[Federal Register Volume 67, Number 15 (Wednesday, January 23, 2002)]
[Notices]
[Pages 3248-3249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1573]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25366; 812-12642]


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

January 15, 2002.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``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 Wells Fargo 
Funds Trust (``Funds Trust'') not to reconstitute its board 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 Funds Management, LLC 
(``Funds Management'') to rely upon the safe harbor provisions of 
section 15(f).

Applicants: Funds Trust and Funds Management.

Filing Dates: The application was filed on October 1, 2001 and amended 
on January 8, 2002.

Hearing or Notification of Hearing: An order granting the application 
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 February 11, 2002, 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 may request notification of a hearing by writing to 
the Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW, Washington, DC 
20549-0609. Applicants, 525 Market Street, 12th Floor, San Francisco, 
California 94105.

FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Sr., Senior Counsel, 
at (202) 942-0714, or Nadya B. Roytblat, Assistant Director, at (202) 
942-0564 (Division of Investment Management, Office of Investment 
Company Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
Commission's Public Reference Branch, 450 Fifth Street, NW, Washington, 
DC 20549-0102 (tel. 202-942-8090).

Applicants' Representations

    1. Funds Trust is an open-end management investment company 
registered under the Act and consists of sixty-seven series (``Funds 
Trust Series''). Funds Management, a wholly owned subsidiary of Wells 
Fargo & Company (``Wells Fargo''), currently serves as investment 
adviser to sixty-two of the Funds Trust Series, and will serve as 
investment adviser to a newly created series (the ``Successor Fund''). 
Funds Management is registered under the Investment Advisers Act of 
1940 (``Advisers Act''). The SIFE Trust Fund (``SIFE Fund'') is an 
open-end management investment company registered under the Act. SIFE, 
a privately held company, serves as investment adviser to SIFE Fund and 
is registered under the Advisers Act.
    2. On August 24, 2001, Wells Fargo and SIFE entered into an 
agreement providing for the acquisition of the outstanding shares of 
SIFE by Wells Fargo. The transaction is anticipated to

[[Page 3249]]

occur on February 22, 2002, which will cause SIFE to become an indirect 
wholly-owned subsidiary of Wells Fargo (``Acquisition''). Following the 
Acquisition, the Successor Fund will acquire the assets of SIFE Fund 
(``Reorganization''). Applicants state that the Acquisition will result 
in a change in control of SIFE within the meaning of section 2(a)(9) of 
the Act.
    3. On August 7, 2001 and August 29, 2001, the respective boards of 
trustees (each a ``Board'') of Funds Trust and SIFE Fund unanimously 
approved the Reorganization. The Reorganization will require approval 
by a majority of the outstanding shares of SIFE Fund and SIFE Fund has 
scheduled a special meeting of the SIFE Fund's shareholders for January 
31, 2002. Proxy materials for the special meeting were mailed to 
shareholders on or about November 15, 2001.
    4. In connection with the Acquisition and the Reorganization, 
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 Reorganization, more 
than twenty-five percent of the Board of Funds Trust 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 these conditions, 
set forth in section 15(f)(1)(A), provides that, for a period of three 
years after the sale, at least seventy-five 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 Reorganization, Funds Trust would have to 
reconstitute its Board to meet the seventy-five percent 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 company with or to 
another registered investment company with assets substantially greater 
in amount, such discrepancy in size shall be considered by the 
Commission 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 Commission 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 
December 31, 2001, Funds Trust had approximately $70 billion and SIFE 
Fund had approximately $700 million in aggregate net assets, 
respectively, making SIFE Fund's assets approximately 1% of the 
aggregate net assets of Funds Trust.
    5. Applicants state that three of the eight trustees who serve on 
the Board of Funds Trust are ``interested persons,'' within the meaning 
of section 2(a)(19) of the Act, of Funds Management. Applicants state 
that none of the trustees who serves on the Board of Funds Trust is an 
interested person of the SIFE Fund or SIFE.
    6. Applicants state that to comply with section 15(f)(1)(A) of the 
Act, Funds Trust would have to alter the composition of its Board, 
either by asking experienced trustees to resign or by adding new 
trustees. Applicants further state that adding new trustees could 
require a shareholder vote not only of shareholders of the Successor 
Fund, but also the shareholders of the sixty-seven Funds Trust Series 
not otherwise affected by the Reorganization. Applicants state that 
either of these solutions would be unfair to Funds Trust shareholders 
in view of the amount of the assets of SIFE Fund being acquired 
relative to the amount of assets of Funds Trust. Applicants state that 
adequate safeguards will be in place to protect the interest of the 
former shareholders of SIFE Fund following the consummation of the 
Reorganization. Applicants also assert that adding a substantial number 
of additional non-interested trustees to the Board of Funds Trust could 
entail a lengthy process, which could delay and increase the cost of 
the Reorganization, and make the Board unwieldy.
    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. 02-1573 Filed 1-22-02; 8:45 am]
BILLING CODE 8010-01-P