[Federal Register Volume 67, Number 114 (Thursday, June 13, 2002)]
[Notices]
[Pages 40757-40761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-14946]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25607; 812-12592]


Pioneer America Income Trust, et al.; Notice of Application

June 7, 2002.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order under section 12(d)(1)(J) of 
the Investment Company Act of 1940 (``Act'') for an exemption from 
sections 12(d)(1)(A) and (B) of the Act, under sections 6(c) and 17(b) 
of the Act for an exemption from section 17(a) of the Act, and under 
section 17(d) of the Act and rule 17d-1 under the Act to permit certain 
joint transactions.

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    Applicants: Pioneer America Income Trust, Pioneer Balanced Fund, 
Pioneer Bond Fund, Pioneer Emerging Markets Fund, Pioneer Equity Income 
Fund, Pioneer Europe Fund, Pioneer Europe Select Fund, Pioneer Fund, 
Pioneer Global Consumers Fund, Pioneer Global Energy and Utilities 
Fund, Pioneer Global Financials Fund, Pioneer Global Health Care Fund, 
Pioneer Global High Yield Fund, Pioneer Global Industrials Fund, 
Pioneer Global Telecoms Fund, Pioneer Global Value Fund, Pioneer Growth 
Shares, Pioneer High Yield Fund, Pioneer Independence Fund, Pioneer 
Interest Shares, Pioneer International Equity Fund, Pioneer 
International Value Fund, Pioneer Large Cap Value Fund, Pioneer Mid Cap 
Growth Fund, Pioneer Mid Cap Value Fund, Pioneer Money Market Trust, 
Pioneer Real Estate Shares, Pioneer Science & Technology Fund, Pioneer 
Small Cap Value Fund, Pioneer Small Company Fund, Pioneer Strategic 
Income Fund, Pioneer Tax Free Income Fund, Pioneer Tax Managed Fund, 
Pioneer Value Fund, and Pioneer Variable Contracts Trust (each an 
``Investment Company'' and collectively, the ``Investment Companies''), 
and Pioneer Investment Management, Inc. (``PIM'') and Pioneer Funds 
Distributor, Inc.
    Summary of Application:
    The applicants request an order that would permit (a) certain 
registered management investment companies and certain entities that 
are excluded from the definition of investment company by section 
3(c)(1), 3(c)(7) or 3(c)(11) of the Act to invest uninvested cash and 
cash collateral in (i) affiliated money market funds and/or short-term 
bond funds or (ii) one or more affiliated entities that operate as cash 
management investment vehicles and that are excluded from the 
definition of investment company by section 3(c)(1) or 3(c)(7) of the 
Act, and (b) the registered investment companies and the affiliated 
entities to continue to engage in purchase and sale transactions 
involving portfolio securities in reliance on rule 17a-7 under the Act.
    Filing Dates:
    The application was filed on August 8, 2001 and amended on June 4, 
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 July 2, 2002, and should be 
accompanied by proof of service on the 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, c/o Martin J.

[[Page 40758]]

Wolin, Esq., Pioneer Investment Management, Inc., 60 State Street, 
Boston, MA 02109.

FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at 
(202) 942-0527 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. Each Investment Company is organized as a Massachusetts business 
trust or a Delaware business trust. Each Investment Company, other than 
Pioneer Interest Shares, is registered under the Act as an open-end 
management investment company. Pioneer Interest Shares is registered 
under the Act as a closed-end management investment company. Some of 
the Investment Companies have multiple series, each with separate 
investment objective and policies. PIM is an investment adviser 
registered under the Investment Advisers Act of 1940 and serves as 
investment adviser to each Investment Company (PIM and entities 
controlling, controlled by, or under common control with PIM, 
collectively, ``PIM'').\1\
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    \1\ Applicants request that any relief granted also apply to (a) 
any other registered investment company or series thereof for which 
PIM currently is or in the future may act as investment adviser and 
(b) any entity excluded from the definition of investment company 
under section 3(c)(1), section 3(c)(7) or section 3(c)(11) of the 
Act, now existing or established in the future, for which PIM 
currently is or in the future may serve as investment adviser of 
trustee exercising investment discretion, that operates as a cash 
management investment vehicle (``Funds,'' and together with the 
``Investment Companies'' and any existing or future series of the 
Investment Companies, the ``Funds''). All Funds that currently 
intend to rely on the requested order are named as applicants. Any 
other existing or future Fund will rely on the order only in 
accordance with the terms and conditions of the application.
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    2. Each Fund that is not a money market fund (a ``Participating 
Fund'') has, or may be expected to have cash that has not been invested 
in portfolio securities (``Uninvested Cash''). Uninvested Cash may 
result from a variety of sources, including dividends or interest 
received on portfolio securities, unsettled securities transactions, 
strategic reserves, matured investments, proceeds from liquidation of 
investment securities, dividend payments or money from investors. 
Certain Participating Funds also may participate in a securities 
lending program (``Securities Lending Program'') under which a Fund may 
lend its portfolio securities to registered broker-dealers or other 
institutional investors. The loans are secured by collateral, including 
cash collateral (``Cash Collateral'' and together, with Uninvested 
Cash, ``Cash Balances''), equal at all times to at least the market 
value of the securities loaned. Currently, the Participating Funds can 
invest Cash Balances directly in money market instruments or other 
short-term debt obligations. Applicants state that Participating Funds 
will either be management investment companies or their series that are 
registered under the Act (``Registered Participating Funds'') or 
investment vehicles that are excluded from the definition of investment 
company under section 3(c)(1), 3(c)(7) or 3(c)(11) of the Act (the 
``Non-Registered Participating Funds'') for which PIM acts as trustee 
or investment adviser.
    3. Applicants request an order to permit: (i) The Participating 
Funds to use their Cash Balances to purchase shares of one or more of 
the Funds that are money market funds or short-term bond funds (the 
``Registered Central Funds'') or shares of one or more future entities 
for which PIM acts as trustee or investment adviser that operate as 
cash management investment vehicles and that are excluded from the 
definition of investment company pursuant to section 3(c)(1) and 
3(c)(7) of the Act (the ``Non-Registered Central Funds'') (the 
Registered Central Funds and the Non-Registered Central Funds, 
collectively, the ``Central Funds''); (ii) the Central Funds to sell 
their shares to and purchase (redeem) such shares from the 
Participating Funds; (iii) the Participating Funds and Central Funds to 
continue to engage in interfund purchase and sale transactions 
(``Interfund Transactions''); and (iv) PIM to effect the above 
transactions.
    4. The investment by each Registered Participating Fund in shares 
of the Central Funds will be in accordance with that Registered 
Participating Fund's investment policies and restrictions as set forth 
in its registration statement. The Registered Central Funds are or will 
be taxable or tax-exempt money market funds that comply with rule 2a-7 
under the Act or short-term bond funds that invest in fixed-income 
securities and maintain a dollar-weighted average maturity of three 
years or less. The Non-Registered Central Funds will comply with rule 
2a-7 under the Act.

Applicants' Legal Analysis

I. Investment of Cash Balances by the Participating Funds in the 
Central Funds

A. Section 12(d)(1)
    1. Section 12(d)(1)(A) of the Act provides that no investment 
company may acquire securities of a registered investment company if 
such securities represent more than 3% of the acquired company's 
outstanding voting stock, more than 5% of the acquiring company's total 
assets, or if such securities, together with the securities of other 
acquired investment companies, represent more than 10% of the acquiring 
company's assets. Section 12(d)(1)(B) of the Act provides that no 
registered open-end investment company may sell its securities to 
another investment company if the sale will cause the acquiring company 
to own more than 3% of the acquired company's voting stock, or if the 
sale will cause more than 10% of the acquired company's voting stock to 
be owned by investment companies. Any entity that is excluded from the 
definition of investment company under section 3(c)(1) or 3(c)(7) of 
the Act is deemed to be an investment company for the purposes of the 
3% limitation specified in sections 12(d)(1)(A) and (B) with respect to 
purchases by and sales to such company.
    2. Section 12(d)(1)(J) of the Act provides that the Commission may 
exempt any person, security, or transaction from any provision of 
section 12(d)(1) if and to the extent that such exemption is consistent 
with the public interest and the protection of investors. Applicants 
request relief under section 12(d)(1)(J) to permit the Participating 
Funds to use their Cash Balances to acquire shares of the Registered 
Central Funds in excess of the percentage limitations in section 
12(d)(1)(A), provided however, that in all cases a Registered 
Participating Fund's aggregate investment of Uninvested Cash in shares 
of the Central Funds will not exceed 25% of the Registered 
Participating Fund's total assets at any time. Applicants also request 
relief to permit the Registered Central Funds to sell their securities 
to the Participating Funds in excess of the percentage limitations in 
section 12(d)(1)(B).
    3. Applicants state that the proposed arrangement will not result 
in the abuses that sections 12(d)(1)(A) and (B) were intended to 
prevent. Applicants state that there is no threat of redemption to gain 
undue influence over the Registered Central Funds due

[[Page 40759]]

to the highly liquid nature of each Registered Central Fund's 
portfolio. Applicants state that the proposed arrangement will not 
result in inappropriate layering of fees. Shares of the Central Funds 
sold to the Participating Funds will not be subject to a sales load, 
redemption fee, distribution fee under a plan adopted in accordance 
with rule 12b-1 under the Act or service fee (as defined in rule 
2830(b)(9) of the National Association of Securities Dealers Inc. 
Conduct Rules (``NASD Conduct Rules''). If a Central Fund offers more 
than one class of shares in which a Registered Participating Fund may 
invest, the Registered Participating Fund will invest its Cash Balances 
only in the class with the lowest expense ratio at the time of 
investment. In addition, if PIM collects a fee from a Central Fund for 
acting as its investment adviser with respect to assets invested by a 
Registered Participating Fund, when approving an investment advisory 
contract under section 15 of the Act, the board of trustees of each 
Registered Participating Fund (``Board''), including a majority who are 
not ``interested persons,'' as defined in section 2(a)(19) of the Act 
(``Independent Trustees''), will consider to what extent, if any, the 
advisory fees charged to the Registered Participating Fund by PIM 
should be reduced to account for reduced services provided to the 
Registered Participating Fund as a result of the investment of 
Uninvested Cash in the Central Fund. Applicants represent that no 
Central Fund will acquire securities of any other investment company in 
excess of the limitations contained in section 12(d)(1)(A) of the Act.
B. Section 17(a) of the Act
    1. Section 17(a) of the Act makes it unlawful for any affiliated 
person of a registered investment company, acting as principal, to sell 
or purchase any security to or from the investment company. Section 
2(a)(3) of the Act defines an affiliated person of an investment 
company to include any person directly or indirectly owning, 
controlling, or holding with power to vote 5% or more of the 
outstanding voting securities of the other person, any person 5% or 
more of whose outstanding securities are directly or indirectly owned, 
controlled, or held with power to vote by the other person, any person 
directly or indirectly controlling, controlled by, or under common 
control with the other person, and any investment adviser to the 
investment company. Because the Participating Funds and the Central 
Funds have PIM as investment adviser or trustee exercising investment 
discretion, they may be deemed to be under common control and thus 
affiliated persons of each other. In addition, if a Participating Fund 
purchases more than 5% of the voting securities of a Central Fund, the 
Central Fund and the Participating Fund may be affiliated persons of 
each other. As a result, section 17(a) would prohibit the sale of the 
shares of Central Funds to the Participating Funds, and the redemption 
of the shares by the Participating Funds.
    2. Section 17(b) of the Act authorizes the Commission to exempt a 
transaction from section 17(a) of the Act if the terms of the proposed 
transaction, including the consideration to be paid or received, are 
reasonable and fair and do not involve overreaching on the part of any 
person concerned, and the proposed transaction is consistent with the 
policy of each registered investment company concerned and with the 
general purposes of the Act. Section 6(c) of the Act permits the 
Commission to exempt persons or transactions from any provision of the 
Act, if the 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.
    3. Applicants submit that their request for relief to permit the 
purchase and redemption of shares of the Central Funds by the 
Participating Funds satisfies the standards in sections 6(c) and 17(b) 
of the Act. Applicants note that shares of the Central Funds will be 
purchased and redeemed at their net asset value, the same consideration 
paid and received for these shares by any other shareholder. Applicants 
state that the Registered Participating Funds will retain their ability 
to invest Cash Balances directly in money market instruments as 
authorized by their respective investment objectives and policies. 
Applicants state that a Registered Central Fund has the right to 
discontinue selling shares to any of the Participating Funds if the 
Central Fund's Board or PIM determines that such sale would adversely 
affect the Central Fund's portfolio management and operations.
C. Section 17(d) of the Act and Rule 17d-1 Under the Act
    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
an affiliated person of a registered investment company, acting as 
principal, from participating in or effecting any transaction in 
connection with any joint enterprise or joint arrangement in which the 
investment company participates, unless the Commission has approved the 
joint arrangement. Applicants state that the Participating Funds and 
the Central Funds, by participating in the proposed transactions, and 
PIM, by managing the proposed transactions, could be deemed to be 
participating in a joint arrangement within the meaning of section 
17(d) and rule 17d-1.
    2. In considering whether to approve a joint transaction under rule 
17d-1, the Commission considers whether the investment company's 
participation in the joint transaction is consistent with the 
provisions, policies and purposes of the Act, and the extent to which 
the participation is on a basis different from or less advantageous 
than that of other participants. Applicants state that the investment 
by the Participating Funds in shares of the Central Funds would be on 
the same basis and no different from or less advantageous than that of 
other participants. Applicants submit that the proposed transactions 
meet the standards for an order under rule 17d-1.

II. Interfund Transactions

    1. Applicants state that certain Funds currently rely on rule 17a-7 
under the Act to conduct Interfund Transactions. Rule 17a-7 under the 
Act provides an exemption from section 17(a) for a purchase or sale of 
certain securities between a registered investment company and an 
affiliated person (or an affiliated person of an affiliated person), 
provided that certain conditions are met, including that the 
affiliation between the registered investment company and the 
affiliated person (or an affiliated person of the affiliated person) 
must exist solely by reason of having a common investment adviser, 
common directors and/or common officers. Applicants state that the 
Participating Funds and Central Funds may not be able to rely on rule 
17a-7 when purchasing or selling portfolio securities to each other, 
because some of the Participating Funds may own 5% or more of the 
outstanding voting securities of a Central Fund and, therefore, an 
affiliation would not exist solely by reason of the transacting Funds 
having a common investment adviser, common directors and/or common 
officers.
    2. Applicants request relief under sections 6(c) and 17(b) of the 
Act to permit the Interfund Transactions. The Interfund Transactions 
for which relief is requested are transactions between Registered 
Participating Funds and Non-Registered Central Funds and between Non-
Registered Participating Funds and Registered Central Funds. Applicants 
submit that the requested relief satisfies

[[Page 40760]]

the standards for relief in sections 6(c) and 17(b). Applicants state 
that the Funds will comply with rule 17a-7 under the Act in all 
respects, other than the requirement that the participants be 
affiliated solely by reason of having a common investment adviser, 
common directors and/or common officers. Applicants state that the 
additional affiliation created under sections 2(a)(3)(A) and (B) does 
not affect the other protections provided by rule 17a-7, including the 
integrity of the pricing mechanism employed and oversight by each 
Fund's Board.

Applicants' Conditions

    Applicants agree that the order granting the requested relief shall 
be subject to the following conditions:
    1. Shares of the Central Funds sold to and redeemed by the 
Participating Funds will not be subject to a sales load, redemption 
fee, distribution fee under a plan adopted in accordance with rule 12b-
1 under the Act, or service fee (as defined in rule 2830(b)(9) of the 
NASD Conduct Rules).
    2. If PIM collects a fee from a Central Fund for acting as 
investment adviser with respect to assets invested by a Registered 
Participating Fund, before the next meeting of the Board of the 
Registered Participating Fund that invests in the Central Fund is held 
for the purpose of voting on an advisory contract under section 15 of 
the Act, PIM will provide the Board with such information as the Board 
may request to evaluate the effect of the investment of Uninvested Cash 
in the Central Funds upon the direct and indirect compensation to PIM. 
Such information will include specific information regarding the 
approximate cost to PIM of, or portion of the advisory fee under the 
existing advisory contract attributable to, managing the Uninvested 
Cash of the Registered Participating Fund that can be expected to be 
invested in the Central Funds. In connection with approving any 
advisory contract for a Registered Participating Fund, the Board, 
including a majority of the Independent Trustees, shall consider to 
what extent, if any, the advisory fees charged to the Registered 
Participating Fund by PIM should be reduced to account for reduced 
services provided to the Registered Participating Fund by PIM as a 
result of the Uninvested Cash being invested in the Central Funds. The 
minute books of the Registered Participating Fund will record fully the 
Board's consideration in approving the advisory contract, including the 
considerations relating to fees referred to above.
    3. Each Registered Participating Fund will invest Uninvested Cash 
in, and hold shares of, the Central Funds only to the extent that the 
Registered Participating Fund's aggregate investment of Uninvested Cash 
in the Central Funds does not exceed 25% of the Registered 
Participating Fund's total assets. For purposes of this limitation, 
each Registered Participating Fund or series thereof will be treated as 
a separate investment company.
    4. Investment by a Registered Participating Fund in shares of the 
Central Funds will be in accordance with each Registered Participating 
Fund's respective investment restrictions and will be consistent with 
each Registered Participating Fund's investment policies as set forth 
in its prospectus and statement of additional information.
    5. Each Fund that may rely on the order will be advised by PIM or 
will have PIM as its trustee.
    6. No Central Fund will acquire securities of any other investment 
company in excess of the limits contained in section 12(d)(1)(A) of the 
Act.
    7. The Non-Registered Central Funds will comply with the 
requirements of sections 17(a), (d), and (e), and 18 of the Act as if 
the Non-Registered Central Funds were registered open-end investment 
companies. With respect to all redemption requests made by a 
Participating Fund, the Non-Registered Central Funds will comply with 
section 22(e) of the Act. PIM will adopt procedures designed to ensure 
that each Non-Registered Central Fund complies with sections 17(a), 
(d), and (e), 18 and 22(e) of the Act. PIM will also periodically 
review and update as appropriate such procedures and will maintain 
books and records describing such procedures, and maintain the records 
required by rules 31a-1(b)(1), 31a-1(b)(2)(ii), and 31a-1(b)(9) under 
the Act. All books and records required to be made pursuant to this 
condition will be maintained and preserved for a period of not less 
than six years from the end of the fiscal year in which any transaction 
occurred, the first two years in an easily accessible place, and will 
be subject to examination by the Commission and its staff.
    8. Each Non-Registered Central Fund will comply with rule 2a-7 
under the Act. With respect to such Non-Registered Central Fund, PIM 
will adopt and monitor the procedures described in rule 2a-7(c)(7) and 
will take such other actions as are required to be taken under those 
procedures. A Participating Fund may only purchase shares of a Non-
Registered Central Fund if PIM determines on an ongoing basis that the 
Non-Registered Central Fund is in compliance with rule 2a-7. PIM will 
preserve for a period of not less than six years from the date of 
determination, the first two years in an easily accessible place, a 
record of such determination and the basis upon which the determination 
was made. This record will be subject to examination by the Commission 
and its staff.
    9. Each Participating Fund will purchase and redeem shares of any 
Non-Registered Central Fund as of the same time and at the same price, 
and will receive dividends and bear its proportionate share of expenses 
on the same basis, as other shareholders of the Non-Registered Central 
Fund. A separate account will be established in the shareholder records 
of each Non-Registered Central Fund for the account of each 
Participating Fund that invests in such Non-Registered Central Fund.
    10. To engage in Interfund Transactions, the Participating Funds 
and the Central Funds will comply with rule 17a-7 under the Act in all 
respects other than the requirement that the parties to the transaction 
be affiliated persons (or affiliated persons of affiliated persons) of 
each other solely by reason of having a common investment adviser, or 
investment advisers which are affiliated persons of each other, common 
directors and/or common officers, solely because a Participating Fund 
and a Central Fund might become affiliated persons within the meaning 
of section 2(a)(3)(A) and (B) of the Act.
    11. The net asset value per share with respect to shares of a Non-
Registered Central Fund will be determined separately for each Non-
Registered Central Fund by dividing the value of the assets belonging 
to that Non-Registered Central Fund, less the liabilities of that Non-
Registered Central Fund, by the number of shares outstanding with 
respect to that Non-Registered Central Fund.
    12. Before a Registered Participating Fund may participate in the 
Securities Lending Program, a majority of the Board (including a 
majority of the Independent Trustees) will approve the Registered 
Participating Fund's participation in the Securities Lending Program. 
No less frequently than annually, the Board also will evaluate, with 
respect to each Registered Participating Fund, any securities lending 
arrangement and its results and determine that any investment of Cash 
Collateral in the Central Funds is in the best interests of the 
Registered Participating Fund.


[[Page 40761]]


    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-14946 Filed 6-12-02; 8:45 am]
BILLING CODE 8010-01-P