Publishing Acquisition, Inc., Second Lien
Term Loan, 10.4%, 2/5/13 1,803,334
995,000 B/B2 North American Membership Group, Inc.,
First Lien Tranche B Term Loan,
7.27038%, 5/19/11 999,975
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$ 15,558,197
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Energy - 7.0%
4,975,000 B-/B3 ATP Oil & Gas Corp., Term Loan,
9.29% - 9.84188%, 4/14/10 $ 5,136,687
3,000,000 B/B2 Cheniere LNG Holdings, LLC, Term Loan,
6.77038% - 6.95%, 8/30/12 3,024,375
2,000,000 B+/B3 Coffeyville Resources, LLC, Second Lien Term
Loan, 10.8125%, 7/8/11 2,072,500
1,000,000 B/Ba3 Energy Transfer Co., L.P., Term Loan,
6.8125%, 6/16/08 1,005,313
3,000,000 NR/NR Exco Holdings II, Inc., Term Loan,
10.0%, 7/3/06 (e) 2,977,500
4,289,308 B+/NR Ferrell Companies, Inc., Term Loan,
7.38563% - 9.5%, 12/17/11 4,401,902
3,000,000 NR/B2 Hawkeye Renewables, LLC, Term Loan,
6.925%, 1/31/12 2,985,000
5,790,000 BBB+/Ba3 Mainline, L.P., Term Loan, 6.295%, 12/17/11 5,876,850
12 The accompanying notes are an integral part of these financial statements.
Pioneer Floating Rate Trust
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Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Energy (continued)
2,757,500 NR/B1 NSG Holdings II, LLC, Initial Term Loan,
7.02038%, 12/13/11 $ 2,794,555
1,985,000 B+/B1 Regency Gas Services, LLC, Additional Term
Loan, 6.78%, 6/1/10 2,004,850
371,911 B/Ba3 SemCrude, L.P., U.S. Term Loan,
6.12125% - 7.75%, 3/16/11 376,560
-------------
$ 32,656,092
-------------
Financial - 1.3%
2,000,000 B/B3 ARG Holdings, Inc. (Alliant Resources Group),
Second Lien Term Loan,
11.47%, 11/30/12 $ 2,030,000
2,000,000 B-/B2 FleetCor Technologies Operating
Co., LLC, Term Loan,
7.58813% - 7.75219%, 6/30/11 1,997,500
1,000,000 B+/B1 HMSC Corp., First Lien Term Loan,
6.87125%, 11/16/11 1,012,500
1,000,000 B+/B1 Mitchell International, Inc., Term Loan,
6.15%, 8/15/11 1,011,563
-------------
$ 6,051,563
-------------
Food & Drug - 2.9%
4,866,539 B+/B2 Jean Coutu Group (PJC), Inc., Term Loan B,
6.375% - 6.5%, 7/30/11 $ 4,903,798
997,500 B/B2 Sturm Foods, Inc., First Lien Term Loan,
6.8125%, 5/26/11 1,004,981
4,500,000 B/B3 Sturm Foods, Inc., Second Lien Term Loan,
10.6875%, 5/26/12 4,567,500
1,995,000 B/B2 Vitaquest International, LLC, First Lien Term
Loan, 7.6225% - 9.25%, 3/17/11 1,971,309
1,000,000 B/Caa1 Vitaquest International, LLC, Second Lien
Term Loan, 11.2475%, 3/7/12 945,000
-------------
$ 13,392,588
-------------
The accompanying notes are an integral part of these financial statements. 13
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 11/30/05 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Food & Tobacco - 8.6%
997,500 B+/B1 AFC Enterprises, Inc., Tranche B Term Loan,
6.3125%, 5/11/11 $ 1,009,969
2,842,500 B/B2 Captain D's, LLC, First Lien Term Loan,
7.84%, 12/27/10 2,885,137
3,860,909 B+/B1 Carrols Corp., Term Loan B,
6.5625%, 12/31/10 3,921,838
2,157,229 B+/Ba3 Commonwealth Brands, Inc., Incremental Term
Loan, 7.125%, 8/28/07 2,157,229
6,051,336 CCC+/Caa3 DS Water Enterprises, L.P., Term Loan,
8.72%, 11/7/09 5,786,590
600,000 NR/B3 Krispy Kreme Doughnut Corp., Second Lien
Tranche A Credit-Linked Deposit Loan,
4.14313%, 4/1/10 600,000
2,388,000 NR/Caa1 Krispy Kreme Doughnut Corp., Second Lien
Tranche B Loan, 10.11813%, 4/1/10 2,388,000
8,094,754 CCC+/B2 Merisant Co., Tranche B Term Loan,
7.49313%, 1/11/10 7,993,570
2,000,000 BB-/B3 National Distributing Co., Inc., Second Lien
Term Loan, 10.56%, 6/1/10 2,005,000
2,859,167 B/B1 PBM Products, LLC, Term Loan B,
7.09% - 7.17%, 7/18/11 2,873,463
4,283,426 B+/B1 Pinnacle Foods Group, Inc., Term Loan,
6.37% - 7.31%, 11/25/10 4,343,394
2,000,000 B/NR Real Mex Restaurants, Inc, Term Loan,
13.37%, 12/31/08 2,040,000
2,000,000 BB/Ba3 Trustreet Properties, Inc., Term Loan,
6.08875%, 4/8/10 2,020,000
-------------
$ 40,024,190
-------------
Forest Products - 1.5%
1,496,250 B+/B1 Berry Plastics Corp., Term Loan,
6.105%, 12/2/11 $ 1,515,264
2,481,250 B/B2 Graham Packaging Co., L.P., Term Loan B,
6.0% - 6.625%, 10/7/11 2,517,112
2,977,330 B/B2 U.S. Can Corp., Term Loan B,
7.65% - 9.75%, 1/10/10 2,999,660
-------------
$ 7,032,036
-------------
14 The accompanying notes are an integral part of these financial statements.
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Gaming & Leisure - 10.2%
1,085,000 B/NR BRE/ESA Mezz5, LLC, Mezzanine D Term
Loan, 7.0%, 7/11/08 $ 1,079,575
5,915,000 B/NR BRE/Homestead Mezz4, LLC, Mezzanine D
Term Loan, 7.0%, 7/11/08 5,885,425
1,995,750 B+/B1 CCM Merger, Inc. (Motor City Casino), Term B
Loan, 5.84063% - 6.09%, 7/21/12 2,012,215
3,000,000 CCC-/NR CNL Hotel Del Partners, L.P., First Mezzanine
Loan, 5.83%, 2/9/08 3,007,500
600,000 B-/NR Fontainebleu Florida Hotel, LLC, Tranche A
Term Loan, 7.09%, 5/11/08 600,000
400,000 B-/NR Fontainebleu Florida Hotel, LLC, Tranche B
Term Loan, 7.09%, 5/11/08 400,000
1,500,000 B-/B1 Kuilima Resort Co. (Turtle Bay), First Lien
Term Loan, 6.97%, 9/30/10 1,515,000
3,613,972 B/B2 Lake at Las Vegas Joint Venture, First
LienTerm Loan, 6.59063% - 7.0463%, 11/1/09 3,650,112
6,880,859 B-/B3 OpBiz, LLC, New Term Loan A,
5.30488%, 8/31/10 6,888,386
17,221 B-/B3 OpBiz, LLC, New Term Loan B,
8.05488%, 8/31/10 17,245
1,000,000 B/B1 Pivotal Promontory, LLC, First Lien Term Loan,
6.97%, 8/31/10 1,002,500
5,000,000 B/B3 Resorts International Holdings, LLC, Second
Lien Term Loan, 9.42%, 4/26/13 4,887,500
3,953,649 B/B2 Resorts International Holdings, LLC, Term
Loan B, 6.53%, 4/26/12 3,980,336
3,198,492 B-/B1 Six Flags Theme Parks, Inc., Tranche B Term
Loan, 6.5% - 6.84%, 6/30/09 3,238,473
997,500 B/B2 Trump Entertainment Resorts Holdings, L.P.,
Term Loan B-1, 5.93% - 6.14%, 5/20/12 1,007,475
6,000,000 B+/B2 Wynn Las Vegas, LLC, Term Loan,
6.195%, 12/14/11 6,073,752
1,991,467 B+/B1 Yellowstone Mountain Club, LLC, Loan,
6.595%, 9/30/10 1,998,935
-------------
$ 47,244,429
-------------
The accompanying notes are an integral part of these financial statements. 15
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 11/30/05 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Healthcare - 10.3%
2,000,000 B+/B2 Accellent, Inc., Term Loan,
6.393%, 11/22/12 $ 2,019,376
2,025,289 B/B1 Aircast, LLC, First Lien Term Loan,
6.511%, 12/7/10 2,041,744
5,427,724 B+/B1 Alliance Imaging, Inc., Tranche C1 Term Loan,
6.125% - 6.5%, 12/29/11 5,481,155
2,977,500 B+/B2 AMR HoldCo, Inc. EmCare HoldCo, Inc., Term
Loan, 6.35% - 6.78%, 2/10/12 3,008,207
1,000,000 B/B3 Capella Healthcare, Inc., First Lien Term Loan,
7.078%, 11/30/12 1,010,000
3,000,000 BB-/B1 DaVita, Inc., Tranche B Term Loan,
6.35% - 6.64%, 10/5/12 3,046,041
5,000,000 B/Caa1 FHC Health Systems, Inc., Third Lien Term
Loan, 12.87%, 2/9/11 5,075,000
3,030,976 B/B2 Hanger Orthopedic Group, Inc., Tranche B
Term Loan, 7.75%, 9/30/09 3,070,757
1,950,000 BB/B1 Healthcare Partners, LLC, Term Loan,
5.82%, 3/2/11 1,966,454
3,927,656 NR/NR HealthSouth Corp., Term Loan,
6.53%, 3/21/10 3,950,362
1,062,500 NR/NR HealthSouth Corp., Tranche B Letter of Credit
Loan, 5.6%, 3/21/10 1,068,642
2,000,000 B/B2 QTC Acquisition, Inc., First Lien Term Loan,
2.75%, 11/10/12 2,017,500
2,487,500 NR/NR Reliant Pharmaceuticals, Inc., First Lien Term
Loan, 13.52038% - 13.63%, 6/30/08 2,462,625
2,000,000 B/NR Renal Advantage, Inc., Tranche B Term Loan,
6.61%, 10/6/12 2,023,126
1,995,000 B/B1 Skilled Healthcare Group, Inc., First Lien Term
Loan, 6.8% - 6.865%, 6/15/12 2,015,574
3,000,000 B/Caa1 Skilled Healthcare Group, Inc., Second Lien
Term Loan, 11.53%, 12/15/12 3,084,999
2,000,000 B/Caa1 Triumph HealthCare Second Holdings, LLC,
Second Lien Term Loan, 14.50%, 8/31/12 2,000,834
1,629,542 B/B2 Warner Chilcott Co., Inc., Tranche B
Acquisition Date Term Loan,
6.77038% - 7.01063%, 1/18/12 1,630,416
16 The accompanying notes are an integral part of these financial statements.
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Healthcare (continued)
656,626 B/B2 Warner Chilcott Corp., Tranche C Acquisition
Date Term Loan, 6.77038%, 1/18/12 $ 656,978
303,343 B/B2 Warner Chilcott Holdings Co. III, Ltd.,
Tranche D Acquisition Date Term Loan,
6.77038%, 1/18/12 303,505
-------------
$ 47,933,295
-------------
Housing - 7.2%
3,990,000 B/B2 Associated Materials, Inc., Term Loan,
5.89% - 6.84%, 8/29/10 $ 4,009,950
3,868,874 CCC+/B2 Atrium Companies, Inc., Term Loan,
7.78% - 8.03%, 12/28/11 3,868,069
2,500,000 BB/Ba3 BioMed Realty, L.P., Senior Secured Term
Loan, 6.33875%, 5/31/10 2,506,250
866,667 B+/B1 Builders FirstSource, Inc., Term Loan,
6.19%, 8/11/11 873,528
2,857,131 B/B1 Custom Building Products, Inc., First Lien Term
Loan, 6.27038%, 10/20/11 2,882,131
1,000,000 B/B3 Custom Building Products, Inc., Second Lien
Term Loan, 9.02038%, 4/20/12 994,688
1,485,000 B+/B1 Desa, LLC, Term Loan,
8.88563% - 10.75%, 11/26/11 1,466,438
1,866,467 B/B2 LNR Property Corp., Tranche A Term Loan,
7.09%, 2/3/08 1,878,132
5,879,820 B/B2 LNR Property Corp., Tranche B Term Loan,
7.09% - 7.26%, 2/3/08 5,916,569
5,000,000 BB-/Ba3 TWLDC Holdings, L.P., Mezzanine Loan,
8.34%, 11/30/07 5,075,000
4,000,000 BB-/Ba3 Woodlands Commercial Properties Co., L.P.,
Bridge Loan, 7.19%, 2/28/06 4,030,000
-------------
$ 33,500,755
-------------
Information Technology - 9.6%
950,000 B+/B2 ACI Billing Services, Inc., First Lien Term Loan,
7.0% - 9.0%, 4/27/10 $ 954,750
995,000 B+/Caa1 ACI Billing Services, Inc., Second Lien Term
Loan, 11.8125%, 4/27/11 1,019,875
2,000,000 B/Caa2 ClientLogic Corp., Second Lien Term Loan,
12.8125% - 13.125%, 9/1/12 2,020,000
The accompanying notes are an integral part of these financial statements. 17
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 11/30/05 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Information Technology (continued)
3,000,000 B/Caa2 Corel Corp., Second Lien Term Loan,
12.19375%, 8/15/10 $ 3,015,000
3,850,968 B+/B2 Data Transmissions Network Corp.,
Tranche B Term Loan,
6.51563% - 6.60875%, 3/17/12 3,889,477
4,000,000 B/B2 GXS Worldwide, Inc., First Lien Term Loan,
8.9% - 9.43%, 7/29/11 3,950,000
2,000,000 B/Caa1 GXS Worldwide, Inc., Second Lien Term Loan,
13.68%, 12/20/11 2,010,000
448,875 B/B2 Infor Global Solutions European Finance,
S.a.r.l., First Lien Lux Term Loan,
6.82% - 7.47%, 4/18/11 449,717
1,125,000 B/Caa2 Infor Global Solutions European Finance,
S.a.r.l., Second Lien Lux Term Loan,
10.82% - 11.47%, 4/18/12 1,154,531
1,000,000 B+/B3 IPC Acquisition Corp., Second Lien Term Loan,
11.11%, 8/5/12 981,667
1,000,000 NR/B2 Inovis International, Inc, Term Loan,
8.0%, 11/15/08 1,000,000
548,625 B/B2 Magellan Holdings, Inc., First Lien U.S. Term
Loan, 6.82% - 7.47%, 4/18/11 549,654
1,875,000 B/Caa2 Magellan Holdings, Inc., Second Lien U.S.
Term Loan, 10.82% - 11.34%, 4/18/12 1,924,219
4,864,167 B+/B3 ON Semiconductor Corp., Tranche G Term
Loan, 7.0625%, 12/15/11 4,896,091
2,000,000 B/B3 RedPrairie Corp., Second Lien Term Loan,
13.25%, 5/23/09 2,010,000
6,982,500 B+/B1 SunGard Data Systems, Inc. (Solar
Capital Corp.), U.S. Term Loan,
6.68% - 6.81%, 2/11/13 7,038,437
3,980,000 B+/B1 Telcordia Technologies, Inc., Term Loan,
6.36%, 9/15/12 3,951,396
3,646,923 B/B2 Vertafore, First Lien Term Loan,
6.94375% - 7.14375%, 12/22/10 3,683,392
-------------
$ 44,498,206
-------------
18 The accompanying notes are an integral part of these financial statements.
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Manufacturing - 2.3%
997,501 B/B2 Brand Services, Inc., Term Loan B,
7.02038% - 7.32063%, 1/15/12 $ 1,013,087
2,000,000 B+/B2 Mueller Group, LLC, Term Loan,
6.30438% - 6.65625%, 10/3/12 2,028,572
3,368,750 B+/B3 Propex Fabrics, Inc., Term Loan,
6.28%, 12/31/11 3,377,172
2,441,154 B+/B1 Unifrax Corp., New Term Loan,
6.375%, 3/29/12 2,480,823
2,000,000 B/B2 Wire Rope Corporation of America, Inc.,
Secured Term Loan,
11.63% - 11.95%, 6/15/11 2,050,000
-------------
$ 10,949,654
-------------
Metals & Minerals - 2.5%
4,468,737 B/B3 Murray Energy Corp., Tranche B Term Loan,
7.22%, 1/28/10 $ 4,493,874
3,482,500 B-/B3 Trout Coal Holdings, LLC, First Lien Term
Loan, 7.22% - 7.33%, 3/23/11 3,469,441
3,473,750 B+/B1 Tube City, LLC, First Lien Tranche C Term
Loan, 6.97%, 12/31/10 3,525,856
-------------
$ 11,489,171
-------------
Retail - 10.9%
11,471,250 B-/B3 Blockbuster, Inc., Tranche B Term Loan,
6.58% - 7.54%, 8/20/11 $ 11,159,656
4,962,500 B+/B1 Dollarama Group, L.P., Term Loan B,
6.49313%, 11/18/11 5,043,141
2,961,854 BBB-/Ba2 General Growth Properties, Inc., Tranche B
Term, 6.22%, 11/12/08 2,983,327
3,918,585 B+/B1 Harbor Freight Tools USA, Inc., Term Loan,
6.29% - 6.65%, 7/15/10 3,961,199
15,374,548 CCC/B3 Home Interiors & Gifts, Inc., Initial Term Loan,
9.09%, 3/31/11 14,163,802
997,500 B+/B2 MAPCO Express, Inc./MAPCO Family Centers,
Inc., Term Loan, 6.71% - 8.75%, 4/28/11 1,010,904
1,187,500 B-/B2 Movie Gallery, Inc., Term Loan A,
7.58%, 4/27/10 1,138,516
7,231,875 B-/B2 Movie Gallery, Inc., Term Loan B,
7.83%, 4/27/11 6,936,142
The accompanying notes are an integral part of these financial statements. 19
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 11/30/05 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Retail (continued)
4,000,000 B+/B1 Neiman Marcus Group, Inc., Term Loan,
6.475%, 4/6/13 $ 4,022,728
-------------
$ 50,419,415
-------------
Service - 3.5%
2,805,000 B/B1 Alliance Laundry Systems, LLC, Term Loan,
6.34%, 1/27/12 $ 2,847,075
913,636 B/B2 Envirocare of Utah, LLC, New Term Loan,
6.95%, 4/13/10 926,580
2,978,433 B+/B1 Headwaters, Inc., First Lien Term Loan,
6.43% - 8.25%, 4/30/11 3,006,976
2,404,167 B+/B2 Maxim Crane Works, L.P., First Lien Term
Loan, 6.47813% - 9.25%, 1/28/10 2,438,226
1,000,000 B+/B3 Maxim Crane Works, L.P., Second Lien Term
Loan, 9.625%, 1/28/12 1,026,667
1,861,667 B-/B2 Outsourcing Solutions, Inc., Term Loan,
8.72%, 9/30/10 1,875,629
3,000,000 B/NR Penhall International Corp., Second Lien Term
Loan, 10.84%, 11/1/10 2,992,500
1,000,000 B/Caa1 Survey Sampling International, LLC, Second
Lien Term Loan, 11.28%, 5/6/12 1,007,500
-------------
$ 16,121,153
-------------
Telecommunications - 8.3%
3,000,000 B+/B1 Alaska Communications Systems Holdings,
Inc., Term Loan, 6.02038%, 2/1/12 $ 3,039,750
5,500,000 CCC/B3 Millennium Digital Media Systems, LLC,
Facility Term Loan C,
9.12% - 9.5%, 10/31/08 5,510,312
4,987,557 BB/Ba3 PanAmSat Corp., Tranche B-1 Term Loan,
5.85688%, 8/20/11 5,052,794
2,000,000 B+/Caa1 Pine Tree Holdings, Inc., Second Lien
Tranche B Term Loan, 11.64%, 7/15/13 2,035,000
2,000,000 BB-/B1 Qwest Corp., Tranche A Loan,
9.02%, 6/30/07 2,054,166
4,000,000 BB-/B1 Qwest Corp., Tranche B Term Loan,
6.95%, 6/30/10 (e) 4,032,500
3,943,002 CCC-/B3 RCN Corp., Term Loan,
5.6875% - 8.5%, 12/21/11 3,972,575
20 The accompanying notes are an integral part of these financial statements.
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Telecommunications (continued)
EURO 833,334 BB/B2 SatBirds Finance S.-.r.l., Facility Term Loan
A-1, 4.3966%, 4/4/12 $ 1,000,269
EURO 833,333 BB/B2 SatBirds Finance S.-.r.l., Facility Term Loan
B-1, 4.8966%, 4/4/13 983,354
EURO 833,333 BB/B2 SatBirds Finance S.-.r.l., Facility Term Loan
B-2, 4.8966%, 4/4/13 983,354
EURO 2,500,000 BB/B3 SatBirds Finance S.-.r.l., Second Lien Term
Loan, 6.3966%, 10/4/13 2,986,436
2,041,667 B/B1 United Online, Inc., Term Loan,
6.875% - 7.1875%, 12/13/08 2,051,875
4,765,625 NR/NR WestCom Corp., Tranche B Term Loan,
6.91063% - 6.99313%, 12/17/10 4,792,432
-------------
$ 38,494,817
-------------
Transportation - 7.2%
4,653,550 B/B2 Affinia Group, Inc., Tranche B Term Loan,
6.4%, 11/30/11 $ 4,619,812
2,549,486 B-/Caa2 Carey International, Inc., Second Lien Term
Loan, 12.14% - 13.01%, 5/10/12 2,422,012
5,735,625 D/NR Delphi Corp., Term Loan, 12.5%, 6/14/11 5,971,027
3,000,000 NR/NR Federal-Mogul Corp., DIP Term Loan,
6.875%, 12/9/06 3,052,500
EURO 3,000,000 NR/B1 Goodyear Dunlop Tires Europe B.V., Term Loan
Euro, 4.494%, 4/30/10 3,545,702
3,605,440 BB-/B2 Key Plastics, LLC/Key Safety Systems, Inc.,
Term Loan C, 9.75% - 10.15%, 6/24/11 3,569,386
875,000 B-/Caa1 Quality Distribution, Inc., PF Letter of Credit
Loan, 3.92038%, 11/13/09 879,375
1,957,577 B-/Caa1 Quality Distribution, Inc., Term Loan,
7.15938% - 7.22%, 11/13/09 1,967,365
823,529 B/B2 Rural/Metro Operating Co., LLC, Letter of
Credit Term Loan, 3.94%, 3/4/11 837,426
2,847,059 B/B2 Rural/Metro Operating Co., LLC, Term Loan,
6.0375% - 8.25%, 3/4/11 2,895,103
1,220,588 B+/B2 SIRVA Worldwide, Inc., Tranche B Term Loan,
7.58% - 7.6%, 12/1/10 1,169,730
2,517,857 B+/B2 Transport Industries, L.P., Term Loan B,
6.5625%, 9/30/11 2,533,594
-------------
$ 33,463,032
-------------
The accompanying notes are an integral part of these financial statements. 21
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 11/30/05 (continued)
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Utility - 12.3%
6,000,000 B/NR ANP Funding I, LLC, Tranche A Term Loan,
7.57688%, 7/29/10 $ 6,018,750
3,873,874 B+/Ba3 Basic Energy Services, L.P., Term Loan B,
6.96% - 9.0%, 10/3/09 3,883,559
5,700,000 B-/B3 Calpine Corp., Second Lien Term Loan,
5.75%, 7/16/07 4,377,600
2,330,146 BB-/Ba2 Cogentrix Delaware Holdings, Inc., Term Loan,
5.78%, 4/14/12 2,358,546
1,658,537 B+/B1 Covanta Energy Corp., Funded Letter of Credit
Loan, 3.85% - 3.89%, 6/24/12 1,682,378
1,338,110 B+/B1 Covanta Energy Corp., Term Loan,
9.0%, 6/24/12 1,357,345
GBP 1,000,000 NR/NR Eggborough Power, Ltd., Term Loan,
7.0%, 3/31/22 (e) 3,694,411
1,975,904 B/B3 El Paso Corp., Term Loan, 6.8125%, 11/23/09 1,988,939
2,985,000 NR/B2 KGEN, LLC, Tranche A Loan,
6.64538%, 8/5/11 2,981,269
AUD 10,000,000 NR/NR Loy Yang Power Projects Pty, Ltd., Second Lien
Term Loan, 5.0%, 5/12/15 7,364,479
2,422,226 NR/NR Mirant Americas Development Capital, LLC,
Term A Loan, 1.25%, 11/5/05 (a)(b) 2,558,477
341,899 NR/NR Mirant Americas Development Capital, LLC,
Term B Loan, 1.25%, 8/31/04 (a)(b) 361,130
35,875 NR/NR Mirant Americas Development Capital, LLC,
Term C Loan, 1.25%, 8/31/04 (a)(b) 37,893
2,000,000 NR/NR Mirant Corp., 03 REV Loan, 3.0%,
7/17/05 (a)(b) 2,166,072
1,556,449 BB-/B1 Pike Electric, Inc., Tranche C Term Loan,
6.4375%, 12/10/12 1,575,904
2,208,031 B/B3 Quachita Power, LLC, Term Loan,
6.97%, 8/17/07 2,180,430
7,458,750 B+/B1 Reliant Energy, Inc., Term Loan,
6.08875% - 6.915%, 4/30/10 7,470,408
1,492,500 BB-/Ba2 Texas Genco, LLC, Delayed Draw Term Loan,
5.87% - 6.11375%, 12/14/11 1,496,581
3,473,750 BB-/Ba2 Texas Genco, LLC, Initial Term Loan,
5.66938% - 6.11375%, 12/14/11 3,483,247
-------------
$ 57,037,418
-------------
22 The accompanying notes are an integral part of these financial statements.
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Wireless Communication - 2.4%
1,979,849 B-/B1 Centennial Cellular Operating Co., Term Loan,
6.27038% - 6.83%, 2/9/11 $ 1,990,831
3,970,000 NR/B1 Cricket Communications, Inc., Term Loan B,
6.52038%, 1/10/11 4,017,640
2,000,000 B/B2 Maritime Telecommunications Network, Inc.,
First Lien Term Loan, 6.85%, 4/7/11 2,010,000
1,000,000 CCC+/B3 MetroPCS Wireless, Inc., First Lien Tranche B
Term Loan, 8.25%, 5/27/11 1,029,167
2,000,000 B/B2 Ntelos, Inc., Second Lien Term Loan,
9.03%, 2/24/12 2,008,334
-------------
$ 11,055,972
-------------
TOTAL SENIOR SECURED FLOATING RATE
LOAN INTERESTS
(Cost $649,808,865) $ 649,103,665
-------------
CORPORATE NOTES - 6.4% of Net Assets
Broadcasting - 0.2%
1,000,000 B-/B1 Paxson Communications Corp., 6.9%,
1/15/10 (144A) (c) $ 1,002,500
-------------
Chemicals - 1.0%
4,500,000 CCC+/B3 Constar International, Inc., 7.715%,
2/15/12 (c) $ 4,410,000
-------------
Consumer Non-Durables - 1.3%
6,000,000 B-/Caa2 Levi Strauss & Co., 8.80438%, 4/1/12 (c) $ 6,075,000
-------------
Energy - 0.5%
2,000,000 B-/B2 Secunda International, Ltd., 12.15%,
9/1/12 (c) $ 2,100,000
-------------
Food & Drug - 0.3%
2,000,000 CCC-/Caa3 Duane Reade, Inc., 9.75%, 8/1/11 $ 1,380,000
-------------
Gaming & Leisure - 0.6%
3,000,000 B-/Caa1 Trump Entertainment Resorts, Inc.,
8.5%, 6/1/15 $ 2,910,000
-------------
Healthcare - 0.8%
2,000,000 NR/NR Duloxetine Pharma, 13.0%, 10/15/13 (144A) $ 2,000,000
2,000,000 B/B3 Elan Finance PLC/Elan Finance Corp.,
8.34%, 11/15/11 (c) 1,860,000
-------------
$ 3,860,000
-------------
The accompanying notes are an integral part of these financial statements. 23
Pioneer Floating Rate Trust
--------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 11/30/05 (continued)
--------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Housing - 0.4%
2,000,000 B/B3 Builders FirstSource, Inc., 8.59%, 2/15/12 (c) $ 2,030,000
-------------
Retail - 0.4%
2,000,000 B/B2 Finlay Fine Jewelry Corp., 8.375%, 6/1/12 $ 1,800,000
-------------
Wireless Communication - 0.9%
5,000,000 NR/Caa2 Clearwire Corp., 11.0%, 8/15/10 $ 4,249,439
-------------
TOTAL CORPORATE NOTES
(Cost $30,375,565) $ 29,816,939
-------------
Shares
WARRANTS - 0.2% of Net Assets
Gaming & Leisure - 0.0%
13,873 OpBiz, LLC, Term A, Exp. 8/31/10 (d) $ -
32 OpBiz, LLC, Term B, Exp. 8/31/10 (d) -
-------------
$ -
-------------
Wireless Communication - 0.2%
400,000 Clearwire Corp., Exp. 8/15/10 (d) $ 748,000
-------------
TOTAL WARRANTS
(Cost $0) $ 748,000
-------------
Principal
Amount
USD ($)
TEMPORARY CASH INVESTMENT - 5.6% of Net Assets
Repurchase Agreement - 5.6%
26,000,000 UBS Warburg, Inc., 3.8%, dated 11/30/05,
repurchase price of $26,000,000 plus
accrued interest on 12/1/05 collateralized by
$26,740,000 U.S. Treasury Bills,
3.8%, 2/16/06 $ 26,000,000
-------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $26,000,000) $ 26,000,000
-------------
TOTAL INVESTMENTS IN SECURITIES - 152.0%
(Cost $706,184,430) (f) $ 705,668,604
-------------
OTHER ASSETS AND LIABILITIES - (1.4)% $ (6,673,830)
-------------
PREFERRED SHARES AT REDEMPTION
VALUE, INCLUDING DIVIDENDS
PAYABLE - (50.6)% $(234,671,224)
-------------
NET ASSETS APPLICABLE TO COMMON
SHAREOWNERS - 100.0% $ 464,323,550
=============
24 The accompanying notes are an integral part of these financial statements.
Pioneer Floating Rate Trust
--------------------------------------------------------------------------
--------------------------------------------------------------------------
NR Security not rated by S&P or Moody's.
* Senior secured floating rate loan interests in which the Trust invests
generally pay interest at rates that are periodically redetermined by
reference to a base lending rate plus a premium. These base lending rates
are generally (i) the lending rate offered by one or more major European
banks, such as LIBOR (London InterBank Offered Rate), (ii) the prime rate
offered by one or more major United States banks, (iii) the certificate
of deposit or (iv) other base lending rates used by commercial lenders.
The rate shown is the coupon rate at period end.
(144A) Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At
November 30, 2005 the value of these securities amounted to $3,002,500
or 0.6% of net assets applicable to common shareowners.
(a) Security is in default and is non-income producing.
(b) Security is under protection of the Federal bankruptcy court.
(c) Floating Rate Note. The rate shown is the coupon rate at period end.
(d) Non-income producing security.
(e) Fixed Rate Senior Loan.
(f) At November 30, 2005, the net unrealized loss on investments based on cost for federal income
tax purposes of $706,221,055 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost $ 5,191,377
Aggregate gross unrealized loss for all investments in which there is an
excess of tax cost over value (5,743,828)
------------
Net unrealized loss $ (552,451)
============
For financial reporting purposes net unrealized loss on investments was $(515,826) and
cost of investments aggregated $706,184,430.
Purchases and sales of securities (excluding temporary cash investments) for the
period ended November 30, 2005, aggregated $1,037,199,617 and $355,124,423,
respectively.
Glossary of Terms:
DIP - Debtor-In-Possession
Senior floating rate interests often require prepayments from excess cash flows
or permit the borrower to repay at its election. The rate at which the borrower
repays cannot be predicted with accuracy. As a result, the actual remaining
maturity may be substantially less than the stated maturities shown.
The accompanying notes are an integral part of these financial statements. 25
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 11/30/05
--------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value (cost $706,184,430) $705,668,604
Cash 9,503,504
Foreign currencies, at value (cost $12,085,161) 11,587,094
Receivables -
Investment securities sold 4,523,760
Paydown 341,523
Interest and foreign tax reclaim 6,035,098
Commitment fees 12,081
Unrealized appreciation on unfunded corporate loans 78,995
Prepaid expenses 18,484
------------
Total assets $737,769,143
------------
LIABILITIES:
Payables -
Investment securities purchased $ 38,066,949
Due to affiliate 435,251
Unamortized facility fee 110,901
Accrued expenses 161,268
------------
Total liabilities $ 38,774,369
------------
PREFERRED SHARES AT REDEMPTION VALUE:
$25,000 liquidation value per share applicable to
9,380 shares, including dividends payable of $171,224 $234,671,224
------------
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Paid-in capital $460,987,677
Undistributed net investment income 2,701,834
Accumulated net realized gain on investments and foreign
currency transactions 1,134,392
Net unrealized loss on investments (436,831)
Net unrealized loss on foreign currency assets and liabilities
denominated in foreign currencies (63,522)
------------
Net assets applicable to common shareowners $464,323,550
============
NET ASSET VALUE PER SHARE:
No par value, (unlimited number of shares authorized)
Based on $464,323,550/24,330,240 common shares $ 19.08
============
26 The accompanying notes are an integral part of these financial statements.
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the period 12/23/04 (commencement of operations) to 11/30/05
INVESTMENT INCOME:
Interest $37,116,221
Facility and other fees 266,194
-----------
Total investment income $ 37,382,415
------------
EXPENSES:
Management fees $ 4,099,337
Administrative fees and reimbursement 391,180
Transfer agent fees and expenses 31,605
Auction agent fees 416,072
Custodian fees 63,651
Registration fees 27,984
Organization costs 40,000
Professional fees 93,219
Printing expenses 17,728
Trustees' fees 15,178
Pricing fees 58,508
Miscellaneous 43,703
-----------
Total expenses $ 5,298,165
Reimbursement of organization costs (40,000)
------------
Net expenses $ 5,258,165
------------
Net investment income $ 32,124,250
------------
REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 50,445
Foreign currency contracts and other assets
and liabilities denominated in foreign
currencies (435,742) $ (385,297)
----------- ------------
Net unrealized gain (loss) on:
Investments $ (515,826)
Unfunded corporate loans 78,995
Foreign currency contracts and other assets and
liabilities denominated in foreign currencies (63,522) $ (500,353)
----------- ------------
Net loss on investments and foreign
currency transactions $ (885,650)
------------
DISTRIBUTIONS TO PREFERRED SHAREOWNERS FROM
NET INVESTMENT INCOME $ (5,523,772)
------------
Net increase in net assets applicable to common
shareowners resulting from operations $ 25,714,828
============
The accompanying notes are an integral part of these financial statements. 27
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
For the Period 12/23/04 (Commencement of Operations) to 11/30/05
12/23/04
to
11/30/05
FROM OPERATIONS:
Net investment income $ 32,124,250
Net realized loss on investments and foreign
currency transactions (385,297)
Net unrealized loss on investments and foreign
currency transactions (500,353)
Distributions to preferred shareowners from net
investment income (5,523,772)
------------
Net increase in net assets applicable to
common shareowners $ 25,714,828
------------
DISTRIBUTIONS TO COMMON SHAREOWNERS:
Net investment income ($0.92 per share) $(22,378,955)
------------
Total dividends to common shareowners $(22,378,955)
------------
FROM TRUST SHARE TRANSACTIONS:
Net proceeds from the issuance of common shares $430,705,000
Net proceeds from underwriters' over-allotment
option exercised 33,902,500
Common share offering expenses charged to
paid-in capital (973,000)
Preferred share offering expenses charged to
paid-in capital (2,746,907)
------------
Net increase in net assets applicable to
common shareowners resulting from Trust
share transactions $460,887,593
------------
Net increase in net assets applicable to
common shareowners $464,223,466
NET ASSETS APPLICABLE TO COMMON SHAREOWNERS:
Beginning of period 100,084
------------
End of period (including undistributed net investment
income of $2,701,834) $464,323,550
============
28 The accompanying notes are an integral part of these financial statements.
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 11/30/05
--------------------------------------------------------------------------------
12/23/04(b)
to
11/30/05
Per Common Share Operating Performance
Net asset value, beginning of period $ 19.10(c)
--------
Increase (decrease) from investment operations:(a)
Net investment income 1.33
Net realized and unrealized loss on investments and foreign currency transactions (0.05)
Distributions to preferred shareowners from:
Net investment income (0.23)
--------
Net increase from investment operations $ 1.05
Distributions to common shareowners from:
Net investment income (0.92)
Capital charge with respect to issuance of:
Common shares (0.04)
Preferred shares (0.11)
--------
Net decrease in net asset value $ (0.02)
--------
Net asset value, end of period(d) $ 19.08
========
Market value, end of period(d) $ 17.14
========
Total return(e) (9.76)%
Ratios to average net assets of common shareowners
Net expenses(f) 1.23%(g)
Net investment income before preferred share dividends(f) 7.52%(g)
Preferred share dividends 1.29%(g)
Net investment income available to common shareowners 6.23%(g)
Portfolio turnover 61%
Net assets of common shareowners, end of period (in thousands) $464,324
Preferred shares outstanding (in thousands) $234,500
Asset coverage per preferred share, end of period $74,520
Average market value per preferred share $25,000
Liquidation value, including dividends payable, per preferred share $25,018
Ratios to average net assets of common shareowners before reimbursement of
organization expenses
Net expenses(f) 1.24%(g)
Net investment income before preferred share dividends(f) 7.51%(g)
Preferred share dividends 1.29%(g)
Net investment income available to common shareowners 6.22%(g)
(a) The per share data presented above is based upon the average common shares
outstanding for the period presented.
(b) Trust shares were first publicly offered on December 23, 2004.
(c) Net asset value immediately after the closing of the first public offering
was $19.06.
(d) Net asset value and market value are published in Barron's on Saturday, The
Wall Street Journal on Monday and The New York Times on Monday and
Saturday.
(e) Total investment return is calculated assuming a purchase of common shares
at the current market value on the first day and a sale at the current
market value on the last day of the period reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions. Total
investment return less than a full period is not annualized. Past
performance is not a guarantee of future results.
(f) Ratios do not reflect the effect of dividend payments to preferred
shareowners.
(g) Annualized.
The information above represents the audited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for the period indicated. This
information has been determined based upon financial information provided in the
financial statements and market value data for the Trust's common shares.
The accompanying notes are an integral part of these financial statements. 29
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/05
--------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Floating Rate Trust (the "Trust") was organized as a Delaware business
trust on October 6, 2004. Prior to commencing operations on December 23, 2004,
the Trust had no operations other than matters relating to its organization and
registration as a non-diversified, closed-end management investment company
under the Investment Company Act of 1940, as amended, and the sale and issuance
to Pioneer Funds Distributor, Inc., an affiliate of Pioneer Investment
Management, Inc. ("PIM"), the Trust's investment adviser, a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), of
5,240 shares of beneficial interest at an aggregate purchase price of $100,084.
PIM has paid all the Trust's organizational expenses and has paid the amount by
which the aggregate offering costs (other than the sales load) exceeded $0.04
per share of the common share offering. The investment objective of the Trust is
to provide a high level of current income. The Trust will, as a secondary
objective, also seek preservation of capital to the extent consistent with its
primary goal of high current income.
The Trust invests primarily in senior floating rate loans ("Senior Loans"). The
Trust may also invest in other floating and variable rate instruments, including
second lien loans, and high yield, high risk corporate bonds. The Trust may
invest in Senior Loans and other securities of any credit quality, including
Senior Loans and other investments that are rated below investment grade, or are
unrated but are determined by the investment subadviser to be of equivalent
credit quality. Information regarding the Trust's principal investment risks is
contained in the Trust's Prospectus(es). Please refer to these documents when
considering the Fund's risks.
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.
Investments in high yield or lower-rated securities are subject to
greater-than-average risk. The Fund may invest in securities of issuers that are
in default or that are in bankruptcy.
The Trust may invest in derivative securities, which may include futures and
options. These types of instruments can increase price fluctuation.
30
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The Trust is not limited in the percentage of its assets that may be invested in
Senior Loans and other securities deemed to be illiquid. Illiquid securities may
be difficult to dispose of at a fair price at the times when the trust believes
it is desirable to do so and their market price is generally more volatile than
that of more liquid securities. Illiquid securities are also more difficult to
value and investment of the Trust's assets in illiquid securities may restrict
the Trust's ability to take advantage of market opportunities.
The Trust's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Trust to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses and gains and losses 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 preparation of its financial statements, which are consistent with those
generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Senior Loans 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. For the
limited number of Senior Loans for which no reliable price quotes are
available, such Senior Loans will be valued by Loan Pricing Corporation
through the use of pricing matrices to determine valuations. If Loan
Pricing Corporation does not provide a value for the Senior Loans, the
investment sub-adviser will value the Senior Loans at fair value, which is
intended to approximate market value.
Fixed-income securities are valued at prices supplied by independent
pricing services, which consider such factors as Treasury spreads, yields,
maturities and ratings. Valuations may be supplemented by values obtained
from dealers and other sources, as required. Equity securities are valued
at the last sale price on the principal exchange where they are traded.
Securities for which quotations are not readily available are valued at
their fair values as determined by, or under the direction of, the Board of
Trustees.
31
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/05 (continued)
--------------------------------------------------------------------------------
Trading in foreign 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 also use the fair value of a security,
including a non U.S. security, when the closing market price on the
principal exchange where the security is traded no longer accurately
reflects the value of the security as of the close of the exchange. At
November 30, 2005, the Trust held no fair valued securities. Temporary cash
investments are valued at amortized cost.
Discount and premium on debt securities are accreted or amortized daily,
respectively, on an effective yield to maturity basis and are included in
interest income. Interest income, including income on interest bearing cash
accounts, is recorded on an accrual basis.
The Trust's investments in foreign markets or countries with limited
developing markets may subject the Trust to 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.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. 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 represent,
among other things, the net realized gains and losses on foreign currency
contracts, disposition of foreign currencies and the difference between the
amount of income accrued and the U.S. dollars actually received. Further,
the effects of changes in foreign currency exchange rates on investments
are not segregated in the Statement of Operations from the effects of
changes in market price of those securities but are included with the net
realized and unrealized gain or loss on investments.
32
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C. Federal Income Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the source of the Trust's distributions may be
shown in the accompanying financial statements as either from or in excess
of net investment income or net realized gain on investment transactions,
or from paid-in capital, depending on the type of book/tax differences that
may exist.
At November 30, 2005, the Trust reclassified $1,519,689 to decrease
undistributed net investment income and to increase accumulated net
realized gain on investments. The reclassification has no impact on the net
asset value of the Trust and presents the Trust's capital accounts on a tax
basis.
The tax character of current year distributions paid to common and
preferred shareowners during the period ended November 30, 2005 was as
follows:
--------------------------------------------------------------------------------
2005
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $27,902,727
Long-term capital gain -
-----------
Total taxable distribution $27,902,727
===========
--------------------------------------------------------------------------------
33
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/05 (continued)
--------------------------------------------------------------------------------
The following shows the components of distributable earnings on a federal
income tax basis at November 30, 2005.
--------------------------------------------------------------------------------
2005
--------------------------------------------------------------------------------
Undistributed ordinary income $4,044,075
Distributions payable (171,224)
Unrealized depreciation (536,978)
----------
Total $3,335,873
==========
--------------------------------------------------------------------------------
The difference between book basis and tax basis unrealized appreciation is
primarily attributable to the difference between book and tax amortization
methods for premiums and discounts on fixed income securities.
D. Repurchase Agreements
With respect to repurchase agreements entered into by the Trust, the value
of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the repurchase agreement at the time of purchase. The collateral
for all repurchase agreements is held in safekeeping in the customer-only
account of the Trust's custodian, or subcustodians. PIM is responsible for
determining that the value of the collateral remains at least equal to the
repurchase price.
E. Automatic Dividend Reinvestment Plan
All common shareowners automatically participate in the Automatic Dividend
Reinvestment Plan (the "Plan"), under which participants receive all
dividends and capital gain distributions (collectively, "dividends") in
full and fractional common shares of the Trust in lieu of cash. Shareowners
may elect not to participate in the Plan. Shareowners not participating in
the Plan receive all dividends and capital gain distributions in cash.
Participation in the Plan is completely voluntary and may be terminated or
resumed at any time by notifying Mellon Investor Services LLC, the agent
for shareowners in administering the Plan (the "Plan Agent"), prior to any
dividend record date; otherwise such termination or resumption will be
effective with respect to any subsequently declared dividend or other
distribution. Whenever the Trust declares a dividend on common shares
payable in cash, participants in the Plan will receive
34
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
the equivalent in common shares acquired by the Plan Agent either (i)
through receipt of additional unissued but authorized common shares from
the Trust or (ii) by purchase of outstanding common shares on the New York
Stock Exchange or elsewhere. If, on the payment date for any dividend the
net asset value per common share is equal to or less than the market price
per share plus estimated brokerage trading fees ("market premium"), the
Plan Agent will invest the dividend amount in newly issued common shares.
The number of newly issued common shares to be credited to each account
will be determined by dividing the dollar amount of the dividend by the net
asset value per common share on the date the shares are issued, provided
that the maximum discount from the then current market price per share on
the date of issuance does not exceed 5%. If, on the payment date for any
dividend, the net asset value per common share is greater than the market
value ("market discount"), the Plan Agent will invest the dividend amount
in common shares acquired in open-market purchases. There are no brokerage
charges with respect to newly issued common shares. However, each
participant will pay a pro rata share of brokerage trading fees incurred
with respect to the Plan Agent's open-market purchases. Participating in
the Plan does not relieve shareowners from any federal, state or local
taxes which may be due on dividends paid in any taxable year. Shareowners
holding Plan shares in a brokerage account may not be able to transfer the
shares to another broker and continue to participate in the Plan.
2. Management Agreement
The Trust has entered into an advisory agreement with PIM. Management fees are
calculated daily at the annual rate of 0.70% of the Trust's average daily
managed assets. "Managed assets" is the average daily value of the Trust's total
assets minus the sum of the Trust's liabilities, which liabilities exclude debt
related to leverage, short-term debt and the aggregate liquidation preference of
any outstanding preferred shares. At November 30, 2005, $435,251 was payable to
PIM related to management fees.
In addition, under PIM's management and administration agreements, certain other
services and costs are paid by PIM and reimbursed by the Trust. For the year
period ended November 30, 2005, the Trust recorded $35,000 in reimbursement and
is included in "Administration fees and reimbursement" on the Statement of
Operations.
35
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 11/30/05 (continued)
--------------------------------------------------------------------------------
PIM has engaged Highland Capital Management, L.P. to act as the Trust's
investment sub-adviser ("Sub-adviser") and manage the Trust's investments. Under
the terms of the sub-advisory agreement, for its services, the Sub-adviser is
entitled to a sub-advisory fee from PIM at an annual rate of 0.35% of the
Trust's average daily managed assets. The fee is paid monthly in arrears. The
Trust does not pay a fee to the Sub-adviser.
The Trust has entered into an administration agreement with PIM pursuant to
which PIM will provide certain administrative and accounting services to the
Trust. PIM has appointed Princeton Administrators, L.P. ("Princeton") as the
sub-administrator to the Trust to perform certain of PIM's administration and
accounting obligations to the Trust. Under the administration agreement, the
Trust pays PIM a monthly fee equal to 0.07% of the Trust's average daily managed
assets up to $500 million and 0.03% for average daily managed assets in excess
of $500 million. PIM and not the Trust, is responsible for paying the fees of
Princeton, which is affiliated with Merrill, Lynch & Co.
Also, PIM has agreed for the first three years of the Trust's investment
operations to limit the Trust's total annual expenses [excluding offering costs
for common and preferred shares, interest expense, the cost of defending or
prosecuting any claim or litigation to which the Trust is a party (together with
any amount in judgment or settlement), indemnification expenses or taxes
incurred due to the failure of the Trust to qualify as a regulated investment
company under the Code or any other non-recurring or non-operating expenses] to
0.95% of the Trust's average daily managed assets. The dividend on any preferred
shares is not an expense for this purpose. For the period ended November 30,
2005, the Trust's expenses were not reduced under such arrangements.
3. Forward Foreign Currency Contracts
The Trust may enter into any contracts that obligate the Trust to deliver
currencies at specified future dates. At the maturity of a contract, the Trust
must make delivery of the foreign currency. Alternatively, prior to the
settlement date of a portfolio hedge, the Trust may close out such contracts by
entering into an offsetting hedge contract. At November 30, 2005, the Trust had
no outstanding portfolio hedges or forward currency settlement contracts.
36
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. Unfunded Loan Commitments:
As of November 30, 2005, the Trust had unfunded loan commitments of
approximately $6,054,000, which could be extended at the option of the borrower,
pursuant to the following loan agreements:
--------------------------------------------------------------------------------
Unfunded
Commitment
Borrower (in thousands)
--------------------------------------------------------------------------------
Covanta Energy Corp., Revolver $1,000
Cricket Communications, Inc., Revolver $1,000
DeCrane Aircraft Holdings, Inc., Revolver $1,000
Eastman Kodak Co., Delayed Draw $1,177
Transport Industries, L.P., Delayed Draw $ 482
Trump Entertainment Resorts Holdings, L.P.,
Delayed Draw $ 998
Warner Chilcott Co., Inc., Donovex Delayed Draw $ 331
Warner Chilcott Co., Inc., Dovobet Delayed Draw $ 66
5. Transfer Agents
Pioneer Investment Management Shareholder Services, Inc. ("PIMSS"), a wholly
owned indirect subsidiary of UniCredito Italiano, through a sub-transfer agency
agreement with Mellon Investor Services LLC, provides substantially all transfer
agent and shareowner services related to the Trust's common shares at negotiated
rates. Deutsche Bank Trust Company Americas is the transfer agent, registrar,
dividend paying agent and redemption agent with respect to the Trust's Auction
Market Preferred Shares ("AMPS"). The Trust pays Deutsche Bank Trust Company
Americas an annual fee, as is agreed to from time to time by the Trust and
Deutsche Bank Trust Company Americas, for providing such services.
6. Trust Shares
There are an unlimited number of common shares of beneficial interest
authorized. Of the 24,330,240 common shares of beneficial interest outstanding
at November 30, 2005, PIM owned 5,240 shares.
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Pioneer Floating Rate Trust
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NOTES TO FINANCIAL STATEMENTS 11/30/05 (continued)
--------------------------------------------------------------------------------
Transactions in common shares of beneficial interest for the period December 23,
2004 (commencement of investment operations) to November 30, 2005 were as
follows:
--------------------------------------------------------------------------------
Shares issued in connection with
initial public offering 22,550,000
Shares issued from underwriters' over-allotment
option exercised 1,775,000
Shares outstanding at beginning of period 5,240
----------
Shares outstanding at end of period 24,330,240
==========
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Offering costs of $973,000 incurred in connection with the Trust's offering of
common shares have been charged to paid-in capital.
The Trust may classify or reclassify any unissued common shares of beneficial
interest into one or more series of preferred shares of beneficial interest. On
March 28, 2005, the Trust reclassified and issued 9,380 common shares into three
series of AMPS as follows: Series M7-3,130, Series W7-3,125 and Series
TH7-3,125. Offering costs of $401,907 and underwriting discounts of $2,345,000
have been charged to paid-in capital.
Dividends on Series M7, Series W7 and Series TH7 are cumulative at a rate which
is reset every seven days based on the results of an auction. Dividend rates
ranged from 2.98% to 4.00% during the period ended November 30, 2005.
The Trust may not declare dividends or make other distributions on its common
shares or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
preferred shares would be less than 200%.
The AMPS are redeemable at the option of the Trust, in whole or in part, on any
dividend payment date at $25,000 per share plus any accumulated or unpaid
dividends, whether or not declared. The AMPS are also subject to mandatory
redemption at $25,000 per share plus any accumulated or unpaid dividends,
whether or not declared, if certain requirements relating to the composition of
the assets and liabilities of the Trust as set forth in the Agreement and
Declaration of Trust are not satisfied.
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Pioneer Floating Rate Trust
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The holders of AMPS have voting rights equal to the holders of the Trust's
common shares (one vote per share) and will vote together with holders of the
common shares as a single class. However, holders of AMPS are also entitled to
elect two of the Trust's Trustees. In addition, the Investment Company Act of
1940, as amended, requires that along with approval by shareowners that might
otherwise be required, the approval of the holders of a majority of any
outstanding preferred shares, voting separately as a class, would be required to
(a) adopt any plan of reorganization that would adversely affect the preferred
shares and (b) take any action requiring a vote of security holders, including,
among other things, changes in the Trust's subclassification as a closed-end
investment company or changes in its fundamental investment restrictions.
7. Subsequent Event
Subsequent to November 30, 2005, the Board of Trustees of the Trust declared a
dividend from undistributed net investment income of $0.115 per common share and
from net short term capital gains of $0.048453 per common share payable December
30, 2005, to common shareowners of record on December 12, 2005.
For the period December 1, 2005 to December 31, 2005, dividends declared on
preferred stock totaled $753,310 in aggregate for the three outstanding
preferred share series.
CEO CERTIFICATION DISCLOSURE (unaudited)
The Trust's Chief Executive Officer has submitted to the New York Stock Exchange
the annual CEO certification as required by Section 303A.12(a) of the NYSE
Listed Company Manual. In addition, the Trust has filed with the Securities and
Exchange Commission the certification of its Chief Executive Officer and Chief
Financial Officer required by Section 302 of the Sarbanes-Oxley Act.
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Pioneer Floating Rate Trust
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Pioneer Floating Rate Trust:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Pioneer Floating Rate Trust (the "Trust") as of
November 30, 2005, and the related statements of operations, changes in net
assets and the financial highlights for the period from December 23, 2004
(commencement of operations) to November 30, 2005. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Trust's internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trust's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of November 30, 2005, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Floating Rate Trust at November 30, 2005, the results of its operations,
changes in net assets and the financial highlights for the period from December
23, 2004 (commencement of operations) to November 30, 2005, in conformity with
U.S. generally accepted accounting principles.
/s/ Ernst + Young LLP
Boston, Massachusetts
January 20, 2006
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Pioneer Floating Rate Trust
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ADDITIONAL INFORMATION (unaudited)
During the period, except as discussed below, there have been no material
changes in the Trust's investment objective or fundamental policies that have
not been approved by the shareowners. There have been no changes in the Trust's
charter or By-Laws that would delay or prevent a change in control of the Trust
which have not been approved by the shareowners. Except as discussed below,
there have been no changes in the principal risk factors associated with
investment in the Trust. There have been no changes in the persons who are
primarily responsible for the day-to-day management of the Trust's portfolio.
Notice is hereby given in accordance with Section 23(C) of the Investment
Company Act of 1940 that the Trust may purchase, from time to time, its common
shares in the open market.
Additional Information Regarding the Trust's Investment Policies
The Trust's Board of Trustees has authorized the Trust to enter into cross
currency interest rate swaps and invest in commercial mortgage-backed
securities.
Cross Currency Interest Rate Swaps
The Trust may, but is not required to, use various currency and interest rate
transactions to earn income, facilitate portfolio management and mitigate risks.
The Board has authorized the use of cross currency interest rate swaps, in
addition to other instruments that the Fund may use for these purposes.
A swap contract is an agreement to exchange the return generated by one
instrument for another. Payment streams typically are calculated by reference to
a specified rate, such as an index, interest or currency rate, for an agreed
upon transaction amount and time period. For example, with an interest rate
swap, the Trust might agree to swap the return generated by a floating interest
rate for the return generated by a fixed interest rate. The Trust might enter
into such a transaction if the Trust's subadviser anticipated that the
prevailing floating rate was likely to decline and believed that converting it
to a fixed rate would enhance the Trust's return. Currency swaps usually involve
the delivery of the entire principal value of one designated currency in
exchange for the other designated currency. The Trust might use a currency swap
to lock in the exchange rate on the principal of a loan
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Pioneer Floating Rate Trust
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denominated in euro if the subadviser believed that the value of the euro might
decline relative to the U.S. dollar.
Cross currency interest rate swap agreements combine features of currency swap
agreements and interest rate swap agreements. The cross currency interest rate
swaps in which the Trust may enter generally will involve both the exchange of
currency and the payment of interest streams with reference to one currency
based on a specified index in exchange for receiving interest streams with
reference to the other currency. Such swaps may involve initial and final
exchanges that correspond to the agreed upon transaction amount. For example,
the payment stream on a specified amount of euro based on a European market
floating rate might be exchanged for a U.S. oriented floating rate on the same
principal amount converted into U.S. dollars.
The risks of various types of swap agreements, strategic transactions and
derivatives are described in the Trust's prospectus. The use of swap agreements
is a highly specialized activity that involves investment techniques and risks
different from those associated with ordinary portfolio security transactions.
Depending on the state of currency and interest rates in general, the Trust's
use of cross currency interest rate swaps could enhance or harm the Trust's
overall performance. To the extent there are lower prevailing interest rates or
currency valuations in the local market relative to those in the U.S., the value
of the swap could decline, which could result in a decline in the Trust's net
asset value.
In connection with these transactions, the Trust relies on the other party to
the transaction to perform its obligations pursuant to the underlying agreement.
If there were a default by the other party, the Trust would have contractual
remedies, but could incur delays in obtaining, or be unable to obtain, the
expected benefit of the transaction. The entire principal value of a currency
swap is subject to the risk that the other party to the swap will default on its
delivery obligations.
Although the Trust may enter into currency-related transactions to reduce
currency exchange risks, changes in currency exchange rates may result in poorer
overall performance for the Trust than if it had not engaged in such
transactions. Moreover, there may be an imperfect correlation between the
Trust's portfolio holdings of securities and the instruments that the Trust uses
to hedge interest rate or currency exposure. An imperfect correlation of this
type may prevent the
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Pioneer Floating Rate Trust
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Trust from achieving the intended hedge or expose the Trust to the risk of
currency exchange loss.
Mortgage-Backed Securities
The Trust may invest in mortgage-backed and mortgage-related securities,
including securities with respect to which the underlying mortgages are on
commercial properties. These securities may include mortgage pass-through
certificates and multiple-class pass-through securities, and mortgage derivative
securities such as real estate mortgage investment conduits ("REMICs"),
pass-through certificates, collateralized mortgage obligations ("CMOs") and
stripped mortgage-backed securities ("SMBS"), interest only mortgage-backed
securities, principal only mortgage-backed securities, commercial
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 semi-annual 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 (prepayment 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
(the estimated period until the security is paid in full) and reduce the value
of the security (extension risk). To the extent the Trust invests significantly
in mortgage-related securities, its exposure to prepayment and extension risks
may be greater than if it invested in other fixed income securities.
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Pioneer Floating Rate Trust
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Mortgage-backed securities may have less potential for capital appreciation 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.
Certain mortgage-backed securities may only pay principal at maturity or may
only represent the right to receive payments of principal or interest on
underlying pools of mortgage or government securities, but not both. The value
of these types of instruments may change more drastically than debt securities
that pay both principal and interest during periods of changing interest rates.
Principal only mortgage-backed securities generally increase in value if
interest rates decline, but are also subject to the risk of prepayment. Interest
only instruments generally increase in value in a rising interest rate
environment when fewer of the underlying mortgages are prepaid.
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.
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Pioneer Floating Rate Trust
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FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT
--------------------------------------------------------------------------------
The Investment Company Act of 1940 requires that both the Board of Trustees and
a majority of the Independent Trustees (collectively "the Trustees") voting
separately annually approve the Trust's management contract (the "Management
Contract") between the Trust and Pioneer Investment Management, Inc., the
Trust's adviser (the "Investment Adviser"). The Investment Adviser has retained
Highland Capital Management, L.P. (the "Sub-adviser") to act as sub-adviser to
the Trust pursuant to a sub-advisory agreement between the Investment Adviser
and the Sub-adviser (the "Sub-advisory Agreement"). The Trustees have determined
that the terms of the Management Contract and the Sub-advisory Agreement are
fair and reasonable and that renewal of these contracts will enable the Trust to
receive quality investment advisory services at a cost deemed reasonable and is
in the best interests of the Trust and its shareowners. In making such
determinations, the Independent Trustees relied upon the assistance of counsel
to the Independent Trustees and counsel to the Trust.
Throughout the year, the Independent Trustees regularly met in executive session
separately from the Interested Trustees of the Trust and any officer of the
Investment Adviser, or its affiliates. While the Trustees, including the
Independent Trustees, act on all major matters relating to the Trust, a
significant portion of the activities of the Board of Trustees (including
certain of those described herein) is conducted through committees, the members
of which are comprised exclusively of Independent Trustees. Such committee
meetings are attended by officers of the Trust or the Investment Adviser to the
extent requested by the members of the committee.
In evaluating the Management Contract and Sub-advisory Agreement, the Trustees
conducted a review that was specifically focused upon the renewal of the
Management Contract and Sub-advisory Agreement, and relied upon their knowledge,
resulting from their meetings throughout the year, of the Investment Adviser,
its services and the Trust. Both in meetings specifically dedicated to renewal
of the Management Contract and at other meetings during the course of the year,
the Trustees, including the Independent Trustees, received materials relating to
the Investment Adviser's investment and management services under the Management
Contract. These materials included (i) information on the investment performance
of the Trust, a peer group of funds and an index, in each case selected by the
Independent Trustees for this purpose, (ii) the general investment outlook in
the markets in which the Fund invests, (iii) the procedures employed to
determine the value of
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Pioneer Floating Rate Trust
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FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
--------------------------------------------------------------------------------
each of the Trust's assets, (iv) the Investment Adviser's management of the
relationships with the Trust's unaffiliated service providers, (v) the record of
compliance with the Trust's investment policies and restrictions and with the
Trust's Code of Ethics and the structure and responsibilities of the Investment
Adviser's compliance department, (vi) the nature, cost and character of
non-investment management services provided by the Investment Adviser and its
affiliates, (vii) the disclosures included in the Trust's prospectus and reports
to shareowners, (viii) the investment and compliance staff and operations of the
Subadviser, (ix) an analyses of the benefits and costs of the use of leverage
through the issuance of the Trust's preferred shares and the sensitivity of such
analysis to changes in interest rates and (x) the discount or premium of the
market price of the Trust's common stock relative to its net asset value and
measures that are or could be taken to address any discount.
Specifically, in connection with the Independent Trustees' review of the
Management Contract and the Sub-advisory Agreement, the Independent Trustees
requested and the Investment Adviser provided additional information in order to
evaluate the quality of the Investment Adviser's and Sub-adviser's services and
the reasonableness of the fee under the Management Contract and the Sub-advisory
Agreement. Among other items, this information included data or analyses of (1)
investment performance for the year to date period ended June 30, 2005 for the
Trust and a peer group selected by the Independent Trustees for this purpose,
(2) management and other fees incurred by a peer group of funds selected by the
Independent Trustees for this purpose, (3) the advisory fees of comparable
portfolios of other clients of the Investment Adviser and the Sub-adviser, (4)
expense ratios for the Trust and a peer group of funds selected by the
Independent Trustees for this purpose, (5) the overall organization of the
Investment Adviser, (6) the Investment Adviser's and the Sub-adviser's financial
results and condition, including, in the case of the Investment Adviser, its and
certain of its affiliates profitability from services performed for the Trust,
(7) transfer agency fees and administrative reimbursements paid to the
Investment Adviser or affiliates, (8) investment management staffing, and (9)
operating expenses paid to third parties.
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Pioneer Floating Rate Trust
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The following summarizes factors considered by the Trustees in connection with
reviewing the information described above and their renewal of the Trust's
Management Contract and Sub-advisory Agreement. The Trustees did not identify
any single factor as all-important or controlling, and the summary does not
detail all the matters that were considered.
A. Ancillary Benefits to Shareowners. The Trustees considered what was
believed to be the benefits to shareowners of investing in a closed-end
fund that is part of an established group of open and closed-end funds. The
Trustees also noted that the relationship of the market price relative to
the Trust's net assets attributed to its common shares was comparable
relative to other closed-end funds with similar investment approaches.
B. Compliance and Investment Performance. The Trustees determined that the
Investment Adviser had policies and systems reasonably designed to achieve
compliance with the Trust's investment objectives and regulatory
requirements. The Trustees also reviewed the Trust's investment performance
based upon total return, as well as the Trust's performance compared to
both the performance of a peer group and an index, in each case selected by
the Independent Trustees for this purpose. The Trust's performance, based
upon total return, was in the first quintile of the peer group for the year
to date period ended June 30, 2005. (In all quintile rankings referred to
throughout this discussion first quintile is most favorable to the Trust's
shareowners. Thus, highest relative performance would be first quintile and
lowest relative expenses also would be first quintile.) The Trustees
considered the yield (gross of expenses) to the Trust's common shareholders
compared to the yield (as of June 30, 2005) of the CFSB Leveraged Loan
index. The Trustees also considered the activities of the Investment
Adviser in monitoring the investment and compliance operations of the
Sub-adviser. The Trustees concluded the Trust had conducted investment
operations for too short a period to evaluate performance.
C. The Investment Adviser's Personnel and Methods. The Trustees reviewed the
background of members of the team responsible for the daily management of
the Trust and the Trust's investment objective and discipline. The
Independent Trustees also have had discussions with senior management of
the Investment Adviser responsible for investment operations. Among other
things, the
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Pioneer Floating Rate Trust
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FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
--------------------------------------------------------------------------------
Trustees considered the number, education and experience of the
Sub-adviser's investment staff. The Trustees concluded that the Investment
Adviser and the Sub-adviser have the quality and depth of personnel and the
well-developed methods essential to performing its duties under the
Management Contract and the Sub-advisory Agreement.
D. Nature and Quality of Other Services. The Trustees considered the nature,
quality, cost and extent of other services provided to shareowners of the
Trust, including administrative and shareowner services performed by the
Investment Adviser under the Management Contract. The Trustees also
considered the reasonableness of the arrangements for reimbursement of the
Investment Adviser's out-of-pocket costs and expenses, including overhead,
for certain administrative services that the Investment Adviser is not
required to provide under the Management Contract. The Trustees also
considered the nature and extent of the other services provided by the
Investment Adviser's affiliates under other contracts and its supervision
of third party service providers. Based on these considerations, the
Trustees concluded that the nature, quality, cost and extent of such
services are satisfactory and reliable and serve the shareowners of the
Trust well.
E. Management Fee and Expenses. The Trustees considered the Investment
Adviser's fee under the Management Contract relative to the management fees
charged by a peer group of funds selected by the Independent Trustees for
this purpose using data provided by an independent third party. The
Trustees noted that, although the peer group was small, the Trust's
management fee was the lowest in the peer group. The Trustees determined
that the fee under the Management Contract was reasonable and fair in light
of both the overall nature and quality of services provided by the
Investment Adviser and the fees charged by the funds in the peer group. The
Trustees also evaluated the fee under the Sub-advisory Agreement and the
portion of the fee under the Management Contract retained by the Investment
Adviser and determined that they were consistent with other sub-advised
funds. The Trustees also considered the Trust's expense ratio and expense
ratios of a peer group of funds selected by the Independent Trustees for
this purpose. The Trustees noted that, although the peer group was small,
the Trust's expense ratio was favorable compared to the expense ratios of
the peer funds. The Trustees concluded that
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Pioneer Floating Rate Trust
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the Trust's overall expense ratio (after expense limitations) was
reasonable compared to that of comparable funds.
F. Profitability. The Trustees considered the level of the Investment
Adviser's profits with respect to the management of the Pioneer funds,
including details with respect to the Trust. This consideration included a
review of the Investment Adviser's methodology in allocating certain of its
costs to the management of each fund. The Trustees also considered the
financial results realized by the Investment Adviser in connection with the
operation of the Trust. They further considered the profits realized by the
Investment Adviser and its affiliates from non-fund businesses that may
benefit from or be related to the Trust's business. The Trustees considered
the Investment Adviser's profit margins in comparison with the limited
available industry data. The Trustees concluded that the Investment
Adviser's profits from management of the Pioneer funds, including the
financial results derived from the Trust, bear a reasonable relationship to
the services rendered and are fair for the management of the Trust.
G. Economies of Scale. The Trustees considered whether the Trust has
appropriately benefited from any economies of scale, and whether there is
potential for realization of any further economies of scale. Since the
Trust is a closed-end fund and its size is relatively stable and at the
level of assets that was anticipated when the management fee was initially
set, the Trustees concluded that economies of scale were not a relevant
consideration.
H. Other Benefits to the Investment Adviser. The Trustees also considered the
character and amount of fees paid by the Trust, other than under the
Management Contract, for services provided by the Investment Adviser and
affiliates. The Trustees further considered the revenues and profitability
of the Investment Adviser's businesses other than the fund business,
including the Investment Adviser's institutional investment advisory
business. The Trustees considered the intangible benefits that accrue to
the Investment Adviser and its affiliates by virtue of its relationship
with the Trust and the Pioneer funds as a group. The Trustees concluded
that all these types of benefits accruing to the Investment Adviser were
reasonable in the context of the overall relationship between the
Investment Adviser and the Trust.
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FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
--------------------------------------------------------------------------------
Conclusion. The Trustees, in light of the Investment Adviser's and Sub-adviser's
overall performance, considered it appropriate to continue to retain the
management services of the Investment Adviser and the Sub-adviser. Based on
their evaluation of all material factors deemed relevant and the advice of
independent counsel, the Trustees concluded that the Management Contract with
the Trust and the Sub-advisory Agreement are fair and reasonable and voted to
approve the continuation of the Management Contract and the Sub-advisory
Agreement for another year.
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Pioneer Floating Rate Trust
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TRUSTEES, OFFICERS AND SERVICE PROVIDERS
--------------------------------------------------------------------------------
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Shareowner Services and Sub-Transfer Agent
Mellon Investor Services LLC
Preferred Share Auction/Transfer Agent and Registrar
Deutsche Bank Trust Company Americas
Investment Sub-Advisor
Highland Capital Management, L.P.
Sub-Administrator
Princeton Administrators, L.P.
Trustees and Officers The Trust's Board of Trustees provides broad supervision
over the Trust's affairs. The officers of the Trust are responsible for the
Trust's operations. The Trust's Trustees and officers are listed below, together
with their principal occupations during the past five years. Trustees who are
interested persons of the Trust within the meaning of the Investment Company Act
of 1940 are referred to as Interested Trustees. Trustees who are not interested
persons of the Trust are referred to as Independent Trustees. Each of the
Trustees may serve as a trustee of each of the 91 U.S. registered investment
portfolios for which Pioneer Investment Management, Inc. ("Pioneer") serves as
investment adviser (the "Pioneer Funds"). The address for all Interested
Trustees and all officers of the Fund is 60 State Street, Boston, Massachusetts
02109.
The Trust's statement of additional information provides more detailed
information regarding the Trust's Trustees and is available upon request,
without charge, by calling 1-800-225-6292.
Proxy Voting Policies and Procedures of the Trust are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Trust voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerfunds.com and on the SEC's web site at
http://www.sec.gov.
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Pioneer Floating Rate Trust
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INTERESTED TRUSTEES
--------------------------------------------------------------------------------
Positions Held Length of Service
Name and Age With the Trust and Term of Office
John F. Cogan, Jr. (79)* Chairman of the Trustee since
Board, November, 2004.
Trustee and President Term expires in 2007.
-----------------------------------------------------------------------------------------------------------------------
Osbert M. Hood (53)** Trustee and Trustee since
Executive Vice June, 2003.
President Term expires in 2005.
**Mr. Hood is an Interested Trustee because he is an officer or director of Pioneer and certain of its affiliates.
-----------------------------------------------------------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Trustee
John F. Cogan, Jr. (79)* Deputy Chairman and a Director of Pioneer Global Chairman and Director of
Asset Management S.p.A. ("PGAM"); Non-Executive ICI Mutual Insurance
Chairman and a Director of Pioneer Investment Company; Director
Management USA Inc. ("PIM-USA"); Chairman and a of Harbor Global
Director of Pioneer; Director of Pioneer Alternative Company, Ltd.
Investment Management Limited (Dublin); President and
a Director of Pioneer Alternative Investment Management
(Bermuda) Limited and affiliated funds; President and
Director of Pioneer Funds Distributor, Inc. ("PDF");
President of all of the Pioneer Funds; and of Counsel
(since 2000, partner prior to 2000), Wilmer Cutler
Pickering Hale and Dorr LLP (counsel to PIM-USA and the
Pioneer Funds).
*Mr. Cogan is an Interested Trustee because he is an officer or director of Pioneer and certain of its affiliates.
-----------------------------------------------------------------------------------------------------------------------
Osbert M. Hood (53)** President and Chief Executive Officer, PIM-USA since None
May 2003 (Director since January 2001); President and
Director of Pioneer since May 2003; Chairman and
Director of Pioneer Investment Management Shareholder
Services, Inc. ("PIMSS") since May 2003; Executive
Vice President of all of the Pioneer Funds since June
2003; Executive Vice President and Chief Operating
Officer of PIM-USA, November 2000 to May 2003.
**Mr. Hood is an Interested Trustee because he is an officer or director of Pioneer and certain of its affiliates.
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Pioneer Floating Rate Trust
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INDEPENDENT TRUSTEES
--------------------------------------------------------------------------------
Positions Held Length of Service
Name, Age and Address With the Trust and Term of Office
David R. Bock (61)** Trustee Trustee since
3050 K. Street NW, October, 2004.
Washington, DC 20007 Term expires in 2007.
--------------------------------------------------------------------------------
Mary K. Bush (57) Trustee Trustee since
3509 Woodbine Street, November, 2004.
Chevy Chase, MD 20815 Term expires in 2006.
--------------------------------------------------------------------------------
Margaret B.W. Graham (58) Trustee Trustee since
1001 Sherbrooke Street West, November, 2004.
Montreal, Quebec, Canada Term expires in 2005.
H3A 1G5
--------------------------------------------------------------------------------
Other Directorships Held
Name, Age and Address Principal Occupation During Past Five Years by this Trustee
David R. Bock (61)** Senior Vice President and Chief Financial Officer, I-trax, Director of The Enterprise
3050 K. Street NW, Inc. (publicly traded health care services company) Social Investment
Washington, DC 20007 (2001 - present); Managing Partner, Federal City Capital Company (privately-held
Advisors (boutique merchant bank) (1995 - 2000; 2002 affordable housing
to 2004); Executive Vice President and Chief Financial finance company);
Officer, Pedestal Inc. (internet-based mortgage trading Director of New York
company) (2000 - 2002). Mortgage Trust (publicly
traded mortgage REIT)
**Mr. Bock became a Trustee of the Fund on January 1, 2005.
------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (57) President, Bush International (international financial Director of Brady
3509 Woodbine Street, advisory firm) Corporation (industrial
Chevy Chase, MD 20815 identification and
specialty coated
material products
manufacturer),
Millennium Chemicals,
Inc. (commodity
chemicals), Mortgage
Guaranty Insurance
Corporation, and R.J.
Reynolds Tobacco
Holdings, Inc. (tobacco)
------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (58) Founding Director, The Winthrop Group, Inc. (consulting None
1001 Sherbrooke Street West, firm); Professor of Management, Faculty of Management,
Montreal, Quebec, Canada McGill University.
H3A 1G5
------------------------------------------------------------------------------------------------------------------------
53
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
--------------------------------------------------------------------------------
Positions Held Length of Service
Name, Age and Address With the Trust and Term of Office
Marguerite A. Piret (57) Trustee Trustee since
One Boston Place, 28th Floor, November, 2004.
Boston, MA 02108 Term expires in 2006.
--------------------------------------------------------------------------------
Stephen K. West (77) Trustee Trustee since
125 Broad Street, November, 2004.
New York, NY 10004 Term expires in 2007.
--------------------------------------------------------------------------------
John Winthrop (69) Trustee Trustee since
One North Adgers Wharf, November, 2004.
Charleston, SC 29401 Term expires in 2005.
--------------------------------------------------------------------------------
Other Directorships Held
Name, Age and Address Principal Occupation During Past Five Years by this Trustee
Marguerite A. Piret (57) President and Chief Executive Officer, Newbury, Piret & Director of New America
One Boston Place, 28th Floor, Company, Inc. (investment banking firm) High Income Fund, Inc.
Boston, MA 02108 (closed-end investment
company)
-------------------------------------------------------------------------------------------------------------------------
Stephen K. West (77) Senior Counsel, Sullivan & Cromwell, (law firm) Director, The Swiss
125 Broad Street, Helvetia Fund, Inc.
New York, NY 10004 (closed-end investment
company) and
AMVESCAP PLC
(investment managers)
-------------------------------------------------------------------------------------------------------------------------
John Winthrop (69) President, John Winthrop & Co., Inc. None
One North Adgers Wharf, (private investment firm)
Charleston, SC 29401
-------------------------------------------------------------------------------------------------------------------------
54
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
EXECUTIVE OFFICERS
--------------------------------------------------------------------------------
Positions Held Length of Service
Name and Age With the Trust and Term of Office
Dorothy E. Bourassa (57) Secretary Since October, 2004.
Serves until her
successor is chosen
and qualified, or until
her resignation or
removal by the Board.
--------------------------------------------------------------------------------
Christopher J. Kelley (40) Assistant Secretary Since October, 2004.
Serves until his
successor is chosen
and qualified, or until
his resignation or
removal by the Board.
--------------------------------------------------------------------------------
David C. Phelan (48) Assistant Secretary Since October, 2004.
Serves until his
successor is chosen
and qualified, or until
his resignation or
removal by the Board.
--------------------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Officer
Dorothy E. Bourassa (57) Secretary of PIM-USA; Senior Vice President - Legal None
of Pioneer; and Secretary/Clerk of most of PIM-USA's
subsidiaries; and Secretary of all of the Pioneer Funds
since September 2003 (Assistant Secretary from
November 2000 to September 2003).
-------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (40) Assistant Vice President and Senior Counsel of None
Pioneer since July 2002; Vice President and Senior
Counsel of BISYS Fund Services, Inc. (April 2001 to
June 2002); Senior Vice President and Deputy General
Counsel of Funds Distributor, Inc. (July 2000 to April
2001); and Assistant Secretary of all Pioneer Funds since
September 2003.
-------------------------------------------------------------------------------------------------------------------
David C. Phelan (48) Partner, Wilmer Cutler Pickering Hale and Dorr LLP; None
Assistant Secretary of all Pioneer Funds since
September 2003.
-------------------------------------------------------------------------------------------------------------------
55
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
EXECUTIVE OFFICERS
--------------------------------------------------------------------------------
Positions Held Length of Service
Name and Age With the Trust and Term of Office
Vincent Nave (60) Treasurer Since October, 2004.
Serves until his
successor is chosen
and qualified, or until
his resignation or
removal by the Board.
--------------------------------------------------------------------------------
Mark E. Bradley (46) Assistant Treasurer Since November,
2004. Serves until his
successor is chosen
and qualified, or until
his resignation or
removal by the Board.
--------------------------------------------------------------------------------
Luis I. Presutti (40) Assistant Treasurer Since October, 2004.
Serves until his
successor is chosen
and qualified, or until
his resignation or
removal by the Board.
--------------------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Officer
Vincent Nave (60) Vice President - Fund Accounting, Administration None
and Custody Services of Pioneer; and Treasurer of all
of the Pioneer Funds.
-----------------------------------------------------------------------------------------------------------
Mark E. Bradley (46) Deputy Treasurer of Pioneer since 2004; Treasurer None
and Senior Vice President, CDC IXIS Asset
Management Services from 2002 to 2003; Assistant
Treasurer and Vice President, MFS Investment
Management from 1997 to 2002; and Assistant
Treasurer of all of the Pioneer Funds since
November 2004.
-----------------------------------------------------------------------------------------------------------
Luis I. Presutti (40) Assistant Vice President - Fund Accounting, None
Administration and Custody Services of Pioneer; and
Assistant Treasurer of all of the Pioneer Funds.
-----------------------------------------------------------------------------------------------------------
56
Pioneer Floating Rate Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Positions Held Length of Service
Name and Age With the Trust and Term of Office
Gary Sullivan (47) Assistant Treasurer Since October, 2004.
Serves until his
successor is chosen
and qualified, or until
his resignation or
removal by the Board.
--------------------------------------------------------------------------------
Katherine Kim Sullivan (31) Assistant Treasurer Since October, 2004.
Serves until her
successor is chosen
and qualified, or until
her resignation or
removal by the Board.
--------------------------------------------------------------------------------
Martin J. Wolin (38) Chief Compliance Since October, 2004.
Officer Serves until his
successor is chosen
and qualified, or until
his resignation or
removal by the Board.
The outstanding capital stock of PFD, PIM and PIMSS is indirectly wholly owned by UniCredito Italiano S.p.A.
("UniCredito Italiano"), one of the largest banking groups in
Italy. PIM, the Trust's investment adviser, provides investment management and financial services to mutual
funds, institutional and other clients.
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Officer
Gary Sullivan (47) Fund Accounting Manager - Fund Accounting, None
Administration and Custody Services of Pioneer; and
Assistant Treasurer of all of the Pioneer Funds since
May 2002.
-----------------------------------------------------------------------------------------------------------------
Katherine Kim Sullivan (31) Fund Administration Manager - Fund Accounting, None
Administration and Custody Services since June
2003; Assistant Vice President - Mutual Fund
Operations of State Street Corporation from June
2002 to June 2003 (formerly Deutsche Bank Asset
Management); Pioneer Fund Accounting, Administration
and Custody Services (Fund Accounting Manager
from August 1999 to May 2002); and Assistant
Treasurer of all Pioneer Funds since September
2003.
-----------------------------------------------------------------------------------------------------------------
Martin J. Wolin (38) Chief Compliance Officer of Pioneer (Director of None
Compliance and Senior Counsel from November 2000
to September 2004); and Chief Compliance Officer
of all of the Pioneer Funds since 2004.
-----------------------------------------------------------------------------------------------------------------
The outstanding capital stock of PFD, PIM and PIMSS is indirectly wholly owned
by UniCredito Italiano S.p.A. ("UniCredito Italiano"), one of the largest
banking groups in Italy. PIM, the Trust's investment adviser, provides
investment management and financial services to mutual funds, institutional and
other clients.
57
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58
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59
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This page for your notes.
60
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HOW TO CONTACT PIONEER
--------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact Mellon
for assistance or information.
You can call Mellon Investor Services LLC for:
Account Information 1-800-710-0935
Telecommunications Device for the Deaf (TDD) 1-800-231-5469
Or write to Mellon Investor Services LLC:
For Write to
General inquiries, lost dividend checks P.O. Box 3315
South Hackensack, NJ
07606-1915
Change of address, account consolidation P.O. Box 3316
South Hackensack, NJ
07606-1916
Lost stock certificates P.O. Box 3317
South Hackensack, NJ
07606-1917
Stock transfer P.O. Box 3312
South Hackensack, NJ
07606-1912
Dividend reinvestment plan (DRIP) P.O. Box 3338
South Hackensack, NJ
07606-1938
For additional information, please contact your investment advisor or visit our
web site www.pioneerfunds.com.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
The Trust's Chief Executive Officer-Finance and Administration is required by
the New York Stock Exchange's Listing Standards to file annually with the
Exchange a certification that he is not aware of any violation by the Trust of
the Exchange's Corporate Governance Standards applicable to the Trust. The Trust
has signed such certification.
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit Fees
Fees for audit services provided to the Trust, including fees associated with
the initial and updated filings of its Form N-2 and issuance of various comfort
and bring down letters letters, totaled approximately $83,500 in 2005.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
Audit-Related Fees
Fees for the Trust's audit-related services totaled approximately $14,500 in
2005. These services included issuance of agreed upon procedures report to the
rating agencies.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
Tax Fees
Fees for tax compliance services, primarily for tax return, totaled $6,800
in 2005.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
Other Fees
There were no other services provided to the Trust during the fiscal year
ended November 30, 2005 and 2004.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER TrustS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Trusts recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Trusts recognize that a Trust's independent auditors: 1) possess knowledge
of the Trusts, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Trust personnel
and processes, and 3) have expertise that has value to the Trusts. As a result,
there are situations where it is desirable to use the Trust's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Trusts when retaining the independent audit
firm to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Trust shall also
constitute approval for any other Trust whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Trust's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Trusts statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Trust shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the Trust fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Trust's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Trust o Tax compliance, tax returns, excise
determines that using the tax returns and support
Trust's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
----------------------- --------------------------- -----------------------------------------------
------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- -------------------------
------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the Trust fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Trust's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Trust compliance projects
UNIQUE QUALIFICATIONS determines that using the
Trust's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Trust's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Trust.
----------------------- --------------------------- -----------------------------------------------
--------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the Trust fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Trust's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
----------------------- ------------------------- -----------------------------------------------
------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
------------------------------------------- ------------------------------
--------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Trusts and the Trust's auditors will
each make an assessment to determine that any proposed projects will not
impair independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
--------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
Non-Audit Services
Beginning with non-audit service contracts entered into on or after May 6,
2003, the effective date of the new SEC pre-approval rules, the Trust's
audit committee is required to pre-approve services to affiliates defined
by SEC rules to the extent that the services are determined to have a direct
impact on the operations or financial reporting of the Trust. For the years
ended November 30, 2005 and 2004, there were no services provided to an
affiliate that required the Trust's audit committee pre-approval.
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The aggregate non-audit fees for the Trust and affiliates, as previously
defined, totaled $21,300 in 2005.
The Trust's audit committee of the Board of Trustees has considered whether
the provision of non-audit services that were rendered to the Affiliates (as
defined) that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Trust's independent auditor, Ernst &
Young LLP ("E&Y"), has advised the Audit
Committee of the Trust's Board of Trustees that
E&Ys Spanish affiliate (E&Y Spain) performed
certain non-audit work for Pioneer Global
Investments Limited ("PGIL"), an affiliate of the
Trusts investment adviser. The services involved
the receipt and disbursement of monies transferred
to E&Y Spain by PGIL in payment of individual
payroll and related income tax withholdings due on
returns prepared by E&Y Spain for certain PGIL
employees located in Spain from February 2001 to
October 2005. E&Y became auditors of the Trust in
May 2002. These payroll and tax services were
discontinued in November 2005. The annual fee
received by E&Y Spain for all such services totaled
approximately 9,000 Euro per year. E&Y has informed
the Audit Committee that based on its internal
reviews and the de minimus nature of the services
provided and fees received, E&Y does not believe
its independence with respect to the Trust has been
impaired or that it is disqualified from acting as
independent auditors to the Trust.
N/A
Item 5. Audit Committee of Listed Registrants
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrants audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
The registrant has a separately-designated standing audit
committe eestablished in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption
from the listing standards for audit committees.
N/A
Item 6. Schedule of Investments.
File Schedule I Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.12-
12 of Regulation S-X [17 CFR 210.12-12], unless the schedule is
included as part of the report to shareholders filed under Item
1 of this Form.
Included in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Not applicable, the Fund does not invest in voting securities.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
(a)(1)
As of the date of this report, day-to-day management of the fund's portfolio is
the responsibility of Mark Okada and Joe Dougherty. Mr. Okada, Executive Vice
President and Chief Investment Officer, joined Highland in 1993. Mr. Dougherty,
Senior Vice President and Senior Portfolio Manager, joined Highland in 1998.
(a)(2)
Other Accounts Managed by the Portfolio Managers. The table below indicates, for
each portfolio manager of the fund, information about the accounts other than
the fund over which the portfolio manager has day-to-day investment
responsibility. All information on the number of accounts and total assets in
the table is as of November 30, 2005. For purposes of the table, "Other Pooled
Investment Vehicles" may include investment partnerships, undertakings for
collective investments in transferable securities ("UCITS") and other non-U.S.
investment funds and group trusts, and "Other Accounts" may include separate
accounts for institutions or individuals, insurance company general or separate
accounts, pension funds and other similar institutional accounts. Certain funds
and other accounts managed by the portfolio manager may have substantially
similar investment strategies.
-----------------------------------------------------------------------------------------------------------------------
Name of Portfolio Type of Account Number of Total Assets Number of Accounts Assets Managed
Manager Accounts Managed Managed for which for which
Managed (millions) Advisory Fee is Advisory Fee is
Performance-Based Performance-Based
(millions)
-----------------------------------------------------------------------------------------------------------------------
Mark Okada Other Registered 7 $4,080 0 N/A
Investment
Companies
-------------------------------------------------------------------------------------------------
Other Pooled
Investment 20 $8,028 10 $4,939
Vehicles
-------------------------------------------------------------------------------------------------
Other Accounts 0 N/A 0 N/A
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Name of Portfolio Type of Account Number of Total Assets Number of Accounts Assets Managed
Manager Accounts Managed Managed for which for which
Managed (millions) Advisory Fee is Advisory Fee is
Performance-Based Performance-Based
(millions)
-----------------------------------------------------------------------------------------------------------------------
Joe Dougherty Other Registered 7 $4,080 0 N/A
Investment
Companies
-------------------------------------------------------------------------------------------------
Other Pooled 1 $236 0 N/A
Investment
Vehicles
-------------------------------------------------------------------------------------------------
Other Accounts 0 N/A 0 N/A
-----------------------------------------------------------------------------------------------------------------------
Potential Conflicts of Interest. When a portfolio manager is responsible for the
management of more than one account, the potential arises for the portfolio
manager to favor one account over another. The principal types of potential
conflicts of interest that may arise are discussed below. For the reasons
outlined below, Pioneer does not believe that any material conflicts are likely
to arise out of a portfolio manager's responsibility for the management of the
fund as well as one or more other accounts. Although Pioneer has adopted
procedures that it believes are reasonably designed to detect and prevent
violations of the federal securities laws and to mitigate the potential for
conflicts of interest to affect its portfolio management decisions, there can be
no assurance that all conflicts will be identified or that all procedures will
be effective in mitigating the potential for such risks. Generally, the risks of
such conflicts of interests are increased to the extent that a portfolio manager
has a financial incentive to favor one account over another. Pioneer has
structured its compensation arrangements in a manner that is intended to limit
such potential for conflicts of interests. The fund's investment sub-adviser
also has adopted certain compliance procedures which are designed to address
these types of conflicts. However, there is no guarantee that such procedures
will detect each situation in which a conflict might arise.
o A portfolio manager could favor one account over another in allocating
new investment opportunities that have limited supply, such as initial
public offerings and private placements. If, for example, an initial
public offering that was expected to appreciate in value significantly
shortly after the offering was allocated to a single account, that
account may be expected to have better investment performance than
other accounts that did not receive an allocation of the initial
public offering. Generally, investments for which there is limited
availability are allocated based upon a range of factors including
available cash and consistency with the accounts' investment
objectives and policies. This allocation methodology necessarily
involves some subjective elements but is intended over time to treat
each client in an equitable and fair manner. Generally, the investment
opportunity is allocated among participating accounts on a pro rata
basis. Although Pioneer believes that its practices are reasonably
designed to treat each client in an equitable and fair manner, there
may be instances where a fund may not participate, or may participate
to a lesser degree than other clients, in the allocation of an
investment opportunity.
o A portfolio manager could favor one account over another in the order
in which trades for the accounts are placed. If a portfolio manager
determines to purchase a security for more than one account in an
aggregate amount that may influence the market price of the security,
accounts that purchased or sold the security first may receive a more
favorable price than accounts that made subsequent transactions. The
less liquid the market for the security or the greater the percentage
that the proposed aggregate purchases or sales represent of average
daily trading volume, the greater the potential for accounts that make
subsequent purchases or sales to receive a less favorable price. When
a portfolio manager intends to trade the same security on the same day
for more than one account, the trades typically are "bunched," which
means that the trades for the individual accounts are aggregated and
each account receives the same price. There are some types of accounts
as to which bunching may not be possible for contractual reasons (such
as directed brokerage arrangements). Circumstances may also arise
where the trader believes that bunching the orders may not result in
the best possible price. Where those accounts or circumstances are
involved, Pioneer will place the order in a manner intended to result
in as favorable a price as possible for such client.
o A portfolio manager could favor an account if the portfolio manager's
compensation is tied to the performance of that account to a greater
degree than other accounts managed by the portfolio manager. If, for
example, the portfolio manager receives a bonus based upon the
performance of certain accounts relative to a benchmark while other
accounts are disregarded for this purpose, the portfolio manager will
have a financial incentive to seek to have the accounts that determine
the portfolio manager's bonus achieve the best possible performance to
the possible detriment of other accounts. Similarly, if Pioneer
receives a performance-based advisory fee, the portfolio manager may
favor that account, whether or not the performance of that account
directly determines the portfolio manager's compensation.
o A portfolio manager could favor an account if the portfolio manager
has a beneficial interest in the account, in order to benefit a large
client or to compensate a client that had poor returns. For example,
if the portfolio manager held an interest in an investment partnership
that was one of the accounts managed by the portfolio manager, the
portfolio manager would have an economic incentive to favor the
account in which the portfolio manager held an interest.
o If the different accounts have materially and potentially conflicting
investment objectives or strategies, a conflict of interest could
arise. For example, if a portfolio manager purchases a security for
one account and sells the same security for another account, such
trading pattern may disadvantage either the account that is long or
short. In making portfolio manager assignments, Pioneer seeks to avoid
such potentially conflicting situations. However, where a portfolio
manager is responsible for accounts with differing investment
objectives and policies, it is possible that the portfolio manager
will conclude that it is in the best interest of one account to sell a
portfolio security while another account continues to hold or increase
the holding in such security.
(a)(3)
Compensation of Portfolio Managers. Highland's financial arrangements with its
portfolio managers, its competitive compensation and its career path emphasis at
all levels reflect the value senior management places on key resources.
Compensation may include a variety of components and may vary from year to year
based on a number of factors including the relative performance of a portfolio
managers underlying account, the combined performance of the portfolio managers
underlying accounts, and the relative performance of the portfolio managers
underlying accounts measured against other employees. The principal components
of compensation include a base salary, a discretionary bonus, various retirement
benefits and one or more of the incentive compensation programs established by
Highland such as the Option It Plan and the Long-Term Incentive Plan.
Base compensation. Generally, portfolio managers receive base compensation based
on their seniority and/or their position with the firm, which may include the
amount of assets supervised and other management roles within the firm.
Discretionary compensation. In addition to base compensation, portfolio managers
may receive discretionary compensation, which can be a substantial portion of
total compensation. Discretionary compensation can include a discretionary cash
bonus as well as one or more of the following:
o Option It Plan. The purpose of the Plan is to attract and retain
the highest quality employees for positions of substantial
responsibility, and to provide additional incentives to a select
group of management or highly compensated employees of the Fund
so as to promote the success of the Fund.
o Long Term Incentive Plan. The purpose of the Plan is to create
positive morale and teamwork, to attract and retain key talent,
and to encourage the achievement of common goals. The Plan seeks
to reward participating employees based on the increased value of
Highland through the use of Long-term Incentive Units.
Senior portfolio managers who perform additional management functions may
receive additional compensation in these other capacities. Compensation is
structured such that key professionals benefit from remaining with the firm.
(a)(4)
Share Ownership by Portfolio Managers. The following table indicates as of
November 30, 2005 the value, within the indicated range, of shares beneficially
owned by the portfolio managers of the fund.
--------------------------------------------------------------------------------
Name of Portfolio Manager Beneficial Ownership of the Fund*
--------------------------------------------------------------------------------
Mark Okada D
--------------------------------------------------------------------------------
Joe Dougherty C
--------------------------------------------------------------------------------
*Key to Dollar Ranges
A. None
B. $1 - $10,000
C. $10,001 - $50,000
D. $50,001 - $100,000
E. $100,001 - $500,000
F. $500,001 - $1,000,000
G. Over $1,000,000
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
During the period covered by this report, there were no purchases
made by or on behalf of the registrant or any affiliated purchaser
as defined in Rule 10b-18(a)(3) under the Securities Exchange Act
of 1934 (the Exchange Act), of shares of the registrants equity
securities that are registered by the registrant pursuant to
Section 12 of the Exchange Act.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in
its definitive proxy statement, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer and principal financial
officer have concluded, that the registrant's disclosure controls and
procedures are effective based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Floating Rate Trust
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date January 30, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date January 30, 2006
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date January 30, 2006
* Print the name and title of each signing officer under his or her signature.