Document ID: SEC-2006-1368-0001
Agency: sec
Document Type: Notice
Title: Pioneer America Income Trust, et al., Notice of Application
Posted Date: 2006-10-23T04:00Z

[Federal Register: October 23, 2006 (Volume 71, Number 204)]
[Notices]               
[Page 62137-62141]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23oc06-89]                         

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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.

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    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.''
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    \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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    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