01-8025. Wells Fargo Funds Trust, et al.;

March 27, 2001.

AGENCY:

Securities and Exchange Commission (“Commission”).

ACTION:

Notice of 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 December 19, 2000 and amended on March 27, 2001.

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 April 23, 2001, 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, N.W., Washington, D.C. 20549-0609. Applicants, 525 Market Street, San Francisco, California 94105.

FOR FURTHER INFORMATION CONTACT:

John L. Sullivan, Senior Counsel, at [phone], or Janet M. Grossnickle, Branch Chief, at [phone] (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. [phone]).

Applicants' Representations

1. Funds Trust is an open-end management investment company registered under the Act and consists of sixty-seven series (“Funds Trust Series”). Funds Management, a bank and a wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”), currently serves as investment adviser to 62 of the Funds Trust Series, including each of the Acquiring Funds Trust Series (as defined below). Funds Management is registered with the Commission as an investment adviser under the Investment Advisers Act of 1940 (“Advisers Act”).

2. The Coventry Group (“Coventry”) is an open-end management investment company registered under the Act and consists of 15 series. Brenton Bank, N.A. (“Brenton Bank”), an indirect wholly owned subsidiary of Brenton Banks, Inc. (“Brenton Holding Company”), serves as investment adviser to three series of Coventry (“Brenton Funds”).^[1] Brenton Bank is not registered under the Advisers Act in reliance on section 202(a)(11) of the Advisers Act.

3. On December 1, 2000, Wells Fargo acquired Brenton Holding Company in a transaction in which Brenton Holding Company shareholders received Wells Fargo common stock and Brenton Holding Company became an indirect wholly owned subsidiary of Wells Fargo (“Acquisition”). Following the Acquisition, it is proposed that three existing series of Funds Trust (“Acquiring Funds Trust Series”) will acquire the assets of the Brenton Funds (“Reorganization”).

4. Applicants state that the Acquisition resulted in a change in control of Brenton Bank within the meaning of section 2(a)(9) of the Act, and in an assignment of the current advisory contract between Brenton Bank and each of the Brenton Funds within the meaning of section 2(a)(4) of the Act. As required by section 15(a)(4) of the Act, the advisory contract automatically terminated in accordance with its terms.

5. On November 16, 2000 and December 18, 2000, the respective boards of trustees (each a “Board”) of Coventry and Funds Trust unanimously approved the Reorganization. In addition, in reliance on rule 15a-4 under the Act, the Board of Coventry unanimously approved an interim advisory agreement (“Interim Agreement“) between Brenton Bank and each of the Brenton Funds covering the time period between the date of the Acquisition and the closing date of the Reorganization. The Reorganization and the Interim Agreement will require approval by a majority of the outstanding shares of each Brenton Fund. Applicants state that the Board of Coventry has scheduled a special meeting of the Brenton Funds' shareholders for April 6, 2001. Proxy materials for the special meeting were mailed to shareholders on or about February 15, 2001.

6. In connection with the Acquisition and the Reorganization, applicants have determined to seek to comply with the “safe harbor” provisions of section 15(f) of the Act. Applicants state that, absent exemptive relief, following consummation of the Reorganization, more than twenty-five percent of the Board of Funds Trust would be “interested persons” for purposes of section 15(f)(1)(A) of the Act.

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 sale of its business 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 the sale, at least seventy-five percent of 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 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 November 30, 2000, Funds Trust had approximately $70 billion in aggregate net assets. Applicants also state that, as of November 30, 2000, the aggregate net assets of the Brenton Funds were approximately $120 million. Applicants thus assert that the Brenton Funds' assets would represent less than one-quarter of 1% of the aggregate net assets of Funds Trust.

5. Applicants state that three of the eight trustees who serve on a 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 Coventry is an interested person of the Brenton Funds, Brenton Bank, or Funds Management.

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 experienced trustees to resign or by adding new trustees. Applicants further state that adding new trustees could require a shareholder vote only of shareholders of the Acquiring Funds Trust Series, but also the shareholders of the Funds Trust Series not otherwise affected by the Reorganization. Applicants assert that adding a substantial number of additional non-interested trustees to the Board of Funds Trust could entail a lengthy process and increase the ongoing costs of Funds Trust.

7. 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.

Jonathan G. Katz,

Secretary.

Footnotes

1.  The Brenton Funds are the only series of Coventry for which Brenton Bank serves as an investment adviser, administrator or principal underwriter.