[Federal Register Volume 77, Number 181 (Tuesday, September 18, 2012)]
[Notices]
[Pages 57597-57602]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-22917]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30201; File No. 812-13967]


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

September 12, 2012.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 12(d)(1)(J) 
of the Investment Company Act of 1940 (the ``Act'') for an exemption 
from sections 12(d)(1)(A) and (B) of the Act, under sections 6(c) and 
17(b) of the Act for an exemption from sections 17(a)(1) and (2) of the 
Act, and under section 6(c) of the Act for an exemption from rule 12d1-
2(a) under the Act.

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Summary of the Application: The requested order would (a) permit 
certain registered open-end management investment companies to acquire 
shares of other registered open-end management investment companies and 
unit investment trusts (``UITs'') that are within and outside the same 
group of investment companies as the acquiring investment companies, 
and (b) permit funds of funds relying on rule 12d1-2 under the Act to 
invest in certain financial instruments.

Applicants:  Wells Fargo Funds Trust (``Trust''), on behalf of its 
series, Wells Fargo Advantage WealthBuilder Conservative Allocation 
Portfolio, Wells Fargo Advantage WealthBuilder Moderate Balanced 
Portfolio, Wells Fargo Advantage WealthBuilder Growth Balanced 
Portfolio, Wells Fargo Advantage WealthBuilder Growth Allocation 
Portfolio, Wells Fargo Advantage WealthBuilder Equity Portfolio and 
Wells Fargo Advantage WealthBuilder Tactical Equity Portfolio 
(collectively, the ``WealthBuilder Portfolios''), and Wells Fargo Funds 
Management, LLC (``WFFM'' or the ``Adviser'').

DATES: Filing Dates: The application was filed on October 12, 2011, and 
amended on May 10, 2012, and August 27, 2012. Applicants have agreed to 
file an amendment during the notice period, the substance of which is 
reflected in this notice.

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

[[Page 57598]]

by 5:30 p.m. on October 9, 2012, 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 Commission's Secretary.

ADDRESSES: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants: 
525 Market Street, 12th Floor, San Francisco, CA 94105.

FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at 
(202) 551-6876, or Mary Kay Frech, Branch Chief, at (202) 551-6821 
(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 via the 
Commission's Web site by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

Applicants' Representations

    1. The Trust is a Delaware statutory trust and is registered as an 
open-end management investment company under the Act. The WealthBuilder 
Portfolios are series of the Trust, and each pursues a distinct 
investment objective and strategy.\1\ The WealthBuilder Portfolios are 
the only Wells Fargo Advantage Funds that currently intend to rely on 
the requested order. In the future, other Wells Fargo Advantage Funds, 
including series of Wells Fargo Variable Trust, that pursue their 
investment objective by investing in Underlying Funds (as defined 
below) may rely on the requested order. \2\
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    \1\ Applicants request that the relief apply to any existing or 
future registered open-end management investment companies and any 
series thereof that are part of the same group of investment 
companies (as defined in section 12(d)(1)(G)(ii) of the Act) as the 
WealthBuilder Portfolios and that are, or may in the future be, 
advised by WFFM (together with the WealthBuilder Portfolios, the 
``Wells Fargo Advantage Funds'').
    \2\ Shares of the series of Wells Fargo Variable Trust are not 
offered directly to the public. Shares of each series of Wells Fargo 
Variable Trust are offered to separate accounts that are registered 
as investment companies under the Act (``Registered Separate 
Accounts'') or that are not registered under the Act (``Unregistered 
Separate Accounts'', and together with the Registered Separate 
Accounts, ``Separate Accounts'') of affiliated and unaffiliated 
insurance companies (collectively, ``Insurance Companies'') as the 
underlying investment vehicles for the variable life insurance and 
variable annuity contracts (``Variable Contracts'') issued by the 
Insurance Companies.
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    2. The Adviser is registered as an investment adviser under the 
Investment Advisers Act of 1940 (``Advisers Act'') and serves as 
investment adviser for each Wells Fargo Advantage Fund.\3\ The Adviser 
may engage one or more affiliated or unaffiliated subadvisers (each a 
``Subadviser''). Each Subadviser will be registered as an investment 
adviser under the Advisers Act.
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    \3\ The term ``WFFM'' or ``Adviser'' includes any existing or 
future entity controlling, controlled by or under common control 
with Wells Fargo Funds Management, LLC and any successor thereto. A 
successor entity is limited to any entity that results from a 
reorganization of the Adviser into another jurisdiction or a change 
in the type of business organization.
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    3. Applicants request an order to permit (a) certain Wells Fargo 
Advantage Funds that operate as a ``fund of funds'' (each, a ``Wells 
Fargo Fund-of-Funds'') to acquire shares of (i) registered open-end 
management investment companies that are not part of the same ``group 
of investment companies,'' within the meaning of section 
12(d)(1)(G)(ii) of the Act, as the Wells Fargo Fund-of-Funds (the 
``Unaffiliated Investment Companies'') and unit investment trusts 
(``UITs'') that are not part of the same ``group of investment 
companies'' as the Wells Fargo Fund-of-Funds (``Unaffiliated Trusts'' 
and together with the Unaffiliated Investment Companies, ``Unaffiliated 
Funds''),\4\ and (ii) registered open-end management companies or UITs 
that are part of the same ``group of investment companies'' as the 
Wells Fargo Fund-of-Funds (collectively, ``Affiliated Funds,'' and 
together with the Unaffiliated Funds, ``Underlying Funds'') and (b) 
each Underlying Fund, any principal underwriter for the Underlying 
Fund, and any broker or dealer registered under the Securities Exchange 
Act of 1934 (``Broker'') to sell shares of the Underlying Fund to the 
Wells Fargo Fund-of-Funds.\5\ Applicants also request an order under 
sections 6(c) and 17(b) of the Act to exempt applicants from section 
17(a) to the extent necessary to permit Underlying Funds to sell their 
shares to Wells Fargo Funds-of-Funds and redeem their shares from Wells 
Fargo Funds-of-Funds.
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    \4\ Certain of the Unaffiliated Funds may be registered under 
the Act as either UITs or open-end management investment companies 
and have received exemptive relief to permit their shares to be 
listed and traded on a national securities exchange at negotiated 
prices (``ETFs'').
    \5\ All entities that currently intend to rely on the requested 
order are named as applicants, and any other entity that relies on 
the order in the future will comply with the terms and conditions of 
the application.
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    4. Applicants also request an exemption under section 6(c) from 
rule 12d1-2 under the Act to permit any existing or future Wells Fargo 
Fund-of-Funds that relies on section 12(d)(1)(G) of the Act (``Same 
Group Fund of Funds'') and that otherwise complies with rule 12d1-2 to 
also invest, to the extent consistent with its investment objective, 
policies, strategies and limitations, in financial instruments that may 
not be securities within the meaning of section 2(a)(36) of the Act 
(``Other Investments'').

Applicants' Legal Analysis

Investments in Underlying Funds

A. Section 12(d)(1)
    1. Section 12(d)(1)(A) of the Act, in relevant part, prohibits a 
registered investment company from acquiring shares of an investment 
company if the securities represent more than 3% of the total 
outstanding voting stock of the acquired company, more than 5% of the 
total assets of the acquiring company, or, together with the securities 
of any other investment companies, more than 10% of the total assets of 
the acquiring company. Section 12(d)(1)(B) of the Act prohibits a 
registered open-end investment company, its principal underwriter, and 
any broker or dealer from selling the investment company's shares to 
another investment company if the sale will cause the acquiring company 
to own more than 3% of the acquired company's voting stock, or if the 
sale will cause more than 10% of the acquired company's voting stock to 
be owned by investment companies generally.
    2. Section 12(d)(1)(J) of the Act provides that the Commission may 
exempt any person, security, or transaction, or any class or classes of 
persons, securities or transactions, from any provision of section 
12(d)(1) if the exemption is consistent with the public interest and 
the protection of investors. Applicants seek an exemption under section 
12(d)(1)(J) of the Act to permit a Wells Fargo Funds-of-Funds to 
acquire shares of the Underlying Funds in excess of the limits in 
section 12(d)(1)(A), and an Underlying Fund, any principal underwriter 
for an Underlying Fund, and any Broker to sell shares of an Underlying 
Fund to a Wells Fargo Fund-of-Funds in excess of the limits in section 
12(d)(1)(B) of the Act.
    3. Applicants state that the terms and conditions of the proposed 
arrangement will not give rise to the policy concerns underlying 
sections 12(d)(1)(A) and (B), which include concerns about undue

[[Page 57599]]

influence by a fund of funds over underlying funds, excessive layering 
of fees, and overly complex fund structures. Accordingly, applicants 
believe that the requested exemption is consistent with the public 
interest and the protection of investors.
    4. Applicants submit that the proposed arrangement will not result 
in the exercise of undue influence by a Wells Fargo Fund-of-Funds or a 
Fund of Funds Affiliate (as defined below) over the Unaffiliated 
Funds.\6\ To limit the control that a Wells Fargo Fund-of-Funds may 
have over an Unaffiliated Fund, applicants propose condition 1 
prohibiting the Adviser, any person controlling, controlled by, or 
under common control with the Adviser, and any investment company or 
issuer that would be an investment company but for section 3(c)(1) or 
3(c)(7) of the Act that is advised or sponsored by the Adviser or any 
person controlling, controlled by, or under common control with the 
Adviser (the ``Advisory Group'') from controlling (individually or in 
the aggregate) an Unaffiliated Fund within the meaning of section 
2(a)(9) of the Act. The same prohibition would apply to any Subadviser 
within the meaning of section 2(a)(20)(B) of the Act to a Wells Fargo 
Fund-of-Funds, any person controlling, controlled by or under common 
control with the Subadviser, and any investment company or issuer that 
would be an investment company but for section 3(c)(1) or 3(c)(7) of 
the Act (or portion of such investment company or issuer) advised or 
sponsored by the Subadviser or any person controlling, controlled by or 
under common control with the Subadviser (the ``Subadvisory Group'').
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    \6\ A ``Fund of Funds Affiliate'' is the Adviser, any 
Subadviser, promoter or principal underwriter of a Wells Fargo Fund-
of-Funds, as well as any person controlling, controlled by, or under 
common control with any of those entities. An ``Unaffiliated Fund 
Affiliate'' is an investment adviser, sponsor, promoter, or 
principal underwriter of an Unaffiliated Fund, as well as any person 
controlling, controlled by, or under common control with any of 
those entities.
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    5. Applicants also propose conditions to limit the potential for 
undue influence over the Unaffiliated Funds, including that no Wells 
Fargo Fund-of-Funds or Fund of Funds Affiliate (except to the extent it 
is acting in its capacity as an investment adviser to an Unaffiliated 
Investment Company or sponsor to an Unaffiliated Trust) will cause an 
Unaffiliated Fund to purchase a security in an offering of securities 
during the existence of any underwriting or selling syndicate of which 
a principal underwriter is an Underwriting Affiliate (``Affiliated 
Underwriting''). An ``Underwriting Affiliate'' is a principal 
underwriter in any underwriting or selling syndicate that is an 
officer, director, member of an advisory board, investment adviser, 
Subadviser, or employee of the Wells Fargo Fund-of-Funds, or a person 
of which any such officer, director, member of an advisory board, 
investment adviser, Subadviser, or employee is an affiliated person. An 
Underwriting Affiliate does not include any person whose relationship 
to an Unaffiliated Fund is covered by section 10(f) of the Act.
    6. As an additional assurance that an Unaffiliated Investment 
Company understands the implications of an investment by a Wells Fargo 
Fund-of-Funds under the requested order, prior to a Wells Fargo Fund-
of-Funds' investment in the shares of an Unaffiliated Investment 
Company in excess of the limit in section 12(d)(1)(A)(i) of the Act, 
the Wells Fargo Fund-of-Funds and the Unaffiliated Investment Company 
will execute an agreement stating, without limitation, that their 
boards of directors or trustees (``Boards'') and their investment 
advisers understand the terms and conditions of the order and agree to 
fulfill their responsibilities under the order (``Participation 
Agreement''). Applicants note that an Unaffiliated Investment Company 
(other than an ETF whose shares are purchased by a Wells Fargo Fund-of-
Funds in the secondary market) will retain its right at all times to 
reject any investment by a Wells Fargo Fund-of-Funds.\7\
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    \7\ An Unaffiliated Investment Company, including an ETF, would 
retain its right to reject any initial investment by a Wells Fargo 
Fund-of-Funds in excess of the limit in section 12(d)(1)(A)(i) of 
the Act by declining to execute the Participation Agreement with the 
Wells Fargo Fund-of-Funds.
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    7. Applicants state that they do not believe that the proposed 
arrangement will involve excessive layering of fees. The Board of the 
Wells Fargo Fund-of-Funds, including a majority of the trustees who are 
not ``interested persons'' (within the meaning of section 2(a)(19) of 
the Act) (``Independent Trustees''), will find that the advisory fees 
charged under any investment advisory or management contract are based 
on services provided that will be in addition to, rather than 
duplicative of, the services provided under the advisory contract(s) of 
any Underlying Fund in which the Wells Fargo Fund-of-Funds may invest. 
In addition, the Adviser will waive fees otherwise payable to it by the 
Wells Fargo Fund-of-Funds in an amount at least equal to any 
compensation (including fees received pursuant to any plan adopted by 
an Unaffiliated Investment Company under rule 12b-1 under the Act) 
received from an Unaffiliated Fund by the Adviser or an affiliated 
person of the Adviser, other than any advisory fees paid to the Adviser 
or its affiliated person by an Unaffiliated Investment Company, in 
connection with the investment by the Wells Fargo Fund-of-Funds in the 
Unaffiliated Fund.
    8. Applicants state that with respect to Registered Separate 
Accounts that may invest in a Wells Fargo Fund-of-Funds in the future, 
no sales load will be charged at the Wells Fargo Fund-of-Funds level or 
at the Underlying Fund level. Other sales charges and service fees, as 
defined in Rule 2830 of the Conduct Rules of the NASD (``NASD Conduct 
Rule 2830''),\8\ if any, will only be charged at the Wells Fargo Fund-
of-Funds level or at the Underlying Fund level, not both. With respect 
to other investments in a Wells Fargo Fund-of-Funds, any sales charges 
and/or service fees charged with respect to shares of the Wells Fargo 
Fund-of-Funds will not exceed the limits applicable to funds of funds 
as set forth in NASD Conduct Rule 2830.
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    \8\ Any references to NASD Conduct Rule 2830 include any 
successor or replacement rule to NASD Conduct Rule 2830 that may be 
adopted by FINRA.
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    9. Applicants represent that if a series of Wells Fargo Variable 
Trust operates as a Wells Fargo Fund-of-Funds in the future, each such 
Wells Fargo Fund-of-Funds will represent in its Participation Agreement 
that no Insurance Company sponsoring a Registered Separate Account 
funding Variable Contracts will be permitted to invest in the Wells 
Fargo Fund-of-Funds unless the Insurance Company has certified to the 
Wells Fargo Fund-of-Funds that the aggregate amount of all fees and 
charges associated with each Variable Contract that invests in the 
Wells Fargo Fund-of-Funds, including fees and charges at the Separate 
Account, Wells Fargo Fund-of-Funds, and Underlying Fund levels, is 
reasonable in relation to the services rendered, the expenses expected 
to be incurred, and the risks assumed by the Insurance Company.
    10. Applicants submit that the proposed arrangement will not create 
an overly complex fund structure. Applicants note that no Underlying 
Fund will acquire securities of any investment company or company 
relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the 
limits contained in section 12(d)(1)(A) of the Act, except in certain 
circumstances identified in condition 11 below.

[[Page 57600]]

B. Section 17(a)
    1. Section 17(a) of the Act generally prohibits sales or purchases 
of securities between a registered investment company and any 
affiliated person of the company. Section 2(a)(3) of the Act defines an 
``affiliated person'' of another person to include (a) any person 
directly or indirectly owning, controlling, or holding with power to 
vote, 5% or more of the outstanding voting securities of the other 
person; (b) any person 5% or more of whose outstanding voting 
securities are directly or indirectly owned, controlled, or held with 
power to vote by the other person; and (c) any person directly or 
indirectly controlling, controlled by, or under common control with the 
other person.
    2. Applicants state that a Wells Fargo Fund-of-Funds and the 
Affiliated Funds might be deemed to be under common control of the 
Adviser and therefore affiliated persons of one another. Applicants 
also state that a Wells Fargo Fund-of-Funds and the Unaffiliated Funds 
might be deemed to be affiliated persons of one another if the Wells 
Fargo Fund-of-Funds acquires 5% or more of an Unaffiliated Fund's 
outstanding voting securities. In light of these and other possible 
affiliations, section 17(a) could prevent an Underlying Fund from 
selling shares to and redeeming shares from a Wells Fargo Fund-of-
Funds.
    3. Section 17(b) of the Act authorizes the Commission to grant an 
order permitting a transaction otherwise prohibited by section 17(a) if 
it finds that (a) the terms of the proposed transaction are fair and 
reasonable and do not involve overreaching on the part of any person 
concerned; (b) the proposed transaction is consistent with the policies 
of each registered investment company involved; and (c) the proposed 
transaction is consistent with the general purposes of the Act. Section 
6(c) of the Act permits the Commission to exempt any person or 
transactions from any provision of the Act if such 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 submit that the proposed transactions satisfy the 
standards for relief under sections 17(b) and 6(c) of the Act.\9\ 
Applicants state that the terms of the transactions are reasonable and 
fair and do not involve overreaching. Applicants state that the terms 
upon which an Underlying Fund will sell its shares to or purchase its 
shares from a Wells Fargo Fund-of-Funds will be based on the net asset 
value of the Underlying Fund.\10\ Applicants state that the proposed 
transactions will be consistent with the policies of each Wells Fargo 
Fund-of-Funds and each Underlying Fund and with the general purposes of 
the Act.
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    \9\ Applicants acknowledge that receipt of any compensation by 
(a) an affiliated person of a Wells Fargo Fund-of-Funds, or an 
affiliated person of such person, for the purchase by a Wells Fargo 
Fund-of-Funds of shares of an Underlying Fund or (b) an affiliated 
person of an Underlying Fund, or an affiliated person of such 
person, for the sale by the Underlying Fund of its shares to a Wells 
Fargo Fund-of-Funds may be prohibited by section 17(e)(1) of the 
Act. The Participation Agreement also will include this 
acknowledgement.
    \10\ Applicants note that a Wells Fargo Fund-of-Funds generally 
would purchase and sell shares of an Unaffiliated Fund that operates 
as an ETF through secondary market transactions rather than through 
principal transactions with the Unaffiliated Fund. To the extent 
purchases and sales of shares of an ETF occur in the secondary 
market (and not through principal transactions directly between a 
Wells Fargo Fund-of-Funds and an ETF), relief from section 17(a) 
would not be necessary. The requested relief is intended to cover, 
however, transactions directly between ETFs and a Wells Fargo Fund-
of-Funds. Applicants are not seeking relief from section 17(a) for, 
and the requested relief will not apply to, transactions where an 
ETF could be deemed an affiliated person, or an affiliated person of 
an affiliated person of a Wells Fargo Fund-of-Funds, because an 
investment adviser to the ETF is also an investment adviser to the 
Wells Fargo Fund-of-Funds.
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Other Investments by Same Group Funds of Funds

    1. Section 12(d)(1)(G) of the Act provides that section 12(d)(1) 
will not apply to securities of an acquired company purchased by an 
acquiring company if: (i) The acquiring company and acquired company 
are part of the same group of investment companies; (ii) the acquiring 
company holds only securities of acquired companies that are part of 
the same group of investment companies, government securities, and 
short-term paper; (iii) the aggregate sales loads and distribution-
related fees of the acquiring company and the acquired company are not 
excessive under rules adopted pursuant to section 22(b) or section 
22(c) of the Act by a securities association registered under section 
15A of the Exchange Act or by the Commission; and (iv) the acquired 
company has a policy that prohibits it from acquiring securities of 
registered open-end management investment companies or registered unit 
investment trusts in reliance on section 12(d)(1)(F) or (G) of the Act.
    2. Rule 12d1-2 under the Act permits a registered open-end 
investment company or a registered UIT that relies on section 
12(d)(1)(G) of the Act to acquire, in addition to securities issued by 
another registered investment company in the same group of investment 
companies, government securities, and short-term paper: (1) Securities 
issued by an investment company that is not in the same group of 
investment companies, when the acquisition is in reliance on section 
12(d)(1)(A) or 12(d)(1)(F) of the Act; (2) securities (other than 
securities issued by an investment company); and (3) securities issued 
by a money market fund, when the investment is in reliance on rule 
12d1-1 under the Act. For the purposes of rule 12d1-2, ``securities'' 
means any security as defined in section 2(a)(36) of the Act.
    3. Applicants state that the proposed arrangement would comply with 
the provisions of rule 12d1-2 under the Act, but for the fact that the 
Same Group Fund of Funds may invest a portion of their assets in Other 
Investments. Applicants request an order under section 6(c) of the Act 
for an exemption from rule 12d1-2(a) to allow the Same Group Funds of 
Funds to invest in Other Investments. Applicants assert that permitting 
Same Group Funds of Funds to invest in Other Investments as described 
in the application would not raise any of the concerns that the 
requirements of section 12(d)(1) were designed to address.
    4. Consistent with its fiduciary obligations under the Act, the 
Board of each Same Group Fund of Funds will review the advisory fees 
charged by the Same Group Fund of Fund's investment adviser to ensure 
that they are based on services provided that are in addition to, 
rather than duplicative of, services provided pursuant to the advisory 
agreement of any investment company in which the Same Group Fund of 
Funds may invest.

Applicants' Conditions

Investments by Funds of Funds in Underlying Funds

    Applicants agree that the relief to permit Funds of Funds to invest 
in Underlying Funds shall be subject to the following conditions:
    1. The members of an Advisory Group will not control (individually 
or in the aggregate) an Unaffiliated Fund within the meaning of section 
2(a)(9) of the Act. The members of a Subadvisory Group will not control 
(individually or in the aggregate) an Unaffiliated Fund within the 
meaning of section 2(a)(9) of the Act. If, as a result of a decrease in 
the outstanding voting securities of an Unaffiliated Fund, the Advisory 
Group or a Subadvisory Group, each in the aggregate, becomes a holder 
of more than 25 percent of the outstanding voting securities of the 
Unaffiliated

[[Page 57601]]

Fund, then the Advisory Group or the Subadvisory Group will vote its 
shares of the Unaffiliated Fund in the same proportion as the vote of 
all other holders of the Unaffiliated Fund's shares. This condition 
will not apply to a Subadvisory Group with respect to an Unaffiliated 
Fund for which the Subadviser or a person controlling, controlled by, 
or under common control with the Subadviser acts as the investment 
adviser within the meaning of section 2(a)(20)(A) of the Act (in the 
case of an Unaffiliated Investment Company) or as the sponsor (in the 
case of an Unaffiliated Trust). A Registered Separate Account will seek 
voting instructions from its Variable Contract holders and will vote 
its shares of an Unaffiliated Fund in accordance with the instructions 
received and will vote those shares for which no instructions were 
received in the same proportion as the shares for which instructions 
were received. An Unregistered Separate Account will either (i) vote 
its shares of the Unaffiliated Fund in the same proportion as the vote 
of all other holders of the Unaffiliated Fund's shares; or (ii) seek 
voting instructions from its Variable Contract holders and vote its 
shares in accordance with the instructions received and vote those 
shares for which no instructions were received in the same proportion 
as the shares for which instructions were received.
    2. No Wells Fargo Fund-of-Funds or Fund of Funds Affiliate will 
cause any existing or potential investment by the Wells Fargo Fund-of-
Funds in shares of an Unaffiliated Fund to influence the terms of any 
services or transactions between the Wells Fargo Fund-of-Funds or a 
Fund of Funds Affiliate and the Unaffiliated Fund or an Unaffiliated 
Fund Affiliate.
    3. The Board of each Wells Fargo Fund-of-Funds, including a 
majority of the Independent Trustees, will adopt procedures reasonably 
designed to assure that its Adviser and any Subadviser(s) to the Wells 
Fargo Fund-of-Funds are conducting the investment program of the Wells 
Fargo Fund-of-Funds without taking into account any consideration 
received by the Wells Fargo Fund-of-Funds or Fund of Funds Affiliate 
from an Unaffiliated Fund or an Unaffiliated Fund Affiliate in 
connection with any services or transactions.
    4. Once an investment by a Wells Fargo Fund-of-Funds in the 
securities of an Unaffiliated Investment Company exceeds the limit of 
section 12(d)(l)(A)(i) of the Act, the Board of the Unaffiliated 
Investment Company, including a majority of the Independent Trustees, 
will determine that any consideration paid by the Unaffiliated 
Investment Company to a Wells Fargo Fund-of-Funds or a Fund of Funds 
Affiliate in connection with any services or transactions: (a) IS fair 
and reasonable in relation to the nature and quality of the services 
and benefits received by the Unaffiliated Investment Company; (b) is 
within the range of consideration that the Unaffiliated Investment 
Company would be required to pay to another unaffiliated entity in 
connection with the same services or transactions; and (c) does not 
involve overreaching on the part of any person concerned. This 
condition does not apply with respect to any services or transactions 
between an Unaffiliated Investment Company and its investment 
adviser(s) or any person controlling, controlled by, or under common 
control with such investment adviser(s).
    5. No Wells Fargo Fund-of-Funds or Fund of Funds Affiliate (except 
to the extent it is acting in its capacity as an investment adviser to 
an Unaffiliated Investment Company or sponsor to an Unaffiliated Trust) 
will cause an Unaffiliated Fund to purchase a security in any 
Affiliated Underwriting.
    6. The Board of an Unaffiliated Investment Company, including a 
majority of the Independent Trustees, will adopt procedures reasonably 
designed to monitor any purchases of securities by the Unaffiliated 
Investment Company in an Affiliated Underwriting once an investment by 
a Wells Fargo Fund-of-Funds in the securities of the Unaffiliated 
Investment Company exceeds the limit of section 12(d)(l)(A)(i) of the 
Act, including any purchases made directly from an Underwriting 
Affiliate. The Board of the Unaffiliated Investment Company will review 
these purchases periodically, but no less frequently than annually, to 
determine whether the purchases were influenced by the investment by 
the Wells Fargo Fund-of-Funds in the Unaffiliated Investment Company. 
The Board of the Unaffiliated Investment Company will consider, among 
other things, (a) whether the purchases were consistent with the 
investment objectives and policies of the Unaffiliated Investment 
Company; (b) how the performance of securities purchased in an 
Affiliated Underwriting compares to the performance of comparable 
securities purchased during a comparable period of time in 
underwritings other than Affiliated Underwritings or to a benchmark 
such as a comparable market index; and (c) whether the amount of 
securities purchased by the Unaffiliated Investment Company in 
Affiliated Underwritings and the amount purchased directly from an 
Underwriting Affiliate have changed significantly from prior years. The 
Board of the Unaffiliated Investment Company will take any appropriate 
actions based on its review, including, if appropriate, the institution 
of procedures designed to assure that purchases of securities in 
Affiliated Underwritings are in the best interests of shareholders.
    7. Each Unaffiliated Investment Company shall maintain and preserve 
permanently in an easily accessible place a written copy of the 
procedures described in the preceding condition, and any modifications 
to such procedures, and shall maintain and preserve for a period not 
less than six years from the end of the fiscal year in which any 
purchase in an Affiliated Underwriting occurred, the first two years in 
an easily accessible place, a written record of each purchase of 
securities in an Affiliated Underwriting once an investment by a Wells 
Fargo Fund-of-Funds in the securities of an Unaffiliated Investment 
Company exceeds the limit of section 12(d)(l)(A)(i) of the Act, setting 
forth the: (a) Party from whom the securities were acquired, (b) 
identity of the underwriting syndicate's members, (c) terms of the 
purchase, and (d) information or materials upon which the 
determinations of the Board of the Unaffiliated Investment Company were 
made.
    8. Prior to its investment in shares of an Unaffiliated Investment 
Company in excess of the limit in section 12(d)(l)(A)(i) of the Act, 
the Wells Fargo Fund-of-Funds and the Unaffiliated Investment Company 
will execute a Participation Agreement stating, without limitation, 
that their Boards and their investment advisers understand the terms 
and conditions of the order and agree to fulfill their responsibilities 
under the order. At the time of its investment in shares of an 
Unaffiliated Investment Company in excess of the limit in section 
12(d)(l)(A)(i), a Wells Fargo Fund-of-Funds will notify the 
Unaffiliated Investment Company of the investment. At such time, the 
Wells Fargo Fund-of-Funds will also transmit to the Unaffiliated 
Investment Company a list of the names of each Fund of Funds Affiliate 
and Underwriting Affiliate. The Wells Fargo Fund-of-Funds will notify 
the Unaffiliated Investment Company of any changes to the list of the 
names as soon as reasonably practicable after a change occurs. The 
Unaffiliated Investment Company and the Wells Fargo Fund-of-Funds will 
maintain and preserve a copy of the order, the Participation

[[Page 57602]]

Agreement, and the list with any updated information for the duration 
of the investment and for a period of not less than six years 
thereafter, the first two years in an easily accessible place.
    9. Before approving any advisory contract under section 15 of the 
Act, the Board of each Wells Fargo Fund-of-Funds, including a majority 
of the Independent Trustees, shall find that the advisory fees charged 
under such advisory contract are based on services provided that are in 
addition to, rather than duplicative of, services provided under the 
advisory contract(s) of any Underlying Fund in which the Wells Fargo 
Fund-of-Funds may invest. Such finding and the basis upon which the 
finding was made will be recorded fully in the minute books of the 
appropriate Wells Fargo Fund-of-Funds.
    10. The Adviser will waive fees otherwise payable to it by a Wells 
Fargo Fund-of-Funds in an amount at least equal to any compensation 
(including fees received pursuant to any plan adopted by an 
Unaffiliated Investment Company under rule 12b-1 under the Act) 
received from an Unaffiliated Fund by the Adviser, or an affiliated 
person of the Adviser, other than any advisory fees paid to the Adviser 
or its affiliated person by an Unaffiliated Investment Company, in 
connection with the investment by the Wells Fargo Fund-of-Funds in the 
Unaffiliated Fund. Any Subadviser will waive fees otherwise payable to 
the Subadviser, directly or indirectly, by the Wells Fargo Fund-of-
Funds in an amount at least equal to any compensation received by the 
Subadviser, or an affiliated person of the Subadviser, from an 
Unaffiliated Fund, other than any advisory fees paid to the Subadviser 
or its affiliated person by an Unaffiliated Investment Company, in 
connection with the investment by the Wells Fargo Fund-of-Funds in the 
Unaffiliated Fund made at the direction of the Subadviser. In the event 
that the Subadviser waives fees, the benefit of the waiver will be 
passed through to the Wells Fargo Fund-of-Funds.
    11. No Underlying Fund will acquire securities of any other 
investment company or company relying on section 3(c)(l) or 3(c)(7) of 
the Act in excess of the limits contained in section 12(d)(1)(A) of the 
Act, except to the extent that such Underlying Fund: (a) Receives 
securities of another investment company as a dividend or as a result 
of a plan of reorganization of a company (other than a plan devised for 
the purpose of evading section 12(d)(l) of the Act); or (b) acquires 
(or is deemed to have acquired) securities of another investment 
company pursuant to exemptive relief from the Commission permitting 
such Underlying Fund to (i) acquire securities of one or more 
investment companies for short-term cash management purposes, or (ii) 
engage in interfund borrowing and lending transactions.
    12. With respect to Registered Separate Accounts that invest in a 
Wells Fargo Fund-of-Funds, no sales load will be charged at the Wells 
Fargo Fund-of-Funds level or at the Underlying Fund level. Other sales 
charges and service fees, as defined in NASD Conduct Rule 2830, if any, 
will only be charged at the Wells Fargo Fund-of-Funds level or at the 
Underlying Fund level, not both. With respect to other investments in a 
Wells Fargo Fund-of-Funds, any sales charges and/or service fees 
charged with respect to shares of a Wells Fargo Fund-of-Funds will not 
exceed the limits applicable to funds of funds set forth in NASD 
Conduct Rule 2830.

Other Investments by Same Group Funds of Funds

    Applicants agree that the relief to permit Same Group Funds of 
Funds to invest in Other Investments shall be subject to the following 
condition:
    13. Applicants will comply with all provisions of rule 12d1-2 under 
the Act, except for paragraph (a)(2), to the extent that it restricts 
any Same Group Fund of Funds from investing in Other Investments as 
described in the application.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-22917 Filed 9-17-12; 8:45 am]
BILLING CODE 8011-01-P