DEFC14A: Pioneer Funds Seek Stockholder Approval for New Advisory Agreement Following Amundi-Victory Capital Deal

Pioneer Diversified High Income Fund, Pioneer Floating Rate Fund, and Pioneer High Income Fund are seeking stockholder approval for a new investment advisory agreement with Victory Capital Management Inc. following Amundi's deal to combine its US subsidiary with Victory Holdings.

Summary

• Pioneer Diversified High Income Fund, Pioneer Floating Rate Fund, and Pioneer High Income Fund are holding special meetings on March 26, 2025, to seek stockholder approval for a new investment advisory agreement with Victory Capital Management Inc.
• This action is prompted by a binding agreement between Amundi and Victory Capital Holdings, Inc. to combine Amundi Holdings with Victory Holdings.
• The current investment advisory agreement with Amundi Asset Management US, Inc. will automatically terminate upon the consummation of this transaction.
• If approved, Victory Capital will succeed Amundi US as the investment adviser, with the Funds' current portfolio managers expected to continue managing the Funds as members of Pioneer Investments, a Victory Capital investment franchise.
• The advisory fee rate will remain the same under the new agreement.
• Victory Capital has agreed to waive advisory fees and/or reimburse expenses for at least three years to maintain the Funds' total net annual operating expenses at or below existing levels.
• The Board of Directors unanimously recommends voting FOR the proposal, cautioning against potential disruption from Saba Capital Management, L.P., which is expected to launch a campaign against the approval.
• Saba Capital's actions are viewed as an attempt to force structural changes for short-term profit, potentially leaving the Funds without an investment adviser.
• The transaction is expected to close at the end of the first quarter of 2025, subject to regulatory approvals and other conditions.
• If stockholders do not approve the new agreement, an interim agreement may be implemented for up to 150 days while the Board determines further action.

Sentiment

Score: 7

Explanation: The document is generally positive, emphasizing continuity and maintained fee structures. However, the potential disruption from Saba Capital and the need for stockholder approval introduce some uncertainty.

Positives

• Continuity of portfolio management is expected, with current managers remaining in place.
• The advisory fee rate will not increase.
• Victory Capital will waive fees and/or reimburse expenses for at least three years to maintain current net operating expenses.
• Victory Capital has advised the Board that it does not anticipate that having Victory Capital provide investment advisory services would result in any reduction in the level or quality of services now provided to your Fund.
• The consummation of the Transaction is not expected to (1) result in any significant changes to the day-to-day management of your Fund, (2) affect your Funds investment objective(s) or investment strategies, or (3) impact the investment philosophy or process of your Funds portfolio management team.

Negatives

• Potential disruption from Saba Capital's expected campaign against the agreement.
• The Funds could potentially be left without an investment adviser if the new agreement is not approved.
• The Funds will transition from certain of the Funds current service providers, including fund administration, to the Victory Funds service providers following the consummation of the Transaction.

Risks

• Failure to approve the new investment advisory agreement could lead to disruption of Fund operations.
• Saba Capital's actions could force the Fund to implement major structural changes like liquidation or a large tender offer.
• The completion of the Transaction may not occur if certain conditions are not met.
• There can be no assurance that the MCSAA will be enforceable with respect to the Funds.
• The exercise of the provisions of the MCSAA may create exposure to liability for the Funds.

Future Outlook

The transaction is expected to close at the end of the first quarter of 2025, subject to regulatory approvals and other conditions. Victory Capital does not expect to propose any changes to the investment objective(s) of any Fund or any changes to the principal investment strategies of any Fund as a result of the Transaction.

Management Comments

• The Board unanimously recommends that you vote on the enclosed WHITE proxy card FOR the approval of a new investment advisory agreement with Victory Capital.
• Do not let Saba Capital put its interests above yours.
• Victory Capital has advised the Board of Directors of your Fund that it does not anticipate that having Victory Capital provide investment advisory services would result in any reduction in the level or quality of services now provided to your Fund, and that Victory Capital is not aware of any circumstances that may have any adverse effect on its ability to fulfill its obligations to your Fund.

Industry Context

The consolidation in the asset management industry continues with this transaction, as firms seek to achieve greater scale and efficiency. The involvement of activist investors like Saba Capital highlights the pressure on closed-end funds to deliver value to shareholders.

Comparison to Industry Standards

• Victory Capital's acquisition and integration of several investment management companies is a common strategy in the asset management industry to expand capabilities and market reach.
• The reciprocal distribution agreements between Amundi and Victory Capital are similar to partnerships formed by other global asset managers to leverage each other's distribution networks.
• The fee waivers and expense reimbursements offered by Victory Capital are in line with industry practices to ensure a smooth transition and maintain competitive expense ratios.
• BlackRock's acquisition of Global Infrastructure Partners (GIP) for $12.5 billion is a comparable transaction in terms of scale and strategic rationale, as it expands BlackRock's presence in the infrastructure investment space.
• Trian Fund Management's activist campaigns targeting companies like Janus Henderson Investors demonstrate the increasing scrutiny on asset managers to improve performance and shareholder value.

Management Changes

Stakeholder Impact

• Shareholders: Impacted by the change in investment advisor and potential disruption from activist investors.
• Employees: Certain operations and personnel of Amundi US will move to Victory Capital.
• Customers: The Funds' investment objectives and strategies are not expected to change.
• Suppliers: Potential changes in service providers, including fund administration.

Next Steps

• Stockholders need to vote on the new investment advisory agreement by March 25, 2025.
• The transaction is expected to close at the end of the first quarter of 2025, subject to regulatory approvals and other conditions.

Key Dates

Keywords

investment advisory agreement, Victory Capital, Amundi, Saba Capital, merger, fund management, proxy statement, investment funds