[Federal Register Volume 83, Number 105 (Thursday, May 31, 2018)]
[Notices]
[Pages 25071-25074]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-11594]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33108; File No. 812-14662]


Pioneer ILS Interval Fund and Amundi Pioneer Asset Management, 
Inc.; Notice of Application

May 24, 2018
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from sections 
18(a)(2), 18(c) and 18(i) of the Act, under sections 6(c) and 23(c) of 
the Act for an exemption from rule 23c-3 under the Act, and for an 
order pursuant to section 17(d) of the Act and rule 17d-1 under the 
Act.

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SUMMARY OF APPLICATION: Applicants request an order to permit certain 
registered closed-end management investment companies to issue multiple 
classes of shares and to impose asset-based distribution and/or service 
fees and early withdrawal charges (``EWCs'').

APPLICANTS: Pioneer ILS Interval Fund (the ``Fund'') and Amundi Pioneer 
Asset Management, Inc. (the ``Adviser'').

FILING DATES: The application was filed on June 10, 2016 and amended on 
December 14, 2016, September 28, 2017, and May 15, 2018.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested 
relief 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 June 18, 2018, and should be accompanied by proof of 
service on the applicants, in the form of an affidavit, or, for 
lawyers, a certificate of service. Pursuant to rule 0-5 under the Act, 
hearing requests should state the nature of the writer's interest, any 
facts bearing upon the desirability of a hearing on the matter, 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 02109-1820.

FOR FURTHER INFORMATION CONTACT: Jennifer O. Palmer, Senior Counsel, at 
(202) 551-5786, or Nadya Roytblat, Assistant Chief Counsel, at (202) 
551-6825 (Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's website by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. The Fund is a Delaware statutory trust that is registered under 
the Act as a non-diversified, closed-end management investment company. 
The Fund's investment objective is total return. The Fund normally 
invests at least 80% of its net assets (plus the amount of borrowings, 
if any, for investment purposes) in insurance-linked securities 
(``ILS''). Derivative instruments that provide exposure to ILS or have 
similar economic characteristics may be used to satisfy the Fund's 80% 
policy.
    2. The Adviser is a Delaware corporation and is registered as an 
investment adviser under the Investment Advisers Act of 1940. The 
Adviser is an indirect, wholly-owned subsidiary of Amundi and Amundi's 
wholly-owned subsidiary, Amundi USA, Inc. Amundi, an asset manager 
headquartered in Paris, France, acquired the Adviser on July 3, 2017. 
The Adviser serves as investment adviser to the Fund.
    3. The applicants seek an order to permit the Fund to issue 
multiple classes of shares, each having its own fee and expense 
structure, and to impose asset-based distribution and/or service fees 
and EWCs.
    4. Applicants request that the order also apply to any 
continuously-offered registered closed-end management

[[Page 25072]]

investment company that may be organized in the future for which the 
Adviser or any entity controlling, controlled by, or under common 
control with the Adviser, or any successor in interest to any such 
entity,\1\ acts as investment adviser and which operates as an interval 
fund pursuant to rule 23c-3 under the Act or provides periodic 
liquidity with respect to its shares pursuant to rule 13e-4 under the 
Securities Exchange Act of 1934 (``Exchange Act'') (each, a ``Future 
Fund'' and together with the Fund, the ``Funds'').\2\
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    \1\ A successor in interest is limited to an entity that results 
from a reorganization into another jurisdiction or a change in the 
type of business organization.
    \2\ Any Fund relying on this relief in the future will do so in 
a manner consistent with the terms and conditions of the 
application. Applicants represent that each entity presently 
intending to rely on the requested relief is listed as an applicant.
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    5. The Fund is currently making a continuous public offering of its 
common shares. Applicants state that additional offerings by any Fund 
relying on the order may be on a private placement or public offering 
basis. Shares of the Funds will not be listed on any securities 
exchange, nor quoted on any quotation medium. The Funds do not expect 
there to be a secondary trading market for their shares.
    6. If the requested relief is granted, the Fund intends to 
redesignate its common shares as ``Class 1 Shares'' and to continuously 
offer ``Class 2 Shares'', and may also offer additional classes of 
shares in the future. Because of the different distribution fees, 
services and any other class expenses that may be attributable to the 
Class 1 Shares and Class 2 Shares, the net income attributable to, and 
the dividends payable on, each class of shares may differ from each 
other. The Fund's Class 1 Shares will not be subject to a front-end 
sales charge, whereas Class 2 Shares may be subject to a front-end 
sales charge. The Fund's Class 1 Shares will be subject to other 
expenses, but will not be subject to a distribution or service fee. The 
Fund's Class 2 Shares will be subject to a distribution and service fee 
and other expenses. Currently, Class 1 Shares and Class 2 Shares will 
not be subject to an EWC. However, applicants state that Class 1 
Shares, Class 2 Shares and other classes may, in the future, be subject 
to an EWC. Shares that are not subject to an EWC when purchased will 
not subsequently be subject to an EWC.
    7. Applicants state that, from time to time, the Fund may create 
additional classes of shares, the terms of which may differ from the 
Class 1 and Class 2 Shares in the following respects: (i) The amount of 
fees permitted by different distribution plans or different service fee 
arrangements; (ii) voting rights with respect to a distribution and/or 
service plan of a class; (iii) different class designations; (iv) the 
impact of any class expenses directly attributable to a particular 
class of shares allocated on a class basis as described in the 
application; (v) any differences in dividends and net asset value 
resulting from differences in fees under a distribution and/or service 
plan or in class expenses; (vi) any EWC or other sales load structure; 
and (vii) exchange or conversion privileges of the classes as permitted 
under the Act.
    8. Applicants state that, to the extent a Fund charges a repurchase 
fee, shares of the Fund will be subject to a fee at a rate of no 
greater than 2% of the shareholder's repurchase proceeds if the 
interval between the date of purchase of the shares and the valuation 
date with respect to the repurchase of those shares is less than one 
year. Additionally, applicants state that any repurchase fee will 
equally apply to any new class of shares and to all classes of Shares 
of the Fund, consistent with Section 18 of the 1940 Act and Rule 18f-3 
thereunder. Further, applicants represent that to the extent a Fund 
determines to waive, impose scheduled variations of, or eliminate any 
repurchase fee, it will do so consistently with the requirements of 
Rule 22d-1 under the Act as if the repurchase fee were a CDSL and as if 
the Fund were an open-end investment company and the Fund's waiver of, 
scheduled variation in, or elimination of, the repurchase fee will 
apply uniformly to all shareholders of the Fund regardless of class. 
Applicants state that the Fund does not currently intend to charge a 
repurchase fee.
    9. Applicants state that the Fund has adopted a fundamental policy 
to repurchase a specified percentage of its shares (no less than 5% and 
no more than 25%) at net asset value on a quarterly basis. Such 
repurchase offers will be conducted pursuant to rule 23c-3 under the 
Act. Each of the other Funds will likewise adopt fundamental investment 
policies and make quarterly repurchase offers to its shareholders in 
compliance with rule 23c-3 or will provide periodic liquidity with 
respect to its shares pursuant to rule 13e-4 under the Exchange Act.\3\ 
Any repurchase offers made by the Funds will be made to all holders of 
shares of each such Fund.
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    \3\ Applicants submit that rule 23c-3 and Regulation M under the 
Exchange Act permit an interval fund to make repurchase offers to 
repurchase its shares while engaging in a continuous offering of its 
shares pursuant to Rule 415 under the Securities Act of 1933.
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    10. Applicants represent that any asset-based service and 
distribution fees for each class of shares of the Funds will comply 
with the provisions of Financial Industry Regulatory Authority 
(``FINRA'') Rule 2341 (formerly NASD Rule 2830(d) (``FINRA Sales Charge 
Rule'').\4\ Applicants also represent that each Fund will disclose in 
its prospectus the fees, expenses and other characteristics of each 
class of shares offered for sale by the prospectus, as is required for 
open-end multiple class funds under Form N-1A. As is required for open-
end funds, each Fund will disclose its expenses in shareholder reports, 
and describe any arrangements that result in breakpoints in or 
elimination of sales loads in its prospectus.\5\ In addition, 
applicants will comply with applicable enhanced fee disclosure 
requirements for fund of funds, including registered funds of hedge 
funds.\6\
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    \4\ Any reference to the FINRA Sales Charge Rule includes any 
successor or replacement to the FINRA Sales Charge Rule.
    \5\ See Shareholder Reports and Quarterly Portfolio Disclosure 
of Registered Management Investment Companies, Investment Company 
Act Release No. 26372 (Feb. 27, 2004) (adopting release) (requiring 
open-end investment companies to disclose fund expenses in 
shareholder reports); and Disclosure of Breakpoint Discounts by 
Mutual Funds, Investment Company Act Release No. 26464 (June 7, 
2004) (adopting release) (requiring open-end investment companies to 
provide prospectus disclosure of certain sales load information).
    \6\ Fund of Funds Investments, Investment Company Act Rel. Nos. 
26198 (Oct. 1, 2003) (proposing release) and 27399 (Jun. 20, 2006) 
(adopting release). See also Rules 12d1-1, et seq. of the Act.
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    11. Each of the Funds will comply with any requirements that the 
Commission or FINRA may adopt regarding disclosure at the point of sale 
and in transaction confirmations about the costs and conflicts of 
interest arising out of the distribution of open-end investment company 
shares, and regarding prospectus disclosure of sales loads and revenue 
sharing arrangements, as if those requirements applied to the Fund. In 
addition, each Fund will contractually require that any distributor of 
the Fund's shares comply with such requirements in connection with the 
distribution of such Fund's shares.
    12. Each Fund will allocate all expenses incurred by it among the 
various classes of shares based on the net assets of the Fund 
attributable to each class, except that the net asset value and 
expenses of each class will reflect the expenses associated with the 
distribution and/or service plan of that class, service fees 
attributable to that

[[Page 25073]]

class, and any other incremental expenses of that class. Expenses of 
the Fund allocated to a particular class of shares will be borne on a 
pro rata basis by each outstanding share of that class. Applicants 
state that each Fund will comply with the provisions of rule 18f-3 
under the Act as if it were an open-end investment company.
    13. Applicants state that each Fund may impose an EWC on shares 
submitted for repurchase that have been held less than a specified 
period and may waive the EWC for certain categories of shareholders or 
transactions to be established from time to time. Applicants state that 
each of the Funds will apply the EWC (and any waivers or scheduled 
variations of the EWC) uniformly to all shareholders in a given class 
and consistently with the requirements of rule 22d-1 under the Act as 
if the Funds were open-end investment companies.
    14. Each Fund operating as an interval fund pursuant to rule 23c-3 
under the Act may offer its shareholders an exchange feature under 
which the shareholders of the Fund may, in connection with the Fund's 
periodic repurchase offers, exchange their shares of the Fund for 
shares of the same class of (i) registered open-end investment 
companies or (ii) other registered closed-end investment companies that 
comply with rule 23c-3 under the Act and continuously offer their 
shares at net asset value, that are in the Fund's group of investment 
companies (collectively, ``Other Funds''). Shares of a Fund operating 
pursuant to rule 23c-3 that are exchanged for shares of Other Funds 
will be included as part of the amount of the repurchase offer amount 
for such Fund as specified in rule 23c-3 under the Act. Any exchange 
option will comply with rule 11a-3 under the Act, as if the Fund were 
an open-end investment company subject to rule 11a-3. In complying with 
rule 11a-3, each Fund will treat an EWC as if it were a contingent 
deferred sales load (``CDSL'').

Applicants' Legal Analysis

Multiple Classes of Shares

    1. Section 18(a)(2) of the Act provides that a closed-end 
investment company may not issue or sell a senior security that is a 
stock unless certain requirements are met. Applicants state that the 
creation of multiple classes of shares of the Funds may violate section 
18(a)(2) because the Funds may not meet such requirements with respect 
to a class of shares that may be a senior security.
    2. Section 18(c) of the Act provides, in relevant part, that a 
closed-end investment company may not issue or sell any senior security 
if, immediately thereafter, the company has outstanding more than one 
class of senior security. Applicants state that the creation of 
multiple classes of shares of the Funds may be prohibited by section 
18(c), as a class may have priority over another class as to payment of 
dividends because shareholders of different classes would pay different 
fees and expenses.
    3. Section 18(i) of the Act provides that each share of stock 
issued by a registered management investment company will be a voting 
stock and have equal voting rights with every other outstanding voting 
stock. Applicants state that multiple classes of shares of the Funds 
may violate section 18(i) of the Act because each class would be 
entitled to exclusive voting rights with respect to matters solely 
related to that class.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security or transaction or any class or classes of persons, 
securities or transactions from any provision of the Act, or from any 
rule or regulation under the Act, if and to the extent 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. Applicants request an exemption under 
section 6(c) from sections 18(a)(2), 18(c) and 18(i) to permit the 
Funds to issue multiple classes of shares.
    5. Applicants submit that the proposed allocation of expenses 
relating to distribution and voting rights among multiple classes is 
equitable and will not discriminate against any group or class of 
shareholders. Applicants submit that the proposed arrangements would 
permit a Fund to facilitate the distribution of its shares and provide 
investors with a broader choice of shareholder services. Applicants 
assert that the proposed closed-end investment company multiple class 
structure does not raise the concerns underlying section 18 of the Act 
to any greater degree than open-end investment companies' multiple 
class structures that are permitted by rule 18f-3 under the Act. 
Applicants state that each Fund will comply with the provisions of rule 
18f-3 as if it were an open-end investment company.

Early Withdrawal Charges

    1. Section 23(c) of the Act provides, in relevant part, that no 
registered closed-end investment company shall purchase securities of 
which it is the issuer, except: (a) On a securities exchange or other 
open market; (b) pursuant to tenders, after reasonable opportunity to 
submit tenders given to all holders of securities of the class to be 
purchased; or (c) under other circumstances as the Commission may 
permit by rules and regulations or orders for the protection of 
investors.
    2. Rule 23c-3 under the Act permits a registered closed-end 
investment company (an ``interval fund'') to make repurchase offers of 
between five and twenty-five percent of its outstanding shares at net 
asset value at periodic intervals pursuant to a fundamental policy of 
the interval fund. Rule 23c-3(b)(1) under the Act permits an interval 
fund to deduct from repurchase proceeds only a repurchase fee, not to 
exceed two percent of the proceeds, that is paid to the interval fund 
and is reasonably intended to compensate the fund for expenses directly 
related to the repurchase.
    3. Section 23(c)(3) provides that the Commission may issue an order 
that would permit a closed-end investment company to repurchase its 
shares in circumstances in which the repurchase is made in a manner or 
on a basis that does not unfairly discriminate against any holders of 
the class or classes of securities to be purchased.
    4. Applicants request relief under section 6(c), discussed above, 
and section 23(c)(3) from rule 23c-3 to the extent necessary for the 
Funds to impose EWCs on shares of the Funds submitted for repurchase 
that have been held for less than a specified period.
    5. Applicants state that the EWCs they intend to impose are 
functionally similar to CDSLs imposed by open-end investment companies 
under rule 6c-10 under the Act. Rule 6c-10 permits open-end investment 
companies to impose CDSLs, subject to certain conditions. Applicants 
note that rule 6c-10 is grounded in policy considerations supporting 
the employment of CDSLs where there are adequate safeguards for the 
investor and state that the same policy considerations support 
imposition of EWCs in the interval fund context. In addition, 
applicants state that EWCs may be necessary for the distributor to 
recover distribution costs. Applicants represent that any EWC imposed 
by the Funds will comply with rule 6c-10 under the Act as if the rule 
were applicable to closed-end investment companies. The Funds will 
disclose EWCs in accordance with the requirements of Form N-1A 
concerning CDSLs.

[[Page 25074]]

Asset-Based Distribution and/or Service Fees

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
an affiliated person of a registered investment company, or an 
affiliated person of such person, acting as principal, from 
participating in or effecting any transaction in connection with any 
joint enterprise or joint arrangement in which the investment company 
participates unless the Commission issues an order permitting the 
transaction. In reviewing applications submitted under section 17(d) 
and rule 17d-1, the Commission considers whether the participation of 
the investment company in a joint enterprise or joint arrangement is 
consistent with the provisions, policies and purposes of the Act, and 
the extent to which the participation is on a basis different from or 
less advantageous than that of other participants.
    2. Rule 17d-3 under the Act provides an exemption from section 
17(d) and rule 17d-1 to permit open-end investment companies to enter 
into distribution arrangements pursuant to rule 12b-1 under the Act. 
Applicants request an order under section 17(d) and rule 17d-1 under 
the Act to the extent necessary to permit the Fund to impose asset-
based distribution and/or service fees. Applicants have agreed to 
comply with rules 12b-1 and 17d-3 as if those rules applied to closed-
end investment companies, which they believe will resolve any concerns 
that might arise in connection with a Fund financing the distribution 
of its shares through asset-based fees.
    For the reasons stated above, applicants submit that the exemptions 
requested under section 6(c) are necessary and appropriate in the 
public interest and are consistent with the protection of investors and 
the purposes fairly intended by the policy and provisions of the Act. 
Applicants further submit that the relief requested pursuant to section 
23(c)(3) will be consistent with the protection of investors and will 
insure that applicants do not unfairly discriminate against any holders 
of the class of securities to be purchased. Finally, applicants state 
that the Funds' imposition of asset-based distribution and/or service 
fees is consistent with the provisions, policies and purposes of the 
Act and does not involve participation on a basis different from or 
less advantageous than that of other participants. Applicants therefore 
believe that the requested relief meets the standards of section 6(c) 
of the Act.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Each Fund relying on the order will comply with the provisions of 
rules 6c-10, 12b-1, 17d-3, 18f-3, 22d-1, and, where applicable, 11a-3 
under the Act, as amended from time to time, as if those rules applied 
to closed-end management investment companies, and will comply with the 
FINRA Sales Charge Rule, as amended from time to time, as if that rule 
applied to all closed-end management investment companies.

For the Commission, by the Division of Investment Management, under 
delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-11594 Filed 5-30-18; 8:45 am]
 BILLING CODE 8011-01-P


