[Federal Register Volume 65, Number 155 (Thursday, August 10, 2000)]
[Notices]
[Pages 49036-49037]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-20213]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-24591; 812-12002]


Wells Fargo Funds Trust, et al.; Notice of Application

August 3, 2000.
AGENCY: Securities and Exchange Commission (``SEC'' or the 
``Commission'').

ACTION: Notice of application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from section 
15(f)(1)(A) of the Act.

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    Summary of Application: The requested order would permit certain 
investment companies advised by Wells Fargo Bank, N.A. (``Wells 
Fargo'') not to reconstitute their respective boards of trustees to 
meet the 75 percent non-interested director requirement of section 
15(f)(1)(A) of the Act in order for Wells Fargo to rely upon the safe 
harbor provisions of section 15(f).
    Applicants: Wells Fargo Fund Trust (``Funds Trust''), Wells Fargo 
Core Trust (``Core Trust''), and Wells Fargo.
    Filing Date: The application was filed on August 3, 2000.
    Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the SEC orders a hearing. Interested 
persons may request a hearing by writing to the SEC's Secretary and 
serving applicants with a copy of the request, personally or by mail. 
Hearing requests should be received by the SEC's by 5:30 p.m. on August 
28, 2000, 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 
SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 5th Street, NW., Washington, DC 20549-
0609. Applicants, 525 Market Street, San Francisco, California 94105.

FOR FURTHER INFORMATION CONTACT: J. Amanda Machen, Senior Counsel, 
(202) 942-7120, or Mary Kay Frech, Branch Chief, (202) 942-0564 (Office 
of Investment Company Regulation, 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 
SEC's Public Reference Branch, 450 5th Street, NW., Washington, DC 
20549-0102 (tel. 202-942-8090).

Applicants' Representations

    1. Funds Trust and Core Trust are open-end management investment 
companies registered under the Act. Funds Trust consists of sixty-four 
series and Core Trust has fourteen portfolios. Wells Fargo, a bank and 
a wholly owned subsidiary of Wells Fargo & Company (``Wells''), 
currently serves as investment adviser to each of Funds Trust and Core 
Trust. Wells Fargo is not registered under the Investment Advisers Act 
of 1940 (``Advisers Act'') in reliance on section 202(a)(11) of the 
Advisers Act.
    2. Great Plains Funds (``GP Funds'') is an open-end management 
investment company registered under the Act and consists of five 
series. First Commerce Investors, Inc. (``FCI''), a wholly-owned 
subsidiary of First Commerce Bancshares, Inc. (``First Commerce''), 
serves as investment adviser to each of the series of the GP Funds and 
is registered under the Advisers Act.
    3. On or about June 15, 2000, Wells acquired First Commerce in a 
transaction in which First Commerce shareholders received Wells common 
stock and First Commerce became a wholly-owned subsidiary of Wells (the 
``Acquisition''). Following the Acquisition, it is proposed that one 
new series and three existing series of Fund Trust (the ``Acquiring 
Funds Trust Series'') will acquire the assets of four series of GP 
Funds (the ``Great Plains Series'') (the ``Reorganization'') (the 
Acquisition and Reorganization are collectively referred to as the 
``Transaction''). Two of the Acquiring Funds Trust Series invest 
substantially all of their assets in various portfolios of Core Trust 
(``Core Trust Portfolios'').
    4. Applicants state that the Acquisition resulted in a change in 
control of FCI within the meaning of section 2(a)(9) of the Act, and in 
an assignment of the current advisory contract between FCI and the GP 
Funds within the meaning of section 2(a)(4) of the Act. As required by 
section 15(a)(4) of the Act, the advisory contract automatically 
terminated in accordance with its terms.
    5. On May 9, 2000, the boards of trustees (each a ``Board'') of GP 
Funds and of Funds Trust unanimously approved the Reorganization. In 
addition, in reliance on rule 15a-4 under the Act, the Board of GP 
Funds unanimously approved an interim advisory agreement (``Interim 
Agreement'') between FCI and each of the Great Plains Series covering 
the time period between the date of the Acquisition and the closing 
date of the Reorganization. The Reorganization and

[[Page 49037]]

the Interim Agreement will require approval by a majority of the 
outstanding shares of the Great Plains Series voting on the proposals. 
Applicants states that the Board of GP Funds has scheduled a special 
meeting of the Great Plains Series' shareholders for August 23, 2000. 
Proxy materials for the special meeting were mailed to shareholders on 
July 13, 2000.
    6. In connection with the Transaction, applicants have determined 
to seek to comply with the ``safe harbor'' provisions of section 15(f) 
of the Act. Applicants state that, absent exemptive relief, following 
consummation of the Transaction, more than 25 percent of the Boards of 
Funds Trust and Core Trust, which have identical membership, would be 
``interested persons'' for purposes of section 15(f)(1)(A) of the Act.

Applicants' Legal Analysis

    1. Section 15(f) of the Act is a safe harbor that permits an 
investment adviser to a registered investment company (or an affiliated 
person of the investment adviser) to realize a profit on the sale of 
its business if certain conditions are met. One of the conditions is 
set forth in section 15(f)(1)(A). This condition provides that, for a 
period of three years after the sale, at least 75 percent of the board 
of directors of the investment company may not be ``interested 
persons'' with respect to either the predecessor or successor adviser 
of the investment company. Applicants state that, without the requested 
exemption, following the Transaction, each of Funds Trust and Core 
Trust would have to reconstitute its Board to meet the 75% non-
interested director requirement of section 15(f)(1)(A).
    2. Section 15(f)(3)(B) of the Act provides that if the assignment 
of an investment advisory contract results from the merger of, or sale 
of substantially all of the assets by, a registered investment company 
with or to another registered investment company with assets 
substantially greater in amount, such discrepancy in size shall be 
considered by the SEC in determining whether, or to what extent, to 
grant exemptive relief under section 6(c) from section 15(f)(1)(A).
    3. Section 6(c) of the Act permits the SEC to exempt any person or 
transaction from any provision of the Act, or any rule or regulation 
under the Act, if the 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.
    4. Applicants request an exemption under section 6(c) of the Act 
from section 15(f)(1)(A) of the Act. Applicants state that, as of April 
30, 2000, Funds Trust had approximately $61 billion in aggregate net 
assets. Applicants also state that, as of April 30, 2000, the aggregate 
net assets of the GP Funds were less than $450 million. Applicants thus 
assert that GP Funds' assets would represent less than 1% of the 
aggregate net assets of Funds Trust.
    5. Applicants state that four of the ten trustees (``Trustees'') 
who serve on the Boards of Funds Trust and Core Trust are ``interested 
persons,'' within the meaning of section 2(a)(19) of the Act, of Wells 
Fargo. Applicants also state that two of the Trustees who are not 
interested persons on each Board are expected to retire at the end of 
2000, but that no other changes to the Boards are anticipated. 
Applicants state that none of the Trustees who serve on the Board of GP 
Funds is an interested person of GP Funds, FCI, or Wells Fargo.
    6. Applicants state that to comply with section 15(f)(1)(A) of the 
Act, Funds Trust and Core Trust would have to alter the composition of 
their Boards, either by asking experienced Trustees to resign or adding 
new Trustees. Applicants further state that adding new Trustees could 
require a shareholder vote not only of shareholders of the four 
Acquiring Funds Trust Series, but also the shareholders of Funds Trust 
series and Core Trust portfolios not otherwise affected by the 
Reorganization. Applicants assert that adding a substantial number of 
additional non-interested Trustees to each Board could entail a lengthy 
process and increase the ongoing costs of Funds Trust and Core Trust.
    7. For the reasons stated above, applicants submit that the 
requested relief is necessary and 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.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-20213 Filed 8-9-00; 8:45 am]
BILLING CODE 8010-01-M