U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No. 1
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 1
(Check appropriate box or boxes)
WELLS FAMILY OF REAL ESTATE FUNDS
(Exact Name of Registrant as Specified in Charter)
3885 Holcomb Bridge Road
Norcross, Georgia 30092
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (800) 448-1010
Brian M. Conlon
Wells Asset Management, Inc.
3885 Holcomb Bridge Road
Norcross, Georgia 30092
(Name and Address of Agent for Service)
Copies to:
Frank J. Bitzer
Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement becomes effective.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.
<PAGE>
THE WELLS FAMILY OF REAL ESTATE FUNDS
Cross Reference Sheet
Pursuant to Rule 481(a)
Under the Securities Act of 1933
<TABLE>
<S> <C> <C>
PART A
Item No. Registration Statement Caption Caption in Prospectus
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Information Performance Information
4. General Description of Registrant Operation of the Fund;
Investment Objective,
Investment Policies and Risk
Considerations
5. Management of the Fund Operation of the Fund
6. Capital Stock and Other Securities Cover Page; Operation of the
Fund; Dividends and
Distributions; Taxes
7. Purchase of Securities Being Offered How to Purchase Shares;
Shareholder Services;
Distribution Plan;
Calculation of Share Price
and Public Offering Price;
Application
8. Redemption or Repurchase How to Redeem Shares;
Shareholder Services;
Distribution Plan
9. Pending Legal Proceedings Inapplicable
PART B
Caption in Statement
of Additional
Item No. Registration Statement Caption Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
(i)
<PAGE>
12. General Information and History The Trust
13. Investment Objectives and Policies Definitions, Policies and
Risk Considerations;
Investment Limitations;
Securities Transactions;
Portfolio Turnover
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Holders Inapplicable
of Securities
16. Investment Advisory and Other Services The Investment Adviser; The
Sub-Adviser; Distribution
Plan; Custodian; Auditors;
Countrywide Fund Services,
Inc.
17. Brokerage Allocation and Other Securities Transactions
Practices
18. Capital Stock and Other Securities The Trust
19. Purchase, Redemption and Pricing of Calculation of Share
Securities Being Offered Price and Public Offering
Price; Other Purchase
Information; Redemption in
Kind
20. Tax Status Taxes
21. Underwriters The Underwriter
22. Calculation of Performance Data Historical Performance
Information
23. Financial Statements Statement of Assets and
Liabilities
</TABLE>
PART C
The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
______, 1998
WELLS FAMILY OF REAL ESTATE FUNDS
3885 Holcomb Bridge Road
Norcross, Georgia 30092
WELLS S&P REIT INDEX FUND
---------------------------------------------------------------
The Wells S&P REIT Index Fund (the "Fund"), a separate series of the
Wells Family of Real Estate Funds (the "Trust"), seeks to provide investment
results corresponding to the performance of the S&P REIT Index (the "Index") by
investing in the stocks included in the Index.
Wells Asset Management, Inc. (the "Adviser") serves as the investment
adviser to the Fund. Gateway Investment Advisers, L.P. (the "Sub-Adviser")
manages the Fund's investments under the supervision of the Adviser.
This Prospectus sets forth concisely the information about the Fund that you
should know before investing. Please retain this Prospectus for future
reference. A Statement of Additional Information dated ___________, 1998 has
been filed with the Securities and Exchange Commission and is hereby
incorporated by reference in its entirety. A copy of the Statement of Additional
Information can be obtained at no charge by calling 800-282-1581 or writing the
Fund.
- -----------------------------------------------------------------
TABLE OF CONTENTS
EXPENSE INFORMATION............................................................
INVESTMENT OBJECTIVE, INVESTMENT POLICIES AND RISK
CONSIDERATIONS......................................................
OPERATION OF THE FUND..........................................................
HOW TO PURCHASE SHARES........................................................
SHAREHOLDER SERVICES...........................................................
HOW TO REDEEM SHARES...........................................................
DIVIDENDS AND DISTRIBUTIONS....................................................
TAXES..........................................................................
DISTRIBUTION PLAN..............................................................
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE...........................
PERFORMANCE INFORMATION........................................................
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
EXPENSE INFORMATION
Shareholder Transaction Expenses:
Maximum Initial Sales Load Imposed on Purchases
(as a percentage of offering price) 4.00%
Deferred Sales Charge None
Sales Charge Imposed on Reinvested Dividends None
Redemption Fee None*
* A wire transfer fee is charged by the Fund's Custodian in
the case of redemptions made by wire. Such fee is subject
to change and is currently $9. See "How to Redeem Shares."
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees After Waivers .00% (A)
12b-1 Fees .25% (B)
Other Expenses After Reimbursements .74% (C)
----
Total Fund Operating Expenses .99% (D)
====
(A) Absent waivers of management fees, such fees would be .50%.
(B) Under the rules of the National Association of Securities Dealers, Inc.
("NASD"), a 12b-1 fee may be treated as a sales charge for certain purposes
under these rules. Because the 12b-1 fee is an annual fee charged against the
assets of the Fund, long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charges permitted by the NASD.
(C) Absent expense reimbursements by the Adviser, other expenses would be 1.61%.
(D) Absent waivers of management fees and expense reimbursements by the Adviser,
total Fund operating expenses would be 2.36%.
Example: You would pay the following expenses on a $1,000 investment, whether or
not you redeem at the end of the period, assuming 5% annual return:
1 Year $50
3 Years 70
The purpose of the foregoing table is to assist investors in the Fund in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Operation of the Fund" for more information about the fees and
costs of operating the Fund. The percentages expressing "Other Expenses" are
based on estimated amounts for the current fiscal year. THE EXAMPLE SHOWN SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES
IN THE FUTURE MAY BE GREATER OR LESS THAN THOSE SHOWN.
- 5 -
<PAGE>
INVESTMENT OBJECTIVE, INVESTMENT POLICIES
AND RISK CONSIDERATIONS
The investment objective of the Fund is to provide investment results
corresponding to the performance of the S&P REIT Index by investing in the
stocks included in the Index.
The Fund attempts to duplicate the investment results of the S&P Real
Estate Investment Trust Composite Price Index (the "S&P REIT Index" or the
"Index"). The Index is made up of approximately 100 stocks which constitute a
representative sample of all publicly traded Real Estate Investment Trusts. A
Real Estate Investment Trust ("REIT") is a pooled investment vehicle which
invests primarily in income producing real estate or real estate related loans
or interests. REITs are generally classified as equity REITs, mortgage REITs or
hybrid REITs. An equity REIT, which owns properties, generates income from
rental and lease properties. Equity REITS also offer the potential for growth as
a result of property appreciation and, in addition, occasional capital gains
from the sales of appreciated property. Mortgage REITs invest the majority of
their assets in real estate mortgages and derive income from the collection of
interest payments. Hybrid REITs are designed to strike a balance between equity
investments and mortgage backed investments. They will derive their income from
the collection of rents, the realization of capital gains from the sale of
properties and from the collection of interest payments on outstanding mortgages
held within the trust.
Investors buy shares in REITs rather than investing directly in
properties because direct ownership of real estate can be costly and difficult
to quickly convert into cash. REITs do not have to pay income taxes if they meet
certain Internal Revenue Code requirements. To qualify, a REIT must distribute
at least 95% of its taxable income to its shareholders and receive at least 75%
of that income from rents, mortgages and sales of property. REITs offer
investors greater liquidity and diversification than does direct ownership of a
handful of properties.
To be included in the Index, a REIT must be traded on a major U.S.
stock exchange and must have a total market capitalization of at least
$100,000,000. As of September 30, 1997, 105 REITs were included in the Index.
The Index is rebalanced every calendar quarter as well as each time that a REIT
is removed from the Index because of corporate activity such as a merger,
acquisition, leveraged buyout, bankruptcy, IRS removal of REIT status,
fundamental change in business, or a change in shares outstanding.
- 6 -
<PAGE>
The Fund is not sponsored, endorsed, sold or promoted by Standard &
Poor's Corporation ("S&P"). S&P makes no representation or warranty, express or
implied, to the purchasers of the Fund or any member of the public regarding the
advisability of investing in securities generally, or in the Fund particularly
or the ability of the Index to track the market performance of real estate
investment trusts. S&P's only relationship to the Fund is the licensing of
certain trademarks and trade names of S&P and of the S&P REIT Index which is
determined, composed and calculated by S&P without regard to the Fund. S&P has
no obligation to take the needs of the Fund or the purchasers of the Fund into
consideration in determining, composing or calculating the REIT Index. S&P is
not responsible for and has not participated in the determination of the prices
and amount of the shares of the Fund or the timing of the issuance or sale of
the shares of the Fund or in the determination or calculation of the equation by
which the shares of the Fund are to be converted into cash. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the Fund.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P
REIT INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE FUND, PURCHASERS OF THE FUND, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P REIT INDEX OR ANY DATA
INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE WITH RESPECT TO THE S&P REIT INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Investment Selection. Under normal market conditions at least 90% of the
Fund's total assets will be invested in the stocks included in the S&P REIT
Index. The proportion of the Fund's assets invested in each stock held in the
Fund's portfolio is substantially similar to the proportion of the Index
represented by the stock. For example, if a stock represents 2% of the value of
the Index, the Fund invests approximately 2% of its assets in the stock. The
Fund will normally be invested in all of the stocks which comprise the S&P REIT
Index, except when changes are made to the Index itself. The Index is currently
made up of approximately 90% equity REITs, 4% mortgage REITs and 6% hybrid
REITS; however, these percentages are subject to change at any time at the
discretion of S&P. The Sub-Adviser monitors the composition of the Index and
makes adjustments to the Fund's portfolio as necessary in order to correlate
with the Index.
- 7 -
<PAGE>
The Fund will attempt to achieve a correlation between its performance
and that of the Index of at least 0.95, without taking into account expenses. A
correlation of 1.00 would indicate perfect correlation, which would be achieved
when the Fund's net asset value, including the value of its dividend and capital
gains distributions, increases or decreases in exact proportion to changes in
the Index. The Fund's ability to correlate its performance with the Index,
however, may be affected by, among other things, changes in securities markets,
the manner in which the Index is calculated by S&P and the timing of purchases
and redemptions.
Money Market Instruments. Money market instruments will typically
represent a portion of the Fund's portfolio as funds awaiting investment, to
accumulate cash for anticipated purchases of portfolio securities and to provide
for shareholder redemptions and operational expenses of the Fund. Money market
instruments mature in thirteen months or less from the date of purchase and may
include U.S. Government Securities (defined below), repurchase agreements,
bankers' acceptances and certificates of deposit of domestic branches of U.S.
banks, shares of money market investment companies, and commercial paper
(including variable amount demand master notes). At the time of purchase, money
market instruments will have a short-term rating in the highest category from
any nationally recognized statistical rating organization ("NRSRO") or, if not
rated, will have been issued by a corporation having an outstanding unsecured
debt issue rated in the three highest categories of any NRSRO or, if not so
rated, will be of equivalent quality in the Adviser's opinion. The Fund may
invest in shares of money market investment companies to the extent permitted by
Section 12(d) of the Investment Company Act of 1940. Investments by the Fund in
shares of other investment companies may result in duplication of advisory and
administrative fees and other expenses.
U.S. Government Securities. U.S. Government Securities include direct
obligations of the U.S. Treasury, securities guaranteed as to interest and
principal by the U.S. Government such as obligations of the Government National
Mortgage Association, as well as securities issued or guaranteed as to interest
and principal by U.S. Government authorities, agencies and instrumentalities
such as the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation, the Federal Land Bank, the Federal Farm Credit Banks, the
Federal Home Loan Banks, the Student Loan Marketing Association, the Small
Business Administration, the Bank for Cooperatives, the Federal Intermediate
Bank, the Federal Financing Bank, the Resolution Funding Corporation, the
Financing Corporation of America and the Tennessee Valley Authority. U.S.
Government Securities may be acquired subject to repurchase agreements. While
obligations of some U.S. Government sponsored entities are supported by the full
faith and credit of the U.S. Government, several are supported by the right
- 8 -
<PAGE>
of the issuer to borrow from the U.S. Government, and still others are supported
only by the credit of the issuer itself. The guarantee of the U.S. Government
does not extend to the yield or value of the U.S. Government Securities held by
the Fund or to the Fund's shares.
Borrowing. The Fund may borrow, temporarily, up to 5% of its total
assets for extraordinary purposes and may increase this limit to 33.3% of its
total assets to meet redemption requests which might otherwise require untimely
disposition of portfolio holdings. To the extent the Fund borrows for these
purposes, the effects of market price fluctuations on portfolio net asset value
will be exaggerated. If, while such borrowing is in effect, the value of the
Fund's assets declines, the Fund would be forced to liquidate portfolio
securities when it is disadvantageous to do so. The Fund would incur interest
and other transaction costs in connection with such borrowing. The Fund will not
make any additional investments while its borrowings are outstanding.
Portfolio Turnover. The Fund sells portfolio securities, without regard
to the length of time they have been held, primarily to accommodate cash flows
into and out of the Fund and changes in the Index. The Fund's annual portfolio
turnover generally is not expected to exceed 100%. The degree of portfolio
activity affects the brokerage costs of the Fund and may have an impact on the
amount of taxable distributions to shareholders.
Factors to Consider. The Fund is not intended to be a complete
investment program and there can be no assurance that the Fund will achieve its
investment objective. The Fund's investment objective may be changed by the
Board of Trustees without shareholder approval, but only after notification has
been given to shareholders and after this Prospectus has been revised
accordingly. If there is a change in the Fund's investment objective,
shareholders should consider whether the Fund remains an appropriate investment
in light of their then current financial position and needs. Unless otherwise
indicated, all investment practices and limitations of the Fund are
nonfundamental policies which may be changed by the Board of Trustees without
shareholder approval.
Risk Considerations. Although the Fund does not invest in real estate
directly, its concentration in shares of REITs will subject the Fund to the
risks associated with the ownership of real estate. These risks include, among
others: possible declines in the value of real estate; risks related to general
and local economic conditions; possible lack of availability of mortgage funds;
overbuilding; extended vacancies of properties; increases in competition,
property taxes and operating expenses;
- 9 -
<PAGE>
changes in zoning laws; costs resulting from the clean-up of and liability to
third parties for damages resulting from, environmental problems; casualty or
condemnation losses; uninsured damages from floods, earthquakes or other natural
disasters; limitations on and variations in rents; and changes in interest
rates.
Investing in REITs involves certain risks in addition to those risks
associated with investing in the real estate industry in general. REITs are
dependent upon management skills, often have limited diversification, and are
subject to the risks of financing projects. REITs are subject to heavy cash flow
dependency, default by borrowers, self-liquidation, and the possibilities of
failing to maintain their exemptions from the Investment Company Act of 1940.
Equity REITs may be affected by changes in the value of the underlying property
owned by the REITs. Mortgage REITs may be affected by the quality of any credit
extended and interest rate risks. Hybrid REITs will be affected by risks
inherent in both equity and mortgage REITs.
Certain REITs have relatively small market capitalizations, which may
result in less market liquidity and greater price volatility of their
securities. Historically, however, the significant amount of dividend income
provided by REITs has tended to soften the impact of this volatility. When a
shareholder invests in real estate indirectly through the Fund, the
shareholder's return will be reduced not only by his or her proportionate share
of the expenses of the Fund, but also, indirectly, by similar expenses of the
REITs in which the Fund invests.
OPERATION OF THE FUND
- ---------------------
The Fund is a diversified series of the Wells Family of Real Estate
Funds, an open-end management investment company organized as an Ohio business
trust on June 4, 1997. The Board of Trustees supervises the business activities
of the Trust. Like other mutual funds, the Trust retains various organizations
to perform specialized services for the Fund.
The Trust retains Wells Asset Management, Inc.(the "Adviser"), 3885
Holcomb Bridge Road, Norcross, Georgia, to provide general investment
supervisory services to the Fund and to manage the Fund's business affairs. The
controlling shareholder of the Adviser is Leo F. Wells, III. Mr. Wells, through
various organizations under his control, has extensive experience in the
acquisition, disposition, management, leasing and development of investment real
estate. The Adviser has not previously provided investment advisory services to
a registered investment company. The Fund pays the Adviser a fee equal to the
annual rate of .50% of the average value of its daily net assets. As of the date
of this prospectus, Wells Capital, Inc. is the sole shareholder of the Fund.
- 10 -
<PAGE>
Gateway Investment Advisers, L.P. (the "Sub-Adviser"), 400 TechneCenter
Drive, Milford, Ohio, has been retained by the Adviser to manage the Fund's
investments. The Adviser (not the Fund) pays the Sub-Adviser a fee at the annual
rate of .15% of the value of the Fund's average daily net assets up to
$100,000,000, .10% of such assets from $100,000,000 to $200,000,000 and .07% of
such assets in excess of $200,000,000; provided, however, that the minimum fee
is $3,000 per month. The Sub-Adviser will waive its fee for the first three
months of the Fund's operations. The Sub-Adviser is a Delaware limited
partnership in which Gateway Investment Advisers, Inc. ("GIA") is the general
partner with a 76% partnership interest. The sole limited partner of the
Sub-Adviser is Alex. Brown Investments Incorporated, an affiliate of BT Alex
Brown Incorporated, a nationally known investment banking firm and registered
broker/dealer located in Baltimore, Maryland. The principal and controlling
shareholders of GIA are Walter G. Sall and J. Patrick Rogers.
The Fund is responsible for the payment of all operating expenses,
including fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses of registering shares under federal and state securities
laws, expenses related to the distribution of the Fund's shares (see
"Distribution Plan"), insurance expenses, taxes or governmental fees, fees and
expenses of the custodian, transfer agent and accounting and pricing agent of
the Fund, fees and expenses of members of the Board of Trustees who are not
interested persons of the Trust, the cost of preparing and distributing
prospectuses, statements, reports and other documents to shareholders, expenses
of shareholders' meetings and proxy solicitations, and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Fund may
be a party and indemnification of the Trust's officers and Trustees with respect
thereto.
Wells Investment Securities, Inc., 3885 Holcomb Bridge Road, Norcross,
Georgia (the "Underwriter"), an affiliate of the Adviser, serves as principal
underwriter for the Fund and, as such, is the exclusive agent for the
distribution of shares of the Fund. Mr. Leo F. Wells, the controlling
shareholder of the Adviser and a Trustee of the Trust, is the controlling
shareholder of the Underwriter.
The Trust has retained Countrywide Fund Services, Inc., P.O. Box 5354,
Cincinnati, Ohio (the "Transfer Agent") to serve as the Fund's transfer agent,
dividend paying agent and shareholder service agent. The Transfer Agent is a
wholly-owned indirect subsidiary of Countrywide Credit Industries, Inc., a New
York Stock Exchange listed company principally engaged in residential mortgage
lending.
- 11 -
<PAGE>
The Transfer Agent also provides accounting and pricing services to the
Fund. The Transfer Agent receives a monthly fee from the Fund for calculating
daily net asset value per share and maintaining such books and records as are
necessary to enable it to perform its duties.
In addition, the Transfer Agent has been retained to provide
administrative services to the Fund. In this capacity, the Transfer Agent
supplies executive, administrative and regulatory services, supervises the
preparation of tax returns, and coordinates the preparation of reports to
shareholders and reports to and filings with the Securities and Exchange
Commission and state securities authorities. The Fund pays the Transfer Agent a
fee for these administrative services at the annual rate of .15% of the average
value of its daily net assets up to $50,000,000, .125% of such assets from
$50,000,000 to $100,000,000 and .1% of such assets in excess of $100,000,000;
provided, however, that the minimum fee is $1,000 per month.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its objective of seeking best
execution of portfolio transactions, the Sub-Adviser may give consideration to
sales of shares of the Fund as a factor in the selection of brokers and dealers
to execute portfolio transactions of the Fund. Subject to the requirements of
the Investment Company Act of 1940 (the "1940 Act") and procedures adopted by
the Board of Trustees, the Fund may execute portfolio transactions through any
broker or dealer and pay brokerage commissions to a broker (i) which is an
affiliated person of the Trust, or (ii) which is an affiliated person of such
person, or (iii) an affiliated person of which is an affiliated person of the
Trust, the Adviser, the Sub-Adviser or the Underwriter.
Shares of the Fund have equal voting rights and liquidation rights.
When matters are submitted to shareholders for a vote, each shareholder is
entitled to one vote for each full share owned and fractional votes for
fractional shares owned. The Trust does not normally hold annual meetings of
shareholders. The Trustees shall promptly call and give notice of a meeting of
shareholders for the purpose of voting upon the removal of any Trustee when
requested to do so in writing by shareholders holding 10% or more of the Trust's
outstanding shares. The Trust will comply with the provisions of Section 16(c)
of the 1940 Act in order to facilitate communications among shareholders.
HOW TO PURCHASE SHARES
- ----------------------
Your initial investment in the Fund ordinarily must be at least $2,500
($1,000 for tax-deferred retirement plans). The Fund may, in the Adviser's sole
discretion, accept certain accounts with less than the stated minimum initial
investment. You may open an account and make an initial investment through
- 12 -
<PAGE>
securities dealers having a sales agreement with the Underwriter. You may also
make a direct initial investment by sending a check and a completed account
application form to Countrywide Fund Services, Inc., P.O. Box 5354, Cincinnati,
Ohio 45201-5354. Checks should be made payable to "Wells S&P REIT Index Fund".
Third party checks will not be accepted. An account application is included in
this Prospectus. You may purchase additional shares through the Open Account
Program described below.
Shares of the Fund are sold on a continuous basis at the public
offering price next determined after receipt of a purchase order by the Transfer
Agent. Purchase orders received by dealers prior to 4:00 p.m., Eastern time, on
any business day and transmitted to the Transfer Agent by 5:00 p.m., Eastern
time, that day are confirmed at the public offering price determined as of the
close of the regular session of trading on the New York Stock Exchange on that
day. It is the responsibility of dealers to transmit properly completed orders
so that they will be received by the Transfer Agent by 5:00 p.m., Eastern time.
Dealers may charge a fee for effecting purchase orders. Direct purchase orders
received by the Transfer Agent by 4:00 p.m., Eastern time, are confirmed at that
day's public offering price. Direct investments received by the Transfer Agent
after 4:00 p.m., Eastern time, and orders received from dealers after 5:00 p.m.,
Eastern time, are confirmed at the public offering price next determined on the
following business day.
The public offering price of the Fund's shares is the next determined
net asset value per share plus a sales load as shown in the following table.
Dealer
Reallowance
Sales Load as % of: as % of
Public Net Public
Offering Amount Offering
Amount of Investment Price Invested Price
Less than $50,000 4.00% 4.17% 3.50%
$50,000 but less than $100,000 3.50 3.63 3.00
$100,000 but less than $250,000 3.00 3.09 2.50
$250,000 but less than $500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.50
$1,000,000 or more None None
Under certain circumstances, the Underwriter may increase or decrease
the reallowance to dealers. The Underwriter retains the entire sales load on all
direct initial investments in the Fund and on all investments in accounts with
no designated dealer of record.
- 13 -
<PAGE>
The Trust mails you confirmations of all purchases or redemptions of
Fund shares. Certificates representing shares are not issued. The Trust and the
Underwriter reserve the right to limit the amount of investments and to refuse
to sell to any person.
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Adviser, the Underwriter, the Transfer
Agent and certain of their affiliates, excluding such entities from certain
liabilities (including, among others, losses resulting from unauthorized
shareholder transactions) relating to the various services made available to
investors.
Should an order to purchase shares be canceled because your check does
not clear, you will be responsible for any resulting losses or fees incurred by
the Trust or the Transfer Agent in the transaction.
Open Account Program. Please direct inquiries concerning the services
described in this section to the Transfer Agent at the address or telephone
number listed below.
After an initial investment, all investors are considered participants
in the Open Account Program. The Open Account Program helps investors make
purchases of shares of the Fund over a period of years.
Under the Open Account Program, you may purchase and add shares to your
account at any time either through your securities dealer or by sending a check
to Countrywide Fund Services, Inc., P.O. Box 5354, Cincinnati, Ohio 45201-5354.
The check should be made payable to "Wells S&P REIT Index Fund."
Under the Open Account Program, you may also purchase shares of the
Fund by bank wire. Please telephone the Transfer Agent (Nationwide call
toll-free 800-282-1581) for instructions. Your bank may impose a charge for
sending your wire. There is presently no fee for receipt of wired funds, but the
Trust reserves the right to charge shareholders for this service upon thirty
days' prior notice to shareholders.
Each additional purchase request must contain the name of your account
and your account number to permit proper crediting to your account. While there
is no minimum amount required for subsequent investments, the Trust reserves the
right to impose such requirement. All purchases under the Open Account Program
are made at the public offering price next determined after receipt of a
purchase order by the Transfer Agent. If a broker-dealer received concessions
for selling shares of the Fund to a current shareholder, such broker-dealer will
receive the concessions described above with respect to additional investments
by the shareholder.
- 14 -
<PAGE>
Reduced Sales Load. A "purchaser" (defined below) may use the Right of
Accumulation to combine the cost or current net asset value (whichever is
higher) of his or her existing Fund shares with the amount of his or her current
purchases in order to take advantage of the reduced sales loads set forth in the
table above. Purchases made pursuant to a Letter of Intent may also be eligible
for the reduced sales loads. The minimum initial investment under a Letter of
Intent is $10,000. Shareholders should contact the Transfer Agent for
information about the Right of Accumulation and Letter of Intent.
Purchases at Net Asset Value. Banks, bank trust departments and savings
and loan associations, in their fiduciary capacity or for their own accounts,
may also purchase shares of the Fund at net asset value. To the extent permitted
by regulatory authorities, a bank trust department may charge fees to clients
for whose account it purchases shares at net asset value. Federal and state
credit unions may also purchase shares at net asset value.
In addition, shares of the Fund may be purchased at net asset value by
broker-dealers who have a sales agreement with the Underwriter, and their
registered personnel and employees, including members of the immediate families
of such registered personnel and employees.
Clients of investment advisers and financial planners may also purchase
shares of the Fund at net asset value if their investment adviser or financial
planner has entered into an administrative services agreement with the Fund. The
investment adviser or financial planner must notify the Fund that an investment
qualifies as a purchase at net asset value.
Trustees, directors, officers and employees of the Trust, the Adviser,
the Sub-Adviser, the Underwriter or the Transfer Agent, including members of the
immediate families of such individuals and employee benefit plans established by
such entities, may also purchase shares of the Fund at net asset value.
Additional Information. For purposes of determining the applicable
sales load and for purposes of the Letter of Intent and Right of Accumulation
privileges, a purchaser includes an individual, his or her spouse and their
children under the age of 21, purchasing shares for his, her or their own
account; a trustee or other fiduciary purchasing shares for a single fiduciary
account although more than one beneficiary is involved; employees of a common
employer, provided that economies of scale are realized through remittances from
a single source and quarterly confirmation of such purchases; or an organized
group,
- 15 -
<PAGE>
provided that the purchases are made through a central administration, or a
single dealer, or by other means which result in economy of sales effort or
expense. Contact the Transfer Agent for additional information concerning
purchases at net asset value or at reduced sales loads.
SHAREHOLDER SERVICE
- -------------------
Contact the Transfer Agent (Nationwide call toll-free 800- 282-1581)
for additional information about the shareholder services described below.
Tax-Deferred Retirement Plans
-----------------------------
Shares of the Fund are available for purchase in connection with the
following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals
-- Individual retirement account (IRA) plans for
individuals and their non-employed spouses
-- Qualified pension and profit-sharing plans for
employees, including those profit-sharing plans with a
401(k) provision
-- 403(b)(7) custodial accounts for employees of public school
systems, hospitals, colleges and other non-profit
organizations meeting certain requirements of the Internal
Revenue Code
Direct Deposit Plans
--------------------
Shares of the Fund may be purchased through direct deposit plans
offered by certain employers and government agencies. These plans enable a
shareholder to have all or a portion of his or her payroll or social security
checks transferred automatically to purchase shares of the Fund.
Automatic Investment Plan
-------------------------
You may make automatic monthly investments in the Fund from your bank,
savings and loan or other depository institution account. The minimum initial
and subsequent investments must be $100 under the plan. The Fund pays the costs
associated with these transfers, but reserves the right, upon thirty days'
written notice, to make reasonable charges for this service. Your depository
institution may impose its own charge for debiting your account which would
reduce your return from an investment in the Fund.
- 16 -
<PAGE>
Reinvestment Privilege
----------------------
If you have redeemed shares of the Fund, you may reinvest all or part
of the proceeds without any additional sales load. This reinvestment must occur
within ninety days of the redemption and the privilege may only be exercised
once per year.
HOW TO REDEEM SHARES
- --------------------
You may redeem shares of the Fund on each day that the Trust is open
for business by sending a written request to the Transfer Agent. The request
must state the number of shares or the dollar amount to be redeemed and your
account number. The request must be signed exactly as your name appears on the
Fund's account records. If the shares to be redeemed have a value of $25,000 or
more, your signature must be guaranteed by any eligible guarantor institution,
including banks, brokers and dealers, municipal securities brokers and dealers,
government securities brokers and dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
You may also redeem shares by placing a wire redemption request through
a securities broker or dealer. Unaffiliated broker-dealers may impose a fee on
the shareholder for this service. You will receive the net asset value per share
next determined after receipt by the Trust or its agent of your wire redemption
request. It is the responsibility of broker-dealers to properly transmit wire
redemption orders.
If your instructions request a redemption by wire, you will be charged
a $9 processing fee. The Trust reserves the right, upon thirty days' written
notice, to change the processing fee. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
Redemption requests may direct that the proceeds be deposited directly
in your account with a commercial bank or other depository institution via an
Automated Clearing House (ACH) transaction. There is currently no charge for ACH
transactions. Contact the Transfer Agent for more information about ACH
transactions.
Shares are redeemed at the net asset value per share next determined
after receipt by the Transfer Agent of a proper redemption request in the form
described above, less any applicable charges imposed by unaffiliated brokers,
dealers or
- 17 -
<PAGE>
your bank, as described herein. Payment is normally made within three business
days after tender in such form, provided that payment in redemption of shares
purchased by check will be effected only after the check has been collected,
which may take up to fifteen days from the purchase date. To eliminate this
delay, you may purchase shares of the Fund by certified check or wire.
At the discretion of the Trust or the Transfer Agent, corporate
investors and other associations may be required to furnish an appropriate
certification authorizing redemptions to ensure proper authorization. The Trust
reserves the right to require you to close your account if at any time the value
of your shares is less than $2,500 (based on actual amounts invested including
any sales load paid, unaffected by market fluctuations), or $1,000 in the case
of tax-deferred retirement plans, or such other minimum amount as the Trust may
determine from time to time. After notification to you of the Trust's intention
to close your account, you will be given thirty days to increase the value of
your account to the minimum amount.
The Trust reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Securities and Exchange Commission.
DIVIDENDS AND DISTRIBUTION
- --------------------------
The Fund expects to distribute substantially all of its net investment
income, if any, on a quarterly basis. The Fund expects to distribute any net
realized long-term capital gains at least once each year. Management will
determine the timing and frequency of the distributions of any net realized
short-term capital gains.
Distributions are paid according to the following options:
Share Option - income distributions and capital gains
distributions reinvested in additional shares.
Income Option - income distributions and short-term
capital gains distributions paid in cash;
long-term capital gains distributions reinvested
in additional shares.
Cash Option - income distributions and capital gains
distributions paid in cash.
- 18 -
<PAGE>
You should indicate your choice of option on your application. If no option is
selected, distributions will automatically be reinvested in additional shares
without the imposition of a sales load. All distributions will be based on the
net asset value in effect on the payable date.
If you select the Income Option or the Cash Option and the U.S. Postal
Service cannot deliver your checks or if your checks remain uncashed for six
months, your dividends may be reinvested in your account at the then-current net
asset value and your account will be converted to the Share Option. No interest
will accrue on amounts represented by uncashed distribution checks.
An investor who has received any dividend or capital gains distribution
from the Fund in cash may return the distribution to the Transfer Agent within
thirty days of the distribution date for reinvestment at the net asset value
next determined after its return. The investor or his dealer must notify the
Transfer Agent that a distribution is being reinvested pursuant to this
provision.
TAXES
- -----
The Fund intends to qualify for the special tax treatment afforded a
"regulated investment company" under Subchapter M of the Internal Revenue Code
so that it does not pay federal taxes on income and capital gains distributed to
shareholders. The Fund intends to distribute substantially all of its net
investment income and any net realized capital gains to its shareholders.
Distributions of net investment income as well as from net realized short-term
capital gains, if any, are taxable as ordinary income. Dividends distributed by
the Fund from net investment income are not eligible for the dividends received
deduction available to corporations. Distributions of net realized long-term
capital gains are taxable as long-term capital gains regardless of how long you
have held your Fund shares. Redemptions of shares of the Fund are taxable events
on which a shareholder may realize a gain or loss.
The Fund will mail to each of its shareholders a statement indicating
the amount and federal income tax status of all distributions made during the
year. In addition to federal taxes, shareholders of the Fund may be subject to
state and local taxes on distributions. Shareholders should consult their tax
advisers about the tax effect of distributions and withdrawals from the Fund.
The tax consequences described in this section apply whether distributions are
taken in cash or reinvested in additional shares.
- 19 -
<PAGE>
DISTRIBUTION PLAN
- -----------------
Pursuant to Rule 12b-1 under the 1940 Act, the Trust has adopted a plan
of distribution (the "Plan") under which the Fund may incur or reimburse the
Underwriter for certain distributionrelated expenses, including payments to
securities dealers and other persons, including the Underwriter and its
affiliates, who are engaged in the sale of shares of the Fund and who may be
advising investors regarding the purchase, sale or retention of Fund shares;
expenses of maintaining personnel who engage in or support distribution of
shares or who render shareholder support services not otherwise provided by the
Transfer Agent or the Trust; expenses of formulating and implementing marketing
and promotional activities, including direct mail promotions and mass media
advertising; expenses of preparing, printing and distributing sales literature
and prospectuses and statements of additional information and reports for
recipients other than existing shareholders of the Fund; expenses of obtaining
such information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable; and any other
expenses related to the distribution of the Fund's shares.
The annual limitation for payment of expenses pursuant to the Plan is
.25% of the Fund's average daily net assets. Unreimbursed expenditures will not
be carried over from year to year. In the event the Plan is terminated by the
Trust in accordance with its terms, the Fund will not be required to make any
payments for expenses incurred after the date the Plan terminates.
Pursuant to the Plan, the Fund may also make payments to banks or other
financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act prohibits banks from engaging in
the business of underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, management of the
Trust believes that the Glass-Steagall Act should not preclude a bank from
providing such services. However, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Trust believes that there would be no material impact on the
Fund or its shareholders. Banks may charge their customers fees for offering
these services to the extent permitted by applicable regulatory authorities, and
the overall return to those shareholders availing themselves of the bank
services will
- 20 -
<PAGE>
be lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
The National Association of Securities Dealers, in its Rules of Fair
Practice, places certain limitations on asset-based sales charges of mutual
funds. These Rules require fund-level accounting in which all sales charges -
front-end load, 12b-1 fees or contingent deferred sales load - terminate when a
percentage of gross sales is reached.
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
- ----------------------------------------------------
On each day that the Trust is open for business, the public offering
price (net asset value plus applicable sales load) of the shares of the Fund is
determined as of the close of the regular session of trading on the New York
Stock Exchange, currently 4:00 p.m., Eastern time. The Trust is open for
business on each day the New York Stock Exchange is open for business and on any
other day when there is sufficient trading in the Fund's investments that its
net asset value might be materially affected. The net asset value per share of
the Fund is calculated by dividing the sum of the value of the securities held
by the Fund plus cash or other assets minus all liabilities (including estimated
accrued expenses) by the total number of shares outstanding of the Fund, rounded
to the nearest cent.
U.S. Government obligations are valued at their most recent bid prices
as obtained from one or more of the major market makers for such securities.
Other portfolio securities are valued as follows: (i) securities which are
traded on stock exchanges or are quoted by NASDAQ are valued at the last
reported sale price as of the close of the regular session of trading on the New
York Stock Exchange on the day the securities are being valued, or, if not
traded on a particular day, at the closing bid price, (ii) securities traded in
the over-the-counter market, and which are not quoted by NASDAQ, are valued at
the last sale price (or, if the last sale price is not readily available, at the
last bid price as quoted by brokers that make markets in the securities) as of
the close of the regular session of trading on the New York Stock Exchange on
the day the securities are being valued, (iii) securities which are traded both
in the over-the-counter market and on a stock exchange are valued according to
the broadest and most representative market, and (iv) securities (and other
assets) for which market quotations are not readily available are valued at
their fair value as determined in good faith in accordance with consistently
applied procedures established by and under the general supervision of the Board
of Trustees. The net asset value per share of the Fund will fluctuate with the
value of the securities it holds.
- 21 -
<PAGE>
PERFORMANCE INFORMATION
- -----------------------
From time to time, the Fund may advertise its "average annual total
return." The Fund may also advertise "yield". Both yield and average annual
total return figures are based on historical earnings and are not intended to
indicate future performance.
The "average annual total return" of the Fund refers to the average
annual compounded rates of return over the most recent 1, 5 and 10 year periods
or, where the Fund has not been in operation for such period, over the life of
the Fund (which periods will be stated in the advertisement) that would equate
an initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment. The calculation of "average annual total
return" assumes the reinvestment of all dividends and distributions and the
deduction of the current maximum sales charge from the initial investment. The
Fund may also advertise total return (a "nonstandardized quotation") which is
calculated differently from "average annual total return." A nonstandardized
quotation of total return may be a cumulative return which measures the
percentage change in the value of an account between the beginning and end of a
period, assuming no activity in the account other than reinvestment of dividends
and capital gains distributions. A nonstandardized quotation of total return may
also indicate average annual compounded rates of return over periods other than
those specified for "average annual total return." These nonstandardized returns
do not include the effect of the applicable initial sales which, if included,
would reduce total return. A nonstandardized quotation of total return will
always be accompanied by the Fund's "average annual total return" as described
above.
The "yield" of a Fund is computed by dividing the net investment income
per share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum public offering price per share on the last day of
the period (using the average number of shares entitled to receive dividends).
The yield formula assumes that the net investment income earned and reinvested
at a constant rate and annualized at the end of a six month period.
From time to time, the Fund may advertise its performance rankings as
published by recognized independent mutual fund statistical services such as
Lipper Analytical Services, Inc. ("Lipper"), or by publications of general
interest such as Forbes, Money, The Wall Street Journal, Business Week,
Barron's, Fortune or Morningstar Mutual Fund Values. The Fund may also compare
its performance to that of other selected mutual funds, averages of the other
mutual funds within its category as
- 22 -
<PAGE>
determined by Lipper, or recognized indicators such as the Dow Jones Industrial
Average and the Standard & Poor's 500 Stock Index. In connection with a ranking,
the Fund may provide additional information, such as the particular category of
funds to which the ranking relates, the number of funds in the category, the
criteria upon which the ranking is based, and the effect of fee waivers and/or
expense reimbursements, if any. The Fund may also present its performance and
other investment characteristics, such as volatility or a temporary defensive
posture, in light of the Adviser's view of current or past market conditions or
historical trends.
- 23 -
<PAGE>
<TABLE>
WELLS S&P REIT INDEX FUND ACCOUNT NO. L4 -____________________
Account Application (For Fund Use Only)
<S> <C> <C> <C>
FOR BROKER/DEALER USE ONLY
Firm Name: ____________________________
Home Office Address: ___________________
Branch Address: ________________________
Rep Name & No.: ________________________
Please mail account application to: Rep Signature: _________________________
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
========================================================================================================================
Initial Investment of $__________________ ($1,000 minimum)
[] Check or draft enclosed payable to the Wells S&P REIT Index Fund.
[] Bank Wire From: __________________________________________________________________________________________________________
Account Name S.S. #/Tax I.D.#
_________________________________________________________________________________________ _____________________________
Name of Individual, Corporation, Organization, or Minor, etc. (In case of custodial account
please list minor's S.S.#)
_______________________________________________________________________________________________ Citizenship: [] U.S.
Name of Joint Tenant, Partner, Custodian [] Other
Address Phone
_____________________________________________________________________________________________ ( )______________________
Street or P.O. Box Business Phone
____________________________________________________________________________________________ ( )_______________________
City State Zip Home Phone
Check Appropriate Box: [] Individual [] Joint Tenant (Right of survivorship presumed)
[] Partnership [] Corporation [] Trust [] Custodial [] Non-Profit [] Other
Occupation and Employer Name/Address______________________________________________________________________________________________
Are you an associated person of an NASD member? [] Yes [] No
========================================================================================================================
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that the Taxpayer Identification Number listed
above is my correct number. The Internal Revenue Service does not require my consent to any provision of this document other than
the certifications required to avoid backup withholding. Check box if appropriate:
[] I am exempt from backup withholding under the provisions of section 3406(a)(1)(c) of the Internal Revenue Code; or I am not
subject to backup withholding because I have not been notified that I am subject to backup withholding as a result of a failure
to report all interest or dividends; or the Internal Revenue Service has notified me that I am no longer subject to backup
withholding.
[] I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me and I have mailed or
delivered an application to receive a Taxpayer Identification Number to the Internal Revenue Service Center or Social Security
Administration Office. I understand that if I do not provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
======================================================================================================================
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
[] Share Option -- Income distributions and capital gains distributions automatically reinvested in additional
shares.
[] Income Option -- Income distributions and short term capital gains distributions paid in cash, long term capital
gains distributions reinvested in additional shares.
[] Cash Option -- Income distributions and capital gains distributions paid in cash.
[ ] By Check [ ] By ACH to my bank checking or savings account. Please attach a voided check.
========================================================================================================================
<PAGE>
REDUCED SALES CHARGES
Right of Accumulation: I apply for Right of Accumulation subject to the Agent's confirmation of the following holdings of
the Wells S&P REIT Index Fund.
Account Number/Name Account Number/Name
_______________________________________________________ _______________________________________________________
_______________________________________________________ _______________________________________________________
Letter of Intent: (Complete the Right of Accumulation section if related accounts are being applied to your Letter of Intent.)
[] l agree to the Letter of Intent in the current Prospectus of the Wells S&P REIT Index Fund. Although I am not obligated to
purchase, and the Trust is not obligated to sell, I intend to invest over a 13 month period beginning _________________
19_______ (Purchase Date of not more than 90 days prior to this Letter) an aggregate amount in the Fund at least equal to
(check appropriate box):
[ ] $50,000 [ ]$100,000 [ ] $250,000 [ ] $500,000 [ ] $1,000,000
========================================================================================================================
SIGNATURES
By signature below each investor certifies that he has received a copy of the Fund's current Prospectus, that he is of legal
age, and that he has full authority and legal capacity for himself or the organization named below, to make this investment and
to use the options selected above. The investor appoints Countrywide Fund Services, Inc. as his agent to enter orders for shares
whether by direct purchase or exchange, to receive dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption shares held in the investor's account in accordance
with any of the procedures elected above or for payment of service charges incurred by the investor. The investor further
agrees that Countrywide Fund Services, Inc. can cease to act as such agent upon ten days' notice in writing to the investor at the
address contained in this Application. The investor hereby ratifies any instructions given pursuant to this Application and for
himself and his successors and assigns does hereby release the Fund, Wells Asset Management, Inc., Gateway Investment Advisers,
L.P., Wells Investment Securities, Inc., Countrywide Fund Services, Inc., and their respective officers, employees, agents and
affiliates from any and all liability in the performance of the acts instructed herein.
__________________________________________________ ___________________________________________________
Signature of Individual Owner, Corporate Officer,
Trustee, etc. Signature of Joint Owner, if Any
___________________________________________________ ____________________________________________________
Title of Corporate Officer, Trustee, etc. Date
NOTE: Corporations, trusts and other organizations must complete the resolution form on the reverse side.
Unless otherwise specified, each joint owner shall have full authority to act on behalf of the account.
=========================================================================================================================
AUTOMATIC INVESTMENT PLAN (Complete for Investments Into the Fund)
The Automatic Investment Plan is available for all established accounts of the Wells S&P REIT Index Fund. There is no charge for
this service, and it offers the convenience of automatic investing on a regular basis. The minimum investment is $50.00 per month.
For an account that is opened by using this Plan, the minimum initial and subsequent investments must be $50.00. Though a
continuous program of 12 monthly investments is recommended, the Plan may be discontinued by the shareholder at any time.
Please invest $ ______________ per month in the Wells S&P REIT Index Fund.) ABA Routing Number__________________________
FI Account Number_____________________________
[] Checking Account [] Savings Account
__________________________________________________________________
Name of Financial Institution (FI) Please make my automatic investment on:
[] the last business day of each month
_________________________________________________________________ [] the 15th day of each month
City State [] both the 15th and last business day
X______________________________________________________ X__________________________________________________
(Signature of Depositor EXACTLY as it appears on FI Records) (Signature of Joint Tenant - if any)
(Joint Signatures are required when bank account is in joint names. Please sign exactly as signature appears on your FI's
records.)
Please attach a voided check for the Automatic Investment Plan.
<PAGE>
Indemnification to Depositor's Bank
In consideration of your participation in a plan which Countrywide Fund Services, Inc. ("Countrywide") has put into effect, by
which amounts, determined by your depositor, payable to the Fund for purchase of shares of the Fund, are collected by Countrywide,
Countrywide hereby agrees:
Countrywide will indemnify and hold you harmless from any liability to any person or persons whatsoever arising out of the payment
by you of any amount drawn by the Fund to its own order on the account of your depositor or from any liability to any person
whatsoever arising out of the dishonor by you whether with or without cause or intentionally or inadvertently, of any such
checks. Countrywide will defend, at its own cost and expense, any action which might be brought against you by any person or persons
whatsoever because of your actions taken pursuant to the foregoing request or in any manner arising by reason of your
participation in this arrangement. Countrywide will refund to you any amount erroneously paid by you to the Fund on any such check
if the claim for the amount of such erroneous payment is made by you within six (6) months from the date of such erroneous
payment; your participation in this arrangement and that of the Fund may be terminated by thirty (30) days written notice from
either party to the other.
========================================================================================================================
AUTOMATIC WITHDRAWAL PLAN (Complete for Withdrawals from the Fund)
This is an authorization for you to withdraw $_________ from my mutual fund account beginning the last business day of the
month of __________________.
Please Indicate Withdrawal Schedule (Check One):
[] Monthly -- Withdrawals will be made on the last business day of each month.
[] Quarterly -- Withdrawals will be made on or about 3/31, 6/30, 9/30 and 12/31.
[] Annually -- Please make withdrawals on the last business day of the month of:_____________________.
Please Select Payment Method (Check One):
[] Check: Please mail a check for my withdrawal proceeds to the mailing address on this account.
[] ACH Transfer: Please send my withdrawal proceeds via ACH transfer to my bank checking or savings account as indicated below.
I understand that the transfer will be completed in two to three business days and that there is no charge.
[] Bank Wire: Please send my withdrawal proceeds via bank wire, to the account indicated below. I understand that the wire will
be completed in one business day and that there is an $8.00 fee.
Please attach a voided check for ACH or bank wire
___________________________________________________________________________________________________________________________
Bank Name Bank Address
___________________________________________________________________________________________________________________________
Bank ABA# Account # Account Name
[] Send to special payee (other than applicant): Please mail a check for my withdrawal proceeds to the mailing address below:
Name of payee__________________________________________________________________________________________________________________
Please send to:________________________________________________________________________________________________________________
Street address City State Zip
========================================================================================================================
<PAGE>
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other Organizations)
RESOLVED: That this corporation or organization become a shareholder of the Wells S&P REIT Index Fund (the Fund) and that
________________________________________________________________________________________________________________________
is (are) hereby authorized to complete and execute the Application on behalf of the corporation or organization and to take any
action for it as may be necessary or appropriate with respect to its shareholder account with the Fund, and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to sign any documents necessary or appropriate to
appoint Countrywide Fund Services, Inc. as redemption agent of the corporation or organization for shares of the Fund, to establish
or acknowledge terms and conditions governing the redemption of said shares and to otherwise implement the privileges elected on
the Application.
Certificate
I hereby certify that the foregoing resolutions are in conformity with the Charter and By-Laws or other empowering documents of
the
________________________________________________________________________________________________________________________
(Name of Organization)
incorporated or formed under the laws of_________________________________________________________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the organization or corporation duly called and held on
________ at which a quorum was present and acting throughout, and that the same are now in full force and effect. I further certify
that the following is (are) duly elected officer(s) of the corporation or organization, authorized to act in accordance with the
foregoing resolutions.
Name Title
__________________________________________________ _________________________________________________________
___________________________________________________ _________________________________________________________
___________________________________________________ _________________________________________________________
Witness my hand and seal of the corporation or organization this_______________________day of__________________________, 19_______
___________________________________________________ _________________________________________________________
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above resolutions, this certificate must also be
signed by another officer.
</TABLE>
<PAGE>
WELLS S&P REIT INDEX FUND
3885 Holcomb Bridge Road
Norcross, Georgia 30092
Board of Trustees
Leo F. Wells
Brian M. Conlon
John L. Bell
Richard W. Carpenter
Walter W. Sessoms
Investment Adviser
WELLS ASSET MANAGEMENT, INC.
3885 Holcomb Bridge Road
Norcross, Georgia 30092
Sub-Adviser
GATEWAY INVESTMENT ADVISERS, L.P.
400 TechneCenter Drive
Milford, Ohio 45150
Underwriter
WELLS INVESTMENT SECURITIES, INC.
3885 Holcomb Bridge Road
Norcross, Georgia 30092
Independent Auditors
ARTHUR ANDERSEN LLP
425 Walnut Street
Cincinnati, Ohio 45202
Transfer Agent
COUNTRYWIDE FUND SERVICES, INC.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Services
Nationwide: (Toll-Free) 800-282-1581
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
- 24 -
<PAGE>
WELLS FAMILY OF REAL ESTATE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
_______, 1998
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Prospectus of the Wells Family of Real Estate Funds (the
"Trust") dated _______, 1998. A copy of the Trust's Prospectus can be obtained
by writing the Trust at 312 Walnut Street, 21st floor, Cincinnati, Ohio 45202 or
by calling the Trust nationwide toll-free 800-282-1581.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Wells Family of Real Estate Funds
3885 Holcomb Bridge Road
Norcross, Georgia 30092
THE TRUST.......................................................... 3
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS...................... 3
INVESTMENT LIMITATIONS............................................. 5
TRUSTEES AND OFFICERS.............................................. 7
THE INVESTMENT ADVISER.............................................. 9
THE SUB-ADVISER.................................................... 10
THE UNDERWRITER.................................................... 11
DISTRIBUTION PLAN.................................................. 12
SECURITIES TRANSACTIONS............................................ 13
PORTFOLIO TURNOVER................................................. 14
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE............... 15
OTHER PURCHASE INFORMATION......................................... 15
TAXES .......................................................... 16
REDEMPTION IN KIND................................................. 17
HISTORICAL PERFORMANCE INFORMATION................................. 18
CUSTODIAN.......................................................... 20
AUDITORS .......................................................... 21
COUNTRYWIDE FUND SERVICES, INC..................................... 21
STATEMENT OF ASSETS AND LIABILITIES................................ 22
- 2 -
<PAGE>
THE TRUST
The Wells Family of Real Estate Funds was organized as an Ohio business
trust on June 4, 1997. The Trust currently offers one series of shares to
investors: the Wells S&P REIT Index Fund (the "Fund").
Each share of the Fund represents an equal proportionate interest in
the assets and liabilities belonging to the Fund with each other share of the
Fund and is entitled to such dividends and distributions out of the income
belonging to the Fund as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
the Fund into a greater or lesser number of shares so long as the proportionate
beneficial interest in the assets belonging to the Fund are in no way affected.
In case of any liquidation of the Fund, the holders of shares of the Fund being
liquidated will be entitled to receive as a class a distribution out of the
assets, net of the liabilities, belonging to the Fund. No shareholder is liable
to further calls or to assessment by the Fund without his express consent.
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS
- ---------------------------------------------
A more detailed discussion of some of the terms used and investment
policies described in the Prospectus (see "Investment Objective, Investment
Policies and Risk Considerations") appears
below:
Majority. As used in the Prospectus and this Statement of Additional
Information, the term "majority" of the outstanding shares of the Fund means the
lesser of (1) 67% or more of the Fund's outstanding shares present at a meeting,
if the holders of more than 50% of the outstanding shares of the Fund are
present or represented at such meeting or (2) more than 50% of the outstanding
shares of the Fund.
Repurchase Agreements. The Fund may acquire U.S. Government Securities
or other high-grade debt securities subject to repurchase agreements. A
repurchase transaction occurs when, at the time the Fund purchases a security
(normally a U.S. Treasury obligation), it also resells it to the vendor
(normally a member bank of the Federal Reserve System or a registered Government
Securities dealer) and must deliver the security (and/or securities substituted
for them under the repurchase agreement) to the vendor on an agreed upon date in
the future. Such securities, including any securities so substituted, are
referred to as the "Repurchase Securities." The repurchase price exceeds the
purchase price by an amount which reflects an agreed upon market interest rate
effective for the period of time during which the repurchase agreement is in
effect.
- 3 -
<PAGE>
The majority of these transactions run day-to-day, and the delivery
pursuant to the resale typically will occur within one to five days of the
purchase. The Fund's risk is limited to the ability of the vendor to pay the
agreed upon sum upon the delivery date; in the event of bankruptcy or other
default by the vendor, there may be possible delays and expenses in liquidating
the instrument purchased, decline in its value and loss of interest. These risks
are minimized when the Fund holds a perfected security interest in the
Repurchase Securities and can therefore sell the instrument promptly. Under
guidelines issued by the Trustees, the Adviser will carefully consider the
creditworthiness of a vendor during the term of the repurchase agreement.
Repurchase agreements are considered loans collateralized by the Repurchase
Securities, such agreements being defined as "loans" under the Investment
Company Act of 1940 (the "1940 Act"). The return on such "collateral" may be
more or less than that from the repurchase agreement. The market value of the
resold securities will be monitored so that the value of the "collateral" is at
all times as least equal to the value of the loan, including the accrued
interest earned thereon. All Repurchase Securities will be held by the Fund's
custodian either directly or through a securities depository.
Description of Money Market Instruments. Money market instruments may
include U.S. Government Securities, as described herein, provided that they
mature in thirteen months or less from the date of acquisition and are otherwise
eligible for purchase by the Fund. Money market instruments also may include
Bankers' Acceptances and Certificates of Deposit of domestic branches of U.S.
banks, Commercial Paper and Variable Amount Demand Master Notes ("Master
Notes"). Bankers' Acceptances are time drafts drawn on and "accepted" by a bank,
which are the customary means of effecting payment for merchandise sold in
import-export transactions and are a source of financing used extensively in
international trade. When a bank "accepts" such a time draft, it assumes
liability for its payment. When the Fund acquires a Bankers' Acceptance, the
bank which "accepted" the time draft is liable for payment of interest and
principal when due. The Bankers' Acceptance, therefore, carries the full faith
and credit of such bank. A Certificate of Deposit ("CD") is an unsecured
interest-bearing debt obligation of a bank. CDs acquired by the Fund would
generally be in amounts of $100,000 or more. Commercial Paper is an unsecured,
short term debt obligation of a bank, corporation or other borrower. Commercial
Paper maturity generally ranges from two to 270 days and is usually sold on a
discounted basis rather than as an interest-bearing instrument. The Fund will
invest in Commercial Paper only if it is rated in the highest rating category by
any nationally recognized statistical rating organization ("NRSRO") or, if not
rated, if the issuer has an outstanding unsecured debt issue rated in the three
highest categories by any NRSRO or, if not so rated, is of
- 4 -
<PAGE>
equivalent quality in the Adviser's assessment. Commercial Paper may include
Master Notes of the same quality. Master Notes are unsecured obligations which
are redeemable upon demand of the holder and which permit the investment of
fluctuating amounts at varying rates of interest. Master Notes are acquired by
the Fund only through the Master Note program of the Fund's custodian, acting as
administrator thereof. The Adviser will monitor, on a continuous basis, the
earnings power, cash flow and other liquidity ratios of the issuer of a Master
Note held by the Fund.
INVESTMENT LIMITATIONS
The Trust has adopted certain fundamental investment limitations
designed to reduce the risk of an investment in the Fund. These limitations may
not be changed without the affirmative vote of a majority of the outstanding
shares of the Fund.
Under these fundamental limitations, the Fund may not:
(1) Issue senior securities, pledge its assets or borrow money,
except that it may borrow from banks as a temporary measure
(a) for extraordinary or emergency purposes, in amounts not
exceeding 5% of the Fund's total assets, or (b) in order to
meet redemption requests that might otherwise require
untimely disposition of portfolio securities if, immediately
after such borrowing, the value of the Fund's assets,
including all borrowings then outstanding, less its
liabilities (excluding all borrowings), is equal to at least
300% of the aggregate amount of borrowings then outstanding,
and may pledge its assets to secure all such borrowings;
(2) Underwrite securities issued by others except to the extent the Fund
may be deemed to be an underwriter under the federal securities laws in
connection with the disposition of portfolio securities;
(3) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of transactions);
(4) Make short sales of securities or maintain a short position, except
short sales "against the box";
(5) Make loans of money or securities, except that the Fund may (i) invest
in repurchase agreements and commercial paper; (ii) purchase a portion
of an issue of publicity distributed bonds, debentures or other debt
securities; and (iii) acquire private issues of debt securities subject
to the limitations on investments in illiquid securities;
- 5 -
<PAGE>
(6) Write, purchase or sell commodities, commodities contracts, futures
contracts or related options;
(7) Invest more than 25% of its total assets in the securities of issuers
in any particular industry (other than securities of the United States
Government, its agencies or instrumentalities), except that the Fund
will invest at least 25% of its assets in securities of issuers in the
real estate industry;
(8) Invest for the purpose of exercising control or management
of another issuer;
(9) Invest in interests in oil, gas or other mineral exploration or
development programs, except that the Fund may invest in the securities
of companies (other than those which are not readily marketable) which
own or deal in such things;
(10) Invest in interests in real estate or real estate limited partnerships
(although it may invest in real estate investment trusts and purchase
securities secured by real estate or interests therein, or issued by
companies or investment trusts which invest in real estate or interests
therein);
(11) Invest more than 15% of its net assets in illiquid securities. For this
purpose, illiquid securities include, among others (a) securities for
which no readily available market exists or which have legal or
contractual restrictions on resale and (b) repurchase agreements not
terminable within seven days; or
(12) Purchase the securities of any issuer if such purchase at
the time thereof would cause less than 75% of the value of
the total assets of the Fund to be invested in cash and cash
items (including receivables), securities issued by the U.S.
Government, its agencies or instrumentalities, securities of
other investment companies, and other securities for the
purposes of this calculation limited in respect of any one
issuer to an amount not greater in value than 5% of the
value of the total assets of the Fund and to not more than
10% of the outstanding voting securities of such issuer.
Percentage restrictions stated as an investment limitation apply at the
time of investment; if a later increase or decrease in percentage beyond the
specified limits results from a change in securities values or total assets, it
will not be considered a violation. However, in the case of the borrowing
limitation (limitation number 1, above), the Fund will, to the extent necessary,
reduce its existing borrowings to comply with the limitation.
- 6 -
<PAGE>
While the Fund has reserved the right to make short sales "against the
box" (limitation number 4, above), the Sub-Adviser has no present intention of
engaging in such transactions at this time or during the coming year.
TRUSTEES AND OFFICERS
- ---------------------
The following is a list of the Trustees and executive officers of the
Trust. Each Trustee who is an "interested person" of the Trust, as defined by
the 1940 Act, is indicated by an asterisk.
Estimated Annual
Compensation
Name Age Position Held From the Trust
- ----- --- ------------- ------------------
*Leo F. Wells III 53 President $ 0
and Trustee
*Brian M. Conlon 39 Executive Vice
President
and Trustee 0
+John L. Bell 57 Trustee 1,000
+Richard W. Carpenter 60 Trustee 1,000
+Walter W. Sessoms 63 Trustee 1,000
Robert G. Dorsey 40 Vice President 0
Mark J. Seger 35 Treasurer 0
John F. Splain 40 Secretary 0
* Mr. Wells and Mr. Conlon, as affiliated persons of the Adviser and
the Underwriter, are "interested persons" of the Trust within the
meaning of Section 2(a)(19) of the 1940 Act.
+ Member of Audit Committee.
The principal occupations of the Trustees and executive officers of the
Trust during the past five years are set forth below:
LEO F. WELLS, III, 3885 Holcomb Bridge Road, Norcross, Georgia, is
President and sole Director of Wells Capital, Inc. a real estate company. In
addition, he is President of Wells & Associates, Inc. (a real estate brokerage
company). He is also the sole Director and President of Wells Management
Company, Inc., a property management company he founded in 1983; Wells Advisers,
Inc., a company he organized in 1991 to act as a non-bank custodian for IRAs;
Wells Real estate Funds, Inc., a company he organized in February, 1997 to act
as a holding company for the Wells group of companies; and Wells Development
Corporation, a company formed in April, 1997 to acquire and develop commercial
real properties on behalf of the Wells Real Estate Funds and the Wells REIT. Mr.
Wells holds a Bachelor of Business Administration degree in Economics from the
University of Georgia. He is also a member of the International Association for
Financial Planning and a registered NASD principal.
- 7 -
<PAGE>
BRIAN M. CONLON, 3885 Holcomb Bridge Road, Norcross, Georgia, is the
Executive Vice President and Chief Operating Officer of Wells Capital, Inc. Mr.
Conlon joined Wells Capital in 1985 as a Regional Vice President, served as Vice
President and National Marketing Director from 1991 until April, 1996, and as
Executive Vice President from April, 1996 until February, 1997 when he assumed
his current position. Mr. Conlon received a Bachelor of Business Administration
degree from Georgia State University and a Master of Business Administration
degree from the University of Dallas. Mr. Conlon is a member of the
International Association for Financial Planning, a general securities
principal, and a Georgia real estate broker. Mr. Conlon also holds the Certified
Financial Planner (CFP) designation of the Certified Financial Planner Board of
Standards, Inc. and the Certified Commercial Investment Member (CCIM)
designation of the Commercial Investment Real Estate Institute.
JOHN L. BELL, 800 Mount Vernon Highway, Suite 230, Atlanta, Georgia, is the
General Partner of JB Family LLP (an investment firm). He is also the past owner
and Chief Executive Officer of Bell-Mann, Inc. (a flooring company).
RICHARD W. CARPENTER, 5570 Glenridge Drive, Atlanta, Georgia, is President
and Director of the following business entities: Reamark Holdings, Corp.(a real
estate company); Commonwealth Oil Refining Company (a refinery); Leisure
Technology, Inc. (a real estate company); and Wyatt Energy, Inc. (a refinery).
In addition, he is also the Managing Partner of Carpenter Properties LP (a real
estate company) and a Director of TaraCorp (a _______ company). He also serves
as a Director of First Liberty Savings Bank.
WALTER WOODROW SESSOMS, 5995 River Chase Circle, Atlanta, Georgia, is
presently retired. He previously served as a Group President for BellSouth
Telecommunications from December, 1991 through June 30, 1997.
ROBERT G. DORSEY, 312 Walnut Street, Cincinnati, Ohio, is President and
Treasurer of Countrywide Fund Services, Inc. (a registered transfer agent) and
Treasurer of Countrywide Investments, Inc. (a registered broker-dealer and
investment adviser) and Countrywide Financial Services, Inc. (a financial
services company and parent of Countrywide Fund Services, Inc. and Countrywide
Investments, Inc. and a wholly-owned subsidiary of Countrywide Credit
Industries, Inc.). He is also Vice President of Brundage, Story and Rose
Investment Trust, PRAGMA Investment Trust, Markman MultiFund Trust, Dean Family
of Funds, The New York State Opportunity Funds and Maplewood Investment Trust
and Assistant Vice President of Interactive Investments, Schwartz Investment
Trust, The Tuscarora Investment Trust, Williamsburg Investment Trust and The
Gannett Welsh & Kotler Funds (all of which are registered investment companies).
- 8 -
<PAGE>
MARK J. SEGER, C.P.A., 312 Walnut Street, Cincinnati, Ohio, is Vice
President of Countrywide Financial Services, Inc. and Countrywide Fund Services,
Inc. He is also Treasurer of Countrywide Investment Trust, Countrywide Tax-Free
Trust, Countrywide Strategic Trust, Brundage, Story and Rose Investment Trust,
Markman MultiFund Trust, PRAGMA Investment Trust, Williamsburg Investment Trust,
Dean Family of Funds, The New York State Opportunity Funds and Maplewood
Investment Trust, Assistant Treasurer of Interactive Investments, Schwartz
Investment Trust, The Tuscarora Investment Trust and The Gannett Welsh & Kotler
Funds.
JOHN F. SPLAIN, 312 Walnut Street, Cincinnati, Ohio, is Secretary and
General Counsel of Countrywide Fund Services, Inc., Countrywide Investments,
Inc. and Countrywide Financial Services, Inc. He is also Secretary of
Countrywide Investment Trust, Countrywide Tax-Free Trust, Countrywide Strategic
Trust, Brundage, Story and Rose Investment Trust, Markman MultiFund Trust, The
Tuscarora Investment Trust, Williamsburg Investment Trust, PRAGMA Investment
Trust and Maplewood Investment Trust and Assistant Secretary of Interactive
Investments, Schwartz Investment Trust, Dean Family of Funds, The New York State
Opportunity Funds and The Gannett Welsh & Kotler Funds.
Each non-interested Trustee will receive a $250 fee for each Board
meeting attended and will be reimbursed for travel and other expenses incurred
in the performance of their duties.
THE INVESTMENT ADVISER
- ----------------------
Wells Asset Management, Inc. (the "Adviser") is the Fund's investment
adviser. Leo F. Wells, III is the controlling shareholder of the Adviser. Mr.
Wells, by reason of such affiliation, may directly or indirectly receive
benefits from the advisory fees paid to the Adviser. Mr. Wells is also the
controlling shareholder of the Underwriter and a Trustee of the Trust.
Under the terms of the advisory agreement between the Trust and the
Adviser, the Adviser manages the Fund's investments. The Fund pays the Adviser a
fee computed and accrued daily and paid monthly at an annual rate of .50% of its
average daily net assets.
The Fund is responsible for the payment of all expenses incurred in
connection with the organization, registration of shares and operations of the
Fund, including such extraordinary or non-recurring expenses as may arise, such
as litigation to which the Fund may be a party. The Fund may have an obligation
to indemnify the Trust's officers and Trustees with respect to such litigation,
except in instances of willful misfeasance, bad faith, gross negligence or
reckless disregard by such officers and Trustees in the performance of their
duties. The Adviser bears promotional expenses in connection with the
distribution of the Fund's shares to the extent that such expenses are not
assumed
- 9 -
<PAGE>
by the Fund under their plan of distribution (see below). The compensation and
expenses of any officer, Trustee or employee of the Trust who is an officer,
director, employee or stockholder of the Adviser are paid by the Adviser.
By its terms, the Trust's advisory agreement will remain in force until
_______, 2000 and from year to year thereafter, subject to annual approval by
(a) the Board of Trustees or (b) a vote of the majority of the Fund's
outstanding voting securities; provided that in either event continuance is also
approved by a majority of the Trustees who are not interested persons of the
Trust, by a vote cast in person at a meeting called for the purpose of voting
such approval. The Trust's advisory agreement may be terminated at any time, on
sixty days' written notice, without the payment of any penalty, by the Board of
Trustees, by a vote of the majority of the Fund's outstanding voting securities,
or by the Adviser. The advisory agreement automatically terminates in the event
of its assignment, as defined by the 1940 Act and the rules thereunder.
THE SUB-ADVISER
- ---------------
Gateway Investment Advisers, L.P. (the "Sub-Adviser") supervises the Fund's
investments pursuant to a Sub-Advisory Agreement (the "Sub-Advisory Agreement")
between the Sub-Adviser, the Adviser and the Trust.
The Sub-Adviser is a Delaware limited partnership which has been managing
assets for institutional and individual investors since December 15, 1995. Prior
to that time, Gateway Investment Advisers, Inc. ("GIA") had provided investment
management services to institutional and individual investors since its
inception in June, 1977. The Sub-Adviser became the successor in interest to the
assets, business and personnel of GIA. GIA is the general partner of the
Sub-Adviser with a 76% ownership interest, while Alex. Brown Investments
Incorporated ("ABII") is the sole limited partner with a 24% ownership interest.
ABII is an affiliate of Alex. Brown Incorporated, a nationally known investment
banking firm and registered broker/dealer located in Baltimore, Maryland. Walter
G. Sall, Chairman, and J. Patrick Rogers, President, together own of record and
beneficially 99.85% of the outstanding shares of GIA and thereby control the
Sub-Adviser.
The Adviser (not the Fund) pays the Sub-Adviser a fee computed and accrued
daily and paid monthly at an annual rate of .15% of the value of the Fund's
average daily net assets up to $100,000,000, .10% of such assets from
$100,000,000 to $200,000,000 and .07% of such assets in excess of $200,000,000;
provided, however, that the minimum fee is $3,000 per month. The Sub-Adviser
will waive its fees for the first three months of the Fund's operations.
- 10 -
<PAGE>
By its terms, the Sub-Advisory Agreement will remain in force until
_____________, 2000 and from year to year thereafter, subject to annual approval
by (a) the Board of Trustees or (b) a vote of the majority of the Fund's
outstanding voting securities; provided that in either event continuance is also
approved by a majority of the Trustees who are not interested persons of the
Trust, by a vote cast in person at a meeting called for the purpose of voting on
such approval. The Sub-Advisory Agreement may be terminated at any time, on
sixty days' written notice, without the payment of any penalty, by the Board of
Trustees, by a vote of the majority of the Fund's outstanding voting securities,
or by the Adviser or Sub-Adviser. The Sub-Advisory Agreement automatically
terminates in the event of its assignment, as defined by the 1940 Act and the
rules thereunder.
THE UNDERWRITER
- --------------
Wells Investment Securities, Inc. (the "Underwriter") is the principal
underwriter of the Fund and, as such, is the exclusive agent for distribution of
shares of the Fund. The Underwriter is obligated to sell the shares on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
The Underwriter currently allows concessions to dealers who sell shares
of the Fund. The Underwriter receives that portion of the initial sales load
which is not reallowed to the dealers who sell shares of the Fund. The
Underwriter retains the entire sales charge on all direct initial investments in
the Fund and on all investments in accounts with no designated dealer of record.
The Fund may compensate dealers, including the Underwriter and its
affiliates, based on the average balance of all accounts in the Fund for which
the dealer is designated as the party responsible for the account. Such
compensation will be paid on a quarterly basis after monies have been in the
Fund for greater than twelve months. See "Distribution Plan" below.
By its terms, the Trust's underwriting agreement will remain in force until
__________, 2000 and from year to year thereafter, subject to annual approval by
(a) the Board of Trustees or (b) a vote of the majority of the Fund's
outstanding voting securities; provided that in either event continuance is also
approved by a majority of the Trustees who are not interested persons of the
Trust, by a vote cast in person at a meeting called for the purpose of voting
such approval. The Trust's underwriting agreement may be terminated at any time,
on sixty days' written notice, without the payment of any penalty, by the Board
of Trustees, by a vote of the majority of the Fund's outstanding voting
securities, or by the Adviser. The underwriting agreement automatically
terminates in the event of its assignment, as defined by the 1940 Act and the
rules thereunder.
- 11 -
<PAGE>
DISTRIBUTION PLAN
- -----------------
As stated in the Prospectus, the Fund has adopted a plan of
distribution (the "Plan") pursuant to Rule 12b-1 under the 1940 Act which
permits the Fund to pay for expenses incurred in the distribution and promotion
of its shares, including but not limited to, the printing of prospectuses,
statements of additional information and reports used for sales purposes,
advertisements, expenses of preparation and printing of sales literature,
promotion, marketing and sales expenses, and other distribution-related
expenses, including any distribution fees paid to the Underwriter and its
affiliates or to securities dealers or other firms who have executed a
distribution or service agreement with the Underwriter. The Plan expressly
limits payment of the distribution expenses listed above in any fiscal year to a
maximum of .25% of the average daily net assets of the Fund.
The continuance of the Plan must be specifically approved at least annually
by a vote of the Trust's Board of Trustees and by a vote of the Trustees who are
not interested persons of the Trust and have no direct or indirect financial
interest in the Plan (the "Rule 12b-1 Trustees") at a meeting called for the
purpose of voting on such continuance. The Plan may be terminated at any time by
a vote of a majority of the Rule 12b-1 Trustees or by a vote of the holders of a
majority of the outstanding shares of the Fund. In the event the Plan is
terminated in accordance with its terms, the Fund will not be required to make
any payments for expenses incurred after the termination date. The Plan may not
be amended to increase materially the amount to be spent for distribution
without shareholder approval. All material amendments to the Plan must be
approved by a vote of the Trust's Board of Trustees and by a vote of the Rule
12b-1 Trustees.
In approving the Plan, the Trustees determined, in the exercise of their
business judgment and in light of their fiduciary duties as Trustees, that there
is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Board of Trustees believes that expenditure of the Fund's
assets for distribution expenses under the Plan should assist in the growth of
the Fund which will benefit the Fund and its shareholders through increased
economies of scale, and less chance of disruption of planned investment
strategies. The Plan will be renewed only if the Trustees make a similar
determination for each subsequent year of the Plan. There can be no assurance
that the benefits anticipated from the expenditure of the Fund's assets for
distribution will be realized. While the Plan is in effect, all amounts spent by
the Fund pursuant to the Plan and the purposes for which such expenditures were
made must be reported quarterly to the Board of Trustees for its review. In
addition, the selection and nomination of those Trustees who are not interested
persons of the Trust are committed to the discretion of the Rule 12b-1 Trustees
during such period.
- 12 -
<PAGE>
SECURITIES TRANSACTIONS
- -----------------------
Decisions to buy and sell securities for the Fund and the placing of
the Fund's securities transactions and negotiation of commission rates where
applicable are made by the Sub-Adviser and are subject to review by the Board of
Trustees of the Trust. In the purchase and sale of portfolio securities, the
Sub-Adviser seeks best execution for the Fund, taking into account such factors
as price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. The Sub-Adviser generally seeks favorable prices and commission rates
that are reasonable in relation to the benefits received.
Generally, the Fund attempts to deal directly with the dealers who make a
market in the securities involved unless better prices and execution are
available elsewhere. Such dealers usually act as principals for their own
account. On occasion, portfolio securities for the Fund may be purchased
directly from the issuer.
The Sub-Adviser is specifically authorized to select brokers who also
provide brokerage and research services to the Fund and/or other accounts over
which the Sub-Adviser exercises investment discretion and to pay such brokers a
commission in excess of the commission another broker would charge if the
Sub-Adviser determines in good faith that the commission is reasonable in
relation to the value of the brokerage and research services provided. The
determination may be viewed in terms of a particular transaction or the
Sub-Adviser's overall responsibilities with respect to the Fund and to accounts
over which it exercises investment discretion.
Research services include securities and economic analyses, reports on
issuers' financial conditions and future business prospects, newsletters and
opinions relating to interest trends, general advice on the relative merits of
possible investment securities for the Fund and statistical services and
information with respect to the availability of securities or purchasers or
sellers of securities. Although this information is useful to the Fund and the
Sub-Adviser, it is not possible to place a dollar value on it. Research services
furnished by brokers through whom the Fund effects securities transactions may
be used by the Sub-Adviser in servicing all of its accounts and not all such
services may be used by the Sub-Adviser in connection with the Fund.
The Fund has no obligation to deal with any broker or dealer in the
execution of securities transactions. However, the Sub-Adviser and other
affiliates of the Trust or the Sub-Adviser may effect securities transactions
which are executed on a national securities exchange or transactions in the
over-the-counter market conducted on an agency basis. The Fund
- 13 -
<PAGE>
will not effect any brokerage transactions in its portfolio securities with the
Sub-Adviser if such transactions would be unfair or unreasonable to its
shareholders. Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers. Although the Fund does not
anticipate any ongoing arrangements with other brokerage firms, brokerage
business may be transacted from time to time with other firms. Neither the
Adviser nor the Sub-Adviser, nor affiliates of the Trust, the Adviser, or the
Sub-Adviser will receive reciprocal brokerage business as a result of the
brokerage business transacted by the Fund with other brokers.
Code of Ethics. The Trust, the Adviser and the Sub-Adviser have each
adopted a Code of Ethics under Rule 17j-1 of the Investment Company Act of 1940.
The Code significantly restricts the personal investing activities of all
employees of the Adviser and the Sub-Adviser and, as described below, imposes
additional, more onerous, restrictions on investment personnel of the Adviser
and the Sub-Adviser. The Code requires that all employees of the Adviser and the
Sub-Adviser preclear any personal securities investment (with limited
exceptions, such as U.S. Government obligations). The preclearance requirement
and associated procedures are designed to identify any substantive prohibition
or limitation applicable to the proposed investment. In addition, no employee
may purchase or sell any security which at the time is being purchased or sold
(as the case may be), or to the knowledge of the employee is being considered
for purchase or sale, by the Fund. The substantive restrictions applicable to
investment personnel of the Adviser and the Sub-Adviser include a ban on
acquiring any securities in an initial public offering and a prohibition from
profiting on short-term trading in securities. Furthermore, the Code provides
for trading "blackout periods" which prohibit trading by investment personnel of
the Adviser and the Sub-Adviser within periods of trading by the Fund in the
same (or equivalent) security.
PORTFOLIO TURNOVER
- ------------------
The Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the fiscal year by the monthly
average of the value of the portfolio securities owned by the Fund during the
fiscal year. High portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
Fund. The Sub-Adviser anticipates that the Fund's portfolio turnover rate
normally will not exceed 100%. A 100% turnover rate would occur if all of the
Fund's portfolio securities were replaced once within a one year period.
- 14 -
<PAGE>
Generally, the Fund intends to invest for long-term purposes. However, the
rate of portfolio turnover will depend upon cash flows into and out of the Fund,
changes in the S&P REIT Index and market and other conditions, and it will not
be a limiting factor when the Sub-Adviser believes that portfolio changes are
appropriate.
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
- ----------------------------------------------------
The share price (net asset value) and the public offering price (net asset
value plus applicable sales load) of the shares of the Fund are determined as of
the close of the regular session of trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time), on each day the Trust is open for business.
The Trust is open for business on every day except Saturdays, Sundays and the
following holidays: New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Trust may
also be open for business on other days in which there is sufficient trading in
the Fund's portfolio securities that its net asset value might be materially
affected. For a description of the methods used to determine the share price and
the public offering price, see "Calculation of Share Price and Public Offering
Price" in the Prospectus.
OTHER PURCHASE INFORMATION
- --------------------------
The Prospectus describes generally how to purchase shares of the Fund.
Additional information with respect to certain types of purchases of shares of
the Fund is set forth below.
Right of Accumulation. A "purchaser" (as defined in the Prospectus) of
shares of the Fund has the right to combine the cost or current net asset value
(whichever is higher) of his existing Fund shares with the amount of his current
purchases in order to take advantage of the reduced sales loads set forth in the
tables in the Prospectus. The purchaser or his dealer must notify Countrywide
Fund Services, Inc. (the "Transfer Agent") that an investment qualifies for a
reduced sales load. The reduced sales load will be granted upon confirmation of
the purchaser's holdings by the Fund.
Letter of Intent. The reduced sales loads set forth in the tables in
the Prospectus may also be available to any "purchaser" (as defined in the
Prospectus) of shares of the Fund who submits a Letter of Intent to the Transfer
Agent. The Letter must state an intention to invest in the Fund within a
thirteen month period a specified amount which, if made at one time, would
qualify for a reduced sales load. A Letter of Intent may be submitted with a
purchase at the beginning of the thirteen month period or within ninety days of
the first purchase under the Letter of Intent.
- 15 -
<PAGE>
Upon acceptance of this Letter, the purchaser becomes eligible for the reduced
sales load applicable to the level of investment covered by such Letter of
Intent as if the entire amount were invested in a single transaction.
The Letter of Intent is not a binding obligation on the purchaser to
purchase, or the Fund to sell, the full amount indicated. During the term of a
Letter of Intent, shares representing 5% of the intended purchase will be held
in escrow. These shares will be released upon the completion of the intended
investment. If the Letter of Intent is not completed during the thirteen month
period, the applicable sales load will be adjusted by the redemption of
sufficient shares held in escrow, depending upon the amount actually purchased
during the period. The minimum initial investment under a Letter of Intent is
$10,000.
A ninety-day backdating period can be used to include earlier purchases at
the purchaser's cost (without a retroactive downward adjustment of the sales
load). The thirteen month period would then begin on the date of the first
purchase during the ninety-day period. No retroactive adjustment will be made if
purchases exceed the amount indicated in the Letter of Intent. The purchaser or
his dealer must notify the Transfer Agent that an investment is being made
pursuant to an executed Letter of Intent.
Other Information. The Trust does not impose a sales load or imposes a
reduced sales load in connection with purchases of shares of the Fund made under
the reinvestment privilege or the purchases described in the "Reduced Sales
Load" or "Purchases at Net Asset Value" sections in the Prospectus because such
purchases require minimal sales effort by the Adviser. Purchases described in
the "Purchases at Net Asset Value" section may be made for investment only, and
the shares may not be resold except through redemption by or on behalf of the
Fund.
TAXES
The Prospectus describes generally the tax treatment of distributions
by the Fund. This section of the Statement of Additional Information includes
additional information concerning federal taxes.
The Fund intends to qualify for the special tax treatment afforded a
"regulated investment company" under Subchapter M of the Internal Revenue Code
so that it does not pay federal taxes on income and capital gains distributed to
shareholders. To so qualify the Fund must, among other things, (i) derive at
least 90% of its gross income in each taxable year from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock, securities or foreign currency, or certain other income
(including but not limited to gains from options, futures and forward contracts)
derived with respect to its business of investing in stock, securities or
- 16 -
<PAGE>
currencies; and (ii) diversify its holdings so that at the end of each quarter
of its taxable year the following two conditions are met: (a) at least 50% of
the value of the Fund's total assets is represented by cash, U.S. Government
securities, securities of other regulated investment companies and other
securities (for this purpose such other securities will qualify only if the
Fund's investment is limited in respect to any issuer to an amount not greater
than 5% of the Fund's assets and 10% of the outstanding voting securities of
such issuer) and (b) not more than 25% of the value of the Fund's assets is
invested in securities of any one issuer (other than U.S. Government securities
or securities of other regulated investment companies).
The Fund's net realized capital gains from securities transactions will be
distributed only after reducing such gains by the amount of any available
capital loss carryforwards. Capital losses may be carried forward to offset any
capital gains for eight years, after which any undeducted capital loss remaining
is lost as a deduction.
A federal excise tax at the rate of 4% will be imposed on the excess, if
any, of the Fund's "required distribution" over actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its net capital gains
recognized during the one year period ending on October 31 of the calendar year
plus undistributed amounts from prior years. The Fund intends to make
distributions sufficient to avoid imposition of the excise tax.
The Trust is required to withhold and remit to the U.S. Treasury a
portion (31%) of dividend income on any account unless the shareholder provides
a taxpayer identification number and certifies that such number is correct and
that the shareholder is not subject to backup withholding.
REDEMPTION IN KIND
- ------------------
Under unusual circumstances, when the Board of Trustees deems it in the
best interests of the Fund's shareholders, the Fund may make payment for shares
repurchased or redeemed in whole or in part in securities of the Fund taken at
current value. If any such redemption in kind is to be made, the Fund intends to
make an election pursuant to Rule 18f-1 under the 1940 Act. This election will
require the Fund to redeem shares solely in cash up to the lesser of $250,000 or
1% of the net asset value of the Fund during any ninety day period for any one
shareholder. Should payment be made in securities, the redeeming shareholder
will generally incur brokerage costs in converting such securities to cash.
Portfolio securities which are issued in an in-kind redemption will be readily
marketable.
- 17 -
<PAGE>
HISTORICAL PERFORMANCE INFORMATION
- ----------------------------------
From time to time, the Fund may advertise average annual total return.
Average annual total return quotations will be computed by finding the average
annual compounded rates of return over 1, 5 and 10 year periods that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P (1 + T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 and 10 year periods
at the end of the 1, 5 or 10 year periods (or fractional
portion thereof)
The calculation of average annual total return assumes the reinvestment of
all dividends and distributions and the deduction of the current maximum initial
sales load from the initial $1,000 payment. If the Fund has been in existence
less than one, five or ten years, the time period since the date of the initial
public offering of shares will be substituted for the periods stated. The Fund
may also advertise total return (a "nonstandardized quotation") which is
calculated differently from average annual total return. A nonstandardized
quotation of total return may be a cumulative return which measures the
percentage change in the value of an account between the beginning and end of a
period, assuming no activity in the account other than reinvestment of dividends
and capital gains distributions. This computation does not include the effect of
the applicable initial sales load which, if included, would reduce total return.
A nonstandardized quotation may also indicate average annual compounded rates of
return without including the effect of the applicable initial sales load or over
periods other than those specified for average annual total return. A
nonstandardized quotation of total return will always be accompanied by the
Fund's average annual total return as described above.
From time to time, the Fund may also advertise its yield. A yield
quotation is based on a 30-day (or one month) period and is computed by dividing
the net investment income per share earned during the period by the maximum
offering price per share on the last day of the period, according to the
following formula:
- 18 -
<PAGE>
Yield = 2[(a-b/cd + 1)6 - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that the
Fund owns the security. Generally, interest earned (for the purpose of "a"
above) on debt obligations is computed by reference to the yield to maturity of
each obligation held based on the market value of the obligation (including
actual accrued interest) at the close of business on the last business day prior
to the start of the 30-day (or one month) period for which yield is being
calculated, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest). With respect to the treatment of
discount and premium on mortgage or other receivables-backed obligations which
are expected to be subject to monthly paydowns of principal and interest, gain
or loss attributable to actual monthly paydowns is accounted for as an increase
or decrease to interest income during the period and discount or premium on the
remaining security is not amortized.
The Fund's performance may be compared in advertisements, sales literature
and other communications to the performance of other mutual funds having similar
objectives or to standardized indices or other measures of investment
performance. In particular, the Fund may compare its performance to the S&P 500
Index, which is generally considered to be representative of the performance of
unmanaged common stocks that are publicly traded in the United States securities
markets. Comparative performance may also be expressed by reference to a ranking
prepared by a mutual fund monitoring service, such as Lipper Analytical
Services, Inc. or Morningstar, Inc., or by one or more newspapers, newsletters
or financial periodicals. Performance comparisons may be useful to investors who
wish to compare the Fund's past performance to that of other mutual funds and
investment products. Of course, past performance is not a guarantee of future
results.
o Lipper Analytical Services, Inc. ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset value over a
specific period of time.
- 19 -
<PAGE>
o Morningstar, Inc., an independent rating service, is the publisher of
the bi-weekly Mutual Fund Values. Mutual Fund Values rates more than
1,000 NASDAQ-listed mutual funds of all types, according to their
risk-adjusted returns. The maximum rating is five stars, and ratings
are effective for two weeks.
Investors may use such indices in addition to the Fund's Prospectus to
obtain a more complete view of the Fund's performance before investing. Of
course, when comparing the Fund's performance to any index, factors such as
composition of the index and prevailing market conditions should be considered
in assessing the significance of such comparisons. When comparing funds using
reporting services, or total return, investors should take into consideration
any relevant differences in funds such as permitted portfolio compositions and
methods used to value portfolio securities and compute offering price.
Advertisements and other sales literature for the Fund may quote total returns
that are calculated on non-standardized base periods. The total returns
represent the historic change in the value of an investment in the Fund based on
monthly reinvestment of dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as Standard & Poor's Ratings Group and Moody's Investors Service, Inc.).
The Fund may also depict the historical performance of the securities in which
the Fund may invest over periods reflecting a variety of market or economic
conditions either alone or in comparison with alternative investments,
performance indices of those investments, or economic indicators. The Fund may
also include in advertisements and in materials furnished to present and
prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.
CUSTODIAN
- ---------
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio, has been retained
to act as Custodian for the Fund's investments. Star Bank, N.A. acts as the
Fund's depository, safekeeps its portfolio securities, collects all income and
other payments with respect thereto, disburses funds as instructed and maintains
records in connection with its duties.
- 20 -
<PAGE>
AUDITORS
- --------
The firm of Arthur Andersen LLP has been selected as independent public
accountants for the Trust for the fiscal year ending January 31, 1999. Arthur
Andersen LLP, 425 Walnut Street, Cincinnati, Ohio, performs an annual audit of
the Trust's financial statements and advises the Funds as to certain accounting
matters.
COUNTRYWIDE FUND SERVICES, INC.
- -------------------------------
The Trust has retained Countrywide Fund Services, Inc. (the "Transfer
Agent") to act as its transfer agent. The Transfer Agent is an indirect
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New York Stock
Exchange listed company principally engaged in the business of residential
mortgage lending. The Transfer Agent maintains the records of each shareholder's
account, answers shareholders' inquiries concerning their accounts, processes
purchases and redemptions of the Fund's shares, acts as dividend and
distribution disbursing agent and performs other shareholder service functions.
The Transfer Agent receives from the Fund for its services as transfer agent a
fee payable monthly at an annual rate of $20 per account, provided, however,
that the minimum fee is $1,200 per month. In addition, the Fund pays
out-of-pocket expenses, including but not limited to, postage, envelopes,
checks, drafts, forms, reports, record storage and communication lines.
The Transfer Agent also provides accounting and pricing services to the
Fund. For calculating daily net asset value per share and maintaining such books
and records as are necessary to enable the Transfer Agent to perform its duties,
the Fund pays the Transfer Agent a fee in accordance with the following
schedule:
Average Monthly Net Assets Monthly Fee
-------------------------- -----------
$ 0 - $ 50,000,000 $2,000
$ 50,000,000 - 100,000,000 $2,500
$100,000,000 - 200,000,000 $3,000
$200,000,000 - 300,000,000 $4,000
Over - 300,000,000 $5,000 + .001%
of average monthly
net assets.
In addition, the Fund pays all costs of external pricing services.
The Transfer Agent also provides administrative services to the Fund. In
this capacity, the Transfer Agent supplies non-investment related statistical
and research data, internal regulatory compliance services and executive and
administrative services. The Transfer Agent supervises the preparation of tax
- 21 -
<PAGE>
returns, reports to shareholders of the Fund, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees. For the performance of these
administrative services, the Fund pays the Transfer Agent a fee at the annual
rate of .15% of the average value of its daily net assets up to $50,000,000,
.125% of such assets from $50,000,000 to $100,000,000 and .1% of such assets in
excess of $100,000,000, provided, however, that the minimum fee is $1,000 per
month.
STATEMENT OF ASSETS AND LIABILITIES
- -----------------------------------
The Fund's Statement of Assets and Liabilities as of December 23,
1997, which has been audited by Arthur Andersen LLP, is attached to this
Statement of Additional Information.
- 22 -
<PAGE>
WELLS S&P REIT INDEX FUND
(A Series of the Wells Family of Real Estate Funds)
STATEMENT OF ASSETS AND LIABILITIES
AS OF
DECEMBER 22, 1997
TOGETHER WITH
AUDITORS' REPORT
- 23 -
<PAGE>
ARTHUR ANDERSEN LLP
Report of Independent Public Accountants
----------------------------------------
To the Trustees and Shareholder of
The Wells S&P REIT Index Fund:
We have audited the accompanying statement of assets and liabilites of
The Wells S&P REIT Index Fund as of December 22, 1997. This financial statement
is the responsibility of the Trust's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of assets and liabilities is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of The Wells
S&P REIT Index Fund as of December 22, 1997 in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Cincinnati, Ohio
December 23, 1997
- 24 -
<PAGE>
WELLS S&P REIT INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES
AS OF DECEMBER 22, 1997
ASSETS:
Cash $100,000
Organization costs (Note 2) 36,000
-------
Total assets $136,000
LIABILITIES
Accrued expenses (Note 2) 36,000
-------
Total liabilities 36,000
-------
Net assets for shares of
beneficial interest outstanding $100,000
========
Shares outstanding 10,000
========
Net asset value per share $ 10.00
========
The accompanying notes are an integral part of this statement.
- 25 -
<PAGE>
WELLS S&P REIT INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES
AS OF DECEMBER 22, 1997
(1) The Wells S&P REIT Index Fund (the Fund) is a diversified
series of the Wells Family of Real Estate Funds, an open-end
investment company established as an Ohio business trust
under a Declaration of Trust dated June 4, 1997. The Fund
has had no operations except for the initial issuance of shares.
On December 23, 1997, 10,000 shares of the Fund were issued
for cash at $10.00 per share.
(2) Expenses incurred in connection with the organization of the
Fund and the initial offering of shares are estimated to be
$36,000, which includes $30,000 paid to Countrywide Fund Services,
Inc., the Fund's administrator. These expenses have been
paid by Wells Asset Management, Inc. (the Adviser). Upon
commencement of the public offering of shares of the Fund,
the Fund will reimburse the Adviser for such expenses, with
that amount being capitalized and amortized on a straight-
line basis over five years. As of December 22, 1997, all
outstanding shares of the Fund were held by an affiliate of
the Adviser, who purchased these initial shares in order to
provide the Trust with its required capital. In the event
the initial shares of the Fund are redeemed below the
required minimum initial capitalization of $100,000 by any
holder thereof at any time prior to the complete
amortization of organizational expenses, the redemption
proceeds payable with respect to such shares will be reduced
by the pro rata share (based upon the portion of the shares
redeemed in relation to the required minimum initial
capitalization) of the unamortized deferred organizational
expenses as of the date of such redemption.
(3) Reference is made to the Prospectus and this Statement of Additional
Information for a description of the Advisory Agreement, the
Sub-Advisory Agreement, the Underwriting Agreement, the Distribution
Expense Plan, the Administration Agreement, tax aspects of the Fund and
the calculation of the net asset value of shares of the Fund.
- 26 -
<PAGE>
WELLS FAMILY OF REAL ESTATE FUNDS
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (i) Financial Statements included in Part A:
None
(ii) Financial Statements included in Part B:
Statement of Assets and Liabilities,
December 23, 1997
Notes to Financial Statement
Independent Auditor's Report
(b) Exhibits
(1) Agreement and Declaration of Trust*
(2) Bylaws*
(3) Inapplicable
(4) Inapplicable
(5) (i) Form of Advisory Agreement with Wells Asset
Management, Inc.*
(ii) Form of Sub-Advisory Agreement with Gateway
Investment Advisers, L.P.*
(6) Form of Underwriting Agreement with Wells
Investment Securities, Inc.*
(7) Inapplicable
(8) Form of Custody Agreement with Star Bank, N.A.
(9) (i) Form of Administration Agreement with
Countrywide Fund Services, Inc.*
(ii) Form of Accounting Services Agreement with
Countrywide Fund Services, Inc.*
(iii) Form of Transfer, Dividend Disbursing,
Shareholder Service and Plan Agency
Agreement with Countrywide Fund Services,
Inc.*
<PAGE>
(10) Opinion and Consent of Counsel
(11) Consent of Independent Auditors
(12) Inapplicable
(13) Form of Agreement Relating to Initial
Capital*
(14) Inapplicable
(15) Form of Plan of Distribution Pursuant to
Rule 12b-1*
(16) Inapplicable
(17) Financial Data Schedule
(18) Inapplicable
- --------------------------------------
* Incorporated by reference to the Trust's initial
registration statement on Form N-1A.
Item 25. Persons Controlled by or Under Common Control with
Registrant.
After commencement of the public offering of the
Registrant's shares, the Registrant expects that no person
will be directly or indirectly controlled by or under common
control with the Registrant.
Item 26. Number of Holders of Securities.
As of December 23, 1997, there is one holder of the shares
of beneficial interest of the Registrant.
Item 27. Indemnification
Article VI of the Registrant's Agreement and Declaration of
Trust provides for indemnification of officers and Trustees
as follows:
"Section 6.4 Indemnification of Trustees, Officers, etc.
Subject to and except as otherwise provided in the
Securities Act of 1933, as amended, and the 1940 Act, the
Trust shall indemnify each of its Trustees and officers,
including persons who serve at the Trust's request as
directors, officers or trustees of another organization in
which the Trust has any interest
<PAGE>
as a shareholder, creditor or otherwise (hereinafter
referred to as a "Covered Person") against all liabilities,
including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel
fees, incurred by any Covered Person in connection with the
defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or
otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or
trustee, and except that no Covered Person shall be
indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in
the conduct of such Covered Person's office
Section 6.5 Advances of Expenses. The Trust shall
advance attorney's fees or other expenses incurred by
a Covered Person in defending a proceeding to the
full extent permitted by the Securities Act of 1933,
as amended, the 1940 Act, and Ohio Revised Code
Chapter 1707, as amended. In the event any of these
laws conflict with Ohio Revised Code Section
1701.13(E), as amended, these laws, and not Ohio
Revised Code Section 1701.13(E), shall govern.
Section 6.6 Indemnification Not Exclusive, etc. The
right of indemnification provided by this Article VI
shall not be exclusive of or affect any other rights
to which any such Covered Person may be entitled. As
used in this Article VI, "Covered Person" shall
include such person's heirs, executors and
administrators. Nothing contained in this article
shall affect any rights to indemnification to which
personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by
contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on
behalf of any such person.
<PAGE>
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to Trustees, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a Trustee, officer or controlling
person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such Trustee,
officer or controlling person in connection with the
securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
The Registrant expects to maintain a standard mutual fund and
investment advisory professional and directors and officers
liability policy. The policy will provide coverage to the
Registrant, its Trustees and officers, Wells Asset Management,
Inc. (the "Adviser") and Wells Investment Securities, Inc.,
the Trust's principal underwriter. Coverage under the policy
will include losses by reason of any act, error, omission,
misstatement, misleading statement, neglect or breach of duty.
The Advisory Agreement with the Adviser provides that the
Adviser shall not be liable for any action taken, omitted or
suffered to be taken by it in its reasonable judgment, in good
faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by the
Advisory Agreement, or in accordance with (or in the absence
of) specific directions or instructions from the Trust,
provided, however, that such acts or omissions shall not have
resulted from the Adviser's willful misfeasance, bad faith or
gross negligence.
The Sub-Advisory Agreement with Gateway Investment Advisers,
L.P. (the "Sub-Adviser") provides that the Sub-Adviser shall
be held harmless and indemnified by the Adviser and the Trust
from any and all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses)
arising from any
<PAGE>
claim, demand, action, or suit which results from any action
taken, omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by
the Sub-Advisory Agreement, or in accordance with (or in the
absence of) specific directions or instructions from the
Trust, provided, however, that such acts or omissions shall
not have resulted from the Sub-Adviser's willful misfeasance,
bad faith or gross negligence or reckless disregard of the
Sub-Adviser's obligations and duties under the Sub-Advisory
Agreement.
Item 28. Business and Other Connections of the Investment Adviser
(a) The Adviser is a Georgia corporation organized in
June, 1997 to provide investment advisory services to
the Registrant. The Adviser has no other business of
a substantial nature.
The Sub-Adviser, a Delaware limited partnership,
provides investment advisory services to the
Registrant, The Gateway Trust and various other
individual and institutional clients.
(b) The directors and officers of the Adviser and any
other business, profession, vocation or employment of
a substantial nature engaged in at any time during
the past two years:
(i) Leo F. Wells, III, President and Treasurer of
the Adviser.
President and a Trustee of the Registrant.
President, Treasurer and a Director of Wells
Investment Securities, Inc., a registered
broker-dealer and Registrant's principal
underwriter.
President of Wells & Associates, Inc.; Wells
Management Company, Inc.; Wells Capital,
Inc.; Wells Real Estate Funds, Inc.; Wells
Advisors, Inc.; Wells Development
Corporation; and Wells Real Estate
Investment Trust, Inc.
<PAGE>
(ii) Brian M. Conlon, Executive Vice President and
Chief Operating Officer of the Adviser.
Executive Vice President and a Trustee of the
Registrant.
Secretary of Wells Investment Securities,
Inc. and Chief Operating Officer of Wells
Capital, Inc.
(iii) Linda L. Carson - Secretary of the Adviser.
Vice President, Accounting of Wells Capital,
Inc.
The directors and officers of the Sub-Adviser and any other
business, profession, vocation or employment of a substantial
nature engaged in at any time during the past two years:
(i) Walter G. Sall, Chairman of the Board and a
controlling shareholder of the Sub-Adviser.
(ii) J. Patrick Rogers, President and a
controlling shareholder of the Adviser.
President of The Gateway Trust.
Item 29. Principal Underwriters
(a) Inapplicable
(b) Position with Position with
Name Underwriter Registrant
---- -------------- --------------
Leo F. Wells, III President, President
Treasurer and Trustee
a Director
Brian M. Conlon Secretary Executive Vice
President and
Trustee
The address of the above-named persons is 3885 Holcomb Bridge Road,
Norcross, Georgia 30092
(c) Inapplicable
<PAGE>
Item 30. Location of Accounts and Record
- ------- -------------------------------
Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder will be maintained by the
Registrant at its offices located at 3885 Holcomb Bridge Road
30092 as well as at the offices of the Registrant's transfer
agent located at 312 Walnut Street, 21st Floor, Cincinnati,
Ohio 45202.
Item 31. Management Services Not Discussed in Parts A or B
- ------- -------------------------------------------------
Inapplicable
Item 32. Undertakings
- ------- ------------
(a) Inapplicable
(b) The Registrant undertakes to file a post-effective
amendment, using financial statements which need not
be certified, within four to six months from the
effective date of this Registration Statement.
(c) The Registrant undertakes to furnish each person to
whom a Prospectus is delivered a copy of the
Registrant's latest annual report to shareholders,
upon request and without charge.
(d) The Registrant undertakes to call a meeting of
shareholders, if requested to do so by holders of
at least 10% of the Fund's outstanding shares, for
the purpose of voting upon the question of removal
of a trustee or trustees and to assist in
communications with other shareholders as required
by Section 16(c) of the Investment Company Act of
1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed below on its behalf by the undersigned, thereunto duly
authorized, in the City of Norcross and State of Georgia, on the 29th day of
December, 1997.
WELLS FAMILY OF REAL ESTATE FUNDS
By:/s/ Brian M. Conlon
---------------------
Brian M. Conlon
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Brian M. Conlon President December 29, 1997
- ------------------- and Trustee
Brian M. Conlon
/s/ Mark J. Seger Treasurer December 29, 1997
- -----------------
Mark J. Seger
<PAGE>
INDEX TO EXHIBITS
(1) Agreement and Declaration of Trust*
(2) Bylaws*
(3) Inapplicable
(4) Inapplicable
(5)(i) Form of Advisory Agreement*
(5)(ii) Form of Sub-Advisory Agreement*
(6) Form of Underwriting Agreement*
(7) Inapplicable
(8) Form of Custody Agreement
(9)(i) Form of Administration Agreement*
(9)(ii) Form of Accounting Services Agreement*
(9)(iii) Form of Transfer, Dividend Disbursing, Shareholder
Service and Plan Agency Agreement*
(10) Opinion and Consent of Counsel
(11) Consent of Independent Auditors
(12) Inapplicable
(13) Form of Agreement Relating to Initial Capital*
(14) Inapplicable
(15) Form of Plan of Distribution Pursuant to Rule 12b-1*
(16) Inapplicable
(17) Financial Data Schedule
(18) Inapplicable
- ----------------------------
* Incorporated by reference to the Trust's initial registration
statement on Form N-1A.
<PAGE>
CUSTODY AGREEMENT
This AGREEMENT, dated as of January ___, 1998, by and between WELLS FAMILY
OF REAL ESTATE FUNDS (the "Trust"), a business trust organized under the laws of
the State of Ohio, acting with respect to its existing series as of the date of
this Agreement and such other series as shall be designated from time to time by
the Trust (individually, the "Fund" and, collectively, the "Funds"), each of
them a series of the Trust and each of them operated and administered by the
Trust, and STAR BANK, N.A., a national banking association (the "Custodian").
W I T N E S S E T H
-------------------
WHEREAS, the Trust desires that the Fund's Securities and cash be held
and administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and the Custodian hereby agree as follows:
- 2 -
<PAGE>
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly
authorized by resolution of the Board of Trustees to give Oral Instructions and
Written Instructions on behalf of the Funds and named in Exhibit A hereto or in
such resolutions of the Board of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "Board of Trustees" shall mean the Trustees from time to time
serving under the Trust's Agreement and Declaration of Trust, as from time to
time amended.
1.3 "Book-Entry System" shall mean a federal book-entry system as
provided in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of
31 CFR Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "Business Day" shall mean any day recognized as a settlement day by
The New York Stock Exchange, Inc. and any other day for which the Trust computes
the net asset value of Shares of the Fund.
1.5 "Fund Custody Account" shall mean any of the accounts in the name
of the Trust, which is provided for in Section 3.2 below.
1.6 "NASD" shall mean The National Association of Securities
Dealers, Inc.
1.7 "Officer" shall mean the Chairman, the President, any
- 3 -
<PAGE>
Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, the Treasurer, or any Assistant Treasurer of the Trust.
1.8 "Oral Instructions" shall mean instructions orally transmitted to
and accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by an Authorized Person, (ii)
recorded and kept among the records of the Custodian made in the ordinary course
of business and (iii) orally confirmed by the Custodian. The Trust shall cause
all Oral Instructions to be confirmed by Written Instructions prior to the end
of the next Business Day. If such Written Instructions confirming Oral
Instructions are not received by the Custodian prior to a transaction, it shall
in no way affect the validity of the transaction or the authorization thereof by
the Trust. If Oral Instructions vary from the Written Instructions which purport
to confirm them, the Custodian shall notify the Trust of such variance but such
Oral Instructions will govern unless the Custodian has not yet acted.
1.9 "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The Depository Trust Company
and (provided that Custodian shall have received a copy of a resolution of the
Board of Trustees, certified by an Officer, specifically approving the use of
such clearing agency as a depository for the Funds) any other clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
- 4 -
<PAGE>
Securities and Exchange Act of 1934 as amended (the "1934 Act"), which acts as a
system for the central handling of Securities where all Securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the Securities.
1.11 "Securities" shall include, without limitation, common and
preferred stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed securities or
other obligations, and any certificates, receipts, warrants or other instruments
or documents representing rights to receive, purchase or subscribe for the same,
or evidencing or representing any other rights or interests therein, or any
similar property or assets that the Custodian has the facilities to clear and to
service.
1.12 "Shares" shall mean, with respect to the Fund, the units of
beneficial interest issued by the Trust on account of such Fund.
1.13 "Sub-Custodian" shall mean and include (i) any branch of a
"qualified U.S. bank," as that term is defined in Rule 17f-5 under the 1940 Act,
(ii) any "eligible foreign custodian," as that term is defined in Rule 17f-5
under the 1940 Act, approved by the Board of Trustees and having a contract with
the Custodian which contract has been approved by the Board of Trustees, and
(iii) any securities depository or clearing agency, incorporated or organized
under the laws of a country other than the United States, which operates the
central system for handling of securities or equivalent book-entries in that
country or a transnational system
- 5 -
<PAGE>
for the central handling of securities or equivalent book-entries, which
securities depository or clearing agency has been approved by the Board of
Trustees; provided, that the Custodian, or a SubCustodian has entered into an
agreement with such securities depository or clearing agency.
1.14 "Written Instructions" shall mean (i) written communications
actually received by the Custodian and signed by an Authorized Person, or (ii)
communications by telex or any other such system from one or more persons
reasonably believed by the Custodian to be Authorized Persons, or (iii)
communications between electro-mechanical or electronic devices provided that
the use of such devices and the procedures for the use thereof shall have been
approved by resolutions of the Board of Trustees, a copy of which, certified by
an Officer, shall have been delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby constitutes and appoints the
Custodian as custodian of all Securities and cash owned by or in the possession
of the Fund at any time during the period of this Agreement.
2.2 Acceptance. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter set forth.
2.3 Documents to be Furnished. The following documents,
- 6 -
<PAGE>
including any amendments thereto, will be provided contemporaneously with the
execution of the Agreement to the Custodian by the Trust:
a. A copy of the Declaration of Trust of the Trust
certified by the Secretary;
b. A copy of the Bylaws of the Trust certified by the
Secretary;
c. A copy of the resolution of the Board of Trustees of
the Trust appointing the Custodian, certified by the
Secretary;
d. A copy of the then current Prospectus of the Fund;
and
e. A certification of the President and Secretary of the
Trust setting forth the names and signatures of the
current Officers of the Trust and other Authorized
Persons.
2.4 Notice of Appointment of Dividend and Transfer Agent. The Trust
agrees to notify the Custodian in writing of the appointment, termination or
change in appointment of any Dividend and Transfer Agent of the Fund.
- 7 -
<PAGE>
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held
by the Custodian for the account of the Fund (other than Securities maintained
in a Securities Depository or Book-Entry System) shall be physically segregated
from other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other Funds) and shall be
identified as subject to this Agreement.
3.2 Fund Custody Accounts. As to the Fund, the Custodian shall open and
maintain in its trust department a custody account in the name of the Trust
coupled with the name of such Fund, subject only to draft or order of the
Custodian, in which the Custodian shall enter and carry all Securities, cash and
other assets of such Fund which are delivered to it.
3.3 Appointment of Agents. (a) In its discretion, the Custodian may
appoint one or more Sub-Custodians to act as Securities Depositories or as
sub-custodians to hold Securities and cash of the Fund and to carry out such
other provisions of this Agreement as it may determine, provided, however, that
the appointment of any such agents and maintenance of any Securities and cash of
the Fund shall be at the Custodian's expense and shall not relieve the Custodian
of any of its obligations or liabilities under this Agreement.
(b) If, after the initial approval of Sub-Custodians by the Board of
Trustees in connection with this Agreement, the Custodian wishes to appoint
other Sub-Custodians to hold property of the Fund, it will so notify the Trust
and provide it with information reasonably necessary to determine any such new
Sub-Custodian's
- 8 -
<PAGE>
eligibility under Rule 17f-5 under the 1940 Act, including a copy of the
proposed agreement with such Sub-Custodian. The Trust shall at the meeting of
the Board of Trustees next following receipt of such notice and information give
a written approval or disapproval of the proposed action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) If the Custodian intends to remove any Sub-Custodian previously
approved by the Board of Trustees, it shall so notify the Trust and move the
Securities and cash of the Funds deposited with such Sub-Custodian to another
Sub-Custodian previously approved by the Board of Trustees. The Custodian shall
promptly take such steps as may be required to remove any Sub-Custodian that has
ceased to meet the requirements of Rule 17f-5 under the 1940 Act.
(e) The Custodian hereby warrants to the Trust that in its opinion,
after due inquiry, the established procedures to be followed by each
Sub-Custodian in connection with the safekeeping of property of the Fund
pursuant to this Agreement afford protection for such property not materially
different from that afforded by the Custodian's established safekeeping
procedures with respect to similar property held by it (and its securities
depositories) in Cincinnati, Ohio.
(f) The Custodian shall oversee the maintenance of any
- 9 -
<PAGE>
Securities held for the Fund by any Sub-Custodian. Any Securities held by a
Sub-Custodian will be subject only to the instructions of the Custodian or its
agents; and any Securities held in an eligible foreign securities depository for
the account of a Sub-Custodian will be subject only to the instructions of such
Sub-Custodian. In the event that a Sub-Custodian permits any of the Securities
placed in its care to be held in an eligible foreign securities depository, such
Sub-Custodian will be required by its agreement with the Custodian to identify
on its books such Securities as being held for the account of the Custodian as a
custodian for its customers.
3.4 Delivery of Assets to Custodian. The Trust shall deliver, or cause
to be delivered, to the Custodian all of the Fund's Securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such Securities,
cash or other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The Custodian may
deposit and/or maintain Securities of the Fund in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Fund in any
- 10 -
<PAGE>
Securities Depository or Book-Entry System, the Trust shall
deliver to the Custodian a resolution of the Board of
Trustees, certified by an Officer, authorizing and instructing
the Custodian on an on-going basis to deposit in such
Securities Depository or Book-Entry System all Securities
eligible for deposit therein and to make use of such
Securities Depository or Book-Entry System to the extent
possible and practical in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of collateral
consisting of Securities.
(b) Securities of the Fund kept in a Book-Entry System or
Securities Depository shall be kept in an account ("Depository
Account") of the Custodian in such BookEntry System or
Securities Depository which includes only assets held by the
Custodian as a fiduciary, custodian or otherwise for
customers.
(c) The records of the Custodian with respect to Securities of a
Fund maintained in a Book-Entry System or Securities
Depository shall, by book-entry, identify such Securities as
belonging to such Fund.
(d) If Securities purchased by a Fund are to be held in a
Book-Entry System or Securities Depository, the Custodian
shall pay for such Securities upon (i) receipt of advice from
the Book-Entry System or Securities Depository that
- 11 -
<PAGE>
such Securities have been transferred to the Depository
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the account
of such Fund. If Securities sold by a Fund are held in a
Book-Entry System or Securities Depository, the Custodian
shall transfer such Securities upon (i) receipt of advice from
the Book-Entry System or Securities Depository that payment
for such Securities has been transferred to the Depository
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account
of such Fund.
(e) The Custodian shall provide the Trust with copies of any
report (obtained by the Custodian from a Book-Entry System or
Securities Depository in which Securities of the Fund are
kept) on the internal accounting controls and procedures for
safeguarding Securities deposited in such Book-Entry System or
Securities Depository.
(f) Anything to the contrary in this Agreement
notwithstanding, the Custodian shall be liable to the
Trust for any loss or damage to a Fund resulting (i) from
the use of a Book-Entry System or Securities Depository
by reason of any negligence or willful misconduct on the
part of Custodian or any Sub-Custodian appointed pursuant
to Section 3.3 above or any of its or their employees, or
(ii) from failure of Custodian or any such Sub-Custodian
to enforce effectively such rights as it may have against
- 12 -
<PAGE>
a Book-Entry System or Securities Depository. At its election,
the Trust shall be subrogated to the rights of the Custodian
with respect to any claim against a BookEntry System or
Securities Depository or any other person from any loss or
damage to the Fund arising from the use of such Book-Entry
System or Securities Depository, if and to the extent that the
Fund has not been made whole for any such loss or damage.
3.6 Disbursement of Moneys from Fund Custody Accounts. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from a Fund Custody
Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only in
accordance with Section 4.1 of this Agreement and only
(i) in the case of Securities (other than options on
Securities, futures contracts and options on futures
contracts), against the delivery to the Custodian (or any
Sub-Custodian appointed pursuant to Section 3.3 above) of
such Securities registered as provided in Section 3.9
below or in proper form for transfer, or if the purchase
of such Securities is effected through a Book-Entry
System or Securities Depository, in accordance with the
conditions set forth in Section 3.5 above; (ii) in the
case of options on Securities, against delivery to the
Custodian (or such Sub-Custodian) of such receipts as are
required by the customs prevailing among dealers in such
options; (iii) in the case of futures contracts and
- 13 -
<PAGE>
options on futures contracts, against delivery to the
Custodian (or such Sub-Custodian) of evidence of title thereto
in favor of the Fund or any nominee referred to in Section 3.9
below; and (iv) in the case of repurchase or reverse
repurchase agreements entered into between the Trust and a
bank which is a member of the Federal Reserve System or
between the Trust and a primary dealer in U.S. Government
securities, against delivery of the purchased Securities
either in certificate form or through an entry crediting the
Custodian's account at a Book-Entry System or Securities
Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as
set forth in Section 3.7(f) below, of Securities owned by the
Fund;
(c) For the payment of any dividends or capital gain
distributions declared by the Fund;
(d) In payment of the redemption price of Shares as provided
in Section 5.1 below;
(e) For the payment of any expense or liability incurred by
the Fund, including but not limited to the following
payments for the account of the Fund: interest; taxes;
administration, investment advisory, accounting,
auditing, transfer agent, custodian, trustee and legal
fees; and other operating expenses of the Fund; in all
cases, whether or not such expenses are to be in whole or
in part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any
- 14 -
<PAGE>
agreement among the Trust, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD,
relating to compliance with rules of The Options Clearing
Corporation and of any registered national securities exchange
(or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions
by the Fund;
(g) For transfer in accordance with the provision of any
agreement among the Trust, the Custodian, and a futures
commission merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of
the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or
organizations) regarding account deposits in connection
with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution
(including the Custodian), which deposit or account has a term
of one year or less; and
(i) For any other proper purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of
the Board of Trustees, certified by an Officer, specifying the
amount and purpose of such payment, declaring such purpose to
be a proper corporate purpose, and naming the person or
persons to whom such payment is to be made.
- 15 -
<PAGE>
3.7 Delivery of Securities from Fund Custody Accounts. Upon receipt of
Proper Instructions, the Custodian shall release and deliver Securities from a
Fund Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but
only against receipt of payment therefor in cash, by certified
or cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund; provided
that, in any such case, the cash or other consideration is to
be delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into
the name of the Fund, the Custodian or any Sub-Custodian
appointed pursuant to Section 3.3 above, or of any
nominee or nominees of any of the foregoing, or (ii) for
exchange for a different number of certificates or other
evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new
Securities are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in
accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan or
- 16 -
<PAGE>
merger, consolidation, recapitalization, reorganization or
readjustment of the issuer of such Securities, or pursuant to
provisions for conversion contained in such Securities, or
pursuant to any deposit agreement, including surrender or
receipt of underlying Securities in connection with the
issuance or cancellation of depository receipts; provided
that, in any such case, the new Securities and cash, if any,
are to be delivered to the Custodian;
(g) Upon receipt of payment therefor pursuant to any
repurchase or reverse repurchase agreement entered into
by the Fund;
(h) In the case of warrants, rights or similar Securities, upon
the exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the Trust
shall have specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Trust, but only
against receipt by the Custodian of the amounts borrowed;
- 17 -
<PAGE>
(k) Pursuant to any authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization
of the Trust;
(l) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian and a
broker-dealer registered under the 1934 Act and a member
of the NASD, relating to compliance with the rules of The
Options Clearing Corporation and of any registered
national securities exchange (or of any similar
organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Fund;
(m) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian, and a futures
commission merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of
the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or
organizations) regarding account deposits in connection
with transactions by the Fund; or
(n) For any other proper corporate purpose, but only upon
receipt, in addition to Proper Instructions, of a copy of
a resolution of the Board of Trustees, certified by an
Officer, specifying the Securities to be delivered,
setting forth the purpose for which such delivery is to
be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom
delivery of such Securities shall be made.
- 18 -
<PAGE>
3.8 Actions Not Requiring Proper Instructions. Unless otherwise instructed
by the Trust, the Custodian shall with respect to all Securities held for a Fund
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Fund is entitled either
by law or pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect
on a timely basis the amount payable upon all Securities which
may mature or be called, redeemed, or retired, or otherwise
become payable;
(c) Endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary
form for Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the federal income tax laws or
the laws or regulations of any other taxing authority now or
hereafter in effect, and prepare and submit reports to the
Internal Revenue Service ("IRS") and to the Trust at such
time, in such manner and containing such information as is
prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to
Securities held therein, through a Book-Entry System or
Securities Depository, all rights and similar securities
issued with respect to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
- 19 -
<PAGE>
Instructions, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of the
Fund.
3.9 Registration and Transfer of Securities. All Securities held for
the Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System if eligible therefor. All other Securities held for the Fund
may be registered in the name of such Fund, the Custodian, or any Sub-Custodian
appointed pursuant to Section 3.3 above, or in the name of any nominee of any of
them, or in the name of a Book-Entry System, Securities Depository or any
nominee of either thereof. The Trust shall furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of any of the nominees hereinabove referred
to or in the name of a Book-Entry System or Securities Depository, any
Securities registered in the name of a Fund.
3.10 Records. (a) The Custodian shall maintain, by Fund, complete and
accurate records with respect to Securities, cash or other property held for the
Fund, including (i) journals or other records of original entry containing an
itemized daily record in detail of all receipts and deliveries of Securities and
all receipts and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in physical possession,
(C) monies and Securities borrowed and monies and Securities loaned (together
with a record of the collateral
- 20 -
<PAGE>
therefor and substitutions of such collateral), (D) dividends and interest
received, and (E) dividends receivable and interest receivable; and (iii)
canceled checks and bank records related thereto. The Custodian shall keep such
other books and records of the Fund as the Trust shall reasonably request, or as
may be required by the 1940 Act, including, but not limited to, Section 31 of
the 1940 Act and Rule 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Trust and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Trust and at all times during the regular business hours of the Custodian be
made available upon request for inspection by duly authorized officers,
employees or agents of the Trust and employees or agents of the Securities and
Exchange Commission, and (iii) if required to be maintained by Rule 31a-1 under
the 1940 Act, be preserved for the periods prescribed in Rule 31a-2 under the
1940 Act.
3.11 Fund Reports by Custodian. The Custodian shall furnish the Trust
with a daily activity statement by Fund and a summary of all transfers to or
from each Fund Custody Account on the day following such transfers. At least
monthly and from time to time, the Custodian shall furnish the Trust with a
detailed statement, by Fund, of the Securities and moneys held by the Custodian
and the Sub-Custodians for the Fund under this a Agreement.
- 21 -
<PAGE>
3.12 Other Reports by Custodian. The Custodian shall provide the Trust
with such reports, as the Trust may reasonably request from time to time, on the
internal accounting controls and procedures for safeguarding Securities, which
are employed by the Custodian or any Sub-Custodian appointed pursuant to Section
3.3 above.
3.13 Proxies and Other Materials. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of the Fund, to be
promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Trust such proxies, all proxy soliciting materials and
all notices relating to such Securities.
3.14 Information on Corporate Actions. The Custodian shall promptly
deliver to the Trust all information received by the Custodian and pertaining to
Securities being held by the Fund with respect to optional tender or exchange
offers, calls for redemption or purchase, or expiration of rights as described
in the Standards of Service Guide attached as Exhibit B. If the Trust desires to
take action with respect to any tender offer, exchange offer or other similar
transaction, the Trust shall notify the Custodian at least five Business Days
prior to the date on which the Custodian is to take such action. The Trust will
provide or cause to be provided to the Custodian all relevant information for
any Security which has unique put/option provisions at least five Business Days
prior to the beginning date of the tender period.
- 22 -
<PAGE>
ARTICLE IV
----------
PURCHASE AND SALE OF INVESTMENTS OF THE FUNDS
---------------------------------------------
4.1 Purchase of Securities. Promptly upon each purchase of Securities
for the Fund, Written Instructions shall be delivered to the Custodian,
specifying (a) the Fund for which the purchase was made, (b) the name of the
issuer or writer of such Securities, and the title or other description thereof,
(c) the number of shares, principal amount (and accrued interest, if any) or
other units purchased, (d) the date of purchase and settlement, (e) the purchase
price per unit, (f) the total amount payable upon such purchase, and (g) the
name of the person to whom such amount is payable. The Custodian shall upon
receipt of such Securities purchased by the Fund pay out of the moneys held for
the account of such Fund the total amount specified in such Written Instructions
to the person named therein. The Custodian shall not be under any obligation to
pay out moneys to cover the cost of a purchase of Securities for the Fund, if in
the relevant Fund Custody Account there is insufficient cash available to the
Fund for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for the purchase of Securities
for the Fund is made by the Custodian in advance of receipt of the Securities
purchased but in the absence of specified Written Instructions to so pay in
advance, the Custodian shall be liable to the Fund for such Securities to the
same extent as if the Securities had been received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of
Securities by the Fund, Written Instructions shall be delivered to
- 23 -
<PAGE>
the Custodian, specifying (a) the Fund for which the sale was made, (b) the name
of the issuer or writer of such Securities, and the title or other description
thereof, (c) the number of shares, principal amount (and accrued interest, if
any), or other units sold, (d) the date of sale and settlement, (e) the sale
price per unit, (f) the total amount payable upon such sale, and (g) the person
to whom such Securities are to be delivered. Upon receipt of the total amount
payable to the Fund as specified in such Written Instructions, the Custodian
shall deliver such Securities to the person specified in such Written
Instructions. Subject to the foregoing, the Custodian may accept payment in such
form as shall be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in Securities.
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above or
any other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Fund for which such Securities
were delivered shall bear the risk that final payment for such Securities may
not be made or that such Securities may be returned or otherwise held or
disposed of by or through the person to whom they were delivered, and the
Custodian shall have no liability for any for the foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion
and from time to time, the Custodian may credit the relevant Fund
- 24 -
<PAGE>
Custody Account, prior to actual receipt of final payment thereof, with (i)
proceeds from the sale of Securities which it has been instructed to deliver
against payment, (ii) proceeds from the redemption of Securities or other assets
of the Fund, and (iii) income from cash, Securities or other assets of the Fund.
Any such credit shall be conditional upon actual receipt by Custodian of final
payment and may be reversed if final payment is not actually received in full.
The Custodian may, in its sole discretion and from time to time, permit the Fund
to use funds so credited to its Fund Custody Account in anticipation of actual
receipt of final payment. Any such funds shall be repayable immediately upon
demand made by the Custodian at any time prior to the actual receipt of all
final payments in anticipation of which funds were credited to the Fund Custody
Account.
4.6 Advances by Custodian for Settlement. The Custodian may, in its
sole discretion and from time to time, advance fund to the Trust to facilitate
the settlement of the Fund's transactions in its Fund Custody Account. Any such
advance shall be repayable immediately upon demand made by Custodian.
ARTICLE V
REDEMPTION OF FUND SHARES
5.1 Transfer of Funds. From such funds as may be available for the
purpose in the relevant Fund Custody Account, and upon receipt of Proper
Instructions specifying that the fund is required to redeem Shares of the Fund,
the Custodian shall wire each amount specified in such Proper Instructions to or
through such bank as the Trust may designate with respect to such amount in
- 25 -
<PAGE>
such Proper Instructions.
5.2 No Duty Regarding Paying Banks. The Custodian shall not be under
any obligation to effect payment or distribution by any bank designated in
Proper Instructions given pursuant to Section 5.1 above of any amount paid by
the Custodian to such bank in accordance with such Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of a Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD (or any
futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract
market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Fund,
- 26 -
<PAGE>
(b) for purposes of segregating cash or Securities in connection
with securities options purchased or written by the Fund or in
connection with financial futures contracts (or options
thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made
by the Fund,
(d) for purposes of compliance by the Fund with requirements under
the 1940 Act for the maintenance of segregated accounts by
registered investment companies in connection with reverse
repurchase agreements and when-issued, delayed delivery and
firm commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees, certified by an Officer,
setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate
purposes.
Each segregated account established under this Article VI shall be
established and maintained for a single Fund only. All Proper Instructions
relating to a segregated account shall specify the Fund involved.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the
exercise of reasonable care in carrying out its obligations under
- 27 -
<PAGE>
this Agreement, and shall be without liability to the Trust or any Fund for any
loss, damage, cost, expense (including attorneys' fees and disbursements),
liability or claim unless such loss, damage, cost, expense, liability or claim
arises from negligence, bad faith or willful misconduct on its part or on the
part of any SubCustodian appointed pursuant to Section 3.3 above. The Custodian
shall be entitled to rely on and may act upon advice of counsel on all matters,
and shall be without liability for any action reasonably taken or omitted
pursuant to such advice. The Custodian shall promptly notify the Trust of any
action taken or omitted by the Custodian pursuant to advice of counsel. The
Custodian shall not be under any obligation at any time to ascertain whether the
Trust or a Fund is in compliance with the 1940 Act, the regulations thereunder,
the provisions of the Trust's charter documents or bylaws, or its investment
objectives and policies as then in effect.
7.2 Actual Collection Required. The Custodian shall not be liable for,
or considered to be the custodian of, any cash belonging to the Fund or any
money represented by a check, draft or other instrument for the payment of
money, until the Custodian or its agents actually receive such cash or collect
on such instrument.
7.3 No Responsibility for Title, etc. So long as and to the extent that
it is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be
- 28 -
<PAGE>
required to enforce collection, by legal means or otherwise, of any money or
property due and payable with respect to Securities held for the Fund if such
Securities are in default or payment is not made after due demand or
presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and any Written Instructions
actually received by it pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are specifically
set forth in this Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
7.7 Co-operation. The Custodian shall cooperate with and supply
necessary information, by Fund, to the entity or entities appointed by the Trust
to keep the books of account of the Fund and/or compute the value of the assets
of the Fund. The Custodian shall take all such reasonable actions as the Trust
may from time to time request to enable the Trust to obtain, from year to year,
favorable opinions from the Trust's independent accountants with respect to the
Custodian's activities hereunder in connection with (a) the preparation of the
Trust's reports on Form N-1A and Form NSAR and any other reports required by the
Securities and Exchange Commission, and (b) the fulfillment by the Trust of any
other requirements of the Securities and Exchange Commission.
-29-
<PAGE>
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Trust. The Trust shall indemnify and hold
harmless the Custodian and any Sub-Custodian appointed pursuant to Section 3.3
above, and any nominee of the Custodian or of such Sub-Custodian, from and
against any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability (including, without limitation, liability arising
under the Securities Act of 1933, the 1934 Act, the 1940 Act, and any state or
foreign securities and/or banking laws) or claim arising directly or indirectly
(a) from the fact that Securities are registered in the name of any such
nominee, or (b) from any action or inaction by the Custodian or such
Sub-Custodian (i) at the request or direction of or in reliance on the advice of
the Trust, or (ii) upon Proper Instructions, or (c) generally, from the
performance of its obligations under this Agreement or any subcustody agreement
with a Sub-Custodian appointed pursuant to Section 3.3 above, provided that
neither the Custodian nor any such Sub-Custodian shall be indemnified and held
harmless from and against any such loss, damage, cost, expense, liability or
claim arising from the Custodian's or such Sub-Custodian's negligence, bad faith
or willful misconduct.
8.2 Indemnification by Custodian. The Custodian shall indemnify and
hold harmless the Trust from and against any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability (including without
limitation, liability arising under the Securities Act of 1933, the 1934 Act,
the 1940
- 30-
<PAGE>
Act, and any state or foreign securities and/or banking laws) or claim arising
from the negligence, bad faith or willful misconduct of the Custodian or any
Sub-Custodian appointed pursuant to Section 3.3 above, or any nominee of the
Custodian or of such SubCustodian.
8.3 Indemnity to be Provided. If the Trust requests the Custodian to
take any action with respect to Securities, which may, in the opinion of the
Custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
8.4 Security. If the Custodian advances cash or Securities to a Fund
for any purpose, either at the Trust's request or as otherwise contemplated in
this Agreement, or in the event that the Custodian or its nominee incurs, in
connection with its performance under this Agreement, any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim
(except such as may arise from its or its nominee's negligence, bad faith or
willful misconduct), then, in any such event, any property at any time held for
the account of such Fund shall be security therefor, and should such Fund fail
promptly to repay or indemnify the Custodian, the Custodian shall be entitled to
utilize available cash of such Fund and to dispose of other assets of such Fund
to the extent necessary to obtain reimbursement or indemnification.
- 31-
<PAGE>
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay (i) shall not discriminate against the Fund in favor of any other
customer of the Custodian in making computer time and personnel available to
input or process the transactions contemplated by this Agreement and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall become effective as of its
execution and shall continue in full force and effect until terminated as
hereinafter provided.
10.2 Termination. Either party hereto may terminate this
- 32-
<PAGE>
Agreement by giving to the other party a notice in writing specifying the date
of such termination, which shall be not less than sixty (60) days after the date
of the giving of such notice. If a successor custodian shall have been appointed
by the Board of Trustees, the Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on such specified date of termination (a)
deliver directly to the successor custodian all Securities (other than
Securities held in a Book-Entry System or Securities Depository) and cash then
owned by the Fund and held by the Custodian as custodian, and (b) transfer any
Securities held in a Book-Entry System or Securities Depository to an account of
or for the benefit of the Fund at the successor custodian, provided that the
Trust shall have paid to the Custodian all fees, expenses and other amounts to
the payment or reimbursement of which it shall then be entitled. Upon such
delivery and transfer, the Custodian shall be relieved of all obligations under
this Agreement. The Trust may at any time immediately terminate this Agreement
in the event of the appointment of a conservator or receiver for the Custodian
by regulatory authorities or upon the happening of a like event at the direction
of an appropriate regulatory agency or court of competent jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor custodian
is not designated by the Trust on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or trust
- 33-
<PAGE>
company of its own selection, which (a) is a "bank" as defined in the 1940 Act
and (b) has aggregate capital, surplus and undivided profits as shown on its
then most recent published report of not less than $25 million, all Securities,
cash and other property held by Custodian under this Agreement and to transfer
to an account of or for the Fund at such bank or trust company all Securities of
the Fund held in a Book-Entry System or Securities Depository. Upon such
delivery and transfer, such bank or trust company shall be the successor
custodian under this Agreement and the Custodian shall be relieved of all
obligations under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from
time to time by the Trust and the Custodian. The fees and other charges in
effect on the date hereof and applicable to the Fund are set forth in Exhibit C
attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the trust
property of the Trust as provided in the Trust's Agreement and Declaration of
Trust, as from
- 34-
<PAGE>
time to time amended. The execution and delivery of this Agreement have been
authorized by the Trustees, and this Agreement has been signed and delivered by
an authorized officer of the Trust, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust as provided in the above-mentioned Agreement and Declaration of Trust.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions,
and other communications to be given hereunder shall be in writing and shall be
sent or delivered to the recipient at the address set forth after its name
hereinbelow:
To the Trust:
Wells Family of Real Estate Funds
312 Walnut Street, 21st Floor
Cincinnati, OH 45202
Telephone: (513) 629-2000
Facsimile: (513) 629-2008
To Custodian:
Star Bank, N.A.
425 Walnut Street, M.L. 6118
Cincinnati, Ohio 45202
Attention: Mutual Fund Custody Services
Telephone: (513) 632-3016
Facsimile: (513) 632-4448
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmissions by or through teletype,
- 35 -
<PAGE>
facsimile, central processing unit connection, on-line terminal and
magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.
14.2 References to Custodian. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for the Fund and such other printed matter
as merely identifies Custodian as custodian for one or more Funds. The Trust
shall submit printed matter requiring approval to Custodian in draft form,
allowing sufficient time for review by Custodian and its counsel prior to any
deadline for printing.
14.3 No Waiver. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
14.4 Amendments. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or
- 36 -
<PAGE>
more counterparts, and by the parties hereto on separate counterparts, each of
which shall be deemed an original but all of which together shall constitute but
one and the same instrument.
14.6 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its behalf by its
representatives thereunto duly authorized, all as of the day and year first
above written.
ATTEST: WELLS FAMILY OF REAL ESTATE FNDS
_____________________________ By:_____________________________
Its:
ATTEST: STAR BANK, N.A.
______________________________ By:_____________________________
Its:
- 37 -
<PAGE>
EXHIBIT A
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to administer the Fund Custody Accounts.
Name Signature
Brian M. Conlon ______________________________
John F. Splain ______________________________
Robert G. Dorsey ______________________________
Mark J. Seger ______________________________
M. Kathleen Leugers ______________________________
Christina H. Kelso ______________________________
Tina D. Hosking ______________________________
J. Patrick Rogers ______________________________
Paul R. Stewart ______________________________
Kenneth H. Toft ______________________________
Shi Cheng ______________________________
- 38 -
<PAGE>
EXHIBIT B
STAR BANK, N.A.
Standards of Service Guide
Star Bank, N.A., is committed to providing superior quality service to
all customers and their agents at all times. We have compiled this guide as a
tool for our clients to determine our standards for the processing of security
settlements, payment collection, and capital change transactions. Deadlines
recited in this guide represent the times required for Star Bank to guarantee
processing. Failure to meet these deadlines will result in settlement at our
client's risk. In all cases, Star Bank will make every effort to complete all
processing on a timely basis.
Star Bank is a direct participant of the Depository Trust Company, a direct
member of the Federal Reserve Bank of Cleveland, and utilizes the Bankers Trust
Company as its agent for ineligible and foreign securities.
For corporate reorganizations, Star Bank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK, DTC Important Notices, and the Wall Street
Journal,
For bond calls and mandatory puts, Star Bank utilizes SEI's Bond Source,
Kenny Information Systems, Standard & Poor's Corporation, and DTC Important
Notices. Star Bank will not notify clients of optional put opportunities.
Any securities delivered free to Star Bank or its agents must be
received three (3) business days prior to any payment or settlement in order for
the Star Bank standards of service to apply.
Should you have any questions regarding the information contained in
this guide, please feel free to contact your account representative.
The information contained in this Standards of Service Guide
is subject to change. Should any changes be made Star Bank
will provide you with an updated copy of its Standards of
Service Guide.
<PAGE>
STAR BANK SECURITY SETTLEMENT STANDARDS
<TABLE>
<S> <C> <C>
TRANSACTION TYPE INSTRUCTIONS DEADLINES* DELIVERY INSTRUCTIONS
DTC 1:30 P.M. on Settlement Date DTC Participant #2219
Agent Bank ID #27895
Institutional #
For Account #
Federal Reserve Book Entry 12:30 P.M. on Settlement Date Federal Reserve Bank of
Cinti/Trust for Star Bank, N.A.
ABA # 0420000013
For Account #
Federal Reserve Book Entry 1:00 P.M. on Settlement Date Federal Reserve Bank of
(Repurchase Agreement Cinti/Spec for Star Bank, N.A.
Collateral Only) ABA #042000013
For Account #
PTC Securities 12:00 P.M. on Settlement Date PTC For Account BTRST/CUST
(GNMA Book Entry) Sub Account: Star Bank, N.A. #090334
Physical Securities 9:30 A.M. EST on Settlement Date Bankers Trust Company
(for Deliveries, by 4:00 P.M. on 16 Wall Street 4th Floor, Window 43
Settlement Date minus 1) for Star Bank Account #090334
<PAGE>
CEDEL/EURO-CLEAR 11:00 A.M. on Settlement Date Eurclear Via Cedel Bridge
minus 2 In favor of Bankers Trust Comp
Cedel 53355
For Star Bank Account #501526354
Cash Wire Transfer 3:00 P.M. Star Bank, N.A. Cinti/Trust ABA# 042000013
Credit Account #9901877
Further Credit to
Account #
</TABLE>
*All times listed are Cincinnati time.
<PAGE>
STAR BANK PAYMENT STANDARDS
SECURITY TYPE INCOME PRINCIPAL
Equities Payable Date
Municipal Bonds* Payable Date Payable Date
Corporate Bonds* Payable Date Payable Date
Federal Reserve Bank
Book Entry* Payable Date Payable Date
PTC GNMA's (P&I) Payable Date + 1 Payable Date + 1
CMOs*
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
SBA Loan Certificates When Received When Received
Unit Investment Trust Payable Date Payable Date
Certificates*
Certificates of Deposit* Payable Date Payable Date
Limited Partnerships When Received When Received
Foreign Securities When Received When Received
*Variable Rate Securities
Federal Reserve Bank
Book Entry Payable Date Payable Date
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
NOTE: If a payable date falls on a weekend or bank holiday, payment will be
made on the immediately following business day.
<PAGE>
STAR BANK CORPORATE REORGANIZATION STANDARDS
<TABLE>
<S> <C> <C> <C>
TYPE OF ACTION NOTIFICATION TO CLIENT DEADLINE FOR CLIENT INSTRUCTIONS TRANSACTION
TO STAR BANK POSTING
Rights, Warrants, Later of 10 business days prior 5 business days prior to expiration Upon receipt
and Optional Mergers to expiration or receipt of notice
Mandatory Puts with Later of 10 business days prior 5 business days prior to expiration Upon receipt
Option to Retain to expiration or receipt of notice
Class Actions 10 business days prior to 5 business days prior to expiration Upon receipt
expiration date
Voluntary Tenders, Later of 10 business days prior 5 business days prior to expiration Upon receipt
Exchanges, to expiration or receipt of notice
and Conversions
Mandatory Puts, Defaults, At posting of funds or securities None Upon receipt
Liquidations, Bankruptcies, received
Stock Splits, Mandatory
Exchanges
Full and Partial Calls Later of 10 business days prior None Upon receipt
to expiration or receipt of notice
</TABLE>
NOTE: Fractional shares/par amounts resulting from any of the above will be sold
<PAGE>
EXHIBIT C
STAR BANK, N.A.
Domestic Custody Fee Schedule
Star Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:
<TABLE>
<S> <C>
I. Portfolio Transaction Fees:
(a)For each repurchase agreement transaction $ 7.00*
(b)For each portfolio transaction processed through DTC or Federal Reserve $ 9.00
(c)For each portfolio transaction processed through our New York custodian $25.00
(d)For each GNMA/Amortized Security Purchase $16.00
(e)For each GNMA Prin/Int Paydown, GNMA Sales $ 5.00
(f)For each option/future contract written, exercised or expired $40.00
(g)For each Cedel/Euroclear transaction $80.00
(h)For each Disbursement (Fund expenses only) $ 5.00
</TABLE>
A transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange:
II. Aggregate Market Value Fee
Based upon an annual rate of: Million
.0003 (3 Basis Points) on First $20
.0002 (2 Basis Points) on Next $20
.00015 (1.5 Basis Points) on Balance
III. Monthly Minimum Fee - Per Fund $300.00
IV. Out-of-Pocket Expenses
The only out-of-pocket expenses charged to your account will be shipping fees
or transfer fees.
V. Earnings Credits
On a monthly basis any earnings credits generated from uninvested custody
balances will be applied against any cash management service fees generated.
Earnings credits are based on a Cost of Funds Tiered Earnings Credit Rate.
Countrywide
Fund Services, Inc.
December 26, 1997
Wells Family of Real Estate Funds
3885 Holcomb Bridge Road
Norcross, Georgia 30092
Gentlemen:
You have requested my opinion in connection with the registration by Wells
Family of Real Estate Funds, an Ohio business trust (the "Trust"), of an
indefinite number of shares of beneficial interest of the Wells S&P REIT Index
Fund (the "Shares") authorized by the Trust's Agreement and Declaration of
Trust, to be filed with the Securities and Exchange Commission as an exhibit to
the Trust's registration statement on Form N-1A (File No. 33-35677), as amended
(the "Registration Statement"), under the Securities Act of 1933 and the
Investment Company Act of 1940.
I have examined and relied upon originals or copies, certified or otherwise
identified to my satisfaction, of such records, agreements, documents and other
instruments and certificates or comparable documents of public officials and of
officers and representatives of the Trust, and I have made such inquiries of the
officers and representatives of the Trust, as I have deemed relevant and
necessary as the basis for the opinion hereinafter set forth.
In such examination, I have assumed, without independent verification, the
genuineness of all signatures (whether original or photostatic) and the
authenticity of all documents submitted to me as originals and the conformity to
authentic original documents of all documents submitted to me as certified or
photostatic copies. As to all questions of fact material to such opinion, I have
relied upon the certificates referred to hereinabove. I have assumed, without
independent verification, the accuracy of the relevant facts stated therein.
This letter expresses my opinion as to the provisions of the Trust's Agreement
and Declaration of Trust and the laws of the State of Ohio applying to business
trusts generally, but does not extend to the Ohio Securities Act or to federal
securities or other laws.
Based on the foregoing, and subject to the qualifications set forth herein, I am
of the opinion that the Shares have been duly and validly authorized, and, when
issued and delivered as described in the Registration Statement, will be fully
paid and nonassessable by the Trust.
312 Walnut Street . Cincinnati, Ohio 45202 . 513.629.2000 . 800.543.8721
<PAGE>
Wells Family of Real Estate Funds
December 26, 1997
Page 2
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement. In giving such consent, I do not thereby admit that I come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933 or under the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
Sincerely,
/s/ Frank J. Bitzer
Frank J. Bitzer
Counsel
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in or made a part of this Form N-1A
Registration Statement, Pre-Effective Amendment No. 1.
/s/ Arthur Andersen LLP
Cincinnati, Ohio,
December 23, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001040623
<NAME> WELLS FAMILY OF REAL ESTATE FUNDS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-22-1997
<PERIOD-END> DEC-22-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 100,000
<OTHER-ITEMS-ASSETS> 36,000
<TOTAL-ASSETS> 136,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 36,000
<TOTAL-LIABILITIES> 36,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100,000
<SHARES-COMMON-STOCK> 10,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 100,000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 100,000
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
