Total investment return does not reflect broker sales charges or
commissions. All performance is for common shares of the Fund.
Shares of closed-end funds, unlike open-end funds, are not continuously
offered. There is a one-time public offering and, once issued, shares of closed-end funds are bought and sold in the open market through
a stock exchange and frequently trade at prices lower than their NAV. NAV per common share is total assets less total liabilities, which
include preferred shares or borrowings, as applicable, divided by the number of common shares outstanding.
When NAV is lower than market price, dividends are assumed to be
reinvested at the greater of NAV or 95% of the market price. When NAV is higher, dividends are assumed to be reinvested at prices obtained
through open-market purchases under the Fund’s dividend reinvestment plan.
The performance table and graph do not reflect the deduction of
fees and taxes that a shareowner would pay on Fund distributions or the sale of Fund shares. Had these fees and taxes been reflected,
performance would have been lower.
The Bloomberg Municipal Bond Index is an unmanaged, broad measure
of the municipal bond market. The Bloomberg U.S. Municipal High Yield Bond Index is unmanaged, totals over $26 billion in market value
and maintains over 1,300 securities. Municipal bonds in this index have the following requirements: maturities of one year or greater,
sub investment grade (below Baa or nonrated), fixed coupon rate, issued after 12/31/90, deal size over $20 million, and maturity size
of at least $3 million. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Fund returns, do not reflect
any fees, expenses or sales charges. The indices do not use leverage. It is not possible to invest directly in the indices.
* Date of the Fund's inception and initial public offering. The
Fund commenced operations on August 6, 2021.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The concentration of investments as a percentage of total investments
by type of obligation/market sector is as follows:
The accompanying notes are an integral part of these financial statements.
Purchases and sales of securities (excluding short-term investments)
for the year ended April 30, 2022, aggregated $859,315,442 and $385,193,019, respectively.
The Fund is permitted to engage in purchase and sale transactions
(“cross trades”) with certain funds and accounts for which the Amundi Asset Management US, Inc. (the “Adviser”)
serves as the Fund’s investment adviser, as set forth in Rule 17a-7 under the Investment Company Act of 1940, pursuant to procedures
adopted by the Board of Directors. Under these procedures, cross trades are effected at current market prices. During the year ended April
30, 2022, the Fund engaged in purchases of $0 and sales of $19,899,200 pursuant to these procedures, which resulted in a net realized
gain/(loss) of $(1,294,655).
At April 30, 2022, the net unrealized depreciation on investments
based on cost for federal tax purposes of $445,725,507 was as follows:
Various inputs are used in determining the value of the Fund’s
investments. These inputs are summarized in the three broad levels below.
Level 1 – unadjusted quoted prices in active markets for identical
securities.
Level 2 – other significant observable inputs (including quoted
prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). See Notes to Financial Statements — Note
1A.
Level 3 – significant unobservable inputs (including the Fund’s
own assumptions in determining fair value of investments). See Notes to Financial Statements — Note 1A.
The following is a summary of the inputs used as of April 30, 2022,
in valuing the Fund’s investments:
During the period ended April 30, 2022 there were no transfers in
or out of Level 3.
The accompanying notes are an integral part of these financial statements.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities
of Pioneer Municipal High Income Opportunities Fund, Inc. (the “Fund”), including the schedule of investments, as of April
30, 2022, and the related statements of operations, changes in net assets, cash flows and the financial highlights for the period from
August 6, 2021 (commencement of operations) through April 30, 2022 and the related notes (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of Pioneer
Municipal High Income Opportunities Fund, Inc. at April 30, 2022, the results of its operations and its cash flows, changes in net assets,
and its financial highlights for the period from August 6, 2021 (commencement of operations) through April 30, 2022, in conformity with
U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s
management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audit. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent
with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an
audit of the Fund’s internal control over financial reporting. As part of our audit, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s
internal control over financial reporting. Accordingly, we express no such opinion.
Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
Report | 4/30/22 37
Our audit included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of April 30, 2022, by correspondence with the custodian and brokers or by other appropriate
auditing procedures where replies from brokers were not received. Our audit also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that
our audit provides a reasonable basis for our opinion.
We have served as the auditor of one or more investment companies
in the Pioneer family of funds since 2017.
Boston, Massachusetts
June 29, 2022
38 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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Additional Information (unaudited)
Notice is hereby given in accordance with Section 23(c) of the
Investment Company Act of 1940 that the Fund may purchase, from time to time, its shares in the open market.
The percentages of the Fund’s ordinary income distributions
that are exempt from nonresident alien (NRA) tax withholding resulting from qualified interest income was 100.00%.
Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
Report | 4/30/22 39
Investment Objectives, Principal
Investment Strategies and Principal Risks (unaudited)
CHANGES OCCURRING DURING MOST RECENT FISCAL YEAR
The following information in this annual report is a summary of
certain changes during the most recent fiscal year. This information may not reflect all of the changes that have occurred since you purchased
shares of the Fund. The following principal risk disclosure has been revised:
Market risk. The market prices of securities or other assets
held by the Fund may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse
economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the
bond markets, the spread of infectious illness or other public health issues, armed conflict, market disruptions caused by tariffs, trade
disputes, sanctions or other government actions, or other factors or adverse investor sentiment. Changes in market conditions may not
have the same impact on all types of securities. The value of securities may also fall due to specific conditions that affect a particular
sector of the securities market or a particular issuer. If the market prices of the Fund’s securities and assets fall, the value
of your investment will go down. A change in financial condition or other event affecting a single issuer or market may adversely impact
securities markets as a whole. Rates of inflation have recently risen. The value of assets or income from an investment may be worth less
in the future as inflation decreases the value of money. As inflation increases, the real value of the Fund’s assets can decline
as can the value of the Fund’s distributions.
In the past decade, financial markets throughout the world have
experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. Governmental and non-governmental
issuers have defaulted on, or been forced to restructure, their debts. These conditions may continue, recur, worsen or spread. Events
that have contributed to these market conditions include, but are not limited to, major cybersecurity events; geopolitical events (including
wars, terror attacks and economic sanctions); measures to address budget deficits; downgrading of sovereign debt; changes in oil and commodity
prices; changes in currency exchange rates; global pandemics; and public sentiment. The global pandemic of the novel coronavirus respiratory
disease designated COVID-19 has resulted in major disruption to economies and markets around the world, including the United States. Global
financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity
for many instruments has been
40 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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greatly reduced for periods of time. Some sectors of the economy
and individual issuers have experienced particularly large losses. These circumstances may continue for an extended period of time, and
may continue to affect adversely the value and liquidity of the Fund’s investments. Following Russia’s recent invasion of
Ukraine, Russian securities have lost all, or nearly all, their market value. Other securities or markets could be similarly affected
by past or future geopolitical or other events or conditions.
Governments and central banks, including the U.S. Federal Reserve,
have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. These actions have
resulted in significant expansion of public debt, including in the U.S. The consequences of high public debt, including its future impact
on the economy and securities markets, may not be known for some time. Interest rates are very low, which means there is more risk that
they may go up. In some cases yields are negative. U.S. Federal Reserve or other U.S. or non-U.S. governmental or central bank actions,
including increases or decreases in interest rates, or contrary actions by different governments, could negatively affect financial markets
generally, increase market volatility and reduce the value and liquidity of securities in which the Fund invests. Policy and legislative
changes in the U.S. and in other countries are affecting many aspects of financial regulation, and these and other events affecting global
markets, such as the United Kingdom’s exit from the European Union (or Brexit), potential trade imbalances with China or other countries,
or sanctions or other government actions against Russia, other nations or individuals or companies (or their countermeasures), may contribute
to decreased liquidity and increased volatility in the financial markets. The impact of these changes on the markets, and the implications
for market participants, may not be fully known for some time.
Economies and financial markets throughout the world are increasingly
interconnected. Economic, financial or political events, trading and tariff arrangements, armed conflict including Russia's military invasion
of Ukraine, terrorism, natural disasters, infectious illness or public health issues, cybersecurity events, supply chain disruptions,
sanctions against Russia, other nations or individuals or companies and possible countermeasures, and other circumstances in one country
or region could have profound impacts on other countries or regions and on global economies or markets. As a result, whether or not the
Fund invests in securities of issuers located in or with significant exposure to the countries or regions directly affected, the value
and liquidity of the Fund’s investments may be negatively affected. The Fund may experience a substantial or complete loss on any
security or derivative position.
Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
Report | 4/30/22 41
INVESTMENT OBJECTIVES
The Fund’s primary investment objective is to provide its
common shareholders with a high level of current income exempt from regular federal income tax. As a secondary investment objective, the
Fund may seek capital appreciation to the extent consistent with its primary investment objective. Distributions from sources other than
interest income from the Fund’s portfolio of municipal securities, including capital gain distributions, are not exempt from regular
federal income tax. There can be no assurance that the Fund will achieve its investment objectives.
The Fund’s investment objectives may be changed without shareholder
approval. The Fund will provide notice prior to implementing any change to its investment objectives.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the Fund invests at least 80% of its net assets (plus
the amount of borrowings, if any, for investment purposes) in securities issued by or on behalf of states, counties, municipalities, territories
and possessions of the United States and the District of Columbia and their authorities, political subdivisions, agencies and instrumentalities,
the interest on which is exempt from regular federal income tax (“municipal securities”). Derivative instruments that provide
exposure to municipal securities or have similar economic characteristics may be used to satisfy the Fund’s 80% policy.
The Fund may invest without limit in debt securities of any credit
quality, including those rated below investment grade (known as “high yield” or “junk” bonds) or, if unrated,
of equivalent credit quality as determined by the Adviser. The Adviser expects that the Fund will invest mainly in securities that are
below investment grade. Debt securities rated below investment grade are speculative, tend to be less liquid and are more difficult to
value than higher grade securities. The Fund’s investments in securities rated below investment grade may include securities that
are in default. The Fund may invest in debt securities, loans or preferred stock rated below investment grade or, if unrated, of equivalent
credit quality as determined by the Adviser. Such investments may include credit obligations and related instruments of issuers that are
insolvent or of issuers that either are in default or are likely to default.
Municipal securities are generally issued to finance public works
such as housing, hospitals, schools, mass transportation projects, airports, bridges, highways, and water and sewer works. Municipal securities
may be issued to repay outstanding obligations, to raise funds for general operating expenses, or to make loans to other institutions
and facilities. They also may be issued by or on behalf of public authorities to finance various
42 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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privately operated facilities which are expected to benefit the
municipality and its residents, such as business, manufacturing, housing, sports and pollution control, as well as public facilities such
as airports, mass transit systems, ports and parking. Municipal security issuances may be small, with the securities issued to one or
a small number of institutional investors such as the Fund.
The Adviser considers both broad economic factors and issuer specific
factors in selecting a portfolio designed to achieve the Fund’s investment objectives. In assessing the appropriate maturity and
rating weighting of the Fund’s portfolio, the Adviser considers a variety of factors that are expected to influence economic activity
and interest rates, as well as other economic fundamentals at national, state and regional levels. These factors include fundamental economic
indicators, such as the rates of economic growth and inflation, Federal Reserve monetary policy and the relative value of the U.S. dollar
compared to other currencies. Once the Adviser determines the preferable portfolio characteristics, the Adviser selects individual securities
based upon the terms of the securities (such as yields compared to U.S. Treasuries or comparable issues), liquidity, rating, diversification
and perceived risk. The Adviser also employs fundamental research, an evaluation of the obligor based on its financial statements and
operations, to assess an obligor’s credit quality, taking into account financial condition, future capital needs and potential for
change in rating. In making these portfolio decisions, the Adviser relies on the knowledge, experience and judgment of its staff and the
staff of its affiliates who have access to a wide variety of research.
In selecting securities to buy and sell, the Adviser considers
a security’s income and return prospects relative to perceived risk. In making decisions with respect to specific municipal securities,
the Adviser employs a disciplined approach, driven primarily by in-depth credit research conducted by the Adviser’s investment staff.
The Adviser attempts to identify municipal securities available at attractive valuations relative to the Adviser’s evaluation of
the obligor’s creditworthiness and, with respect to private activity bonds, expectations of the revenue supporting the bonds. The
Adviser assesses a security’s income, return and risk characteristics as well as a security’s impact on the overall income,
return and risk characteristics of the Fund. In making this assessment, the Adviser takes into account various factors including the credit
quality, maturity, sensitivity to interest rates and the expected after-tax income of the security under consideration and of the Fund’s
other holdings.
The Adviser anticipates investment opportunities in municipal securities
funding projects that involve traditional infrastructure (e.g., bridges, highways, mass transit, and water and sewer), as well as projects
that
Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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involve social infrastructure. Social infrastructure is broadly
defined by the Adviser as the development, construction, improvement or maintenance of facilities that support social services or are
intended to improve the quality of life of a community. Types of social infrastructure include education (such as charter schools, other
educational facilities and programs, and expansion of internet access), health care (such as hospitals and other medical or dental services),
retirement living (such as continuing care retirement facilities and other communities for older adults), and affordable housing, as well
as projects with environmental purposes (such as waste disposal and the reduction of pollution or resource use).
The extent to which the Fund invests in specific market segments
and project types will depend on the availability of such securities and their income, return and risk characteristics relative to those
of other holdings, as well as other portfolio management considerations including diversification and overall credit and interest rate
risk.
The Fund’s 80% investment policy may not be changed without
shareholder approval. The Fund’s other investment strategies and policies may be changed from time to time without shareholder approval,
unless specifically stated otherwise.
Portfolio investments. The Fund may invest in a broad range
of issuers and segments of the municipal debt securities market. Municipal securities include general obligation bonds, revenue bonds,
tax and revenue anticipation notes, bond anticipation notes, tax-exempt commercial paper, municipal leases, participation certificates
and custodial receipts. General obligation bonds are backed by the full faith and credit of the issuing entity. Revenue bonds are typically
used to fund particular projects, such as those relating to education, health care, transportation and utilities, that are expected to
produce income sufficient to make the payments on the bonds, since they are not backed by the full taxing power of the municipality. Housing
authority bonds are used primarily to fund low to middle income residential projects and may be backed by the payments made on the underlying
mortgages. Tax and revenue anticipation notes are generally issued in order to finance short-term cash needs or, occasionally, to finance
construction. Tax and revenue anticipation notes are expected to be repaid from taxes or designated revenues in the related period, and
they may or may not be general obligations of the issuing entity. Bond anticipation notes are issued with the expectation that their principal
and interest will be paid out of proceeds from renewal notes or bonds and may be issued to finance such items as land acquisition, facility
acquisition and/or construction and capital improvement projects.
44 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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Municipal securities include municipal lease obligations, which
are undivided interests issued by a state or municipality in a lease or installment purchase contract which generally relates to equipment
or facilities. In some cases, payments under municipal leases do not have to be made unless money is specifically approved for that purpose
by an appropriate legislative body.
Although municipal securities are issued by qualifying issuers,
payments of principal and interest on municipal securities may be derived solely from revenues from certain facilities, mortgages or private
industries, and may not be backed by the issuers themselves. These securities include participation or other interests in municipal securities
issued or backed by banks, insurance companies and other financial institutions.
The Fund purchases municipal securities the interest on which,
in the opinion of bond counsel at the time the securities are issued, is exempt from regular federal income tax. There is no guarantee
that this opinion is correct, and there is no assurance that the IRS will agree with bond counsel’s opinion. If the IRS determines
that an issuer of a municipal security has not complied with applicable requirements, interest from the security could become subject
to regular federal income tax, possibly retroactively to the date the security was issued, and the value of the security could decline
significantly and a portion of the distributions to Fund shareholders could be recharacterized as taxable. Future litigation or legislation
could adversely affect the tax treatment of municipal securities held by the Fund.
The Fund may invest in municipal securities of any maturity. Municipal
securities with longer maturities are generally more volatile than other fixed income securities with shorter maturities. The Fund may
invest 25% or more of its assets in issuers in any one or more states or in the same economic sector or similar project type (such as
projects relating to health care, education, transportation, and utilities).
The Fund may invest without limit in debt securities of any credit
quality, including “high yield” municipal obligations. For this purpose, “high yield” municipal obligations are
municipal obligations rated at the time of purchase Ba or lower by Moody’s or BB or lower by S&P or unrated securities determined
by the Adviser to be of comparable credit quality. The Adviser expects that the Fund will invest mainly in securities that are below investment
grade. Municipal securities of below investment grade quality are regarded as having predominantly speculative characteristics with respect
to the issuer’s capacity to pay interest and repay principal, and are commonly referred to as “junk bonds.” The Fund
may invest in securities in any rating category, including those in default, and in debtor-in-possession
Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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financings. The Fund may invest in debt securities, loans or preferred
stock rated below investment grade or, if unrated, of equivalent credit quality as determined by the Adviser. Such investments may include
credit obligations and related instruments of issuers that are insolvent or of issuers that either are in default or are likely to default.
Interest income from certain types of municipal securities in which
the Fund may invest generally may be subject to the federal alternative minimum tax (the “AMT”). The Fund may not be suitable
for investors subject to the AMT. The rate of interest paid on municipal securities normally is lower than the rate of interest paid on
taxable securities.
The Fund’s investments may have fixed or variable principal
payments and all types of interest rate payment and reset terms, including fixed and floating rates, inverse floating rate, zero coupon,
contingent, deferred and payment in kind and auction rate features.
The Fund also may invest in subordinated securities, asset-backed
securities of any rating, and may hold cash or other short-term investments. A holder of securities that are subordinated or “junior”
to more senior securities of an issuer is entitled to payment after the holders of more senior securities of the issuer. The Fund’s
investments may include mortgage-backed instruments, the underlying assets of which allow for balloon payments (where a substantial portion
of a mortgage loan balance is paid at maturity, which can shorten the average life of the mortgage-backed instrument) or negative amortization
payments (where, as a result of a payment cap, payments on a mortgage loan are less than the amount of principal and interest owed, with
excess amounts added to the outstanding principal balance, which can extend the average life of the mortgage-backed instrument).
The Fund may invest up to 20% of its net assets in taxable investments,
including securities of other investment companies (including mutual funds, exchange-traded funds and closed-end funds), commercial paper,
U.S. government securities, U.S. or foreign bank instruments and repurchase agreements.
The Fund may invest in securities and instruments that are not
income-producing for purposes of seeking capital appreciation or managing risk or other portfolio characteristics.
Municipal securities. Municipal securities are often issued
to obtain funds for various public purposes, including refunding outstanding obligations, funding for general operating expenses and lending
to other public institutions and facilities. Municipal securities also include certain “private activity bonds” or industrial
development bonds, which are issued by or on
46 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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behalf of public authorities to provide financing aid to acquire
sites or construct or equip facilities within a municipality for privately or publicly owned corporations. The two principal classifications
of municipal securities are “general obligations” and “revenue obligations.” General obligations are secured by
the issuer’s pledge of its full faith and credit for the payment of principal and interest, although the characteristics and enforcement
of general obligations may vary according to the law applicable to the particular issuer. Revenue obligations, which include, but are
not limited to, private activity bonds, certificates of participation and certain municipal notes, are not backed by the credit and taxing
authority of the issuer and are payable solely from the revenues derived from a particular facility or class of facilities or, in some
cases, from the proceeds of a special excise or other specific revenue source. The obligations of the issuer of a revenue obligation may,
in addition, be backed by a letter of credit from a bank, a guarantee from another issuer or insurance. The credit rating assigned to
municipal securities may reflect the existence of these guarantees, letters of credit or other credit enhancement features. General obligations
and revenue obligations may be issued in a variety of forms, including commercial paper, fixed, variable and floating rate securities,
tender option bonds, auction rate bonds, zero coupon bonds, deferred interest bonds and capital appreciation bonds. In addition to general
obligations and revenue obligations, there are a variety of hybrid and special types of municipal securities.
One or a small number of institutional investors such as the Fund
may purchase an entire issue of municipal securities. Thus, the issue may not be said to be publicly offered. Unlike some securities that
are not publicly offered, a secondary market exists for many municipal securities that were not publicly offered initially and such securities
may be readily marketable.
Although distributions of interest income from the Fund’s
municipal securities are generally exempt from regular federal income tax, distributions from other sources, including capital gain distributions,
and any gains on the sale of your common shares are not. You should consult your tax adviser as to whether the AMT applies to you and
as to whether you will be subject to state and local taxes on your distributions from the Fund.
From time to time, proposals have been introduced before Congress
for the purpose of restricting or eliminating the federal income tax exemption for interest on municipal securities. The Fund cannot predict
what legislation, if any, may be proposed in the future in Congress regarding the federal income tax status of interest on municipal securities.
Such proposals, if enacted, might materially and adversely affect the Fund.
Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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The Fund may invest in municipal securities that are collateralized
by the proceeds from class action or other litigation against the tobacco industry. Payment by tobacco industry participants of such proceeds
is spread over several years, and the collection and distribution of such proceeds to the issuers of municipal securities is dependent
upon the financial health of such tobacco industry participants, which cannot be assured. Additional litigation, government regulation
or prohibition on the sales of tobacco products, or the seeking of protection under the bankruptcy laws, could adversely affect the tobacco
industry, which, in turn, could have an adverse affect on tobacco-related municipal securities.
Municipal leases and certificates of participation. The
Fund may invest in municipal leases and certificates of participation in such leases. A municipal lease is an obligation in the form of
a lease or installment purchase that is issued by a state or local government to acquire equipment and facilities. Income from such obligations
is generally exempt from state and local taxes in the state of issuance. Municipal leases frequently involve special risks not normally
associated with general obligations or revenue obligations. Leases and installment purchase or conditional sale contracts (which normally
provide for title to the leased asset to pass eventually to the governmental issuer) have evolved as a means for governmental issuers
to acquire property and equipment without meeting the constitutional and statutory requirements for the issuance of debt. The debt issuance
limitations are deemed to be inapplicable because of the inclusion in many leases or contracts of “non-appropriation” clauses
that relieve the governmental issuer of any obligation to make future payments under the lease or contract unless money is appropriated
for such purpose by the appropriate legislative body on a yearly or other periodic basis. In addition, such leases or contracts may be
subject to the temporary abatement of payments in the event the issuer is prevented from maintaining occupancy of the leased premises
or utilizing the leased equipment. Although the obligations may be secured by the leased equipment or facilities, the disposition of the
property in the event of non-appropriation or foreclosure might prove difficult, time consuming and costly, and result in a delay in recovering,
or the failure to fully recover, the Fund’s original investment. To the extent that the Fund invests in unrated municipal leases
or participates in such leases, the credit quality and risk of cancellation of such unrated leases will be monitored on an ongoing basis.
A certificate of participation represents an undivided interest
in an unmanaged pool of municipal leases, installment purchase agreements or other instruments. The certificates are typically issued
by a municipal agency, a trust or other entity that has received an assignment of the payments to be made by the state or political subdivision
under such leases
48 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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or installment purchase agreements. Such certificates provide the
Fund with the right to a pro rata undivided interest in the underlying municipal securities. In addition, such participations generally
provide the Fund with the right to demand payment, on not more than seven days’ notice, of all or any part of the Fund’s participation
interest in the underlying municipal securities, plus accrued interest.
Certain municipal lease obligations and certificates of participation
may be deemed to be illiquid. Other municipal lease obligations and certificates of participation acquired by the Fund may be determined
by the Adviser, pursuant to guidelines adopted by the Board, to be liquid securities. In determining the liquidity of municipal lease
obligations and certificates of participation, the Adviser will consider a variety of factors, including: (i) the willingness of dealers
to bid for the obligation; (ii) the number of dealers willing to purchase or sell the obligation and the number of other potential buyers;
(iii) the frequency of trades or quotes for the obligation; and (iv) the nature of the marketplace trades. In addition, the Adviser will
consider factors unique to particular lease obligations and certificates of participation affecting the marketability thereof. These include
the general creditworthiness of the issuer, the importance to the issuer of the property covered by the lease and the likelihood that
the marketability of the obligation will be maintained throughout the time the obligation is held by the Fund.
Municipal notes. Municipal securities in the form of notes
generally are used to provide for short-term capital needs, in anticipation of an issuer’s receipt of other revenues or financing,
and typically have maturities of up to three years. Such instruments may include tax anticipation notes, revenue anticipation notes, bond
anticipation notes, tax and revenue anticipation notes and construction loan notes. Tax anticipation notes are issued to finance the working
capital needs of governments. Generally, they are issued in anticipation of various tax revenues, such as income, sales, property, use
and business taxes, and are payable from these specific future taxes. Revenue anticipation notes are issued in expectation of receipt
of other kinds of revenue, such as federal revenues available under federal revenue sharing programs. Bond anticipation notes are issued
to provide interim financing until long-term bond financing can be arranged. In most cases, the long-term bonds then provide the funds
needed for repayment of the notes. Tax and revenue anticipation notes combine the funding sources of both tax anticipation notes and revenue
anticipation notes. Construction loan notes are sold to provide construction financing. Mortgage notes insured by the Federal Housing
Authority secure these notes; however, the proceeds from the insurance may be less than the economic equivalent of the payment of principal
and interest on the mortgage note if there has
Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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been a default. The anticipated revenues from taxes, grants or
bond financing generally secure the obligations of an issuer of municipal notes. An investment in such instruments, however, presents
a risk that the anticipated revenues will not be received or that such revenues will be insufficient to satisfy the issuer’s payment
obligations under the notes or that refinancing will be otherwise unavailable.
Tax-exempt commercial paper. Issues of commercial paper
typically represent short-term, unsecured, negotiable promissory notes. These obligations are issued by state and local governments and
their agencies to finance the working capital needs of municipalities or to provide interim construction financing and are paid from general
revenues of municipalities or are refinanced with long-term debt. In most cases, tax-exempt commercial paper is backed by letters of credit,
lending agreements, note repurchase agreements or other credit facility agreements offered by banks or other institutions.
Pre-refunded municipal securities. The principal of and
interest on pre-refunded municipal securities are no longer paid from the original revenue source for the securities. Instead, the source
of such payments is typically an escrow fund consisting of U.S. government securities. The assets in the escrow fund are derived from
the proceeds of refunding bonds issued by the same issuer as the pre-refunded municipal securities. Issuers of municipal securities use
this advance refunding technique to obtain more favorable terms with respect to securities that are not yet subject to call or redemption
by the issuer. For example, advance refunding enables an issuer to refinance debt at lower market interest rates, restructure debt to
improve cash flow or eliminate restrictive covenants in the indenture or other governing instrument for the pre-refunded municipal securities.
However, except for a change in the revenue source from which principal and interest payments are made, the pre-refunded municipal securities
remain outstanding on their original terms until they mature or are redeemed by the issuer.
Private activity bonds. Private activity bonds, formerly
referred to as industrial development bonds, are issued by or on behalf of public authorities to obtain funds to provide privately operated
housing facilities, airport, mass transit or port facilities, sewage disposal, solid waste disposal or hazardous waste treatment or disposal
facilities and certain local facilities for water supply, gas or electricity. Other types of private activity bonds, the proceeds of which
are used for the construction, equipment, repair or improvement of privately operated industrial or commercial facilities, may constitute
municipal securities, although the current federal
50 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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tax laws place substantial limitations on the size of such issues.
The Fund’s distributions of its interest income from private activity bonds may subject certain investors to the AMT.
Tender option bonds. A tender option bond is a municipal
security (generally held pursuant to a custodial arrangement) having a relatively long maturity and bearing interest at a fixed rate substantially
higher than prevailing short-term, tax-exempt rates. The bond is typically issued with the agreement of a third party, such as a bank,
broker-dealer or other financial institution, which grants the security holders the option, at periodic intervals, to tender their securities
to the institution and receive the face value thereof. As consideration for providing the option, the financial institution receives periodic
fees equal to the difference between the bond’s fixed coupon rate and the rate, as determined by a remarketing or similar agent
at or near the commencement of such period, that would cause the securities, coupled with the tender option, to trade at par on the date
of such determination. Thus, after payment of this fee, the security holder effectively holds a demand obligation that bears interest
at the prevailing short-term, tax-exempt rate. However, an institution will not be obligated to accept tendered bonds in the event of
certain defaults or a significant downgrade in the credit rating assigned to the issuer of the bond. The liquidity of a tender option
bond is a function of the credit quality of both the bond issuer and the financial institution providing liquidity. Tender option bonds
are deemed to be liquid unless, in the opinion of the Adviser, the credit quality of the bond issuer and the financial institution is
deemed, in light of the Fund’s credit quality requirements, to be inadequate and the bond would not otherwise be readily marketable.
The Fund intends to invest in tender option bonds the interest on which will, in the opinion of bond counsel, counsel for the issuer of
interests therein or counsel selected by the Adviser, be exempt from regular federal income tax. However, because there can be no assurance
that the IRS will agree with such counsel’s opinion in any particular case, there is a risk that the Fund will not be considered
the owner of such tender option bonds and thus will not be entitled to treat such interest as exempt from such tax. Additionally, the
federal income tax treatment of certain other aspects of these investments, including the proper tax treatment of tender option bonds
and the associated fees in relation to various regulated investment company tax provisions, is unclear. The Fund intends to manage its
portfolio in a manner designed to eliminate or minimize any adverse impact from the tax rules applicable to these investments.
Auction rate securities. The Fund may invest in auction
rate securities. Auction rate securities include auction rate municipal securities and auction rate preferred securities issued by closed-end
investment companies that
Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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invest primarily in municipal securities (collectively, “auction
rate securities”). Provided that the auction mechanism is successful, auction rate securities usually permit the holder to sell
the securities in an auction at par value at specified intervals. The dividend is reset by a “Dutch” auction in which bids
are made by broker-dealers and other institutions for a certain amount of securities at a specified minimum yield. The dividend rate set
by the auction is the lowest interest or dividend rate that covers all securities offered for sale. While this process is designed to
permit auction rate securities to be traded at a value equal to the liquidation preference, there is some risk that an auction will fail
due to insufficient demand for the securities. The Fund will take the time remaining until the next scheduled auction date into account
for the purpose of determining the securities’ duration. The Fund’s investments in auction rate securities of closed-end funds
are subject to the limitations prescribed by the 1940 Act.
Illiquid securities. The Fund may invest in bonds or other
municipal securities that lack a secondary trading market or are otherwise considered illiquid. Liquidity of a security relates to the
ability easily to dispose of the security and the price to be obtained upon disposition of the security, which may be less than would
be obtained for a comparable, more liquid security. The Fund may invest without limit in illiquid investments due to the closed-end fund
structure. Such investments may affect the Fund’s ability to realize its net asset value in the event of a voluntary or involuntary
liquidation of its assets.
Structured securities. The Fund may invest in structured
securities. The value of the principal and/or interest on such securities is determined by reference to changes in the value of specific
currencies, interest rates, commodities, indices or other financial indicators (“reference”) or the relative change in two
or more references. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased depending
upon changes in the reference. The terms of the structured securities may provide, in certain circumstances, that no principal is due
at maturity and, therefore, may result in a loss of the Fund’s investment. Changes in the interest rate or principal payable at
maturity may be a multiple of the changes in the value of the reference. Consequently, structured securities may entail a greater degree
of market risk than other types of fixed income securities.
Insured municipal securities. The Fund may invest in “insured”
municipal securities, which are securities for which scheduled payments of interest and principal are guaranteed by a private (non-governmental)
insurance company. The insurance only entitles the Fund to receive at maturity the face or par value of the securities held by the Fund.
The insurance does not guarantee the market value of the municipal securities or the value of the
52 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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shares of the Fund. The Fund may utilize new issue or secondary
market insurance. A bond issuer who wishes to increase the credit rating of a security purchases a new issue insurance policy. By paying
a premium and meeting the insurer’s underwriting standards, the bond issuer is able to obtain a high credit rating (usually, Aaa
from Moody’s or AAA from S&P) for the issued security. Such insurance is likely to increase the purchase price and resale value
of the security. New issue insurance policies are non-cancelable and continue in force as long as the bonds are outstanding. A secondary
market insurance policy is purchased by an investor subsequent to a bond’s original issuance and generally insures a particular
bond for the remainder of its term.
Standby commitments. In order to enhance the liquidity of
municipal securities, the Fund may acquire the right to sell a security to another party at a guaranteed price and date. Such a right
to resell may be referred to as a “standby commitment” or “liquidity put,” depending on its characteristics. The
aggregate price which the Fund pays for securities with standby commitments may be higher than the price which otherwise would be paid
for the securities. Standby commitments may not be available or may not be available on satisfactory terms. Standby commitments may involve
letters of credit issued by domestic or foreign banks supporting the other party’s ability to purchase the security. The right to
sell may be exercisable on demand or at specified intervals and may form part of a security or be acquired separately by the Fund.
Because the period prior to the put date is generally less than
365 days, the Fund generally values the municipal securities subject to standby commitments at amortized cost. The Board has adopted procedures
pursuant to which the Adviser may determine that amortized cost represents the fair value of these securities. The exercise price of the
standby commitments is expected to approximate such amortized cost. Consequently, no separate value is assigned to standby commitments
for purposes of determining the Fund’s net asset value. The cost of a standby commitment is carried as unrealized depreciation from
the time of purchase until it is exercised or expires. Since the value of a standby commitment is dependent on the ability of the standby
commitment writer to meet its obligation to repurchase, the Fund’s policy is to enter into standby commitment transactions only
with banks, brokers or dealers that present a minimal risk of default. However, this policy reduces, but does not eliminate, the risk
of default by the standby commitment writer.
U.S. government securities. The Fund may invest in U.S.
government securities. U.S. government securities are obligations of, or guaranteed by, the U.S. government, its agencies or government-sponsored
entities. U.S. government securities include obligations: directly issued by or supported
Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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by the full faith and credit of the U.S. government, like Treasury
bills, notes and bonds and Government National Mortgage Association (GNMA) certificates; supported by the right of the issuer to borrow
from the U.S. Treasury, like those of the Federal Home Loan Banks (FHLBs); supported by the discretionary authority of the U.S. government
to purchase the agency’s securities like those of the Federal National Mortgage Association (FNMA); or supported only by the credit
of the issuer itself, like the Tennessee Valley Authority. U.S. government securities include issues by non-governmental entities (like
financial institutions) that carry direct guarantees from U.S. government agencies as part of government initiatives in response to the
market crisis or otherwise. U.S. government securities include zero coupon securities that make payments of interest and principal only
upon maturity and which therefore tend to be subject to greater volatility than interest-bearing securities with comparable maturities.
Although the U.S. government guarantees principal and interest payments on securities issued by the U.S. government and some of its agencies,
such as securities issued by the GNMA, this guarantee does not apply to losses resulting from declines in the market value of these securities.
Some of the U.S. government securities that the Fund may hold are not guaranteed or backed by the full faith and credit of the U.S. government,
such as those issued by FNMA and the Federal Home Loan Mortgage Corporation (FHLMC).
Debtor-in-possession financings. The Fund may participate
in or acquire debtor-in-possession financings (commonly known as “DIP financings”). DIP financings are arranged when an entity
seeks the protections of the bankruptcy court under Chapter 11 of the U.S. bankruptcy code. These financings allow the entity to continue
its business operations while reorganizing under Chapter 11. Such financings constitute senior liens on unencumbered security (i.e., security
not subject to other creditors’ claims). There is a risk that the entity will not emerge from Chapter 11 and be forced to liquidate
its assets under Chapter 7 of the U.S. Bankruptcy Code. In the event of liquidation, the Fund’s only recourse would be against the
property securing the DIP financing.
Investments in mortgage-backed, asset-backed and other securities.
The Fund may invest in mortgage-backed securities. Mortgage-backed securities may be issued by private issuers, by government-sponsored
entities such as FNMA or FHLMC or by agencies of the U.S. government, such as GNMA. Mortgage-backed securities represent direct or indirect
participation in, or are collateralized by and payable from, mortgage loans secured by real property. The commercial mortgages underlying
certain commercial mortgage-backed securities generally allow all or a substantial portion of the loan balance to be paid at maturity,
commonly known as a balloon payment. Some mortgage loans restrict periodic adjustments by limiting
54 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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changes in the borrower’s monthly principal and interest
payments rather than limiting interest rate changes. These payment caps may result in negative amortization, where payments are less than
the amount of principal and interest owed, with excess amounts added to the outstanding principal balance, which can extend the average
life of the mortgage-backed securities.
The Fund may invest in asset-backed securities and in securities
issued by entities, such as trusts, whose underlying assets are municipal securities. The Fund may invest in collateralized debt obligations
(CDOs), which include collateralized bond obligations (CBOs), collateralized loan obligations (CLOs) and other similarly structured securities.
A CDO is a trust backed by a pool of fixed income securities. The trust typically is split into two or more portions, called tranches,
which vary in credit quality and yield. Lower tranches pay higher interest rates but represent lower degrees of credit quality and are
more sensitive to the rate of defaults in the pool of obligations. Certain CDOs may use derivatives, such as credit default swaps, to
create synthetic exposure to assets rather than holding such assets directly.
Subordinated securities. The Fund may invest in securities
that are subordinated or “junior” to more senior securities of the issuer. The investor in a subordinated security of an issuer
is entitled to payment after other holders of debt in that issuer.
Zero coupon securities. The Fund may invest in zero coupon
securities. Zero coupon securities are debt instruments that do not pay interest during the life of the security but are issued at a discount
from the amount the investor will receive when the issuer repays the amount borrowed (the face value). The discount approximates the total
amount of interest that would be paid at an assumed interest rate.
Derivatives. The Fund may, but is not required to, invest
without limit in synthetic municipal securities and other structured securities, inverse floating rate obligations, credit default swaps
and other derivatives. Credit default swaps can be used to acquire or to transfer the credit risk of a security or index of securities
without buying or selling the security or securities comprising the relevant index. A derivative is a security or instrument whose value
is determined by reference to the value or the change in value of one or more securities, currencies, indices or other financial instruments.
The Fund may use derivatives for a variety of purposes, including:
• | | In an attempt to hedge against adverse changes in the market prices of securities, interest
rates or currency exchange rates |
Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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• | | As a substitute for purchasing or selling securities |
• | | To attempt to increase the Fund’s return as a non-hedging strategy that may be considered
speculative |
• | | To manage portfolio characteristics (for example, the duration or credit quality of the Fund’s
portfolio) |
• | | As a cash flow management technique |
The Fund may choose not to make use of derivatives for a variety
of reasons, and any use may be limited by applicable law and regulations. Derivative instruments are valued based on their mark-to market
value in accordance with the Fund’s valuation procedures adopted by the Board.
Inverse floating rate obligations. The Fund may invest in
inverse floating rate obligations (a type of derivative instrument). Inverse floating rate obligations represent interests in tax-exempt
bonds. Inverse floating rate obligations are created by depositing municipal bonds in a trust which divides the income stream of the underlying
municipal bond into two parts: a short-term variable rate demand note and a residual interest bond (the inverse floating rate obligation)
which receives interest based on the remaining cash flow of the trust after payment of interest on the note and various trust expenses.
The interest rate on inverse floating rate obligations will generally decrease as short-term interest rates increase, and increase as
short-term rates decrease. Due to their leveraged structure, the sensitivity of the market value of an inverse floating rate obligation
to changes in interest rates is generally greater than a comparable long-term bond issued by the same issuer and with similar credit quality,
redemption and maturity provisions. Inverse floating rate obligations may be volatile and involve leverage risk.
Other investment companies. The Fund may invest in the securities
of other investment companies to the extent that such investments are consistent with the Fund’s investment objectives and principal
investment strategies and permissible under the 1940 Act. Subject to the limitations on investment in other investment companies, the
Fund may invest in exchange-traded funds (“ETFs”). The Fund does not currently intend to invest in investment companies that
are not registered under the 1940 Act.
Repurchase agreements. In a repurchase agreement, the Fund
purchases securities from a broker/dealer or a bank, called the counterparty, upon the agreement of the counterparty to repurchase the
securities from the Fund at a later date, and at a specified price, which is typically higher than the purchase price paid by the Fund.
The securities purchased serve as the Fund’s collateral for the obligation of the counterparty to repurchase the securities. If
the counterparty does not repurchase the securities, the Fund
56 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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is entitled to sell the securities, but the Fund may not be able
to sell them for the price at which they were purchased, thus causing a loss. Additionally, if the counterparty becomes insolvent, there
is some risk that the Fund will not have a right to the securities, or the immediate right to sell the securities.
Reverse repurchase agreements. The Fund may enter into reverse
repurchase agreements, which involve the sale of securities held by the Fund subject to its agreement to repurchase the securities at
an agreed-upon date or upon demand and at a price reflecting a market rate of interest. Reverse repurchase agreements are subject to the
Fund’s limitation on borrowings and may be entered into only with banks or securities dealers or their affiliates. While a reverse
repurchase agreement is outstanding, the Fund will maintain the segregation, either on its records or with the Fund’s custodian,
of cash or other liquid securities, marked to market daily, in an amount at least equal to its obligations under the reverse repurchase
agreement.
Reverse repurchase agreements involve the risk that the buyer of
the securities sold by the Fund might be unable to deliver them when the Fund seeks to repurchase. If the buyer of securities under a
reverse repurchase agreement files for bankruptcy or becomes insolvent, the buyer or trustee or receiver may receive an extension of time
to determine whether to enforce the Fund’s obligation to repurchase the securities, and the Fund’s use of the proceeds of
the reverse repurchase agreement may effectively be restricted pending such decision.
Use of leverage by the Fund. The Fund anticipates using
leverage in order to pursue its investment objectives. The Fund may use leverage to the extent permitted by the 1940 Act. The Fund may
source leverage initially and throughout the life of the Fund through a number of methods including through borrowings, issuing preferred
shares, which have seniority over the common shares, the issuance of debt securities, entering into reverse repurchase agreements (effectively
a borrowing), and investing in residual interest certificates of tender option bond trusts, also called inverse floating rate securities,
that have the economic effect of leverage because the Fund’s investment exposure to the underlying bonds held by the trust have
been effectively financed by the trust’s issuance of floating rate certificates. The sources of leverage will vary depending on
market conditions. The Fund anticipates using such leverage in an aggregate amount equal to approximately 30% of the Fund’s managed
assets, if current market conditions persist. The Fund initially intends to leverage its assets through borrowings from banks and other
financial institutions. It is expected that these borrowings will be made pursuant to a revolving credit facility established with a bank
or other financial institution. Under the 1940 Act,
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the Fund is generally not permitted to incur indebtedness unless
immediately after such borrowing the Fund has asset coverage of at least 300% of the aggregate outstanding principal balance of indebtedness.
The fees and expenses attributed to leverage, including all offering expenses, will be borne by holders of common shares.
The Fund may not be leveraged at all times, and the amount of leverage,
if any, may vary depending on a variety of factors, including the Adviser’s outlook for interest rates and credit markets and the
costs that the Fund would incur as a result of such leverage. The Fund’s leveraging strategy may not be successful. By leveraging
its investment portfolio, the Fund creates an opportunity for increased net income or capital appreciation. However, the use of leverage
also creates risks for the Fund’s shareholders, including the likelihood of greater volatility of the Fund’s net asset value
and market price. There is a risk that fluctuations in the interest rates on any leverage may adversely affect the return to the Fund’s
shareholders. If the return on the securities purchased with such funds is not sufficient to cover the cost of leverage, the return on
the Fund will be less than if leverage had not been used, and therefore the amount available for distribution to the Fund’s shareholders
as dividends and other distributions will be reduced. Because the fees paid to the Adviser will be calculated on the basis of the Fund’s
managed assets (which include the proceeds of leverage), the fees will be higher when leverage is utilized, giving the Adviser an incentive
to utilize leverage. The Fund generally will not utilize leverage if it anticipates that it would result in a lower return to the Fund’s
common shareholders over time.
If the Fund uses leverage, associated costs will be borne by common
shareholders through a reduction of the NAV of the Fund’s common shares. Costs associated with leverage would likely include legal
fees, audit fees, rating agency fees, structuring fees, commitment fees, and a usage (borrowing) fee. If the Fund issues preferred shares
or debt, holders of preferred shares and holders of any debt issued by the Fund would not bear the advisory fee. Therefore, common shareholders
bear the portion of the advisory fee attributable to the assets purchased with the proceeds of leverage.
Limited term and eligible tender offer. In accordance with
the Fund’s charter, the Fund intends to terminate on the close of business on August 31, 2033 (the “Termination Date”);
provided, that if the Board of Directors (the “Board”) believes that it is in the best interests of the Fund to do so, the
Fund may extend the Termination Date: (i) once for up to one year (i.e., up to August 31, 2034), and (ii) once for up to an additional
six months (i.e., up to February 28, 2035 (which date shall then become the Termination Date)), in each case upon the affirmative vote
of a majority of the entire
58 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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Board and without shareholder approval. In determining whether
to extend the Termination Date, the Board may consider the inability to sell the Fund’s assets in a time frame consistent with termination
due to lack of market liquidity or other extenuating circumstances. Additionally, the Board may determine that market conditions are such
that it is reasonable to believe that, with an extension, the Fund’s remaining assets will appreciate and generate income in an
amount that, in the aggregate, is meaningful relative to the cost and expense of continuing the operation of the Fund.
Beginning one year before the Termination Date (the “wind-down
period”), the Fund may begin liquidating all or a portion of the Fund’s portfolio, and may deviate from its investment policies
and may not achieve its investment objectives. In addition, within twelve months preceding the Termination Date, the Board may (but is
not required to) cause the Fund to conduct an Eligible Tender Offer. An Eligible Tender Offer would consist of a tender offer to all common
shareholders to purchase common shares of the Fund at a price equal to the net asset value (“NAV”) per common share on the
expiration date of the tender offer. The Board has established that, following an Eligible Tender Offer, the Fund must have at least $100
million of net assets to ensure the continued viability of the Fund (the “Termination Threshold”).
In an Eligible Tender Offer, the Fund will offer to purchase all
common shares held by each common shareholder; provided, that if the number of properly tendered common shares would result in the Fund’s
net assets totaling less than the Termination Threshold, the Eligible Tender Offer will be terminated and no common shares will be repurchased
pursuant to the Eligible Tender Offer. Instead, the Fund will begin (or continue) liquidating its portfolio and proceed to terminate on
or before the Termination Date. The Adviser will pay all costs and expenses associated with the making of an Eligible Tender Offer, other
than brokerage and related transaction costs associated with disposition of portfolio investments in connection with the Eligible Tender
Offer, which will be borne by the Fund and its shareholders. An Eligible Tender Offer would be made, and common shareholders would be
notified thereof, in accordance with the requirements of the Investment Company Act of 1940 (the “1940 Act”), the Securities
Exchange Act of 1934 (the “Exchange Act”) and the applicable tender offer rules thereunder (including Rule 13e-4 and Regulation
14E under the Exchange Act).
If the number of properly tendered common shares would result in
the Fund’s net assets totaling greater than the Termination Threshold, all common shares properly tendered and not withdrawn will
be purchased by the Fund pursuant to the terms of the Eligible Tender Offer. Following the completion of the Eligible Tender Offer, the
Board may eliminate the Termination Date upon the affirmative vote of a majority of the Board and
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without shareholder approval and provide for the Fund’s perpetual
existence. In making a decision to eliminate the Termination Date to provide for the Fund’s perpetual existence, the Board will
take such actions with respect to the continued operations of the Fund as it deems to be in the best interests of the Fund, based on market
conditions at such time, the extent of common shareholder participation in the Eligible Tender Offer and all other factors deemed relevant
by the Board in consultation with the Adviser, taking into account that the Adviser may have a potential conflict of interest in seeking
to convert to a perpetual fund.
The Fund is not a so called “target date” or “life
cycle” fund whose asset allocation becomes more conservative over time as its target date, often associated with retirement, approaches.
In addition, the Fund is not a “target term” fund whose investment objective is to return its original NAV on the Termination
Date. The Fund’s investment objectives and policies are not designed to seek to return to investors that purchase common shares
in this offering their initial investment of $20.00 per common share on the Termination Date or in an Eligible Tender Offer, and such
investors and investors that purchase common shares after the completion of this offering may receive more or less than their original
investment upon termination or in an Eligible Tender Offer.
Upon its termination, the Fund will distribute substantially all
of its net assets to common shareholders, after paying or otherwise providing for all charges, taxes, expenses and liabilities, whether
due or accrued or anticipated, of the Fund, as may be determined by the Board.
PRINCIPAL RISKS
General. The Fund is a diversified, closed-end management
investment company designed primarily as a long-term investment and not as a trading tool. The Fund is not a complete investment program
and should be considered only as an addition to an investor’s existing portfolio of investments. Due to uncertainty inherent in
all investments, there can be no assurance that the Fund will achieve its investment objectives.
Limited operating history. The Fund is a recently-organized,
diversified, closed-end management investment company and has a limited operating history and a limited history of public trading.
Market price of shares. Common shares of closed-end funds
frequently trade at a price lower than their NAV. This is commonly referred to as “trading at a discount.” This characteristic
of shares of closed-end funds is a risk separate and distinct from the risk that the Fund’s NAV may decrease. Both long and short-term
investors, including investors who sell their shares within a relatively short period after completion of the initial
60 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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public offering, will be exposed to this risk. The Fund is designed
primarily for long-term investors and should not be considered a vehicle for trading purposes.
Whether investors will realize a gain or loss upon the sale of
the Fund’s common shares will depend upon whether the market value of the shares at the time of sale is above or below the price
the investor paid, taking into account transaction costs, for the shares and is not directly dependent upon the Fund’s NAV. Because
the market value of the Fund’s shares will be determined by factors such as the relative demand for and supply of the shares in
the market, general market conditions and other factors beyond the control of the Fund, the Fund cannot predict whether its common shares
will trade at, below or above NAV, or below or above the initial offering price for the shares.
Limited term risk. Unless the limited term provision of
the Fund’s Charter is amended by the Board and shareholders in accordance with Maryland law and the Fund’s Charter, or unless
the Fund completes an Eligible Tender Offer and converts to perpetual existence, the Fund intends to terminate on or about the Termination
Date (as such date may be extended by the Board in accordance with the Fund’s Charter). The Fund is not a so called “target
date” or “life cycle” fund whose asset allocation becomes more conservative over time as its target date, often associated
with retirement, approaches. In addition, the Fund is not a “target term” fund whose investment objective is to return its
original NAV on the Termination Date. The Fund’s investment objectives and policies are not designed to seek to return to investors
that purchase common shares in this offering their initial investment of $20.00 per share on the Termination Date or in an Eligible Tender
Offer, and such investors and investors that purchase shares after the completion of this offering may receive more or less than their
original investment upon termination or in an Eligible Tender Offer.
Because the assets of the Fund will be liquidated in connection
with the termination, the Fund will incur transaction costs in connection with dispositions of portfolio securities. The Fund does not
limit its investments to securities having a maturity date prior to the Termination Date and may be required to sell portfolio securities
when it otherwise would not, including at times when market conditions are not favorable, which may cause the Fund to lose money. In particular,
the Fund’s portfolio may still have large exposures to illiquid securities as the Termination Date approaches, and losses due to
portfolio liquidation may be significant. During the wind-down period, beginning one year before the Termination Date, the Fund may begin
liquidating all or a portion of the Fund’s portfolio, and may deviate from its investment policies and may not achieve its investment
objectives. During the wind-down period, the Fund’s
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portfolio composition may change as more of its portfolio holdings
are called or sold and portfolio holdings are disposed of in anticipation of liquidation. The disposition of portfolio investments by
the Fund could cause market prices of such instruments, and hence the NAV and market price of the common shares, to decline. In addition,
disposition of portfolio investments will cause the Fund to incur increased brokerage and related transaction expenses. The Fund may receive
proceeds from the disposition of portfolio investments that are less than the valuations of such investments by the Fund. Rather than
reinvesting the proceeds of matured, called or sold securities, the Fund may invest such proceeds in short-term or other lower yielding
securities or hold the proceeds in cash, which may adversely affect its performance and the market price of the common shares. The Fund
may distribute the proceeds in one or more liquidating distributions prior to the final liquidation, which may cause fixed expenses to
increase when expressed as a percentage of assets under management. Upon a termination, it is anticipated that the Fund will have distributed
substantially all of its net assets to common shareholders, although securities for which no market exists or securities trading at depressed
prices, if any, may be placed in a liquidating trust. Such a liquidating trust will not register as an investment company under the 1940
Act. As a result, the holders of the interests in the liquidating trust will not receive the protections under the 1940 Act that are afforded
to investors in registered investment companies. Shareholders will bear the costs associated with establishing and maintaining a liquidating
trust, if necessary. Securities placed in a liquidating trust may be held for an indefinite period of time until they can be sold or pay
out all of their cash flows. Additionally, the tax treatment of the liquidating trust’s assets may differ from the tax treatment
applicable to such assets when held by the Fund. To the extent the costs associated with a liquidating trust exceed the value of the remaining
securities, the liquidating trust trustees may determine to dispose of the remaining securities in a manner of their choosing. The Fund
cannot predict the amount, if any, of securities that will be required to be placed in a liquidating trust.
If the Fund conducts an Eligible Tender Offer, the Fund may be
required to dispose of portfolio investments in connection with any reduction in the Fund’s outstanding leverage necessary in order
to maintain the Fund’s desired leverage ratios following a tender offer. The risks related to the disposition of securities in connection
with the Fund’s termination also would be present in connection with the disposition of securities in connection with an Eligible
Tender Offer. In addition, the Fund’s purchase of tendered common shares pursuant to a tender offer will have tax consequences for
tendering shareholders and may have tax consequences for
62 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
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non-tendering shareholders. All common shareholders remaining after
a tender offer will be subject to proportionately higher expenses due to the reduction in the Fund’s total assets. The reduction
in the Fund’s total assets may also result in less investment flexibility, reduced diversification and greater volatility for the
Fund and the common shares, and may have an adverse effect on the Fund’s investment performance.
The Adviser may have a conflict of interest in recommending to
the Board that the Termination Date be eliminated and the Fund have a perpetual existence. The Fund is not required to conduct additional
tender offers following an Eligible Tender Offer and conversion to perpetual existence. Therefore, remaining common shareholders may not
have another opportunity to participate in a tender offer. Shares of closed-end management investment companies frequently trade at a
discount from their NAV, and as a result remaining shareholders may only be able to sell their common shares at a discount to NAV.
Market risk. The market prices of securities or other assets
held by the Fund may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse
economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the
bond markets, the spread of infectious illness or other public health issues, armed conflict, market disruptions caused by tariffs, trade
disputes, sanctions or other government actions, or other factors or adverse investor sentiment. Changes in market conditions may not
have the same impact on all types of securities. The value of securities may also fall due to specific conditions that affect a particular
sector of the securities market or a particular issuer. If the market prices of the Fund’s securities and assets fall, the value
of your investment will go down. A change in financial condition or other event affecting a single issuer or market may adversely impact
securities markets as a whole. Rates of inflation have recently risen. The value of assets or income from an investment may be worth less
in the future as inflation decreases the value of money. As inflation increases, the real value of the Fund’s assets can decline
as can the value of the Fund’s distributions.
In the past decade, financial markets throughout the world have
experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. Governmental and non-governmental
issuers have defaulted on, or been forced to restructure, their debts. These conditions may continue, recur, worsen or spread. Events
that have contributed to these market conditions include, but are not limited to, major cybersecurity events; geopolitical events (including
wars, terror attacks and economic sanctions); measures to address budget deficits; downgrading of
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sovereign debt; changes in oil and commodity prices; changes in
currency exchange rates; global pandemics; and public sentiment. The global pandemic of the novel coronavirus respiratory disease designated
COVID-19 has resulted in major disruption to economies and markets around the world, including the United States. Global financial markets
have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments
has been greatly reduced for periods of time. Some sectors of the economy and individual issuers have experienced particularly large losses.
These circumstances may continue for an extended period of time, and may continue to affect adversely the value and liquidity of the Fund’s
investments. Following Russia’s recent invasion of Ukraine, Russian securities have lost all, or nearly all, their market value.
Other securities or markets could be similarly affected by past or future geopolitical or other events or conditions.
Governments and central banks, including the U.S. Federal Reserve,
have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. These actions have
resulted in significant expansion of public debt, including in the U.S. The consequences of high public debt, including its future impact
on the economy and securities markets, may not be known for some time. Interest rates are very low, which means there is more risk that
they may go up. In some cases yields are negative. U.S. Federal Reserve or other U.S. or non-U.S. governmental or central bank actions,
including increases or decreases in interest rates, or contrary actions by different governments, could negatively affect financial markets
generally, increase market volatility and reduce the value and liquidity of securities in which the Fund invests. Policy and legislative
changes in the U.S. and in other countries are affecting many aspects of financial regulation, and these and other events affecting global
markets, such as the United Kingdom’s exit from the European Union (or Brexit), potential trade imbalances with China or other countries,
or sanctions or other government actions against Russia, other nations or individuals or companies (or their countermeasures), may contribute
to decreased liquidity and increased volatility in the financial markets. The impact of these changes on the markets, and the implications
for market participants, may not be fully known for some time.
Economies and financial markets throughout the world are increasingly
interconnected. Economic, financial or political events, trading and tariff arrangements, armed conflict including Russia's military invasion
of Ukraine, terrorism, natural disasters, infectious illness or public health issues, cybersecurity events, supply chain disruptions,
sanctions against Russia, other nations or individuals or companies and possible
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countermeasures, and other circumstances in one country or region
could have profound impacts on other countries or regions and on global economies or markets. As a result, whether or not the Fund invests
in securities of issuers located in or with significant exposure to the countries or regions directly affected, the value and liquidity
of the Fund’s investments may be negatively affected. The Fund may experience a substantial or complete loss on any security or
derivative position.
LIBOR risk. LIBOR (London Interbank Offered Rate) is used
extensively in the U.S. and globally as a “benchmark” or “reference rate” for various commercial and financial
contracts, including corporate and municipal bonds, bank loans, asset-backed and mortgage-related securities, and interest rate swaps
and other derivatives. ICE Benchmark Administration, the administrator of LIBOR, ceased publication of most LIBOR settings on a representative
basis at the end of 2021 and is expected to cease publication of a majority of U.S. dollar LIBOR settings on a representative basis after
June 30, 2023. In addition, global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered
into after 2021. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies.
Markets are developing in response to these new rates, but questions around liquidity in these rates and how to appropriately adjust these
rates to eliminate any economic value transfer at the time of transition remain a significant concern. The effect of any changes to -
or discontinuation of - LIBOR on the Fund will vary depending on, among other things, existing fallback provisions in individual contracts
and whether, how, and when industry participants develop and widely adopt new reference rates and fallbacks for both legacy and new products
and instruments. The transition process may involve, among other things, increased volatility or illiquidity in markets for instruments
that rely on LIBOR. The transition may also result in a reduction in the value of certain LIBOR-based investments held by the Fund or
reduce the effectiveness of related transactions such as hedges. Any such effects of the transition away from LIBOR, as well as other
unforeseen effects, could result in losses for the Fund. Because the usefulness of LIBOR as a benchmark may deteriorate during the transition
period, these effects could occur at any time.
Municipal securities risk. The municipal bond market can
be susceptible to unusual volatility, particularly for lower-rated and unrated securities. Liquidity can be reduced unpredictably in response
to overall economic conditions or credit tightening. Issuers of municipal securities tend to derive a significant portion of their revenue
from taxes, particularly property and income taxes, and decreases in personal income levels and property values and other unfavorable
economic factors, such as a general economic
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recession, adversely affect municipal securities. Municipal issuers
may also be adversely affected by rising health care costs, increasing unfunded pension liabilities and by the phasing out of federal
programs providing financial support. Where municipal securities are issued to finance particular projects, especially those relating
to education, health care, transportation, housing, water or sewer and utilities, issuers often depend on revenues from those projects
to make principal and interest payments. Adverse conditions and developments in those sectors can result in lower revenues to issuers
of municipal securities, potentially resulting in defaults, and can also have an adverse effect on the broader municipal securities market.
To the extent the Fund invests significantly in a single state, or in securities the payments on which are dependent upon a single project
or source of revenues, or that relate to a sector or industry, including health care facilities, education, special revenues and housing,
the Fund will be more susceptible to associated risks and developments. There may be less public information available on municipal issuers
or projects than other issuers, and valuing municipal securities may be more difficult. In addition, the secondary market for municipal
securities is less well developed and liquid than other markets, and dealers may be less willing to offer and sell municipal securities
in times of market turbulence. Changes in the financial condition of one or more individual municipal issuers (or one or more insurers
of municipal issuers), or one or more defaults by municipal issuers or insurers, can adversely affect liquidity and valuations in the
overall market for municipal securities. The value of municipal securities can also be adversely affected by regulatory and political
developments affecting the ability of municipal issuers to pay interest or repay principal, actual or anticipated tax law changes or other
legislative actions, and by uncertainties and public perceptions concerning these and other factors. Municipal securities may be more
susceptible to downgrades or defaults during recessions or similar periods of economic stress. Financial difficulties of municipal issuers
may continue or get worse. The rate of interest paid on municipal securities normally is lower than the rate of interest paid on fully
taxable securities. Some municipal securities, such as general obligation issues, are backed by the issuer’s taxing authority, while
other municipal securities, such as revenue issues, are backed only by revenues from certain facilities or other sources and not by the
issuer itself. The payment of principal and interest on private activity and industrial development revenue bonds is solely dependent
on the ability of the facility’s user to meet its financial obligations and the pledge, if any, of the facility or other property
as security for payment. The municipal market can be susceptible to unusual volatility, particularly for lower-rated and unrated securities.
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Taxable investment risk. Although distributions of interest
income from the Fund’s tax-exempt securities are generally exempt from regular federal income tax, distributions from other sources,
including capital gain distributions, and any gains on the sale of your shares are not. In addition, the interest on the Fund’s
municipal securities could become subject to regular federal income tax or the AMT due to noncompliant conduct by issuers, unfavorable
legislation or litigation, or adverse interpretations by regulatory authorities. You should consult a tax Adviser about whether the AMT
applies to you and about state and local taxes on your Fund distributions.
“High yield” or “junk” bond risk. Debt
securities that are below investment grade, called “junk bonds,” are speculative, have a higher risk of default or are already
in default, tend to be less liquid and are more difficult to value than higher grade securities and may involve major risk of exposure
to adverse conditions and negative sentiments. These securities have a higher risk of issuer default because, among other reasons, issuers
of junk bonds often have more debt in relation to total capitalization than issuers of investment grade securities. Junk bonds tend to
be volatile and more susceptible to adverse events and negative sentiments. These risks are more pronounced for securities that are already
in default. The Fund may not receive interest payments on defaulted securities and may incur costs to protect its investment. In addition,
defaulted securities involve the substantial risk that principal will not be repaid. Changes in economic conditions or developments regarding
the individual issuer are more likely to cause price volatility and weaken the capacity of such securities to make principal and interest
payments than is the case for higher grade debt securities. The value of lower-quality debt securities often changes in response to issuer,
political, or economic developments and can decline significantly over short as well as long periods of time or during periods of general
or regional economic difficulty. Junk bonds may also be less liquid than higher-rated securities, which means that the Fund may have difficulty
selling them at times, and it may have to apply a greater degree of judgment in establishing a price for purposes of valuing Fund shares.
Junk bonds generally are issued by less creditworthy issuers. Issuers of junk bonds may have a larger amount of outstanding debt securities
relative to their assets than issuers of investment grade bonds. In the event of an issuer’s bankruptcy, claims of other creditors
may have priority over the claims of junk bond holders, leaving few or no assets available to repay junk bond holders. The Fund may incur
expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting issuer. Junk bonds frequently
have redemption features that permit an issuer to
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repurchase the security from the Fund before it matures. If the
issuer redeems junk bonds, the Fund may have to invest the proceeds in bonds with lower yields and may lose income.
Interest rate risk. The market prices of the Fund's fixed
income securities may fluctuate significantly when interest rates change. The value of your investment will generally go down when interest
rates rise. A rise in rates tends to have a greater impact on the prices of longer term or duration securities. For example, if interest
rates increase by 1%, the value of a Fund’s portfolio with a portfolio duration of ten years would be expected to decrease by 10%,
all other things being equal. In recent years interest rates and credit spreads in the U.S. have been at historical lows, which means
there is more risk that they may go up. The U.S. Federal Reserve has recently started to raise certain interest rates. A general rise
in interest rates could adversely affect the price and liquidity of fixed income securities. The maturity of a security may be significantly
longer than its effective duration. A security’s maturity and other features may be more relevant than its effective duration in
determining the security’s sensitivity to other factors affecting the issuer or markets generally, such as changes in credit quality
or in the yield premium that the market may establish for certain types of securities (sometimes called “credit spread”).
In general, the longer its maturity the more a security may be susceptible to these factors. When the credit spread for a fixed income
security goes up, or “widens,” the value of the security will generally go down.
Rising interest rates can lead to increased default rates, as issuers
of floating rate securities find themselves faced with higher payments. Unlike fixed rate securities, floating rate securities generally
will not increase in value if interest rates decline. Changes in interest rates also will affect the amount of interest income the Fund
earns on its floating rate investments
Credit risk. If an issuer or guarantor of a security held
by the Fund or a counterparty to a financial contract with the Fund defaults on its obligation to pay principal and/or interest, has its
credit rating downgraded or is perceived to be less creditworthy, or the credit quality or value of any underlying assets declines, the
value of your investment will typically decline. Changes in actual or perceived creditworthiness may occur quickly. The Fund could be
delayed or hindered in its enforcement of rights against an issuer, guarantor or counterparty.
Prepayment or call risk. Many issuers have a right to prepay
their securities. If interest rates fall, an issuer may exercise this right. If this happens, the Fund will not benefit from the rise
in market price that normally accompanies a decline in interest rates, and will be forced to
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reinvest prepayment proceeds at a time when yields on securities
available in the market are lower than the yield on the prepaid security. The Fund also may lose any premium it paid on the security.
Extension risk. During periods of rising interest rates,
the average life of certain types of securities may be extended because of slower than expected principal payments. This may lock in a
below market interest rate, increase the security’s duration and reduce the value of the security.
Risk of illiquid investments. Certain securities and derivatives
held by the Fund may be impossible or difficult to purchase, sell or unwind. Illiquid securities and derivatives also may be difficult
to value. Liquidity risk may be magnified in an environment of rising interest rates or widening credit spreads. During times of market
turmoil, there have been, and may be, no buyers or sellers for securities in entire asset classes. If the Fund is forced to sell an illiquid
asset or unwind a derivatives position, the Fund may suffer a substantial loss or may not be able to sell at all.
Portfolio selection risk. The Adviser’s judgment about
the quality, relative yield, relative value or market trends affecting a particular sector or region, market segment, security or about
interest rates generally may prove to be incorrect, or there may be imperfections, errors or limitations in the models, tools and information
used by the Adviser.
Small and mid-size issuers risk. Compared with those of
larger municipal issuers, securities of small and mid-size municipal issuers may experience sharper swings in market values, have limited
liquidity, be harder to value or to sell at the times and prices the Adviser thinks appropriate, and offer greater potential for gain
and loss.
Risks of subordinated securities. A holder of securities
that are subordinated or “junior” to more senior securities of an issuer is entitled to payment after holders of more senior
securities of the issuer. Subordinated securities are more likely to suffer a credit loss than non-subordinated securities of the same
issuer, any loss incurred by the subordinated securities is likely to be proportionately greater, and any recovery of interest or principal
may take more time. As a result, even a perceived decline in creditworthiness of the issuer is likely to have a greater impact on subordinated
securities than more senior securities.
Debtor-in-possession financings risk. Debtor-in-possession
financings are loans to a debtor-in-possession in a proceeding under the U.S. Bankruptcy Code that have been approved by the bankruptcy
court. These financings allow the entity to continue its business operations while reorganizing under Chapter 11 of the U.S. Bankruptcy
Code. Debtor-in-possession financings can provide creditors with varying levels of protection, as they may carry
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super-priority repayment status, be secured by a lien on the borrower’s
otherwise unencumbered assets, or be secured by a junior lien on the borrower’s encumbered assets. These financings are subject
to the risk that the borrower will not emerge successfully from the bankruptcy/reorganization proceedings and will be forced to liquidate
its assets. In the event of liquidation, the Fund’s only recourse will be against the property securing the debtor-in-possession
loan and any remaining unencumbered assets, which might be insufficient to repay the debtor-in-possession loan in full.
U.S. Treasury obligations risk. The market value of direct
obligations of the U.S. Treasury may vary due to changes in interest rates. In addition, changes to the financial condition or credit
rating of the U.S. government may cause the value of the Fund’s investments in obligations issued by the U.S. Treasury to decline.
U.S. government agency obligations risk. The Fund invests
in obligations issued by agencies and instrumentalities of the U.S. government. Government-sponsored entities such as the Federal National
Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”) and the Federal Home Loan
Banks (“FHLBs”), although chartered or sponsored by Congress, are not funded by congressional appropriations and the debt
and mortgage-backed securities issued by them are neither guaranteed nor issued by the U.S. government. The maximum potential liability
of the issuers of some U.S. government obligations may greatly exceed their current resources, including any legal right to support from
the U.S. government. Such debt and mortgage-backed securities are subject to the risk of default on the payment of interest and/or principal,
similar to debt of private issuers. Although the U.S. government has provided financial support to FNMA and FHLMC in the past, there can
be no assurance that it will support these or other government-sponsored entities in the future.
Mortgage-related and asset-backed securities risk. The value
of mortgage-related securities, including commercial mortgage-backed securities, collateralized mortgage-backed securities, credit risk
transfer securities, and asset-backed securities, will be influenced by factors affecting the assets underlying such securities. As a
result, during periods of declining asset value, difficult or frozen credit markets, swings in interest rates, or deteriorating economic
conditions, mortgage-related and asset-backed securities may decline in value, face valuation difficulties, become more volatile and/or
become illiquid. Mortgage-backed securities tend to be more sensitive to changes in interest rate than other types of debt securities.
These securities are also subject to prepayment and extension risks. Some of
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these securities may receive little or no collateral protection
from the underlying assets and are thus subject to the risk of default. The risk of such defaults is generally higher in the case of mortgage-backed
investments offered by non-governmental issuers. The structure of some of these securities may be complex and there may be less available
information than for other types of debt securities. Upon the occurrence of certain triggering events or defaults, the Fund may become
the holder of underlying assets at a time when those assets may be difficult to sell or may be sold only at a loss.
Risks of investing in collateralized debt obligations. Investment
in a collateralized debt obligation (CDO) is subject to the credit, subordination, interest rate, valuation, prepayment, extension and
other risks of the obligations underlying the CDO and the tranche of the CDO in which the Fund invests. CDOs are subject to liquidity
risk. CDOs carry additional risks including, but not limited to: (i) the possibility that distributions from collateral securities will
not be adequate to make interest or other payments; (ii) the risk that the collateral may default or decline in value or be downgraded,
if rated by a nationally recognized statistical rating organization; (iii) the structure and complexity of the transaction and the legal
documents could lead to disputes among investors regarding the characterization of proceeds; (iv) the investment return achieved by the
Fund could be significantly different than those predicted by financial models; (v) the lack of a readily available secondary market for
CDOs; (vi) the risk of forced “fire sale” liquidation due to technical defaults such as coverage test failures; and (vii)
the CDO’s manager may perform poorly. In addition, investments in CDOs may be characterized by the Fund as illiquid securities.
CDOs may be highly leveraged (which could make them highly volatile). Synthetic CDOs are also subject to the risks of investing in derivatives,
such as credit default swaps, and leverage risk. The Fund may invest in or be exposed to CDOs that are sometimes referred to as “covenant-lite”
obligations, which generally are debt obligations that lack financial maintenance covenants or possess fewer or contingent financial maintenance
covenants and other financial protections for lenders and investors. These “covenant-lite” obligations typically are particularly
subject to the risks associated with investments in loans.
Risks of instruments that allow for balloon payments or negative
amortization payments. Certain debt instruments allow for balloon payments or negative amortization payments. Such instruments permit
the borrower to avoid paying currently a portion of the interest accruing on the instrument. While these features make the debt instrument
more affordable
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to the borrower in the near term, they increase the risk that the
borrower will be unable to make the resulting higher payment or payments that become due at the maturity of the loan.
Derivatives risk. Using synthetic municipal securities,
inverse floating rate obligations, credit default swaps and other derivatives can increase Fund losses and reduce opportunities for gains
when market prices, interest rates or the derivative instruments themselves behave in a way not anticipated by the Fund. Using derivatives
may increase the volatility of the Fund’s net asset value and may not provide the result intended. Derivatives may have a leveraging
effect on the Fund. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund’s initial investment.
Derivatives are generally subject to the risks applicable to the assets, rates, indices or other indicators underlying the derivative.
Changes in a derivative’s value may not correlate well with the referenced asset or metric. The Fund also may have to sell assets
at inopportune times to satisfy its obligations. Derivatives may be difficult to sell, unwind or value, and the counterparty may default
on its obligations to the Fund. Use of derivatives may have different tax consequences for the Fund than an investment in the underlying
security, and such differences may affect the amount, timing and character of income distributed to shareholders. The U.S. government
and foreign governments are in the process of adopting and implementing regulations governing derivatives markets, including mandatory
clearing of certain derivatives, margin and reporting requirements. The ultimate impact of the regulations remains unclear. Additional
regulation of derivatives may make them more costly, limit their availability or utility, otherwise adversely affect their performance
or disrupt markets.
Synthetic municipal securities risk. The tax-exempt character
of the interest paid on tender option bonds, bond receipts and similar synthetic municipal securities, a type of derivative instrument,
is based on the tax-exempt income stream from the collateral. In addition to the risks of investing in municipal securities and in derivatives
generally, investments in synthetic municipal securities are subject to the risk that income derived from such securities is deemed to
be taxable.
Risks of investing in inverse floating rate obligations. The
interest rate on inverse floating rate obligations will generally decrease as short-term interest rates increase, and increase as short-term
rates decrease. Due to their leveraged structure, the sensitivity of the market value of an inverse floating rate obligation to changes
in interest rates is generally greater than
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a comparable long-term bond issued by the same issuer and with
similar credit quality, redemption and maturity provisions. Inverse floating rate obligations may be volatile and involve leverage risk.
Credit default swap risk. Credit default swap contracts,
a type of derivative instrument, involve special risks and may result in losses to the Fund. Credit default swaps may in some cases be
illiquid, and they increase credit risk since the Fund has exposure to the issuer of the referenced obligation and either the counterparty
to the credit default swap or, if it is a cleared transaction, the brokerage firm through which the trade was cleared and the clearing
organization that is the counterparty to that trade.
Structured securities risk. Structured securities may behave
in ways not anticipated by the Fund, or they may not receive the tax, accounting or regulatory treatment anticipated by the Fund.
Leverage risk. When the Fund uses leverage through issuing
preferred shares or borrowing or otherwise engages in transactions that have a leveraging effect on the Fund’s portfolio, the value
of the Fund will be more volatile and all other risks will tend to be compounded. This is because leverage generally magnifies the effect
of any increase or decrease in the value of the Fund’s underlying assets or creates investment risk with respect to a larger pool
of assets than the Fund would otherwise have, potentially resulting in the loss of all assets. Engaging in such transactions may cause
the Fund to liquidate positions when it may not be advantageous to do so to satisfy its obligations or meet segregation requirements.
In addition, fluctuations in interest rates on leverage may adversely affect returns.
The Fund may use financial leverage on an ongoing basis for investment
purposes by borrowing from banks through a revolving credit facility and by engaging in certain other forms of leverage, including investments
in inverse floating rate securities. The fees and expenses attributed to leverage, including any increase in the management fees, will
be borne by holders of common shares. Since the Adviser’s fee is based on a percentage of the Fund’s managed assets, its fee
will be higher if the Fund is leveraged, and the Adviser will thus have an incentive to leverage the Fund.
Risks of zero coupon bonds, payment in kind, deferred and contingent
payment securities. These securities may be more speculative and may fluctuate more in value than securities which pay income periodically
and in cash. In addition, although the Fund receives no periodic cash payments on such securities, the Fund is deemed for tax purposes
to receive income from
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such securities, which applicable tax rules require the Fund to
distribute to shareholders. Such distributions may be taxable when distributed to shareholders.
Repurchase agreement risk. In the event that the other party
to a repurchase agreement defaults on its obligations, the Fund may encounter delay and incur costs before being able to sell the security.
Such a delay may involve loss of interest or a decline in price of the security. In addition, if the Fund is characterized by a court
as an unsecured creditor, it would be at risk of losing some or all of the principal and interest involved in the transaction.
Market segment risk. To the extent the Fund emphasizes,
from time to time, investments in a market segment, the Fund will be subject to a greater degree to the risks particular to that segment,
and may experience greater market fluctuation than a fund without the same focus.
Valuation risk. The sales price the Fund could receive for
any particular portfolio investment may differ from the Fund’s valuation of the investment, particularly for illiquid securities
and securities that trade in thin or volatile markets or that are valued using a fair value methodology. The Fund’s ability to value
its investments may also be impacted by technological issues and/or errors by pricing services or other third party service providers.
Cybersecurity risk. Cybersecurity failures by and breaches
of the Adviser or other service providers may disrupt Fund operations, interfere with the Fund’s ability to calculate its NAV, prevent
Fund shareholders from receiving distributions, cause loss of or unauthorized access to private shareholder information, and result in
financial losses, regulatory fines, penalties, reputational damage, or additional compliance costs.
Cash management risk. The value of the investments held
by the Fund for cash management or temporary defensive purposes may be affected by market risks, changing interest rates and by changes
in credit ratings of the investments. To the extent that the Fund has any uninvested cash, the Fund would be subject to credit risk with
respect to the depository institution holding the cash. If the Fund holds cash uninvested, the Fund will not earn income on the cash and
the Fund’s yield will go down. During such periods, it may be more difficult for the Fund to achieve its investment objectives.
Anti-takeover provisions. The Fund’s Charter and Bylaws
include provisions that are designed to limit the ability of other entities or persons to acquire control of the Fund for short-term objectives,
including by converting the Fund to open-end status or changing the composition of the Board, that may be detrimental to the Fund’s
ability to achieve its primary investment
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objective of seeking to provide its common shareholders with a
high level of current income exempt from regular federal income tax. These provisions include staggered terms of service for the Directors,
advance notice requirements for shareholder proposals, and super-majority voting requirements for certain transactions with affiliates,
open-ending the Fund or a merger, liquidation, asset sale or similar transaction. The Fund’s Bylaws also contain a provision providing
that the Board has adopted a resolution to opt in the Fund to the provisions of the Maryland Control Share Acquisition Act (“MCSAA”).
Such provisions may limit the ability of shareholders to sell their shares at a premium over prevailing market prices by discouraging
a third party from seeking to obtain control of the Fund. There can be no assurance, however, that such provisions will be sufficient
to deter activist investors that seek to cause the Fund to take actions that may not be aligned with the interests of long-term shareholders.
Please note that there are many other factors that could adversely
affect your investment and that could prevent the Fund from achieving its goals.
An investment in the Fund is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
INVESTMENT RESTRICTIONS
The following are the Fund’s fundamental investment restrictions.
These restrictions, along with the Fund’s investment objectives, may not be changed without the approval of the holders of a majority
of the Fund’s outstanding voting securities (which for this purpose and under the 1940 Act means the lesser of (i) 67% of the common
shares represented at a meeting at which more than 50% of the outstanding common shares are represented or (ii) more than 50% of the outstanding
common shares).
The Fund may not:
(1) | | The Fund may not borrow money except as permitted by (i) the 1940 Act, or interpretations
or modifications by the SEC, SEC staff or other authority of competent jurisdiction, or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of competent jurisdiction. |
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(2) | | The Fund may not engage in the business of underwriting the securities of other issuers except
as permitted by (i) the 1940 Act, or interpretations or modifications by the SEC, SEC staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission from the SEC, SEC staff or other authority of competent jurisdiction. |
(3) | | The Fund may lend money or other assets to the extent permitted by (i) the 1940 Act, or interpretations
or modifications by the SEC, SEC staff or other authority of competent jurisdiction or (ii) exemptive or other relief or permission from
the SEC, SEC staff or other authority of competent jurisdiction. |
(4) | | The Fund may not issue senior securities except as permitted by (i) the 1940 Act, or interpretations
or modifications by the SEC, SEC staff or other authority of competent jurisdiction, or (ii) exemptive or other relief or permission
from the SEC, SEC staff or other authority of competent jurisdiction. |
(5) | | The Fund may not purchase or sell real estate except as permitted by (i) the 1940 Act, or
interpretations or modifications by the SEC, SEC staff or other authority of competent jurisdiction, or (ii) exemptive or other relief
or permission from the SEC, SEC staff or other authority of competent jurisdiction. |
(6) | | The Fund may purchase or sell commodities or contracts related to commodities to the extent
permitted by (i) the 1940 Act, or interpretations or modifications by the SEC, SEC staff or other authority of competent jurisdiction,
or (ii) exemptive or other relief or permission from the SEC, SEC staff or other authority of competent jurisdiction. |
(7) | | Except as permitted by exemptive or other relief or permission from the SEC, SEC staff or
other authority of competent jurisdiction, the Fund may not make any investment if, as a result, the Fund’s investments will be
concentrated in any one industry. |
(8) | | Normally, the Fund invests at least 80% of its net assets (plus the amount of borrowings,
if any, for investment purposes) in securities issued by or on behalf of states, counties, municipalities, territories and possessions
of the United States and the District of Columbia and their authorities, political subdivisions, agencies and instrumentalities, the
interest on which is exempt from regular federal income tax (“municipal securities”). |
All other investment policies of the Fund are considered non-fundamental
and may be changed by the Board of Directors without prior approval of the Fund’s outstanding voting shares.
76 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
Report | 4/30/22
More Information
For more detailed descriptions of the Fund’s investment policies,
strategies and risks, see the Fund’s registration statement on Form N-2 that was declared effective by the Securities and Exchange
Commission on August 4, 2021.
Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
Report | 4/30/22 77
Effects of Leverage
The following table is furnished in response to requirements of
the Securities and Exchange Commission. It is designed to illustrate the effects of leverage on common share total return, assuming investment
portfolio total returns (consisting of income and changes in the value of investments held in the Fund's portfolio) of -10%, -5%, 0%,
5% and 10%. The table below reflects the Fund’s borrowings under a credit agreement as a percentage of the Fund’s total assets
(which includes the amounts of leverage obtained through such borrowings), the annual rate of interest on the borrowings as of April 30,
2022, and the annual return that the Fund’s portfolio must experience (net of expenses) in order to cover such costs. The information
below does not reflect the Fund’s use of certain other forms of economic leverage achieved through the use of other instruments
or transactions not considered to be senior securities under the 1940 Act, such as covered credit default swaps or other derivative instruments.
The assumed investment portfolio returns in the table below are
hypothetical figures and are not necessarily indicative of the investment portfolio returns experienced or expected to be experienced
by the Fund. Your actual returns may be greater or less than those appearing below. In addition, actual borrowing expenses associated
with borrowings by the Fund may vary frequently and may be significantly higher or lower than the rate used for the example below.
Borrowings under credit agreement as a percentage of total managed assets |
|
(including assets attributable to borrowings) |
36.20% |
Annual effective interest rate payable by Fund on borrowings |
1.09% |
Annual return Fund portfolio must experience (net of expenses) to cover interest |
|
rate on borrowings |
0.39% |
Common share total return for (10.00)% assumed portfolio total return |
(16.29)% |
Common share total return for (5.00)% assumed portfolio total return |
(8.46)% |
Common share total return for 0.00% assumed portfolio total return |
(0.62)% |
Common share total return for 5.00% assumed portfolio total return |
7.22% |
Common share total return for 10.00% assumed portfolio total return |
15.05% |
Common share total return is composed of two elements - investment
income net of the Fund's expenses, including any interest/dividends on assets resulting from leverage, and gains or losses on the value
of the securities the Fund owns. As required by Securities and Exchange Commission rules, the table assumes that the Fund is more likely
to suffer capital losses than to enjoy capital appreciation. For example, to assume a total return of 0%, the Fund must assume that the
income it receives on its investments is entirely offset by losses in the value of those investments.
78 Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
Report | 4/30/22
This table reflects hypothetical performance of the Fund's portfolio
and not the performance of the Fund's common shares, the value of which will be determined by market forces and other factors.
Should the Fund elect to add additional leverage to its portfolio,
the potential benefits of leveraging the Fund's shares cannot be fully achieved until the proceeds resulting from the use of leverage
have been received by the Fund and invested in accordance with the Fund's investment objective and principal investment strategies. The
Fund’s willingness to use additional leverage, and the extent to which leverage is used at any time, will depend on many factors,
including, among other things, the Adviser’s assessment of the yield curve environment, interest rate trends, market conditions
and other factors.
Pioneer Municipal High Income Opportunities Fund, Inc. | Annual
Report | 4/30/22 79