Pioneer America Income Trust, et al., Notice of Application, 62137-62141 [E6-17619]
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Federal Register / Vol. 71, No. 204 / Monday, October 23, 2006 / Notices
survey or study of the costs of
Commission rules and forms.
The collection of information under
Rule 35d–1 is mandatory. The
information provided under Rule
35d–1 is not kept confidential. The
Commission may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid OMB
control number.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
Please direct your written comments
to R. Corey Booth, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Shirley
Martinson, 6432 General Green Way,
Alexandria, Virginia 22312; or send an
e-mail to: PRA_Mailbox@sec.gov.
Dated: October 16, 2006.
Nancy M. Morris,
Secretary.
[FR Doc. E6–17618 Filed 10–20–06; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
27518; 812–13043]
Pioneer America Income Trust, et al.,
Notice of Application
October 16, 2006.
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 and under
sections 6(c) and 17(b) of the Act for an
exemption from section 17(a) of the Act.
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AGENCY:
Summary of the Applications: The
order would permit certain registered
open-end management investment
companies to acquire shares of other
registered open-end management
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investment companies both within and
outside the same group of investment
companies.
Applicants: Pioneer America Income
Trust, Pioneer Balanced Fund, Pioneer
Bond Fund, Pioneer Emerging Growth
Fund, Pioneer Emerging Markets Fund,
Pioneer Equity Income Fund, Pioneer
Equity Opportunity Fund, Pioneer
Europe Select Equity Fund, Pioneer
Fund, Pioneer Fundamental Growth
Fund, Pioneer Global High Yield Fund,
Pioneer Growth Shares, Pioneer High
Yield Fund, Pioneer Ibbotson Asset
Allocation Series, Pioneer
Independence Fund, Pioneer
International Equity Fund, Pioneer
International Value Fund, Pioneer Mid
Cap Growth Fund, Pioneer Mid Cap
Value Fund, Pioneer Money Market
Trust, Pioneer Real Estate Shares,
Pioneer Research Fund, Pioneer Select
Equity Fund, Pioneer Select Value
Fund, Pioneer Series Trust I, Pioneer
Series Trust II, Pioneer Series Trust III,
Pioneer Series Trust IV, Pioneer Series
Trust V, Pioneer Short Term Income
Fund, Pioneer Small Cap Value Fund,
Pioneer Strategic Income Fund, Pioneer
Tax Free Income Fund, Pioneer Value
Fund, Pioneer Variable Contracts Trust
(each a ‘‘Fund’’) and Pioneer Investment
Management, Inc. (‘‘PIM’’).
Filing Dates: The application was
filed on November 12, 2003, and
amended on September 22, 2006.
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 November 9, 2006, 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.
Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
Applicants, 60 State Street, Boston, MA
02109.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
Bruce R. MacNeil, Senior Counsel, at
(202) 551–6817 and Mary Kay Frech,
Branch Chief, at (202) 551–6821 (Office
of Investment Company Regulations,
Division of Investment Management).
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The
following is a summary of the
application. The complete application
may be obtained for a fee at the
Commission’s Public Reference Branch,
100 F Street NE., Washington, DC
20549–0102, (202) 551–5850.
SUPPLEMENTARY INFORMATION:
Applicants’ Representations
1. Each of the Funds is an open-end
management investment company
registered under the Act. Certain of the
Funds are comprised of separate series
(each series, also a ‘‘Fund’’). Pioneer
Variable Contracts Trust serves as a
funding vehicle for separate accounts
registered under the Act (‘‘Registered
Separate Accounts’’) and separate
accounts exempt from registration under
the Act (‘‘Unregistered Separate
Accounts,’’ together with the Registered
Separate Accounts, the ‘‘Separate
Accounts’’) of unaffiliated insurance
companies. PIM is an investment
adviser registered under the Investment
Advisers Act of 1940.1
2. Applicants request relief to permit
certain Funds (the ‘‘Funds of Funds’’) to
acquire shares of registered open-end
management investment companies that
are part of the same group of investment
companies, as defined in section
12(d)(1)(G)(ii) of the Act, as the Funds
(‘‘Same Group Funds’’) and shares of
registered open-end management
investment companies that are not part
of the same group of investment
companies as the Funds (‘‘Other Group
Funds,’’ together with Same Group
Funds, the ‘‘Underlying Funds’’) in
excess of the limits set forth in section
12(d)(1)(A) of the Act, and Same Group
Funds and Other Group Funds, their
principal underwriter, and any broker or
dealer to sell their shares to the Fund of
Funds in excess of the limits set forth
in section 12(d)(1)(B) of the Act.2
1 Applicants also request relief for any other
registered open-end management investment
company, or series thereof, that currently or in the
future is part of the same group of investment
companies, as defined in section 12(d)(1)(G)(ii) of
the Act, as the Funds (included in the term
‘‘Funds’’) and is advised by PIM or an entity
controlling, controlled by or under common control
with PIM (together with PIM, the ‘‘Manager’’). All
entities that currently intend to rely on the
requested order are named as applicants. Any other
entities that rely on the order in the future will
comply with the terms and conditions of the
application.
2 The initial Funds of Funds are Pioneer Ibbotson
Conservative Allocation Fund, Pioneer Ibbotson
Moderate Allocation Fund, Pioneer Ibbotson
Growth Allocation Fund and Pioneer Ibbotson
Aggressive Allocation Fund, each a series of
Pioneer Ibbotson Asset Allocation Series, and
Pioneer Ibbotson Moderate Allocation VCT
Portfolio, Pioneer Ibbotson Growth Allocation VCT
Portfolio, and Pioneer Ibbotson Aggressive
Allocation VCT Portfolio, each a series of Pioneer
Variable Contracts Trust.
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Applicants also seek relief to permit
Same Group Funds and Other Group
Funds that are affiliated persons of a
Fund of Funds to sell shares to, and
redeem shares from, the Fund of Funds.
Each Fund of Funds may also make
direct investments, including stocks,
bonds and other securities, which are
consistent with its investment objective.
3. Applicants state that each Fund of
Funds will provide an efficient and
simple method of allowing investors to
create either a comprehensive asset
allocation program or achieve
diversification in the market with just
one investment. Applicants assert that
the Fund of Funds structure is helpful
for investors who are able to identify
their investment goals but are not
comfortable deciding how to invest their
assets to achieve those goals.
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Applicants’ Legal Analysis
A. Section 12(d)(1) of the Act
1. Section 12(d)(1)(A) prohibits a
registered investment company from
acquiring shares of any other investment
company if the securities represent
more than 3% of the total outstanding
voting stock of the acquired company,
more than 5% of the total assets of the
acquiring company or, together with the
securities of other investment
companies, more than 10% of the total
assets of the acquiring company. Section
12(d)(1)(B) prohibits a registered openend investment company, its principal
underwriter and any broker or dealer
from selling shares of the company to
another investment company if the sale
will cause the acquiring company to
own more than 3% of the acquired
company’s outstanding voting stock or
more than 10% of the acquired
company’s voting stock to be owned by
investment companies generally.
2. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security or
transaction from any provisions of
section 12(d)(1) if the exemption is
consistent with the public interest and
the protection of investors. Applicants
seek an exemption under section
12(d)(1)(J) to permit a Fund of Funds to
acquire shares of Same Group Funds
and Other Group Funds, and Same
Group Funds and Other Group Funds
and their principal underwriter and any
broker or dealer to sell shares to a Fund
of Funds, beyond the limits set forth in
sections 12(d)(1)(A) and (B) of the Act.
3. Applicants state that the proposed
arrangement will not give rise to the
policy concerns underlying sections
12(d)(1)(A) and (B), which include
concerns about undue influence by a
fund of funds over underlying funds,
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excessive layering of fees, and overly
complex fund structures. Accordingly,
applicants believe that the requested
exemption is consistent with the public
interest and the protection of investors.
4. Applicants state that the proposed
arrangement will not result in undue
influence by a Fund of Funds or its
affiliates over any Other Group Fund.
To limit the influence that a Fund of
Funds may have over an Other Group
Fund, applicants propose a condition
prohibiting (a)(i) the Manager, (ii) any
person controlling, controlled by or
under common control with the
Manager, and (iii) any investment
company or issuer that would be an
investment company but for section
3(c)(1) or 3(c)(7) of the Act advised by
the Manager or any person controlling,
controlled by or under common control
with the Manager (collectively, the
‘‘Group’’), and (b)(i) any investment
adviser within the meaning of section
2(a)(20)(B) of the Act (‘‘Subadviser’’) of
a Fund of Funds, (ii) any person
controlling, controlled by or under
common control with the Subadviser,
and (iii) any investment company or
issuer that would be an investment
company but for section 3(c)(1) or
3(c)(7) of the Act (or portion of such
investment company or issuer) advised
by the Subadviser or any person
controlling, controlled by or under
common control with the Subadviser
(collectively, the ‘‘Subadviser Group’’)
from controlling (individually or in the
aggregate) an Other Group Fund within
the meaning of section 2(a)(9) of the Act.
5. Applicants also propose conditions
2–7, stated below, to preclude a Fund of
Funds and its affiliated entities from
taking advantage of an Other Group
Fund with respect to transactions
between the entities and to ensure the
transactions will be on an arm’s length
basis. Condition 2 precludes a Fund of
Funds and its Manager, any Subadviser,
promoter, principal underwriter and
any person controlling, controlled by or
under common control with any of
these entities (each, a ‘‘Fund of Funds
Affiliate’’) from causing any existing or
potential investment by the Fund of
Funds in an Other Group Fund to
influence the terms of any services or
transactions between the Fund of Funds
or a Fund of Funds Affiliate and the
Other Group Fund or its investment
adviser(s), promoter, principal
underwriter and any person controlling,
controlled by or under common control
with any of these entities (each, an
‘‘Other Group Fund Affiliate’’).
Condition 5 precludes a Fund of Funds
and Fund of Funds Affiliates (except to
the extent they are acting in their
capacity as an investment adviser to an
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Other Group Fund) from causing an
Other Group Fund to purchase a
security in an offering of securities
during the existence of any
underwriting or selling syndicate of
which a principal underwriter is an
officer, director, member of an advisory
board, Manager, Subadviser or
employee of a Fund of Funds, or a
person of which any such officer,
director, member of an advisory board,
Manager, Subadviser or employee is an
affiliated person (each, an
‘‘Underwriting Affiliate,’’ except any
person whose relationship to the Other
Group Fund is covered by section 10(f)
of the Act is not an Underwriting
Affiliate). An offering of securities
during the existence of an underwriting
or selling syndicate of which a principal
underwriter is an Underwriting Affiliate
is an ‘‘Affiliated Underwriting.’’
6. In addition, as an assurance that an
Other Group Fund understands the
implications of an investment by a Fund
of Funds operating in reliance on the
requested exemptive relief from sections
12(d)(1)(A) and (B), prior to any
investment by a Fund of Funds in the
Other Group Fund in excess of the limit
set forth in section 12(d)(1)(A)(i),
condition 8 requires the Fund of Funds
and the Other Group Fund to execute an
agreement stating, without limitation,
that their boards of directors or trustees
and their investment advisers
understand the terms and conditions of
the order and agree to fulfill their
responsibilities under the order.
Applicants note that the Other Group
Fund has the right to reject an
investment from a Fund of Funds.
7. Applicants do not believe that the
proposed arrangement will involve
excessive layering of fees. With respect
to investment advisory fees, applicants
state that, prior to reliance on the order
and subsequently in connection with
the approval of any investment advisory
contract under section 15 of the Act, the
board of directors or trustees of a Fund
of Funds (‘‘Board’’), including a
majority of the directors or trustees who
are not ‘‘interested persons,’’ as defined
in section 2(a)(19) of the Act
(‘‘Independent Trustees’’), will find that
the advisory fees charged to the Fund of
Funds under its investment advisory
contract(s) are based on services
provided that are in addition to, rather
than duplicative of, services provided
under the investment advisory
contract(s) of any Same Group Fund and
Other Group Fund. Applicants further
state that the Manager to a Fund of
Funds will waive fees otherwise payable
to the Manager by a Fund of Funds in
an amount at least equal to any
compensation (including fees received
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pursuant to a plan adopted by the Other
Group Fund under rule 12b-1 under the
Act (‘‘12b–1 Fees’’)) received from the
Other Group Fund by the Manager, or
an affiliated person of the Manager,
other than any advisory fees paid to the
Manager or its affiliated person, in
connection with the investment by the
Fund of Funds in the Other Group
Fund. Applicants also state that any
Subadviser to a Fund of Funds will
waive fees otherwise payable to the
Subadviser by the Fund of Funds in an
amount at least equal to any
compensation received from the Other
Group Fund by the Subadviser, or an
affiliated person of the Subadviser,
other than any advisory fees paid to the
Subadviser or its affiliated person, in
connection with the investment by the
Fund of Funds in the Other Group Fund
made at the direction of the Subadviser.
Applicants agree that the benefit of any
such waiver by a Subadviser will be
passed through to the Fund of Funds.
8. Applicants represent that the
aggregate sales charges and/or service
fees (as defined in the NASD Conduct
Rules) charged with respect to any Fund
of Funds will not exceed the limits
applicable to funds of funds set forth in
NASD Conduct Rule 2830 (‘‘Rule
2830’’). Applicants also represent that
with respect to Registered Separate
Accounts that invest in a Fund of
Funds, no sales load will be charged at
the Fund of Funds level or at the
Underlying Fund level. Moreover, the
prospectus and sales literature for a
Fund of Funds will contain clear,
concise, ‘‘plain English’’ disclosure
tailored to the particular document
designed to inform investors of the
unique characteristics of the Fund of
Funds’ structure, including but not
limited to, its expense structure and the
additional expenses of investing in
Same Group Funds and Other Group
Funds. Each Fund of Funds will comply
with the disclosure requirements
concerning aggregate costs of investing
in the Underlying Funds set forth in
Investment Company Act Release No.
27399 by the compliance date set forth
therein.
9. Applicants contend that the
proposed arrangement will not create an
overly complex fund structure.
Applicants note that the Underlying
Funds will be prohibited from acquiring
securities of any investment company or
company relying on section 3(c)(1) or
3(c)(7) of the Act in excess of the limits
contained in section 12(d)(1)(A), except
to the extent that such Underlying Fund
(a) receives securities of another
investment company as a dividend or as
a result of a plan of reorganization of a
company (other than a plan devised for
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the purpose of evading section 12(d)(1));
or (b) acquires (or is deemed to have
acquired) securities of another
investment company pursuant to
exemptive relief from the Commission
permitting such Underlying Fund to (i)
acquire securities of one or more
affiliated investment companies for
short-term cash management purposes
or (ii) engage in interfund borrowing
and lending transactions.
B. Section 17(a) of the Act
1. Section 17(a) generally prohibits
purchases and sales of securities, on a
principal basis, between a registered
investment company and any affiliated
person or promoter of, or principal
underwriter for, the company, and
affiliated persons of such persons.
Section 2(a)(3) of the Act defines an
‘‘affiliated person’’ of another person to
include, among other things, any person
directly or indirectly owning,
controlling or holding with power to
vote 5% or more of the other’s
outstanding voting securities; any
person 5% or more of whose
outstanding voting 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 an
investment company.
2. Section 17(b) authorizes the
Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) the terms of the proposed
transaction, including the consideration
to be paid and received, are fair and
reasonable and do not involve
overreaching on the part of any person
concerned; (b) the proposed transaction
is consistent with the policies of each
registered investment company
concerned; and (c) the proposed
transaction is consistent with the
general purposes of the Act. Section 6(c)
permits the Commission to exempt any
person or transaction, or any class or
classes of persons or transactions from
any provisions of the Act, if 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.
3. Applicants state that a Fund of
Funds and the Same Group Funds may
be deemed to be under common control
since both are advised by the Manager.
Applicants also state that an Underlying
Fund might be deemed to be an
affiliated person of a Fund of Funds if
the Fund of Funds acquires 5% or more
of the Underlying Fund’s outstanding
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62139
voting securities. Accordingly, section
17(a) could prevent a Same Group Fund
or an Other Group Fund from selling
shares to, and redeeming shares from, a
Fund of Funds.
4. Applicants seek an exemption
under sections 6(c) and 17(b) to allow
the proposed transactions. Applicants
state that the transactions satisfy the
standards for relief under sections 6(c)
and 17(b). Specifically, applicants state
that the terms of the transactions are fair
and reasonable and do not involve
overreaching. Applicants represent that
the proposed transactions will be
consistent with the policies of each
Fund of Funds and Underlying Fund,
and with the general purposes of the
Act. In addition, applicants note that the
consideration paid in sales and
redemptions permitted under the
requested order of shares of the
Underlying Funds will be based on the
net asset values of the Underlying
Funds.
Applicants’ Conditions
Applicants agree that the order
granting the requested relief will be
subject to the following conditions:
1. The members of the Group will not
control (individually or in the aggregate)
an Other Group Fund within the
meaning of section 2(a)(9) of the Act.
The members of the Subadviser Group
will not control (individually or in the
aggregate) an Other Group Fund within
the meaning of section 2(a)(9) of the Act.
If, as a result of a decrease in the
outstanding voting securities of an
Other Group Fund, the Group or the
Subadviser Group, each in the aggregate,
becomes a holder of more than 25
percent of the outstanding voting
securities of an Other Group Fund, the
Group and the Subadviser Group
(except for any member of the Group or
the Subadviser Group that is a Separate
Account) will vote its shares of the
Other Group Fund in the same
proportion as the vote of all other
holders of the Other Group Fund’s
shares. A Registered Separate Account
will seek voting instructions from its
contract holders and will vote its shares
of an Other Group Fund in accordance
with the instructions received and will
vote those shares for which no
instructions were received in the same
proportion as the shares for which
instructions were received. An
Unregistered Separate Account will
either (a) vote its shares of the Other
Group Fund in the same proportion as
the vote of all other holders of the Other
Group Fund’s shares; or (b) seek voting
instructions from its contract holders
and vote its shares in accordance with
the instructions received and vote those
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shares for which no instructions were
received in the same proportion as the
shares for which instructions were
received. This condition shall not apply
to the Subadviser Group with respect to
an Other Group Fund for which the
Subadviser, or a person controlling,
controlled by, or under common control
with the Subadviser, acts as the
investment adviser within the meaning
of section 2(a)(20)(A) of the Act.
2. No Fund of Funds or Fund of
Funds Affiliate will cause any existing
or potential investment by the Fund of
Funds in an Other Group Fund to
influence the terms of any services or
transactions between the Fund of Funds
or a Fund of Funds Affiliate and the
Other Group Fund or an Other Group
Fund Affiliate.
3. The Board of each Fund of Funds,
including a majority of the Independent
Trustees, will adopt procedures
reasonably designed to assure that the
Manager and any Subadviser to the
Fund of Funds are conducting the
investment program of the Fund of
Funds, including the initial selection of
Other Group Funds and any subsequent
changes, without taking into account
any consideration received by the Fund
of Funds or a Fund of Funds Affiliate
from an Other Group Fund or an Other
Group Fund Affiliate in connection with
any services or transactions including
any revenue sharing or similar
payments by an Other Group Fund
Affiliate to a Fund of Funds Affiliate.
4. Once an investment by a Fund of
Funds in the securities of an Other
Group Fund exceeds the limit in section
12(d)(1)(A)(i) of the Act, the board of
directors or trustees of the Other Group
Fund, including a majority of the
Independent Trustees, will determine
that any consideration paid by the Other
Group Fund to the Fund of Funds or a
Fund of Funds Affiliate in connection
with any services or transactions: (a) Is
fair and reasonable in relation to the
nature and quality of the services and
benefits received by the Other Group
Fund; (b) is within the range of
consideration that the Other Group
Fund would be required to pay to
another unaffiliated entity in connection
with the same services or transactions;
and (c) does not involve overreaching
on the part of any person concerned.
This condition does not apply with
respect to any services or transactions
between an Other Group Fund and its
investment adviser(s), or any person
controlling, controlled by, or under
common control with such investment
adviser(s).
5. No Fund of Funds or Fund of
Funds Affiliate (except to the extent it
is acting in its capacity as an investment
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adviser to an Other Group Fund) will
cause an Other Group Fund to purchase
a security in an Affiliated Underwriting.
6. The board of directors or trustees of
an Other Group Fund, including a
majority of the Independent Trustees,
will adopt procedures reasonably
designed to monitor any purchases of
securities by the Other Group Fund in
Affiliated Underwritings, once an
investment by a Fund of Funds in
shares of the Other Group Fund exceeds
the limit of section 12(d)(1)(A)(i) of the
Act, including any purchases made
directly from an Underwriting Affiliate.
The board will review these purchases
periodically, but no less frequently than
annually, to determine whether the
purchases were influenced by the
investment by a Fund of Funds in
shares of the Other Group Fund. The
board should consider, among other
things: (a) Whether the purchases were
consistent with the investment
objectives and policies of the Other
Group Fund; (b) how the performance of
securities purchased in an Affiliated
Underwriting compares to the
performance of comparable securities
purchased during a comparable period
of time in underwritings other than
Affiliated Underwritings or to a
benchmark such as a comparable market
index; and (c) whether the amount of
securities purchased by the Other Group
Fund in Affiliated Underwritings and
the amount purchased directly from an
Other Group Fund have changed
significantly from prior years. The board
shall take any appropriate actions based
on its review, including, if appropriate,
the institution of procedures designed to
assure that purchases of securities in
Affiliated Underwritings are in the best
interest of shareholders.
7. Each Other Group Fund shall
maintain and preserve permanently in
an easily accessible place a written copy
of the procedures described in the
preceding condition, and any
modifications, and will maintain and
preserve for a period of not less than six
years from the end of the fiscal year in
which any purchase in an Affiliated
Underwriting occurred, the first two
years in an easily accessible place, a
written record of each purchase of
securities in Affiliated Underwritings
once an investment by a Fund of Funds
in the securities of the Other Group
Fund exceeds the limit of section
12(d)(1)(A)(i) of the Act, setting forth
from whom the securities were
acquired, the identity of the
underwriting syndicate’s members, the
terms of the purchase, and the
information or materials upon which
the board’s determinations were made.
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8. Before investing in an Other Group
Fund in excess of the limit in section
12(d)(1)(A)(i), each Fund of Funds and
the Other Group Fund will execute an
agreement stating, without limitation,
that their boards of directors or trustees
and their investment advisers
understand the terms and conditions of
the order and agree to fulfill their
responsibilities under the order
(‘‘Participation Agreement’’). At the
time of its investment in shares of an
Other Group Fund in excess of the limit
in section 12(d)(1)(A)(i), a Fund of
Funds will notify the Other Group Fund
of the investment. At such time, the
Fund of Funds will also transmit to the
Other Group Fund a list of the names of
each Fund of Funds Affiliate and
Underwritings Affiliate. The Fund of
Funds will notify the Other Group Fund
of any changes to the list of names as
soon as reasonably practicable after a
change occurs. The Other Group Fund
and the Fund of Funds will maintain
and preserve a copy of the order, the
Participation Agreement and the list
with any updated information for the
duration of the investment and for a
period of not less than six years
thereafter, the first two years in an
easily accessible place.
9. Before approving any advisory
contract under section 15 of the Act, the
Board of each Fund of Funds, including
a majority of the Independent Trustees,
will find that the advisory fees charged
under such advisory contract(s) are
based on services provided that will be
in addition to, rather than duplicative
of, the services provided under the
advisory contract(s) of any Underlying
Fund in which the Fund of Funds may
invest. These findings and their basis
will be recorded fully in the minute
books of the appropriate Fund of Funds.
10. The Manager will waive fees
otherwise payable to the Manager by the
Fund of Funds, in an amount at least
equal to any compensation (including
fees received pursuant to any plan
adopted by an Other Group Fund under
rule 12b–1 under the Act) received from
an Other Group Fund by the Manager,
or an affiliated person of the Manager,
other than any advisory fees paid to the
Manager or its affiliated person by the
Other Group Fund, in connection with
the investment by the Fund of Funds in
the Other Group Fund. Any Subadviser
will waive fees otherwise payable to the
Subadviser, directly or indirectly, by the
Fund of Funds in an amount at least
equal to any compensation received
from an Other Group Fund by the
Subadviser, or an affiliated person of the
Subadviser, other than any advisory fees
paid to the Subadviser or its affiliated
person by the Other Group Fund, in
E:\FR\FM\23OCN1.SGM
23OCN1
Federal Register / Vol. 71, No. 204 / Monday, October 23, 2006 / Notices
connection with the investment by the
Fund of Funds in the Other Group Fund
made at the direction of the Subadviser.
In the event that the Subadviser waives
fees, the benefit of the waiver will be
passed through to the Fund of Funds.
11. With respect to Registered
Separate Accounts that invest in a Fund
of Funds, no sales load will be charged
at the Fund of Funds level or at the
Underlying Fund level. Other sales
charges and services fees, as defined in
Rule 2830, if any, will only be charged
at the Fund of Funds level or at the
Underlying Fund level, but not both.
With respect to other investments in a
Fund of Funds, any sales charges and/
or service fees will not exceed the limits
applicable to a fund of funds as set forth
in Rule 2830.
12. No Underlying Fund will acquire
securities of any investment company or
company relying on section 3(c)(1) or
3(c)(7) of the Act in excess of the limits
contained in section 12(d)(1)(A) of the
Act except to the extent the Underlying
Fund (a) receives securities of another
investment company as a dividend or as
a result of a plan of reorganization of a
company (other than a plan devised for
the purpose of evading section 12(d)(1)
of the Act); or (b) acquires (or is deemed
to have acquired) securities of another
investment company pursuant to
exemptive relief from the Commission
permitting the Underlying Fund to (i)
acquire securities of one or more
affiliated investment companies for
short-term cash management purposes;
or (ii) engage in interfund borrowing or
lending transactions.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Nancy M. Morris,
Secretary.
[FR Doc. E6–17619 Filed 10–20–06; 8:45 am]
staff members who have an interest in
the matters may also be present.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), (8), (9)(B) and
(10) and 17 CFR 200.402(a) (3), (5), (7),
(8), (9)(ii), and (10) permit consideration
of the scheduled matters at the Closed
Meeting.
Commissioner Nazareth, as duty
officer, voted to consider the items
listed for the closed meeting in closed
session.
The subject matters of the Closed
Meeting scheduled for Thursday,
October 26, 2006 will be:
Formal orders of investigation;
Institution and settlement of injunctive
actions;
Institution and settlement of
administrative proceedings of an
enforcement nature;
Other matters relating to enforcement
proceeding;
Collection matter;
Regulatory matter regarding a financial
institution; and
Adjudicatory matters.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact:
The Office of the Secretary at (202)
551–5400.
Dated: October 19, 2006.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 06–8861 Filed 10–19–06; 3:59 pm]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
BILLING CODE 8011–01–P
[Release No. 34–54612, File No. SR–MSRB–
2006–07]
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations;
Municipal Securities Rulemaking
Board; Order Approving Proposed
Rule Change to MSRB Rule G–14
RTRS Procedures Relating to ‘‘List
Offering Price’’ and ‘‘Takedown’’
Transactions
mstockstill on PROD1PC76 with NOTICES
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold the following
meeting during the week of October 23,
2006:
A Closed Meeting will be held on
Thursday, October 26, 2006 at 10 a.m.
Commissioners, Counsels to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
VerDate Aug<31>2005
15:50 Oct 20, 2006
Jkt 211001
October 17, 2006.
On August 15, 2006, the Municipal
Securities Rulemaking Board (‘‘MSRB’’
or ‘‘Board’’), filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’),1 and Rule 19b–4
1 15
PO 00000
U.S.C. 78s(b)(1).
Frm 00062
Fmt 4703
Sfmt 4703
62141
thereunder,2 a proposed rule change to
Rule G–14 RTRS Procedures under Rule
G–14, Reports of Sales or Purchases, to
expand the usage of ‘‘list offering price’’
transactions to include certain interdealer ‘‘takedown’’ transactions and to
require the reporting of these
transactions as ‘‘list offering price’’
transactions on the first day of trading
of a new issue. The MSRB proposed an
effective date for the proposed rule
change of January 8, 2007. The proposed
rule change was published for comment
in the Federal Register on September
14, 2006.3 The Commission received no
comment letters regarding the proposal.
The proposed rule change retains the
end of the day exception from the
normal fifteen minute reporting
deadline for the expanded category of
‘‘List Offering Price/Takedown’’
transactions. The MSRB believes that
the proposed rule change recognizes the
similarities between List Offering Price
and Takedown transactions and the
dissimilarities between these
transactions and secondary market
transactions in a new issue, and further
believes that transparency reports on the
first day of trading for a new issue
would be more useful if List Offering
Price and Takedown transactions were
identified with a special condition
indicator.
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to the MSRB 4 and, in
particular, the requirements of Section
15B(b)(2)(C) of the Act 5 and the rules
and regulations thereunder. Section
15B(b)(2)(C) of the Act requires, among
other things, that the MSRB’s rules be
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in municipal
securities, to remove impediments to
and perfect the mechanism of a free and
open market in municipal securities,
and, in general, to protect investors and
the public interest.6 In particular, the
Commission finds that the proposed
rule change will allow the municipal
2 17
CFR 240.19b–4.
Securities Exchange Act Release No. 54416
(September 8, 2006), 71 FR 54323 (September 14,
2006).
4 4 In approving this rule the Commission notes
that it has considered the proposed rule’s impact on
efficiency, competition and capital formation. 15
U.S.C. 78c(f).
5 15 U.S.C. 78o–4(b)(2)(C).
6 Id.
3 See
E:\FR\FM\23OCN1.SGM
23OCN1
]]>Agencies
[Federal Register Volume 71, Number 204 (Monday, October 23, 2006)]
[Notices]
[Pages 62137-62141]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-17619]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 27518; 812-13043]
Pioneer America Income Trust, et al., Notice of Application
October 16, 2006.
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 and under sections 6(c) and
17(b) of the Act for an exemption from section 17(a) of the Act.
-----------------------------------------------------------------------
Summary of the Applications: The order would permit certain
registered open-end management investment companies to acquire shares
of other registered open-end management investment companies both
within and outside the same group of investment companies.
Applicants: Pioneer America Income Trust, Pioneer Balanced Fund,
Pioneer Bond Fund, Pioneer Emerging Growth Fund, Pioneer Emerging
Markets Fund, Pioneer Equity Income Fund, Pioneer Equity Opportunity
Fund, Pioneer Europe Select Equity Fund, Pioneer Fund, Pioneer
Fundamental Growth Fund, Pioneer Global High Yield Fund, Pioneer Growth
Shares, Pioneer High Yield Fund, Pioneer Ibbotson Asset Allocation
Series, Pioneer Independence Fund, Pioneer International Equity Fund,
Pioneer International Value Fund, Pioneer Mid Cap Growth Fund, Pioneer
Mid Cap Value Fund, Pioneer Money Market Trust, Pioneer Real Estate
Shares, Pioneer Research Fund, Pioneer Select Equity Fund, Pioneer
Select Value Fund, Pioneer Series Trust I, Pioneer Series Trust II,
Pioneer Series Trust III, Pioneer Series Trust IV, Pioneer Series Trust
V, Pioneer Short Term Income Fund, Pioneer Small Cap Value Fund,
Pioneer Strategic Income Fund, Pioneer Tax Free Income Fund, Pioneer
Value Fund, Pioneer Variable Contracts Trust (each a ``Fund'') and
Pioneer Investment Management, Inc. (``PIM'').
Filing Dates: The application was filed on November 12, 2003, and
amended on September 22, 2006.
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 November 9, 2006, 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, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090. Applicants, 60 State Street,
Boston, MA 02109.
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 551-6817 and Mary Kay Frech, Branch Chief, at (202) 551-6821
(Office of Investment Company Regulations, 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, 100 F Street NE., Washington, DC
20549-0102, (202) 551-5850.
Applicants' Representations
1. Each of the Funds is an open-end management investment company
registered under the Act. Certain of the Funds are comprised of
separate series (each series, also a ``Fund''). Pioneer Variable
Contracts Trust serves as a funding vehicle for separate accounts
registered under the Act (``Registered Separate Accounts'') and
separate accounts exempt from registration under the Act
(``Unregistered Separate Accounts,'' together with the Registered
Separate Accounts, the ``Separate Accounts'') of unaffiliated insurance
companies. PIM is an investment adviser registered under the Investment
Advisers Act of 1940.\1\
2. Applicants request relief to permit certain Funds (the ``Funds
of Funds'') to acquire shares of registered open-end management
investment companies that are part of the same group of investment
companies, as defined in section 12(d)(1)(G)(ii) of the Act, as the
Funds (``Same Group Funds'') and shares of registered open-end
management investment companies that are not part of the same group of
investment companies as the Funds (``Other Group Funds,'' together with
Same Group Funds, the ``Underlying Funds'') in excess of the limits set
forth in section 12(d)(1)(A) of the Act, and Same Group Funds and Other
Group Funds, their principal underwriter, and any broker or dealer to
sell their shares to the Fund of Funds in excess of the limits set
forth in section 12(d)(1)(B) of the Act.\2\
[[Page 62138]]
Applicants also seek relief to permit Same Group Funds and Other Group
Funds that are affiliated persons of a Fund of Funds to sell shares to,
and redeem shares from, the Fund of Funds. Each Fund of Funds may also
make direct investments, including stocks, bonds and other securities,
which are consistent with its investment objective.
3. Applicants state that each Fund of Funds will provide an
efficient and simple method of allowing investors to create either a
comprehensive asset allocation program or achieve diversification in
the market with just one investment. Applicants assert that the Fund of
Funds structure is helpful for investors who are able to identify their
investment goals but are not comfortable deciding how to invest their
assets to achieve those goals.
Applicants' Legal Analysis
A. Section 12(d)(1) of the Act
1. Section 12(d)(1)(A) prohibits a registered investment company
from acquiring shares of any other investment company if the securities
represent more than 3% of the total outstanding voting stock of the
acquired company, more than 5% of the total assets of the acquiring
company or, together with the securities of other investment companies,
more than 10% of the total assets of the acquiring company. Section
12(d)(1)(B) prohibits a registered open-end investment company, its
principal underwriter and any broker or dealer from selling shares of
the company to another investment company if the sale will cause the
acquiring company to own more than 3% of the acquired company's
outstanding voting stock or more than 10% of the acquired company's
voting stock to be owned by investment companies generally.
2. Section 12(d)(1)(J) of the Act provides that the Commission may
exempt any person, security or transaction from any provisions of
section 12(d)(1) if the exemption is consistent with the public
interest and the protection of investors. Applicants seek an exemption
under section 12(d)(1)(J) to permit a Fund of Funds to acquire shares
of Same Group Funds and Other Group Funds, and Same Group Funds and
Other Group Funds and their principal underwriter and any broker or
dealer to sell shares to a Fund of Funds, beyond the limits set forth
in sections 12(d)(1)(A) and (B) of the Act.
3. Applicants state that the proposed arrangement will not give
rise to the policy concerns underlying sections 12(d)(1)(A) and (B),
which include concerns about undue influence by a fund of funds over
underlying funds, excessive layering of fees, and overly complex fund
structures. Accordingly, applicants believe that the requested
exemption is consistent with the public interest and the protection of
investors.
4. Applicants state that the proposed arrangement will not result
in undue influence by a Fund of Funds or its affiliates over any Other
Group Fund. To limit the influence that a Fund of Funds may have over
an Other Group Fund, applicants propose a condition prohibiting (a)(i)
the Manager, (ii) any person controlling, controlled by or under common
control with the Manager, and (iii) any investment company or issuer
that would be an investment company but for section 3(c)(1) or 3(c)(7)
of the Act advised by the Manager or any person controlling, controlled
by or under common control with the Manager (collectively, the
``Group''), and (b)(i) any investment adviser within the meaning of
section 2(a)(20)(B) of the Act (``Subadviser'') of a Fund of Funds,
(ii) any person controlling, controlled by or under common control with
the Subadviser, and (iii) any investment company or issuer that would
be an investment company but for section 3(c)(1) or 3(c)(7) of the Act
(or portion of such investment company or issuer) advised by the
Subadviser or any person controlling, controlled by or under common
control with the Subadviser (collectively, the ``Subadviser Group'')
from controlling (individually or in the aggregate) an Other Group Fund
within the meaning of section 2(a)(9) of the Act.
5. Applicants also propose conditions 2-7, stated below, to
preclude a Fund of Funds and its affiliated entities from taking
advantage of an Other Group Fund with respect to transactions between
the entities and to ensure the transactions will be on an arm's length
basis. Condition 2 precludes a Fund of Funds and its Manager, any
Subadviser, promoter, principal underwriter and any person controlling,
controlled by or under common control with any of these entities (each,
a ``Fund of Funds Affiliate'') from causing any existing or potential
investment by the Fund of Funds in an Other Group Fund to influence the
terms of any services or transactions between the Fund of Funds or a
Fund of Funds Affiliate and the Other Group Fund or its investment
adviser(s), promoter, principal underwriter and any person controlling,
controlled by or under common control with any of these entities (each,
an ``Other Group Fund Affiliate''). Condition 5 precludes a Fund of
Funds and Fund of Funds Affiliates (except to the extent they are
acting in their capacity as an investment adviser to an Other Group
Fund) from causing an Other Group Fund to purchase a security in an
offering of securities during the existence of any underwriting or
selling syndicate of which a principal underwriter is an officer,
director, member of an advisory board, Manager, Subadviser or employee
of a Fund of Funds, or a person of which any such officer, director,
member of an advisory board, Manager, Subadviser or employee is an
affiliated person (each, an ``Underwriting Affiliate,'' except any
person whose relationship to the Other Group Fund is covered by section
10(f) of the Act is not an Underwriting Affiliate). An offering of
securities during the existence of an underwriting or selling syndicate
of which a principal underwriter is an Underwriting Affiliate is an
``Affiliated Underwriting.''
---------------------------------------------------------------------------
\1\ Applicants also request relief for any other registered
open-end management investment company, or series thereof, that
currently or in the future is part of the same group of investment
companies, as defined in section 12(d)(1)(G)(ii) of the Act, as the
Funds (included in the term ``Funds'') and is advised by PIM or an
entity controlling, controlled by or under common control with PIM
(together with PIM, the ``Manager''). All entities that currently
intend to rely on the requested order are named as applicants. Any
other entities that rely on the order in the future will comply with
the terms and conditions of the application.
\2\ The initial Funds of Funds are Pioneer Ibbotson Conservative
Allocation Fund, Pioneer Ibbotson Moderate Allocation Fund, Pioneer
Ibbotson Growth Allocation Fund and Pioneer Ibbotson Aggressive
Allocation Fund, each a series of Pioneer Ibbotson Asset Allocation
Series, and Pioneer Ibbotson Moderate Allocation VCT Portfolio,
Pioneer Ibbotson Growth Allocation VCT Portfolio, and Pioneer
Ibbotson Aggressive Allocation VCT Portfolio, each a series of
Pioneer Variable Contracts Trust.
---------------------------------------------------------------------------
6. In addition, as an assurance that an Other Group Fund
understands the implications of an investment by a Fund of Funds
operating in reliance on the requested exemptive relief from sections
12(d)(1)(A) and (B), prior to any investment by a Fund of Funds in the
Other Group Fund in excess of the limit set forth in section
12(d)(1)(A)(i), condition 8 requires the Fund of Funds and the Other
Group Fund to execute an agreement stating, without limitation, that
their boards of directors or trustees and their investment advisers
understand the terms and conditions of the order and agree to fulfill
their responsibilities under the order. Applicants note that the Other
Group Fund has the right to reject an investment from a Fund of Funds.
7. Applicants do not believe that the proposed arrangement will
involve excessive layering of fees. With respect to investment advisory
fees, applicants state that, prior to reliance on the order and
subsequently in connection with the approval of any investment advisory
contract under section 15 of the Act, the board of directors or
trustees of a Fund of Funds (``Board''), including a majority of the
directors or trustees who are not ``interested persons,'' as defined in
section 2(a)(19) of the Act (``Independent Trustees''), will find that
the advisory fees charged to the Fund of Funds under its investment
advisory contract(s) are based on services provided that are in
addition to, rather than duplicative of, services provided under the
investment advisory contract(s) of any Same Group Fund and Other Group
Fund. Applicants further state that the Manager to a Fund of Funds will
waive fees otherwise payable to the Manager by a Fund of Funds in an
amount at least equal to any compensation (including fees received
[[Page 62139]]
pursuant to a plan adopted by the Other Group Fund under rule 12b-1
under the Act (``12b-1 Fees'')) received from the Other Group Fund by
the Manager, or an affiliated person of the Manager, other than any
advisory fees paid to the Manager or its affiliated person, in
connection with the investment by the Fund of Funds in the Other Group
Fund. Applicants also state that any Subadviser to a Fund of Funds will
waive fees otherwise payable to the Subadviser by the Fund of Funds in
an amount at least equal to any compensation received from the Other
Group Fund by the Subadviser, or an affiliated person of the
Subadviser, other than any advisory fees paid to the Subadviser or its
affiliated person, in connection with the investment by the Fund of
Funds in the Other Group Fund made at the direction of the Subadviser.
Applicants agree that the benefit of any such waiver by a Subadviser
will be passed through to the Fund of Funds.
8. Applicants represent that the aggregate sales charges and/or
service fees (as defined in the NASD Conduct Rules) charged with
respect to any Fund of Funds will not exceed the limits applicable to
funds of funds set forth in NASD Conduct Rule 2830 (``Rule 2830'').
Applicants also represent that with respect to Registered Separate
Accounts that invest in a Fund of Funds, no sales load will be charged
at the Fund of Funds level or at the Underlying Fund level. Moreover,
the prospectus and sales literature for a Fund of Funds will contain
clear, concise, ``plain English'' disclosure tailored to the particular
document designed to inform investors of the unique characteristics of
the Fund of Funds' structure, including but not limited to, its expense
structure and the additional expenses of investing in Same Group Funds
and Other Group Funds. Each Fund of Funds will comply with the
disclosure requirements concerning aggregate costs of investing in the
Underlying Funds set forth in Investment Company Act Release No. 27399
by the compliance date set forth therein.
9. Applicants contend that the proposed arrangement will not create
an overly complex fund structure. Applicants note that the Underlying
Funds will be prohibited from acquiring securities of any investment
company or company relying on section 3(c)(1) or 3(c)(7) of the Act in
excess of the limits contained in section 12(d)(1)(A), except to the
extent that such Underlying Fund (a) receives securities of another
investment company as a dividend or as a result of a plan of
reorganization of a company (other than a plan devised for the purpose
of evading section 12(d)(1)); or (b) acquires (or is deemed to have
acquired) securities of another investment company pursuant to
exemptive relief from the Commission permitting such Underlying Fund to
(i) acquire securities of one or more affiliated investment companies
for short-term cash management purposes or (ii) engage in interfund
borrowing and lending transactions.
B. Section 17(a) of the Act
1. Section 17(a) generally prohibits purchases and sales of
securities, on a principal basis, between a registered investment
company and any affiliated person or promoter of, or principal
underwriter for, the company, and affiliated persons of such persons.
Section 2(a)(3) of the Act defines an ``affiliated person'' of another
person to include, among other things, any person directly or
indirectly owning, controlling or holding with power to vote 5% or more
of the other's outstanding voting securities; any person 5% or more of
whose outstanding voting 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 an
investment company.
2. Section 17(b) authorizes the Commission to grant an order
permitting a transaction otherwise prohibited by section 17(a) if it
finds that (a) the terms of the proposed transaction, including the
consideration to be paid and received, are fair and reasonable and do
not involve overreaching on the part of any person concerned; (b) the
proposed transaction is consistent with the policies of each registered
investment company concerned; and (c) the proposed transaction is
consistent with the general purposes of the Act. Section 6(c) permits
the Commission to exempt any person or transaction, or any class or
classes of persons or transactions from any provisions of the Act, if
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.
3. Applicants state that a Fund of Funds and the Same Group Funds
may be deemed to be under common control since both are advised by the
Manager. Applicants also state that an Underlying Fund might be deemed
to be an affiliated person of a Fund of Funds if the Fund of Funds
acquires 5% or more of the Underlying Fund's outstanding voting
securities. Accordingly, section 17(a) could prevent a Same Group Fund
or an Other Group Fund from selling shares to, and redeeming shares
from, a Fund of Funds.
4. Applicants seek an exemption under sections 6(c) and 17(b) to
allow the proposed transactions. Applicants state that the transactions
satisfy the standards for relief under sections 6(c) and 17(b).
Specifically, applicants state that the terms of the transactions are
fair and reasonable and do not involve overreaching. Applicants
represent that the proposed transactions will be consistent with the
policies of each Fund of Funds and Underlying Fund, and with the
general purposes of the Act. In addition, applicants note that the
consideration paid in sales and redemptions permitted under the
requested order of shares of the Underlying Funds will be based on the
net asset values of the Underlying Funds.
Applicants' Conditions
Applicants agree that the order granting the requested relief will
be subject to the following conditions:
1. The members of the Group will not control (individually or in
the aggregate) an Other Group Fund within the meaning of section
2(a)(9) of the Act. The members of the Subadviser Group will not
control (individually or in the aggregate) an Other Group Fund within
the meaning of section 2(a)(9) of the Act. If, as a result of a
decrease in the outstanding voting securities of an Other Group Fund,
the Group or the Subadviser Group, each in the aggregate, becomes a
holder of more than 25 percent of the outstanding voting securities of
an Other Group Fund, the Group and the Subadviser Group (except for any
member of the Group or the Subadviser Group that is a Separate Account)
will vote its shares of the Other Group Fund in the same proportion as
the vote of all other holders of the Other Group Fund's shares. A
Registered Separate Account will seek voting instructions from its
contract holders and will vote its shares of an Other Group Fund in
accordance with the instructions received and will vote those shares
for which no instructions were received in the same proportion as the
shares for which instructions were received. An Unregistered Separate
Account will either (a) vote its shares of the Other Group Fund in the
same proportion as the vote of all other holders of the Other Group
Fund's shares; or (b) seek voting instructions from its contract
holders and vote its shares in accordance with the instructions
received and vote those
[[Page 62140]]
shares for which no instructions were received in the same proportion
as the shares for which instructions were received. This condition
shall not apply to the Subadviser Group with respect to an Other Group
Fund for which the Subadviser, or a person controlling, controlled by,
or under common control with the Subadviser, acts as the investment
adviser within the meaning of section 2(a)(20)(A) of the Act.
2. No Fund of Funds or Fund of Funds Affiliate will cause any
existing or potential investment by the Fund of Funds in an Other Group
Fund to influence the terms of any services or transactions between the
Fund of Funds or a Fund of Funds Affiliate and the Other Group Fund or
an Other Group Fund Affiliate.
3. The Board of each Fund of Funds, including a majority of the
Independent Trustees, will adopt procedures reasonably designed to
assure that the Manager and any Subadviser to the Fund of Funds are
conducting the investment program of the Fund of Funds, including the
initial selection of Other Group Funds and any subsequent changes,
without taking into account any consideration received by the Fund of
Funds or a Fund of Funds Affiliate from an Other Group Fund or an Other
Group Fund Affiliate in connection with any services or transactions
including any revenue sharing or similar payments by an Other Group
Fund Affiliate to a Fund of Funds Affiliate.
4. Once an investment by a Fund of Funds in the securities of an
Other Group Fund exceeds the limit in section 12(d)(1)(A)(i) of the
Act, the board of directors or trustees of the Other Group Fund,
including a majority of the Independent Trustees, will determine that
any consideration paid by the Other Group Fund to the Fund of Funds or
a Fund of Funds Affiliate in connection with any services or
transactions: (a) Is fair and reasonable in relation to the nature and
quality of the services and benefits received by the Other Group Fund;
(b) is within the range of consideration that the Other Group Fund
would be required to pay to another unaffiliated entity in connection
with the same services or transactions; and (c) does not involve
overreaching on the part of any person concerned. This condition does
not apply with respect to any services or transactions between an Other
Group Fund and its investment adviser(s), or any person controlling,
controlled by, or under common control with such investment adviser(s).
5. No Fund of Funds or Fund of Funds Affiliate (except to the
extent it is acting in its capacity as an investment adviser to an
Other Group Fund) will cause an Other Group Fund to purchase a security
in an Affiliated Underwriting.
6. The board of directors or trustees of an Other Group Fund,
including a majority of the Independent Trustees, will adopt procedures
reasonably designed to monitor any purchases of securities by the Other
Group Fund in Affiliated Underwritings, once an investment by a Fund of
Funds in shares of the Other Group Fund exceeds the limit of section
12(d)(1)(A)(i) of the Act, including any purchases made directly from
an Underwriting Affiliate. The board will review these purchases
periodically, but no less frequently than annually, to determine
whether the purchases were influenced by the investment by a Fund of
Funds in shares of the Other Group Fund. The board should consider,
among other things: (a) Whether the purchases were consistent with the
investment objectives and policies of the Other Group Fund; (b) how the
performance of securities purchased in an Affiliated Underwriting
compares to the performance of comparable securities purchased during a
comparable period of time in underwritings other than Affiliated
Underwritings or to a benchmark such as a comparable market index; and
(c) whether the amount of securities purchased by the Other Group Fund
in Affiliated Underwritings and the amount purchased directly from an
Other Group Fund have changed significantly from prior years. The board
shall take any appropriate actions based on its review, including, if
appropriate, the institution of procedures designed to assure that
purchases of securities in Affiliated Underwritings are in the best
interest of shareholders.
7. Each Other Group Fund shall maintain and preserve permanently in
an easily accessible place a written copy of the procedures described
in the preceding condition, and any modifications, and will maintain
and preserve for a period of not less than six years from the end of
the fiscal year in which any purchase in an Affiliated Underwriting
occurred, the first two years in an easily accessible place, a written
record of each purchase of securities in Affiliated Underwritings once
an investment by a Fund of Funds in the securities of the Other Group
Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting
forth from whom the securities were acquired, the identity of the
underwriting syndicate's members, the terms of the purchase, and the
information or materials upon which the board's determinations were
made.
8. Before investing in an Other Group Fund in excess of the limit
in section 12(d)(1)(A)(i), each Fund of Funds and the Other Group Fund
will execute an agreement stating, without limitation, that their
boards of directors or trustees and their investment advisers
understand the terms and conditions of the order and agree to fulfill
their responsibilities under the order (``Participation Agreement'').
At the time of its investment in shares of an Other Group Fund in
excess of the limit in section 12(d)(1)(A)(i), a Fund of Funds will
notify the Other Group Fund of the investment. At such time, the Fund
of Funds will also transmit to the Other Group Fund a list of the names
of each Fund of Funds Affiliate and Underwritings Affiliate. The Fund
of Funds will notify the Other Group Fund of any changes to the list of
names as soon as reasonably practicable after a change occurs. The
Other Group Fund and the Fund of Funds will maintain and preserve a
copy of the order, the Participation Agreement and the list with any
updated information for the duration of the investment and for a period
of not less than six years thereafter, the first two years in an easily
accessible place.
9. Before approving any advisory contract under section 15 of the
Act, the Board of each Fund of Funds, including a majority of the
Independent Trustees, will find that the advisory fees charged under
such advisory contract(s) are based on services provided that will be
in addition to, rather than duplicative of, the services provided under
the advisory contract(s) of any Underlying Fund in which the Fund of
Funds may invest. These findings and their basis will be recorded fully
in the minute books of the appropriate Fund of Funds.
10. The Manager will waive fees otherwise payable to the Manager by
the Fund of Funds, in an amount at least equal to any compensation
(including fees received pursuant to any plan adopted by an Other Group
Fund under rule 12b-1 under the Act) received from an Other Group Fund
by the Manager, or an affiliated person of the Manager, other than any
advisory fees paid to the Manager or its affiliated person by the Other
Group Fund, in connection with the investment by the Fund of Funds in
the Other Group Fund. Any Subadviser will waive fees otherwise payable
to the Subadviser, directly or indirectly, by the Fund of Funds in an
amount at least equal to any compensation received from an Other Group
Fund by the Subadviser, or an affiliated person of the Subadviser,
other than any advisory fees paid to the Subadviser or its affiliated
person by the Other Group Fund, in
[[Page 62141]]
connection with the investment by the Fund of Funds in the Other Group
Fund made at the direction of the Subadviser. In the event that the
Subadviser waives fees, the benefit of the waiver will be passed
through to the Fund of Funds.
11. With respect to Registered Separate Accounts that invest in a
Fund of Funds, no sales load will be charged at the Fund of Funds level
or at the Underlying Fund level. Other sales charges and services fees,
as defined in Rule 2830, if any, will only be charged at the Fund of
Funds level or at the Underlying Fund level, but not both. With respect
to other investments in a Fund of Funds, any sales charges and/or
service fees will not exceed the limits applicable to a fund of funds
as set forth in Rule 2830.
12. No Underlying Fund will acquire securities of any investment
company or company relying on section 3(c)(1) or 3(c)(7) of the Act in
excess of the limits contained in section 12(d)(1)(A) of the Act except
to the extent the Underlying Fund (a) receives securities of another
investment company as a dividend or as a result of a plan of
reorganization of a company (other than a plan devised for the purpose
of evading section 12(d)(1) of the Act); or (b) acquires (or is deemed
to have acquired) securities of another investment company pursuant to
exemptive relief from the Commission permitting the Underlying Fund to
(i) acquire securities of one or more affiliated investment companies
for short-term cash management purposes; or (ii) engage in interfund
borrowing or lending transactions.
For the Commission, by the Division of Investment Management,
under delegated authority.
Nancy M. Morris,
Secretary.
[FR Doc. E6-17619 Filed 10-20-06; 8:45 am]
BILLING CODE 8011-01-P
