Fund Times: New Leadership at Pioneer

Pioneer Investment Management, advisor to the Pioneer lineup of funds, has appointed Daniel Keith Kingsbury president and CEO, starting March 1, 2007. Kingsbury replaces former chief executive Osbert Hood, who resigned in January to take up the position of president at MacKay Shields, an affiliate of New York Life Investment Management. Previously, Kingsbury headed Pioneer's New Markets Division, overseeing operations in Central Europe and Asia.

Before joining Pioneer in 1999, Kingsbury served as CEO of Renaissance Capital Asset Management and worked at American International Group (AIG), serving there as vice president of equity sales, and later as president of AIG Capital Corp. At these positions, and at Pioneer, Kingsbury has developed significant experience in developing money management businesses internationally, but it remains to be seen if he can be successful in the U.S., or can stem the flow of recent management losses from Pioneer's equity division.

Domini Launches International SRI Funds
Domini Social Investments has launched two regionally oriented international SRI funds, Domini PacAsia Social Equity  and Domini EuroPacific Social Equity , which are available in both no-load and front-load share classes. Both offerings will focus on the Asia-Pacific region, but the latter fund also will add European firms to provide a broader international exposure. As with other Domini offerings, Wellington Management Company will subadvise the funds, but Domini will monitor the suitability, from a socially responsible investing perspective, of potential holdings.

Wellington has been subadvising the Domini European Social Equity Fund  since it launched in October 2005 with impressive early results. Hopefully Wellington, which we respect a great deal, can extend that success to the new funds.

Accounting Changes Force Restatements at Municipal Offerings
The municipal fund lineups of several major fund families, such as Morgan Stanley, Goldman Sachs, BlackRock, AllianceBernstein, Eaton Vance Management, and Dreyfus, among others, have been forced to delay filings or restate past financial documentation, such as with expenses, based on an obscure change auditors made to an accounting rule. This new change involves the treatment of inverse floating rate municipal securities, or "inverse floaters," a security structured to create an inverse relationship between its yield and short-term rates. The change states that the creation of an inverse floater should be accounted for as collateral-secured borrowing, rather than a sale.

If all of this seems arcane, investors should be glad to know that these changes do not appear to have had any impact on the various funds' net asset values, either current or historical. That said, investors might see companies restate fund expenses in a way that appears to increase them. For example, at Dreyfus New York Tax Exempt (DRNYX), A share expenses were restated from 0.72% to 0.81% for 2006, from 0.72% to 0.80% for 2005, and from 0.71% to 0.79% for 2004, however this doesn't actually represent an added cost to investors. This is because, with the accounting change, extra income offsets the extra expenses, both of them now being higher.

T. Rowe Reopens High-Yield Fund
All share classes of Morningstar Fund Analyst Pick  T. Rowe Price High Yield (PRHYX) reopened to new investments on Feb. 15, 2007. The fund originally closed on Feb. 20, 2004, due to asset growth, but T. Rowe now feels the market environment allows for the reopening. This is good news for investors seeking a solid, yet measured, high-yield fund. Manager Mark Vaselkiv's approach is prudent and has served shareholders very well in past market downturns.

Harbor Funds to Launch New Small/Mid-Cap Fund
On May, 1, 2007, Harbor Capital Advisors plans to launch Harbor Small to Mid Cap Value Fund. The new offering will be subadvised by Evercore Asset Management LLC, where managers Greg Sawers and Andrew Moloff--both veterans of Sanford C. Bernstein & Co., as well as of Credit Suisse Asset Management and Citigroup Asset Management, respectively--will follow an approach that combines quantitative screening with fundamental research in their attempt to capitalize on market mispricings relative to their view of a firm's intrinsic value. Management expects the fund to have a reasonably low turnover of 25%-30%, and to own between 40 and 60 companies.

The retail-oriented Investor share class will charge 1.38% (that reflects a 1.03% fee waiver, which must be reapproved by May 2008 to stay in effect). The Institutional shares require a $50,000 minimum investment but will charge a reasonable 0.95% (again, after a 1.03% fee waiver).

John Hancock Seeks to Merge Away Lackluster Offerings
John Hancock Focused Equity  would be absorbed by mid-growth sibling John Hancock Mid Cap Equity . Both the merged-away and the acquiring funds have the same managers, Alan Norton and Henry Mehlman.

Also, John Hancock Mid Cap Growth  would be merged into mid-growth peer John Hancock Growth Opportunities . Investors in Mid Cap Growth, which has a dismal long-term record, have reason to applaud the Hancock board, as Growth Opportunities is subadvised by the highly regarded quant shop Grantham, Mayo, Van Otterloo. Of course, both mergers are subject to shareholder approval.

Correction
In an earlier version of this article, we misidentified the new Harbor fund as a quantitative offering, when in fact it employs both quantitative and fundamental investment processes. Also, the former place of employment of manager Andrew Moloff was misidentified, and is, as corrected, Citigroup Asset Management. Finally, we added the fact that both managers previously worked at Sanford Bernstein & Co., and changed the language on portfolio turnover to reflect management's expected turnover rate of 25% to 30%.