Pioneer Compass A Quarterly Update on the Direction of the Markets

Transcription

1 Pioneer Compass A Quarterly Update on the Direction of the Markets Q / As of April 2016 The views expressed in this presentation are those of Pioneer, and are subject to change at any time. These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any Pioneer investment product. Not FDIC insured May lose value No bank guarantee

2 Topics of Discussion 1. Overview and Global Context 2. US Economic Outlook 3. Equity Markets 4. Fixed Income Markets 5. Alternatives 6. Appendix Page I April 2016

3 Four Pressing Questions From Investors Fluctuating Oil Prices = Global volatility? A New 2008-style crisis? China: Structural Transition Brexit Then what? Page I April 2016

4 2016: Low Interest Rates Benefit Fixed Income and Emerging Markets But investors remain concerned (gold prices) Year-to-Date 3/31/16 Index Performance 20.0% 15.0% 16.2% 10.0% 5.0% 0.0% 5.4% 0.8% 0.2% 5.9% 5.9% 4.6% 3.2% 3.0% 1.6% 3.5% 0.3% 6.8% 4.8% -5.0% -1.5% -3.7% -2.6% -10.0% Equity Fixed Income Commodities Currencies Source: Pioneer Investments. Bloomberg data as of 3/31/16. Indices used to represent asset classes, commodities and currencies include: Emerging Markets Stocks - MSCI Emerging Markets Index. US Large Caps Index. World Stocks - MSCI All Country (AC) World Index. US Small Caps Russell Non-US Developed - MSCI EAFE Index. Global Bonds - Global Aggregate Bond Index. Emerging Markets Bonds - Bloomberg Emerging Markets Index. US Treasuries - Bloomberg US 7-10 Treasuries. US High Yield - BoA ML US High Yield Bond Index US IG Corporate - US Aggregate Bond. Municipals BofA ML Municipal Bond Index Gold Bloomberg Spot Price. West Texas Crude (Oil) - Bloomberg West Texas Intermediate Crude Index. Global Commodities Bloomberg Commodities Index Yen-USD X-RATE - Japanese Yen/USD Exchange Rate Bloomberg. Euro-USD X-RATE - Euro/USD Exchange Rate Bloomberg. Sterling-USD X-Rate - British Pound/USD Exchange Rate Bloomberg. See pages for more information on indices. Page I April 2016

5 Economic Update We expect modest growth of approximately 2% to 2.25% over the next year in the US led by consumption, the housing sector and improved government spending. Easy global monetary policies may continue to support growth. Europe may enjoy higherthan-expected growth from the European Central Bank stimulus and lower oil prices. Corporations are currently enjoying solid margins and balance sheets. They may continue to benefit from US growth and a stabilized global economic climate, although they may begin to experience margin pressures from wage increases. Multinationals have experienced significant headwinds from the strong dollar but this should diminish as the rate of change begins to slow. Shareholder-friendly activity remains a risk(bondholders)/opportunity (equity owners) in many slow-growing sectors. Many emerging market countries look attractive with stabilizing commodity prices and increased China stimulus. Page I April 2016

6 Market Update We Believe: US equities should be favored as valuations are reasonable. US earnings growth, while limited, may outperform international. Developed market sovereigns, including most US government debt, look unattractive. Corporate credit offers value. Fundamentals, excluding energy, remain relatively strong. High yield, including bank loans, offers value with above-average spreads and well-below-average default rates. Leverage has risen, but coverage ratios remain strong. Non-Agency structured credit is attractive in light of the strong housing and commercial real estate markets in the US. Floating rate securities, including structured securities and event-linked (catastrophe) bonds may be attractive to hedge interest rate risk without too much yield give-up. Select emerging market sovereigns may be attractive, with reasonable valuations and stabilized commodity prices. The US Dollar should trade in a range, given more dovish Federal Reserve policy. Page I April 2016

7 Global Markets Recap Fixed income off to a strong start in % Equity 1Q % Fixed Income 1Q % 5.71% 6% 5.94% 5.90% 0% -5% 2.10% -2.90% 1.35% 1.38% -0.35% -0.87% -1.52% -4.41% -3.01% -0.81% 4% 2% 0% 1.82% 3.92% 3.35% 3.28% 1.02% 3.30% 3.03% 1.67% 0.55% -10% -2% -0.77% -15% % -4% -3.15% -4.47% -20% Emerging Markets US Mid Caps US Large Caps World US Small Caps Non-US Developed -6% Emerging Markets Global Bonds Unhedged US Credit US High Yield Bonds Global Bonds Hedged US Bonds Munis Source: Morningstar. As of 3/31/16. Asset classes are represented by the following indices: US Large Caps - Index. Non-US Developed MSCI EAFE Index. World Stocks MSCI World ACWI. Mid Cap Stocks Russell Mid Cap Index. Small Cap Stocks Russell 2000 Index. Emerging Market Stocks MSCI Emerging Markets. Global Investment Grade (hedged, unhedged) Bonds Global Aggregate (Hedged/Unhedged) Index. Emerging Market Bonds JPM Emerging Markets Debt Index. Municipals Municipal Bond Index. US Bonds US Aggregate Index. US Credit US Credit Index. US High Yield BofA ML US High Yield Index. See pages for more information on indices. Page I April 2016

8 10 Years of Asset Class Returns No one sector has outperformed every year Years Annualized MSCI EM 32.14% MSCI EM 39.42% Treasuries 13.98% MSCI EM 78.51% Russell % Munis 10.70% MSCI EM 18.22% Russell % 13.69% Munis 3.30% 7.31% MSCI EAFE 26.34% MSCI EAFE 11.17% U.S. Agg. 5.24% U.S. HY 57.51% MSCI EM 18.88% Treasuries 9.78% MSCI EAFE 17.32% 32.39% Munis 9.05% 1.38% U.S. HY 6.96% Russell % Global Agg. 9.48% Global Agg. 4.79% Bank Loans 51.62% U.S. HY 15.19% U.S. Agg. 7.84% Russell % MSCI EAFE 22.78% Treasuries 6.02% Treasuries 0.83% Russell % 15.79% Treasuries 9.06% Munis -2.47% MSCI EAFE 31.78% 15.06% Global Agg. 5.64% 16.00% U.S. HY 7.42% U.S. Agg. 5.97% U.S. Agg. 0.55% Munis 4.72% U.S. HY 11.77% Barlclays U.S. Agg. 6.97% U.S. HY % Russell % Bank Loans 10.13% U.S. HY 4.38% U.S. HY 15.59% Bank Loans 5.29% Russell % U.S. HY -0.17% U.S. Agg. 4.51% Bank Loans 6.74% 5.49% Bank Loans % 26.46% MSCI EAFE 7.75% 2.11% Bank Loans 9.66% U.S. Agg % U.S. HY 2.50% MSCI EAFE -0.81% Bank Loans 4.30% Global Agg. 6.64% Munis 3.36% Russell % Munis 12.91% U.S. Agg. 6.54% Bank Loans 1.52% Munis 6.78% Munis -2.55% Bank Loans 1.60% Global Agg % Treasuries 4.24% Munis 4.84% U.S. HY 2.19% % Global Agg. 6.93% Treasuries 5.88% Russell % Global Agg. 4.32% Global Agg % Global Agg. 0.59% Russell % Global Agg. 3.74% U.S. Agg. 4.33% Bank Loans 2.08% MSCI EAFE % U.S. Agg. 5.93% Global Agg. 5.54% MSCI EAFE % U.S. Agg. 4.21% MSCI EM -2.60% MSCI EM -2.19% Bank Loans -4.47% MSCI EM 3.61% Treasuries 3.14% Russell % MSCI EM % Treasuries -3.72% Munis 2.38% MSCI EM % Treasuries 2.17% Treasuries -3.35% MSCI EAFE -4.90% MSCI EM % MSCI EAFE 3.03% Source: Bloomberg. Data as of 12/31/15. Chart returns updated annually. Asset classes represented by the following indices: US Stocks Index. Small Cap Stocks Russell 2000 Index. US High Yield Bonds - BofA ML US High Yield Bond Index. Bank Loans - S&P/LSTA Leveraged Loan Index. Municipals - Municipal Index. US Treasuries - BofA ML US Treasury Master Index. US Bonds US Aggregate Bond Index. Global Investment Grade Bonds Global Aggregate Index. Non-US Developed - MSCI EAFE (Europe, Australasia, and Far East) Growth Index. Emerging Market Stocks - MSCI Emerging Markets (EM) Free Index. See pages for more information on indices. Page I April 2016

9 10 Years of Asset Class Standard Deviation Bank Loans 0.49% Munis 2.28% U.S. HY 2.29% U.S. Agg. 2.70% Treasuries 2.79% Global Agg. 4.18% Munis 2.37% U.S. Agg. 2.64% Treasuries 3.73% Global Agg. 4.58% Bank Loans 4.66% U.S. HY 5.67% U.S. Agg. 6.09% Treasuries 6.76% Munis 8.10% Global Agg. 9.70% Bank Loans 16.07% 21.02% U.S. Agg. 3.34% Treasuries 5.63% Munis 5.79% Global Agg. 8.35% Bank Loans 9.57% U.S. HY 12.84% U.S. Agg. 2.91% Treasuries 4.26% Bank Loans 4.35% Munis 4.37% Global Agg. 6.58% U.S. HY 6.98% U.S. Agg. 2.35% Munis 3.27% Treasuries 3.66% Global Agg. 5.12% Bank Loans 5.99% U.S. HY 9.63% U.S. Agg. 2.01% Bank Loans 2.31% Global Agg. 2.99% Treasuries 3.16% Munis 3.52% U.S. HY 3.81% Bank Loans 1.62% U.S. Agg. 3.19% Treasuries 3.23% Munis 4.53% U.S. HY 4.82% Global Agg. 4.84% Bank Loans 1.94% Munis 2.15% U.S. Agg. 2.31% Treasuries 2.44% Global Agg. 4.01% U.S. HY 4.52% Munis 2.48% Bank Loans 2.73% U.S. Agg. 2.95% Global Agg. 3.08% Treasuries 4.07% U.S. HY 6.41% 10 Years Annualized U.S. Agg. 3.22% Treasuries 4.28% Munis 4.33% Global Agg. 5.64% Bank Loans 8.47% U.S. HY 10.59% 5.64% MSCI EAFE 9.62% U.S. HY 21.59% 22.28% 19.26% 15.94% 10.52% 8.48% 8.26% 13.66% 15.06% MSCI EAFE 9.40% 9.66% MSCI EAFE 27.02% MSCI EAFE 25.62% MSCI EM 21.08% MSCI EAFE 19.52% Russell % Russell % MSCI EAFE 9.69% Russell % MSCI EAFE 18.48% Russell % Russell % Russell % MSCI EM 28.85% MSCI EAFE 22.99% Russell % MSCI EAFE 16.68% MSCI EM 11.81% MSCI EM 13.59% MSCI EAFE 15.24% Russell % MSCI EM 18.66% MSCI EM 18.42% MSCI EM 37.46% Russell % Russell % MSCI EM 24.50% MSCI EM 19.68% MSCI EAFE 12.15% Russell % MSCI EM 17.67% MSCI EM 23.60% Source: Bloomberg. As of 12/31/15. Chart returns updated annually. Standard Deviation - A statistical measure of the historic volatility of a portfolio; a lower standard deviation indicates historically less volatility Asset classes represented by the following indices: US Stocks Index. Small Cap Stocks Russell 2000 Index. US High Yield Bonds - BofA ML US High Yield Bond Index. Bank Loans - S&P/LSTA Leveraged Loan Index. Municipals - Municipal Index. US Treasuries - BofA ML US Treasury Master Index. US Bonds US Aggregate Bond Index. Global Investment Grade Bonds Global Aggregate Index. Non-US Developed - MSCI EAFE (Europe, Australasia, and Far East) Growth Index. Emerging Market Stocks - MSCI Emerging Markets (EM) Index. See pages for more information on indices. Page I April 2016

10 GDP Growth for Main Economic Areas Our US GDP estimate in 2016: Approximately 2.0% % real growth 5.0% 8% EMs World DMs 4.0% % 6% 3.0% 5% 2.0% 4% 3% % % 1% 0.0% WORLD US EURO AREA UK JAPAN EM 0% Pioneer Forecasts -1.0% Source: Pioneer Investments forecasts for all countries ex Emerging Markets, IMF forecasts for Emerging Markets. As of 3/31/16. Page I April 2016

11 Central Bank Outlook More Dovish Than Previously Expected Fed: After the first rate increase in December 2015, rate cycle is likely to be gradual. Two interest rate hikes expected through year-end. ECB: Still accommodative, but space for further intervention reduced compared to BoE: On hold until second half 2016, given the expected inflation dynamics and Brexit fears. Continental Europe (SNB, Riksbank): Acting to prevent negative side effects from ECB. BoJ: BoJ ready to act if fiscal stimulus does not work. PBoC: To remain supportive, with pressures from capital outflows still manageable. Tightening Hold Easing EM: Pressure to ease remains widespread, with few exceptions. However, less room in 2016 than in Note: Federal Reserve (Fed), Swiss National Bank (SNB), Bank of England (BOE), Peoples Bank of China (PBoC), Bank of Japan (BOJ), Riksbank (Swedish Central bank). European Central Bank (ECB) Emerging Markets (EM). Source: Pioneer Investments, Bloomberg. data as of April 12, Page I April 2016

12 Topics of Discussion 1. Overview and Global Context 2. US Economic Outlook 3. Equity Markets 4. Fixed Income Markets 5. Alternatives 6. Appendix Page I April 2016

13 We Expect Continued Strength in Consumer Spending in 2016 Source: Bloomberg as of 3/31/16. Page I April 2016

14 JOLTS Report Millions (people), Seasonally Adjusted Job Openings Layoffs And Discharges U.S. Unemployment Rate (right) Quits Other Separations 12% 10% 8% 6% 4% 2% Unemployment % Source: Factset. Last data point for Unemployment rate 3/31/16. Others end as of 2/29/16. The JOLTS Report is the Labor Department's Job Openings and Labor Turnover Survey. The headline number is job openings. The JOLTS report defines Job Openings as all positions that are open (not filled) on the last business day of the month. Page I April 2016

15 The ISM Indexes are Still Signaling Growth Strength in services combines with recent upturn in manufacturing Above 50 indicates expansion, below 50 contraction Manufacturing / Non-Manufacturing 65 ISM, Non-Manufacturing Index ISM Manufacturing, Purchasing Managers Index Index Level New Orders 30 ISM Non-Manufacturing New Orders Index ISM Manufacturing New Orders Index Index Level Source: Factset as of 3/31/16. ISM Manufacturing New Orders Index - Monitors employment, production inventories, new orders and supplier deliveries. The index based on surveys of more than 300 manufacturing firms by the Institute of Supply Management (ISM). ISM Manufacturing Purchasing Managers Index (PMI) - An indicator of the economic health of the manufacturing sector. ISM Non-Manufacturing Index - An index based on surveys of more than 400 non-manufacturing firms' purchasing and supply executives, within 60 sectors across the nation, by the Institute of Supply Management (ISM). ISM Non-Manufacturing New Orders Index - An index based on surveys of more than 400 non-manufacturing firms' purchasing and supply executives that tracks new orders, seasonally adjusted. Page I April 2016

16 Global Outlook Supported by Developed Market (DM) Outlook We think domestic conditions in DM are getting traction ECONOMIC CONDITIONS STABILITY CONDITIONS Poor Good US Strong labor market stimulating consumption and residential investments. Inflation low but picking up. Fed started normalizing. Poor Good EU Growth based on domestic consumption but challenged by international headwinds. Inflation much lower than expected (oil). Refugee crisis implies increased public spending. Poor Good China Economic activity remains downbeat, visible in slowdown of exports. Industrial overcapacity a policy focus. Capital outflows easing helped by recent US dollar weakness. Poor Good EM Weak outlook but not deteriorating further. Commodity prices and US dollar stabilization bolstering currencies and economic conditions. Source: Pioneer Investments. As of 3/31/16. Page I April 2016

17 Topics of Discussion 1. Overview and Global Context 2. US Economic Outlook 3. Equity Markets 4. Fixed Income Markets 5. Alternatives 6. Appendix Stock markets and investments in individual stocks involve certain risks, including issuer, market, economic, industry, political, regulatory, geopolitical, and other risks. Investment return and principal value may go down as well as up and could result in the loss of all capital invested. Page I April 2016

18 Playing by Secular Bull Market Rules A secular market trend is a long-term trend that lasts 5 to 25 years and consists of a series of primary trends. A secular bear market consists of smaller bull markets and larger bear markets; a secular bull market consists of larger bull markets and smaller bear markets. Page I April 2016

19 One Of The Longest Bull Market Cycles on Record Bull Market Cycles Since 1928 Source: S&P Dow Jones Indices and Pioneer Investments. Last data point 3/31/16. Trough-to-Peak Duration - The stage of the market cycle from its ultimate cyclical bottom (trough) to a period of growth (peak). Page I April 2016

20 Equity Earnings Growth Since 2000 Earnings growth stalled in We believe earnings should grow (low-mid) in Earnings Per Share Index Level Source: Pioneer Investments, Bloomberg. As of 3/31/16. Earnings per Share - A company's profit divided by its number of common outstanding shares. Page I April 2016

21 Equities More Attractive than Fixed Income In our view, equities are fairly valued on an absolute basis, but underpriced relative to bonds. Percent 8% 6% 4% 2% 0% -2% -4% Investment Grade Corporate Yield (YTW) vs. Investment Grade Bond Yield Yld > Trailing Earnings Yield -6% Investment Grade Bond Yield Yld < Trailing Earnings Yield -8% SD +1 SD Mean 79% -1 SD -2 SD Trailing P/E Source: Bloomberg (P/E Ratio). As of 3/31/16. Investment grade bonds represented by BofA ML Corporate Bond Master Index. Equities are represented by Index. See pages for more information about the indices. Standard Deviation (SD) - A statistical measure of the historic volatility of a portfolio; a lower standard deviation indicates historically less volatility. YTW (Yield to Worst) is the lowest potential yield that can be received on a bond without the issuer actually defaulting. Trailing P/E (price/earnings) is the sum of a company's price-to-earnings, calculated by taking the current stock price and dividing it by the trailing earnings per share for the past 12 months. Page I April 2016

22 Investment Style Valuations Current P/E vs. 20-Year Average P/E Value Blend Growth Current P/E as % of 20-Year Average P/E Value Blend Growth Large Large 114% 97% 92% Mid Mid 122% 114% 93% Small Small 118% 107% 95% Source: Russell Investment Group, IBES, FactSet, Pioneer Investments. Data as of 3/31/16. Price-Earnings Ratio is a valuation ratio of a company's current share price compared to its per-share earnings. Page I April 2016

23 Topics of Discussion 1. Overview and Global Context 2. US Economic Outlook 3. Equity Markets 4. Fixed Income Markets 5. Alternatives 6. Appendix Fixed income investments are subject to certain risks, including interest rate changes and possible loss due to financial failure of issuers; investments in high yield or lower rated securities are subject to greater volatility, illiquidity and possibility of default. Page I April 2016

24 Federal Funds Forecast: Federal Open Market Committee (FOMC) Dot Plot Divergence between the FOMC and the Federal Funds Futures Market Source: Federal Reserve DOTS latest projections as of 3/31/16. Bloomberg for Fed Funds Futures. Fed Funds Futures - Important risk management tools to hedge against, or speculate on changes, in short-term interest rates brought about by changes in Federal Reserve monetary policy. Page I April 2016

25 Inflation CPI Core Inflation and CPI Services are trending higher 4.0% Evidence of Inflation 3.5% CPI Core Inflation (Ex-food and energy) CPI Services (Ex-energy) 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Year-over-year monthly percent change. Source: Bloomberg. Last data point 2/29/16. Consumer Price Index (CPI) - A measure that examines the weighted average of prices of a basket of consumer goods and services; one of the most frequently used statistics for identifying periods of inflation or deflation. Page I April 2016

26 Previous Fed Tightening Cycles: Treasury Curve Flattening We expect the yield curve to flatten with an increase in monetary policy. 11 U.S. Treasury Curve 3/25/88-2/24/89 10 U.S. Treasury Curve 1/28/94-2/3/95 Yield % m 6m 1Y 2Y 3Y 5Y 10Y 30Y Yield % m 6m 1Y 2Y 3Y 5Y 10Y 30Y Cycle 1 Begins Cycle 1 Ends Cycle 2 Begins Cycle 2 Ends Yield % U.S. Treasury Curve 6/25/99-5/19/00 3m 6m 1Y 2Y 3Y 5Y 10Y 30Y Cycle 3 Begins Cycle 3 Ends Yield % U.S. Treasury Curve 6/25/04-06/30/ m 6m 1Y 2Y 3Y 5Y 10Y 30Y Cycle 4 Begins Cycle 4 Ends Source: Bloomberg. Dates as shown. Page I April 2016

27 Previous Fed Tightening Cycles Credit sectors have tended to outperform Asset Class Returns During Target Rate Increases Rate Rise Period 2/4/94 2/1/95 2% 0% -2% -4% -6% -8% -10% 10-Year Treasury -7.64% Agg -2.04% IG Corporates -3.38% U.S. High Yield -1.71% Munis -3.56% Global Agg MBS ABS HY Muni Global HY 1.13% #N/A #N/A -0.49% -8.26% 6% 5.21% 4.99% Rate Rise Period 6/30/99 5/16/00 4% 2% 0% -2% -4% 0.79% 2.02% 0.10% -1.84% -0.16% -2.53% 2.27% #N/A 10% 7.66% 10.97% 10.11% Rate Rise Period 6/25/04 6/29/06 5% 1.92% 3.15% 3.04% 4.65% 4.00% 3.49% 3.59% 0% Source: Bloomberg. Dates as shown. Asset classes represented by the following indices: 10-Year Treasury 10-Year U.S. Treasury Bellwether Index. US Bonds US Aggregate Bond Index. Investment Grade Corporates - US Corporate Investment Grade Index. US High Yield - BofA ML US High Yield Bond Index. Global Investment Grade Bonds - Global Aggregate Bond Index. Municipals - Municipal Index, High Yield Municipal Bonds - US High Yield Municipal Bond Index, Mortgage-Backed Securities (MBS) - US Agency MBS Index, Asset-backed Securities (ABS) - BofA ML Home Equity Loan Floating Rate Index. Global High Yield Global High Yield Index. See pages for more information on indices. Page I April 2016

28 US High Yield Spreads and Defaults Average: Percent Defaults OAS 562 bp Spread 4.56% Default Rate Current OAS 705 bp Current Default Rate: 3.63% Source: BofA ML and Moody s as of 3/31/16. Default Rate - Calculated as the amount defaulted over the last twelve months divided by the amount outstanding at the beginning of the twelve-month period. Option-Adjusted Spread (OAS) - The measurement of the spread of a fixed income security rate and the risk-free rate of return, adjusted to take into account an embedded option. Basis Point (bp) - A unit of measure used to describe the percentage change in the value or rate of a financial instrument. One basis point is equivalent to 0.01% (1/100th of a percent) or in decimal form. In most cases, it refers to changes in interest rates and bond yields. Page I April 2016

29 US Bank Loan Spreads Over LIBOR and Defaults Source: S&P LSTA Leveraged Loan Index through 3/31/16; Pioneer Investments. Spread to Maturity - The difference in return on bonds that have different maturity dates; typically bonds with a longer maturity have a higher return. London Interbank Offer Rate (LIBOR) - The interest rate participating banks offer to other banks for loans on the London market; the most widely used benchmark for short-term interest rates in the world, mainly because most of the world s largest borrowers borrow money on the London market. Bank Loan Risk: Floating rate loans may not be fully collateralized and therefore may decline significantly in value. Floating rate loans may reduce, but not eliminate, interest rate risk. Page I April 2016

30 Bank Loans Can Offer an Attractive Complement in Credit Portfolios Floating rate nature can help insulate investors in rising rate environments Relatively attractive income level vs. fixed income peers Negative correlation to Treasuries 12% Yield to Maturity Effective Duration 9 10% 8.6% 9.7% 8 7 Yield to Maturity 8% 6% 4% 2% 5.1% 6.5% 3.2% 1.3% 0.6% 1.1% 0.2% Effective Duration 0% US High Yield EM Corporates Euro High Yield US Loans US IG US Treasuries Pan Europe Govt Bond Euro IG US Treasury Bills 0 Source: Pioneer Investments, BofA Merrill Lynch, LCD S&P, JP Morgan. As of 3/31/16. Yield to Maturity - The total return anticipated on a bond if the bond is held until the end of its lifetime. Effective duration - A duration calculation for bonds that takes into account that expected cash flows will fluctuate as interest rates change. Correlation is the degree to which assets or asset class prices have moved in relation to one another. Correlation ranges from -1 (always moving in opposite directions) through 0 (absolutely independent) to 1 (always move together). Bank Loan Risk: Floating rate loans may not be fully collateralized and therefore may decline significantly in value. Floating rate loans may reduce, but not eliminate, interest rate risk..asset classes are represented by the following indices: US High Yield BoA ML US High Yield Bond Index. Emerging Market (EM) Corporates - BofA ML Emerging Markets Bond Index. European High Yield BofA ML Euro High Yield Index. US Loans S&P/LSTA Loan Index. US Investment Grade BoA ML US Corporate Master Index. US Treasuries BofA ML Treasury Master Index. Pan Europe Government Bonds - BofA ML Pan-Europe Government Bond Index. European Investment Grade BofA ML Euro Corporate Index. US Treasury Bills BofA ML US Treasury Bill Index. See pages for more information on indices. Page I April 2016

31 Municipal Yields and Tax Equivalent Returns Yield 5% 5% 4% 4% 3% 3% 2% 2% 1% 1% 0% MMA 5% AAA GO (General Obligation) 4.7% MMA 5% AAA General Obligation Yield Tax-Equivalent (28% Tax Rate) Tax-Equivalent (43.4% Tax Rate) 3.7% 3.0% 2.7% 2.4% 1.9% 1.7% 1.5% 1.2% 1.1% 0.9% 0.7% 2 yr 5 Yr 10yr 30 Yr Tax Equivalent Yields for Investment Grade Municipal Bonds Municipal Bond Index Yield to Taxable Taxable Worst Equivalent at 43.4% Equivalent at 28% 1.93% 3.41% 2.68%% An investor in the 43.4% tax bracket earning 1.93% on a tax-free investment would need to earn 3.41% on a taxable investment of comparable safety and maturity. An investor in the 28% tax bracket, earning 1.92% on a tax-tree investment would need to earn 2.68% on a taxable investment of comparable safety and maturity. The value of municipal securities can be adversely affected by changes in financial conditions of municipal issuers, lower revenues, and regulatory and political developments. A portion of income may be subject to local, state, federal and/or alternative minimum tax. Capital gains, if any, are subject to capital gains tax. Chart 1 Source: Municipal Market Advisors, Inc. (MMA). As of 3/31/16. General Obligation Bonds (GOs) - Bonds backed by the full faith and credit of the issuer, with no specific project identified as the source of funds. Chart 2 Source: as of 3/31/16. This chart is for illustrative purposes only and not intended to predict or project investment performance of any Pioneer fund. Yield to Worst - Calculated by making worst-case scenario assumptions on the issue by calculating the returns that would be received if provisions, including prepayment, call or sinking fund, are used by the issuer. Tax Equivalent Yield - Measures what an investor would have to earn on a taxable investment in order to match the yield provided by a tax-exempt municipal bond. Municipal Bond Index - A broad measure of the municipal bond market. See pages for more information about indices. Page I April 2016

32 Municipal Tax Equivalent vs. Major Asset Class Returns 10-Year Risk / Return Profile 10% Tax-adjusted Muni Tax-adjusted Muni HY 8% US High Yield Annualized Return 6% 4% 2% MBS Agency US Credit Muni Muni HY Global Treasury Treasury Aggregate Russell % ABS -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Annualized Standard Deviation Source: Municipal Market Advisors, Inc. As of 3/31/16. Standard Deviation - A statistical measure of the historic volatility of a portfolio; a lower standard deviation indicates historically less volatility. Asset classes represented by the following indices: Mortgage-Backed Securities (MBS) - US Agency Fixed Rate MBS Index, Asset-Backed Securities (ABS) - BofA ML ABS Master Floating Rate Index, US High Yield - BofA ML U.S. High Yield Bond Index, Treasury - US Treasury Index. Agency - US Agency Index, Municipals (Muni) - Municipal Index, Aggregate - US Aggregate Bond Index, High Yield Municipals (Muni HY) - US High Yield Municipal Index, US Stocks - Index. Small Cap Stocks - Russell 2000 Index. Global Treasury - Global Treasury Index. US Credit - US Credit Index. See pages for more information on indices. Page I April 2016

33 Topics of Discussion 1. Overview and Global Context 2. US Economic Outlook 3. Equity Markets 4. Fixed Income Markets 5. Alternatives 6. Appendix Alternative investments products involve a high degree of risk, often engaging in leveraging and other speculative investment practices that may increase the risk of investment loss. Alternative investments can be highly illiquid, are not always transparent, and can increase the risk of loss. Alternative investments can be volatile, and subject the investor to loss of all or a substantial amount of the investment. Page I April 2016

34 Correlations of Asset Classes and Alternative Investment Strategies to Traditional Stocks and Bonds Traditional Non-Traditional Stocks ( Index) Bonds ( U.S. Aggregate Bond Index) International Equities 0.88 EM Equities 0.79 Long/Short Equity 0.75 REITs 0.64 Multi-Strategy 0.6 Relative Value 0.55 Long/Short Credit 0.5 Fixed Income Arb 0.42 Commodities 0.33 Global Macro 0.21 Managed Futures Short Bias Correlation Treasuries 0.91 US Corporate IG Bonds 0.84 Municipal Bonds 0.67 Global Macro 0.32 Managed Futures 0.27 US High Yield Bonds 0.19 REITs 0.18 Fixed Income Arb 0.18 Short Bias 0.14 Relative Value 0.14 Long/Short Credit 0.05 Multi-Strategy 0 Long/Short Equity Commodities Correlation Source: Pioneer Investments and Morningstar. As of 3/31/16. Correlation - The degree to which assets or asset class prices have moved in relation to one another. Correlation ranges from -1 (always moving in opposite directions) through 0 (absolutely independent) to 1 (always move together). Asset classes and alternative (non-traditional) investment strategies are represented by the following indices: International Equities - MSCI EAFE Growth Index. Emerging Markets Equities - MSCI Emerging Markets (EMD) Free Index. US Stocks Index. US Bonds US Aggregate Bond Index. Treasuries BofA ML US Treasury Master Index. US High Yield Bonds - BofA ML US High Yield Bond Index. US Corporate Investment Grade (IG) Bonds - US Corporate Investment Grade Index. Municipal Bonds Municipal Bond index. Global Macro Credit Suisse Global Macro Index. Managed Futures Credit Suisse Managed Futures Index. REITS MSCI US REITS Index. Commodities S&P GSCI Index. Long/Short Equity Credit Suisse Long/Short Equity Index. Multi Strategy Credit Suisse Multi Strategy Index. Fixed Income Arbitrage Credit Suisse Fixed Income Arbitrage Index. Relative Value - Morningstar MSCI Relative Value Index. Long/Short Credit Morningstar MSCI Long/Short Credit Index. Short Bias Credit Suisse Dedicated Short Bias Index. See pages for more information on indices. Page I April 2016

35 10 Year Returns of Major Asset Classes Ex-Duration Cumulative 10 Years 15.8% Treasury 9.0% Treasury 13.7% High Yield 59.5% 15.1% Treasury 9.8% 16.0% 32.0% 13.7% 1.4% 102.3% High Yield 8.4% 5.5% MBS -2.3% EMD 38.0% High Yield 9.7% 2.1% EMD 15.0% High Yield 9.2% Treasury 5.1% Treasury 0.8% Treasury 50.6% EMD 7.0% MBS -1.8% Securitized -6.2% 26.5% Treasury 5.9% Securitized -0.9% High Yield 13.9% U.S. Corps. 2.9% Securitized 0.4% EMD 0.0% High Yield 46.9% Treasury 3.1% Agg. -2.1% Agg. -7.1% U.S. Corps. 22.8% EMD 5.1% MBS -1.1% U.S. Corps. 7.3% MBS 1.0% MBS 0.4% MBS -0.1% EMD 32.7% U.S. Corps. 1.3% Securitized -2.2% U.S. Corps % Agg. 7.5% Securitized 3.2% Agg. -1.1% Agg. 2.3% Securitized 1.0% Agg. 0.1% Securitized -0.1% U.S. Corps. 8.5% Securitized 1.2% EMD -4.6% EMD -28.4% Securitized 7.0% U.S. Corps. 2.3% High Yield -2.4% Treasury 2.0% Agg. 0.9% U.S. Corps. -0.5% Agg. -0.5% MBS 8.5% MBS 1.2% U.S. Corps. -5.2% -37.0% MBS 4.9% MBS 2.2% U.S. Corps. -3.7% Securitized 1.4% EMD -0.3% High Yield -1.1% U.S. Corps. -1.6% Securitized 7.6% Agg. 0.9% High Yield -7.8% High Yield -38.3% Treasury -3.6% Agg. 1.7% EMD -5.4% MBS 0.9% Treasury -2.8% EMD -1.2% High Yield -5.8% Agg. 4.6% Source: POINT and Bloomberg. As of 12/31/15. This chart is updated annually at year-end. Duration is a measure of the sensitivity of the price (the value of principal) of a fixed income investment to a change in interest rates, expressed as a number of years. Ex-Duration: The impact of duration on a portfolio s returns is reflected primarily in yield curve movements and spread changes. Ex-duration returns remove the duration impact resulting from changes in these two factors from the return calculation..asset categories are represented by the following indices: US Stocks Index. US High Yield Bonds - BofA ML US High Yield Bond Index. Emerging Market Debt (EMD) - Emerging Markets (EM) USD Aggregate Bond Index. US Treasuries - BofA ML U.S. Treasury Master Index. US Corporate Bonds -- US Credit Index. Securitized - US. Securitized Index, Mortgage-backed Securities (MBS) US Agency Fixed Rate MBS Index. US Bonds US Aggregate Bond Index. See pages for more information on indices. Page I April 2016

36 Does Lower Correlation = Lower Volatility? Over time, alternatives delivered similar returns to with lower volatility. 250% Alternatives vs. Traditional Stocks and Bonds Cumulative Total Return 200% 150% 100% 50% 0% Credit Suisse Liquid Alts Index U.S. Agg Bond -50% Liquid Alts Stocks Bonds Returns 1 Year 3 Year 5 Year 10 Year Since 12/31/1997 Standard Deviation 3 Year 5 Year 10 Year Since 12/31/1997 Index US Aggregate Bond Index Credit Suisse Liquid Alternative Index Source: Pioneer Investments and Morningstar. Data as of December 31, 1997 March 31, Not representative of any Pioneer investment. Standard Deviation - A statistical measure of the historic volatility of a portfolio; a lower standard deviation indicates historically less volatility. Asset categories represented by the following indices: Liquid Alternatives - Credit Suisse Liquid Alts Index (inception 12/31/97). Stocks - Index. Bonds US Aggregate Bond Index. See pages for more information on indices. Page I April 2016

37 Topics of Discussion 1. Overview and Global Context 2. U.S. Economic Outlook 3. Equity Markets 4. Fixed Income Markets 5. Alternatives 6. Appendix Page I April 2016

38 Equity Sector Returns Before and after Fed target rate increases Rate Rise Period 6/25/04-6/29/06 Index 7.85% 6 Months Before 1st Hike 0% 10% 20% Rate Rise Period 6/30/99-5/16/00 Index 7.94% 6 Months Before 1st Hike -25% 25% 75% Rate Rise Period 2/4/94-2/1/95 Index 2.94% 6 Months Before 1st Hike -20% 0% 20% Energy Industrials Consumer Staples Telecommunications Utilities Financials Consumer Discretionary Health Care Materials Information Technology 7.29% 6.74% 6.49% 4.98% 4.06% 3.49% 2.84% 0.97% 0.76% 15.19% Information Technology Materials Energy Industrials Telecommunications Consumer Discretionary Financials Utilities Health Care Consumer Staples 25.07% 22.47% 18.84% 17.22% 16.28% 16.01% 11.49% 1.21% -2.27% -8.07% Materials Information Technology Health Care Consumer Discretionary Industrials Consumer Staples Energy Financials Telecommunications Utilities 4.43% -2.98% -3.84% -7.83% 15.77% 12.01% 11.27% 11.15% 10.85% 9.66% 6 Months After 0% 20% 40% 6 Months After -50% 0% 50% 6 Months After 0% 50% Telecommunications Utilities Consumer Discretionary Financials Information Technology Health Care Materials Energy Consumer Staples Industrials 20.93% 16.14% 15.90% 15.08% 14.07% 12.33% 11.19% 9.00% 8.84% 5.67% Utilities Consumer Staples Health Care Financials Energy Industrials Consumer Discretionary Materials Telecommunications Information Technology 22.26% 19.54% 13.36% 12.38% 4.72% 3.75% % % % % Information Technology Materials Industrials Financials Health Care Consumer Staples Consumer Discretionary Energy Telecommunications Utilities 24.74% 22.99% 21.68% 20.61% 17.63% 16.54% 16.00% 10.29% 8.52% 45.05% Source: Pioneer Investments, Bloomberg and Federal Reserve. Dates as shown. Page I April 2016

39 Alpha from Currencies Can Be Possible in US Dollar Bull OR Bear Markets* Managing for currency will be critical going forward. Macro, geopolitical, and monetary policy factors will affect risk Source: Pioneer Investments,. As of 12/31/15. Periods above represent the greatest bull and bear market periods for the US Dollar in the past 20 years. *A bear market for the US Dollar is when it depreciates, and a bull market is when it appreciates. Alpha - Measures risk-adjusted performance, representing excess return relative to the return of the benchmark. A positive alpha suggests risk-adjusted value added by the manager versus the index. Global Aggregate Index Hedged - Provides a broad-based measure of the global investmentgrade fixed income markets hedged in USD. Global Aggregate Index Unhedged - Provides a broad-based measure of the global investment-grade fixed income markets denominated in local currency.. See pages for more information on indices. Page I April 2016

40 Identifying the Real Source of Risk in Portfolios Today s fixed income portfolio may benefit from allocating to uncorrelated strategies We believe fixed income is a combination of duration and equity Duration has been responsible for the bulk of fixed income returns for the last 20 years 15.0% Components of the US Aggregate Bond Index Returns Duration Spread Total 10.0% 5.0% 0.0% -5.0% -10.0% Source: Pioneer Investments and. Data as of 12/31/15. Duration is a measure of the sensitivity of the price (the value of principal) of a fixed income investment to a change in interest rates, expressed as a number of years. Credit Spread - The spread (difference) between Treasury securities and non-treasury securities that are identical in all respects except for quality rating. Treasury Yield' - The return on investment, expressed as a percentage, on the U.S. government's debt obligations (bonds, notes and bills). US Bonds represented by US Aggregate Bond Index. See pages for more information on indices. Page I April 2016

41 10 Years of Country Returns (Equity) No one country has outperformed every year China 82.87% Brazil 79.56% Japan % Brazil % South Africa 34.21% U.S. 2.11% Germany 30.90% U.S % India 23.87% Japan 9.57% Russia 55.60% India 73.11% U.S % Russia % India 20.95% U.K % India 25.97% Germany 31.37% U.S % Russia 4.21% India 51.00% China 66.24% South Africa % India % Russia 19.07% Australia % China 22.75% Japan 27.16% China 7.96% U.S. 1.38% Brazil 45.30% Germany 35.21% Germany % Australia 76.43% Japan 15.44% Japan % Australia 22.07% U.K % South Africa 5.21% Germany -1.89% Germany 35.99% Australia 28.34% U.K % China 62.29% U.S % South Africa % South Africa 18.69% Australia 4.16% Australia -3.41% India -6.12% Australia 30.86% Russia 24.50% Australia % South Africa 57.82% Australia 14.52% Germany % U.S % China 3.64% Japan -4.02% U.K % U.K % South Africa 18.14% China % U.K % U.K. 8.76% China % U.K % Russia 0.76% U.K % China -7.82% South Africa 20.53% U.K. 8.36% Brazil % U.S % Germany 8.44% Russia % Russia 13.66% India -3.83% Germany % Australia -9.95% U.S % U.S. 5.49% India % Germany 25.15% Brazil 6.54% Brazil % Japan 8.18% South Africa -6.21% Brazil % South Africa % Japan 6.24% Japan -4.23% Russia % Japan 6.25% China 4.63% India % Brazil 0.05% Brazil % Russia % Brazil % Source: Bloomberg. Data of 12/31/15. Chart updated annually at year-end. Countries represented by the following indices: US - Index. All other countries - Country-specific Morgan Stanley Capital International (MSCI) indices. See page 49 for more information on country indices. Page I April 2016

42 Diverse Asset Classes Can Offer the Advantage of Lower Correlated Returns Correlation among fixed income asset classes: 10 years as of 3/31/16 1 U.S. Treasuries Agencies Agency MBS Traditional Fixed Income Sectors 4 CMBS Investment Grade Corporates TIPS Municipals Non Agency ABS High Yield Non-Traditional Fixed Income Sectors 10 Leveraged Bank Loans Convertibles Preferred Stock International Bonds Emerging Market Bonds Event-Linked Bonds Low Medium High Source:, BofA ML, JP Morgan, Morningstar. As of 3/31/16. Asset classes represented by the following indices: US Treasuries US Treasury Index. Agencies - US Agency Index. Agency MBS - US Agency Fixed Rate MBS Index. CMBS - CMBS Investment Grade Index. Investment Grade Corporates - US Corporate Investment Grade Index. TIPS - US Treasury TIPS Index. Municipals - Municipal Index. Non Agency ABS - BofA ML ABS Master Floating Rate Index. High Yield - BofA ML US High Yield Bond Index. Leveraged Bank Loans - Credit Suisse Leveraged Loan Index. Convertibles BofA ML All Convertible Index. Preferred Stock - BofA ML Preferred Stock Index. International Bonds Citi WGBI non USD Index. Emerging Market Bonds JPMorgan EMBI Plus Index. Event-linked Bonds SwissRe Cat Bond Index. See pages for more information on indices. Page I April 2016

43 Non-Traditional Strategies Can Offer Correlation Diversification Correlation of non-traditional to traditional strategies: 10 years as of 3/31/ Aggregate Bond Traditional Stocks & Bonds 3 Global Macro Managed Futures REITs Non-Traditional Strategies 6 Commodities Long/Short Equity Multi Strategy Fixed Income Arbitrage Relative Value Long/Short Credit Low Medium High Source: Source:, BofA ML, Morningstar, Credit Suisse. As of 3/31/16. Asset classes and alternative investment strategies are represented by appropriate indices. US Stocks Index. US Bonds US Aggregate Bond Index. Global Macro S&P GSCI Index. Managed Futures Credit Suisse Managed Futures Index. REITS MSCI US REITS Index. Commodities S&P GSCI Index. Long/Short Equity Credit Suisse Long/Short Equity Index. Multi Strategy Credit Suisse Multi Strategy Index. Fixed Income Arbitrage Credit Suisse Fixed Income Arbitrage Index. Relative Value - Morningstar MSCI Relative Value Index. Long/Short Credit Morningstar MSCI Long/Short Credit Index. See pages for more information on indices. Page I April 2016

44 Disclosures and Definitions This presentation provides comprehensive data and commentary on global markets without reference to specific Pioneer products. Designed as a tool to help clients understand the markets and support investment decision-making, the capital markets update explores the potential implications of current economic data and changing market conditions. IMPORTANT DEFINITIONS Alpha measures risk-adjusted performance, representing excess return relative to the return of the benchmark. A positive alpha suggests risk-adjusted value added by the manager versus the index. Basis Point - A unit of measure used to describe the percentage change in the value or rate of a financial instrument. One basis point is equivalent to 0.01% (1/100th of a percent) or in decimal form. In most cases, it refers to changes in interest rates and bond yields Correlation The degree to which assets or asset class prices have moved in relation to one another. Correlation ranges from -1 (always moving in opposite directions) through 0 (absolutely independent) to 1 (always move together). Curve Bear Flattener - A yield-rate environment in which short-term rates are increasing at a rate faster than long-term rates, which causes the yield curve to flatten as the short-term and long-term rates start to converge. Diversification Does not protect against profit or loss. Duration A measure of the sensitivity of the price (the value of principal) of a fixed income investment to a change in interest rates, expressed as a number of years. Price to Earnings (P/E) Ratio - The price of a stock divided by its earnings per share. Spread - The difference between two prices or interest rates. Standard Deviation - A statistical measure of the historic volatility of a portfolio; a lower standard deviation indicates historically less volatility. Trailing P/E (price/earnings) - The sum of a company's price-to-earnings, calculated by taking the current stock price and dividing it by the trailing earnings per share for the past 12 months. Trough to Peak - The change in a data measure - from its highest point to its lowest point, often used to refer to declines during a cyclical downturn. Yield to Maturity - The total return anticipated on a bond if the bond is held until the end of its lifetime. Yield to Worst (YTW) - The lowest potential yield that can be received on a bond without the issuer actually defaulting. Page I April 2016

45 Index Definitions General The historical index performance shown is provided to illustrate market trends and is not intended to represent the past or future performance of any Pioneer product. Indices are unmanaged and their returns assume reinvestment of dividends, and unlike investment products returns, do not reflect any fees or expenses. It is not possible to invest directly in an index. Bloomberg West Texas Intermediate (WTI) Crude Index A single commodity sub-index of the Bloomberg Commodity Index (CI) composed of futures contracts on crude oil. It reflects the return of underlying commodity futures price movements only and is quoted in USD Citigroup World Government Bond (Citi WGBI) Index - Measures the government bond markets around the world. JP Morgan Emerging Markets Bond Plus (the EMBI Plus) Index - Is comprised of external-currency-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities. Issues include: Brady bonds (restructured bank loans) Eurobonds and other U.S. dollar-denominated bonds JP Morgan Emerging Markets (EM) Bond Index - Measures the total return performance of international government bonds issued by emerging market countries that are considered sovereign (issued in something other than local currency Morningstar MSCI Long-Short Credit Index - Tracks the performance of strategies that seek to take exposure to credit-sensitive securities, long and/or short, based upon credit analysis of issuers and securities, and credit market views. Morningstar MSCI Relative Value Index - Tracks the performance of strategies that focus on spread relationships between pricing components of financial assets or commodities. Nasdaq Composite Index - Market-capitalization weighted index of the more than 3,000 common equities listed on the Nasdaq stock exchange. Russell 2000 Index - Measures the performance of U.S. small cap stocks. Russell Mid Cap Index - Measures the performance of U.S. mid cap stocks. Index A commonly used measure of the broad U.S. stock market. S&P GSCI Index - Recognized as a leading measure of general price movements and inflation in the world economy and includes the most liquid commodity futures S&P/LSTA Leveraged Loan Index - A capitalization-weighted syndicated loan index based upon market weightings, spreads and interest payments for the U.S. market. S&P/LSTA European Leveraged Loan Index - A capitalization-weighted syndicated loan index based upon market weightings, spreads and interest payments for the European market. Swiss Re Cat Bond Index - Constructed to track the price return and the total rate of return for U.S. dollar-denominated catastrophe bonds. Page I April 2016

46 Index Definitions - The historical index performance shown is provided to illustrate market trends and is not intended to represent the past or future performance of any Pioneer product. Indices are unmanaged and their returns assume reinvestment of dividends, and unlike investment products returns, do not reflect any fees or expenses. It is not possible to invest directly in an index. 10-Year U.S. Treasury Bellwethers Index - A universe of Treasury bonds, and used as a benchmark against the market for long-term maturity fixed-income securities. Investment Grade Commercial Mortgage-backed Securities (CMBS) Index Measures performance of the mortgage-backed securities market. Emerging Markets Debt (EMD) USD Aggregate Index - A flagship hard currency emerging markets debt benchmark that includes USD-denominated debt from sovereign, quasi-sovereign, and corporate emerging markets issuers. Eurodollar Index - Contains US dollar-denominated securities that are registered outside the US (except for global issues that can be SEC-registered). Global Aggregate Bond Index Provides a broad-based measure of the global investment grade fixed income market. Global Aggregate Index Hedged - Provides a broad-based measure of the global investment-grade fixed income markets hedged in USD. Global Aggregate Index Unhedged - Provides a broad-based measure of the global investment-grade fixed income markets denominated in local currency. Global High-Yield Index A broad-based measure of the global high-yield fixed income markets. Global Treasury Index - Tracks fixed-rate, local currency government debt of investment grade countries, both developed and emerging markets. Municipal Bond Index A broad-based measure of the municipal bond market. US Treasury Index - Measures US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury, excluding Treasury bills. US Treasury Inflation Protection Securities (TIPS) Index Includes all publicly issued, US TIPS with one year remaining to maturity, are rated investment grade. US Agency MBS Index - Tracks agency mortgage backed pass-through securities (both fixed-rate and hybrid ARM) guaranteed by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). US Aggregate Bond Index A measure of the US bond market. US Corporate Investment Grade Index - An unmanaged index considered representative of the US investment-grade, fixed-rate bond market. US Credit Index - A broad measure of the investment grade, US dollar-denominated, fixed-rate, taxable corporate and government related bond markets US High Yield Index - A measure of the broad non-investment grade bond market. US High Yield Municipal Index - Measures the non-investment grade and non-rated US dollar-denominated, fixed-rate, tax-exempt bond market. US Securitized Index - A subset of the US Aggregate Bond Index that includes the mortgage-backed securities (MBS), asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS) sectors. Page I April 2016

47 Index Definitions Bank of America Merrill Lynch (BofA ML) The historical index performance shown is provided to illustrate market trends and is not intended to represent the past or future performance of any Pioneer product. Indices are unmanaged and their returns assume reinvestment of dividends, and unlike investment products returns, do not reflect any fees or expenses. It is not possible to invest directly in an index. BofA ML All US Convertibles Index - Consists of convertible bonds traded in the US dollar-denominated investment grade and non-investment grade convertible securities sold into the US market and publicly traded in the US. BofA ML Preferred Stock Fixed Rate Index - Consists of fixed rate US dollar denominated preferred securities and fixed-to-floating rate securities. BofA ML US High Yield Master II Index - A commonly accepted measure of the performance of high yield securities. BofA ML US Corporate Master Index Includes publicly-issued, fixed-rate, nonconvertible investment grade dollar-denominated, SEC-registered corporate debt having at least one year to maturity and an outstanding par value of at least $250 million. BofA ML US Mortgage Backed Securities Index - Tracks the performance of US dollar-denominated fixed rate and hybrid residential mortgage pass-through securities publicly issued by US agencies in the US domestic market. BofA ML US Asset Backed Securities (ABS) Floating Rate Index - Tracks the performance of US dollar-denominated investment grade floating rate asset backed securities publicly issued in the US domestic market. BofA ML US Asset Backed Securities (ABS) Fixed Rate Home Equity Loan Index - A subset of the BofA ML US Fixed Rate Asset Backed Securities Index including all asset backed securities collateralized by home equity loans. BofA ML US Treasury Bill Index - Tracks the performance of US dollar-denominated US Treasury Bills publicly issued in the US domestic market. BofA ML US Treasury Current 10-year Index Measures the total return performance of US Treasury bonds with an outstanding par greater than or equal to $25 million. The maturity range of these securities is greater than ten years. BofA ML US Treasury Master Index Tracks the performance of US dollar-denominated sovereign debt publicly issued by the US government in its domestic market. BofA ML Euro Large Cap Corporate Index - Tracks the performance of large capitalization euro-denominated investment grade corporate debt publicly issued in the eurobond or Euro member domestic markets. BofA ML Pan-Europe Government Bond Index A subset of the BofA ML Global Government Index including all securities issued by countries associated with the geographical region of Europe. BofA ML Euro High Yield Index - Tracks the performance of euro-denominated below-investment grade corporate debt publicly issued in the euro domestic or eurobond markets. Page I April 2016

48 Index Definitions Credit Suisse The historical index performance shown is provided to illustrate market trends and is not intended to represent the past or future performance of any Pioneer product. Indices are unmanaged and their returns assume reinvestment of dividends, and unlike investment products returns, do not reflect any fees or expenses. It is not possible to invest directly in an index. Credit Suisse Dedicated Short Bias Index - Measures the aggregate performance of dedicated short bias strategies. Credit Suisse Fixed Income Arbitrage Index - Measures the aggregate performance of fixed income arbitrage strategies. Credit Suisse Global Macro Index - Measures the aggregate performance of global macro strategies. Credit Suisse Leveraged Loan Index - Tracks the investable market of the U.S. dollar denominated leveraged loan market. Credit Suisse Liquid Alternative Index - Reflects the returns of a dynamic basket of liquid, investable market factors selected and weighted in accordance with an algorithm that aims to approximate the aggregate returns of the universe of hedge fund managers, as represented by the Credit Suisse Hedge Fund Index. Credit Suisse Long/Short Equity Index - Measures the aggregate performance of long/short equity strategies. Credit Suisse Managed Futures Index - Measures the aggregate performance of managed futures strategies. Credit Suisse Multi-Strategy Index - Measures the aggregate performance of multi-strategy strategies. Page I April 2016

49 Index Definitions - Morgan Stanley Capital International (MSCI) The historical index performance shown is provided to illustrate market trends and is not intended to represent the past or future performance of any Pioneer product. Indices are unmanaged and their returns assume reinvestment of dividends, and unlike investment products returns, do not reflect any fees or expenses. It is not possible to invest directly in an index. MSCI ACWI - Captures large and mid cap representation across 23 Developed Markets (DM) and 23 Emerging Markets (EM) countries. MSCI EAFE (Europe, Australasia, and Far East) Growth Index - A commonly used measure of international growth stocks. MSCI Emerging Markets (EM) Free Index - Measures the performance of emerging market stocks. MSCI Country Indices measure the performance of the large and mid-cap segments of the specific country s market, including Russia, Japan, Germany, United Kingdom, China, India, Australia, South Africa and Brazil. MSCI U.S. REIT Index - Defines and measures the investable universe of publicly traded real estate investment trusts domiciled in the U.S. MSCI World Index - Captures large and mid-cap representation across 23 developed markets (DM) countries. The MSCI information may only be used for your internal use, may not be reproduced or re-disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an as is basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the MSCI Parties ) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. ( Page I April 2016

50 Investment Suitability is Important There is no guarantee that forecasts discussed will be realized. Unless otherwise stated, all information contained in this document is from Pioneer Investments and is as of March 31, 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.. Before investing, consider the product s investment objectives, risks, charges and expenses. Contact your advisor or Pioneer Investments for a prospectus or a summary prospectus containing this information. Read it carefully. Neither Pioneer, nor its representatives are legal or tax advisors. In addition, Pioneer does not provide advice or recommendations. The investments you choose should correspond to your financial needs, goals, and risk tolerance. For assistance in determining your financial situation, please consult an investment professional. Securities offered through Pioneer Funds Distributor, Inc. Underwriter of Pioneer mutual funds, Member SIPC 60 State Street Boston, Massachusetts us.pioneerinvestments.com 2016 Pioneer Investments Page I April 2016

51 Page I April 2016