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 agreement to combine its US holdings with Victory Capital.

Summary

• Pioneer Diversified High Income Fund, Pioneer Floating Rate Fund, and Pioneer High Income Fund are holding a special meeting on March 26, 2025, to seek stockholder approval for a new investment advisory agreement with Victory Capital Management Inc.
• This is due to Amundi Asset Management US, Inc., the current investment advisor, becoming a wholly-owned subsidiary of Victory Capital through a transaction expected to close in the first quarter of 2025.
• The existing advisory agreement with Amundi US will automatically terminate upon the transaction's completion.
• The proposed agreement ensures the Funds' current portfolio managers will continue managing the Funds as part 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 current levels.
• Saba Capital Management, L.P., is expected to launch a campaign against the approval of the new investment advisory agreement.
• The Board of Directors recommends voting FOR the new agreement to prevent disruption to the Funds' operations and potential loss of an investment advisor.
• Amundi will contribute all of the shares of Amundi Holdings to Victory Holdings.
• In exchange, Victory Holdings will issue to Amundi a number of newly issued shares of Victory Holdings common stock and newly issued shares of Victory Holdings preferred stock, equal in the aggregate to 26.1% of Victory Holdings fully diluted shares after giving effect to such share issuance.

Sentiment

Score: 7

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

Positives

• The Funds' current portfolio managers are expected to continue managing the Funds.
• The advisory fee rate will remain the same.
• Victory Capital will waive fees and/or reimburse expenses for at least three years to maintain current operating expense levels.
• The transaction is not expected to result in any significant changes to the day-to-day management of the Funds.
• The transaction is not expected to affect the Funds' investment objectives or investment strategies.
• The transaction is not expected to impact the investment philosophy or process of the Funds' portfolio management team.

Negatives

• Saba Capital is expected to launch a campaign against the approval of the new investment advisory agreement, potentially disrupting Fund operations.
• If the new investment advisory agreement is not approved by stockholders, it could potentially leave the Fund without an investment adviser.
• 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 leave the Funds without an investment advisor.
• Saba Capital's opposition could disrupt Fund operations.
• 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. The Funds' current portfolio managers are expected to continue managing the Funds as part of Pioneer Investments, a Victory Capital investment franchise. 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.
• 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, 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

This announcement reflects the ongoing consolidation in the asset management industry, with larger firms acquiring smaller players to achieve economies of scale and expand their product offerings. The transaction also highlights the increasing importance of global distribution networks, as evidenced by the reciprocal distribution agreements between Amundi and Victory Capital.

Comparison to Industry Standards

• Victory Capital's acquisition of Amundi US is similar to other deals in the asset management industry, such as Franklin Templeton's acquisition of Legg Mason, which aimed to increase scale and diversify investment capabilities.
• The reciprocal distribution agreements between Amundi and Victory Capital are comparable to similar arrangements between other global asset managers, such as those between Allianz Global Investors and Voya Investment Management, which allow firms to leverage each other's distribution networks.
• The expense limitation agreement offered by Victory Capital is a common practice in the fund industry to ensure that investors are not negatively impacted by increased costs following a merger or acquisition. This is similar to expense caps offered by other fund companies, such as BlackRock and Vanguard.

Management Changes

Stakeholder Impact

• Shareholders are asked to vote on the new investment advisory agreement.
• Employees of Amundi US will move to Victory Capital as part of the integration.
• The Funds' service providers may change following the consummation of the Transaction.

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, Pioneer Funds, Saba Capital, merger, acquisition, proxy statement, investment management, closed-end funds