

[Federal Register: May 19, 2006 (Volume 71, Number 97)]
[Notices]               
[Page 29190-29192]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19my06-91]                         

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 27321; 812-13027]

 
WT Mutual Fund, et al.; Notice of Application

May 15, 2006.
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(a) of 
the Act and rule 18f-2 under the Act.

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Summary of the Application: The requested order would permit certain 
registered open-end management investment companies to enter into and 
materially amend sub-advisory agreements without shareholder approval.

Applicants: WT Mutual Fund (the ``Fund''), Rodney Square Management 
Corporation (``RSMC''), and Roxbury Capital Management, LLC 
(``Roxbury'') (each of RSMC and Roxbury, an ``Adviser'' and 
collectively, the ``Advisers'').

Filing Dates: The application was filed on September 30, 2003 and 
amended on May 10, 2006.

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 June 12, 2006, 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 29191]]

notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington DC 20549-1090. Applicants: Fund and RSMC, 1100 
North Market Street, Wilmington, Delaware 19890-0001; Roxbury, 100 
Wilshire Boulevard, Suite 1000, Santa Monica, California 90401.

FOR FURTHER INFORMATION CONTACT: Laura J. Riegel, Senior Counsel, at 
(202) 551-6873, or Nadya B. Roytblat, Assistant Director, 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 for a fee from 
the Commission's Public Reference Branch, 100 F Street NE., Washington 
DC 20549-0102 (telephone (202) 551-5850).

Applicants' Representations

    1. The Fund, a Delaware statutory trust, is registered under the 
Act as an open-end management investment company. The Fund currently 
offers multiple series (each a ``Portfolio,'' and collectively, the 
``Portfolios''), each of which has its own investment objectives, 
policies and restrictions.\1\
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    \1\ Applicants also request relief with respect to future 
Portfolios of the Fund and any other existing or future registered 
open-end management investment company or series thereof that: (a) 
Is advised by either Adviser or a person controlling, controlled by 
or under common control with either Adviser; (b) uses the management 
structure described in the application; and (c) complies with the 
terms and conditions of the application (included in the term 
``Portfolios''). The Fund is the only existing registered open-end 
management investment company that currently intends to rely on the 
requested order. If the name of any Portfolio contains the name of a 
Sub-Adviser (as defined below), the name of the Adviser or the name 
of the entity controlling, controlled by, or under common control 
with the Adviser that serves as the primary adviser to the Portfolio 
will precede the name of the Sub-Adviser.
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    2. RSMC and Roxbury are registered as investment advisers under the 
Investment Advisers Act of 1940 (``Advisers Act''). Either RSMC or 
Roxbury currently serves as the investment adviser to the Portfolios 
(the ``RSMC Portfolios'' and the ``Roxbury Portfolios,'' respectively). 
RSMC, a Delaware corporation, is a wholly-owned subsidiary of 
Wilmington Trust Corporation, a publicly held, financial services 
holding company.
    3. The Fund has entered into separate investment management 
agreements with RSMC and Roxbury (each, an ``Advisory Agreement'' and 
together, the ``Advisory Agreements''), respectively, that were 
approved by the Fund's board of trustees (the ``Board''), including a 
majority of the trustees who are not ``interested persons,'' as defined 
in section 2(a)(19) of the Act (``Independent Trustees''), and the 
shareholders of each Portfolio. Under the terms of the respective 
Advisory Agreement, the Adviser provides each Portfolio with investment 
research, advice and supervision, and furnishes an investment program 
for each Portfolio consistent with its investment objectives and 
policies. For its services, each Adviser receives a management fee at 
an annual rate based on a percentage of the applicable Portfolio's 
average net assets.
    4. Under the respective Advisory Agreement, the Adviser may 
delegate to one or more sub-advisers (``Sub-Advisers'') its 
responsibility for providing investment advice and making investment 
decisions for all or a portion of a particular Portfolio's assets 
pursuant to a separate sub-advisory agreement (the ``Sub-Advisory 
Agreement''). Each RSMC Portfolio has one or more Sub-Advisers. None of 
the Roxbury Portfolios currently has a Sub-Adviser. Each current Sub-
Adviser to a RSMC Portfolio is, and any future Sub-Adviser to a 
Portfolio will be, an investment adviser registered under the Advisers 
Act. A Portfolio that has a Sub-Adviser or would have a Sub-Adviser, 
respectively, pays or would pay the Sub-Adviser directly for its 
investment management services.
    5. Applicants request relief to permit each Adviser, subject to 
Board approval, to enter into and materially amend Sub-Advisory 
Agreements without shareholder approval. The requested relief will not 
extend to a Sub-Adviser that is an affiliated person, as defined in 
section 2(a)(3) of the Act, of the Fund or the respective Adviser, 
other than by reason of serving as a Sub-Adviser to one or more of the 
Portfolios (an ``Affiliated Sub-Adviser'').\2\
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    \2\ Currently, the RSMC Portfolios have three Affiliated Sub-
Advisers.
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Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that it is 
unlawful for any person to act as an investment adviser to a registered 
investment company except pursuant to a written contract that has been 
approved by the vote of a majority of the company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of stock in a series company affected by a matter must approve such 
matter if the Act requires shareholder approval.
    2. Section 6(c) 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 the Act, or 
from any rule thereunder, if and to the extent that such exemption is 
necessary or appropriate in the public interest and consistent with the 
protection of investors and the purposes fairly intended by the 
policies and provisions of the Act. Applicants believe that their 
requested relief meets this standard for the reasons discussed below.
    3. Applicants state that the Portfolios' shareholders will rely on 
the respective Adviser, subject to oversight by the Board, to select 
the Sub-Advisers best suited to achieve a Portfolio's investment 
objectives. Applicants assert that, from the perspective of the 
investor, the role of the Sub-Advisers is comparable to that of 
individual portfolio managers employed by traditional investment 
advisory firms. Applicants contend that requiring shareholder approval 
of Sub-Advisory Agreements would impose costs and unnecessary delays on 
the Portfolios and may preclude the respective Adviser from acting 
promptly in a manner considered advisable by the Board. Applicants also 
note that the Advisory Agreements will remain subject to the 
shareholder approval requirements in section 15(a) of the Act and rule 
18f-2 under the Act.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Before a Portfolio may rely on the order requested in the 
application, the operation of the Portfolio in the manner described in 
the application will be approved by a majority of the outstanding 
voting securities of the Portfolio, as defined in the Act, or, in the 
case of a Portfolio whose public shareholders purchase shares on the 
basis of a prospectus containing the disclosure contemplated by 
condition 2 below, by the initial shareholder(s) before shares of the 
Portfolio are offered to the public.
    2. Each Portfolio will disclose in its prospectus the existence, 
substance and effect of any order granted pursuant to the application. 
In addition, each Portfolio will hold itself out to the public as 
employing the management structure described in the application. Such 
Portfolio's prospectus will prominently disclose that the Adviser has 
ultimate responsibility, subject to oversight by the Board, to oversee 
the

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Sub-Advisers and recommend their hiring, termination, and replacement.
    3. At all times, at least a majority of the Board will be 
Independent Trustees, and the nomination of new or additional 
Independent Trustees will be placed within the discretion of the then-
existing Independent Trustees. The Board also will satisfy the fund 
governance standards defined in rule 0-1(a)(7) under the Act.
    4. The respective Adviser will not enter into a Sub-Advisory 
Agreement with any Affiliated Sub-Adviser without that agreement, 
including the compensation to be paid thereunder, being approved by the 
shareholders of the applicable Portfolio.
    5. When a Sub-Adviser change is proposed for a Portfolio with an 
Affiliated Sub-Adviser, the Board, including a majority of the 
Independent Trustees, will make a separate finding, reflected in the 
Board minutes, that the change is in the best interests of the 
Portfolio and its shareholders, and does not involve a conflict of 
interest from which the respective Adviser or Affiliated Sub-Adviser 
derives an inappropriate advantage.
    6. Within 90 days of the hiring of a new Sub-Adviser, the 
respective Adviser will furnish shareholders of the applicable 
Portfolio with all information about the new Sub-Adviser that would be 
included in a proxy statement. The respective Adviser will meet this 
condition by providing shareholders of the applicable Portfolio with an 
information statement meeting the requirements of Regulation 14C, 
Schedule 14C and Item 22 of Schedule 14A under the Securities Exchange 
Act of 1934.
    7. The respective Adviser will provide general investment 
management services to each Portfolio, including overall supervisory 
responsibility for the general management and investment of the 
Portfolio's assets, and, subject to review and approval by the Board, 
will (i) Set each Portfolio's overall investment strategies; (ii) 
evaluate, select and recommend Sub-Advisers to manage all or a part of 
a Portfolio's assets; (iii) allocate and, when appropriate, reallocate 
a Portfolio's assets among multiple Sub-Advisers; (iv) monitor and 
evaluate the performance of Sub-Advisers; and (v) ensure that the Sub-
Advisers comply with the Portfolio's investment objectives, policies 
and restrictions by, among other things, implementing procedures 
reasonably designed to ensure compliance.
    8. No trustee or officer of the Fund, or director or officer of the 
respective Adviser will own directly or indirectly (other than through 
a pooled investment vehicle that is not controlled by such person) any 
interest in a Sub-Adviser except for (i) ownership of interests in the 
respective Adviser or any entity that controls, is controlled by, or is 
under common control with the respective Adviser; or (ii) ownership of 
less than 1% of the outstanding securities of any class of equity or 
debt of a publicly-traded company that is either a Sub-Adviser or an 
entity that controls, is controlled by or is under common control with 
a Sub-Adviser.
    9. The requested order will expire on the effective date of rule 
15a-5 under the Act, if adopted.
    10. Shareholders of a Portfolio will approve any change to a Sub-
Advisory Agreement if such change would result in an increase in the 
overall management and advisory fees payable by the Portfolio that have 
been approved by the shareholders of the Portfolio.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6-7639 Filed 5-18-06; 8:45 am]

BILLING CODE 8010-01-P
