27114 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Notices

1The Pacifica Trusts received an SEC exemptive

order permitting them to implement interim

advisory contracts with FICM without shareholder

approval for up to 120 days following the

consummation of the merger. Investment Company

Act Release Nos. 21794 (March 1, 1996) (notice) and

21860 (March 27, 1996) (order).

interest earned on such amounts) will

be paid (a) to Dunedin only upon

approval of the shareholders of the

Equity Series or (b) in the absence of

such approval, to the Fund.

3. The fund will hold a special

meeting of shareholders to vote on the

approval or disapproval of the New SubAdvisory Contract, on or before the

120th day following March 19, 1996. It

is expected that the special meeting will

be held June 19, 1996, but it will be held

no later than July 17, 1996.

4. Dunedin or Edinburg will bear the

costs of preparing and filing this

application and the costs of a special

meeting relating to the solicitation of the

approvals of the Fund’s shareholders of

the New Sub-Advisory Contract

necessitated by the acquisition.

5. Dunedin will take all appropriate

actions to ensure that the scope and

quality of advisory and other services

provided to the Equity Series under the

New Sub-Advisory Contract will be at

least equivalent, in the judgment of the

Board, including the independent

directors, to the scope and quality of

services previously provided. In the

event of any material change in

personnel providing services pursuant

to the New Sub-Advisory Contract,

Dunedin will apprise and consult the

Board to assure that the Board,

including the independent directors, are

satisfied that the services provided by

Dunedin will not be diminished in

scope and quality.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–13546 Filed 5–29–96; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21979; 812–10074]

Stagecoach Funds, Inc., et al.; Notice

of Application

May 23, 1996.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANTS: Stagecoach Funds, Inc.

(‘‘Stagecoach’’), Life & Annuity Trust

(collectively with Stagecoach, the

‘‘Companies’’), and Wells Fargo Bank,

N.A. (‘‘Wells Fargo Bank’’).

RELEVANT ACT SECTIONS: Order requested

under section 6(c) of the Act for an

exemption from section 15(f)(1)(A) of

the Act.

SUMMARY OF APPLICATION: Applicants

request an order that would permit

Stagecoach to retain its present directors

following a reorganization involving

other registered investment companies.

Without the requested exemption,

Stagecoach would have to reconstitute

its board of directors after the

reorganization to meet the 75 percent

non-interested director requirement of

section 15(f)(1)(A) in order to comply

with the safe harbor provisions of

section 15(f).

FILING DATES: The application was filed

on April 3, 1996, and amended on May

21, 1996.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application 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 by 5:30 p.m. on

June 17, 1996, 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 Fifth

Street, N.W., Washington, D.C. 20549.

Applicants: the Companies, 111 Center

Street, Little Rock, Arkansas 72201 and

Wells Fargo, 420 Montgomery Street,

San Francisco, CA 94105.

FOR FURTHER INFORMATION CONTACT:

Elaine M. Boggs, Staff Attorney, at (202)

942–0572, or Alison E. Baur, 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 SEC’s

Public Reference Branch.

Applicants’ Representations

1. Each of the Companies is a

registered open-end management

investment company. Wells Fargo Bank,

a wholly-owned subsidiary of Wells

Fargo & Company (‘‘Wells Fargo’’),

currently serves as investment adviser

to each series of the Companies.

2. On April 1, 1996, Wells Fargo

acquired First Interstate Bancorp

(‘‘Interstate’’) and its indirect whollyowned subsidiary of Interstate, First

Interstate Capital Management, Inc.

(‘‘FICM’’) (the ‘‘Holding Company

Merger’’). Interstate shareholders

received consideration in connection

with the Holding Company Merger. The

Holding Company Merger, whereby

FICM became an indirect wholly-owned

subsidiary of Wells Fargo, constituted a

change in control of FICM.

3. FICM currently serves as

investment adviser to the Pacifica Funds

Trust and Pacifica Variable Trust

(collectively, the ‘‘Pacifica Trusts’’). The

Holding Company Merger caused an

automatic termination of FICM’s then

current advisory agreements with the

Pacifica Trusts. At meetings in February

and March 1996, the boards of trustees

of the Pacifica Trusts approved the

interim continuation of the Pacifica

Trusts’ advisory relationship with FICM

following the Holding Company Merger,

subject to shareholder ratification and

approval.1

4. Several new and existing series of

Stagecoach propose to acquire the assets

of each series of the Pacific Funds Trust

(the ‘‘Reorganization’’). The

Reorganization is intended to

consolidate the operations of separate

mutual fund families into fewer separate

companies. Among other things, it is

believed that the Reorganization will

improve efficiency, eliminate duplicate

shareholder costs and market overlap,

facilitate the consolidation of mutual

fund investment advisory capabilities

by Wells Fargo Bank, and provide

potentially enhanced investment

returns.

5. At meetings held in late April and

mid-May, the Pacifica Funds Trust

board of trustees and the Stagecoach

board of directors (collectively, the

‘‘Boards’’), determined, after reviewing

and evaluating relevant information,

that (a) participation in the

Reorganization is in the best interest of

the particular series and (b) the interests

of existing shareholders will not be

diluted as a result of participating in the

Reorganization.

6. The Pacifica Funds Trust Board has

called a special meeting of the Pacifica

Funds Trust shareholders to be held in

July 1996, for the purpose of

considering the Reorganization.

Approval of a particular series’

participation in the Reorganization will

require approval by a majority of the

outstanding shares of such series

entitled to vote at the meeting, voting

separately on a series-by-series basis. If

required by its declaration of trust or by

state law, approval may also be required
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Notices 27115

2FICM has been renamed Wells Fargo Investment

Management, Inc.

3None of the trustees of the Pacifica Trusts is an

interested person of FICM or Wells Fargo Bank for

the purposes of section 15(f)(1)(A).

4The exemption provided by rule 2a19–1 is not

available with respect to the two directors who are

officers of a broker-dealer because the broker-dealer

serves as placement agent or distributor to the

Companies (the ‘‘Distributor’’). The exemption

provided by rule 2a19–1 is not available with

respect to the director who is a limited partner of

a government securities dealer because the dealer

engages in government securities transactions with

the broker-dealer, as well as the Wells Fargo Bank,

all of which fall within the definition of ‘‘complex’’

in the rule. Accordingly, this director does not meet

the condition specified in the rule.

by a majority of the outstanding shares

of Pacifica Funds Trust entitled to vote

at the meeting, voting in the aggregate

and not by series or class. These special

meetings also will be called for the

purpose of ratifying and approving the

Pacifica Funds Trust’s interim

investment advisory agreements with

FICM.2

7. There are no plans currently to

reorganize any of the series operating

under Pacifica Variable Trust into

corresponding series of Life & Annuity

Trust, although such a transaction may

be considered in the future.

Accordingly, applicants request that the

order extend to Life & Annuity Trust to

the same extent as Stagecoach. Any

such reorganization in the future will be

the same, in all material respects, to the

transactions described in the

application with respect to Stagecoach.

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

upon the sale of its business if certain

conditions are met. One of these

conditions is set forth in section

15(f)(1)(A). This condition provides

that, for a period of three years after

such a sale, at least 75% of the board of

an investment company may not be

‘‘interested persons’’ with respect to

either the predecessor or successor

adviser of the investment company.

Section 2(a)(19)(B)(v) of the Act defines

an interested person of an investment

adviser to include any broker or dealer

registered under the Securities

Exchange Act of 1934 or any affiliated

person of such broker or dealer. In

addition, section 2(a)(19)(B)(iii) defines

an interested person of an investment

adviser to include anyone who has any

interest in any security issued by the

investment adviser or by a controlling

person thereof.

2. The restrictions of section

15(f)(1)(A) do not currently apply to the

Companies as a result of the Holding

Company Merger because there was no

change in control of Wells Fargo Bank.

Because Interstate shareholders received

consideration in connection with the

Holding Company Merger, however, the

restrictions of section 15(f)(1)(A)

currently apply to the Pacifica Trusts.

The Reorganization may, therefore, have

the effect of subjecting Stagecoach

(which will then be offering series that

are successors to the Pacifica Funds

Trust 3), to the restrictions of section

15(f)(1)(A). In particular, Stagecoach

will be subject to the requirement that,

for at least three years following a

change in control of an investment

adviser, at least 75% of the directors of

a successor investment company not be

‘‘interested persons’’ of the predecessor

or successor adviser.

3. The board of directors of each

Company is comprised of the same

seven individuals. Currently, four of the

seven directors of each Company may

be considered interested persons of

Wells Fargo Bank. Two of these

directors are officers of a registered

broker-dealer, and another is a limited

partner of a government securities

dealer. As such, these three directors are

affiliated persons of a registered broker

or dealer (the ‘‘Broker-Affiliated

Directors’’), and interested persons of

Wells Fargo Bank.4 Another director is

a shareholder of Wells Fargo, the parent

of Wells Fargo Bank, and therefore is an

interested person of Wells Fargo Bank.

The three remaining directors are not

interested persons of either the

Companies or the predecessor or

successor adviser.

4. One of the Broker-Affiliated

Directors has tendered her resignation,

effective upon consummation of the

Reorganization. The remaining

Stagecoach directors have voted to add

one of the individuals currently serving

as a non-interested trustee of the

Pacifica Trusts as a non-interested

director of Stagecoach. This will result

in four of the seven Stagecoach directors

being non-interested following the

consummation of the Reorganization.

Because, after the Reorganization, three

of the seven directors of the Companies

will be interested persons of the

predecessor and successor advisers,

absent an exemption, applicants would

be unable to comply with the

requirements of section 15(f)(1)(A).

5. Section 6(c) provides, in relevant

part, that the SEC may, conditionally or

unconditionally, by order, exempt any

person or class of persons from any

provision of the Act or from any rule

thereunder, if such exemption is

necessary or appropriate in the public

interest, consistent with the protection

of investors, and consistent with the

purposes fairly intended by the policy

and provisions of the Act.

6. Applicants believe that the

requested exemption is necessary or

appropriate in the public interest.

Applicants submit that section

15(f)(1)(A) was designed primarily to

address the types of biases and conflicts

of interest that might exist where a

fund’s board of directors is influenced

by a substantial number of interested

directors to approve a transaction

because the interested directors have an

economic interest in the adviser or

another party to the transaction, and the

adviser has a material economic

motivation to influence the interested

directors. Applicants argue that no such

circumstances exist with respect to the

Broker-Affiliated Directors and the

Holding Company Merger and the

Reorganization. Although the BrokerAffiliated Directors are technically

interested persons of Wells Fargo Bank

and FICM (the ‘‘Advisers’’), these

directors and the broker-dealers with

which they are affiliated are not

affiliated persons of the Advisers within

the meaning of section 2(a)(3) of the Act,

nor are they controlled by or under

common control with the Advisers.

Moreover, none of these directors is an

officer, director, partner, co-partner, or

employee of any Adviser. The brokerdealers with which the Broker-Affiliated

Directors are affiliated do not share any

common directors, officers, or

employees with the Advisers and do not

control, are not controlled by, and are

not under common control with the

Advisers. Applicants also state that the

Distributor is retained directly by the

Companies. Accordingly, the

Companies’ retention of the Distributor

is not dependent on the identity of, or

transactions involving, the Adviser. The

Distributor’s compensation for its

services is based on asset levels and/or

the receipt of sales loads, and it

therefore has a direct economic interest

in having the Companies prosper and

grow. In this respect, the Distributor’s

interests are consistent with the

interests of the shareholders of the

Companies.

7. Applicants believe that the

requested exemption is consistent with

the protection of investors. Applicants

state that all the directors, with the

exception of the new non-interested

director, have served on the Boards of

the Companies since their inception. In

addition, applicants state that

compelling one or more of the BrokerAffiliated Directors to resign from the

Stagecoach Board in connection with
27116 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Notices

the Reorganization would deprive

Stagecoach and its shareholders of the

services of skilled individuals

possessing considerable experience and

financial and business acumen at a time

when their experience may be most

needed. Adding a substantial number of

disinterested directors to the Board

would require a lengthy interview and

selection process, which could delay

and increase the cost of the

Reorganization, and could make the

Board unwieldy. Further, applicants

state that the three interested directors

remaining after the Reorganization will

continue to be treated as interested

persons of Stagecoach and of Wells

Fargo Bank for all purposes other than

section 15(f)(1)(A).

8. Applicants also believe that the

requested exemption is consistent with

the purposes fairly intended by the

policies and provisions of the Act.

Applicants submit that section 15(f) is

intended to permit the SEC to deal

flexibly with situations where the

imposition of the 75% requirement

might pose an unnecessary obstacle or

burden on a fund. Further, applicants

state that section 15(f) was intended to

ensure that, where there is a change in

control of an investment adviser, the

interests of the investment company

shareholders will be protected and they

will not be subject to any unfair burden

as a result of such transaction.

Applicants argue that the proposed

Reorganization is structured to protect

the interests of the shareholders of the

Pacifica Funds Trust and Stagecoach

and that shareholders will benefit from

the requested exemption.

Applicants’ Condition

Applicants agree as conditions to the

issuance of the requested exemptive

order that:

If within three years of the

consummation of the Holding Company

Merger (assuming the Reorganization is

also consummated), it becomes

necessary to replace any director, that

director will be replaced by a director

who is not an ‘‘interested person’’ of

Wells Fargo Bank or FICM within the

meaning of section 2(a)(19)(B) of the

Act, unless at least 75% of the directors

at that time are not interested persons of

Wells Fargo Bank or FICM.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–13545 Filed 5–29–96; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21980; 812–10104]

THC Partners; Notice of Application

May 23, 1996.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: THC Partners.

RELEVANT ACT SECTIONS: Order requested

under section 6(c) of the Act for an

exemption from all provisions of the

Act.

SUMMARY OF APPLICATION: Applicant

requests an exemption from all

provisions of the Act. Applicant is a

private family-controlled special

purpose investment vehicle whose

interests are owned by the family and

certain other persons.

FILING DATES: The application was filed

on April 23, 1996 and amended on May

23, 1996.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application 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 by 5:30 p.m. on

June 17, 1996, and should be

accompanied by proof of service on the

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 Fifth

Street, N.W., Washington, D.C. 20549.

Applicant: 4200 Texas Commerce

Tower, 600 Travis, Houston, Texas

77002.

FOR FURTHER INFORMATION CONTACT:

Marianne H. Khawly, Staff Attorney, at

(202) 942–0562, or Alison E. Baur,

Branch Chief, at (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.

Applicant’s Representations

1. Applicant is a Texas general

partnership organized in 1977.

Applicant’s partners consist of the

maternal heirs of Howard R. Hughes, Jr.

(‘‘Howard Hughes’’), including trusts

established for family members of

maternal heirs and estates of deceased

maternal heirs (collectively, the

‘‘Hughes Maternal Heirs’’) and partners

and former partners of Andrews &

Kurth, L.L.P. (‘‘Andrews & Kurth’’), a

Houston law firm, including trusts

established for Andrews & Kurth family

members and heirs of deceased

Andrews & Kurth partners (collectively,

‘‘A&K’’). Applicant’s assets presently

consist of common stock of The Hughes

Corporation (‘‘THC’’) and limited

partnership interests in Howard Hughes

Properties, L.P. (‘‘HHPLP’’) (collectively,

‘‘Hughes’’). Hughes was formed to hold,

manage, and develop the assets of the

estate of Howard Hughes (the ‘‘Hughes

Estate’’) including casinos, a large

military aircraft manufacturer, and

widespread real estate holdings.

2. Howard Hughes dies in April 1976

unmarried and childless. A complex

estate battle began when 32 wills were

offered for probate, and California,

Nevada, and Texas each claimed

domicile for purposes of subjecting

Howard Hughes’ assets to death taxes.

Andrews & Kurth represented Howard

Hughes and various of his companies

for over 50 years. William R. Lummis,

son of Annette Gano Lummis, Howard

Hughes’ aunt, and a senior partner at

Andrews & Kurth, left the firm shortly

after Howard Hughes’ death to

undertake management of the Hughes

Estate and serve as executive officer of

Hughes.

3. The Hughes Maternal Heirs,

claiming through Annette Gano

Lummis, the beneficiary holding the

largest single interest in the Hughes

Estate, did not possess the resources to

finance the long, complicated, multijurisdictional legal defense of their

claim. The Hughes Maternal Heirs and

A&K formed applicant to prosecute and

defend the claims of the Hughes

Maternal Heirs. In return for the

contribution of their interests in the

Hughes Estate, the Hughes Maternal

Heirs collectively received 662⁄3% of the

interests in applicant. In return for

undertaking to defend, or cause to be

defended, and otherwise to provide the

financial resources to further applicant’s

purposes, A&K received a 331⁄3%

interest in applicant. In 1983, the last of

the final, non-appealable orders

establishing ownership of the Hughes

Estate was issued that decreed that

applicant was the beneficiary of

approximately 71% of the Hughes

Estate’s assets. Other than through gifts

and testamentary dispositions, applicant

has not changed composition since its

inception. As of the date of the filing of

this application, the Hughes Maternal

Heirs owned 67.279% of the interests in