[Federal Register Volume 64, Number 163 (Tuesday, August 24, 1999)]
[Notices]
[Pages 46216-46218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21864]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 23950; 812-11640]
Norwest Advantage Funds, et al.; Notice of Application
August 17, 1999.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under section 17(b) of the Investment
Company Act of 1940 (the ``Act'') for an exemption from section 17(a)
of the Act.
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Summary of Application: Applicants request an order to permit
certain series of Wells Fargo Funds Trust (``WFFT'') and Wells Fargo
Core Trust (``WFCT'') to acquire all of the assets and liabilities of
certain series of Norwest Advantage Funds (``NAF'') and Core Trust
(Delaware) (``Core Trust''), respectively (the ``Reorganizations'').
Because of certain affiliations, applicants may not rely on rule 17a-8
under the Act.
Applicants: NAF, WFFT, Core Trust, WFCT (each, a ``Trust''),
Norwest Bank Minnesota, N.A. (``Norwest Bank''), Norwest Investment
Management, Inc. (``NIM''), and Wells Fargo Bank, N.A. (``Wells Fargo
Bank'').
Filing Date: The application was filed on June 3, 1999. 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 by
5:30 p.m. on September 13, 1999, 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
[[Page 46217]]
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, Commission, 450 Fifth Street, NW, Washington, DC
20549-0609; Applicants: c/o Kevin M. Broadwater, Esq., Seward & Kissel
LLP, 1200 G Street, NW, Washington, DC 20005.
FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at
(202) 942-0574 or George J. Zornada, 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 (telephone (202) 942-8090).
Applicants' Representations
1. NAF, a Delaware business trust, is registered under the Act as
an open-end management investment company comprised of 39 series. Two
of the series, NAF Small Company Growth Fund (``NAF Growth Fund'') and
NAF International Fund (each an ``Acquired Fund''), are involved in the
Reorganizations. NAF Growth Fund is a feeder fund in a master/feeder
structure and invests all of its assets in the Small Company Growth
Portfolio of Core Trust. NAF International Fund is a fund of funds that
currently invests all of its assets in the International Portfolio of
Core Trust (with the Small Company Growth Portfolio, the ``Acquired
Portfolios''). Core Trust, a Delaware business trust, is registered
under the Act as an open-end management investment company.
2. WFFT, a Delaware business trust, is registered under the Act as
an open-end management investment company comprised of 61 series. Two
newly-created series, WFFT Small Company Growth Fund (``WFFT Growth
Fund'') and WFFT International Fund (each an ``Acquiring Fund'') (the
Acquiring Funds together with the Acquired Funds, the ``Funds''), are
involved in the Reorganizations. WFCT, a Delaware business trust, is
registered under the Act as an open-end management investment company
comprised of 14 series. WFCT Small Company Growth Portfolio and WFCT
International Portfolio (the ``Acquiring Portfolios'') are two newly-
created series of WFCT (Acquiring Portfolios together with the Acquired
Portfolios, the ``Portfolios'').\1\
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\1\ Acquired Funds and Acquired Portfolios and their
corresponding Acquiring Funds and Acquiring Portfolios are: NAF
Growth Fund and WFFT Growth Fund; NAF International Fund and WFFT
International Fund; Small Company Growth Portfolio and WFCT Small
Company Growth Portfolio; and International Portfolio and WFCT
International Portfolio.
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3. NIM is an investment adviser registered under the Investment
Advisers Act of 1940 (the ``Advisers Act'') and is a wholly-owned
subsidiary of Norwest Bank. Norwest Bank is a wholly-owned subsidiary
of Wells Fargo. NIM curently serves as investment adviser to each
series of NAF and Core Trust except the International Portfolio of Core
Trust. Schroder Capital Management International Inc. (``Schroder''),
an investment adviser registered under the Advisers Act, serves as
investment adviser to the International Portfolio of Core Trust. Wells
Fargo Bank is a national bank and is a wholly-owned subsidiary of Wells
Fargo. Wells Fargo Bank is the investment adviser for each series of
WFFT and WFCT, and is exempt from registration under the Advisers Act.
4. Norwest Bank, as trustee for defined benefit plans sponsored by
Norwest Bank (``Norwest Pension Plans''), owns more than 5% of the
outstanding voting securities of NAF Growth Fund and NAF International
Fund and has an indirect beneficial ownership of more than 5% of Small
Company Growth Portfolio and International Portfolio of Core Trust.
5. On March 25 and 26, 1999, the boards of trustees (``Boards'') of
NAF and WFFT, respectively, including a majority of their respective
trustees who are not ``interested persons'' as defined in section
2(a)(19) of the Act (``Independent Trustees''), approved a form of
Agreement and Plan of Reorganization between NAF and WFFT (the
``Agreement''). On April 12 and March 26, 1999, the Boards of Core
Trust and WFCT, respectively, including a majority of their respective
Independent Trustees, approved a form of Agreement and Plan of
Reorganization between Core Trust and WFCT (together with the
Agreement, the ``Agreements''). Under the Agreements, the Acquiring
Funds and Acquiring Portfolios will acquire the assets and assume the
liabilities of the Acquired Funds and Acquired Portfolios in exchange
for shares of the Acquiring Funds and Acquiring Portfolios having an
aggregate net asset value equal to the aggregate net asset value of the
Acquired Funds and Acquired Portfolios. Each Acquired Fund and Acquired
Portfolio will simultaneously distribute pro rata the Acquiring Fund
and Acquiring Portfolio shares received to its shareholders of record,
determined as of the close of business on the closing date, which is
currently anticipated to be on or about September 18, 1999 (``Closing
Date''). The Acquired Funds and Acquired Portfolios will be liquidated
following the distribution.
6. Applicants state that the investment objectives and policies of
the Acquired Funds and Acquired Portfolios are substantially similar to
those of the respective Acquiring Funds and Acquiring Portfolios. The
Acquired Funds offer class I, class A, and class B shares, which, will
one exception, are the same as the respective classes of the Acquiring
Funds. Class I shares are offered without a front-end load, contingent
deferred sales load (``CDSL''), or rule 12b-1 fee. Class A shares have
a front-end load but no CDSL or rule 12b-1 fee, and class B shares have
no front-end load, but have a CDSL and a rule 12b-1 fee.\2\ For
purposes of calculating the CDSL on class B shares, B shareholders of
the Acquired Fund will be deemed to have held class B shares of the
Acquiring Fund since the date the shareholders initially purchased the
shares of the Acquired Fund. Shareholders of the Acquired Funds and
Acquired Portfolios will not incur any sales charges in connection with
the Reorganizations. Wells Fargo Bank will pay all of the expenses of
the Reorganizations.
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\2\ NAF Growth Fund and WFFT Growth Fund only offer class I
shares. Class B shares differ in that NAF International Fund class B
shares have a 5% CDSL and a 1% rule 12b-1 fee and WFFT International
Fund class B shares have a 5% CDSL and a .75% rule 12b-1 fee.
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7. The Board of each Fund and Portfolio, including the Independent
Trustees, has determined that the Reorganization is in the best
interests of the shareholders of that Fund or Portfolio and that the
interests of shareholders would not be diluted. In assessing the
Reorganizations, the Boards considered, among other things, the
following factors: (a) the terms and conditions of the Reorganizations;
(b) the compatibility of the investment objectives of the Funds and the
Portfolios; (c) the expense ratios of the Funds and the Portfolios; (d)
the potential economics of scale and operating efficiencies that may
result from being in a larger fund family; and (e) the tax-free nature
of the Reorganizations.
8. The Reorganizations are subject to a number of conditions
precedent, including the following: (a) approval of the Reorganizations
by the shareholders of the Acquired Funds; (b) the receipt of an
accountant's opinion to the effect that the Reorganizations will be
tax-free;
[[Page 46218]]
and (c) that applicants obtain any required exemption from the
Commission under section 17(a) of the Act. Under the Agreements, a
majority of the Boards may terminate the Agreements with respect to the
Acquiring Fund or Acquiring Portfolio or Acquired Fund or Acquired
Portfolio, as appropriate, at any time before the Reorganizations if
(i) the party's conditions precedent are not satisfied or (ii) the
Boards determine that the consummation of the applicable Reorganization
is not in the best interests of shareholders. Applicants will not make
any material changes to the Reorganizations without Commission
approval.
9. On April 23, 1999, definitive proxies were filed with the
Commission and proxies were mailed to shareholders of the Acquired
Funds on June 2, 1999. At a special meeting of shareholders held on
August 5, 1999 the shareholders of the Acquired Funds approved the
Agreement.
Applicants' Legal Analysis
1. Section 17(a) of the Act generally prohibits an affiliated
person of a registered investment company or an affiliated person of
such person, acting as principal, from selling any security to, or
purchasing any security from, the company. Section 2(a)(3) of the Act
defines ``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 securities are
directly or indirectly owned, controlled, or held with power to vote by
the other person; (c) any person directly or indirectly controlling,
controlled by or under common control with the other person; and (d) if
the other person is an investment company, any investment adviser of
that company.
2. Rule 17a-8 under the Act exempts from the prohibitions of
section 17(a) mergers, consolidations, or purchases or sales of
substantially all of the assets of registered investment companies that
are affiliated persons, or affiliated persons of an affiliated person,
solely by reason of having a common investment adviser, common
directors, and/or common officers, provided that certain conditions set
forth in the rule are satisfied.
3. Applicants believe that they may not rely on rule 17a-8 in
connection with the Reorganizations because the Funds and the
Portfolios may be deemed to be affiliated by reasons other than having
a common investment adviser, common directors, and/or common officers.
Applicants state that Norwest Bank, NIM, and Wells Fargo are under
common control and Norwest Bank may be deemed to have an indirect
interest in the assets of the Norwest Plans. Applicants further state
that because the Norwest Plans own more than 5% of each of the Acquired
Funds and indirectly of the Acquired Portfolios, the Acquired Funds and
Acquired Portfolios may be deemed affiliated persons of an affiliated
person of the Acquiring Funds and Acquiring Portfolios.
4. Section 17(b) of the Act provides that the Commission may exempt
a transaction from the provisions of section 17(a) if the evidence
establishes that the terms of the proposed transaction, including the
consideration to be paid, are reasonable and fair and do not involve
overreaching on the part of any person concerned, and that the proposed
transaction is consistent with the policy of each registered investment
company concerned and with the general purposes of the Act.
5. Applicants request an order pursuant to section 17(b) of the Act
exempting them from section 17(a) of the Act to the extent necessary to
consummate the Reorganizations. Applicants submit that the terms of the
Reorganizations satisfy the standards set forth in section 17(b) of the
Act. The Board of each Fund and Portfolio, including the Independent
Trustees, has determined that the Reorganization is in the best
interests of the shareholders of the Fund or the Portfolio and that the
interests of shareholders would not be diluted. Applicants also state
that the Reorganizations will be effected based on the relative net
asset values.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-21864 Filed 8-23-99; 8:45 am]
BILLING CODE 8010-01-M
