[Federal Register Volume 65, Number 149 (Wednesday, August 2, 2000)]
[Notices]
[Pages 47526-47528]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19499]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 24583; 812-11916]


Pioneer America Income Trust el al.; Notice of Application

July 27, 2000.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 17(d) of the Investment 
Company Act of 1940 (the ``Act'') and rule 17d-1 under the Act to 
permit certain joint transactions.

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    Summary of Application: Applicants request an order to permit 
certain registered investment companies to deposit their uninvested 
cash balances and their cash collateral in one or more joint accounts 
to be used to enter short-term investments.
    Applicants: The Pioneer Family of Funds, consisting of: Pioneer 
America Income Trust, Pioneer Balanced Fund, Pioneer Bond Fund, Pioneer 
Emerging Markets Fund, Pioneer Equity-Income Fund, Pioneer Europe Fund, 
Pioneer Fund, Pioneer Growth Shares, Pioneer High Yield Fund, Pioneer 
Independence Fund, Pioneer Indo-Asia Fund, Pioneer Interest Shares, 
Pioneer International Growth Fund, Pioneer Limited Maturity Bond Fund, 
Pioneer Micor-Cap Fund, Pioneer Mid-Cap Fund, Pioneer Mid-Cap Value 
Fund (formerly Pioneer Capital Growth Fund), Pioneer Money Market 
Trust, a series fund consisting of Pioneer Cash Reserves Fund, Pioneer 
Real Estate Shares, Pioneer Science & Technology Fund, Pioneer Small 
Company Fund, Pioneer Strategic Income Fund, Pioneer Tax-Free Income 
Fund, Pioneer Tax-Managed Fund, Pioneer II, Pioneer World Equity Fund, 
Pioneer Variable Contracts Trust, a series fund consisting of the 
following series: Pioneer America Income VCT Portfolio, Pioneer 
Balanced VCT Portfolio, Pioneer Emerging Markets VCT Portfolio, Pioneer 
Equity-Income VCT Portfolio, Pioneer Europe VCT Portfolio, Pioneer Fund 
VCT Portfolio (formerly Growth & Income Portfolio), Pioneer Growth 
Shares VCT Portfolio, Pioneer High Yield VCT Portfolio, Pioneer 
International Growth VCT Portfolio, Pioneer Mid-Cap Value VCT Portfolio 
(formerly Capital Growth Portfolio), Pioneer Money Market VCT 
Portfolio, Pioneer Real Estate Growth VCT Portfolio, Pioneer Science & 
Technology VCT Portfolio, Pioneer Strategic Income VCT Portfolio, and 
Pioneer Swiss Franc Bond VCT Portfolio (individually, a ``Fund'' and, 
collectively, the ``Funds'') and Pioneer Investment Management, Inc. 
(the ``Investment Manager'').
    Filing Dates: The application was filed on December 27, 1999 and 
amended on July 21, 2000.
    Hearing or Notification of Hearing: An order granting the 
application will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on August 21, 2000, 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 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW, Washington, DC 
20549-0609. Applicants, Robert P. Nault, Esq., The Pioneer Group, Inc., 
60 State Street, Boston, Massachusetts 02109.

FOR FURTHER INFORMATION CONTACT: Janet M. Grossnickle, Branch Chief, or 
Nadya B. Roytblat, Assistant Director, at (202) 942-0564, Office of 
Investment Company Regulation, Division of Investment Management.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
Commission's Public Reference Branch, 450 Fifth Street, NW., 
Washington, DC 20549-0102 (tel. (202) 942-8090).

Applicants' Representations

    1. Each Fund, other than Pioneer Interest Shares, is an open-end 
management investment company registered under the Act. Pioneer 
Interest Shares is a closed-end management investment company 
registered under the Act. Each Fund currently offers one series of 
shares, except for the Pioneer Variable Contracts Trust which currently 
offers fifteen series of shares. The assets of the Funds are held by 
Brown Brothers, Harriman & Co. (the ``Custodian''), which is not an 
affiliated person of any of the Funds or of the Investment Manager.
    2. The Investment Manager is registered under the Investment 
Advisers Act of 1940 and serves as investment adviser for each of the 
Funds. The Investment Manager is a wholly-owned subsidiary of The 
Pioneer Group, Inc. (``PGI'').
    3. Applicants request that any relief granted pursuant to the 
application also apply to all future series of the Funds and other 
registered management investment companies for which the Investment 
Manager or any entity controlling, controlled by, or under common 
control with the Investment Manager acts as investment adviser.\1\
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    \1\ Each Fund that currently intends to rely on the requested 
order is named as an applicant. Any registered management investment 
company that relies on the requested relief in the future will do so 
only in compliance with the terms and conditions of the application.
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    4. Several of the Funds are authorized to enter into securities 
lending transactions. In connection with such transactions, the Funds 
may receive collateral in the form of either cash (``Cash Collateral'') 
or certain securities. When Cash Collateral is received, it is invested 
in a manner consistent with (i) each Fund's investment objectives and 
restrictions and (ii) Commission and staff guidelines concerning the 
investment of Cash Collateral.
    5. On a daily basis, the Funds also may have uninvested cash 
balances representing proceeds from sales of portfolio securities, the 
cost of securities purchased but not yet delivered, cash available to 
meet the Fund's redemptions or other liquidity requirements and cash 
awaiting investment (``Uninvested Cash,'' and together with Cash 
Collateral, ``Cash Balances''). The Cash Balance of each Fund is 
invested by the Investment Manager in short-term liquid investments 
authorized by the Fund's investment policies. Currently, the Investment 
Manager must make these investments separately on behalf of each Fund. 
Applicants assert that these separate purchases result in certain 
inefficiencies, a reduction in the returns that the Funds could 
otherwise achieve on such investments, and higher costs.
    6. Applicants propose that the Funds deposit some or all of their 
Cash Balances into one or more joint accounts (``Joint Accounts''). The 
daily balances in the Joint Accounts would be invested in (i) 
repurchase agreements ``collateralized fully'' (as defined in Rule 2a-7 
under the Act); (ii) interest-bearing or discounted commercial paper, 
including United States dollar-

[[Page 47527]]

denominated commercial paper of foreign issuers; (iii) government 
securities, as defined in section 2(a)(16) of the Act; and (iv) any 
other short-term taxable or tax-exempt money market instruments that 
constitute ``Eligible Securities,'' as defined in rule 2a-7 under the 
Act (collectively, ``Short-Term Investments'').
    7. Any repurchase agreements entered into through the Joint 
Accounts will comply with the terms of Investment Company Act Release 
No. 13005 (Feb. 2, 1983) or any subsequent interpretive position of the 
Commission or its staff. The participating Funds will not enter into 
``hold-in-custody'' repurchase agreements in which the counterparty or 
one of its affiliated persons may have possession of, or control over, 
the collateral subject to the agreement except in instances when cash 
is received very late in the business day or would otherwise be 
unavailable for investment.
    8. Each Fund's decision to invest through a Joint Account would be 
based on the same factors as its decision to make any other short-term 
liquid investments consistent with its investment objectives, policies, 
and restrictions. The Joint Accounts will only be used to aggregate 
what otherwise would be one or more daily transactions by some or all 
participating Funds to manage their respective daily Cash Balances.
    9. The Investment Manger will be responsible for investing the Cash 
Balances in the Joint Accounts, establishing accounting and control 
procedures, and operating the Joint Accounts in accordance with 
procedures that seek to ensure fair treatment of the participating 
Funds. The Investment Manager will not charge any additional or 
separate fees for administering or advising the Joint Accounts and will 
not participate monetarily in the Joint Accounts.

Applicants' Legal Analysis

    1. Section 17(d) of the Act and rule 17d-1 prohibit an affiliated 
person of a registered investment company, or an affiliated person of 
such a person, acting as principal, from participating in any joint 
enterprise or arrangement in which that investment company is a 
participant, unless the Commission has issued an order authorizing the 
arrangement. In determining whether to grant such an order, the 
Commission may consider whether the participation of the registered 
investment company in the proposed joint arrangement is consistent with 
the provisions, policies, and purposes of the Act and the extent to 
which such participation is on a basis different from or less 
advantageous than that of other participants in the arrangement.
    2. Under section 2(a)(3)(C) of the Act, each fund may be deemed to 
be an ``affiliated person'' of each other Fund if the Investment 
Manager were deemed to control each Fund. Applicants state that each 
Fund participating in a Joint Account and the Investment Manager, by 
managing that Joint Account, may be deemed to be ``joint participants'' 
in a transaction within the meaning of section 17(d) of the Act. 
Applicants further state that each Joint Account may be deemed to be a 
``joint enterprise or other joint arrangement'' within the meaning of 
rule 17d-1.
    3. Applicants assert that no Fund would be in a less favorable 
position than any other Fund as a result of its participation in one or 
more Joint Accounts. Applicants also assert that the proposed operation 
of the Joint Accounts will not result in any conflicts of interest 
among any of the Funds and the Investment Manager. Each Fund's 
liability on any Short-Term Investment invested in through the Joint 
Accounts will be limited to its interest in such Short-Term Investment.
    4. Applicants state that operation of the Joint Accounts could 
result in certain benefits to the Funds. The Funds may earn a higher 
rate of return on Short-Term Investments through the Joint Accounts 
relative to the returns they could earn individually. Under most market 
conditions, applicants assert it is generally possible to negotiate a 
rate of return on larger Short-Term Investments that is higher than 
that available on smaller Short-Term Investments. Applicants also 
contend that the aggregation of Cash Balances in a Joint Account may 
make more investment opportunities available to the Funds and may 
reduce the possibility of the Funds' Cash Balances remaining 
uninvested. In addition, the Joint Accounts may result in certain 
administrative efficiencies and reduce the potential for error by 
reducing the number of trade tickets and cash wires that the sellers of 
Short-Term Investments, the Custodian, and the Investment Manager must 
process.
    5. Applicants submit that the proposed Joint Accounts meet the 
criteria of rule 17d-1 for issuance of an order. Applicants state that 
although the Investment Manager may realize some benefit through 
administrative convenience and reduced clerical costs, the Funds would 
be the primary beneficiaries of the Joint Accounts.

Applicants' Conditions

    Applicants agree that the order granting the requested relief will 
be subject to the following conditions:
    1. One or more Joint Accounts will be established on behalf of the 
Funds as separate accounts into which a Fund may deposit daily all or a 
portion of its Cash Balances. The Joint Accounts will be subject to the 
Funds' custody agreements and will not be distinguishable from any 
other accounts maintained by the Funds at the Custodian except that 
monies from the Funds will be deposited in the Joint Accounts on a 
commingled basis. The Joint Accounts will not have separate existences 
and will not be separate legal entities. The sole function of the Joint 
Accounts will be to provide a convenient way of aggregating individual 
transactions, which would otherwise require daily management by the 
Investment Manager of Cash Balances.
    2. Assets in the Joint Accounts will be invested in Short-Term 
Investments, as directed by the Investment manager (or, in the case of 
Cash Collateral, the Custodian, in its role as securities lending agent 
in instruments pre-approved by the Investment Manager). Short-Term 
Investments that are repurchase agreements will have a remaining 
maturity of 60 days or less and other Short-Term Investments will have 
a remaining maturity of 90 days or less, each as calculated in 
accordance with rule 2a-7 under the Act. Cash Collateral in a Joint 
Account will be invested in Short-Term Investments which have a 
remaining maturity of 397 calendar days or less calculated in 
accordance with rule 2a-7 under the Act. No Fund will be permitted to 
invest in a Joint Account unless the Short-Term Investments in that 
Joint Account will comply with the investment policies and restrictions 
of that Fund.
    3. All assets held by the Joint Accounts will be valued on an 
amortized cost basis to the extent permitted by applicable Commission 
or staff releases, rules, letters, or orders.
    4. Each Fund valuing its net assets in reliance on rule 2a-7 under 
the Act will use the average maturity of the instruments in the Joint 
Account in which such Fund has an interest (determined on a dollar-
weighted basis) for the purpose of computing its average portfolio 
maturity with respect to its portion of the assets held in the Joint 
Account on that day.
    5. To prevent any Fund from using any part of a balance of a Joint 
Account credited to another Fund, no Fund will be allowed to create a 
negative balance

[[Page 47528]]

in any Joint Account for any reason, although each Fund will be 
permitted to draw down its entire balance at any time, provided the 
Investment Manager determines such draw-down would have no significant 
adverse impact on any other Fund in that Joint Account. Each Fund's 
decision to invest in a Joint Account would be solely at its option, 
and no Fund will be obligated to invest in a Joint Account or to 
maintain any minimum balance in a Joint Account. In addition, each Fund 
will retain the sole rights of ownership to any of its assets invested 
in a Joint Account, including interest payable on such assets invested 
in the Joint Account.
    6. The Investment Manager will administer, manage, and invest the 
cash in the Joint Accounts in accordance with, and as part of, its 
general duties under existing or future investment management 
agreements with the Funds and will not collect any additional or 
separate fee for advising any Joint Account.
    7. The administration of the Joint Accounts will be within the 
fidelity bond coverage required by section 17(g) of the Act and rule 
17g-1 thereunder.
    8. The Boards will adopt procedures for each of the Funds pursuant 
to which the Joint Accounts will operate, which will be reasonably 
designed to provide that the requirements of this application will be 
met. Each Board will make and approve such changes as it deems 
necessary to ensure such procedures are followed. In addition, the 
Board of each Fund will determine, no less frequently than annually, 
that the Joint Accounts have been operated in accordance with the 
adopted procedures and will only permit a Fund to continue to 
participate therein if it determines that there is a reasonable 
liklehood that the Fund and its shareholders will benefit from the 
Fund's continued participation.
    9. Each Fund will participate in the Joint Accounts on the same 
basis as any other Fund in conformity with its respective fundamental 
investment objectives, policies, and restrictions.
    10. Any Short-Term Investments made through the Joint Accounts will 
satisfy the investment criteria of all Funds in that Short-Term 
Investment.
    11. Each Fund's investment in the Joint Accounts will be documented 
daily on its books and on the books of the Custodian. The Investment 
Manager and the Custodian of each Fund will maintain records 
documenting, for any given day, each Fund's aggregate investment in a 
Joint Account and each Fund's pro rata share of each investment made 
through such Joint Account. The records maintained for each Fund will 
be maintained in conformity with section 31 of the Act and the rules 
and regulations promulgated thereunder.
    12. Every Fund participating in a Joint Account will not 
necessarily have its cash invested in every Short-Term Investment made 
through such Joint Account. However, to the extent that a Fund's cash 
is applied to a particular Short-Term Investment, the Fund will 
participate in and own its proportionate share of such Short-Term 
Investment, and any income earned or accrued thereon, based upon the 
percentage of such investment purchased with monies contributed by the 
Fund.
    13. Short-Term Investments held in a Joint Account generally will 
not be sold prior to maturity except if: (i) The Investment Manager 
believes the investment no longer presents minimal credit risks; (ii) 
the investment no longer satisfies the investment criteria of all Funds 
participating in the investment because of a credit downgrading or 
otherwise; or (iii) in the case of a repurchase agreement, the 
counterparty defaults. The Investment Manager may sell any Short-Term 
Investment (or any fractional portion thereof) on behalf of some or all 
Funds prior to the maturity of the investment provided the cost of such 
transaction will be allocated solely to the selling Funds and the 
transaction will not adversely affect the other Funds participating in 
that Joint Account. In no case would an early termination by less than 
all Funds be permitted if such early termination would reduce the 
principal amount or yield received by other Funds in the Joint Account 
or otherwise adversely affect the other Funds. Each Fund in a Joint 
Account will be deemed to have consented to such sale and partition of 
the investments in the Joint Account.
    14. Short-Term Investments held through a Joint Account with 
remaining maturities of more than seven days, as calculated pursuant to 
rule 2a-7 under the Act, will be considered illiquid and, for any Fund 
that is an open-end management investment company registered under the 
Act, subject to the restriction that the Fund may not invest more than 
15%, or in the case of a money market fund, more than 10% (or such 
other percentage as set forth by the Commission from time to time) of 
its net assets in illiquid securities, and any similar restrictions set 
forth in the Fund's investment restrictions and policies, if the 
Investment Manager cannot sell the instrument, or the Fund's fractional 
interest in such instrument, pursuant to the preceding condition.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-19499 Filed 8-1-00; 8:45 am]
BILLING CODE 8010-01-M