Transcript Document

U.S. Economic and Market Update
Fund Focus: Pioneer Funds – U.S. Mid Cap Value
Samuel A. Wardwell, CFA
Senior Vice President,
Director of Investment Communications
Pioneer Investment Management, Inc.
March 2006
The U.S. Economy in 2005
Still in the “Goldilocks” zone
Still in the “Goldilocks” zone
 Consistent real GDP growth
 Low unemployment
 Low core inflation
 Solid profit growth
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2006 U.S. Economic Outlook
 U.S. economic growth expected to be in range of 3-4%
 Unemployment expected to average around 5%
 Core inflation expected to be roughly 2%
 Oil price expected to gradually decline toward $50
 Profit growth expected to slow, but continue
 Short-term U.S. interest rates expected to peak at 4.5-5%
 Longer-term U.S. interest rates expected to remain near current
levels
 Dollar expected to weaken somewhat
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U.S. Real GDP Growth Remains Strong
The preliminary Q4 number is not a signal of weakness
Change in U.S. Real Gross Domestic Product
8
Quarterly (annualized)
Rolling 4 Quarter
6
4
2
0
-2
-4
Q4 1989
Q4 1991
Q4 1993
Q4 1995
Q4 1997
Q4 1999
Q4 2001
Q4 2003
Q4 2005
Source: DataStream. Last data point: 2005Q4
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Recent Core Inflation Data is Encouraging
Core CPI (Consumer Price Index excluding Food and Energy)
7%
Rolling 3-month, annual rate
Rolling 12-month
6%
5%
4%
3%
2%
1%
0%
Dec90
Dec91
Dec92
Dec93
Dec94
Dec95
Dec96
Dec97
Dec98
Dec99
Dec- Dec00
01
Dec02
Dec03
Dec04
Dec05
Source: DataStream. Last data point: December 2005
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The U.S. is not far from Full Employment
The unemployment rate has fallen to 4.7%
U.S. Unemployment Rate
11
10
9
8
7
6
5
4
3
2
1
0
Dec-60
Dec-65
Dec-70
Dec-75
Dec-80
Dec-85
Dec-90
Dec-95
Dec-00
Dec-05
Source: DataStream. Last data point: January 2006
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Productivity Growth Remains Very High
The “New Economy” is real
Growth in non-Farm Business Output per Hour
6%
Rolling 1-year
Rolling 5-year
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
Dec-80
Dec-85
Dec-90
Dec-95
Dec-00
Dec-05
Source: DataStream. Last data point: 2005Q4
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Corporate Profits are High and Growing
Slowing profit growth is to be expected at this point in the cycle
U.S. After-Tax Corporate Profits (log scale)
1000
100
10
Q4 1950
Q4 1960
Q4 1970
Q4 1980
Q4 1990
Q4 2000
Source: DataStream. Last data point: 2005Q3
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The Hurricanes: No Lasting Impact on Energy Prices
US Spot Energy Prices - Percentage Change since June 30, 2005
140%
Crude Oil
Gasoline
Natural Gas
120%
100%
80%
60%
40%
20%
0%
-20%
06/30/05
07/30/05
08/30/05
09/30/05
10/30/05
11/30/05
12/30/05
01/30/06
Source: DataStream. Last data point: January 31, 2006
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Little Pass-Through of Energy Prices to Core Inflation is Visible
Thus Far
Rolling 12-Month Inflation
6%
CPI
5%
Core CPI
4%
3%
2%
1%
0%
Dec-95
Dec-96
Dec-97
Dec-98
Dec-99
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Source: DataStream. Last data point: December 2005
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Ben Bernanke
 Education
– B.A., Economics, 1975, summa cum laude,
Harvard University
– Ph.D., Economics, 1979, Massachusetts Institute
of Technology
 Teaching
– Stanford University 1979-85
– Princeton University 1985
• Chairman of Economics Department
 Government
– Chairman of the White House Council of
Economic Advisers, 2005
– Board of Governors of the Federal Reserve
System, 2002-2005
Photograph: Ron Edmonds/AP
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The Evolving Language of the Fed
The Fed’s language signals it isn’t finished yet
 “a considerable period of time”
 “patient”
 “accommodation can be removed at a pace which is likely to be
measured”
 “some further measured policy firming is likely to be needed”
 “some further policy firming may be needed”
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Inflation and the Real Fed Funds Rate
The Fed is now in the “data dependent” phase
20%
Fed Funds Rate
15%
Rolling 12-month Core CPI
10%
5%
0%
Dec-60
Dec-65
Dec-70
Dec-75
Dec-80
Dec-85
Dec-90
Dec-95
Dec-00
Dec-05
Dec-90
Dec-95
Dec-00
Dec-05
10%
5%
0%
-5%
Real Fed Funds Rate
-10%
Dec-60
Dec-65
Dec-70
Dec-75
Dec-80
Dec-85
Source: DataStream. Last data points: January 31, 2006
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TIPS Breakeven Rates Signal Market Confidence in the Fed’s
Control of Inflation
Breakeven Inflation on US TIPS
3.5
5yr spot
10yr spot
5y5y fwd
3.0
2.5
2.0
1.5
12/31/03
6/30/04
12/31/04
6/30/05
12/31/05
Source: Macroeconomic Advisers, LLC. Calculated from smoothed nominal and TIPS yield curves. Last data point: January 26, 2006
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A Flattening/Inverting Yield Curve
US Treasury Yield Curve
5
4.5
4
3.5
3
2.5
2
12/31/2004
12/31/2005
2/14/2006
1.5
1
1m
3m
6m
1
2
3
5
7
10
20
Source: DataStream. Last data point: February 14, 2005
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The Value of the Dollar: A 30-Year View
The value of the dollar is more or less where it was a decade ago
Trade-Weighted Value of the U.S. Dollar
150
140
130
120
110
100
90
80
70
Dec-75
Dec-80
Dec-85
Dec-90
Dec-95
Dec-00
Dec-05
Source: DataStream. Last data point: January 2006
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Both High Import Growth and Weak Export Growth Contribute to
the Trade Deficit
US Foreign Trade ($ billions)
2000
Imports
Exports
Trade Deficit
1500
1000
500
0
-500
-1000
Q4 1955 Q4 1960 Q4 1965 Q4 1970 Q4 1975 Q4 1980 Q4 1985 Q4 1990 Q4 1995 Q4 2000 Q4 2005
Source: DataStream. Last data point: 2005Q4
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The U.S. Budget Deficit was Beginning to Shrink Before Katrina
Higher tax receipts due to economic strength, not spending restraint, were the reason
US Fiscal Surplus/Deficit as % of GDP
3
2
1
0
-1
-2
-3
-4
-5
Q4 1960
Q4 1965
Q4 1970
Q4 1975
Q4 1980
Q4 1985
Q4 1990
Q4 1995
Q4 2000
Source: DataStream. Last data point: 2005Q3
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Global Interest Rates
10-Year Treasury Yields
10
9
US
Euro
Japan
8
7
6
5
4
3
2
1
0
Dec90
Dec91
Dec92
Dec93
Dec94
Dec95
Dec96
Dec97
Dec98
Dec99
Dec00
Dec01
Dec02
Dec03
Dec04
Dec05
Source: DataStream. Last data point: January 2006
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U.S. Equity Valuations are Not Excessive
Relative to Bond Yields
S&P 500 Earnings Yield and 10-Year US Treasury Bond Yield
7
10-Yr Treasury Yield
S&P 500 E/P (T-12)
6
5
4
3
Jun-00
Dec-00
Jun-01
Dec-01
Jun-02
Dec-02
Jun-03
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Source: DataStream, FactSet. Last data point: December 31, 2005
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US Equity Market Leadership: Market Capitalization
Mid Cap stocks have led since 1999
Cumulative Return Relative to the Russell 3000
170%
Russell Top 200
Russell Midcap
150%
Russell 2000
130%
110%
90%
70%
50%
Dec-78
Dec-83
Dec-88
Dec-93
Dec-98
Dec-03
Source: DataStream. Last data point: January 31, 2006.
The Russell Top 200 Index measures the performance of large-cap U.S. growth stocks. The Russell Midcap Index measures the performance of mid-cap
U.S. value stocks. The Russell 2000 Index measures the performance of small-cap U.S. growth stocks. It is not possible to invest directly in an index.
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Mid-Cap Stocks Offer the Best of the
Small- and Large-Cap Worlds
Small-Cap
Stocks
Stability
Established market positions
Mid-Cap
Stocks
X
Large-Cap
Stocks
X
X
X
Potential for future growth
X
X
Acquisition potential
X
X
Adaptability to changing markets
X
X
Experienced management
X
X
Liquidity
X
X
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Mid Cap: an Attractive Risk/Return History
A Market “Sweet Spot”?
Zephyr StyleADVISOR: Pioneer Investment Management
Risk/Return 1986 - 2005
16%
15%
Russell 2000
Russell Top 200
Russell Midcap
Russell Midcap Value
Return
10%
5%
0%
0%
5%
10%
Standard Dev iation
20%
Source: Zephyr
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Pioneer U.S. Value Team
Rod Wright
Head of Value Team
20 Years Experience
Aaron Clark
Portfolio Manager
13 Years Experience
Sean Gavin
Associate
Portfolio Manager
8 Years Experience
Tim Horan
Associate
Portfolio Manager
7 Years Experience
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Mid Cap Value Investment Philosophy and Process
A Focus on Quality Value
Philosophy:
 Selecting quality companies, clearly undervalued, can add significant
value while controlling risk; strategy is to sell risk and buy opportunity
Focus:
We seek to own:
 Great companies at reasonable valuations
 Good companies at a discount to fair value
 Turnarounds at compelling values
Objective:
 Preserve capital; generate positive absolute returns; outperform the peer
group and the S&P 500 Index
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Pioneer Mid Cap Value
Investment Process
Investment
Investment
Universe
Universe
Fundamental
Research
Security
Selection
Portfolio
Construction
 Emphasis on companies within Russell Mid Cap Value Index; target capitalization
between $1-12 billion
 Team of portfolio managers and analysts dedicated to in-house, fundamental,
bottom-up research; face-to-face meetings with 1000 companies annually;
 Security selection focuses on better than average companies – those with attractive
characteristics, attractive prices and a value driver
 Sector weightings decisions driven primarily by bottom-up, individual security
selection; sectors are not targeted; portfolio construction is quantitatively enhanced;
emphasis on long term investment horizon with appropriate diversification and
favorable risk/reward
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Mid Cap Value Investment Process
Buy Discipline
Three Keys to Value
Characteristics
Growth
Profitability
ROIC
Market Position
Management
Balance Sheet
Price
Undervalued
Attractive Risk Reward
Absolute Upside
Value Drivers
Improving Fundamentals
Catalyst
Clear Strategic Plan
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Mid Cap Value Investment Process
Sell Discipline
Reduce or eliminate positions when:
–
Stock reaches fair value or target price
–
A material fundamental change could adversely impact our view of
fair value
–
Price appreciation makes risk/reward less favorable
–
A more attractive opportunity is uncovered
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Pioneer Funds – U.S. Mid Cap Value
Attractive Valuations (as of 31/01/06)
Pioneer Funds U.S. Mid Cap Value
Russell
Mid Cap Value Index
Price to Earnings (FY1)
18.0
19.9
Price to Earnings (FY2)
16.6
17.8
Price to Cash Flow
23.4
20.8
2.0
2.3
Price to Sales
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Pioneer Funds – U.S. Mid Cap Value
Quality Characteristics (as of 31/01/06)
Pioneer Funds U.S. Mid Cap Value
Russell
Mid Cap Value Index
EPS growth-5 years
14.2
8.6
Long-term growth rate (First Call)
11.8
10.1
ROE-3 year average
13.3
10.3
ROA-3 year average
4.8
3.0
Total Debt to Capital
41.4
46.0
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Pioneer Funds – U.S. Mid Cap Value
Top 10 Holdings (as of 31/01/06)
Security
W.W Grainger
Sector
Industrials
% of Fund
2.1%
Information Technology
2.0%
Ball Corp.
Materials
2.0%
Ashland Inc.
Materials
2.0%
Mellon Financial Corp.
Financial
1.9%
Federated Investors Inc.
Financial
1.9%
The PMI Group Inc.
Financial
1.9%
Consumer Staples
1.9%
Air Products & Chemicals
Materials
1.8%
Bear Stearns Companies
Financial
1.7%
Xerox Corp.
Safeway Inc.
Total
19.2%
The portfolio is actively managed, and current holdings may be different.
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Pioneer Funds – U.S. Mid Cap Value
Sector Allocation (as of 31/01/06)
1,3
1,3
Telecommunication Services
6,3
5,2
Energy
7,4
7,4
Consumer Staples
Pioneer Funds - U.S.
Mid-Cap Value
8,0
Utilities
Russell Midcap Value
Index
13,8
8,8
8,6
Information Technology
9,0
Materials
7,0
9,2
Industrials
7,2
9,8
Health Care
4,9
12,5
12,4
Consumer Discretionary
23,3
Financial
32,2
0
5
10
15
20
25
30
35
The Fund is actively managed and portfolio sectors will vary over time.
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Pioneer Funds – U.S. Mid Cap Value
5-Year Risk versus Return (as of 31/01/06)
Europe/HK North America Equity Mid Cap Category Average
Pioneer Funds - US Mid Cp Value (A Non-Distributing USD)
Russell Midcap Value Index
Peer Group:Europe/HK - North America Equity Mid Cap
-3.00 0.00
3.00
6.00
9.00
12.00 15.00
5 Year Annualized Return
4.00 8.00 12.00 16.00 20.00 24.00 28.00
5 Year Standard Deviation
Source: Morningstar Direct
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Pioneer Funds – U.S. Mid Cap Value
Performance (as of 31/01/06)
PF - US Mid Cap Value (Class A Non-Dis USD)
Russell Mid Cap Value Index
Percent 30,00
27,33
25,00
22,10
20.33
20,00
14.71
15,00
13,25
11.01
10,63
9,69
10,00
5,00
0,00
1 Year
3 Years
5 Year
Since Incep.
*Pioneer Mid Cap Value Fund (a U.S. RIC of which Pioneer Funds – U.S. Mid Cap Value is a mirror) returns are used for performance purposes from inception date of
Class A Shares USD distributing 31/05/95 until inception date 30/11/01 of the Unit Class A USD Non-distributing of Pioneer Funds – U.S. Mid Cap Value.
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Pioneer Mid Cap Value Fund
Outperformed the Morningstar Mid Cap Value Average
5-Year Scatter Chart as of 12/31/05
Call 1-800-225-6292 or visit
www.pioneerfunds.com for the most
recent month-end performance results.
Current performance may be lower or
higher than the performance data
quoted.
11%
Pioneer Mid Cap
Value Fund (Class A at NAV)
The performance data quoted
represents past performance, which
is no guarantee of future results.
Return
10%
Investment return and principal value
will fluctuate, and shares, when
redeemed, may be worth more or less
than their original cost.. NAV results
represent the percent change in net
asset value per share. Returns would
have been lower had sales charges
been reflected. All results are historical
and assume the reinvestment of
dividends and capital gains.
Morningstar
Mid-Cap
Value
Funds Average
9%
8%
Volatility (Standard Deviation)
12%
13%
14%
Average Annual Total Returns
As of 12/31/05
1 Year
3 Years
Standard Deviations
5 Years
10 Years
3 Years
5 Years
10 Years
Pioneer Mid Cap
Value Fund
(Class A at NAV)
7.66%
21.48%
10.74%
10.67%
11.01%
14.26%
15.28%
Mstar Mid-Cap
Value Funds Avg.
8.43%
20.46%
9.36%
11.38%
11.74%
14.82%
16.34%
Source: Morningstar Direct and Lipper Inc. The
Morningstar Mid Value category represents
average annual total returns, excluding sales
charges, for the mid-cap value funds in the
Morningstar universe. The Lipper Mid Cap
Value average represents the average annual
total returns of all funds in the group in
existence for the period.
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Portfolio Manager
J. RODMAN WRIGHT, CFA, Senior Vice President
and Portfolio Manager
Connecticut College, B.A. (1984), New York University
Graduate School, M.B.A. (1988)
Joined Pioneer in 1994
Mr. Wright is responsible for management of the Pioneer
Mid Cap Value Fund and the related Vision Variable
Annuity Mid Cap Value Fund, as well as the offshore
version, Pioneer Funds – Mid Cap Value Fund. Mr. Wright
has managed these funds since January 1997, and served
as assistant fund manager of the Mid Cap Value Fund
since January 1996. He started his investment
management experience in 1987. Prior to joining Pioneer,
he was employed by the Prudential Investment Advisors,
first as an analyst and later as a portfolio co-manager.
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Vielen Dank für Ihre
Aufmerksamkeit!
Für die in den jeweiligen Ländern zum Vertrieb berechtigten Fonds von Pioneer Investments gilt:
MARKETING UND VERTRIEB
Pioneer Fonds Marketing GmbH, Hopfenstraße 4, 80335 München, Deutschland
✆ +49 (0) 89.29 07 41-0  +49 (0) 89.29 07 41-80 99
KUNDENSERVICE UND AUFTRAGSABWICKLUNG
Pioneer Global Investments Limited, Niederlassung Deutschland
Postfach 10 51 42, 20035 Hamburg, Deutschland
GEBÜHRENFREIE TELEFON- UND FAXNUMMERN FÜR ANFRAGEN
aus Deutschland:
✆ 0800.082 08 68
 0800.082 08 73
aus Österreich:
✆ 0800.29 76 57
 0800.29 14 76
Der Pioneer Funds – U.S. Mid Cap Value ist ein Teilfonds des Pioneer Funds, eines „Fonds commun de placement“ mit verschiedenen, voneinander getrennten Teilfonds,
aufgelegt nach luxemburgischem Recht. Der Pioneer Mid Cap Value Fund wurde in der Rechtsform eines Business Trust nach dem Recht von Delaware, USA, gegründet.
Die Fonds von Pioneer Investments erhalten Sie ausschließlich bei Banken, Versicherungen und ausgewählten Anlageberatern. Der Pioneer Mid Cap Value Fund und der
Pioneer Funds – U.S. Mid Cap Value werden vom selben Fondsmanager verwaltet und verfolgen ein ähnliches Anlageziel und eine vergleichbare Anlagepolitik. Die Portfolios
sind jedoch in unterschiedlichen Ländern domiziliert und unterliegen dadurch abweichenden gesetzlichen Regelungen, was die Portfolioverwaltung beeinflusst. Die
Anlageergebnisse können voneinander abweichen. Aufgrund unterschiedlicher Auflegungsdaten, Fondsvolumina, Portfolio-Holdings und anderer Faktoren gibt es keine
Gewissheit, dass der Pioneer Funds – U.S. Mid Cap Value vergleichbare Ergebnisse wie der Pioneer Mid Cap Value Fund erzielen wird.
Der für den Anteilserwerb allein maßgebliche Verkaufsprospekt ist als Druckstück kostenlos erhältlich in Deutschland bei der Pioneer Fonds Marketing GmbH und in
Österreich bei der Bank Austria Creditanstalt AG, Wien.
Die in der Vergangenheit erzielten Erfolge sind keine Garantie für die zukünftige Entwicklung einer Anlage. Soweit nicht anders angegeben, beruhen die in diesem Dokument
enthaltenen Ansichten auf Recherchen, Berechnungen und Informationen von Pioneer Investments. Diese Ansichten können sich jederzeit ändern, abhängig von
wirtschaftlichen und anderen Rahmenbedingungen. Es gibt keine Gewähr, dass sich Länder, Märkte oder Branchen wie erwartet entwickeln werden. Investitionen beinhalten
gewisse Risiken, darunter politische und währungsbedingte Risiken. Die Rendite und der Wert der zugrunde liegenden Anlage sind Schwankungen unterworfen. Dies kann
zum vollständigen Verlust des investierten Kapitals führen. Bitte lesen Sie den Verkaufsprospekt aufmerksam, bevor Sie investieren. Anteile des Pioneer Funds – U.S. Mid
Cap Value („Anteile“) dürfen in den Vereinigten Staaten von Amerika („USA“) sowie zugunsten von US-Staatsangehörigen nicht öffentlich zum Kauf angeboten werden.
Gleiches gilt für die Hoheitsgebiete oder Besitztümer, die der Gesetzgebung der USA unterliegen. Dieses Dokument ist kein Verkaufsprospekt und stellt kein Angebot zum
Kauf oder Verkauf von Anteilen in Ländern dar, in denen ein solches Angebot nicht rechtmäßig wäre. Außerdem stellt dieses Dokument kein solches Angebot an Personen
dar, an die es nach der jeweils anwendbaren Gesetzgebung nicht abgegeben werden darf. Nur für Vertriebspartner von Pioneer Investments.
Pioneer Investments ist ein Markenname der Unternehmensgruppe Pioneer Global Asset Management S.p.A.
www.pioneerinvestments.de
© Pioneer Fonds Marketing GmbH
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