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Pioneer Global Asset Management

Pioneer Global Asset Management. New York – February 2003. Structure and Governance. Future Perspectives. 2002 Overview. UCI. Private bank. Structure and Governance

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Pioneer Global Asset Management

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  1. Pioneer Global Asset Management New York – February 2003

  2. Structure and Governance • Future Perspectives • 2002 Overview

  3. UCI Private bank Structure and Governance Pioneer Investments is part of UCI group, whose structure has been designed to exploit all the existing business potential and to drive future growth Corporate division Retail division Private & AM division New Europe division New Europe Banks Retail Bank Corporate bank Xelion

  4. Structure and GovernanceStrong Senior Management Team PGAMDario Frigerio (CEO) USA Dan Geraci (CEO PIM Inc.) INTERNATIONAL Matteo Perruccio (CEO PIM Sgr & Head of Intl.) NEW EUROPE Dan Kingsbury (CEO N.E.) ALTERNATIVE INV. Alberto La Rocca (CEO Alt. Inv.) CIO Giordano Lombardo COO Angelo Forloni USA Canada Mexico Italy Cont. Europe Latin America Asia Poland Czech Rep. Turkey Slovakia Dublin Milan Momentum Intl

  5. Holding Company UCI Global Finance Pioneer Global AssetManagement Research Unit Compliance & Org. Inform. Technology Strategic Planning 44 Risk Management Human Resources Investment Milan Dublin Boston Singapore Total number of employees: 1,632 (as of 31 December 2002) Structure and GovernanceA lean Holding Company: strong Investment, Distribution and Operations structures Audit Distribution Operations 390 958 240

  6. Structure and Governance A Global Presence … Dublin Warsaw London Prague Munich Paris Boston Milan Madrid Miami Hong Kong Singapore Buenos Aires

  7. Structure and Governance … leveraging on four Manufacturing Centres Pioneer IM Ltd Dublin Pioneer IM Singapore Pioneer IM Inc Boston Pioneer IM SgrpA Milan

  8. Structure and Governance The four pillars of Pioneer as a “BestPractice Company” • Corporate Governance: Active role of Independent Directors, Self Regulation Code • Risk Control: Segregated Investment and Operational Risk Management • Consistency in Communication: Performance Presentation Standards - GIPS /AIMR Compliant • Asset Management: Disciplined investment process and client oriented philosophy

  9. Structure and Governance Focus on Risk Management Risk Management InvestmentRisk * Operational Risk Dimensions Organisational Business Event Categories Market Liquidity Credit * Portfolio Risk • Investment Risks are controlled within the Investment Division and are reported ultimately to the Global Chief Investment Officer. Independent monitoring is run by Risk Management function which reports to the Board of Directors • Operational Risks are controlled by the Risk Management function, providing guidance and support to employees and executive management. All Pioneer employees have responsibilities for managing operational risks.

  10. Structure and Governance • Future Perspectives • 2002 Overview

  11. EBITA in line with 2001thanks to: • Good revenue stream, due to: • product innovation in Italy • strong sales in USA, New Europe and International business areas • cost control • Strong relative performance of leading funds • Higher Third Party penetration and Brand Awareness 2002 Overview Most important achievements

  12. 2001 2002 2002 Overview – Focus on Sales Record net sales in the US, New Europe and International business areas; positive sales in Italy Net Sales 2002(1) AuM 31.12.’02 Net Sales 2001(1) (Euro mln) 5,242.3 6,045.4 103,474 TOTAL PIONEER 1,375.7 3,211.1 17,659 USA 596.5 972.7 2,754 International 2,862.6 1,342.2 80,655 Italy 407.5 578.7 1,522 New Europe 145.2 220 1,520 Alternative Investment(2) PGAM Net Sales (Mln EUR) (1) Excluding Proprietary Funds (2) Net Sales already included in the other divisions; AuM including Momentum (acquired in Nov. 2002)

  13. 2002 Overview – Analysis by business area Italy - Shift towards high value added products: Capital Guaranteed, Unit Linked and Hedge Funds Innovative Capital Guaranteed Products: Hedge Funds • Single Strategy Hedge Funds • Funds of Hedge Funds (Momentum) • Structured products on Hedge Funds Unit Linked WrapAccounts • Flexible segregated accounts, invested in Pioneer funds and securities linked to a 5-year put option • Guarantee: 100% of the investment including entry fees, plus the option cost • Maximum weight of equities: 60% of total assets • Adaptable to several risk profiles • Guarantee of capital

  14. 2002 Overview – Analysis by business area Italy – Benefiting from a long tradition in innovation, Pioneer has gained leading market share in new products Innovative Products Hedge Funds: 20.18% Mkt. Share (as of 31.12.2002) Traditional Products UCI current accounts and other deposits: 9.50% Mkt. Share (as of 30.09.2002) Unit Linked: 17.72% Mkt. Share (as of 30.06.2002) vs. Mutual Funds: 13.32% Mkt. Share (as of 31.12.2002) Source: Assogestioni for Mkt. Shares in Hedge and Mutual funds; IAMA for Unit Linked and ABI for UCI current accounts and other saving deposits

  15. 2002 Overview – Analysis by business area International – New mandates and new products New Mandates • Agreement with Primary Spanish Bank • New mandate from GIC (Singapore) • Penetration into new markets (HK, Switzerland) • Signed agreements with major global platforms: UBS Paine Webber, Salomon Smith Barney, Lehman Private Clients, Standard Chartered, Crédit Suisse Fund Lab., Merrill Lynch, Prudential Bache New products • First launch of guaranteed notes • Launch of guaranteed products High Ranking • Top ranking in Chilean Pension System (out of 59) • Top ranking in Merrill Lynch offshore platform • Top ranking in Prudential Bache platform • # 1 foreign fund brand in Germany

  16. First closed-end mutual fund Innovative principal-protected mutual fund 2002 Overview – Analysis by business area USA – 2002 Major initiatives/achievements Pioneer High Income Trust • Lead underwriters: Merrill Lynch and UBS Paine-Webber • Over $ 500 million raised in one-month offering 2 asset-allocation concepts (for financial advisors) • Double Feature: combination of Pioneer Equity Income Fund and Pioneer High Yield Fund in a single portfolio offering competitive performance and low volatility through negatively correlated investments • Pioneer 4: a diversified mix of Pioneer Fund, Pioneer Mid Cap Value Fund, Pioneer Small Cap Value Fund and Pioneer High Yield Fund that outperformed the S&P 500 over the past 3+ years with significantly less volatility • Over $160 million raised in less than 2 months UNI-K: Innovative individual retirement account • Co-branded with Merrill Lynch and H&R Block

  17. 2002 Overview – Analysis by business area New Europe: Leveraging on Euro-convergence and international products Poland • Continued shift from saving deposits to fixed income funds despite tax disadvantages (+75% AUM growth) • Launch of closed-end tax-advantaged products • Launch of 2 USD fixed income products (clones of Pioneer US funds) Czech Republic • Launch of a Luxembourg funds family Slovakia • Start of sales of international products Croatia • First-move into the market and launch of a balanced fund jointly with Zagrebacka Banka

  18. 2002 Overview – Key Financial Indicators Sustained profitability, despite difficult market conditions, … ‘02/’01 % ch. +6.1% • Good net sales trend outside Italy and related strong performance of underwritingfees (+69.4% y/y) • Confirmed commitment on cost reduction and monitoring,resulting in increased efficiency Euro mln … and EBITA improves thanks to cost control 113,8 120.7 9M01 9M02 Managerial EBITA(1) Euro mln -0.7% Despite lower AuM due to market conditions … 403.9 401.1 Euro bn -2.3% 110.3 107.8 … revenuesare in line with 9M01 … 9M01 9M02 Revenues(2) 9M01 9M02 Avg AuM(2) (1) Accounting Gross Operating Inc. + Interest expenses + Non-cash Operating items. (2) Revenues from pure Asset Management business.

  19. 2002 Overview – Focus on Fund Performance … coupled with strong relative fund performance in leading segments… Top Quartile Funds European Equities US Equities • Pioneer French Equity** • Pioneer Top European Players*** • Pioneer European Small Companies*** • Pioneer Euro Select*** • Pioneer Fund* • Pioneer Small Cap Value* • Pioneer US Small Companies*** • Pioneer US Mid Cap Value*** • Pioneer US Value*** • Pioneer Independence*** Bonds • Pioneer US High Yield Corporate Bond** • Pioneer Strategic Income** • Pioneer Euro Short Term*** Note: * Over 5 years history – Comparison with peers universe for the last 5 years ** Over 3 years history but less than 5 years – Comparison with peers universe for the last 3 years *** Over 1 year history but less than 3 years – Comparison with peers universe for the last 1 years

  20. 2002 Overview – Focus on Fund Performance … and on average overperforming benchmarks in bond and equity portfolios % Funds outperforming Benchmark 1,3,5 years to December '02 0% 25% 50% 75% 100% Total Equity Bond Balanced 1 Year 3 Year 5 Year

  21. 2002 Overview – Focus on Fund Performance New Products: Hedge Funds Period: January 1999 - December 2002 Total Return Annualised Return Annualised Volatility Sharpe Ratio* Morgan Stanley World Equity -31.1% 8.9% 16.6% -0.78% JP Morgan Global Govt Bond 15.0% 3.6% 6.9% -0.06% CSFB/Tremont HF Index 37.8% 8.3% 7.6% 0.57% Pioneer Global Opportunities** 26.4% 6.5% 4.9% 0.65% Momentum All Weather Fund*** 96.8% 9.2% 3.6% 1.19% • Dublin domiciled Pioneer Global Opportunities Pioneer Convertible Bond Arbitrage Pioneer Global Equity Arbitrage Pioneer Long Short European Equity Pioneer Global Macro • Italian domiciled Pioneer Conservative Hedge Pioneer Balanced Hedge Pioneer High Risk Hedge • Momentum All Weather Funds Orbit Funds Meteor Funds Capital Guaranteed Funds Note: *Risk free rate for computing Sharpe Ratios at 4% ** Since inception (April 1999) *** Since May 1995

  22. Structure and Governance • Future Perspectives • 2002 Overview

  23. Future Perspectives – Strategic Guidelines Leveraging on three business divisions with a clearly defined mission Pioneer Investments Mainly Bank/Insurance Captive Networks and Global Distribution Euro-convergence Open Platforms Continental Europe New Europe North America Latin America Asia Further enhance leadership in Asset Management in close cooperation with UCI Be the best in class provider for UCI Group, while building international presence through selected Third Party channels Position Pioneer for Market Share Growth and Introduce Wealth Management Products

  24. Future Perspectives – Focus on Continental Europe Still a positive medium-term scenario for Asset Managers in Europe ... European Asset Management Revenue* and AuM growth (% Change) Medium-term sustainable AuM growth Real GDP Growth 35.6 2.5% AuM Performance Revenue Inflation 5% + 2% 17.6 Risk premium effect Switch effect into retirement** 7.9 7.5 AuM growth 0.5% 11% 2.7% Financial savings/ Disposable Income -6.7 Net inflows Financial saving /HFA 12% -10.9 3.3% x Is it realistic? Disposable Income/ Household financial assets 1998-1999 1999-2000 2000-2001 28% * Pertaining to Asset Managers only ** The switch effect has been calculated assuming that in Europe in a 15 year time at least 45% of household financial assets will be institutionally managed Source: PGAM Research

  25. Future Perspectives – Focus on Continental Europe ... thanks also to the expected alignment of household portfolios to Dutch, UK and US standards Total Household managed assets*/Household financial assets Data as of 2000 Penetration potential 59% 55% 47% 45% target in 15 years 35% 30% 29% 24% 24% France Italy Germany Spain Europe (4) ** Netherlands UK US * Calculated including mutual funds, pension funds, life insurance and segregated accounts ** Germany, France, Italy, Spain Source: PGAM Research on National statistics data

  26. Future Perspectives – Focus on Continental Europe Our strategy: devising a winning combination of two distribution models • Vertical integration with distribution • Continuous innovation • Scalability • Operational efficiency in risk management • Advice role • Brand Proprietary Model Distinctive Mission One platform, twodistribution models Synergies and cross- fertilization • Gain recognition as independent manager • Excellence in products such as European equities, US value, corporate bonds • Focus on high growth segments of open platforms • Customization and client servicing for selected channels (A.I., Structured Products) Third Party Model

  27. Future Perspectives – Focus on Continental Europe/Italy Our consolidated expertise in the proprietary model is a strong competitive advantage within UCI new organization • Internationally recognised Brand “Pioneer Inside” Cross–fertilization of global expertise • Best practice in client services • Ability to innovate and segment product and service offerings Personalised solutions/ Industrialised processes Private Retail Corporate

  28. Future Perspectives – Focus on Continental Europe/Italy Two examples: one for the Wealth Management Division … UCI Private Banking (Relationship) Pioneer (Manufacturing) UniCredit Private A.M. (Specialist) • Asset management advice • Product Development and marketing strategies • Stock Picking Modelling • A/L Risk Modelling “industrial model” • Client relationships • Sales effort • Product Development • Packaging • Profiling • Personalization of strategies on single client portfolios “personalized model”

  29. The Pioneer/Cambridge model Future Perspectives – Focus on Continental Europe/Italy … and one across all client segments including mass/affluent and institutional Since 1999 Pioneer has been engaged with the University of Cambridge-UK in a joint research on Asset Liability Management, that has now delivered the first operational models. Liabilities model Model returns on investment classes Risk preferences Investment horizon Dynamic optimization model for assets-liabilities Dynamic Investment Decisions Capital Guaranteed & VaR Constrained Portfolios Long-term Retirement Products Multi Manager Target Portfolios

  30. Build Hedge Funds business Brand Recognition Future Perspectives – Focus on Continental Europe (ex Italy), LatAm and Asia Gaining even broader recognition as leading third party player in Europe, LatAm and Asia Focus on strategic relationships • Excellence in key products • Gaining Third Party Mandates proposing “non transactional” deals • Focus on Funds of Funds, Structured Products, Institutional and Private Banking • Focus on key partners and value added of being integrated provider with full range of Long, Alternative + Structured Products • “Pioneer Investments is the most distinguished brand in the financial services sector in Germany”* * Source: Capital Corporate Branding survey – Sector Analysis 2002

  31. Future Perspectives – Focus on USA Position Pioneer USA for market share growth and introduce Wealth Management products Upcoming Initiatives • Diversify Pioneer’s mix of equity and fixed income fund sales through multi-asset class fund packages (e.g., Pioneer Four, Double Feature) • Actively promote and distribute Pioneer’s hedge fund strategies (institutional and retail) • Close gaps in product range (investment styles; various disciplines) New Product Launches • Separate account strategies and capabilities • Enhanced variable annuity products now wrapped by Travelers Insurance Company • Tax deferred education savings program (i.e., 529 Plan) • Institutional mandates across all appropriate disciplines

  32. Poland Czech Republic Slovakia Croatia Turkey Future Perspectives – Focus on New Europe Further enhance leadership in Asset Management in close cooperation with UCI local banks • Launch clones of Pioneer Euro funds (fixed income, balanced, &equity) • Launch Savings Plan program with Bank Pekao • Work to shift emphasis from local fixed income to local balanced & equity and to international strategies • Complete registration of fixed income portion of Luxembourg family product line • Determine synergies with Zivnostenska Banka asset management • Launch a Luxembourg fund family • Launch guaranteed products • Explore and develop opportunities with new financial service joint venture between UCI and the Koc Group

  33. Personalised Solutions Pioneer / Industrialised Process Future Perspectives – Strategy Synopsis Our Mission: Help distributors to best service their clients by optimising portfolio strategy and risk control

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