From Manufacturing to Energy: How to Capture Sustainable Growth …isd.pioneerinvestments.com/microsite/the_renaissance_of_risk/pdfs/... · From Manufacturing to Energy: How to Capture

Page 1 I For Dublin 2013 Investment Conference Attendees Only

and Not to be Distributed to the Public

From Manufacturing to Energy:

How to Capture Sustainable

Growth in US Equity Andrew Acheson, Portfolio Manager

John Peckham, CFA, Portfolio Manager, Co-Head of Equity Research, US

June 2013

Page 2 I For Dublin 2013 Investment Conference Attendees Only and Not to be Distributed

to the Public.

Andrew Acheson

Portfolio Manager

Pioneer Funds – U.S. Fundamental Growth


to the Public.

Fertile Environment for US Large-Cap Growth Companies

Opportunity: Pioneer Funds – U.S. Fundamental Growth


Great Companies at Good Prices

Implications for Investing: Consider an allocation to:

In an environment of slow but steady economic momentum, a position in quality large-capitalisation companies may help pursue growth

For growth investors who fear the effects of volatile markets, consider an investment approach that has delivered lower volatility



Morningstar Rating TM

An Attractive Track Record of Risk and Reward

Source: Morningstar, 30 April 2013. Copyright © 2013 Morningstar UK Limited. All Rights Reserved. The information contained herein: (1) may not be copied or distributed; and (2) is

not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.


to the Public.


Our Philosophy

“We believe that a concentrated portfolio of companies with

businesses that generate high returns on incremental invested

capital, possess a sustainable competitive advantage, and

capitalise on secular trends, can provide competitive performance

over time.”


to the Public.



• Large-cap growth fund seeking to deliver investment upside at lower than average risk

• Highly analytical approach looking to identify growth companies with:

– Fortress franchises: strong and enduring business models

– Superior sales and cash flow growth

– Above average returns on capital

– Self-funded growth: long-term growth through re-investment

– Justifiable valuations

• High conviction (approx. 30-40 holdings)

– Ten largest holdings typically represent 35% – 45% of assets


to the Public.

The Characteristics that Define Our Approach

Valuation: Growth at the Right Price

Return on Incremental Invested Capital

Steady State Cash Flow Yield

(a) Growth investments include incremental Selling, General and Administrative Expenses (SG&A) and Research and Development (R&D). (b) Enterprise value equals total equity

market cap plus company debt less cash. (c) Incremental growth capital invested equals incremental SG&A and R&D, capital expenditures above depreciation and working capital.

A Multi-Factor Approach

• Traditional Price Multiple Metrics

• Discounted Cash Flow

• Cash Flow and ROIC Evaluation

Operating cash flow (excluding growth investments) (a)

Enterprise Value (b)

Incremental Operating Cash Flow

Incremental Growth Capital Invested (c)


to the Public.

1) Strong Track Record vs. Morningstar Peer Average

Delivering on Our Investment Philosophy

3rd 3rd

Source: Morningstar, 30 April 2013. Morningstar overall ratings, rankings and performance are based on Class A USD non-distributing units net of fees. Morningstar quartile rankings are based on a

comparison of Pioneer Funds – U.S. Fundamental Growth’s performance relative to all the other funds in the Morningstar US Large-Cap Growth Equity category. Copyright © 2013 Morningstar UK

Limited. All Rights Reserved. The information contained herein: (1) may not be copied or distributed; and (2) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content

providers are responsible for any damages or losses arising from any use of this information.

12.4% 13.6%

13.2%

4.9%

17.0%

12.6% 13.4% 15.3%

2.6%

16.7%

10.2% 9.7%

13.5%

-3.7%

13.3%

-5%

0%

5%

10%

15%

20%

1 Year 3 Years Ann. 2012 2011 2010

Pioneer Funds – U.S. Fundamental Growth Russell 1000 Growth Index Morningstar US Large-Cap Growth Equity Average

Morningstar Rating TM Overall Rating Percentile Ranking

3 Years Ann. 2012 2011 2010

Pioneer Funds – U.S. Fundamental Growth ⋆⋆⋆⋆⋆ 23rd 51st 7th 4th


to the Public.

2) Strong Returns Achieved at Lower Volatility than BMK & Morningstar Peer Average


Standard Deviation

Source: Morningstar, 30 April 2013. Copyright © 2013 Morningstar UK Limited. All Rights Reserved. The information contained herein: (1) may not be copied or distributed; and (2)

is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Risk/return figures are based on Class A USD non-distributing units net of fees. Benchmark refers to the Russell Growth 1000 Index. Past performance does not guarantee and is

not indicative of future results.

Return % Std Dev %

Pioneer Funds –

U.S. Fundamental Growth 13.6 14.5

Russell 1000 Growth Index (TR) 13.4 15.5

Morningstar US Large-Cap

Growth Equity Average

9.7 16.8

Standard Deviation

8%

10%

12%

14%

16%

14% 16% 18%

Re

turn

R

etu

rn

3-Year Volatility/Return Comparison


to the Public.

Source: Morningstar, 30 April 2013. Copyright © 2013 Morningstar UK Limited. All Rights Reserved. The information contained herein: (1) may not be copied or distributed; and (2)

is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Downside capture figures are based on Class A USD non-distributing units net of fees.

96% 100%

112%

0%

20%

40%

60%

80%

100%

120%

Pioneer Funds -U.S. Fundamental

Growth

Russell 1000Growth Index

Morningstar USLarge Cap Growth

Equity Average

1-Year Downside Capture Ratio

89%

100%

125%

0%

20%

40%

60%

80%

100%

120%

140%

Pioneer Funds -U.S. Fundamental

Growth

Russell 1000Growth Index

Morningstar USLarge Cap Growth

Equity Average

3-Year Downside Capture Ratio

3) Has Captured Less Downside Compared to Morningstar Peer Average


Page 10 I For Dublin 2013 Investment Conference Attendees Only and Not to be

Distributed to the Public.

Summary

What Makes the Difference?

• Offers exposure to high-quality franchises with strong and enduring business models

and sustainable long-term growth potential

• The focus is not just on earnings, but on how a company achieves its earnings

• Companies selected for the Portfolio have been successful in increasing profits with

relatively moderate capital needs

• Maximises return potential through careful stock selection and concentration

• Consistent and disciplined investment approach



John Peckham, CFA

Portfolio Manager,

Co-Head of Equity Research, US

Pioneer Funds – U.S. Research



Pioneer Investments US Equity Research Team

S&P 500 Sector Breakdown

J. Clarkson Williams, CFA

Technology Hardware

Pioneer Investments since 1995

Over 26 years in Investment Management

Paul Cloonan, CFA

Semiconductors



David Sobell

Biotechnology, Health Care Equipment and Services



Yves Raymond

Software and Services



George Sidgwick

Telecommunications, Media and Transportation



Bradley Galko, CFA

Capital Goods



Carol Lintz

Consumer Staples

Pioneer Investments since 2006 Over 29 years in Investment Management

Robert Petrie

Consumer Discretionary ex-Media



Terry Shu, CFA

Insurance and Utilities



James Moynihan

Banks and Real Estate



Brian Popiel

Diversified Financials



John Peckham, CFA

Materials



John Murray

Energy



US Equity Analysts’ Average Experience: 20 Years

Chris Stevo

Pharmaceuticals






Investment Philosophy

• Bottom-up, research-driven investment philosophy

• Specialist career Analysts, with in-depth knowledge of companies and sectors

• Aim to produce stable outperformance over time using insights gained from research




Investment Process

Stock Selection – Research Insights and Investment Cases

• Research insight is a fundamentally different understanding of an investment

controversy or critical issue that manifests itself in a material price anomaly versus the

existing share price

• An investment case is a clear, concise articulation of an analyst’s research insight. An

articulation of what an analyst understands regarding investment controversy that is

different to what is imputed in the share price




Portfolio Overview

• Broadly diversified* US equity portfolio, sector neutral versus benchmark (S&P 500 Index)

– As such, performance is not achieved through sector positions but by selecting the most attractive companies

• Managed by Pioneer Investments’ US Research Analysts

• Best ideas from analysts in each sector

• Based on proprietary fundamental research

• Leverage off Research team of experienced and specialised career analysts

Total AUM (Mil) $2,609.6

Total Number of Holdings 100

Assets in Top 10 Holdings 24.3%

Fund Inception 20 April 1998

First NAV Date (A Class) 27 December 2001

Morningstar Rating ⋆⋆⋆⋆

Source: Pioneer Investments as at 30 April 2013. Morningstar Ratings: Copyright © 2013 Morningstar UK Limited. All Rights Reserved. The information contained herein: (1) may not

be copied or distributed; and (2) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising

from any use of this information. *Diversification does not guarantee a profit or protect against a loss.



70%

Source: Pioneer Investments as at 30 April 2013. Morningstar Ratings: Copyright © 2013 Morningstar UK Limited. All Rights Reserved. The information contained herein: (1) may not

be copied or distributed; and (2) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising

from any use of this information.

42%

21%

17% 10 Years

5 Years

1 Year

3 Years

% Rank Quartile

3rd

2nd

1st

1st


Performance vs. Morningstar Peers as at 30 April 2013



Shale Gas in the United States

Source: Pioneer Investments – For Illustrative purpose only.



Energy Sector – How We Invest

• Investment Universe

– 43 Energy Companies in the S&P 500 Index

– 80 Companies that meet Cap requirement

• Leverage Quant group to “Fish from a better pool”

• Understand and exploit longer-term trends

– E&Ps

– Service Companies

– Refiners



Energy Sector – How We Invest (Continued)

• Understand expectations

– Conferences, Sell Side and Trade Conferences

– Company Road Shows

– Dialogue with Sell Side

• Define range of outcomes

– Base Case DCF using marginal prices for Commodities

– Downside Case (what happens when we are wrong)



$80

$100

$120

$140

$160

$180

$200

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rebased t

o 1

00)

Analyst Idea: Oil and Gas Company

Investment Case based on:

• 200,000 acres in the Marcellus shale is the highest IRR oil or gas resource play in the entire US

• Potential reserves are at least 10 times that of their proven reserves providing decades of growth

• Grows production at least two times faster than its peers, while keeping capex within their operating cash flow

• Will start generating substantial free cash flow – potentially as much as $1 - $1.5B over the next two years

The portfolio is actively managed, and information may not be representative of current

or future holdings. References to individual stocks should not be

taken as investment recommendations to buy or sell any security. Past performance

does not guarantee and is not indicative of future results.

Source: Pioneer Investments and Bloomberg as at 30 April 2013.

Oil and Gas Company (Price)



Manufacturing – How We Invest

• Monitor extensive and diverse universe of capital goods companies

– Hundreds of issuers, most with diverse multi-business portfolios

– Defense to Healthcare, Energy to Agriculture

• Leverage Quant Group

– Multiple screens (capitalisation, macro indicators)

– Captures intersection of historical fundamental data and stockmarket data

• Develop and articulate clearly defined investment thesis, while being aware of

cyclical undercurrents

– Leverage analysts’ deep knowledge of companies’ diverse business portfolios,

developed over more than a decade

– Stay attuned to various, individual industry cycles



Manufacturing – How We Invest (Continued)

• Go beyond the merely cyclical in developing investment cases

– Management changes / Operational improvement

– Portfolio actions / Capital allocation stories

– Longer-term (“secular”) global trends

• EM infrastructure

• Shifts in global energy / shale revolution

• Global emissions standards

• Fiscal austerity or rising threats from “rogue” regimes



$90

$95

$100

$105

$110

$115

$120

$125

$130

$135

Ap

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-12

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rebased t

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Analyst Idea: Global Diversified Industrial Company

The portfolio is actively managed, and information may not be representative of current

or future holdings. References to individual stocks should not be

taken as investment recommendations to buy or sell any security. Past performance

does not guarantee and is not indicative of future results.

Source: Pioneer Investments and Bloomberg as at 30 April 2013.

Global Diversified Industrial Company (Price)

Investment Case based on:

• Company has strong brands that are

market leaders

• Historically undermanaged, however,

company’s financials have improved

as new management’s operational

initiatives have taken hold

• More shareholder-friendly capital

redeployment (and strategic portfolio

actions) should further augment

returns over time



Important Information

Unless otherwise stated all information contained in this document is from Pioneer Investments and is as at 30 April 2013.

Pioneer Funds – U.S. Fundamental Growth and Pioneer Funds – U.S. Research are sub-funds (the “Sub-Funds”) of Pioneer Funds (the “Fund”), a fonds commun de placement with

several separate sub-funds established under the laws of the Grand Duchy of Luxembourg.

Past performance does not guarantee and is not indicative of future results. Unless otherwise stated, all views expressed are those of Pioneer Investments. These views are subject

to change at any time based on market and other conditions and there can be no assurances that countries, markets or sectors will perform as expected. Investments involve certain

risks, including political and currency risks. Investment return and principal value may go down as well as up and could result in the loss of all capital invested. More recent returns

may be different than those shown. Please contact your local sales representative for more current performance results.

In the event this Sub-Fund holds derivatives, portfolio breakdown and allocation slides reflect such derivative exposure only where specifically noted.

This material is not a prospectus and does not constitute an offer to buy or a solicitation to sell any units of the Fund or any services, by or to anyone in any jurisdiction in which such

offer or solicitation would be unlawful or in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or

solicitation. For additional information on the Fund, a free prospectus should be requested from Pioneer Global Investments Limited (“PGIL”), 1 George’s Quay Plaza, George’s

Quay, Dublin 2, Ireland. Call +353 1 480 2000 Fax +353 1 449 5000.

This information is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities or services in the United States or in any of its

territories or possessions subject to its jurisdiction to or for the benefit of any United States person (being residents and citizens of the United States or partnerships or corporations

organized under United States laws). The Fund has not been registered in the United States under the Investment Company Act of 1940 and units of the Fund are not registered in

the United States under the Securities Act of 1933.

This document is not intended for and no reliance can be placed on this document by retail clients, to whom the document should not be provided.

The content of this document is approved by PGIL. In the UK, it is directed at professional clients and not at retail clients and it is approved for distribution by Pioneer Global

Investments Limited (London Branch), Portland House, Bressenden Place, London, SW1E 5BH, authorised by the Central Bank of Ireland and regulated by the Financial Services

Authority for the conduct of UK business. The Fund is an unregulated collective investment scheme under the UK Financial Services and Markets Act 2000 and therefore does not

carry the protection provided by the UK regulatory system.

Pioneer Funds Distributor, Inc., 60 State Street, Boston, MA 02109 (“PFD”), a U.S.-registered broker-dealer, provides marketing services in connection with the distribution of Pioneer

Investments’ products. PFD markets these products to financial intermediaries, both within and outside of the U.S. (in jurisdictions where permitted to do so) for sale to clients who

are not United States persons

For Dublin 2013 Investment Conference Attendees Only and Not to be Distributed to the Public

Pioneer Investments is a trading name of the Pioneer Global Asset Management S.p.A. group of companies.

Date of First Use: 6 June 2013

Documents

From Manufacturing to Energy: How to Capture Sustainable Growth …isd.pioneerinvestments.com/microsite/the_renaissance_of_risk/pdfs/... · From Manufacturing to Energy: How to Capture