[Federal Register Volume 67, Number 71 (Friday, April 12, 2002)]
[Notices]
[Pages 18045-18046]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-8930]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25512; 812-12198]


Pioneer Balanced Fund, et al.; Notice of Application

April 8, 2002.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from section 15(a) 
of the Act and rule 18f-2 under the Act.

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SUMMARY OF APPLICATION: Applicants request an order to permit them to 
enter into and materially amend subadvisory agreements without 
obtaining shareholder approval.
    Applicants: Pioneer Balanced Fund, Pioneer Global Value Fund, 
Pioneer Variable Contracts Trust (each a Trust, collectively, the 
``Trusts'') and Pioneer Investment Management, Inc. (the Adviser'').

FILING DATES:  The application was filed on July 27, 2000, and amended 
on March 25, 2002.
    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 May 3, 2002, 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 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW., Washington, DC 
20549-0609; Applicants, 60 State Street, Boston, Massachusetts 02109.

FOR FURTHER INFORMATION CONTACT: Lidian Pereira, Senior Counsel, at 
(202) 942-0524 or Nadya B. Roytblat, Assistant Director, 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 at the 
Commission's Public Reference Branch, 450 Fifth Street, NW., 
Washington, DC 20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. The Trusts, each a Delaware business trust, are registered under 
the Act as open-end management investment companies. Each Trust is 
organized as a series investment company and offers shares of multiple 
series (each series, a ``Fund,'' and together, the ``Funds'').\1\
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    \1\ Applicants also request relief with respect to future series 
of the Trusts and any other registered open-end management 
investment companies and their series that: (a) Are advised by the 
Adviser (or any successor entity) or any person controlling, 
controlled by, or under common control with the Adviser (or any 
successor entity); (b) operate in substantially the same manner as 
the Funds with regard to the Adviser's responsibility to select, 
evaluate and supervise Subadvisers; and (c) comply with the terms 
and conditions in this application (``Future Funds,'' included in 
the term ``Funds''). A successor entity is limited to entities that 
result from a reorganization into another jurisdiction or a change 
in the type of business organization. All entities that currently 
intend to rely on the requested relief are named as applicants. If 
the name of a Fund contains the name of a Subadviser, it will be 
preceded by the name of the Adviser.
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    2. The Adviser, an indirect, majority owned subsidiary of 
UniCredito Italiano, S.p.A., serves as the investment adviser to each 
Fund and is registered as an investment adviser under the Investment 
Advisers Act of 1940 (``Advisers Act'').
    3. Each Fund has entered into an investment advisory agreement 
(each an ``Advisory Agreement'') with the Adviser. Each Advisory 
Agreement has been approved by each Fund's shareholders and by a 
majority of the Fund's board of trustees (``Board''), including a 
majority of the trustees who are not ``interested persons,'' as defined 
in section 2(a)(19) of the Act, of the Fund or the Adviser 
(``Independent Trustees'').
    4. The Advisory Agreement permits the Adviser to enter into 
separate investment advisory agreements (``Subadvisory Agreements'') 
with subadvisers (``Subadvisers'') to whom the Adviser may delegate 
responsibility for providing investment advice and making investment 
decisions for a Fund. Each Subadviser is an investment adviser 
registered under the Advisers Act. The Adviser monitors and evaluates 
the Subadvisers and recommends to the Board their hiring, termination, 
and replacement. The Adviser compensates the Subadvisers out of the 
fees paid to the Adviser by the Fund.
    5. Applicants request relief to permit the Adviser to enter into 
and materially amend Subadvisory Agreements without obtaining 
shareholder approval.

[[Page 18046]]

The requested relief will not extend to a Subadviser that is an 
``affiliated person,'' as defined in section 2(a)(3) of the Act, of the 
Fund or the Adviser, other than by reason of serving as a Subadviser to 
one of more of the Funds (an ``Affiliated Subadviser'').

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that it is 
unlawful for any person to act as an investment adviser to a registered 
investment company except under a written contract that has been 
approved by a majority of the investment company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of stock in a series company affected by a matter must approve the 
matter if the Act requires shareholder approval.
    2. Section 6(c) of the Act authorizes the Commission to exempt 
persons or transactions from the provisions of the Act, or from any 
rule thereunder, to the extent that the exemption is necessary or 
appropriate in the public interest and consistent with the protection 
of investors and the purposes fairly intended by the policies and 
provisions of the Act. Applicants state that the requested relief meets 
this standard for the reasons discussed below.
    3. Applicants assert that the Funds' shareholders rely on the 
Adviser to select Subadvisers best suited to achieve a Fund's 
investment objectives. Applicants assert that, from the perspective of 
the investor, the role of the Subadvisers is comparable to that of 
individual portfolio managers employed by other investment advisory 
firms. Applicants contend that requiring shareholder approval of each 
Subadvisory Agreement would impose costs and unnecessary delays on the 
Funds, and may preclude the Adviser from acting promptly in a manner 
considered advisable by the Board. Applicants also note that the 
Advisory Agreement will remain subject to section 15(a) of the Act and 
rule 18f-2 under the Act.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Before a Fund may rely on the order requested in this 
application, the operation of the Fund in the manner described in this 
application will be approved by a majority of the Fund's outstanding 
voting securities (or, if the Fund serves as a funding medium for any 
sub-account of a registered separate account, pursuant to voting 
instructions provided by the unitholders of the sub-account), as 
defined in the Act, or by its initial shareholder, provided that, in 
the case of approval by the initial shareholder, the pertinent Fund's 
shareholders (or, if the Fund serves as a Funding medium for any sub-
account of a registered separate account, the unitholders of the sub-
account) purchase shares on the basis of a prospectus containing the 
disclosure contemplated by condition 2 below.
    2. Each Fund will disclose in its prospectus the existence, 
substance, and effect of any order granted pursuant to the application. 
In addition, each Fund will hold itself out to the public as employing 
the management structure described in the application. The prospectus 
will prominently disclose that the Adviser has ultimate responsibility 
(subject to oversight of the Board) to oversee Subadvisers and 
recommend their hiring, termination, and replacement.
    3. At all times, a majority of the Board will be Independent 
Trustees, subject to the suspension of this requirement for the death, 
disqualification or bona fide resignation of trustees as provided in 
rule 10e-1 under the Act, and the nomination of new or additional 
Independent Trustees will be at the discretion of the then existing 
Independent Trustees.
    4. The Adviser will not enter a Subadvisory Agreement with any 
Affiliated Subadviser, without that agreement, including the 
compensation to be paid thereunder, being approved by the shareholders 
of the applicable Fund (or if the Fund serves as a funding medium for 
any sub-account of a registered separate account, pursuant to voting 
instructions provided by the unitholders of the sub-account).
    5. When a Subadviser change is proposed for a Fund with an 
Affiliated Subadviser, the Board, including a majority of the 
Independent Trustees will make a separate finding, reflected in the 
affected Fund's Board minutes, that the change is in the best interests 
of the Fund and its shareholders (or if the Fund serves as a funding 
medium for any sub-account of a registered separate account, the best 
interests of the Fund and unitholders of any such sub-account), and 
does not involve a conflict of interest from which the Adviser or the 
Affiliated Subadviser derives an inappropriate advantage.
    6. Within 90 days of the hiring of any new Subadviser for any Fund, 
the Fund shareholders (or, if the Fund serves as a funding medium for 
any sub-account of a registered separate account, the unitholders of 
the sub-account), will be furnished all information about the new 
Subadviser that would be contained in a proxy statement, including any 
change in such disclosure caused by the addition of a new Subadviser. 
Each Fund will meet this condition by providing shareholders (or 
unitholders), within 90 days of the hiring of a Subadviser, with an 
information statement meeting the requirements of Regulation 14C, 
Schedule 14C, and Item 22 of Schedule 14A under the Securities Exchange 
Act of 1934.
    7. The Adviser will provide general management services to each 
Fund, including overall supervisory responsibility for the general 
management and investment of each Fund's portfolio, and subject to 
review and approval by the Board, will: (i) Set the Fund's overall 
investment strategies; (ii) evaluate, select and recommend 
Subadviser(s) to manage all or part of a Fund's assets; (iii) monitor 
and evaluate the performance of Subadviser(s); (iv) ensure that 
Subadvisers comply with the Fund's investment objectives, policies and 
restrictions by, among other things, implementing procedures reasonably 
designed to ensure compliance; and (v) allocate and, where appropriate, 
reallocate a Fund's assets among its Subadvisers when a Fund has more 
than one Subadviser.
    8. No trustee or officer of any Fund or director or officer of the 
Adviser will own directly or indirectly (other than through a pooled 
investment vehicle that is not controlled by any such person) any 
interest in a Subadviser except for: (i) ownership of interests in the 
Adviser or any entity that controls, is controlled by, or is under 
common control with the Adviser; or (ii) ownership of less than 1% of 
the outstanding securities of any class of equity or debt of a 
publicly-traded company that is either a Subadviser or an entity that 
controls, is controlled by or is under common control with a 
Subadviser.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-8930 Filed 4-11-02; 8:45 am]
BILLING CODE 8010-01-P