[Federal Register Volume 69, Number 128 (Tuesday, July 6, 2004)]
[Notices]
[Pages 40689-40690]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-15187]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 26489; 812-13087]


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

June 29, 2004.
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.

-----------------------------------------------------------------------

    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 May 17, 2004 and amended 
on June 29, 2004.
    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 July 22, 2004, 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: Deepak Pai, Senior Counsel, at (202) 
942-0574, or Mary Kay Frech, Branch Chief, 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 approximately seventy series. 
Funds Management, a wholly owned subsidiary of Wells Fargo & Company 
(``Wells Fargo''), currently serves as investment adviser to all of the 
Funds Trust series, and will serve as investment adviser to certain 
newly created series of Funds Trust. Funds Management is registered 
under the Investment Advisers Act of 1940 (``Advisers Act'').
    2. The Advisors' Inner Circle Fund (the ``AIC Trust'') consists of 
45 series and is registered under the Act as an open-end management 
investment company. Cooke & Bieler, L.P. (``C&B'') serves as investment 
adviser to the three series of AIC Trust involved in the Reorganization 
(as defined below) (the ``C&B Funds'').\1\ C&B is an investment adviser 
registered under the Advisers Act.
---------------------------------------------------------------------------

    \1\ The remaining series of AIC Trust are not advised by C&B and 
are not a party to the transaction.
---------------------------------------------------------------------------

    3. On March 9, 2004, Funds Management and C&B entered into an 
agreement providing for the reorganization of the C&B Funds with and 
into three newly created series of Funds Trust (the ``Successor 
Funds'') (the ``Reorganization''). Funds Management will serve as 
investment adviser to the Successor Funds. C&B will remain 
independently owned and will serve as sub-adviser to the Successor 
Funds. Funds Management will pay a lump-sum cash fee to C&B on the date 
that the Reorganization is consummated. On February 18, 2004 and 
February 3, 2004, respectively, the boards of trustees (each a 
``Board'') of AIC Trust and Funds Trust unanimously approved the 
Reorganization. The Board of AIC Trust has scheduled a special meeting 
of the C&B Funds' shareholders for July 9, 2004. Proxy materials for 
the special meeting were mailed to shareholders of the C&B Funds on May 
28, 2004.

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 assignment 
of an investment advisory contract 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 an assignment of an investment 
advisory contract, at least seventy-five percent of

[[Page 40690]]

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 believe that 
the assumption by Funds Management of the investment advisory 
responsibilities for the C&B Funds and the compensation to be paid by 
Funds Management to C&B in connection with the Reorganization 
constitute a transaction covered by section 15(f) of the Act. 
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 March 
31, 2004, Funds Trust had approximately $75 billion and C&B Funds had 
approximately $500 million in aggregate net assets, respectively, 
making the C&B Funds' aggregate net assets less than 1% of the 
aggregate net assets of Funds Trust.
    5. Applicants state that two of the seven 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 serve on the Board of Funds Trust is an 
interested person of C&B or the C&B Funds.
    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 an experienced trustee to resign or by adding a new 
non-interested trustee. Applicants state that either of these solutions 
would be unfair to shareholders of Funds Trust, particularly in view of 
the amount of the assets of the C&B Funds being acquired relative to 
the amount of the assets of Funds Trust.
    7. Applicants acknowledge that the Commission has adopted 
amendments to certain existing rules that will require that at least 
75% of the board of directors of any registered investment company that 
relies on these rules not be ``interested persons'' of the investment 
company. Funds Trust intends to comply with this requirement by the 
compliance date of the rule amendments. Applicants are not requesting 
relief from these rule amendments and acknowledge that the requested 
relief from section 15(f)(1)(A) will not extend beyond the compliance 
date of the rule amendments.
    8. 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.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-15187 Filed 7-2-04; 8:45 am]
BILLING CODE 8010-01-P