SEC Division of Investment Management staff letter: Pioneer Interest Shares

HALEAND DORR LLP
COUNStLLORS AT LAW www,haledorr.com I 60 SIATE STREET BOSTON,MA 02109 617-526-6000 FAX 617-526-5000 5 17-526-6516 joseph barri@haledon corn April 17, 2001 By Federal Express Securities and Exchange Commission 450 Fifih Street, N.W. Washington. D.C. 20549 Attention: Office of Chief Counsel Division of Corporation Finance Re: Shareholder Proposal Submitted to Pioneer Interest Shares by The Tobener Trust Dear Ladies and Gentlen~en:
This letter is submitted on behalf of our client, Pioneer Interest Shares, a Delaware business trust (the "Fund"). pursuant to Rule 14a-8G) under the Securities Exchange Act of 1 934, as amended (the "Exchange Act"). The Fund hereby gives notice of its intention to omit fronl its proxy statement and form of proxy (the "Proxy Materials") the proposal and statement of support (the "Proposal") submitted by The Tobener Trust (the "l'roponcnt") by undat cd letter, which the Fund acknowledged receipt of on July 10,
2000. l'he Proposal in its entirety is restated below. The Fund has advised us that the
Proxy Materials are tentatively scheduled to be filed pursuant to Rule 14a-6 on or about July 6. 2001. l'ursuant to the provisions of Rule 14a-8(j) under the Exchange Act, enclosed for filing are six copies of each of this letter and the Proposal. Also, pursuant to the provisions of Rule 14a-86), we are sending a copy of this letter and the ~xhibitsto the Proponent. The Fund respectfully requests the concuuence of the Staff of the Division of Corporation Finance (the "Staff') that no enforcement action will be recommended by the Commission if the Fund omits the proposal fiom the Proxy Materials. For ease of reference, the text of the Proposal, exactly as received, is set forth below. Stockholder Proposal "The records of the fund will indicate ownership of 1,000 shares of the stock. certificate # PI 3660 by the trust with my name as one of the rrustecs. Thc Trust also owns 5,000 shares registered to Waterhouse Sccuritics I nc. Personally I bought some of this security when it was first

Securitiesand Exchange Commission
April 17,2001 issued by the Mutual of Omaha so I have a long acquaintance with this security. This form of investment has grown increasinglyunpopular to the point that the daily trade volume is insignificant and the price differential is unjust to those stockholders who must sell their stock. The dividend has been recently reduced which will no doubt be reflected in still lower prices. As a stockholder I wish to propose that the directors take the following action or propose the action at the next meeting of the stockholders. Either sell enough offhe lower yielding securities listed onpages 10-11 in the statet~tet~f yf Decen~ber31 1999 to declare a 35% return of capital dillidend to f l~e~r0~kl70ldei~s. (kEnjireiy Ziquidute thefund and retire the stock" It is our opinion that this Proposal may be omitted fiom the Proxy Materials based on Rules14a-8(i)(l), (7) and (I 3). Rule 14a-8(i)(1) (Inlproper Under State Law) l'lle Proposal seeks to declare a dividend of 35% of the Fund's assets or to liquidate the Fund. According to Rule 14a-8(i)(l), a shareholder proposal is excludable fi-om proxy materials if it is not a proper subject for action by shareholders under the issuer's state of organization. The Proposal is excludable fiom the Proxy Materials under Rule 14a-8(i)(l). Section 3806 of the Delaware Business Trust Act ("DBTA") provides that "[elxcept to the extent otherwise provided in the governing instrument of a business trust, the business and affairs of a business trust shall be managed by and under the direction of its trustees." Section 3806 of the DBTA allows a business trust's declaration of trust to grant voting rights lo the beneficial owners of the trust. The DBTA does not mandate that beneficial owners have any voting rights.
Section 6.1 of the Fund's Declaration of Trust, dated April 30, 1996, grants to the
Trustees the sole power to declare dividends and other distributions and expressly provides that "the amount and payment of dividends and distributions ... shall be determined by the Trustees." Section 9.4 of the Declaration of Trust grants the Trustees the power to liquidate the Trust. Section 9.4(b) provides that such liquidation need only bc submitted to shareholders of the Fund if required by applicable law or the listing requirements of any exchange on which the Fund's shares are listed. The Declaration of rl'rustdoes not provide for the liquidation of the Fund solely by the action of sharcho lders.
Section 7.1 of the Declaration of Trust sets forth all the voting rights of the Fund's
sharcholdurs. Section 7.1 of the Declaration of Trust provides that the shareholders of the Iknd ollly have power to vote \villi respect to the following matters:
'I'he clcciior~and re~novalof trustees,
'I'hc 1:und's invcstment advisory contract,

Securities and Exchange Commission
April 17, 2001
Any termination of the Fund as provided in Article IX (Article IX only contemplatesa shareholder vote subsequent to Trustee action), Conversion of the Fund to an open-end investment company, In connection with certain amendmentsto the Declaration of Trust, and To the extent otherwise required by law, the Declaration of Trust or the requirementsof any exchange on which the shares are listed. To the extent that the Proposal seeks to declare a dividend, the Proposal exceeds the authority granted to shareholders under the Declaration of Trust. The Declaration of 'Irust clearly designates the Trustees as the parties with the power to declare a dividend. I'he DBTA similarly is clear in providing that the Trustees have all power in connection with thc management of a business trust except for the powers expressly granted to shareholders. Consequently, the Proposal, as it relates to the declaration of a dividend, is improper under both the Declaration of Trust and the DBTA. To the extent that the Proposal calls for a liquidation of the Fund, it is also an ituproper action under the Declaration of Trust and the DBTA. The Declaration of Trust grants only to the Trustees the power to liquidate the Trust. Shareholders only have the power to reject a proposal by the Trustees to liquidate the Fund, and then only are granted such authority to the extent necessary to comply with applicable law or the listing rcquireillents of the New York Stock Exchange. The Declaration of Trust does not grant the shareholders any power to propose the liquidation of the Fund. Consequently, the I'roposal is beyond the scope of the powers of the shareholders of the Fund under both the Declaratiol~of Trust and DBTA. Rule 14a-S(i)(,7)[Mana ement Functions) Rule 14a-8(i)(7)provides that the Proposal may be excluded if it relates to matters dealing with the issuer's ordinary business operations. The ordinary business of the Fund is to act as a closed-end investment company and to invest in debt securities. The Proposal identifies specific assets of the Fund that the Proposal directs shall be sold. The Fund has retained Pioneer Investment Management, Inc. to act as investment adviser to the Fund and manage its assets. The Proposal would substitute the Proponent's judgment as to the proper management of the Fund's assets for Pioneer's and interfere in the Fund's ordinary business of investing in debt securities. Rule 14a-8(i)( 13) (Specific Amount of Dividends) l'he Proposal calls for the declaration of a dividend equal to 35% of the Fund's net assets. Rule 14a-S(i)(13) provides that a proposal may be excluded if the proposal relates to a specific ;in~ountof d ividends to be paid by the issuer. Consequently, the Proposal is cscludablc pursuant to Rule 14a-8(i)(13).

Securities and Exchange Commission
April 17,2001
Based on the foregoing, the Fund intends to exclude the Proposal fiom the Proxy Materials. Please contact David C. Phelan at (617) 526-6372 or Joseph P. Barri at (6 17) 526-6516 with any questions regarding this request. Very truly yours, Hale and Dorr LLP cc: Thc Tobener Trust David C. I'helan, Esq. Elizabeth A. Watson, Esq. michcllc rhcc - z:\lcga1\71976.I 15\l_sec 14a-8.d~

From:

Tha Tobener Trust

2220 Gainsborough Avc -

Santa Rosa C A 95405

To

John F Cogan, President, The Pioneer Interest Shares Pioneer Investment Hanagamtnt Inc, 69 State st Boston Mass 02109 Dear Hr, Cogan:
The records of the fund vill indicate ownership of 1,000 ahares of

the stock , certificate # PI 3660 by the truet with ag name as one

of the trustees. The Trust also ownes 5,000 &arts registered to

Waterhouse Securities Inc. Personally 1 bought some of this sccurlty

when it wa~first issued by the Mutual of OHlaha so 1 have a long

acquaintance with thi 6 security.

This fora of investment ha grown increasingly unpopular to the point

that the daily trade volume is insignificant and the price differential

16 uJust to those stockholders who must sell their atock,

Tba dividend bas been recently reduced which will no doubt be rcflectd in still lower pricec, Aa a stockholder 1 wish to propose that the directors take the followiqg __ action or propose the action at the next meeting of the stockhoPdcra. Either a011 enough of the lower yielding eecurittas listed on pages 4+11

in the statement of Dccambcr 31 1999 to declare a 35% return of capital

dividend to the stockholder6.

Or Entirely liquidate the fund and retire the stock.
It is my rigbt to propose these actions and I insist that you advise me if further steps must be taken by me or my attorney to effect these act ion8 * Si ncere ly , /'-> < {3&!:.--72 Ralph E Tobener Tru~toc The Toboner Truct