[Federal Register Volume 60, Number 143 (Wednesday, July 26, 1995)]
[Notices]
[Pages 38382-38384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18287]



-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Rel. No. 21219; 812-9638]


Pioneer Winthrop Real Estate Investment Fund, et al.; Notice of 
Application

July 19, 1995.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for exemption under the Investment 
Company Act of 1940 (the ``Act'').

-----------------------------------------------------------------------

applicantS: Pioneer Winthrop Real Estate Investment Fund (``Pioneer 
Winthrop Fund''); Pioneer Variable Contracts Trust (``Variable Trust'') 
on behalf of its Real Estate Growth Portfolio series (together with 
Pioneer Winthrop Fund, the ``Funds''); and Pioneering Management 
Corporation (``PMC'').

relevant act SectionS: Order requested under section 6(c) for an 
exemption from section 15(a).

suMMary of aPPlication: Apollo Real Estate Advisors, L.P. (``Apollo'') 
has agreed to acquire W.L. Realty, L.P. (``Realty LP''), including the 
investment advisory business of its indirect subsidiary Winthrop 
Advisors Limited Partnership (``WALP''), from The Nomura Securities Co. 
(``Nomura'') and certain principals of Realty L.P. The reorganization 
will result in the assignment, and thus the termination, of existing 
investment advisory contracts of the applicant investment companies. 
Applicants seek an order to permit the implementation, without 
shareholder approval, of interim investment advisory contracts during a 
period of up to 120 days following July 3, 1995. The order also will 
permit the applicant investment adviser to receive from the applicant 
investment companies fees earned under the interim investment advisory 
contracts following approval by the investment companies' shareholders.

filing dates: The application was filed on June 20, 1995 and amended on 
July 19, 1995.

hearing or notification of hearing: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
applicants with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on August 14, 1995, 
and should be accompanied by proof of service on applicants, in the 
form of an affidavit or, for lawyers, a certificate of service. Hearing 
requests should state the nature of the writer's interest, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request such notification by writing to the 
SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth St. NW., Washington, DC 20549. 
Applicants, 60 State St., Boston, MA 02109.

FOR FURTHER INFORMATION CONTACT:Marianne H. Khawly, Staff Attorney, at 
(202) 942-0562, or C. David Messman, Branch Chief, at (202) 942-0564 
(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the SEC's Public Reference Branch.

Applicants' Representations

    1. The Funds, each a Delaware business trust, are registered open-
end management investment companies. Pioneer Winthrop Fund continuously 
offers its shares for sale to the general investing public. Real Estate 
Growth Portfolio continually offers its shares for sale primarily to 
insurance company segregated accounts that fund variable annuity and 
life insurance contracts.
    2. The Funds each have entered into an investment advisory 
agreement with Pioneer Winthrop Associates (``PWA''), a general 
partnership and registered investment adviser under the Investment 
Advisers Act of 1940 (the ``Advisers Act''), under which PWA provides 
advisory and management services to the Funds (the ``Advisory 
Agreements''). Also, the Funds each have entered into subadvisory 
agreements with PMC and WALP, (the ``Subadvisory Agreements,'' and 
together with the Advisory Agreements, the ``Prior Agreements''), each 
a registered investment adviser under the Advisers Act.
    3. PMC currently serves as investment adviser to each of the mutual 
funds, other than the Funds, in the Pioneer complex of mutual funds. 
PMC is a wholly-owned subsidiary of The Pioneer Group, Inc. (``PGI''). 
WALP is a wholly-owned subsidiary of Winthrop Financial Associates 
(``WFA''). PGI and WFA each own 50% of the partnership interests of 
PWA.
    4. WFA's indirect parent company, Realty LP, is a majority owned 
subsidiary of Nomura, an international brokerage and financial services 
firm. The remaining minority interests in Realty LP are owned by Arthur 
J. Halleran and Stephen G. Kasnet, (collectively, the ``Management 
Investors''), principals of WFA. The Management Investors serve as 
trustees 

[[Page 38383]]
and officers of Pioneer Winthrop Fund and officers of Variable Trust.
    5. On May 11, 1995, Apollo and Nomura announced that they had 
entered into negotiations pursuant to which Apollo intended to acquire 
from Nomura its controlling interest, and from the Management Investors 
their remaining minority interest, in Realty LP (the 
``Reorganization''). On July 17, 1995, the Reorganization was 
consummated. PMC agreed to provide the investment advisory services now 
provided to the Funds by PWA and WALP.
    6. PMC has entered into an employment agreement with the key 
employee of WALP, pursuant to which such employee has agreed to provide 
to PMC real estate securities advice equivalent to that which he 
currently provides to the Funds through WALP. In addition, PMC is in 
the process of entering into a consulting agreement with Winthrop 
Commercial Partnership (``WCP''), a subsidiary of WFA, under which WCP 
will continue to provide information regarding real estate properties 
and markets that it currently provides to the Funds through WALP. WCP 
will provide this information to PMC under the consulting agreement at 
cost, which will be borne by PMC.
    7. Immediately upon being notified of the agreements in principal, 
the respective Boards of Trustees of the Funds (the ``Boards'') held 
special meetings on June 6, 1995 to discuss the Reorganization. During 
those meetings, the Boards, including a majority of the Board members 
who are not ``interested persons,'' as that term is defined in the Act 
(the ``Independent Trustees''), of the respective Funds, with the 
advice and assistance of counsel to the Independent Trustees, made a 
full evaluation of the interim investment advisory agreements between 
the Funds and PMC (the ``Interim Agreements''). In accordance with 
section 15(c) of the Act, the Boards voted to approve the Interim 
Agreements. The Boards concluded that payment of the advisory and 
subadvisory fees during the Interim Period would be appropriate and 
fair because there will be no diminution in the scope and quality of 
services provided to the Funds, the fees to be paid are unchanged from 
the fees paid under the Prior Agreements,the fees would be maintained 
in an interest-bearing escrow account until payment is approved or 
disapproved by shareholders, and the nonpayment of fees would be 
inequitable to PMC in view of the substantial services to be provided 
by PMC to the Funds, and the expenses incurred by PMC. The Boards of 
each Fund also voted to recommend that shareholders of each Fund 
approve the Interim Agreements, as well as the new advisory agreements 
with PMC.
    8. Applicants seek an exemption from section 15(a) of the Act to 
permit the implementation, without shareholder approval, of the Interim 
Agreements. On June 20, 1995, the date of the filing of the original 
application, applicant anticipated that the Reorganization would be 
consummated on July 3, 1995. Accordingly, the exemption would cover the 
period commencing on July 3, 1995 and continuing through the date the 
Interim Agreements are approved or disapproved by shareholders of the 
respective Funds, which period shall be no longer than 120 days (the 
``Interim Period'').

Applicants' Legal Conclusions

    1. Section 15(a) prohibits an investment adviser from providing 
investment advisory services to an investment company except under a 
written contract that has been approved by a majority of the voting 
securities of such investment company. Section 15(a) further requires 
that such written contract provide for its automatic termination in the 
event of an assignment. Section 2(a)(4) defines ``assignment'' to 
include any direct or indirect transfer of a contract by the assignor 
or of a controlling block of the assignor's outstanding voting 
securities by a security holder of the assignor.
    2. Section 2(a)(9) defines ``control'' as the power to exercise a 
controlling influence over the management or policies of a company. 
Beneficial ownership of more than 25% of the voting securities of a 
company is presumed under section 2(a)(9) to constitute control.
    3. Upon consummation of the Reorganization, Apollo will acquire all 
of Realty LP's outstanding voting securities and thus an indirect, 
controlling interest in each of WFA and WALP, Including WFA's 50% 
general partnership interest in PWA. Thus, the Reorganization will 
result in an ``assignment,'' within the meaning of section 2(a)(4), of 
the Advisory Agreements and WALP Subadvisory Agreements. Therefore, 
each such agreement will terminate by its terms.\1\

    \1\ The PMC Subadvisory Agreements terminate by their terms upon 
the termination of the Advisory Agreements.
---------------------------------------------------------------------------

    4. Rule 15a-4 provides, among other things, that if an advisory 
contract is terminated by assignment, the investment adviser may 
continue to act as such for 120 days at the previous compensation rate 
if a new contract is approved by the board of directors of the 
investment company, and if the investment adviser or a controlling 
person of the investment adviser does not directly or indirectly 
receive money or other benefit in connection with the assignment. 
Because Nomura and the Management Investors will receive a benefit in 
connection with the assignment of the contracts, applicants may not 
rely on rule 15a-4.
    5. Applicants assert that because the Funds did not have sufficient 
advance notice of the Reorganization, it was not possible for the Funds 
to obtain shareholder approval of the new advisory agreements in 
accordance with section 15(a) prior to the closing of the 
Reorganization. Applicants believe that the requested relief will 
enable the Funds to receive the same scope and quality of advisory 
services after the Reorganization as they received prior to the 
Reorganization, and that the engagement of PMC as the Funds' sole 
investment adviser is in the best interests of the Funds and their 
shareholders.
    6. Applicants believe that the requested relief will allow the 
Funds to continue to operate on an orderly basis until the shareholders 
have the opportunity to consider new investment advisory agreements. 
The 120 day Interim Period will facilitate the orderly and reasonable 
consideration of the new agreements.
    7. Section 6(c) of the Act provides that the SEC may exempt any 
person, security, or transaction from any provision of the Act, if and 
to the extent that such exemption is necessary or appropriate in the 
public interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act. 
Applicants believe that the requested relief meets this standard.

Applicants' Conditions

    Applicants agree as conditions to the requested exemptive relief 
that:
    1. The Interim Agreements will have the same terms and conditions 
as the Advisory Agreements, except in each case for the names and 
identities of the parties, the dates of execution and termination, and 
the inclusion of escrow arrangements.
    2. Fees earned by PMC during the Interim Period in accordance with 
the Interim Agreements will be maintained in an interest-bearing escrow 
account, and amounts in such account (including interests earned on 
such paid fees) will be paid to PMC only upon approval of the Funds' 
respective shareholders or, in the absence of such approval, to the 
respective Funds.

[[Page 38384]]

    3. The Funds will hold meetings of shareholders to vote on approval 
of the Interim Agreements and new investment advisory agreements, on or 
before the 120th day following July 3, 1995.
    4. PMC will bear the cost of preparing and filing this application 
and the costs relating to the solicitation of the approvals of the 
Funds' shareholders of the Interim Agreements necessitated by the 
Reorganization.
    5. PMC will take all appropriate actions to ensure that the scope 
and quality of advisory and other services provided to the Funds under 
the Interim Agreements will be at least equivalent, in the judgment of 
the respective Boards, including a majority of the Independent 
Directors, to the scope and quality of services previously provided. In 
the event of any material change in personnel providing services under 
the Interim Agreements, PMC will apprise and consult the Boards of the 
affected Funds to assure that such Boards, including a majority of the 
Independent Directors, are satisfied that the services provided by PMC 
will not be diminished in scope or quality.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-18287 Filed 7-25-95; 8:45 am]
BILLING CODE 8010-01-M